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Cambridge Strategy Group

Executive Summary

Opportunity

Problem

The start up businesses in Cambridge are in need of a consulting firm that helps them decide how to market themselves and build themselves to a successful business. Research shows that many of these businesses fail since they don’t have the resources to make the right choices. Helping them keeps people employed and the economy going strong. 

Solution

The Cambridge Strategy Group (CSG), L.L.C. is dedicated to providing marketing and management consulting services to small and emerging businesses looking for opportunities to increase their potential for success. 

Market

The target market is defined by the customer needs that create the market, the structural forces that govern operation within the market, and the attractiveness of the market based on strategic value, market size, market growth, and potential for profit.

Competition

There are many rivals in the Cambridge area that fall into 4 categories: segment rivals, market rivals, generic rivals, structural rivals.

Why Us?

The Cambridge Strategy Group is focused specifically on helping small and emerging businesses maximize their potential for success. 

Expectations

Forecast

The market for Cambridge Strategy Group’s services is enormous. Initially, the three founding members intend to work part-time on this venture while maintaining full-time positions with other corporations. As we determine how best to enlarge our operations, we will consider expanding the business as defined in our strategy.

Financial Highlights by Year

Chart visualizing the data for Financial Highlights by Year

Financing Needed

The three managing directors will contribute $115,000.  John Gordon is contributing $40,000, Todd Kuczaj will be contributing $40,000 and Ben Cordell will be contributing $35,000. 

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Opportunity

Problem & Solution

Problem Worth Solving

The new businesses in the area  were started by an entrepreneur with a solid idea, but little experience in creating the formal business strategies or marketing deliverables necessary to turn their idea into a successful business. With recent IPOs giving back much of their initial valuations, companies are now being forced to demonstrate profitable business models in order to maintain strong valuations. Venture capitalists need to focus on making their existing companies successful instead of simply prospecting for the next great idea. To accomplish this, founders need to effectively define and communicate their value propositions. Since this is not a core competency for many entrepreneurs, there is an opportunity to provide this skill set through outsourcing arrangements. Additionally, founders need experience in sales and marketing to exploit market opportunities and create early revenue wins. Finally, no business currently exists with dominant mind-share as a "small business consulting" firm.

Our Solution

The Cambridge Strategy Group is focused specifically on helping small and emerging businesses maximize their potential for success. We differentiate ourselves in the following ways:

  1. Focus on small business: Our mission is to help small businesses of today become the leading corporations of tomorrow. Cambridge Strategy Group will attempt to own the words "small business" in the minds of our potential clients.
  2. Cost-effective personal interaction with local consultant presence:We will target new regions with local consultants, allowing us to personally interact with small businesses without needing to bring consultants to the region.
  3. A diverse network of consultants and alliance partners: By relying on a nationally distributed talent base coordinated to work together remotely, we will be able to bring together a variety of skills to meet the needs of our clients.

Target Market

Market Size & Segments

Market Segmentation

ENVIRONMENTAL FACTORS
The following factors define the environment in which CSG hopes to succeed.

  1. Physical: New businesses are being formed across the United States every day. Providing consulting services to these businesses will require local presence. North Carolina’s Triangle Area has recently been rated as one of the top three metropolitan areas for small businesses by Dun and Bradstreet’s Entrepreneur magazine.
  2. Legal: The creation of the Limited Liability Company has made it very simple for new businesses to organize as formal business entities. Limited Liability Companies are ideal for small businesses as they avoid the double taxation characteristic of C Corporations, while providing limited liability for the company members.
  3. Economic: Current economic conditions are continuing to challenge investors’ views regarding the potential for return. The market is no longer rewarding entrepreneurs solely on the strength of their ideas. Instead, business owners and Venture Capitalists are expected to show profitability before they will be allowed to reap the rewards of their hard work. While small business owners bring innovative ideas and possibly leadership qualities to their organization, they will need to rely upon skills from other disciplines, including marketing, to succeed.
  4. Social: According to a Small Business Administration report, U.S. small business is at an all-time high (The Facts About Small Business, 1999)"interest in owning or starting a small business has broken new records [between 1993 and 1998]." While recent stock market corrections may have frightened a segment of potential entrepreneurs, the opportunity for financial reward keeps many small business owners diligently chasing their dreams.
  5. Technological: Recent advances in technology have greatly enhanced the ability for distributed teams to work together on common projects. The proliferation of the Internet facilitates data sharing and communication. Voice-over-IP technology reduces the cost of conversation between CSG members working across the country.

With these conditions in mind, CSG will concentrate on initially building clients in the North Carolina area before expanding into other areas. We will be concentrating on all businesses that employ less than 100 individuals. CSG will not segment its market to any greater degree since the company wants to build clients as quickly as possible. Therefore our market analysis chart below reflects this initial strategy.

Target Market 

The target market is defined by the customer needs that create the market, the structural forces that govern operation within the market, and the attractiveness of the market based on strategic value, market size, market growth, and potential for profit. Each of these areas is described below.

STRUCTURAL FACTORS
Particular market forces affect the ability of the Cambridge Strategy Group to succeed. These forces are identified below:

  1. Buyer Power: With almost 900,000 new businesses starting each year, there is ample demand for consulting services. If any particular business chooses to work with another consulting firm, there are still a large number of firms that can be targeted by CSG. Buyers have power in this market, but the size of the market makes it unlikely that buyer power will have any significant negative impact on the consulting firm.
  2. Threat of Conventional Competitors: No other conventional competitor owns the idea of "small business consulting" in the minds of today’s business owners. A number of high-profile management and marketing consulting firms exist, yet most of these firms have a reputation for being expensive and much too theoretical for small business owners who have practical, short-term concerns. Still, there is potential for these firms to open distinct teams of consultants focused on this market place. These teams would have particular strength in an area where the competitors already have an established consulting presence, such as the major U.S. cities. By beginning our efforts in the Triangle Area of North Carolina, Cambridge Strategy Group will exploit an area that has a very strong market of small businesses, yet does not have many high-profile competitor offices outside of tax specialists. No smaller competitor has emerged in this area.
  3. Supplier Power: Suppliers have minimal power over a consulting firm. The www.cambridgestrategy.net website URL as well as all of the Cambridge Strategy Group email addresses are owned by CSG. Our Web-hosting provider can be changed quickly in the event of any disruption of service. CSG intends to work with third party alliance partners to fulfill client projects. For example, CSG is in the process of entering into an agreement with a Web development firm. This supplier will provide website development for the www.cambridgestrategy.net website in exchange for first right of refusal for future client projects. Contractual stipulations have given the Group legal remedies to terminate the contract due to cost, quality, or time issues with the supplier. By crafting supplier contracts in a careful manner, we hope to limit our exposure to risk due to suppliers’ power.
  4. Threat of Substitutes: Potential substitutes are a very real threat. Venture Capitalists could add more consulting services to their portfolio in order to have more points of contact with the new business. Additionally, non-profit groups such as the Council for Entrepreneurial Development offer basic business plan services, primarily focusing on pre-Angel businesses. Cambridge Strategy Group intends to form relationships with each of these potential substitutes. By working with Venture Capitalists, CSG is able to provide a set of core competencies in marketing and business strategy that complements the VCs funding and business model assessment competencies. Also, by becoming more involved with the Council for Entrepreneurial Development and other non-profit organizations, CSG will gain access to a number of firms who will be potential prospects for marketing consulting once they receive their initial funding.
  5. Threat of New Entrants: This threat is significant as there are very few barriers to entry in a consulting market. Consulting firms do not normally have significant intellectual property that can be patented, and the requirements for creating these firms are minimal. Fortunately, the size of the new business market should sustain a number of firms in this area. The Cambridge Strategy Group will focus on gaining ownership of the idea "small business consulting" in the mind of the market. By owning that idea, CSG will minimize its exposure to new consulting firms with similar targets. Owning this idea is an expensive task that will have to start locally and move from one city to another as the company expands.

Competition

Current Alternatives

Competitors to the Cambridge Strategy Group fall into four categories:

  1. Segment Rivals: Segment Rivals offer the exact same services as the Cambridge Strategy Group. These firms must focus exclusively on small businesses and offer marketing and/or management strategy services.
  2. Market Rivals: There are a number of available Market Rivals who compete with the Cambridge Strategy Group while having slightly different business focuses. Examples of market rivals include start-up focused branches of Big Five Consulting Firms, Management Consulting Firms, and Venture Capitalists who also provide business services.
  3. Generic Rivals: Generic Rivals represent alternative solutions. The main alternative to outsourcing work to a consulting firm is performing the work in-house.
  4. Structural Rivals: Structural Rivals are the forces inherent in the market through which the firm must operate. These forces were described in the previous section entitled Target Market Analysis.

Our Advantages

The Cambridge Strategy Group is focused specifically on helping small and emerging businesses maximize their potential for success. We differentiate ourselves in the following ways:

  1. Focus on small business: Our mission is to help small businesses of today become the leading corporations of tomorrow. Cambridge Strategy Group will attempt to own the words "small business" in the minds of our potential clients.
  2. Cost-effective personal interaction with local consultant presence:We will target new regions with local consultants, allowing us to personally interact with small businesses without needing to bring consultants to the region.
  3. A diverse network of consultants and alliance partners: By relying on a nationally distributed talent base coordinated to work together remotely, we will be able to bring together a variety of skills to meet the needs of our clients.

Key Success Factors: After exploring the opportunities and threats that permeate this market, the following Key Success Factors emerge as the requirements to be successful at providing marketing and management consulting services to small businesses.

  • Local presence in a strong small business market;
  • Affordable pricing structure/minimal costs;
  • Clear value proposition, communicated into target market;
  • Core competencies in marketing and strategy;
  • Recognition as leading "small business consultants" or, no other firm claiming that title;
  • Venture Capitalist relationships.

Keys to Success

Keys to Success

UNIQUENESS OF SERVICES
The Cambridge Strategy Group is focused specifically on helping small and emerging businesses maximize their potential for success. We combine Blue Chip training with small business experience and local presence. We differentiate ourselves in the following ways:

  1. Focus on small business. We place our best people on small business customers. Our mission is to help small businesses of today become the leading corporations of tomorrow. Cambridge Strategy Group will attempt to own the words "small business" in the minds of our potential clients.
  2. Cost-effective personal interaction with local consultant presence.Personal interaction provides small businesses with a level of comfort not available with remote consultants. There may be many occasions where the small business founders may ask the consultant to simply "stop by," to react to a new development, or to answer a question. While this local presence and personal interaction is highly valued, business owners are often unable to afford the cost associated with bringing consultants to them from other areas.
  3. A diverse network of consultants and alliance partners. Solving the unique problems that face small businesses today demands a wide range of skills and experiences. By relying on a nationally distributed talent base coordinated to work together remotely, Cambridge Strategy Group will be able to bring together the skills required by a particular client without incurring the expense of physically bringing all of the individuals together. In the book, 22 Immutable Laws of Marketing, authors Al Ries and Jack Trout note that being first in the customer’s mind is more important than being the overall leader. In the world of small business, this is particularly true. With 898,000 small businesses starting each year, there is a significant opportunity for a consulting firm such as Cambridge Strategy Group to become the "first" consulting firm dedicated exclusively to small businesses in the minds of a number of these potential clients.
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Execution

Marketing & Sales

Marketing Plan

We have a number of ways to promote We will use a number of relationships to promote the Cambridge Strategy Group.

Through participation in the North Carolina Chapter of the Council for Entrepreneurial Development, we will make contacts with key Venture Capitalists, small business founders, and small businesses resources in the area. Once we have helped our first few clients, we will then explore relationships with local newspapers. Participating in local chambers of commerce will also help us to get increased exposure. In every method of communication, we will constantly reinforce our differential advantage:

  • Focus on helping small businesses start moving in the right direction;
  • Practical, actionable, short-term marketing and business strategy help;
  • Local presence for availability and minimization of costs;
  • Broad skill base combining Fortune 500 training with small business experience.

Sales Plan

The short-term Cambridge Strategy Group plan is to complete a total of four client projects, averaging 50 hours each . As we move into the Long-term sales plan we assume that we have started working on more substantial projects identified by both Venture Capital firms and their sponsored companies.

The 20 projects averaging 200 hours each listed represents approximately two person-years of work. However, additional time must be included for finding new clients and building Venture Capitalist relationships. For this forecast to become a reality, it will require either: (a) additional consultants to join the firm or (b) some members of CSG to work full-time on group activities. Note that "projects" are not synonymous with "clients." Any given client may require multiple projects from CSG.

Operations

Technology

The Cambridge Strategy Group understands the importance of implementing the technological components of a small business as soon as possible in order to facilitate communication between the company and its clients, employees, and partners. Therefore, we offer assistance in email enablement as well as phone and fax set-up. CSG also offers expertise in constructing an Internet presence through Web development and Web hosting.

Milestones & Metrics

Milestones Table

Milestone Due Date
Full time Work/ Business
Jan 02, 2020
Geographic Expansion
Jan 09, 2020
Venture Capital Partnership
Mar 13, 2020
Hire Employees
Mar 27, 2020
Service Offering Expansion
July 03, 2020
Incorporation
Aug 08, 2020
Communication Structure
Aug 22, 2020
Operation agreement
Sept 05, 2020
Website
Oct 03, 2020
Clients
Nov 07, 2020

Key Metrics

Our Key Metrics are: 

  1. Total clients per month 
  2. Average billing per engagement. 
  3. Repeat business vs. new business. 
  4. Facebook likes, Twitter follows. 
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Company

Overview

Ownership & Structure

The company is organized as a manager-managed Limited Liability Company. Initially, we will have three members with equal equity stakes in the company making all voting decisions. An executive director who is one of the managers will be identified to run meetings and provide some form of order to ongoing discussions. Additionally, we will hire consultants as needed to help our clients. Consultants will be paid on a per-deliverable basis.

Team

Management Team

The CSG management team brings a broad range of industry experience and training from both energetic small firms and experienced industry leaders.

John B. Gordon, Executive Director: John has worked in marketing, business development, and corporate strategy for a number of small and large firms, including EMC Corporation, IBM Corporation, and Larscom, Incorporated. John’s participation on the North Carolina Council for Entrepreneurial Development, plus his experience providing consulting services to small businesses, catalyzed the formation of the Cambridge Strategy Group.

Todd D. Kuczaj, Managing Director: Todd has worked in Internet consulting, Web design/development, financial services, and media publications for a variety of companies, including a Big Five consulting firm, Integrated Information Systems Inc., SunAmerica Securities Inc., and the Foothills Sentinel. Todd currently functions as an experienced analyst for a Big Five consulting firm, working with Fortune 100 and Fortune e-50 firms to solve their business and technology issues.

Ben S. Cordell, Managing Director: Ben has worked in business development, account management, systems engineering, marketing, and product development positions at LifeServ and ONE Co. (formerly DC Systems). Ben currently functions as a corporate strategy specialist at LifeServ, discovering and developing merger, acquisition and strategic partnership opportunities.

Advisors

The Cambridge Strategy Group will create an advisory board to bring insight into new areas including consulting management, finance and accounting, venture capital, and local media. The Founders of CSG have a number of contacts that could certainly provide useful guidance in our future operations. We will determine the value and compensation for the advisory board in future discussions.

Personnel Table

2020 2021 2022
Partners (3) $90,000 $108,000 $150,000
Office Manager $30,000 $31,200 $32,448
Consultants (3.56) $40,000 $99,840 $129,790
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Financial Plan

Forecast

Key Assumptions

Below is a list of assumptions that define the short-term business model:

  • Year 1 will  be spent preparing and learning how best to approach clients and building relationships with VCs;
  • All managers will hold full-time positions with other companies;
  • We will focus on business opportunities in NC until we create sufficient revenue to open foreign LLC’s in other states;
  • year 1  financial model represents only three managers;
  • All revenue is realized when a project is finished

Revenue by Month

Chart visualizing the data for Revenue by Month

Expenses by Month

Chart visualizing the data for Expenses by Month

Net Profit (or Loss) by Year

Chart visualizing the data for Net Profit (or Loss) by Year

Financing

Use of Funds

Our Startup Expenses are: 

Start-up Expenses

Legal$200

Stationery etc.$100

Brochures$150

Insurance$200

Other$4,000

TOTAL START-UP EXPENSES$4,650

Sources of Funds

Our 3 owners will contribute to our startup: John Gordon is contributing 40,000, Todd Kuczaj is contributing 40,000, Ben Cordell contributed 35,000. The total from the owner investment is 115000

Statements

Projected Profit & Loss

2020 2021 2022
Gross Margin $231,525 $396,900 $455,700
Operating Expenses
Salaries & Wages $160,000 $239,040 $312,238
Employee Related Expenses $32,000 $47,808 $62,448
Sales and Marketing $2,400 $2,400 $2,400
Utilities $960 $960 $960
Insurance $1,200 $1,200 $1,200
Rent $24,000 $24,000 $24,000
Startup Expense $4,600
Interest Incurred
Depreciation and Amortization
Gain or Loss from Sale of Assets
Income Taxes $0 $0 $0
Total Expenses $324,385 $485,508 $598,546
Net Profit $6,365 $81,492 $52,454

Projected Balance Sheet

2020 2021 2022
Cash $121,365 $2,857 $55,311
Accounts Receivable $0 $0 $0
Inventory
Other Current Assets
Total Current Assets $121,365 $2,857 $55,311
Long-Term Assets
Accumulated Depreciation
Total Long-Term Assets
Accounts Payable $0 $0 $0
Income Taxes Payable $0 $0 $0
Sales Taxes Payable $0 $0 $0
Short-Term Debt
Prepaid Revenue
Total Current Liabilities $0 $0 $0
Long-Term Debt
Long-Term Liabilities
Paid-In Capital $115,000 $115,000 $115,000
Retained Earnings ($193,635) ($112,143)
Earnings $6,365 $81,492 $52,454

Projected Cash Flow Statement

2020 2021 2022
Net Cash Flow from Operations
Net Profit $6,365 $81,492 $52,454
Depreciation & Amortization
Change in Accounts Receivable $0 $0 $0
Change in Inventory
Change in Accounts Payable $0 $0 $0
Change in Income Tax Payable $0 $0 $0
Change in Sales Tax Payable $0 $0 $0
Change in Prepaid Revenue
Investing & Financing
Assets Purchased or Sold
Investments Received $115,000
Dividends & Distributions ($200,000)
Change in Short-Term Debt
Change in Long-Term Debt
Cash at Beginning of Period $0 $121,365 $2,857
Net Change in Cash $121,365 ($118,508) $52,454
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