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Business Plan Business Plan: Progressive Consulting What follows is a complete business plan for a hypothetical company. Please copy or save to your disk and use as an example in developing your own business plan. If you would like to read a series of articles jump to Web Marketing. For additional business aids click on The Practical Tools of ConsultinExecutive Summary Progressive Consulting will be formed as a consulting company specializing in marketing of high technology products in international markets. Its founders are former marketers of consulting services, personal computers, and market research, all in international markets. They are founding Progressive Consulting to formalize the consulting services they offer Mission Progressive Consulting offers high-tech manufacturers a reliable, high quality alternative to inhouse resources for business development, market development, and channel development on an international scale.
A true alternative to in house resources offers a very high level of practical experience, know how, contacts, and confidentiality. Clients must know that working with Progressive Consulting is a more professional, less risky way to develop new areas even than working completely in house with their own people. Progressive Consulting must also be able to maintain financial balance, charging a high value for its services, and delivering an even higher value to its clients. Initial focus will be development in the European and Latin American markets, or for European clients in the United States market Keys to Success? Excellence in fulfilling the promise completely confidential, reliable, trustworthy expertise and information. ? Developing visibility to generate new business leads. ?
Leveraging from a single pool of expertise into multiple revenue generation opportunities: retainer consulting, project consulting, market research, and market research published reports Company Summary Progressive Consulting is a new company providing high-level expertise in international high-tech business development, channel development, distribution strategies, and marketing of high tech products. It will focus initially on providing two kinds of international triangles: ? Providing United States clients with development for European and Latin American markets. ? Providing European clients with development for the United States and Latin American markets. As it grows it will take on people and consulting work in related markets, such as the rest of Latin America, and the Far East, and similar markets. As it grows it will look for additional leverage by taking brokerage positions and representation positions to create percentage holdings in product results Company Ownership Progressive Consulting will be created as a California C corporation based in Los Angeles County, owned by its principal investors and principal operators.
As of this writing it has not been chartered yet and is still considering alternatives of legal formation Startup Summary Total start up expense (including legal costs, logo design, stationery and related expenses) come to $ 73, 000. Start up assets required include $ 3, 000 in short term assets (office furniture, etc. ) and $ 1, 000, 000 in initial cash to handle the first few months of consulting operations as sales and accounts receivable play through the cash flow. The details are included in the table Start-up Plan Start-up Expenses Legal $ 1, 000 Stationery etc. $ 3, 000 Brochures $ 5, 000 Consultants $ 5, 000 Insurance $ 350 Expensed equipment $ 3, 000 Other $ 1, 000 Total Start-up Expense $ 18, 350 Start-up Assets Needed Cash requirements $ 25, 000 Start-up inventory $ 0 Other Short-term Assets $ 7, 000 Total Short-term Assets $ 32, 000 Long-term Assets WORD DOCUMENT HAS NO NUMBER HERE Capital Asset Total Assets $ 32, 000 Total Startup Requirements: $ 50, 350 Left to finance Start-up Funding Plan Investment Investor 1 $ 20, 000 Investor 2 $ 20, 000 Other $ 10, 000 Total investment $ 50, 000 Short-term borrowing Unpaid expenses $ 5, 000 Short-term loans $ 0 Interest-free short-term loans $ 0 Subtotal Short-term Borrowing $ 5, 000 Long-term Borrowing $ 0 Total Borrowing $ 5, 000 Loss at start-up ($ 23, 000) Total Equity $ 27, 000 Total Debt and Equity $ 32, 00 Company Services Progressive offers expertise in channel distribution, channel development, and market development, sold and packaged in various ways that allow clients to choose their preferred relationship: these include retainer consulting relationships, project based consulting, relationship and alliance brokering, sales representation and market representation, project-based market research, published market research, and information forum events Company locations and facilities The initial office will be established in A quality office space in the Los Angeles County Dearborn Valley area of California, the heart of the U. S. high tech industry Services Progressive offers the expertise a high-technology company needs to develop new product distribution and new market segments in new markets. This can be taken as high-level retainer consulting, market research reports, or project- based consulting Service DescriptioRetainer consulting: we represent a client company as an extension of its business development and market development functions.
This begins with complete understanding of the client companys situation, objectives, and constraints. We then represent the client company quietly and confidentially, sifting through new market developments and new opportunities as is appropriate to the client, representing the client in initial talks with possible allies, vendors, and channels Project consulting: Proposed and billed on a per-project and per-milestone basis, project consulting offers a client company a way to harness our specific qualities and use our expertise to solve specific problems, develop and / or implement plans, develop specific information Market research: group studies available to selected clients at $ 5, 000 per unit. A group study is packaged and published, a complete study of a specific market, channel, or topic. Examples might be studies of developing consumer channels in Japan or Mexico, or implications of changing margins in software Competitive Comparison The competition comes in several forms The most significant competition is no consulting at all, companies choosing to do business development and channel development and market research in-house. Their own managers do this on their own, as part of their regular business functions. Our key advantage in competition with in-house development is that managers are already overloaded with responsibilities, they dont have time for additional responsibilities in new market development or new channel development.
Also, Progressive can approach alliances, vendors, and channels on a confidential basis, gathering information and making initial contacts in ways that the corporate managers cant The high-level prestige management consulting: High-Tec, San Diego Consulting Group, etc. These are essentially generalists who take their name- brand management consulting into specialty areas. Their other very important weakness is the management structure that has the partners selling new jobs, and inexperienced associates delivering the work. We compete against them as experts in our specific fields, and with the guarantee that our clients will have the top-level people doing the actual work The third general kind of competitor is the international market research company: International Electronic Data Corporation (IEDC), Dataquest, Stanford Research Institute, etc. These companies are formidable competitors for published market research and market forums, but cannot provide the kind of high-level consulting that Triangle will provide The fourth kind of competition is the market-specific smaller house. For example: Nomura Research in Japan, Select S.
A. de C. V. in Mexico (now affiliated with IEDC) Sales representation, brokering, and deal catalysts are an ad-hoc business form that will be defined in detail by the specific nature of each individual case Sales Literature The business will begin with a general corporate brochure establishing the positioning.
This brochure will be developed as part of the start-up expenses. Literature and mailings for the initial market forums will be very important, with the need to establish a high-quality look and feel for [truncated because this plan is provided for purposes of illustration only Sourcing? The key fulfillment and delivery will be provided by the principals of the business. The real core value is professional expertise, provided by a combination of experience, hard work.
and education (in that order). ? We will turn to qualified professionals for free-lance back-up in market research and presentation and report development, which are areas that we can afford to contract out without risking the core values provided to the clients Technology Progressive Consulting will maintain latest Windows and Macintosh capabilities including Complete Email facilities in Internet, Compuserve, America Online, and Apple link, for working with clients directly through email delivery of drafts and information Complete presentation facilities for preparation and delivery of multimedia presentations on Macintosh or Windows machines, in formats including on-disk presentation, live presentation, or video presentation Complete desktop publishing facilities for delivery of regular retainer reports, project output reports, marketing materials, market research reports Future Services In the future Progressive will broaden the coverage by expanding into coverage of additional markets (e. g. all of Latin America, Far East, Western Europe) and additional product areas (e.
g. telecommunications and technology integration). We are also studying the possibility of newsletter or electronic newsletter services, or perhaps special on-topic reports Market Analysis Summary Progressive will be focusing on high-technology manufacturers of computer hardware and software, services, networking, who want to sell into markets in the United States, Europe, and Latin America. These are mostly larger companies, and occasionally medium-sized companies. Our most important group of potential customers are executives in larger corporations. These are marketing managers, general managers, sales managers, sometimes charged with international focus and sometimes charged with market or even specific channel focus.
They do not want to waste their time or risk their money looking for bargain information or questionable expertise. As they go into markets looking at new opportunities, they are very sensitive to risking their companys name and reputation. Professional experience [truncated because this plan is provided for purposes of illustration only Market Segmentation? Large manufacturer corporations: our most important market segment is the large manufacturer of high-technology products, such as Apple, Hewlett- Packard, IBM, Microsoft, Siemens, or Olivetti.
These companies will be calling on Progressive for development functions that are better spun off than managed in-house, and for market research, and for market forums. ? Medium sized growth companies: particularly in software, multimedia, and some related high growth fields, Triangle will be able to offer an attractive development alternative to the company that is management constrained and unable to address opportunities in new markets and new market segments Industry Analysis The consulting industry is pulverized and disorganized, thousands of smaller consulting organizations and individual consultants for every one of the few dozen well-known companies. Consulting is a disorganized industry, with participants ranging from major international name brand consultants to tens of thousands of individuals. One of Progressives challenges will be establishing itself as a real consulting company, positioned as a relatively risk free corporate purchase Industry Participants The consulting industry is pulverized and disorganized, thousands of smaller consulting organizations and individual consultants for every one of the few dozen well-known companies. At the highest level are the few well established major names in management consulting. Most of these are organized as partnerships established in major markets around the world, linked together by interconnecting directors and sharing the name and corporate wisdom.
Some evolved from accounting companies (e. g. Arthur Anderson, Touche Ross) and some from management consulting (McKinsey, Bain). These companies charge very high rates for consulting, and maintain relatively high overhead structures and fulfillment structures based on partners selling and junior associates fulfilling. At the intermediate level are some function specific or market specific consultants, such as the market research firms (IEDC, Dataquest) or channel development firms (Channel Corp, Channel Strategies, Channel Mark).
Some kinds of consulting is little more than contract expertise provided by somebody looking for a job and offering consulting services as a stop-gap measure while looking Distribution Patterns Consulting is sold and purchased mainly on a word-of-mouth basis, with relationships and previous experience being by far the most important factor. The major name-brand houses have locations in major cities and major markets, and executive-level managers or partners develop new business through industry associations, business associations, and chambers of commerce and industry, etc. , even in some cases social associations such as country clubs. The medium-level houses are generally area-specific or function specific, and are not easily able to leverage their business through distribution Competition and Buying Patterns The key element in purchase decisions made at the Progressive client level is trust in the professional reputation and reliability of the consulting firm Main Competitors? The high-level prestige management consulting: Strengths: international locations managed by owner-partners with a high level of presentation and understanding of general business.
Enviable reputations which make purchase of consulting an easy decision for a manager, despite the very high prices. Weaknesses: General business knowledge doesnt substitute for the specific market, channel, and distribution expertise of Triangle, focusing on high-technology markets and products only. Also, fees are extremely expensive, and work is generally done by very junior-level consultants, even though sold by high-level partners. ? The international market research company: Strengths: International offices, specific market knowledge, permanent staff developing market research information on permanent basis, good relationships with potential client companies. Weaknesses: market numbers are not marketing, not channel development or market development.
Although these companies compete for some of the business Triangle is after, they cannot really offer the same level of business understanding at a high level. ? Market specific or function-specific experts Strengths: expertise in market or functional areas. Triangle should not try to compete with Normura or Select in their markets with market research, or with Channel Corp in channel management. Weaknesses: the inability to spread beyond a specific focus, or to rise above a specific focus, to provide actual management expertise, experience, and wisdom beyond the specifics.
The most significant competition is no consulting at all, companies choosing to do business development and channel development and market research in- house. Strengths: no incremental cost except travel; also, the general work is done by the people who are entirely responsible, the planning done by those who will implement. Weaknesses: most managers are terribly overburdened already, unable to find incremental resources in time and people to apply to incremental opportunities. Also, there is a lot of additional risk in market development and channel development done in house from the ground up. Finally, retainer-based antenna consultants can greatly enhance a companys reach and extend its position into conversations that might otherwise never have taken place Market Analysis As indicated by the illustrations, we must focus on a few thousand well- chosen potential customers in the United States, Europe, and Latin America. These few thousand high-tech manufacturing companies are the key customers for Progressive.
Potential Customers Customers Growth rat U. S. High Tech 5, 000 10 % European High Tech 1, 000 15 % Latin America 250 35 % Other 10, 00 Total 16, 250 n. a Strategy Summary Progressive will focus on three geographical markets, the United States, Europe, and Latin America, and in limited product segments: personal computers, software, networks, telecommunications, personal organizers, and technology integration products.
The target customer is usually a manager in a larger corporation, and occasionally an owner or president of a medium- sized corporation in a high-growth period Pricing Strategy Progressive Consulting will be priced at the upper edge of what the market will bear, competing with the name brand consultants. The pricing fits with the general positioning of Triangle as high-level expertise. Consulting should be based on $ 5, 000 per day for project consulting, $ 2, 000 per day for market research, and $ 10, 000 per month and up for retainer consulting. Market research reports should be priced at $ 5, 000 per report, which will of course require that reports be very well planned, focused on very important topics very well presented Sales Forecast The sales forecast monthly summary is included in the appendix. The annual sales projections are included here in the following table.
Sales Forecast Sales 1995 1996 199 Retainer Consulting $ 200, 000 $ 250, 000 $ 325, 000 Project Consulting $ 270, 000 $ 325, 000 $ 350, 000 Market Research $ 122, 000 $ 150, 000 $ 200, 000 Strategic Reports $ 0 $ 50, 000 $ 125, 000 Othe Total Sales $ 592, 000 $ 775, 000 $ 1, 000, 000 Cost of sales 1995 1996 199 Retainer Consulting $ 30, 000 $ 20, 000 $ 30, 000 Project Consulting $ 45, 000 $ 25, 000 $ 31, 000 Market Research $ 84, 000 $ 45, 000 $ 50, 000 Strategic Reports $ 0 $ 20, 000 $ 40, 000 Othe Total Cost of Sales $ 159, 000 $ 110, 000 $ 151, 00 Strategic Alliances At this writing strategic alliances with Smith and Jones are possibilities, given the content of existing discussions. Given the background of prospective partners, we might also be talking to European companies including Siemens and Olivetti and others, and to United States companies related to Apple Computer. In Latin America we would be looking at the key local high-technology vendors, beginning with PrintaformManagement Summary The initial management team depends on the founders themselves, with little back-up. As we grow we will take on additional consulting help, plus graphic/ editorial, sales, and marketing Organizational Structure Progressive should be managed by working partners, in a structure taken mainly from Smith Partners.
In the beginning we assume 3 - 5 partners: ? Ralph Sampson? At least one, probably two partners from Smith and Jones? One strong European partner, based in Paris.
The organization has to be very flat in the beginning, with each of the founders responsible for his or her own work and management. ? One other strong part 6. 2 Management Team The Progressive business requires a very high level of international experience and expertise, which means that it will not be easily leveragable in the common consulting company mode in which partners run the business and make sales, while associates fulfill. Partners will necessarily be involved in the fulfillment of the core business proposition, providing the expertise to the clients. The initial personnel plan is still tentative.
It should involve 3 - 5 partners, 1 - 3 consultants, 1 strong editorial / graphic person with good staff support, 1 strong marketing person, an office manager, and a secretary. Later we add more partners, consultants and and sales staff. Founders resumes are included as an additional attachment to this plan Personnel Plan The detailed monthly personnel plan for the first year is included in the appendices. The annual personal estimates are included here as Tabl Personnel Plan 1995 1996 199 Partners $ 144, 000 $ 175, 000 $ 200, 000 Consultants $ 0 $ 50, 000 $ 63, 000 Editorial / graphic $ 18, 000 $ 22, 000 $ 26, 000 VP Marketing $ 20, 000 $ 50, 000 $ 55, 000 Sales people $ 0 $ 30, 000 $ 33, 000 Office Manager $ 7, 500 $ 30, 000 $ 33, 000 Secretarial $ 5, 250 $ 20, 000 $ 22, 000 Othe Subtotal $ 194, 750 $ 377, 000 $ 432, 00 Financial Plan We will maintain a conservative financial strategy, based on developing capital for future growth Important Assumptions The table in this section summarizes key financial assumptions, including 45 -day average collection days, sales entirely on invoice basis, expenses mainly on net 30 basis, 35 days on average for payment of invoices, and present-day interest rates. General Assumptions 1995 1996 199 Collection days 43 45 45 Payment Days 35 35 35 1995 1996 199 Short Term Interest Rate 8. 00 % 8. 00 % 8. 00 % Long Term Interest Rate 10. 00 % 10. 00 % 10. 00 % Payment days 35 35 35 Tax Rate Percent 0. 00 % 322
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