Háskólinn í Reykjavík

Nýsköpun og frumkvöðlafræði
Páll Kristján Pálsson

GROUP 3

Business Plan on Gift Finder

Reykjavík, 14.04.2016

Inga María Backman

Sigurður Möller
Lilian Aketch Okwiri

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Contents
1 Introduction......................................................................................................................................6

2 Executive summary..........................................................................................................................6

2.1 Definition of solution and need................................................................................................6

2.1.1 Competition......................................................................................................................7

2.1.2 Target market....................................................................................................................7

2.1.3 Potential growth................................................................................................................8

3 Market...............................................................................................................................................8

3.1 Competition analysis................................................................................................................8

3.1.1 Is there a company doing the same thing in Iceland?.......................................................8

3.1.2 Are there any similar solutions out there..........................................................................8

3.2 Market segmentation..............................................................................................................10

3.2.1 Target market segment strategy......................................................................................10

3.2.2 Gift finder app user.........................................................................................................11

3.3 PESTLE and SWOT analysis.................................................................................................12

3.3.1 Polititcal..........................................................................................................................12

3.3.2 Economical.....................................................................................................................12

3.3.3 Social..............................................................................................................................13

3.3.4 Technological.................................................................................................................13

3.3.5 Legal...............................................................................................................................14

3.3.6 Overview of the PESTLE and SWOT............................................................................14

3.4 Market research......................................................................................................................15

3.4.1 Results............................................................................................................................15

3.5 The 4 P’s marketing; Product, Price, Place and Promotion....................................................22

3.5.1 Product............................................................................................................................22

3.5.2 Price................................................................................................................................22

3.5.3 Place................................................................................................................................23

3.5.4 Promotion.......................................................................................................................23

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 3.6 Curve of expected sales/need first three years after market introduction...............................24

3.7 Promotion...............................................................................................................................26

3.7.1 Direct marketing.............................................................................................................26

3.7.2 Indirect marketing...........................................................................................................26

3.7.3 Internet............................................................................................................................27

3.7.4 Public relation.................................................................................................................27

3.7.5 Time and cost table for promoting the app.....................................................................28

3.8 Income ideas...........................................................................................................................28

4 Technical part.................................................................................................................................29

4.1 Business plan..........................................................................................................................29

4.2 Project Management...............................................................................................................29

4.2.1 Management and strategy planning................................................................................29

4.2.2 Staffing...........................................................................................................................30

4.2.3 Time and cost analysis....................................................................................................30

4.3 Legal issues product and/or processes. Intellectual property rights.......................................30

4.3.1 Copyright........................................................................................................................31

4.3.2 Trademark protection......................................................................................................31

4.3.3 Patent protection.............................................................................................................31

4.3.4 Time and cost analysis....................................................................................................31

4.4 R&D, design, prototypes, testing............................................................................................31

4.4.1 Research..........................................................................................................................31

4.4.2 Development...................................................................................................................32

4.4.3 Time and cost analysis....................................................................................................34

4.5 Quantity demands...................................................................................................................34

4.5.1 Machines/equipment.......................................................................................................34

4.5.2 Outsourcing....................................................................................................................35

4.5.3 Premises..........................................................................................................................35

4.5.4 Software systems and other systems..............................................................................35

4.5.5 Time and cost analysis....................................................................................................35

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 4.6 Distribution.............................................................................................................................36

4.6.1 Signing up for developer accounts.................................................................................36

4.6.2 Time and cost analysis....................................................................................................36

4.7 Time and cost plan..................................................................................................................37

5 Financial.........................................................................................................................................38

5.1 Calculating total capital need..................................................................................................38

5.1.1 Cost of business plan and additional cost for deepening what we have done so far......38

5.1.2 Cost of legal issues; product and/or processes and intellectual property rights.............40

5.1.3 Cost of research and development..................................................................................40

5.1.4 Cost of supporting material (manuals etc.).....................................................................40

5.1.5 Cost of machines and equipment, premisis, space, layout (build or rent), etc...............40

5.1.6 Cost of software systems and other systems..................................................................40

5.1.7 Cost of distribution.........................................................................................................40

5.1.8 Cost of promotion...........................................................................................................40

5.1.9 Cost of fees to cover capital need...................................................................................40

5.1.10 Cost of establishing the company (Consultants, Accountants, Lawyers).......................41

5.1.11 Financial cost during development time.........................................................................41

5.1.12 Capital needed to cover negative Cashflow in the first periods after we start value
creation. 41

5.1.13 Total time and cost plan..................................................................................................41

5.2 Financing................................................................................................................................41

5.2.1 From entrepreneurs.........................................................................................................41

5.2.2 Grants..............................................................................................................................41

5.2.3 Long term loans..............................................................................................................42

5.2.4 Short term loans (bank, leasing etc.)..............................................................................42

5.2.5 Venture capital................................................................................................................42

5.2.6 Total financing plan........................................................................................................42

5.3 Income and cost plan for first 3 years.....................................................................................43

5.4 Net present valuation and calculation of equity need and price.............................................43

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6 Valuation........................................................................................................................................43

7 Structure of company......................................................................................................................43

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1 Introduction

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2 Executive summary
2.1 Definition of solution and need
The Gift Finder: The Gift Finder is an app/website that builds a database, searches for and findes a
product or an idea for a gift for the user. The goal is to make the search fully automated by simple data
entry by the user when he signs up for the service.

The first data collection is when the user signs up for the service. The user would sign in either via an
account creating page or preferably with Facebook. The app/website then askes the user standardized
question to gather data and information to build a data profile for the user. For example: interest,
favorite literature, authors and if the user prefers to create and share a wish list.

The app/website would then access other user profiles connected to the user or show the user how to
add connection with other users. The next step would be to ask the user to add relation to other users if
the user would like to access a relationship based data base. For example popular gifts for spouses.

The next step of the sign up process would be to ask the user if he would like to add a budget search
parameter for connected profiles. The parameter would aid in narrowing the search criteria for
connected profiles and finally ask the user how often he would like to be shown possible gifts
solutions.

Extra Features:

 Adding gift giving dates on your calendar, graduations, anniversaries and other occasions.
 Suggested friend profiles, you can see who has added you in their calendar.
 Settings to further modify the app to better suit your need. For example how often the user
wants to be shown products found by the application.
 The Gift Finder Canvas Model
 The Canvas template was implemented for the Gift Finder idea and is shown in Figure 1. Each
segment or area was well thought out for further developing the business model for this new
idea.

Customer segment: The target groups for the service are online shoppers, users that tend to forget
important gift-giving dates, users that are busy with day-to-day life and never seem to find the time to
search for a perfect gift until the last minute and last but not least users that are impulse purchase
products when they see great offers.

Value proposition: The service saves time for the user by searching for the product using search
parameters from the data base. The app/website has the potential of saving money for the user by

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finding great offers and deals. The app/website is simple in use, the service is automatic excluding the
few times the user enters new search parameters.

Channels: The main distribution channels are the appstore/playstore or by directly signing up on the
website.

Customer relationships: Customers service phone number, frequently asked questions list and
questions answered via email.

Revenue streams: Selling data to retailers, ad revenue, traffic revenue and % of purchasing if the
purchase is done with the app.

Key resources: App development team, marketing team and data analysis team.

Key activities: Developing and testing the user interface of the app, developing the search algorithm.
Creating the data mining part of the app. Developing a marketing strategy and analysing the data
mined from the users.

Key partnerships: online retailers, marketing companies and data brokers.

Cost structure: Data storage facilities or rent storage from data storage companies. Marketing
campaigns. App development. Fulltime staff.

2.1.1 Competition
There are some gift finding solutions out there, but none providing a passive searching service for the
user. Passive meaning that the app is searching for gifts and comparing them to the database and
picking the “perfect” gift.

2.1.2 Target market

Gift finder App intends to cater to a wide customer base starting in Iceland then gradually the rest of
the world. Icelanders love sending gifts both in the peak holiday season and off-season. Our product
would especially cater to the consumer that shop online. Icelanders are frequent internet users, with
95 percent connecting to the internet daily or almost daily. A recent survey showed that
Iceland Facebook users are currently 72.4% of the population. Women make up 52% of users and men
48%. The survey also shows that the social networking site is most used by people aged 25-34,
followed by people aged 18-24.

2.1.3 Potential growth

It wis expected that the users will access and start using the Gift Finder App at different stages. This
was taken care of by staggering the entry in 5 years. The first year we get into a market only 20% of

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the targeted population will use the app, the second year will see an increase by 25% to 45%. The third
year there will be a further increase by 25% resulting in 70% percent usage by the target market. The
fourth and the fifth years will see a 15% increase in use each resulting in 100% usage of the entire
target group.

An overview of funding requirements

(What you are offering investors in % and Price, The Team, Next steps)

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3 Market
3.1 Competition analysis
3.1.1 Is there a company doing the same thing in Iceland?
No companies have currently published an app or provided a similar service. The Icelandic app
creation companies focus either on the mobile gaming sector or on the already established companies
market (Banking, phone companies etc.)

3.1.2 Are there any similar solutions out there

Many gift finding apps and online retailers have their own app; below are popular apps that are rated
highly by reviewers and are widely used.

Amazon: The Amazon app, you can browse and shop, compare prices; find deals and create wish lists.

The Thoughtful Gift Finder app is from notonthehighstreet.com. It allows you to add events into the
app so you never forget any of those special occasions and there are push notifications that will remind
you of the events or special offers and news from the site. The app uses only products form
notonthehighstreet.com.

ASOS is predominantly a clothing app but it also sells beauty products and accessories. You will find
ASOS own-branded clothing as well as branded clothing and it has numerous filter options, such as
Secret Santa to help you find a variety of gifts. ASOS account holders can add things to their wish lists
by tapping the heart and there is a recommendations section that allow you to see the things you
might like so you can add them to your own Christmas list.

The eBay app is a bit like Amazon in that it offers almost everything, but you can also sell if you need
a bit of extra cash. In terms of buying, you can search through the various categories and bid, buy or
make an offer on a product you like. Once you have purchased, you can track your packages and leave
feedback, the app also lets you save your favorite sellers and searches.

Groupon, the app lets you buy and redeem deals directly, as well as track purchased vouchers by
location and expiration in case you get a bit bargain happy. You will also be able to share any deals
you find with your family and friends using Twitter. Groupon also has themed collections for holidays
and events.

Gift it is a Christmas shopping list and countdown app so it will not only help you stay organized, but
you will also be fully aware of how long you have left until the big day. The Gift It app allows you to
create lists, set a budget and share lists via email or SMS. You can enter an amount next to each gift

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and the total will appear at the bottom so you know how much you have spent. It will also give you a
"Budget Status" and "Ready for Santa" status.

There are some gift finding solutions out there, but none providing a passive searching service for the
user. Passive meaning that the app is searching for gifts and comparing them to the database and
picking the “perfect” gift.

3.2 Market segmentation

Gift finder App intends to cater to a wide customer base starting in Iceland then gradually the rest of
the world. Icelanders love sending gifts both in the peak holiday season and off-season. Our product
would especially cater to the consumer that shop online. Icelanders are frequent internet users, with
95 percent connecting to the internet daily or almost daily. A recent survey showed that Iceland
Facebook users are currently 72.4% of the population. Women make up 52% of users and men 48%.
The survey also shows that the social networking site is most used by people aged 25-34, followed by
people aged 18-24.

The gift finder app will focus on the entire market segment with focus on the busy individual. The app
will add some functionality and significant ease of use to customers in this market. The app reminds
the user of upcoming occasions, suggest possible gifts for the intended receiver, based on that user
profile, and lists where to find it. By using the app, the gift giver removes uncertainty from the
equation and the gift receiver will be more likely to more appreciate the perfect gift.

We believe that the Gift finder app will be attractive to a wide range of users since it is free, given
that our sources of revenue will be from the sale of data and PPC (Pay-Per-Click). Our vision is that he
app is far more user friendly than other products currently on the market. The following groups were
identified as targeted segments that will contribute to our growth projections:

 Generation X (Young adult)

 Generation Y
 Mature and Older generation

3.2.1 Target market segment strategy

Generation X (Young adult) – This group forms our most probable customer segment. This group
aged 25-40 years, married and raising children. As people grow they get jobs have families and days
become busier and busier, with less and less free time. This group is always looking for ways to
simplify everyday activities. The more convenient everyday tasks are, the more free time they have for
themselves and their family. They are busy and at the same time would like to keep up with
anniversaries and holiday seasons tradition of gifting. They are huge users of social media, already
using the internet a lot to accomplish tasks in the convenience of their home or offices. Gift finder app

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provides the same convenience and the user does not need to leave the comfort of his home or office
or worry about forgetting the special occasions. This particular market segment has disposable income
and are likely to spend more on gifts they perceive as unique. They are also the most open to trying
something new, and jump on opportunities to save time of their busy schedule.

Females belonging generation X make up the most gift purchases, though most of the females do not
mind walking from shop to shop to find the perfect gift. The males in this group make occasional
purchase, they feel a great burden regarding the entire gift shopping experience and are undecided
when it comes to performing a selection but still would like to purchase the best gift in the easiest
convenient way possible. By offering them a means of doing this they can be converted to frequent
gift shoppers as this app will make shopping appealing and convenient and allow them to give the
most perfect useful gifts that will be appreciated.

Generation Y – They are aged between 18 and 25. This group is mostly made up of students and
therefore do not have the highest income since they are not working. They would like to shop at
reduced price. Though they do have a high rate of disposable income given that parents are no longer
controlling their spending habits and they are more impulse shoppers. They use the social media a lot
and have internet access therefor the gift finder app will be appealing to them as it will increase their
options of what to get their friends and loved ones. The app will cater to them as it will inform them of
available discount and reduced price

Mature adults and older generations – This segment is 40 years of age and above. Have teenage or
grown up kids with kids of their own. Do not use the internet as much as the other two segments; they
want ease and convenience and security of use. They most likely need a reminder of all those
upcoming events and will prefer to give gifts that will be appreciated. A friendly app that they can use
without having their teenage kids or grandkids help.

3.2.2 Gift finder app user

The Gift Finder App will appeal to all the three segment of users. For the reason that 95% of these
segments are already using the internet and have smart phones. It reduces the worry of forgetting
special occasion and the hustle of figuring what gift will be appreciated or if they will be useful to the
receiver. With the three target segments in mind and offering every customer benchmarked customer
service, and ensuring that every customers needs are well taken care of. Even so we will not pursue a
niche strategy to the market. We view everyone as a potential customer since everyone buys a gift
sometimes during special events. Our App will serve the needs of all gift shoppers both frequent gift
shoppers and the occasional ones. It’s a total solution for gift shoppers, free and it’s user-friendly. It
will significantly improve the quality of gifts our users give and at the same time it will reduce time
spent on searching these gifts and ensure that one does not forget the special occasions.

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We will approach the market through the available social media especially Facebook. And maybe
advertise on shopping site that draw a lot of traffic from individuals searching for gifts online industry.

3.3 PESTLE and SWOT analysis

In this chapter, we will do a PESTLE analysis, which is a mnemonic for political, economical, social,
technological and legal. For each of these segments we will do a SWOT analysis, which is a
mnemonic for strength, weaknesses, opportunity and technical.

3.3.1 Polititcal
In this segment, we think about the political situation of our country or how it can affect our industry
and product. We find there are no political effect on our product.

3.3.2 Economical
Here we consider the prevalent economic factors.

Table 1: SWOT analysis for the economy

Strengths Weaknesses
Good economy The app is free and the revenue stream is from data sales
The gift giving industry is generally quite steady in and incentives.
terms of sales It will take a while to gather enough data to start earning
revenue

We live in a society that believes in giving gifst

Opportunities Threats
Tournaround; The industry is attractive, in part, because of
People have more to spend; That creates more traffi c its simplicity, creating an incentive for new entrants into the
on retailer's site therefor increase our income market.

Threat of gift shops creating their own app

Exchange reates for buying gifts from abroad

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3.3.3 Social
We look at the social part and how much importance culture has on the market.

Table 2: SWOT analysis for the social part

Strengths Weaknesses
Internet shopping is a high social trend and so affect People don't like change, may take a while to adopt new
the demand for our company's product technology
It is getting more common for older people to be tech
savvy.

It is trending to own a smartphone, most people have

one

It is trending for public places to have internet (café,

bus etc.)

Opportunities Threats

No shortage of social events, holidays, anniversaris and

birthdays
Population is small, word of mouth is strong

3.3.4 Technological
For the technological affect on the market structure we ponder if there could be technological
innovations likely to pop up but also how it can assist our product and strengthen it.

Table 3: SWOT analysis for the technological part

Strengths Weaknesses
We are leading to innovation. No company has this Carriers or hosting web services have control of the delivery
solution

Development of simple and user friendly apps

Time to market is less

Availability of skilled programmers

Opportunities Threats
95% of icelanders are connected to the internet and a Other existing apps developing fast
majority shop online

Population size that owns smart phones

Introduction of sophisticated hardware (tablet pc)
Network technology advancement 3G/4G

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3.3.5 Legal
In this segment we look at current legislations that regulate the industry or if changes within the
legislation would affect our product. We do not think this has any specific effect on our product.

3.3.6 Overview of the PESTLE and SWOT

Here we can see all the strenghts, weaknesses, opportunities and threats put togeter in an overview.

Table 4: Overview of the PESTLE and SWOT

Strengths Weaknesses
Good economy The app is free and the revenue stream is from data sales
and incentives.
The gift giving industry is generally quite steady in
terms of sales It will take a while to gather enough data to start earning
We live in a society that believes in giving gifst revenue

Internet shopping is a high social trend and so affect People don't like change, may take a while to adopt new
the demand for our company's product technology

It is getting more common for older people to be tech Carriers or hosting web services have control of the delivery
savvy.

It is trending to own a smartphone, most people have

one

It is trending for public places to have internet (café,

bus etc.)

We are leading to innovation. No company has this

solution

Development of simple and user friendly apps

Time to market is less

Availability of skilled programmers

Opportunities Threats
Tournaround; The industry is attractive, in part, because of
People have more to spend; That creates more traffi c its simplicity, creating an incentive for new entrants into the
on retailer's site therefor increase our income market.

No shortage of social events, holidays, anniversaris and Threat of gift shops creating their own app
birthdays
Population is small, word of mouth is strong Exchange reates for buying gifts from abroad

95% of icelanders are connected to the internet and a

majority shop online

Population size that owns smart phones

Introduction of sophisticated hardware (tablet pc)

Network technology advancement 3G/4G

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3.4 Market research
Market research is important for every business, and should not be just a one time activity. Doing a
marketing research helps with identifying potential customers and understanding them. It gives us a
better picture about the size of the market both in volume and in value. It can tell us about our
customers consuming pattern and gives us a glance at the competition.

The market research we sent out is a survey from surveymonkey.com. There you can create a simple
up to a sophisticated survey. We got in total over 100 answers. Survey monkey only releases the first
100 unless having a professional account. We had seven questions in total so it was a short and to the
point and survey. Our focus was to scope our potential users.

3.4.1 Results
The first question was a basic gender question. The question of Gender is an important tool to able to
filter out males and females. By looking at females and males separately it is possible to create
different market strategies based on gender.

Figure 1: Question 1 of the survey; Gender

By collecting data on the age of the surveys participants, they can be filtered by their age group.
Different age groups have different consumer behaviours and the key is to find what age group should

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be aggressively targeted by our marketing strategy. According to our survey the key groups are 25 to
34, with 18 to 24 being the second biggest and 35 to 44 following closely behind.

Figure 2: Question 2 of the survey; Age

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To get an idea on the survey participants’ consumer behaviour as a group, the question: “ How many
gift are you giving on average per year?” was asked. The data generated by this question is used to
create a prediction model on how many times would a potential user, use the app. It is clearly
noticeable that the participant of the survey are buying on average more than seven gifts per year. This
data indicates that the number of clicks can be calculated. Given that the app finds two to six ideas per
gift and the user clicks on half of the generated gift ideas. The number of click per year for one user
would be 7 -21, which is a rough estimate of clicks per year.

Figure 3: Question 3 of the survey; Average gifts per year

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How many times do you buy product online, this question asked to narrow down consumer behaviour
of the participants. The online shopping is clearly not highly regarded of the participants.

Figure 4: Question 4 of the survey; Buying products online

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Would you buy a gift online? Even if the behaviour of the participants indicated a tenancy of not doing
the majority of their shopping online. They clearly would consider buying a gift online given the
opportunity. There seems to be an unfulfilled demand/need which indicated an opportunity in the
market place.

Figure 5: Question 5 of the survey: Buying gifts online

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This is a typical question that the app would ask the user. What occasion are you giving gifts on. The
search algorithm would use this kind of data entry to narrow down the search criteria.

Figure 6: Question 6 of the survey; On what occasion

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A direct question to the participant. The question was set up with a short description of the app and
after reading the description: “The Gift Finder is an app/website that searches for and finds products or
an idea for a gift. The search is based on the recipient's profile and wish list uploaded in the app. The
app notifies you about birthdays, anniversaries and/or other gift giving occasions and suggests a
suitable gift idea. “they would ether answer yes or no.

Figure 7: Question 7 of the survey; Would you use a Gift finder app

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3.5 The 4 P’s marketing; Product, Price, Place and Promotion
3.5.1 Product
The Gift finder application is a free app for mobiles and tablets. Wherever you are, you can now with
the Gift Finder, access Gift ideas and wish list for your friends and family. You can look at your
friends profile and quickly find the perfect gift for that person.

Gift giving, is a worldwide practice that has been around since the beginning of time. Gifts are used to
build, strengthen, and maintain relationships, or to show respect, interest, gratitude, and appreciation.
Giving a gift is easy. But to give the right gift to the right person at the right time and in the right way,
that is not easy to do. Regardless of why you decide to give, the most important element of this social
custom is gift selection, determining what needs to be given and making sure it fits with the receiver.
A poorly chosen gift can leave you looking more disingenuous than generous. Therefore, what is an
appropriate and thoughtful gift?

The Gift Finder Features

 Access your friend’s profiles.

 Manage search criteria based on your own settings
 Add wish lists and see wish lists of connected profiles
 Add a value to each connected profile
 Add a relationship to connected profiles
 No Ads
 Add favourite or preferred stores /retailers
 No commitment – cancel any time you like
What is the Gift Finder?

 Shopping assistant
 Search engine
 Inspiration platform
 Gift Finder

3.5.2 Price
The application will be available via Playstore and the appstore.

Even so there any many more app distribution channels:

 Get Jar 30 million Visitors per month, 100 million downloads/Month

 The app store is preloaded in iPhones.
 Amazone.com/appstore Generates three times more revenue per day than google play store.
There are many more app distribution channels to choose from, but the key players are the ones
mentioned above.

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3.5.3 Place
The application will be free to attract users more rapidly, but at the same time the focus will be on
offering a product with high quality. We want the users to keep using the application and have app
deliver a fast and reliable service. The application will be Ad free to make it more streamline and
without the constant barrage of products not related to the search criteria of the app.

3.5.4 Promotion
We will promote our company name and products name by focusing on events and special offers. The
promotion strategy will be based on the quality and accuracy of the gift finding application. The
promotion campaign will be as follows.

Indirect marketing:

 Start a blog
 Create a product promotion video
 Contact bloggers, to create word to mouth buzz.
 Create a Vine
 Post on Pinterest
 Promotional contests
 Create a buzz by sharing the app on social media
o Facebook
o Twitter
o And other social media platforms
 App store optimization
 Google search optimization
Internet:

 Microsites
 Teaser website
 Generate feedback via reviews
 Collect future users by having them enter their email via promotional material
PR:

 News releases
 Generate press coverage
 Try to win award by making the app have high quality and innovative features
 Promote the app at seminars and public speaking events for example TED

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3.6 Curve of expected sales/need first three years after market introduction.
A survey was sent out and 84% of the respondents said they would use the gift finder App. To ensure
that the our survey has yielded answers that can be trusted and answers that can be used with
confidence to inform future decisions, only 5% (Páll Kristján Pálsson) was chosen. It was also
expected that the users will access and start using the Gift Finder App at different stages. This was
taken care of by staggering the entry in 5 years. The first year we get into a market only 20% of the
targeted population will use the app, the second year will see an increase by 25% to 45%. The third
year there will be a further increase by 25% resulting in 70% percent usage by the target market. The
fourth and the fifth years will see a 15% increase in use each resulting in 100% usage of the entire
target group.

ICELAND (TEST MARKET)

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14

12
USERS IN THOUSANDS

10

0
0 2 4 6 8 10 12 14 16
YEARS

ICELAND (TEST MARKET)

Figure 8: Curve of expected users in the test market; Iceland

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A projection of expected used was made for 15 years. Iceland was considered the test market with an
entry on the first year targeting a population of both men and women of 13,840. If successful, it will
be followed by an entry in the Scandinavian market that includes Denmark, Norway, Sweden, Finland
and Faroe Islands, in the third year in with a targeted population of 1,079,764. The fifth year will see
an entry in the Switzerland, Germany & United Kingdom with a targeted population of 6,426,575. The
entry to the rest of Europe will start on the 7 th year targeting a population of 9,047,841. The countries
considered for the rest of Europe include Italy, France, Poland, Portugal, Hungary, Lithuania, Ireland
and Australia. The projection of expected used in the test market (Iceland) targeted market is as shown
in the Figure 8. The projection of expected used of all our target market is shown in Figure 9. Figure 10
shows the market share at year 15.

Curve of expected users

18000

16000

14000

12000
USERS IN THOUSANDS

10000

8000

6000

4000

2000

0
0 2 4 6 8 10 12 14 16

TIME IN YEARS

ICELAND (TEST MARKET) SCANDINAVIAN MARKET

SWITZERLAND, GERMANY & UNITED KINGDOM REST OF EUROPE
TOTAL

Figure 9: Curve of expected users for the first 15 years

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Figure 10: Market share at year 15

3.7 Promotion
The goal of every business is to make the best of their marketing investment. When it comes to
launching a new product, having a solid marketing strategy will not only effectively engage your
current customers, but also make an attractive appeal to potential customers. Promoting is never easy
and never free. You need time or you need capital or even both to execute a strategic marketing plan.
When marketing a product you ideally start before its birth. Solely relying on direct marketing, for
example advertising campaigns, during the building phase or even after the launch of the product
would not be a wise move even though it is too common. For our product, being an app, there are
many low cost ways to promote. One of which being indirect marketing and the usage of social media.

3.7.1 Direct marketing

Direct marketing includes for example magazine ads, television commercials and marketing
campaigns. This kind of marketing allows us to target a group of people with a customized message
made especially for them. This is costly. For this app, we will not be focusing on direct marketing. Our
focus will be indirect marketing mostly on the internet as well as public relations.

3.7.2 Indirect marketing

Indirect marketing is marketing strategy for business to market their product, or service without the
methods affiliated with direct marketing. The idea behind indirect marketing is to let the target market
feel like they are not being targeted but rather introduced to a new “friend”.

Our strategy will include starting a blog; add a blog to our microsite. Write about each different
feature of the app to draw potential users to the website. Create a product video is essential. It has been

27
tried and tested, creating funny, thought-provoking and creative promotional videos can make or break
a product.

It is important to identify blogger groups that can write niches that relate to our app. Using social
media is crucial like create a Vine series featuring the app. Create a catchy hashtag for the vine
promotion. Post on Pinterest; Use blog images, infographics and visual content from our app to create
content on our Pinterest board.

Getting attention in the market can be hard but running a contest often creates a buzz. For example, we
can encourage people to tweet and share content on their social networks promoting the app.

Share our content on social media is vital; Use the apps Twitter, Facebook, Google+ and LinkedIn
profiles to promote the app several times in a week. As well as making good use of App Store and
google search optimization.

3.7.3 Internet
Building a microsite for the app for promotional material. The site is a one or two pager that
showcases our app to the web audience. Building a teaser website. The website will be launched one
or two months before the release of the app to collect email addresses of people who would like to
know when the app launches. Pitch the product to app review websites, this can generate a word to
mouth buzz. The more reviews the more attention and buzz the app gets. Not forgetting the small
things like collecting emails while promoting the produce as well as getting contacts all around will
come to good use.

3.7.4 Public relation

Set up a PR team that sends out regular news releases and other content for the press. Set up
interviews for the PR team and talk to other companies on a regular basis to build lasting relationships
to strengthen the business. Get press coverage, being in the spotlight of the press is the best way to
kick start our startup. Stay in regular contact with journalists and “leak” new information about the
app. Applying for awards also helps generating attention. Awards often get ton of press, even if we
don‘t win. If you win, you also get a ton of press, not to mention winner's booty. Get speaking
opportunities by attending seminars and large public speaking venues will be a part of our strategy for
public realtions.

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3.7.5 Time and cost table for promoting the app
Even though many of these strategies aren‘t costly it takes man-hours to execute. Table 5 that you can
see here below sums up our market strategy actions and how many hours the entrepreneurs would
spend on them in a year; six months before launch and six months after.

Table 5: Time and cost table for promoting the app

Time Cost/hour Cost

Entrepreneur Cost of
Action (time) entrepreneurs Outsorces (cost) Total
1 Start a blog 60 9.000 - 540.000
2 Create a product video - 9.000 2.160.000 2.160.000
Indirect Marketing

3 Contact bloggers 30 9.000 - 270.000

4 Make a Vine 40 9.000 - 360.000
5 Post on pinterest 20 9.000 - 180.000
6 Run a contest 100 9.000 - 900.000
7 Share our content 20 9.000 - 180.000
8 Tweet about the app 20 9.000 - 180.000
9 Use the power of facebook 20 9.000 - 180.000
10 Go for a App Store Optimization 200 9.000 - 1.800.000
11 Go for a Google search Optimization 200 9.000 - 1.800.000
12 Build a microsite - 9.000 600.000 600.000
Internet

13 Build a teaser website - 9.000 900.000 900.000

14 Get reviews 40 9.000 - 360.000
15 Collecting emails of potential customers 40 9.000 - 360.000
16 Writing news releases 30 9.000 - 270.000
17 Get press 70 9.000 - 630.000
PR

18 Apply for awards 30 9.000 - 270.000

19 Get speaking opportunities 50 9.000 - 450.000
Total: 12.390.000

Some of the actions can be outsourced. The cost for that you can see in the table. In total the cost for
promoting the app will be approximately 12,4 million Icelandic crowns. This cost is categorize as
Promotion in the Financial cost and time table seen in figure XX before launch and is a part of the
entrepreneurs wages after launch.

3.8 Income ideas

Selling mined data, selling data would be at best a backup plan. Selling data is bluntly like working
for some else. The payoff is small and the true benefit is receiving the data for a small fee. The nature
of data has been changing in the modern high tech world as it has gone from being an asset that can
easily be sold on the data exchange, to an open source of unrealized opportunities for the data
collector.

Pay per Click, also called cost per click, is an internet ad model used to direct traffic to websites.
Advertisers pay the owner of the website/app when the ad/link is clicked. Flat rate PPC is where the
advertiser and the owner of the site/app agree on a fixed amount paid for each click. The Flat rate PPC
is the revenue model that would be the preferred revenue model to begin with, given that the traffic

29
reroute model introduced in the app. For Example: The app finds the gift idea and the user clicks on
the link.

Subscribing local stores: Adding local stores to the app will be beneficiary for both users as well as
the entrepreneurs. When the app has established a user base, the app will offer local stores to add in
there website/online business. Users can add local stores or categories from that specific store to their
wish list. The proposals for gifts will then come from that store as well as other online retailers
previously assigned. People tend to trust local businesses better as they might know the product they
are buying. Adding local stores adds value to the app, it expands our target group, increases our
service to the user, and increases the diversity of gift proposals which the user appreciates. When the
app as gained an established user base in several countries you can also get the local stores when
traveling abroad as the app uses your location to find gifts. Local stores would pay a subscription fee
for this service.

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4 Technical part
4.1 Business plan
Writing a business plan will help you understand how the business is put together. It can also help you
monitor progress, help you in sales and surely be used as a recruiting tool for courting key employees
or more importantly future investors. The three entrepreneurs spent ten hours a week for 13 weeks
doing the business plan for this app. At this point the cost of this business plan will categorize as an
accrued cost.

4.2 Project Management

4.2.1 Management and strategy planning
The entrepreneurs will take a managerial role during the development phase. The focus will be on
active management and setting milestones and goal for the technological process. The strategy and
vision will be clear to all involved in the project and the management will regularly hold meetings to
keep up the focus in the project. The management will handle any communication with stakeholders
outside the project. They are also responsible for hiring and recruiting new members and seek out the
best talent available.

As stated above; the gift finder App will be managed by the three directors who are the founders. The
company will have the following departments.

Design Department: In charge of creating the designs of the app and getting them approved

Marketing/Sales Department: In charge of setting up meetings with relevant entities to sell the app
data, finding ways to advertise the app and distribute the app. This department will take care of the
financial of the company including the budget. Interact with the media as well as the prospective
audience so that you can build interest towards our app well before its launch.

Coding Department: In charge of the development of the app and conducting test runs before the
launch of the app, update and maintain the app after launch.

Running a software company, you need to find a tool that helps with managing the projects in hand.
Scrum methodology is a very popular way to manage software development projects. Scrumming
promotes communication between team members. It helps us getting early feedback as well as give us
focus on what is important.

4.2.2 Staffing
The company will hire three personnel’s, both permanent employees and contractual ones. The
permanent employees will be there for the long run for operations and maintenance issues of the app

31
while the contractual employees will be required during the development phase. The permanent
employees will include a Backend Engineer, a Designer and a Development and Operations Engineer.
The entrepreneurs will have the job of a Project Manager/Quality Assurance officer as well as
handling the sales and marketing department in most part. The engineers hired will cover all the
platforms planned for the app. The platforms are iOS, Android and Web.

4.2.3 Time and cost analysis

As mentioned above the entrepreneurs spent ten hours a week for 13 weeks doing the business plan for
this app. They will charge for that work six thousand an hour. All together that is 2.340.000 m.kr.- that
will go into accrued cost.

The entrepreneurs estimate spending fifteen hours each position on Project management. Each six
months that sums up to be 720 hours or 2.880.000 kr.- give that the entrepreneurs charge 4.000 an
hour. Altogether summed up for both these parts for the two years of development before launch is
13.860.000 kr.- See the brake down of these figures in figure XX in the Financial time and cost table.

4.3 Legal issues product and/or processes. Intellectual property rights.

There are various types of intellectual property that we will need to protect our content.

Copyright: We choose who can copy, modify, distribute or make derivative works from our original
creation.

Patent protection: We have the authority to prohibit other from using our original work.

Trademark: Trademark our product to keep other companies or competitors from confusing users
into thinking that their company is affiliated with our company.

4.3.1 Copyright
Copyright will protect our original work, including the source code, graphics, text and audio/visual
content. The process of filing for copyright protection is easy and fast. However the app is only
protected by copyright protection, then the idea is not protected, unless the idea is implemented in an
artistic/creative way. Our idea does not fit in that category.

4.3.2 Trademark protection

Trademark protection will protect our logo, name and slogan. If the name is unique it will fall under
protections that are protected by the registered trademark category. The app needs protection by
trademark protection to stop others from exploiting the reputation that the app will achieve. Before we
publish the app publicly the trademark protection process will be in process and well on its way.
Expenses for the trademark are around 1,5 M Kr.

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4.3.3 Patent protection
Filing for patents, if the app is successful the company need to file for patents. The process is costly,
but once they are in place they will strongly protect our idea, content and all work done on the app.
The cost may vary, but the best strategy would be to get a copyright attorney to handle the application.
The Cost figure that was presented to our company by Arnason – Faktor was an estimated cost of
roughly 1-1.5 M Kr. The typical application process may take two to three years and is only necessary
if our app launch is successful.

Our PR strategy is to file for PR protection within one year after the launch of the app. We seek to
attain the service of a PR attorney to handle all PR related issues. It is best to leave processes that are
at an expert level to expert.

4.3.4 Time and cost analysis

The Entrepreneurs are expecting to use 14 workdays to prepare all the material for the patent lawyers.
As they charge 4.000 an hour the estimated cost for the legal issues from the entrepreneurs is 432.000
kr.- There is an expected price of 1.5 M Kr; it is the cost to apply for trademark and copyright
protection as well as the same amount for the patent.

4.4 R&D, design, prototypes, testing.

4.4.1 Research
The R&D process has already been completed, we applied different techniques to identify the market
need, our target audience and to scope out the competition.

4.4.2 Development
The majority time will be spent on the app development at least two to three months to
develop from start to finish. This time will be split into planning out, designing, development
and launching of the app. The typical development timeline would take between 2.5 to 3
months of total work time over two years.

Activity Time

Architecture and planning 2.5 to 3 weeks

Design 3 weeks

Development 4 to 8 weeks

Testing 1 to 1.5 weeks

33
 Deployment to app store 1 to 2 weeks

Architecture & Planning – 2.5-3 Weeks:

During this phase of the project all facets of the Gift finder app are thought out. The entire app
well be mapped out from start to finish, as well as wire frames for the app. During this phase
we will also plan for other resources needed, such as the outside database we require to
connect to.

Design Phase – 3 Weeks:

In this phase, the app idea is put on paper and the framework created to show how the app
will look. Colour schemes are implemented. A storyboards and mock-ups for the gift finder
App will be prepare to provide exact details on the interface design, including screen wire
frames with an overview of how the mobile app will look and function after been developed.

Development Phase – 4-8 Weeks: The designs are handed over to the developers so that they
can properly code the application. We expect to have the first version of your fully working
app at the end of this stage.

Testing Phase – 1-1.5 Weeks: The app is tested to ensure that the app works properly on all
devices that the App will run on through simulators and live devices, including the iOS,
Android, Windows, Blackberry and Web.

Deployment Phase – 6-14 Days: Before launch if one of the platforms decided on is iOS, the
app will be submitted to Apple and wait for approval. Once it passes the approval the fully
functional app will be ready to be downloaded from the App store.

Maintenance and update – This will be a continuous process through the lifetime of the app
software to cope with newly discovered problems or new requirements.

4.4.2.1 Prototypes
Prototype, the prototype phase is the next step in the business. The prototype phase will include the
creation of mock-ups of any procedures that will be used as guidelines for the prototype team. The
prototype will simulate a few aspects of what will probably be a completely different product. The
prototype design will be more of how the app function rather than the usability of the app.

34
Our prototyping process will be as follows.

 Identify the basic requirements, including the input and output of information. Data
management and data input functionality of the app.
 Develop the prototype. Focus on the user interface. Get a basic idea of what the user interface
will be developed into.
 Review, give out alpha and beta accounts to testers to try. Gather all the feedback and make
additions or change features.
 Revise and enhance the prototype. By getting testers to try out the app we can focus on
improving the app. If the app is changed we go back to the development phase and repeat all
the steps from there.

4.4.3 Support material

Training and Support - A large percentage of software projects fail because the developers fail to
realize that it doesn't matter how much time and planning a development team puts into creating
software if nobody ends up using it. Keeping a good training and support system is vital. There is
more than one way of doing that. You can make a support manual or user manual and you can even go
so far as making a video. This will help us in promoting the app as well as it will be good as a training
and support tool.

One pager

Available online on our website will be a one-page quick start guide. It will be a very simple pdf file
that explains what the app does and how it works and details how to start using the app. It will take an
entrepreneur 5 days to finish the one pager.

User Manual

Make a more specific User Manual: User manuals, explain how a product is used. The difference
here to the one pager is that the user manual map the product in all respects. Present instructions as
step-by-step procedures telling the user what functions there are, and what they are for. This will
decrease support costs as well as improve our company’s image. It will take an entrepreneur fourteen
days to finish the user manual. These fourteen days will be divided over the last weeks of the last
quarter before the beta testing.

Video training/Introduction

We will do several videos. Most of them for marketing purposes but at least one will be on how to use
the app. This will be outsources to a company that will art direct it, film it and put it together. The

35
entrepreneurs’ will spend thirty hours in collaboration with this company doing this
training/introductory video. We have both time and cost from their work as well as expenses for the
outsourcing. The outsourcing project will cost approximately 500.000 kr.

4.4.4 Time and cost analysis

For the first six months or the first period of the Research and development time there will only be a
cost of entrepreneurs’ wages. They are finding an overhead, setting up the space, buying equipment,
interviewing potential staff which leads to hiring some of them. In period two the cost of staff comes
in without change until launch. We hire two engineers and one designer. One of the engineers a little
less experienced one as well as the designer charge 6.000 an hour. The more experienced engineer
charges 7.000 an hour. In period two and three the entrepreneurs spend their time divided between
Project management (15 hours a week each) and R&D. The last six month before launch they spend
less hours on R&D and focus on other things such as Distribution, Supporting material and promotion.
The entrepreneurs will spend 374 hours or approximetaly 47 days on supporting material and training
as well as 500.000 in outsourcing.

4.5 Quantity demands

4.5.1 Machines/equipment
The equipment for the staff will be bought from a computer supplier such as Advania. The Equipment
will include laptops, screen and other related material. The cost of the setup per person has been
calculated to be approx.: 700.000 kr. For three entrepreneurs and three employees that sums up to a
little over 4 million kr.

The total time spent on the setup and purchasing of the machines is 7 working days or approximetaly
216.000 kr.

4.5.2 Outsourcing
We will outsource power and data storage; for example Advania OpenCloud is a scalable
Infrastructure as a Service (IaaS) platform that is powered by renewable energy. The service is easy-
to-use with templates for deploying virtual instances and self-service web console for computing and
storage manipulation. The cost for this segment is around thirty thousand a month and is calculated in
the sum of the approximated cost for machines and equipment seen in chapter 4.5.1.

4.5.3 Premises
The premises are rented with the office furniture. The office rental market is growing in Iceland and
finding a suitable office with the proper facilities will not be a problem. The goal is to apply for a
entrepreneurs office that are popular in Iceland at the moment, these facilities are often given to
winners of entrepreneurial competitions such as Gulleggið. We will be renting around 15 m 2 per

36
person for 2000 kr. per square meter. That adds up to 900.000 each six months. Time spent finding the
appropriate building, making a lease and moving in to the area takes around 9 working days for the
entrepreneurs.

4.5.4 Software systems and other systems

The software systems manly used are the ones on our computers use. We will be using windows 10 a
personal computer operating system. That is included in our purchase of our computer so no extra
expense there. In addition, we will be using Exchange, which is an e-mail-based collaborative
communications server for businesses. That will be our main working tool as well as the Windows
Office 365. This will cost us 19.7 euros a month for each of us or 2.800 Icelandic kroner a month. For
six employees that adds up to around 100.000 kr.- For unforeseen software costs we estimate 188.000
kr. for each period or 30.000 a month. (Internet, sími, fleira)

4.5.5 Time and cost analysis

In figure XX you can see the total cost for each of these segments. In total the cost for quantity
demands are 9.137.600 kr.- for the two years before launch. For further brakedown see figure XX

TOTAL
cost\time Entreprenure Other Total
Machines and equipment 216.000 4.160.000 4.376.000
Premisis, space, layout (build or rent), 288.000 3.600.000 3.888.000
Software systems and other systems (Tecnical Report). - 873.600 873.600

4.6 Distribution
The distribution channels for the app are the main app distribution channels. To begin with, the focus
will be on the channels that are mainstream and popular. The key is to gain market share quickly we
need to first enter the Google play store for android and App store for IOs. The time spent on
distribution channel will be six months prior to launch. Each Entrepreneur and our developers take on
a distribution channel with only the developer and one entrepreneur for other channels.

4.6.1 Signing up for developer accounts.

As mentioned earlier our app will be on three different platforms. iOs, Android and Windows. All
have different app stores. It is necessary to have a developers account. The cost for that for each
platform is negligible.

Google play - After signing up for a google play developer account, it is easy to upload the app on the
google play store. The store offers guidelines, which are recommended by Google to follow
thoroughly as they are set up to maximize the apps potential to reach the market easier.

37
App store - The process of uploading the app into the app store is not complicated but it has to be
done correctly from the start. The app store has a very detailed process that developer have to go
through for publication. The steps range from testing the app with a service called iTunes Connect to
the Human Interface guidelines, which used for reviewing the human interface of the app and making
sure that the app is in par with the app stores guidelines for successful launch.

Other channels are similar but in the beginning, it is more cost effective approach to tackle google
play and the app store. The distribution cost included in entering these two channels are not high per
say, but there will be accumulated cost involved in preparing the app for a successful launch with
these channels.

The gifts - We use large databased like Amazon.com to search for gift ideas. If the market penetration
is successful, the app will add more databases to search for gifts. The problem will be to get access to
databases owned by other companies the data is available but we will need get access through the
proper channels.

4.6.2 Time and cost analysis

On starting the company and building the app, our total expenses in the first year would be an
estimated 8.2 Mkr. Our costs are calculated based on the listed below and the forecast has been done
on the workdays going in to the distribution. It will take around 1600 manhours to do focus on this
part making it in total of 8.256.000 kr.-

Submission fees and processes will cost us for iTunes Store, $99 per annum to create and also to
maintain a developer’s account. For Android, onGoogle Play, it will cost us a onetime fee of a $25.
For Windows apps, it costs $12 per annum for an individual developer account, or $65 for a company
account. All in all that makes it 176 $ or around 22.000 ISL kr.-

4.7 Time and cost plan

Financial time and cost analyses – total cost

38
 TOTAL
cost\time Entreprenure Other Total
Business plan 2.340.000 - 2.340.000
Project Management 11.520.000 11.520.000
Legal issues and Intelectual property rights 432.000 3.000.000 3.432.000
Research and development of solution; prototypes, testing 14.331.000 54.720.000 69.051.000
Supporting material (manuals etc.) and training 1.494.000 500.000 1.994.000
Machines and equipment 216.000 4.160.000 4.376.000
Premisis, space, layout (build or rent) 288.000 3.600.000 3.888.000
Software systems and other systems - 873.600 873.600
Distribution cost 3.456.000 4.800.000 8.256.000
Promotion 4.365.000 3.660.000 8.025.000
113.755.600

Table 6 The total cost and time plan

Accrued cost
cost\time Entreprenure Other Total
Business plan 2.340.000 2.340.000
Project Management
Legal issues and Intelectual property rights -
Research and development of solution; prototypes, testing -
Supporting material (manuals etc.) and training -
Machines and equipment -
Premisis, space, layout (build or rent) -
Software systems and other systems -
Distribution cost -
Promotion -

First year

Period 1 Period 2
cost\time Entreprenure Other Total Entreprenure Other Total
Business plan - -
Project Management 2.880.000 2.880.000 2.880.000 2.880.000
Legal issues and Intelectual property rights - 432.000 1.500.000 1.932.000
Research and development of solution; prototypes, testing 4.296.000 4.296.000 4.800.000 18.240.000 23.040.000
Supporting material (manuals etc.) and training - -
Machines and equipment 216.000 4.160.000 4.376.000 -
Premisis, space, layout (build or rent) 288.000 900.000 1.188.000 900.000 900.000
Software systems and other systems 218.400 218.400 218.400 218.400
Distribution cost - -
Promotion - -

Second year

Period 3 Period 4
cost\time Entreprenure Other Total Entreprenure Other Total
Business plan - -
Project Management 2.880.000 2.880.000 2.880.000 2.880.000
Legal issues and Intelectual property rights - 1.500.000 1.500.000
Research and development of solution; prototypes, testing 4.800.000 18.240.000 23.040.000 435.000 18.240.000 18.675.000
Supporting material (manuals etc.) and training - 1.494.000 500.000 1.994.000
Machines and equipment - -
Premisis, space, layout (build or rent) 900.000 900.000 900.000 900.000
Software systems and other systems 218.400 218.400 218.400 218.400
Distribution cost - 3.456.000 4.800.000 8.256.000
Promotion - 4.365.000 3.660.000 8.025.000

39
40
5 Financial
5.1 Calculating total capital need
5.1.1 Cost of business plan and additional cost for deepening what we have done so far
The total cost of business plan is 2.340.000 kr.- see chapter 4.2.3.

5.1.2 Cost of legal issues; product and/or processes and intellectual property rights
The total cost of legal issues is 3.432.000 kr.- see chapter 4.3.4.

5.1.3 Cost of research and development

The total cost of Research and development is 69.051.000 kr.- see chapter 4.3.3.

5.1.4 Cost of supporting material (manuals etc.)

The total cost of supporting material is 1.994.000 kr.- see chapter 4.5.5.

5.1.5 Cost of machines and equipment, premisis, space, layout (build or rent), etc.
See chapter 5.1, 5.3 4.104.000
5.1.6 Cost of software systems and other systems
The total amount of other software systems is really not significant. In total it is 873.600 for the two
years before the launch. 873.600
5.1.7 Cost of distribution
Total Cost of distribution 8.256.000

5.1.8 Cost of promotion

See report 2, chapter 8.4, time and cost table for promoting the app. 12.390.000 kr.-

5.1.9 Cost of fees to cover capital need

(Consulting fees).

Calculate what it will cost to get the money the needed capital

Hire someone a consultant to find the money (artica financing in iceland usualy charge 5% and 15%)

Call investers

Participate in startup ventur capitalists

5.1.10 Cost of establishing the company (Consultants, Accountants, Lawyers).

160.000 + 500.000

660.000

41
Do it ourselves

5.1.11 Financial cost during development time.

Intrest rates we have to pay when we are still developing

5.1.12 Capital needed to cover negative Cashflow in the first periods after we start value
creation.

5.1.13 Total time and cost plan

Excel

5.2 Financing

5.2.1 From entrepreneurs

work

5.2.2 Grants
50% chance we get a grant

Uses of funds

We require initial financing to fund operating expenses, marketing and advertising, and
development for the first three years, and negative cash flow.

The majority of funds will be used to cover start-up expenses for the first three years 1-3.
These expenses include rent, purchase of equipment and office furnishings, insurance,
utilities, Marketing, and salaries for the entrepreneurial team, engineers and software
programmers. The largest use of funds is devoted to development of the app. We are
expecting to generate revenue in the fourth year to fund all further expenses.

Once the app has taken off, the business will earn revenues through pay per click from the
product suppliers along with data sales,

5.2.2.1 1.2 sources of funds

Entrepreneur

The entrepreneurs will contribute to the finances of the business through forfeiting 30% of
their salaries to be used as capital. This will amount to XXXXXX per year in the first 3 years.

42
Start-up grants

The entrepreneurs intend to apply for start-up grants to a seed investment program such as the
Startup Reykjavik Invest ehf. If our idea is selected, we could get up to $18,500 in seed
funding from. There being only a 50/50 chance of getting the grant we put in our income one
time grant of $9,250

Venture capital

We calculate the capital required from investors to be _____ over the course of 3 years, in
exchange for approximately % equity.

We project that the net present value will be ___. And the company will be ___ net worth in
___ years which will lead to a __ time’s return for investors.

5.2.3 Long term loans.

Long term? 40 years?

5.2.4 Short term loans (bank, leasing etc.).

5.2.5 Venture capital.

5.2.6 Total financing plan

Excel

Notes
 Enteprenures
o intend to put 100 in the acrued
o 30% in period 1 through our weges
o 35% in period 2 etc
 Grants
o We think we is a 50 /50 chance that we will get loand.
 Loans
o We could get 60% of loans on equipment in period 2.(thats when we
have bought equipment point 6)
 The diffrence will be funded by venture capital

43
5.3 Income and cost plan for first 3 years
Done

5.4 Net present valuation and calculation of equity need and price

44
6 Valuation
Asdf

45
7 Structure of company
Who are you, why are you the best Team to bring your Idea sucessfully to reality

Organisational Chart

Role of Investors in the Company

46