Business Plan Outline http://www.planwrite.com/ Non disclosure 1.0 Executive Summary 1.1 Mission Statement 1.2 The Enterprise 1.3 Key Personnel 1.4 The Market 1.5 The Offering 1.6 Marketing Strategy 1.7 Competition 1.8 Projections 1.9 Resource Requirements 1.10 Key Issues 2.0 The Enterprise 2.1 Objectives 2.2 History 2.3 Organization 2.3.1 Key Personnel 2.3.2 Personnel Count 2.4 Operations 2.5 The Future 3.0 The Market 3.1 Market Segments 3.2 Prospects 3.3 Prospect Objectives 3.4 Segmentation 3.5 Size 3.6 Environment 3.7 Alternatives 4.0 The Offerings 4.1 Description 4.2 Market Status 4.3 Value 4.4 Cost to Produce 4.5 Support 5.0 Marketing Strategy 5.1 Targets 5.2 Image 5.3 Promotion 5.3.1 Internet Web Site 5.3.2 Publicity 5.3.3 Advertising 5.4 Pricing 5.5 Sales 5.6 Distribution 5.7 Logistics 5.8 Support 6.0 Competitive Analysis 7.0 Development Program 7.1 Objectives 7.2 Organization 7.3 Market Status 7.4 Schedules 7.5 Technology 8.0 Operations / Production 8.1 Organization 8.2 Suppliers 8.3 Sub-contractors 8.4 Technology 8.5 Quality 8.6 Inventory 9.0 Investment Capital 9.1 Initial Funding 9.2 Use of Funds 9.3 Return on Investment 10.0 Historical Financials 10.1 Income Statement 10.2 Balance Sheet 10.3 Cash Flow 11.0 Financial Projections 11.1 Year One Income Statement 11.2 Year Two Income Statement 11.3 Five Year Income Statement 11.4 Year One Cash Flow 11.5 Year Two Cash Flow 11.6 Five Year Cash Flow 11.7 Balance Sheet 12.0 Financial Alternatives 12.1 Best Case 12.2 Worst Case 13.0 Financial Addendums 13.1 Assumptions 13.2 Ratios 13.3 Income Statement Comparison 13.4 Balance Sheet Comparison 1.0 Executive Summary Explanation The Executive Summary appears first in the final plan, but should only be written after you have completed all other sections of the business plan. The Executive Summary should include a concise presentation of those aspects of your business that are critical to a potential investor or lender. A prospective investor or lender will scan the Executive Summary to determine whether the details which follow merits their time. Factors to consider: Objectives of the business plan (to raise capital, to guide the team) Profile of your enterprise Qualifications of the founders Market Opportunity (what is missing in the market) Proposed Offering Strategy for success Financial Projections Requirements (finances, technology, key personel) 1.1 Mission Statement Explanation Provide a clear and concise statement of the long-term mission of your enterprise. This should act as the "gospel" for your employees whenever they are asked to describe your enterprise. Sample from CitiLoc, Inc. CitiLoc is committed to improving communications between government (city, state & federal) and businesses seeking to relocate. 1.2 The Enterprise Explanation This topic should be written after you have completed section 2 containing the detailed description of factors relevant to your enterprise. This topic should very concisely summarize that description by stating primary objectives, a short description of origin and financial achievements, key personnel and organization structure, current and projected size, facilities locations, scope of activities and plans for changes in the future. Sample from CitiLoc, Inc. CitiLoc, Inc. is a newly established C corporation. We are located in Austin, Texas and are presently working out of one of the principal's homes. There are four principals who have formed CitiLoc; Mark Hanson, Jim Jones, Donald van Pelt and Jessica Lane. Our primary objective is to establish a presence on the Internet with a data base of information about every city in the U.S. with a population over 50,000. This data base will be of so much value to any business evaluating a move to a new city that it will be orders of magnitude more cost effective than any alternative method of evaluation. The CitiLoc service will be unique in that it will be the only service that offers a data base specifically designed to help a business evaluate and locate the most appropriate city for their expanded business. It will offer a quick and effective way to evaluate all of the cities in the U.S. with populations over 50,000 on the basis of a wide variety of criteria. There are about 570 cities in the U.S. with a population of 50,000 or more. We expect about 90% of these cities will be willing to pay a fee to be included in our data base. There are an estimated 200,000 businesses in the U.S. large enough to consider expanding their operation to a new city. On an annual basis 2% - 3% of those will actively consider such a move. We project that more than half of these will choose to use our services in some manner. To initiate this business, the first year of operations will involve collecting information about the cities, populating the data base and developing the web site. This will involve 40-45 permanent and temporary personnel. Following the initial development stage, the organizational objective is to be "lean and mean". Because the business will be web based and the majority of the prospect/customer interface will be achieved electronically there will not be a need for a large organization. Starting in the second year we expect to conduct business with twenty six personnel. We are projecting a requirement for about 6,000 square feet of space for our operation. The cost will be about $4,500 per month with a one-time finish out cost of about $10,000. Additional equipment and software require a one time, up front expense of about $80,000. 1.3 Key Personnel Explanation List the key personnel in the enterprise, with name, position, responsibilities and a short description of their experience. In the Executive Summary you are "selling" your key personnel, so make a special effort to emphasize their past achievements. Sample from CitiLoc, Inc. Mark Hanson, age 33, has a masters degree in political science, and has been the marketing director and chief operating officer of two successful businesses. His latest business was recently sold to XYZ, Corp. and Mr. Hanson chose to leave his position there in favor of starting CitiLoc. He is the president and COO of CitiLoc. Jim Jones, age 30, has a masters degree in computer science and has participated in the development of two major web sites. He is a vice president and will be responsible for the initial development of our web site and thereafter the maintenance and expansion of the services we will offer. Donald van Pelt, age 28, is a vice president and will direct the effort of data collection and population of the data base. Mr. van Pelt has a degree in economics and has worked with the city of Austin, Texas for four years. For the last two years he has been involved in the area of attracting and working with businesses that are considering locating a facility in the Austin area. Jessica Lane, age 31, is a vice president and will be responsible for marketing, sales and public relations. Ms. Lane has a degree in public relations and has been working with an established company for three years as their director of marketing. She helped this company modify and expand their sales program from a field sales force orientation to a broader web based approach. 1.4 The Market Explanation This topic should be written only after you have completed section 3 containing the detailed description of a variety of factors relating to your market. First, describe the market in terms of the need that is being addressed by your product or service (don't discuss your product or service yet). Explain what is creating the need, what the market is currently doing to address that need and the opportunity this need is providing for the solution provided by your offering. Then, provide a description of the overall market, how it breaks down into segments, geographical distributions, sizes, growth expectations and the share of the market your enterprise expects to capture. Remember this is a summary and your objective is to convince the reader of the quality of your market. Sample from CitiLoc, Inc. Our objective is to be recognized as the premiere data base for evaluating the pros and cons of moving a business operation to any given city. We expect our data base to be populated with information from over 500 U.S. cities and 50 to 100 international cities that will pay for the service. We also expect about 500 businesses to pay to use the data base in the first year growing to about 2000 businesses in the fifth year. 1.5 The Offering Explanation This topic should not be written now, but only after you have completed section 4 containing the detailed description of your product or service. Provide a description of your products/services that will make the reader want to rush out and purchase them. The important thing in the Executive Summary is to convince the reader that the market will be excited about your products/services. Factors to consider: Name of your products/services Benefit to user Emotional/visual appeal Ease of use Return on investment for the user Sample from CitiLoc, Inc. CitiLoc will provide, via the Internet, a service to both cities and businesses that helps cities attract new business and businesses determine which city is best for them. This service is valuable to a city because it provides an opportunity for them to present their information to a wide audience of potential new businesses. Businesses benefit by having essential city information available in one data base. They will have the ability to specify qualifying criteria and get a list of cities that meet those criteria. Initially the collection, organization and entry of data about the cities will be very time and people intensive. It will require about one year to construct a database with enough information to be of interest to businesses. 1.6 Marketing Strategy Explanation Explain how you are going to sell your products/services by describing your channels of distribution, your methods for generating publicity and your advertising plans with focus on each market segment. Once again, remember this is a summary and your objective is to convince the reader of the efficacy of your marketing strategy. Sample from CitiLoc, Inc. We will promote our service using literature, links with other relevant web pages, a strong push to gain publicity, advertising in strategic planning, financial and human resource publications and a direct mail program. Pricing for cities to be included in the data base will range from $1,000 to $2,500 per year and for businesses to use the data base from $2,500 to $10,000 per year. In addition to our web site being accessible through well indexed search engines, we will have an initial staff of five personnel contacting businesses on a daily basis to locate the person who would be involved in establishing a new business location. Their objective will be to get the business prospect to visit our web site. In addition to our own efforts to promote and distribute our services, there will be a secondary distribution channel in the form of "links" to our web site from other web sites. We will actively pursue the establishment of links with sites we believe will have a viewer base that may be interested in our service. 1.7 Competition Explanation Create a concise analysis of your competitors as a group describing number of competitors, whether the market is gaining or losing competitors, competitive profitability, any manufacturing or marketing advantages competition may have and any pricing pressures competition might create. Then describe the main competitor's strengths and weaknesses and how you will address this competitor. Sample from CitiLoc, Inc. At present there are two major forms of competition: consultants and information provided by the individual cities. Consultants range in size from individuals to large international firms. The minimum consulting fee a business can expect to pay is $10,000 and it can easily reach $100,000. The quality of information a business can expect to receive from our service will be equal to or better than what they get from a consultant at a fraction of the cost and the information will be available in a fraction of the time. Most cities have a web page today. The information they provide is designed to help visitors and citizens locate restaurants, parks, forms of entertainment, retail outlets and in some cases city government contacts. It is not designed to be user friendly to the business considering a move to the city. Cities that are aggressively trying to attract new business will often have a contact point to provide information to prospective businesses. This usually comes in the form of written literature and seldom addresses the majority of a business' concerns. 1.8 Projections Explanation Describe your expectations for profit (or loss) over the five year planning period. Be sure to explain when you will start operating at a profit, when you expect to reach a break even point and what the profit margins will be following the break even point. If you are proposing a capital investment, explain your financial needs and how the investor can expect to achieve a return on their investment. Sample from CitiLoc, Inc. There will be no revenue generated in the first year which will be dedicated to developing the web site and creating the data base. We expect to achieve break even cash flow by the middle of year two with a positive cash flow and a profit by the end of that year. Year three will see a major increase in revenue, a complete recovery of our investment and positive retained earnings at year end. Years four and five will result in revenues of $5,485,000 and $7,885,000 respectively with after tax profits of $2,793,000 and $4,368,000. Revenues per employee will approach $225,000 by year five. 1.9 Resource Requirements Explanation Describe the resources you will need to achieve the objectives of this business plan. This most likely will include: Personnel Equipment & materials Access to technology Access to distribution channels Availability of external services Sample from CitiLoc, Inc. The primary resource requirement during the first year will be personnel who can contact appropriate city employees and gather the information necessary to populate our data base. In support of these personnel we will require phone lines and computers (25 each). During the same period we will be developing our data base software technology. The primary resources here are qualified programming personnel, support software and computers. 1.10 Key Issues Explanation Describe the steps that must happen to get your plan on the path to a successful implementation. This might include acquisition of investment capital, technological breakthroughs, establishment of relationships, hiring of key personnel, advertising and publicity coverage or many other things. Be sure these really are the critical issues. Include a spreadsheet listing the key milestones involved in implementing your business plan including specific dates and responsible personnel. If you are using business plan software to write your plan, this should be included for you automatically. Sample from CitiLoc, Inc. There are only a few issues to address as we begin the business. They are, in order of priority: Find and lease facilities Acquire the necessary hardware, software and communication capabilities Hire the necessary personnel to collect the data and develop the software Get development and data collection under way Establish appropriate accounting procedures Create the contracts we will use with our customers Milestones What? Who? When? How much? Web Site Registration ELB 1/1/2009 1/10/2009 $0 Completion of DB Design JAJ 1/1/2009 2/28/2009 $10,000 Data Gathering & DB Population DVP 1/1/2009 9/30/2009 $1,000,000 DB Search Technique Dev. ELB 3/1/2009 5/30/2009 $10,000 Web Site Dev. KAG 3/1/2009 7/30/2009 $50,000 On-line Help Dev. KAG 3/1/2009 8/30/2009 $15,000 Web Site/DB Security DVP 5/1/2009 7/30/2009 $10,000 Cross Browser Testing ELB 5/1/2009 8/30/2009 $5,000 Search Engine Registration ELB 5/1/2009 8/30/2009 $10,000 Web Site/Acctg. Interface JAJ 7/1/2009 8/30/2009 $10,000 Install site Activity tracking S/W JAJ 8/1/2009 9/30/2009 $5,000 Web Site Beta Test ELB 9/1/2009 9/30/2009 $40,000 Web Site Promotion JL 7/1/2009 6/30/2010 $200,000 Totals 1/1/2009 6/30/2010 $1,365,000 2.0 The Enterprise Explanation This topic should concisely describe your enterprise by stating primary objectives, a short description of origin and financial achievements, key personnel and organization structure, current and projected size, facilities locations, scope of activities and plans for changes in the future. Other factors to consider: Legal structure (partnership or corporation) Enterprise ownership Products/services Critical operations Patents, trademarks or proprietary technologies Community relations Ability to compete Sample from CitiLoc, Inc. CitiLoc, Inc. will be structured as a C corporation, located in Austin, Texas. There are four principals who will all invest money in the enterprise and who will take primary responsibility for the various operational aspects of the business. As a new enterprise our primary objective will be to secure funding so that we can develop the required data base and web site to provide service to our customers. Our first year of operation will require 43 personnel, however, once the data base and web site are complete we will reduce staff to twenty six personnel. 2.1 Objectives Explanation Describe short and long term objectives for your enterprise. The long term objective should be somewhat philosophical, while the short term objectives should be more operational. For example, a long term objective might be; Our enterprise will strive to be recognized as the leader in the field of exploration and mining. A short term objective might be: Our AA-1000 boring machine will capture 60% market share within the next two years as measured in the Exploration Monthly sales review. Sample from CitiLoc, Inc. To achieve our primary objective we must, in the short term, secure funding, collect the necessary data and populate the data base and develop a high quality, professional looking web site. Longer term we must develop a strong base of business clients and as opportunities occur expand the data base content to attract a wider range of business users. 2.2 History Explanation Describe the origin of your enterprise, who the key personnel were and their current status. If previous investment capital was provided, explain how much, on what terms and what the performance has been in providing a return for that investment. Describe what markets your enterprise has been pursuing, what market penetration has been achieved and whether you have been profitable. Factors to consider: Founder names Years in business Market share Distribution channel relationships Distribution channel costs Experience with regard to offering: quality, durability, uniformity, pricing. Reputation of enterprise, offerings Customer relations Financials Sample from CitiLoc, Inc. Since CitiLoc is a new enterprise, this section will not be included. 2.3 Organization Explanation Provide an organization chart that shows structure and size for each of the functional units in The Enterprise. If you are using a software program to write your business plan, it should provide a tool for creating an organization chart. In the text associated with the organization chart describe the current and planned staffing, the skill levels available, and any internal or external factors that may influence your organization. Factors to consider: General management philosophy Completeness of current staffing Management access to counsel Management access to legal support Labor union relationships Operations sharing between projects Employee benefits: Insurance, Retirement plan, Health & fitness program, Profit sharing plan, Stock options, Stock purchase plan, Child care program Sample from CitiLoc, Inc. Following the initial development stage, the organizational objective is to be "lean and mean". Because the business will be web based and the majority of the prospect/customer interface will be achieved electronically there will not be a need for a large organization. The two areas requiring the most personnel will be the web site support and improvement group and the customer support and sales program. Starting in the second year we expect to have a total of about twenty six employees. 2.3.1 Key Personnel Explanation For each of the key personnel describe their functional responsibilities, how their experience prepares them for these responsibilities and their operational objectives for the next 12 months. The objectives should be measurable and the personnel prepared to review them at any time. Factors to consider: Name Age Marital status Children Education Work experience Position title Placement in organization structure Management responsibilities Achievements Key positions that need to be filled within the next twelve months should be described with an explanation of how you expect to fill the position. Factors to consider: Position title Placement in organization structure Experience level required Management responsibilities Staffing from inside or outside Use of professional recruiters Desired date for staffing Drop dead date for staffing Sample from CitiLoc, Inc. Mark Hanson, age 33, has a masters degree in political science, and has been the marketing director and chief operating officer of two successful businesses. His latest business was recently sold to XYZ, Corp. and Mr. Hanson chose to leave his position there in favor of starting CitiLoc. He is the president and COO of CitiLoc. Jim Jones, age 30, has a masters degree in computer science and has participated in the development of two major web sites. He is a vice president and will be responsible for the initial development of our web site and thereafter the maintenance and expansion of the services we will offer. Donald van Pelt, age 28, is a vice president and will direct the effort of data collection and population of the data base. Mr. van Pelt has a degree in economics and has worked with the city of Austin, Texas for four years. For the last two years he has been involved in the area of attracting and working with businesses that are considering locating a facility in the Austin area. Jessica Lane, age 31, is a vice president and will be responsible for marketing, sales and public relations. Ms. Lane has a degree in public relations and has been working with an established company for three years as their director of marketing. She helped this company modify and expand their sales program from a field sales force orientation to a broader web based approach. During the first year of operation, we will contract with two outside agencies to help us with the development program. One will supply 3-4 personnel to assist in the design and development of the web site. The other will supply about 25 personnel to collect information about the cities and enter it into the data base. We will need to hire one other key manager prior to the end of the first year, responsible for finance and accounting. Mark Hanson will handle these responsibilities until such a person is hired. 2.3.2 Personnel Count Explanation Include a spreadsheet listing the headcount projected for every department in your enterprise for each of the next five years. The total number of personnel in this list must be used to calculate the Revenue & Profit per Employee later in this document. If you are using business plan software to write your plan, this will be done for you automatically. Sample from CitiLoc, Inc. 2009 2010 2011 2012 2013 Engineering/Development Management 1 1 1 1 1 Non-management 3 5 5 5 5 Production/Service Delivery Management Non-management Marketing Management 1 1 1 1 1 Non-management 1 1 1 1 Sales Management Non-management 1 5 6 7 8 Customer Support Management 1 1 1 1 1 Non-management 5 9 10 11 12 General & Administrative Management 1 1 1 1 1 Non-management 1 1 2 3 3 Other Management 1 1 1 1 1 Non-management 27 1 1 1 Total Personnel 42 26 30 33 35 2.4 Operations Explanation Describe the material assets of your enterprise including buildings, equipment, inventories, proprietary technologies, etc. If your plan is for a start-up business you will have little to describe. If your plan is for an on-going business your description should be consistent with the information provided in your historical balance sheet. Describe what functions of your business are considered appropriate for performing in-house and those that could be or are done by sub-contractors. Factors to consider: Buildings Office equipment Production equipment Inventories Proprietary technologies Company vehicles Sample from CitiLoc, Inc. We do not currently have any facilities. However, we will quickly have to lease an estimated 6,000 square feet of space for our operation. We are aware of two new commercial office space areas where we can get a three year lease of that much space for about seventy five cents a square foot per month (about $4,500 per month). There will be a one-time finish out cost of about $10,000. In addition to the space we will need desks, office equipment, communication lines and equipment, computers and software. This will require a one time, up front expense of about $80,000. 2.5 The Future Explanation Project any organizational changes, growth in personnel count and changes in material assets. Discuss any new product or business concepts that have some likelihood of affecting your enterprise. Explain new technologies on the horizon that could influence your way of doing business. Sample from CitiLoc, Inc. Technology associated with the Internet is changing at a rapid pace. Our web site is designed to isolate the various aspects of the process so that if new technology affects a portion of our design we can incorporate it without impacting the total design. Isolated areas include the browser interface, the e-commerce process, security measures, the data base processes and the report generation and return to the customer. Our data base is designed to be modified or extended with minimal impact on existing processes and we fully expect that as the service matures this will happen. 3.0 The Market Explanation Describe the general characteristics of the distinct segments of prospects that make up the market for your offerings. Factors to consider: Extent of market (local, regional, national, international) General description of segments Current versus new customers Size of the typical prospect Prospect profitability Current ability of prospects to use your offerings Prospect's incentive to buy Prospect's decision process Sample from CitiLoc, Inc. Our market involves two segments; cities and businesses. The cities will provide about 10% of our service income with businesses providing the rest. Cities will find this of value because they will be able to present their information in a format specifically designed to assist and attract businesses. Businesses will derive great value from the service because, from a single source, they will be able to evaluate all of the major cities in the United States against a wide variety of selection criteria. Our objective is to have over 500 cities represented in our data base and between 1,000 and 2,000 businesses using the data base annually to assist in their location of a new operations site. The modern business world is focusing on communications and information technology as the driving force for growth. Support for this growth involves production of communications equipment, data storage equipment, computers (and related technologies such as chips, monitors, etc.), software and much more. Because these businesses are accustomed to using high-tech solutions for their business, we believe they will embrace our service when planning their expansion. 3.1 Market Segments Explanation Create a spreadsheet containing a list of descriptive names for each of the current market segments and the percent of the total industry market that segment represents. The total of the percentages should be 100% of the available market. If you are using business plan software to write your plan, this will be handled for you automatically. Include all segments of the market whether you will be selling to them or not. It is just as important to understand the segments you will not address as those that you will. For example, if you are planning on a fine dining restaurant you will not be attracting the fast food segment but you should understand that segment as a part of the overall market. Choose the segments most important to the market and group the remaining segments into an "Other" category. For example, if you were AMTRAK, you might describe yourself as being in the transportation business and offering your services to two market segments, recreational and business travelers. If you were DELL Computer, you might say you were in the PC, Server and ISP markets addressing the business and individual consumer communities. Each of these would then be broken down into segments. EG: the PC market might segment into individual consumers, small business and large business. If you are selling to other businesses (B2B) some examples might be: Industry by SIC code This is especially beneficial for vertical market offerings. Size - revenues, # employees, # locations In general if your offering is highly sophisticated, requires significant resources or provides greater value based on volume, then the target should be the larger enterprises. Climate Examples of offerings might be dehumidifiers in areas near the ocean or snow plows in northern areas. Language An example of a language specific service is a Spanish TV channel. Status in the industry You might want to target businesses that are the technology leader or revenue leader or employee satisfaction leader, etc. Accessibility To minimize promotion and sales expense you may want to target urban rather than rural or local rather than national prospects. Access (or lack of access) to competitive offerings Cable TV business's significant investment in their service delivery system has allowed a near monopoly for some time. IBM's service reputation insured minimal competition during the mainframe days. If you are selling to individual consumers some examples might be: Creation of or response to a fad Examples are hula hoops, Jurassic Park T-shirts, pet rock, physical fitness, etc. Geographic location Marketers take advantage of location by selling suntan lotion in Hawaii, fur coats in Alaska, etc. Time related factors You may be able to target vacationers in summer, impulse buyers during the holidays or commuters at 7AM. Social status This could include country club memberships, philanthropic contributions, etc. Education Product and service examples are encyclopedias, scientific calculators, learning to read tools and financial counseling. Avocation This could include products for hunting, fishing, golf, art work, knitting, etc. Sample from CitiLoc, Inc. Our market is segmented by the size of the cities we will serve. Small cities 75% Medium cities 15% Large cities 4% International cities 6% 3.2 Prospects Explanation Create a spreadsheet containing a list of descriptive names for each of the specific market segments you will be targeting for your marketing efforts. Show the percent of your total revenue that each segment represents. They may be some of the same segments you described earlier or you may plan to create a new segment. The total of the percentages should be 100% of your revenue. If you are using business plan software to write your plan, this will be handled for you automatically. If you are selling business to business (B2B) some examples might be: Job position/responsibility Examples of offerings might be planning software for managers or cleaning agents for maintenance managers. Future potential A good example is how Apple Computer supplied products to schools at all levels to condition students graduating into the marketplace. Ability to make a quick purchase decision Targeting individual purchasers (EG: product manager or HR manager) versus business committees can significantly reduce marketing expense and increase the probability of a quick close. Need for customization Offerings such as police cars or busses to city governments or specialized computer systems for specific departments fall into this category. Product or service application to a business function Examples are specific departments responsible for data processing, accounting, human resources or plant maintenance. If you are selling to individual consumers some examples might be Physical Size Offerings might be big men's clothing, golf clubs for shorter players, etc. Time related factors You may be able to target vacationers in summer, impulse buyers during the holidays or commuters at 7AM. Demographics/culture/religion Ethnic products would fall into this category. Gender Product examples are scarves for women, ties for men, etc. Age Product examples are toys for children, jewelry for women, etc. Special Interests You could target cat lovers, science fiction readers, jazz music collectors, etc. Accessibility Because the individual is more difficult to reach you may want to segment by urban versus rural, train commuters, people who read Wall Street Journal, etc. Need for specific information Based on features or content of your offering you can target a market segment. A product might be books on how to start a business or a service might be seminars on how to quit smoking. Sample from CitiLoc, Inc. 3.3 Prospect Objectives Explanation Describe who the prospective buyer is, why they want an offering like yours and what their objectives are with the use of your offering. Factors to consider: Individual consumer description or if a business, purchaser's job title Secondary influencers of the purchase decision Does offering improve prospect's financial situation or day to day operations? Is "prestige" involved in the purchase? Can the prospect measure the benefits? Does the prospect require a customized offering? Will prospect purchase more than one unit of your offering? What are prospect's requirements for: Dependability, Durability, Economy, Efficiency, Reliability, Productivity, Uniformity? Sample from CitiLoc, Inc. We have two market segments for our services. A city (city manager) interested in attracting new businesses to their locale. Businesses looking for a city where they can establish a new site to expand their operations. Longer term we will probably have others who would like to be included in our service (for a fee) such as real estate agents, attorneys and a variety of local vendors wanting to attract the attention of new businesses moving to their city. 3.4 Segmentation Explanation Describe the distribution and characteristics of the various prospect segments. Segments may have descriptions like government versus commercial or homeowners versus large businesses. Market distribution might be described as local versus international or urban versus rural. Characteristics include factors such as profitability, growth rates, knowledge of your industry, whether they are past customers, etc. You should be exhaustive in these descriptions whether or not you intend to address all of the segments. This is a critical factor in your marketing strategy, so close attention should be given to insuring accurate and detailed descriptions. Factors to consider: Geographic locations Concentrations of prospects Accessibility Segments that require different marketing strategies Purchasing power by segment Numbers by segment Segments with past customers Segments with greatest need for the offering Segments with shortest purchase decision cycle Segments more willing to take risks to use a new concept Segments impacted by external factors such as unions or buyer protection groups Sample from CitiLoc, Inc. The content of our data base consists of information about cities. We will start the process of populating the data base by gathering information for cities having a population of 500,000 or more. The next stage will be cities between 250,000 and 500,000 population. Finally we will add cities with populations between 50,000 and 250,000. We realize there are a number of international cities where a business may wish to locate a part of their operation. After completing the U.S. portion of the data base we will include selected cities from around the world. Each of these cities will be approached with a request to provide information to be included in the data base at no charge for the first year. At the end of that year, if they find the inclusion of their information to be of value, they will be asked to pay an annual "exposure fee". We expect that over 90% of the cities will be willing to pay the fee. The other market segment will be the businesses wanting to gather information about potential sites for an expanded operation. These are usually well established businesses in high growth industries that have outgrown their current facilities or for strategic reasons wish to establish multiple operating sites. 3.5 Size Explanation Using the breakdown provided in the market segmentation topic, for each segment show the past and present sizes. Then make a growth projection for each with a rationale in support of the projections. When specifying market sizes, include supporting information from sources that will be credible to an investor. Some investors like to see numbers that represent the Total Available Market (TAM) and the Served Available Market (SAM). The TAM represents all of the buyers that could potentially use your offering while the SAM represents the number who will actually buy an offering like yours in any given time period. Your sales, represented as "market share", will be some percentage of the SAM. Factors to consider: Number of buyers Number of units (yours or competitors) to be purchased by each buyer annually $$ value of the market Size projections over time Special considerations that could cause projections to change Sample from CitiLoc, Inc. The number of cities that will be represented in our data base (based on 2008 U.S. Census bureau reports) includes: Population Number >500,000 26 250,000 - 500,000 41 50,000 - 250,000 505 International cities 100 It is estimated that over 4,000 businesses establish a new operation or move their operation to a new city each year. We expect that the majority of these will use our data base to evaluate that move. The following are announcements of businesses locating new facilities, taken from a January, 2008 edition of CC NEWS, a small customer support publication. Boise Express opens second call center - Boise Express is in the process of investing $5 million to open its newest sales facility in Norman, OK. Directory assistance opens Boston Center - Metro One Telecommunications Inc., .... has opened a new call center here. RightNow Technologies opens Dallas center - RightNow Tech. (of Bozeman, Mont.) announced the opening of its new sales office in Dallas, TX. Financier brings center to Knoxville - Associates Housings Finance LLC announced the opening of its new collections center in Knoxville, TN. The facility will house 250 employees. Rockwell Electronics expands worldwide - Rockwell Electronics is opening five new offices. EGain opens office in Australia - EGain Communications, a provider of customer communications solutions for e-commerce, is launching operations in Australia. 3.6 Environment Explanation Discuss environmental factors influencing the sale of your products/services. These might include factors such as new government regulations, fuel oil shortages, an aging population, greater health consciousness, etc. You should be very specific as to why these factors are positive or negative for your enterprise and how you expect to use that knowledge. Factors to consider: Changing technologies Changing social values Resource limitations Taxes Fashion trends Life style trends Age of the society Government price controls Government subsidies Licensing requirements Safety regulations Education changes Changes in geographic preference Changes in usable income Sample from CitiLoc, Inc. We are experiencing a strong period of growth and expansion in nearly all areas of our economy. While the future is open to debate, most economists are predicting continued growth for several years. The modern business world is focusing on communications and information technology as the driving force for growth. Support for this growth involves production of communications equipment, data storage equipment, computers (and related technologies such as chips, monitors, etc.), software and much more. Because these businesses are accustomed to using "high-tech" solutions for their business, we believe they will embrace our service when planning their expansion. 3.7 Alternatives Explanation In most cases, the prospect has a variety of alternatives to solve their problem. First you should explain the prospect's motivation for solving the problems your products/services address. Then explain the alternative solutions. For instance, if you are selling chain saws, the prospect could buy your product, a competitive chain saw product, an axe, or a tree saw. They could also be influenced by tree conservationists and decide to purchase nothing. This description should explain the prospect's alternatives and why they would choose your offering. Sample from CitiLoc, Inc. Most cities now have some sort of presence on the Internet. Some of the information of interest to a business considering the city as an expansion location is probably available on the Internet site. It will however, be sporadic and organized differently for each city. Also, most of the larger cities have an information packet available to any business that requests it. However, many businesses would prefer to conduct their preliminary evaluation in private, contacting the city personnel only after they have determined that the city is a viable location for their operation. 4.0 The Offerings Explanation Address capabilities relative to competition, industry standards, environmental influences and the impact on the user's day-to-day operations. Factors to consider: Benefit to user Comparison to competition Patent/trademark Adherence to industry standards Emotional/visual appeal Environmental influences Ease of use Impact on user operations Use of proprietary technology Pricing Sample from CitiLoc, Inc. CitiLoc will provide, via the Internet, a service to both cities and businesses that helps cities attract new business and businesses determine which city is best for them. Getting started will involve setting up a web site, finalizing data base design, contacting city management, collecting city data and entering it into the data base, developing the user interface, insuring the security of the data and making sure that our web site is properly indexed in all of the most popular search engines. This service is valuable to a city because it provides an opportunity for them to present their information to a wide audience of potential new businesses. Businesses benefit by having essential city information available in one data base. They will have the ability to specify qualifying criteria and get a list of cities that meet those criteria. Initially the collection, organization and entry of data about the cities will be very time and people intensive. We estimate that each new city we add to the data base will require about two man weeks (on the average) of effort. It will require about one year to construct a database with enough information to be of interest to businesses. Once the data base is on- line, a primary service objective will be to review the information on every city no less than once every six months. In addition we encourage the cities to provide us with updated information anytime a change occurs (especially personnel changes). 4.1 Description Explanation This is a technical description of each product or service that will be offered by your enterprise. If it is a product, describe the function performed, the physical characteristics, operational characteristics, technological factors of import and unique aspects that make it more desirable to the market than competitive products. If it is a service, describe the purpose, content, method of delivery and unique aspects that make it more desirable to the market than competitive services. Factors to consider: Function(s) performed Sizes Tolerances Quality Durability Special/unique abilities New/proprietary technology Product or service family relationships Sample from CitiLoc, Inc. Businesses are regularly faced with the problem of expanding their operation. In many cases it is strategically appropriate to do so in a new city. When they make this decision they must then select a city. CitiLoc will provide, via the Internet, a service to both cities and businesses that helps cities attract new business and businesses determine which city is best for them. Businesses will have access to information about every city in the United States with a population of over 50,000. City management can get a regular report comparing what they offer a business with every other city in the data base. The data base will contain a wide range of information. The types of information include: Demographics: work force size, % unemployment, salary ranges Major forms of transportation: highways, trucking, bus lines, air lines Direct access to major cities by each form of transportation Communication: phone lines, digital/optical lines, newspapers (affiliations) Commercial real estate: quantity, occupancy rates, prices, expected growth Housing: quantity, occupancy rates, prices, expected growth Educational institutions: availability, occupancy, grade levels, planned growth Breakdown of major businesses by industry and size Three year history of businesses that have located in the city Availability and cost of utilities and water Taxes of all forms, any tax abatement programs for new businesses Any limitations on the types of industries allowed to locate in the city Review of all EPA conformance issues Geographic boundaries of the city, including ETJ's City government structure and contacts 4.2 Market Status Explanation Explain whether the product or service is ready for the market or still in development. If still in development, provide a schedule for delivery that includes a "PERT" chart showing critical decision and completion points. You should also include the projected cost to complete the development. Sample from CitiLoc, Inc. This service concept has been thoroughly thought out, several city managers have been interviewed with an almost universal positive response to the concept and a prototype data base has been developed. A number of strategic planning managers from various businesses have also been contacted. Their response has been positive and in some cases they have offered good advice on the kind of features they would like the service to have. The basic features of the user interface for the Internet have been defined, however, additional work is required in this area. From start-up to initial market entry will require about one year. This will involve setting up a web site, finalizing data base design, contacting city management, collecting city data and entering it into the data base, developing the user interface, insuring the security of the data and making sure that our web site is properly indexed in all of the most popular search engines. As the service matures, new sets of information will be collected that will be of value to the customer and of financial benefit to CitiLoc. For example, real estate agents capable of meeting the needs of a business looking for property could include their information in the data base. The same would be true for many other services such as attorneys, parts suppliers and numerous other vendors of products or services 4.3 Value Explanation Explain why the product or service is of value to a purchaser and attempt to present the value in measurable terms. For example, a product might "reduce rejects by 20% and eliminate one person from each assembly line". A service might "educate middle management in personnel review techniques, thus significantly reducing employee dissatisfaction". Your explanations should be specific and detailed. Factors to consider: Trial usage Measurable results Impact on buyer's operation/product Time required to benefit Return on investment $$$ savings Useful life of offering Installation considerations Education of purchaser or purchaser's employees Maintenance requirements Technical assistance requirements Sample from CitiLoc, Inc. This service is valuable to a city because it provides an opportunity for them to present their information to a wide audience of potential new businesses. If they so choose they can also get information comparing what their city has to offer a new business with all other cities in the data base. Businesses benefit by having essential city information available in one data base. They will have the ability to specify qualifying criteria and get a list of cities that meet those criteria. When they have chosen their target cities they will have access to the information necessary to contact the appropriate city personnel to begin discussions. For each business a "customized" and secure interface will be created at the time they begin their city search. Each time they re-enter the web site they will have access to all the information they collected in prior visits. 4.4 Cost to Produce Explanation If you offer a product, itemize the typical bill of materials and other expense factors in manufacturing the product. If you expect to improve manufacturing costs as you gain experience, explain and show specific numbers. If you offer a service, while you may not have a manufacturing operation, you will still probably deliver materials which will need to be inventoried and organized prior to delivery to the customer, all of which involves costs. For example, if you were a consultant offering a seminar your production costs might include hand out materials, facilities for the seminar, presentation slides, lunch or refreshments for the attendees, etc. Factors to consider: Part numbers Part cost Labor costs Sub-contractor costs Benefits of volume purchases Effect of experience on labor costs Total cost to produce Change in costs over time Sample from CitiLoc, Inc. Essentially all production costs for the CitiLoc service will be personnel costs. There will be costs for communication and for data storage, but these represent a small portion of the total. Initially the collection, organization and entry of data about the cities will be very time and people intensive. We estimate that each new city we add to the data base will require, on the average, about two man weeks of effort (more for larger cities, less for smaller). Thereafter, we will accept updates to the data base (as provided by a member city) on a daily basis. In addition we will initiate a regular (once every six months) review of each city's data by our personnel and the city's personnel. As the service matures we will be expanding the data base with new information content and with new ways for the businesses to search, review or print the information. 4.5 Support Explanation If you are selling a product, indicate whether the customer will expect maintenance of the product and who will provide the service. Project the Mean Time To Failure "MTTF" for the product and show a chart that projects the growth of support demand over time. If hands on repair will be required, show most probable parts requirements, cost to customer, personnel and inventory requirements. If on-site maintenance will be required, show travel and living expenses as well. For a service you are always in a support situation. You should concentrate on how to insure that the on-going quality and content of the service is meeting your customer's needs. Factors to consider: Warranty commitments Most likely part(s) to fail How critical is offering to customer's day to day business? Repair time requirements Location of maintenance/service sites Contract with an another enterprise to maintain your products Customer's ability to maintain product Spare parts availability Is maintenance operation a profit center? Sample from CitiLoc, Inc. The information in the data base is of no use to our customers unless it is current. Therefore, a primary service objective will be to review the information on every city no less than once every six months. In addition we encourage the cities to provide us with updated information anytime a change occurs (especially personnel changes). We will back our data base up on a daily basis and, if and when necessary, rebuild the data base to eliminate any fragmentation problems. We know that providing information to us will be far down on a city manager's priority list so we must regularly maintain contact and present a positive service image. To this end we will assign an individual the task of preparing a monthly newsletter and a set of data base statistics to send to each of the city contacts. 5.0 Marketing Strategy Explanation Describe your strategy for achieving your goals. Explain why this strategy will succeed. Factors to consider: Pricing strategy Promotion strategy Market shares Type of sales force Sales support activities Critical dependencies Channels of distribution Advertising commitment Promotional commitment Use of outside agencies Sample from CitiLoc, Inc. Our objective is to be recognized as the premiere data base for evaluating the pros and cons of moving a business operation to any given city. We expect our data base to be populated with information from over 500 U.S. cities and 50 to 100 international cities that will pay for the service. We also expect about 500 businesses to pay to use the data base in the first year growing to about 2000 businesses in the fifth year. We will promote our service using literature, links with other relevant web pages, a strong push to gain publicity, advertising in strategic planning, financial and human resource publications and a direct mail program. Pricing for cities to be included in the data base will range from $1,000 to $2,500 per year and for businesses to use the data base from $2,500 to $10,000 per year. In addition to our web site being accessible through well indexed search engines, we will have an initial staff of five personnel contacting businesses on a daily basis to locate the person who would be involved in establishing a new business location. Their objective will be to get the business prospect to visit our web site. In addition to our own efforts to promote and distribute our services, there will be a secondary distribution channel in the form of "links" to our web site from other web sites. We will actively pursue the establishment of links with sites we believe will have a viewer base that may be interested in our service. We will provide customer support to city personnel in maintaining the integrity of the information in the data base and to business customers using the data base. 5.1 Targets Explanation Describe each of the target segments described in the Market Description section and why you believe they are appropriate. Factors to consider: Immediate need for your offering Purchasing power Accessibility Willingness to make a decision Sample from CitiLoc, Inc. There are about 570 cities in the U.S. with a population of 50,000 or more. We expect about 90% of these cities will be willing to pay a fee to be included in our data base. There are an estimated 200,000 businesses in the U.S. large enough to consider expanding their operation to a new city. On an annual basis 2% - 3% of those will actively consider such a move. We project that more than half of these will choose to use our services in some manner. As we grow, a third market segment will be services and vendors within each of the cities that want to attract the attention of new businesses. A special section that presents their business will be available for a fee. 5.2 Image Explanation Describe how your enterprise is perceived in the market today and how you want it to be perceived in the future. If you are changing the image, explain why and how you expect to achieve the change. If the image change requires operational changes explain them and the impact they will have on your day to day operations. Factors to consider: Product/service quality Past promotional objectives Past ad contents Sales organization Service organization Industry peer perception Customer/prospect perception Past market segments Sample from CitiLoc, Inc. CitiLoc is a new service and therefore currently has no image. Our objective is to be recognized as the premiere data base for evaluating the pros and cons of moving a business operation to any given city. Through the process of constant communication with city management, regular exposure of our service offerings to the business community and consistently excellent service to our customers we expect to build our image. 5.3 Promotion Explanation There are two basic promotion strategies, PUSH and PULL. The PUSH strategy maximizes the use of all available channels of distribution to "push" the offering into the marketplace. This usually requires generous discounts or commissions to achieve the objective of giving the channels incentive to promote the offering, thus minimizing your need for advertising. The PULL strategy requires direct interface with the end-user of the offering. Use of channels of distribution is minimized during the first stages of offering promotion and a major commitment to advertising is required. The objective is to "pull" the prospects into the various channel outlets creating a demand for the offering the channels cannot ignore. Describe your promotion strategy. Factors to consider: Offering price Offering quality Relationships with channels Competitors relationships with channels Channel discount requirements Potential for publicity Avenues for advertising Kind of offering Sample from CitiLoc, Inc. There are a number of ways we will promote our service, all basically being a PULL strategy. These include: A CitiLoc employee acting as the personal coordinator for each city in the data base. A one page flyer in each city's packet of literature sent to prospective businesses. A link from each city's web page (if one exists) to our web page. Links with other relevant web pages throughout the Internet. Each search engine on the web will be fully indexed to find our site. A strong push to gain publicity about our web site. Advertising in strategic planning, financial and human resource publications. A direct mail program to inform top level business management of our service. 5.3.1 Internet Web Site Explanation It is very important in today’s market to have a presence on the Internet. Some sites actually allow the viewer to purchase products or services directly while others act only to supply information and promote products or services. If you plan to have a web site, describe the objectives for the content. While it is not essential that you document the implementation and support considerations for your site in the plan it is critical that you understand them if you are planning on presenting your plan to a venture capitalist. Factors to consider: Domain name simplicity and relevance to the product/service A description of your web site content How you will get registered with the search engines? What key word search criteria you want to locate your site? Links with other web sites Will you provide e-commerce capability? Integration concerns between Internet sales and field/direct sales Understand the relationship between web site access and revenue How you plan to keep web site information current Requirements for and ability to support web site customers Will site content and projected traffic attract advertisers? Your ability to insure security for viewers Sample from CitiLoc, Inc. Our web site will be professionally constructed with respect to presentation, content, navigation, security and usability across browsers. The business customer will immediately feel comfortable with the interface, because it will be customized to his or her needs. All of the customer's analysis will be stored in a secure entry in the data base and will be instantly available for as long as the business is a customer. 5.3.2 Publicity Explanation Describe what media you are targeting for publicity, how you intend to generate the interest, what form the publicity will take and when the publicity will occur. Factors to consider: New offering announcements Offering update announcements Offering application articles Press conferences Endorsements from customers or experts Trade show presentations Local/national news articles Talk shows - TV/radio Sample from CitiLoc, Inc. We will aggressively pursue as much free publicity as we can get. To address the city market segment, starting in the fourth month of the development project we will be sending press releases to a wide range of city planning publications. This should cause the publicity to appear in the various publications during months six through nine. We will be contacting every city manager of the cities we want in our data base, describing our service, providing them an access code to a secure sight describing the service in more detail and, of course, asking them to provide us with the desired information. In addition, there is a national Governor's conference being held in Miami, FL in the month of May and a national Mayor's conference being held in Phoenix, AZ in the month of June. Because our service is Internet based (the hot topic these days), we would expect to be included on the agenda of each of these conferences to present the concepts of our service. To address the business market segment, starting in month nine we will send press releases to about 500 strategic planning, accounting and business publications. To complement the press release, we will conduct a press tour in New York City, Chicago, San Francisco and Los Angeles making personal visits to appropriate editors and writers of key publications. We will also offer a white paper to several fall and winter business conferences describing the concepts of our service. Again, because of the Internet hook, we expect to be included on the agenda of a number of these conferences. 5.3.3 Advertising Explanation Advertising can take many forms, from calendars to coffee mugs to billboards to magazine ads to radio and TV spots. In most cases advertising is expensive, so you should plan carefully, making sure that the advertising is well focused on your target markets with a high exposure per dollar invested. Describe each form of advertising planned, specifying the market it is aimed at, the form it will take, what it will cost and the expected return. Factors to consider: Literature: Article reprints Competitive comparisons Feature explanations Benefits explanations Concepts education Advertising thrust: Corporate image Product/service family Product/service features Competitive comparisons Media: Magazines Trade journals Newspapers User letters Television Radio Trade shows Conferences Direct mail Card decks Media focus on your market segment Cost to expose each prospect to your message Sample from CitiLoc, Inc. We will judiciously use advertising to promote our service. There are a few key publications that we believe will reach the right management personnel in businesses that might use our service. These include Harvard Business Review, CEO, Red Herring, two or three financial and accounting publications, The Wall Street Journal, The Christian Science Monitor and some major city newspapers. Beginning in the eleventh or twelfth month we will begin placing ads in these publications. Beginning in the first month of year two we will begin a direct mail campaign directed at CEO's, COO's and CFO's in high growth industries. The mailings will be followed up with a phone contact and where available an e-mail contact. We will also pay major Internet search engines such as Yahoo and Google to display our ad whenever specific search criteria is used. 5.4 Pricing Explanation Your pricing strategy is heavily influenced by whether your objective is cash generation or market penetration. Cash generation is possible if you can price the offering significantly higher than your cost to produce. To achieve this there must be minimal competition. This could be because you are the first to the market, you have a monopoly on the market or because you are the only one willing to offer such an offering due to market decline, liability, social pressures, market location, etc. Significant market penetration is usually only feasible in the early stages of an offering form's life cycle and is often accompanied with very competitive pricing. In later life cycle stages, market penetration might be feasible if you are able to offer much greater value for the same price or you have been able to substantially reduce your cost to produce as compared to the competition. Describe your pricing strategy in terms of dollars per unit and how that compares to the competition. If you plan pricing specials or volume discounts, describe them. If you intend to use dealers or distributors, discounts or commissions will be required and should be described. The mix of sales from full price to your deepest discount will result in an average selling price (ASP) that is lower than your retail price. You should project this mix and the resulting ASP. Factors to consider: Cash requirements Long term staying power Market penetration objectives Competitive pricing Competitor's objectives Strength of competitors Average selling price considering all channel discounts Prospect's sensitivity to price versus product value Use of pricing specials or trade allowances Impact on sales organization Sample from CitiLoc, Inc. We will generate revenue by charging each city to be listed in the data base, by charging businesses to search the data base and by charging vendors to advertise their services on the data base. There will be two pricing levels for cities. The basic level, priced at $1,000 per year, will include our effort of accumulating and storing the city data on our data base and keeping the data current. The advanced level, priced at $2,500 per year, will include quarterly reports comparing the data for all cities in the data base plus a listing of businesses that have made a commitment to locate in a specific city. There will also be two pricing levels for businesses wishing to use the data base. The basic level, priced at $2,500, will allow a business to access and search the data base for up to one year using the search tools provided by our system. For example, the business could search for all cities that offer a tax abatement program, have an average price per foot for commercial space of less than $1.75/month, have an occupancy rate of less than 90%, have direct airline connections to San Jose and have a major university within 50 miles. The advanced level, priced at $10,000, will provide extensive analysis tools plus evaluations, written by our staff, for up to three cities. The evaluations will review over fifty important factors to consider before making a commitment to a new city. We may also offer to provide consulting support to businesses. If so, we will make proposals on request from the prospect. Minimum consulting rates will be $1,200 per day. In addition, we expect that service and product vendors in the various cities will be interested in promoting their business in the data base. We have not established pricing for this as yet, but, in any case, do not expect it to be a substantial portion of our revenue. 5.5 Sales Explanation Whether you are offering a product or a service you have to convince the prospect to buy it. This requires a sales organization in some form. Describe your sales organization with respect to structure, personnel, experience, size and location. Show how this relates to your target markets. Explain how the sales personnel will sell the product or service and how they will be compensated. Factors to consider: Sales method: Full service retail Self service retail Wholesale Mail order Field sales force for on-site sales Management experience Current sales personnel Sales personnel recruiting Motivation techniques Commissions Education of sales personnel Technical support for sales Demonstrations of offering Sales offices Generation of leads Ability to contact prospects Sample from CitiLoc, Inc. Selling an Internet service is not much different than selling any other service. However, we have an edge over traditional services. Prospects can find us more easily by searching the Internet. (The key here is to insure that the search engines have our site indexed in a way that will position us in the top one or two pages of the search results.) However, we can't depend on that alone. We will have an initial staff of five personnel contacting businesses on a daily basis to locate the person who would be involved in establishing a new business location. When that person is reached, our personnel will explain the basic features of our service and how they can get more information by looking at our web site. A primary objective will be to get their e-mail address so we can follow up the call with an e-mail that will link them directly to our web site. As can be determined from the above, a very critical part of the sales process is the content of our web page. It will be designed to educate the prospect, lead them through a decision process and then propose a closure. The prospect can make a commitment "on the spot" using the e-commerce capabilities. They can pay using a credit card, enter a purchase order number and a phone number for verification or request that a representative contact them. If they pay with a credit card, the card will be verified and an access code will be provided to the new customer. If they provide a purchase order number or request to be contacted, our personnel will receive the information within seconds after the e-commerce transaction. Their response will be to take whatever steps are necessary to close the sale. 5.6 Distribution Explanation Often products or services are sold through channels other than direct sales to the customer. Describe the channels of distribution you will use, their reputation, financial stability, ability to address your target markets, the discounts or commissions they expect and the volume of sales you expect to achieve through each channel. Make some assessment of how your success depends on each of the channels. Factors to consider: Competitors use of channels Channel's locations Channel's reputation Channel's financial stability Channel's discounts as compared to alternative channels Channel's access to desired market segment Channel's experience with your kind of offering Conflict between in-house sales and selected channels Sample from CitiLoc, Inc. We and our web site represent the major distribution channel for our services. There is a secondary distribution channel in the form of "links" to our web site from other web sites. We will actively pursue the establishment of links with sites we believe will have a viewer base that may be interested in our service. These sites will be defined as "Referral Partners". If a prospect links to our site from a Referral Partner and contracts for our service within a 10 day period, we will pay a "referral fee" to the partner. Our objective is to establish over 100 Referral Partners by the time we put the data base on-line. 5.7 Logistics Explanation Once a product or service is sold, whether direct to a customer or to a channel of distribution, it must be delivered to them. If your offering is a product, describe your ability to inventory, ship, warehouse and deliver product when and where needed. If your offering is a service, describe your ability to deliver the service when and where needed and especially how you handle peak demands. Factors to consider: Access to transportation Use of transportation services versus in-house service Size of offering Fragility of offering Delivery time expectations of customer Alternative methods of delivery Offering availability when ordered Warehouse locations and space Implications of late or lost deliveries Delivery prices part of offering price or additional Requirement for insurance Sample from CitiLoc, Inc. For the most part, our service consists of making the data base and its search tools available to the customer. This is all done through our web site and does not require any intervention by our personnel. For advanced city subscribers we will distribute a quarterly report via e-mail. For advanced business customers there will be e-mail communication to request and deliver customized city reports 5.8 Support Explanation There is always a need to provide customer support. Describe your policy for product or service warranty and what form of support will be required to meet the warranty commitments including organization structure, personnel, experience, size and location. Factors to consider: Warranty commitments In-house versus on-site support Service after warranty Proof of purchase Delivery to and from service area Parts sales Parts inventories Service site locations Service personnel experience requirements Education of service personnel Sample from CitiLoc, Inc. Support falls into two categories. Cities who wish to add or modify information stored in the data base will interface with one of our personnel who has been assigned as their personal representative. New or changed data will be reviewed with the customer to confirm its validity and then entered into the data base, usually on the same day it is provided. City personnel can contact their personal representative at any time with questions or data changes. We will initiate contact with each city at least every six months to determine if the data base needs any changes. Business users may have problems using the search tools or have questions regarding the data. If so, there is an on-line help facility that will answer most questions. There will also be an e- mail facility that allows the user to pose a question via e-mail. Our commitment will be to respond to all e-mail queries within 24 hours. If neither of those methods satisfy the user, we will also have a 1-800 customer support line that will be available during normal working hours (7AM to 7PM CST). 6.0 Competitive Analysis Explanation Provide a summary of the competition as a group. Factors to consider: Number of competitors Is market gaining or losing competitors? Are competitors profitable? Do competitors have manufacturing or marketing advantages? Do you expect more or less pricing pressure from the competition? Describe each competitor and their offering and why they are such strong competition. Describe how your enterprise is positioned as one of the competitors. Factors to consider: Image Names of key competitors/offerings Leader or follower How long have they been in business? Employee relations Pricing record Growth record Manufacturing/marketing experience Record of response to competition Record of technological innovation Market share Record in other markets Offering Price Price versus value Ease of installation Ease of use Education requirements Technical support requirements Reliability Operating costs Proven return on investment Proprietary technology Offering differences Service/warranty record Marketing Marketing organization Promotional techniques Financials Return on investment record Profitability record Current level of profitability Liquidity Cash requirements Commitment to the market Investment in specialized equipment Strategic importance to competitor's business objectives Percent of total income derived from competitive offering Commitment to channel relationships Labor contracts involving termination costs Responsibility to installed customer base Sample from CitiLoc, Inc. At present there are two major forms of competition: consultants and information provided by the individual cities. Consultants range in size from individuals to large international firms. The minimum consulting fee a business can expect to pay is $10,000 and it can easily reach $100,000. The quality of information a business can expect to receive from our service will be equal to or better than what they get from a consultant at a fraction of the cost and the information will be available in a fraction of the time. Most cities have a web page today. The information they provide is designed to aid visitors and citizens locate restaurants, parks, forms of entertainment, retail outlets and in some cases city government contacts. It is not designed to be user friendly to the business considering a move to the city. Cities that are aggressively trying to attract new business will often have a contact point to provide information to prospective businesses. This usually comes in the form of written literature and seldom addresses the majority of a business' concerns. Once again, our service provides more relevant information on any given city and, in addition, the business has immediate access to "every other" city that might be a candidate. Another service could pursue the same business model as CitiLoc, however, we will be first and have at least a year's head start. The commitment by all of the cities to our service will make them reluctant to enter into a second agreement with another service and the high up- front development investment for a "me-too" business will represent a significant barrier to entry.