New Venture Creation - Essay Example

?Business Report for New Venture Creation: lucraspace.com Purpose of the Report The purpose of this business report is to present a 3-year operational plan for lucraspace.com, a new business venture; this document further aims at highlighting on the core objectives and operational vision of the venture and comment on various management aspects in the new venture creation. Further, this plan aims at describing the new venture in light of the 3-year operational aspects within all the essential components of business management. In order that we achieve the profitable status and desired business growth while ensuring that our business objectives met and supported from an operational perspective, an analysis of the business scenario for the anticipated 3-year growth and the business availability and longevity thus considered as a basis for business price and financial evaluation and growth sustainability. Industry analysis: background information Lucraspace.com is an online social site created out of the possibility of designing an online community for that could In essence pull a great online following that forms a massive pool for business advertising. Online social marketing in essence grew out of the need by business organizations to reduce operational costs associated with running any business while ensuring that maximum returns accrue to the business. While agreeing with Whiting, it is generally agreeable that online social marketing is no longer age restricted and therefore associated with all age sets in the 21st century. Daily, every social networking organization tries to make a huge following with different interests. Within these varied usage of social networking sites, different people relate social sites with different meanings and implications. From a business perspective, social networking site refers to a huge potential consumer group with homogenous product or service needs that gives the company a good avenue for advertising their products, within this definition, online marketers sees online social networking as a new consumer market. Equally, social networking site is composed of “individuals or organizations that are connected through various social contacts ranging from casual acquaintances to family members. (Dickerson, 2006) Dickerson, 2006 further attest that online social sites created “to encourage connections and communication to occur on a wide variety levels.” Popular online social sites include; MySpace, Facebook, Hi5, Xanga, and Friendster, which allows users an opportunity to create a user profile, connect with other online friends. User information and behaviors gathered used by marketing companies to determine the market niche and therefore be able to advertise their products on these sites. Revenue from online social site advertising often follows Uniform Resource Locator (URL) strategy that arbitrarily locates any file available in the internet. The figure below depicts the aggregated social network segment that lucraspace.com exploited as an alternative investment strategy for new venture creation. Marketing niche Lucraspace.com driven by the many opportunities that exist around social networking sites and a new need to develop revenues around social websites, as such advertising remained the main source of revenue for these sites in 2007. Within this new reality, online sites aimed at generating revenue from sites given their potentiality to reach millions of audiences and potential customers. Marketing estimates in 2006 indicated that markets and business companies paid $350million on advertising on social sites and further estimated that the figure could be higher with technological advances and internet access across many populations globally. The reported business success for these online social sites in their advertising strategy and their low operational costs associated with website design influenced many organizations to prefer these sites as advertising medium. (Cashmore, 2006; Venture Capital, 2007) Service/product information Lucraspace.com is an online social company that enables users with an opportunity to connect and re-connect with others around the globe. While maintaining and providing a good consumer foundation, lucraspace.com ventures into one of the most competitive and lucrative service provision to achieves two things; (1) provide our users with an opportunity to share on their personal life and tool for communication. (2) As an advertising agency, reach out to companies and organizations to introduce, popularize and entice potential consumers into the existence of an organization’s products and services. Marketing Report Lucraspace.com got into a lucrative market that could attract many clients. Our decision anchored on technology influx and recent upward trend in computing among many people globally. Marketing strategy Lucraspace.com adopted a competitive and cutting edge marketing strategy that among other things, presented a better and secure data sharing to the users, and unique opportunity that enables potential organizational businesses to advertise with us. Within this provision, lucraspace.com developed a user-friendly free social website interface that enabled users to create personal photographs, journal entries, description of users and their personal preference, re-connect with friends and family in other social sites without having to register in those social sites, and one stop registration process, in essence these were aimed at attracting a large user registration. Subsequently, potential organizations approached for possibility of signing advertising contracts with them so that our users were able to access full range of products and services at affordable and competitive rates. Advertising costs charged guided by prevalent market rates, amount services and products advertised and need for business sustainability given competitor’s existence. While using secondary source of data and within the provision of understanding our marketing options, several secondary literature analyzed in context in evaluating the marketing performance of the new venture. Presently, in terms of market share, MySpace is the leading and most popular social networking site with about over 70million active users to the site, within this huge user numbers MySpace is preferred by most organizations as a preferred marketing destination. Other cross sectional surveys on marketing evaluation indicate that MySpace is the biggest competitor and entry barrier for any online business with over 40million users logging into the site per hour daily. (Social Networking in Focus, 2006) Within our first 3years of existence, locospace.com attracted user registration of about 500,000 annually. However, this figure rose tremendously within the second and subsequent third year of operation hitting a target of 2.5million global users. Drawing from marketing success of MySpace, our company relied heavily on organizational adverts from upcoming companies. Our endeavor to contract big business within the industry challenged given the huge operational demands required by these organizations to run a successful advert and the huge customer base targeted by these firms. In terms of global presence, users from Asia continents registered a large population, followed by European continents and subsequently Africa. In comparing the marketing trends observed above, our better performance in Asia attributed to the fact that Asia is a growing economy with many small and medium enterprises, cheap, and fast accessible to online and internet based resources. In terms of Age structure, lucraspace.com draws its audience in a large bar of age composition. But that notwithstanding, our frequent users to the company’s site consisted of teenage age group between 15-30years of age, a general trend observed between the three continents under consideration for the marketing period under review. Our organization’s poor marketing performance in Africa could be attributed a number of various marketing weaknesses including low level of marketing presence in Africa as a result of both internal weaknesses within the organization and external threats outside the operational scope of the organization. Given the foregoing 3year marketing performance assessment, it is estimated that lucraspace.com, we project that we will be in a position to develop strategies that effectively tackle emerging organizational weaknesses while capitalizing on our strengths, it is also hypothesized that there would be better user registration within site using better opportunities that minimizes emerging threats. Financial Report and Analysis We note that our organization’s financial commitment rose sharply within the first three years under review. The increased operational costs and business expenses rose from the emerging threats that rose within the business operation and a growing user registration. As business operations advanced, decrease in operational costs started reducing significantly within the third year of operation because of economies of scale associated with the business. A general impression though strict financial management policies were required to cater for the emerging opportunities and threats in the global business. 3-year profit and loss; Year by year Profit and Loss scenario Year 1 Year 2 Year 3 Annual cumulative revenue increase - 2.00% 4.00% Year1 Year 2 Year 3 Interest Income Loans, and fees $0 $0 $0 Interest accruing from federal funds sold 0 0 0 Interest and dividends from investment securities 0 0 0 Taxable 0 0 0 Non taxable 0 0 0 Others 0 0 0 Total 0 0 0 Total noninterest income 240,000 260,000 300,000 Non Interest expenses incurred Web development fees $10,000 $7,000 $4,000 Web hosting fees $16,000 $9,000 $10,000 Marketing fees $12,000 $8,000 $6,000 Occupancy fees $5,000 $5,000 $5,000 Equipment costs and charges $25,000 $30,000 $35,000 Professional fees $12,000 $6,000 $8,000 Salaries and employee benefits $24,000 $36,000 $40,000 Total noninterest expense $104,000 $101,000 $108,000 Income before taxes $136,000 $159,000 $192,000 Taxes on income 30% taxes on income ($40,800) ($47,700) ($57,600) Net profit $95,200 $111,300 $134,400 Conclusion Online social marketing is an important element in many people’s lives as people increasingly use these sites for daily communication. With the expansion of internet opportunities, social networking becomes progressively specialized and more consumers focused. Our three-year operational plan revealed significant information regarding online marketing and advertising. Our advertising strategies have proved profitable and vital for our business success. In future, we intend to inject huge financial commitments in terms of hosting equipment while tapping on the expertise of many technological perceptive professional to maintain our sites. As a priority, it appeared apparent that we constantly monitor and evaluate our marketing priorities and performance as people increasingly visit online sites. References Cashmore, P. (2006, November 1). Social Networking Ads: $2 Billion by 2010. Dickerson, T. (2006). So What is a Social Network? Retrieved March 24, 2007 from, http://article.maxlinks.org/index.php?CatID=31&ArtID=89221 Retrieved March 27, 2007, from http://mashable.com/2006/11/01/social-networking-ads-2-billion-by-2010/ Social Networking in Focus. (2006). Retrieved March 23, 2007, from http://www.cbsnews.com/stories/2006/09/08/fyi/main1989139.shtml Venture Capital; Money Talks. (2007, January 11). New Media Age, 17-21. Whiting, R. (2007). Social Networking: Not Just For Teens Anymore. VAR Business,23 (4), 17-19 Read More