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Business Plan
OWNERS Darius Oosthuizen Business name: Address:
Telephone: Fax: Email:
SuperMAGazine© Fuchsia Str 19 Karen Park Pretoria, South Africa, 0118 +27 76 467 8985 +27 12 549 3638 superdarius@gmail.com
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I.
Table of contents
I.
Table of contents .................................................................................................... 2
II.
Executive summary ............................................................................................... 3
III.
General Company Description ............................................................................ 4
IV.
Products and services ............................................................................................ 5
V.
Marketing plan ....................................................................................................... 7
VI.
Operational Plan .................................................................................................. 22
VII. Management and organisation .......................................................................... 32 VIII. Start‐up Expenses and Capitalisation ............................................................... 34 IX.
Financial plan ....................................................................................................... 35
X.
Appendixes ........................................................................................................... 37
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II.
Executive summary
SuperMAGazine© is a project Darius Oosthuizen has been working on for seven years. It is a digital magazine published on an enhanced CD‐ROM on a monthly basis, as well as on an online website. The main target is young adults in South Africa. It generates income from advertisers, who needs an innovative and modern technique to get its message across to the target market. The content of SuperMAGazine© is modern entertainment, which includes videos, photos, animation, free software and games. This is a new initiative that will catch a new and modern audience as the world moves to a digital era. Other magazines have been looking into new products like this in the past years and are planning a shift in their way of communicating. SuperMAGazine© plans to be first in the industry. Although online magazines do exist, a magazine published on a CD or DVD is not yet on the market. To make this task possible, SuperMAGazine© will need finances. A R 70, 000 overdraft is needed to survive the first two months of business. Set up costs include computer equipment, software and monthly expenses. For the start‐up computer equipment a R 47, 981.40 financing option in at least twelve month payback period is requested. Concise financial planning subsists in this document to ensure success. An interest rate of prime + 1 is proposed on the loan and overdraft. Please look at the demo model attached (appendix A) in this document for SuperMAGazine© to get an idea of how everything are put together, including demo content and advertisements. This is only a demo model and is not going to be used as a published magazine. All advertisements are purely for demonstration purposes. The companies advertised on the demo model are NOT involved in SuperMAGazine©. Also, this demo magazine does not include articles or content which will be used in an issue. It is only to demonstrate the possibilities and layouts of the intended magazine.
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III.
General Company Description
SuperMAGazine© is in the published entertainment media industry. SuperMAGazine© is a digital magazine published on an enhanced CD‐ROM as a monthly entertainment and information magazine which targets young adults in South Africa. Mission Statement: To be South Africa’s first and leading Digital Magazine published on a CD / DVD ROM media and be unique in our own way. Also be most popular to our intended market, as well as to advertisers. Our aim is to keep our high moral values, while still being hip and trendy in our content. SuperMAGazine© aspires to become an international published entertainment magazine in at least ten year’s time. The entertainment industry becomes more and more technology driven and to take advantage of that SuperMAGazine© will take the benefits of the Internet, magazines, television, radio and computer/television games and combine them into a compact collectable media. SuperMAGazine© is a unique and innovative concept which takes advantage of the more technology driven market, transforming old entertainment media into a fashionable collectable medium. To the advertising market SuperMAGazine© is focussed to combine different ways of advertising into one easy and extensive direction, which is technology motivated. In terms of advertising SuperMAGazine© will have no boundaries in methods for getting the message across to the expected market, which advances over printed media, television, radio and billboards, similar to websites and the Internet. The selected legal form of ownership is a closed corporation.
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IV.
Products and services
The following outlines the dynamics of the intended magazine (attached find a demo copy of the magazine – appendix A): • A digital interactive magazine published and distributed on an enhanced CD‐ROM enclosed in a cardboard cover with full color printing. • The magazine and its contents is in HTML format with Flash and Java technology, not too advanced as it has to be universal for any operating system and Internet browser. • The concept is similar to a website, which it will also be hosted on, but, because of South Africa’s lack of Internet bandwidth, is not yet obtainable by the largest part of the market. • Content will include articles on trendy topics, especially health, wealth, entrepreneurship, fitness, beauty, lifestyle, advice on general issues, music, albums, software, websites, humoristic content, movies, television programs, cars and sport. • Content will also consist of 30% user contributed material, which will be requested from readers to be sent via email and suggestions. This type of bits and pieces that will be published in an issue will not be paid for, but the provider will receive credit, as well as the initiator, after being approved by SuperMAGazine©. • Video clips as a substitute to written interviews. Animated cartoons in video or Flash format, as well as free music, software, game demos, movie trailers as promotional content for related organisations. • Advertisements captured on the CD / DVD as a separate full page, like the company’s webpage with technologies like Flash, video and/or demo material. • Quick links to all sections of the magazine, as well as websites on the Internet. • Interactive content, like feedback, competitions, humoristic and fun games and Flash objects. • Sponsored content from other companies who will use it as promotional means. • The possibilities prove to be endless. For strategic purposes SuperMAGazine© will be distributed freely to a selected market and end up in households in Pretoria and surrounding regions on a limited scale first. The intended market will be reached by strategically selecting areas and ways to distribute. Potential considerations include: • Giving it out with a popular university newspaper. • Handing it out on a campus. • Placing it in computer shops. • Handing out an amount of CD’s at schools for matric students. • Making use of promotion people to hand it out in the streets and in shopping areas. • Making use of a distribution company. SuperMAGazine business plan.doc Created on 4/10/2008 11:42:00 PM
Page 6 of 37 Some or all of the abovementioned methods will be used until the distribution target of 30, 000 copies is circulated. This target will grow from time to time. Marketing will ensue by means of promotional exertion. Proposals to a local radio station, Tuks FM, about promotional events are already being discussed. An advertising space on radio airtime will be arranged in turn for an advertising space on the magazine for the relevant radio station. Discussions will be made with Tuks FM on potential promotional activities and assistance in marketing and distribution. Because of the nature of the intended market, being young adults and mostly students, Tuks FM is the perfect marketing centre point. Distribution will be initiated at the University of Pretoria, which Tuks FM is the radio station for. The statistics, quantities and percentages of the market related to the anticipated distribution and advertised areas are mentioned in a following section. SuperMAGazine© will also be distributed on a subscription basis to a network of subscribers, which will grow rapidly. The abovementioned network is already selected through a networking website called Facebook. All the members are in the intended market and have got access to a computer. The members knowingly subscribed for receiving the magazine and requests for entering new members will be submitted to the members on a regular basis. The first level members of the networking group will maintain a lifetime free subscription to the magazine for the effort and out of appreciation for joining. The magazine will be sent to the subscribers via post and the prices for that will be revealed shortly. A maximum of 100 members are budgeted for. Newsletters and updated information will be sent to the members on the content and market related issues. Marketing research will also be collected from these members systematically. The strategy behind this is to build on a loyal fan base and projected to market the product through word of mouth. In a year’s time SuperMAGazine© will be advertised and sold through paying subscribers and sold on newsstands throughout South Africa. The price for the magazine will be market related and cost effective at R29 (excluding VAT) for buying it from the shelf and R21 (excluding VAT) for subscribers. This price includes production and distribution prices with a small profit added, with price risings kept in mind. A projection of this will be covered later. The main income will be generated through advertising. Please find the pricing structure for the advertisements attached.
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V.
Marketing plan
Economics Facts about industry: SuperMAGazine©’s main market is young adults, between 18 and 30 years of age, in LSM (Living Standards Measure) 6 to 10. Male and female of all races are part of the intended market. Attached (appendix B) find some examples of marketing research for SuperMAGazine©’s market. These attached documents are extracted from SAARF’s (South African Advertising Research Foundation) website. The highlights are drew from the marketing research documents to show a wider image of the intended market, the growth of the market and proof that South Africa is becoming more and more technology dependent. Information is also extracted about the main magazines SuperMAGazine© would get inspiration from and would like to be associated with, like Cosmopolitan, HEAT, CAR, FHM, ZOO, Men’s Health, SA Sports Illustrated, PC Format, People, GQ SA, SL, Computer SA, SA Dance and Music, Bike SA, Speed and Sound and Blunt magazines. These are all random comments about the intended market and are only meant to state assumptions of the tastes and likes of the market for SuperMAGazine©. Comments on each highlight follows: A1 Population of South Africa, 16+ (years of age): 30,903,000 (2006) from 24,539,000 (1994) LSM 6 – Up to almost 20% (2006) from about 12% (1994) LSM 7 – Up to about 15% (2006) from about 11% (1994) LSM 8 – Constant at about 6% of total population (2006), slightly less than in 2000 A2 In Gauteng (2006): LSM 6 – Almost 35%, more than 5% more than in 2000 LSM 7 – More than 25%, 3% more than in 2000 LSM 8 – More than 10%, slightly less than in 2000 A3 Femina and Cosmopolitan, two popular female interest magazines’ readers are mostly between LSM 6 – 10 in 2006. A4 Bona and Cosmopolitan’s readers are mostly between 20 – 34 years of age. A5 Male and female readers are more or less equal in reading magazines. A6 LSM 6 – 10 earns between R4, 400 and R19, 974 per month per household. A7 The number of people in each LSM: LSM 6 – 14.4% LSM 7 – 7.8% LSM 8 – 5.7% LSM 9 – 6.7% LSM 10 – 6% SuperMAGazine business plan.doc Created on 4/10/2008 11:42:00 PM
Page 8 of 37 A8 Gauteng’s LSM 1‐4 is second least of any other province in South Africa. More than 60% of Gauteng’s area is urban. A9 LSM 7, 8 Demographics: Media – Magazines; Accessed Internet in the last four weeks. LSM 8 Demographics: General – Full ownership of PC A10 LSM 9, 10 Demographics: Media: Magazines; Accessed Internet in the last four weeks; Full ownership of PC B1 Population of South Africa in 2000 grew from 1980 a lot more in each race group. B2 Estimated population figures in 2010 ‐ 2015 are up to 44, 939, 000, getting less in 2020 ‐ 2025 to 43, 683, 000. B3 Fertility rate getting lower in a few years, but staying relatively stable in white race. B4 Life expectancy is tumbling in a few years before getting more, but staying relatively stable in the white race group. B5 Population is staying relatively stable in all race groups over the next 12 years. B6 Total population in 2011 is up to 48, 130, 335, getting more, but stable. B7 Growth rates in population are staying stable, but make downward curves. B9 Population in Gauteng in 2005 was 9, 018, 000, but grew from 2001. B10 Number of deaths increases. Less youth, more aged. C1 20.6% of adults in SA lives in Gauteng. C2 Average household income is up to R5, 319 per month in 2007, getting higher since 2000. C3 The average household income of LSM 7 ‐ 10 varies from R7, 579 to R20, 278 per month. C4 LSM 7 ‐ 10 got much more part of the population since 2004. C5 Fewer blacks are part of LSM 7 – 10 groups. C6 Whites, Coloureds and Indians are more in LSM 7 ‐ 10 groups. C7 Although average household income increased a lot in black race, but is still a lot more in white, coloured and Indian race. C8 Average household income in LSM 8 ‐ 10 is pretty much equal in all races. C9 Education is getting higher in South Africa. C10 Literacy and education among adults in South Africa got a significant increase from 2006. C11 Unemployment has decreased in SA. C12 Electricity in homes increased from 1996. C13 56% of all adults in SA owns a cell phone, whereas 70.5% of them are white, coloureds and Indians. C14 Cell phone owners, electricity and water users are increasing. D1 Magazine readership has increased since 2006. D3 Growth in number of publications in magazines has increased a lot since 2005. D4 Magazines usually get shared by 4.12 people and that amount increased since 2006. D5 Magazine readership is more in LSM groups 7 – 10. D6 Magazine readership has decreased in groups LSM 7 ‐ 10 since 2006. SuperMAGazine business plan.doc Created on 4/10/2008 11:42:00 PM
Page 9 of 37 D7 Magazine readership has increased in Gauteng and is second most in SA. D8 Monthly magazines is more than any other, but has decreased since 2002. D9 Magazine penetration has increased. D10 Magazines in the following genres have increased: Male interest; sport; female interest; general English; youth and specialist. D11 CAR magazine is number one in male interest genre. D12 FHM, Men’s Health and GQ SA have increased in readership. D13 Cosmopolitan’s readership has increased. D14 SA Sports Illustrated and Kickoff has increased since 2006. D15 People magazine has increased its readership. D16 SL magazine has been stable in its readership, while HEAT magazine’s readership has increased. D17 PC Format and Computer SA magazine’s readerships have increased slightly. D18 GQ SA, Men’s Health, SL, PC Format, FHM, People has between 10.3 and 6.8 readers per copy. D20 The average household income for the GQ SA and PC Format magazine readers are around R14, 848 per month. D23 Average age for Computer SA, Cosmopolitan, SA Sports Illustrated, Men’s Health and People magazines is between 33 and 34 years of age. D24 Average age for Computer SA, Cosmopolitan, SA Sports Illustrated, Men’s Health and People magazines is between 33 and 34 years of age. E1 Internet access has significantly increased in LSM 8 ‐ 10, as well as the total population in SA. E2 Internet users’ profile is on average more between 16 and 34 years of age and in LSM 7 – 10. E3 Top sports interest for men is soccer, cricket, boxing, wrestling and rugby. E4 Sport most men participate in is soccer, whereas 4% of South African men play rugby and cricket each. E5 Sport interest between women is more soccer than anything else, whereas cricket enjoys a 14% interest among women. E6 Participation in soccer is among 3% of women. E7 Music genre’s which adults in South African listen to is more Gospel and Kwaito. Under 35 years of age adults enjoy House music and Rap/Hip‐Hop more. E9 A significant increase in adults’ ownership of DVD players in South Africa has become an average. E10 Between 2006 and 2007 an 11% increase has happened in accessing the Internet in South Africa. E11 DIY activities in the past month have increased by 4% for adults between 2006 and 2007. Gym/health activities in the past month have also increased by 10% since 2006. E12 43.5% of adults in SA has read a book in the past month in 2007. F1 Tuks FM, SuperMAGazine©’s main marketing radio station has reached 32, 000 listeners in February 2008 in the past seven days.
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Page 10 of 37 Forecasts show that in 2011 the South African population will be about 47, 958, 250 adults. Out of that number 40.6% will be part of LSM 6 – 10, which is about 19, 471, 050 adults. Out of this number approximately 20% will live in Gauteng, which are 3, 699, 500 adults. 15.6% of this number is between 20 and 29 years of age, which covers a large part of the intended market of 577, 122 adults. As Gauteng is the basis of SuperMAGazine©’s distribution, the number of young adults (between 18 and 30 years of age) in LSM 6 – 10 is approximately 577, 122 people in Gauteng. This will be the market for SuperMAGazine© in the first year. From these numbers it is assumed that 90% of LSM 7 – 10 has access to a computer and that approximately 2.5 people will share one copy of SuperMAGazine© between households and friends, which means that in Gauteng the possibility exist for 129, 853 copies to be distributed in the first year. This also means that this number of readers will see an advertisement from an advertiser in Gauteng. The strategy around the network created on Facebook (mentioned earlier) aspires to get SuperMAGazine© started all over South Africa. After a year SuperMAGazine© will be sold all over South Africa, which means the intended market will be 649, 262 people. Obviously SuperMAGazine© will aim to reach 100% of the market, but with a reach of 10% of the intended market SuperMAGazine© will already have 12, 986 readers in Gauteng and 64, 926 readers in South Africa. The current demand for digital entertainment can be weighed by looking at the number of members a networking website like Facebook has. The Facebook South African network consists of about 600, 000 members, which is second most in the world. This means that about 600, 000 people in South Africa have an Internet connection and a computer at home or at work and that these people are interested in digital entertainment. The magazine industry in South Africa is moving in a digital direction as needs change. SuperMAGazine© will open a new chapter in the entertainment industry. The possibility of growth exists as the population grows and LSM 7 – 10 is growing in population. As the statistics show the use of cellular phones, DVD players and access to the Internet grows, this means growth in the industry does have prospect. Barriers SuperMAGazine© will face in entering the market includes: • • • • • •
High capital costs High production costs High marketing / promotional costs High distribution costs Consumer acceptance / brand recognition Training / skills
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Page 11 of 37 • •
Unique technology High research costs
The abovementioned barriers can be overcome by concentrating on the following: •
High capital costs o Providing unique and dynamic ways of marketing for advertising clients, providing a vast income. o Using capital distinctively to add value to the end product and to advertising clients. o Providing the customers of the advertising clients with easy access to their products and services. o Making use of sponsors as much as possible. • High production costs o The effect of the low internet bandwidth in South Africa, SuperMAGazine© must ensure that the magazine is of more value to the end consumer than available media on, for instance, the Internet. o Making it worthwhile for the reader to rather get the magazine on a disc than search for similar content elsewhere, such as on the Internet or other magazines. • High marketing / promotional costs o Ensuring that the content is popular enough to initiate word of mouth marketing. o Making use of the best methods of marketing and promotion, which is best for the intended market. o Making use of sponsors as much as possible. • High distribution costs o Making use of effective distribution. o Ensuring that the content is of enough value to get more subscribers, which will make distributing easier and cheaper. • Consumer acceptance / brand recognition o Ensuring SuperMAGazine© scores a high popularity with its readers. • Training / skills o Employing the right people by doing extensive searching when occupying freelance and permanent employees. o Keeping on top of technologies and potential market / technology changes. o Keeping on top of new technologies and take advantage of that to ensure future success. o Making use of sponsors as much as possible. • Unique technology o Being first in the market. o Staying unique in content, technology and layouts. o Keeping in mind of what technologies customers (readers and advertisers) need and want, as well as understand. o Making use of sponsors as much as possible. SuperMAGazine business plan.doc Created on 4/10/2008 11:42:00 PM
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High research costs o Using the Internet for most of the research and keeping travel and interviewing to a minimum. o Making sure that when doing research by travelling, articles will be of great value. o Making use of sponsors as much as possible.
The following can affect the future of SuperMAGazine© and will be handled in the following ways: Change in technology and the published entertainment industry SuperMAGazine© will have an advantage of being on the basis of cutting edge technology. SuperMAGazine© can and will take advantage of any change in technologies. Where most of the published entertainment industries are now working on ways to become more efficient in the new technology driven market, SuperMAGazine© will start off as a root and an example of how the new market should be handled.
Product Features and Benefits o SuperMAGazine© as an advertising media for industries and businesses all around South Africa which markets relate to those of SuperMAGazine©. • Features: A widely covered market with quick access to the advertised products or services, their websites and contact details. A unique way of advertising similar to web content with a variety of choices in how much the advertisers need to spend and how popular their advertisement needs to be. A full page on the magazine disc of the advertiser’s choice of content with direct links to their websites and shopping sites. Links to the advertising page all over the magazine related to the content of the magazine. Promotional content with infinite possibilities and an assortment of choices for the advertiser. • Benefits Financial and marketing control to the advertiser. Control over the methods of publicity. Pride and satisfaction over the association with the content provided. o SuperMAGazine© as a digital published entertainment magazine. • Features A fun and exciting new entertainment medium, jam‐packed with trendy, interesting and modern material. An attractive way to bring the promoter to the consumer with easy accessible links. SuperMAGazine business plan.doc Created on 4/10/2008 11:42:00 PM
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•
An entertaining and interactive way of browsing through the content. Multimedia content as a substitute to previous written or ‘dead’ content. Bringing the reader easily available opportunities to give feedback on the articles and topics they want to read about. Giving the reader the opportunity to comment and discuss the issues at hand in an entertaining and interactive way. Articulating new ideas and advice to the readers about relative matters. Keeping the readers up to date on news and events in the local environments and on their interests and hobbies. Benefits A feeling of belonging to the reader. Interaction with the magazine. An innovative and modern way of entertainment and researching. A satisfied sense from accumulating every issue of SuperMAGazine©. A passion for the new, innovative, modern culture and desire for the next issue. A sense of communicating to ones inner self through reading about correlated issues and matters.
After sales service All advertisers will receive a published disc to be sure of the success of their published advertisement. This will be available to plan their future advertisements and links. Any disc that does not work properly on a reader’s PC will be under warrantee and will undergo tests to avoid such problems in the future. Also SuperMAGazine© will have a technical help telephone line, as well as an online help site to get technical assistance from. A frequently asked questions section on the magazine will also be updated with any recent and frequent problems readers might have with the product.
Customers The targeted customers (readers) are as follows: o o o o o o o
Age: 18 – 30 years of age Gender: Male and Female Location: South Africa Race: All race groups Living Standards Measures: LSM 6 – 10 Business people; house wives; students; young working adults Education: High school education, literate and computer literate people
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Page 14 of 37 o Interests and activities: Sport, music, health, fitness, wealth, entrepreneurship, entertainment, television, films, games, computers, gossip, news and education. The targeted advertisers are as follows: o Industries: • Technology industries • Software and gaming industry • Television and film industry • Music industry • Health and fitness industry • Beauty and hygiene industry • Sport and accessories industry • Motor vehicle industry • Food industry • Fast food industry o Location: South Africa o Size: Large companies o Quality: High quality companies
Competition As a published media SuperMAGazine© will have many competitors and with digital published media SuperMAGazine© will have the Internet to compete, but in the sense of published digital entertainment on a CD, SuperMAGazine© is quite unique. Major competitors: • • • • •
FHM Magazine Sandton, Johannesburg ,South Africa ZOO Magazine Sandton, Johannesburg, South Africa MonkeyMag.co.uk United Kingdom, Internet SL Magazine Sandton, Johannesburg, South Africa EasyInfo Sandton, Johannesburg, South Africa
These are some examples of competitors in the published entertainment industry. FHM, ZOO and SL magazine are printed magazines and will compete with SuperMAGazine© on entertainment value. Considering that they are printed magazines, SuperMAGazine© is quite unique in its effort of becoming a digital magazine with content which is alive, moving and has sound and interactive capabilities.
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Page 15 of 37 MonkeyMag.co.uk is a digital online magazine from the United Kingdom. It is free and is always available to its readers. Its content is amazing, but is unknown in South Africa. Its advertisers are also from abroad and do not affect my business. FHM is busy with a digital magazine like SuperMAGazine© and will be distributed freely with their printed magazine. It is not yet on the market. EasyInfo is an advertisement company which has many ways of advertising options for customers, which includes a CD with an index of all the companies advertising on it. They only concentrate on adverts and does not have any entertainment value added to their product. SuperMAGazine© will still be a unique product as it will concentrate on content and invest in quality articles to stand out above the other entertainment media. Table 1: Competitive Analysis Factor
SuperMAGazine©
Strength
Weakness
FHM
MonkeyMag.co.uk
Importance to Customer
Products
Digital; quality content; faster than Internet; online too
More alive than printed media; Faster than online magazine; choice between online or CD Free at first; cheap adverts compared to other magazine adverts prices.
Not popular enough yet; needs marketing Not popular yet, difficult to get advertisers
Popular, content is impressive; printed media
Digital; content is impressive; online; fast, but slower than CD
Speed; quality; distribution; marketing Very important
Expensive; expensive adverts
Free for readers; expensive for advertisers
Quality disc and cover, as well as content.
Product to hold; quality print and disc
Excellent content
Excellent content
Selection of content is wide and triggers all ages and interests; advertisements are unique and limitless
Wide selection of content and interests; great way for advertising, makes use of alive content to advertise User contributed content
Needs great quality content to compete with Monkeyma g and FHM Selection too wide; may not target specific market None
Relatively cheap compared to other magazines for advertisers; free at first for readers Relatively important Content makes or breaks product Critical
Men’s magazine; wide selection
Wide selection; interesting content
Relatively good service
Free; user contributed content
Reliable with content and entertainment value NA
Reliable with content and entertainment value
Free at first; but relatively cheap at point of sale; adverts are cheaper than other advertising mediums
Price
Quality
Selection
Service
Reliability
Stability
After sales service; comments and suggestions easy to submit; user contributed content Reliable in service; entertainment value
CD should at all times be stable and reliable on users computer; without viruses and errors
Keep reliability in mind at all times of production and service Work on stability and do virus checks before duplicating
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Risks exist of being unreliable Risks exist in being unstable in user’s computer
Very stable, but complicated for illiterate computer users
Content will make or break the product; selection should be interesting and precise, true and fun Critical User interactivity plays large role Very important
Expects a consistent quality of content and entertainment value. Very important Very big risk for consumer; should build trust in customer about stability Very important
Page 16 of 37 Factor
Expertise
Company Reputation
Appearance
Sales Method
Credit Policies
Importance to Customer
SuperMAGazine©
Strength
Weakness
FHM
MonkeyMag.co.uk
Need a lot more training to become experts in the industry; need sales expertise for advertisements
None
No expertise
Expertise in quality content and articles
Experts in content, technology and entertainment
No reputation yet, but should work on reputation and a popular demand on the product Design of cover very important; full colour and good quality disc
None
New in industry and market
Very good reputation with readers
Very good reputation with readers
Interesting look and feel; unique product
Appearance very well with model on front page
Interesting look and feel; unique appearance
Appearance might make or break an issue or reputation Relatively important
Need sales reps for sales of advertisement; build strong relationships; should be able to work with people
None
NA
NA
Advertisers needs expert sales persons to trust and buy adverts from Very important
Monthly contracts for advertisers; subscription service for readers
Subscription service for readers; cheaper for a 12 month contract for advertisers
Might be a setback if disc and cover are not well designed Lack of expertise in sales, depended on a commission system for selling advertisem ents Risk of bad debts
NA
NA
Promotions and word of mouth; radio airtime on TuksFM
Popular product makes it easier for word of mouth type marketing
Need a lot of advertising and promotiona l marketing; dependant on word of mouth
Popular in market, need limited advertising; front page is a marketing tool
Needs more marketing in South Africa
Subscription service makes it easier for readers to collect and read every issue; cheaper for advertiser to take out a 12 month contract Not very important Without advertising or any form of marketing the customer would not know of the product Very important
Advertising
User won’t notice lack of expertise in content, but it will get boring if not done well; advertisers needs to see expert sales approaches Not very important Content might make or break reputation Not very important
Summary SuperMAGazine© offers video clips instead of written interviews or telling a story. Humoristic content that is more alive than written or drawn cartoons. Compared to an online magazine, like MonkeyMag.co.uk, SuperMAGazine© is much faster on a disc than over the Internet. South Africa does not have the bandwidth and Internet speeds that countries like United Kingdom or United States of America have. Also SuperMAGazine© can be read without interruptions like site construction or Internet links being down. SuperMAGazine© will also be available online to give the user/reader the choice of receiving the magazine on disc or online. SuperMAGazine business plan.doc Created on 4/10/2008 11:42:00 PM
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Niche SuperMAGazine© is a unique and pioneering concept with endless possibilities. The content is “alive” and interactive, making the reader more passionate about topics he/she reads about. To advertisers SuperMAGazine© is a new and exciting way to reach potential and existing customers by giving them interactive and fun ways to browse through advertising pages. Possibilities for advertisers are, once again, endless. Direct links to the advertiser’s website are an added value. Also if the customer’s Internet link is down, he/she can still browse through the advertising pages. Advertisers can associate their products or services with the exciting content SuperMAGazine© provides, making themselves part of the new and improved technology era. For advertisers SuperMAGazine© brings them a way to present themselves through a combination of TV, radio, web and magazine advertising methods. Promotional marketing is also made more interactive, interesting and exciting.
Strategy Promotion Promotional events and parties will be held at venues like Dropzone or Good4’s in Hatfield Square in Pretoria or Recess in Centurion, Pretoria. This will function as an opening promotion for SuperMAGazine© at the end of June for the first release to get the name out there. These clubs are a popular hangout spot for students and young working adults. The grand opening will be advertised all over the Hatfield area and the University of Pretoria with posters. We will also involve TuksFM radio station to promote this on shared airtime. Promotional giveaways, like free first edition CD’s of SuperMAGazine©, T‐shirts and other merchandise with SuperMAGazine© logo on, will be held at the earlier mentioned venues. Advertising on TuksFM radio station will be a huge marketing tool. Also Facebook advertising pages will be created for marketing purposes and adding “fans” and subscribers. Proposals to a popular student website, called GoStudent (www.gostudent.co.za) have been discussed and are being prepared. To produce this marketing and promotions at a very low cost SuperMAGazine© will trade an advertising page on the magazine for each of these companies for the proposed actions. Posters, radio airtime, flyers, online advertising, Internet search sites, promotional events and word of mouth will be SuperMAGazine©’s strategy for marketing, because of the low cost and the field the market and the product is involved with.
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Page 18 of 37 To promote the advertising a commission structure (price lists attached – appendix C) has been created to ensure dealer incentives. SuperMAGazine© will have sales representatives to sell our advertising space to corporations. The image SuperMAGazine© wants to project is a fun, entertaining and modern image to the readers and to the companies who will advertise, SuperMAGazine© wishes to project an innovative, productive, professional and popular image. Excellent service will also be a main concern in the image SuperMAGazine© will project. In addition to advertising, SuperMAGazine© plans to concentrate on graphic image design where the company image will be projected from. Logo design, business cards, letterheads, brochures, presentations, signage, etc. are already being created. SuperMAGazine© has a professional graphic designer and design company, DreamStudio which does the designs for them. A network of subscribers for the readers and contracts for the advertisers will keep it possible to keep in contact with our customers. We will systematically contact these customers to assure excellent service and feedback on our products will also be collected on a regular basis. The timeline strategy to get SuperMAGazine© off the ground will be outlined below: • SuperMAGazine© will be online from the 1st of May 2008, onwards every month. • For two months SuperMAGazine© will be hosted online only. • In this two months SuperMAGazine© will be advertised through flyers, posters and the Internet to get more hits on the website. • User contributed content will be collected, as well as articles written by freelance journalists and SuperMAGazine© employees. • Hit counts will be collected in this time to give an advertising company an idea about the market and the amount of readers. Also a projected image of SuperMAGazine© is up and running for presentation. • From the 1st of July 2008, SuperMAGazine© will be published, duplicated and distributed on CD. • Advertisers will pay for the first month from the first online release, but this will include the two months it is only hosted online and the next payment will only be payable from the 2nd release of the published disc. • This will give the advertiser the opportunity to look at their page online and analyse the success of their advertisement. Promotional Budget The following is outlined per marketing method: • GoStudent website SuperMAGazine business plan.doc Created on 4/10/2008 11:42:00 PM
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•
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•
o Links to SuperMAGazine©’s homepage and the latest release of an issue, as well as a summary of the magazine will be published on the GoStudent’s website. o A page of GoStudent, with links to their page will be traded at no cost. (An advertising package) Facebook o An advertising page with links and a summary of the magazine with a group created for SuperMAGazine© will be displayed and active on Facebook’s website free of charge. Online search sites o With an Internet webpage hosting package SuperMAGazine© will be added to all relevant search sites across the Internet. Rehab books o Distribution of SuperMAGazine© through Rehab books. o Flyers and posters through Rehab books for marketing of SuperMAGazine©. o An advertising page of Rehab books, with links to their page will be traded at no cost. (An advertising package) TuksFM o Airtime for an advertisement of SuperMAGazine© (still in discussion with TuksFM). o An advertising page of TuksFM, with links to their page will be traded at no cost. (An advertising package – still in discussion) o TuksFM will also contribute content, like Top 40 of music and albums, etc. Promotional events at Dropzone, Good4’s or Recess night clubs. o A promotional budget of R5000 per promotional party, especially the grand opening of the first release of SuperMAGazine©.
All the above marketing methods will be before start‐up and ongoing. More ongoing methods will include TV (on a later stage), radio, flyers, posters and promotions with an ongoing budget of R5000 a month. Focus on low cost and trading advertising methods, like the above mentioned methods, will be reserved.
Pricing After taking into consideration some popular magazines, television stations and online websites advertising prices, a decision has been made on SuperMAGazine©’s advertising prices (attached – appendix C). Prices are a lot more affordable and in rapport with the distribution numbers of SuperMAGazine©. Prices may increase when SuperMAGazine© reaches a higher distribution quantity. Prices of advertisements are not completely comparable with other media, because of the uniqueness of the marketing tool. SuperMAGazine©’s intended advertising customers do not make their purchase decisions mostly on price, but on popularity and distribution numbers. SuperMAGazine business plan.doc Created on 4/10/2008 11:42:00 PM
Page 20 of 37 Advertisers will have the choice of a monthly, 6 monthly or 12 monthly contracts, which will be R500 cheaper per month for 6 months more. Packages are also calculated with a 15% discount. A commission structure of 14.85% is included in all prices to make it possible for sales representatives and marketing companies to sell the advertising space. No credit will be given at this stage. A monthly payment is necessary on date of issue. For the readers SuperMAGazine© will start off free and at the time of sale, SuperMAGazine© will be popular enough to charge a small amount for the CD.
Proposed Location Location is not important to customers, as the reader will receive the magazine in the shop, at another location or in the post. For the advertiser sales representatives will be visiting them at their location. SuperMAGazine© will run from home for at least six months before an office space will be selected for employees to work from. A boardroom in an office next to SuperMAGazine©’s home office will be used for any meetings. This will be a shared office for SuperMAGazine© and DreamStudio. This is situated in an urban area in Pretoria North. Parking is available, and all office furniture and equipment are available. Rearrangements will be made to make this meeting place consistent with the company image. It is not important as to where the location is, but should be convenient for customers in case they would want to meet. Coffee shops or public meeting areas will be used as much as possible.
Distribution Channels Rehab books is a second hand book shop for students and they will assist in the distribution of the discs. This will happen at Rehab books’ shop at the campuses. An amount of discs will also be distributed at Computer Corporation shops all over Pretoria and eventually around South Africa. A discount for advertising will be arranged with Computer Corporation. Also some other computer retailers will assist in giving away the discs. Another way SuperMAGazine© will be distributed is by charging advertisers a cost price for discs to distribute themselves to their customers. This will also benefit the intended market by combining the advertisers’ and SuperMAGazine©’s customers. At the time of sales SuperMAGazine© will be distributed through distribution companies. All other corresponding will occur over email and telephonic, as well as over the Internet. SuperMAGazine business plan.doc Created on 4/10/2008 11:42:00 PM
Page 21 of 37 Direct distribution will also be in order, as subscribers will receive SuperMAGazine© through mail order. Sales representatives will be responsible for advertising sales. This will also be transacted through email, Internet and telephonic conversations after the initial meeting of the sales representative. Independent reps are also possible and with the commission structure this will occur smoothly. Agents, like advertising agents are already being discussed with.
Sales Forecast Please find the best guess and worst case sales forecasts for the 2008 – 2009, as well as 2009 – 2013 financial years attached (appendix D). Notes: C1 In the first two months SuperMAGazine© will not generate an income, but from the third month, income generated from adverts will come through. The strategy for that is to show advertisers the webpage and the advertisements that are already there. As for the hit counts and unique visitors numbers will also be available to give advertisers an idea of what they actually buying. In this time all advertisers will not pay for their advertisement on the website. Income will only be collected from the first release of SuperMAGazine©. C2 A percentage of all the possible sales will be generated as an income, which will get higher each month as skills and sales develop. The highest percentage estimate for year one is 85%. C3 The highest percentage for year two’s estimate is 90% of all possible sales per month. C4 The highest percentage for year three’s estimate is 95% of all possible sales per month, which will be the constant estimate through out. D1 For a worst case sales forecast projection a percentage of 50% up to 60 % of possible sales are calculated in the first financial year. D2 In a worst case scenario 80% is the maximum of sales to be estimated.
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VI.
Operational Plan
Production Daily functions in SuperMAGazine© will operate in an organised and structured manner like the image of the company projects. SuperMAGazine© will maintain a well structured operational plan across all business functions and production procedures. The right time structures are put in place to have the latest issues arrive on time and all research, as well as articles will have to be done at the given times to ensure the issues are on time. To guarantee a successful first issue, SuperMAGazine© will have to work in the following time frame and operational plan: • • • • • • • •
•
SuperMAGazine© will be online from the 1st of May 2008 at the webpage: www.supermagazine.co.za and www.supermag.co.za. The online issue will act as a basic and demo issue that will be prepared in the following two months to produce a successful first issue. In this time articles, user contributed content, features, suggestions, comments, letters, photos, videos, interviews, etc. will be collected to make up the first issue. While the demo edition is online, advertisements are going to be sold by the representatives appointed. In this time online hits, unique visitors and success rates will be measured to have reports ready at point of sale to the advertiser. This first two months will be free for the advertiser and the first payment will be payable from the 1st of May 2008 when the first issue is released on disc. Marketing of the website will be done through Facebook, TuksFM radio station, Rehab Books and GoStudent. A full productive issue full of content and advertisements will be put on disc and sent to a duplication company for duplication and packaging 7 ‐ 15 working days before distribution. At this stage SuperMAGazine© will concentrate on the next issue and production will function normally from here with two weeks in current month and two weeks in the next month to produce a functioned disc ready for distribution.
Production and distribution will operate in the following manner: • • •
A fully functioning master disc will be created per issue. This copy with its cover and packaging design will be stored in a safe offsite. Tests will be made for each issue to ensure functionality on various operating systems, Internet browsers and PC setups, as well as a thorough virus check. A second master disc will be created to send to the duplicators for duplication, whereas a soft copy for future reference will be held on the server hard drives.
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Another soft copy will be uploaded to the website hosting servers for online hosting, while the previous issue will be archived online. This archived issue will still be available to online readers. When duplication is completed, distribution will be done by posting to all subscribers firstly. Then sending 15, 000 copies for distribution by Rehab Books in Pretoria. Another 10, 000 will be distributed to other branches of Rehab Books all over the country. The remaining 4, 500 copies will be distributed at Computer Corporations all over Pretoria. This numbers will increase when duplication and distribution numbers increase. An image file of the disc will also be available for download or email if subscribers prefer it that way.
The formation of the content and designs of an issue will be done the following ways: • • • • • • • •
Brainstorming meetings will be held at certain times before production to discuss and choose certain topics and content two months ahead. Tasks will be given to appropriate employees for research, writing the articles and producing content for the specified issues. Content will be collected and edited by the magazine editor. The edited content will be sent to the designer to produce the layouts and insert the content into the pages for creation. Verification of all content will be prepared by the editor and proof reading will be made to ensure no mistakes or errors. A fully functioning disc will be put together by the designer and sent for testing and virus check. This disc will be sent for duplication. The above mentioned production will be communicated through email, meetings, telephonic conversations and teamwork mainly across different locations until a building is hired for a location of offices.
Production techniques and costs At first duplication will operate by use of a duplication company to limit start up costs. Production costs will be high. After about a year, a budget of R 150, 000 will be allocated for a duplicating machine to assist in duplication and reducing costs. (See attached budget – appendix E)
Quality control and customer service A suggestion and comment service will be available for readers to ensure that content stay up to date on what the market needs and wants. Content will also be 30% user contributed to ensure that. Virus checks will be made throughout production to ensure safe content for the readers. Tests and research will be consistent to ensure compatibility with all sorts of PC setups, SuperMAGazine business plan.doc Created on 4/10/2008 11:42:00 PM
Page 24 of 37 operating systems and Internet browsers. Proof readers will be appointed to read through content to make sure errors and mistakes are at the minimum. Reports to advertisers of the number of hits, unique visitors, subscribers and distributions will be unswerving. This will be consistently monitored and reported to ensure SuperMAGazine© stays an effective way of advertising. SuperMAGazine© will also make use of an open source customer relationship managing software, called vtigerCRM.
Inventory control An open source inventory system built into vtigerCRM will be used to ensure a stable inventory.
Product development SuperMAGazine© will make certain of keeping up to date with technology and happenings around the world to keep the content and entertainment value at the top of its industry and to make use of all the advantages of technology changes. Training for journalists and available courses for all employees will be monitored at secondary educational facilities to examine opportunities for further skill enhancements.
Location Location is not important to customers, as the reader will receive the magazine in the shop, at another location or in the post. For the advertiser sales representatives will be visiting them at their location. SuperMAGazine© will run from home for at least six months before an office space will be selected for employees to operate from. A boardroom in an office next to SuperMAGazine©’s home office will be used for meetings. This will be a shared office for SuperMAGazine© and DreamStudio. This is situated in an urban area in Pretoria North. Parking is available, and all office furniture and equipment are available. It is not important as to where the location is, but should be convenient for customers in case they would want to meet. Coffee shops or public meeting areas will be used as much as possible. When a location will be selected it will consist of the following physical requirements: •
In a central area, like Centurion, Pretoria or Sandton, Johannesburg.
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Minimum of two offices and an open office plan for about three to four employees. A small office building to ensure production and smooth communication. A boardroom for presentations and meetings. A reception area for receiving guests and answering incoming phone calls. A separate room for production and storage with power outlets, a UPS, a generator and space for equipment, like duplication machines, copiers and printers. • A telephone system. • A server room with necessary servers, UPS’s, generators, air‐cooling systems and other equipment. • Secure entrances and a security system. Access: • The location will also need to be convenient to suppliers for delivery. • Secure parking for employees, suppliers and customers. Cost: See attached budget (appendix E)
Business hours: Daily activities will operate from 8h00 AM to 17h00 PM, Monday to Friday for fulltime employees. Overtime will be expected from all employees when deadlines become close and production is slow. Saturdays will be open for overtime necessities. Freelance journalists will be given assignments to complete on their own time, but before a deadline.
Legal Environment A membership with Advertising Bureau of Circulation (ABC) of South Africa is expected from advertisers to assist in the audits of circulation for the magazine. This can only be accrued after the first two issues according to ABC’s rules and regulations. This should be explained to the advertisers before commencing in a contract. SuperMAGazine© should also follow the regulations of the Film and Publications Act (Act No. 65 of 1996), which will be monitored by staff. A membership with the Government Gazette will only occur in a year’s time to brand the magazine with an age restriction or a credibility label. Insurance against lawsuits should be taken out, but this will only occur in the second year of SuperMAGazine©’s existence. Copyright statements will go along with every issue to guard against any plagiarism or illegal copying of any intellectual property. Also a statement to release SuperMAGazine© from any illegal publications from user contributed content will be stated in each issue in the associated sections. A trademark for SuperMAGazine© is pending at CIPRO South Africa. A registered business name for SuperMAGazine© is also pending at CIPRO. SuperMAGazine business plan.doc Created on 4/10/2008 11:42:00 PM
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Personnel The following positions are selected for SuperMAGazine©, their job descriptions, qualifications and the filled personnel (name abbreviations attached – appendix J), as well as the open positions: •
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Managing member / owner (x 1) o Employed: DO o Managing all functions and above all employees; managing the flow of business functions. o Skilled labour. Marketing manager (x 1) o Employed: BM o Managing marketing and customer relations. o Skilled labour. Distribution manager (x 1) o Employed: SC o Manage distribution of discs and communicate with distributors. o Skilled labour. Customer service manager (x 1) o Employed: DO o Managing technical help telephone line, online website, email system and all reader queries. o Skilled labour. Sales manager (x 1) o Employed: SC o Managing sales representatives and customers. o Skilled labour. Sales representatives (x 6) o Employed: SC / NC / DO / AO o Available: 2 o Sales of advertisements, representatives for SuperMAGazine© at customers and advertisers. o Skilled labour. Product development manager o Employed: DO o Manage all product development functions. o Skilled labour. Technical manager (x 1) o Employed: NB o Manage technical functions of products and technical functionality. o Skilled labour. Information technology manager / network administrator (x 1) o Employed: DO
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o Manage all information technology technicians, networks and information systems. o Skilled labour. Information technology technician (x 1) o Employed: JM o All technical tasks required from information systems and network. o Skilled labour. Web designer (x 1) o Employed: NB o Designing the website, magazine and all web content. o Skilled labour. Content manager / magazine editor (x 1) o Employed: DO o Manage content, brainstorming meetings and decisions of final content; final decisions on content and editing of content. o Skilled labour. Journalists manager (x 1) o Employed: AE o Managing journalists and content, articles and photography. o Skilled labour. Freelance journalist (x 6) o Employed: AE / MvdW o Available: 4 o Writing of articles, columns and features for SuperMAGazine©. o Freelance labour. Articles journalist ( x 1) o Employed: AE o Research and writing of articles for articles section of magazine. o Skilled labour. Music journalist (x 1) o Employed: BM o Research and writing of articles for music section of magazine. o Skilled labour. Sport journalist (x 1) o Employed: WP o Research and writing of articles for sport section of magazine. o Skilled labour. Cars journalist (x 1) o Employed: JvdW o Research and writing of articles for cars section of magazine. o Skilled labour. Movies and television journalist (x 1) o Employed: MvdW
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•
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o Research and writing of articles for movies and television section of magazine. o Skilled labour. Software journalist (x 1) o Employed: NB o Research and writing of articles for software section of magazine. o Skilled labour. Website journalist (x 1) o Employed: NB o Research and writing of articles for websites section of magazine. o Skilled labour Games journalist (x 1) o Employed: NC o Research and writing of articles for games section of magazine. o Skilled labour. Layout manager (x 1) o Employed: QvdW o Manage layout and design of magazine and website. o Skilled labour. Presenter (x 1) o Employed: DO o Presenting all video clips and video presentations. o Skilled labour. Graphic designer (x 1) o Employed: QvdW o Designing covers, logos, layouts, advertisements and all graphical and animated content. o Skilled labour. Animator (x 1) o Employed: QvdW o Designing and creating of al animation content. o Skilled labour. Soundtrack manager (x 1) o Employed: DO o Manage soundtrack and music industry contacts. o Skilled labour. Proof reader (x 1) o Employed: MdB o Proof reading magazine and fixing mistakes and errors. o Skilled labour. Personal assistant (x 1) o Employed: AO o Assisting managers in daily tasks. o Skilled labour.
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Secretary / receptionist (x 1) o Available: 1 o Answering of phones and emails, receiving guests. o Unskilled labour. Tea lady / cleaning lady (x 1) o Available: 1 o Making coffee, tea, snacks and food for employees and customers, cleaning offices and reception area. o Unskilled labour.
Outsourcing departments available in SuperMAGazine©: • Photography department o Outsourcing to DreamStudio. o Responsible for all photography. o Professional labour. • Videography department o Outsourcing to RProductions. o Responsible for all videography. o Professional labour. • Human resources department o Outsourcing to Le Roux Rekenmeesters. o Responsible for all human resources. o Professional labour. • Financial department o Outsourcing to Le Roux Accountants. o Responsible for all financial functions. o Professional labour. • Legal department o Outsourcing to Spoor and Fischer. o Responsible for all legal requirements. o Professional labour. • External advisors (x 2) o Employed: DOS / RM o Experienced advice about business decisions. o Professional labour. The above mentioned positions are an outline of the total positions SuperMAGazine© will have available eventually. Most of the already employed people will be filling an amount of positions for the time being. By “employees already employed” is meant people who already agreed to fill the specified positions. The number of employees already employed is 14. The number of available positions to be filled in the future is 13. The outsourcing companies have sent quotes.
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Page 30 of 37 When SuperMAGazine© needs employees, an advertisement will be placed in local newspapers, where after a complete legal procedures will be followed to appoint the acceptable persons. Training will be done domestically at first and tasks will be evaluated by managers. Available courses will be monitored at secondary educational facilities to assist in any needed skills enhancements in the future.
Inventory At start up SuperMAGazine© will not have any raw materials. At the time of self production, stock like empty discs, labels and packaging will be kept in a CRM database and stored onsite. By that time duplication amounts would have been more than at start up. About 50, 000 of each raw material will be stored per month to duplicate and distribute as a magazine. The rate of turnover will be 90% from the time of start up, but at the time of sale of the magazine disc, the rate of turnover will move up to 200% at least. Seasonal build‐ups won’t have an influence as distribution will stay the same throughout the year, but advertising will be less by December months. That would mean that November will be used to get enough contracts for December months. Lead‐time for ordering at the stage of using a duplication company will be 7 – 15 working days, which means the disc should be available two weeks before the end of each month and issue for duplication and at least 5 working days before for distribution.
Suppliers Key suppliers: •
•
Notebook Company ‐ Pretoria, South Africa. o Note books, computer equipment and supplies. o Cash on delivery o No delivery o Great history o Very reliable Digital Direct – Randburg, Johannesburg. o Duplication of discs, printing and packaging. o 70% of payment before commencing, 30% of payment on delivery. o Free delivery o 8 – 15 working days turnaround time. o Long history
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o Very reliable AvoMedia – Bryanston, Johannesburg. o Duplication of discs, printing and packaging (backup supplier) o Cash on delivery payment. o Free delivery o 5 – 7 working days turnaround time. o Long history o Very reliable
An agreement with the duplication companies will be made before hand to ensure they will have enough stock and be able to deliver on time. The supply costs are reasonably stable, but if costs fluctuate SuperMAGazine will be covered in other areas of the budget and income.
Credit Policies SuperMAGazine© will not sell its discs or its advertisements on credit, but will have contracts available for once‐off payments or monthly payments or subscriptions to readers, which are also payable ahead of time in an once‐off payment or per month deductible payment. Advertisement costs are structured in a discounted way for 6 months and yearly contracts weighed against one month contracts. The same goes for subscriptions and per month readers.
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VII. Management and organisation A managing director, already appointed (see employee list above and name abbreviation list attached), will manage the business on a day to day basis. Each department (see below) will have its own manager to manage daily activities. All management employees will also be involved in doing daily tasks, as write articles and collect content, as well as business functional tasks. The following is an organisational chart for SuperMAGazine©:
Figure 1 (also attached – appendix K)
Professional and Advisory Support Board of directors consist only of the owner, Darius Oosthuizen. An attorney at Spoor and Fischer has been available for advice from the start and has agreed to help in any way at no cost until the business is up and running. SuperMAGazine business plan.doc Created on 4/10/2008 11:42:00 PM
Page 33 of 37 JFI Accountants has been giving support with a lot of financial queries. They will be used as accountants from the start of business. Consultants, mentors and key advisors consist of Rolf Moe, managing director of Gemini Spice and C.J. Petrow Foods (an expert on marketing and business management), as well as Darius Oosthuizen Sr. from Northern Food Ingredients, Arend Eysel and Andre Nel from GTI.
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VIII. Start‐up Expenses and Capitalisation See attached start‐up expenses sheet (appendix I). Notes: H1 A laptop is needed for work and presentations to potential advertisers. H2 Different software packages are needed in order to get all the work done. H3 The duplication machine will only be needed at a later stage of business. A capital loan or overdraft facility of R 70, 000 will be needed to assist in the starting of SuperMAGazine©. The first two months of business (see attached budget – appendix E) will be done with this capital.
For bankers: An overdraft facility of R 70, 000 is requested. This capital will assist in getting the business up and running. (See cash flow statement and budget – appendix G and E.) Financing for R47, 891.40 will be needed for start‐up equipment. This will be paid back with a 16% interest rate in a minimum of twelve months. A yearly interest of prime + 1 will be paid monthly in the case of an overdraft. In an eight month period SuperMAGazine© will have a positive cash flow, as the statement project.
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IX.
Financial plan
Twelve Month Profit and Loss Projection See attached budget (appendix E). Notes: A1 In the first two months SuperMAGazine© will not generate an income, but from the third month, income generated from adverts will come through. The strategy for that is to show advertisers the webpage and the advertisements that are already there. As for the hit counts and unique visitors numbers will also be available to give advertisers an idea of what they actually buying. In this time all advertisers will not pay for their advertisement on the website. Income will only be collected from the first release of SuperMAGazine©. A percentage of all the possible sales will be generated as an income, which will get higher each month as skills and sales develop. The highest percentage estimate for year one is 85%. A2 Casual labour includes freelance journalists for articles to spread work load. A3 Commission for advertisements is included into the advertisement prices. A 15% commission of the minimum income are calculated into the budget. This is for sales representatives to sell the advertisement packages. A4 Overdraft interest is displayed under interest paid. This includes the loan or financing on the start‐up expenses. Interest are calculated and estimated for an overdraft facility at 16% interest per month. A5 For sales representatives and business meetings fuel are budgeted for the employees’ vehicles. A6 An office will only be budgeted for from December 2008 when an office location will be rented. A7 Cost of sales material is included in the budget as CD’s and packaging. A8 Distribution costs and postage are included for the distribution for the magazine. A9 Property costs are included from December 2008 when an office building will be rented. A10 Rent is budgeted for from December 2008 with a deposit set aside. A11 Salaries are included. The salaries are divided into the amount of employees SuperMAGazine© have employed. Many of these employees are employed at the moment and will only assist in their duties after hours until SuperMAGazine© can afford to employ them full‐time. See employee list attached (appendix J). A12 Telephone and Internet costs include hosting of the Internet site, the Internet service provider and cellular phone usages. A13 Tax is included for profits at a 29% rate.
Two Year Profit Projection See attached budget for 2008 – 2009, as well as for 2009 – 2010 (appendix E and F). SuperMAGazine business plan.doc Created on 4/10/2008 11:42:00 PM
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Projected Cash flow See attached cash flow statement (appendix G) Notes: B1 The opening bank balance includes the interest paid and start‐up costs from the first month and ensures that balances will never reach the overdraft limit. B2 Depreciation is not included into the sales forecast. B3 Overdraft interest is included at the bottom of the sheet. This interest is the interest on the loan or financing for the start‐up expenses. B4 Interest of 16% per month is calculated and estimated. B5 Closing bank balances show that balances will be at a positive from December 2008. G1 In the next year of business bank balances are positive and a budget of R 150, 000 in July 2009 will be made for a duplication machine to reduce costs.
Opening Day Balance Sheet See attached open day balance sheet (appendix H). Notes: E1 Start‐up costs of R 47,891.40 (VAT included) are included and will be a long term liability.
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X.
Appendixes
The following items and documents are attached: A. B. C. D. E. F. G. H. I. J. K. L. M. N. O. P. Q. R. S. T.
Demo disc of SuperMAGazine©. Market research studies. Price lists and packages for SuperMAGazine© advertisements and links. Sales forecasts 2008 – 2013 and worst case sales forecasts 2008 ‐ 2013. Budget 2008 – 2009. Budget 2009 – 2010. Cash flow statement 2008 – 2009 and 2009 – 2010. Opening day balance sheet. Start‐up expenses sheet. Employee list and name abbreviations. Organisational chart. Business notes (used for calculations). CK2 documents for registration of closed corporation. Curriculum Vitae of Darius Oosthuizen, sole owner. Certified copy of identification document of Darius Oosthuizen, sole owner. Three month personal bank account statement of sole owner, Darius Oosthuizen. Water and electricity bill as proof of residence for Darius Oosthuizen, sole owner. Details of advisors and service providers. Personal statement of assets and liabilities for sole owner, Darius Oosthuizen. Quotations from suppliers of computer equipment and CD Duplication Company.
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