Pie in the Sky Wi-Fi
Strategy and Implementation Summary
Pie in the Sky Wi-Fi will focus on its strengths, and exploit the market opportunities, by offering a complete service package of wireless installation and management to property owners and ISPs.
6.1 SWOT Analysis
Proven and balanced management team
More working capital needed to fulfill the plan
New and emerging, fast-growing market demand, “gap-filler” position in nationwide coverage
Possible new competitors drawn to the ripening market
The new and emerging market for this technology will require companies with proven expertise in providing technology. The Pie in the Sky Wi-Fi management team has substantial experience, not only in launching new businesses in new markets, but also in developing technology for widespread use.
The biggest strength of Pie in the Sky Wi-Fi is its dynamic and experienced management team. The four principles have an average of ten years of experience directly within new businesses development, emerging technology and telecom. The combination of an experienced management team, coupled with an emerging industry with a projected growth rate of over 300% per year will give Pie in the Sky Wi-Fi a first mover competitive advantage from the outset, with the long-term advantage of a sustainable and scalable business model.
Although the management team has substantial experience in new business creation and industry expertise in the target market, none of the members have successfully raised enough working capital needed in order to grow a business such as Pie in the Sky Wi-Fi in an emerging market. The stated exit plan is to build the business in a profitable manner and find a company to acquire it by 2008. In order to provide value and attain the stated exit plan it is critical that the business grow as described in this document, stay focused on the businesses model and successfully set up the business so that the equity holders are rewarded for their investment should an acquisition occur. Subsequently, none of the members of the management team have successfully sold a business previously.
To mitigate the risk of these weaknesses, the management team has elected key individuals to participate on the Board of Advisors. This Board of Advisors is set up to fill any perceived management gaps in order to ensure the long-term success of this business plan. The Board of Advisors is comprised of financial experts, merger and acquisition experts, planning experts and technical experts. Members on the Board of Advisors are not compensated monetarily in exchange for their work done on behalf of the company. They will provide an additional feedback to the management team on the implementation of this business plan and assist in the challenges of growing a company in a rapidly changing and emerging market.
Our focus is on owners and managers of commercial and residential property, with an emphasis on private networks for businesses. Although Wi-Fi has started becoming mainstream in the form of public “hotspots,” there is a largely untapped opportunity to introduce Wi-Fi as the new standard in commercial and residential property, particularly in multi-tenant dwellings and business parks.
However, a secondary opportunity will come from the current race to create a blanket Wi-Fi network across the U.S. Many companies right now are trying to cover the entire U.S. with their technology and brand in the form of public hotspots. With our network in place, Pie in the Sky Wi-Fi will be well-positioned to fill in the gaps in this network, through partnerships with many of these aggregators. The fact that Pie in the Sky Wi-Fi is solely focused on non-public hotspots, on private businesses with the ability to broadcast to potential public hotspots, makes the company a strong strategic acquisition for one of the many aggregators currently in the market.
Because of the current demand and increasing popularity of Wi-Fi installations, many new businesses will enter the marketplace, increasing the competition. This will drive additional investment into the market and create additional competitors which will directly compete with Pie in the Sky Wi-Fi. Fortunately, the market opportunity is still in its early stages, so our first-mover advantage, coupled with our placement as a partner to aggregators and sufficient equity investment should keep the possible threats to a minimum.
6.2 Value Proposition
For all three-market segments targeted, the Pie in the Sky Wi-Fi Enterprise solution can provide value-added services to residential or commercial buildings. With vacancy rates climbing and new housing developments going up every day it is becoming vital for property owners to increase the perceived value of their properties.
As vacancies in commercial buildings climb into the double digits, building owners are seeking ways to differentiate themselves in a cluttered market. A recent trend for many commercial property owners has been to provide additional services such as finished office space, including broadband Internet access, finished office space and even office furnishings like conference tables and office chairs. According to Michael Belka, Senior Vice President of management and leasing at Unico Properties Inc., “it’s all about standing out in a cluttered market. With so much space in the market and few potential tenants, it becomes more important to differentiate your space.”
Pre-built or “speculative” office suites suites offer a fast solution for tenants needing space right away. A tenant with only a month or two to find an office for a start-up business, or one who needs to relocate quickly, is much more likely to choose a pre-built suite with full amenities than to contract for renovation of an existing space.
Pie in the Sky Wi-Fi offers property owners that extra edge in a competitive market, and offers ISPs a reliable partner in meeting the demands of an increasingly wireless customer base.
Scalable and flexible
Potential revenue generator
Aggregate Connection for tenants
- Techonology changes
- Guaranteed uptime
- User support
- Network administration
- Network monitoring
- Reporting and usage statistics
- Scalable and flexible
- Lower cost
6.3 Sales Strategy
Due to the competitive nature of this rapidly growing market it is necessary to expand and market Pie in the Sky Wi-Fi services through the use of independent contractors. This will allow the company to expand quickly without the added cost and liability of adding employees in-house. These positions will be paid 10% of the initial set-up and a 10% recurring fee based on the recurring revenue collected on a monthly basis. These contractors will solicit residential and commercial business through various forms of contact, i.e. telephone, personal contact, networking groups, etc. All of these independent contractors will report directly to Mr. Jones until a regional manager is established in the area.
Pie in the Sky Wi-Fi will rely on these reps to provide information about the service to both the initial client (landlords, municipalities, etc.) and the end-users. The Commercial division has a longer sales cycle than the Residential division, due to the contract situation of current tenants with their existing wired Internet providers. Commercial accounts are placed into a database with their current contract length and estimated time of expiration for follow-up by the reps at a later date.
The core sales focus, regardless of sales cycle, is equal across all three divisions. Each division will be set up quickly and simultaneously. The company will begin with independent contractors dedicated to these divisions within the specific markets. Although Pie in the Sky Wi-Fi is a nationally focused company, each division will be rolled out using a staged approach, entering region by region for maximum efficiency in installations and sales management.
Rollout started in Oregon, and will begin shortly throughout the northwest, launching a new state no later than every two months, while keeping contractors within their specific divisions. This staged rollout will be accomplished strategically by separating the nation into 6 individual regions consisting of the Northwest, Southwest, North Central, South Central, North East, and South East. The regional breakdown or “footprint” described is illustrated in greater detail in Appendix VI of this document. The goal is to hire a specific regional manager to oversee these specific territories, their businesses, and their contractors as the states in the regions become active.
Mr. Jones and Mr. Smith will kick off the business the week of Jan 26, 2004 with initial sales calls. They will begin actively pursuing business within all 3 divisions while recruiting independent contractors to seek customers within the territories. Since the county in which we are based is somewhat of an anomaly when it comes to the adoption of new business and technology, the founders will not be deterred by the lack of acceptance in the local market. The opportunity for this business model is far greater than one individual market; although the business is based in one location, rapid movement into new markets will be essential to grow the business.
The first goal is to immediately make contact with the primary ISPs and other key accounts. These relationships will give Pie in the Sky Wi-Fi instant credibility in the marketplace and will provide the company with an established business and sales team that will promote the service.
We will emphasize the ISPs’ advantages in partnering with us
- First, we can help them fill the current void in the marketplace by providing a product/service previously unavailable to them
- Second, when they sell Pie in the Sky Wi-Fi services, we will compensate them ISP, as well using the ISP as the primary connection provider. This will solidify the clients’ dependency on that ISP’s connection, giving the ISP a competitive advantage and increasing the revenue generated.
The ISP resale program accounts for 50% of the overall business, so making inroads in this area is vital to the overall success and sustainability of Pie in the Sky Wi-Fi.
6.3.1 Key Account Management
The Executive Management Team will handle key accounts in the beginning; these key accounts will consist of ISPs, Competitive Local Exchange Carriers (CLECs), hardware providers, and installers. Establishing relationships with these groups quickly and effectively will be vital to the success of the business. As we grow, the employed Regional Managers will take on this responsibility. When entering a new market, we will focus immediately upon establishing these relationships.
6.3.2 Sales Forecast
Pie in the Sky Wi-Fi’s sales objectives are to reach as many building owners and ISP operators throughout North America as possible, quickly and for the least amount of capital outlay. The sales department will grow and manage as many capable independent contractors as possible, while maintaining the high level of quality service and the good reputation of Pie in the Sky Wi-Fi in the marketplace. Dedicated management and oversight of these contractors is critical to the success of the company as a whole.
Each territory is split up by specialty and certain metropolitan boundaries will be defined as each location is added to the sales team. The area in which the reps will be working will determine territories. Within each of territory, the company will simultaneously target both the commercial and residential divisions to gain maximum market share and market penetration as quickly as possible.
Sales growth shown in the table and chart below is based on solid industry data, as outlined in the Market Analysis.
Using the average install cost of $10,000 in gross income with a monthly management fee of $1,500, total sales of $586,750 should be easily attained for the first year of operations. Cost of Goods includes all up-front costs assumed by Pie in the Sky Wi-Fi for installation of base stations. Costs for these installations are averaged out into the prices for all customers. Monthly details for the first year sales forecast can be found in the Appendix.
|Year 1||Year 2||Year 3|
|Enterprise Plan Revenue||$200,000||$660,000||$1,560,000|
|ISP Plan Revenue||$200,000||$660,000||$1,560,000|
|Monthly – Enterprise Plan||$124,500||$936,000||$2,859,000|
|Monthly – ISP Plan||$62,250||$468,000||$1,429,500|
|Direct Cost of Sales||Year 1||Year 2||Year 3|
|Enterprise Plan Revenue||$120,000||$396,000||$936,000|
|ISP Plan Revenue||$120,000||$396,000||$936,000|
|Monthly – Enterprise Plan||$66,400||$499,200||$1,524,800|
|Monthly – ISP Plan||$0||$0||$0|
|Subtotal Direct Cost of Sales||$306,400||$1,291,200||$3,396,800|
The management team has established some basic milestones to keep the business plan priorities in place. Responsibility for implementation falls on the shoulders of the founders fairly equally in the first year. This Milestones Table below will be updated as the year progresses using the actual tables. New milestones will be added as the first year of operations commences.
|Milestone||Start Date||End Date||Budget||Manager||Department|
|First round outside investment||3/10/2005||3/20/2005||$0||ABC||Department|
|Interview Potential Employees||3/10/2005||3/25/2005||$0||ABC||Department|
|First Employees start||4/1/2005||4/5/2005||$0||ABC||Department|
|Deadline for First Sales||4/1/2005||4/10/2005||$0||ABC||Department|
|Long-term loan begins||7/1/2005||7/15/2005||$0||ABC||Department|
|Interviewing for Sales Team||6/10/2005||10/15/2005||$0||ABC||Department|
|Sales Commissions reach $10,000/month||12/1/2005||12/31/2005||$0||ABC||Department|
6.5 Competitive Edge
Pie in the Sky Wi-Fi is targeting the 4.25-billion-square-foot commercial office market, the even larger multi-family housing market, the nation’s independent trucks stops and travel plazas, as well as all the ISPs currently providing Internet connectivity throughout the world. The focus is on expanding our customers’ available services by providing value-added features in the form of wireless Internet access to their current services or properties.
Wi-Fi providers are a part of a very fragmented market, with many players all trying to find their niche. Currently there is a race going on to create public hotspots in an effort to control a nationwide network. Although this may be a sound business model in the long-term, Pie in the Sky Wi-Fi does have the desire to provide these services, nor does it have the resources to compete against the major players at this level. Currently there are a few major providers making a name for themselves in the public hotspot arena, but this is a very speculative and costly process. These access points are dependent upon subscribers signing up for a monthly plan or logging in and paying a site access fee. Although this may prove to be a viable way to build a nationwide Wi-Fi network, it is not our main focus.
By focusing on the middle-man (the building owner or ISP), Pie in the Sky Wi-Fi does not have to negotiate contracts with individual end-users, but can focus on installation and service of access for entire buildings, or let the ISP develop contracts and wholesale contract to do the installations. This model gives us a huge advantage over our competitors, who are focused on creating geographical coverage, and then have to find ways to sell this existing utility to end-users, one by one.
For example, MobileStar Network Corp. filed for bankruptcy because it couldn’t sign up enough customers to cover the cost of building its wireless network. With dozens of companies in every city chasing the same market, few people have been willing to pay for the service, which costs about $30 a month. According to analysts, MobileStar was paying large fees to put their service in Starbucks locations, with no clear return on investment.
Since Pie in the Sky Wi-Fi is a wholesale provider of Wi-Fi networks, a new location is not installed until the hardware and installation costs are paid for, plus a 40% margin. Once installed, the wireless feed is provided and managed by Pie in the Sky Wi-Fi, but the individual who requested the network to be installed is responsible for the promotion and user participation of the network. Since the business model does not depend on individual users subscribing to the network, the risk/reward proposition is maximized. It is more effective to sell and maintain one large client and get paid up front, than depend on multiple users sold individually while covering the costs up front. This will allow us to be profitable from the outset and outlast our competitors, so we are well-positioned when the consolidation of the market occurs in 2008 (see exit strategy for additional details).
6.6 Marketing Strategy
Although Wi-Fi has been around for a while, it has just recently become known to the general public and many property owners are still unaware of what it is, much less how it can positively increase the services inside their buildings or municipalities. The largest marketing challenge will be trying to convey the vast benefits of using Wi-Fi and how it works with a simple and easy to understand message. Many traditional clients may not truly understand how the technology works and may shy away from looking at Pie in the Sky Wi-Fi as a viable solution for their broadband needs. The educational materials produced will promote the industry as a whole; examples of the explanations are included below in Sales Literature.
6.6.1 Distribution Strategy
The residential division will have specific reps targeting apartment buildings, condos, residential developments, and upper end housing developments with an owners’ association. The CRO will establish and define territories prior to hiring representatives.
The commercial division will include specific reps targeting Commercial buildings, such as office buildings, industrial parks, and general large-scale businesses and office buildings. Although “hotspot” implementation is not the primary focus, these may be a residual benefit as these commercial footprints are established.
The ISP division will be handled in the beginning by the Executive Management team. However, as Regional Sales Managers are employed, the responsibility for generating these ISP accounts will be transferred to them.
6.6.2 Marketing Programs
The primary outlet for announcing information about the company will be through the use of press releases distributed on the AP wire and through our website. The company will utilize PR Newswire in order to promote news and updated information about Pie in the Sky Wi-Fi on an ongoing basis. The cost associated with the distribution of each press release is minimal when compared to the credibility and promotion these releases can produce.
The marketing budget will increase as a result of increased sales (variable budget of 2% of revenue). As we increase marketing monies, we will introduce additional promotional initiatives to increase brand awareness in specific target markets. These opportunities will be evaluated on a quarterly basis as they come available. Promotional sponsorships of events may be of benefit in certain areas, based on the sales and marketing mix already used in a particular area.
6.6.3 Sales Literature
Wi-Fi allows individual users to connect to the Internet via a high-speed connection without being tied to a phone line or broadband cable. With recent advancements in Wi-Fi technology, the speed, security and reliability are on par with traditional wired connections. Wireless connections have several advantages over traditional wired ones, including the low cost to connect large areas and the spatial flexibility of locating desktop or laptop computers within the connected area. As described earlier in this document, the cost savings in the first year alone could amount to more than $100,000 when compared to a similarly configured network.
The benefits of a wireless network are still being realized everyday. Some of the many exciting benefits of Wi-Fi are:
- Freedom from wires
- Quick and unobtrusive network rollouts
- Lower cost than fiber or wired networks
- Easy to network many computers and appliances
- Available where cable and DSL are not
- Lower cost phone system, compared to switch phone networks
- Connect multiple buildings/locations efficiently
- Increased worker productivity
- Quicker return on investment
There are many small ways in which wireless is saving time and gaining efficiencies for people everyday. For instance, the ability to go through e-mail in the lobby, check your database during an appointment, or present networked data to colleagues in a meeting, all add up. Businesses and individuals are realizing every day how wireless connections can break down barriers for collaboration and introduce new ways to make the most of online time.
6.6.4 Pricing Strategy
The pricing structure for all installations is based on the direct hardware and installation costs for each particular site plus 40%. For the purposes of this plan, we have based our direct costs on an average 30,000 sq. ft coverage area. With the 40% markup on materials, installation and hardware, the company is assured positive variable margins on any job before it begins. The monthly fee charged will be based on the number of users on network:
- 0 – 30 users = $1,500 a month
- 31 – 50 users = $1,750 a month
- 51 – 100 users = $2,000 a month
- 100 + negotiable
This pricing structure is intended to be competitive with the current fees incurred for traditional networks. Because of the remote management feature of the Pie in the Sky Enterprise system, the cost savings compared to an on-site managed network is significant. For a detailed customer ROI analysis, please refer to the Target Market Segmentation Strategy topic, above.
6.6.5 Promotion Strategy
Our marketing objective is to quickly and aggressively establish Pie in the Sky Wi-Fi’s wireless “footprint.” The executive management team will employ a low-key educational approach.
- First we will introduce Pie in the Sky Wi-Fi to the potential prospect, setting an appointment to discuss Wi-Fi and how it might benefit the prospect.
- We will gain buy-in from the prospect, then do a site assessment of the location to determine the cost associated with launching such a service.
- When the site assessment is made, the prospect may choose to survey his/her tenants to determine their interest in such a service within the building.
- Once the site assessment is done, the rep will return and do a question and answer session, hopefully including potentially-interested tenants.
- We will then present the site assessment and the detailed cost analysis for launching a wireless network.
- The rep will close the prospect, write up an order form, and establish an installation timeline together with the property owner.