XYZ, LLC BUSINESS PLAN€¦ · 3 | p a g e 5. marketing plan ..... 18
Transcript of XYZ, LLC BUSINESS PLAN€¦ · 3 | p a g e 5. marketing plan ..... 18
XYZ, LLC
BUSINESS PLAN
JULY 2020
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TABLE OF CONTENTS
1. EXECUTIVE SUMMARY ........................................................................................................................................... 4
2. COMPANY OVERVIEW ............................................................................................................................................ 5
2.1. MISSION STATEMENT ...................................................................................................................................... 5
2.2. COMPANY DESCRIPTION & HISTORY .......................................................................................................... 5
2.3. GROWTH STRATEGY ........................................................................................................................................ 6
3. THE APPLICATION .................................................................................................................................................... 6
3.1. DESCRIPTION ..................................................................................................................................................... 7
3.2. PRODUCT CATEGORIES ................................................................................................................................... 7
3.2. FEATURES ........................................................................................................................................................... 8
3.3. DEVELOPMENT .................................................................................................................................................. 9
3.4. REVENUE MODEL & PRICING ........................................................................................................................ 9
3.4.1. PHONE CARRIER PARTNERSHIP ............................................................................................................. 9
3.4.2. TRANSACTION FEES ................................................................................................................................. 9
3.4.3. ADVERTISING SALES ................................................................................................................................ 9
4. THE MARKET ........................................................................................................................................................... 10
4.1. TARGET CONSUMER PROFILE ..................................................................................................................... 10
4.1.1. OVERVIEW ................................................................................................................................................ 10
4.2. U.S. SOCIAL NETWORKING SITES MARKET ANALYSIS ......................................................................... 11
4.2.1. FIGURES & TRENDS ................................................................................................................................. 11
4.2.2. INDUSTRY ANALYSIS ............................................................................................................................. 12
4.6. U.S. SOCIAL MEDIA USAGE BY AGE STATS .............................................................................................. 12
4.3.1. OVERVIEW ................................................................................................................................................ 12
4.3.2. PEOPLE AGED 13 - 29 ............................................................................................................................... 13
4.3.3. PEOPLE AGED 30 - 49 ............................................................................................................................... 13
4.3.4. PEOPLE AGED 50 - 64 ............................................................................................................................... 14
4.3.5. PEOPLE AGED 65 & OVER ...................................................................................................................... 14
4.4. U.S. SOCIAL MEDIA USAGE STATS ............................................................................................................. 14
4.5. GLOBAL SOCIAL MEDIA USAGE STATS .................................................................................................... 14
4.6. PROFILE OF DIRECT COMPETITORS ........................................................................................................... 15
4.6.2. XYZ ............................................................................................................................................................. 15
4.6.2. XYZ ............................................................................................................................................................. 16
4.6.3. XYZ ............................................................................................................................................................. 16
4.6.4. XYZ ............................................................................................................................................................. 16
4.6.5. XYZ ............................................................................................................................................................. 17
4.6.6. XYZ (XYZ) .................................................................................................................................................. 17
4.7. COMPETITIVE ANALYSIS .............................................................................................................................. 18
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5. MARKETING PLAN ................................................................................................................................................. 18
5.1. MARKETING OVERVIEW & STRATEGY ..................................................................................................... 19
5.2. INTERNET MARKETING ................................................................................................................................. 19
5.2.1. OVERVIEW ................................................................................................................................................ 19
5.1.2. SOCIAL MEDIA MARKETING ................................................................................................................. 19
5.2.3. CELEBRITY/INFLUENCER ENDORSEMENT ........................................................................................ 20
5.3. PRINT ADVERTISING ...................................................................................................................................... 20
5.5. TELEVISION ADVERTISING .......................................................................................................................... 20
5.6. PUBLIC RELATIONS ........................................................................................................................................ 20
5.7. PROMOTIONAL MARKETING ....................................................................................................................... 20
6. OPERATIONAL PLAN ............................................................................................................................................. 21
6.1. OPERATIONAL OVERVIEW ........................................................................................................................... 21
6.1.1. HOURS OF OPERATION ........................................................................................................................... 21
6.1.2. LEGAL STRUCTURE ................................................................................................................................ 21
6.1.3. OPERATIONAL GROWTH PLAN ............................................................................................................ 21
6.2. COMPUTER HARDWARE & SOFTWARE ..................................................................................................... 21
6.3. LEGAL & INSURANCE .................................................................................................................................... 21
6.4. ACCOUNTING ................................................................................................................................................... 21
6.5. LICENSES & PERMITS ..................................................................................................................................... 21
7. MANAGEMENT & STAFF ....................................................................................................................................... 22
7.1. EXECUTIVE MANAGEMENT ......................................................................................................................... 22
7.1.1. JOHN DOE, CHIEF EXECUTIVE OFFICER ............................................................................................ 22
7.1.2. JOHN DOE, CHIEF OPERATING OFFICER ............................................................................................ 22
7.1.3. JANE DOE, CHIEF BRANDING OFFICER .............................................................................................. 23
7.2. BOARD MEMBERS ........................................................................................................................................... 23
7.2.1. JOHN DOE, BOARD MEMBER ................................................................................................................ 23
8. FINANCING & GROWTH STRATEGY .................................................................................................................. 24
8.1. CAPITAL REQUIREMENTS ............................................................................................................................. 24
8.3 RISK ANALYSIS ................................................................................................................................................ 24
8.3 EXIT STRATEGY ............................................................................................................................................... 24
9. FINANCIALS ............................................................................................................................................................. 25
9.1. SALES ................................................................................................................................................................. 25
9.1.1. SALES ASSUMPTIONS ............................................................................................................................. 25
9.1.2. SALES PROJECTIONS .............................................................................................................................. 26
9.2. OPERATING EXPENSES .................................................................................................................................. 26
9.2.1. GENERAL & ADMINISTRATIVE EXPENSES ........................................................................................ 26
9.2.2. MARKETING EXPENSES ......................................................................................................................... 27
9.2.3. STAFF HEADCOUNT & SALARIES ........................................................................................................ 27
9.3. PRO-FORMA ANNUAL FINANCIAL STATEMENT SUMMARIES ............................................................. 28
9.3.1. PRO-FORMA INCOME STATEMENT ..................................................................................................... 28
9.3.2. PRO-FORMA STATEMENT OF CASH FLOWS ...................................................................................... 28
9.3.3. PRO-FORMA BALANCE SHEET ............................................................................................................. 29
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1. EXECUTIVE SUMMARY
OVERVIEW
▪ XYZ, LLC
▪ Founded in XYZ 2020
▪ XYZ will be a social networking
app that REMOVED INFO
▪ Owned and led by John Doe
(CEO), John Doe (COO), and John
Doe (CMO), who collectively have
xx years of executive experience.
▪ Has already developed marketing
materials, secured seed financing
of $xxx,xxx, and developed a
functional beta version of the iOS,
Android, and online app
THE APP
▪ Enables XYZs to post XYZ for sale
for a one-time purchase
▪ XYZ can depict his/her XYZ how
he/she chooses using XYZ as a
canvas
▪ Sellers can include XYXs and
XYZs related to his/her life
▪ XYZs can focus on REMOVED
INFO
REVENUE MODEL
▪ Users can initially sell XYZ for $x,
$x, or $x
▪ XYZ $x fee per transaction
▪ Advertising sales (CPM)
TARGET CONSUMERS
▪ Removed info
▪ Removed info
▪ Removed info
▪ Removed info
U.S. SOCIAL NETWORKING
MARKET
MARKETING
▪ Marketing materials
▪ Internet marketing (social media,
video, SEO, PPC, articles)
▪ Print advertising
▪ Public relations
▪ Television advertising
▪ Promotional marketing
FINANCING
▪ XYZ 2020: Secured $xxx,xxx
o App development
o Web design
o Soft marketing
▪ Seeks “Series A” of $3.5M
▪ Raise “Series B” of $10M in M19
▪ Might raise “Series C” financing
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2. COMPANY OVERVIEW
2.1. MISSION STATEMENT
XYZ, LLC’s mission is to become a REMOVED INFO.
2.2. COMPANY DESCRIPTION & HISTORY
XYZ, LLC (herein also referred to as “the Company“ or “XYZ“) was registered as
a limited liability company in the state of ABC on January 1, 1234 and will be
headquartered in ABC, ABC, where the Company has identifed an office to lease.
XYZ, LLC will launch a new XYZ-enabled, social networking app that enables
users to REMOVED INFO, as well as REMOVED INFO.
XYZ, LLC is owned and led by John Doe (CEO), John Doe (COO), and Jane Doe
(CMO), who collectively have over 40 years of executive management experience
within the media industry.
XYZ users will be able to use XYZ to post any XYZ for sale, which can consist of
REMOVED INFO. Examples include:
▪ XYZ
▪ XYZ
▪ XYZ
▪ XYZ
▪ XYZ
▪ XYZ
▪ XYZ
▪ XYZ
XYZs will initially be able to be sold for $x, $x, or $x per XYZ.
XYZ, LLC will target any XYZ that is an REMOVED INFO and social media user
with a major focus on social media XYZs that REMOVED INFO
Since being launched, the Company has achieved the following milestones:
▪ Developed marketing materials
▪ Developed a splash page for the website
▪ Secured seed financing of $xxx,xxx
▪ Completed development of a beta version of the app for iOS and Android
▪ Furthered development of v1.0 of the app for iOS, Android, and online,
which is scheduled for release in January 1234
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XYZ, LLC will launch an agressive marketing campaign that includes:
▪ Internet marketing (social
media, video, SEO, PPC)
▪ Celebrity/influencer
endorsement
▪ Print advertising
▪ Public relations
▪ Promotional marketing
2.3. GROWTH STRATEGY
Phase 1 (Month 1-12):
▪ Raise Series A financing of $x million
▪ Develop updated versions of the iOS, Android, and online app
▪ Launch marketing throughout ABC and ABC
▪ Aggressively market directly to XYZs and XYZs
▪ Hire and train operational and marketing staff
▪ Garner positive reviews from customers
▪ Promote the Company’s social media pages
▪ Establish an efficient operations process
Phase 2 (Month 13-36):
▪ Raise Series B financing of $x million
▪ Develop updated versions of the app
▪ Increase marketing in ABC and ABC
▪ Expand marketing to ABC, ABC, and ABC
▪ Launch new marketing initiatives
▪ Continue to aggressively market the app directly to XYZs and XYZs
▪ Hire and train additional operational and marketing staff
▪ Improve operational efficiency
Phase 3 (Month 37 - 60)
▪ Potentially raise Series C financing
▪ Develop updated versions of the app
▪ Increase marketing in focus countries
▪ Expand international marketing
▪ Continue to aggressively market directly to XYZs and XYZs
▪ Hire and train additional operational and marketing staff
▪ Improve operational efficiency
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3. THE APPLICATION
3.1. DESCRIPTION
▪ XYZ will enable XYZs to post XYZ for sale for a one-
time purchase in XYZs.
▪ Users will be able to sell XYZs for $x, $x, or $x initially.
▪ Sellers can upload XYZs related to a particular subject
or type of XYZ.
▪ Sellers can upload XYZs (XYZsTM) or (XYZ XYZsTM)
related to the XYZ’s life.
▪ XYZ has no "XYZs" or "XYZs" features, so that users can
focus more on content, commerce, and networking in
an undisturbed environment.
3.2. PRODUCT CATEGORIES
The following are examples of categories that XYZ users
can focus on:
▪ XYZ
o Removed info
o Removed info
o Removed info
▪ XYZ
o Removed info
o Removed info
o Removed info
o Removed info
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▪ XYZ
o Removed info
o Removed info
o Removed info
▪ XYZ
o Removed info
o Removed info
o Removed info
▪ XYZ
o Removed info-+
o MJK
o Removed info
o Removed info
o Removed info
3.2. FEATURES
▪ Interface menu has specific categories such as XYZ, XYZ, XYZ, XYZ, XYZ,
XYZ, XYZ, and XYZ enabling the user to immediately access XYZs relevant
to specific categories
▪ XYZ features that enables users to post XYZs (XYZ XYZsTM), XYZs (XYZTM),
and information related to XYZ
▪ Messaging feature THAT enables users to message either other by either
chat, video chat, or video message. Messaging will have an “unsend”
feature, which enables users to unsend a text or video message
▪ Search feature that enable users to search for XYZs, XYZs, XYZs, XYZs,
XYZs, XYZ, XYZs
▪ Audio/video editing features that enable users to enhance and alter posts
▪ Alert notification feature that alerts users when someone in their network
has posted a new XYZ
▪ Performance features that track the number of purchases, amount of
purchases, amounts, and amount of sellers’ earnings
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▪ Privacy features that enable users to block, restrict, or mute unwanted
followers
▪ Bookmarking feature that enables users to add an “XYZ” to their Favorites
list
▪ Networking features that enable users to find XYZs and bolster their
network
▪ XYZ features that enable users to edit, modify, and add XYZs to XYZ and
XYZ
3.3. DEVELOPMENT
XYZ has been collaborating with XYZ to develop the beta version of the mobile
app, which was released in June and to develop the iOS, Andorid, and online App,
which was relesed on July 2. XYZ has been and is developing the XYZ app using
Python to develop the app, which is the same platform used by Instagram and
considered the state-of-the-art social networking back-end design platform.
3.4. REVENUE MODEL & PRICING
3.4.1. PHONE CARRIER PARTNERSHIP
The Company will offer all sales via App Store and Google
Play. During year 1, App Store and Google Play fees will be a
30% commission for any content sold. After 12 months, Apple
and Google's commissions will decrease to 15% of sales.
3.4.2. TRANSACTION FEES
During the first year, XYZ will be a freemium model, in which, users will be able
to sell content with no transaction fee charged by XYZ. After 12 months, XYZ,
LLC will charge users a fee of x% per transaction in year 1. After year 1, XYZ, LLC
will charge x% per transaction.
3.4.3. ADVERTISING SALES
From inception, the Company will sell advertising to XYZs in the form of XYZ or
XYZ. XYZ intends to REMOVED INFO.
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4. THE MARKET
4.1. TARGET CONSUMER PROFILE
4.1.1. OVERVIEW
The Company will target XYZs, as well as
specifically target XYZs, which will be a cornerstone
of the Company’s userbase.
XYZs include:
▪ XYZs
▪ XYZs
▪ XYZs
▪ XYZs
▪ XYZs
The Company will also specifically target social media users, which include:
▪ Instagram Users = 1 billion users
▪ TikTok Users = 800 million users
▪ Facebook Users = 2.6 billion users
A major focus of the Company’s marketing efforts will be on XYZs, which can
REMOVED INFO. This includes XYZs, XYZs, XYZs, and XYZs with REMOVED
INFO. In addition to the XYZs, the Company will also heavily market towards
any XYZ that has XYZ. According to Mention.com, approximately x% of
Instagram users have over x followers1
1 “Instagram Follower Rates 2018”; Mention.com; 2019
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4.2. U.S. SOCIAL NETWORKING SITES MARKET ANALYSIS2
4.2.1. FIGURES & TRENDS
Mobile platforms in particular are
expected to continue to drive
revenue in the U.S. social networking
sites market as the market
penetration of devices such as
smartphones and tablets grows.
However, as growth in the
percentage of services conducted
online and the number of mobile
internet connections slows, industry
revenue growth will deaccelerate,
especially during the latter part of
the period. Consequently,
IBISWorld expects revenue to
increase at an annualized rate of
only 19.6% from an estimated $52.7
billion in 2020 to an estimated $129.0
billion over the five years to 2025.
Key players in the industry such as Facebook Inc., LinkedIn Corp. and Twitter Inc.
remain poised to maintain a strong user base that will keep industry profit near
historical highs. Despite slowed growth in the number of mobile internet
connections and percentage of services conducted online, the prospects of high
revenue and profit, coupled with low barriers to entry, will continue to lure new
operators to Social Networking Sites industry.
Niche social networking sites experience a lower level of competition because their
target markets are so narrowly defined. Niche social networking sites also do not
necessarily have to rely on advertising revenue as heavily as other sites, such as
Facebook. For example, Meetup is a social networking site that aims to get people
off the internet by encouraging them to connect in real life through group
activities.
2 “Social Networking Sites”; IBIS Word; June 2020
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As the number of industry operators continues to climb and growth in the number
of mobile internet connections and percentage of services conducted online slows,
larger companies will focus on acquiring smaller companies with cutting-edge
technology to better serve advertisers. Over the past decade, Facebook and
Twitter acquired companies that could help them increase their industry revenue
and diversify their product portfolios. In 2012, Facebook purchased Instagram,
which contributes billions of dollars to Facebook's revenue. Two years later,
Facebook acquired Whatsapp Inc., a messaging app that is used by over 1.0 billion
people worldwide.
4.2.2. INDUSTRY ANALYSIS
The Social Networking Sites
industry is extremely
concentrated; the top three players
in the industry, Facebook Inc.
(Facebook), Twitter Inc. (Twitter)
and LinkedIn Inc. (LinkedIn),
generate 83.4% of total revenue in
2020. Facebook alone will
generate an estimated 68.0% of revenue in 2020. While other companies, such as
Pinterest, have a significant user base and well-known operations, none generate
revenue near the scale of Facebook. Facebook was an early entrant in this industry
and consequently, has acquired a massive user base, which attracts advertisers.
Additionally, companies can reach out to targeted demographics and track
campaigns using Facebook, which improves their rate of return for advertising
expenditures.
4.6. U.S. SOCIAL MEDIA USAGE BY AGE STATS
4.3.1. OVERVIEW
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4.3.2. PEOPLE AGED 13 - 29
People aged 13 to 29 are expected to account for 30.5% of U.S. Social Networking
Sites industry activity in 2020. People in this segment are typically the most tech
savvy, which enables them to adapt to new developments much more quickly than
other age groups. In addition to using casual social networking sites, older people
in this segment also use professional networking sites to connect with professional
in industries they want to work in, currently have a position in or want to stay
connected to.
4.3.3. PEOPLE AGED 30 - 49
IBISWorld estimates that people aged 30 to 49 will account for 39.8% of activity on
social networking sites in 2020. This segment also represents the largest
population share. Individuals in this segment are frequent users of casual social
networking sites such as Facebook and professional social networks such as
LinkedIn.
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4.3.4. PEOPLE AGED 50 - 64
People aged 50 to 64 are expected to account for 19.1% of social networking activity
in 2020. Historically, this segment has been slow to adopt social networking sites
because of its heavy online focus. However, as social networking sites have
become more accepted over the years, individuals in this segment have increased
their use at a faster rate than individuals aged 18 to 49.
4.3.5. PEOPLE AGED 65 & OVER
People aged 65 and over are expected to account for 10.6% of social networking
activity in 2020. Individuals in this group tend to use casual and specialized social
networking sites rather than professional sites to stay connected with friends and
family. During the period, this segment has increased as a percentage of total use.
4.4. U.S. SOCIAL MEDIA USAGE STATS3
3 “Social Media”; Pew Research; 2020
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4.5. GLOBAL SOCIAL MEDIA USAGE STATS4
4.6. PROFILE OF DIRECT COMPETITORS5
4.6.2. XYZ
▪ Year Founded: 2007
▪ Overview:
o Social network for XYZs.
o Video platform and community for XYZs, where 100 million+ users
gather each month to broadcast, watch, and discuss XYZs.
▪ Revenues: $x.xxB (2019)6
▪ Funding/Acquisitions7:
o 3 funding rounds, $xx million
o Last funding round: Series C
o 6 acquisitions; XYZ (2019), XYZ (2019), XYZ (2018), XYZ (2017), XYZ
(2016), XYZ (2014)
o Acquired by XYZ (2014)
4 “Social Media Statistics for Social Media Managers”; HootSuite; 2020 5 “XYZ”; Crunchbase; 2020 6 “Twitch Revenue and Usage Statistics (2020)”; Business of Apps; 2020 7 “XYZ”; Crunchbase 2020
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4.6.2. XYZ
▪ Year Founded: 2013
▪ Overview:
o Makes it easy for XYZs and XYZs to XYZ
o Enables XYZs, as well as XYZs, to XYZ
▪ Revenues8: $xxM (2018)
▪ Funding/Acquisitions9:
o 5 funding rounds, $xxx.xM
o Last funding round: Series E
o 3 acquisitions; XYZ (2018), XYZ (2018), XYZ (2015)
4.6.3. XYZ
▪ Year Founded: 2016
▪ Overview:
o App where users can XYZ their XYZ by
offering XYZ for XYZ
o XYZ keeps x% of the revenue
▪ Revenues: $x.xM (2018)10
▪ Funding: Unknown
▪ Acquisitions/Mergers: unknown
4.6.4. XYZ
▪ Year Founded: 2016
▪ Overview: XYZ sharing app and social network
▪ Revenues: $176.9M (2019)11
▪ Funding/Acquisitions12:
o Funding is Unknown
o 2 acquisitions: XYZ (2019), XYZ (2019)
8 “Next Billion-Dollar Startup XYZ, A Membership Platform for Artists, Raises $60M In Latest
Funding Round”; Forbes; 2019 9 “XYZ”; Crunchbase; 2020 10 “The Economics of XYZ”; XSRUS; 2020 11 “XYZ Revenues are Exploding” Barron’s; 2020 12 “XYZ”; Crunchbase; 2020
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4.6.5. XYZ
▪ Year Founded: 2010
▪ Overview:
o Free app that enables user to XYZ and XYZ
o Enables users to share XYZs with XYZs
▪ Revenues: $xxB (2019)13
▪ Funding/Acquisitions14:
o Total: $57.5M (3 rounds)
o Last round: $50M “Series B” (2012)
o 3 acquisitions, XYZ (2013), XYZ (2005), XYZ (2020)
4.6.6. XYZ (XYZ)
▪ Year Founded: 2004
▪ Overview:
o XYZ is an app that allows users to XYZ
o Any XYZ user can use XYZ to XYZ
▪ Revenues: $ xx.x billion (2019)15
▪ Funding/Acquisitions:
o x rounds of private funding, $x.x billion
o $xx.x billion raised at IPO
o Last private round = $x.x billion (2013)
o xx including XYZ (2019), XYZ (2015), XYZ (2014), XYZ (2014), XYZ
(2014)
13 “XYZ brought in $x billion in ad revenue last year, more than a quarter of Facebook’s earnings;
The Verge; 2020 14 “XYZ”; Crunchbase; 2020 15 “XYZ; Wikipedia; 2020
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4.7. COMPETITIVE ANALYSIS
XYZ is a is an application that allows its users to donate money to content creators.
Similar to XYZ, users can make XYZ from XYZ. XYZ requires a membership for
XYZs to join, whereas XYZ allows user to join without a membership. Users only
pay if REMOVED INFO.
XYZ is a x-year old social media platform that allows users to XYZ. XYZ is heavily
targeted to XYZs, whereas XYZ is targeted to anyone that XYZ. XYZ also focuses
on XYZs, XYZs, and XYZs; whereas, XYZ is focused on XYZs.
XYZ is a XYZ service based in ABC. It is a website with a XYZ and is not an
application. XYZ is mainly deemed as an XYZ site, due to XYZ. XYZ’s content
will consist of XYZ, XYZ, XYZ, etc. and will not be specifically targeted to XYZ.
XYZ is a XYZ application based in ABC. The application allows users to XYZ and
XYZ. In contrast, XYZ allows its users to post XYZs
XYZ a social media app that allows its users to XYZ. XYZ gives users the option
to post XYZ and users have the option to purchase it; however, XYZ users can
merely promote XYZ; whereas, XYZ users can sell any XYZ to their user base.
XYZ) is a separate app within XYZ that allows its XYZ creators to post XYZ and
monetize XYZ; however, XYZ users cannot sell XYZ; but, can merely promote it.
XYZ has competitive advantages compared to most of its competitors and is only
1 of 2 players within the market the focuses on REMOVED INFO. It is the only
company in the market that combines the elements of a social network with
REMOVED INFO. As the Company has many unique elements, will be competing
in a large market space, and has the attributes of new, proven, and successful
business models, the Company should be able to effectively penetrate the market
and garner significant market share.
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5. MARKETING PLAN
5.1. MARKETING OVERVIEW & STRATEGY
XYZd will launch an aggressive marketing campaign to promote brand awareness
and brand loyalty amongst its target audience. The Company will employ the
following marketing methods:
▪ Marketing materials
▪ Internet marketing
▪ Print advertising
▪ Public relations
▪ Television advertising
▪ Promotional marketing
▪ Celebrity/influencer
endorsement
5.2. INTERNET MARKETING
5.2.1. OVERVIEW
Internet marketing will be the major focus of the Company’s marketing campaign
and will include search engine optimization, social media advertising, video
advertising, display advertising, and search engine marketing.
The Company will utilize search engine optimization, video marketing, social
media marketing, pay-per-click advertising, and article marketing.
5.1.2. SOCIAL MEDIA MARKETING
Specifically, social media marketing will initially be a major focus of XYZ’s
marketing campaign and always be one of the most important and most employed
forms of marketing for XYZ. The Company has a profile on Instagram, Facebook,
and Twitter and already has xx,xxx followers on Instagram.
XYZ will advertise on:
▪ XYZ
▪ XYZ
▪ XYZ
▪ XYZ
▪ XYZ
▪ XYZ
▪ XYZ
▪ XYZ
▪ XYZ
▪ XYZ
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5.2.3. CELEBRITY/INFLUENCER ENDORSEMENT
XYZ will partner with top celebrity influencers to bring more exposure to its
application and content. The Company will receive endorsements from “Insta-
famous” models and have them post exclusive content for its users on XYZ.
5.3. PRINT ADVERTISING
Upon growth, the Company will utilize print advertising in regional and national
magazines that appeal to its primary demographic of x-x-year-old individuals.
Examples of U.S. magazines that appeal to XYZs, which the Company can
advertise in are:
▪ XYZ
▪ XYZ
▪ XYZ
▪ XYZ
▪ XYZ
▪ XYZ
▪ XYZ
▪ XYZ
▪ XYZ
▪ XYZ
5.5. TELEVISION ADVERTISING
As the Company grows and once it has raised a 2nd round of venture financing in
year 2, the Company will begin to promote its application by advertising on cable
and/or broadcast television programming that appeals to the Company’s target
demographics.
5.6. PUBLIC RELATIONS
The Company will pursue a strong public relations campaign to garner press
online, on TV, in magazines, in newspapers, and on the radio. By maintaining
relations with the national, regional, and local communities, it will bolster the
Company’s marketing campaign by boosting public awareness and improving
credibility, which will foster good relationships with customers.
5.7. PROMOTIONAL MARKETING
XYZ will engage in several forms of promotional marketing including sponsoring
events (parties, nightclubs), promotional contests, promotional incentives,
promotional giveaways, and various forms of innovative.
The Company will distribute these promotions within its website/app, its social
media profiles on Instagram and Facebook, and street marketing initiatives.
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6. OPERATIONAL PLAN
6.1. OPERATIONAL OVERVIEW
6.1.1. HOURS OF OPERATION
▪ 9AM to 6PM EST on Monday - Friday
6.1.2. LEGAL STRUCTURE
▪ XYZ, LLC registered as a limited liability company in ABC on January 1,
1234.
6.1.3. OPERATIONAL GROWTH PLAN
▪ Rent an approximately xxxx sf office in ABC, ABC.
▪ Upon securing 2nd round of financing, move to a larger office (approx.
xx,xxx sf)
6.2. COMPUTER HARDWARE & SOFTWARE
▪ PC and Apple laptops
▪ Software
o Payroll administration
o Sales management
o Managerial accounting
o Financial analysis &
performance management
6.3. LEGAL & INSURANCE
▪ John Doe, XYZ Law Firm
▪ Will obtain liability insurance to manage the business risks
6.4. ACCOUNTING
▪ Will hire a full-time accountant that reports to the CFO
▪ Will outsource tax reporting responsibilities to a full-time CPA
6.5. LICENSES & PERMITS
▪ XYZ has a business license from the city of ABC, ABC.
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7. MANAGEMENT & STAFF
7.1. EXECUTIVE MANAGEMENT
7.1.1. JOHN DOE, CHIEF EXECUTIVE OFFICER
REMOVED INFO
7.1.2. JOHN DOE, CHIEF OPERATING OFFICER
REMOVED INFO
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7.1.3. JANE DOE, CHIEF BRANDING OFFICER
REMOVED INFO
7.2. BOARD MEMBERS
7.2.1. JOHN DOE, BOARD MEMBER
REMOVED INFO
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8. FINANCING & GROWTH STRATEGY
8.1. CAPITAL REQUIREMENTS
In January 1234, XYZ, LLC secured $xxx,xxx
in seed equity financing for app
development completion (iOS, Android,
online), web design, and “soft marketing”.
XYZ, LLC seeks “Series A” equity financing
of $3,500,0000, of which an estimated
$345,000 will be used for capital
expenditures including $300,000 for
application development; the remaining
$3,155,000 will be available for working
capital to support marketing expenses and
G&A expenses.
The Company plans to raise “Series B”
equity financing of $10,000,000 in month 19,
of which an estimated $802,500 will be for
capital expenditures including $700,000 for
application development; the remaining
$9,197,500 will be for working capital.
The Company might raise “Series C” financing within 5 years.
8.3 RISK ANALYSIS
The Company is a start-up entity and will be managed by a professional executive
team. The risks associated with this venture are related to future uncertainties
associated with competition, changing industry patterns, and technological
innovation and fall within the medium risk segment of the investment spectrum.
Management believes that the demand for social media and videos within its
target market will remain strong in the near future. While there is no guarantee
that the Company will effectively manage risks, management is confident that it
will be able to effectively grow and sustain revenues.
8.3 EXIT STRATEGY
XYZ will pursue an exit strategy that includes either an acquisition by a larger
industry player, management buyout, or initial public offering (IPO).
Capital expenditures:
Application development $300,000
Computer hardware & software $20,000
Office furniture $15,000
Leasehold improvements $5,000
Miscellaneous assets $5,000
Total capital expenditures $345,000
Working capital:
Marketing expenses $1,905,000
G & A expenses $1,250,000
Total working capital $3,155,000
Total capital requirements $3,500,000
Table 1
XYZ, LLC
Capital Requirements - Series A
Capital expenditures:
Application development $700,000
Computer hardware & software $50,000
Office furniture $30,000
Leasehold improvements $15,000
Miscellaneous assets $7,500
Total capital expenditures $802,500
Working capital:
Marketing expenses $6,500,000
G & A expenses $2,697,500
Total working capital $9,197,500
Total capital requirements $10,000,000
Table 2
XYZ, LLC
Capital Requirements - Series B
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9. FINANCIALS
9.1. SALES
9.1.1. ASSUMPTIONS
As of August 2019, the average cost to acquire an app user who registered
with an app or created an account was 3.52 U.S. dollars.16
17
16 “Average Mobile App User Acquisition Costs 2018-2019”; Statista; November 27, 2019 17 “How Much Does Social Media Advertising Cost in 2020”; WebFx; 2020
Social Media Platform Average Advertising Cost (CPM)
Facebook $7.19 per 1000 impressions
Instagram $7.91 per 1000 impressions
YouTube $9.68 per 1000 impressions
LinkedIn $6.59 per 1000 impressions
Twitter $6.46 per 1000 impressions
Pinterest $30 per 1000 impressions
Sales: M 1-6 Year 2 Year 3 Year 4 Year 5
# New users $6.00 $5.50 $5.00 $4.50 $4.25 user acquisition cost
# Total users M 7-12 3% monthly user attrition rate
$5.75
Year 1-5
# Customers 75% of users
Year 1 Year 2 Year 3 Year 4 Year 5
# Purchases 0.2 0.25 0.3 0.35 0.4 per customer per mo.
Purchases amount ($) $2.50 $2.75 $3.00 $3.25 $3.25 per purchase
# Ad impressions 50 60 70 80 90 per user per month
Revenues:
Transaction revenues 2% 17% 17% 17% 17% of purchases
Advertising revenues $4.50 $4.75 $5.00 $5.25 $5.50 CPM
Total revenues
Cost of Sales:
Cost of XYZ licensing 10% 10% 10% 10% 10% of revenues
Cost of bandwith 3% 2.5% 2.25% 2.0% 2.00% of revenues
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9.1.2. PROJECTIONS
9.2. OPERATING EXPENSES
9.2.1. GENERAL & ADMINISTRATIVE EXPENSES
Year 1 Year 2 Year 3 Year 4 Year 5
Sales:
# New users 257,518 688,636 1,659,000 2,396,333 2,946,459
# Users (Year-End) 212,569 744,776 1,885,307 3,284,901 4,718,411
# Purchases 31,885 139,646 424,194 862,286 1,238,583
Purchases amount ($) 79,713 384,025 1,272,583 2,802,431 4,025,394
# Ad impressions 10,628,426 44,686,574 131,971,522 262,792,068 424,656,987
Revenues:
Transaction revenues 10,900 443,353 1,923,649 4,674,056 7,094,737
Advertising revenues 327,008 1,441,490 5,867,338 13,535,728 24,214,744
Total revenues $337,909 $1,884,843 $7,790,987 $18,209,785 $31,309,481
Cost of Sales:
Cost of XYZ licensing $33,791 $188,484 $779,099 $1,820,978 $3,130,948
Cost of bandwith $10,137 $47,121 $175,297 $364,196 $626,190
Total cost of sales $43,928 $235,605 $954,396 $2,185,174 $3,757,138
Gross margin $293,981 $1,649,238 $6,836,591 $16,024,610 $27,552,343
XYZ, LLC
Sales & Revenue Forecast
Table 2
Year 1 Year 2 Year 3 Year 4 Year 5
Wages & salaries $543,000 $862,971 $1,388,683 $1,613,507 $1,713,512
Payroll expense 54,300 86,297 138,868 161,351 171,351
Benefits 21,720 34,519 55,547 64,540 68,540
Insurance 30,000 14,136 58,432 136,573 234,821
Internet 2,400 2,880 3,168 3,326 3,410
Telephone 8,400 10,080 11,088 11,642 11,933
Training & development 30,000 36,000 39,600 41,580 42,620
Licenses & permits 1,690 9,424 38,955 91,049 156,547
Office rent 81,000 141,225 203,775 213,964 219,313
Legal & consulting 72,000 86,400 95,040 99,792 102,287
Travel 42,000 50,400 55,440 58,212 59,667
Meals & entertainment 24,000 28,800 31,680 33,264 34,096
Utilities 4,800 5,760 6,336 6,653 6,819
Dues & subscriptions 7,800 9,360 10,296 10,811 11,081
Total general & administrative expenses $923,110 $1,378,253 $2,136,908 $2,546,265 $2,835,998
Table 3
XYZ, LLC
General & Administrative Expenses
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9.2.2. MARKETING EXPENSES
9.2.3. STAFF HEADCOUNT & SALRIES
Year 1 Year 2 Year 3 Year 4 Year 5
Marketing materials $42,500 $57,750 $115,500 $150,150 $180,180
Internet marketing $900,000 $1,732,500 $3,465,000 $4,504,500 $5,405,400
Print advertising $300,000 $577,500 $1,155,000 $1,501,500 $1,681,650
Television advertising $0 $900,000 $2,520,000 $3,276,000 $3,633,600
Promotional marketing $210,000 $404,250 $808,500 $1,051,050 $1,261,260
Public relations $60,000 $115,500 $231,000 $300,300 $360,360
Toal marketing expenses $1,512,500 $3,787,500 $8,295,000 $10,783,500 $12,522,450
Marketing Expenses
XYZ, LLC
Table 4
Year 1 Year 2 Year 3 Year 4 Year 5
Chief Executive Officer 1 1 1 1 1
Chief Operating Officer 1 1 1 1 1
Chief Marketing Officer 1 1 1 1 1
Chief Financial Officer 1 1 1 1 1
Director of Operations - - 1 1 1
Director of Human Resources - - 1 1 1
Business Development Assistant - 1 2 3 3
Operations Assistant - 1 2 2 2
Customer Support Representative 2 3 4 4 4
Executive Assistant - 2 3 3 3
Director of Int'l Marketing - 1 1 1 1
Advertising Sales Manager 1 1 1 2 2
Advertising Account Manager - 1 2 3 5
Marketing Assistant 1 3 3 3 4
Accountant 1 1 1 2 2
Bookkeeper - 1 1 1 1
Total headcount 9 19 26 30 33
XYZ, LLC
Staff Headcount
Table 5
Year 1 Year 2 Year 3 Year 4 Year 5
Chief Executive Officer $150,000 $189,000 $207,900 $218,295 $223,752
Chief Operating Officer $96,000 $120,960 $133,056 $139,709 $143,202
Chief Marketing Officer $90,000 $113,400 $124,740 $130,977 $134,251
Chief Financial Officer $50,000 $115,500 $127,050 $133,403 $136,738
Director of Operations (starts M19) $40,500 $83,025 $85,101 $87,228
Director of Human Resources (starts M19) $30,000 $61,500 $63,038 $64,613
Business Development Assistant $60,000 $61,500 $63,038 $64,613 $66,229
Operations Assistant $30,000 $30,750 $31,519 $32,307 $33,114
Customer Support Representative $30,000 $30,750 $31,519 $32,307 $33,114
Executive Assistant $32,500 $33,313 $34,145 $34,999 $35,874
Director of Int'l Marketing (starts M19) $45,000 $92,250 $94,556 $96,920
Advertising Sales Manager $51,000 $52,275 $53,582 $54,921 $56,294
Advertising Account Manager $51,000 $52,275 $53,582 $54,921 $56,294
Marketing Assistant $40,000 $50,400 $55,440 $58,212 $59,667
Accountant $66,000 $76,230 $81,857 $83,903 $86,000
Bookkeeper (starts M19) $24,000 $49,200 $50,430 $51,691
Table 6
XYZ, LLC
Staff Salaries
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9.3. PRO-FORMA ANNUAL FINANCIAL STATEMENT SUMMARIES
9.3.1. PRO-FORMA INCOME STATEMENT
9.3.2. PRO-FORMA STATEMENT OF CASH FLOWS
Year 1 Year 2 Year 3 Year 4 Year 5
Cash flows from operations
Net Income: ($2,160,873) ($1,834,505) ($3,749,954) $2,478,126 $12,118,615
Depreciation & amortization $63,548 $174,667 $285,786 $324,952 $324,952
Increase (decrease) in accrued liabilities 28,168 (11,703) 5,523 3,560 1,583
Increase (decrease) in accrued taxes $0 $0 $0 $0 $0
Increase (decrease) in accounts payable $8,367 ($837) $753 $414 $217
Increase (decrease) in accounts receivable ($47,828) $21,142 ($193,266) ($226,200) ($332,386)
Net cash flows from operations ($2,108,620) ($1,651,236) ($3,651,159) $2,580,853 $12,112,983
Cash flows from investing activities:
Capital expenditures 345,000 402,500 300,000 402,500 327,500
Prepaid expenses $0 $0 $0 $0 $0
Net cash flows from investing $345,000 $402,500 $300,000 $402,500 $327,500
Cash flows from financing: $0 $0 $0 $0 $0
Proceeds from issuance of debt $0 $0 $0 $0 $0
Debt service payments $0 $0 $0 $0 $0
Proceeds from sale of stock 3,500,000 $10,000,000 $0 $0 $0
Net cash flows from financing 3,500,000 10,000,000 0 0 0
Net increase (decrease) in cash 1,046,380 7,946,264 (3,951,159) 2,178,353 11,785,483
Beginning cash balance 0 1,046,380 8,992,644 5,041,486 7,219,838
Ending cash balance $1,046,380 $8,992,644 $5,041,486 $7,219,838 $19,005,321
Pro-Forma Statements of Cash Flows
Schedule 2
XYZ, LLC
Year 1 Year 2 Year 3 Year 4 Year 5
Revenues $337,909 $1,884,843 $7,790,987 $18,209,785 $31,309,481
Cost of Sales $43,928 $235,605 $954,396 $2,185,174 $3,757,138
Marketing expense $1,512,500 $2,006,250 $8,295,000 $10,783,500 $12,522,450
General & administrative $923,110 $1,378,253 $2,136,908 $2,546,265 $2,835,998
Net operating income ($2,141,629) ($1,735,265) ($3,595,317) $2,694,846 $12,193,895
Depreciation $63,548 $174,667 $285,786 $324,952 $324,952
Interest expense $0 $0 $0 $0 $0
Interest earned $44,303 $75,427 $131,149 $108,233 $249,672
Income before taxes ($2,160,873) ($1,834,505) ($3,749,954) $2,478,126 $12,118,615
Income taxes $0 $0 $0 $0 $0
Net income ($2,160,873) ($1,834,505) ($3,749,954) $2,478,126 $12,118,615
Schedule 1
XYZ, LLC
Pro-Forma Income Statement
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9.3.3. PRO-FORMA BALANCE SHEET
Year 1 Year 2 Year 3 Year 4 Year 5
Assets:
Current assets
Cash and marketable items $1,046,380 8,992,644 $5,041,486 $7,219,838 $19,005,321
Prepaid expenses $0 $0 $0 $0 $0
Accounts receivable $47,828 $26,686 $219,953 $446,152 $778,538
Total current assets $1,094,208 $9,019,330 $5,261,438 $7,665,990 $19,783,859Net non-current assets: $281,452 $509,286 $523,500 $601,048 $603,595Total assets $1,375,661 $9,528,616 $5,784,938 $8,267,038 $20,387,454
Liabilities & Shareholders' Equity
Current liabilities
Accounts payable $8,367 $7,530 $8,283 $8,697 $8,915
Accrued liabilities $28,168 $16,465 $21,987 $25,547 $27,131
Accrued taxes $0 $0 $0 $0 $0
Total current liabilities $36,534 $23,995 $30,270 $34,244 $36,045
Total long-term liabilities $0 $0 $0 $0 $0
Total liabilities $36,534 $23,995 $30,270 $34,244 $36,045
Shareholders' equity
Common stock $3,500,000 $13,500,000 $13,500,000 $13,500,000 $13,500,000
Retained earnings (2,160,873) (3,995,379) (7,745,332) (5,267,206) 6,851,409
Total shareholders' equity 1,339,127 9,504,621 5,754,668 8,232,794 20,351,409
Total liabilities & equity $1,375,661 $9,528,616 $5,784,938 $8,267,038 $20,387,454
Schedule 3
XYZ, LLC
Pro-Forma Balance Sheet