c h a p s . c o m
“The precise information, when it is needed most”
Business Plan
Marcos Hashimoto
Al. Sta. Mônica, 60
Itu – São Paulo
13301-871
11-4013-3089
Table of contents
2. Executive summary 3
3. Company general profile 4
4. Product description 6
5. Marketing Plan 6
5.1 Market Segmentation 6
5.2 Target Marketing Segment Strategy 7
5.2.1 Market Needs 8
5.2.2 Market Trends 8
5.3 Industry Analysis 9
5.3.1 Industry Participants 10
5.3.2 Distribution Pattern 10
5.4 Marketing Strategies 10
5.4.1 Sales Strategy 11
5.4.2 Sales Forecast 11
5.4.3 Pricing Strategy 11
5.5 Advertising, Public Relations, and Promotion 12
5.6 Distribution Strategy 13
5.7 Brand Strategy 14
6. Operational Plan 14
6.1 Legal feasibility 14
6.2 Operation overview 15
6.3 Sales Process flow 17
6.4 Operational Process flow 18
7. Organizational structure 19
8. Capital structure 20
8.1 Partners Participation 20
8.2 Venture Capital from Investors 21
9. Finance plan 21
9.1 Break-even Analysis 21
9.2 Expense Forecast 22
9.3 Linking Sales and Expenses to Strategy 22
9.4 Contribution Margin 22
9.5 Details of the financial line 23
10. Appendix 1
11. Appendix 2
12. Appendix 3
2. Executive summary
Chaps.com is an Internet service company specialized in providing information in a very unique way to the academic community and the general public. Chaps.com offers the possibility of purchasing one or more chapters from a vast variety of books in digital format, making it easier, cheaper and faster to access only the information needed.
We realized that, very often, the faculty of any given university recommends several books to be studied during the course, while using only few chapters in each of the books. What follows is the inconvenience of making copies of the required material, and the tiresome work of waiting in long lines at the school’s copy centers. Those who prefer to buy the books face the cost opportunity of using a small portion of what they have bought. Both situations--making copies and buying the books--in a way restrain the accessibility to the use of information, making it more difficult to conduct studies and research, or to prepare classes.
In this way, the academic community or any user can access Chaps.com’s web page, search for a specific subject, select which chapters within a book he or she is interested in purchasing, and then download the material into his/her personal computer.
Yet for the general public interested only in one specific subject, he or she, so far, can’t find any service that would allow them to compose a customized book according to his or her preferences.
Chaps.com plans to capitalize on this opportunity by fulfilling the needs of students and the general public through this innovative service. We are able to electronically deliver chapters of books--or even entire books--direct to the client’s home.
Since there’s no similar service offered in our market, Chaps.com will take advantage by being the first company to acquire the necessary exclusive rights of editors, writers and/or publishing companies, so they can provide the content of our service. By being partners with Chaps.com, the suppliers of content will have the opportunity to increase revenues that otherwise would not exist, since the copies taken at copy centers do not submit royalties to the copyright owner.
We are proposing this new business aiming our strengths on the marketing component, and we are confident that a good and well-structured marketing strategy is fundamental to approach this segment in the best way.
Chaps’ customers initially are related with business, economics and accounting areas, and can be divided into five groups: undergraduate students, graduate students, people who look for updating courses, professionals, and instructors. Since we are in tune with the so-called knowledge society, basically anyone looking for information is a potential customer. However, we will first concentrate our marketing efforts in the academic community, which is a fast-growing segment in our region. Our goal is to have 3,000 purchases in our site in the first year of operation, increasing to 25,000 purchases in year 2, 78,000 in year 3, 243,000 in year 4 and 450,000 in year 5.
To accomplish effectively the company goals, Chaps.com management team, led by M. Hashimoto, Electronic Delivery Process Manager at Citibank, an expert in Information Technology, has assembled a staff of other leading executives in each relevant field of the company. Y. Y. Kim, using his past experience in consumer marketing, will be responsible for all the marketing matters. A. V. Bittar will take the financial responsibilities and decisions. J. W. Pimentel, an experienced engineer, will play an important role as the chief operational officer. A. A. Kubo, a former tax lawyer, will be the legal advisor, specially concerning contracts, copyrights and intellectual property issues. All the team members are MBA students at Fundação Getúlio Vargas, in São Paulo, Brazil, a top business school in Latin America.
Chaps.com will require a capital of US $650,000, requesting venture capital of US $550,000 for administration, overhead, and marketing expenses, besides the founder’s equity of US $100,000. The venture capital will be requested as a long-term loan, divided in three quotas according cash necessities, providing the investor an internal rate of 40% per year. The main financial indicators are shown below:
US$ / Year 1 / Year 2 / Year 3 / Year 4 / Year 5Net Sales / 51,304 / 398,307 / 1,217,986 / 3,460,193 / 7,079,160
Net Profit / (350,058) / (146,417) / 74,466 / 836,978 / 2,093,908
Cash Balance / 167,500 / 22,943 / 67,349 / 18,681 / 911,301
Profit Margin / (682 %) / (37 %) / 6 % / 24 % / 30 %
Chaps.com is a new business ready to be launched, a limited company (Ltda.) that aims to fulfill the needs of those looking for information. Chaps.com believes that will provide it in a very efficient and practical way.
3. Company general profile
The idea of the company has its beginning in the desire to break a current paradigm that restrains the efficiency and value creation in the relationship between information consumers and information makers.
The information consumer can be defined as everyone who searches for any kind of information, and from this large group we selected three main segments: (1) the academic community, such as the faculty, students and researchers, (2) professionals longing for updated information, and (3) the general public who access the current media (e.g. books, magazines, newspapers, Internet).
For the purpose of our business, we have divided the information makers into two main groups: (1) the academic community, and (2) the people who are linked to a publishing company (that have their work published in books, magazines, newspapers, etc.).
We realized that those publishing companies of the industrial era play an important role, since whatever material to be published needs to pass through their hands before they reach the end consumer. Most of the time, the decision of publishing information is based solely in economics terms (in other words, will it be profitable?).
In this way, many of the information makers cannot share their ideas with a larger number of people who would potentially be interested in such thoughts, simply because it is notprofitable enough to be published.
And due to economic and physical limitations, it is difficult to customize information because the publishing companies are not able to sell pieces of information, such as chapters of books or a customized book containing several articles (of magazines and newspapers) or chapters (of books) about a specific subject. The customization is limited by the industrial era restrictions: economy of scale, low target public, high fixed costs of press activities.
Chaps.com wants to offer digital information mainly by the Internet through partnerships with publishing companies and writers (the information makers), allowing search, download and customization of specific products: single chapters of books (instead of entire books), articles from magazines, papers, theses, researches or customized books about a specific issues (recipes with mango, for example).
The kind of service provided by Chaps.com, which is based on Internet access, brings more efficiency and added value in the relationship among the parties: it gives the possibility of buying only the required material instead of purchasing lots of books and magazines, facilitates the search of a specific subject, saves time (libraries and book stores). New opportunities will emerge due to this change of paradigm:
1) Books sold ‘by the piece,’ enabling the digital purchase of chapters from a wide variety of titles.
2) Easy search of articles and papers that can be downloaded and purchased direct from the Chaps.com site.
3) Deep change in the way people can obtain information. In the physical world, people have to take some actions which do not add value: spending time to go to libraries and bookstores, handling many books, purchasing a book when it will be only useful for a few chapters, facing lines in order to copy a couple of pages, etc. Chaps.com allows its consumers to consult our database, to search, select and purchase only the required information. Nothing more will be necessary.
4) Specific or specialized books, theses, papers that do not have enough economy of scale to be published, due to high cost or lack of interest by the publishers (a limitation of the physical world). However, Chaps.com can and will provide all the resources so the author will have his or hers work published through the internet.
4. Product description
Chaps.com will provide availability of information service and its main sources will be from books, essays, articles, thesis published or to be published. The emphasis will be on commercializing these products through electronic delivery, preferably through the Internet. Such information will be stored in a digital format at the company main database server and will be accessed from any Internet station connected to this web site. Some of the product variations are described below:
· Individual chapters – chapters of books can be sold individually. For instance, someone can be interested in getting copies of chapters I, III, VI and XIV of a certain book and the chapters II, V and XXI of a second book. The final product to be delivered electronically or physically to this customer would be a collection of all the chapters extracted from these two books.
· Personalized Kits – Chaps.com will have a special package offered directly to universities’ faculty prior to the beginning of the classes. This package will contain all the articles, essays, chapters of book and all the other materials that will be used by the professor along the course. This personalized material can be easily accessed by the student during the term.
· Theses and dissertations – Each academic work generated within the university by the faculty or the students can be digitally stored into the company database and commercialized through the web site.
· Physical books – Supposing that customers desire to have a traditional paper book, it will also be available for searching and purchasing through the same web site technology.
Chaps.com fully respects all Brazilian laws regarding copyrights. Using our service is a way to not break the law by making unauthorized copies at copy centers. All the material will be distributed by Chaps.com, only under the author’s and/ or the publisher’s permission through a formal contract.
5. Marketing Plan
5.1 Market Segmentation
At first, Chaps.com’s customers will be from the business, economics and accounting areas (applied sciences), and can be divided into five groups.
The first group is undergraduate students who need a reference book and other support materials to complement their studying process. Support materials are mainly chapters of books and magazine articles, as the professors usually recommend. One of the features of this group is that they have more time available to search in libraries for the material needed. This is our most important market segment, with an estimated potential market of 400,000 undergraduate business-related students in Brazil alone.
The second group is the graduate students who have the same needs of the first group but require more intensive research and specialized literature. This group does not have the same free time as the first group, meaning that they have less time available to search for materials in libraries and spend time at the copy center. The use of the Internet allows them to save time: instead of moving into the library, the student can search the material using Chaps.com and have it downloaded in a digital format. This group is estimated to be as large as 5,000 students.
The third group is comprised of people who participate in updating courses (time duration ranging from one to a few months, usually partial time). Most of those people work and are looking for knowledge improvement, basic knowledge in other areas or state-of-the-art information in specific areas. In general, this is the case where the instructors require all the material needed. This group has been estimated to be about 20,000 people.
The fourth group is composed of professionals who are not attending any course, but need specialized information to help in their work assignments. These people will not be regular customers, but will need a more friendly site design to help him find what they need. There is no published data about the size of this group, but we are confident in saying that it is the largest group, although it will not be the source of our most relevant customers in the first 5 years of Chaps.com.
The last group, faculty and researchers, is composed of members who usually have a shorter amount of time to work with, and are continuously under pressure to read a lot of materials. They will use Chaps.com in two ways:
1) As a place to find single chapters and reference materials so they can update a specific topic, write papers, and prepare courses, presentations and support their consulting.
2) As the most convenient way to indicate their program’s reference material to their students. At the same time, the students will have all the readings, avoiding wasting time at the school’s copy center and spending money on a whole book while using only part of it.