Professional Documents
Culture Documents
Wiredu 20 Business 20 Plan 20 Final
Wiredu 20 Business 20 Plan 20 Final
Wiredu 20 Business 20 Plan 20 Final
TABLE
OF
CONTENTS
1. EXECUTIVE
SUMMARY...........................................................................................3
2. THE
STUDENT
ADVANTAGE..................................................................................4
3.
CUSTOMER..............................................................................................................5
a. Universities
&
Local
Businesses
..........................................................................
b. Applications
on
the
Open
Market.......................................................................
4. CUSTOMER
BENEFITS.............................................................................................7
5. PRODUCTS
&
SERVICES..........................................................................................7
a. Product
Description................................................................................................
b. Envisioned
Uses........................................................................................................
6. MARKET
&
COMPETITION.....................................................................................8
a. Market.........................................................................................................................
b. Competitors...............................................................................................................
7. STRATEGY
&
IMPLEMENTATION..........................................................................8
a. Initial
Rollout............................................................................................................
b. Milestones...............................................................................................................
c. Exit
Strategy...............................................................................................................
8. OPERATIONS.........................................................................................................12
a. Legal
Structure..........................................................................................................
b. Location
and
Facilities............................................................................................
9. CRITICAL
RISKS
&
ASSUMPTIONS......................................................................13
10.
CULTURE................................................................................................................14
11.
MARKETING..........................................................................................................15
a. Marketing
Overview.................................................................................................
b. Pricing...........................................................................................................................
12.
FINANCIALS...........................................................................................................16
a. Costs
&
Revenue.......................................................................................................
b. Ask..................................................................................................................................
13.
EXECUTIVE
TEAM.................................................................................................18
14.
GROWTH
TIMELINE.............................................................................................19
15.
APPENDIX..............................................................................................................20
16.
WORKS
CITED.......................................................................................................22
1.
EXECUTIVE
SUMMARY
Over
the
past
decade,
cellphone
use
has
become
ubiquitous.
As
a
result,
most
companies
have
started
using
smartphone
applications
to
attract
and
communicate
with
their
customers.
Yet,
the
development
of
smartphone
applications
requires
specialized
programming
skills
and
technological
resources.
As
a
result,
these
interested
parties
turn
to
application
development
companies.
In
the
current
marketplace,
almost
all
smartphone
application
developers
exclusively
target
large
clients.
As
such,
WiredU
has
recognized
this
opportunity
to
develop
applications
for
smaller
niche
customers,
specifically
universities,
local
businesses,
and
individuals
on
the
open
marketplace.
We
will
uniquely
realize
this
objective
by
utilizing
the
intellectual
capital
localized
on
university
campuses,
especially
in
computer
science
students,
to
program
and
develop
applications
of
the
highest
quality
for
customers
in
a
cost-efficient
and
creative
manner.
The
mission
of
WiredU
is
to
build
a
low-cost
application
development
company
using
a
unique
double-fold
business
model
to
attract
the
business
of
specific
niche
market
segments:
namely,
universities,
their
students
and
local
businesses.
The
model
will
employ
student
programmers
who
are
physically
located
at
the
same
sites
as
all
three
types
of
customers
requiring
app
development,
allowing
them
to
better
understand
and
meet
the
needs
of
the
customers.
WiredU
will
be
ready
with
a
convenient
and
cost-effective
solution
to
modernizing
the
university
or
businesses.
In
addition
to
developing
distinct
applications
based
on
the
customers
instructions,
WiredU
will
also
have
template
application
ideas
and
features
to
pitch
to
customers.
The
WiredU
will
operate
with
a
unique
hub
and
spoke
system
model.
The
Executive
Team
will
be
located
in
one
hub
while
teams
of
different
student
contractors
will
compose
different
spokes,
located
on
various
university
campuses.
The
hub
and
spoke
system
increases
WiredUs
scalability.
The
spoke
model
is
easily
replicable
so
new
spokes
can
easily
and
quickly
be
opened
at
different
locations,
growing
our
market
presence
in
a
short
time
frame.
Our
competitive
advantage
is
the
employment
of
computer
science
students
to
develop
the
applications.
This
creative
labor
source
benefits
both
WiredU
and
the
student
contractors.
WiredU
will
provide
the
student
contractors
who
desire
hands-on
programming
experience
and
who
would
otherwise
lack
the
business,
with
application
development
contracts
obtained
by
our
marketing
and
operations
department.
Additionally,
they
will
receive
the
necessary
material
goods,
a
computer
and
development
software,
as
well
as
industry-appropriate
fiscal
compensation.
Furthermore,
WiredU
plans
to
initiate
a
programmer
certification
program
in
cooperation
with
their
home
university
to
further
sharpen
their
competitive
edge
in
the
post- graduation
job
market.
WiredU
will
attract
high-quality
student
programmers
by
providing
opportunities
for
skill
improvement
through
professional
development
events
like
online
lectures
and
programming
challenges.
As
they
begin
developing
apps
on
a
contract
basis,
each
team
will
have
at
minimum
a
weekly
virtual
conference
with
our
CTO.
To
foster
connectivity
amongst
the
student
contractors
and
facilitate
creative
problem
solving,
WiredU
will
maintain
a
back-end
website
for
student
contractors
to
connect. The
employment
of
student
3
contractors will also enable WiredU to operate in a cost-effective manner. The programming completed by students does not require expert developers, especially because a programming consultant will develop the platform code in the first few months. Our decentralized operations and utilization of technology to communicate with our spoke teams also reduce our overhead costs. As a result, WiredU will be able to maximize its profits. WiredU will target its anticipated populations, customers on the open market and contracted businesses, through tailored marketing. As a technology-based business, we plan on employing social media to reach students, universities and other potential customers. In addition, we also recognize the need for more traditional marketing such as print materials and local advertising to attract customers who are not technologically current. WiredU plans on being strategically acquired by a mid-size application development firm after five years of operation. As application development companies are looking to increase their size and presence, many mid-size firms have been acquiring smaller application development companies. An examination of recent transactions and industry trends in the application development industry confirms such acquisitions. Five years after implementation, WiredU will have expanded to 14 university campuses with over 50 employees, placing the firm in an ideal position to be strategically acquired.
A. Benefit for Student Contractors The student contractor model is the backbone of WiredU and gives us our competitive advantage. Although the workforce demand for computer science majors is growing, there are still fewer jobs than computer science students. While there may be increased demand for employment post college graduation, there are still a limited number of positions for undergraduate computer science students while they are still enrolled in university. Furthermore, the existing employment positions for computer science majors require past internship experience developing applications. For this reason, computer science majors are looking for direct, hands-on experience programming apps to place them at a competitive advantage in the job market. Through working with WiredU, they will have the opportunity to gain hands-on expertise and learn more about specific areas of programming. WiredU provides students a platform to obtain contracts from businesses that would not otherwise offer business to individual undergraduate students. 4
WiredU, specifically its CTO, will provide the students with all the necessary resources to program applications, including a computer with the latest software. Every student contractor will also be working in a spoke team with at least two other students. As a result, they will be able to share ideas and more effectively problem solve. The expertise of our contracted professional computer programmer and Executive Team members will serve as unique resources for student contractors. B. Benefit for WiredU The employment of computer science students allows WiredU to be cost effective and gives our company a competitive edge. Although student contractors will be paid in accordance with the industry standard for their skill level, our employee pay will be cheaper than that of graduated computer programmers. Before the company officially launches, three months will be spent developing the foundational programming code. This base code will then be adapted for individual projects. As a result, students will have the understanding and resources to efficiently and knowledgably complete the contracted projects. The majority of the applications that WiredU will develop will be for locally-based businesses and universities; we believe that the perspective provided by these students will help us to best deliver the product through intimate knowledge of the target demographic.
3. CUSTOMER
WiredU is uniquely situated to reach a varying range of customer populations due to the nature of our business structure. WiredU can tailor its applications to target burgeoning markets by producing products that reach unmet needs or solve problems in innovative ways. We will target three customer segments: universities, businesses and individuals seeking applications for the open market. A. Universities & Local Businesses Our initial entry market will be universities and the surrounding businesses. We will contact university departments first about our company; university departments are ideal entry points because they can be hired on a contract basis. Additionally the fact that university systems are comprised of many different departments and organizations means that WiredUs potential customer base within the university system alone is quite broad and diverse. Furthermore, university departments are always looking for ways to communicate more effectively with their students. They can achieve this objective with a smartphone application. We will use the technological generation gap to our advantage as well: 5
many university professionals may not be technologically savvy or may not have the time to develop an application themselves. WiredU will be ready with a convenient and cost-effective solution to modernizing the university. The relationships with universities will enable WiredU to develop a presence in the community, which will then allow us to effectively approach local businesses. The ideal small business customer is interested in contracting the development of a smartphone application tailored to the goods, services, and customers of their individual business. Because our business model is localized around university campuses, there are many small businesses looking to maintain a fresh image with up-to- date technology in order to reach their tech- devoted student customers. Using student developers for these applications will increase the desirability of our product because they understand the customer base and will be able to thus create the most effective product. We also see strong potential for the development of an arm of WiredU that would work alongside smaller colleges to provide opportunities for students to gain experience at schools that do not have the resources to grow a robust computer science department. Students at these schools would work for WiredU to gain experience in an environment previously vetted by the college. This way, smaller universities can serve students interested in computer science without having to establish an entirely new department. B. Applications on the Open Market After establishing ourselves through Projected Customer Segmentation the contracting arm of our business, we plan to branch out into developing applications for the open market. Once again, our location on Universities university campuses will provide an almost-guaranteed customer base. As universities continue to highlight Local B usinesses innovation and entrepreneurship, more students are creating the ideas Applications o n t he for potential smartphone open m arket applications. Yet, a majority of students do not have the resources or the knowledge to develop the applications themselves, creating a space for WiredU. Similar to the services that we offer to universities and businesses, WiredU will develop applications based on the individual customers desires. This market sector 6
is more volatile and we plan to mitigate the increased risk through a portfolio model wherein we spread risk through the simultaneous development of several applications. Smartphone sales are predicted to reach 631.3 million in 2012 and 1,438,010,000 by 2015.
4. CUSTOMER BENEFITS
Customers will yield more benefits through working with WiredU than through any other smartphone application developer. The primary benefit lies in the localized services provided by a company that understands the needs of smaller businesses as well as the knowledge of their particular environment and customer base. Close proximity makes in-person meetings possible and thus provides a superior level of customer service if required or requested. As outlined Exhibit 11.1 (Price Comparisons), WiredU also offers a lower-cost alternative in the long term thanks to our innovative tiered maintenance plan.
A. Product Description The product that WiredU provides is the development of a customizable smartphone application. Although the applications will be made to order for each client, WiredU will provide customers with application ideas and suggestions for features. For example, WiredU predicts that a common application will be a campus guide for universities. Even though the product for each university will be different, WiredU will have a general framework and suggested ideas to quickly and easily personalize it. Although not the product that will be brought to market, the unique business structure of WiredU is a component of its product as well. B. Envisioned Uses As previously mentioned, we plan to have several framework applications ready to be modified by the students at the location quickly and easily. Although the specific design and features will be unique to each client, WiredU will create a base template for the common application types in order to quickly and easily customize from the base model. One sample framework for a university client would be the Campus Guide application, which would be a supplementary campus tour for the University Admissions to distribute for prospective tourists who want a more specialized tour, or who may not have time for the traditional tour. Other such applications for university usage might be an application to inform students of events that are happening around campus in the near future or an application that will allow visitors and students to find handicap accessible locations around campus. After establishing WiredU as an application company through our work with universities and businesses, we plan to branch out in designing apps from individuals ideas. This will help to fill the gap in the current market that exists between skilled programmers and members of the general population with strong ideas for potential smartphone and tablet applications. This will be an invaluable step for our business because it increases our idea base and our potential for having wildly successful applications branded under the WiredU banner. 7
The initial strategy for WiredU will begin on a single test campus where the company can develop techniques for gaining connections with students and faculty in addition to testing different ideas for possible applications. This test site will also provide experience in selling and otherwise contracting with the University personnel. Once the test campus is established, WiredU will enact a hub and spoke model to include new campuses into their consumer base, independent of other campuses, and maintain a central office as the home location, to be determined.
A. Initial Rollout Initially, WiredU will reach out to the test university (currently forecasted to be the University of North Carolina at Chapel Hill), which has been identified as interested in producing a number of mobile applications for students to use. Our firm will consult with the university on the types 8
of applications available and provide other potential designs for the university to consider. Then the company will reach out to the computer science students on campus interested in contracting their skills. Students who do work with us will then be provided with any tools necessary for the production of the application as well as contact with other students on the campus who may be able to aid in the production of the application. WiredU will also contract an experienced programmer whom the students may contact virtually for aid or advice concerning programming. When students have completed the raw code for the applications, WiredU will provide beta testing and will enter negotiations with the university concerning the sale, maintenance, advertisement, and other processes involved in implementing the application. If the university or a company were ever to sell these developed applications on the open market, the students responsible for producing these applications would receive a predetermined percentage of the sales of that application. This process will be repeated at this campus for as long as the University is interested in contracting applications, and will be maintained simultaneously at other Universities, allowing for fast production and multiple negotiations to be happening concurrently. We anticipate that programming quality applications may take several months per application. Given the nature of programming unique apps, each application might take a slightly different amount of time. However, keeping in mind the advice of experts, one app should not take longer than 3 months (Android App Developer). We anticipate that this application development timeframe will shorten as our student contractors become more experienced and can share helpful tips and advice (Clark). Exhibit 7.1: Spoke Implementation Steps
We will start specifically promoting Android based applications, as they are a more popular mobile device, can be programmed faster by less experienced programmers, and Android mobile phones also outnumber Apple-based products in sales, as evidenced by the graph below. WiredU also recognizes the prevalence of Apple devices, especially in university communities. As a result, we will begin programming for the iPhone after we have established ourselves in the Android market. Exhibit 7.2: Projected Global Smartphone Sales
http://www.statista.com/statistics/12867/forecast-for-global-sales-of-smartphones-by-operating-system/
Our strategic market positioning is what makes WiredU unique. We will already have spokes in 14 locations across the country in the fourth year. We will also have established ties with universities. These connections are helpful double-fold: they build brand recognition and reputation as well as generate profit in the future. As technology continues to play an increasing role in our every-day lives, institutions will need new applications developed accordingly. These established customers will also need their previously developed applications to be updated. B. Milestones The following chart demonstrates the milestones that WiredU hopes to reach. As evidenced by the Growth Plan (Exhibit 6.3), we hope to grow the number of spokes at an increasing but feasible rate in order to achieve the best results. 10
Exhibit 7.3: Growth Plan Year 1 2 3 New Spokes 2 3 4 Total 6 9 12 Employees at New Spokes New - 2 4 Employees at Old Spokes New 6 9 12 Contracts at New Spokes (3 in the initial year) New - 8 20 Contracts at Old Spokes (4/yr) Total 6 17 32 Contracts Total Student 6 17 33 Contractors Total Spokes 2 5 9 Exhibit 7.4: Growth of Total Spokes & Student Contactors
4 5 15 6 15
36
51 54 14
11
C. Exit Strategy WiredU aims to be acquired after its fifth year of operation. We envision ourselves being acquired by a mid-sized company that is looking to expand. There have been several acquisitions of this kind in recent months. Examples include Appcelerators acquisition of smaller app developer, Aptana. The final terms of the sale were undisclosed, but Aptana was valued at $7.8 million before the sale (Haynie). Also, Taiwanese smartphone company HTC acquired Inquisitive Minds Inc., a childs app and interface designer, for $13 million (Brian). We have identified two companies that could expand their production and strategic options by acquiring WiredU: WillowTree Apps and Y Media Labs. Each company has an annual revenue of $1-3 million, approximately 25 full time employees, and a loyal clientele ("bestwebdesignagencies.com"). WillowTree Apps and Y Media Labs do development work for the University of Virginia and Stanford University, respectively, and could use our connections with college towns to expand further into that market ("bestwebdesignagencies.com"). While they both develop apps for businesses, neither company has the operations on a local scale that we can provide them.
8. OPERATIONS
A. Development Strategy The scope of our operations will be to provide design concepts and organize students together to develop these programs. We will pipeline the production of these applications by having students work both individually and with a support group of other students to produce the applications faster. We estimate that they will be working roughly ten to fourteen hours a week, but our contract with them does not dictate the amount of time they spend on programming, just that they have a complete program at previously decided check-in dates. We will then enter negotiations with the University for the sale, advertisement, and implementation of these applications, and possible designs for future applications. The sale of these applications will provide a majority of our revenue, though we will offer the university to contract our services to maintain the sold applications for an amount to be determined by the magnitude and frequency of maintenance needed by the application. Should the university decide not to contract our maintenance services, we will only provide initial setup and promotion, in addition to the physical application (Harper). Based on the industry standard, we should charge roughly 15% of the initial contract cost for upkeep and maintenance per year (Haugen). The number of student contractors on each individual campus will be determined by interest and needs of the University. These students can be added and removed from the operation without affecting the processes on other campuses, and will reflect the growth of our company. As discussed before, they will be hired on a contract basis for several reasons, including cost
12
efficiency and ownership issues. The core team of WiredU, and its executive board, will consist of one CTO, a CEO, a CFO, and Marketing Director. B. Legal Structure Since WiredU will not require venture capital funding, the best route of incorporation will be to file as an S-Corporation. This will enable taxable income to be passed directly through the shareholders, the four officers named in this plan in this case, and taxed at their applicable rates according to their ownership percentage (Riley). This is more beneficial than filing as a C- Corporation, in which WiredU pays a tax on its earnings, and then the shareholders would pay a second tax when earnings are distributed to them in the form of dividends. Though some individuals tax rates are higher than those applied to a C-Corporation, this would not be applicable to our presiding officers. Filing as an S-Corporation would also give us more flexibility in terms of deducting any unforeseen losses we might have from personal income taxes (Riley). We will also have legal counsel to advise us on any structural changes we may need to make, or patents for which it would be beneficial to file. C. Location and Facilities Though we hope to expand this operation across the country, the amount of personnel located at each individual campus is minimal. Our primary interaction with students, beyond the initial meeting, will be maintained through virtual contact from a home facility, where a majority of the employees will work. Possible locations for the main location of the operation would be an office space; preferably in an area with easy access to the different locations we have student teams. Such areas would be cities like Raleigh, which has easy access to prominent universities, local business, and an airport, which we could use to access other universities quickly, or New York for many of the same reasons. Possible locations of starter universities include UNC at Chapel Hill. Ideal candidates are close to a large city, but are a part of thriving smaller towns, which would provide for when we choose to expand to small businesses. These universities also have strong computer science departments, providing a solid pool for student contractors.
WiredU assumes that there will be a market for our services. WiredU also assumes that the target campuses do not have a currently established infrastructure designed for producing mobile applications. This assumption also implies that these target campuses desire or need applications to modernize various aspects around the campus. The business structure assumes that some of the computer science students located on campus will be interested in developing applications in conjunction with WiredU, in exchange for pay, experience within the business arena, and other compensations. We also assume that they will have some basic understanding of programming, but will be interested in expanding that experience by creating applications based on information and design specific to their University. We plan to hire them as independent contractors, so that we may maintain rights to the code and set contract prices rather than an hourly wage, which is typical in such contracts (U.S. Chamber of Commerce).
13
The company is aware of potential risks associated with the venture and accordingly, has taken actions to minimize risk. In dealing with intellectual property, there is also the potential for legal issues. In anticipation of such concerns, WiredU has employed a lawyer to oversee that the contracts address these issues. Similarly, the student contractors will be obligated to sign contracts for the apps that they help develop to protect the rights of the company. There is an element of technical risk associated with any technology company. We recognize that the students may not all have the immediate industry knowledge, which is why we will work with a computer programmer consultant regularly. We are providing the student contractors with the necessary tools, the information and the computers, to aid them in their job, but we recognize that there is still risk whenever a human element is involved in using less experienced labor. However, we believe that recognizing these risk will help mitigate their impact on the venture.
10. CULTURE
Culture plays an integral role in the success of our venture. Due to our decentralized nature, we will place a large emphasis on creating a culture that enables our student contractors to feel like they are part of a team. One of the objectives that our student contractors hope to realize through their work with WiredU is the first-hand experience and insight into developing apps. For that reason, the role of CTO on Executive Team is primarily devoted to encouraging our culture. Mandy Melton will serve as the students point person with all questions, technologically related and otherwise. It will be in their weekly team meetings with Mandy that individual team members can ask questions and share their creative suggestions for programming ideas. They will work together to develop individual and team goals, and action plans to realize them. While we do expect contractors to develop the work that is being asked of them, we will have their preferences on file -- in which fields they would like to work and in which capacities they would like more experience and consider their preference when assigning contracts. As a company that also aims to grow our intellectual capital, we will provide students with any resources programs or books that they might need. We will also hold regular webinars, coordinated by Mandy, for them to further their knowledge. Given that our contractors are technologically inclined and often communicate best online, Mandy will develop a back-end website through which our student contractors can interact as a part of a team to share coding tips and ideas. We recognize that strong leadership and recognition of quality work are cornerstones of creating a successful company and inclusive culture. We hope to reward successful student contractors by giving them more influence regarding their contracts. After the initial period of implementation, we hope to develop a time-based incentive program, rewarding student contractors for quick turnaround time for development.
14
11.
MARKETING
A.
Marketing
Overview
As
a
technology
based
company,
WiredU
will
emphasize
marketing
through
social
media
platforms
such
as
Facebook,
Twitter,
and
Blogspot.
We
foresee
these
ways
as
effective
mediums
to
share
about
our
company
and
create
buzz
surrounding
application
ideas.
The
use
of
social
media
is
also
low
cost,
especially
since
our
founders
are
technologically
savvy
and
there
is
no
need
to
bring
in
an
external
social
media
coordinator
for
startup
purposes.
We
also
recognize
that
a
portion
of
our
initial
target
market
is
comprised
of
businesses
that
currently
lack
knowledge
of
social
media.
Therefore,
we
will
also
use
more
traditional
low-tech
marketing
in
order
to
reach
these
companies.
Door-knock
campaigns
and
appropriate
literature
in
the
form
of
brochures
detailing
the
services
and
benefits
provided
by
WiredU
will
be
essential
to
procuring
those
initial
contracts.
B.
Pricing
In
order
to
establish
a
foothold
and
attract
initial
customers,
we
expect
that
the
introductory
contracts
at
new
"spokes"
will
cost
$10,000.
One
year
following
the
initial
opening
of
a
"spoke"
WiredU
will
charge
$15,000
per
application
developed.
This
pricing
structure
allows
us
to
compete
effectively
with
other
companies
like
Hobson's
and
Bar-Z
Adventures
in
our
market
space
while
paying
our
student
contractors
fairly
and
developing
a
profitable
company.
The
flexibility
in
our
pricing,
only
paying
one
lump
sum
fee
instead
of
an
annual
rate,
will
hopefully
attract
customers.
After
an
application
has
been
developed
and
delivered
to
the
customer,
the
customer
has
the
opportunity
to
pay
for
upkeep.
This
service
will
provide
for
both
software
updates
as
well
as
content
updates
at
a
price
of
$10,000
per
update.
Exhibit
11.1:
Price
Comparisons
Hobson
Droid
Application
One
time
implementation
fee
Total
cost
Year
1
Total
cost
subsequent
years
$2,650
$5,000
$15,500
$10,500
Barz
Adventure
Minimum
for
basic
package
Subsequent
years
$5,000
$5,000
WiredU
Basic
Package
Upkeep
15
12.
Financials
A
.Costs
&
Revenue
WiredU
has
relatively
low
start-up
costs,
enabling
a
large
profit
margin.
The
capital
needed
to
implement
one
spoke,
with
a
minimum
of
3
student
contractors,
is
only
$4,000
.
Each
student
will
need
access
to
a
computer,
at
a
cost
of
$1,200,
resulting
in
a
minimum
start-up
cost
of
$3,597
with
an
additional
$400
allocated
for
marketing
to
publicize
the
venture.
Each
spoke
will
also
be
allocated
$300
annually
to
continue
their
marketing
and
advertising
efforts
after
the
initial
year.
The
implementation
of
spokes
will
also
necessitate
one
week
of
programming
consulting
from
an
expert.
This
expert
consulting
will
cost
$1,500,
in
alignment
with
the
industry
standard
annual
salary
of
$80,000.
Given
that
our
venture
requires
many
legal
documents
such
as
contracts,
it
is
necessary
that
WiredU
contract
the
services
of
legal
counsel
to
protect
our
rights
and
intellectual
property.
In
our
Cost
Projections
(see
Appendix
3),
we
have
adjusted
the
legal
costs
to
adapt
with
our
growing
business.
This
investment
is
necessary
for
the
long-term
success
of
our
venture.
The
other
associated
cost
is
travel;
one
member
of
our
team
will
be
the
designated
point- person
to
travel
to
new
collegiate
locations
to
open
up
operation
spokes.The
salary
that
we
pay
to
our
student
contractors
and
employees
is
the
only
other
large
expenditure.
The
initial
four
investors
will
take
a
reduced
salary
because
our
ultimate
pay-off
will
derive
from
the
sale
of
WiredU.
Although
we
will
be
generating
profit
by
Year
2,
the
primary
return
on
our
investment
will
be
through
our
exit
strategy.
For
that
reason,
the
four
executives
on
our
team
will
each
receive
a
salary
of
$20,000.
The
student
contractors
will
be
paid
$3,000
annually
for
their
work
on
approximately
3
contracts.
(For
more
detailed
financial
information,
see
Cost
Projections
in
the
Appendix)
Exhibit
12.1:
Cost
Price
Assumptions
Price
Assumptions
(Cost)
Programming
Consulting
$1,500/week
based
on
a
$80,000
annual
salary
(1
week
for
each
new
Spoke)
Technology
Packet
for
$1,200
new
student
contractors
Implementing
new
spokes
$3,600
for
3
technology
packets
+
$400
advertising
Marketing
(per
spoke)
$300
Legal
Counsel
$10,000
initial
+
$2,000
more
every
additional
year
Travel
for
New
Spoke
$1,000
Student
Contractors
Pay
$3,000
Executive
Team
Pay
$20,000
16
WiredU expects to receive average revenue of $15,000 for each contract. As mentioned in the pricing section (11.b), this payment is consistent with industry pricing, even presenting a cheaper long-term alternative for many businesses. We predict that in our initial year of implementation, the revenue generated might be lower because we will still be establishing ourselves in the area. For that reason, we have adjusted the revenue projections appropriately. We will begin offering upkeep services in our third year of implementation for businesses that want their initial application updated with new information and technology. We will charge $10,000 for the upkeep of one application. (For further financial information, see Revenue Projections in the Appendix) Exhibit 12.2: Revenue Price Assumptions Given above costs and revenue assumptions, Price Assumptions (Revenue) Contracts at $10,000 on average WiredU will become profitable in its second year. By the fourth year of implementation, the firms Spokes in their profitability will approach half a million dollars Initial Year Contracts at $15,000 on average ($458,100). It is important to underscore that the largest profit will result from the sale of Spokes after their WiredU. Initial Year Upkeep $10,000 (For detailed financial information, see Profit and Loss based on Growth Projections in the Appendix) Exhibit 12.3: Projected Profit Graph
Projected
Profit
500,000 400,000 300,000 t i f o 200,000 r P 100,000 0 Year
1 -100,000 Year
2 Year
3 Year
4
Profit
17
B. Ask After consultation with fellow entrepreneurs and legal experts, WiredU has determined that the most appropriate funding vehicle to fund the venture is a bank loan. Given that the Executive Team will be investing $10,000 of their own equity and be taking a reduced paycheck for the beginning years, it is in their best interest to retain as much equity as possible. WiredU will be asking for a bank loan for $100,000. The combined total fund of $140,000 should cover all start-up costs and provides an appropriate cushion for unforeseen costs.
Carly Uhlman (CEO) Carly is a sophomore Economics and Spanish double-major at UNC Chapel Hill. Her understanding of the markets and global economic climate will be critical for the success of WiredU, especially around the time of acquisition. Carly has experience implementing creative business models in developing countries through her employment with the microfinance company Soluciones Comunitarias in Ecuador. This experience will help her to foster innovation and ensure the success of WiredU as a venture. Furthermore, her work in finance at JP Morgan will also allow her to bring critical logistical skills to the team. Her knowledge of Spanish serves to further broaden our network of potential customers. Sam Poole (Director of Business Development) Sam is a junior American Studies major and Art History Minor at the University of North Carolina at Chapel Hill. As a self-made entrepreneur, he has demonstrated the drive and work-ethic essential to creating a successful venture. His studies in Art History help him to consider aesthetics, a valuable insight in the creation and management of promotional materials. This expertise could also be useful in the design stage of the applications we produce. Additionally, his work in the Carolina Admissions Department gives him valuable insight as to the way departments function. This allows him to better build relationships and reach out to universities as we work to establish new spokes. Mandy Melton (CTO) Mandy is a junior who is majoring in Computer Science and English at UNC Chapel Hill. As a computer programmer, Mandy has experience in app development. In addition, she has been programming in Java and C for over a year and recently has learned how to use location-based technology an innovative feature that will be a cornerstone of our apps. Mandys insight into the mind of a computer programmer will enable us to more accurately address the needs of our student contractors. Her connections with the computer science community will be integral in the creation of new spokes. Ross Hardeman (COO) Ross is a junior at the University of North Carolina at Chapel Hill. He is majoring in History and Political Science. Ross has first-hand experience with technology-based customer service due to his previous employment. His study of Political Science gives him insight into the legality concerns of our venture. Ross is dedicated to making the business succeed and knows how to passionately communicate our vision to customers and contractors alike. 18
19
Revenue
Projections
Year
All
Contracts
--
New
hubs
--
New
contracts
at
old
schools
Upkeep
Total
Revenue
1
60,000
60,000
-
-
60,000
2
210,000
90,000
120,000
-
210,000
3
420,000
120,000
300,000
60,000
480,000
4
690,000
150,000
540,000
70,000
760,000
20
5 33 420,000 60,000 480,000 185,000 20,800 4,000 2,700 14,000 229,000 251,000
5 54 690,000 70,000 760,000 249,500 27,200 5,000 4,200 16,000 301,900 458,100
21
22
Haugen, Dan . "Negotiating Software Costs." Twin Cities Business. N.p. Sept 2010. Web. 27 Mar 2012. <http://www.tcbmag.com/industriestrends/technology/130082p1.aspx>.
Riley, Peter. "S-Corporation vs. C-Corporation."cpaservices.com. Riley & Associates P.C., n.d. Web. 7 Apr 2012. <http://cpa-services.com/special_sco.shtml>.
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