pic
twitte today groups
opportunity weblogs
live
love
friends
microbl
sharin success
publicity
collabora
joy
everyone
blogging
prof
contacts
mashups
networking
business
engaging
search
marketing
strategy
contribut
listenin
people
partners
integration
ideas
po
web
tha vot
flickr
tactical
virtual
success mobile
fun everything
happy
chat
forums
conversation
quality
following
audio
communication
professional
personal
different
connecting
human
online
we are mobymeetsmonkey and we are social anywhere media photos agents
business plan
vibrant
interaction
vi
moby meets monkey
Co-authors Student Numbers Department of Study University Year of Graduation Type of Graduation Paper Publication Date Name of Start-up Company Tutor
Ron Kamps Gion Tummers 2054667 2055633 International Business & Management Studies Zuyd University of Applied Sciences Maastricht, the Netherlands 2009 Business Plan November 16, 2009 Moby meets Monkey Mr. M.J.C. Heckman LLM
6
Words of Thank This graduation paper, part of our study of International Business and Management, could not have been completed without the help of many professors, friends and family. Hard work by itself does not guarantee success; it is the collaboration among individuals that provide guidance, and our own dedication and enthusiasm that ultimately shaped this business plan. Therefore, we would like to reserve a page and thank all those individuals who helped us successfully complete this project. First and foremost, we would like to thank our tutor and first examiner Mr. Heckman for the time and efforts he dedicated to us. Without his feedback, advice and assistance it would have been difficult to deliver a quality report. Furthermore, we would like to thank all professors associated with the IBMS department for providing us with the business knowledge needed to write this report. In particular Mr. Wilbers who, just like our tutor enlightened and reassured us some of our initial thoughts on the business plan were actually the way to go. Last but not least, we would also like to show our deepest appreciation to numerous friends, fellow students and our families who kept giving us positive reinforcement and ideas when they were needed the most. You know who you are and it meant more than you can imagine. Sincerely,
Ron Kamps Gion Tummers
About This Report This business plan was written by Ron Kamps and Gion Tummers as a graduation paper for the study of International Business and Management at Zuyd University of Applied Sciences, Maastricht, the Netherlands. For the final assignment fourth-year students were given two possibilities: Either we could do a research project for an existing company or we could write our own business plan. As it appeared we had a common interest in marketing and an appealing research project was hard to come by, we decided on writing a business plan together, as co-authors. Our first thought was to see how feasible the idea of a full-scale online marketing agency would be by writing a report on it. However, as time passed and knowledge and ideas piled up this initial plan slowly changed and took a different shape. Eventually, we settled with a more specialized marketing company: a social media agency. A business plan on a social media (marketing) agency allowed us to better comprehend something we have been part of and fascinated by for so long; something that is rapidly changing today’s business world. We believe that, as a dedicated social media agency, we will have a very good chance of survival given the predicted future and current demand for social media marketing services. This, combined with passion, dedication and enthusiasm will make our business, and those of our potential clients, a success.
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8
Executive Summary Companies are not trusted, brands are not trusted, and nor are their expensive advertising campaigns anymore. Nowadays, people have the tools to trust each other again and so, those brands: They live on in the voices of their customers; in the conversations within social media. Social media are like word of mouth on steroids, connecting hundreds of millions of people to each other via instant communication. Businesses have to understand this chatter is unstoppable, and even worse: uncontrollable. However, it is possible for companies to influence it. If they carefully join the conversation around their brand(s) they can tap the power of social media to increase sales and cut marketing costs by earning credibility and gaining advocates. Moby meets Monkey navigates businesses through this new and unknown landscape by helping them listen, understand and engage in conversations in social media. We can plan, apply, manage and develop their social media activities and strategies, and upon request we will blend in some search engine marketing for an even bigger online visibility boost. Our services are not just delivered. They are the outcome of cooperation and teamwork, both inside our company and with our clients. This focus on collaboration and truthful communication is captured by our mission; our mission “to help brands leverage social media to its infinite potential by being social.� Hence, when we do our job, we do it with integrity, respect and honesty: Toward our clients, and toward our client’s customers. That responsibility, combined with the agility and efficiency that comes with being a web-based company constitutes our unique
9 competitive advantage. We will enter a multi-billion euro market that is growing at an average rate of 34% per year, and is expected to continue doing so for the coming years. In this market we will concentrate ourselves on a select, yet large, group of small and medium enterprises (SMEs) operating in the service and retail industry within our six target countries: the Netherlands, Belgium (Flanders), Germany, the United Kingdom, Ireland and the United States. Of course, in order to reach these potential customers and attract clients our marketing plan will mainly focus on those things we also sell, namely social media and search engine marketing. Given our predicted marketing efforts, industry forecasts, competition and other factors sales are projected at ¤11.025 for the first year, and are believed to more than triple by year 5. Moby meets Monkey is not the first, and certainly not the last agency to enter the social media marketing industry. Thankfully so, because despite the fact that we have numerous competitors trying to get a piece of the same pie, the market will grow at such high rates there will be plenty for everyone to fill their belly. The firm will be incorporated as a limited liability company, owned and operated part-time by Ron Kamps and Gion Tummers. Both will work and collaborate from separate virtual offices in Europe and the United States to provide unified services to Moby meets Monkey’s clientele. We estimate annual profits of about ¤14.000 by year 5 with a net profit margin nearing 40%. Also, for the first year(s) of operation we do not expect any cash flow problems to arise. Hence, no complementary third-party funding will be required in addition to our own initial investment. The purpose of this plan is to inform the reader of our ideas and ambitions as graduates and founders of Moby meets Monkey. As early entrepreneurs we would be delighted to receive your feedback, positive and negative alike.
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Contents 6 7 8 16
Words of Thank About This Report Executive Summary Entrepreneurs1 THE REASON FOR STARTING A BUSINESS; 16 ABOUT RON; 17
19
ABOUT GION; 17
The Nature of Our Business2 MISSION, VISION AND VALUES; 21 GOAL AND OBJECTIVES; 24 LEGAL STRUCTURE; 24
11 LOCATION AND FACILITIES; 26 REQUIREMENTS; 27 BRAND; 28 TRADEMARK PROTECTION; 28
33
START-UP EXPENSES; 30
Service Description3 SOCIAL MEDIA MARKETING; 34 MONITORING; 34 INFLUENCER IDENTIFICATION; 35 PLANNING & APPLICATION; 36 SOCIAL NETWORK MANAGEMENT; 38 INFLUENCER OUTREACH; 39 COMMUNITY MANAGEMENT; 39 EXTENSION & DEVELOPMENT; 40
45
SEARCH ENGINE MARKETING AND OPTIMIZATION; 41
Market Analysis4 TARGET MARKET; 45 THE NETHERLANDS & BELGIUM; 46
12 GERMANY; 47 THE UNITED KINGDOM & IRELAND; 48 THE UNITED STATES OF AMERICA; 48 MARKET SEGMENTATION; 49 INDUSTRY ANALYSIS; 51 BARGAINING POWER OF SUPPLIERS; 51 BARGAINING POWER OF BUYERS; 52 THREAT OF NEW ENTRANTS; 52 THREAT OF SUBSTITUTE PRODUCTS; 53
55
RIVALRY AMONG COMPETITORS; 53
SWOT Analysis5 STRENGTHS; 55 WEAKNESSES; 56 OPPORTUNITIES; 57
61
THREATS; 58
Marketing Plan6 UNIQUE SELLING PROPOSITION; 61 MARKETING MIX; 63
13 PRODUCT (SERVICE); 63 PRICE; 63 PROMOTION; 64 ADVERTISING; 65 PERSONAL SELLING; 65 DIRECT MARKETING; 65 ONLINE MARKETING; 66 EXHIBITIONS; 66
69 70
PLACE; 67
Management Team7 Financial Indicators8 START-UP REQUIREMENTS; 70 START-UP FUNDING; 71 ASSETS; 71 LIABILITIES AND CAPITAL; 71 MARKET ANALYSIS; 73 SALES FORECAST; 74 BREAK-EVEN ANALYSIS; 76
14 PRO FORMA PROFIT AND LOSS; 78 PRO FORMA CASH FLOW; 80 PRO FORMA BALANCE SHEET; 82
89 92
RATIO ANALYSIS; 84
Exit Strategy9 WHEN BUSINESS IS GOOD; 89 WHEN BUSINESS IS BAD; 90
Notes and References CHAPTER 2: THE NATURE OF OUR BUSINESS; 92 CHAPTER 3: SERVICE DESCRIPTION; 93 CHAPTER 4: MARKET ANALYSIS; 94 CHAPTER 5: SWOT ANALYSIS; 96 CHAPTER 6: MARKETING AND SALES PLAN; 97 CHAPTER 7: MANAGEMENT TEAM; 97 CHAPTER 8: FINANCIAL INDICATORS; 97 CHAPTER 9: EXIT STRATEGY; 98 APPENDICES; 98 A. PARTNERSHIP, LIMITED COMPANY AND LLC FURTHER EXPLAINED; 98
15 B. SOCIAL MEDIA PARTICIPATION IN CHOSEN TARGET MARKETS; 99
102 Appendices
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1
Entrepreneurs THE REASON FOR STARTING A BUSINESS There should be something behind this business plan, and there is. We are excited to build our own company, and feel that doing so would give us the opportunity to put our knowledge into practice; make our ideas become reality; and give us room to express our creativity. It will allow us to further develop ourselves on both a personal and a professional level. We truly believe that social media is currently not only changing the rules of marketing but even transforming the world to the benefit of both companies and consumers alike, and we want to be part of that. Actually, we are already part of it, but starting a social media agency that helps businesses succeed through better conversation would allow us to add value to it on a whole new level. Even though the following is not the main reason, it also contributes to the fact that the company will likely provide us with a complementary income, and eventually a full-time living if our efforts turn out to be fruitful. The main goal of starting our own business remains the same: To build our career, a network, and a solid track record by establishing our own company and making it successful.
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ABOUT RON
ABOUT GION
While gaining an extensive and good level of business knowledge at the Zuyd University, my interests have always been within the field of marketing. My internship gave me the possibility of expanding my knowledge in marketing, while my thesis has given me the opportunity to put this knowledge into practice. I am a very positive person, always up for a laugh. But I also want to make as much out of (my professional) life as possible. I am goal-oriented and enjoy working in a changing environment where challenges await and problems need to be solved.
Even though my education at Zuyd University has provided me with a solid and wide business knowledge, I have always leaned toward the profession of marketing. Fortunately, I had the opportunity to practice this, including social media marketing, along with other skills through an internship and voluntary work during the past years. Personally, I see myself as a positive thinker who is achievement-oriented, yet also considers how those goals are accomplished. Fulfilment should go beyond the task itself to achieve true and overall success.
PERSONAL
EMPLOYER
PERSONAL
EMPLOYER
Ron Kamps
MyDays
Gion Tummers
United Way of Southeast Missouri
Marijkelaan 8 6133 BA Sittard The Netherlands
ZielstattstraĂ&#x;e 21-23 81379 MĂźnchen Germany
Veersestraat 5 6143 AL Guttecoven The Netherlands
430A Broadway Cape Girardeau, MO 63701 United States
Telephone: +31(0)649771143
Period: September 2009 till March 2010
Telephone: +31(0)621887326
Period: January till August, 2008
E-mail: ronkamps@hotmail.com Social Networks:
Intern Position: Product Expansion, Netherlands
E-mail: giontummers@gmail.com Social Networks:
Intern Position: Marketing and Publications
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SOCIAL MEDIA IS “AN UMBRELLA TERM DEFINING THE VARIOUS ACTIVITIES THAT INTEGRATE TECHNOLOGY, SOCIAL INTERACTION, AND THE CONSTRUCTION OF 1 WORDS, PICTURES, VIDEO AND AUDIO.”
2
The Nature of Our Business Much has happened over the past decade, with the most powerful change being the vast adoption of the Internet. It has revolutionized almost every facet of our personal lives and impacted the way we do business tremendously. However, today, we are on the verge of yet another revolution. This time it is being driven by people and enabled by social media, and once again businesses cannot be sitting on the sidelines. It calls for a change in the way we market products and services. Some core marketing and business practices will still apply whilst other basic principles will become extinct as the companies that continue to force themselves on the unwilling public. Simply put, the days of interruption marketing are counted. Instead, word of mouth is the new king, and so brands and businesses have to listen, understand and participate in conversations in this new world of social media. A world made by many, grasped by few. This is where we come in, or at least hope to. Moby meets Monkey is an ambitious idea on the road to reality. We are a to be established web-based social media agency delivering services to help companies and brands engage in honest and meaningful conversations in
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20 social media, giving them the opportunity to earn credibility by participation, gain advocates and increase sales through word of mouth. That sounds great and all, but as a reader you are likely questioning yourself at this point what it is we actually do, right? Let us explain by first telling you what we are not; how we differ from other agencies. Although the core principles of marketing still apply we are definitely not about traditional (media) marketing, or a traditional marketing agency for that matter. Even though the essence of marketing has always been to communicate ideas in order to change minds and sell products this communication was mainly one-way and one-sided. Old marketing simply takes a command-and-control approach to the creation and spread of these ideas. It sends out messages to the masses in the hopes that these will resonate with the right people and cause them to take action of some sort. Of course demographic targeting and market segmentation is possible with the old media, but the vast majority of people reached is simply not interested in the story being pushed. They feel interrupted2. However, that 30-second commercial is being replaced by the 30-second review, Tweet, post, status update, and so on. Consumers are the new media, and therefore businesses have to become comfortable with consumers taking ownership of their brand. Our job at Moby meets Monkey is to create value for our clients by helping them listen, understand and react to what these consumers are saying about them; building quality rather than quantity by attracting interested consumers and connecting with them through multi-directional communication. In other words, our services strengthen their brands through stronger conversations. Conversations taking place online, with countless people involved, going on 24/7, and potentially all over the world. Something that is overwhelming to most businesses, yet necessary to capture if they do not want to fall behind the curve. Meaning, something we can help them with through the services listed on the next page.
21 Services offered by Moby meets Monkey • Social Media Marketing • Monitoring • Planning & Application • Extension & Development • Search Engine Marketing & Optimization A more detailed list and description of our services can be found in the next chapter.
MISSION, VISION AND VALUES At Moby meets Monkey, “we help brands leverage social media to its infinite potential by being social.” That is all; that is our mission statement. It is so short we could actually Tweet3 it, but it captures everything we do and stand for. We believe a mission statement should be meaningful and memorable acting as a credo and a mantra for action; a catalyst, and we crafted it that way. Our mission: • Talks about “helping” instead of providing or delivering services because we rather work together than give advice and leave; • Uses the word “leverage” instead of “monetize” (for example) because it is not always about money. It could as well be about satisfaction, awareness, and so on; • Emphasizes the (almost) infinite nature of anything social;
22 • Breathes social, as the essence of good social media marketing is being social and getting in the conversation. Where our mission starts, our vision statement goes further, “we believe markets are conversations that if understood benefit both consumers and businesses making for a brighter world with greater products and better services.” Let us explain this by first giving credit where it is due. The concept that “markets are conversations”4 is actually a quote from The Cluetrain Manifesto. The authors state that historically the marketplace was a location where people gathered and talked to each other discussing the available products, price, reputation and in doing so connect with others. Nowadays, the internet is providing a means for anyone connected to it to re-enter such a marketplace and once again achieve such a level of communication and conversation between people. Something that was not possible in the age of mass media. As a result of the scale of these conversations and the ease and speed at which information can be distributed, today’s winners are great products and services, which ultimately means that people win (and of course those businesses that sell something worthy). Our mission and vision would not mean anything without a set of values. We believe we should practice what we preach: If we tell our clients to engage in honest and meaningful conversations in order to create better products and services, so should we. Ultimately, values are the driving forces that shape our actions and as a soon-to-be member of WOMMA,5 an organization promoting ethical and effective word of mouth marketing, we are required and committed to compliance with laws and regulations that govern the prevention of unfair, deceptive and misleading marketing practices. Therefore, we will strive to maintain the highest standards of business conduct; comply with all applicable laws and regulations; promote and encourage integrity; lead by example and adhere to ethical standards that go further than the law; and commit ourselves to outstanding consumer protection. As a result, we believe in the following values, listed on the next page.
23 Values of Moby meets Monkey • Trust: Creating an environment of trust between the consumer and us, the marketer; • Integrity: Promoting honesty and transparency in our marketing practices by rejecting any methods that promote consumer deception; • Respect: Recognizing that we are in a consumer- rather than marketer-driven industry; • Honesty: Being clear about who we are and who we represent; never asking anyone what to say or how to say it; • Responsibility: Working with minors in marketing programs requires a sensitive and careful approach as they are particularly vulnerable to manipulation; • Privacy: Respecting the privacy of those targeted through our campaigns. We also believe in the following non-ethics related values: • Excellence: Delivering perfection should not be an option, it should be a rule; • Enjoyment: Loving what you do. To foster this we prioritize people over process; • Accountability: Results should be measurable even though that might prove to be very hard sometimes in a “world of mouth”; • Collaboration: Direct, real-time sharing of project updates and feedback benefits our clients and ourselves; • Challenge: Being a small agency we do not shy away for big challenges;
24 • Learning: Building knowledge and talent is vital for us and we think learning is best done by doing even if that means failing and trying again sometimes; • Flexibility: Operating in a constantly changing world agility and adaptability is a must; • Transparency: It is not only important for us to get a good understanding of our client’s business if we want to work together; it also applies vice versa.
GOAL AND OBJECTIVES Our primary goal at Moby meets Monkey is “to advance our clients’ businesses and our own by raising the bar on standards, both ethical and beyond, in a world of mouth.” Based on this we have set the following objectives for our company: • End year 1 without a loss, and increase net profits to at least 30% by year 4; • At least triple (unit) sales by year 5 (compared to year 1); • Remain an active and respected member of WOMMA throughout the years; • Have a very good to excellent client satisfaction rate at all times.
LEGAL STRUCTURE Since we have only two reasonably possible options for incorporation in the Netherlands given the nature of our business we had to make a deliberate decision between either a partnership6 or a limited company7. Unfortunately,
25 this turned out more difficult than expected with both of them having their respective advantages and disadvantages without a real winner in our opinion. Consequently, we started looking outside the borders of our home country for more likable ways of incorporation. Eventually, we found that the U.S.-specific business entity form of a limited liability company (LLC) would combine the benefits of both the limited company and a partnership without the drawbacks, and settled for that form as it is possible for non-resident aliens of the United States to start such a business. The following is a short list of the key characteristics of an LLC. For a full overview and comparison of the three aforementioned forms of incorporation, see Appendix A. Characteristics of a Limited Liability Company • A more difficult way of incorporation than a partnership that, like a limited company, requires some formal meetings, minutes and reporting; • Does not have a contributed capital minimum like a limited company; • Contrary to a limited company it is not taxed at entity level if partnership tax treatment is used. Profit and loss is passed through directly to the members who pay tax on their distributive share of the entity’s taxable income; • Unlike a partnership members are typically not personally liable for debts of the LLC as it has a legal existence separate and distinct from its owners; • Exempted from all U.S. federal taxes for non-U.S. business activities; • Incorporation costs amount to $450 (¤3028) for the first year including the required agent fees. The annual cost for the years thereafter is a $50 agent fee plus a franchise tax of $250 totaling $300 (¤201).
26 We see the LLC as a hybrid business solution that combines the limited liability of a limited company with the passthrough taxation and minimal required paid in capital of a partnership. Even though it is not the easiest or least costly way of incorporation we are strongly convinced this is right form for us as the benefits far outweigh these weaknesses.
LOCATION AND FACILITIES Since neither the sea, nor the jungle offer any decent infrastructure for a marketing agency we have to look for a spot in the civilized world. However, as our business practices will mainly revolve around exploiting knowledge and talent through the offering of online services there is no need for dedicated brick and mortar. Thanks to advancements in Internet, communication and mobile technologies we can move beyond traditional organizational limits and rely on the concept of the virtual office. Virtual offices provide a workplace that is not confined to one physical location but allows employees to work remotely through the use of technology9. It is also the only viable option as we see this as a part-time project and both intend to pursue careers in different countries while serving our clients via the Internet from separate remote locations around the world. Yet, if a certain project requires us to meet face-to-face with a client we will either visit them at their company or temporarily rent a conference room to meet with each other and discuss business. By implementing the concept and using the right communication and space services we can increase our flexibility, cost effectiveness and efficiency while still boasting professionalism. Also, if our agency proves to be successful beyond point where expansion is required the virtual office concept will allow us to add remote agents quickly without huge investments. Thus, increasing scalability as well.
27
REQUIREMENTS Despite the savings associated with a virtual office it also calls for some extra investments and expenses as technology functions as the enabler in this organizational form. Apart from what is present in a regular office working with virtual offices requires: • Laptop computers: As we will have to be able to get to back to work anywhere needed laptop computers are definitely a must, besides the regular desktop computers; • Mobile internet service: Even though public WiFi is already common good in some places these days we will need additional data plans to fall back upon for when we are on the road; • Collaborative software (Groupware): Since our services require input and teamwork from several separate locations we will have to implement sophisticated web-based collaboration tools in order to efficiently and successfully complete our tasks and achieve our common goals; • Central servers and backup systems: Because project information should be available in real-time to anyone involved anywhere they please (via collaborative software) we have to rely on central servers to store all data; • Number forwarding and other telephony services: We will need (internet-based) services that handle local incoming calls and faxes for us, and divert them to the right person or office; • Post office box or a CMRA mailbox service: In order to keep work and private life separate, and increase professionalism renting either a post office box or using a CMRA (Commercial Mail Receiving Agency) mailbox service is essential;
28 • Business meeting space: If a personal meeting with one of our clients would be necessary we will either visit them at their site or rent an on-demand conference room or office to meet. As we find that the benefits of virtual offices far outweigh any additional costs for our agency we are sure it will be a perfect fit for Moby meets Monkey.
BRAND At first, the idea was to name the company “Moby’s” as it sounds homey, friendly and easygoing. However, in an industry that often prides itself for originality we had to find something more differentiating and meaningful. Eventually, struck by creativity the company was blessed with the name “Moby meets Monkey.” It speaks playfulness, yet thoughtfulness. It describes how opposites attract and underlines the fruitful joining of unlike minds working on something bigger than the sum of parts. Perhaps it brings to mind how companies break free and enter the “crazy” world of connected marketing. It sounds inviting and social, and that is exactly what we are: We are a social media agency; a conversation agency. The company name should establish us as open, attractive and creative. Whether or not accompanied by our logo, it will catch peoples’ imagination making it easier to remember. We feel it will give us another edge over competitors and reflects our business, its culture and its activities perfectly.
TRADEMARK PROTECTION As a start-up we will invest a considerable amount of time and money in promoting and establishing our company within the markets that we serve, trying to make a name for our business. In order to protect this investment we have to register our trademarks through an Intellectual Property Office, like the Benelux Office for Intellectual Prop-
29 erty (BOIP). Thereby we make sure our company’s name and logo remain exclusive to our agency and its services, and distinguishable from those of other entities within the jurisdictions the trademarks are registered. As a result of this territoriality and our plans to operate internationally it is necessary for us to opt for registration in multiple jurisdictions. Although this is very costly it will allow us to safely and sustainably build our brand. As a social media (marketing) agency we will register our trademarks to be identified with a “business management consultancy” business (Class 35) as defined by the International Classification of Goods and Services under the Nice Agreement10. Based on this and the need for international registration of our trademarks the total costs associated with protecting our brand amount to CHF 200711 (¤1 325) as detailed in Table 2.1. The registration is valid for 10 years, and can be renewed again at the end of this period.
DESCRIPTION Benelux Registration Complementary Fee for Territorial Extension Individual Fee Per Country Germany United Kingdom Ireland United States
Total
AMOUNT 903 100 0 295 372 337
CHF 2007
Table 2.1: Total Costs of International Trademark Registration
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START-UP EXPENSES Before we can officially get to business there are a number of initial expenses we will be facing. Some were already mentioned before, like the costs of incorporation and trademark registration, but there is more. Although we do not have to worry about real-estate also our virtual offices require some regular and extra initial investments, being: • Computers and other electronic equipment (long-term assets): • Desktop computers; • Notebook computers; • Computer peripherals, like printers and scanners; • Cellphones; • Software (long-term assets): • Office software suite (e.g. Microsoft Office); • Creative software (e.g. Adobe Creative Suite); • Services and subscriptions (expenses): • WOMMA membership (annual fee); • Website (expenses): • Domain.
31 Based on this list and the other costs already mentioned (incorporation and trademark registration) the total requirements in order to open our doors and get things going are estimated at 造16.362. A break-down and detailed overview of our start-up expenses can be found in Table 2.2 below.
START-UP EXPENSES Incorporation Services and Subscriptions Domain Name Other
AMOUNT 302 685 10 200
Total Start-Up Expenses
造1.197
START-UP ASSETS Cash Required Start-Up Inventory Long-Term Assets
5.000 10.165
Total Assets
15.165
Total Requirements
16.362
Table 2.2: Total Start-Up Requirements
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66% OF THE GLOBAL INTERNET POPULATION 1 VISIT SOCIAL NETWORKS.
3
Service Description Moby meets Monkey uses social media and integrated search marketing to help companies achieve their business goals. Then again, as an agency we do more than simply provide a service and run off: Enabled by technology we want to become a remote part of our client’s organization, pro-actively handling a general area of responsibility or a specific project on their behalf. We will not only fill requests but also try to figure out what our client’s business really needs, and make suggestions accordingly. Together with our clients, we make a plan, and we make it work. Success, however, is not necessarily our final destination as we can stick around to support, develop and expand what we started on; building a true long-term relationship with our clients. Customers can pick any number or all of our services as they wish. Anyhow, the first step will always be a meeting (e.g. video conference) so everyone can get to know each other. It is not only important we can gain a thorough understanding of their business but we feel it is equally important for them to know us as we simply value transparency. If, as a result of the kick-off meeting, our client feels them and us would make a great team we will work out the details of their social media program and get to work.
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34 Hereafter, we will explain the various services we offer as part of our programs and separately. Even though we are a social media agency we also offer Search Engine Optimization and Marketing (SEO, SEM) services as complementary to our Social Media Marketing (SMM) services. We will get into the latter one first as social media marketing is our core activity.
SOCIAL MEDIA MARKETING Our Social Media Marketing services use social networks, blogs, online communities or any other collaborative form of Internet media to advance the client’s business by creating more value for their customers through stronger conversations, which will ultimately capture value for their business in return. Before we enter that conversation, we should first listen to what is being said, in order to make relevant contributions later on. We can monitor and analyze the conversation around our client’s business or brand as a stand-alone service or as a start-off for a more holistic approach.
MONITORING Whether businesses like it or not, people are already talking about their brands online, with or without them. All these people are publishers spreading their feelings, beliefs and attitudes using thousands of social media tools. This almost incomprehensible chatter can affect a company’s reputation, positively or negatively. Moby meets Monkey can monitor and analyze what is being said about a brand, product, service or even the competition. Based on the research we can determine sentiment toward a brand; track trends; identify influencers; recognize risks early; give recommendations and optimize any further SMM efforts. Out of these abilities influencer
35 identification is by far the most important as it is them who essentially affect all other aspects.
INFLUENCER IDENTIFICATION In just about every community only 1 percent2 of the people are givers: The people who actually contribute to social media rather than just absorb it. They are the blog3 writers, the reviewers, the opinion leaders of today and tomorrow: The movers and shakers whose recommendations play a determining role in the way word of mouth spreads in a given market. The thing is, who are they? Influencers tend to voice their criticism or favoritism more than others, whether it be directly with the customer service department or simply online. It is our company’s task to find out who these people are and what channels they use to broadcast their message. Fortunately, given the great measurability and accessibility of things on the Internet we can employ data mining technologies4 to do most of the hard work for us. With this, followed by a human review process, we can: • Identify the most influential bloggers concerning our client’s cause; • Find relevant social network groups and other outlets; • Create a plan to guide outreach efforts. Based on Influencer Identification and further monitoring and analysis of the social media landscape we can give recommendations to our clients, and if it is in their interest these monitoring activities can be followed up by an actual social media plan and application thereof.
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PLANNING & APPLICATION Only after careful monitoring can we move on to the stage of actually planning and launching a social media strategy for and with our client. Contrary to what most businesses do when they enter the social world one should actually start with focusing on what their objectives are rather than picking a set of technologies (e.g. blogs or Twitter) right away. Like with any other business endeavor one of the first steps in creating a social media strategy is to know what you want to accomplish. To make sure our clients are not going about their strategy backward and to help ourselves create more effective plans in less time we adopted a four-step system called the POST method5, for People, Objectives, Strategy, Technology. Let us go through these steps one by one.
People It is important to assess how our client’s customers will engage, based on what they are already doing. In other words, we do not want to make guesses about their customers and build a social media strategy around them only to find out they have different tendencies. Although this step involves a fair amount of research, most of this has already been taken care of during the Monitoring stage described earlier. Further research may be necessary however.
Objectives Secondly, our clients should clearly define what their goals are; what they want to accomplish through social media, as different objectives simply need different approaches.
37 Overall, there appear to be a few primary objectives, relating to common business functions, that companies tend to pursue with social media: • Listening (Research): Use social media for research and to better understand customers and prospects; • Talking (Marketing): Participating in and stimulating two-way conversations customers have with each other, not just outbound communications to them; • Energizing (Sales): Activate the best customers and brand advocates to evangelize others. This works best if a company knows who they should focus on (see Influencer Identification discussed earlier); • Supporting (Support): Set up communities to help customers support each other. • Embracing (Development): Integrate customers into the way the business works, including using their help to develop better products (e.g. seeding trials, crowdsourcing). Each one of these, or any other one could think of, can make a powerful impact on a company. It is important that the strategy (defined in the step hereafter) is designed from the start to focus on a primary objective, making it easier to measure progress and return on investment.
Strategy During this step we figure out, together with our client, what we want to be different after we are done; how we want their relationships with customers to change. Of course, this is greatly influenced by the primary objective we set during the previous step in the process. It gives us the ability to plan for the desired changes up-front and figure out how to measure them once the strategy is in motion.
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Technology Finally, after having decided on the people, objectives and strategy we can move on and pick the appropriate social technologies necessary to achieve our goals and make our strategy a success. These could be blogs, social network groups, communities, and so on.
After everything is said, it is time things get done. With the objectives set, the strategy in shape and the technologies filtered we will start to leverage the latter one to accomplish the other two. Leveraging technologies will most likely revolve around any number or all of the following: Social Network Management, Blogger Outreach and Community Management. This is the point where the actual application starts.
SOCIAL NETWORK MANAGEMENT Social networking is an inexpensive yet time-consuming activity. It requires constant commitment to make it work, stay relevant and keep up with the changes. At Moby meets Monkey we can add value to our client’s business by: • Creating and customizing corporate accounts in various major social networks, like Facebook, YouTube and Twitter, or smaller ones like Netlog and Hyves; • Implementing viral and engagement strategies within these social networks; • Maintaining the accounts with content updates and responses.
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INFLUENCER OUTREACH Even though these people are usually skeptical about marketing, reaching out to influencers or bloggers can lead to amazing results as they have a large audience; an audience that is already interested in the products and services these bloggers recommend: The same products and services our clients may produce or provide. Because of the skepticism it is important to approach these bloggers, or actually their followers with care and always make sure whatever it is that you offer, there is something in it for them, too. Our outreach efforts focus on personal and genuine communication to: • Engage bloggers to increase brand awareness; • Motivate bloggers to become (better) brand advocates.
COMMUNITY MANAGEMENT Communities are usually set up for helping customers support each other, and eventually listen and talk to them. They offer an environment for focused conversations, good or bad, around a company’s products or services. We can create and maintain such private communities for our clients and leverage their power to help them design superior products and services; gain a better understanding of passionate customers; discover potential revenue streams; facilitate inter-customer support and give meaningful company feedback.
If we have defined the four steps in the POST process and implemented the proper technologies, it does not mean the remainder is going to be a quick and easy ride: Things will sometimes go wrong. That is not because we are the
40 new kid on the block as an agency but rather because social media cannot be controlled and is hard to predict even with the best tools available. Fortunately, we can always go back to the POST system, diagnose how our efforts are failing, and fix them accordingly. As soon as things go as planned, it is possible that once we get truly started, we feel we can accomplish more than we actually set out to do. If our primary objective was to create communities for “supporting” and great product ideas surface from the conversations happening we might end up “embracing” for example. To give room to improvements like this we also offer scaling and development solutions.
EXTENSION & DEVELOPMENT As we mentioned before, the nature of social media is nearly infinite and so is its potential. A social media strategy around one primary objective will just not be able to capture all that, hence businesses will very likely want to expand their social marketing activities. We cater to that by offering additional services focused on maintaining, growing and developing a company’s social media presence through continuous research and new objectives. As a result, enabling us to benchmark, track, improve and extend our work over time.
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SEARCH ENGINE MARKETING AND OPTIMIZATION Search Engine Marketing (SEM) and Search Engine Optimization (SEO) are two interrelated activities making sure that when people are trying to find someone’s company, product or service (through search engines) they actually can or at least have a higher rate of success. Whether we are talking about Google, Yahoo, Bing or any other search engine for that matter; it is all about visibility in the end: Companies have to be there when their customers and prospects are searching for them. Unlike almost every other form of marketing, search engine marketing (and SEO) does not rely on interruption techniques due to the fact that what is being shown in search engines is in the searcher’s interest. Thus, search engine marketing and social media marketing have something in common as they are both permission-based, non-interruptive forms of marketing. Although SEO is basically a component of SEM there is a difference between the two: Where SEM is about paid search marketing methods to achieve greater visibility in search engines, SEO tries to make websites rank higher (increasing visibility) using organic search marketing methods. “Organic” simply means that search engines would naturally consider a website to be relevant to a search request rather than based on monetary incentives. The main components of our search engine marketing services include: • Keyword Analysis: Research and selection of the right keywords that generate (convertible) traffic to our client’s website, paid advertisements or social media presence; • Search Engine Optimization (SEO): Ensuring that the (key)words and phrases on our client’s website, blog and other online content are found by search engines and that their outlets are given the highest ranking possible
42 in the natural search results. As this is a major component of SEM it requires a couple of steps: • Keyword Grouping: Based on the Keyword Analysis we will divide them into groups for targeting specific web and landing pages6. • Initial Site Ranking Report: To make sure our further efforts are measurable it is important for us and our client to determine the current ranking of their site(s). • Optimization: Actual implementation of the suggested and approved improvements on our client’s pages. • Search Engine Submission: After the optimization is complete it is important to let the search engines know changes have been made in order to speed up the indexing process. • Paid Search Advertising: Creation of so-called Pay-Per-Click7 campaigns through Google Adwords, Microsoft (Bing) adCenter or Yahoo Search Marketing with a focus on high conversions. This requires preliminary Keyword Analysis, split-testing8 and regular adjustments to be successful.
These search services are a natural complement to social media marketing making for a whole greater than the sum of its parts, as: • Search engines are the gateway to billions of websites including the social network groups, blogs, or communities of our clients; • While exactly those groups, blogs and communities can provide the words, content, links and freshness a search engine algorithm is looking for when valuing and ranking our client’s pages.
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VISITING SOCIAL SITES IS NOW THE 4TH MOST POPULAR ONLINE ACTIVITY, AHEAD OF PERSONAL E-MAIL.1
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Market Analysis Moby meets Monkey is going to compete in an ever-growing segment of the marketing business. We are not the first social media agency, but we are definitely jumping in while it is fresh. Actually, it is not only fresh; social media is getting a hotter topic every day. In less than three years, it became the most popular activity on the web1 and online marketing is expected to continue its double-digit annual growth in the future3 with even more businesses and consumers flocking to social networks, blogs and online communities, both in the United States4 and in Europe5. While this industry is rapidly growing there is plenty of room for a start-up like ourselves to get in and grab a piece of this multi-billion euro pie.
TARGET MARKET We conducted extensive research and had long discussions over this as it is not just a matter of which markets are most attractive as far as their social media adoption progresses, but also a question of what we will be able to cope with, and how much demand for social media marketing there potentially is in different regions. Although we could take on the whole world given that we are a web-based agency this is neither feasible, nor practical.
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46 First of all, as a part-time project it will be hard work albeit the great amount of enthusiasm and passion we will put into it. We only have so much time on our hands, and serving the whole world is obviously not going to work as a result. Secondly, even though we are International Business students, we do not consider ourselves miracles in the multiple-language department. Of course, the international language of business is English but that mostly applies to companies and businessmen operating across borders and within English-speaking countries. As a social media agency we rely heavily on communication with our clients, and perhaps even more on understandable conversation with their customers. Therefore, it is important for us to focus on markets where people primarily speak English, Dutch or German, as those are the languages we consider ourselves competent in. This will avoid miscommunication between our clients and ourselves and allows us to listen and talk to their customers as well. Thirdly, we will have to keep in mind that it will sometimes be necessary for us to meet with our clients to discuss business face-to-face. As we also want to keep costs down we have to take the maximum possible travel distance into account when selecting regions. Given the fact that one of us will be working from Europe while the other one operates from the U.S. this is still going to be a large area. Lastly, it is necessary to think about how well social media is evolving within those regions if we want to deliver successful campaigns. With these points in mind we are going to focus on the following geographic regions:
THE NETHERLANDS & BELGIUM As we both grew up in the Netherlands we speak the language (Dutch), know the culture and have a feeling for the market. Belgium, located south of the Netherlands, is a bilingual nation with two languages: Dutch and French. As a
47 result, we will focus our efforts on the Netherlands and the Dutch-speaking part of Belgium, named Flanders. These have a population (over the age of 14) of 13,8 and 5,2 million, respectively. Of these people 73% are active in social networks in the Netherlands, where that is only 60% in Flanders. This percentage makes the Dutch the most active participants in social media in Europe6. On the other hand, businesses are not doing so great in both countries with only 28% (European average) trying to get in the conversation with their customers and prospects, which gives us ample opportunity to help them do better. Also, it appears especially smaller businesses are hesitant in adopting social media as part of their marketing plan as the top 100 businesses in the Netherlands have an average social media participation rate of 35%7. However, there is light on the horizon as research conducted in Flanders shows that more and more businesses are increasing their budget for social media but are often held back by a lack of skill or the feeling that it might put the organization at risk due to its uncontrollable nature. Nonetheless, they consider it necessary to reach potential customers and maximize their campaign effectiveness8.
GERMANY Germany has a huge population (over the age of 14) of 71,1 million, but is lagging behind when it comes to participation in social media: Only 48% of the Germans are somehow active in social media by reading or writing blogs, social networking, and so on. Also, German businesses seem to shy away from social media as they find the thought of their customers taking over their brand uncomfortable9. As this feeling is largely unfounded we feel there is potential in this market on the condition that also the German consumer will catch up with the rest of Europe in the near future.
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THE UNITED KINGDOM & IRELAND The U.K. and Ireland have a population (over the age of 14) of 50,9 and 3,3 million of whom 63% and 60% participate in social media, respectively. Both rather high rates compared to other European countries. Businesses in the United Kingdom, however, either seem to lack the skill or are still figuring out how to harness the power of social networks without risking their brand10. Although there is no hard data of social media usage for Ireland (the percentage given here is based on the European average) a study showed that 33% of the respondents ( Irish employees) spent two hours or more per day using social media, while a staggering 89% said they had left comments on blogs or other social media in the past11. All in all, making this region a very promising market.
THE UNITED STATES OF AMERICA The United States, our largest market, has a population (over the age of 14) of 245,2 million people. Not only is it the largest market, it is also on the absolute forefront of social media topping the world ranking with 82% of the people participating in social media. Overall, also American businesses are doing slightly better than the European average: 29,5% versus 28%. Although various studies have different results, by estimate only a quarter of all small businesses in the U.S. are currently using social media to their advantage12 while more than 30% plan on including social media in their marketing mix within 12 months13. Although this will be a challenging market, we think there is a reasonable chance for us to grab some market share. It is important to mention that we found numerous discrepancies among the estimates, numbers and “facts� in the third-party studies we ploughed through. Since social media came into play (and is being studied) only recently we even had to use averages sometimes as there was no specific country data available. Therefore, the amounts
49 and percentages we have used so far are the best estimates we can give based on the available data and may differ from the actual figures. An overview of population, business and social media usage data including references can be found in Appendix B.
MARKET SEGMENTATION Now that we have some knowledge of our target markets the subject of market segmentation arises: On what groups of businesses do we want to focus? For us, the answer is that we do want to focus more on some businesses than others but that we will take every kind of business into consideration if they request our services. Whether they are American or Dutch, small or large, B2C or B2B-focused; it does not matter as long as them and us make a good team. However, we expect the following to happen: • Less focus on Germany as it seems like both the German people and their businesses are not adopting social media as well as the rest of Europe, and are not directly planning on doing so either. • A stronger focus on SMEs (compared to large enterprises) as their social media usage is currently increasing rapidly and shows the greatest potential for the future, too. Furthermore, large enterprises usually already have a dedicated marketing team making it unlikely for them to hire outsiders; especially a start-up. • A focus on SMEs with 10 to 250 employees as they are likely to have more funds available for marketing efforts than micro enterprises (0-9 employees). • A focus on the service and retail sector as those companies will be most interested in what their customers are saying about them and in how to influence that chatter. Also, most online conversations revolve around
50 end-customer services and products, making it easier for us to deliver meaningful results, too. • As we expect to close the majority of deals through personal networking in the beginning (until we establish a certain reputation); we believe that initially our clients will be concentrated around the locations we reside. There may be projects that turn out to be too much for us to handle, but we can decide ourselves if we want to take them or not. Also, being able to work with different sized companies in multiple industries makes the job more versatile, challenging and fun. It also gives us more opportunities to explore, keeping us motivated and innovative. Given our expectations above, we can conclude the following market characteristics and numbers. More numbers can be found in Appendix B.
NETHERLANDS
BELGIUM
GERMANY
UNITED KINGDOM
IRELAND
UNITED STATES
Total SMEs
492.240
233.165
1.657.194
1.582.576
84.412
5.982.000
With 10-250 Employees
50.655
17.361
283.657
199.265
12.072
1.227.961
In Service/Retail
36.927
13.212
196.007
148.452
5.915
977.457
26.587
9.513
141.125
106.885
4.259
689.107
Not Active in SMM
Table 4.1: Market Segmentation
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INDUSTRY ANALYSIS In order to analyze the social media marketing industry we used the 5 Forces model, developed by M. Porter. This will determine the competitive intensity, and thus attractiveness of our market.
BARGAINING POWER OF SUPPLIERS If you look at the industry we are in, it is all about knowledge management, and when our knowledge falls short of what we are supposed to have for a certain project we will need to hire a third-party. This also applies to situations when the knowledge required is simply not within the scope of our business or we decided we would outsource a certain task anyway, like data mining for example (see Chapter 3). Because of the fact that we will only be in need of complementary knowledge it will be a difficult task for us to determine the supplier with the right competencies and the right price given it is an intangible asset we are looking for. It will likely be a journey of trial-and-error till we have selected a group of long-term partners on the services we frequently need. Even though the Internet offers great insight into potential suppliers, the fact remains that information clutter and a lack of transparency will make selecting the right partners a difficult task. There is also the factor of switching costs. As it takes a considerable amount of time, trust and respect to build a good relationship with a supplier; having to switch would mean finding a new one and start all over again. Despite the time investment that comes with switching, we do not think this will be too big of an issue as most services we may need are widely offered.
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BARGAINING POWER OF BUYERS Although there is a great deal of marketing agencies around; there are relatively only few dedicated to the new and growing segment of social media within the world of marketing, and exactly those latter ones might actually get “it�. The big boys in marketing are missing the boat by still focusing on making messages instead of establishing community connections research says14. Therefore, we feel the real competition is among the rather limited specialized agencies. As we will be operating in an underdeveloped yet fast growing market with the right knowledge and know-how, we feel there is still plenty of room to expand for us and establish ourselves. Even though demand will most likely exceed supply for quite some time we have to take into account that transparency is somewhat a common value for the word-of-mouth industry. Hence, it will be rather easy for clients to choose and switch amongst competitors; increasing their power over us.
THREAT OF NEW ENTRANTS The fact that we as two students are able to start a company in the social media sector means that many people would be able to do so. In fact, there are no real barriers to entry, especially when compared to some other industries. A barrier could have been the protection of key technologies, but the software we are using is widely available; to anyone. Economies of scale is another factor often taken into the equation when assessing the threat of new entrants, especially in the production industry, but it has little to no effect in our business segment as we create customized solutions. Unfortunately, this adds up to the fact that this is an easy industry to enter. The industry does, however, require creativity, fresh ideas and a vision that sets you apart from others. Therefore, we will focus on building a reputation
53 by creating talent to set ourselves apart from the competition.
THREAT OF SUBSTITUTE PRODUCTS The question is if there actually is a substitute product (or service) for social media marketing as it itself is already partly substitute for something, namely traditional marketing. It is replacing one-way communication with multidirectional conversation. Not because the average business wants it like that, but because consumers are already in that conversation talking about their brands; the corporate world has to move along and join. At this moment we do not see a direct substitute for social media marketing, but we are expecting to see many different forms of it emerging in the future. As a social media agency, we just have to make sure that we are able to keep up with new trends in this segment to stay ahead of the competition.
RIVALRY AMONG COMPETITORS Since we are targeting a very fast growing niche market we expect there to be reasonable space to grow for everyone operating in it. However, with all of the agencies basically offering the same services it may from time to time lead to some fierce competition. All in all, we feel that even though there are tens to hundreds of agencies offering social media marketing services in our target countries the size of the market and its growth potential will not make competition a game-breaker.
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RECOMMENDATIONS FROM PEERS OR OPINIONS POSTED BY CONSUMERS ONLINE ARE THE MOST 1 TRUSTED FORMS OF ADVERTISING.
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SWOT Analysis In this chapter, we will discuss the SWOT analysis of Moby meets Monkey with an evaluation of the internal and external environment of our start-up company. The strengths and weaknesses represent the internal environment that can be influenced. The opportunities and threats on the other hand concern external forces that cannot be influenced or changed by us. The purpose of this analysis is to help us better understand ourselves as a company, and gain insight into the external market forces we are facing. Thereby, giving us valuable information to shape and develop our future actions and plans.
STRENGTHS • Investing time rather than money: Establishing a social media marketing agency will allow us to build a company through increasing knowledge rather than increasing capital. A pretty good deal, given that we are “poor” students. Also, if our business would happen to fail we can always apply our knowledge somewhere else. Knowledge is never lost; we will always carry it with us.
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56 • Not being space-bound: As our company is greatly inspired by the concepts of “Zero Space”2,3 we operate from virtual offices to get our services to our clients. As a knowledge-based company, intangibles (knowledge) are the key to success. Keeping ourselves free from as many tangibles as possible gives us the ability to work from any place at any time; increasing both our agility and adaptability. • More accountable than traditional marketing: Even though measuring the ROI of social media marketing campaign can turn out to be very complex; it is no secret that the internet provides one of the greatest tools to measure and track something, including effectiveness and efficiency. • Build our brand through our own services: Given that we are a marketing agency, we can establish and advance our own business by doing what we do best. • Specializing to build talent: We believe we can and should not try to be a Jack of all trades. It is better to focus and specialize in something than truly master nothing in particular, at all.
WEAKNESSES • Little available capital hinders scalability: Few funds are, as we said, not necessarily a weakness by itself and we will build our company with costeffectiveness in mind. On the other hand, it will limit our ability to pursue certain opportunities; opportunities
57 our already well-established competitors might run off with. • No integrated service offering: Besides Search Engine Marketing we do not offer any complementary services as we feel it is better to specialize and approach additionally required talent on a project-basis. This might, however, leave a certain market untapped. • No reputation to start with: Since we have no established brand name, or impressive client portfolio we can fall back on, we will have to make a name for ourselves first. • No known reliable partners: Everything is new as a start-up company. It is challenging in a good way, but it might also have negative effects if we think about the time and money we have to invest into finding the right (supply) partners and build long-term relationships with them.
OPPORTUNITIES • Jumping in when it is hot, not hyped: We will offer our services in a marketing segment that has turned out to be more than a fad4: Social media marketing has proven itself in being a worthy complement or even substitute for traditional marketing, and is here to stay. More and more businesses are recognizing this, and are increasing their spending on SMM5. • Huge growth potential in SME and newly-established business market: We believe that, besides the (possibly) low demand from large companies, our biggest growth potential is
58 through servicing small and medium businesses as they are catching up quickly according to research6. Also, start-up companies should be targeted as they mostly lack the financial resources to launch expensive advertising campaigns but are in dire need of attention: A perfect fit for social media marketing. • Ability to get ahead because of market dynamics: The world of social media has very short (life) cycles and is subject to constant change. Although change may feel uncomfortable, we think it might help us get an edge over the competition by adapting new tools earlier and faster. • Geographic expansion opportunities: Even though expansion will require additional funds our company structure is very scalable and expansion into new (emerging) markets should be easy. • Bad economy means great potential: Traditional advertising meant spending enormous amounts of money on getting the message out there, which was not only highly ineffective but is also undesired in today’s economy. Companies want to see an actual return on their marketing investment. The solution is social media as it is measurable and also very cost-effective.
THREATS • Inability to keep up with changes and trends: Even though change can be our savior, it can hurt us as well if we fail to move along with or stay ahead of the competition in our industry.
59 • Powerful competition: Although social media is still an upcoming segment within the marketing industry, we are definitely not alone. We will be surrounded by agencies with more knowledge and more money, which basically equals more power. • It can get very personal: Just like social media can make positive messages spread quickly; it can also fire back and hurt our or our client’s reputation if we are not careful enough in our practices, especially when dealing with cultures different from our own or the ones we are familiar with.
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93% OF SOCIAL MEDIA PARTICIPANTS BELIEVE A COMPANY SHOULD HAVE A 1 PRESENCE IN SOCIAL MEDIA.
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Marketing Plan How are we going to put Moby meets Monkey out there for the world to see? If we want our customers to see, or actually find us, we have to implement certain tactics. As a start-up business we have little cash at hand. However, we can help ourselves get noticed by exploiting the same tools we usually implement for marketing our clients’ businesses in our own advantage. On top of that, social media marketing is very cost-effective: A win-win situation for a new company.
UNIQUE SELLING PROPOSITION So, what qualities do we have that our competitors do not possess; why would someone want to hire us? Surely, that fancy name is inviting but it is not a deal-maker by itself. Fortunately, we have more in our magic box to attract customers for our services. Features and qualities, that if combined, will set us apart from the competition. First of all, let us repeat our mission: “We help brands leverage social media to its infinite potential by being social.� It is those last three words that make us stand out. We are not just the average social media agency delivering social media services no matter how; we do it responsibly. We will attain the highest standards at any time, and with everyone we touch
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62 through our services. Not just our clients, but especially their customers, too. Secondly, we are an agency rather than service providers. We intend to be part of the companies we team up with; having a certain set of responsibilities we carry out on their behalf instead of a simple task. With a thorough understanding of their business we focus on working toward their business goals and building a long-term relationship; not just a few deliverables. Thirdly, we are a web-based firm operating from virtual offices. Although this, on first thought, somewhat conflicts with the idea of becoming a part of our client’s organization (discussed above) we feel it is very much possible as tangible work environments do not necessarily have to merge to work together. Perhaps, the ability for both parties to operate within the environment familiar to them is even a plus all by itself. Anyway, a true business relationship does not revolve around physical presence; it is built on mutual respect and understanding. We want our clients to know who we are by being transparent and genuine. Thereby, creating a feeling of trust; the vital part of any relationship. Furthermore, working with virtual offices and the Internet increases our approachability, responsiveness and reach beyond anything possible with a dedicated office. Equally important is the fact that our online collaboration environment allows us to provide real-time updates to our clients and receive immediate feedback in return. This makes for time-efficient progress where everyone is kept in the loop, at all times. Lastly, the virtual office concept also keeps our costs relatively low, which is a huge advantage for a start-up business and will be reflected in the prices we charge for our services.
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MARKETING MIX The marketing mix consists of four major elements, namely product (or service), price, promotion and place. These four Ps will describe the strategic positioning of our service in the marketplace, and work together to achieve our company’s objectives.
PRODUCT (SERVICE) Our services, and how we offer them, are what Moby meets Monkey is all about. As mentioned before, we are going to specialize ourselves in Social Media Marketing (SMM), with an additional focus on Search Engine Marketing and Optimization (SEM/SEO) as a complementary service. As time and technology advances, and trends come and go within the social media world we will constantly invest in service innovation and differentiation to make sure we keep up, or stay ahead of the competition. Also, we will use client and market feedback to fine-tune our marketing services and online collaboration environment. For a more detailed description of our services, see Chapter 3.
PRICE The price of our service is determined by factors like market share, competition, supplier costs and the customer’s perceived value of our services. As we provide custom solutions it is impossible to stick a general price tag to our service. Also, someone always gets a bad deal with fixed-fee projects. Therefore, we charge our customers a rate of ¤45 per hour (per person working on it), billed in quarter-hour increments. This way they only pay for the work
64 actually performed on their behalf, and not a cent more. We can, however, do budget caps to work around possible constraints our clients might have. The rate includes any third-party expenses related to helping us carry out our services, like data mining. If additional services are required we will upon agreement with our client attract them and bill them separately. Our 造45 hourly rate is very fair compared to our competitors who charge anywhere from $752 to $3003 (造50 to 造200). Slightly undercutting our competitors prices is in our eyes an effective way of entering a market as a start-up business. We do not want to start a price war but we feel the perceived value of services from start-ups is generally less than that of already established firms and should be reflected in the prices charged. Also, our agile and lean company structure enables us to charge less by lowering costs. Then, once we have a certain reputation we can gradually increase the price. Therefore, starting in year 3, we will increase the price to 造50. We will also develop a loyalty program for returning customers. One can think in the direction of certain incentive and discount programs, which makes it attractive for our clients to come back to us. Finally, it is important to note that we do not want to differentiate ourselves based on price; we want our services to set ourselves apart from the competition.
PROMOTION This involves the types of exposure (discussed on the next page) to be chosen in order to achieve the highest level of awareness and visibility. Even though there are quite a few options available through the promotional mix, some are simply not made for us as we have a limited budget.
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ADVERTISING Traditionally advertising has been a costly practice. So, besides the question if it is actually desirable, mass marketing (print, TV, radio) is out of our league during the first years of operation. However, we can use our in-house talent to benefit from paid search engine advertising. This is not only very cost-efficient (Pay-Per-Click) but is also non-interruptive and highly targeted, both demographically and geographically.
PERSONAL SELLING Personal selling is all about oral communication (usually by cold-calling) with prospective purchasers with the intention of making a sale. It can be effective yet it is also time-consuming. As a company new to the market this might be a good way of acquiring new customers, and because we do not have the funds to employ someone for this position, we will have to do it ourselves, occasionally. Nonetheless, we feel that building our client-base via personal contacts and networking (whether on- or offline) will be even more effective.
DIRECT MARKETING Direct marketing means that the distribution of service information and promotions to target customers goes through interactive communication in a way that allows response to be measured. Being able to target potential clients through direct (mail) marketing will enable us to contact many prospects without a large time commitment. However, direct mail marketing is costly and often generates little response, meaning we will probably not imple-
66 ment it in our promotion budget in the beginning.
ONLINE MARKETING We already mentioned paid search engine advertising as part of our promotional mix. Unquestionably, being a social media agency we are going to use online marketing to its fullest extend as it is what we do best. Not only by creating an appealing, informative and easy-to-use website, but in particular by establishing a comprehensive, inviting and content-rich social media presence around it. Social media will help us to understand, engage and embrace our customers and prospects. It will make it easier for potential customers to find and reach us, and vice versa. Through social media we can gradually build an interested audience that can help us advance our brand and improve our services. Hence, it is by far the most powerful marketing tool we will employ. No wonder we sell it.
EXHIBITIONS Exhibitions are unique as they bring buyers, sellers and competitors together in a commercial setting (trade fairs). They can be of great importance to our company, especially during the first year(s). It is a place where we can talk about our services and do networking. We will be able to, at relatively low costs, get into direct contact with potential clients and partners, and see what competitors have on offer. The advantage of these fairs is that visitors are generally already interested as it is usually organized around a certain theme or subject.
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PLACE This involves the channels we use to distribute our services, and is quite obvious in our case. No matter if we acquire a client through a trade show, personal contacts or via social networking; as we are a web-based company our distribution channel will be the Internet. It is the place where we connect with our (potential) customers, help our clients and deliver our services.
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ONLY 18% OF TRADITIONAL TV ADVERTISING CAMPAIGNS GENERATE A POSITIVE ROI.1
7
Management Team The two of us will co-manage and -run our company without employing any additional staff. Together, we will be in charge of daily operations and decision making within our company, taking a team approach to every project we take on albeit one of us focusing on Europe while the other’s emphasis is on the United States. With just two people running the company we will not implement any vertical hierarchy as this is both inefficient and unnecessary for what we do. If, however, a specific task or project would call for leadership we can always appoint one of us based on related competence. There will also be times when our own knowledge falls short of what is requested by our clients. In this case, we will add an external party to our team to provide the skills necessary to successfully complete the given project. Or, if time allows it, we might follow a training course to gain the required skills ourselves. Furthermore, Moby meets Monkey will be a part-time job for us as we both intend to pursue a master’s degree after graduating from Zuyd University. Besides, there will likely be a second job on the side for us in order to make a full-time living, and as a safety net in case our start-up company fails. Then, if over time our business turns out to be successful and yields enough profits we may focus our full attention on it.
69
70
8
Financial Indicators START-UP REQUIREMENTS START-UP EXPENSES Incorporation Services and Subscriptions Domain Name Other
AMOUNT 302 685 10 200
Total Start-Up Expenses
造1.197
START-UP ASSETS Cash Required Start-Up Inventory Long-Term Assets
5.000 10.165
Total Assets
15.165
Total Requirements
16.362
Table 8.1: Total Start-Up Requirements
71
START-UP FUNDING START-UP FUNDING Start-Up Expenses to Fund Start-Up Assets to Fund
Total Funding Required
AMOUNT 1.197 15.165
¤16.362
ASSETS ASSETS Non-Cash Assets from Start-Up Cash Requirements from Start-Up Additional Cash Raised Cash Balance on Starting Date
Total Assets
AMOUNT 10.165 5.000 0 5.000
¤15.165
LIABILITIES AND CAPITAL LIABILITIES Current Borrowing Long-Term Liabilities Oustanding Bills
Total Liabilities
AMOUNT 0 0 0
¤0
72 LIABILITIES Other Current Liabilities
AMOUNT 0
Total Liabilities CAPITAL Planned Investment Ron Kamps Gion Tummers Additional Investment Requirement
¤0 AMOUNT 8.181 8.181 0
Total Planned Investment
¤16.362
Loss at Start-Up (Expenses)
(1.197)
Total Capital
¤15.165
Total Capital and Liabilities
¤15.165
Total Funding
¤16.362
Table 8.2: Start-Up Funding We will both invest an equal amount of ¤8.181 and will not need any additional funding to start our business.
73
MARKET ANALYSIS POTENTIAL CUSTOMERS GROWTH The Netherlands 0,9% Belgium (Flanders) 1,5% Germany -0,2% United Kingdom 0,6% Ireland 1,3% United States 1,0%
Total
0,79%
YEAR 1 26.587 9.513 141.125 106.885 4.259 689.107
YEAR 2 26.826 9.656 140.843 107.526 4.314 695.998
YEAR 3 27.067 9.801 140.561 108.171 4.370 702.958
YEAR 4 27.311 9.948 140.280 108.820 4.427 709.988
YEAR 5 27.557 10.097 139.999 109.473 4.485 717.088
977.476
985.163
992.928
1.000.774
1.008.699
Table 8.3: Market Analysis The potential customers represent all SMEs with 10 to 250 employees operating in the service and retail industry. The numbers are also adjusted to show the estimated number of businesses not yet using social media marketing in their marketing mix, see Appendix B for more information. The growth percentages are based on the average growth of the respective countries’ GDPs over the years 2005 till 20091.
74
SALES FORECAST UNIT SALES
YEAR 1
YEAR 2
YEAR 3
YEAR 4
YEAR 5
66
86
117
160
221
43
56
76
105
145
22 16 6
29 21 8
39 29 11
53 40 15
73 55 21
14 28
18 36
24 49
33 67
46 92
20 20 10
23 23 12
27 27 14
31 31 17
35 35 19
245
312
413
552
742
YEAR 1 ¤45
YEAR 2 ¤45
YEAR 3 ¤50
YEAR 4 ¤50
Social Media Marketing Monitoring
Planning & Application Planning
Application Social Network Management Blogger Outreach Community Management
Extension & Development Extension Development
Search Engine Marketing Keyword Analysis SEO Paid Search Advertising
Total Unit Sales UNIT PRICES All Services
YEAR 5 ¤50
75
SALES
YEAR 1
YEAR 2
YEAR 3
YEAR 4
YEAR 5
2.970
3.870
5.850
8.000
11.050
1.935
2.520
3.800
5.250
7.250
990 720 270
1.305 945 360
1.950 1.450 550
2.650 2.000 750
3.650 2.750 1.050
630 1.260
810 1.620
1.200 2.450
1.650 3.350
2.300 4.600
900 900 450
1.035 1.035 540
1.350 1.350 700
1.550 1.550 850
1.750 1.750 950
¤11.025
¤14.040
¤20.650
¤27.600
¤37.100
YEAR 1 ¤0
YEAR 2 ¤0
YEAR 3 ¤0
YEAR 4 ¤0
Social Media Marketing Monitoring
Planning & Application Planning
Application Social Network Management Blogger Outreach Community Management
Extension & Development Extension Development
Search Engine Marketing Keyword Analysis SEO Paid Search Advertising
Total Sales DIRECT UNIT COSTS All Services
YEAR 5 ¤0
76 DIRECT COST OF SALES All Services
Subtotal Direct Cost of Sales
YEAR 1 ¤0
YEAR 2 ¤0
YEAR 3 ¤0
YEAR 4 ¤0
YEAR 5 ¤0
¤0
¤0
¤0
¤0
¤0
Table 8.4: Sales Forecast The units in the first part of the table (8.4) represent hours, as we work and charge by the hour (See Chapter 6). Furthermore, we do not have any direct cost of sales as a consultancy. We do, however, have non-specific other cost of sales as you will find in our Profit and Loss statement.
BREAK-EVEN ANALYSIS The break-even point is the situation where total revenue generated equal the total costs. To put it differently, the number of hours we have to work in order to make no loss and no profit. Below is the analysis for year 1.
Monthly Units Break-Even Monthly Revenue Break-Even ASSUMPTIONS Average Per-Unit Revenue Average Per-Unit Variable Cost Estimated Monthly Fixed Cost Table 8.5: Break-Even Analysis
15 ¤659 AMOUNT ¤45 ¤0 ¤659
REVENUE
77
400 300 200 100 0 -100 -200 -300 -400 -500 -600 -700
0
2
4
6
Graph 8.1: Break-Even Analysis
8
10 12 14 16 18 20 22 UNITS
78
PRO FORMA PROFIT AND LOSS SALES
YEAR 1
YEAR 2
YEAR 3
YEAR 4
YEAR 5
Total Cost of Sales
¤11.025 0 1.224 ¤1.224
¤14.040 0 1.224 ¤1.224
¤20.650 0 1.224 ¤1.224
¤27.600 0 1.224 ¤1.224
¤37.100 0 1.224 ¤1.224
Gross Margin Gross Margin (%)
¤9.801 88,90%
¤12.816 91,28%
¤19.426 94,07%
¤26.376 95,57%
¤35.876 96,70%
0 2.237 2.286 1.845 468 804 268
0 2.842 2.286 2.343 468 1.700 341
0 3.609 2.191 2.976 468 1.700 433
0 4.583 2.191 3.779 468 1.700 549
0 5.821 2.191 4.800 468 1.700 698
¤7.909
¤9.979
¤11.376
¤13.271
Total Sales Direct Cost of Sales Other Cost of Sales
EXPENSES Payroll Marketing & Promotion Depreciation Utilities Insurance Other Services General Supplies
Total Operating Expenses
¤15.677
79
PROFITS Profit Before Interest & Taxes EBITDA Interest Expense Tax Incurred
Net Profit Net Profit/Sales (%)
YEAR 1 1.892 4.178 0 568 ¤1.325
YEAR 2 2.837 5.123 0 851 ¤1.986
YEAR 3 8.050 10.241 0 2.415 ¤5.635
YEAR 4 13.105 15.296 0 3.932 ¤9.174
YEAR 5 20.199 22.390 0 6.060 ¤14.139
12,01%
14,14%
27,29%
33,24%
38,11%
Table 8.6: Pro Forma Profit and Loss This table indicates how our revenue is transformed into net income. Note that we do not pay ourselves a salary. Instead, we will divest a certain amount of money from the business if when we feel it is needed or necessary (not shown). The growth in sales (left) can be expected as a result from our increasing marketing expenses (left). However, it is based on a 5-year interactive marketing growth forecast by Forrester Research2. Also, the depreciation amount (left) changes as the new software purchased will be an upgrade rather than a full version. See Appendix C for a detailed calculation. The amount of “Other Services” (left) are lower in year 1 because of the fact that some of them were already included in the start-up expenses.
80
PRO FORMA CASH FLOW CASH RECEIVED
YEAR 1
YEAR 2
YEAR 3
YEAR 4
YEAR 5
0 9.155
0 13.528
0 19.529
0 26.421
0 35.488
¤9.155
¤13.528
¤19.529
¤26.421
¤35.488
1.808 0 0 0 0 0 0 0
2.303 0 0 0 0 0 0 0
3.387 0 0 0 0 0 595 0
4.526 0 0 0 0 0 1685 0
6.084 0 0 0 0 0 349 0
¤10.963
¤15.831
¤23.510
¤32.632
Cash from Operations Cash Sales Cash from Receivables
Subtotal Cash from Operations Additional Cash Received Sales Tax Received Cash from Receivables New Current Borrowing New Other Liabilities New Long-term Liabilities Sales of Other Current Assets Sales of Long-term Assets New Investment Received
Subtotal Cash Received
¤41.922
This table illustrates the amount of cash and cash equivalents that enter and leave the firm. As you can see above all our sales are on credit. The sales tax received is calculated using the average percentage (sales tax) imposed in the countries we operate in. The changes in long-term assets are explained in Appendix C.
81
EXPENDITURES
YEAR 1
YEAR 2
YEAR 3
YEAR 4
YEAR 5
0 7.010
0 9.798
0 12.707
0 16.105
0 20.596
¤7.010
¤9.798
¤12.707
¤16.105
¤20.596
1.085 0 0 0 0 0 0
1.382 0 0 0 0 0 0
2.032 0 0 0 0 1.746 0
2.716 0 0 0 0 5.615 0
3.650 0 0 0 0 1.746 0
Subtotal Cash Spent
¤8.095
¤11.180
¤16.485
¤24.435
¤25.992
Net Cash Flow Cash Balance
¤2.868 ¤7.868
¤4.651 ¤12.519
¤7.025 ¤19.545
¤8.197 ¤27.741
¤15.930 ¤43.671
Expenditures from Operations Cash Spending Bill Payments
Subtotal Spent on Operations Additional Cash Spent Sales Tax Paid Out Principal Repayment of Cur. Borrowing Other Liabilities Principal Repayment Long-term Liabilities Principal Repaym. Purchase Other Current Assets Purchase Long-term Assets Dividends
Table 8.7: Pro Forma Cash Flow
82
PRO FORMA BALANCE SHEET ASSETS
YEAR 1
YEAR 2
YEAR 3
YEAR 4
YEAR 5
Cash Accounts Receivable Other Current Assets
7.868 1.871 0
12.519 2.382 0
19.545 3.503 0
27.741 4.683 0
43.671 6.294 0
Total Current Assets
¤9.738
¤14.901
¤23.048
¤32.424
¤49.966
10.165 2.286
10.165 4.572
11.316 6.763
¤7.879 ¤17.617
¤5.593
¤4.553 ¤27.601
15.246 8.954 ¤6.292 ¤38.716
16.642 11.145 ¤5.498 ¤55.463
Current Assets
Long-term Assets Long-term Assets Accumulated Depreciation
Total Long-term Assets Total Assets
¤20.494
The pro forma balance sheet is made up from combined information about the projected sales forecast, profit and loss and cash flow statement. As can be seen on the right, the net worth of our company increases steadily during the first five years of operation.
83
LIABILITIES AND CAPITAL
YEAR 1
YEAR 2
YEAR 3
YEAR 4
YEAR 5
404 0 723
375 0 1.644
492 0 2.998
623 0 4.809
797 0 7.243
¤1.128
¤2.019
¤3.490
¤5.432
¤8.040
0 ¤1.128
0 ¤2.019
0 ¤3.490
0 ¤5.432
0 ¤8.040
16.362 (1.197) 1.325
16.362 128 1.986
16.362 2.113 5.635
16.362 7.748 9.174
16.362 16.922 14.139
Total Capital Total Liabilities and Capital
¤16.490 ¤17.617
¤18.475 ¤20.494
¤24.110 ¤27.601
¤33.284 ¤38.716
¤47.423 ¤55.463
Net Worth
¤16.490
¤18.475
¤24.110
¤33.284
¤47.423
Current Liabilities Accounts Payable Current Borrowing Other Current Liabilities
Total Current Liabilities Long-term Liabilities
Total Liabilities Paid-in Capital Retained Earnings Earnings
Table 8.8: Pro Forma Balance Sheet
84
RATIO ANALYSIS With business ratios, we are able to assess a company’s strengths and weaknesses and, in addition, it can be used for benchmarking purposes when we compare Moby meets Monkey with other businesses in the music industry. All the applicable ratios are presented in the table below. SALES GROWTH
YEAR 1
YEAR 2
YEAR 3
YEAR 4
YEAR 5
Sales Growth
0,00%
27,35%
47,08%
33,66%
34,42%
PERCENT OF TOTAL ASSETS Accounts Receivable Other Current Assets Total Current Assets Long-term Assets
10,62% 0,00% 55,28% 44,72%
11,62% 0,00% 72,71% 27,29%
12,69% 0,00% 83,51% 16,49%
12,09% 0,00% 83,75% 16,25%
11,35% 0,00% 90,09% 9,91%
100,00%
100,00%
100,00%
100,00%
100,00%
6,40% 0,00% 6,40%
9,85% 0,00% 9,85%
12,65% 0,00% 12,65%
14,03% 0,00% 14,03%
14,50% 0,00% 14,50%
93,60%
90,15%
87,35%
85,97%
Total Assets Current Liabilities Long-term Liabilities Total Liabilities
Net Worth
85,50% ď‚„
85
PERCENT OF SALES Sales Gross Margin Selling, General & Admin. Expenses Advertising Expenses Profit Before Interest and Taxes
YEAR 1 100,00% 88,90% 76,88% 20,29% 17,16%
YEAR 2 100,00% 91,28% 77,14% 20,24% 20,20%
YEAR 3 100,00% 94,07% 66,78% 17,48% 38,98%
YEAR 4 100,00% 95,57% 62,33% 16,61% 47,48%
YEAR 5 100,00% 96,70% 58,59% 15,69% 54,45%
MAIN RATIOS Current Quick Total Debt to Total Assets Pre-tax Return on Net Worth Pre-tax Return on Assets
8,64 8,64 6,40% 11,48% 10,74%
7,38 7,38 9,85% 15,35% 13,84%
6,60 6,60 12,65% 33,39% 29,17%
5,97 5,97 14,03% 39,37% 33,85%
6,21 6,21 14,50% 42,59% 36,42%
ADDITIONAL RATIOS Net Profit Margin Return on Equity
12,01% 8,03%
14,14% 10,75%
27,29% 23,37%
33,24% 27,56%
38,11% 29,82% ď‚„
86 ACTIVITY RATIOS Accounts Receivable Turnover Collection Days Accounts Payable Turnover Payment Days Total Asset Turnover
YEAR 1 5,89 29 18,34 12 0,63
YEAR 2 5,89 55 26,07 15 0,69
YEAR 3 5,89 52 26,07 12 0,75
YEAR 4 5,89 54 26,07 13 0,71
YEAR 5 5,89 54 26,07 12 0,67
DEBT RATIOS Debt to Net Worth Current Liabilities to Liabilities
0,07 1,00
0,11 1,00
0,14 1,00
0,16 1,00
0,17 1,00
LIQUIDITY RATIOS Net Working Capital Interest Coverage
8.611 0,00
12.882 0,00
19.558 0,00
26.992 0,00
41.926 0,00
ADDITIONAL RATIOS Assets to Sales Current Debt/Total Assets Acid Test Sales/Net Worth Dividend Payout
1,60 6% 6,98 0,67 0,00
1,46 10% 6,20 0,76 0,00
1,34 13% 5,60 0,86 0,00
1,40 14% 5,11 0,83 0,00
1,49 14% 5,43 0,78 0,00
Table 8.9: Ratio Analysis
87 Monthly pro forma statements (Sales Forecast, Profit and Loss, Cash Flow, Balance Sheet) for the first year of operations can be found in Appendices DEFG.
88
BARACK OBAMA RAISED 87% OF HIS FUNDS THROUGH SOCIAL NETWORKING.1
9
Exit Strategy An exit plan is not the first thing that comes to mind when writing a business plan. However, it is of great importance to think about possible risks, their consequences and how we need to cope with them. Exit strategies basically describe what you are going to do when your business is either flourishing or when you are seeing the other side of the medal. Whatever is happening, the strategies have the same goal: maximize the value of your company before you sell it.
WHEN BUSINESS IS GOOD We both, of course, hope that Moby meets Monkey will have a healthy and successful future, and when this actually turns out to be reality there are several options. It all depends on the moment in the future to see what will be the best option for us. When the company is generating enough cash for us to make a living and is ready to expand to a new level we would consider giving up our other part-time job to focus full-time on the success of our company. This would be, by far, our main goal and the most favorable situation: turning Moby meets Monkey into a healthy business, that would earn us a decent income by contributing full-time to its success.
89
90 Another option, which can only be partly influenced by us, is catching the interest of another company wanting to acquire us or enter a partnership. We will always be prepared to listen to their offer and see whether it could take our company to the next level. Whether or not we would accept an offer in this category will fully depend on the moment, value and future plans the interested party would have in mind for Moby meets Monkey. We will also have to take into consideration the economic climate at that moment. Although we expect that social media marketing demand will actually grow in a recession (see Chapter 5) nothing is certain. If our business would get hurt by it we will try to get through it in anticipation of better times, as the company would probably be undervalued in a depressed economy.
WHEN BUSINESS IS BAD Hopefully, this is a situation we will never find ourselves in, but nonetheless it is important to think about what to do in case it actually does happen. When we would get into the position where we are no longer able to keep our business running, we have to consider other options. The first option would be to find another company willing to take over our business in order to save our company. They may be interested in the services and knowledge we have developed over time and might make an interesting offer we would not be able to refuse given the circumstances. Creating a partnership between our company and another, more healthy company, could also be a suitable option. This way we would still be able to try and rebuild our own company, together with the support of another, perhaps more knowledgeable, partner.
91 The least favorable scenario would be that we cannot find anyone willing to cooperate or acquire us. Meaning, we will inevitably have to file for bankruptcy. Of course, this is the last option any entrepreneur wishes to pursue. However, given the fact that we are a limited liability company we, ourselves, are (very likely) protected from the company’s creditors. Something that has been a determining factor in choosing this form of incorporation.
The choices we have to make when we would ever have to call on one of our exit strategy options do deeply depend on the nature of the circumstances and the feelings we would have about them. As in the end, Moby meets Monkey will still be the company we built with great enthusiasm, and invested so much time, energy and money in.
92
Notes and References CHAPTER 2: THE NATURE OF OUR BUSINESS 1. Brand Infiltration; What is Social Media? (October, 2009); Retrieved on October 31, 2009, from SlideShare: http://www.slideshare.net/mzkagan/what-is-social-media-2005829 2. Seth Godin; Meatball Sundae: How New Marketing is Transforming the Business World (2008); Page 25. 3. Definition: A Tweet is an online posting or status update on Twitter, a microblogging service. Tweets are restricted to 140 characters or less. 4. Christopher Locke, Rick Levine, Doc Searles, David Weinberger; The Cluetrain Manifesto - Chapter Four (1999); Retrieved on September 10, 2009, from The Cluetrain Manifesto: http://www.cluetrain.com/book/markets. html 5. Abbreviation: Word of Mouth Marketing Association 6. Translation (Dutch): Vennootschap Onder Firma (V.O.F.) 7. Translation (Dutch): Besloten Vennootschap (B.V.) 8. All conversions are based on the exchange rates provided by XE.com on October 15, 2009. http://www.xe.com
93 9. BNET Business Dictionary; Virtual Office: Definition and additional resources from BNET (n.d.); Retrieved on September 14, 2009, from BNET: http://dictionary.bnet.com/definition/virtual+office.html 10. World Intellectual Property Organization; International Classification of Goods and Services for the Purposes of the Registration of Marks (2006); Page 3-6; Retrieved on September 21, 2009, from WIPO: www.wipo.int/classifications/nivilo/pdf/eng/nice/engp1.pdf 11. World Intellectual Property Organization; International Registration of Marks - Fee Calculation (n.d.); Retrieved on September 21, 2009, from WIPO: http://www.wipo.int/madrid/feecalc/FirstStep?Lang=E&ForDate=200911 07&Origin=BX&Classes=1&ServCd=EN&Colour=Y&Figurative=Y&DE=Y&GB=Y&IE=Y&US=Y
CHAPTER 3: SERVICE DESCRIPTION 1. Nielsen; Global Faces & Networked Places (March, 2009); Retrieved on October 31, 2009, from Nielsen: http:// blog.nielsen.com/nielsenwire/wp-content/uploads/2009/03/nielsen_globalfaces_mar09.pdf 2. Seth Godin; Meatball Sundae: How New Marketing is Transforming the Business World (2008); Page 73. 3. Definition: A blog or weblog provides a convenient online tool for writing about ones individual thoughts, activities and interests. 4. Examples of data mining services for social media: Collective Intellect, Sysomos (licensed), Google Trends and Trendrr (open). 5. Charlene Li, Josh Bernoff; Groundswell: Winning in a World Transformed by Social Technologies (2008), Page 65-76.
94 6. Definition: A landing page is the page someone arrives after clicking on a link or search result. 7. Definition: In PPC campaigns the advertiser (our client) will pay the publisher (a third party) an agreed upon rate per click on the advertisement, regardless if a sale is made or not. 8. Definition: Split-testing is a powerful strategy where different alternatives are tested to determine their effectiveness, and afterwards implement the ones that generate the best results.
CHAPTER 4: MARKET ANALYSIS 1. Nielsen; Global Faces & Networked Places (March, 2009); Retrieved on October 31, 2009, from Nielsen: http:// blog.nielsen.com/nielsenwire/wp-content/uploads/2009/03/nielsen_globalfaces_mar09.pdf 2. Erik Qualman; Socialnomics: How Social Media Transforms the Way We Live and Do Business (2009); Page 1. 3. Shar VanBoskirk; Interactive Marketing Nears $55 Billion; Advertising Overall Declines (July, 2009); Retrieved on Oktober 25, 2009, from The Forrester Blog for Interactive Marketing Professionals: http://blogs.forrester. com/marketing/2009/07/interactive-marketing-nears-55-billion-advertising-overall-declines.html 4. eMarketer; User-Generated Content Draws Fans (February, 2009); Retrieved on October 25, 2009, from eMarketer: http://www.emarketer.com/Article.aspx?R=1006895 5. Universal McCann; Power to the People - Social Media Tracker Wave 4 (July, 2009); Retrieved on October 26, 2009, from Universal McCann: http://www.universalmccann.bitecp.com/wave4/Wave4.pdf 6. Groundswell; Consumer Profile Tool (2009); Retrieved on October 26, 2009, from Forrester Research: http:// www.forrester.com/Groundswell/profile_tool.html
95 7. Social Embassy; Social Media Monitor 2 (October, 2009); Retrieved on October 26, 2009, from SlideShare: http://www.slideshare.net/mfredactie/19102009-socialmediamonitor-socialembassy-2276356?src=embed 8. Rob van Alphen; Research into the Development of Social Media Strategies in Corporate Communication, Directed to the Consumer (2009) (Dutch); Page 83-88. Retrieved on October 26, 2009, from Media Publications Database: http://mediapublicationsdb.files.wordpress.com/2009/08/17134055-thesis-development-of-socialmedia-strategies-in-external-organizational-communication.pdf 9. David Nelles; Social Media - Deutsche Unternehmen Sind zu Angstlich (December, 2008) (German); Retrieved on October 26, 2009, from Ethority: http://www.ethority.de/weblog/2008/12/07/social-media-marketingdeutsche-unternehmen-sind-zu-angstlich/ 10. McCann Bristol; U.K. Marketers Admit Falling Behind Social Media Trends (May, 2009); Retrieved on October 27, 2009, from McCann Bristol: http://www.mccannbristol.co.uk/news/?p=117 11. Simply Zesty; Irish Social Networking Statistics (July, 2009); Retrieved on October 27, 2009, from O’Connall Street: http://oconallstreet.com/2009/07/22/irish-social-networking-statistics/ 12. Ellen Wulfhorst; Small Business, Social Media Not Mixing (October, 2009); Retrieved on October 27, 2009, from Reuters: http://www.reuters.com/article/smallBusinessNews/idUSTRE59759L20091008 13. BIA/Kelsey; 9% of SMBs Currently Use Twitter to Market Their Businesses, According to BIA/Kelsey (October, 2009); Retrieved on October 27, 2009, from PR Newswire: http://www.prnewswire.com/news-releases/9-ofsmbs-currently-use-twitter-to-market-their-businesses-according-to-biakelsey-65171387.html 14. Brian Morrissey; Forrester: Agencies Need to Reboot (February, 2008); Retrieved on September 28, 2009, from
96 AdWeek: http://www.adweek.com/aw/content_display/news/digital/e3i55bff7bc1a68ecef566a2850d389d8f3
CHAPTER 5: SWOT ANALYSIS 1. Nielsen; Global Advertising: Consumers Trust Real Friends and Virtual Strangers the Most (July, 2009); Retrieved on October 30, 2009, from Nielsen Wire: http://blog.nielsen.com/nielsenwire/consumer/global-advertising-consumers-trust-real-friends-and-virtual-strangers-the-most/ 2. Definition: A concept that defines eight business features to achieve full business potential in today’s knowledge-based economy by letting go of all restricting pre-conceived ideas and existing organizational barriers. Basically, it says “less (or zero) is more”. 3. Frank Lekanne Deprez, René Tissen; Zero Space: Moving Beyond Organizational Limits (2002). 4. Andrew Davis; Gartner’s Hype Cycle and Tippingpoint Labs’ Life Cycle Analysis (February, 2009); Retrieved on October 12, 2009, from Tippingpoint Labs: http://blog.tippingpointlabs.com/2009/02/gartners-hype-cycleand-tippingpoint-labs-life-cycle-analysis/ 5. Adam Ostrow; Social Media Marketing Budgets on the Rise; Retrieved on October 13, 2009, from Mashable: http://mashable.com/2009/03/23/social-media-marketing-budgets/ 6. BIA/Kelsey; 9% of SMBs Currently Use Twitter to Market Their Businesses, According to BIA/Kelsey (October, 2009); Retrieved on October 27, 2009, from PR Newswire: http://www.prnewswire.com/news-releases/9-ofsmbs-currently-use-twitter-to-market-their-businesses-according-to-biakelsey-65171387.html
97
CHAPTER 6: MARKETING AND SALES PLAN 1. Cone; Cone Finds That Americans Expect Companies to Have a Presence in Social Media (September , 2008); Retrieved on October 26, 2009, from Cone: http://www.coneinc.com/content1182 2. Jason Falls; Advertising Agencies and Social Media: A Culture Clash (September, 2009); Retrieved on October 28, 2009, from Social Media Explorer: http://www.socialmediaexplorer.com/2009/09/21/advertising-agencies-and-social-media-a-culture-clash/ 3. Marshall Kirkpatrick; How Much Do Top Tier Bloggers and Social Media Consultants Get Paid? (October, 2008); Retrieved on October 28, 2009, from ReadWriteWeb: http://www.readwriteweb.com/archives/how_ much_do_top_tier_bloggers_make.php
CHAPTER 7: MANAGEMENT TEAM 1. Larry Weber; Marketing to the Social Web (2009); Page 10.
CHAPTER 8: FINANCIAL INDICATORS 1. Trading Economics; Economic Indicators for 50 Countries (2009); Retrieved on October 25, 2009, from Trading Economics: http://www.tradingeconomics.com/World-Economy/Index.aspx 2. Shar VanBoskirk; Interactive Marketing Nears $55 Billion (July, 2009); Retrieved on October 28, 2009, from Forrester Research: http://blogs.forrester.com/marketing/2009/07/interactive-marketing-nears-55-billion-
98 advertising-overall-declines.html
CHAPTER 9: EXIT STRATEGY 1. Ryan Peddycord; How Obama Raised 87% of his Funds through Social Networking (October, 2008); Retrieved on October 27, 2009, from Resource Nation: http://www.resourcenation.com/blog/how-obama-used-socialnetworking-to-set-fundraising-records
APPENDICES A. PARTNERSHIP, LIMITED COMPANY AND LLC FURTHER EXPLAINED 1. Wikipedia; Besloten Vennootschap met Beperkte Aansprakelijkheid (August, 2009) (Dutch); Retrieved on September 26, 2009, from Wikipedia: http://nl.wikipedia.org/wiki/Besloten_vennootschap_met_beperkte_ aansprakelijkheid#De_Nederlandse_bv 2. Delaware Inc.; International Filings - Form an LLC or Corporation (n.d.); Retrieved on September 26, 2009, from Delaware Inc.: http://www.delawareinc.com/ourservices/int_basic.cfm 3. Delaware Inc.; Business Entity Comparison Chart (n.d.); Retrieved on September 26, 2009, from: Delaware Inc.: http://www.delawareinc.com/101/chart.html 4. Kamer van Koophandel; Bereken de Jaarlijkse Bijdrage (n.d.); Retrieved on September 26, 2009, from Kamer van Koophandel: http://www.kvk.nl/overdekamervankoophandel/030_Factuur_KvK/berekenjaarlijksebijdrage/
99 default.asp?rechtsvorm=2&pc=6229 5. Kamer van Koophandel; Bereken de Jaarlijkse Bijdrage (n.d.); Retrieved on September 26, 2009, from Kamer van Koophandel: http://www.kvk.nl/overdekamervankoophandel/030_Factuur_KvK/berekenjaarlijksebijdrage/ default.asp?rechtsvorm=5&medewerkers=1&vrijstelling+KVK=3&vrijstelling+SER=3&pc=6229 6. KostenVan.nl; Kosten van de Oprichting van een Besloten Vennootschap (n.d.) (Dutch); Retrieved on September 26, 2009, from KostenVan.nl: http://www.kostenvan.nl/oprichting_besloten_vennootschap/ 7. Delaware Inc.; Incorporating 101 (n.d.); Retrieved on September 26, 2009, from Delaware Inc.: http://www. delawareinc.com/101/index.cfm?pageid=10069&menu_item=b6#7
B. SOCIAL MEDIA PARTICIPATION IN CHOSEN TARGET MARKETS 1. CIA; The World Factbook (2009); Retrieved on October 26, 2009, from CIA: https://www.cia.gov/library/publications/the-world-factbook/index.html 2. Groundswell; Consumer Profile Tool (2009); Retrieved on October 26, 2009, from Forrester Research: http:// www.forrester.com/Groundswell/profile_tool.html 3. European average; no specific country data available. 4. Wikipedia; Belgium (October, 2009); Retrieved on October 26, 2009, from Wikipedia: http://en.wikipedia.org/ wiki/Belgium#Languages 5. European Commission; SBA Fact Sheets (2005); Retrieved on October 26, 2009, from European Commission: http://ec.europa.eu/enterprise/policies/sme/facts-figures-analysis/performance-review/index_en.htm
100 6. U.S. Census Bureau; Statistics of U.S. Businesses (2006); Retrieved on October 27, from U.S. Census Bureau: http://www2.census.gov/econ/susb/data/2006/us_state_totals_2006.xls 7. McKinsey Quarterly; How Businesses Are Using Web 2.0 (2007); Retrieved on October 26, from McKinsey Quarterly: https://www.mckinseyquarterly.com/Marketing/Digital_Marketing/How_businesses_are_using_ Web_20_A_McKinsey_Global_Survey_1913?pagenum=3#Exhibit5 8. CIA; The World Factbook (2008); Retrieved on October 26, 2009, from CIA: https://www.cia.gov/library/publications/the-world-factbook/fields/2012.html?countryName=United%20States&countryCode=us&regionCo de=na&#us
101
102
Appendices A. PARTNERSHIP, LIMITED COMPANY AND LLC FURTHER EXPLAINED Partnership (Vennootschap Onder Firma) • Easiest way of incorporation with minimal legal requirements; • Does not have a contributed capital minimum; • The partners pay income tax as the entity is not taxable; • Unlimited personal liability for all partners; • Incorporation costs amount to ¤974 for the first year, and the years thereafter.
Limited Company (Besloten Vennootschap) • A more difficult way of incorporation that also requires some formal meetings, minutes and reporting; • Has a contributed capital minimum of ¤18.0001; • Taxed at the entity level and shareholders receiving dividends are taxed at the individual level;
103 • Typically, shareholders are not personally liable for debts of the company; • Incorporation costs amount to ¤2375,6 for the first year excluding the notary costs ranging from ¤500 to ¤10006. The annual costs for the years thereafter is ¤1475.
Limited Liability Company • A more difficult way of incorporation that also, like a limited company, requires some formal meetings, minutes and reporting; • Does not have a contributed capital minimum; • Not taxed at entity level if partnership tax treatment is used. Profit and loss is passed through directly to the members who pay tax on their distributive share of the entity’s taxable income; • Typically, members are not personally liable for debts of the LLC; • Incorporation costs amount to $4502 (¤302) for the first year including the required agent fees. The costs for the years thereafter is a $50 agent fee plus a franchise tax of $250 totaling $3007 (¤201) annually.
104 PARTNERSHIP3/V.O.F.
Formation
Liability
Raising Capital
Taxation
Formalities Management
LIMITED COMPANY3/B.V.
LIMITED LIABILITY COMPANY3 Incorporation must be filed Incorporation must be filed Incorporation must be filed with the Chamber of Comand executed via a notary with the state through an merce agent Unlimited personal liability Typically, shareholders are Typically, members are not for all of the partners not personally liable for debts personally liable for debts of of the company the LLC Contributions are limited to Shares of stock are usually Potential to sell interests, the partners’ funds sold to raise capital contingent upon operating agreement Not a separate taxable entity. Taxed at the entity level Not taxed at entity level if Partners pay all of the taxes and shareholders receiving properly structured. Profit dividends are taxed at the and loss is passed through individual level directly to the members Minimal legal requirements Some formal meetings, min- Some formal meetings, minutes and reporting is required utes and reporting is required Each partner has an equal Shareholders manage day-to- Members have an operating right to participate in the day operations agreement that outlines manmanagement and control of agement responsibilities the business 
105 PARTNERSHIP3/V.O.F. Existence
Costs Year 1
By default a partnership will terminate upon the death, disability, or even withdrawal of any one partner unless otherwise specified in the partnership agreement. Only with the consent of all partners. C. of C.: ¤97,434
Costs Year 2, 3,...
C. of C.: ¤97,434
Transferability
LIMITED COMPANY3/B.V. Perpetual unless otherwise specified
Restrictions on transferring shares of stock C. of C.: ¤147,225 Notary: ¤500-10006 M. of J.: ¤906 C. of C.: ¤147,225
LIMITED LIABILITY COMPANY3 Perpetual unless otherwise specified
Contingent upon operating agreement restrictions Agent: $4502
Agent: $507 Franchise Tax: $2507
Table A.1: Comparison of Partnership (V.O.F.), Limited Company (B.V.) and Limited Liability Company
106
B. SOCIAL MEDIA PARTICIPATION IN CHOSEN TARGET MARKETS POPULATION (>14 Y/O) (MLN.)1,4 The Netherlands Belgium (Flanders) Germany United Kingdom Ireland United States
The Netherlands Belgium (Flanders) Germany United Kingdom Ireland United States
13,8 5,2 71,1 50,9 3,3 245,2 SMALL/MEDIUM EMPLOYERS5,6
WITH 10-250 EMPLOYEES5,6
492.240 233.165 1.657.194 1.582.576 84.412 5.982.000
50.655 17.361 283.657 199.265 12.072 1.227.961
Table A.2: Social Media Participation in Chosen Target Markets
PEOPLE ACTIVE IN SOCIAL MEDIA (MLN./%)2 10,1 (73%) 3,1 (60%)3 34,1 (48%) 32,1 (63%) 2,0 (60%)3 201,1 (82%) OPERATING IN BUSINESSES ACTIVE SERVICE/RETAIL IN SOCIAL MEDIA SECTOR8 (ABS./%)7 36.927 10.340 (28%)3 13.212 3.699 (28%)3 196.007 54.882 (28%)3 148.452 41.567 (28%)3 5.915 1.656 (28%)3 977.457 288.350 (29,5%)
107
C. CALCULATION OF DEPRECIATION/CHANGES IN LONG-TERM ASSETS
Trademark Computer Software Software Update Office Equipment DEPRECIATION Trademark Computer Software Software Update Office Equipment
Total L-TERM ASSETS Sale LT. Assets Purch. LT. Assets
PRICE LIFE (YEARS) SALVAGE (ABS./%) 1.325 10 0 (0%) 5.615 3 1.684,50 (30%) 2.975 2 595 (20%) 1.746 2 349,10 (20%) 250 5 0 (0%)
DEPR. PER YEAR DEPR. PER MONTH 132,5 11,04 1.310,17 109,18 793,33 66,11 698,21 58,18 50 4,17
YEAR 1 132,5 1.310,17 793,33 50
YEAR 2 132,5 1.310,17 793,33 50
YEAR 3 132,5 1.310,17 698,21 50
YEAR 4 132,5,5 1.310,17 698,21 50
YEAR 5 132,5 1.310,17 698,21 50
2286
2286
2190,87
2190,87
2190,87
-
-
595 1.746
1.684,50 5.615
349,10 1.746
Table A.3: Calculation of Depreciation/Changes in Long-term Assets
108
D. PRO FORMA SALES FORECAST (MONTHLY) UNIT SALES
MONTH 1
MONTH 2
MONTH 3
MONTH 4
MONTH 5
3
3
4
4
5
0
0
0
3
4
0 0 0
0 0 0
0 0 0
0 0 0
2 2 0
0 0
0 0
0 0
0 0
0 0
0 0 0
0 0 0
0 0 0
0 0 0
2 2 1
3
3
4
7
18
MONTH 1 ¤45
MONTH 2 ¤45
MONTH 3 ¤45
MONTH 4 ¤45
Social Media Marketing Monitoring
Planning & Application Planning
Application Social Network Management Blogger Outreach Community Management
Extension & Development Extension Development
Search Engine Marketing Keyword Analysis SEO Paid Search Advertising
Total Unit Sales UNIT PRICES All Services
MONTH 5 ¤45
109
MONTH 6
MONTH 7
MONTH 8
MONTH 9
MONTH 10
MONTH 11
MONTH 12
5
6
6
7
7
8
8
4
5
5
5
5
6
6
2 2 0
3 2 0
3 2 0
3 2 0
3 2 0
3 2 3
3 2 3
0 1
0 2
0 3
3 4
3 5
4 6
4 7
2 2 1
2 2 1
2 2 1
2 2 1
2 2 1
4 4 2
4 4 2
19
23
24
29
30
42
43
MONTH 6 ¤45
MONTH 7 ¤45
MONTH 8 ¤45
MONTH 9 ¤45
MONTH 10 ¤45
MONTH 11 ¤45
MONTH 12 ¤45
110 SALES
MONTH 1
MONTH 2
MONTH 3
MONTH 4
MONTH 5
135
135
180
180
225
0
0
0
135
180
0 0 0
0 0 0
0 0 0
0 0 0
90 90 0
0 0
0 0
0 0
0 0
0 0
0 0 0
0 0 0
0 0 0
0 0 0
90 90 45
¤135
¤135
¤180
¤315
Social Media Marketing Monitoring
Planning & Application Planning
Application Social Network Management Blogger Outreach Community Management
Extension & Development Extension Development
Search Engine Marketing Keyword Analysis SEO Paid Search Advertising
Total Sales
¤810
111 MONTH 6
MONTH 7
MONTH 8
MONTH 9
MONTH 10
MONTH 11
MONTH 12
225
270
270
315
315
360
360
180
225
225
225
225
270
270
90 90 0
135 90 0
135 90 0
135 90 0
135 90 0
135 90 135
135 90 135
0 45
0 90
0 135
135 180
135 225
180 270
180 315
90 90 45
90 90 45
90 90 45
90 90 45
90 90 45
180 180 90
180 180 90
¤855
¤1.035
¤1.080
¤1.305
¤1.350
¤1.890
¤1.935
112 DIRECT UNIT COSTS All Services
MONTH 1 ¤0
MONTH 2 ¤0
MONTH 3 ¤0
MONTH 4 ¤0
MONTH 5 ¤0
DIRECT COST OF SALES All Services
MONTH 1 ¤0
MONTH 2 ¤0
MONTH 3 ¤0
MONTH 4 ¤0
MONTH 5 ¤0
¤0
¤0
¤0
¤0
Subtotal Direct Cost of Sales
¤0
113 MONTH 6 ¤0
MONTH 7 ¤0
MONTH 8 ¤0
MONTH 9 ¤0
MONTH 10 ¤0
MONTH 11 ¤0
MONTH 12 ¤0
MONTH 6 ¤0
MONTH 7 ¤0
MONTH 8 ¤0
MONTH 9 ¤0
MONTH 10 ¤0
MONTH 11 ¤0
MONTH 12 ¤0
¤0
¤0
¤0
¤0
¤0
¤0
¤0
Table A.4: Pro Forma Sales Forecast (Monthly)
114
E. PRO FORMA PROFIT AND LOSS (MONTHLY) SALES
Total Sales Direct Cost of Sales Other Cost of Sales
Total Cost of Sales Gross Margin Gross Margin (%) EXPENSES Payroll Marketing & Promotion Depreciation Utilities Insurance Other Services General Supplies
Total Operating Expenses
MONTH 1
MONTH 2
MONTH 3
MONTH 4
MONTH 5
¤135 0 102 ¤102
¤135 0 102 ¤102
¤180 0 102 ¤102
¤315 0 102 ¤102
¤810 0 102 ¤102
¤33 24,44%
¤33 24,44%
¤78 43,33%
¤213 67,62%
¤708 87,41%
0 250 191 130 39 67 20
0 250 191 134 39 67 20
0 250 191 138 39 67 21
0 200 191 142 39 67 21
0 150 191 146 39 67 22
¤697
¤701
¤705
¤660
¤614
115
MONTH 6
MONTH 7
MONTH 8
MONTH 9
MONTH 10
MONTH 11
MONTH 12
¤855 0 102 ¤102
¤1.035 0 102 ¤102
¤1.080 0 102 ¤102
¤1.305 0 102 ¤102
¤1.350 0 102 ¤102
¤1.890 0 102 ¤102
¤1.935 0 102 ¤102
¤753 88,07%
¤933 90,14%
¤978 90,56%
¤1.203 92,18%
¤1.248 92,44%
¤1.788 94,60%
¤1.833 94,73%
0 153 191 151 39 67 22
0 156 191 155 39 67 23
0 159 191 160 39 67 23
0 162 191 165 39 67 23
0 166 191 170 39 67 24
0 169 191 175 39 67 24
0 172 191 180 39 67 25
¤622
¤630
¤639
¤647
¤656
¤665
¤674
116 PROFITS Profit Before Interest & Taxes EBITDA Interest Expense Tax Incurred
Net Profit Net Profit/Sales (%)
MONTH 1 (664) (473) 0 (199) (¤464)
MONTH 2 (668) (477) 0 (200) (¤467)
MONTH 3 (627) (437) 0 (188) (¤439)
MONTH 4 (447) (256) 0 (134) (¤313)
-344,04%
-346,27%
-243,92%
-99,28%
MONTH 5 94 284 0 28 ¤65
8,08%
117 MONTH 6 131 321 0 39 ¤91
MONTH 7 303 493 0 91 ¤212
MONTH 8 339 530 0 102 ¤238
MONTH 9 556 747 0 167 ¤389
MONTH 10 592 783 0 178 ¤415
MONTH 11 1.123 1.314 0 337 ¤786
MONTH 12 1.159 1.350 0 348 ¤812
10,70%
20,47%
22,00%
29,82%
30,72%
41,61%
41,94%
Table A.5: Pro Forma Profit and Loss (Monthly)
118
F. PRO FORMA CASH FLOW (MONTHLY) CASH RECEIVED
MONTH 1
MONTH 2
MONTH 3
MONTH 4
MONTH 5
0 5 ¤5
0 135
0 137
0 185
0 332
¤135
¤137
¤185
¤332
22 0 0 0 0 0 0 0
22 0 0 0 0 0 0 0
30 0 0 0 0 0 0 0
52 0 0 0 0 0 0 0
133 0 0 0 0 0 0 0
¤27
¤157
¤166
¤236
Cash from Operations Cash Sales Cash from Receivables
Subtotal Cash from Operations Additional Cash Received Sales Tax Received Cash from Receivables New Current Borrowing New Other Liabilities New Long-term Liabilities Sales of Other Current Assets Sales of Long-term Assets New Investment Received
Subtotal Cash Received
¤464
119
MONTH 6
MONTH 7
MONTH 8
MONTH 9
MONTH 10
MONTH 11
MONTH 12
0 812
0 861
0 1.037
0 1.088
0 1.307
0 1.368
0 1.892
¤812
¤861
¤1.037
¤1.088
¤1.307
¤1.368
¤1.892
140 0 0 0 0 0 0 0
170 0 0 0 0 0 0 0
177 0 0 0 0 0 0 0
214 0 0 0 0 0 0 0
221 0 0 0 0 0 0 0
310 0 0 0 0 0 0 0
317 0 0 0 0 0 0 0
¤952
¤1.031
¤1.214
¤1.302
¤1.528
¤1.678
¤2.209
120 EXPENDITURES
MONTH 1
MONTH 2
MONTH 3
MONTH 4
MONTH 5
0 232
0 411
0 421
0 433
0 503
¤232
¤411
¤421
¤433
¤503
0 0 0 0 0 0 0
0 0 0 0 0 0 0
0 0 0 0 0 0 0
0 0 0 0 0 0 0
0 0 0 0 0 0 0
¤232
¤411
¤421
¤433
¤503
(¤205) ¤4.795
(¤254) ¤4.541
(¤255) ¤4.286
(¤197) ¤4.089
Expenditures from Operations Cash Spending Bill Payments
Subtotal Spent on Operations Additional Cash Spent Sales Tax Paid Out Principal Repayment of Cur. Borrowing Other Liabilities Principal Repayment Long-term Liabilities Principal Repaym. Purchase Other Current Assets Purchase Long-term Assets Dividends
Subtotal Cash Spent Net Cash Flow Cash Balance
(¤39) ¤4.050
121 MONTH 6
MONTH 7
MONTH 8
MONTH 9
MONTH 10
MONTH 11
MONTH 12
0 565
0 607
0 644
0 693
0 736
0 840
0 924
¤565
¤607
¤644
¤693
¤736
¤840
¤924
0 0 0 0 0 0 0
0 0 0 0 0 0 0
0 0 0 0 0 0 0
0 0 0 0 0 0 0
0 0 0 0 0 0 0
0 0 0 0 0 0 0
¤565
¤607
¤644
¤693
¤736
¤840
1.085 0 0 0 0 0 0 ¤924
¤387
¤424
¤570
¤608
¤792
¤838
¤200
¤4.437
¤4.861
¤5.431
¤6.039
¤6.830
¤7.668
¤7.868
Table A.6: Pro Forma Cash Flow (Monthly)
122
G. PRO FORMA BALANCE SHEET (MONTHLY) ASSETS
START
MONTH 1
MONTH 2
MONTH 3
MONTH 4
Cash Accounts Receivable Other Current Assets
5.000 0 0
4.795 131 0
4.541 131 0
4.286 174 0
4.089 305 0
Total Current Assets
¤5.000
¤4.925
¤4.672
¤4.460
¤4.393
10.165 0
10.165 191
10.165 381
10.165 572
10.165 762
¤10.165 ¤15.165
¤9.975
¤9.784 ¤14.456
¤9.594 ¤14.054
Current Assets
Long-term Assets Long-term Assets Accumulated Depreciation
Total Long-term Assets Total Assets
¤14.900
¤9.403 ¤13.796
123
MONTH 5
MONTH 6
MONTH 7
MONTH 8
MONTH 9
MONTH 10
MONTH 11
MONTH 12
4.050 783 0
4.437 827 0
4.861 1.001 0
5.431 1.044 0
6.039 1.262 0
6.830 1.305 0
7.668 1.827 0
7.868 1.871 0
¤4.833
¤5.263
¤5.861
¤6.475
¤7.300
¤8.135
¤9.495
¤9.738
10.165 953 ¤9.213
10.165 1.143
10.165 1.334
10.165 1.524
10.165 1.715
10.165 1.905
10.165 2.096
10.165 2.286
¤9.022 ¤14.285
¤8.832 ¤14.693
¤8.641 ¤15.116
¤8.451 ¤15.751
¤8.260 ¤16.395
¤8.070 ¤17.564
¤14.045
¤7.879 ¤17.617
124 LIABILITIES AND CAPITAL
START
MONTH 1
MONTH 2
MONTH 3
MONTH 4
0 0 0
177 0 22
179 0 44
186 0 74
189 0 125
¤0
¤199
¤223
¤260
¤315
0
0
0
0
0
¤0
¤199
¤223
¤260
¤315
16.362 (1.197) 0
16.362 (1.197) (464)
16.362 (1.197) (932)
16.362 (1.197) (1.371)
Total Capital Total Liabilities and Capital
¤15.165 ¤15.165
¤14.701 ¤14.900
¤14.233 ¤14.456
¤13.794 ¤14.054
16.362 (1.197) (1.684) ¤13.481 ¤13.796
Net Worth
¤15.165
¤14.701
¤14.233
¤13.794
¤13.481
Current Liabilities Accounts Payable Current Borrowing Other Current Liabilities
Total Current Liabilities Long-term Liabilities
Total Liabilities Paid-in Capital Retained Earnings Earnings
125 MONTH 5
MONTH 6
MONTH 7
MONTH 8
MONTH 9
MONTH 10
MONTH 11
MONTH 12
240 0 258
248 0 399
274 0 568
282 0 745
314 0 959
323 0 1.181
396 0 1.491
404 0 723
¤498
¤647
¤842
¤1.028
¤1.274
¤1.504
¤1.886
¤1.128
0
0
0
0
0
0
0
0
¤498
¤647
¤842
¤1.028
¤1.274
¤1.504
¤1.886
¤1.128
16.362 (1.197) (1.618)
16.362 (1.197) (1.527)
16.362 (1.197) (1.315)
16.362 (1.197) (1.077)
16.362 (1.197) (688)
16.362 (1.197) (273)
16.362 (1.197) 513
16.362 (1.197) 1.325
¤13.547 ¤14.045
¤13.638 ¤14.285
¤13.850 ¤14.693
¤14.088 ¤15.116
¤14.477 ¤15.751
¤14.892 ¤16.395
¤15.678 ¤17.564
¤16.490 ¤17.617
¤13.547
¤13.638
¤13.850
¤14.088
¤14.477
¤14.892
¤15.678
¤16.490
Table A.7: Pro Forma Balance Sheet (Monthly)
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