Memo to Morgan Ogden

October 10, 2008

Memo

Date: October 10, 2008

To: Morgan Richens, CEO

From: Licia Bailey, Aerin Richens, Taylor Zoll and Dale Brox

Subject: Proposal for New Small Business Sales Platform Study

Purpose

The purpose of our proposal is to request authorization and funding to study whether a new sales platform tailored to small business owners would be cost effective and increase the company’s net income.

Summary

QFlooring Technologies is one of the most user-friendly software on the market today (BNET 2001). It isspecifically designed to help efficiently manage retail-flooring companies of all sizes. Fully integrated, it organizes, records, administers inventory, sales, accounting, ordering, payroll, scheduling, and other operations. The goal of Qflooring Technologies has always been to help businesses become more successful by using applications that target the individual’s specific needs. However,the majority of our clients continue to be big business owners.

As you know, the majority of sales and leads come from referrals after carpet market tradeshows. These tradeshows are expensive to attend and are usually visited by bigger business owners. Our current sales platform has been successful closing sales for companies with annual gross revenue over $750,000 and those that are more “tech savvy”. It has been less successful with business under this revenue mark. The small businesses we have been in contact with are concerned with two aspects: the price of the product and unaware of the product and the benefits.

Because of our growing concern about our net income and lack of fulfilling our mission of helping the small business owner succeed we propose to research options for a new sales platform tailored to small business. We would begin by taking the comparisons of past sales (see figure 1.1) and calculating if lowering the price of the system would be cost effective, other payment options and new marketing techniques to tap into businesses who are not technologically progressive. Next, we would establish necessary and desirable criteria for evaluating the data, research available payment and marketing options, and evaluate these options according to our criteria.

To perform this research, coordinate team collaboration, and present a report on our findings, we estimate that we would require 140 hours over six weeks, for a total of $1,100. Our research tem would consist of marketing specialist Aerin Richens, CFO Taylor Zoll, retired flooring business owner Dale Brox, and organizational manager intern Licia Bailey.

If you accept this proposal, we would begin by November in order to ensure its completion, review and possible implementation before the next carpet market expo in Las Vegas February 2009. (Surfaces, 2008) The completed report will include the details of our research and a recommendation for addressing our current sales platform and net income.

Introduction

We are seeking approval for a research project to study whether lowering the product price for small businesses, finding other payment options and/or new marketing techniques can increase net revenue by finding small business owners and meeting their needs in a cost effective manner. This proposal is based on the growing concerns with decreasing net income and the inability to help small businesses that are struggling.

Figure 1 shows a preliminary look atthe comparison of our product sales in units between businesses over and under annual revenue of $750,000. Figure 2 shows a how net income has decreased in the past two years. We are very proud to be one of the leaders in the industry with big businesses;however, there is a major market we could be tapping into with the smaller businesses. Not only could increasing sales with smaller business help our net income it would help smaller companies become more efficient and help them make the leap into becoming a competitive, technologically friendly company.

Figure 1 Units Sold (broken down by annual revenue of client’s business)

Although our product has been competitive and reasonably priced in the past, flooring businesses are struggling more than ever before. The flooring industry is taking a major hit with the low economy, stalled construction on new homes and rising energy prices. (Chattanooga Times Free Press, 2008). Now is the time to tap into the small business market and help businesses stay in business. Our client’s testimonials and research from the consulting firm confirm that if our system is fully incorporated into a business it does save the company money, become more efficient, and the Business-to-Business (B2B) functionality is more important than ever. A press release from our most recent training seminar recognized our efforts to help businesses and our emphasis on B2B development. (Floorbiz.com, 2008)

Figure 2 Qflooring Technologies Net Income

We propose to study options for improving our current sales platform and net income. Our research will help our experienced financial team determine if reducing the price of the system would be cost-effective or if there are other payment options. This information from the financial team will help our marketing team determine effective options to reach smaller business owners and build our sales platform from the price, marketing techniques and needs of the smaller businesses.

Proposed Program

  1. Investigate the extent of the problem by taking the comparisons of past sales (see figure 1and 2) and calculating if lowering the price of the system would be cost effective.

We will use the data from past unit sales and net income to help in our calculations if lowering the product price for smaller companies who need less customer service, consulting, and setup time would be cost-effective and increase net income if a particular number of units are sold.

  1. Identify our options for addressing this price problem with small businesses.

We will consider the potential advantages and disadvantages for lowering the price. If the disadvantages far out weigh the benefits, we will identify other payment options that may also be marketable for small businesses. We have already researched other options and ideas from PaySimplesoftware, referral program discounts and other promotions.

  1. Identify the main criteria against which we will evaluate different payment options.

To help us determine the necessary and desirable criteria, we have already identified fifteen of our current clients and five potential clients that are willing to take a standard written survey, allow scheduled visits with standard interview questions and time for a “testsales pitch” trying our new platform with feedback from the participants. This task will require materials for testing supplies and traveling expenses. This is included in the budget.

  1. Research available payment and marketing options.

Our next company basic training seminar, Technology Seminar: Saving You Time and Money, November 13th and 14thwill be a great opportunity for Aerin Richens and Licia Bailey to talk with several of our clients about the new options. It will also be a great time to get feedback and advice from other experts that will be attending, such as a representative from Mohawk Carpets and a leading business owner from Salt Lake City, Utah.

  1. Evaluate options using test groups and evaluation criteria.

We will evaluate and test the new sales platform and marketing strategies by testing different groups against a control group. Each group will consist of five companies, three test groups and one control group for a total of twenty companies.Each test group will be given a different variation of a new sales platform. Based on how many units are sold, future partnerships, and other specified criterion we will test the effectiveness of the three new sales platforms against our current platform.

  1. Prepare a completion report.

We will prepare a completion report that explains our product pricing and marketing problem with small businesses, our research methods, and our findings. We will include information about our current problem with our sales platform for small businesses/decreasing net income, about how we established criteria, and about how we determined the pricing, payment and marketing options. We will include our test group results and evaluations that shaped our conclusions and final sales platform recommendations. This report will be submitted to you six weeks from the start date of our research study.

Schedule

The following is a schedule of the tasks for the project.

Experience

We bring over sixty years of combined flooring business experience to the project.

  • Aerin Richens has over fifteen years of marketing research and technical/creative writing experience, nine of those years are directly related to the flooring industry and is currently the Marketing Specialist with Qflooring Technologies.
  • Taylor Zoll has over twelve years of accounting experience in the flooring industry and is currently the Chief Financial Officer for Qflooring Technologies.
  • Dale Brox is a retired flooring business owner and entrepreneur. He has over 35 years experience in the flooring industry.
  • Licia Bailey has over five years of administrative experience in business, medical and higher education settings. She is currently working on her B.I.S. in Organizational Studies while working as the Organizational Management Intern for Qflooring Technologies.

Budget

Following is an itemized budget for our proposed research.

Name / Hours / Hourly Rate / Cost
Aerin / 40 / pro bono / $0
*Taylor / 20 / $15 / $300
Dale / 40 / pro Bono / $0
Licia / 40 / $10 / $400
Materials / $400
Total / $1,100

*Taylor’s costs will be used to reimburse overtime to Ron for covering Taylor’s job responsibilities while he is working on the research pro bono.

References

BNET Business Network.(2001).National floor trends. QFloors software takes care of business. Retrieved October 11, 2008, from

TimesFreePress.com. (2008). Chattanooga Times Free Press. Retrieved October 12, 2008, from

Floorbiz.(n.d.). Floorbiz.com. Retrieved October 11, 2008, from

Paysimple Software. (2007). Retrieved October 9, 2008, from

Qfloors. (2008), Qfloors Training Seminar. Technology Seminar: Saving You Time and Money. Retrieved October 12, 2008, from

Surfaces 2009 (2008). Retrieved October 10, 2008 from

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