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Agricultural Consultants Business Plan

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Agricultural Consultants Business Plan

Executive Summary

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.

1.1 Mission

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.

1.2 Objectives

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)

Company Summary

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.

Services

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.

3.4 Fulfillment

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

Chemical Manufacturers
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.

Bio-refinery Start-ups
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.

Agricultural
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).

Utilities
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.)

Other
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.

4.1.3 Agricultural

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).

4.1.4 Utilities

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.

Non-profit organizations
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.

No consulting
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.

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Telemarketing Consultants Sample Business Plan

Starting up a telemarketing consultants company will require you to have a business plan similar to this.

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Telemarketing Consultants Business Plan

Executive Summary

Introduction
It is the mission of Roth & Calder Telemarketing Professionals, Inc. (R&C) to provide comprehensive telemarketing consultation and creation of telemarketing advertising campaigns for our clients in the Cawleweton region. It is our long-term goal to become THE preferred business-to-business telemarketing agency for the East Coast area. Our firm is not interested in simply producing a service for our clients. We believe in creating a long-term relationship with them so that the delivery of their message can reach the right people, at the right moment to insure effective communication with their market.

The Company

Roth & Calder will be a limited liability partnership registered in the state of Delaware for tax purposes. Its founder is Mr. Thomas Roth, a former marketing executive with General Foods. Mr. Roth has brought together a highly respected group of marketing, development, and telemarketing specialists who, combined, have a total of 25 years of experience in this industry.

The company has a limited number of private investors and does not plan to go public. The company has its main offices in Cawleweton. The facilities include conference rooms and office spaces. The company expects to begin offering its services in January of Year 1. The company’s potential clients will initially be all the companies in the Cawleweton area. We can service both small and large companies and provide virtually any consultation services in regards to telephone communications with clients.

The Services
In order to create the maximum effect for our clients, we provide a comprehensive program for them that may include some of the following services:

  • Identification of Program Objectives and Expectations
  • Creation of customized lists of leads
  • Market research
  • Consultation and training of telemarketing personnel
  • Script writing for programs
  • Creation of follow-up programs for successful calls.

This is only a partial list of our services as each project is customized to our client and its scope, length, depth, reach, and cost are unique.

The Market
The telemarketing industry is, at the moment, a growing industry with most companies having an annual growth between 6.5% and 8%. This is due to businesses that are becoming increasingly aware of the need for market information and the desire to reduce customer turnover rates in a hard hit economy. However, long-term analysis of growth rates in this industry shows a cyclical pattern and R&C does not expect this high growth rate to continue.

The telemarketing industry is quite fragmented with companies that vary greatly in size, scope, services offered, and market share. Many companies are general advertising agencies that offer telemarketing services along with a wide range of other consulting services. In addition, many companies, not realizing the potential advantages of outsourcing, choose to develop their own telemarketing services.

R&C believes that the greatest threat at the moment is in new entrants to the market who perceive an opportunity in a “high” growth industry. The most likely entrants will be existing advertising agencies wishing to horizontally integrate and enter new sub-markets. However, the one major disadvantage to new entrants is that all firms engaged in contracting to telemarketing agencies face significant switching costs when bringing on a new partner. Furthermore, R&C understands that in this industry there is a significant learning curve that creates declining “unit” costs as a firm gains more cumulative experience in the field itself and with long-term clients specifically.

Rivalry among different telemarketing agencies as stated before is quite intense. The telemarketing industry as a whole is mature with long-term moderate growth. Most of the largest agencies are mutually dependent when it comes to jockeying for position and market share. The fact that there are so many diverse and seemingly “generic” or general telemarketing agencies makes this a cutthroat industry. The threat of clients backwardly integrating so as to have all their advertising done in-house is one of the major factors that buyers use to indirectly control price in this industry, and increase competition among firms. This must always be foremost in the minds of R&C’s management when offering services and setting prices.

1.1 Objectives

The Three-year goals for Roth & Calder Telemarketing Professionals, Inc. are as follows.

  • Achieve break-even by year two.
  • Establish a regional (East Coast) scope for operations within five years and a national presence within 10 years.
  • Establish minimum 95% customer satisfaction rate to establish long-term relationships with our clients and create a viable reputation.

1.2 Mission

It is the mission of Roth & Calder Telemarketing Professionals, Inc. (R&C) to provide comprehensive telemarketing consultation, and creation of telemarketing advertising campaigns for our clients in the Cawleweton region. It is our long-term goal to become THE preferred business-to-business telemarketing agency for the East Coast area. Our firm is not interested in simply producing a service for our clients. We believe in creating a long-term relationship with them so that the delivery of their message can reach the right people, at the right moment to insure effective communication with their market.

R&C is strictly a business-to-business company and seeks to provide answers to companies who desire to communicate with their customers via the phone. This can take the shape of advertising, surveys, seminar and conference invitations, etc. R&C has a combined 25 years of experience working with companies in delivering effective and professional telemarketing techniques.

1.3 Keys to Success

R&C’s keys to long-term survivability and profitability are as follows:

  • Differentiate our services so that our clients realize that we are able to better serve their needs rather than a more generic competitor or in-house telemarketing.
  • Keeping close contact with clients and establishing a well functioning long-term relationship with them to generate repeat business and a top notch reputation.
  • Establish a comprehensive service experience for our clients that includes consultation, analysis of telemarketing campaign goals and target markets, creation of streamlined and custom advertising campaigns based on needs, expectations, implementation, and follow-up analysis.

Company Summary

Roth & Calder will be a limited liability partnership registered in the state of Delaware for tax purposes. Its founder is Mr. Thomas Roth, formerly a marketing executive with General Foods. Mr. Roth has brought together a highly respected group of marketing, development, and telemarketing specialists who, combined, have a total of 25 years of experience in this industry.

The company has a limited number of private investors and does not plan to go public. The company has its main offices in Cawleweton. The facilities include conference rooms and office spaces. The company expects to begin offering its services in January.

The company’s potential clients will initially be all the companies in the Cawleweton area. We can service both small and large companies and provide virtually any consultation services in regards to telephone communications with clients.

2.1 Company Ownership

The company will have a number of outside private investors who will own 27% of the company’s shares. The rest will be owned by the senior management including Mr. Thomas Roth, (25%), Ms. Jane Calder (20%), Mrs. Susan Howell, (20%), and Mr. Leonard Gray (8%). All other financing will come from loans.

2.2 Start-up Summary

Start-up assets required include equipment, and additional expenses as well as cash to support operations until revenues reach an acceptable level. Most of the company’s liabilities will come from outside private investors and management investment, however, we have obtained current borrowing from Bank of America Commercial Investments, the principal to be paid off in three years. A long-term loan through VieilArgent Bank of Richburb will be paid off in ten years.

Services

Roth & Calder offers a complete, custom telemarketing campaign. The most common telemarketing campaigns are for the following purposes:

  • Generate sales leads
  • Set appointments
  • Market research
  • Surveys (including statistical analysis and political surveys)
  • Driving eyeballs to websites
  • Trial subscriptions
  • Database or mailing list information
  • Business development
  • Point-of-sale product promotion
  • Seminar and conference invitations.

In order to create the maximum effect for our clients, we provide a comprehensive program for them that may include some of the following services:

  • Identification of Program Objectives and Expectations.
  • Creation of customized lists of leads
  • Market research
  • Consultation and training of telemarketing personnel
  • Script writing for programs
  • Creation of follow-up programs for successful calls.

This is only a partial list of our services as each project is customized to our client and its scope, length, depth, reach, and cost are unique.

Market Analysis Summary

The telemarketing industry is, at the moment, a growing industry with most companies having an annual growth between 6.5% and 8%. This is due to businesses that are becoming increasingly aware of the need for market information and the desire to reduce customer turnover rates in a hard hit economy. However, long-term analysis of growth rates in this industry shows a cyclical pattern and R&C does not expect this high growth rate to continue.

The telemarketing industry is quite fragmented with companies that vary greatly in size, scope, services offered, and market share. Many companies are general advertising agencies that offer telemarketing services along with a wide range of other consulting services. In addition, many companies, not realizing the potential advantages of outsourcing, choose to develop their own telemarketing services.

Roth & Calder Telemarketing Professionals’ business strategy is to establish a focused approach to its services rather than being everything to its clients. Our company does not intend to be a call center, nor will it ever become so. We are a consulting firm that designs telemarketing campaigns for its clients and matches these clients with the appropriate call center who has the necessary capabilities. These services are where we can offer a higher standard of quality to our clients. This will allow us to charge a higher profit margin to our clients for these differentiated and more focused services. This will also require average project times to be somewhat longer, and therefore we expect initial profitability levels to be lower than average.

4.1 Market Segmentation

Virtually every company, whether large and small, requires some form of telemarketing at some point. Often it is a survey to determine customer satisfaction or awareness. Sometimes it is effectively communicating an upcoming event such as a conference. Other companies wish to know if telemarketing is a feasible method of sales generation. Because of this almost universal need for some form of telemarketing consultation that spans almost all industries, R&C has decided not to create any market segments it wishes to concentrate on nor focus on a target market. We have the capacity to service almost any company of whatever size. We think that at this point in the company’s history, any attempt to target specific markets would hinder our growth potential.

4.2 Service Business Analysis

The telemarketing industry is, at the moment, a growing industry with most companies having an annual growth between 6.5% and 8%. This is due to businesses that are becoming increasingly aware of the need for market information and the desire to reduce customer turnover rates in a hard hit economy. However, long-term analysis of growth rates in this industry shows a cyclical pattern and R&C does not expect this high growth rate to continue.

The telemarketing industry is quite fragmented with companies that vary greatly in size, scope, services offered, and market share. Many companies are general advertising agencies that offer telemarketing services along with a wide range of other consulting services. In addition, many companies, not realizing the potential advantages of outsourcing, choose to develop their own telemarketing services.

R&C believes that the greatest threat at the moment is in new entrants to the market who perceive an opportunity in a “high” growth industry. The most likely entrants will be existing advertising agencies wishing to horizontally integrate and enter new sub-markets. However, the one major disadvantage to new entrants is that all firms engaged in contracting to telemarketing agencies face significant switching costs when bringing on a new partner. Furthermore, R&C understands that in this industry there is a significant learning curve that creates declining “unit” costs as a firm gains more cumulative experience in the field itself and with long-term clients specifically.

Rivalry among different telemarketing agencies as stated before is quite intense. The telemarketing industry as a whole is mature with long-term moderate growth. Most of the largest agencies are mutually dependent when it comes to jockeying for position and market share. The fact that there are so many diverse and seemingly “generic” or general telemarketing agencies makes this a cutthroat industry.

The threat of clients backwardly integrating so as to have all their advertising done in-house is one of the major factors that buyers use to indirectly control price in this industry, and increase competition among firms. This must always be foremost in the minds of R&C’s management when offering services and setting prices.

4.2.1 Competition and Buying Patterns

Competition
Competition includes all potential advertising and telemarketing agencies plus call centers across the country. In addition we have indirect competition from organizations that handle all their telemarketing in-house. Practically speaking, this means we have the greatest threat from the largest telemarketing agencies such as Davis & Henke, Ludquist telemarketing, and other big, nationwide consulting companies that hold significant market share. The telemarketing consultation industry is highly fragmented, with a large number of small companies that mainly cater to small firms and a few large companies that seek the largest contracts from companies such as Sprint, GM, etc. This makes competition within the industry very intense. Through our focused strategy we intend to avoid such a debilitating environment and avoid its drawbacks such as price wars, etc.

Buying patterns and needs
Companies usually enter into contracts with telemarketing agencies based on their reputation of professionalism and effective campaigns in the past. This reputation is difficult to obtain by new firms unless its personnel bring it with them from previous companies such as ours. Price and scope are also important reasons for accepting contracts, especially if the company is small.

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Wedding Consultant Sample Business Plan

During the start-up stage of as a wedding consultant, having a detailed business plan such as this one is important.

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Wedding Consultant Business Plan

Executive Summary

TLC Wedding Consultants is a full service company that provides complete consulting services for weddings, holy unions and anniversaries. Our consultants are experienced and dedicated professionals with many years of event planning experience. TLC is unique in that we give our clients our undivided attention. We listen to their needs and work with them to create the event of their dreams. Our clients’ wishes become our commands. So whether our client wants a Western, Tropical, Las Vegas or more traditional wedding, we can help. Our services include weddings, honeymoons, receptions, anniversary consultations, budget planning, answers to etiquette questions, as well as full-service referrals to florists, hair stylists, entertainers, musicians, etc.

1.1 Mission

TLC Wedding Consultants is a full service company that provides complete consulting services for weddings, holy unions and anniversaries. Our consultants are experienced and dedicated professionals with many years of event planning experience. TLC is unique in that we give our clients our undivided attention. We listen to their needs and work with them to create the event of their dreams. Our clients’ wishes become our commands. So whether our client wants a Western, Tropical, Las Vegas or more traditional wedding or anniversary party, we can help. Our services include weddings, honeymoons, receptions, anniversary consultations, budget planning, answers to etiquette questions, as well as full-service referrals to florists, hair stylists, entertainers, musicians, etc.

1.2 Objectives

Whether this is our client’s first wedding, a renewal of their vows or their anniversary, we want every detail of their event to be both a pleasurable and a memorable experience. Therefore we offer a host of packages and services specifically tailored to the needs of each couple. We are confident that this business venture will be a success and we estimate that our net income will increase modestly by the second year.

1.3 Keys to Success

The keys to our success are as follows:

  • Service our clients’ needs promptly and efficiently.
  • Maintain an excellent working relationships with vendors such as florists, hair salons and bridal shops.
  • Maintain a professional image at all times.

Company Summary

TLC Wedding Consultants is a start-up company that provides wedding, holy union, and anniversary consulting services to brides, grooms and other family members. We are a full-service bridal consulting group and our goal is to put the “fun” back into planning a wedding, holy union or anniversary party. Too many people become overly stressed and frustrated when planning these wonderful events. We are experienced and professional consultants and will use our expertise to help create memorable and stress free events for our customers. By doing this, our clients can sit back and enjoy their event. The result? We create events suited to the couple’s unique style–a true expression of their relationship and individuality as a couple.

2.1 Company Ownership

This business will start out as a simple proprietorship, owned by its founders, Darla and Micah Johnson. As the operation grows, the owners will consider re-registering as a limited liability company or as a corporation, whichever will better suite the future business needs.

2.2 Start-up Summary

The company founders, Darla and Micah Johnson, will handle day-to-day operations of the plan and will work collaboratively to ensure that this business venture is a success.

2.3 Company Locations and Facilities

Initially this will be a home-based business; however, by Year 5, we intend to expand our facilities into a well-equipped and operational office.

Services

We are a full-service wedding consultant group and provide the following services: etiquette advice, event scheduling, discounted invitations and products, vendor confirmation, rehearsal attendance, supervision of both ceremony and reception setup and budget planning.

Market Analysis Summary

Nearly $35 billion are spent every year on weddings and receptions. Therefore, professional wedding consultants are a commodity, not a calamity. TLC Wedding Consultants are full-service wedding consultants that offer a variety of services to our clients. We pride ourselves on being professional and courteous at all times and we have packages to suit everyone’s needs.

As previously stated, marriage is a billion dollar industry, therefore, just about everyone we meet is a potential client. However, we mostly advertise to brides, grooms, and family members.

4.1 Market Segmentation

Although the flash and excitement of impending nuptials can be intoxicating, it can also be overwhelming. Therefore, we primarily market our services to the people who need them most–brides and grooms. In 1997, 2.4 million marriages took place in the United States. According to the Encarta Encyclopedia, the current US marriage rate of nine marriages per 1,000 people is still the highest rate among the industrialized countries. This marriage rate is expected to remain at the same level in the near future. In the Eugene, OR area where TLC Wedding Consultants plans to operate their business, over 1,500 marriages are registered each year, which creates a sizable market potential for this line of business.

Another customer segment is represented by the numerous family members and guests attending weddings, anniversaries, and similar events. This segment requires event preparation services like gift ideas, etiquette tips, etc. Besides the wedding arrangements, which TLC Wedding Consultants believe to be their major client assignments, other events the company will provide services to include corporate retreats, etiquette training, etc. This customer segment is estimated to have the annual volume of 1,000 orders in the Eugene, OR area.

4.2 Target Market Segment Strategy

TLC Wedding Consultants will offer its services mostly to the brides and grooms, as well as to the family members. The company will position itself as an experienced provider of wedding planning services. Unlike most of its competitors, TLC will be offering a full range of services and thus provide the convenience of one-stop shopping for its clients. This will significantly reduce the customers’ time and efforts preparing for such an important event as a wedding. Moreover, by utilizing numerous supplier contacts that the company owners have established and economies of scale, TLC Wedding Consultants will be able to pass on to its customers sizable cost savings.

4.2.1 Market Needs

The market needs for wedding planning services are strongly shaped by the customers’ desire to have a perfectly planned and executed wedding ceremony. Although both major customer segments, brides and grooms and family members, plan and budget for the wedding ceremony as far as a year or more in advance, they often realize that they cannot make all the necessary preparations by themselves in a cost effective manner. Strongly affected by the established social values, such customers seek professional advice to ensure that all the important aspects of the wedding ceremony meet or exceed perceived expectations.

4.3 Service Business Analysis

The wedding services market is fragmented with the overwhelming majority of the incumbents offering only a limited line of services. There are numerous florists, hair stylists, and caterers to choose from. However, there are almost no companies that will provide the full range of services associated with the wedding planning and execution.

4.3.1 Competition and Buying Patterns

Competitive analysis conducted by the company owners has shown that there are 20 companies currently offering some sort of wedding planning services in the Eugene area. However, the majority of the incumbent competitors offer only a limited line of services like catering, flower arrangements or gifts. In fact, of these 25 competitors only three offered a range of services comparable with what TLC Wedding Consultants plan to offer to its customers. The following is the list of the major competitors with a brief description of their services:

Rent-An-Action offers ceremony preparation, rehearsing and execution services.
Cross & Reeves provide flower and catering arrangements and wedding consulting services.
Lafayette Wedding offers its clients entertaining, catering, floral design and hair styling services.

The market research has also shown that customers anticipate the complete wedding consulting services to be expensive and they budget accordingly. In fact, lower prices are very often associated with poor service quality. By aggregating a complete range of wedding services under one roof, TLC Wedding Consultants will offer its customers the ease of one-stop shopping.

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Advertising Consulting Business Plan

If starting up an advertising consulting business is on the cards then this sample business plan will get you off to a good start.

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Advertising Consulting Business Plan

Executive Summary

Introduction
It is the mission of Marrowstone Advertising Consultants to provide comprehensive marketing consultation and creation of advertising campaigns for the nonprofit industry. It is our long-term goal to become THE preferred advertising agency for nonprofit institutions nationwide. Our firm is not interested in simply producing a service for our clients. We believe in creating a long-term relationship with them so that the delivery of their message becomes a seemless, thought-provoking experience that engenders action.

The Company
Marrowstone Advertising Consultants will be a limited liability partnership registered in the state of Delaware for tax purposes. Its founder is Mr. Curtiss Cole, a former marketing executive with the Boy Scouts of America. Mr. Cole has brought together a highly respected group of marketing, development, and graphic art specialists who, combined, have a total of 35 years of experience with nonprofit organizations.

The company has a limited number of private investors and does not plan to go public. The company has its main offices in Reston, Virginia. The facilities include a design lab, conference rooms and office spaces. The company expects to begin offering its services in January.

The Services
The firm offers a complete, custom advertising campaign that covers all audio-visual and printed media. Examples include radio and television ads, billboards, building advertisements, brochures, direct mailing, business cards, etc. Management has designed a proven and effective seven step process to building a winning campaign.

The company’s main clients will be small and start-up nonprofit institutions and local governments. By focusing on institutions such as these that have special needs, we believe we will be able to better serve our clients and produce a superior service that is more effective that other advertising firms.

The Market
Marrowstone Advertising Consultants will be concentrating on three main types of nonprofits who operate in the environmental, youth development, and cultural awareness fields. This is because these types of organizations have the greatest needs and/or are the best capitalized in the nonprofit industry.

Profitability and growth in this untapped market is expected to be strong, as evidenced by the fact that over the past 15 years the U.S. has seen an explosion of nonprofits in new fields such as environmental awareness. Furthermore with the greater capitalization of such agencies, we are seeing a widening gap between these organizations needs and what conventional advertising companies can provide.

1.1 Objectives

The three year goals for Marrowstone Advertising are the following:

  • Achieve break-even by Year 2.
  • Establish a long-term contract with The Nature Conservancy.
  • Establish a minimum of 95% customer satisfaction rate to establish long-term relationships with our clients and create word-of-mouth marketing.

1.2 Keys to Success

Marrowstone Advertising’s keys to long-term survivability and profitability are as follows:

  • Differentiate our services to nonprofits so that our clients realize that we are able to better serve their needs than a more generic competitor.
  • Keeping close contact with clients and establishing a well functioning long-term relationship with them to generate repeat business and a top notch reputation.
  • Establish a comprehensive service experience for our clients that includes consultation, analysis of nonprofit’s goals and target markets. Creation of streamlined and custom advertising campaigns based on needs, total design work of all audio-visual advertising tools, implementation, and follow-up analysis.

1.3 Mission

It is the mission of Marrowstone Advertising Consultants to provide comprehensive marketing consultation and creation of advertising campaigns for the nonprofit industry. Our firm is not interested in simply producing a service for our clients. We believe in creating a long-term relationship with them so that the delivery of their message becomes a seemless, thought-provoking experience that engenders action. Marrowstone understands that nonprofit groups and institutions have special needs in delivering their information and messages to the public and creating inspiration to act on these messages.

Company Summary

Marrowstone Advertising Consultants will be a limited liability partnership registered in the state of Delaware for tax purposes. Its founder is Mr. Curtiss Cole, a former marketing executive with the Boy Scouts of America. Mr. Cole has brought together a highly respected group of marketing, development, and graphic art specialists who, combined, have a total of 35 years of experience with nonprofit organizations.

The company has a limited number of private investors and does not plan to go public. The company has its main offices in Reston, Virginia. The facilities include a design lab, conference rooms and office spaces. The company expects to begin offering its services in January.

The company’s main clients will be small and start-up nonprofit institutions and local governments. By focusing on institutions such as these that have special needs, we believe we will be able to better serve our clients and produce a superior service that is more effective that other advertising firms.

2.1 Start-up Summary

Start-up assets required are $122,300, which includes cash needed to support operations until revenues reach an acceptable level. Start-up expenses are $31,700. Most of the company’s liabilities will come from outside private investors and management investment, however, we have obtained $16,000 in current borrowing from Bank of America Commercial Investments, the principal to be paid off in two years. A long-term loan of $45,000 through Charter Bank of Richmond will be paid off in ten years.

2.2 Company Ownership

The company will have a number of outside private investors who will own 27% of the company’s shares. The rest will be owned by the senior management including Mr. Curtis Cole, (25%), Ms. Jennie Marks (20%), Mr. David Danielson, (20%), and Mr. Milo Winn (8%). All other financing will come from loans.

Services

Marrowstone Advertising Consultants offers a complete, custom advertising campaign that covers all audio-visual and printed media. Examples include radio and television ads, billboards, building advertisements, brochures, direct mailing, business cards, etc. Our proven and effective seven step process to building a winning campaign incudes the following:

  • Initial consultation.
  • Analysis of nonprofit’s goals and target market demographics.
  • Planning.
  • Creation of streamlined and custom advertising campaigns based on needs.
  • Total design work of all audio-visual/printed advertising tools.
  • Implementation (usually through subcontractors).
  • Follow-up analysis.

Each project is customized to our client and its scope, length, depth, reach, and cost are unique.

Market Analysis Summary

Marrowstone Advertising Consultants will be concentrating on three main types of nonprofits who operate in the environmental, youth development, and cultural awareness fields. This is because these types of organizations have the greatest needs and/or are the best capitalized in the nonprofit industry.

Profitability and growth in this little tapped market is expected to be strong, as evidenced by the fact that over the past 15 years the U.S. has seen an explosion of nonprofits in new fields such as environmental awareness. Furthermore with the greater capitalization of such agencies, we are seeing a widening gap between these organizations needs and what conventional advertising companies can provide.

An analysis of the market using the five forces of profitability indicates that there will be a short time where growth of market share and profitability will be extremely high while demand outstrips supply. As new entrants move into the market this opportunity will disappear. This is the time for Marrowstone to create its reputation and niche in the industry.

4.1 Market Segmentation

There are various nonprofit institutions nationwide that concentrate on various public issues. Marrowstone will be focusing on the following groups of clients:

  • Environmental nonprofit institutions.
  • Youth development nonprofit institutions.
  • Cultural nonprofit institutions.
  • Other.

We are concentrating on these specific market segments for a variety of reasons. The environmental segment which includes organizations such as the Sierra Club and the Nature Conservancy is the fastest growing segment at the moment, and Marrowstone’s management concludes that in the near future, they will also include some of the largest nonprofits in the nation. Youth development nonprofits such as the Boy Scouts, Camp Fire girls, 4-F, and The Boys and Girls Club includes some of the largest and most well capitalized nonprofit organizations in the country. Finally, although they tend to be small in size, there are a huge number of cultural nonprofits such as museums.

The market analysis table and graph which follows shows the number of each type of organization in the greater Washington D.C. area. This will be our initial geographical focus for the first three to four years of our company’s existance. Later, as we expand to a nationwide scope, our future business plans will include all our potential clients across the country.

4.2 Service Business Analysis

The advertising industry for nonprofits is at the moment, an unfulfilled market with demand greater than supply. Many nonprofit organizations have found that only the largest and most expensive advertising agencies will enter into contracts with nonprofits and this leaves a great void which must be filled by in-house advertising.

Marrowstone believes that the greatest threat at the moment is in new entrants to the market who will also perceive this opportunity. The most likely entrants will be pre-existing advertising agencies wishing to horizontally integrate and enter new sub-markets. However, the one major disadvantage to new entrants is that all firms engaged in contracting to advertising agencies face significant switching costs when bringing on a new advertising partner. Furthermore, Marrowstone understands that in this industry there is a significant learning curve that creates declining “unit” costs as a firm gains more cumulative experience in the field itself and with long-term clients specifically.

Rivalry among different advertising agencies as stated before is quite intense. The advertising market as a whole is mature with low growth. Most of the largest agencies are mutually dependent when it comes to jockeying for position and market share. The fact that there are so many diverse and seemingly “generic” or general advertising agencies makes this a cutthroat industry.

The threat of clients backwardly integrating so as to have all their advertising done in-house is one of the major factors that buyers use to indirectly control price in this industry, and increase competition among firms. This must always be foremost in the minds of Marrowstone’s management when offering services and setting prices.

4.2.1 Competition and Buying Patterns

Competition
Competition includes all potential advertising agencies that are willing to accept nonprofit contracts and nonprofit organizations that handle all their advertising in-house. Practically speaking, this means the largest advertising agencies such as Werner & Voss, Price, Waterhouse, & Cooper, and other large, nationwide agencies that hold significant market share. The advertising agency industry is highly fragmented, with a large number of small companies that mainly cater to small firms and a few large companies that seek the largest contracts from companies such as McDonald’s, GM, etc. This makes competition within the industry very intense. Through our niche strategy we intend to avoid such a debilitating environment and avoid its drawbacks such as price wars, etc.

Buying patterns and needs

Companies usually enter into contracts with advertising agencies based on their reputation of professionalism and effective campaigns in the past. This reputation is difficult to obtain by new advertising firms unless its personnel bring it with them from previous firms such as ours. Price and scope are also important reasons for accepting contracts, especially if the company is small.

nonprofit organizations have very different needs that other firms. Companies offering a product or service need to inform the public about the benefits of their product/service and then inspire them to purchase by leading them through an implicit or explicit cost-benefit analysis. On the other hand, nonprofits must appeal to a person’s higher sense of community duty in order to obtain contributions. Advertisements must be a thought-provoking experience that engenders action. This is a far more difficult task to achieve than ordinary marketing and usually requires more resources and time than product/service marketing. Many advertising agencies do not desire to accept these types of contracts and leave it to the nonprofit organizations to create their own marketing. This leads to higher costs, more emphasis on obtaining contributions, and less effective management of the organization’s goals.

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