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MyHaystack.com

Executive Summary

Imagine if your mail carrier not only delivered mail to your front door, but also cleared the piles of documents off your desk and filed everything in the appropriate folder in your filing cabinet. MyHaystack.com delivers, organizes, and files your documents electronically, without ever entering your home. Like a home filing cabinet, MyHaystack.com stores product owner’s manuals, insurance policies, financial statements, and other product and service information. An electronic gatekeeper protects your privacy by allowing you to determine what information is added or removed from your files.

In addition, you may choose to accept promotional offers that are tailored to your needs based on the contents of your filing cabinet. Because all transmittals pass through MyHaystack.com, your contact information is never distributed for marketing purposes. As an additional benefit, MyHaystack.com offers rewards points for registering a new account and for agreeing to share information with product and service providers.

MyHaystack.com generates revenue through permission-based direct marketing and consumer market research. The company delivers targeted advertising messages to consumers without releasing contact information directly to advertisers. As a result, the consumer maintains complete control over the amount and source of advertising they receive. MyHaystack.com also builds profiles of aggregate consumer purchase and ownership data. The data is made available to business clients that pay a monthly subscription fee.

The MyHaystack.com branded website is an organizational system that manages the most common information stored in a home filing cabinet. The service makes user documents and information more accessible while minimizing the level of user maintenance. MyHaystack.com delivers electronic product and service information, insurance policy information, financial records, and similar documentation directly into user accounts. The organizational structure includes an interactive, easy-to-use, interface with personalized search, archiving, and retrieval functionality. Users have control of the type, frequency, and source of the Individual Filings and Dynamic Postings they receive.

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1.1 Objectives

MyHaystack.com traffic and revenue objectives are as follows:

 

Total User Base

Client Base

Projected Revenue

Year 1

4,520

30 $18,808
Year 2 34,995 145 $1,256,400
Year 3 99,985 350 $7,737,661

1.2 Keys to Success

Key advantages of MyHaystack.com:

  • Consumers have complete control of the personal information that is shared with goods and service providers.
  • The interactive system keeps user profiles current and permissions relevant.
  • MyHaystack.com improves, rather than degrades, the relationship between the supplier and the consumer through permission-based communications.
  • Long term relationships with consumers provide time series data that is unique to MyHaystack.com market research.
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Company Summary

MyHaystack.com is an Internet marvel. Imagine if your mail carrier not only delivered mail to your front door, but also cleared the piles of documents off your desk and filed everything in the appropriate folder in your filing cabinet. MyHaystack.com delivers, organizes, and files your documents electronically, without ever entering your home. Like a home filing cabinet, MyHaystack.com stores product owner’s manuals, insurance policies, financial statements, and other product and service information. An electronic gatekeeper protects your privacy by allowing you to determine what information is added or removed from your files.

2.1 Company Ownership

MyHaystack.com was formed as a C-Corporation and is headquartered in California. The two founders are currently the directors of the company and the majority shareholders. In addition to shares held by the founding partners, a number of shares have been set aside to accommodate an employee incentive plan. Shares have been authorized to accommodate future investors. MyHaystack.com corporate offices are located in San Francisco, CA.

2.2 Start-up Summary

MyHaystack.com is raising $450,000 in private investment. The funds will be used to complete the prototype development, add members to both the management team and board of advisors, and to establish additional corporate relationships necessary to launch the complete service.

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Start-up
Requirements
Start-up Expenses
Legal $5,000
Stationery etc. $500
Brochures $3,500
Consultants $10,000
Insurance $1,000
Rent $500
Research and development $5,000
Expensed equipment $10,000
Other $1,500
Total Start-up Expenses $37,000
Start-up Assets
Cash Required $453,000
Other Current Assets $10,000
Long-term Assets $0
Total Assets $463,000
Total Requirements $500,000
Start-up Funding
Start-up Expenses to Fund $37,000
Start-up Assets to Fund $463,000
Total Funding Required $500,000
Assets
Non-cash Assets from Start-up $10,000
Cash Requirements from Start-up $453,000
Additional Cash Raised $0
Cash Balance on Starting Date $453,000
Total Assets $463,000
Liabilities and Capital
Liabilities
Current Borrowing $0
Long-term Liabilities $0
Accounts Payable (Outstanding Bills) $0
Other Current Liabilities (interest-free) $0
Total Liabilities $0
Capital
Planned Investment
John Smith $30,000
Jane Doe $20,000
Other $0
Additional Investment Requirement $450,000
Total Planned Investment $500,000
Loss at Start-up (Start-up Expenses) ($37,000)
Total Capital $463,000
Total Capital and Liabilities $463,000
Total Funding $500,000

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Services

MyHaystack.com is both a branded consumer organizational service and a proprietary market research and communications tool. The core of MyHaystack.com is a comprehensive database that links consumers with product or service use. A transaction-monitoring portion of the database maintains a history of when items are filed, archived, or deleted from a consumer’s filing cabinet. Queries on the database will serve as the market research engine for client research.

For Consumers

MyHaystack.com provides value to consumers in exchange for their personal information. Customer acquisition is driven by business-to-business partnerships with manufacturers and service providers, as well as partnerships with third party Internet incentive programs. Consumers log in to a personalized organizational system through a branded Internet site and have access to free personalized content. They can also subscribe to additional services, product notices, and targeted marketing messages.

For Business Clients

Business clients that subscribe to MyHaystack.com market intelligence will have access to the MyHaystack.com database through online market research tools. The tools provide a number of predefined database search and analysis functions. Unique to the MyHaystack.com database is the ability to capture time-series data that is utilized to perform lifecycle marketing analysis and regression analysis. MyHaystack.com also captures consumer ownership data from both the online and the brick-and-mortar worlds, providing a more comprehensive consumer profile.

How it Works

Documents stored in a MyHaystack.com account are organized in a simple hierarchical structure. Each account consists of six predefined categories for documents and information: Product Ownership, Personal Finance, Insurance, Clubs and Groups, Health, and Professional. Users can add customized categories or eliminate existing categories based on their organizational requirements.

Enhanced functionality allows information to be easily located and manipulated across categories. The integrated MyHaystack.com search engine is able to search the entire MyHaystack.com database or limit the search to information linked to a user account or specific document. Reports can be generated based on category, a complete alphabetical listing, or the date each item was entered. Qualifiers allow data that is no longer valid to be archived or deleted based on consumer needs. A section on user tips addresses varying skill levels by integrating help functions and step-by-step guides.

Customers have the option to receive product specific information and targeted marketing by email or as a part of their personalized account. When a product or service is registered, the user selects the level of information he/she wishes to receive. These preferences can be changed at anytime. All online direct marketing offers will be in a separate window so as not to clutter the overall organizational look and feel of the site.

Development of a prototype database and Web service is projected to take 14 to 16 weeks from initial project launch. The prototype site includes product registration and information, access to bill paying services, online document storage, and general consumer information. The sections that will be deployed in the first production launch of the service are Financial, Health, Insurance, Groups, and Professional.

3.1 Service Description

MyHaystack.com serves as an infomediary between business clients and the consumer marketplace. The company enables product manufacturers and consumer service providers to deliver targeted market communications to a predefined consumer base. MyHaystack.com also provides market intelligence through an interactive market research tool and periodic industry analysis reports.

MyHaystack.com is built around an automated, online, organizational system that replaces the home filing cabinet as a repository of critical consumer information. This application provides value to the consumer in exchange for their personal information. The information is then used in demographic sampling and general market research.

Customer acquisition is driven by business-to-business partnerships with manufacturers and service providers, as well as affiliations with third party incentive programs. Consumers log in to MyHaystack.com through a branded destination website. Once logged in, they have access to a personalized organizational service. Registered users have access to free content available on the site and can subscribe to additional services, product notices, and targeted marketing messages.

MyHaystack.com is a free service to the consumer. Revenue is generated through service fees charged to MyHaystack.com clients for market communications and market intelligence. Database Posting is free to clients and strategic partners but other activities generate revenue as follows:

Business Client Service Fees

  • Individual Filing- MyHaystack.com clients will be charged a per-user fee to file personalized documents in a MyHaystack.com user filing cabinet. This fee replaces the cost of printing, addressing, and mailing individual documents. Estimated cost for an Individual Filing is between $0.50 and $5.75 per user.
  • Dynamic Posting- Dynamic Posting may be used to distribute highly targeted marketing messages as well as customer service communications. Because MyHaystack.com users have agreed to receive Dynamic Postings, the response rate is expected to be 15% to 20% higher than other forms of online advertising. Estimated cost per thousand (CPM) for a single Dynamic Posting is between $10 and $250, or $0.01 and $0.25 per user reached.
  • Annual Subscriptions- Annual client subscriptions to the MyHaystack.com service allow varying levels of access to online market research tools and research reports. Typical annual subscription rates are between $10,000 and $15,000 per client.
  • Research Reports- Periodic research reports are available individually or for an annual subscription fee. The fee varies based on the type of report and the detail of the data and analysis presented. Monthly reports cost between $250 and $1,000. Quarterly reports cost between $2,500 and $5,000.

In addition to the core revenue sources presented above, MyHaystack.com offers select fee-based services to users. These include extended warranty purchases, online bill paying, and document archiving. MyHaystack.com may generate revenue through transaction or commission fees on some or all of these types of services.

3.1.1 Market Communications

Market communications services are designed to allow product manufacturers or service providers to communicate directly with both their existing and their potential customer base. Three independent channels of communication serve different information delivery needs. They are as follows:

  1. Database Posting- Database Posting is used to provide information to all MyHaystack.com registered users. Information in a Database Posting is generally static data that applies to a specific product or service provided by the MyHaystack.com client. Examples include product manuals, tech support or company contact information, and company annual reports. Users link documents to their personalized filing cabinet. Changes to the information in the MyHaystack.com database are then seamlessly updated in each user account.
  2. Dynamic Posting- Dynamic Posting is used to provide current information to a targeted group of MyHaystack.com users. Current information can be product or service related but may also include direct marketing messages and promotional offers. Customers will be targeted based on a cross-reference of information in their filing cabinets and a willingness to accept certain types of communication. Dynamic Postings generally appear in email or in an independent window within a user’s workspace.
  3. Individual Filing- An Individual Filing is a personalized document that is delivered directly into a user’s filing cabinet. Customers receive the document based on individual ID numbers, product registrations, or by subscription. In general, MyHaystack.com clients will only be able to submit Individual Filings to their own customer base. Examples of Individual Filings include financial statements, insurance policies, and product receipts.

3.1.2 Market Intelligence

Market intelligence is derived from consumer data acquired through the organizational service. Clients have access to market intelligence 24 hours per day through an online research tool. They may also choose to receive monthly and quarterly industry analysis reports. The MyHaystack.com online research tool uses predefined analysis functions that allow clients to view real-time information from the MyHaystack.com database. However, clients are restricted from directly accessing customer names and addresses without customer permission. Further restrictions are in place to protect the confidential information of individual clients.

Initial functionality targets competitive market analysis, consumer demographic information, and product ownership data. Later functionality will allow “What-if” scenarios by performing customized queries and conjoint analysis. Unique to the MyHaystack.com information structure is the ability to capture time-series data used to perform lifecycle marketing analysis and regression analysis. The methodology employed by MyHaystack.com also permits consumers to register products and services purchased in the brick-and-mortar world, increasing the breadth of consumer market data.

Monthly reports are designed as a low cost market research tool that meets the needs of a broad variety of consumer-oriented businesses. Each monthly report provides quantitative analysis of industry segments in a standardized format that allows subscribers to track monthly trends. Quarterly reports are designed to provide a much deeper understanding of the consumer marketplace. These reports analyze information gathered over a number of months or years. Data mining techniques are applied to identify relationships between related data components and consumer behavior. Forecasts are incorporated to maximize the value of the information presented. Research reports will be sold individually or as part of an annual subscription.

3.1.3 Technology

The MyHaystack.com website consists of four main components: a client interface, supporting database infrastructure, data analysis tools, and a user interface. MyHaystack.com has established a preliminary agreement with a technology development agency to design and develop a prototype of the MyHaystack.com site. Additional development will be conducted internally using MyHaystack.com resources.

Clients access the MyHaystack.com site to conduct market intelligence research and to submit information for market communications. Market intelligence services will be provided through a series of standardized data queries that are accessible through a secure browser connection. Graphic data formatting and the ability to download raw data will be incorporated in to the interface.

The MyHaystack.com data infrastructure is based on a structured query language (SQL) database system. A minimum of three database tables are necessary: a detailed customer database, a detailed client database, and a transaction database that maintains a transaction history. Additional database tables will be added as functionality increases. Available production data-mining software will be used to generate detailed analysis of the MyHaystack.com database. Additional analytic functions may be designed internally.

The end-user interface will be created using industry standard server-based development tools. As the objective is a browser accessible interface, likely programming languages are Sun Microsystems’ JAVA or Microsoft’s Active Server Page technology. The user interface will be developed such that it can be easily hosted on multiple, scalable systems and is not directly tied to the database architecture. End-user security is a primary concern.

The MyHaystack.com service will be deployed in two phases. The first phase will be the deployment of an initial prototype site that offers some of the core functionality but is not a comprehensive service. The functionality of the prototype site will include product registration, extended warranty registration and sales, online bill paying and archiving, online data file storage, and a Dynamic Posting system. Additional functionality will be integrated in the production system in the second phase of deployment.

3.2 Web Plan Summary

The MyHaystack.com branded website is an organizational system that manages the most common information stored in a home filing cabinet. The service makes user documents and information more accessible while minimizing the level of user maintenance. MyHaystack.com delivers electronic product and service information, insurance policy information, financial records, and similar documentation directly into user accounts. The organizational structure includes an interactive, easy-to-use, interface with personalized search, archiving, and retrieval functionality. Users have control of the type, frequency, and source of the Individual Filings and Dynamic Postings they receive.

Organizational Model

Documents stored in a MyHaystack.com account are organized in a simple hierarchical structure. Each account consists of six predefined categories for documents and information: Product Ownership, Personal Finance, Insurance, Clubs and Groups, Health, and Professional. Users can add customized categories or eliminate existing categories based on their organizational requirements. Enhanced functions take advantage of cross-references between organizational categories and simplify information retrieval. Information such as direct marketing offers, product recall notifications, and warranty expiration reminders are delivered to consumers based on the level of permission they have indicated.

Additional Functions

Enhanced functionality allows information to be easily located and manipulated across categories. The integrated MyHaystack.com search engine is able to search the entire MyHaystack.com database or limit the search to information linked to a user account. This functionality allows registered users to access a product manual even if they do not register the product. Alternatively, users may search the products they have registered to verify compatibility with new purchases. Online reports can be generated based on category, a complete alphabetical listing, or the date each item was entered. Qualifiers allow data that is no longer valid to be archived or deleted based on consumer needs. A section on user tips addresses varying skill levels by integrating help functions and step-by-step guides.

Customers have the option to receive product specific information and targeted marketing by email or as a part of their personalized account. When a product or service is registered, the user selects the level of information he/she wishes to receive. These preferences can be changed at anytime and all online direct marketing offers will be in a separate window so as not to clutter the overall organizational look and feel of the site.

3.2.1 Product Ownership Example

The product ownership category captures and manages critical data for every item a consumer registers online. Initially, products are registered by selecting the appropriate manufacturer, product name, and model number from a series of drop-down menu items. Eventually, online retailers will offer the option to send product information directly to MyHaystack.com at the time of purchase. For example, if a user purchases a VCR, the sales receipt, product model, and purchase location will be forwarded to the MyHaystack.com database. Using the consumer’s account number, the record will be linked with the relevant documents stored in the MyHaystack.com database. When the consumer logs on to MyHaystack.com, his/her personal filing cabinet will automatically reflect the new purchase.

In addition to accessing updates and information online, users can opt to receive update information by email. The most basic level of information includes notices identifying products that have been recalled or modified since they were originally purchased. A more personalized level offers targeted direct marketing through MyHaystack.com partners. Targeted marketing may be ‘buy now’ online offers or coupons that can be used at a brick-and-mortar business. Up-to-date product information is easily accessible to the user at any time from any location.

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Market Analysis Summary

 The organizational challenge faced by consumers today is enormous. In 1995, the United States produced approximately 4 trillion documents–over 600 million pages of computer printouts each day! The average American consumer receives 49,060 pieces of mail in a lifetime and uses 250 pounds of paper in a year. Approximately 50% of filed material is redundant or out of date and over 80% can’t be located when it’s needed. The demand for help solving this organizational crisis has spawned an entire industry of professional organizers who charge up to $350 an hour for organizational services.

To further the organizational challenge, consumers are demanding online access to their personal information. The rapid growth in online bill paying services, online financial account management, and online stock trading is evidence of this trend. Other industries, like insurance and health care, are examining ways that they can leverage the Internet to support document distribution. Simply sending information by email places the organizational burden on the customer. MyHaystack.com not only delivers the data, but organizes it for easy retrieval.

A MyHaystack.com account is more than an online repository for electronic files, it is a personalized, interactive, organizational system. MyHaystack.com seamlessly categorizes and stores critical consumer data in a personalized “File Cabinet.” Information includes product manuals, receipts, insurance policies, financial statements, and any other documents typically found in a home filing cabinet. For example, a consumer can register a product online to insure direct access to warranty data, manuals, technical support contacts, and other product specific information. When critical product information changes, the consumer’s file cabinet is automatically updated.

4.1 Market Segmentation

My Haystack.com has two large market segments to target:

  • the individual consumer, who needs file storage and organization
  • businesses which want to market to, or know about, these consumers

While our sales revenue comes from businesses seeking market research or a marketing audience, we can only provide these services once we have a large consumer user-base to offer them.

The chart and table below outline the total market potential for MyHaystack.com.

Sbp, electronic filing storage business plan, market analysis summary chart image

Market Analysis
Year 1 Year 2 Year 3 Year 4 Year 5
Potential Customers Growth CAGR
End-users: Consumers 20% 3,000,000 3,600,000 4,320,000 5,184,000 6,220,800 20.00%
Business Clients 10% 90,000 99,000 108,900 119,790 131,769 10.00%
Total 19.74% 3,090,000 3,699,000 4,428,900 5,303,790 6,352,569 19.74%

4.2 Target Market Segment Strategy

Consumers

Our marketing to end-users will focus on consumers comfortable with technology who want secure online access to their personal documents. Such users are savvy about online marketing, and will appreciate the opt-in nature of our data collection. Easy access to their documents, security, and organizational tools will be offered free, in exchange for receiving marketing messages. For the technologically fluent Internet user, this is seen as a good trade.

Business Clients

Although this consumer base needs all sorts of products, we will first focus on high-tech business clients who are seeking marketing information about the kinds of consumers willing to use online services like ours.

As Internet use increases at the household level, and consumer acceptance of new technology speeds up, consumers are demanding more personalized services. Direct marketing companies have demonstrated that a segment of the population is willing to exchange personal information for customized services or online convenience. Consumers frequently personalize Internet portals and are actively adopting online services like bill paying, investment management, and document storage. The growth in e-commerce creates new customer service challenges for product manufacturers while service providers are seeking new ways to remain competitive in the online environment. Additional relevant market statistics are:

  • As of March 15, 2000, there were 259 million Internet users worldwide.
  • Opt-in email services yield 5% to 15% response rates, compared to approximately 1% for banner ads and direct mail.
  • This year, the average consumer will see or hear 1 million marketing messages–almost 3,000 per day.
  • Email marketing expenditures alone will increase 417% to $4.6 billion by 2003.
  • Online retail sales will grow to $184.5 billion by 2004 while online spending per household averaged $1,167 in 1999.

4.3 Service Business Analysis

MyHaystack.com provides business clients with market intelligence, targeted marketing, and consumer care services. Clients are product manufacturers, consumer-oriented service providers, and market analysis firms that use MyHaystack.com to streamline their interaction with a consumer base. Market data is acquired directly from consumers through their use of an innovative, online organizational tool.

The market research industry generated $13.4 billion in revenue in 1998. The Internet based portion of that industry is still in its infancy but is poised for rapid growth. Worldwide Internet users are expected to grow from 196 million in 1999 to approximately 502 million by 2003. MyHaystack.com is a pioneer in the Internet-based market research industry and is poised to take advantage of rapid online growth. Unique to the MyHaystack.com methodology is the ability to track detailed data on household product ownership over time, functionality that is not yet available in existing research organizations.

Online advertising and direct customer communications represents an even larger opportunity. Online advertising is expected to grow from $5.25 billion this year to over $45.5 billion by 2005–more than that spent in the United States on cable and network TV advertising. More importantly, as the competition for consumer attention grows, traditional Internet banner ads are giving way to permission based marketing. The MyHaystack.com organizational service allows consumers to actively choose the frequency, type, and source of direct communications they receive, positioning MyHaystack.com to become a leader in the online permission marketing industry.

4.3.1 Business Participants

The broader competitive landscape can be broken into three segments. Traditional research companies, as well as a new generation of online market research companies, offer market intelligence to businesses. Direct mail, and direct email, companies typically offer targeted market communications. MyHaystack.com also competes for consumer attention with other organizational systems and Internet destinations.

Market Research

Online market research is a rapidly growing market, expected to reach $230 million by the end of 2000. Current online research companies analyze consumer preferences derived from buyer’s guides, product-rating services, purchase information from e-commerce transactions, and online traffic. New research tools are evolving that allow real-time analysis of these growing information databases.

However, the number of consumers who conduct online commerce is still small when compared to the overall retail industry. Moreover, a limited number of consumers conduct a majority of the online transactions, creating a high bias in online research data. MyHaystack.com provides ownership and usage data for both online and brick-and-mortar goods and services. In addition, the MyHaystack.com database will aggregate detailed consumer ownership and service usage over time. Mining this data will identify previously unknown relationships and lifecycle marketing opportunities.

Permission Marketing

Traditional direct marketing is a $160 billion market. Online direct marketing is less expensive, faster, and more effective. Forrester Research estimates that direct marketing and promotions will control 50 to 70% of the online marketing budgets by 2003, or roughly $10 to $15 billion. Permission-based marketing is rapidly becoming one of the most preferred, cost-effective marketing tools available. In exchange for consumers’ attention, companies offer rewards, sweepstakes, points programs, and other promotions.

Consumers are willing to barter their privacy for personalization, but many don’t want to invest time to receive rewards. MyHaystack.com users will not need to fill in surveys, check boxes indicating categories of interest, or surf for interesting promotions. Cross-referencing a user’s filing cabinet will enable MyHaystack.com to deliver user-specific direct marketing and promotions. The user gains a valuable organizational service and receives relevant information.

A majority of online, permission-based marketing is focused on opt-in email mailing lists. The proliferation of HTML as a standard allows email messages to embed active links for immediate consumer response. MyHaystack.com extends the effectiveness of direct email marketing by building an interactive user service.

Organizational Tools

Consumer oriented organizational tools vary in functionality, cost, and consumer input requirements. Traditional, paper-based systems provide an organizational structure but require the user to do all of the information management and filing. PC-based systems are similar, requiring the user to scan and upload documents or manually input data. Consumers have historically been willing to enter certain data if the service is deemed useful, such as electronic calendars and address books.

More recently, bill-paying services have taken over the burden of scanning and uploading financial statements and bills. These services present an electronic copy of each bill to the user and provide the functionality to pay it online. MyHaystack.com views online bill payment service providers as strategic partners. Most of these companies are using substantial resources to manage paper bills and other consumer mail and are poorly positioned to offer organizational functionality similar to MyHaystack.com.

Product information can generally be found in the original hard copy format or by searching the Internet. Some product information is aggregated online to support the sale of extended warranties or to provide customer service solutions to manufacturers. These sites do not have a personalized organizational structure or integrate different categories of user data.

File storage solutions provide disk space for electronic files. Users are required to scan, upload, or save all information in electronic format. They’re also responsible for creating their own organizational structure. The online storage companies’ economies of scale in personal file storage make them attractive strategic partners. The lack of organizational tools and the inability to source electronic documents limit the immediate competitive threat posed by these solutions

4.3.2 Main Competitors

Appendix B profiles several companies that are potential MyHaystack.com competitors.

**Appendices not available for this sample plan.

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Strategy and Implementation Summary

The success of MyHaystack.com depends on the company’s ability to build a user base by converting visitors into registered members that use the organizational system. MyHaystack.com acquires customers through strategic business-to-business partnerships with product manufacturers and service providers. Customers access the organizational service through a branded Internet website. Marketing activities and partnerships with third party incentive programs serve to increase brand awareness and attract additional users to the website.

Early strategic partnerships target product manufacturers that will post user manuals and similar product information in the MyHaystack.com database. These partners may also reach consumers through the Dynamic Posting service. Online bill paying, online disk storage, and other value-added services are provided through co-branding agreements with third party Internet companies. These partnerships not only provide a more comprehensive organizational structure for the initial deployment of the MyHaystack.com service, but also serve to accelerate customer acquisition.

5.1 Competitive Edge

Product manufacturers that sell through multi-tiered distribution rely on a retail channel to manage the customer experience. However, as retailers move online, they reduce their interaction with consumers and place an additional burden on the manufacturer. Product rebates, warranty registration forms, and similar promotions are an effort to partially eliminate the information gap between the manufacturer and customer. With a response rate that is usually less than 5%, these methods have limited effectiveness in helping the manufacturer better serve the consumer.

Consumer-oriented service providers face a different challenge. While most have direct access to their customers, they often need to deliver personalized documentation. The high volume of individual mailings creates an information challenge for both the service provider, and the customer.

MyHaystack.com serves manufacturers by providing a channel for direct communication to the consumer. The user benefits from an increased level of post-purchase consumer care while the manufacturer learns how to better meet their customers’ needs. MyHaystack.com supports consumer service providers by allowing personalized documentation to be filed electronically in a customer’s filing cabinet.

All MyHaystack.com business clients benefit through increased customer knowledge. A product manufacturer can not only determine who is buying their product, but can also determine what other products that consumer owns, or is likely to purchase. Service providers can better determine the service requirements of their customers through a deeper understanding of overall service usage. They can further improve consumer satisfaction and reduce customer inquiries by insuring that all documentation is readily available through an online service. Using this service, business clients can target new customer segments, participate in direct marketing to a highly qualified consumer base, or partner with other manufacturers to offer a comprehensive product solution.

5.2 Sales Strategy

MyHaystack.com is currently negotiating co-branding agreements in the following key categories that will serve to increase traffic and user registrations on the MyHaystack.com site:

  • Financial services- MyHaystack.com will partner with a third party provider to allow MyHaystack.com users to pay bills online. The co-branding agreement is structured such that the provider’s logo will appear within the MyHaystack.com organizational system. Users who subscribe to the service will have to pay a fee directly to the provider, but will access the site through MyHaystack.com. Financial documentation is then archived within the MyHaystack.com organizational system. Users of the partner’s site will have the option to join MyHaystack.com when they open a new account. Once they join, they will become shared users between MyHaystack.com and the financial services provider.
  • E-commerce- MyHaystack.com has established initial partnerships with key e-commerce providers and is in the process of negotiating additional relationships. E-commerce partnerships allow MyHaystack.com customers to directly purchase products that are offered through other sites. Similar functionality may allow MyHaystack.com users to join a purchasing group for specific e-commerce transactions. Consumers who purchase at partner e-commerce sites will have the option to open a MyHaystack.com account at the time of purchase. Initial product information, including an electronic receipt, will then be automatically filed into the MyHaystack.com account.
  • Warranty Services- MyHaystack.com is discussing a partnership to offer extended warranties on registered products. The partnership will consist of a co-branding agreement whereby MyHaystack.com users will purchase an extended warranty through a third party partner. Users who originally visit the partner site will have the opportunity to open a MyHaystack.com account when they purchase an extended warranty. Warranty documentation will automatically be filed in the account.
  • Product Manufacturers- MyHaystack.com is actively seeking strategic partnerships and co-branding agreements with product manufacturers. The agreements will give those strategic partners additional access to market intelligence in return for joint marketing.

Later stage strategic partnerships target companies that require economical document delivery and information management systems for their customers. Insurance companies, investment and financial services companies, and health management organizations are targets for later stage partnerships. Online and traditional retail businesses may also serve as key strategic partners and drive future e-commerce opportunities.

5.2.1 Sales Forecast

As services are added and users increase the volume of information managed through MyHaystack.com, the frequency of repeat visits will increase. More importantly, the value of information stored in the MyHaystack.com database increases as registered members expand their activities on the website.

Market Intelligence Sales

For the purposes of financial forecasts, market intelligence sales are divided into online market research clients and research subscriptions. It is likely that a single client will use both the online service and the reporting service.

The number of MyHaystack.com online research clients is based on recent client acquisition numbers of comparable companies. Jupiter Research acquired 921 clients, over three years, for their market research practice. They were able to accelerate acquisition by converting the attendees of their conferences into clients. Greenfield Online has acquired over 350 clients since 1995. This analysis assumes the acquisition of 350 clients by the end of year 3. MyHaystack.com will accelerate acquisition by ensuring that strategic partners are also online research clients.

Pricing for online research depends on the industry and level of functionality required. Annual rates for Active Research Inc., an industry leader in online research, start at $10,000 and run as high as $50,000. Jupiter Research increased their average contract value from $28,000 to $41,000 in the last year by bundling additional services. These services include online research, periodic reports, and access to conference calls. MyHaystack.com will initially offer a basic online research tool free to our early strategic partners. Following a full launch, pricing will start at $6,000 per year and increase to an average of $12,000 by year 3. Although online subscriptions may be bundled with research reports, this model accounts for them separately, keeping the combined cost within the industry range for total contract value.

The projected number of market research subscriptions assumes that some clients of the online research tool will subscribe to market research reports. Research reports will also be sold individually and may exceed the number of online market research clients.

Initially, MyHaystack.com will sell monthly and quarterly reports at between $250 and $5,000 per report, depending on the industry and the number of reports bundled into an annual package. The first reports will not be marketed until after the production launch of the MyHaystack.com site at the end of year 1.

Individual Filings

The number of individual filings is based on the number of users in the MyHaystack.com database. As more services are added, the percentage of users accepting direct filings and the number of direct filings per user will increase. Prices for filing will vary from $0.50 to $5.75 per document, depending on the number of filings delivered, the size of each filing, and the type of each filing. This can be compared with regular postage, which can vary from $0.53 to $5.72 to mail.

Dynamic Posting

MyHaystack.com’s ability to target users with relevant information will drive up both the price per message and the number of users willing to accept direct marketing. Forrester Research estimates that by 2004, the average household will receive 9 pieces of email marketing a day. The model estimates two messages per week, for users that choose to accept them, by the end of year 3 of operations.

The cost to deliver a direct marketing message will be between $.01 and $.25 per message. MyHaystack.com will be able to charge substantially more than the market average for targeted marketing once extensive user profiles have been established. By year three, the average cost is conservatively estimated at $.15 per message.

Sbp, electronic filing storage business plan, strategy and implementation summary chart image

Sbp, electronic filing storage business plan, strategy and implementation summary chart image

Sales Forecast
Year 1 Year 2 Year 3
Sales
Individual Filing $0 $99,325 $1,128,061
Dynamic Posting $0 $53,409 $885,948
Online Research $18,100 $813,159 $2,770,844
Research Reports $708 $290,507 $2,952,808
Total Sales $18,808 $1,256,400 $7,737,661
Direct Cost of Sales Year 1 Year 2 Year 3
Individual Filing $0 $54,417 $501,169
Dynamic Posting $0 $29,261 $393,605
Online Research $12,670 $445,509 $1,231,017
Research Reports $496 $159,162 $1,311,859
Subtotal Direct Cost of Sales $13,166 $688,349 $3,437,650

5.3 Value Proposition

My Haystack.com offers different values to its various target markets.

Market Research

Key advantages of MyHaystack.com over other online and traditional market research firms are:

  1. MyHaystack.com builds long-term consumer value by maintaining the relationship with our users. The result is time-series market data that models the life cycle purchasing behavior of the consumer population.
  2. MyHaystack.com effectively bridges the gap between online and brick-and-mortar consumer research companies. The unique value offered to the consumer encourages participation from offline participants.
  3. MyHaystack.com is a completely online service, eliminating the expense associated with physical survey methodologies. The result is a shorter time for data collection at a lower cost.

Permission Marketing

Key advantages of MyHaystack.com over similar online direct marketing companies are:

  • While traditional email marketing is completely one-sided, MyHaystack.com maintains a two-way dialog with the users. This not only insures that every message is delivered to a user willing to accept it, but also assures that each user profile is current.
  • MyHaystack.com messages can be received in the MyHaystack.com organizational system or via targeted email. This allows the user to separate MyHaystack.com messaging from the clutter of other online email marketers.
  • Opt-in and Opt-out functions allow a user to adjust the level of information received immediately, without fear of “subscribing” to a mailing list that will be sold, or otherwise distributed.

Organizational Tools

MyHaystack.com has several key advantages over traditional organizational tools:

  1. MyHaystack.com is a highly automated system that limits the amount of consumer effort necessary to build and maintain an organizational system.
  2. MyHaystack.com is an online solution that can be accessed from anywhere. This reduces the possibility that critical data is unavailable when it is needed.
  3. MyHaystack.com is a comprehensive solution with a built in organizational structure. This allows a user to easily start using the system and add components as their needs change.

5.4 Milestones

MyHaystack.com selected to participate in the Bay Tech Incubator Program. Bay Tech has established a consortium of sponsors and partners to provide services to 25 selected start-up, e-business companies. The program provides a development incubation environment for a period of 6 months and allows MyHaystack.com to dramatically reduce the necessary development time. MyHaystack.com is now a member of the Bay Area Incubator Program.

Sara Jones joins Board of Advisors – Sara Jones, Principal at Arthur Coopers Management Consulting Services, has over fifteen years of consulting experience focusing on e-business, strategic planning and organizational design. Ms. Jones has agreed to serve on the Board of Advisors for MyHaystack.com Inc.

BuildIt Inc. contracts for site development – BuildIt Inc., a leading technology development firm, and MyHaystack.com Inc. have established an agreement to complete the development of the MyHaystack.com Internet service within 16 weeks.

Samuel Dewy added to Board of Directors – Mr. Dewy, a partner in the law firm Watson, Sonoma, Goodson & Rodgers has agreed to serve as a member of the Board of Directors of MyHaystack.com. In addition to serving as general counsel to the company, Mr. Dewy’s experience in building new technology ventures will insure the success of MyHaystack.com.

Partnership with Stuff.com – MyHaystack.com has established a strategic partnership with Stuff.com, an online group purchasing service for consumer electronics and related products. The partnership addresses issues of information sharing, market research, and e-commerce.

Arthur Coopers joins Board of Advisors – Arthur Coopers L.L.P. has agreed to serve as advisors to MyHaystack.com. Steven Cross, a partner at Arthur Coopers L.L.P., and a specialist in emerging companies will serve on the Board of Advisors of MyHaystack.com.

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Management Summary

Management Team

The Co-founders of MyHaystack.com, John Smith and Jane Doe have management experience in high growth technology companies and consumer marketing. MyHaystack.com is actively recruiting experienced industry representatives to serve on the management team and as members of the advisory board.

John Smith most recently served as Chief Operating Officer at OnlineNet, where he developed a detailed knowledge of the challenges facing product manufacturers. Mr. Smith was responsible for the development of new distribution channels and the establishment of strategic partnership agreements across a wide range of product manufacturers. He also has a strong background in data warehousing and mass data storage requirements. Mr. Smith completed a Master’s degree in engineering at MIT and an MBA at the Haas School of Business.

Jane Doe served as Director of Marketing at Value Shop Inc., where she built her knowledge of consumer marketing. She led the development of marketing strategies that leverage the Internet. Ms. Doe also has 8 years of experience in market analysis and research. She completed an MBA at Harvard University and has a BA from Dartmouth.

The Principal Member of the Board of Directors

Samuel Dewy, Partner at Watson, Sonoma, Goodson & Rodgers, joined the firm in 1971. Mr. Dewy serves as an advisor and board member for a wide variety of high-tech companies in the computer, semiconductor, entertainment, software, and biotech industries. Mr. Dewy specializes in corporate law as it relates to venture capital and the creation of high-tech companies. Mr. Dewy completed his undergraduate degree at UCLA and his law degree at the University of California at Berkeley.

The Board of Advisors

Charles Brock, Co-Founder and CEO of Successful_business_site.com, has extensive experience in the formation of new ventures. As a partner at Waterhouse & Young LLP, Mr. Brock founded and served as the Director of the Entrepreneurial Services Group in the San Jose Bay Area. He is a Co-Founder and Limited Partner of Venture Flyers venture capital fund.

Sara Jones, Principal at Arthur Coopers Management Consulting Services, has over fifteen years of consulting experience concentrating on issues of M&A, strategic planning, e-business and organizational design. Most recently Ms. Jones led the spin-off / IPO team of ISAVE from BigTime Corporation. She has also worked with manufacturing and technology companies that will translate into valuable knowledge and relationships for MyHaystack.com.

Peter Downey, Director of Business Development at Advanced Network Communications, has both technical and business experience in the deployment of emerging broadband technologies. Prior to ANC, Mr. Downey served as a Product Manager with Hewlett-Packard Corporation. Mr. Downey also has experience at General Electric and IBM.

6.1 Personnel Plan

We will start the company with nine employees:

  • Marketing/Sales (3)
  • Researchers/Analysts (3)
  • Programmers (2)
  • Administrative (1)

Our marketing/sales team includes one member with strong experience in affiliate and partner programs, and another who will oversee the website programmers in website design, search engine optimization, and user experience.

Personnel Plan
Year 1 Year 2 Year 3
Marketing and Sales $144,552 $399,253 $644,103
Researchers and Analysts $115,644 $239,571 $386,456
Programmers $86,736 $0 $0
Administrative $38,544 $159,684 $257,651
Total People 9 18 28
Total Payroll $385,476 $798,508 $1,288,210

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Financial Plan

MyHaystack.com generates revenue through a combination of market communications and market intelligence services. These services are sold to MyHaystack.com clients in a business-to-business transaction. Complete financial statements are presented in Appendix A of this business plan.

This financial projection assumes a conservative scenario where early partnerships are not directly resulting in shared users. Adverse market conditions or a failure to execute on the MyHaystack.com business plan could limit the number of client subscriptions, effectively reducing the forecasted revenue. Alternatively, better than anticipated market reception of the MyHaystack.com service, along with a rapid consumer adoption rate, could substantially increase annual revenue.

Revenue is driven by a combination of MyHaystack.com services that include Individual Filings, Dynamic Posting, Online Research Subscriptions, and Market Research Report Subscriptions. This analysis does not include the potential for additional revenue based on third party licensing agreements, commission generated through the sale of products and services to consumers, or other revenue that is not a core focus of the MyHaystack.com business model.

**Appendices not available for this sample plan.

7.1 Important Assumptions

The following table shows some of our important financial assumptions.

General Assumptions
Year 1 Year 2 Year 3
Plan Month 1 2 3
Current Interest Rate 10.00% 10.00% 10.00%
Long-term Interest Rate 10.00% 10.00% 10.00%
Tax Rate 25.42% 25.00% 25.42%
Other 0 0 0

7.2 Break-even Analysis

Preliminary financial forecasts project a break-even point beyond year 3 of operations, the limit of the detailed financial forecast. Assuming consistent growth, break-even will occur during Q3 of year 4 of operations. However, market fluctuations, changes in the competitive environment, or a failure to effectively execute on the MyHaystack.com business strategy could further delay the break-even point.

An alternative, and more likely, scenario is that rapid expansion of the industry and rapid growth of MyHaystack.com will drive additional expenditures on customer acquisition, marketing, and product development. While these expenditures have the potential to substantially increase revenue and solidify MyHaystack.com as a leader in the online market research industry, they may also serve to further delay the break-even point.

Sbp, electronic filing storage business plan, financial plan chart image

Break-even Analysis
Monthly Revenue Break-even $359,608
Assumptions:
Average Percent Variable Cost 70%
Estimated Monthly Fixed Cost $107,882

7.3 Business Ratios

The following table contains important business ratios. The Industry Profile column presents ratios as described by the Standard Industry Classification (SIC) Index code 8732, Marketing Research and Public Opinion Polling.

Ratio Analysis
Year 1 Year 2 Year 3 Industry Profile
Sales Growth 0.00% 6580.14% 515.86% 8.26%
Percent of Total Assets
Accounts Receivable 0.14% 2.56% 5.01% 23.16%
Other Current Assets 0.36% 0.10% 0.03% 50.04%
Total Current Assets 96.91% 98.56% 99.57% 76.51%
Long-term Assets 3.09% 1.44% 0.43% 23.49%
Total Assets 100.00% 100.00% 100.00% 100.00%
Current Liabilities 4.75% 1.42% 1.29% 36.68%
Long-term Liabilities 0.00% 0.00% 0.00% 20.02%
Total Liabilities 4.75% 1.42% 1.29% 56.70%
Net Worth 95.25% 98.58% 98.71% 43.30%
Percent of Sales
Sales 100.00% 100.00% 100.00% 100.00%
Gross Margin 30.00% 45.21% 55.57% 100.00%
Selling, General & Administrative Expenses 9059.77% 477.51% 125.12% 76.67%
Advertising Expenses 3706.18% 297.17% 75.76% 1.56%
Profit Before Interest and Taxes -6853.18% -106.97% 23.77% 1.30%
Main Ratios
Current 20.41 69.29 77.22 1.48
Quick 20.41 69.29 77.22 1.13
Total Debt to Total Assets 4.75% 1.42% 1.29% 63.55%
Pre-tax Return on Net Worth -48.20% -13.53% 5.88% 3.70%
Pre-tax Return on Assets -45.91% -13.34% 5.80% 10.14%
Additional Ratios Year 1 Year 2 Year 3
Net Profit Margin -6853.18% -106.97% 17.73% n.a
Return on Equity -48.20% -13.53% 4.38% n.a
Activity Ratios
Accounts Receivable Turnover 4.87 4.87 4.87 n.a
Collection Days 57 38 44 n.a
Accounts Payable Turnover 6.83 12.17 12.17 n.a
Payment Days 27 29 20 n.a
Total Asset Turnover 0.01 0.12 0.24 n.a
Debt Ratios
Debt to Net Worth 0.05 0.01 0.01 n.a
Current Liab. to Liab. 1.00 1.00 1.00 n.a
Liquidity Ratios
Net Working Capital $2,587,443 $9,784,986 $31,166,841 n.a
Interest Coverage 0.00 0.00 0.00 n.a
Additional Ratios
Assets to Sales 149.26 8.02 4.10 n.a
Current Debt/Total Assets 5% 1% 1% n.a
Acid Test 20.38 67.49 73.33 n.a
Sales/Net Worth 0.01 0.13 0.25 n.a
Dividend Payout 0.00 0.00 0.00 n.a

7.4 Projected Profit and Loss

MyHaystack.com is positioned as an early entrant into the rapidly growing market for online consumer research. As such, MyHaystack.com expects to enjoy significant first-mover advantages. However, the company expects to incur substantive losses during the first three years of operations. These losses reflect the initial investment necessary to establish a strong market position. This market position will serve as a strategic advantage and a potential barrier to entry as the industry expands. Once the industry matures, the company has the ability to garner additional revenue from the MyHaystack.com client base.

The following table shows our projected Profit and Loss for the next three years.

Sbp, electronic filing storage business plan, financial plan chart image

Sbp, electronic filing storage business plan, financial plan chart image

Pro Forma Profit and Loss
Year 1 Year 2 Year 3
Sales $18,808 $1,256,400 $7,737,661
Direct Cost of Sales $13,166 $688,349 $3,437,650
Other $0 $0 $0
Total Cost of Sales $13,166 $688,349 $3,437,650
Gross Margin $5,642 $568,051 $4,300,011
Gross Margin % 30.00% 45.21% 55.57%
Expenses
Payroll $385,476 $798,508 $1,288,210
Marketing/Promotion $855,223 $1,000,000 $1,000,000
Depreciation $11,889 $58,542 $102,667
Utilities $6,000 $10,000 $15,000
Insurance $18,000 $20,000 $25,000
Rent $18,000 $25,000 $30,000
Payroll Taxes $0 $0 $0
Other $0 $0 $0
Total Operating Expenses $1,294,588 $1,912,050 $2,460,877
Profit Before Interest and Taxes ($1,288,946) ($1,343,999) $1,839,134
EBITDA ($1,277,057) ($1,285,457) $1,941,801
Interest Expense $0 $0 $0
Taxes Incurred $0 $0 $467,447
Net Profit ($1,288,946) ($1,343,999) $1,371,687
Net Profit/Sales -6853.18% -106.97% 17.73%

7.5 Cash Flow

The following chart and table outline anticipated cash flow for MyHaystack.com. The table contains yearly projections; for a monthly analysis, please see table appendix at the end of this plan.

Sbp, electronic filing storage business plan, financial plan chart image

Pro Forma Cash Flow
Year 1 Year 2 Year 3
Cash Received
Cash from Operations
Cash Sales $0 $0 $0
Cash from Receivables $14,944 $1,002,122 $6,406,007
Subtotal Cash from Operations $14,944 $1,002,122 $6,406,007
Additional Cash Received
Sales Tax, VAT, HST/GST Received $0 $0 $0
New Current Borrowing $0 $0 $0
New Other Liabilities (interest-free) $0 $0 $0
New Long-term Liabilities $0 $0 $0
Sales of Other Current Assets $0 $0 $0
Sales of Long-term Assets $0 $0 $0
New Investment Received $3,500,000 $8,600,000 $20,000,000
Subtotal Cash Received $3,514,944 $9,602,122 $26,406,007
Expenditures Year 1 Year 2 Year 3
Expenditures from Operations
Cash Spending $385,476 $798,508 $1,288,210
Bill Payments $777,073 $1,733,376 $4,709,473
Subtotal Spent on Operations $1,162,549 $2,531,884 $5,997,683
Additional Cash Spent
Sales Tax, VAT, HST/GST Paid Out $0 $0 $0
Principal Repayment of Current Borrowing $0 $0 $0
Other Liabilities Principal Repayment $0 $0 $0
Long-term Liabilities Principal Repayment $0 $0 $0
Purchase Other Current Assets $0 $0 $0
Purchase Long-term Assets $98,500 $117,000 $92,500
Dividends $0 $0 $0
Subtotal Cash Spent $1,261,049 $2,648,884 $6,090,183
Net Cash Flow $2,253,895 $6,953,238 $20,315,823
Cash Balance $2,706,895 $9,660,133 $29,975,956

7.6 Balance Sheet

The following table presents the Balance Sheet for MyHaystack.com.

Pro Forma Balance Sheet
Year 1 Year 2 Year 3
Assets
Current Assets
Cash $2,706,895 $9,660,133 $29,975,956
Accounts Receivable $3,864 $258,143 $1,589,797
Other Current Assets $10,000 $10,000 $10,000
Total Current Assets $2,720,759 $9,928,275 $31,575,753
Long-term Assets
Long-term Assets $98,500 $215,500 $308,000
Accumulated Depreciation $11,889 $70,431 $173,098
Total Long-term Assets $86,611 $145,069 $134,902
Total Assets $2,807,370 $10,073,344 $31,710,655
Liabilities and Capital Year 1 Year 2 Year 3
Current Liabilities
Accounts Payable $133,316 $143,289 $408,912
Current Borrowing $0 $0 $0
Other Current Liabilities $0 $0 $0
Subtotal Current Liabilities $133,316 $143,289 $408,912
Long-term Liabilities $0 $0 $0
Total Liabilities $133,316 $143,289 $408,912
Paid-in Capital $4,000,000 $12,600,000 $32,600,000
Retained Earnings ($37,000) ($1,325,946) ($2,669,945)
Earnings ($1,288,946) ($1,343,999) $1,371,687
Total Capital $2,674,054 $9,930,055 $31,301,743
Total Liabilities and Capital $2,807,370 $10,073,344 $31,710,655
Net Worth $2,674,054 $9,930,055 $31,301,743

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Appendix

Sales Forecast
Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12
Sales
Individual Filing 0% $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Dynamic Posting 0% $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Online Research 0% $0 $0 $1,810 $1,810 $1,810 $1,810 $1,810 $1,810 $1,810 $1,810 $1,810 $1,810
Research Reports 0% $0 $0 $0 $0 $0 $0 $100 $100 $100 $100 $100 $208
Total Sales $0 $0 $1,810 $1,810 $1,810 $1,810 $1,910 $1,910 $1,910 $1,910 $1,910 $2,018
Direct Cost of Sales Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12
Individual Filing $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Dynamic Posting $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Online Research $0 $0 $1,267 $1,267 $1,267 $1,267 $1,267 $1,267 $1,267 $1,267 $1,267 $1,267
Research Reports $0 $0 $0 $0 $0 $0 $70 $70 $70 $70 $70 $146
Subtotal Direct Cost of Sales $0 $0 $1,267 $1,267 $1,267 $1,267 $1,337 $1,337 $1,337 $1,337 $1,337 $1,413
Personnel Plan
Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12
Marketing and Sales 0% $12,046 $12,046 $12,046 $12,046 $12,046 $12,046 $12,046 $12,046 $12,046 $12,046 $12,046 $12,046
Researchers and Analysts 0% $9,637 $9,637 $9,637 $9,637 $9,637 $9,637 $9,637 $9,637 $9,637 $9,637 $9,637 $9,637
Programmers 0% $7,228 $7,228 $7,228 $7,228 $7,228 $7,228 $7,228 $7,228 $7,228 $7,228 $7,228 $7,228
Administrative 0% $3,212 $3,212 $3,212 $3,212 $3,212 $3,212 $3,212 $3,212 $3,212 $3,212 $3,212 $3,212
Total People 9 9 9 9 9 9 9 9 9 9 9 9
Total Payroll $32,123 $32,123 $32,123 $32,123 $32,123 $32,123 $32,123 $32,123 $32,123 $32,123 $32,123 $32,123

Pro Forma Profit and Loss
Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12
Sales $0 $0 $1,810 $1,810 $1,810 $1,810 $1,910 $1,910 $1,910 $1,910 $1,910 $2,018
Direct Cost of Sales $0 $0 $1,267 $1,267 $1,267 $1,267 $1,337 $1,337 $1,337 $1,337 $1,337 $1,413
Other $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Total Cost of Sales $0 $0 $1,267 $1,267 $1,267 $1,267 $1,337 $1,337 $1,337 $1,337 $1,337 $1,413
Gross Margin $0 $0 $543 $543 $543 $543 $573 $573 $573 $573 $573 $605
Gross Margin % 0.00% 0.00% 30.00% 30.00% 30.00% 30.00% 30.00% 30.00% 30.00% 30.00% 30.00% 30.00%
Expenses
Payroll $32,123 $32,123 $32,123 $32,123 $32,123 $32,123 $32,123 $32,123 $32,123 $32,123 $32,123 $32,123
Marketing/Promotion $17,223 $17,000 $17,000 $17,000 $17,000 $17,000 $107,000 $127,000 $127,000 $127,000 $132,000 $133,000
Depreciation $991 $991 $991 $991 $991 $991 $991 $991 $991 $991 $991 $991
Utilities $500 $500 $500 $500 $500 $500 $500 $500 $500 $500 $500 $500
Insurance $1,500 $1,500 $1,500 $1,500 $1,500 $1,500 $1,500 $1,500 $1,500 $1,500 $1,500 $1,500
Rent $1,500 $1,500 $1,500 $1,500 $1,500 $1,500 $1,500 $1,500 $1,500 $1,500 $1,500 $1,500
Payroll Taxes 15% $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Other $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Total Operating Expenses $53,837 $53,614 $53,614 $53,614 $53,614 $53,614 $143,614 $163,614 $163,614 $163,614 $168,614 $169,614
Profit Before Interest and Taxes ($53,837) ($53,614) ($53,071) ($53,071) ($53,071) ($53,071) ($143,041) ($163,041) ($163,041) ($163,041) ($168,041) ($169,008)
EBITDA ($52,846) ($52,623) ($52,080) ($52,080) ($52,080) ($52,080) ($142,050) ($162,050) ($162,050) ($162,050) ($167,050) ($168,018)
Interest Expense $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Taxes Incurred $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Net Profit ($53,837) ($53,614) ($53,071) ($53,071) ($53,071) ($53,071) ($143,041) ($163,041) ($163,041) ($163,041) ($168,041) ($169,008)
Net Profit/Sales 0.00% 0.00% -2932.09% -2932.09% -2932.09% -2932.09% -7489.04% -8536.16% -8536.16% -8536.16% -8797.95% -8375.04%

Pro Forma Cash Flow
Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12
Cash Received
Cash from Operations
Cash Sales $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Cash from Receivables $0 $0 $0 $60 $1,810 $1,810 $1,810 $1,813 $1,910 $1,910 $1,910 $1,910
Subtotal Cash from Operations $0 $0 $0 $60 $1,810 $1,810 $1,810 $1,813 $1,910 $1,910 $1,910 $1,910
Additional Cash Received
Sales Tax, VAT, HST/GST Received 0.00% $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
New Current Borrowing $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
New Other Liabilities (interest-free) $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
New Long-term Liabilities $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Sales of Other Current Assets $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Sales of Long-term Assets $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
New Investment Received $0 $0 $0 $0 $0 $0 $3,500,000 $0 $0 $0 $0 $0
Subtotal Cash Received $0 $0 $0 $60 $1,810 $1,810 $3,501,810 $1,813 $1,910 $1,910 $1,910 $1,910
Expenditures Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12
Expenditures from Operations
Cash Spending $32,123 $32,123 $32,123 $32,123 $32,123 $32,123 $32,123 $32,123 $32,123 $32,123 $32,123 $32,123
Bill Payments $691 $20,716 $20,542 $21,767 $21,767 $21,767 $24,769 $112,504 $131,837 $131,837 $132,004 $136,873
Subtotal Spent on Operations $32,814 $52,839 $52,665 $53,890 $53,890 $53,890 $56,892 $144,627 $163,960 $163,960 $164,127 $168,996
Additional Cash Spent
Sales Tax, VAT, HST/GST Paid Out $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Principal Repayment of Current Borrowing $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Other Liabilities Principal Repayment $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Long-term Liabilities Principal Repayment $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Purchase Other Current Assets $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Purchase Long-term Assets $8,208 $8,208 $8,208 $8,208 $8,208 $8,208 $8,208 $8,208 $8,208 $8,208 $8,208 $8,208
Dividends $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Subtotal Cash Spent $41,022 $61,047 $60,874 $62,098 $62,098 $62,098 $65,101 $152,835 $172,168 $172,168 $172,335 $177,204
Net Cash Flow ($41,022) ($61,047) ($60,874) ($62,038) ($60,288) ($60,288) $3,436,709 ($151,022) ($170,258) ($170,258) ($170,425) ($175,294)
Cash Balance $411,978 $350,931 $290,057 $228,019 $167,731 $107,443 $3,544,152 $3,393,130 $3,222,872 $3,052,614 $2,882,189 $2,706,895

Pro Forma Balance Sheet
Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12
Assets Starting Balances
Current Assets
Cash $453,000 $411,978 $350,931 $290,057 $228,019 $167,731 $107,443 $3,544,152 $3,393,130 $3,222,872 $3,052,614 $2,882,189 $2,706,895
Accounts Receivable $0 $0 $0 $1,810 $3,560 $3,560 $3,560 $3,660 $3,756 $3,756 $3,756 $3,756 $3,864
Other Current Assets $10,000 $10,000 $10,000 $10,000 $10,000 $10,000 $10,000 $10,000 $10,000 $10,000 $10,000 $10,000 $10,000
Total Current Assets $463,000 $421,978 $360,931 $301,867 $241,579 $181,291 $121,002 $3,557,812 $3,406,887 $3,236,628 $3,066,370 $2,895,945 $2,720,759
Long-term Assets
Long-term Assets $0 $8,208 $16,417 $24,625 $32,833 $41,042 $49,250 $57,458 $65,667 $73,875 $82,083 $90,292 $98,500
Accumulated Depreciation $0 $991 $1,982 $2,972 $3,963 $4,954 $5,945 $6,935 $7,926 $8,917 $9,908 $10,898 $11,889
Total Long-term Assets $0 $7,218 $14,435 $21,653 $28,870 $36,088 $43,305 $50,523 $57,741 $64,958 $72,176 $79,393 $86,611
Total Assets $463,000 $429,195 $375,366 $323,520 $270,449 $217,379 $164,308 $3,608,335 $3,464,627 $3,301,587 $3,138,546 $2,975,339 $2,807,370
Liabilities and Capital Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12
Current Liabilities
Accounts Payable $0 $20,032 $19,817 $21,041 $21,041 $21,041 $21,041 $108,109 $127,442 $127,442 $127,442 $132,276 $133,316
Current Borrowing $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Other Current Liabilities $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Subtotal Current Liabilities $0 $20,032 $19,817 $21,041 $21,041 $21,041 $21,041 $108,109 $127,442 $127,442 $127,442 $132,276 $133,316
Long-term Liabilities $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Total Liabilities $0 $20,032 $19,817 $21,041 $21,041 $21,041 $21,041 $108,109 $127,442 $127,442 $127,442 $132,276 $133,316
Paid-in Capital $500,000 $500,000 $500,000 $500,000 $500,000 $500,000 $500,000 $4,000,000 $4,000,000 $4,000,000 $4,000,000 $4,000,000 $4,000,000
Retained Earnings ($37,000) ($37,000) ($37,000) ($37,000) ($37,000) ($37,000) ($37,000) ($37,000) ($37,000) ($37,000) ($37,000) ($37,000) ($37,000)
Earnings $0 ($53,837) ($107,451) ($160,521) ($213,592) ($266,663) ($319,734) ($462,774) ($625,815) ($788,856) ($951,897) ($1,119,937) ($1,288,946)
Total Capital $463,000 $409,163 $355,550 $302,479 $249,408 $196,337 $143,267 $3,500,226 $3,337,185 $3,174,144 $3,011,104 $2,843,063 $2,674,054
Total Liabilities and Capital $463,000 $429,195 $375,366 $323,520 $270,449 $217,379 $164,308 $3,608,335 $3,464,627 $3,301,587 $3,138,546 $2,975,339 $2,807,370
Net Worth $463,000 $409,163 $355,550 $302,479 $249,408 $196,337 $143,267 $3,500,226 $3,337,185 $3,174,144 $3,011,104 $2,843,063 $2,674,054

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