M k agency business plan by Meghana Indurti

M+K Agency WILLIAMSBURG

IDEAS TO INNOVATION

“Creativity is an advertising agency’s most valuable asset, because it is the rarest.” - Jef. I Richards

TABLE OF CONTENTS Executive Summary M+K Agency Recruitment Culture Company Vision Executive Team Board of Advisors Target Market Customers New Business Pitch Process M+K Agency Services Social Media Print and Branding Design Public Relations Pricing Opportunities & Threats Competition Growth & Expansion Worst Case Exit Strategy Terms of Agreement Appendix Income Statement Assumptions

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Executive Summary M+K LLC. is an advertising agency built to offer creative solutions for businesses in the Greater Williamsburg area. Currently the opportunities for College of William & Mary students to pursue advertising opportunities alongside coursework is practically nonexistent. M+K is the answer to this problem. Founded by a previous W&M Marketing graduate, M+K will function as an “Ideas University”. Students will gain real-world experience with account management, strategic planning or copywriting and art direction. Workshops, networking functions, guest lectures, and scholarships will be offered to immerse students for a semester in the advertising trade. The culture created at M+K is integral to the company’s objectives. Students will be drawn to the atmosphere of team collaboration, total transparency, and rewards for innovation. Through an exclusive agreement with W&M, M+K will implement advertising campaigns for local businesses. Students will go through the process of new business pitching, creating a campaign, and measuring its reach. The W&M brand, with a marketing program that is ranked #1 nationwide, will elevate M+K’s position in the market. M+K’s main sell for its clients is its expertise in social media marketing and management. The agency workers are all up-to-date on the latest trends offering a solution to businesses that have trouble with changes in the social sphere. The market of agencies is fragmented with small consultants who perform multiple functions or specialize in one niche. M+K will maintain a competitive edge by offering businesses the option of a short-term commitment and a team of workers who are replaced each semester to offer a continuous source of new ideas. M+K is seeking a loan investment of $220,000 at 10% in order to build workshops and training programs for the students, create scholarship rewards, and fund new business pitching through the start-up phase. The full principal will be repaid in the seventh year of operations. M+K is providing new opportunities for education advancement for students, adding further integrity to the W&M Academic Program, and providing local

businesses with a source of new ideas. Just an idea at first that will soon innovate advertising in Williamsburg. Sincerely,

Meghana Indurti Meghana Indurti Chief Executive Officer of M+K Agency

M+K Agency M+K is an advertising agency fueled by the creative students individually chosen from The College of William and Mary. It, at first, exists on a virtual space where freelancers can collaborate together using chat and e-mail programs. M+K offers marketing services for local clients in the Williamsburg area seeking help with branding, social media, public relations, and print advertising. After producing several ideas for a business, instead of wasting the unused ideas, M+K will recycle and sell them with customization to other businesses. M+K also functions as an â&#x20AC;&#x153;Ideas Universityâ&#x20AC;? for students to gain first-hand experience with the business of advertising. A group of freelancers are contracted to work on an account for a semester where they are faced with realworld client problems. M+K will maintain a lean model by only having two fulltime employees, the two founders, and subcontracting the students.

Recruitment The students are hired as freelancers through a competitive application system that looks at relevant experience, GPA, and courses taken. Diversity of staff is important and therefore students with skills in Business, Statistics, Art, English, and other fields of study will be encouraged to apply. Additional elements are based on the department. Account assistants will need to demonstrate a sales pitch, strategy hires should have a good knowledge of excel and research methods, and creatives will submit a portfolio of written works or art. Depending on the account, there will be 1-2 hires in each of the three aforementioned departments per account. Juniors and seniors will have preference but competitive sophomores will also be considered. They will collaborate together and report back time sheets and progress reports on a bimonthly basis or per request by the two founders. They will be billed by an hourly basis negotiated in the contract. For certain projects, a flat fee option will be available. Account executives are responsible for new business searches, pitching, and communicating with the client throughout the contract. Strategy workers will focus on understanding the market research, consolidating audience insights, and creating a marketing plan strategy to execute. Creatives will be responsible for writing copy, creating graphic designs, editing media, and coming up with ideas for the new business pitches.

Culture Since an agency is run by ideas, maintaining a creative atmosphere is important. Despite the lack of a physical office at first, M+K will engage in routine meetings and conference calls that embed the company philosophy into the freelancers. Ideas University will remain the core of the culture and the following programs will be implemented so that the best talent will keep coming back semester after semester. Newsletter: Once a week, the two followers will send an e-newsletter with funny observations about the ad business, recent advertising, and community events. Contributions can be suggested by anyone on the team. Rewards: Scholarships and stipends will regularly be awarded to at least three students to pursue advertising career prospects and contests across the country. Workshops and Lectures: Alumni of this program, W&M professors, and other distinguished personnel will be invited to hold conferences and labs regarding the different fields of advertising and marketing. Key workshops in new technology or business techniques will be important to stay competitive. Total Transparency: Frequent virtual and in-person meetings will occur bimonthly where all the freelancers currently signed on will be in the clear regarding the agency’s outlook and their roles. Updates about individual projects to other teammates, new business prospects, upcoming training plans, and management’s outlook on financials will create an open air. Betterment of Society: An important aspect of joining M+K and Ideas University is the “non-profit” aspect of it. All of the freelancers will choose to work together for a non-profit or cause of their choice, on or off-campus, and help with promotion and planning for it. Freelancers are welcome to create their own initiative or support an existing one. A budget will be provided for each team. Ideally this creates a collaborative air where connections and learning is possible from students working on other accounts.

Vision To function as a continuously changing agency of creative students that produces innovative ideas that solve problems. Executive Team Chief Executive Officer

Meghana Indurti is a BBA Marketing and Entrepreneurship graduate of the College of William & Mary. After receiving her degree, she worked for Leo Burnett as a copywriter and eventually progressed to become the Associate Creative Director. Meghana is passionate about higher education and has spent the past few years guest lecturing the business department at the University of Chicago.

Chief Operations Officer

Kennedy Daniela Madriz graduated with degree in BA Advertising and Finance from the University of North Carolina, Chapel Hill. She has had her artwork displayed in 4 different art galleries in Guatemala City. After spending several years as an Art Director at Bartle Bogle Hegarty, NY, she transferred to Leo Burnett to become Creative Director. Daniela has spent the last couple of years financing and running her own boutique agency in New York, Madriz Productions.

Board of Advisors Rick Spatz Spatz began his 30-year career in advertising with Leo Burnett, moved to D’Aarcy, Madiusm and Benton & Bowles where he worked with several international accounts. He worked on strategy and account services for agency clients such as Proctor & Gamble, Mars Inc, Nestle, Roche, Cadbury, and Heinz. Currently Rick is the director of the Executive Partners program at the College of William & Mary where he works with the entrepreneurship center and the MBA Marketing students.

Richard Ash Ash is a professor of Entrepreneurship and executive director of the Entrepreneurship center at the College of William & Mary. Ash previously founded Dilon Technologies, Inc., a medical device company. He has also contributed to the success of several venture capital firms. He is an acclaimed professor for both undergraduate and MBA students at the College where he has won multiple awards.

Louise Pritchard She is currently the founder and co-owner of Patton Pritchard Consulting, an advertising agency in the Williamsburg area. Previously she was Senior Sales Manager for FORTUNE magazine and was the Director of Marketing for Holiday Inn Worldwide. She has served as the Director of Marketing for a children’s hospital for two years. She is a part of the Executive Partners program at W&M.

Sean Fitzpatrick

Fitzpatrick served a Chief Creative Officer for JWT advertising agency, Vice President of McCann-Erickson World Group, Creative Director of Bing Crosby Productions and Columbia Pictures. He has won more than 300 international creative awards for his advertising campaigns. He is a member of The Wall Street Journal’s Creative Legends Series and has judged the Cannes International Advertising Film Festival. Currently he is an adjunct lecturer and Executive Partner at W&M.

Michael Luchs He is a professor of Marketing Research at W&M. He is spearheading the Design Studio concentration and lecture series at the college. He has acclaimed published research especially in the area of sustainability. He has worked as a consultant for PwC where he worked to improve product development and marketing performance. He served as a senior Vice President of Marketing for Labtec Inc. and as a Product Manager for Black & Decker.

Matt Mattox Mattox is Vice President and Group Planner for the Martin Agency in Richmond, Virginia. He is also an adjunct professor at Virginia Commonwealth University. His expertise is in serving as the conduit between the corporate goals and the agency creative staff.

Target Market Customers The customers lie in the local Williamsburg and Hampton Roads community. This area currently holds a variety of small businesses varying from dining services, education start-ups, entertainment venues, financial services and banks, nonprofits, medical center, and other personal services. Most of these businesses have a relationship with several local agencies that are specialized in a particular skill or topic. Prospective clients need a team of consultants better equipped with social media and brand channel management. Although clients have social media handles, they are in need of more engaging and consistent posts.

New Business Pitch Process M+K holds a portfolio built through promotional work with College of William and Maryâ&#x20AC;&#x2122;s student clubs and events. Additionally, using connections from the executive partners, professors, and alumni of the college, cold calls and e-mails will be necessary to start attracting clients.

M+K will emphasize three points in the pitch process: relationship with W&M, continuous employee turnover, and low-cost business model. Having a board of advisors with professors and executive partners will allow internal promotion of the agency from business, art, research, and other related classes. A new set of students each year means an employee source that is updated with the latest skillset in technology and tools. Agencies typically have a high turnover rate. M+K has a built-in source for new ideas every year. Finally, with the agency existing on a virtual space at first and a contractual system with only two full-time employers, there is a constant supply of talent and only a short-term commitment required.

M+K Agency Services Marketing campaigns will be tailored for the client focused on reaching a set of brand objectives that the client and freelance team will outline prior to the implementation. The process will begin with conducting in-depth research that will identify the brandâ&#x20AC;&#x2122;s strengths and weaknesses, competition, target audience trends, and external environment so that a clear positioning can be identified. M+K takes what people already love about a brand and then expands the clientele. Once the client narrows down the options of creatives on storyboard, implementation will go according to schedule.

Defined M+K Approach: 1. 2. 3. 4. 5. 6. 7.

Identify the clientâ&#x20AC;&#x2122;s need Identify brand strengths in partnership with a 3rd party research agency Identify M+Kâ&#x20AC;&#x2122;s strategy based off of client goals and brand audit Brief the creative team Creative team synthesizes research to come up with a core idea Implement the strategy through different channels (social, print, etc.) Measure interaction between brand and consumer to focus energy on different aspects of the strategy 8. Shelve rejected ideas for other brands to consider

Social Media New media is old media overnight. Innovations are constant and cause disruptions in strategic planning and outlook. Where there is disruption, there is opportunity.

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The competitive edge of M+K lies with social media management. Students recruited each semester are currently millennials. They have grown up with social media and understand best how to use it. Students will manage social channels for accounts, including Facebook, Twitter, Instagram, YouTube, Tumblr, Vine, Yelp and other necessary tools. Original engagement posts, photos, videos, and graphics will be provided consistently according to the marketing plan. Additionally an analysis of reach and social interactions will be given at the end of each month. Mobile marketing is gaining more popularity and therefore, development of apps and targeted outreach will be explored for client projects.

Print and Branding Design Original photography and design of magazine, and newspaper ads can be requested. For new start-ups and events, branding, logo design, and/or design of menus and catalogs are offered. Website design and development is a popular service for older small businesses looking to reach new audiences.

Public Relations Consumers increasingly demand a dialogue with brands they like. Services include press releases, analysis of audience insights, connection of brands and products with others to create sponsorship opportunities, and community outreach. From the web to local newspapers, the brand will be represented according to an approved PR strategy.

Pricing Two founders make $95 per hour and pay the difference to the contractors; 100 hours per month per account. All of the following prices are per account.

Freelance Account Executive - $20 per hour; 20-25 hours per month • • • •

New Business prospect research New Business pitches Client meetings and monthly reports Community outreach

Freelance Strategic Planner - $30 per hour; 25-30 hours per month • !

Coordinating with 3rd party research agencies 11!

• • • •

Conducting focus groups and market research Industry audits Measurement of ongoing campaigns Brand management

Freelance Copywriter and Art Director - $40 per hour; 35-40 hours per month • Coming up with creative storyboards for marketing campaigns • Putting together a brand position • Designing art and copy for the campaign • Design and editing of photography and video • Writing press releases and necessary blog posts • Social channel management

Opportunities & Threats Forbes.com consistently ranks Virginia the Best State for Business. The Greater Williamsburg area has one of the lowest combined state and local tax rates in the nation. The business cost of Workers’ compensation and Unemployment insurance is the lowest in the nation. Williamsburg is characterized by small businesses with 35% having fewer than 50 employees. Since the spring of 2013, there have been 40 new established and private start-up firms. Sourcing talent directly from W&M will help establish M+K quickly as The College is the #1 employer in the Williamsburg area. W&M stands in the center of the Williamsburg economy with consulting experience that students have done for Williamsburg businesses for other classes. There is already a positive relationship between W&M and the local market. The majority of small businesses are adding social media into their Integrated Marketing Communications mix. Offering a cost-effective approach and reputable student body will capitalize on this trend.

Competition The competitive landscape is fragmented with many agencies and consulting companies that even specialize in one skill or area. Very few of them offer more than basic graphic design and printing services. However, the current companies do have a strong relationship and contract with their clients that will make it more difficult for M+K to interfere.

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Growth & Expansion M+K is in negotiations with The College of William & Mary and is currently awaiting a finalized agreement. W&M agrees to encourage strong student applicants to the program if M+K promises to exclusively hire from the College and promote the partnership. The core goals and values of W&M align with those of M+K, especially with the Ideas University segment. M+K will provide W&M students with real-world opportunities and experience. The program will draw nationwide attention. Under the terms of agreement, W&M will agree to disseminate application information and provide professors in relevant departments with the ability to recommend strong candidates. W&M will also provide an opportunity to rent conference rooms for client meetings and pitches and team meetings. Additionally, the school will provide valuable consulting and networking opportunities for M+K. The connections W&M currently has with local businesses will give M+K a strong starting point to set up meetings. In the second year of operations, M+K hopes to purchase a sales office where the two founders can work and provide space for other teams to collaborate. M+K will increase cost of Ideas University by spending more for computers, scholarships and grants, and workshops and training programs for students.

Worst Case If M+K cannot afford to put more investment into Ideas University, the sell to W&M will be weak. Even at worst case scenario, M+K will operate at a profit. At worst case scenario, only two accounts will be won and a total of six students will be hired per semester. While a positive net income still exists, this is very risky for an agency because there is no guarantee that the accounts will sign on for the next term. Hours will either have to be cut or be wasted at low utility.

Exit Strategy M+K has requested a $220,000 loan from investors, with the agreement that annual interest payments in the amount of 10% will be made beginning in the fall of 2014. M+K is prepared to repay the principal amount of $220,000 in the seventh year of operations.

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TERMS OF AGREEMENT • • •

Required Investment: $220,000 Loan repayment beginning year 1 with an interest of 10% Principal to be repaid in the 7th year of operations

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**Starting)Fall)2014 Income'Statement Fall'2014'1'Summer'2015

Fall'2015'1'Summer'2016

Fall'2016'1'Summer'2017

Fall'2017'1'Summer'2018

Fall'2018'1'Summer'2019

Service)Revenues Total)Revenue Cost)of)Sales Returns Gross'Profit

$456,000 $456,000 $131,040 $45,600 $279,360

$570,000 $570,000 $163,800 $57,000 $349,200

$684,000 $684,000 $196,560 $68,400 $419,040

$798,000 $798,000 $229,320 $79,800 $488,880

$912,000 $912,000 $262,080 $91,200 $558,720

Operating'Expenses Licensing)Expense SG&A)Expense Software)&)Equipment)Expense Personal)Property)Tax)Expense Liability)Expense Health)&)Social)Expense Legal)Expense Rent)Expense)(Office) Total'Operating'Expenses

$100,570 $22,500 $2,950 $118 $350 $2,160 $300 $0 $128,948

$125,712 $24,000 $7,750 $310.00 $350 $2,160 $375 $0 $160,657

$150,854 $25,500 $4,150 $166.00 $350 $2,160 $450 $18,000 $201,630

$175,997 $27,000 $4,150 $166.00 $350 $2,160 $525 $18,000 $228,348

$201,139 $28,500 $5,350 $214.00 $350 $2,160 $600 $18,000 $256,313

Pretax)Income Tax)Expense

$150,412 $9,024.74

$188,543 $11,312.58

$217,410 $13,044.58

$260,532 $15,631.93

$302,407 $18,144.41

$141,388

$177,230

$204,365

$244,900

$284,262

Revenue

Net'Income

**Starting)Fall)2014 Income'Statement Best Fall'2014'1'Summer'2015

Fall'2015'1'Summer'2016

Fall'2016'1'Summer'2017

Fall'2017'1'Summer'2018

Fall'2018'1'Summer'2019

Service)Revenues Total)Revenue Cost)of)Sales Returns Gross'Profit

$820,800 $820,800 $183,600 $82,080 $555,120

$957,600 $957,600 $214,200 $95,760 $647,640

$1,094,400 $1,094,400 $244,800 $109,440 $740,160

$1,231,200 $1,231,200 $275,400 $123,120 $832,680

$1,368,000 $1,368,000 $306,000 $136,800 $925,200

$199,843 $22,500 $2,950 $118 $350 $2,160 $450 $0 $228,371

$233,150 $24,000 $7,750 $310 $350 $2,160 $525 $0 $268,245

$266,458 $25,500 $4,150 $166 $350 $2,160 $600 $18,000 $317,384

$299,765 $27,000 $4,150 $166 $350 $2,160 $675 $18,000 $352,266

$333,072 $28,500 $5,350 $214 $350 $2,160 $750 $18,000 $388,396

$326,749 $19,604.93

$379,395 $22,763.68

$422,776 $25,366.58

$480,414 $28,824.85

$536,804 $32,208.24

$307,144

$356,631

$397,410

$451,589

$504,596

Revenue

Pretax)Income Tax)Expense Net'Income

**Starting)Fall)2014

Income'Statement Worst Fall'2014'1'Summer'2015

Fall'2015'1'Summer'2016

Fall'2016'1'Summer'2017

Fall'2017'1'Summer'2018

Fall'2018'1'Summer'2019

Service)Revenues Total)Revenue Cost)of)Sales Returns Gross'Profit

$228,000 $228,000 $72,000 $22,800 $133,200

$342,000 $342,000 $108,000 $34,200 $199,800

$456,000 $456,000 $144,000 $45,600 $266,400

$570,000 $570,000 $180,000 $57,000 $333,000

$684,000 $684,000 $216,000 $68,400 $399,600

$47,952 $22,500 $2,950 $118 $350 $2,160 $150 $0 $76,180

$71,928 $24,000 $7,750 $310 $350 $2,160 $225 $0 $106,723

$95,904 $25,500 $4,150 $166 $350 $2,160 $300 $18,000 $146,530

$119,880 $27,000 $4,150 $166 $350 $2,160 $375 $18,000 $172,081

$143,856 $28,500 $5,350 $214 $350 $2,160 $450 $18,000 $198,880

$57,020 $3,421.20

$93,077 $5,584.62

$119,870 $7,192.20

$160,919 $9,655.14

$200,720 $12,043.20

$53,599

$87,492

$112,678

$151,264

$188,677

Revenue

Pretax)Income Tax)Expense Net'Income

User%Capital Investor%Capital Total

Start6up%Costs Ideas%University%Workshops,%Alumni% Outreach,%Scholarship%Awards Total

Source'of'Funds $80,000 $220,000 $300,000 Use'of'Funds $110,000 $190,000 $300,000

APPENDIX 5: Assumptions Financials: • The business opens September of 2014 • Business works on a tri-semester basis. September-December makes up the Fall Semester. January-April makes up the Spring Semester. MayAugust makes up the Summer Semester. • The user raised $80,000 from family and friends help. • M+K assumed that an hourly rate of $95 would be paid based on a competitor pricing. • M+K assumes that a total of 100 hours will be negotiated in a contract per month, giving about 1200 hours a year of service per account. • The number of accounts is assumed to be increasing by a constant growth rate (1 new account per year). Given the loss of an account, a new account must be found to replace it to maintain this strategy. • Account management, Strategy planning, and Creative team pay ratios are derived and rounded evenly from U.S. National Average Salary for those positions. • All financials are based on hourly rate calculations and no flat fee contracts were included. • The Business Personal Property tax rate is 3.4% in Williamsburg • A Business License must be renewed each year at 35% of the gross income • Sales and Use Tax is necessary for advertising services in the state of Virginia. The Virginia and the additional Hampton Roads tax make it an estimate of 6%. • A fee is undifferentiated based on service offered. For example, social media channel management or logo design will both be offered at the same hourly rate. • SG&A expenses include workshop funding, networking alumni outreach, and funds for scholarships for students. • Adobe Software costs $70 per month and other computer equipment is included in Software & Equipment Expense • Liability expense was derived from comparable quotes in Williamsburg • Average basic health insurance and benefits is $90 per month • Average cost for contract and lawyer consultation is $75 per hour • Rent expense is added in the third year of operations based on $1500 for 1500 square feet office space and utilities. !

Taxes Personal+Property Business+License Sales+and+Use Service'Revenue'Calculation #+of+Accounts Hours+per+month+working Total+Hours+in+a+year Estimated+Revenue+per+Account Total'Service'Revenue

Return+Rate+ 10%

3.50% 36% 6% Most'Likely 4 100 1200 $114,000 $456,000

Cost'of'Sales Most'Likely Account'Executive'Cost'per'account $5,280 Hours+per+month+working 22 Total+Hours+in+a+year 264 Strategy'Planner'Cost'per'account $9,720 Hours+per+month+working 27 Total+Hours+in+a+year 324 Creative'Team'Cost'per'account $17,760 Hours+per+month+working 37 Total+Hours+in+a+year 444 Account,'Strategy,'Creative'per'account $32,760 Account+Executives+Total+Cost $21,120 Strategy+Planners+Total+Cost $38,880 Creative+Team+Total+Cost $71,040 Total'Cost'of'Sales $131,040

Best 6 120 1440 $136,800 $820,800

Worst 2 100 1200 $114,000 $228,000

Best $4,800 20 240 $9,000 25 300 $16,800 35 420 $30,600 $28,800 $54,000 $100,800 $183,600

Worst $6,000 25 300 $10,800 30 360 $19,200 40 480 $36,000 $12,000 $21,600 $38,400 $72,000

#+of+Accounts Fall+2014HSummer+2015 Fall+2015HSummer+2016 Fall+2016HSummer+2017 Fall+2017HSummer+2018 Fall+2018HSummer+2019

Hourly'Rate $95

Hourly'Rate Account Strategy Creative

$20 $30 $40

#+of+Accounts Fall+2014HSummer+2015 Fall+2015HSummer+2016 Fall+2016HSummer+2017 Fall+2017HSummer+2018 Fall+2018HSummer+2019

Most+Likely Best Worst 4 6 2 5 7 3 6 8 4 7 9 5 8 10 6 Growth'Rate Most+Likely Best Worst H H H 0.25 0.16666667 0.5 0.2 0.14285714 0.33333333 0.166666667 0.125 0.25 0.142857143 0.11111111 0.2

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