Quaestor's competitive edge is our positioning as strategic ally with our clients, who are clients more than customers. By building a business based on long-standing relationships with satisfied clients, we simultaneously build defenses against competition. The longer the relationship stands, the more we help our clients understand what we offer them and why they need it.
The marketing strategy is the core of Quaestor's main strategy:
Quaestor's sales strategy will be based on systematic person-to-person contacts through referrals, direct mail, telemarketing and the Internet. A list of potential prospects has already been compiled and will serve as a launching pad for marketing the products and services.
The important elements of the sales forecasts are summarized on three line items, Accounting Services, Insurance Sales, and Miscellaneous Revenue. The summary of the initial sales forecast indicates a first year revenue of $39,500 increasing to over $108,310 by the end of the second year, then $122,110 by the end of the third year. It should be noted that although sales triple in the second year, all revenue has been forecasted very conservatively for the three year forecast. Forecasted sales increases are overstated by the Whelnoan Insurance subsidies or Miscellaneous sales. Actual sales growth for the second year is 160% due to adding a producer for continued sales growth and exponential growth of insurance renewals. The third year of sales reflects an actual growth of 76% due mostly to the increase in insurance renewals. Each element will be discussed separately and in its entirety below:
Accounting Services - it has been determined in order to be conservative for this forecast, that the average accounting client requires services at approximately $500 a month, or 25 hours (x) $20 hour. Obviously this can vary depending on the needs of the client, but for forecasting purposes this is the standard used in determining the monthly revenue. In addition, it is assumed that once our services are sold to the accounting client, they will continue to generate a monthly revenue until replaced. Income tax preparation which will yield a substantial increase in revenue as a future service, but is not considered in this forecast. The illustration below, shows two clients are forecasted for the second year and three clients are forecasted for the third year. Accounting clients can sometimes require substantial time at first, until the clients' needs are defined and set up. Limited clients are being forecasted due to the time required growing the client base for insurance.
Insurance Sales - are comprised of two categories, 1) insurance-new sales and 2) insurance-renewals. The insurance products used to forecast new sales are, auto and high risk auto (renews every six months), property structures such as homes, townhouses, condominiums, renters and landlord insurance, commercial, life and all other types of recreation vehicle insurance, (renews annually). It should be noted that in order to be conservative, not all insurance products that are offered were forecast, such as health, retirement products and plans. Whelnoan Insurance Company District Office supplied the necessary documentation needed for the formulation of the insurance sales and renewals. Sales are based on actual results (averaged) created for the first three years of a new Whelnoan Insurance agency. All numbers have been reviewed and approved by them before the forecast was entered into this business plan.
What makes insurance sales different from other sales are the renewals. In most cases, without an increase in monthly production, the monthly income will almost double due to renewals. It has been determined by Whelnoan Insurance that customer loyalty in the first year is 87%, second year is 85% and third year is 89%. Other than auto, which renews every six months, all other insurance products renew on an annual basis. Because of renewals, it is possible to double sales revenue without increasing production costs. The following is the monthly forecast:
|NEW INSURANCE SALES||INSURANCE RENEWALS||TOTAL|
Miscellaneous - the amounts forecasted in Miscellaneous are Whelnoan Insurance subsidies offered at pivotal times throughout the first two years to financially support the insurance agency during the development stage. The subsidies are broken down into four categories, and require that milestone production levels be achieved before the subsidy is made available, 1) commissions on new sales 2) marketing leads, 3) office space, and 4) staff. At the end of two full years of operations as a career agent, subsidies are no longer available. The total subsidies forecasted in the first year is $13,875, in the second year $41,700, and $4,800 in third year, for a total of $60,375.
The table below lists important program milestones, with dates and managers in charge. The milestone schedule indicates Quaestor's emphasis on planning for implementation and the measurement of these activities. In addition, each milestone is important to achieving the financial forecast used in this business plan. The following is a brief description of each milestone:
Whelnoan Insurance Subsidies are available for 24 months only or 4/1/05-03/31/07