Sample Business Plan communicata

Communicata Limited - Business Plan June 1995 COMMUNICATA Business Plan Prepared by Martin Browne,Tony Purcell & Sid Wales June 1995 Edinburgh Technology Transfer Centre Kings Buildings Mayfield Road Edinburgh EH9 3JL Direct Telephone/Fax: 0131 662 9798 Switchboard: 0131 650 5781 E-mail: info@communicata.com Communicata Limited - Business Plan June 1995 Table of Contents INTRODUCTION .................................................................................................................................. 3 SECTION 1: OVERVIEW OF THE MARKET.................................................................................. 6 1.1 The Internet ............................................................................................................................................... 6 1.2 World Wide Web ...................................................................................................................................... 6 1.3 Web Publishing ......................................................................................................................................... 6 SECTION 2: MARKETING STRATEGY ........................................................................................... 7 2.1. Market Entry ............................................................................................................................................ 7 2.2. Creation of Interest Subjects .................................................................................................................... 7 2.3. Attraction of Advertising Revenue ........................................................................................................... 9 2.4. Hosting of Product Catalogues ............................................................................................................... 10 2.5. Linking Product Catalogues ................................................................................................................... 11 2.6. Electronic Trading .................................................................................................................................. 11 2.7. Revenue Growth ..................................................................................................................................... 12 SECTION 3: OWNERSHIP AND MANAGEMENT........................................................................ 13 3.1 Key Personnel ......................................................................................................................................... 13 3.2. Shareholding .......................................................................................................................................... 13 SECTION 4: SERVICES TO CUSTOMERS .................................................................................... 14 SECTION 5: COMPETITORS ........................................................................................................... 16 5.1 State of the Market .................................................................................................................................. 16 5.2. Market Strategies .................................................................................................................................... 16 5.3. Main Scottish Competitors ..................................................................................................................... 17 5.4. Minor Scottish Competitors ................................................................................................................... 18 5.5. Major UK Competitors ........................................................................................................................... 18 5.6. Future Competition ................................................................................................................................ 19 5.7. Strengths and Weaknesses of the Competition ....................................................................................... 20 5.8. Summary of Competition ....................................................................................................................... 20 SECTION 6: TECHNOLOGY ............................................................................................................ 21 SECTION 7: S.W.O.T. ANALYSIS .................................................................................................... 22 7.1 Strengths.................................................................................................................................................. 22 7.2 Weaknesses ............................................................................................................................................. 22 7.3 Opportunities ........................................................................................................................................... 22 7.4 Threats ..................................................................................................................................................... 22 SECTION 8: FINANCIAL PROJECTIONS ..................................................................................... 23 Communicata Limited - Business Plan June 1995 Introduction COMMUNICATA is in the electronic publishing and trading business. COMMUNICATA is a limited company registered in Scotland (reg. no. 156504) which was formed in March 1995 by three highly knowledgable and experienced individuals in response to what they believe to be an attractive busineess opportunity created by the growth and commercialisation of the Internet and its use as a publishing and electronic trading medium. Their analysis and assesment of conditions in the Industry convinced them that there was a viable opportunity for a company specialising in electronic publishing and electronic trading on the Internet. 1. Overview of the market The use of the Internet as a common means of communication is growing at an exponential rate. The development of the World Wide Web has improved access to distributed information on the Internet and the Web is currently growing at the rate of 20% a month. This growth has created opportunities for companies to gain a presence on the Internet to advertise their products and services and will allow future opportunities for global trade. Electronic trading has been growing since the 1980s and there are a number of projects currently under development to enable the Internet to be used as a low-cost alternative to Value Added Networks [VANs](the current medium used for electronic trading). 2. Business description Companies are increasingly having to compete with well-informed competitors in a global market. Potential customers are being targetted more accurately and better customer service has become increasingly more important for competitive advantage. The Internet allows companies to establish communication links with their customers, suppliers and employees to receive immediate feedback on problems and opportunities. Changes in the employment market have increased the need for companies to improve their internal communications if they are to be able to react quickly to market changes. The nature of COMMUNICATA’s business Web publishing allows companies to maintain an interactive dialogue with their customers. COMMUNICATA is in the business of creating innovative and professionally-designed Web pages to advertise our clients‟ products and services. COMMUNICATA‟s managed service will allow those pages to be hosted on a dedicated server connected to the Internet. 3 Communicata Limited - Business Plan June 1995 The use of the Internet as an alternative to VANs is creating exciting possibilities for low-cost electronic trading. COMMUNICATA aim to provide applications to enable electronic trading to take place on the Internet. COMMUNICATA has identified one such product under development in the U.S. and is looking to act as marketing agent for this product in Europe 3. Ownership and Management The principals have complementary skills. Martin Browne has extensive skills in corporate information management and is a qualified company secretary (ACIS) Tony Purcell worked in the I.T industry over a period of 14 years with both technical experience and management experience (latterly as Computer Services Manager for Oracle Corporation). 4. The Services and Products    Web publishing Electronic trading applications Consultancy 5. Market Analysis and Marketing The demand for Web publishing is growing. The market for providing this service in the UK is fragmented and no company has yet acquired identifiable market share. COMMUNICATA aims to be the market leader in Web publishing through both innovative design and partnership with advertising agencies. Internet providers, advertising agencies and small start-up companies are all competing in this market. COMMUNICATA is assessing the market potential for an Online Product Locator (OPL) software application that was developed by a U.S company to provide designers/purchasers access over the Internet to electronics, electromechanical and mechanical parts information databases. Competitive products are currently paper and CD-ROM catalogues produced by companies such as Technical Indexes, Thomas Register of American Manufacturers and Information Handling Services (IHS) . We are currently looking to market this innovative product which we believe has tremendous potential to become a standard product in Internet electronic trading across a number of industries. 6. Financial Projections Web Publishing In the first year COMMUNICATA expect to achieve 7 Web publishing sales with revenues of 52,894 pounds. The profit margin on Web publishing services is 24.9% in the first year. 4 Communicata Limited - Business Plan June 1995 Electronic Trading On the assumption that we get a positive response from the market in respect of the Online Product Locator application and that we agree a joint venture with the U.S company we would aim to make 1 sale in the first year with estimated revenue of 58,750 pounds. 7. Strategic Partnerships To date Communicata have formed strategic partnerships with Research Systems (technical specialists in Internet applications), Creative Art (professional designers of commercial artwork) and the Holt Agency (advertising agency). There are plans to develop additional partnerships with other advertising agencies, Oracle Corporation, and Sun Microsystems. 8. Conclusion In summary the main objectives of COMMUNICATA are:  To become the UK market leader in Web publishing services.  To become European marketing agent for an existing and innovative U.S. product the Online Product Locator  To be at the leading edge of electronic trading  To establish business partnerships with advertising agencies. 9. Mission Statement Communicata will provide its clients with a high quality service by providing a total solution to accessing business information and facilitating communication between its clients and their customers on the Internet Market Intelligence Market intelligence information has been gathered from a number of sources including: online databases(e.g. ABI/INFORM, American Business Directory, Dun & Bradsheet, Data Monitor, Euromonitor, Frost & Sullivan, ICC, MARS, Compuserve IQUEST, Inspec, Mintel, Keynote, Textline); the Internet for competitor information (what the competitors are doing on the Internet), magazines (Computer Weekly, Scotmedia, Scottish Business Insider, Fortune, Time Magazine, Business Week, Electronic Trader, The Economist and a number of specialist Internet magazines); trade sources (the EDI Association information service, EDI yearbook etc.) 5 Communicata Limited - Business Plan June 1995 Section 1: Overview of the Market 1.1 The Internet The Internet had its origins in a communications system designed by the American military in 1969 to survive a nuclear attack on any of its links with message packets 'bouncing” across connected networks using the common TCP/IP messaging protocol. For this reason the Internet is best described as a network of networks rather than a single machine although it is effectively the second largest „machine‟ in the world (with an estimated 30m users against the telephone system's 600m). The main advantage of the Internet is low-cost communication because messages jump across the world in seconds from one local network to the next rather than down a single line. Estimates vary widely as to the actual number of users but the growth rate over 25 years has been from 5000 to at least 30m or 6000%. By the end of the decade it has been estimated that 180m people will be connected but no one can be really sure. 1.2 World Wide Web The Internet can appear daunting to the new user because there is little organisation of the knowledge available and few signposts to help. In an attempt to overcome this problem, the European Laboratory for Particle Physics in Switzerland created in 1990 the World Wide Web (“the Web”). Together with its associated browser software the Web takes Internet use further than just pure text into the world of graphics, sound and video. The main feature of the Web is hypertext which means that links can be created between any computer regardless of location and without the need to know complicated commands. This feature has made the Web the area of the Internet with the most exciting prospects and this is reflected in growth rates of 20% per month. 1.3 Web Publishing The ease of use of the Web is leading many companies to use the medium as a marketing tool. In the USA most major corporations have a Web 'home page' (as „adverts‟are known) where their customers can visit and find out more about their business. The UK is still some way behind this growth but the number of British companies exploring the use of the medium is growing fast. Barclaycard has reported over 25,000 visits to its home page since January 1995. It is now estimated that there are 4 million Web pages hosted on 6000 servers across the world. The Internet in general is viewed by its users as primarily a means of exchanging information and, although advertising on the Web is accepted, Web publishers must ensure that adverts conform to the role of providing information first and product awareness second if a home page is to be successful in terms of the number of visits it receives. 6 Communicata Limited - Business Plan June 1995 Section 2: Marketing Strategy 2.1. Market Entry Communicata has leased the equipment necessary to publish information on the Web and plans to enter the Web publishing market by the following means: a) Creation of interest „cores‟ around a targetted number of business and leisure subjects using freelance authors who have a keen interest and specialist knowledge in those subjects. Organisation of the subjects in a well thought-out and consistent manner under the trademarked name “LookOver”. We intend LookOver to become synonymous with being able to find information easily on the Web. Regular users will be encouraged to join our “LeapOver” service which will remove menu approach and present users with only the information in which they have expressed an interest. Launch of the business at the Cyberia cafe in Edinburgh on 14 July in combination with an advertising campaign to alert Internet users to the information service provided by Communicata. Targetting of companies supplying products and services into each of the chosen interest cores with the aim of selling advertising „pages‟ to them. Usage statistics will be used to convince advertisers of the numbers of their potential customers connecting to (i.e. visiting) Communicata‟s Web site. Creation of bulletin boards within each subject to encourage users to make regular repeat visits to Communicata‟s Web site to see what‟s new. One key difference over other Web sites is that the pages on Communicata‟s server will be updated daily to give our users confidence that they are looking at the latest information. Hosting of product catalogues within each subject using Oracle database software to produce fully-searchable means of locating products and equipment relevant to the subject. b) the c) d) e) f) 2.2. Creation of Interest Subjects Communicata is in the process of commissioning freelance authors to research and write material on 11 interest subjects. We expect 6 of these to be ready for the launch on 14 July and 5 during the following month. Thereafter it is intended that one new subject will be added every other month. The initial subjects will be as follows: 7 Communicata Limited - Business Plan Business June 1995 Scottish Business Services - this subject consists of a range of services which support Scottish business from legal services to document storage companies. There are currently ___ commercial organisations operating in this marketplace with a turnover of £__bn. This subject will be managed by ________________ Scottish Electronics - the international scope of this sector, which consists of some 500 companies accounting for 35% of the European market, makes it a subject which will attract worldwide attention. The subject also provides an interest core for our power supply locator database (see page __) and will be managed by Sid Wales. Scottish Financial Services - the largest employment sector in Scotland consists of ____ companies with a turnover of £__bn and a current annual advertising spend of £___. This subject will be managed by ____________ Leisure British Basketball - basketball is one of the fastest-growing sports in the UK but currently has no Web presence in Britain. There are 13 professional clubs in England attracting sponsorship of several million pounds and a Scottish game which is starting to attract both significant interest and sponsorship by multinationals like Burger King. This subject will be managed by Nick Cole who is a member of basketball clubs in Scotland and the North of England. Scotch Whisky - the only major site for whisky on the Web is the Edinburgh Malt Whisky Tour by John Butler which was selected by PC Magazine in July 1995 as one of the top 100 Internet sites worldwide. Communicata has contracted with John Butler to develop his whisky pages as one of our interest subjects. There are ___ companies in the Scotch whisky industry with a turnover of £__ bn and an advertising spend of £___ Scottish Angling - angling is the biggest participative sport in the UK and attracts __ people in Scotland and __ worldwide. There are __ companies supplying the market in Scotland with a turnover of £__m. The UK angling market was worth £80m in 1994 and much of the necessary equipment is manufactured in Britain. Communicata are negotiating with an individual who has authored several books on the subject Scottish Golf - 3.5 million adults (7.8%) play golf in the UK and the £200m spent annually on golf equipment accounts for 38% of all UK consumer sports spending. A significant proportion of this equipment is manufactured in Britain. Worldwide some __ million people play golf and all look to Scotland as the home of the game. This subject will be managed by Chris Martin who is a keen golf player. Scottish Hillwalking - Scotland has a world reputation for the quality of its hillwalking, climbing and mountaineering. The activity is pursued by 29.1% of the UK population with 10% of all consumer sports spending being spent on hillwalking equipment (£53m in 1995). In addition, the outdoor clothing market was worth £500m 8 Communicata Limited - Business Plan June 1995 in 1994 due to changing fashion trends. This subject will be managed by Michael De La Rue who created the Scottish Climbing Archive Web pages. Scottish Sailing - sailing attracts __ people in Scotland each year and the __ companies satisfying this market sell high value products with a combined turnover of £___bn. This subject will be managed by Tom Cole who is President of the Edinburgh University Sailing Club. Scottish Skiing - skiing is among the most popular outdoor pursuits in Scotland with some __ people taking to the slopes in Scotland each year. Ski fashion changes every year and consumers spent £40m on clothing in 1994 and £7m on equipment. This subject will be managed by Richard Hannah who is a keen skier and snowboarder. Scottish Water Sports - windsurfing, canoeing (etc) is a £__ market in Scotland with ___ companies selling products and services to it. This subject will be managed by Simon Holmes who is also currently researching water sports for the Scottish Sports Council. The spread of subjects recognises the predominant use of the Web currently for leisure activities and its appeal to the key leisure market, the 7.5 million 15-24 year olds in the UK, who are likely to be prime users of the Internet. We are also signalling our intention to publish material of value to the business-tobusiness sector. Each subject has been chosen for its commercial viability in attracting high quality advertising. Each author has been chosen for his existing knowledge of the subject in order that comprehensive information on each subject can be published quickly. The aim of this strategy is to attract to Communicata, by the depth of our subject information, a large number of Web users with specific subject interests. 2.3. Attraction of Advertising Revenue Communicata‟s income will be derived from advertising revenue. As advertisers will only place adverts where they believe large numbers of their potential customers are likely to notice them, Communicata is focussing on the above subject areas by creating the audience and then attracting the advertisers. Each of our freelance authors is preparing a list of potential advertisers who sell products and services into their subjects and each of these potential advertisers will be targetted from July 1995. Each company‟s advert will present a great deal of information to Web users in a series of linked pages. This is consistent with the style of the Web where users choose to look at adverts because of their information content rather than have unsolicited advertising thrust upon them. A typical advert will consist of 4 “pages” of information and cost £500 to create. This cost involves coding a company‟s sales literature to present on the Web and linking it into the subject information where a user might 9 Communicata Limited - Business Plan June 1995 reasonably expect to find it. Communicata also plans to create more sophisticated adverts at higher cost for customers requiring a greater level of detail. Advertising in the sports sector is currently increasing to match the fashion for wearing sportswear as leisurewear. Allsports spent £400,000 in 1993-94, Intersport £487,500 and 5 other retailers spent over £100,000 each. The proliferation of smaller campaigns is now the dominant feature in sports advertising and, with media expenditure doubling to £6.6m in 1994 over 1992, Communicata expects to be able to win market share with its ability to match cost with exposure in smaller campaigns. The balance of participation in sports in the UK is shifting to expensively equipped and aspirational activities (golf, sailing etc) and also bodes well for Communicata‟s services. In order to maintain a company‟s advert within Communicata‟s subject areas, a monthly rental of £100 a month will be charged to each company. This cost will cover the maintenance of all links to the advert together with detailed analysis of the numbers of users who have looked at it. The ability to tell exactly who has seen an advert is the most powerful selling point of the medium. It is possible to tell the number of people who have visited the advert, the amount of time they spent there as a percentage of their visit and the sections of the advert they found most interesting (also expressed as percentages of time spent). These statistics will be used generally to sell advertising space to those companies who opt not to advertise initially. Communicata salespersons can show a prospective advertiser how his competitors are achieving increased exposure of their own products over those of companies who have chosen not to advertise. The overall cost of advertising on the Web is small in comparison to the cost of advertising in the traditional media where the £1700 annual cost of building and hosting a Web page can be spent in one advert in one issue of a publication. The combination of low cost to advertisers, accurate viewing figures and global exposure augur well for the ability of Communicata to attract advertising revenue to meet an initial sales target of 180 companies buying advertising space at £500 each in the first year. 2.4. Hosting of Product Catalogues Within each subject Communicata intend hosting product catalogues of interest to users of that subject. These catalogues will be a major selling point to users of the service as we aim to hold the most comprehensive lists of products available in one place. The catalogues will be stored on Oracle databases and Oracle software will be used to make these catalogues fully searchable. Communicata will be the first company in the UK to publish searchable product catalogues on the Internet. To be fully up-to-date, companies may wish to host their own product catalogues locally. Communicata will provide consultancy services to these companies with the 10 Communicata Limited - Business Plan June 1995 capability of providing a total business solution. Links to these local servers would continue to come from within the interest subject pages on Communicata‟s Web site. The hosting of product catalogues fits within Communicata‟s subject approach to Web publishing and adds to the reasons for users to visit our Web site and therefore for our advertisers to continue advertising with us. Each product catalogue will be searchable individually so companies will need to continue or increase their advertising with us to differentiate their product catalogues from those of their competitors. In the business-to-business market, product catalogues will reduce the time needed by designers and purchasers to identify and source goods (e.g. typically 30% of a designer‟s time in the electronics industry is spent sourcing components) and in the leisure market our strategy will fit the growing trend towards mail order for specialist equipment as high street shops focus instead on the greater returns to be made from sports clothing as a fashion item. Mail order from product catalogues of sports equipment increased by 36% between 1990 and 1994 and is now worth £45m annually in the UK. In recognition of Communicata‟s leading edge in its ability to host product catalogues on the Internet, Oracle Corporation have invited Communicata to host the Oracle Worldwide Internet User Group. This association with Oracle will give Communicata a powerful edge in any competitive sales situation and will raise our profile considerably around the world. 2.5. Linking Product Catalogues Communicata is working with an American company to develop a means of searching product catalogues simultaneously rather than individually and thereby providing a very powerful information sourcing service to visitors to our Web site. The Directors have signed a Non Disclosure Agreement with the Americans and are therefore unable to provide full details here but Communicata intend becoming the European distributor for the product in 12 months time. In the meantime, Communicata will be building its expertise in hosting product catalogues in relational databases to provide a ready-made user base for the American product and allow it to be implemented in Europe with the minimum of effort. 2.6. Electronic Trading The American product will allow Communicata to become fully involved in electronic trading over the Internet and this is the long-term strategy of the company. 11 Communicata Limited - Business Plan June 1995 2.7. Revenue Growth Q3 1995 2.5 0 0 0 2.5 Q4 1995 20.0 5.0 15.0 15.0 55.0 Q1 1996 30.0 19.5 15.0 15.0 79.5 Q2 1996 37.5 39.0 15.0 15.0 106.5 Q3 1996 75.0 25.3 30.0 54.0 184.3 Q4 1996 75.0 33.6 45.0 54.0 207.6 Q1 1997 75.0 41.8 60.0 54.0 230.8 Q2 1997 75.0 50.0 75.0 75.0 254.0 £000‟s Advertising Rental Catalogues Consultancy Revenue Totals 390.0 214.2 255.0 261.0 1120.2 The Critical Success Factors to achieve these numbers are: 1. 2. 3. To become a reference site on the Web for each subject we create. To match the million visits a week achieved by the Web site of our main competitor. To be adequately funded to achieve growth in a fast-moving market. 12 Communicata Limited - Business Plan June 1995 Section 3: Ownership and Management 3.1 Key Personnel The members of the current management team are Managing Director - Sid Wales Sid has a wide experience of the manufacturing industry where his career has taken him from design through to President of a Public Corporation (Semtech, a multinational company in the electronics industry) in the USA. His professional qualifications include C.Eng., MIEE., MSEE., MinstM., ACIMA. Sid provides strategic direction on all aspects of the business. Marketing Director - Martin Browne Martin has extensive skills in corporate information management with 10 years experience in the industry. He is both a chartered librarian (ALA) and a chartered secretary (ACIS) bringing both information and administrative skills to Communicata. He started an information management function for United Distillers to develop use of electronic information sources (online databases, CDROM etc.) in a commercial environment and contributes regularly to the professional debate on the future of the information society. In addition to responsibility for marketing and sales, Martin is also responsible for the day-to-day administration of the company. Operations Director - Tony Purcell Tony has worked in the IT industry for over 14 years, working mainly in technical areas from programming to systems analysis, technical support through to technical management. He gained his management experience working as Computer Services manager for Oracle Corporation over a period of 4 years. Tony has a Masters in Business Administration from Edinburgh University Management School where he specialised in Business Finance, Management Accounting and Capital Markets. He also has over 5 years experience of using the Internet in a commercial environmment. 3.2. Shareholding Tony and Martin have both invested £20,000 each in the business. To date £20,000 has been used to establish the business and £20,000 remains in an investment account at the Bank of Scotland. Sid‟s investment in the business has yet to be agreed. Shareholdings will be agreed based on the level of investment in the business and the requirements of funders. 13 Communicata Limited - Business Plan June 1995 Section 4: Services to Customers Creation of Web adverts Communicata will charge £500 a day to create Web adverts for companies. For £500 a customer would receive:      Coding of up to 4 A4 pages of sales literature in HyperText Markup Language (HTML) format. Scanning of up to 4 images in GIF format. One hour of design work from Art Creative. Two hours of consultancy to establish the message the customer wishes to project in an advert Creation of hypertext links to the advert from Communicata‟s subject pages and any other relevant Web indexes. It is expected that most companies will test the Web publishing medium with an initial £500 advert before committing to higher profile Web advertising which will be charged for at £500 for every extra day involved in their creation. Maintenance of Web adverts Communicata will charge £100 a month to host and maintain Web adverts for companies. For £100 a month a customer would receive:     Space on Communicata‟s server to store their Web pages. Remote access to their pages to update the information in their advert or, if requested, the time of a Communicata administrator to update the information on a customer‟s behalf. Maintenance of all hypertext links to other pages. Detailed monthly usage statistics presented in a format of value to the customer. Hosting of Product Catalogues Communicata will charge £500 a day to prepare a customer‟s product catalogues in a format capable of being hosted on Communicata‟s Web server. This service assumes the customer‟s data is already held in a relational database. A typical project would take 10 days for which a customer would receive:   The services of one Communicata consultant for 10 days Completion of all technical steps necessary to host a product catalogue on the Internet. 14 Communicata Limited - Business Plan Consultancy June 1995 Some customers will require assistance with hosting product catalogues on the Internet either in the process of creating the database completely or in the conversion of the data into a format suitable for Internet access. Communicata will quote for each project individually, but would expect to charge around £15,000 per project. For this the customer would receive:    The services of a Communicata consultant for 10 days The conversion of data into a suitable form The creation of a database in Oracle if required Linking Product Catalogues It is too early for Communicata to decide prices for participation in a service to link product catalogues. The basic requirement for each customer is to have a catalogue in a relational database format as outlined above. Thereafter there will be a charge for links into the service on a monthly rental basis. 15 Communicata Limited - Business Plan June 1995 Section 5: Competitors 5.1 State of the Market The UK advertising market is worth £__bn annually but the size of the market for Web advertising in particular is unknown. The number of Web publishing companies operating in the UK is difficult to gauge as the market demand has only been significant in the last 12 months and has been satisfied by predominantly start-up companies. In February 1995 there were 70 companies on the UK register with Internet in their name and any or all of these could be offering Web publishing services. In addition, multinationals like News International and Pearson are moving into Web publishing through Delphi Internet and FutureNet and more are certain to follow. 5.2. Market Strategies The competition would appear to be adopting particular strategies as follows: “Yellow Pages” - list as many companies as possible in a geographical area or market sector and then target each one for advertising individually. The intention of each Web publisher offering this kind of service is to become the definitive site for lists of UK companies. Although it is early days yet, this approach will only work once a publisher reaches a critical mass in lists of UK companies (at present the most extensive of these lists 128 companies out of over 1 million companies in the UK) Customer adverts - all Internet Service Providers offer to host Web adverts for companies who use their Internet connection services. Service providers are keen to offer this service to their customers because their rental of advertising space defrays the cost to the provider of running a Web server. The result to the user however is a series of company adverts with no obvious connection to each other. Many of the adverts in this category are of poor quality because they are generally created by the service provider‟s computer people who understand the technology rather than the professional design and PR operations which normally handle a company‟s image. We would expect this to change as companies realise the poor image they are presenting to the world. Opportunistic - some Web publishing companies are looking for revenue wherever they can and put up a range of companies, charities and other organisations with no logical connections to each other simply so that the bodies concerned can say that they are “on the Net”. These Web sites tend to be well advertised because each new client is announced to the Internet community and usage can be shown to be high because of the many individuals who visit to see what‟s new. In reality there is little reason for the average Internet user to visit a company‟s advert more than once. Subjects - some Web publishing companies adopt a particular subject or geographical area and aim to cover everything within it. This approach stands the best chance of 16 Communicata Limited - Business Plan June 1995 success (because, for example, if you wanted to know anything about the Scottish Borders you would visit the “scotborders” pages). 5.3. Main Scottish Competitors The Scottish Web publishing market is particularly competitive with a number of high profile businesses using the media to promote their activities. Communicata‟s main Scottish competitors are: Almac - founded in 1988 in Grangemouth, Almac (Managing Director: Alistair McIntyre) has grown to be one of the largest bulletin board systems (BBS) in Europe with thousands of users leaving messages for each other daily. Almac is the main Scottish-based Internet Service Provider and is developing its Web publishing activities around the “Opportunistic” model using a mixture of gopher, an outdated Internet technology, and Web pages to advertise such diverse organisations as James Thin, Hayes Microcomputer and the Skye Serpentarium. Almac‟s Marketing Director is approaching a range of potential customers in central Scotland and has been talking to some of Communicata‟s potential sales prospects. The feedback on these visits to Communicata is that Almac‟s strategy is to continue putting up individual companies without any logical connections to each other. Once the few really Internet-aware companies have taken advantage of Almac‟s services it is difficult to see the approach Almac will take to induce the bulk of Scottish companies to advertise on their service. Currently 12 clients in total. Colloquium - founded in 1991 in Glasgow, Colloquium is another BBS which has developed into an Internet Service Provider. Their Web pages follow the “Customer adverts” model and also present a range of miscellaneous companies. Colloquium are still developing their information content as, for example, their General Accident Estate Agents pages currently consist of one property - a farm in Strathaven. Currently 9 clients in total. Foremost Training -a computer training company, Foremost Training have developed into an Internet Service Provider offering Web publishing services on an “Opportunistic” basis. Their only major client is the Bank of Scotland. Foremost Training‟s main profile-raising activity is through its close association with Internet training and consultancy agency Internet Business Services. Foremost and IBS are the main backers of the Scottish Internet Business Association. Communicata is watching SIBA with interest but does not have any plans to join in the immediate future. TweedNet - an Internet Service Provider, TweedNet is run by Calligraphix, a graphic design agency, but uses the name “scotborders” as its Internet domain address. TweedNet have adopted the “Subject” strategy and, with the backing of Scottish Borders Enterprise, are creating a comprehensive list of companies in the Borders (all 128 companies in the Borders textile industry are listed complete with contact details). One interesting development reported in May 1995 is TweedNet‟s launch of the first Internet photographic magazine to much publicity. It is likely that TweedNet will use subjects like photography to attack similar vertical markets to Communicata. Currently 16 clients in total. 17 Communicata Limited - Business Plan June 1995 Ecosse Computer Services/NetTrak - based in Aberdeen, this computer consultancy hosts Web pages on the IBM PC User Group server. ECS currently have by far the best designed Web pages of any Scottish Web publisher but at present their clients in the business sector are limited to local concerns in the Aberdeen area. Currently 6 clients in total. 5.4. Minor Scottish Competitors ZetNet - ZetNet are proving it is possible to be an Internet Service Provider anywhere by being based in Shetland and using their low cost location to offer freephone access from anywhere in the UK to their Internet connection. ZetNet do not appear to be committed to Web publishing with only one local photographer advertisiing on their Web pages so far. Wintermute - an Aberdeen-based Internet Service Provider which has 4 local companies on their Web pages. Internet Scotland - an Internet Service Provider with no companies as yet on their Web pages. NSL Partnership - founded in June 1995 by two computer students using Web server space rented from Direct Connection, NSL offer a whole range of Internet services from connectivity to Web publishing. Web13 - an Internet cafe in Edinburgh, it is Web13‟s strategy to make money from Web publishing to offset the low charges made in their cafe. Their charges would appear to be excessive in comparison to the rest of the market (£800 to register a domain name for which others charge £100) but they offer no noticeable difference in quality or added value. 5.5. Major UK Competitors FutureNet - FutureNet is the Web publishing arm of Future Publishing which was bought by the Pearson Group in 1994 for £37m. Future publishes 37 consumer magazines and editorial content from all of these is available on FutureNet. FutureNet‟s strategy is very definitely subject-based in direct competition with Communicata but with greater resources. FutureNet‟s main business objective is to be the UK‟s busiest Web site by July 1995 and, with currently over 1 million visits a week, is on target to achieve this. At present there is little advertising present on FutureNet‟s pages apart from a few exceptions like the high-profile Guinness advert but we know from industry contacts that FutureNet are actively targetting Scottish consumer goods companies and advertising agencies. It is possible that they are trying not to alienate their print advertisers at present but we expect to see full-blown advertising on FutureNet once their July target has been reached. FutureNet is Communicata‟s main competitor in the UK market and we will need to be compete with them on a UK-wide basis. 18 Communicata Limited - Business Plan June 1995 Pipex - Pipex is the main commercial Internet Service Provider in the UK with over 500 corporate customers. They host a WorldServer which contains the homepages of 46 companies including Sainsbury‟s, Barclaycard, Ernst & Young, Eurodollar and the Bradford & Bingley Building Society. This is the “Customer advert” approach to Web publishing and these pages are more an advert of Pipex‟s customer list than a reason to find a sector of UK business on the Internet. Discussions with Pipex indicate that they are not seriously into Web publishing with most work being contracted out to freelancers. Communicata has informally been offered some of this freelance work. Demon - Demon is the biggest provider of individual connections to the Internet in the UK with some 30,000 subscribers and they have a Web site containing the homepages of some 50 companies. Another adopter of the “Customer advert” strategy, we do not believe Demon to be a major competitor in the long term as their main business goal is Internet connectivity. MarketNet - based on a US model, MarketNet are trying to adopt the subject approach to Web publishing in combination with online shopping. Backed by a range of service companies as diverse as lawyers and chocolate shops, MarketNet aims to satisfy the consumer‟s need for certain services anywhere in the UK. MarketNet have the potential to become a formidable competitor. Soft Options - a graphic design agency, Soft Options Web pages look excellent using the latest Web browser software but are not compatible in others which implies a lack of concern for the majority of their potential customer base. They have a small number of high profile clients e.g. Apple Computer in the UK and the BBC Networking Club but little else at present. Others - other companies to watch include New Media Marketing, AKQA New Media and WebMedia which are all based in London and are building links with advertising agencies in particular. 5.6. Future Competition Future competition may come from a number of other areas including:     Major advertising companies Independent television companies Newspaper and magazine publishers U.S Web publishing companies Communicata will be watching the market carefully for any signs of entry by other major players. 19 Communicata Limited - Business Plan June 1995 5.7. Strengths and Weaknesses of the Competition The major strength of the competition is that they have entered the market ahead of Communicata (although few greater than 12 months). These companies are actively promoting their services through various means and achieving a great deal of media coverage. The major weaknesses we have identified include;      very poor on interactive content (the user must be given the opportunity to interact with other users, the application and the information provider) lack of innovation in approach to advertising on the medium a general lack of professional input in the design of the Web pages use of large graphics in Web pages (which slows receipt of information) hypertext links not thought through Summary of Competition 5.8. In summary none of the competition are providing fully searchable product catalogues. FutureNet is our main UK competitor and Almac our main Scottish competitor both through their existing market positions. The Web publishing market changes with amazing speed however and, once our strategy is open for all to see, we expect many competitors to adopt our model for subjects which we have not yet covered. We believe that our link with Oracle Corporation and the American software company will give us a long-term strategy as yet unmatched by those competitors currently offering Web adverts. 20 Communicata Limited - Business Plan June 1995 Section 6: Technology This section will contain details of the technology currently being used by Communicata to deliver its services and the impact of future technological changes. 21 Communicata Limited - Business Plan June 1995 Section 7: S.W.O.T. Analysis 7.1 Strengths     7.2 Internet is a growing market due to high media interest and competitors helping to generate market interest Professional long-term approach to Web publishing using high quality layout and design Strength of management skills and expertise Low barriers to exit Weaknesses    „New to the world‟ products and services Untested and unquantified market Financial strength 7.3 Opportunities     Expanding commercial interest in the Internet as a communication medium. Potential for growth in the UK and Europe - the UK lags behind the US in this area but is ahead of the rest of Europe. Opportunity to become a major player in the Web publishing business Potential to exploit a „killer application‟ in the hosting and linking of product catalogues on the Internet to allow low-cost EDI on a global scale. 7.4 Threats      The perception of the Internet as an insecure communications medium (products already exist to make the Internet an industrial strength medium but potential customers have to be convinced of this) Low barriers to entry in the Web publishing business with potential for greater competition from both small startups and major companies The Internet becomes overloaded due to the continual increase in traffic Potential high marketing costs in communicating the benefits of electronic publishing and trading to target customers Funding for the development of Web publishing and future electronic trading 22 Communicata Limited - Business Plan June 1995 Section 8: Financial Projections Attached to this section are:      Sales projections by month for Year 1 and by quarter for Year 2 Details of below-the-line expenses by month for Year 1 and by quarter for Year 2 Operating statements by month for Year 1 and by quarter for Year 2 Cash flow forecasts by month for Year 1 and by quarter for Year 2 A list of the assumptions made. 23