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A Business Proposal for J. R Creative, a Web Design firm - Dissertation Example

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J.R. Creative is a small firm located in Newcastle, England. It offers web-related services and internet in the area it’s located. Services offered by J.R Creative include website design and development, website hosting and search engine optimization…
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A Business Proposal for J. R Creative, a Web Design firm
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?A Business Proposal for J. R Creative, a Web Design firm XXXXX XXXXX XXXXX XXXXX XXXXX Overview of J.R Creative J.R. Creative is a small start-up firm located in Newcastle Upon Tyne, England. It offers web-related services and internet in the area it’s located. Services offered by J.R Creative include website design and development, website hosting and maintenance, market analysis and search engine optimization (SEO). Give our experience in commercial web development and business-to-business sales; we are quite sure that we will offer a unique and quality service to small business operators compared to our competitors in the market. With most firms, including the small services wanting to have an online presence, the demand for web design and development has gone up and there are no signs of that demand going down soon. Having a fully functional and professional website is nowadays a competitive advantage on the business owners. Even more interesting and enterprising, is an ecommerce website through which the business can advertise and sell its merchandise. Notably, very few companies in Newcastle have taken advantage of this business niche, as there are no dominating participants in this huge market. One of the possible reasons for this untapped market might be due to the expensive project costs. The highest profit margins in website designs are in servicing large and medium sized corporations. By developing a system to cut costs will allow J.R Creative to design and develop websites as larger companies at very low costs to our clients. This plan is aimed at looking at the market analysis and J.R Creative’s financial plan. The market analysis will detail market growth and demand, overview of the market, target customers, competitors and suppliers with justifications, as well as a detailed financial plan of J.R Creative (overview of the estimated finances, and how it will managed, which should include a survival budget, start-up costs, overheads, costing / pricing and Cash flow forecast for 30 months (Nov 2011- May 2014). Market Analysis Initially, J.R Creative will place its focus on the small business owners wanting to have an online presence and making their business known to the world. This will entail professional catch web designs that display the products and services offered by the firm, their missions and objectives and their contact details. J. R Creative will market its services to the small entities as a step by step process, first starting out with a small, simple websites, then gradually up scaling and adding more features to the site. Later on the website can become a fully-fledged ecommerce trading platform. Despite the fact that we want to bring on board many clients who simply need an online presence and probably nothing more, our main focus or area of interest will be on clients who are keen on implementing a large percentage of their company onto the internet. Traditionally, these types of clients will need the following services: Database driven websites Ecommerce trading platform e.g. a shopping cart Dynamic website content and features Aggressive online market Social bookmarks like Facebook, Twitter and many more Target Market Segment J.R Creative will focus on attracting small businesses. The market segment of web design is made up of small firms, large firms and individuals who may want to have personal websites to blog and update their information. Since J.R Creative is a small start-up, it may not be able to provide services that large firms and corporations need. Large firms usually need large database driven websites which need to be maintained every day, a service we may not be able to provide. There is simply low amount of services available for this market which has such a huge demand. Businesses have been picking up in Newcastle, which is attributable to favourable economic conditions in the United Kingdom and the European Union. In addition to the vibrant supply and demand ratio, it is technically easier to less costly to market and attract small projects than large web design and development projects. There is thus, a need for customised, high-end designs exclusively for small business. The majority of our competitors are offering tailored large firms, to small business owners. Market Needs The need for the Internet services by small business has existed since the Internet revolution in the early nineties. Small and micro enterprises, as well as start-up businesses are migrating to the web at a very high rate. Most start-ups have in their business plans set aside costs for website design and development. This is a good thing for J.R Creative since it presents an opportunity for a smooth take off and profitability. The existing websites, after a quick survey by our team, were found to be a bit old and have not been update for years. This basically means they are behind in terms of the revolution and don’t serve the purpose they are intended for. While most small business have seen the need for having an online presence, they don’t know where to begin. There is asymmetry of information concerning the costs and benefits. By talking to small business owners about their decisions and what it entails to take advantage of the web is not a matter of what but a matter of when. Market Trends Notably, there has been aggressive online website marketing. Although many small businesses are waiting to gain internet presence, those already having the online are looking for alternative ways to enhance the existing set of online marketing strategies so that they stay ahead of their competitors. In future, we believe small companies will look for more ways to increase their web traffic for optimal results. Another notable trend is the merging of daily operations of the business with the Internet and the World Wide Web. Interoffice tasks would be the order of the day for small business as it the case in large corporations. This would save costs and time for these small firms and start-ups as they get past the teething problems. Market Growth The market for website design and development in the United Kingdom has been growing at a very high rate. This has translated to Newcastle. Our target market has been expanding and growing towards Internet and Web usage at a staggering rate. In addition, Internet usage has grown exponentially. Below are some of the attributable factors to this unprecedented market growth: By the year 2011, small and micro enterprises (1-99 employees) will spend about 13 billion to either improve the existing efforts to gain new internet presence. This number is up from 7 billion in 2000 (Activemedia Research) Use of the Internet by small, micro and home-based businesses is approximated at 81 percent, an increase from 26 percent in 2005. It is estimated to hit 95 percent by the year 2014 (IDC Research). Total expenditures in Information and Technology in the U.K for 2000 were at 76.2 billion and will reach over 200 billion by the year 2014. Year 2011 will be the first year that United Kingdom businesses spend more of their total expenditure on web related services than on IT hardware (IDC Research). Revenues generated by ecommerce trading platforms in the U.K will reach nearly 10 trillion by 2014 up from 7 trillion in 2010 (Forester Research Group). The use of mobile internet to purchase is expected to experience an unprecedented growth in the next decade. The share of global internet in Europe has increased to 27.6 percent. This present an good opportunity. Source: Comscore Average daily media consumption (Council for Research Excellence via Mediabrand Worldwide, July 2009) as done well with the internet usage coming up. This is shown below: Financial Plan for J.R Creative overview of the estimated finances, and how it will managed, which should include a survival budget, start-up costs, overheads, costing / pricing and Cash flow forecast for 30 months (Nov 2011- May2014 Overview of estimated finances J.R Creative intends to have a capital structure that is divided into debt and equity. The startup capital will be contributed by the members of the firm. Our financial assumptions are based on the steady U.K economy and the standard numbers for a business in our industry. Key financial indicators The following chart indicates J.R. Creative’s key financial indicators over the next 30 months Break-even Analysis This indicates the amount need to just cover all our start-up costs, overhead costs and still be able to continue operating. The following table and chart summarize our break-even analysis. With two developers and two salesmen we plan on developing eight sites in November and once the two new hires are fully trained doubling the number to 16 sites a month Break-even Analysis Monthly Revenue Break-even 4, 694 Assumptions: Average Percent Variable Cost 9% Estimated Monthly Fixed Cost 4, 210 Projected Profit and Loss Statement in GBP Nov 11- Oct 12 Nov 12 – Oct 13 Nov 13 – May 14 Sales 164,520 514, 900 1,0194, 500 Direct Cost of Sales 15,550 50, 000 127, 600 Production Payroll 38,492 90, 000 137, 000 Total Cost of Sales 54,042 140, 000 264, 600 Gross Margin 110,478 374, 900 929, 900 Gross Margin % 67.15% 72.81% 77.85% Operating Expenses Sales and Marketing Payroll 30,000 69,000 108,000 Advertising/ Promotion 2,790 3,500 10,000 Travel 1,020 3,000 7,000 Miscellaneous 0 1,000 2,500 Total Sales and Marketing Expenses 33,810 76,500 127,500 Sales and Marketing % 20.55% 14.86% 10.67% General and Administrative Expenses Depreciation 3,180 5,000 12,000 Rent 4,500 12,000 24, 000 Utilities 805 2,000 5,000 Insurance 0 2,500 5,000 Payroll Taxes 8,219 19,080 29,400 Total General and Administrative Expenses 16,704 42,580 79,400 General and Administrative % 10.15% 8.27% 6.65% Total Operating Expenses Profit Before Interest and Taxes 59,964 255,820 723,000 EBITDA 63,144 260,820 735,000 Interest Expense 2,600 2,302 1,644 Taxes Incurred 14,330 63,380 183,340 Net Profit 43, 034 190, 139 537, 996 Net Profit/ Sales 26.16% 36.93% 45.04% Projected Cash flow statement Cash flow projections for the first half of the year are slightly declining and in May they begin to rise sufficiently. We might consider borrowing against our accounts receivables but we are projecting that the initial capital raised should cover us until our cash becomes fluid. The following is J.R Creative’s projected cash flow in GBP. Nov 11- Oct 12 Nov 12 – Oct 13 Nov 13 – May 14 Cash Received Cash from operations Cash sales 54, 292 169, 917 394, 185 Cash from Receivables 70, 969 261, 372 638, 141 Subtotal Cash from Operations 125, 260 431, 289 1, 032, 326 Additional Cash Received Sales Tax, VAT 0 0 0 Net Current Borrowing 0 0 0 Sale of assets 0 0 0 Subtotal Cash Received 135, 960 431, 289 1, 032, 326 Expenditure Nov 11 – Oct 12 Nov 12 – Oct 13 Nov 13 – May 14 Cash Spending 68, 492 159, 000 245, 000 Bill Payments 40, 764 156, 598 379, 881 Subtotal spent on operations 109, 256 315, 598 624, 881 Additional Cash Spent Long-term Liabilities principal repayment 0 4, 589 5, 222 Purchase Long-term Assets 0 20, 000 20, 000 Subtotal Cash Spent 109, 256 340, 187 650, 103 Net Cash Flow 26, 704 91, 102 382, 224 Cash Balance 43, 704 134, 806 517, 029 References ‘Activemedia’ 2010, Internet Statistics Compendium, viewed 30th November 2011, http://www.un.org/aboutun/charter/history/ Blackwell, E. 2004. How to write a business plan [electronic version]. London: Kogan Page. Retrieved January 28, 2005 from Ebrary database. ‘IDC Research’ 2011, “Worldwide Software Business Solutions 2011 Top 10 Predictions: The Hyperconnected Enterprise”, viewed 30th November 2011, http://www.idc.com/getdoc.jsp?containerId=226541. Whither, J. 2010, How to set up a web design firm Cosmopolitan County Pound, viewed 30th November 2011,http://www.internetbusinesses.com. Logan, J. 2005, "Online Trading Businesses", Cosmopolitan County Pound, viewed 30th November 2011, http://www.medibrand.com. Gant, R and Towers, B. 2011 Business Perceptions on having an Internet presence, February 2011, Kingston upon Thames, Kingston University. Jackson, J.2006, ‘Viability of Ecommerce trading in the U.K’, viewed 11 November 2011, http://eprints.lse.ac.uk. Read More
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