Sample Business Plan NextLevelUp

NextLevelUp.com- An Overview The purpose of this document is to outline a business concept around the creation of an interactive content and e-commerce web site that will provide young, amateur athletes and their parents with the ability to access and share information, purchase sports related products and services, and enable them to achieve higher levels of personal success in their specific sport. Any reproduction or distribution of this plan, in whole or in part, or the divulgence of its contents, without prior written consent of the company is prohibited. Each prospective investor, by accepting delivery of this business plan, agrees to the foregoing and to make no photocopies of this business plan and related documents and, if the prospective investor declines to invest, to return the business plan and all related documents to the company. Estimates and forecasts contained herein have been prepared by the management of the company in good faith basis it believes is reasonable; such estimates and forecasts involve significant elements of subjective judgment analysis and no representation can be made as to their attainability. No representation or warranty, express or made as to the accuracy or completeness of such information, and nothing contained in the business plan is, or relied upon as, a promise or representation as to the past or future. This business plan is not an offer to sell or a solicitation of an offer to buy, nor shall any securities any person in any jurisdiction in which such offer, solicitation, purchase or sale would be unlawful qualification under the securities laws of such jurisdiction. and on a and implied, is shall be be offered or sold to prior to registration or 1. Executive The Business Summary Next Level Up ("NLU" or "NextLevelUp.com") is a dynamic, interactive Internet-based community centered on young elite amateur athletes--teenagers and young adults passionate about their sport and determined to excel. NLU is a creator and consolidator of relevant content for athletes as well as a marketing and sales vehicle for suppliers of athletic products and services. It is NextLevelUp.com's goal and focus to be an indispensable and trusted resource for athletes desiring to take their game to the next level, and to be the premier communications channel for marketers to reach this key audience. Elite young amateur athletes, and their families, spend a disproportionate amount of time and money pursuing peak performance. Their biggest unfulfilled need is accurate information to help them make the right choices: coaches and trainers, colleges and camps, tournaments, agents and advisors, and equipment. Their second need, almost as significant, is the inaccessibility to trusted sources by which to receive this information. Conversely, these product and service providers need a trusted, cost-effective marketing channel to reach these athletes. NLU provides a branded community that brings these interdependent members together. Because the World Wide Web eliminates the traditional geographic constraints on communities, and because of the attractive nature of athletic content in general, NLU believes that it will have a great number of unique opportunities available to it. These may include, by way of example, giving athletes access to personalized advice from top coaches, college recruiters, sports psychologists and nutritionists, manufacturers, and professional athletes who have "already made it." Topics range from choosing a college and getting scholarships and financial aid, to the best tennis racquet for a player whose strength is baseline rallies on clay. Suppliers, on the other hand, have a ready-built channel for personalized marketing that reaches the audience that not only purchases a disproportionately large amount itself but also influences the preferences of the mass market (everyone wants to go to the same camp and use the same equipment as their team's star player). The primary value of the site is creation of a "permission based" environment for the exchange of information and commerce among the community members. Athletes, in exchange for providing data about themselves and giving "permission" to receive communications and offers from groups who target athletes as consumers, will receive the critical information they need to make informed decisions. This allows amateur athletes, and the parents who support them, to save time and money, and increase their success by accessing a central place for information and guidance in the management of the athlete's development. It is management's view that the existing alternatives are highly fragmented, geographically based, and difficult and costly to access (primarily word of mouth from other athletes and their families). Those who target elite amateur athletes and their families as consumers (equipment manufacturers and retailers, camp operators, recruiters, etc.) will reduce their overall marketing costs by using NextLevelUp.com as a highly focused marketing communications outlet. Again, it is management's view that no vehicle is currently available to efficiently focus on this important, profitable segment. For example, most periodicals and web sites are designed for spectators rather than participants or target older "weekend players." The result is that most marketing Next Level Up, Inc. Copyright 2000 1 Confidential Business Plan dollars are "wasted" on the wrong audience. Therefore, vendors and advertisers will be well served by being part of this interactive community, are prepared to pay to do so, and will extend benefits and opportunities to the segment as part of their corporate branding and business development initiatives. The Site The site will be organized by channels--where a channel covers a specific group of athletes in a single sport with related subject matter, vendors, etc. An example of a channel would be women's amateur tennis. Common features and functionality within each channel would include online chats with brand name sports stars, coaching experts, discussion groups, product and service e-commerce, the ability for users to rate and rank products and services, and the ability for athletes to make their personal sports achievement information available to others. Additionally, NLU will engage the athletes, and their parents, by providing mentoring for setting goals, and allowing the athletes to track their progress in achieving those goals. The content within each channel would be personalized for each member athlete based on a "profile" of themselves that they provide. This profile includes an athlete's interests, accomplishments, goals and demographics. Personalization increases the value of the site for both athletes and marketers. For the athlete the most relevant information would be automatically featured and site navigation simplified. A women tennis player in California is not interested in men's tennis camps in Florida. For marketers a database of athlete profiles is the necessary precursor for cost effective targeted marketing. A men's tennis camp in Florida doesn't want to spend its marketing dollars on women players in California. Launch Strategy An important element of NextLevelUp.com's competitive strategy is to initially build a complete and scaleable solution for a limited number of sports. In this first phase four channels will be developed. This allows resources to be directed towards developing a high value added, robust solution for a limited number of channels as opposed to shallow coverage of many sports that would be of little value to either athletes or suppliers of services and products. During this phase NLU will perfect the complexities of the business system, learn to achieve industry leading levels of performance, fine tune value propositions, and develop a viable economic model. At the same time a scalable channel infrastructure and template are created. This important first step gives NLU business processes and a site infrastructure that are designed for scalability from the outset. Once the first four channels are completed, new channels can be added easily. This strategy allows NLU to quickly dominate a select few niches then grow aggressively into adjacent market spaces. Therefore, in the second phase of development NLU will add many additional channels by quickly replicating a proven business model to achieve explosive growth by expanding into other sports channels. NLU believes that unique, sustainable competitive advantages will come from a) the collection of athlete data (profiles); b) its ability to market this information to service and product providers; c) its ability to create a site where athletes can trust the quality, integrity and presentation of pertinent information, and d) the creation of a forum where permission marketing can thrive. Aggressive marketing will increase the barriers to entry for future competitors and establish NextLevelUp.com in a lead position within its niches. The company intends to attract marquee Next Level Up, Inc. Copyright 2000 --2-- Confidential Business Plan athletes to its channels. Their role(s) will be to establish credibility and to create an interactive platform between those athletes who have demonstrated their desire and ability to be successful, and those who aspire to many of the same rewards. Management will actively seek marketing and co-marketing arrangements with high profile sports properties - national sports association, Olympic sponsors and committees, etc. to promote the site and its value to amateur athletes. An athlete's investment in time to create their profile, combined with the value received from those vendors who have been given "permission" to access the data, will create a significant obstacle for other companies who might try to copy the concept. This strong positioning will deliver significant long-term value to the Company's shareholders. The Company intends to direct initial marketing and sales efforts on building strong brand recognition, aggressively growing membership and usage to achieve critical mass, pursuing strategic alliances and partnerships for distribution and content, building sponsorship and advertising revenues, and generating e-commerce revenues. Additionally, the Company will secure endorsements from "brand name" athletes for each channel. NLU already has a verbal agreement, currently being documented, with a former "top ten" tennis professional who will support the content, coaching and related offerings in the tennis channel. Conversations are ongoing with marquee athletes for the hockey channel and golf channel. Management's priorities for initial business operations are building the prototype site and site map, developing a scaleable technical infrastructure that includes data warehousing to track athlete profiles, and sourcing and developing proprietary content. This will require completion of the management, sales and technical staff as well as establishing relationships with content providers and affiliates. During this period management will also complete the detailed business plan and development plan for round one financing. In order to assure rapid growth and value creation, the Company seeks six million dollars in funding to: • * • • Build the NextLevelUp.com site and supporting infrastructure, Finance branding, advertising and public relations efforts, Add and develop its management (specifically a CEO and CFO), sales and technology staff, and Establish a base of working capital. NEXT LEVEL UP, INC. 970 OSAGEROAD, PITTSBURGH, NextLevelUp@mail.com PA 15243 Contact: BARRY ATHOL 412-220-3901 PHILIPGOLDBLUM, ESQ. 412-391-2727113 x Next Level Up, Inc. Copyright 2000 --3-- Confidential Business Plan 2. The Market The biggest barrier between an elite young athlete and achieving a level of excellence in their chosen sport is information. They have talent, they have desire, and they have family support. What they do not have is the knowledge they need to make the fight choices. What are the best tournaments to play in? Who is the best coach for my age, skill and style of play? Which camp should I go to? Which stick, racquet, bat, club, shoe will really improve my game, and which are just hype? If I return this agent's call, will I be jeopardizing my eligibility? The list goes on and on. NextLevelUp was formed to meet this unfulfilled need. NextLevelUp.com is a dynamic interactive Internet-based community centered on providing young elite amateur athletes with the information they need to succeed. As a creator and consolidator of content for these athletes, NLU provides an environment where young athletes and their parents can interact with each other, with professional athletes and coaches, and other experts. By combining the reach of the Internet with the depth of the NLU content. Target Audiences The target audience for NLU is elite amateur athletes aged 6 to 17, and their supporters (principally their parents). Soccer is a popular participant sport that serves as a good example. There are roughly 14 million participants between the ages of 6 and 17 in the United States. Of these participants 7 million play frequently (more than 25 days per year). NLU estimates that these committed soccer amateurs, the ones targeted by NLU, spend over 200 million dollars a year directly on their sport. Other sports have fewer participants than soccer, but the average spending per participant is many times higher. For example, NLU estimates that young tennis, hockey, and golf amateurs spend as much as 15 times more per year on their sport than do soccer players. These participation and spending figures combine to drive the business models developed for NLU. To maximize the robustness of the NLU business plan, conservative numbers are used to estimate the size of the NLU membership in each sport. For the plan to meet its targets, the market share projected in each sport is small. In soccer, for instance, only 160,000 of the estimated 7 million frequent participants need to become part of the NLU community. Further, the site needs to generate no more than $20 per soccer member per year to meet the revenue projections. These revenues can be generated because NLU is a marketing vehicle for suppliers of athletic products and services to reach a key target audience. We believe that NextLevelUp.com appeals to advertisers and merchants because it provides the following attributes to create a powerful environment for advertising and commerce: • A highly targeted and attractive demographic user group, • A high degree of member involvement at the site, including the ability for members to post information about themselves and their sports careers, that is used to build a database of member interests and needs, and • An interactive sponsorship model that integrates advertising and commerce into the content of each section of the site. The list of organizations that would be willing to pay to have their messages delivered to the highly segmented and targeted membership of NLU includes: • equipment manufacturers Next Level Up, Inc. Copyright 2000 --4-- Confidential Business Plan • • • • • • • • magazine, book, and electronic publishers sports camps and clinics other web sites with sports content leagues, clubs, and associations coaches and trainers nutritional products vendors colleges, recruiters, and scouts agents and sport management groups. NLU provides value for these organizations by meeting a need not adequately served by traditional marketing channels. Currently the "community" of elite amateur athletes is highly fragmented, geographically based, and difficult and costly to access. By bringing young athletes together, and by gathering large amounts of information about them, NLU gives marketers from these supplier organizations an opportunity to cost effectively deliver their messages to a highly focused audience. The amateur athletes themselves, and the parents who support them, find value in NLU because they can save time, save money, and increase their success by being able to access a central place for information and guidance in the management of their athletic careers. Furthermore, the vendors and advertisers who pay to reach this highly focused demographic segment extend benefits and opportunities to the segment as part of their corporate branding and business development initiatives. A Unique Offering We believe that the market need for reliable, in depth information required by elite amateur athletes is not being served by existing Internet companies. Nor do current sports sites meet the needs of marketers trying to reach these athletes. With few exceptions, existing sites focus on the sports spectator and fan market, rather than the participating athlete. Most of the sites that do focus on athletes themselves do not provide adequate information, offer little interaction, and usually are built on an e-commerce model. The few sites that do provide guidance to athletes are too narrowly focused to be valuable to marketers. For example, they only cover one sport or they only target college-bound athletes in their junior and senior years of high school. By carefully balancing the needs of both target audiences, the athletes and the marketers, NLU has crafted a business model that creates a community of interest that does not currently exist. Site Content, Products and Services The internet provides an opportunity to expand the amateur athlete "community" and create a site where the members of the community can create and exchange information, and conduct commerce. NextLevelUp.com will provide a complete source of information for parents and children to assist in the child's goal of taking their performance and achievements to the "next level up" by: Next Level Up, Inc. Copyright 2000 --5-- Confidential Business Plan • • • • • • • • • • Aggregating, reviewing, and repackaging content from multiple sources, and then making it available to members. This content will be presented in a manner that is compelling to the target audience. Much of this information already exists in disparate forms (text, video, research, etc.). The value added by NextlevelUp will be in ensuring the integrity of the information, making it available in digital form, and packaging it into short, online "chunks" ready for distribution and syndication. Providing a place where people can get advice, counseling, coaching and mentoring online. Content areas will include skills development, motivation, health, nutrition, legal, and sports psychology. Each of these sections will be moderated by an experienced coach, athlete, or trainer. Providing access to "stars" - professional athletes to whom amateur athletes can relate to as positive role models of professionalism, skill, motivation and dedication to their sport. These stars will be available for periodic online chats, and other interactions. Creating forums where people with shared interests can share and exchange ideas and information. Creating a source of products and services that athletes can purchase online. Products will include sports and fitness equipment, and nutritional supplies. Services will include clinics, coaches, camps, and access to scholarship information. Members of the site will have an opportunity to provide feedback and assessment on the products and services they purchase or use. Their feed back will subsequently be made available to other members, creating a membership rating of quality and efficacy. Working with vendors of products and services to extend discounts and preferred buying status for NextLevelUp members. Creating online question and answer sessions with coaches, trainers, and other athletes. Providing the ability for athletes to create and maintain a personal profile and home page on their sports achievements and goals. Athletes will be able to share their information with colleges, sports associations, coaches, scouts, recruiters, agents. The objective is to create the opportunity for athletes and their parents to be able to market their capabilities. Giving the athlete the ability to post their personal goals and then track their progress in meeting them. This service could be supported with an online mentoring program that helps athletes set appropriate goals. Additionally, "reminders" and "ticklers" generated by the system would help motivate an athlete to keep progressing. Providing web links to other relevant sites. The NLU site will be organized by channels, with each channel representing a specific sport. Within a channel, all the information relevant to an athlete in that sport is housed. This approach has three significant benefits. Athletes benefit because navigation in the site is easier and they are not distracted by information from other sports; tennis players don't see articles about training regimes for hockey goal tenders. Marketers benefit because it is much easier to target their advertising and public relations; hockey players do not receive messages about tennis camps. Finally, the channel approach allows NextLevelUp to focus initial resources on building vertical depth, richness, and critical mass in a limited number of sports, and then scale up by expanding horizontally into additional sports. The first four channels to be developed will be for two individual (tennis and golf), and two team (soccer and hockey) sports. We believe that we can expand the number of channels to sixteen within twelve months of site launch. Next Level Up, Inc. Copyright 2000 --6-- Confidential Business Plan 3. Revenue Model NLU generates revenue from marketers selling to NLU members (Primary) and from the NLU members themselves (Secondary). There are three Primary revenue streams and two Secondary revenue streams. The three Primary revenue streams are Sponsorships, Advertising, and Affiliate Sales. The two Secondary streams are Subscriptions to the Premium sections of the NLU site and the NLU Logo Shop. Management estimates that total revenues( primary plus secondary) for 2000 will be $101,263, rising to $7,256,953 in 2001, and $24,597,518 in 2002. Primary Revenue Streams Primary revenue streams, revenues from marketers communicating with NLU members, account for the majority of the sales generated by NLU. Management estimates that primary revenues for 2000 will be $49,488, rising to $4,340,029 in 2001, and $14,623,081 in 2002. Sponsorships Sponsorships give the sponsoring company or organization a sponsor banner ad in a premier location. NLU offers two types of sponsorships, an overall site sponsorship and sponsorships within each individual sport channel. The overall site sponsor's banner is on the NLU site homepage and is viewed by every NLU member as they log in. Within each sport channel, there are two types of sponsorships, overall channel sponsorship and "event" sponsorship. Overall channel sponsorship provides a sponsor banner on the opening page of each sport channel that is seen by every NLU member upon entering that channel. Channel "event" sponsorships include sponsoring chats with star athletes and other virtual "events." The cost of sponsorship is based on the number of relevant NLU members and is offered on a quarterly basis. As membership grows and as the number of channels increases, sponsorship revenues grow. Overall site sponsorship is $50 CPM (cost per thousand impressions). Overall channel sponsorships are $90 CPM (cost per thousand impressions) and "event" sponsorship pricing will vary by popularity. Advertising NLU provides two types of advertising, banner ads within the website and "hotlink ads" within the NLU e-mail newsletter. Banner ads throughout the NLU site give advertisers the opportunity to target their message by placing their ads adjacent to particular content. For example, a tennis camp could purchase a banner ad next to NLU's listings of tennis camps within the tennis channel. Banner advertising rates are based on the number of impressions (page hits) for the page on which the ad is placed. The cost for banner ads is $30 CPM (cost per thousand impressions) within the NLU site. "Hotlink" newsletter ads in the NLU newsletter give advertisers a short message and a hot link back to their own website within each issue of the newsletter. Newsletter ads are sold by the issue, and the cost is based on the number of subscribers at $50 CPM. The higher cost for newsletter ads is justified because they are "pushed" out to all members and because of the historically high response rates for this type of advertising. Affiliate Sales Affiliate sales is an online marketing technique in which e-commerce merchants pay a commission to other sites that refer customers to them. When NLU refers a member to an ecommerce site, through hot links or banner ads, and the NLU member makes a purchase, the ecommerce site pays a percentage of purchase back to NLU. These payments are based on fixed commission of 15% (12.75% net commission after 15% commission to referring sites). Next Level Up, Inc. Copyright 2000 --7-- Confidential Business Plan Secondary Revenue Streams Secondary revenue streams, revenues from sales to NLU members rather than marketers, account for only a small part of the sales generated by NLU. There are, however, branding and marketing justifications for these secondary streams. Management estimates that secondary revenues for 2000 will be $51,776 rising to $2,916,924 in 2001, and $9,974,438 in 2002. NLU Logo Shop The NLU Logo Shop sells clothing and merchandise with the NLU logo on them. While only modest revenues will be generated from the NLU Logo Shop, the primary benefit is building brand loyalty among members as well as building brand awareness among those who see members wearing NLU logo items. Additionally, the NLU Logo Shop provides a source of rewards and prizes to give away to members during special promotions. For example, as an inducement to join, each new member can be given a free t-shirt with the NLU logo on it. Premium site subscriptions In the second phase of the NLU site development Premium sections will be added within each channel. These premium sections will have high-value content that is not available in the free areas of the channel. An example of premium content would include a service where e-mail questions from subscribers are answered by stars or experts. The cost to subscribe is $19.95 per year. The marketing justification for premium sections is to increase membership. We intend to use referral, or "viral," marketing by offering a free 3-month subscription to any member who gets a colleague to join NLU. This method enlists existing members as a secondary sales force to drive overall site membership. To support the growth of premium level memberships, and to enable service and product providers to attract an audience that meets their target demographic, NLU will enable select product and service providers to "underwrite" the Premium memberships fee on behalf of a member. In practice, and by way of example, a goal equipment manufacturer may indicate to NLU that it is willing to pay the premium subscription fee for all boys, between the ages of 10 and 14, who play goal in a hockey league. Should a boy who fits that criteria apply for a premium site membership, he will receive an email letting him know that the premium fee has been waived, and paid for on his behalf by the goal equipment manufacturer. Similarly, NLU could pro-actively identify boys who meet the description, and extend an invitation to upgrade their subscription, courtesy of the manufacturer. Revenue Forecasts Based on membership and channel growth models, quarterly revenue forecasts by source are: 2000 Revenue ource S Sponsorships Site Banner Ads Newsletter Ads Afinity Sales Subscriptions Logo Shop Total Q4 19,129 19,776 2,160 8,423 44,331 7,445 QI . 74,116 130,193 25,224 74,382 198,068 58,652 560,634l 2001 Q2 . 132,87C 352,835 65,242 177,068 374,13; 140,554 1,242,71_ Q3 Q4 209,0% 308,71E 657,933 1,002,251 120,878 316,136 592,744 253,386 194,12( 498,98_ 897,592 401,79( QI 403,135 1,348,333 279,705 705,551 1,261,648 571,035 4,569,40q 2002 Q2 . 494,519 1,696,794 371,49(] 923,898 1,612,498 750,666 5,849,864 Q3 542,126 1,925,830 450,793 Q4 572,295 2,077,093 505,106 1,102,458 1,223,955 1,849,138 2,027,816 899,933 1,001,698 lOl,263ll 2,150,155l 3,303,45_1 6,77o,278l 7,407,966 Next Level Up, Inc. Copyright 2000 --8-- Confidential Business Plan 4. Competition Initial competitive scans suggest that the primary types of internet companies in this market are typically either of a) a limited number of sports magazines (example: espn.com, major portal sites (Yahoo, Excite)), and b) a limited number of online e-commerce, product and fan based sports sites. Most current online sports sites are focused on the spectator- sports scores, stories, athlete profiles, etc. - or on the sale of sports equipment using an e-commerce model (examples: dsports.com, fogdog.com). A more limited number of sites include some level of instruction or "how to improve" content. We are aware of several sports sites that are well funded and could provide the types of capabilities which NextLevelUp is proposing. These sites include espn.com, broadbandsports.com, and mvp.com. We do not have sufficient knowledge of these company's operating plans apart from what information is publicly available or available through documents made available to the venture capital communities at the time of the sites' deal stages. From the publicly available information, we are unaware of any pending business initiatives that would directly compete with NextLevelUp. NLU management believes that the market space is large enough to support several strong content and application providers. Existing sites on the "radar" of NLU management include: www.myteam.com. This a new startup who has received 50 million dollars in funding to date. They are focussed primarily on the amateur sports market as it relates to team scheduling, communication and information. Over the past several months, they have expanded their offerings to introduce e-commerce capabilities, "how to" skills development and more information for coaches. They are well financed, and have been very aggressive over the last few months as a result of an additional round of funding. The company was started in 1999. www.leveledge.com This too is a startup organization who is focussing their efforts at the senior high school sports participant. Their primary content thrust and focus is on providing the high school athlete with information and resources that can help them make informed decisions about scholarships opportunities. The site is divided into separate sections for each "constituent" involved in an athlete's development - coaches, etc. NLU's understanding is that this company has received in the order of 4 million in funding to date. Each of the sites cited above, particularly www.myteam.con_ are addressing a similar market space to that of NLU. NLU management feels, that while there is some overlap, there are also complementary opportunities for working with each of these two sites. Myteam.com's team emphasis may be a conduit for the identification of "elite" amateur athletes who could leverage NLU's content and site. Leveledge.com may prove to be a strong content alliance for NLU members who are approaching their junior and senior high school years and are interested in scholarship information. www.fogdogsports.coln, www.mvp.com: These two sites are mentioned together due to their similarities of content, approach, etc. Each of these companies is well funded and focuses primarily on the e-commerce sales of sports products across a wide spectrum. They have been included in the analysis because of their perceived ability move and expand quickly into new areas of content and focus. Their ability has been afforded to them as a result of an established management team, staff, funding and infrastructure. While NLU management does not currently Next Level Up, Inc. Copyright 2000 --9.-- Confidential Business Plan know of any planned initiatives of either group to focus on the same market as NLU, each of Fogdog and MVP have relatively high levels of brand awareness in the amateur sports community. NLU would look to one or more of Fogdog.com, dsports.com, or MVP.com as a source of NextLevelUp's product based back end e-commerce capability. (We do know that FogDog Sports was valued at 165 million dollars on September 23, 1999 and went public on December 9, 1999 - raising 66 million dollars in that transaction. We do know that Broadband Sports started with 2 million in seed capital on February 1, 1998, and received two subsequent rounds of financing (17.5 million (May 26, 1999)) and (14.8 million (November 1, 1999)). The November, 1999 transaction valued the company at 211.8 million dollars. MVP.com received an early stage investment of 65 million on December 21, 1999.) NLU management believes that competition in its target space is likely to increase over time. Competition could come from: - magazines - spectator sites - news sites - college entry sites - sporting goods sites athlete's own sites NextLevelUp.com will face competition from both Internet and traditional businesses. NLU management believes that execution of its business plan will provide sustainable competitive advantages that derive from its business strategy, its business model, and its management team. NLU Competitive Advantages NLU management believes it can create unique, sustainable and valuable competitive advantage by fostering an environment with our users that encourages them to provide information to us about their ongoing skills, experience, desires and aspirations. In this model, the athlete, or the athlete's parents, would effectively use our site as the equivalent of a personal sports journal. This information could, with the approval of the athlete (or parent) then be made available to vendors, scholarship providers, agents, coaches, etc. who could target specific offerings at the athlete. This paradigm is commonly referred to as "permission marketing", wherein the athlete is providing permission for others to market their products and services to them. We believe the sustainable advantage will come from the collection of this data and our abilities to market this data. Furthermore, we believe that a combination of the "user" investment in time to create the data, combined with the value received from those vendors who have been given "permission" to access the data, will create a barrier to other companies who may choose to copy the concept. NLU Competitive Advantages: Proprietary Technology NLU management will aggressively seek to patent the business processes that it shall apply to the creation of an online coaching environment. Management believes that it can create a combination of existing data management and software technologies, and couple it with "real time" enabled coaching to create a patentable business process solution. Management believes that its business process will have usability beyond the scope of sports, and - if successfully Next Level Up, Inc. Copyright 2000 --10-- Confidential Business Plan patented - can create additional and sustainable revenues for the company. Management can provide no guarantees that its eventual combination of technologies and their application will receive patent protection. NLU Competitive Advantages: Business Strategy Our strategy is to be the leading online network for "elite" amateur athletes - the top ten percent of amateur athletes who spend disproportionate time and money improving the quality of their game in pursuit of higher achievement. We are purposefully avoiding trying to compete head on with other larger, better funded sites who are pursuing relationships with sports watching enthusiasts, rather than participants. Our business strategy includes: • • • • • • • • Building strong brand recognition quickly, including the style, tone and manner in which we present content to NLU members Aggressively growing membership and usage Obtain "permission" from members to share information about themselves with product and service providers Enhancing and expanding our network or points of access and alliances Pursuing exclusive strategic alliances and partnerships for distribution and offerings (ex. YMCA, U.S. Olympic Committee) Building critical mass quickly in each targeted sports channel. Encouraging a strong forum for NLU members to be able to post feedback, ask questions, about products, services, trends and issues. Providing a one to one relationship between athletes and coaches, in which an NLU premier member can access telephone or email based coaching to assist them in this development. An important element of our competitive strategy is to initially build a complete and scaleable solution for a limited number of sports. We will do this to perfect the complexities of the business system, learn to achieve industry leading levels of performance, fine tune our value proposition and develop a viable economic model. This important first step will enable us to replicate the business model and achieve explosive growth into other sports channels, The business model replicability will also enable us to move into new market segments, and - potentially - other communities of interest. NLU management anticipates that a successful model built around the sports market could easily be licensed or replicated to support young people who aspire to reach the "next level up" in other areas of their lives - music, acting, dance, etc. NLU Competitive Advantages: Business Model advantage: NLU's business model provides an opportunity to create competitive Multiple revenue streams manage risk, reducing the reliance on any one particular revenue stream to drive the business Scalable business model within sports (as well as outside sports like music, acting, business management, etc.), creates an opportunity to leverage the investments made in infrastructure, marketing, business development and staff. Expansion of model to support phone coaching, and - ultimately - video coaching. NLU Competitive Advantages: Management Team Next Level Up, Inc. Copyright 2000 --11-- Confidential Business Plan NLU's existing management team has over 60 years of experience in working within dynamic business environments. Specifically, they have extensive experience in alliance development, building and managing businesses and building and managing relationships. A strong familiarity with technology combined with experience in Internet and more traditional startups provides a well grounded, objective and mature management group. Specifically, the team has: Expertise and track records in building a company culture and "hiring better people, faster" Worked together on projects Experience in business to business development and marketing Knowledge about the industry space Existing contacts with professional athletes in target sports and sports management firms - Next Level Up, Inc. Copyright 2000 --12-- Confidential Business Plan 5. Management Team The three co-founders and existing principals of Next Level Up Inc. have extensive business experience, including strengths in the areas of marketing, the Internet, business development, technology, and commercial law. They are also versed in building business alliances, conducting executive level press and analyst briefing, and hiring and retaining top talent. Core Management Team Initially, Barrie Athol, one of NLU's founders, will head the company as President. Day-to-day operations will be managed by Alice Pescuric. Philip Goldblum and David Patrick, the other NLU founders, will continue as active directors. As soon as initial funding is secured recruitment will begin for additions to the management team and staff. Key positions include: - Chief Executive Officer with a successful dot com track record Chief Financial Officer with experience in Internet and high growth technology businesses VP Technology with experience leading web and database initiatives The company will also contract with strong legal and accounting firms. Board of Advisors The company will have an active, outside board of advisors to assist the management in setting and executing strategy. The existing management team has already initiated discussions with prospective members who have expertise in business development, public relations, sports management, and Internet technology. Additionally, discussions are ongoing with several professional athletes. Management Bios BARRIE H. ATHOL, President Barrie has almost 15 years experience in marketing and strategic planning, principally with international technology-based companies. He has successfully led product development, mergers and acquisitions, customer service and product management groups. Barrie's areas of expertise include: strategic marketing planning, web-based and traditional integrated direct marketing, product management, and the design and implementation of distribution networks. He is currently Vice President, Marketing and Strategy for Development Dimensions International, a $110 million global human resources consulting firm. Barrie has a Masters of Business Administration from the University of Pittsburgh, and Bachelor of Science degree in Chemistry from New College and the University of South Florida. ALICE J. PESCURIC, Vice President Alice has spearheaded the management and launch of over 20 new products including awardwinning initiatives in the areas of leadership and executive development. She also drove the use of advanced electronic delivery technologies including intranet based electronic performance support systems. She has experience in providing strategic direction and business plan development for internet ventures. Alice's career includes experience in Fortune 100 companies, holding positions such as director of executive development and director of manpower and succession planning. Alice has consulted with clients in manufacturing, service, and healthcare sectors including organizations such as GM, Motorola, and Michelin. Her leadership, management, and executive coaching expertise provides the insight, perspective, and experience necessary to provide consulting to senior-level executives of large organizations. In addition, Alice is a member of the American Society for Training and Development. She has recently Next Level Up, Inc. Copyright 2000 --13-- Confidential Business Plan served on the editorial board of Training and Development magazine. She has also been frequently quoted on leadership and development topics, and has had numerous articles published in Training, Training and Development, and Human Resource Executive magazines. DAVID B. PATRICK, Director Dave is an experienced entrepreneur who has been involved in the startup and management of four small businesses - three of those involving technology. He has over 15 years of experience in applying technology solutions to business issues and opportunities. Dave is currently the Vice President and Co-Founder of an Internet startup in the employee screening and assessment field, where he is responsible for sales, marketing, branding and the negotiation of partnership programs. He has held senior management roles in a large, energy company - where he participated in the development of their deregulation business planning, - and for a large human resource consulting business, where he had responsibility for the development and implementation of alliance strategies. Dave has experience in working with industry analysts and the press, and has extensive experience in presenting to senior management teams in Fortune 1000 organizations. Dave is also the co-author of four software application "how to" books. PHILIP A. GOLDBLUM, Director Philip is a shareholder in the law firm of Gefsky and Lehman P.C. Philip has over 10 years experience in representing early stage companies in strategic and business development efforts. He concentrates his practice in business and succession planning matters, commercial transactions, securities law and general corporate law. In addition to his law degree, he has a Masters in Business Administration from the University of Illinois. Philip makes frequent radio appearances and serves as a guest lecturer on business and financial planning topics. Next Level Up, Inc. Copyright 2000 --14-- Confidential Business Plan 6. Key Business Partnerships Strategic alliances are a critical element of NLU's strategy. NLU management will aggressively pursue alliance relationships with companies who can further NLU's: - breadth of content and service offerings - market reach, profile and penetration - ability to support the technical requirement for scalability and explosive growth Content Alliances NLU will seek alliances with organizations who can provide high quality information to NLU members. The nature of the alliance will vary from large, current news providers like CBS, Fox Sports, to more regional and local organizations like sports associations, amateur athletic associations and local media (radio and television). NLU management believes that, with few exceptions, it can obtain or license content from these providers at no cost to NLU other than recognizing the content source at the NLU site. Essentially, the content provider will provide content to NLU in exchange for branding and placement of their company's name and logo at the NLU site. NLU management expects that the exceptions to this business model may be either of the large, "current" sports event providers (i.e. CBS, Fox Sports, ESPN), specific vertical market content providers/publishers (i.e. Golf Magazine), who may require either of a) incremental advertising space (banner ads or buttons), or some annual content fee. NLU management does not anticipate either business model to be financially burdensome. Product and Service Offering Alliances The sale of products and services from the NLU site is one of the forecasted revenue steams. To support this revenue model, NLU will establish co-marketing and affiliate agreements with a range of suppliers. Critical to the business plan will be the development of strong relationships with multiple e-commerce providers of sports equipment. Target suppliers include mvp.com, fogdogsports.com and dsports.com. Criteria for selection of these alliances will include their level of interest in embedding their e-commerce capability into a co-branded, "look and feel" experience that will make purchasing products as seamless as possible for NLU members. Additional product and service alliances will be facilitated and managed on an outsourced basis, likely by BeFree Inc. (www.befree.com). The affiliate program will be extended to quality providers of products and services. Those affiliates shall be able to apply online for inclusion as an affiliate. The affiliates shall be expected to pay a commission of 15% on sales made from their site by any NLU members. This fee shall be payable to NLU on a monthly basis. The affiliate tracking and reporting shall be available to affiliates online. Marketing Alliances To actively build and retain membership, and to generally promote the NLU brand, NLU management will target high profile, high brand awareness companies and associations whose affiliation and "cachet" have the ability to dramatically scale NLU's membership and revenue stream. Examples of this type of alliance include online sites whose demographics align closely with those of NLU (example: www.myteam.com), large media entities with considerable reach into the market segment (examples; VH1, MTV), professional sports associations (example: NFL, PGA), amateur associations (example: U.S. Olympic Committee) and local associations (example: YMCAs, Amateur Hockey Leagues). NLU management anticipates that the types of sponsors will each have varying business objectives, and resultant business models. This diversity is likely to require that NLU enter into Next Level Up, Inc. Copyright 2000 --15-- Confidential Business Plan unique business relationships with these types of alliances. The nature of these deals are likely to range from revenue share models, to channel sponsorship opportunities to specific co-marketing campaigns. NLU management believes that one or multiple of these companies would be a likely eventual acquirer of NLU as it grows and develops. In addition to broad marketing alliances, NLU will create an affiliate network of resellers of NLU memberships and offerings. These affiliates will place a link or banner at their web site, or advertise NLU using more traditional media. Resultant sales at the NLU site from site visitors pushed to the NLU site from the affiliates shall be rewarded with a 15% commission on sales made by NLU to that visitor in their first year of membership. Management of this affiliate network will be outsourced to BeFree Inc. (www.befree.com). NLU management believes that much of its marketing efforts and expenditures will be targeted at a "grass roots" level within targeted communities. To support these initiatives, NLU will aggressively marketing alliances with nationally run organizations who have a strong local or regional presence in numerous markets. It will provide free content to school libraries, local sports associations, etc. in an effort to drive brand, and - where possible - will creatively leverage the reach of long standing and trusted organizations like the YMCA through special marketing promotions and campaigns. Alliances with Athletes - The Experts NLU management believes that the involvement of successful, brand name athletes and coaches within the NextLevelUp community will add a powerful and compelling attraction to potential members. It is believed that attracting proven athletes who have demonstrated their skills, experience and ability to be successful, will provide a strong "leadership by example" model for young athletes. It is the intent of NLU management to identify and attract a well known athlete or coach to be the "content expert" alliance for each one of the sports channels. These athletes will be compensated on an annual license fee, or through some type of stock option pool. The athletes will be expected to dedicate a pre-determined number of hours per year to NLU and its members - either in the form of personal appearances, online chats with members, autograph signing, etc. The nature and scope of each athlete's involvement will be determined based upon their "brand strength", availability for commitment, and the overall market strength of the sport they represent. NLU management has already advanced conversations with athletes in each of tennis and hockey, as at the date of this writing. Technology Alliances NLU will select and retain a tier one internet service provider and hosting service to manage and maintain the NLU site. The vendor will be selected based upon their capacity levels, uptime performance standards and metrics, and the multiplicity ofinternet backbones to which they can connect. At minimum, phase one of software development of the NLU applications will be outsourced to a third party. Upon completion of the initial application, maintenance will be managed internally. Next Level Up, Inc. Copyright 2000 16 Confidential Business Plan 7. Implementation Current Business Plan Status Intellectual Property Next Level Up Inc. has registered the domain names NextLevelUp.com and NextChamp.com. The company is in the process of trademarking the name NextLevelUp.com. The company is incorporated in the Commonwealth of Pennsylvania. Current Operations The company has no fulltime operational staff, no clients and no revenues. The company has entered into a verbal agreement, currently being documented, with a former "top ten" tennis professional who will support the content, coaching and related offerings in the tennis channel. The company is currently having conversations with marquee athletes for the hockey channel. The company has also had early stage discussions with a board member of the U.S. Olympic Committee, and the owners of two professional sports teams. Gettingthe Business Started To initiate and develop the business, Next Level Up Inc. is seeking an initial round of funding in the amount of $ 6,000,000 (six million) U.S. dollars. Application of Funding Funding will be applied as outlined below. Initial Application of Funding - Months one to six • Complete management team. • Develop corporate image and branding • Build prototype site and site map • Build database prototype to support storage of member data. • Attract "brand name" athletes for each sport • Create membership campaign • Get anchor sponsors for site • Complete a revenue model • Develop an affiliates program • Create a PR campaign • Source content and establish relationships with content providers Month 1 to 6 Deliverables: Completed web site with two sports "up and running". Concrete market and test data. Securing of four marquee athletes, one for each sport. Detailed business plan, hiring plan and development plan. Scaleable technical infrastructure. Commitment from four primary sponsors. Attraction of experienced CEO. Next Level Up, Inc. Copyright 2000 --17-- Confidential Business Plan Use of Funds Marketing and Market Testing Salaries and "People" Resources Site Development and Build Operational Expenses Total Forecasted Amount $ 740,000 $ 275,000 $ 568,000 $176,000 $1,759,000 Months Objectives 7 and Ongoing Primary Purpose: Quickly enhance the site and develop a strong brand. Establish a "land grab" through creation of alliances and extensive marketing. Attract media and analyst attention. Complete builds for additional sports. Potential acquisition of small content companies. Deliverables: Robust site with proven e-commerce, advertising and sponsorship revenues. High traffic rates with strong membership base. Strong, experienced management team. Addition of other "marquee" athletes for new sports channels. Proven scaleable business model. Data warehousing capability to track athlete data. Useof Funds Marketing Salaries and "People" Resources Site Development and Build Operational Expenses Total Forecasted Amount $1,800,000 $1,400,000 $ 410,000 $ 631,000 $ 4,241,000 Note: Subsequent rounds may be required to support growth or increase market penetration. EXIT STRATEGY Market Valuation NLU management believes that significant market valuation can be created by being the first to build a web community that supports the needs and interests of highly motivated, amateur athletes, a specific market segment - a place for members to go for compelling content, products and services. The market value will be driven by a) being the first to market, b) collecting information and data about members, and c) creating a brand within a highly specific and focused market segment. Commonly referred to as a "land grab", sites and the companies that own those sites have demonstrated an ability to create market and brand value in a short period of time. The Internet has proven to be able to bring groups of people with common interests together at a site where they can share information, exchange ideas and have access to products and services targeted to them. Sites like oxygen.com (catering to women_ astd.org (catering to training and Next Level Up, Inc. Copyright 2000 --18-- Confidential Business Plan development professionals), ebay.com (catering to collectors), have all created significant market valuations for investors and value propositions for their members. The Internet has the ability to shrink distance and time zones - and create communities based upon interest - rather than geography. These sites typically provide their members with content and services that - before the internet were difficult to source and access. They provide information organized in a manner that is useful to its members - email, news and newsletters, discussion groups, opportunities to exchange ideas, product reviews, vendor reviews, the ability to preview and purchase products online, and the ability to link to other relevant sites. Site members can get the information about products and services more quickly than before; they can effectively level the playing field when it comes to content and access. Increased access creates more efficient use of time, which in turn enhances the ability of members to act quickly on opportunities. The electronic community also puts members in touch with people they might not normally get to meet or be introduced to. The community plays the same role when it comes to increasing the awareness of, and access to, products and services relevant to members. The company forecasts, that upon successful introduction and launch of this business model, the company will be an acquisition target for either of a) a sports management company, who will have interest in the database and brand, or b) a sports vendor, who has been able to measure success (traffic and sales) from the specific target marketing they have conducted with NextlevelUp. We estimate this acquisition is most likely to happen within an eighteen to twenty four month time frame from the date of this document. We forecast the acquisition to be in a multiple of sales in the order of between 15 and 25 times. At a revenue run rate of $ 6,000,000 annually, this would create a valuation potential of between 90 and 150 million dollars. Risks The company currently has neither revenues nor clients and is in a developmental stage. There are no guarantees that the company can achieve its business goals, nor that achieving its business goals will create any type of exit strategy that would return the investment to investors. This document is not intended to be, nor should be construed, as an offering or placement memorandum. Furthermore, this document is based on the analysis of the NextLevelUp founders, and their best projections and forecasts. Next Level Up, Inc. Copyright 2000 --19-- Confidential Business Plan