Sample Business Plan Selling Pros

! ! ! I Innovating the business of e-learning I I I | STRATEGIC BUSINESS PLAN I I II I Selling Pros, Inc. 2212 Dupont Drive, Suite R Irvine, CA 92612 Phone: 949-833-8188 I I Fax: 949-833-8189 Info@sellingpros.com I | November 10, 2000 I I ! I Table of Contents I Executive Summary ......................................................... I I Company Profile ............................................................ Industry Overview .................................................. Market Size Market Analysis .................................................... Industry Challenges ......................................................... Retailer Issues ....................................................... Manufacturer Issues ................................................ Solutions ...................................................................... Selling Solutions .................................................. Today'sPros' Solutions ............................................ Benefits to Retailer ....................................... Benefits to Manufacturer ......... : ...................... Employees ................................... Benefits to Consumers ................................... Technology ................................................................. Training Approach ........................................................ Site Features ...................................................... Reporting ......................................................... Incentive-based Training ....................................... Key Competitor Analysis ................................................ CCS ............................................................... University Retail Knowyourstuff.com ............................................. Key Competitor Summary ..................................... Potential New Competitors .................................... Page 4 8 9 9 9 10 10 10 11 12 11 14 14 14 15 15 15 17 17 18 18 19 19 20 21 I i i I I I I I I i Sustainable Advantages ......................................... Competitive Advantages ................................................. 22 21 I Team ............................................................... Management ............................................................... Challenges ......................................................... 23 23 24 ! ! ! Marketing Strategy ........................................................ I I Sales Strategy ............................................................ Pricing .......................................................... Sales Lead Time - Manufacturers ........................... 25 26 26 27 i Retailer Partnerships ................................................... Alliance and Partnership Opportunities .............................. Affiliates ........................................................ Finance Strategy ......................................................... Financial Projections .......................................... Critical Success Factors ................................................ 28 29 29 30 30 31 i i I I I I I I I I I I I I 3 I I Executive Summary_ A B2B and retailers e-Learningportalfor manufacturers providing scalable, incentive based training solutions through profit sharing partnerships. I The State of Retail Training Ask any retail sales associate for help and the chances are they lack sufficient products.knowledge tois that major recommend, compare,largeupsell currenttheir product The reason effectively resellers experience or turnover of sales associates, high costs of effective sales training, and outdated in-store training methods that do not incorporate incentives limited accesslearning. Additionally, manufacturers and distributors have to motivate to sales associates. In any retail environment, if the sales associate has proper product knowledge, they can positively influence incremental sales and increase profits. Today, with ever-increasing SKU counts and limited shelf space, every manufacturer needs more effective means to compete. In every industry, effective sales training increases sales. Both retailers and manufacturers benefit from effective training methods are not only inefficient because of the lack of sales Current sales training so both are willing to carry the cost of this training. associates' motivation to learn, but they are also administratively cumbersome due to the logistics of coordinating the hundreds and sometimes thousands of sales associates. not a now, efficient, way provide Until there has been cost effective and to customized, retailer specific product training with high emphasis on incentives to motivate sales associates. SellingPros incentive-based eLearning is the answer! i I I I I I I l i SellingPros Experience contract with a major electronics closing time. its secured a dictates approach and shortens retailer to be exclusive training provider within just a few weeks of opening our web site. Why? SellingPros was founded by long-time sales experts with experience in selling packaged products software to major, national U.S. retailers. Because they have dealt with a large number of manufacturers and even larger number of software products, they are intimately aware of the huge influence retailers' buyers have with manufacturers. Therefore, SellingPros has taken a unique approach of securing e-training agreements with major retailers, who have to manufacturers with manufacturers, rather than trying to sell producttraining. major influence who often have become disillusioned with in-store training SellingPros has already secured a contract with Fry's Electronics and Hastings. Staples is currently in final contract negotiations. I I I I I I 4 I i SellingPros and InterConn Group, Inc. (ICG) of Sacramento, CA have designed a fully functional e-training site that has attracted strong interest from sales associates at a number of retailers. The Company has also developed the "Product Wizard" application, which allows manufacturers to easily input their product training information into the customized retailer web site. Having own accuracy manufacturers input their information increases and minimizes SellingPros costs. Each retailer site section is scalable and fully customizable based on specific retailer's needs and characteristics. SellingPros has devised the right solution is 100% paid for by various suppliers provide an e-Learning solution that SellingPros partners with retailers to and manufacturers without any cost to retail chain. Training has always been an expense for retailers. SellingPros' solution creates a new profit center for retailers. This motivates retail management and buyers to strongly encourage manufacturers to on the web-based SellingPros' program. Because SellingPros has capitalized participate in the format to provide "24/7" access to sales associates for product information, manufacturers specifically targeted group. capturing the mind share of this important and are extremely interested in i i n i I i i Until now, SellingPros has been able to attract over 1,000 sales specific products. sales associates have had little incentive to train on associates to our site by offering free product samples and drawings for even larger cash prizes. In doing so, SellingPros requires each associate to pass quizzes on listed products. This motivates each sales associate to "earn more by learning more." The end result: www=win, win, win. • New profits are generated for retailers instead of the traditional • training expenses. Retailers gain a better trained sales force. increased sales. are more inclined to suggest products to customers for Sales personnel Manufacturers have better access and more effective means for training retail manufacturers both gain access to valuable survey Retailers and sales associates. information and product feedback from sales associates. This will directly influence product development, promotions, packaging design and future product training. i I I i • • • I I ! ! ! 5 I I Market Opportunity According to IDC (International Data Corporation - www.idc.com), a major research and consulting firm, estimates for corporate web-based training in the US will be in excess of 1.5 billion dollars in the year 2000 and over 9 billion dollars in the year 2002. The key industries, amongst the specialty chain retailers, that SellingPros will establish long term relationships with are: Computer Hardware & Software Products, Audio & Video Electronics, Sporting Goods, Auto Parts, Pet Supplies, Health Foods, Garment/Apparel, and Communications. Competitive Analysis I I I The current competition for incentive-based e-Learning at retail, is minimal. As of now, only three competitors are known to exist. Their approach is manufacturersdifferent from retailer specific. Their they only targetspace on their substantially and are non Selling Pros because goal is to sell sites. Also, they market directly to all registered and unqualified users who knowledge) not retailers. associates withoutcompetitors are very some cases may or may of be sales Two of the three the support (and in similar and compete more directly with one another. None offer revenue sharing or customized site design to retailers. Management Team SellingPros' which will be team has a solid cross section of sales and retail experience, management a key asset in achieving success. Ivan Katz CEO & Founder. Responsible for overseeing all company's daily operations and future growth planning through marketing, mergers or IPOs. Has over 25 years experience in sales, distribution, publishing and retail management. years Served as President of SoftKat Inc. for 5 and was instrumental in arranging and implementing the sale of SoftKat Inc. to eSynch, a public company. Served as VP of Sales at eSynch. Most recently Mr. Katz joined Market initiated become national sales First To and FTM to a organization representing over 15 publishers. In previous years Mr. Katz was the owner/publisher of Business To Business Magazine, which he sold to Zebra Publishing and previous to that he was the owner of a 10-store chain of womens' discount clothing. Mr. Katz received his BA degree History from California State University at Los Angeles. Steven Graham President & and overseeing site design making presentations, securing agreements Founder. Responsible for features. His most recent experience includes six plus years of executive level selling as VP of Business Development with FTM, Inc., a national manufacturers' repfor three years. he was a National Sales Manager for Ameriquest Technology company. Also, Graduated from University of Southern California, BS Business. i i I I I I I I i I I ! I I Kirit Goradia CFO. He has over 25+ years of experience as Controller for various public and closely held organizations with sales in excess of $55 million. Before joining SellingPros he was the Controller for eSynch Corp. (ticker symbol ESYN). Previously, he was with Towne, Inc., a hi-tech fulfillment house in a as Irvine, CA. He has also worked General Manager for highly specialized software company. Graduated from Franklin University, BS Finance and Accounting. Investment Opportunity Having self-financed the growth of the Company to date, SellingPros is now expeditiously sign up new national chains. investment of $1 this funding, seeking a Series A Preferred Stock equity Upon receipt of Million to SellingPros will immediately: • Hire various industry specific and experienced sales and marketing executives, high tech internet programmers, web-designers and support personnel to achieve revenue goals andto support operations. Extend the Company's server network secure new contracts. 2001 $ 3,005 2002 $ 7,413 2003 $ 18,095 2004 $45,000 I I i I I • I Revenues $ 85,000 I 2005 I I i i ($ooo's) The Company expects profitability by the end of 2001 through the expansion opportunities provided by this Series A investment. Mission Statement SellingPros' mission is to provide incentive-based e-training to sales associates at national specialty retail chain stores. In order to accomplish this mission it is necessary for all of the employees of the Company to share common values in how we do business, deal with each other and focus our efforts. I I I ! I 7 I I Company Profile Location: Selling Pros, Inc. 2212 Dupont Drive Suite R Irvine, CA 92612 Fax: 949-833-8189 Phone: 949-833-8188 I i I Web: http://www.sellingpros.com-Fry's Electronics Training Site http://frys.sellingpros.com - Corporate site Email: info@sellingpros.com Business Summary I I I I SellingPros provides e-learning services to retail sales associates through • partnerships with specialty retailer chains. The company focuses on providing incentive-based e-training to sales associates. Employees train on specific pay products, at home, on their own time. Product supplier manufacturers fees to Selling Pros for the privilege of exposing their product information to the sales associates via SellingPros' custom training site on the Internet and to obtain valuable statistical data on real time basis. i Financial Summary The company will generate revenues from three sources. The bulk of revenues will come from transactions fees paid by product manufacturers (100% of revenuesadditional 81% of revenues by in the secondcompany expects to generate in year 1, revenues beginning year 5). The year from fees collected from 3rdparty e-learning companies with emphasis in different subject matters and advertising revenues. The company has already began transactions with various manufacturers since September 2000. During that month the Company's sales were $52,500. Officers: I I I I I Ivan Katz, 53 Chief Executive Officer Steve Graham, 32 President Kirit Goradia, 55 Chief Financial Officer I I I I I Industry Overview The e-learning industry is exploding with many companies scrambling to positions marketplace. establish their within the Primarily, these companies are focusing on the corporate training sector as the need for advanced management and IT training skyrockets. SellingPros' initial focus will be in training retail sales associates. This target product knowledge. The key reasons for this inadequate training to specific audience has generally received very little attention with regards are (1) This group of employees are at the bottom of the pay scale with non-technical skills, year, (3) retailers turnover rate in employment, on training sales associates (on (2) there is a high have minimized the emphasis generally 70% and higher per specific products) due to extremely high cost manual training methods, (4) sales associates. manufacturers' do not have a cost effective solution for efficiently training i i I I I The basic business model training services including content, course customers to pay fees for of today's e-learning companies call for their development and integrated solutions. Given the reasons listed above, elearning companies have not focused on training sales associates. Market Size the Standard.com in _The September 2000, e-Learning Industry Growth for the year 2000 is $2.2 Billion. Spending on e-Learning increases to over $11.4 Billion by the year 2003. The chart below breaks down the estimated dollars to be spent on e-Learning through 2003. l I I ! 121_-- I 1 [ Billions of $ ,o i 8: . 4"i -- el I ]rae-t.earning Revenuesl o I $1.2 I $2.2 $4.1 _L 1999 2000 2001 2002 2003 $7.1 $11.4 Billions of Dollars Spent | ! Industry_ Challenges I I The task of training sales associates at retail stores has fallen on both retailers and product supplier manufacturers. Most retailers have their own training departments. Retailers' training departments are primarily responsible for training sales associates on policies, store procedures, basic customer service and some non-specific product training such as how a computer works. Product supplier manufacturers who sell their products to consumers through do not have have recognized means for efficiently reaching this group. The retail outlets the cost effective the need for training in-store sales associates but high tumover rate has also prohibited any type of effective, long term program other than brochures and cut sheets. manufacturers. and task of distributing this information is prohibitive for many Even the cost i i I I Retailer Issues Retailers have recently expanded their efforts in training sales associates. each have with link Some retailers implemented an Intranet providing store a to headquarters. SellingPros has had meetings with many large national specialty chains during last few months in 2000. None of them currently offer product training to employees through an Intranet. Some retailers have posted product information on their Intranets but the concept of "pulling" an that we have the with floor to train interested in a web-based training employee off met sales are extremely has not been widely adopted. All retailers approach for their in-store sales associates. Manufacturer Issues I I i I I I Manufacturers have also tried several training techniques for reaching the instore sales associate. Primarily, manufacturers have contracted with 3rdparty training companies to provide in-store training. This approach is very costly to at are and only reaches the employees who happen be working that time and required to attendthe training. Additionally, information is only available during the training session. Manufacturers have also implemented their own training web sites known as feature information on their products. promote low incentives (if any) for "universities." These sites are costly toThere are to employees and basically employees to visit these sites. They are also not endorsed by the retailer as a "go to" site for training. i i I ! I 10 I Solutions I Today's Solution for Training In-store Sales Associates Current solutions for training sales associates are highly fragmented and inefficient. have limited Retailers spending on training and primarily implement classroom training and printed materials. Each solution bares significant costs. Additionally, the content and training time is limited. Manufacturers have participated in some of the training programs implemented format where store managers visit with product supplier manufacturers and by retailers. This type of training is normally done through a "trade show" type view their products. With time constraints and many products to view, training in-depth to merely an "introduction" of the product information as opposed to is limitedproduct training. I i i I I Manufacturers as Microsoft University their Sony training sites (at their own expense) such have also implemented and own University. These sites are generally designed to make their product information available to their own employees, interested consumers, and retail sales associates. These sites are not intended to be retailer specific. The costs to develop and market these sites are born 100% by the manufacturer. The result is that interested sales associates the products carried by their store. Although manufacturers site hosts only have many manufacturers' sites to visit and not one specific havethat done a good job in making the product information available, there is no incentive for the huge number of retail employees to visit these sites. I I I ! II 11 I I Solutions SellingPros has evaluated the current methods of training sales associates at specialty retail stores. We have also participated in many of the current methods. After careful observation, SellingPros has devised a program that provides a "win / win solution for all parties. I I • Retailers pay no fees for SellingPros training. The company believes that retailers will be quick to form partnerships with of any sort. SellingPros is no cost the participate. Retailers do not and fees SellingPros since there provides to training site; programming pay hosting free of charge. Retailers do not have to purchase any equipment. Employees train at home, on their own time, so there is nomany retailers Internet connections or computers in the stores, although need for have indicated this will happen soon. Since employees train "On Their Own Time", retailers do not pay overtime to employees to train. Additionally, employees are NOT pulled off the sales floor to train, essentially paying the employees to train. With SellingPros, retailers not only incur no fees, but they do not pay their employees to train. Retailers receive a percentage I I I I i • of the training fees paid by i manufacturers Not only do retailers receive the SellingPros solution free of charge, now fees from product supplier profit center and expect to pay approximately training actually becomes amanufacturers for them. SellingPros collects 20% of those transaction fees collected from manufacturers to its retailer partner. This SellingPros has met with tremendous amount of interest from retailers that approach has garnered a thus far. I I I The percentage paid to the retailer is negotiatedupon the degree of formal binding agreement with the retailer depending prior to signing a each retailer's partnership involvement with Selling Pros. This exclusive agreement SellingPros is and conditions between each specialty retailer chain and and its terms confidential. • Manufacturers pay fees for training Manufacturers have long sponsored the cost to train employees on their I I I products. Before the Internet, training methods did not allow for a cost effective, highly scalable solution. Coupled with the high turnover rates, manufacturers are seeking a program that reaches a large number of sales i | 12 I I • I associates, with minimal costs. The solution must also possess tools to quickly change content and then re-deploy new information back to sales associates. Retailers receive a ready made Intranet with valuable communication tools In the process of delivering training to sales associates, SellingPros I develops which amounts to an Intranet for the retailer. Again, this comes at no cost to the retailer. Besides being able to access product specific are delivered back can currently reply with comments about products that training, employeesto corporate buyers and manufacturers. This alone will help buyers and manufacturers determine the effectiveness of packaging, price points, marketing campaigns and product features. SellingPros is currently working on a "New Releases" message board program. This will allow employees to see the Station ®and eventually all on books, music titles, DVD's, software, Play most updated release dates new products coming into the stores. The current methods force employees to call 30-40 phone calls per day from to Fry's, buyers receive on average about buyers for updates. According stores about this information. This new SellingPros feature will cut those phone calls, as buyers will direct employees to''NewSellingPros board will have a search information. Additionally, the the Releases" site to access the engine built in with results in a print friendly format. i i I I I I ! II 13 I i i Benefits Benefits to Retailers • • • • • • New profit center no equipment purchases No costs, no fees, with new money Employees train on their own time Ready made, free on training results Real time reports Intranet with valuable communication tools Do not have to manage complex incentive program Potential increased sales and lower employee turnover rate i i i I Benefits to Manufacturers • • • • Reach a higher number employee employees Lower cost to train per of targeted Direct access to content with the ability to modify instantly Measurable results Fast implementation i i i Benefits to Employees • • Access to information on many more products Train on their own train, whenever they want Receive incentives to train ! Benefits to Consumers i • Receive better information on products prior to purchasing ! ! i 14 I I Technology SellingPros employs a web-based training (WBT) application for manufacturers to enable them to reach retail sales associates. SellingPros has developed proprietary technology that include a learning management system (LMS) and real-time reporting features. This technology is tested and currently in use by Frys Electronics' employees. Training Approach I I I - SellingPros' approach the training sales associates is based on the concept and manufacturers supply to content, upload it to SellingPros training sites, that SellingPros delivers the training only to currently employed and qualified sales associates through password protected site. Product Wizard Via the SellingPros proprietary "Product Wizard," manufacturers has training content, such as box shots graphics and text. SellingPros upload their developed a user friendly "template" format for manufacturers to follow, I I I asking the are given alongallowing them to input their content as the answers. Examples questions and the way to ensure proper content placement. SellingPros will employ customer service representatives to assist process. manufacturers with this Content Approval Once content uploaded to the is and proofed, it is submitted the retail buyer for approval via email. The buyer reviews the content and either approves or rejects the information, which may require revisions in the training material. If approved, the content is stored in the SellingPros "Administration" web interface for billing approval. Once billing approves, the product training is posted on the site. I i I I If rejected, the buyerto the notes as to whyfor review. Once rejected. are made, is sent directly back adds manufacturers the content was changes This email the content must be re-submitted to the buyer before it is approved and placed live on the site. Employee Registration I I Employees must register register, the employee simplyPIC - Personal Identification Code. To on SellingPros to receive a inputs his name, employee ID number, and store location and email address. SellingPros also awards cash prizes for employee referrals to increase the number of qualified employee registration. I I | 15 I Personal ID Code Instantly, the employee receives a PIC via email. He then uses this PIC to enter the training site. Once in, the employee selects the products he wishes to train on. I I Training training designed employees learning The is to the level. The content is designed to be interesting, easy to understand but compelling. Currently, employees at Fry's Electronics train on various software products. Training information for each product consists of product name; box shot graphics, customer profile, product features & benefits, upsell, target customer. Also the manufacturers' web address is provided for those sales associates who may be interested in additional information. I I I and successfully pass the quiz on software minutes Generally, it requires employees about 4-8 products. toWith other the training complete products, training content may require more "modules" to emphasize and provide different characteristics and the selling points. The ultimate points, not training is to simply educate key employee on the key selling goal of the make the employee an "expert" on the product. Toolbox A "Toolbox" is available for employees with buttons that access different sets of information. An and times. can can review profile that shows completed quizzes with dates employee He access his training rules, lists of prize winners, company information, buyer messages, manufacturers' supplied news stories and product awards and the "New Releases" board. Downloads may Some software manufacturers elect to offer free demo products. A download area is also available from the toolbox. I I I I I I ! I 16 Reporting I Reports for retailers Retailers can instantly view, through a password protected site, results of training. Results include who has taken certain quizzes, when they were taken, stores which have taken quizzes, and individual employee statistics. SellingPros is constantly working on enhancing these reporting capabilities with more and more features to be included in reporting with sort-able results. All reporting is in real-time. I I i Manufacturers can also access information through their password-protected Reports for manufacturers site. At the request of Fry'sElectronics, manufacturers can only see how many employees. Other retailers may allow different of the total registered employees have taken quizzes, as a percentage types of reporting. SellingPros will be able to "turn on" those features as needed and make available to manufacturers. Incentive-based i I training I SellingPros launched the training. Within fourth 6 months, SellingPros was concept of incentive-basedbeta test site in the the firstquarter of 1999 to test the able to capture over 1,000 participants. Other competitors use incentives to attract sales employees. to their sites. However, there are not enough incentives to motivate associates With Fry's Electronics, everyone receives something for participating. Each user gets $25 for completing quizzes by certain date. Each also receives a certificate of completion. With 3 months of continuos training, employees as qualify larger prizes for such $100, $250 & $500 cash awards. SellingPros has also given away trips to Hawaii, TV, and American Express Gift Certificates. I I I i 1 I 17 I I Key Competition Creative Channel Services (CCS) - Cl_berScholar Format: web-based, non profit sharing Privately held low Incentive-based: yes emphasis Time in business: approximately 5 years Location: Los Angeles, CA CCS was founded in 1994 by a group of software industry marketing and distribution provides computer and software companies with executives. CCS channel services including web design, brochures, marketing merchandising services and training services. The company operates 3 business units. providing provides display setservices. Cyber of products andof merchandisers Each unit in-store different up, stickering Reps - a team inventory maintenance. Cyber Smart- group training sessions in hOtels throughout the core competency is merchandising (Cyber Reps) "one groupfits all" site. Their U.S. Cyber Scholar - on-line training through a and size training (Cyber Smart). Primary revenues are derived from these programs. The company has approximately 60 employees. Approximately 25 of those employees work for the Cyber Rep division. Cyber Smart Manufacturers travel from city to city to meet with retail sales associates at hotels. Associates are paid $100 for attending and also receive free products, tee shirts, food and other items as incentives. The group training generates the bulk of their training revenues. Fees are approximately $2,500 per store to a attend. CCS operates approximately 20 shows year in different cities. CCS averages about 200 sales associates at each show. Cyber Scholar On-line training occurs through one web site for manufacturers and retail sales hotel training and directly Sales Associates' without the support (and in most associates. CCS compiles markets to them contact information through their cases knowledge) of the retailer. Their training is similar to a "community" I i i I I I I I I I I associates review the information and take quizzes. Fees to site and are where manufacturers place basic product information on theparticipatesales approximately $10,000 per quarter for manufacturers. The founders of SellingPros personally know the founders ofCCS. CCS recently founded their Cyber Reps division in January 2000. CCS emphasizes this division and their Cyber Smart shows. I I ! I 18 I Key CompetitionI I continued Channel Force - Retail UniversitF Format: web-based, non profit sharing Privately held Incentive-based: Time in business: Location: yes - low emphasis approximately 7 years Atlanta, GA I i meant to compete directly with CCS - Cyber Scholar. Both companies site is Retail University is a training portal developed by Channel Force. This are very similar in that each offer distribution channel services (merchandising), training - services (research, marketing Retail University. direct mail, customized promotions), and on-line I I Retail University is basically set up the same way asto post their non-retailerIt offers a "community-like" portal for manufacturers CCS's Cyber Scholar. specific product information. Sales Associates are offered prizes such as softwarea applications, GameBoys ®,backpacks, skateboards and (1) grand prize - 3-day trip. It is undetermined how many associates are registered on their site or what their costs are. The company offers many different channel solutions. On-line training is an integral part of their business. However with over 200 field company merchandisers, the is primarily known for their merchandising services. _ ¢¢ ¢¢ _¢ ¢¢ I I I I I Knowyourstuff.com Format: Privately held Incentive-based: Time in business: Location: {KYS) web-based community I none approximately 1 year Morristown, NJ I I KYS operates a similar portal to the two companies listed above. Their "community" approach is designed to bring retail sales associates together with manufacturers and enable them to learn, exchange ideas and provide feedback. The company has some association with The Athlete's Foot ®. It is I undetermined whether it is a profit sharing partnership. The pricing model that KYS employs is unknown at this time. I | 19 ! Competition I I - Summam The three competitors described above offer the closest solution to SellingPros and all employ a "community" model. This type of training solution is easy to each implement, promote and attract associates. CCS and Channel Force have been in business for over 5 years and have successfully promoted their sites. revenues. both companies have training is not units that competency. However, In both cases, on-line other business their core generate their primary Knowyourstuff.com is a start-up that also employs a "community" model. They have been successful in partnering with The Athlete's Foot. Their pricing and program components are undetermined. i I I run. Manufacturers do not have the ability to specifically work sales SellingPros strongly feels the "community" model will not target in the long associates by retailer. There is no privacy on the information provided and associates only see one set of information. SellingPros has approached many retailers in different industries. The I I consensus is that all retailers are looking for an on-line solution that incorporates specific product training on products carried by the retailer, password protected privacy for users and a user friendly customized environment. Some retailers have their own Intranet that SellingPros could replace as the training component. Many others are seeking an "at home" solution. SellingPros is taking an approach of "blitzing" targeted retailers to determine their interest in creating an on-line training partnership. This approach requires extensive knowledge of retail operations and a direct focus. SellingPros has both components where the competition fails. I I I ! ! | 20 i I Competitive Advantages i Besides the direct competition previously outlined, SellingPros must prepare for increased competition from other e-Learning companies and potentially the retailers themselves. In order to combat competition and raise barriers to entry, has and continues add the SellingPros to advantages over competition. i i • 2-year exclusive and binding contracts with retailers SellingPros seeks 2-year contracts with retailers that would preclude the retailer from partnering with other companies that other similar training solutions for its sales associates. i • No cost & revenue sharing model Most e-Learning companies are in the business of charging for the services. SellingPros unique approach fees their solutions of of charge to retailers' Manufacturers pay transactionoffers for the privilegefree reaching the retailers. sales associates. From this fee that SellingPros collects, a percentage is paid to i the retailer. No other e-Learning companies offer this unique model. • Customized sites with valuable features I I Current competitors offer a "one size fits all" site for employees to train on. There is no customization for retailers or their employees. SellingPros custom designs each site for specifically for each specialty retailer SO the sales associates ONLY see the products that are carried by their store. They do not waste time training on products not carried by their store. Besides the training, SellingPros offers the retailer and manufacturers valuable from employees on recent product releases and measurable results. real-time reporting and communication tools. This enables valuable feedback i i i but also, in goal is to intertwine with retailers' daily retail sales associates SellingPros' the process,offer product specific training toprocesses and procedures. Combined, this will raise barriers by producing a high "switching cost" to the retailer. i 1 I 21 I I Sustainable advantages e-Learning Alliances In addition to the advantages listed above, SellingPros will form partnerships with other e-Learning companies. These partnerships with make more solutions available to the retailer and create additional profit centers for SellingPros. To start, SellingPros will partner with content providers and offer "Soft Skill" training to sales associates and eventually all departments within the retailer will be paid Some courses Retailers no cost. Others management a fee but organization. by the retailers. will be at already invest inwill come withtraining, IT training and other. SellingPros will make profit from the resale of these additional soft skill courses. These revenues are projected in the financial section under "Shared I I i I Referral Fees." Web Site SellingPros plans to increase its reporting capabilitiestraining data was not information to the retailers on their employees. This to offer more detailed available to retailer prior to the Internet. Retailers could use this information to further streamline their future training, hiring procedures, and management tactics. Most importantly, SellingPros will own this wealth of information data base for potential future opportunities. SellingPros continues to work with Fry's Electronics and other retailers to understand the most valuable needs. Wherever possible, SellingPros will site much valuable employ those needs into web site features making the more to retailers, beyond just the training. I I I I I I I 22 I I Management Team SellingPros has amassed an excellent team that exudes energy and experience. Ivan and Steve have worked together in the past in selling to retailers by way of their national manufacturer's software rep company. Combined, their experience totals over 30 years in retail, distribution and software. I i protect and propel the company around vast financial experience that will help Equally impressive, Kirit brings a wealth of regulations at all levels. I market leader in the e-learning arena. Together the team uses its energy and visions to position SellingPros as a I I I Ivan Katz, 53 CEO Mr. Katz is responsible for strategically overseeing all of the company's daily mergers operations and future growth through marketing, or IPOs. Having served as President of SoftKat Inc. a national software distributor, for five years, Mr. Katz was instrumental in arranging and implementing the sale of traded Mr. later First SoftKat Inc. to eSynch, a publicly company. Katz joined To Market and expanded FTM as a national sales organization. With the FTM team, Mr. Katz conceived the SellingPros.com business model and concept. In prior years, Mr. Katz was the publisher/owner of the largest business magazine in Southern California, Business To Business Magazine, which he sold to chain Publishing in discount Katz also founded Krazie Katz Clothing, Zebra of 10 womens' 1989. Mr.clothing stores located throughout Orangea County, CA. Mr. Katz has his Bachelor's Degree in History from California State University at Los Angeles. Steven R. Graham, 32 I i I I I President Mr. Graham is responsible for making presentations to retailers and securing agreements. Mr. Graham brings 9+ years of executive level sales experience to recent experience as the Company. His most Vice President of Business Development with FTM, Inc., a national manufacturers rep company, has enabled him to build excellent relationships with top retailers and vendors alike. These relationships will fuel the success of Selling Pros and provide a fast track to sales and profitability. Mr. Graham has been involved with Selling Pros since its inception. His knowledge of the retail industry has allowed Selling Pros to adapt to the needs from the University of Mr. Graham holds of retailers and vendors.Southern California. a Bachelor's Degree in Business I I I ! I 23 I I Kirit Goradia, CFO 56 Mr. Goradia has a Bachelor's Degree with concentration in Finance and Accounting from Franklin University, Columbus, Ohio. Most recently he held years. Prior to position with Controller for Towne, Inc., which for sales the Controller's that he was the eSynch Corporation (OTC: ESYN) had three in excess of $20 million and over 180 employees. Mr. Goradia's main function healthy rate of return. Manage, monitor and supervise resources to produce a is to preserve, protect and utilize company's assets and the accounting activities, budgeting, forecasts and finance. Maintain compliance with various government Mr. Goradia's He has supervised accounting staffs of twenty employees. regulations. has over twenty-five years of experience, mostly as Controller, in public and closely held organizations with sales reaching $55 million. Team Challenges i I I I I I Although the existing team has met many obstacles, the future will only be more challenging. In order to excel in the marketplace, SellingPros' management will have to grow and surround itself with top quality performers. The immediate strategy is to hire additional members of the management team with bring experience relevant to the company's intimate knowledge individuals that strong retail contacts and experience and mission. Namely, of their processes. As the existing team has done in software, future hires will need expertise in: • Computer hardware and consumer electronics specialty retailers and their core products supplier manufacturers Sporting manufacturers retailers and their core products supplier good specialty Auto part specialty retailers and their core products supplier manufacturers These are just a few of the key specialty retail industries that SellingPros will on, immediately concentrate post Series A funding. Initial contacts have already been made with companies such as: Best Buy, Good Guys, Home Depot, Boater's World, Ritz Cameras, Big 5 Sporting Goods, Sports others. Auto Auto and Fred Authority, Kragen Parts, Zone, Meyer amongst i I I • • I I I I 1 24 I I Marketing Strategy methods for SellingPros has evaluated current competition and their marketing. Remember that these companies do NOT partner with retailers and these companies already receive revenues fromsell to manufacturers. for fact are therefore forced to employ a sales force to these manufacturers In merchandising services such as setting up displays and putting stickers on boxes at retailers - their primary competencies. SellingPros will need a qualified sales force. But by partnering with retailers, much of the marketing is supplier manufacturers buyers. Theinsistence to join the influence on the product done by the retailers' and their buyers have a huge retailer endorsed training program with SellingPros make a slam dunk impact. The retailer also has an added incentive to promote SellingProssales force. receive a share of the transaction fee and gain a better-trained since they i i I I I Coupled with hot leads supplied by various buyers(manufacturer) transactions force, the company expects to close many vendor and SellingPros' sales with minimal time and efforts. Trade shows To further promote the company's solutions and seek partnerships, SellingPros will participate in trade shows specifically geared toward e-Learning companies. Shows that attract retailers and companies seeking e-Learning solutions will be attended. Retailer trade shows Many retailers host their own trade shows or symposiums. As partof the contract, SellingPros asks for space at these shows at no charge. Generally, these shows occur twice a year. I I I I I 1 1 25 I I Sales Strategy the manufacturer. SellingPros has a unique approach for reaching its customer, Through partnerships with retailers, the retail buyers act as the front line sales meetings. SellingPros will deploy a sales force with both their regular force. However, they are not expected to close the sale at outside sales reps, which will call on retailers, and inside sales reps that will provide the follow up support and communication. The first key management hire is expected to be a Vice President of Sales who be divided by "classes" of retailers. qualified sales reps with sales force shall will build the sales department with Meaning, individuals. Thecomputer hardware / accessories / software / audio-video electronics/experience will call on those SellingPros sales reps with sporting goods background arena. Likewise, retailers and their products supplier manufacturers in thatand expertise will call on sporting goods retailers and their products supplier manufacturers and so on. Pricing many As mentioned previously, SellingPros has met with large specialty retailers around the country. During these meetings, SellingPros has tested different price points for training. In all cases, retailers agreed that $5,000 for a training was a very reasonable and acceptable amount for manufacturers to pay. The length of the training period will vary as will the number of products factors that SellingPros and retailers use higher than pricing Some (skus). In some cases, the amount may beto determine $5,000. are: of the I i I i I I I i I • • store locations the retailer chain has The number of qualified sales associates employed by the retailer chain The number of products carried by the retailer The number of products carded within the category at the retailer I • Current pricing for Software at Fry's Electronics is as follows: I I • • • • 1 sku = $5,000 for 3 months 2 or 3 skus = $8,750 for 3 months 4 or 5 skus = $11,600 for 3 months more than 5 skus = $11,600 + $2,500 per additional each additional sku for 3 months i ! II 26 I For Books and Computer Accessories: • 1 to 3 sims = $3,000 for 3 months 4 6 sims=S5,250 for3 months over 6 sims = $5,250 + $750 for each additional or I • • I Pricing is always discussed with retailers prior to signing contracts or embarking on a new category of products. The feedback from the buyers is numbers constantly establishing pricing. With of $5,000 is expected to remain most valuable when increasing, the benchmark store locations and employees stable and in most cases increase with time. Manufacturers will be willing to locations as the number of employees increase. As for the manufacturers. pay more increase, so does the size of product order the number of store i I I SellingPros expects to close annual manufacturers to train a wide array of retail industry. This will enable the contracts with top manufacturers in each employees across a wide array of retailers. SellingPros will work with the manufacturers annualized pricing schedulegiven the time analyzed. products. The to establish training needs is still being of year and the target I I I Sales lead time - manufacturers The lead-time for closing manufacturers on training contracts is approximately decrease manufacturers become 3-4 weeks. SellingPros expects this time to as more aware of SellingPros solutions and as retailers further promote the training. i Lead time - retailers I SellingPros' VP of Sales will call on prospective retailers and work toward negotiating binding partnerships. The lead-time to secure these partnerships will vary depending upon the size and SellingPros expects to close retailer more awareness and focusing efforts, organizational culture of retailer. With contracts within 3 months. Generally several meetings are required to answer questions, determine the objectives and performance of the web site. Retailers must also plan for the required marketing publicity to notify their I sales associates, both initially and on on-going basis. The "best" time to reach retailers is Q 1 and Q2, as retailers' busy holiday buying time is over. I I I ! I 27 ! I I Retailer partnerships SellingPros establishes contractual relationship with retailers in order to be the company endorsed exclusive training site and to gain immediate access to their product supplier manufacturers. By partnering with retailer to share a percentage of the fees that manufacturers pay SellingPros, the retailer in turn assists in promoting SellingPros training. Currently, SellingPros has an agreement with Fry's Electronics and Hastings Entertainment. SellingPros has met with Staples and is in the partnership contract negotiating stage. SellingPros expects to have this agreement closed by end of November 2000. I I I I I I I I I I I I I I I II 28 ! I I Alliance and Partnership Opportunities SellingPros intends to aggressively seek partnerships and alliances with other e-Learning companies and companies that can increase and facilitate its strategic positioning. Initially, SellingPros will focus on forming alliances with content providers that offer soft skill learning. SellingPros sees a strong opportunities to realize revenues from these content providers. SellingPros will approach its retail partners with the offering of additional learning courses at reduced and in some cases zero cost to the retailer. SellingPros expects to generate approximately $1.2 million in revenue in the 3rd year and over $11 millionpartners. in year 5 from section for complete fees associated with alliance dollars See financial revenue projections. Additionally, SellingPros will establish partnerships with companies that offer solutions needed to grow its business. SellingPros is currently in negotiations with Kinko's home. With over 1,100 locations throughout thewho do not have computers at to offer a destination point for sales employees country with Internet connections, sales employees will be able to access SellingPros training at no cost. retailer. Retailcost forfor computer use is $12.00 fall hour. SellingPros or the Initially, the price computer access time will per on SellingPros expects to negotiate this price down to $4-5.00 per hour. Kinko's will provide firewall protection, which will ensure that sales employees can use the computer's Internet connection for SellingPros training. other would be the Any computer usage at employees' expense. As volume increases, SellingPros (or the retailer) will not pay computer usage I time. A letter of intent and a non-disclosure agreement are currently being drafted. SellingPros and Kinko's expect the initial agreements to be completed by 12/31/2000. Affiliates With the captive audiences that SellingPros will attract through its retail partnerships, certain other companies will be natural affiliates, i.e., DSL service providers and revenues for issuers. These and similar affiliates should generate incremental credit cards the company. i I i I I I I I I i I I ! ! | 29 I Finance I I The financial strategies are based on SellingPros' goal to be the leader in training retail sales associates. Accordingly, the budgets and planned expenditures indicate an overall conservative spending approach. However, should of these upon a detailed review plans, SellingPros' strategic priorities have sufficient funding within our stated budget guidelines to meet our corporate goals and objectives. SellingPros' approach has been to utilize conservative revenue estimates and also used key industry metrics for planning these sales within We have forecasts and then scale our expenditures to expendituresforecasts.identified categories. This helps the company establish the appropriate levels of spending. The chart below outlines the revenue projections and key expenditures for the first 3 years. In year 4 and 5, the company projects $45,000,000 and $85,000,000 in revenue respectively. i i I I I I Post Series A Funding Revenue Projections $3,005 $871 100 29 $7,413 100 $1,931 26 $18,095 100! $4,280 24 .................... 1"_ $'_g_................................................................ _'_ $'g'_':i _" ............. . g'ii'_i_ .......... I $1,442 $888 48 30 $3,262 $1,260 44 17 $6,751 $1,564 37 9 ................. ............................... Eg_g _6 :$g29"i?gi i_ ............. :i......................... . ......... I $1ooo_i_'?:i; ',' i $_ $o;i!77;5 I II 3o ! ! i I Critical Success Factors The critical success factors for Q4 - 2000 are noted below: • Initiate key management team hires, most importantly,a VP of Sales Complete financing ($1,000,000 - "Early Stage") i i First Quarter (Jan-Mar 2001) • Secure New Office Space • • • • Secure partnerships with retailers Complete Staffing of Critical Positions (Vice President of Marketing & Chief Technology Officer) Complete partnership agreement with Kinko's Add site enhancements I i i i Second Quarter (Apr-Jun 2001) • • • Secure partnershipsalliances with e-Learning companies Complete strategic with retailers Launch Strategic marketing plan I I I I I I I I I 31