Entrepreneurship ENTM 350-X

Astrocorporate Business Plan

Presented to: Dr. Philippe W. Zgheib Presented by: Yara Abboud (200200733)

Presented on June 27th, 2011

Executive Summary
The Opportunity: Astrocorporate offers exclusive high quality astrological advice to corporations and entrepreneurs. It provides astrological solutions related to improving ones business state or opening a new business. It also helps new graduates determine their best potential corporate career. Other readings include business partner compatibility, recruiting advice to select the best compatible corporate crew. This service is unique for it is the only one in Lebanon that provides astrological corporate advice and recruitment advice to human resources as well as employment candidates. Corporations sometimes spend thousands of dollars to train a new employee, and invest lots of time and money only to find out that he/she leaves abruptly. Thus Astrocorporate will save companies time, and money. It will also provide them with sound advice when they face conditions of high debt, bankruptcy, lack of solvency in addition to recommending the best dates for profitable business deals, and closures. The Market: According to the 2011 World fact book 67% of Lebanese range between the ages of 15-65. Astrocorporate mostly targets businessmen: entrepreneurs and employees ages 30 and above. However, it does not exclude the 15-30 age range which includes young graduates and young professionals who are seeking recruitment advice, and are lost as to which corporate position best suits them in the long run. The Competition: Competition exists; however, as stated before Astrocorporate focuses on providing corporate advice not personal advice. Herein lies its exclusivity and competitive edge. The main competitor in Lebanon is Carmen Chammas since she presents herself in a highly professional manner and has a website that offers personal reports for career, family, love and friendship. Although her target market includes all ages, it is most likely that young people age 15-30 will ask for a love horoscope, or a personal forecast. Thus, her site does not market itself as an astrological business advice site. As for Maguy Farah, she does not provide online reports, and mostly relies on selling her books. However, the danger is still there because Carmen provides private consultations which provide advice on any subject.

Business Model: In order to prosper, Astrocorporate will penetrate the market by charging 50$ for a private consultation or online report. This is below Carmens price of 75$. In addition it will provide bonus reports as free offerings on New Year, and Easter. After launching the website advertising on Facebook and Google, as well as appearing on well known TV shows, the service will begin January 2012. Sales forecast estimates indicate that in the worst case scenario Astrocorporate can provide a revenue of 4800$ in five years while it can provide 10,300$ in the best case scenario. Expenses will be high mostly during the first year, and profit will be low; however, after the second year expenses will be maintained at 1900$ and profits will rise each year. According to the optimistic scenario discussed in the plan, the five year profit can reach 8400$, through which the sole proprietor can retain 6500$. In the worst case scenario, the five year profit would reach 2900$ through which the sole proprietor can retain 1000$. Moreover, in the optimistic scenario the fifth year gross profit margin will be 80%, while in the pessimistic one the fifth year gross profit margin will be 60%. Thus, sustaining the business for the long run is profitable since the costs are mostly advertising costs, and the sole proprietor works on keeping them constant starting year 2. Even if an administrative assistant is brought in, costs will not rise that much because she will only be asked to work in times of boom when there is a rush of workload. Moreover to keep expenses constant the sole proprietor will cut costs from Facebook ads and allocate them to TV shows instead. The sole proprietor would also cut costs from Facebook and Google ads to allocate them to the assistants salary. To maintain competitive advantage in the market, the sole proprietor will always update her astrological knowledge and seek to provide accurate reports. Accurate readings will entail customer loyalty. Hence, the customer will spread the word. Astrocorporates market share will grow. Also, once having appeared on TV shows on LBC and Future TV, word will spread to the Arab world. Arab countries would also provide an untapped market share esp. Kuwait, Bahrain, Dubai and Saudi. For now, the sales estimates and the plan are based on developing the business in Lebanon; however surely once the word has spread Astrocorporate will receive lots of online request especially from the Arab countries. Operating Summary: During its first year of operations, Astrocorporate will focus on acquiring the customer base through website development, and word of mouth. The operating costs are mostly advertising and promotion costs including fliers, Facebook ads, Google ad words, appearing on TV shows in addition to the cost of the astrological software.

The focus during the first phase will be on networking, acquiring and retaining potential customers. To properly manage growth the sole proprietor will monitor expenses whereby fixed costs will be maintained at 1900$, and variable costs for the first year only are 1633$. Preliminary Financial Summary: The below table summarizes the five year forecast revenue, expense and net income for Astrocorporate: Proforma Income Statement Astrocorporate (in USD)
For the Year Ending Dec 31, 2012 2013 2014 Revenues (Negative scenario) Revenues (Positive scenario) Total expenses EBIT (negative scenario) EBIT (positive scenario)

2015

2016

3600
3600 3233 367 367

3850
4620 1900 1950 2720

4150
6000 1900 2250 4100

4500
7800 1900 2600 5900

4800
10300 1900 2900 8400

Funding Requirements: Astrocorporate relies on the sole proprietors bootstrapping for funding resources. No bank loans are needed. Money comes mostly from sole proprietors savings, and profits of the first year. The savings are sufficient to finance the website, advertising costs and organizational costs. Exit strategy: There are several possible exit strategies. The whole business could be sold by simply selling the website and astrological software to an astrologer, another successor who really believes in continuing the business. The worst case scenario would be opting out entirely from the business around year 3 or 5 without selling it. Either way costs are minimal, since operations are from home. Another alternative would be exiting just a section of the business. For instance, if selling reports to corporations and entrepreneurs doesnt work, the main focus will shift to the student recruitment sector whereby students are matched to their best possible corporate position based on their astrological chart. For further information contact: Astrocorporate
Mtayleb, La Collina St. Lebanon, www.astrocorporate.lb

II.

General description of the business

Astrocorporate is a new company that provides exclusive high quality astrological advice to corporations and entrepreneurs. It provides astrological solutions related to improving ones business state or opening a new business. Partner compatibility reading for business partners is also provided. Recruiting advice based on employees birth charts is devised to select the best compatible crew. Additionally, it helps new graduates determine their best potential corporate career. This service is unique, for it is the only one in Lebanon that exclusively provides corporate advice and recruitment advice to human resources as well as employment candidates. All others provide personal, love life advice and career life advice. Astrocorporate is initially a sole proprietorship company offered by the founder, Yara Abboud, who operates from her own office, in Mtaileb, Lebanon. She will be available for both in-call and online readings. III. Marketing:

A. Research and analysis Astrocorporates target market consists of business firm owners, CEO s, new entrepreneurs, as well as managers who need advice as to how to improve their business or get out of a financial crisis. Astrology in Lebanon is preached by many; it is hard to find the precise accurate practitioners though. The most famous are Maguy Farah, and Carmen Shammas. However, Carmen seems to be the most professional since she uses astrological software, and has a website for registering private consultations. Maguys website on the other hand, only advertises her book. Whilst most of them offer predictions for the New Year or individual predictions for ones love life, career life and financials; none in Lebanon exclusively provide consultations specifically to business corporations. Since most of the population in Lebanon is young, CIA world Factbook 2011 states that 25.8% range between 0-14 years of age, 67.10% range between 15-65 years of age, and 7.2% are above 65 years of age. Most of my competitors customers age will be in the 15-65 age range. My market share on the other hand, will mostly consist of age range 30-65. Figure 2a and 2b estimate Astrocorporates market share compared to Maguys and Carmens.

Figure2a.
5%

Percentage of people between ages 15-65 asking advice from Astrocorporate

80 %

15 %

15-20 20-30 30-65

Figure 2b. Percentage of people between ages 15-65 asking advice from competitors Maguy and Carmen mostly Carmen though since Maguy only has a book.
20 % 40 % 40 %
15-20 20-30 30-65

Obviously, people ages 30-65 who have established themselves moneywise and who are thinking of growing their own business are most likely to ask advice from Astrocorporate. Basically this is the market share I have to target; and thus market penetration has to occur within this age range. Below are my estimates for a pessimistic scenario and an optimistic one. In both cases however, I am assuming that I get one customer between age 15-20 per month, 2 customers between age 20-30 per month and 3 customers between ages 30-65 per month. The age 15-20 range will consist of young people who have finished their degree, or technical vocation and are looking for advice regarding what corporate position fits their individual personalities. So per year I will have 12 customers between age 15-20, 24 between age 20-30 and 36 between age 30-65. My estimated numbers err on the conservative side since people especially big corporations need time to trust in new astrologers who are not yet known.

The pessimistic scenario is the following:

Potential customers 15-20 20-30 30-65 total Growth 5% 5% 10% 8% year 1 12 24 36 72 year 2 13 25 40 77 year 3 13 26 44 83 year 4 14 28 48 90 year 5 15 29 53 96 CAGR 4% 4% 8% 6%

The optimistic scenario is the following:

Potential customers 15-20 20-30 30-65 total Growth 10% 20% 40% 28% year 1 12 24 36 72 year 2 13 29 50 92 year 3 15 35 71 120 year 4 16 41 99 156 year 5 18 50 138 206 CAGR 8% 16% 31% 23%

The compounded growth rate CAGR is computed based on the following formula: CAGR= (ending value/ beg value)(1/number of years ) - 1 Source: http://www.investopedia.com/terms/c/cagr.asp#axzz1Q52n4l45 B. Marketing Plan:

1. Market Strategy & implementation As previously stated, my target market consists of firm owners, CEOs, new entrepreneurs, as well as managers who need advice as to how to improve their business or get out of a financial crisis. Once convinced with my readings and advice, they will come for long term consulting. The strategy will focus on Mtayleb first then it will expand to surrounding parts of Lebanon. My target customers will be in the age of 30-65, since that usually is the age range of a CEO, or new entrepreneur.

My main competitor is Carmen Chammas who is the most professional among all the astrologers in Lebanon. Maguy is not as strong since her website only contains information about her book. Other competitors include foreign astrologers who have websites and provide online reports or advice via email.
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Such

examples

include:

http://www.indianastrologyhoroscope.com/business_astrology1.html

www.bobmarksastrology.com, www.astro.com
I will target people in my region starting with entrepreneurs in my area, who are also my friends. Readings will be face to face and reasonably priced. I will also have a website available where corporate people can submit their information and sources of concern so the advice report could be sent to their emails. This would definitely work and provide opportunity to get revenue from companies both inside and outside Lebanon.
The key element in purchase decisions made at the client level is trust in the reputation and reliability of

Astrocorporate. 2. Pricing My pricing strategy for consultations will be less than Carmens 75$ price. I will charge 50$ for a 30mn private consultation. As for online reports, I will also charge 50$. Definitely price should not go below 50$ or else customers would question the quality of the readings. As for the sales strategy, it depends on building trust and reputation in the market. It also depends on how well I know my material, and how well I advertise myself in the market. 3. Advertising and Promotion Other than having my own personal website, I will create a Facebook fanpage, and a linked in profile for the company. After having done some readings for prominent people I know, I will advertise my website through Google adwords and through Facebook. This form of advertising only requires an internet credit card whereby you use a specified amount, and the website rolls your ad across Facebook, or Google pages till the specified amount finishes. The company will depend also on word of mouth until a client base is formed. Then I will begin advertising with fliers distributed with Albalad newspaper and sms internet campaigns. Once I have sufficient funds, I will access helwe and mourra on LBC, as well as future TV, and MTV afternoon programs.

Since an astrologer needs time to build a reputation, loyalty and trust, the below sales forecast is yearly not monthly. Based on the previous market analysis on page 3: y The pessimistic scenario is: Growth 8% year 1 72 3600$ year 2 77 3850$ year 3 83 4150$ year 4 90 4500$ year 5 96 4800$

Potential customers Total customers Total Sales y

The optimistic scenario is: Growth 28% year 1 72 3600$ year 2 92 4620$ year 3 120 6000$ year 4 156 7800$ year 5 206 10300$

Potential customers Total customers Total Sales

Estimated sales revenues for each year are calculated as follows: For year one: Total customers *price per session= total customers * 50$= 72*50= 3600$. Consequently, it is similarly calculated for the other years. Pessimistic Scenario: Sales forecast for Five years
$10,000 $9,000 $8,000 $7,000 $6,000 $5,000 $4,000 $3,000 $2,000 $1,000 $0 1 2 3 4 5

Optimistic Scenario: Sales Forecast for Five years

$12,000 $10,000 $8,000 $6,000 $4,000 $2,000 $0 1 2 3 4 5

Cost estimates for advertising at the beginning stage, i.e the first month consists of the following: Advertising Internet credit card for ads to be filled Building website + buying astro software Internet Sms campaign for 1000 messages 1000 flyers Business cards Facebook+ linked in page Sum 333$ 100$ 0$ 1583$ 50$ Costs 100$ 1000$

On monthly basis however, promotion will consist of internet sms campaign, Facebook ads, and messages so monthly promotion costs will be 150$. I will also resort to TV shows like helwe wa moura on LBC, but if I do, I will allocate the money I use to Facebook and Google ads to TV shows instead. This way I keep my costs constant. IV. Location + Production + Distribution

Astrocorporate will operate from my own flat. The advantage is that I dont have to pay rent. Another advantage is that if the client is far away I could talk to him through Skype, yahoo voice (which is less costly than regular phone), or I could send him the report via email. If clients cant come for private consultations, I would meet them in their corporations. However, consultations at their corporations will cost 60$ since I will be the one driving to their place. V. Management

Since I am the sole proprietor, management wont be an issue. In times of rush, when the business gets going and when I have lots of calls, I would hire an assistant for administrative support for 500$ per month. The assistant will most probably be needed in the beginning of the fourth year once my business has boomed. Regarding payroll for myself, I will not take payroll the first year, since I will invest the profit in the business again. I would probably take payroll starting the second year. My payroll however will not consist of the full profit I made. It consists of the profit minus the expenses of the next year.
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Managing expenses will be as follows: Year 1 sales Year2 sales Pessimistic view Optimistic view Expenses Pessimistic Profit Optimistic Profit My optimistic Payroll = this years profit- next years expenses My pessimistic payroll none 50$ 350$ 700$ 1000$ 3600$ 3600$ 3233$ 367$ 367$ none 3850$ 4620$ 1900$ 1950$ 2720$ 820$ 4150$ 6000$ 1900$ 2250$ 4100$ 2400$ Year 3 sales Year4 sales 4500$ 7800$ 1900$ 2600$ 5900$ 4000$ Year5 sales 4800$ 10300$ 1900$ 2900$ 8400$ 6500$

For year 1, expenses consist of the original 1583$ expense in the beginning + promotion costs of 150$ each month (100$ for Facebook ads and 50$ for sms messaging to 1000 customers). In total first year total expenses are: 1583 + 150*11 = 3233$. In case I really need to use TV shows for a month or two, I will keep my expenses the same by allocating the monthly amount of money I use for Facebook ads, sms campaigning and google ads to TV shows instead. For year 2, and the other following years yearly expense will be 150*12 = 1800$ (again Facebook, Google ad words and sms campaign costs for each month). I will also add 100$ yearly to update my website. Hence, total yearly expense is 1900$. The expense is similar for year 3. As for year 4, since people will have already known who I am, and what service I provide, I will minimize the Facebook ads, and the Google adwords to costs of 120*12= 1400$/year. I might hire an assistant if work schedule is full and pay her 500$ so my expenses will remain at 1900$, even if I were to bring her.

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VI.

Financing Section

A. Assumptions Astrocorporates financial growth will be through cash flow. The financial plan is based on the following assumptions: y y Sales growth forecast that were previously estimated using compounded growth rate model CAGR No loans were taken to finance the business; thus all money invested is taken from my personal savings account i.e. bootstrapping y The cost of capital at which I am discounting my cash flows is the rate of 7.27% ( BRR Beirut reference rate, Beirut http://www.byblosbank.com/) y Fixed costs are the Facebook ads the Google adwords, and sms messaging each month. Monthly fixed costs of 150$ meaning 1800$ yearly, and 100 $ yearly for website update. So fixed cost will be 1900$ yearly y Variable costs include the first year expenses for launching the business which consist of building the website, printing the business cards as well as the 1000 flyers. They account for: 1000+ 100 + 333= 1433$. Other variable expenses might include astrological books + new astrological software which might add up 200$. Thus variable costs for year1 amount to 1633$. For each other subsequent year, I will keep variable costs at zero. Anything from changing the astrological software to updating the website will be taken from the expenses I included for Facebook ads. I will always substitute the allocations for the different costs so that total expenses equal 1900$, and variable costs remain at zero.

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B. Projecting Profit and loss To project profit and loss I computed the gross yearly profit margin for years 1-5, and got the below chart. In the below chart ,the red color represents the yearly gross profit margin derived from optimistic scenario, while the blue one represents the gross profit margin derived from the pessimistic scenario.

Gross yearly profit margin

90% 9000 80% 8000 70% 7000 60% 50% 40% 30% 20% 10% 0% y1 y2 y3 y4 y5 6000 5000 4000 3000 2000 1000 0

Yearly Profit

y1

y2

y3

y4

y5

C. Estimated income statements, Balance sheet, and Cash flow (appendix section ) D. NPV analysis Investement one -3233$ -3233$ Y1 367$ 367$ Y2 2720$ 1950$ Y3 4100$ 2250$ Y4 Y5

5900$ 8400$ 2600$ 2900$

NPV optimistic scenario is = - initial investment + discounted future cash flows for each year= NPV= 13164.5$ for optimistic scenario. NPV pessimistic scenario = 5203.7$ (positive either way) I took discount rate to be 7.27% based on Beirut reference rate. E. Budgeting plans : I will always take 1900$ from my profit for the expenses of the next year

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VII.

Critical risks

I might not be able to achieve my sales projections if my marketing strategy fails. In addition, Maguy Farah and Carmen might also start a similar idea in the future so I might lose my competitive edge. They might price their corporate advice at less price or same price. Thus in that case I have to innovate and add special offers to my advice report. Special offers could include bonuses, business solar report which tells an entrepreneur or businessman where to travel to in order to improve financial conditions. If my corporate service advice does not work out, I would focus my efforts on university students ages (20-22), who are seeking to find jobs instead of just focusing on targeting CEOs of business corporations ages 3065. This way I can match university students with the desired job, and help corporations get their required employees. VIII. Harvest Strategy A. Transfer of asset If I dont meet my sales forecast, I could exit the business by selling my website and astrological software to an astrologer I know, or a successor (a cousin of mine) who really believes in continuing the business. The worst case scenario would be opting out entirely from the business around year 3 or 5. Either way my costs are minimal, since I am operating from home. Moreover, if the strategy is not working I could solely concentrate my focus on target market age range 15-30 students who are looking for job and recruitment advice in corporate positions. B. Continuity of business strategy: Since In Lebanon I dont need a license for having a website, or an astrological service, to ensure continuity I have to focus on my marketing strategy, and my sound astrological report. Customer loyalty will be built on my reports accuracy. Word of mouth will spread the word to other customers, and the business will grow. So professionalism and constantly updating my knowledge of astrology is a must. Expanding my network of people be it on linked in and Facebook is essential especially since I have access to people around the world and not only Lebanon.

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IX.

Milestone Schedule The below chart describes the timing, objectives and deadlines for the year.

From the above table, one can see that Astrocorporate starts providing services on New Year, beginning January 2012. The marketing promotion however will start way before. The website will be built in a month. Paper Fliers will only be distributed during January and February. TV shows will only be used during festivities like the first two months of the New Year, and in the month of April during Easter because most business people have vacations during these months. As for Facebook ads, and SMS messages, they will be sent all year long except during New Year, and Easter since TV shows are more frequently watched during these parts of the year.

X. Appendix (next page)

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Appendix
I. Proforma Income Statement Astrocorporate (in USD)
For the Year Ending Dec 31, 2012 2013 2014 Revenues (Negative scenario) Revenues (Positive scenario) Total expenses EBIT (neg scenario) EBIT (positive scenario)

2015

2016

3600
3600 3233 367 367

3850
4620 1900 1950 2720

4150
6000 1900 2250 4100

4500
7800 1900 2600 5900

4800
10300 1900 2900 8400

II.

Proforma Balence Sheet Astrocorporate (in USD) In This balance sheet I will not include depreciation of the Labtop since I can do the business through any accessible computer.

For optimistic scenario

2012 assets current assets cash Total assets Liabilities Equity Paid in capital retained earnings Total equity 2013 2014 2015 2016

3233 3233 0 2866 367 3233

1900 1900 0

1900 1900 0

1900 1900 0

1900 1900 0

1900 1900

1900 1900

1900 1900

1900 1900

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