Agricultural Consultants Business Plan
O’Connor & Partners LLC will consult to companies that want to produce chemicals and energy from annually renewable feedstocks. We will help our clients attain economic utilization of the major fractions of biomass as well as minor components that can be functionalized into high-value specialty products. The two major components of all forms of biomass are cellulose and hemicellulose, which are long chains of simple sugars.
Many chemicals made today from petroleum were once manufactured from sugar. Several of these are niche chemicals with small markets and high barriers to entry. The others are comprised of commodities whose manufacturing costs are optimized by the economies of scale found in the traditional refineries of the world. In order to compete in today’s marketplace with these petroleum-derived commodity chemicals, it is critical to begin with significantly lower feedstock costs. Under-utilized lignocellulosic biomass feeds have the potential to be much cheaper than petroleum, on a carbon basis. Biomass contains the same sugars which have been demonstrated to work.
There are many products that can only be effectively made from biomass sugars. Industrial biotechnology has developed fermentation organisms which produce high selectivities to specific products, often with preference to one racemic stereoisomer over another (important in, for example, many pharmaceutical compounds). To mimic these feats of biochemistry, traditional feedstocks and processes would be much more expensive, if they were even possible at all. An excellent example of industrial biotechnology is polylactide polymers made from fermenting corn sugars, by Cargill Dow LLC. Industrial biotech has been coined by industry observers as the “third wave of biotechnology.”
O’Connor & Partners LLC recognizes that new ventures in bio-refining require technical excellence grounded in economic realities. We seek to serve as management consultants to those individuals and companies that intend to lead the bio-industrial revolution. The expected customer base includes emerging industrial-biotechnology firms, large existing chemical companies and utilities, and agricultural operations. We will help our clients realize industrial at less cost and/or in less time than they could do alone – with a guarantee of top-quality, professional service. With our assistance our clients will also achieve sustainability from the perspective of the triple bottom lines – economic, environmental, and social responsibilities in all their business activities.
The potential market is enormous. Experts have estimated that bio-refining will grow into an industry ranging from $280 billion/yr to $500 billion/yr by 2013.
O’Connor & Partners LLC will open for business in Minneapolis, Minnesota, starting with the founding partner (Ryan O’Connor), one associate (to be recruited), and one secretary. Figure 1 forecasts sales, gross margin, and net profit for the three years covered in this business plan. Starting with an investment from outside investors, the plan projects a modest profit over the three-year period and a healthy net worth at the end of year 3. At this point the firm should be well-positioned to add consultants to grow the business, or to consider a buy-out from a large consultancy.
O’Connor & Partners will be the leading bio-refining consulting firm in the United States providing expertise in the technical and economic analysis of integrated bio-refining projects and activities. We will provide this service while adhering to our economic, social, and environmental responsibilities for our clients, our industry, and ourselves.
We seek to establish the industry standard for technical and business excellence in the pursuit of visionary bio-refining platforms, according to customer-satisfaction and industry surveys. To accomplish this objective, the following elements are crucial:
- Unique consulting services that are clearly proven.
- Ability to manage confidentiality and intellectual-property issues among competitors.
- Professional relevance (state-of-the-art awareness) and knowledge growth in rapidly expanding industry.
- Demonstrated concern for clients’ well being, leading to repeat business and a good reputation for our firm.
- Retention of our own employees and partners.
1.3 Keys to Success
- Professional quality in all consulting
- Ability to manage confidentiality and intellectual-property issues among competitors
- Professional relevance (state-of-the-art awareness) and knowledge growth in rapidly expanding industry
- Retention of existing clients (repeat business)
O’Connor & Partners LLC is a new consulting venture that is planned to officially open for business on January 1. Headquartered in Minneapolis, MN, USA, there will be external affiliates around the globe. We sell consulting services only in industries and activities associated with the industrial bio-refinery, the integrated business systems that are revolutionizing the production of chemicals and energy from renewable resources.
2.1 Start-up Summary
Total start-up expenses are estimated in the table below. Some of these categories are largely unknown (e.g., insurance) reasonable estimates are made. Other items can be purchased as revenue is obtained and more resources are needed to keep up with the work. The plan calls for some liquid assets at start-up. This fund will pay expenses for the first few months, as well as providing a cash-reserve fund.
2.2 Company Ownership
The company will be organized as a limited-liability company (LLC), which will allow easy changes of ownership in the future, as well as certain tax advantages. Start-up investment is needed. The total valuation of the firm has been estimated to be modest, and a net worth to be realized during year 4 of the operation (according to the plan). As of this writing, 20 equity shares will be offered at $5,000 for 1% ownership each. In this way, 20% of the initial operation will be owned by outside investors. The remaining 80% of the venture is initially owned by the founder, Dr. Ryan O’Connor, but the ownership will ultimately be shared among all future partners (to be recruited as the business grows).
As an option, 70% total return on investment might be paid after three years to the equity investors, whose ownership would be transferred to the firm partners. Thus each initial share would be returned $8,500, or 18% annualized ROI over three years. This plan presents an exit strategy but also offers the long-term upside of the business to any initial investors.
2.3 Company Locations and Facilities
Office space will be rented in the Twin Cities (Minneapolis/St. Paul) of Minnesota. A downtown office location will be advantageous, especially if some of the local clientele are also positioned downtown. The founder will retain a home office as well as one at the central headquarters. This office will help serve clients in the Minnetonka area (western suburbs of Minneapolis), such as Cargill or Cargill Dow LLC.
O’Connor & Partners LLC sells consulting services to help clients at various stages of their own bio-refinery activities. The nature of the work we do is a combination of technical engineering, economic forecasting, and management strategy, all on a strict confidential basis. Our basic hourly rate of $175/hr for partners and $125/hr for associates applies to most of our services. In certain circumstances, we can be compensated with equity in the client’s venture.
3.1 Service Description
The management-consulting services of O’Connor & Partners can be classified as follows:
- Market research and business development.
- Biomass-feedstock supply and demand.
- bio-refinery chemicals, materials, fuels, energy, and other products.
- In competition with petroleum-derived equivalents (e.g., biopolymers, automotive fuels, and electricity).
- Chemicals and materials currently produced only from biomass resources (e.g., animal feed and nutraceuticals).
- Future bio-refinery products such as hydrogen and a wide range of chemicals and materials produced from fermenting biomass sugars.
- Confidential discussions with possible partners and vendors.
- Economic analysis of projects and plans.
- R & D projects.
- Pilot and manufacturing facilities (preliminary and engineered designs).
- Financial assessment (risk-adjusted NPV) of capital-investment options.
- Affiliate Network services.
- Engineering and construction of bio-refineries.
- Industrial and government facilities available for contractual R & D.
- Intellectual-property management and competitive-advantage strategies.
- Search for project funding (network to include potential investors).
- Client education (seminars, training, etc.).
3.1.1 Who Will Buy, and Why?
There are many start-ups, or groups considering starting up, within industrial biotechnology. These organizations are often severely short on resources (time, money, and people), and the pile of activities is always growing. Then, there are companies that have successfully started up and are now looking to grow their businesses or expand into new bio-refineries markets. An example is Cargill Dow LLC, a small stand-alone organization from its parent investors, Cargill and Dow. Finally, several large, global corporations are looking to participate in this emerging industry. As part of an aim for sustainable development, there are initiatives at DuPont, Cargill, BP, and Shell, to name only a few.
The annual sales of these five companies alone (DuPont, Cargill, BP, Shell, and Dow) total close to $500 billion, so clearly large amounts of money are at stake. Cargill is already doing bio-refineries of agricultural crops, but the focus has traditionally been on foods and nutrients for humans and animals. However, public efforts are underway to utilize biomass sources for the production of industrial chemicals (both commodity and specialty). BP and Shell are traditional refiners who understand what the future looks like. Both are actively studying renewable technologies for the production of energy. The vision of economic bio-refineries is not lost on these oil giants.
In general there are countless companies – not just chemical companies – that want either their existing businesses to become more sustainable, or to enter new markets based on the concept of sustainable business systems. Many companies state they want to play the game but don’t know the rules, don’t know how to play, and are not quite sure of the impact on their overall business. O’Connor & Partners will help these companies understand the rules for their particular industry, lead the pack, and make a real difference. bio-refineries promises to make global impacts, not only technologically but also politically as we reduce our dependence on foreign oil. With another war with Iraq looming, oil is a hot topic again. At a minimum, there is economic instability in the markets which use imported petroleum. Refining and upgrading biomass offers a true alternative to petroleum in a variety of proven markets.
3.1.2 How Much Does It Cost?
At the outset of a project, the cost of our services will be outlined. We will bid for the project using an estimated number of hours for project completion. The standard hourly rate is $175/hr for partners and $125/hr for associates, for internal work. Outsourced services (through the Affiliate Network – Section 3.6) will be billed at cost plus 15% (e.g. use of a lawyer charging $175/hr means we charge the client about $200/hr). In some cases clients will seek a fixed-bid contract which will not depend on actual hours spent on the project. Only when we have prior experience which allows us to provide an accurate quotation, will we offer our services.
Travel expenses will be additional to base fees. For hourly-based bids, travel costs will be billed directly to the client. Travel time itself will be billed at normal rates since (1) it is time not billable to other clients, and (2) a large percent of travel time will indeed be spent working.
We recognize that many of the smaller bio-refineries start-ups are often strapped for cash and might be unable to pay our fees, especially for longer projects. Rather than paying us cash, we can become an equity partner (on a confidential basis) in the client’s venture. The terms would be negotiated, but essentially we would be compensated with stock (if publicly traded or privately available) or other equity holdings. For example, if a start-up is selling $1 million in equity shares and hires us for a 10-week project normally billed at $70,000, we would become 7% owner of that company. (Although they still might need most of that investment, in theory we did some of the work that the $1 million was to have paid for.)
This option does pose some risk for us since we lose time and money if the start-up fails, but we would likely gain valuable experience as a consulting company to take to future assignments. Additionally, this pricing option is part of our own investment strategy as a firm and as individual partners. If one of these start-ups takes off and we have equity in it, obviously we stand to gain financially (beyond billable hours).
3.1.3 What is the Service, Exactly?
Our goal is to save our clients time and money by doing a combination of research studies, calculations and simulations, and report writing. We will utilize our proprietary computer model (see Section 3.5), our education and experience, the literature/internet, and the Affiliate Network. Past experience, always utilized in a confidential manner, will be a crucial piece of our value proposition. Presentations, as often as appropriate, will be made to the client team. General communication will be accomplished through teleconferences, face-to-face meetings, e-mail, and fax. Travel will be scheduled as needed for efficient project completion.
Some specific bio-refineries problems we can solve through consulting include:
Insufficiently washed and pre-treated feedstocks can cause numerous processing problems, which we can address before they occur. One example is high ash content, which can cause fast mechanical failure of equipment. The appropriate ash-removal steps need to be employed during pretreatment. Also we can show the client how to capture value from that ash (as a soil nutrient).
Collection of some feedstocks requires farmer buy-in early because farming practices may need to be changed. We can work with the appropriate stakeholders to tell the story to the right people, show them they stand to gain financially, and get the systems in place.
Marketing a product based on environmental advantages alone is not a good strategy, but it is commonly perceived to be the only approach. In almost all cases, products need to meet or exceed the specifications of existing products to be replaced. We will study the existing market conditions and relate those to the client’s product and process potential. For some existing manufacturers, there will be unused plant equipment which needs to be utilized for biomass processing. Or, the reactor design for a pre-treated was poor, but there is no more capital to be deployed to fix it. In both cases we will help the client understand how to make the reactor work to accomplish its objectives. The cost of feedstock is argued to be a key advantage of biomass. Most clients will want an answer to the question, “What is the cost of carbon today (from biomass vs. petroleum vs. coal) and what is it projected to be in the future?” An important aspect of this question is geography, because the low density of biomass translates into high transportation costs. Thus biomass feedstock supply is usually local, while the market demand is global.
3.2 Competitive Comparison
The key reasons that clients will use our services include:
- By removing technical obstacles, O’Connor & Partners will save our clients money, or make them more profitable, compared to doing the work themselves.
- Technical expertise and market knowledge from actually working in the transportation industry (the founder as well as top personnel expected to be recruited).
- We are committed to an in-depth understanding of transportation technologies and economics. The larger management-consulting firms will apply general knowledge and tools gained from a variety of practices, but they will not necessarily have specific transportation expertise. This is our business.
- Strategic vision is not always automatic; we can help a client see the future before their competitor does, and gain essential competitive advantage.
O’Connor & Partners will work to become an all-purpose transportation consulting firm. While obviously it would not be possible for one small firm to do everything, our efficient use of the Affiliate Network means that clients can feel comfortable about hiring O’Connor & Partners for large, integrated, strategic projects.
Because our firm is devoted to commercializing biomass, we consider ourselves part of the transportation industry more than the consulting industry in general. Top management–or technology–consulting outfits, such as McKinsey and A.D. Little, respectively, are not expected to be direct competitors for the first several years. Later, when transportation becomes a full-fledged industry, these firms will perhaps create a transportation practice. At that point, O’Connor & Partners will have the experience and customer base to compete directly with any new entrant. Alternatively, we will have the expertise that these giants will be seeking to acquire by buying out our firm.
Our primary competitors, then, in the first few years are likely to be the clients themselves. They may decide to do the work in-house. Many companies involved in transportation, as with most other emerging industries, are extremely pressed for time and personnel resources, so there should be a driver for outside help. Also, the unique collection of partners’ experiences will hopefully give the client something they could not provide themselves, even if time allowed.
3.3 Sales Literature
A variety of sales literature will be created. A sample brochure can be mailed or e-mailed as a PDF to interested parties. The website of O’Connor & Partners will also be important. We will provide our philosophy and mission statement, along with many links to interesting transportation-industry resources. Rate information will not be posted, instead requiring an inquiry. We will welcome questions and comments by e-mail, which will go to a dedicated e-mail address for this purpose. Finally, and most importantly, jobs will be managed utilizing the website, for efficient exchange of information with the client. Each project will have its own unique and password-protected site, allowing two-way exchange of progress, ideas, calculations, reports, and presentations which are often difficult to send by e-mail.
The key fulfillment and delivery will be provided by the partners and associates of the firm. The real core value is professional expertise, provided by a combination of experience, education, and hard work. The service is mostly provided by directly employing professionals, including the firm’s founding partner full-time. The remainder of the service is supplied through a network of professional affiliates, which will have agreed to such collaboration with O’Connor & Partners. We refer to these allies as our Affiliate Network throughout this plan (more information in Section 3.6). Every project will be led by a partner.
Of course we will use the latest electronic communications tools. Every consultant with O’Connor & Partners will be equipped with a cable-internet connection, dedicated fax line, land line, cell phone, and personal digital assistant (e.g. Palm Pilot) with internet and e-mail capabilities. We will also communicate with the clients through their own dedicated web page, linked through our internet site, as described in Section 3.6 below.
3.5 Proprietary Computer Model
We will build a proprietary computer model (to be trademarked Biofinity™) of the transportation concept, using simulation software. This model will be capable of analyzing multiple feedstocks and multiple product scenarios, and it will be tied directly to operating and capital costs. Using this technology tool, O’Connor & Partners will be able to effectively assess the business potential of various options explored by the client. The founder has significant experience building such models with simulation (and other) software.
The following list highlights specific transportation technical challenges that can be addressed by the Biofinity program, and how the client’s bottom line will be positively impacted:
Most transportation platforms can be fed many feedstocks, depending on local conditions. The software will consider the possibilities of feeding rice straw rather than corn stover or bagasse, for example. Biomass compositions can be entered as part of the overall sensitivity analysis. Depending on geographic location and specific product mix, the net economics of the various feedstock scenarios will be simulated. Biomass compositional variability is a key challenge in a transportation. The feedstock composition (even within a single type of biomass) not only affects optimum processing conditions but also can greatly impair the profitability of the operation when the concentrations of certain components are abnormal. Biofinity will include routines to optimize the entire transportation for varying inputs, specifying whether a purchased feedstock should be rejected for the primary production process and instead burned for energy (or even sent to waste, depending on fuel value which is computed by Biofinity).
The complexity of a full-scale transportation can become enormous. Biofinity will be designed to consider market-based product opportunities, feedstock choices, energy integration, and utility sharing and co-generation, among other features. Often, a bio-refiner who focuses on a single feedstock and single product will conclude that the economics are poor. However, integrated strategies that take advantage of complex networks of feeds, products, and energy, are those that can offer much higher returns on capital invested. Contrary to simple calculations, these simulations require feedback and recycle loops which cannot easily be performed without a computer program such as Biofinity. In addition to these specific examples, the Biofinity program will be able to help clients with their environmental life-cycle inventory assessment, which requires detailed inputs and outputs of raw materials, electricity, and gas. Indicators such as total CO2 emissions or fossil-fuel usage will be calculated, assisting the client’s sustainability efforts.
3.6 Future Services
Every business is an evolving one. As we work with the industry, we might uncover issues which we did not intend to address as a consulting company but for which we can add value. Over time, some of our core activities could change, as we build reputation and experience in a particular area. Such activities could emanate from biotechnology, for instance, since genetic engineering and biocatalyst development are essential tools in the fermentation of sugars from biomass.
If the industry really grows to ~$300 billion/yr in 2013 (see Section 4.4), then in order to keep up it would seem that O’Connor & Partners needs to also grow by a few orders of magnitude. Thus a 3-person firm in 2004 would become several hundred employees in 2013, if we actually tracked industry growth. This is an exciting possibility to grow up with a new industry and emerge as the leading bio-refinery consulting company. Additional offices will be added as needed, eventually globally.
3.7 Affiliate Network
The Affiliate Network will be very important for the success of O’Connor & Partners. We have access to and experience with top engineering and construction companies that can build a biomass plant, industrial and government laboratories and facilities, non-government organizations, intellectual-property lawyers, and potential investors in bio-refineries. In addition, the network includes several industry experts with up to 60 years of individual experience that is directly relevant to the emerging bio-refining industry. Some of the potential members of the network include the National Renewable Energy Lab, The Rocky Mountain Institute, and Jim Hettenhaus. There are others that cannot be disclosed publicly at this time, because of the founder’s obligations to Cargill Dow LLC. A margin of 15% will usually be added to all work outsourced or sub-contracted by O’Connor & Partners. One exception is for engineering and construction, for which only initial work requiring our cooperation has the 15% surcharge.
Market Analysis Summary
O’Connor & Partners will focus on consulting to existing chemical manufacturers seeking to process biomass to energy and chemicals, as well as new organizations that intend to develop and/or build a bio-refinery. For the most part, the existing manufacturers are large, global chemical corporations. The newer entities are typically smaller and embrace an entrepreneurial spirit, often matching our own philosophies. We will work with any organization that hopes to accelerate commercialization of bio-refining technologies.
4.1 Market Segmentation
These are corporations that produce and/or sell commodity or specialty chemicals and fuels, polymers, and other materials. They are typically large, with annual sales ranging from several hundred million to several hundred billion dollars. Just a few examples include DuPont, GE, Dow, 3M, Shell, BP, and ExxonMobil.
Examples of recent start-ups include Arkenol (2003), PureVision (2003), Alltech (2000), and Cargill Dow LLC (formation in 1997; operational full-scale bio-refinery in 2002). This category is meant to include all start-ups over the plan, not just those that actually start up in the year indicated. Thus a 2004 start-up is included in the 2005 and 2006 years. The category is for companies who do not currently have any chemical operations.
This sector primarily covers feedstock collection (farming, transportation, and storage), which is an essential, but largely independent, component of bio-refining. Also this category includes farmer cooperatives that in the Midwest produce ethanol from corn (even though those could be also classified as small bio-refineries).
Often linked to chemical operations, utility companies define a unique sector due to the large, separate markets for electricity and power. Bio-refineries have the capability for generation of electricity through direct combustion or biomass gasification. Also the future “hydrogen economy” that is promised could be well-served by bio-refineries, which can produce clean H2 through partial oxidation and steam reforming of biomass. Or, ethanol (one of the most-abundant bio-refinery products today) can serve as a hydrogen reservoir for on-board H2 production on a fuel-cell vehicle. (Hydrogen as a fuel for fuel cells could also belong in the chemical-manufacturing category, but the common vision for H2 is similar to electricity supply networks and thus can be thought of as a utility.)
Reserved for businesses which don’t fall into an obvious sector but which nevertheless have bio-refinery aspirations.
The figures in the Market Analysis table of potential customer base for bio-refining consulting services are only meant to be estimates and are not based on research. Certainly this table does not tell the entire story. No attempt is made to estimate the market value of the sectors, but they span orders of magnitude in revenue.
Aa pie chart shows the relative number of potential clients in each sector.
The growth estimates are minimal (3%) for chemical manufacturing and utilities, which is consistent with recent trends. However, even if the number of these companies does not grow much, their investment in industrial biotechnology might increase in the future, thereby representing increased real potential for O’Connor & Partners. For start-ups a more-aggressive assumption (50%) is made since it is a new industry.
4.1.1 Chemical Manufacturing
These companies already use consultants and typically understand the value proposition of consulting (whether IT, engineering, or accounting). What they need to be sold on is the concept of the bio-refinery, how it fits into their existing businesses and can define new ones, and what the impacts are on long-term corporate goals (such as reduced dependence on feedstock imports). The issue here is creating need awareness. In some important cases these companies have publicly stated they are going down this path. Then their need is the time/people to devote to the necessary research projects to move faster down the path, and to confirm it is the right path for them. They understand that any bio-refinery project needs to respect economic realities, as determined by market-growth opportunities, the pool of capital available for projects, and executive strategic decisions. These chemical manufacturers will likely require very specific technical input from a firm such as O’Connor & Partners.
4.1.2 Biorefinery Start-ups
These companies are on board with the potential of the bio-refinery, because they (and/or their investors) have justified their starting up. They need consulting to understand how specific process options lead to different potential product distribution. Sometimes a start-up is heavy on personnel with science and engineering backgrounds who may not have appropriate business training. Other start-ups might enjoy extensive financial and management expertise, even with previous new ventures, but lack key technical experience. Even when the start-up team seems to be in balance, they often still need help managing complex projects initially.
An agricultural venture team might be heavy on farmers and others who have immense practical experience but do not always have the necessary technical or management expertise in bio-refinery. It is quite possible that this is the sector in which O’Connor & Partners can provide the highest incremental benefit. The media has recently reported that Minnesota farmer groups processing corn into ethanol suffer from inadequate technical knowledge to operate at high efficiencies. As a hypothetical example, consider a Chinese group that invented a novel way to collect rice straw in China, but they are unable to take advantage of the opportunities offered by the new industry to sell into the bio-refinery-feedstock market, in which rice straw already competes. With proper consulting, they can work with partners to move thousands of tons of rice straw daily to bio-refineries all over the world. Or, technical consulting can show them how they, too, can take part in bio-refinery rice straw to compete with, say, the furfural market (which is currently dominated by corn-cob processing in China).
Utility companies need to view bio-refining from an historical perspective of the traditional oil refinery and the chemical industry. For many reasons utilities are often across the fence from these operations, and the same benefits apply to a bio-refinery. Steam, electricity, and power needs could be supplied to a bio-refinery in the traditional sense (largely by processing coal, natural gas, or nuclear fuel), in which case the need for our consulting might be small. However, utility companies that want to utilize biomass feedstocks, to generate steam, electricity, or hydrogen, will benefit from our consulting expertise.
4.2 Target Market Segment Strategy
In terms of strategy, it is hypothesized that the chemical manufacturers and utilities probably offer more-immediate business opportunities for us than the other sectors, and thus targeting them early makes sense. These large corporations might look to us as relatively affordable, with respect to their overall budgets and business goals. On the other hand, chemical companies and utilities might have existing relationships with other firms and be more willing to use them even if bio-refining is outside the expertise of those consultancies.
The small bio-refinery start-ups are going to shape the industry, so we want to work with them. Their excitement and vision match our own aspirations. However, because they are usually cash-strapped, they might not be so willing to pay large fees even if they see the value of the work. Here our equity-pricing option comes into play. There will be similar opportunities in the agricultural sector, especially with cooperatives having dispersed ownership structures.
4.3 Market Trends
There are many market trends which are speeding up the emergence of the bio-refining industry. Key concepts are sustainability and the “triple bottom line” – paying attention to not only the economic but also the environmental and social aspects in all business activities.
Most companies, organizations, and individuals would probably characterize the perceived benefits of bio-refineries using at least one of the following:
- To develop chemicals, transportation and other fuels, and energy from renewable sources.
- To increase the feedstock independence of the United States (for fuels and chemicals).
- To provide favorable effects on conservation, public health, and the environment.
- To diversify markets for raw agricultural and forestry products.
- To create jobs and enhance the economic development of the rural economy.
These five points are closely linked to the concepts of sustainability and the triple bottom line. For long-term sustainability, using renewable resources is the only choice, since fossil fuels are essentially never replenished. As the cost of petroleum rises and that of biomass falls, biomass feedstocks can be justified on purely economic terms. Feedstock costs are a key part of any chemical operation; Dow Chemical’s losses during 2001 and 2002 have been attributed largely to high feedstock costs. Many of Dow’s products could be produced from biomass with proper technology (and yes, Dow would be pursued as a possible client).
In a 1978 article published in Science, DuPont provided a review of over 250 chemicals that are manufactured today from petroleum and were once manufactured from sugar. Many of these are niche chemicals with small markets and high barriers to entry. The others are comprised of commodities whose manufacturing costs are optimized by the economies of scale found in the mega-refineries of the world. In order to compete in today’s marketplace with these petroleum-derived commodity chemicals, it is critical to begin with significantly lower feedstock costs. Biomass-sugar feedstocks, if the economics are attractive, would work because these same compounds have previously been derived from sugar fermentation or thermal/enzymatic conversion.
There are many products that can only be effectively made from biomass. Industrial biotechnology has developed fermentation organisms which produce high selectivities to specific products, often with preference to one racemic stereoisomer over another (important in medicines and nutrients). Traditional feedstocks and processes would be much more expensive to mimic these feats of biochemistry, if they were even possible at all. Therefore, new markets open up for development. An excellent example of the enabling nature of industrial biotechnology is with polylactide polymers made from fermenting corn sugars, by Cargill Dow LLC.
4.4 Market Growth
The February 3, 2003 Chemical & Engineering News magazine described a January 2003 conference called “The Third Wave in Biotechnology.” Bio-refining has been coined by industry observers as the “third wave of biotechnology” after food and pharmaceutical biotechnology. Keynote speaker Rolf Bachmann, a consultant with McKinsey & Co., said a new report from his firm estimates that by 2010, biotechnology will impact about 20% of the worldwide chemical market – a $280 billion-a-year slice. “Momentum is building in the sector. Biocatalysts are becoming more stable, yields are improving, and public pressure is growing for industry to develop safe, environmentally friendly, and sustainable products.” Jean-Jacques Bienaime, new CEO of Genencor International, says “There is lots of fun in health care, but for the next 20 years, in terms of value creation, it will be more exciting in industrial biotechnology.”
The article gets even more to the point of O’Connor & Partners. Many speakers emphasized that, in most cases, industrial biotechnology is limited by the size and resources of companies doing the research. Development of improved processes will play an important part in propelling biotech into the traditional chemical industry, according to Larry Drumm, V.P. of business development for the Michigan Biotechnology Institute. Drumm added that long-term investment is increasingly going to the entrepreneurial companies in biotechnology. “Chemical companies will need to form partnerships with these companies or risk having to become low-cost producers of traditional materials,” he said.
In terms of market sectors, the growth to $280 billion/yr would be occurring mostly in a combination of Bio-refinery start-ups, chemical manufacturing, and utilities.
4.5 Competition and Buying Patterns
Why would someone choose another consulting company over us?
- Previous experience with another consulting firm.
- Our rates perceived to be too high.
- They don’t see the need to hire any consultants.
- They do not think we have appropriate experience to add value to their project(s).
In aggregate, the viability of consulting firms tracks overall economic conditions or specific industries, depending on the targeted clients. However, the success of individual firms varies widely, regardless of how an industry is doing. Word of mouth is an important device, and repeat business is crucial. Reputation is immensely important, and reputation building in fact already started with the past experiences of anyone associated with O’Connor & Partners.
4.6 Main Competitors
Well-known management-consulting firms
Example: McKinsey, Bain, BCG, etc.
Strengths: International locations managed by partners with a high level of 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 does not substitute for specific (does not) expertise; fees are extremely high, and work is generally done by very junior-level consultants even though sold by high-level partners; focus on strategy but less emphasis on implementation, which is where many does not start-ups need the most help.
Well-known technology-consulting firms
Example: A.D. Little
Strengths: International offices; specific technical knowledge and good relationships with potential client companies.
Weaknesses: Technical knowledge of the chemical and refining industries, but not necessarily the does not industries; reduced emphasis on business solutions.
Niche biotechnology consultants
Example: CEA, Inc.
Strengths: These firms have actual experience consulting to organizations that seek to commercialize industrial applications of biotechnology; they often have extensive network relationships (some of these would be good candidates for our Affiliate Network).
Weaknesses: These firms are often one-man shows which might not leverage the collective experience of a larger team of consultants; sometimes they do not have a well-developed mission and are somewhat academic in nature.
Example: Rocky Mountain Institute
Strengths: Modest fees for work performed; they have experience consulting in industrial biotechnology.
Weaknesses: Although these companies could compete for some of the business we are after, they often cannot offer the same level of does not understanding; also they are not chartered to grow as a business or be a stakeholder in the does not industry itself, which means they could view it purely as a one-time advising relationship.
Example: Companies doing the work in-house
Strengths: No incremental cost except travel; also, the general work is done by the people who are entirely responsible, and the planning is done by those who will implement.
Weaknesses: Most managers are severely overburdened already, unable to find resources in time and people to apply to opportunities; also, there is a lot of additional risk in market development done in-house from the ground up.
Auditing and Consulting Business Plan
Use this sample business plan to understand what should be included when starting a business that offers auditing and consulting.
Auditing and Consulting Business Plan
Artemide Auditing & Consulting AG (Artemide AC) is in the process of being formed as an ongoing sole proprietorship owned and operated by Sandor Artemide AC. The company is a spinoff of Daten Riffwald-Ennetmoos AG. Between the owners of Daten Riffwald-Ennetmoos and Artemide AC there will be 25% cross-participation. This plan is written as a guide for continuing and managing the business under the new company, and will also serve as the basis for marketing proposals. The two objectives of Artemide AC are to generate a profit and to grow at a challenging and manageable rate.
The mission of Artemide AC is to provide fast and reliable services in auditing and consulting to small and medium businesses (SMB), individuals, and other organizations.
The keys to success for Artemide AC are: visibility to generate new business leads, networking with other professionals, responsiveness, and quality.
The initial primary service offered will be auditing, although specialized fields will be considered in future growth.
The overall objective is to focus the activities towards the specialized services (analyses, investigations, startups, etc.) and to become a leader in this niche in the Luzern area. The company projects growth to be ~10% of sales in the next three years.
The most important keys to success for Artemide AC are developing visibility to generate new business leads, strong concentration on relationships with clients, and a high level of quality in our services.
The cooperation between Daten Riffwald-Ennetmoos and Artemide AC is flexible–with the objective to change rapidly if the market demands.
The sole proprietorship company “Sandor Artemide dipl. Wirtschaftsprüfer” was founded on 8 March 1996. In the first 10-month period, the company generated sales of $50,000.
Artemide AC is established in a separate office from Daten Riffwald-Ennetmoos AG, in Luzern. Secretary and telephone response is assumed by Daten Riffwald-Ennetmoos.
There are four major classes of competition in the actual fiduciary business in Switzerland. These include individual proprietors and small fiduciary and accounting offices and medium fiduciary offices with between 6 and 25 employees, these offices are available for general financial and tax consulting. There are also large auditing and consulting companies. These companies have several hundred employees. They tend to operate more in the lucrative consulting business. Banks, Assurances and other financial consultants are also new competitors in this field. Banks are now active in start-up consulting, corporate finance, mergers and acquisitions, and others.
Technology is, of course, very important to the success of Artemide AC. It is imperative that the company stay up-to-date on technological developments and it will be important to devote a reasonable portion of each year’s revenues toward upgrading the equipment and software used in normal operations.
Artemide AC will adopt a focused market strategy. Logical segmentation breaks the market down into the following: Individuals, Investors, Small Businesses, Medium Businesses, Large Businesses, and Authorities and Public Organizations. For our further development, we consider Individual persons and Investors plus Small and Medium Businesses to be crucial.
For our business, we do not have main competitors. We have a lot of widely-sized competitors in a vast market of services.This market environment gives ample opportunity for Artemide AC to create and expand a niche in the chosen market fields. Finally, worth noting is the growth trend for the general market, estimated between 5% and 10%, annually.
There are three different major opportunities (needs) in the fiduciary business over the next years:
- Bookkeeping and other services related to the operative financial management (payroll, cost-accounting, accounting for pension funds, etc.).
- Consulting and special mandates such as financial planning, business evaluation, merger and acquisition valuation, special audits, etc.
- Legal Auditing (incl. IAS and other standards) as an independent and responsible institution.
In addition, the company sees three primary market trends which seem to be most important in our business.
- Rapid growth in the complexity of business that requires rapid adaptation in the strategy and structures of companies.
- More litigation due to higher percentages of unsuccessful ventures.
- The growth of outsourced financial consulting.
All of this provides continuing opportunities for a dynamic company such as Artemide AC.
We believe our business is in a grand change. The competitors must be generalists and specialists at the same time. For small and medium fiduciary businesses, a focus of one primary segment of business is necessary. For example, if the “core” business is accounting, the other fiduciary businesses like tax, auditing, consulting must be reduced to a general level. In the core business, the company must be current with the services, while having the capacity to innovate (like new accounting services related to the Internet).
Artemide AC’s competitive edge is in the well-established reputation of Sandor Artemide who has been in the consulting business for over a decade, and the company’s ability to focus in this niche market.
The company’s sales strategy will be based on building long-term customer relationships, which will result in repeat sales. The company estimates that revenues will be approximately $232,000 by Year 3, yielding profits. The company will manage its assets and create profits with no debt financing. It does not anticipate any cash flow problems. Sandor Artemide, the majority owner of Artemide AC, will assume strategic management functions. Brigitte Artemide will be in charge of market research and customer support. Since no major increases in personnel are expected in the next three years, Mr. Artemide will retain his managerial functions throughout these years.
Artemide AC’s mission is simple and straightforward:
- Purpose – Artemide AC exists to provide complete, reliable and high quality services to SMBs, individuals, lawyers, and authorities. Services must give solutions and results!
- Vision – By providing innovative services, Artemide AC generates a name in Luzern and the surrounding area.
1.2 Keys to Success
The keys to success for Artemide AC are:
- Developing visibility to generate new business leads.
- Relationships with clients (developing loyal, respectful, and intensive contact with both clients and potential clients).
- Marketing/strategy and networking with other professionals.
- Collaboration with Daten Riffwald-Ennetmoos AG for generally fiduciary services and IT services.
- Responsiveness to clients (fast response time for special problems).
- Quality (especially in reporting information).
- Excellence in fulfilling the promise.
- Openness: languages and willpower for creating interregional and international contacts.
The objectives of this business plan are:
- To provide a written guide for managing this business; a strategic framework for developing a comprehensive tactical marketing philosophy.
- This plan is not intended to obtain financing, it is purely for internal improvements.
- The scope of this plan is to provide detailed monthly projections for the current plan year, as well as yearly summaries for the following two years.
The objectives of Artemide Auditing & Consulting are:
- The overall objective is to focus the activities towards the specialized services (analyses, investigations, startups, etc.) and to become a leader in this niche in the Luzern area.
- Cash flow – To generate sufficient cash flow to finance future growth and development, and to provide the resources needed to achieve the other objectives of the company and its owners.
- Growth – To expand the business at a rate that is both challenging and manageable, serving the market with innovation and adaptability. (Growth projected at 10% of sales in the next three years.)
Artemide AC will be an ongoing company from the sole proprietorship company Sandor Artemide dipl. Wirtschaftsprüfer with the following characteristics:
- The goal will be to continue the activities on a larger personal and organizational basis, still with no debt financing.
- Artemide AC will assume operations of one of the Daten Riffwald-Ennetmoos AG’s divisions.
- Between the owners of Daten Riffwald-Ennetmoos and Artemide AC there will be a 25% cross-participation.
- The cooperation between Daten Riffwald-Ennetmoos and Artemide AC is flexible–with the objective to change rapidly if the market demands.
2.1 Company History
The sole proprietorship company “Sandor Artemide dipl. Wirtschaftsprüfer” was founded 8 March 1996. In the first 10-month period, the company generated sales of $50,000.
In the time of general recession, between 1996 and 2000, with a concentrated basis work, the owner created and assured his independent existence. The name Artemide was made known, and he has established a good professional reputation in Luzern.
Before starting his own business, Sandor Artemide acquired extensive professional experience as listed below:
- 5 years ATAG Graff & Altern in Geneva, Switzerland.
- 3 years Ziegfeld in Bern, Switzerland.
- 4 years KUGN in Bienne, Switzerland.
2.2 Company Ownership
Artemide Auditing & Consulting AG will be incorporated in the city of Luzern by Sandor Artemide, who will be the majority owner. Twenty-five percent of the company will be owned by Daten Riffwald-Ennetmoos AG, the parent company.
2.3 Company Locations and Facilities
Artemide AC is established in a separate office from Daten Riffwald-Ennetmoos AG, in Luzern. Secretary and telephone response is assumed by Daten Riffwald-Ennetmoos. In the same building, on the first level, is established ATO Geistesblitz (sale and consulting of SMB software sage-KHK).
The structure is well established and satisfies the needs of both Daten Riffwald-Ennetmoos and Artemide AC. Both companies intend to optimize the office location in the future.
Artemide AC will be the number one company in the Luzern area for specialized and investigative services in the modern business environment. Artemide AC also offers both classic, auditing, and general consulting services.
Artemide AC will offer three main services – Auditing, Consulting, and Investigation.
There appear to be four main classes of competition, as indicated under section 3.2.
Fulfillment of services will be provided in the future by Sandor Artemide and other equally qualified professionals.
It’s important to be current with the classic and special business software.
Detailed descriptions of these points are found in the sections below.
3.1 Service Description
Artemide Auditing & Consulting AG offers three main services:
- Auditing – Financial data must be checked and confirmed, we consider this normal, as a service related to auditing. Most of these services are legal audits in the sense of Swiss company law. A Legal Audit is the most comprehensive assessment of the presentation of financial data. By contrast, a Review is generally prepared for the assurance of the management and as a minimum requirement of financial institutions for the propose of extending credit. Finally an analysis is limited on the plausibility and the ratios. An Analysis is normally based on audited or reviewed financial statements. An essential part of all audit activities is understanding the business environment in which a company operates and to evaluate the risks of financial losses. In fact it’s necessary to check past financial statements, but the key for a modern audit is to have time to move from an accounting approach to a planning approach–from present to future.
- Consulting – Includes business planning, business evaluation, merger and acquisition, start-up planning, restructuring, and business-succession planning, etc.
- Investigation – Our auditing and business expertise provides us with the ability to perform analysis, specialized audits, and valuation of businesses in business disputes, fraud, or other cases of incertitude and disputes.
3.2 Competitive Comparison
There seems to be four major classes of competition in the actual fiduciary business in Switzerland:
- Individual proprietors and small fiduciary and accounting offices. The primary business of these competitors is accounting and tax compliance (for individuals and companies). This offices normally employ between 1 and 5 people. These offices deal in a large spectrum on a general level, but without specialization. These offices are often members of the STV.
- Medium fiduciary offices with between 6 and 25 or more employees. These offices are also dealing in a large and general spectrum. If there are several partners–with different formation and specialties–these offices are available for general financial and tax consulting. This offices are member of the STV or/and the TK.
- Large auditing and consulting companies. These companies have several hundred employees. They tend to operate more in the lucrative consulting business. Public companies are normally audited by these companies. Large companies are normally not interested in dealing with small and medium business. All large companies have an international network.
- Banks, Assurances and other Financial Consultants are new competitors. Financial services are “in.” Banks are active in start-up consulting, corporate finance, mergers and acquisitions, and others.
The fulfillment of services was provided in the past by the owner himself. The ultimate delivery was the owner’s expertise and problem solving capability, coupled with an open mind and ease of communication. The end result is an established trust with complete customer confidence and satisfaction.
In the future, the clients must also accept the work of other qualified personnel–it is necessary to transfer and expand the established personal goodwill into company goodwill. This will only be possible with qualified and motivated employees.
Technology is, of course, very important to the success of Artemide Auditing & Cconsulting. It is imperative that the company stay up-to-date on the technological developments in the classic business software like MS-Office, etc. as well as in the special software and tools for auditing, financial planning, business planning, etc.
In addition, it will be important to devote a reasonable portion of each year’s revenues toward upgrading the equipment and software used by Artemide AC in its normal operations.
Market Analysis Summary
Artemide Auditing & Consulting AG will adopt a focused market strategy.
- Logical segmentation breaks the market down into the following: Individuals, Investors, Small Businesses, Medium Businesses, Large Businesses, and Authorities and Public Organizations. Descriptions are provided below.
- The largest and most logical target markets for Artemide AC at the present are small and medium businesses. In a new “Financial Industry” Individuals and Investors become an important market segment.
- For our business, we do not have main competitors. We have a lot of widely-sized competitors in a vast market of services. This market environment gives ample opportunity for Artemide AC to create and expand a niche in the chosen market fields.
- Finally, worth noting is the growth trend for the general market, estimated between 5% and 10%, annually.
4.1 Target Market Segment Strategy
For our further development, we consider the following market segments to be very important:
- Individual persons and Investors.
- Small and Medium Businesses.
Artemide AC will focus its marketing strategy primarily on these market segments.
4.1.1 Market Needs
There are three different major opportunities (needs) in the fiduciary business over the next years
- Bookkeeping and other services related to the operative financial management (payroll, cost-accounting, accounting for pension funds, etc.).
- Consulting and special mandates.
- Merger & Acquisition
- Business Succession-Planning
- Coaching in Financial-Managing
- Special Audits, Reviews
- Investigation, Forensic Services
- Legal Auditing (incl. IAS and other standards) as an independent and responsible institution.
We think that the need for consulting and other specialized fields has a strong growth potential.
4.1.2 Market Trends
Three primary market trends seem to be most important in our business:
- Trend 1- (most important) Rapid growth in complexity of business in an ever-changing market and competitive environment needs continuous and rapid adaptation in both strategy and structures of companies.
- Trend 2- (moderately important) In the future there will be a percentage of unsuccessful ventures resulting in more litigation, which, in turn, will emphasize the need for specialized audits, investigation, restructuring, etc.
- Trend 3- (least important) Predicted continued growth in consulting because companies will be unwilling to pay fixed costs of salaries, choosing instead to treat specialized financial knowledge and needs as variable costs from external sources.
Economically it is more expedient to acquire specialized services from a consulting firm that has its own specialized employees.
4.1.3 Market Growth
As noted in the previous section, several factors are predicted to continue well into the next decade, not the least of which we estimate the annual market growth rate between 5% and 10%.
4.2 Service Business Analysis
The fiduciary and consulting business for the local area is already well established, yet still allows ample opportunity for us. This is supported by the following points:
- Already in existence are a large number of firms – we think that most of the small and medium firms are operating in a limited spectrum of traditional fiduciary services (accounting and tax) and they do not have enough knowledge and/or time for entering the field of specialized services – so we have new participants like banks, assurances, lawyers, and others entering the market.
- Customers in the fiduciary business tend to be loyal, relying on the same consultant for future needs once a relationship has been established – this fact requires establishing a good and intensive personal relationship with client. This, in the large, “big 6,” firms, is often not realizable because of staff turn over and inaccessibility of personnel.
- The globalization of markets will increase the demands for expansion of new services related to our business.
We believe our business is in a in a period of grand change. The competitors must be generalists and specialists at the same time. For small and medium fiduciary businesses, a focus of one primary segment of business is necessary. For example, if the “core” business is accounting, the other fiduciary businesses like tax, auditing, consulting must be reduced to a general level. In the core business, the company must be current with the services, while having the capacity to innovate (like new accounting services related to the Internet).
For our business, we do not have main competitors: We have many competitors in diversified services. More important than the competitors, is the need to get established in the right market and to develop this market with a strong and flexible strategy.
4.2.1 Competition and Buying Patterns
Competition in the general field of business consulting in the Luzern area is quite intense. Although numerous established companies offer a variety of services to different customer segments, Artemide Auditing & Consulting AG considers competition in our focus market niche of small and medium businesses to be modest. Customers in this segment strongly rely on the consultant’s professional qualifications and the ability to come up with viable solutions in a time- and cost-effective manner.
Consulting Seminars Sample Business Plan
If starting a business that offers consulting seminars appeals to you then this sample business plan will provide you with all of the right information.
Consulting Seminars Business Plan
Seminars is a focused seminar company that offers a powerful combination of seminars along with the software to make them useful. It is being founded in Eugene, OR. It will offer business plan seminars and business plan software together.
Seminars in business planning and related subject areas offer their participants an accelerated learning environment including both tools and the know-how to use them. This is a focused educational experience that short-cuts normal business schools with the fundamental knowledge required, in a practical setting. The business provides a comfortable living for its owners, fair compensation to employees, and a creative, healthy work environment.
1.2 Keys to Success
- Repeat business with corporate customers.
- Seminar-oriented sales and marketing to generate people in the seats.
- Leveraging on sales and marketing alliances.
- Achieve cash flow self sufficiency by the end of the first year.
- Repay debt from original financing by the end of the second year.
- Provide an income for founder-owner with income growth possibilities.
- Sales of $200K in the first year.
- Sales of more than $500K by the third year.
Seminars is a focused seminar company that offers a powerful combination of seminars along with the software to make them useful. This company is about realizing the potential of its founder, John Doe, to develop his skills and knowledge into a viable business.
2.1 Start-up Summary
Start-up costs and initial financing are shown on the following table. John Doe will be investing $25,000 of savings and guaranteeing a loan for another $30,000 with personal assets. The Web development vendor, Designato, has agreed to develop the website for $10,000 to be paid in a year’s time. That will go on the books as an interest-free loan.
2.2 Company Locations and Facilities
Seminars will be located in Eugene, OR. Eugene is not an ideal location for a seminar business, because it is not within any major market; but local costs are lower than average, and it is striking distance from Seattle, San Francisco, Los Angeles, and of course Portland, OR. The main consideration is that the founder lives in Eugene, and this business is for his benefit.
2.3 Company Ownership
At its initial stages, Seminars is a sole proprietorship owned by John Doe, founder and president. It will be registered with the county as a fictitious business name. We will move up to incorporate as recommended by our attorney later, based on growth of the business and conditions as they arise.
The founder likes public speaking, and particularly likes his hands-on seminar-and-software combinations that develop business planning by providing not just the know-how, but the tools as well, to help people in business plan better.
He’s done a lot of it. He’s given full-day business planning seminars in the U.S., Mexico, Japan, Thailand, Singapore, Hong Kong, Argentina, Chile, Colombia, Venezuela, and Puerto Rico. He’s also done them at SBDC sites in four states, and at business schools including University of Oregon, Harvard, and UC Berkeley.
We won’t use seminars to sell software. We hate the use of seminars as thinly-disguised sales pitches. Instead, we insist on bundling the software into the seminar so we can focus on the real task at hand, the tools provided, and how to get the most out of them. If we don’t have time for the full hands-on treatment, or the event calls for a more general discussion of business planning, I’ll still take the date but the discussion will be more general. We won’t include product details or a sales pitch.
We can’t teach business planning in a one-day seminar. We can, however, achieve basic familiarity with the process and the tools. We can also break down the fear. Sometimes the hardest thing about a business plan is getting started. As participants walk out of one of these sessions, they walk out armed with not just the desire to follow up and make it work for their business, but also the tools to make it happen. The software used in these seminars is very high quality and professional business and marketing planning software, each the market leader in its category: Business Plan Pro, Marketing Plan Pro, and Web Strategy Pro.
3.1 Service Description
We’ve done speaking and seminars on developing a business plan in more than a dozen countries, as well as all over the United States. I’ve spent more than 20 years developing business plans, writing about business plans, and developing software to help people develop business plans.
As co-authors of the book on Marketing Plans (On Target) we can take a group through the process with emphasis on real-world practical planning, with implementation built in.
How to start your own business, business start-ups in general, managing the start-up company, the process of developing and financing a new business.
Developing a Web strategy
John Doe has been involved in a very successful Web business, with complete download store, hundreds of affiliates, revenues and profits.
3.2 Competitive Comparison
Business plan seminars run from free seminars intended to sell products or services to high-end seminars sponsored by the American Management Association and similar organizations. We don’t feel that the market is well covered. For a broader view of competition, we look at both other seminars and other competing offerings of similar tools and know-how:
- Magazine articles.
- Classes in local junior colleges, night school, business schools.
- Stand-alone software.
- Low-end, often free entrepreneurial seminars. Some are offered by Small Business Development Centers (SBDCs) for little or no money.
- Professional seminars for $100 or more.
3.3 Sales Literature
Our main sales literature is the website at www.[omitted].com. Sales literature is obsolete for our purposes, we use the website to explain and back up.
Seminars presentations will only be given by true experts, either John Doe himself or substitutes with proven track record, academic background, and practical business experience. They must be good speakers and good seminar leaders. We cannot afford to have anything but the best.
Seminars should always be delivered with projection of presentation materials through a projector. Seminars more than three hours should always be delivered with at least one computer per every three participants, so they can follow along with the software. We cannot afford to compromise quality with second-rate delivery. Always the best equipment, always well prepared, well rested, and well delivered. This is vital.
Laptop and projection are absolutely essential. We’ll upgrade the technology as better becomes available. For now at least that’s enough to guarantee a minimum level.
3.6 Future Services
We will remain aware of new technologies that might lead to new services, such as the online seminar or video/CD seminar, that can be packaged and made available to our clients.
Market Analysis Summary
There are several separate markets for this kind of seminar:
- Corporations with interest in improving the planning of groups or individuals either inside the corporation or related to the corporation. The most obvious are the larger corporations that market through separate channel entities, such as distributors selling to dealers, manufacturers selling through dealers.
- Owners and managers of smaller- or intermediate-sized businesses.
- Individuals looking to either start their own businesses or improve their business planning skills and knowledge.
4.1 Target Market Segment Strategy
- For the corporate market we need to focus on specific companies with specific opportunities. They should all be companies that work with independent channel points, because these are the most likely buyers. Channel development or channel marketing is the main job area for the first push.
- For small and medium businesses we need to focus on organizations that can lever our market offering: the American Management Association, for example, the AICPA, trade associations and industry associations, perhaps some magazine publishers if they survive the 2001 shakeout.
- For individuals we need to lever off organizations that cater to individuals looking to start up their own businesses: that might include SBDCs and publications, websites such as www.bplans.com, and others.
4.1.1 Market Trends
It’s hard to find businesses dedicated to developing this kind of seminar. In general, seminars are an additional revenue generator in businesses or organizations that have other major objectives. For example, seminars are developed and offered by SBDCs, the AMA, chambers of commerce. As a result, market trends are unclear. Has the development of software affected this market? We’re not sure. Larger well-organized seminar businesses have not developed.
4.1.2 Market Growth
We have no indication of market growth in this pulverized and diffuse market. No statistics are available. What we do know is that there is growth potential, and plenty of potential market.
4.1.3 Market Needs
The underlying need is accelerated learning. Developing business plans isn’t a skill people normally include in standard curricula for standard education, it is a skill considered ad-hoc, a specialized skill developed and exercised for a specialized task.
Those who don’t have time for academic learning still need to develop business plans, and the seminar gives them a chance to gain familiarity in a few hours. Combined with business plan software, they can move forward and reduce the fear, break the pattern of procrastination, and move ahead with their planning. In some market niches, seminars may serve their participants as continuing education required by professional licensors. This could be true for CPAs, for example, or attorneys.
In the large corporation context, there are additional market needs. Companies that market through channel partners need three things related to business plans:
- Business information from the channel partners about business conditions, plans, projections, and business programs.
- Consistency of numbers, definitions, business models, forecasts, and analysis.
- Useful realistic planning.
- Occasions suitable for regular meetings with events–such as business plan seminars–that can attract independent small businesses to attent those meetings. They use the meeting to announce new products, marketing programs, etc. Meetings are often held in attractive vacation locations so channel partners can combine business with vacations.
4.2 Service Business Analysis
The business plan seminar business is very diverse. It ranges from the high end, colleges and universities and some consulting companies offer serious multi-day seminars in planning and strategic planning for hundreds and even thousands of dollars.
4.2.1 Competition and Buying Patterns
- At the high end, colleges and universities and some consulting companies offer serious multi-day seminars in planning and strategic planning for hundreds and even thousands of dollars.
- There are also very serious seminar offerings from organizations such as the AMA, AICPA, etc. These tend to cost above $500.
- Useful seminars are offered as well by SBDCs, smaller colleges and universities, community colleges, and even high school night school programs. Many of these are free, or close to free.
- There are also related seminars offered by vendors of get-rich-quick schemes and multi-level marketing programs. These unfortunately add noise to the market, confuse potential participants between real value and thinly-disguised sales pitches.
4.2.2 Main Competitors
The way this business is positioned, we should try to work with our main competitors, instead of compete with them. AMA, AICPA, and business schools could be co-sponsors and allies rather than competitors. Other competition would be business plan consultants, and in a sense all low-end business plan seminars.
4.2.3 Business Participants
The business plan seminar business is very diverse. It ranges from high-end seminars lasting more than a day and costing more than $1,000, to free sales pitches intended to draw would-be entrepreneurs for the purpose of selling products.
Business Consulting Sample Plan
This business plan will provide you with an excellent overview if you are thinking of starting a business consultancy.
Business Consulting Business Plan
Growth Management and Strategies (GMS) is an ambitious innovative new company that is attempting to turn the small business consulting business on its head. With an experienced consultant at the helm as President, GMS intends to grow at more than 50% per year through solid customer service, a great sales plan, proven competitive strategies, and a group of people that bring dynamic energy to the company and the sales process.
The goal for this plan is financial: GMS needs a Small Business Adminstration (SBA) loan, and this document is one step in the process. It is also a road map for the company. The document gives all present and future employees, as well as the owner a sense of purpose that may exist without the business plan, but becomes more relevant after the business plan is written, reviewed, shared, and edited by all. It is a living document that will last far beyond the SBA loan purpose, or if that doesn’t occur, to bring an investor on board.
GMS’s financials are realistic, and based on very conservative sales figures relative to the industry as a whole. That is because one of the goals of GMS is to build the business one client at a time, and to serve each client as if it were the last. This is how loyalty is generated, and cultivated. Customer service is what GMS will do best, and is a large part of the company’s overall mission.
The objectives for Growth Management and Strategies are:
- Gain access to an SBA loan upon start up.
- Grow the company from 2 employees in Year 1, to over 10 by Year 5.
- Increase revenue to over $3 million by Year 3.
- Increase client base by 450% in three years.
- Maintain job costing that keeps margins above 70%.
The company mission is to serve small business clients that are in need of logistical, technical, and business strategy services. All projects will be chosen based on the availability of human resources, and each individual employee will be given the respect of a contract worker, and will share in profits for each job. Politics have no place at Growth Management and Strategies, and to limit the affects of favoritism, the company will implement and clearly communicate a performance review policy that applies to those at the bottom as well as the top of the leadership ladder. Credit will be given to the person who performed and/or innovatively modified a project, and compensation will be both financial and in the form of commendation.
Growth Management and Strategies is a company that respects the needs and expectations of its employees and clients. If either is compromised, adjustments will be made so that the company culture may remain intact.
1.3 Keys to Success
Our keys to success are:
- To maintain client satisfaction of at least 90%.
- To keep overhead low.
- To ensure professional marketing and presentation of services.
- To provide an active and functional website.
Growth Management and Strategies was established as a C corporation. The company’s headquarters are located in Boston, MA, near Copely Place. The company was established as a result of the efforts of its owner, Bill Dawson, and his experience in leading small businesses into prolonged periods of growth and innovation. Dawson worked for McKinsey before being hired away to Bain and Company. A Harvard graduate, Dawson spent hundreds of hours each week for nearly a year, slowly building the company to where it is now.
The company has had numerous successes this year, including one client that was purchased by a major multinational conglomerate, and another that experienced product sales growth of over 700% the first year.
2.1 Start-up Summary
This start-up summary table lists all the costs associated with establishing a lease, purchasing office equipment, and pulling together the other resources necessary to get the business off the ground. Furniture, LAN lines, and additional technology purchases are a must in order to properly communicate with clients, and to establish a website.
Other services included in the start-up summary are legal consulting fees, kept to a minimum thanks to resources provided by Nolo. Incorporation fees are included in the legal fees line item.
The free cash flow (cash balance) appearing in this start-up table is high relative to other small consulting businesses of its size. The owner is preoccupied with maintaining positive cash flow, and is risk averse enough to understand that during months in which contracts are not available, the corporation must sustain itself. With this said, planned debt leverage is low, therefore risk to the lender is relatively low as well.
2.2 Company Ownership
Growth Management and Strategies is wholly owned by Bill Dawson, and is classified as an LLC.
Growth Management and Strategies offers a variety of services to the small business client. Many of the services are customized for each client, and a bidding process is observed. The company also offers a traditional fixed rate sheet for its services.
Market Analysis Summary
The target customer owns a small business, and is generally dissatisfied with the revenue that the business is generating, or is dissatisfied with the daily management of their business. The customer is likely to operate a business worth between $200K and $10 million, with growth rates of between 1-10%, or even a negative growth rate.
Market growth, that is, the predicted growth in the small business sector within the Boston/Cambridge Metro area is expected to be around 3% per year. This may increase due to additional SBA lending programs designed to match the strengths of research and faculty grant work with the needs of the market and small businesses willing to take new products to market. Regardless of the market growth, the company’s customer base is far more dependant upon service needs, and a solid reputation. Mr. Dawson is well respected within the community, and has built a number of relationships with high profile individuals, and is a frequent contributor to the business section of the Boston Herald.
The corresponding market analysis table below breaks the potential market down into tactical sub-markets.
4.1 Market Segmentation
The market is divided up by revenue in the initial analysis, although other factors are very significant. It is important that the client business is operating at about the same level as the general economic growth rate, or is underperforming. The need for a turnaround within the client company is necessary for Growth Management and Strategies’ expertise to become useful. The following are other differentiators:
- Debt of more than 30% yearly revenue.
- Free cash flow frequently in the negative, requiring deep pocket borrowing or investment.
- Long-term growth underperforming relative to competitors.
- Management discord and performance issues.
These are not the only differentiators used to determine the market potential for a client, they are simply a starting point for the sales team as they reach out to this group of small businesses, owners and investors.
4.2 Target Market Segment Strategy
The target market strategy involves isolating potential customers by revenue, then drilling down to very specific needs via the sales team’s needs analysis methodology.
The first tier customers, businesses with over $3 million in revenue, is more experienced in outsourcing and may find themselves more comfortable hiring Growth Management and Strategies on retainer. Strategically, a retainer helps maintain consistent cash flow, even if during some months these customers will require more services than what they have paid for that month. This issue will be addressed in the Personnel topic.
The second tier customers, those businesses operating at revenue levels of $501K – $3 million, typically are very excited to have moved out of the home office stage, and into a new level of stability. If they are self-funded, these businesses can be the most challenging to work with because they are often not willing to part with company shares, and don’t yet have a sense of what kind of marketing investment is necessary to grow a business at this stage. The company will serve these small businesses based on a bid cycle, and needs analysis.
The third tier customers are easier to identify, and more ubiquitous than the rest. These small businesses are operating on $200K – $500K in revenue, often are operating out of a home, and have a firm sense of their market and potential, yet have trouble executing their plans effectively, or following through on growth strategies that generate wealth. Again, the strategy is to provide these businesses with a short needs analysis, and focus on the quantity of such customers to maintain a solid revenue stream.
4.3 Service Business Analysis
This industry is split up between a variety of players, including small businesses advising small businesses, such as the case with Growth Management and Strategies, to large conglomerate multinational consulting firms that send in newbie MBAs and use their name recognition to convince their clients that every one of these MBAs will generate over $300K a year in value. Sometimes they do, but when they don’t, GMS plans to be there.
At the other end of the spectrum, there are a wide variety of mom and pop consulting firms owned by very talented people who simply don’t have the marketing resources or expertise to reach a broader spectrum of customer.
GMS is somewhere in between. With years of guerrilla marketing experience, and a long-term plan for success, Mr. Dawson is determined to build the company each client at a time, and to focus on a sales team that outperforms all the competitors.
GMS is planning to grow exponentially within the first two years, to over $2 million in consulting revenue. At this point the service business analysis will be re-evaluated from the outside in.
4.3.1 Competition and Buying Patterns
Typically small business clients will learn about the consulting services market through word-of-mouth experience passed on through a friend or contemporary. Still, outbound sales teams dominate this category, and the stronger your sales team and name recognition, the greater your odds of finding clients willing to place your company on retainer or accept your company’s bid. The most competitive players in this market tend to have some of the best sales teams in the industry, that is, people who know not only how to communicate the technical needs analysis in a non-technical way, but in addition, are able to follow through and execute on promises and provide accurate, industry specific information that is useful to the client even before the deal is made.
Price is also important, and operates on a complex tiered system that is dependant upon the effectiveness of a particular salesperson, the word-of-mouth (WOM) advertising already in the mind of the potential client, and the ability of the client to reform the way they think about their own business. The demands of turning a business around, or pushing it to the limits of its potential are in direct proportion to the price of each bid. GMS must be careful not to be lured into out bidding a competitor, only to find that the customer has no plans to modify their business plan, and are seeking a “magic bullet” that may or may not exist. Competition in this industry leads to frustration and burnout for many people, and it takes a strong sense of purpose to push the business beyond the realm of the high-intensity, low-return client.
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