Business Plan: Acme Consulting
1. 0
Executive Summary
Acme 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 Acme to formalize the consulting services they
offer.
1. 2 Mission
Acme 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 Acme is a more professional, less risky way
to develop new areas even than working completely in house with their own
people. Acme 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 theEuropean and Latin American markets, or
for European clients in the United States market.
1. 3 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.
2. 0 Company Summary
Acme 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 forEuropean 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.
2. 1 Company Ownership
Acme Consulting will be created as a
California C corporation based in Santa Clara 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.
2. 2 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 Assets $0
_______________________________
Total Assets $32,000
Total Startup Requirements: $50,350
Left to finance: $0
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 $32,000
2. 3 Company Services
Acme 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.
2. 4 Company locations and facilities
The initial office will be established in A
quality office space in the Santa Clara County "Silicon Valley" area
of California, the heart of the U.S. high tech industry.
3. 0 Services
Acme 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.
3. 1 Service Description
1. Retainer 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
company's 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.
2. 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.
3. 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.
3. 2 Competitive Comparison
The competition comes in several forms:
1. 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
don't have time for additional responsibilities in new market development or
new channel development. Also, Acme can approach alliances, vendors,and
channels on a confidential basis, gathering information and making initial
contacts in ways that the corporate managers can't.
2. The high-level prestige management consulting: McKinsey,
Bain, Arthur Andersen, Boston 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.
3. The third general kind of competitor is the
international market research company: International Data Corporation (IDC),
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.
4. 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 IDC).
5. 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.
3. 3 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]
3. 4 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.
3. 5 Technology
Acme Consulting will maintain latest
Windows and Macintosh capabilities including:
- 1.
Complete Email facilities in Internet, Compuserve, America online, and
Applelink, for working with clients directly through email delivery of
drafts and information.
- 2.
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.
- 3.
Complete desktop publishing facilities for delivery of regular retainer
reports, project output reports, marketing materials, market research
reports.
3. 6 Future Services
In the future Acme 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.
4. 0 Market Analysis Summary
Acme 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 questionnable
expertise. As they go into markets looking at new opportunities, they are very
sensitive to risking their company's name and reputation.
Professional experience... [truncated because this plan is
provided for purposes of illustration only]
4. 1 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
Acme 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.
4. 2 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 Acme's challenges will be establishing itself as a
"real" consulting company, positioned as a relatively risk free
corporate purchase.
4. 2. 1 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 (IDC, Dataquest) or
channel development firms (ChannelCorp, Channel Strategies, ChannelMark).
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.
4. 2. 2 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.
4. 2. 3 Competition and Buying Patterns
The key element in purchase decisions made
at the Acme client level is trust in the professional reputation and
reliability of the consulting firm.
4. 2. 4 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 doesn't 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 ChannelCorp in channel
management.
Weaknesses: the inability to
spread beyond a specific focus, or to rise above a specific focus, to provide
actuial 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 company's reach and extend its position into
conversations that might otherwise never hanve taken place.
4. 3 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 Acme.
Potential Customers Customers Growth rate
____________________________________________________
U.S. High Tech 5,000 10%
European High Tech 1,000 15%
Latin America 250 35%
Other 10,000 2%
____________________________________________________
Total 16,250 n.a.
5. 0 Strategy Summary
Acme 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.
5. 1 Pricing Strategy
Acme 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.
5. 2 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 1997
__________________________________________________________________
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
Other $0 $0 $0
Total Sales $592,000 $775,000 $1,000,000
Cost of sales 1995 1996 1997
__________________________________________________________________
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
Other $0 $0 $0
Total Cost of Sales $159,000 $110,000 $151,000
5. 3 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 Printaform.
6. 0 Management 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.
6. 1 Organizational Structure
Acme 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 reponsible for his or her own work and
management.
6. 2 Management Team
The Acme 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.
6. 3 Personnel Plan
The detailed monthly personnel plan for the
first year is included in the appendices. The annual personal estimates are
included here as Table 5.
Personnel Plan
1995 1996 1997
_________________________________________________________________
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
Other $0 $0 $0
Subtotal $194,750 $377,000 $432,000
7. 0 Financial Plan
We will maintain a conservative financial
strategy, based on developing capital for future growth.
7. 1 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 1997
______________________________________________________________________
___
Collection days 43 45 45
Payment Days 35 35 35
1995 1996 1997
______________________________________________________________________
___
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% 0.00% 0.00%
Expenses in cash% 25.00% 25.00% 25.00%
Sales on credit 100.00% 100.00%
100.00%
Personnel Burden % 14.00% 14.00%
14.00%
7.2 Key
Financial Indicators
The chart summarizes key financial
benchmarks. Unfortunately, as we increase sales we will have to show a decline
in performance of collection days and gross margin.
7. 3 Break-even
Analysis
Break Even Analysis:
___________________________________________________
Monthly Units Break-even 125,000
Monthly Sales Break-even $125,000
Assumptions:
Average Unit Sale $1.00
Average Per-Unit Cost $0.20
Fixed Cost $100,000
7. 4 Projected Profit and Loss
The detailed monthly pro-forma income
statement for the first year is included in the appendices. The annual
estimates are included here.
Pro-forma Income Statement
1995 1996 1997
______________________________________________________________________
___
Sales $592,000 $775,000
$1,000,000
Cost of Sales $159,000 $110,000
$151,000
Other $1,000 $0 $0
_________________________________________________
Total Cost of Sales $160,000 $110,000
$151,000
Gross margin $432,000 $665,000
$849,000
Gross margin percent 72.97% 85.81% 84.90%
Operating expenses:
Advertising/Promotion 10.00% $36,000 $40,000
$44,000
Public Relations 10.00% $30,000 $30,000
$33,000
Travel 10.00% $90,000 $60,000
$110,000
Miscellaneous 10.00% $6,000 $7,000 $8,000
Payroll expense $194,750 $377,000
$432,000
Leased Equipment $6,000 $7,000 $7,000
Utilities 20% $12,000 $14,000
$17,000
Insurance 20% $3,600 $2,000 $2,000
Depreciation $0 $0
$0
Rent 25% $18,000 $23,000
$29,000
Payroll Burden $0 $0 $0
Contract/Consultants $0 $0 $0
Other $0 $0 $0
_________________________________________________
Total Operating Expenses $396,350 $560,000
$682,000
Profit Before Interest and Taxes$35,650 $105,000
$167,000
Interest Expense ST $3,600 $12,800
$12,800
Interest Expense LT $5,000 $5,000 $5,000
Taxes Incurred $0 $0 $0
Net Profit $27,050 $87,200
$149,200
Net Profit/Sales 4.57% 11.25%
14.92%
7. 5 Projected Cash Flow
Cash flow projections are critical to our
success. The monthly cash flow is shown in the illustration, with one bar
representing the cash flow per month and the other the monthly balance. The
annual cash flow figures are included here. Detailed monthly numbers are included
in the appendices.
Pro-Forma Cash Flow
1995 1996
1997
______________________________________________________________________
______________
Net Profit: $27,050 $87,200
$149,200
Plus:
Depreciation $0 $0
$0
Change in Accounts Payable $49,413 $16,799
$13,764
Current Borrowing (repayment) $60,000 $100,000
$0
Increase (decrease) Other Liabilities $0 $0
$0
Long-term Borrowing (repayment) $50,000 $0
$0
Capital Input $0 $0
$0
Subtotal $186,463 $203,999
$162,964
Less: 1905 1905
1905
Change in Accounts Receivable $94,000 $5,750
$50,500
Change in Inventory $0 $0
$0
Change in Other ST Assets $0 $0
$0
Capital Expenditure $0 $0
$0
Dividends $0 $0
$0
Subtotal $94,000 $5,750
$50,500
Net Cash Flow $92,463 $198,249
$112,464
Cash balance $117,463 $315,712
$428,176
7. 6 Projected Balance Sheet
The balance sheet shows healthy growth of
net worth, and strong financial position. The monthly estimates are included in
the appendices.
Pro-forma Balance Sheet
1995 1996
1997
______________________________________________________________________
______________
Short-term Assets Starting Balances
Cash $25,000 $117,463 $315,712
$428,176
Accounts receivable $0 $94,000 $99,750 $150,250
Inventory $0 $0 $0
$0
Other Short-term Assets $7,000 $7,000 $7,000
$7,000
Total Short-term Assets $32,000 $218,463 $422,462
$585,426
Long-term Assets
Capital Assets $0 $0 $0
$0
Accumulated Depreciation$0 $0 $0
$0
Total Long-term Assets $0 $0 $0
$0
_________________________________________________
Total Assets $32,000 $218,463 $422,462
$585,426
Debt and Equity
1995 1996
1997
______________________________________________________________________
______________
Accounts Payable $5,000 $54,413 $71,212
$84,976
Short-term Notes $0 $60,000 $160,000
$160,000
Other ST Liabilities $0 $0 $0
$0
Subtotal Short-term Liabilities
$5,000 $114,413 $231,212
$244,976
Long-term Liabilities $0 $50,000 $50,000
$50,000
Total Liabilities $5,000 $164,413 $281,212
$294,976
Paid in Capital $50,000 $50,000 $50,000
$50,000
Retained Earnings ($23,000) ($23,000) $4,050
$91,250
Earnings $0 $27,050 $87,200
$149,200
Total Equity $27,000 $54,050 $141,250
$290,450
Total Debt and Equity $32,000 $218,463 $422,462
$585,426
Net Worth $27,000 $54,050 $141,250
$290,450
7. 7 Business Ratios
Acme 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
Acme to formalize the consulting services they offer.
Ratio Analysis
Profitability Ratios: 1995 1996 1997
____________________________________________________________________
Gross margin 72.97% 85.81% 84.90%
Net profit margin 4.57% 11.25% 14.92%
Return on Assets 12.38% 20.64% 25.49%
Return on Equity 50.05% 61.73% 51.37%
Activity Ratios:
AR Turnover 6.30 7.77 6.66
Collection days 29 45 45
Inventory Turnover 0.00 0.00 0.00
Accts payable turnover 7.67 7.06 7.35
Total asset turnover 2.71 1.83 1.71
Debt Ratios: 1995 1996 1997
____________________________________________________________________
Debt to net Worth 3.04 1.99 1.02
Short-term Debt to Liab. 0.70 0.82 0.83
Liquidity Ratios:
Current Ratio 1.91 1.83 2.39
Quick Ratio 1.91 1.83 2.39
Net Working Capital $104,050 $191,250
$340,450
Interest Coverage 4.15 5.90 9.38
Additional Ratios: 1995 1996 1997
____________________________________________________________________
Assets to sales 0.37 0.55 0.59
Debt/Assets 75% 67% 50%
Current debt/Total Assets 52% 55% 42%
Acid Test 1.09 1.40 1.78
Asset Turnover 2.71 1.83 1.71
Sales/Net Worth 10.95 5.49 3.44
Appendices
The appendices to this plan include:
- Complete
financial results including accountants?statement and copies of tax forms
for past years.
- Complete
set of sales literature, brochures, catalogs, etc.
- Resumes
from key managers
- Detailed
monthly pro forma sales forecast, personnel plan, profit and loss, cash
flow, and balance sheet. Important: months are not all shown in this
sample plan, because of page format constraints. Business Plan Pro
normally prints appendices in landscape mode, so it can show all the
months.
Sales Forecast in Detail
Personnel Plan in Detail
Profit and Loss Projection in Detail
Cash Flow Projection in Detail
Projected Balance Sheet in Detail