Project Adriatic Danube Black Sea Multimodal Platform

SEE/C/0004/3.3/X,
WP5, Act.5.3 Designing the ADB model of MDC

DEVELOPMENT OF BUSINESS PLAN

FOR CREATION OF MDC IN BULGARIA FOR ADRIATIC
DANUBE BLACK SEA REGION

Release date, period: 20.11.2013

Responsible organisation: Bulgarian Chamber of Commerce and
Industry, PP9
Version: Draft version

The publication reflects the authors view and the Managing Authority of the SEE
Programme is not liable for any use that may be made of the information contained therein.

Page 1 of 31

CONTENT
1. EXECUTIVE SUMMARY .......................................................................................................................... 3
1.1. OBJECTIVES ................................................................................................................................. 3
1.2. MISSION ...................................................................................................................................... 4
1.3. KEYS TO SUCCESS ....................................................................................................................... 4
2. PRODUCTS AND SERVICES .................................................................................................................. 4
2.1. PRODUCT AND SERVICE DESCRIPTION ......................................................................................... 5
3. STRATEGY AND IMPLEMENTATION SUMMARY .......................................................................... 7
3.1.
3.2.
3.3.
3.4.

VALUE PROPOSITION ................................................................................................................... 7

COMPETITIVE EDGE ..................................................................................................................... 7
MARKET ANALYSIS SUMMARY ................................................................................................... 7
MARKET SEGMENTATION TARGET GROUPS ............................................................................ 11

4. SALES AND MARKETING PLAN ........................................................................................................11

4.1.
4.2.
4.3.
4.4.
4.5.

MARKETING STRATEGY ............................................................................................................ 11

PROMOTION STRATEGY ............................................................................................................. 11
PRICING STRATEGY ................................................................................................................... 13
DISTRIBUTION STRATEGY ......................................................................................................... 14
SALES STRATEGY ...................................................................................................................... 14

5. OPERATIONAL PLAN ...........................................................................................................................18

5.1. START-UP .................................................................................................................................. 19
5.2. MDCS ORGANIZATIONAL STRUCTURE ...................................................................................... 21
5.3. MDCS PERSONAL PLAN ............................................................................................................ 22
6. FINANCIAL PLAN...................................................................................................................................22
6.1. START-UP FUNDING ................................................................................................................... 22
6.2. OPERATIONAL COSTS ................................................................................................................. 23
6.3. PROFIT AND LOSS ...................................................................................................................... 24
7. EFFICIENCY EVALUATION .................................................................................................................25
7.1. PROFITABILITY SUSTAINABILITY RATIOS .................................................................................. 26
7.2. OPERATIONAL EFFICIENCY RATIOS ................................................................................................ 27
7.3. LIQUIDITY RATIOS ....................................................................................................................... 28
8. RISKS AND ASSUMPTIONS ................................................................................................................29

Page 2 of 31

1. Executive Summary
Promotion and facilitation of intermodality is one of important trend of European
transport policy. European MDC network will be a platform that brings together main
actors in the transport and logistics field. A MDC is a new framework of co-operation
among different transport actors (on regional and national level) to improve
knowledge, management and information system for intermodal transport , as well as
to prepare and to support an effective intermodal transport solutions. A MDC is
defined as a neutral non-profit organisation acting as a catalyst to develop intermodal
freight transport solutions along European corridors showing high intermodal
potential. To achieve the self-sustainability the Bulgarian MDC will adopt a balanced
business model. This will not only contribute to achieve this goal but will also
guarantee profitability at the third year of MDC operations.

1.1. Objectives
The main objective of the MDC will be to reach self-sustainability during its first years
of operations.. From this business plan we can see that the MDC will be profitable at
the third year of operations. This will be achieved through the sales of products and
services to the private target group and through a contribution scheme from
stakeholders.
The basic tasks of Bulgarian MDC are:

increase awareness of intermodal transport among shippers and forwarding agents

and logistic providers;
provide shippers with information on the many and varied possibilities of intermodal
transport, especially with regard to intermodal door-to-door transport;
analyze the problems which might affect intermodal transport;
set up and maintain a database on intermodal transport services;
be a source of objectives freight and transport information for trade, industry, as well
as for municipalities governmental institutions.
to take active part in the promotion of the effective intermodal transport network in the
Adriatic-Danube-Black Sea Region (ADBR);
to execute scientific and apply research in the sphere of intermodal transport
development;
to disseminate information on intermodal transport developments and innovations;
to promote co-operation between intermodal transport hubs and logistic centres both
at national and at transnational level.
to prepare Bulgarian intermodal transpor strategy and present it to the governmenta
institutions for approval;
to adopt information on intermodal transport and logistics technologies development
trends as well as innovation and best practices in the EU countries;
Page 3 of 31

to support efforts of the cities and the regional administrations in establishing

intermodal transport, public logistics centres (freight villages) and in developing their
network in Bulgaria;
to promote the co-operation between intermodal transport hubs and logistics centres
both on national and international level;
to take part in the establishment of the effective common intermodal transport
communication network in the Adriatic-Danube-Black Sea Region;

1.2. Mission
The mission of the MDC will be to provide excellent products and services, a shared
environment for MDCs stakeholders in order to pro-actively contribute to the
development of multimodal transport sector in Bulgaria and Adriatic-Danube-Black
Sea Region.

1.3. Keys to Success

The keys to success for the MDC will be:
a. Massive promotion among Bulgarian companies
b. Well balanced business model implementation
c. Professional and trustworthy Service Delivery Organisation
d. Creation of the MDC stakeholders Community

2. Products and Services

The following main products, services and applications have been identified and can
be offered by MDC :
Category 1: Promotion - preparation of brochures promoting Multimodal Transport
(MTT), preparation of website of MDC, conduct newsletter campaigns, organisation
of workshops with target groups and government analysing problems & bottlenecks,
preparing fact-sheets on individual countries (e.g. external trades, ports, hinterland
terminals,..), Establishing and maintaining a database on MMT services and
transport operators
Category 2: Information - provide shippers with information on the many and varied
possibilities of intermodal transport, especially with regard to intermodal door-to-door
transport; set up and maintain a database on intermodal transport services; to
disseminate information on intermodal transport developments and innovations; to
adopt information on intermodal transport and logistics technologies development
trends as well as innovation and best practices in the EU countries

Page 4 of 31

Category 3: Consultancy - strategic advice to policy makers, route or service

provider comparisons and evaluations for shippers, requirements and demand
potential analyses, specific feasibility and research studies.
Category 4: Training - introductory lectures, familiarisation workshops or training
courses to users or operators, or broker training services provided by other
institutions

2.1. Product and Service Description

Category 1: Promotion
Product 1: Preparation of brochures and leaflets
The brochures and leaflets has to be produced periodically not less than twice per
year and for some important events ( conferences, workshops and so on). They have
to provide useful and reusable information and allow people to be more informed
judgments quickly.
Product 2: Annual subscription service
In order to reach self-sustainability, an annual subscription service to Bulgarian and
foreign multimodal transport companies and shippers have to be offered. This service
will be provided through developed MDCs Web site where the public area will offer
free information, but for the access to the private area of the Web site an accessible
fee should be charged to users. We understand that free services do not tend to be
valued. This product will allow users ( Bulgarian and foreign) to properly register
within the MDC database and to obtain a basic web presence. Furthermore the
access to the private area of the portal will allow users to access, without any
additional costs, various informative materials such as specialised studies and
reports, business guides, news, FAQs and knowledge bases. The idea is to offer this
product on two different levels of access and price depending on the type and
quantity of information offered. These levels will be named as basic and advanced.
An additional subscription level (i.e.: top) could be tailored for foreign SMEs and large
companies.
Product 3: Workshops
One of the best ways to promote a product and service in the traditional marketing is
to organize specialized workshops covered different target groups. At the beginning
of MDC the massive promotional campaign with regional workshops have to be
organized. The workshops have to clarify why MDC exists and how it can help in the
development of multimodal transport, what are the benefits of intermodal transport
and what are the possibilities to use MDCs website. Later the annual conference for
multimodal players will be a good idea as well as annual workshops with different
target groups.
Category 2: Information
Product 1: Internet presence

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One of the most important things in our ages is to be well recognized in the Internet
as a producer or service provider. This is a reason for MDC to create and support the
database on MMT services and transport operators. This registration in the database
will be allowed for users with basic subscription and will allow them to find the
partners and to be found as a partner for multimodal transport. The database will
contain list of companies, contact details as well as the list of services provided by
each company.
Product 2: Business and best practices guides
The business and best practice guides will be priced separately depending on the
quality of the material. These guides will help users to acquire knowledge and new
skills on a variety of topics related to their business connected with multimodal
transport.
Product 3: Research studies and specialised reports
Research studies and specialised reports will also be priced separately. They will
have original materials relevant to Multimodal Transport sector.
Category 3: Consultancy services
This category of products and services will include more traditional consultancy
services strategic advice to policy makers, route or service provider comparisons and
evaluations for shippers, requirements and demand potential analyses, specific
feasibility and research studies, commercial services (e.g.: marketing research and
analysis, marketing planning, sales development, matchmaking, etc.) as well as the
exploitation of services that can be produced through the use of the DMCs
infrastructure.
Category 4: Training
The training is other important channel is the training courses. The training courses
are obliged to increase the level of understanding of Multimodal transport as well as
to provide knowledge for different possibilities for usage of Multimodal transport in
Bulgaria and in the Adriatic-Danube-Black Sea region. These course depending of
their goals are divided as follows:

introductory lectures initial short term courses explaining the place and the role of
Multimodal transport in our region, organization of MDC and its goals and tasks, how
to participate and use the MDC.
familiarisation workshops or training courses to users or operators short term
courses explaining the strategy for development of multimodal transport services
(MMTS) in Europe and our region, the possibilities to use MMTS in Bulgaria.
broker training services provided by other institutions courses about the tools for
MMTS in the ADB region, partners for MMTS, principles for organization of MMTS
and so on.

Category 5: Collateral and additional products/services (i.e.: cross linking and

other websites integration or synergy, advertising, etc.).
Page 6 of 31

We foresee the possibility to use the MDCs to publish banner advertising or join the
advertising networks (e.g.: Google, AdSense, Yahoo Search Marketing, etc.). The
income that can be generated via these advertising channels has not to be
underestimated and could become an additional income stream for the MDC..
3. Strategy and Implementation Summary
The MDC will adopt a consistent business model that will allow it to focus on the
main target groups. To the private target group a mixed of free services (on the
public area) and paid services (on the private area) will be offered. The public target
group involvement in the initiative will be leveraged through a contribution scheme
that will clearly support the MDC during its first years of operations.

3.1. Value Proposition

The value proposition of the MDC is to become the single point of access and the
most used organization for Multimodal Transport in Bulgaria as well foreign
companies and organisations that would like to do multimodal transport in Bulgaria.
At the same time to become the main operational and knowledge sharing center for
Multimodal Transport stakeholders in Bulgaria.

3.2. Competitive Edge

By building a business based relationship with satisfied users, the service delivery
organisation will simultaneously build defences against competition. The longer the
relationship stands, the more the MDC will help companys understand what it is
offered to them and why they should both stay with the MDC, and refer it to other
companies. In business communities like the Multimodal transport sector , reputation
is and will be extremely important, and word-of-mouth advertising will be invaluable.

3.3. Market Analysis Summary

An efficient transport system is an essential prerequisite for the European Unions
competitiveness. With the projected growth of international trade, the possible
extension of the Union to the Central and Eastern European countries and enhanced
cooperation with the Mediterranean countries, the role of transport will become even
more important. Since 1970 European freight transport has increased by about 70 %.
Annual growth of about 2 % is expected for the next two decades. Present figures put
the costs of traffic congestion at 120 billion ECU or 2 % of the EU GDP. Accidents,
air pollution and noise amount to a further 2 %. These costs undermine European
competitiveness, when transport demand requires flexibility, reliability and costeffectiveness. Unless the transport sector considers mode-independent service
Page 7 of 31

requirements and utilizes spare capacities in other modes, road transport is likely
further to increase its present market share of 72 % (from almost 50 % in 1970). The
share of rail transport has since 1970 decreased from about 32 % to less than 15 %
in 1995. This decline is likely to continue if present trends persist.
Regarding the present situation of intermodal transport in the EU countries, the
following general conclusions can be made:

The intermodal flows within the EU and in relation with the CEEC are low and
concentrated on a limited number of relations (4% in the EU15, 2-4% between the
EU15 and the CEEC, 0.5% in the CEEC, 5 main corridor relations exist between the
EU and the CEEC);
The intermodal flows between EU15 and the CEEC fluctuate too much; the reason for
this is that the intermodal transport market in particular in the CEEC is not yet mature;
For RoLa (Rollende Landstrae) flows, it is expected that the volumes will decrease
in the future when border crossing problems are solved due to the EU enlargement,
or can slightly increase depending on the implementation of administrative and policy
measures;
Too many bottlenecks still hamper the development of intermodal transport in the
area;
Intermodal transport is often not taken into consideration in decisionmaking when
choosing the transport modes.

The next figure displays the evolution of railway traffic over the period 1996-2010. In
terms of traffic performances, Austria, Germany, Denmark, the Netherlands, Sweden,
Slovenia, and the United Kingdom have displayed annual growth rates, both in
freight and passenger rail (see table IIII.1). Note that freight traffic has been positive
in Estonia, Hungary, Lithuania and Latvia, even though the modal share has sharply
decreased, reflecting a possible restructuring process and/or a development of
international traffic to and from Russia. By contrast, both passenger and freight
railway traffic have displayed negative annual growth over the two past decades in
Bulgaria, Czech Republic, Poland, Romania and Slovakia.

Page 8 of 31

Railways Performance

Source: Transport, Statistical Pocketbook 2012 and Eurostat.

tkm: tonne-kilometres; pkm: passenger-kilometres, infrastructure lines: length of lines
in use.
* Evolution of pkm in SE: 1996-2009; Evolution of infrastructure, HU: 2000-2010
** Modal share, freight, in BG: 2000; Modal share, passenger, EE, LT, LV: 2000
In 2010, EU27 road freight transport accounted for almost 74% of all inland freight
transport; a share almost four times that of the second biggest mode, rail (16%)183.
The modal share of road freight transport has been consistently increasing over time
as it was 67% in 1996 and 70% in 2000. The trend of the increasing dominance of
Page 9 of 31

road freight transport goes back even longer in the EU. In 1970 the tonne-km
performance of road freight was only about 50% more than that of rail in the
countries that became the EU-15184. However, the sharp increase in freight
transport activity since then has been captured almost exclusively by road freight
transport, which has been growing both in absolute terms and in relative terms
compared to other freight transport modes

Modal share* and performance of road transport

Source: Transport, Statistical Pocketbook 2012 and Eurostat.

tkm: tonne-kilometres; pkm: passenger-kilometres, infrastructure:
motorways.

length

of

Page 10 of 31

* Modal share is percentage of inland freight transport (consisting of road, rail, inland
waterways and pipelines). The modal share data is based on the official statistics
reported according to the relevant EU legal acts on transport statistics whose
methodology is not fully consistent across the different transport modes. See Box
III.1 for data constraints.
** Modal share, freight, in BG: 2000; Modal share, passenger, CY, EE, LT, LV, MT:
2000

3.4. Market Segmentation Target groups

According the intermodal definition and technology the following target groups can be
identified:
Cargo shippers.
Cargo carriers.
Multimodal operators (Assignment Operations Management, Supply Chain
Relying, 4PL)
Public authority (e.g. Port Authorities, Customs)
These target groups have been taken into consideration in this business plan.
4. Sales and marketing plan

4.1.

Marketing Strategy

The main components in the Marketing, PR & Promotion plan are as follows:
Emphasise Customer Service
The MDC will have to differentiate itself from other similar initiatives. The MDC
organisation will have to offer a clear and viable alternative for the private target
market that will have to emphasise on the customer service.
Build a Relationship-Oriented Business
Build long-term relationships with the target groups with the goal of allowing target
groups becoming dependent on the MDC.
Focus on Target Markets
The MDC will need to focus the multimodal services offerings on Bulgarian market to
the shippers, who would like to save time and enjoy convenience, by using multiple
services, and high level of customer service.

4.2.

Promotion Strategy

The Promotion Strategy will be based on traditional offline activities and constant adhoc online activities.

Page 11 of 31

Under the traditional offline advertising and promotion activities the following are
foreseen:
Brochures creation preparation of start-up brochure explaining what is the
MDC and what it can propose as products and services. Preparation of
periodically brochures with news in the multimodal transport in Europe and
Bulgaria.
Set up the web site The Web allows for a cheap way of promoting products
and services. It is a great tool because it allows the target customers to
educate themselves about your products and services by reading about it,
seeing a demo, and download a copy (and therefore serve as your distribution
channel). Create a sample web site with public and private part. The web site
will provide free of charge information and news, but in the private part
services and products will be available according level of subscription and role
of the users.
Press releases preparation of a short press release introducing MDC.
Official event when MDC will be created as an organizational structure the
official event will be organized. All stakeholders will be presented at this event
as well as media representatives and interested companies dealing with
multimodal transport.
Promotional tour in order to populate the MDC promotional tour will with 4 or
5 workshops.
As far as the ad-hoc online advertising and promotion activities the following are
foreseen:

E-mailing campaign - An average response rate for direct mail is about 1%. This
depends on the offer, the mailing list, the target audience, the creative (how the direct
mail piece looks), and the timing of the mailing. While it's a big commitment in time,
publishing a monthly e- mail newsletter ("ezine") is one of the very best ways to keep
in touch with prospects, generate trust, develop brand awareness, and build future
business.
Search Engine Optimisation - The most important strategy is to rank high for your
preferred words on the main search engines in "organic" or "natural" searches (as
opposed to paid ads). Search engines send robot "spiders" to index the content on
your webpage, so let's prepare your WebPages for optimal indexing
Cross linking & Link popularity campaign - Links to the site from other sites bring
additional traffic. But since Google and other major search engines consider the
number of incoming links to the website ("link popularity" and "PageRank") as an
important factor in ranking, more links will help site rank higher in the search engines,
too. All links, however, are not created equal. Links from popular information hubs will
help the site rank higher than those from low traffic sites
Paid advertising (Pay per click (PPC), banner advertising) - The main PPC players
are Yahoo Search Marketing (formerly Overture) and Google AdWords
(https://adwords.google.com/select/). The top ads appear as featured links to the right
of "natural" search engine results for keywords. The ranking is determined by how
much you've bid for a particular search word compared to other businesses. This can

Page 12 of 31

be a cost-effective way to get targeted traffic, since you only pay when someone
actually clicks on the link. Yahoo Search Marketing even offers some free credit to
get you started.
Promotion in on-line forums - The Internet offers thousands of targeted e-mail based
discussion lists, online forums, blogs, and Usenet news groups for people with very
specialized interests.

4.3.

Pricing Strategy

The following coherent suggested pricing mix strategy (i.e.: low and competitive cost
but high quality/price ratio value) is outlined below:
Category 1: Promotion
Product 1: Annual subscription service
For Bulgarian companiess:

Basic - 50 Euro per year

Advanced - 100 Euro per year

For foreign businesses:

Basic - 100 Euro per year

Advanced 200 Euro per year

Category 2: Information
Product 1: Internet presence
Bulgarian companies 10 Euro
Foreign companies 20 Euro
Product 2: Business and best practices guides
Digital article: 5 Euro each
Digital book: 10 Euro each
Product 3: Research studies and specialised reports
Research studies and specialised reports - 50 Euro each
Category 3: Consultancy services
Product 1: Commercial services - 300 Euro (and up depending on the request)
Product 2: Consultancy services - 200 Euro (and up depending on the request)
Category 4: Training
Product 1: Introductory lectures 50 Euros per person duration 1 day, 10 persons
per course.
Product 2: Familiarisation workshops or training courses to users or operators 100
Euros per person duration 2 days, 10 persons per course.
Product 3: Broker training services provided by other institutions 300 Euros and up
depending on the request duration 3 to 5 days, 10 persons per course.
Page 13 of 31

Category 5: Collateral and additional products/services (i.e.: cross linking and

other websites/portals integration or synergy, advertising, etc.).
Product 1: Banner advertising campaigns - Tentative price: 200 Euro per campaign

4.4. Distribution Strategy

The products and services proposed by MDC will use a wide range of distribution
channels. The main distribution channel will be the Internet. Rich content on the web
site shall attract companies to become users and will increase popularity of the
multimodal transport services; am extensive e-mail campaign will provide last news
for intermodality in Bulgaria and in the region. Stakeholders regional offices will also
be important in distributing the message to companies of the advantages offered by
the MDC as well as promotional tour.

4.5. Sales Strategy

The Sales Strategy will rely on trying to reach as quickly as possible the "critical
mass" of annual subscribers, in order to build a steady recurring income for the MDC.
During the first three years of operations it will be necessary to rely also on
stakeholders contribution scheme.
Sales Forecast
The following tables and charts present the sales forecast for the MDC.

Page 14 of 31

Sales Forecast
Unit Sales
Cat1 - Basic subscription for
Bulgarian companies
Cat1 - Basic subscription for
Foreign companies
Cat1 - Advanced subscription
for Bulgarian companies
Cat1 - Advanced subscription
for Foreign companies
Cat2 Internet presence of
Bulgarian companies
Cat2 Internet presence of
Foreign companies
Cat2 - Business and best practices guides

2014

2015

2016

600

750

900

100

130

160

50

60

70

10

20

30

650

880

1060

110

150

190

120

150

180

80

100

120

20

30

40

10

20

30

20

30

40

10

10

10

10

12

15

1,796

2,351

2,857

articles ( number of articles (10) multiplied by

readers)

Cat2 - Business and best practices guides

books ( number of books (4) multiplied by
readers)
Cat2 - Research studies and specialised reports
( number of studies (2) multiplied by readers)

Cat3 - Commercial services

Cat3 - Consultancy services
Cat4 - Introductory lectures
Cat4 - Familiarisation workshops or training
courses to users or operators

Cat4 - Broker training services

Cat5 - Banner advertising
campaign
Total Unit Sales

Page 15 of 31

Sales Forecast
Unit Prices
Cat1 - Basic subscription for
Bulgarian companies
Cat1 - Basic subscription for
Foreign companies
Cat1 - Advanced subscription
for Bulgarian companies
Cat1 - Advanced subscription
for Foreign companies
Cat2 Internet presence of
Bulgarian companies
Cat2 Internet presence of
Foreign companies
Cat2 - Business and best practices guides

2014

2015

2016

50.00

50.00

50.00

100.00

100.00

100.00

100.00

100.00

100.00

200.00

200.00

200.00

10.00

10.00

10.00

20.00

20.00

20.00

5.00

5.00

5.00

10.00

10.00

10.00

50.00
300.00

50.00
300.00

50.00
300.00

200.00

200.00

200.00

500.00

500.00

500.00

1000.00

1000.00

1000.00

3000.00

3000.00

3000.00

200.00

200.00

200.00

articles

Cat2 - Business and best practices guides

books
Cat2 - Research studies and specialised reports

Cat3 - Commercial services

Cat3 - Consultancy services
Cat4 - Introductory lectures
Cat4 - Familiarisation workshops or training
courses to users or operators

Cat4 - Broker training services

Cat5 - Banner advertising
campaign

Page 16 of 31

Sales Forecast
Sales
Cat1 - Basic subscription for
Bulgarian companies
Cat1 - Basic subscription for
Foreign companies
Cat1 - Advanced subscription
for Bulgarian companies
Cat1 - Advanced subscription
for Foreign companies
Cat2 Internet presence of
Bulgarian companies
Cat2 Internet presence of
Foreign companies
Cat2 - Business and best practices guides

2014

2015

2016

30000.00

37500.00

45000.00

10000.00

13000.00

16000.00

5000.00

6000.00

7000.00

2000.00

4000.00

6000.00

6500.00

8800.00

10600.00

2200.00

3000.00

3800.00

6000.00

7500.00

9000.00

800.00

1000.00

1200.00

1000.00
3000.00

1500.00
6000.00

2000.00
9000.00

4000.00

6000.00

8000.00

5000.00

5000.00

5000.00

10000.00

12000.00

15000.00

6000.00

9000.00

12000.00

800.00

1200.00

1600.00

92,300.00

132,300.00

151,200.00

articles

Cat2 - Business and best practices guides

books
Cat2 - Research studies and specialised reports

Cat3 - Commercial services

Cat3 - Consultancy services
Cat4 - Introductory lectures
Cat4 - Familiarisation workshops or training
courses to users or operators

Cat4 - Broker training services

Cat5 - Banner advertising
campaign
Total Sales

Page 17 of 31

Direct Unit Costs

Cat1 - Basic subscription
Cat1 - Advanced subscription
Cat2 Internet presence
Cat2 - Digital article
Cat2 Digital book
Cat2 - Research studies &
reports
Cat3 - Commercial services
Cat3 - Consultancy services
Cat4 - Introductory lecture
Cat4 - Familiarisation workshops or training

2014

2015

2016

5,00

5,00

5,00

10,00

10,00

10,00

3,00

3,00

3,00

50,00

50,00

50,00

1000,00

1000,00

1000,00

1000,00

1000,00

1000,00

200,00

200,00

200,00

150,00

150,00

150,00

300,00

300,00

300,00

500,00

500,00

500,00

700,00

700,00

700,00

125,00

125,00

125,00

courses to users or operators

Cat4 - Broker training services

Cat5 - Banner advertising
campaign

Direct Cost of Sales

Cat1 - Basic subscription
Cat1 - Advanced subscription
Cat2 Internet presence
Cat2 - Digital article
Cat2 Digital book
Cat2 - Research studies &
reports
Cat3 - Commercial services
Cat3 - Consultancy services
Cat4 - Introductory lecture
Cat4 - Familiarisation workshops or training

214

215

216

3500,00

4400,00

5300,00

600,00

800,00

1000,00

2280,00

3090,00

3750,00

500,00

500,00

500,00

4000,00

4000,00

4000,00

2000,00

2000,00

2000,00

2000,00

4000,00

6000,00

3000,00

4500,00

6000,00

3000,00

3000,00

3000,00

5000,00

6000,00

7500,00

1400,00

2100,00

2800,00

600,00

750,00

1000,00

27880.00

35140.00

43850.00

courses to users or operators

Cat4 - Broker training services

Cat5 - Banner advertising
campaign
Subtotal Direct Cost of Sales

5. Operational Plan
Bulgarian MDC will be a neutral non-profit organisation acting as a catalyst to
develop intermodal freight transport solutions along European corridors showing high

Page 18 of 31

intermodal potential. In order to meet these requirements Bulgarian MDC has to

guarantee neutrality of information and to be financialy independent.

5.1. Start-up
MDC have to generally improve communication between stakeholders on the
demand side (shippers, forwarders) the supply side (transport operators,
infrastructure providers) and the policy side (authorities and regulators). The best
way to achieve these goals is to create public private partnership for management
and operation of MDC. This will ensure political independence of MDC, its
professional management and market oriented activities. The public part will be the
communication bridge between intermodal transport business and institutions
responsible for transport infrastructure and national transport policy.
The first task is to identify the right stakeholders for the new MDC. The potential
stakeholders are as follows:

Government and municipality institutions Ministry of Transport Information

Technology and Communications, Ministry of Economy, Ministry of Regional
Development, National Company for Railway Infrastructure, Agency Road
Infrastructure, Executive Agency for Exploration and Maintenance of the Danube
River, Agency for small and medium sized enterprises, Executive Agency "Maritime
Administration", Executive Agency "Port Administration", Executive Agency "Port
Administration", Agency Road Infrastructure, big municipalities which will be in
charge with development of multimodal transport services.
Bulgarian Chamber of Commerce and Industry and its members
NGOs.

After identification of the stakeholders, the organizational set-up can be started. It will
include as follows:

Establishment of stakeholders board and stakeholder distribution scheme;

Approval of place for MDC by stakeholders board;
Approval of business plan by stakeholders board;
Approval of organizational structure of MDC by stakeholders board;
Approval of CEO of MDC by stakeholders board;
Hiring the MDCs personal;
Establishment of the MDCs office;
Development of the web page;
Draft of the brochure;
Set up of official launching event;
Set up of the promotional campaign;
Preparation of consultants database;
Starting promotion campaign.

Page 19 of 31

The MDC operations will begin with a general corporate brochure establishing
offered services. This brochure will be developed as part of the PR & Promotion
activities and distributed among institutional and business community. A traditional
direct mailing to selected interested actors could be implemented. Literature and
mailing will be very important, with the need to establish a high-quality look and feel
in order to create a high sense of professionalism.
The key fulfilment and delivery will be provided by MDC. The core value will be the
professional expertise, provided by a combination of experience and hard work.
The only way the MDC can hope to differentiate well from similar initiatives is to
clearly define its vision offering real support and
alliance. The benefits of this
approach will include many intangibles: confidence, reliability, knowing that
somebody will be there to answer questions and help at the important times.
It will be extremely important to form strategic alliances with other infomediaries,
content providers and last but not least Business Service Providers.
We have assumed that basic start-up expenses are foreseen as follows: stationery,
offices preparation (e.g.: workings for cleaning and painting the rooms and making
them connected to PBX and Internet, etc.), office furniture and equipment.
Start-Up
Start-up Expenses
Stationery & others

2,000

Office renting for 1-st year

Office preparation
Office furniture
Office equipment
Development of Website
Hosting & connectivity
Total Start-up Expenses

3,000
3,000
3,000
20,000
2,000
1,000
34,000

Start-up Assets
Cash Required
Other Current Assets
Fixed Assets
Total Assets

80,000
10,000
0
90,000

Total Requirements

124,000

Page 20 of 31

5.2. MDCs Organizational Structure

The MDC will be organised and managed in a creative, innovative fashion to
generate high levels of customer satisfaction. A policy manual will be developed and
implemented. Job descriptions will be developed to identify necessary competencies
and skill sets. Team oriented professionals with common goals will be hired.
The MDC will conduct weekly staff meetings to discuss ideas, suggestions, and
operations. An annual motivational seminar will be held. An employee recognition
program.will be a developmed. The MDCs will have a two level organizational
structure:

1-st level management board formed by stakeholders representatives. The

management board will take the high level strategic decisions concerning
development of MDC.
2-nd level operational management. The operational management will be done by
CEO and MDCs staff. It will include day by day tasks. The CEO will be responsible to
the management board preparing and reporting monthly reports.

The consulting services will be provided through freelancers consultants and

consulting companies which will be registered in the consultants database in the
MDC. This will decrese the costs for MDC and in the same time will allow provision of
high quality services on demand.
The web site will be hosted and administrated by an expert company. The part of the
responsibilities of that specialized company will be: provision of high availability of the
page and content management. The materials for content of the page will be
provided by the staff of the MDC as well as administration of e-marketing campaigns,

Page 21 of 31

administration of the consultants database, administration of the subscription

procedure.

5.3. MDCs Personal Plan

The Personnel Plan will reflect the need to bolster the MDCs capabilities to match the
stated positioning. The main characteristic of personal plan is to establish highly
effective structure and number of persons in the MDC. positioning. Total headcount
should increase to 5 the first and the second year and 6 in the third year.
Personnel Plan persons
Position
CEO
Administrative officer

2014
1

1
3

1
3

1
3

Total
Personnel Plan salary
2014
Position
15000.00
CEO
7800 .00
Administrative officer
9600.00
32400.00

Total salary

2016

Marketing expert

Marketing expert

2015

2015

2016

15750.00

16538.00

8190.00

8600.00

10080.00
34020.00

10600.00
35738.00

6. Financial Plan
We emphasise that the following figures are based on the assumptions and
experience from previous similar projects. At the beginning of the project these
figures will have to be revised in relation to the strategic choices which will be taken.

6.1. Start-up Funding

This chapter illustrates the Start-up Funding situation through the table below.
Start-Up
Start-up Funding
Stationery & others

2,000

Office preparation
Office furniture
Office equipment
Development of Website
Official event
Total Start-up Expenses

3,000
3,000
20,000
2,000
2,000
32,000

Page 22 of 31

6.2. Operational costs

The table bellow shows how operational costs will be distributed for MDC during the
first 3 years.
Operational costs in Euros
Operational costs

2014

2015

2016

Ofice rent

3000

3000

3000

Hosting & connectivity

1000

1000

1000

Subtotal

4000

4000

4000

CEO

15000

15750

16538

Administrative oficer

7800

8190

8600

Salary

Marketing expert
Subtotal

9600

10080

10600

24600

34020

35738

3500

4400

5300

600

800

1000

2280

3090

3750

500

500

500

4000

4000

4000

2000

2000

2000

2000

4000

6000

3000

4500

6000

3000

3000

3000

5000

6000

7500

1400

2100

2800

600

750

1000

27880

35140

42850

Direct cost of sales

Cat1 - Basic subscription
Cat1 - Advanced subscription
Cat2 Internet presence
Cat2 - Digital article
Cat2 Digital book
Cat2 - Research studies & reports
Cat3 - Commercial services
Cat3 - Consultancy services
Cat4 - Introductory lecture
Cat4 - Familiarisation workshops or training
courses to users or operators
Cat4 - Broker training services
Cat5 - Banner advertising campaign
Subtotal

Marketing costs
Preparation of brouchers

500

500

500

Promotional tour

2000

2000

2000

Web marketing

2000

2000

2000

300

300

300

e-mailing campaign

Page 23 of 31

6.3. Profit and loss

Pro Forma Profit and Loss
Sales
Direct Costs of Goods
Payroll
Housing
Marketing
Start-up funding
Gross Margin
Gross Margin %
Incidental expenses
Corporate tax
Gross Margin after taxes
Gross Margin %
Stakeholders distribution
scheme
Net Profit
Net Profit/Sales %

2014

2015

2016

92300

132300

151200

27880

35140

42850

24600

34020

35738

4000

4000

4000

4800

4800

4800

-980

54340

63812

-1,06%

41,07%

42,20%

5000

5000

5000

4934

5818,2

-5980

44406

63812

32000

-6,48%

33,56%

42,20%

10000

15000

-5980

34406

48812

-6,48%

26%

32,28

Page 24 of 31

7. Efficienc y Evaluation
A sustainable business and mission requires effective planning and financial
management. Ratio analysis is a useful management tool that will improve
understanding of financial results and trends over time, and provide key indicators of
organizational performance. Managers can use ratio analysis to pinpoint strengths
and weaknesses from which strategies and initiatives can be formed. Stakeholders
may use ratio analysis to measure the results against other organizations or make
judgments concerning management effectiveness and mission impact.
Page 25 of 31

For ratios to be useful and meaningful, they must be:

Calculated using reliable, accurate financial information

Calculated consistently from period to period
Used in comparison to internal benchmarks and goals
Used in comparison to other companies in your industry
Viewed both at a single point in time and as an indication of broad trends and issues
over time
Carefully interpreted in the proper context, considering there are many other
important factors and indicators involved in assessing performance.

Ratios can be divided into four major categories:

Profitability Sustainability
Operational Efficiency
Liquidity
Leverage (Funding Debt, Equity, Grants)

The ratios presented below represent some of the standard ratios used in
business practice and are provided as guidelines

7.1. Profitability Sustainability Ratios

.
The meaning of these ratios is to measure how well the business is performing
over a specific period, as well as whether the social enterprise has the financial
resources to continue serving its constituents tomorrow as well as today.
Ratio

Explanation and actions

Sales Growth =

Percentage increase (decrease) in sales between two time periods.

(Current Period Sales

If overall costs and inflation are increasing, then you should see a

Previous Period Sales)/

corresponding increase in sales. If not, then may need to adjust

Previous Period Sales

pricing policy to keep up with costs.

Reliance on Revenue Source

=
Revenue Source /Total
Revenue

Measures the composition of an organizations revenue sources

(examples are sales, contributions, grants).
Organizations can use this indicator to determine long and shortterm trends in line with strategic funding goals (for example, move
towards self-sufficiency and decreasing reliance on external funding).

Operating Self-Sufficiency =

Measures the degree to which the organizations expenses are

Business Revenue/

covered by its core business and is able to function independent of

Total Expenses

grant support.

Page 26 of 31

For the purpose of this calculation, business revenue should exclude

any non-operating revenues or contributions. Total expenses should
include all expenses (operating and non-operating) including social
costs.
A ratio of 1 means you do not depend on grant revenue or other
funding.
How much profit is earned on your products without considering
Gross Profit Margin =
Gross Profit Total Sales/Total
Sales

indirect costs.
Is your gross profit margin improving? Small changes in gross margin
can significantly affect profitability. Is there enough gross profit to
cover your indirect costs. Is there a positive gross margin on all
products?

Net Profit Margin =

Net Profit/Sales

SGA to Sales =
Indirect Costs /Sales

How much money are you making per every $ of sales. This ratio
measures your ability to cover all operating costs including indirect
costs
Percentage of indirect costs to sales.
Look for a steady or decreasing ratio which means you are
controlling overhead
Measures your ability to turn assets into profit. This is a very useful
measure of comparison within an industry.

Return on Assets =
Net Profit Average /Total Assets

A low ratio compared to industry may mean that your competitors

have found a way to operate more efficiently. After tax interest
expense can be added back to numerator since ROA measures
profitability on all assets whether or not they are financed by equity or
debt.

Return on Equity =
Net Profit/Average Shareholder
Equity

Rate of return on investment by shareholders.

This is one of the most important ratios to investors. Are you making
enough profit to compensate for the risk of being in business?
How does this return compare to less risky investments like bonds?

7.2. Operational Efficiency Ratios

Page 27 of 31

Following ratios show how efficiently assets are being utilized and liabilities
managed These ratios are used to compare performance over different periods of
time.
Ratio

Explanation and actions

Operating Expense Ratio =

Compares expenses to revenue.

Operating Expenses/Total

A decreasing ratio is considered desirable since it generally indicates

Revenue

increased efficiency.

Accounts Payable Turnover

=
Cost of Sales/Average
Accounts Payable

Days in Accounts Payable =

Average Accounts
Payable/Cost of Sales x 365

The number of times trade payables turn over during the year.
The higher the turnover, the shorter the period between purchases and
payment. A high turnover may indicate unfavourable supplier
repayment terms. A low turnover may be a sign of cash flow
problems.
Compare your days in accounts payable to supplier terms of
repayment.

Total Asset Turnover =

Revenue/Average Total Assets

How efficiently your business generates sales on each dollar of assets.

An increasing ratio indicates you are using your assets more

Fixed Asset Turnover =

productively.

Revenue/Average Fixed Assets

7.3. Liquidity Ratios

Following ratios answer the question: Does your enterprise have enough cash on
an ongoing basis to meet its operational obligations? This is an important
indication of financial health.
Ratio

Explanation and actions

Current Ratio =

Measures your ability to meet short term obligations with short term

Current Assets/Current

assets., a useful indicator of cash flow in the near future.

Liabilities

A ratio less that 1 may indicate liquidity issues. A very high current
ratio may mean there is excess cash that should possibly be invested

Page 28 of 31

(also known as Working

elsewhere in the business or that there is too much inventory. Most

Capital Ratio)

believe that a ratio between 1.2 and 2.0 is sufficient.

Quick Ratio =
(Cash +AR + Marketable
Securities)/Current Liabilities

A more stringent liquidity test that indicates if a firm has enough shortterm assets (without selling inventory) to cover its immediate liabilities.
A ratio of 1:1 means that a social enterprise can pay its bills without
having to sell inventory.
Working Capital is a measure of cash flow and should always be a

Working Capital =

positive number. It measures the amount of capital invested in

Current Assets Current

resources that are subject to quick turnover. Lenders often use this

Liabilities

number to evaluate your ability to weather hard times. Many lenders

will require that a certain level of WC be maintained.

Adequacy of Resources =
(Cash + Marketable Securities +

Determines the number of months you could operate without further

Accounts)/Receivable Monthly

funds received (burn rate)

Expenses

8. Risks and Assumptions

Any event that could potentially impede the progress of the project, cause
additional costs or reduce function or quality should be regarded as a risk and
must be processed by the risk management procedure.
Risks are possible undesirable occurrences, appearing suddenly or gradually,
which could result in objectives not being met. Risks are issues that did not
happen yet. Risks should be analyzed and assessed during all life cycle and
appropriate actions should be planned to eliminate them or to reduce the chances
of their occurrences.
Risk management is a process to ensure that all risks are predicted and well
described in advance in order to either prevent their impact as issues or reduce
their severity. It contains identification and evaluation of risks, their quantitative
and qualitative analysis, action and contingency planning, tracking, reporting,
assessment and resolution.
Stable economical and political development is an important condition for
development of MDC in Bulgaria.
The main risks identified at this stage as well as the estimated level of impact,
occurrence probability and mitigation actions are described below.

Page 29 of 31

Impact 1

Probabilit y 2

Bureaucratic difficulties H
and
slow-decision
process of the public
institutions involved.
Difficulties to agree the H
correct business model
to adopt and the kind of
action that will have to
support the MDC due
to
its
mixed
private/public role.

Enterprise
plcs
consortium
will
extensively support the Beneficiary for
the adoption of a winning business model
and an appropriate Service Delivery
action.

Delays in launching or H
major changes in other
related
projects
(infrastructure
development, common
ICT tool )

Courses are practical and create

mandatory skills for multimodal
transport
Promotional campaigns send clear
message on training benefits.
Work with frontline organisations will
timely address identified weaknesses
and lack of commitment
Interventions will be tailored to each
region specificity
Benefits of services delivery will be
highlighted
during
workshops,
trainings, and other meetings with
frontline bodies
Close cooperation with all parties
involved in the related projects.

Inadequate

Risk

Mitigation
Close cooperation with other public
authorities to lobby and advocate for
the legislative changes
International best practices presented
to decision making bodies
Agents of change selected from key
decision making bodies invited to
workshops
and
brainstorming
meetings
will
increase
their
involvement in project support
Create a short and fast procedure for
decision making inside MDC.

Lack of political will to

develop the policy,
legislative,
and
institutional framework
for multimodal transport

Low interest for training

Frontline
regional
bodies not willing to
provide
first
level
advisory.

1
2

Very

good

implementation

of

High (H), Medium (M), Low (L)

High (H), Medium (M), Low (L), Unknown (U)

Page 30 of 31

Impact 1

Risk

cooperation between
the
different
institutions involved
and an unwillingness
to embrace the SME
portal as a way of
reciprocal exchange
of information.

Probabilit y 2

Mitigation

Community
building
for
supporting actions activities.

SME

There are also external factors which will have direct impact to the MDC:

Improvement of the energy efficiency performance of vehicles across all modes.

Usage of transport and infrastructure more efficiently through improved traffic
management and information systems
Creation of a genuine Single European Transport Area by eliminating all residual
barriers between modes and national systems, easing the process of integration
and facilitating the emergence of multinational and multimodal operators.
Setting the framework for safe transport.
Internalisation of externalities, elimination of tax distortions and unjustified
subsidies and free and undistorted competition.

Page 31 of 31