Olivares Amigo, Alan
(2016)
BUSINESS PLAN: Recomiendame.
[Dissertation (University of Nottingham only)]
Abstract
Recomiendame is seeking funding of US$163,000 for launching our platform, by offering 40% of equity. This investment alongside founders’ capital will be used to implement business activities, develop and release our unique online platform of trusted service providers for Chilean market, which is expected to produce net profit of US$1.2 million yearly by 2020. We have planned an exit strategy of selling business at 5th year of trading, whereby Recomiendame equity value will be nearly US$3 million and minimum return for investors of US$1.2 million. In this Business Plan has been arranged most of business endeavours, including environmental and market analysis, strategies, plan and model, financial and risk analysis. We strongly believe that those, flexibility and continuous innovation will allow to become a leader in online directory for services market and the first choice of consumers.
The Company
Recomiendame is an unregistered start-up in seed stage, which idea was conceived for its founders. Those also shape the management team, starting for Alan Olivares (CEO) with experience in software sector, co-founded of non-profit organisation, and with formal studies in entrepreneurship and management. Rodrigo Castro seconds him as Chief Administrative Officer, whose experience as co-founder and manager of a software consultancy is excellent to support Recomiendame. Next, Rodrigo Campos as Chief Innovation officer is expected to exploit his passion and former experience as successful researcher at Yahoo and senior software developer. Similarly, Juan Huerta and Amauri Gatica, as Chief operational officer and Chief customer officer are successful professionals with entrepreneurial spirit and suitable experience. As marketing and sales director is Claudia Rocco, who has renowned career in marketing and management positions in Chilean public sector. Finally, we consider a business mentor to Nicolas Shea, who is largely famed for his entrepreneurial record founding several successful businesses and organisations, supporting entrepreneurship at national level, all which will help us to fill experience gaps, lead through right decisions and ease connections.
The Product
Recomiendame is an online multi-sided platform that introduces consumers with a service need to trusted service providers, who have been validated by our side, recommended and rated from other consumers. On the one hand, paid users will be service providers that advertise their services after being validated as trusted, which include service in categories of home improvement, home appliance and equipment repair, stylist and hairdressers, private cars, therapists and similar, and pet services. They will pay monthly fee by choosing between two schemes, receiving as benefit more and constant customers and income. On the other hand, consumers will be our free users who will use Recomiendame for finding, contacting and rating traders. This proposition will cope a real need in Chilean market for trusted traders, where our market research suggest this problem has not been addressed directly.
The Industry and Market
Environmental conditions and socioeconomic situation of the current market appears to be favourable for launching and succeeding our business, despite slowdown in economy. Digital advertising and online classified expenditures have been growing steadily last years with auspicious future. Our market size of registered service providers is estimated in 46,000 only for targeted categories, although with potentially double size after adding more categories over time. From market research we have learnt that traders are not satisfied with current options, and most of them are willing to participate and pay for a suitable solution as Recomiendame.
Corporate strategy
Great attraction from consumers and traders towards Recomiendame proposition evidences auspicious launching strategy. In our strategy, we consider five most important aspects alongside marketing. Accordingly to our profiles and passion, we will build platform completely in house, for what a human resource base will be assembled. Besides, it is essential to set legal procedures and contracts with service providers, in order to protect not only our company and consumers, but also themselves. Additionally, the mentor incorporation from early stage is crucial. Also, efforts for creating agreements with trader groups will key for boosting sales. Similarly, promote continuous innovation and creativity internally will important to grow, improve our platform and create a company image. Finally, different activities has been strategized for marketing, such as digital media, social media and in street ads with guerrilla and radio, all which aim to gain rapidly customers in both sides.
Financial projections
Net profit is forecasted at US$120,000 monthly by end of fifth year, breakeven at ninth month. Similarly, cash flow will start being positive at ninth month, reaching highest excess of US$3 million at year 5. To cover the lowest deficit, funding requirement of US$163,000 will be required from investors by offering 40% on equity. Most likely return on equity has been estimated in US$1.2 million by fifth year, which mean 3.5x investment and using 10% discount rate and after implementing exit strategy of sale business. The strategy is spending 44% of investment in staff salaries and 11% in marketing. Contingency is also considered with 35% to cover unfavourable conditions.
Risk assessment
A competitor can appears with a similar proposition or exploit same market, whereby we believe that agreements and brand image and association from marketing will arise barriers. Nonetheless, dependency in agreements is risky whether those do not thrive, which will be addressed reallocating resources and selling more directly. Similarly when one group of customers do not grow as expected, we will adaptably move resources and efforts.
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