VARS Company - Business Plan Example

VARS Company First steps Shilova Alya Rozova Anna Voskanyan Ashot Arevadze Gotcha Table of contents First Steps 3 Identifying priorities & Identifying the readers Executive Summary 4 Company description Mission Statement Company strategy Products and services Management financial projections Market research 5 Competitive environment Market opportunities Economic factors Competitive analysis Competitive advantages Future competition Business strategy 6 Development plan Advertising & Marketing Pricing Operations Financial projections 7 Sales flow projections Income statement Break-Even Funds required & Timing Exit Strategy Conclusion 8 First steps 1) Identifying priorities for writing the plan First and fore most teamwork would stand at the epicenter of the team. It can help us ease the process by dividing all the work. We most probably will not go to make VARS a reality however, during the course of constructing the business plan we will treat VARS as if it was really happening. This way we will better learn the ins and outs of constructing a successful business plan. Since we are a small team, it would be necessary to schedule regular meetings, in order to proceed with the project accordingly. Therefore we would need to find a common ground for the meetings like: IUM classes, our apartments or local cafes. Real information is also a key factor. We will delegate time and effort in trying to find real and raw information for our market research. Furthermore, deliver up to date quotas on the subject. 2) Identifying likely readers and their needs, preferences and prejudices There are many different ways of raising initial capital, ranging from crowd funding and banks to simply family member or friends. The company’s management has deduced to use the following two ways for investments: Personal Investors and Angel Investors. Family or friends with means are a considerable and trust worthy source of investment, if it comes to that. Management at VARS has family backing them up, hence 40% of the initial capital is confidently provided by VARS. Finally, Angel Investors are the next choice due to the nature of their work. They are individuals with significant financial resources who invest in start-up businesses. That is exactly what we need because that is exactly who we are: A start-up business looking for a helping hand. Executive summary Its 11:30 on the most annoying Thursday morning of your life. Not only do you have tons of work, but you also have to see the Boss at 4 pm, with the work that he clearly didn’t give you enough time to finish. You are also really hungry and the only thing on your mind that can lighten up your day is a good lunch. However, you then come to realize that you work in Monaco and here, lunch is equivalent to the storing of Bastille: Busy roads and never a place to park for you. If only there was a way to know, where, when and what parking spots are free, so that you could plan/strategies your lunch. Now those days are over with VARS, an application that will let you know where you can park and at what time. VARS is an SARL (LLC) founded in Monaco in 2014, with issued share capital of EU 15.000. VARS is equally owned and managed by its four partners: Miss. Alya Shilova is a professional in communication and consumer behavior, with experience gained at ‘Viare’ and ‘FlyNautic’ as assistant to communication consultant. Miss. Anna Rozova has extensive experience in the field of finance and administration having worked at ‘Saint Lauren Paris’ as assistant to sales accountant. Mr. Ashot Voskanyan brings experience in the area of tech and web design, including his professional work at ‘Importer-Exclusive’ and the Federal Migration Service in Russia. Mr. Gotcha Arevadze is skilled at marketing and management, having worked as an assistant to marketing director at ‘Dragon GeoResource Ltd’. VARS is an application that strives to ease parking in small to medium sized cities. The service will allow the user to see, free spots at certain parkings. The service updates in real time, giving the user direct feedback. Additionally users are able to ‘favorite’ parking spaces, which allow them to receive a notification when the space becomes free or occupied. The application works using a combination of proximity sensors and geo-localization. Our strategy revolves around capitalizing on our marketing. This means that we will not hold back on the budget. Additionally we will rely highly user feed back. This way will give us a better insight on what the use wants. Thus we will update accordingly. VARS expects to raise EU 30.000 of its own capital, and to receive an investment of EU 50.000 by investors. VARS anticipates sales of about EU 80.000 in our first year of activity. VARS would break even close to the end of the second year. Profits are estimated to be EU 10.200, EU 63.200 and EU 82.400 through years one to three respectively. General Company description VARS is a new company that will provide high quality software development and intellectual property services to its clients. VARS is scheduled to begin operations close to September 2015. VARS is equally owned and operated by its four owners: Shiloya Alya, Rozova Anna, Voskanyan Ashot and Arevadze Gotcha. At this point in time the company owners are last year students at the International University of Monaco. Due to our location, VARS will target small to medium sized cities and the working class segment within the territory of Southern France and its neighboring Italian cities. Including Ventimiglia and San Remo. This however is the strategy for the first two years. VARS plans to expand further into Europe. Starting in such small ands dense cities, will give the company the flexibility it needs to successfully secure and complete the project. By utilizing our expertise in different fields, ranging from finance to marketing management, VARS is in a position to create and maintain the market for parking assistants in Southern France. By year 3, VARS is planning to expand to the above-mentioned regions. The market for parking assistants is very small and at the essence of its creation. The staff at VARS has recognized that there is a potential for a high demand for such software. Therefore, VARS can set the stage as the “Go-To” company for parking assistance and even other software development. The primary objectives of VARS over the next year are to: Obtain initial capital funding of EU. 50.000 to cover start-up costs and initial expenses, generate a new and constant customer base, produce a net profit of EU 10.200 in our first year of operations and keep developing and updating the software together with the company. VARS will be located at: 74 Boulevard d’italie, 98000 Monaco – Regus Offices 00377-99-99-45-45 Mission Become a leader in parking assistance software development, by providing our clients with a solid service that saves them both time and money. Establish a loyal user base in Monaco. Vision Our vision is to morph the constant every day problems from a chore, to a walk in the park. Values Integrity and honesty stand at the fore front of VARS VARS strives for collaboration between creative genius We seek passion and commitment in order to stay productive Quality remaining always above average Friendship glues the company together and thus we are stronger Products and Services Description The sensors will be installed at all parking lots in town. It will utilize a combined technological application of what is referred to as a magnetometer as well as a sensor that is quite light that will help in detecting whether a given space has a car. It will also have the capability of withstanding the city shocks such knocks from the many movements, rain, dirt and other pressures. There will be an established operation center where all transmissions will be received. This will help in determining which section of the city has the highest level of parking than others. Cloud computing technology will be applied where an internet connection box will connect the local area network to the cloud. If someone is an end user, they will be able to connect and interact with data from the central operation center via the sensors at parking lots. This will be necessitated by an app installed on the phone called VARS. Those wishing to park will be able to access space through the system in which specific parking sections will be shown on the phone. The app will determine the exact number of spaces that will be available for parking. The app also determines the exact location of the mobile phone user, the favorite parking zones and the previous place that the owner parked. Even when the car is already parked, the phone will show the exact location so that the owner can trace it back. The app will therefore make it possible for the users to be directed to the preferred parking places by indicating the exact position of the user with respect to the parking zone. When a car leaves a parking lot, green will appear on the phone to indicate that it is a free space. Red will indicate that the place is occupied and therefore not available for occupation. Users will be able to zoom in and out to note specified sections of the city that have parking space. The device will capture important information and must therefore be licensed by the town council certified by the quality assurance standards team for effectiveness. Because of this, it will be necessary that there is a strong and well-coordinated understanding with the Monaco parking. This allows for effective management of available spaces without the need to fuss over who is in control. This is because the town billing system is based on the contents in the appendix 1. The VARS system is slightly different but focuses on the same space. Therefore, co-ordination will be required to make sure that the operation is effective. The service works on a user subscription base. The subscriptions range from weekly, monthly and yearly, depending on the users preferences. The download is free and takes approximately five minutes to install. Nevertheless, users will have to pay the subscription fee. No other micro-transactions are going to take place. The minimum fee of €15 was reached at based on the comparison with the current parking rates in Monaco. The parking rates as stipulated in the parking laws of the town are represented in appendix 1. From the rates, it can be noted that the daily maximum is €20 and therefore an average of €15 with hourly adjustments will suffice the case. SWOT Analysis Strengths Innovative service Good location for providing this service Growing necessity (e.g. the application is time-saving) Regular updates User friendly (“Favorite” function, notifications, bonuses, etc.) No direct competitors Secured payment systems Parking price included in subscription Weaknesses Costs of installing the sensor for every parking slot Customer might not have an Internet connection Might be smartphone battery consuming (e.g. using geo-location and 3G, etc.) Configuration of the sensors (right proximity) Opportunities Expanding to other cities in France, and potentially worldwide Further collaboration with mobile providers (e.g. improving mobile network in underground parkings) Collaboration with Google Maps Threats Getting an agreement with local parkings Other companies innovating faster People potentially blocking the sensor Marketing Plan Market Definition With the growth of people owning a car, and the difficulty to find parking places nowadays, there is a real opportunity for us, to provide consumers with an app that will save their times and fuel. If we look at this market, we can observe that more and more competitors are starting to develop this kind of application, but those apps are mainly developed in bigger cities, and the communication behind it is pretty weak. So the characteristics that will differentiate us will be that our target is small to medium cities in southern France and our target people are working classes. Launch Strategy Before promoting the app to our target people, we will start a « pre-promotion » before the app is launched. This will permit us to measure the amount of interest generated by the announcement of the launch, and if successful, create a feeling of impatience that will make downloads explode on the D-day. This « pre-promotion » will be done through social media, on our Facebook and Twitter accounts on which we will start by inviting people to like/follow our page. Since our target is very wide, the people we will ask to follow us will be part of our network, people we know working in the south of France owning a car. We will see what will be the next steps defined by the marketing strategy in the next parts. Competitors The market for this type of application is starting to be more and more crowded, with people launching their own app. The main difference with our app is that we propose it too small to medium cities, which is exclusivity but also our main target is the working class, struggling to find a place to park. Here is a list of some competitors proposing a similar service. - urLeaving: This app allows people to find in real time, free parking places or about to get free The app is proposed in big cities: Marseille, Paris and New-York. - Placelib: This app developed by two young entrepreneurs gives his users the information about free parking places as well in big cities such as Marseille but also in provinces. - Park’in Monaco: This app is certainly our greatest competitor. Indeed, it allows users to visualize free parkings in Monaco and if it is available or not. This app also gives the tariffs that do not follow the principality’s general regime, your location on a map using a GPS. The principal strength we will use to distinguish from competitors and especially from Park’in Monaco (since others are launched in bigger cities), is marketing/promotion. Indeed, we only got the information that this app exists by doing some researches about our competitors, meaning that marketing actions are kind of weak, and this allows us to take advantage to be known by everyone. Marketing Strategy Once our app is developed and available on smartphones’ digital stores, and after the pre-promotion, we will start to promote the VARS app. This promotion process will be done using different supports, physical and digital. Social Media: We will use social media to promote our app, since we will find a large part of our consumers there. Through Facebook and Twitter, we will create our own page and keep on posting news about the app. Those platforms will also be used to rapidly answer questions from our users. We will not use Instagram, YouTube or Google as we think that it is useless for this application that really needs a platform on which people can find the latest updates, news, Q&A’s and share it with their friends. Brochures: We will distribute brochures in strategic places, such as crowded ones where business men and women are, for example Fontvieille during lunch time. We think that it could be s good way to make them know us rapidly, and discuss with their colleagues when they come back from lunch for example. On those brochures, we will have a QR code. When scanned, this will directly open our app on the user’s phone. To create some buzz, we will have our own car, a green Fiat 500 (very visible but also sign of environmental engagement since we allow people to save fuel, therefore minimizing pollution), posted in the chosen strategic places, with a big flag hanged to it with our logo on it. This strategy is kind of the one chosen by Redbull, it permits people to remind us, when also their curiosity will make them want to know more about us. The app will be available on Apple Store and Android for at the beginning, before expanding to other digital stores. We count on word-of-mouth to build our brand recognition. The fact that we are targeting small cities will make the process easier and quicker. Media: The only media we will use is radio for the moment. Riviera Radio would be perfect since it covers San Remo to St Tropez so all the French Riviera. Our ad will be hearable in the morning when people are going to work and at night when they are going back home. Market Research Following a survey we realized in order to have a closer look to what the people think of the « park apps » that are proposed today. We deduced that most people we interviewed were not aware about those apps that account for 59 out of 72 of people who were interviewed in Monaco city center around Fontvieille and students from the International University of Monaco owning a car. The following characteristics that we observed is that a large majority struggle to find rapidly a place to park especially in the morning when it is crowded. 40 said that they would download the app right away if it was available. Most of all said that they could save 10mns per day looking for a parking place if the app was available (42 out of 72). So when analyzing those results and the actual trend, this help us understand that there is indeed a need to propose such an app. Let’s note that all assumptions are based on a very small sample that helps us in making assumptions which are not fully reliable, but due to limited amount of time we couldn’t have done anymore unfortunately, but enough on a statistical level. Target Market Upon launching the VARS app, we will make sure that the product will present all the characteristics in order to make it attractive for people of all ages, owning a car. We want to make sure that the product has all the characteristics people are looking for, with the goal of helping them save time and money wherever they are. We want to target mostly the working class in South of France, including Ventimiglia and San Remo. So our prime targets are those people from age 18 to 55 mostly, since we will include students owning a driving license, based on our own experience. If ever our app is successful and useful to all users, we will eventually consider expanding to other small to medium cities in France. In the future, we would also analyze the foreign competition, and propose a similar product to small towns in Spain, Portugal, England or Germany. We hope that our app will be a reference, something you open right away without any hesitation when arriving. Concerning our pricing strategy, as we mentioned earlier, the download of the app will be free, but users will have to pay the subscription fee. No other micro-transactions are going to take place. During our pre-launch, during which we will promote the app before launching it on digital stores, we will offer, through social media, to offer the subscription fee to the 100 first users that will like our page on Facebook. The strategy is once again, to generate word-of-mouth and interest for our app. Operation Plan Location The company will be located at 74 Boulevard d’italie, 98000 Monaco – Regus Offices.The choice of this place is based on the fact that it is at the center of the town and there are bound to be many parking lots as possible. This will help in monitoring the offences that will be carried out and easily follow the trend. Moreover, it is one of the places with the highest rates of congestion in the town. Moreover, the employees will be able to reach the nearest reporting station such as police station and other areas. The house that the company is based will be bought in the long run. However, the short run sees the hose being rented for the operation. This is also the place that the item will be reassembled. Supply and Inventory Management The supply chain will constitute a group of individuals that will be hired to act as sales and marketers after rampant advertising has taken place. In the act of supplying, they will also be used to work on a collection of logistical issues at the company. The inventory will be managed by an inventory manager that will be hired on a temporary basis before the company becomes stable. This will also be determined by the level of relationships with the suppliers. Production and Distribution The company will hire an experienced group of independent employment. This will be the ones to carry out all the logistical programmes at the company. The distributors will be carried out through use of word of mouth and the rest of the body. Organization The organizational system at the company will be determined by all senior members available. The organizational structure will be based on a simple company. Most of the operational plans will be carried out by the junior employees. Three small managerial posts will be made to take care of the very basic factors at the company such as the managers for production, marketing and finance. These will be the linking Factors between the top management and junior employees. The chain of command will the vertical and the junior employees will be required to report to the management that will also report to the top management. Management and Organization Given that the business is being established at a smaller level in the beginning, it does not wish to develop an employee or operations infrastructure that is very large. Where possible, some of the activities especially those that require very technical operations on the system will be ultimately outsourced from established IT firms. It is not possible to have a permanent IT specialist at this level of the project. The manpower requirement is reduced at this level. Given that the resources are limited, the company will much try to leverage the resources that are limited through utilization of the external sourcing in the development of the service and marketing. The company also wishes to finance the accounts receivables with the production factors so that there is minimization of the administrative work. With this, the services can be developed quickly and efficiently and distribution done with very minimal upfront costs. This is a strategy that will enable the company to remain very lean on budget, where agility and utilization of the customer needs is clearly defined. a. Managing Director This will be the core centre of all operations and will co-ordinate a unified operation of all activities. b. Management Production Team As referred from the operation strategy, there will be a top director followed by three basic managers in charge of operations, finance and production. A team of consultants will be used to provide expertise in areas that are extremely sensitive. The production manager will be somebody with high knowledge levels in IT and experience but with a keen eye to determining a future progressive plan. The marketing manager will be aggressive personnel able to source external sales persons, train them on the available products and plan their distribution in the market. c. Marketing management This is a section that will mostly mobilise the outside sources to have the products promoted in the whole of Monaco. The post will also be in charge of handling administrative posts at his/her level. He will source individuals that have a devotion to sales and marketing, especially those with sound knowledge of Monaco town. d. Finance manager Has the role of co-ordinating all financial issues due to the company within the given budgetary allocation. Structure and Capitalization a. Business Structure The structure is lean and simple and has only three vertical levels as already indicated. Legal issues will be handled by a hired counsel given that there has to be an agreement with the local council. The company will not venture into any form of capitalization at this stage but the lead counsel will provide future advice to that effect. b. Capital Requirements Most of the funding will initially come from soft loans from financial institutions and the 50,000 hopes to be raised on that basis. The projected future funding will be large loans from financial institutions and starting a shareholder plan. c. Uses of the Capital Capital will be used for a collection of purposes; production and development of the product, for sales and marketing, as capital, for licensing. d. Impact on the balance sheet The initial terms of transaction will be on cash basis. This will help the company to finance its operations as it picks up before strategizing on credit facilities. Risks and Opportunities i. Risks There are several risks in the implementation of the business plan given that it is something that is coming up for the first time. a. General Enterprise Business Risks These are risks faced by entrepreneurs at the initial levels at which a business makes a start. This comes as a result of lack of experience in management, marketing and all other practices at that opening level of operation. Due to this risk, the potential threats that are likely to be experienced are; lack of effective control of quality, marketing and distribution problems. This is because the start-ups must take time to build their customer base and to convince the market that it is a viable venture. Another issue at this level is the general economic environment. Established companies are not likely to face this risk because they are able to anticipate its occurrence and take caution. The company is likely to face all these problems and it is important that some amount of money be set up for contingency purposes. b. Industry Specific Risks One of the challenges is the risk of competition. There are some similar companies that operate in other cities in Europe and they already have a strong capital base which means they can carry out strong market research and initiate their products very effectively. This is not the case with this company and the budget of €50,000 may never suffice that risk of competition. Another risk is the litigation risk. These are specific risks that cause fall of businesses. They can be handled through undertaking a cost of liability insurance. c. Company Specific Risks As a new company in the industry, there is always the risk of capital. VARS is trying to operate within the budget of 50,000 and that would lead to some level but unless the company has a back-up capital, there might be lapses in production. The company must set up sufficient fixed and current costs of operation if it has to survive the market. To this end, there is the problem of the fixed costs structures though they vary from being high to being very low. Given that the company launching VARS has low fixed costs, it is not able to achieve a break even profitability levels. ii. Opportunities For the business, Monaco is still a virgin market that will be up for full utilization. The company has the capability of building an empire in the city and develop as a large monopoly. The frustrations of the people in the town that forces them to spend 15 minutes looking for parking will be an opportunity for the company to grasp and maintain. After expansion, the company also has the opportunity to move to the nearing towns and other cities in Europe if the venture will be successful in Monaco. The company therefore has the entire town its disposal to manipulate and run. Financial Plan The company is limited by budget but hopes to get some financial aid from financial institutions in the town to allow it add to the initial capital that it has. The starting revenue at year 1 is €197,600 having accessed some loan deals. Income Statement Revenues 197600 Cost of Sales 121365 Gross Profit 76234 Accounting 4,500 Advertising & Promotion 14,000 Bank Charges 11,400 Consulting Fees 2,500 Insurance 1,000 Lease - Facilities 13,000 Legal & Professional 500 Licenses & Fees 450 Maintenance 600 Miscellaneous 1,100 Office supplies 2,500 Security 520 Telephone 1,300 Utilities 3800 Website 1,800 Total Operating Exp. 58,970 EBIDTA 17,264 Depreciation 2,316 Operating Profit 14,948 Interest Expense 3,099 Earnings Before Taxes 11,849 Income Taxes 1,848 Net Income 10,001 From the information in the income statement, it is quite evident that the company is still operating at a lower rate. This is because it is the first year of operation and there are several contingency issues that it has to deal with as indicated. Variable Costs Our variable costs will include the updates of VARS app, fee and promotion: Cost of adding new updates / features in the app Updating design Marketing / promotional cost Apple store enrollment yearly fee ($99 to $199 per year) Following is the PERT planning process that will help us measure the amount of time estimated to build and develop our business: 1. Construct and present the VARS app business plan > Optimistic time - 2 months > Most likely time - 4 months > Pessimistic time - 6 months 2. Get investors interested in the plan and obtain the money: €50.000 initial funding > Optimistic time - 2 months > Most likely time - 4 months > Pessimistic time - 9 months 3. Launch the final app > Optimistic time - 2 months > Most likely time - 6 months > Pessimistic time - 1 year 4. Implement the marketing strategies > Optimistic time - 3 months > Most likely time - 5 months > Pessimistic time - 1 year 5. Employee recruitment > Optimistic time - 4 months > Most likely time - 6 months > Pessimistic time - 1 year At the end, this gives us the following time estimation: Optimistic time - 13 months Most likely time - 25 months Pessimistic - 51 months Conclusion The idea for VARS came up through our team’s personal exposure to the problem of parking in small cities. Thus, the problem exists. By following the plan provided above, VARS Company will meet its financial goals and vastly ease the problem of parking. We, whilst still undergraduate students stand strong with the idea by providing 40% of the initial capital. The company’s management is confident that VARS can achieve its predicted sales forecast of EU 80.000, EU 96.000 and EU 115.200 in years 2015, 2016 and 2017 respectively. Moreover, at VARS we strongly stand by our market research, potential customer base and our prediction of gaining and maintaining over 50% market share in the specific industry. VARS has the potential of becoming highly anticipated locally, regionally, nationally and internationally as well. Our customer base is shared in many countries around the world, we see no reason why VARS would not catch on anywhere else. The company’s aggressive marketing strategy together with a unique entity with in the industry due to no competitors, further correlate towards the success of VARS. VARS can provide rewarding long-term returns to potential investors. As previously mentioned VARS has no direct competitors. We don’t need to claim the top spot on the market – we need to keep it. Therefore, for VARS to stay innovative, it must secure initial capital. The capital will be used to always stay one step ahead: establish a reputable name, further develop the business infrastructure, product development and strategic geographic positioning. Providing that the right funding is acquired, VARS can achieve operational success for years to come. So, take the wheel and help guide VARS through its exciting journey to success. Appendix 1: Parking Rates in Monaco Public Car parks Monaco On-street parking is not possible for visitors. So you are advised to use one of the car parks for short term and long term parking.  • First hour is free of charge.  • Second hour: € 4.40  • 3rd-5th hour: € 0.70 per 20 min. • 6th-10th hour: € 0.20 per 20 min. • after 19.00 hours: € 0.30/hr., evening/overnight flat rate: € 2.00 • daily maximum: € 20.00  Read More