Design and Development Plan
To begin with, this part of the business plan will discuss the processes that are involved in the design and development of the Smart Tutorial Books. The first step in these processes consists in setting the goals for the each of the areas that we want to achieve. In the development section we are going to focus on the following areas:
Product development
Market development
Organizational development
In the goal setting process we will use the SMART model. This model states that the goals should be Specific, Measurable, Attainable, Relevant and Time bound. S stands for Specific, meaning that a specific area for improvement or development is targeted. M stands for Measurable, where certain criterion is created for progress measurement. A stands for Attainable, stressing the possible ways that will help to achieve the goals. R stands for Realistic, meaning that we are willing and able to achieve the goal within the present resources and knowledge. The last letter T stands for Time bound, requiring a specific time when the goal must be achieved. Tables below represent the product, market and organizational development goals, and the next few paragraphs will discuss these goals in details.
Product development goals |
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Product development goals consist of technical and marketing aspects of the product that state how the product can be created and what we need in order to sell it. First step in this process starts from the product concept, where we state what the product is about, how it will work and what will deliver to customers. Secondly, we need to identify the target market of the product in order to know who our customer is and what his characteristics are. Next steps involve technological aspects, such as customization of 5000 eBooks from supplier and implementing the electronic books to get a final product – STB. When we get have a final product, we will test it for faults and defects to remove them and when the STB is ready, we need to determine the selling price of one unit. Next, we will promote and position the product among target customers and the last steps include delivering the product to the consumers and constantly adapting it based on their feedback.
Market development goals |
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Market development goals mostly consist of specific targets that we want to achieve for STB. For example, in one year we want to achieve market share of 14% that was calculated in the previous section of market share projection. In the next two goals we want to achieve 53,000,000 tg of sales and total of 77,500 customers based on the sales projection. In addition, we are expecting the increase in the amount of customers each year by 20% based on the third goal. Next goals consist of high customer retention and brand awareness among customers that will lead to higher revenues and the last goal is expansion of market by targeting a segment of public universities, which will be possible after a successful product implementation in the private universities.
Organizational development goals |
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Organizational development goals focus on the acquisition of expertise that will support
achievement of product and market development goals. First, we need to create a business entity and afterwards we can recruit qualified employees for our company. The next step consists in the development of technological skills among employees and negotiating contracts with private universities, starting from the KIMEP University. Moreover, in our long-term plans the main goal consists in gaining a governmental support in 3 years, which will give us a strong competitive advantage. We believe that achievement of all these goals will lead us to big success and high satisfaction among customers.
Procedures
In this part we divide each goal on three necessary steps in order to achieve these goals. Below you can see an illustration of these procedures.
Product development |
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Goals |
Procedures |
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Create an overall concept and a prototype of the product idea |
1. Communication, planning |
2. Modeling product |
3. Construction of prototype |
Identify the target market for the product |
1. Divide market into segments based on characteristics |
2. Carefully examine each segment |
3. Decide which segment to enter - targeting |
Customizing first 5000 eBooks |
1. Find a supplier |
2. Sign up a contract with supplier |
3. Deliver the eBooks |
Implementation of 150 electronic books into the eBook |
1. Contact to the authors of the books |
2. Sign up a contract with them based on the 10% interest from each book |
3. Get online version and implement it to the eBook = STB |
Test STB for any faults or defects |
1. Test for safety, durability |
2. Test for functionality |
3. Remove the defects |
Promote STB among target customers |
1. Advertising, packaging |
2. Discounts |
3. Brochures |
Deliver product to the Universities |
1. Present product to the Universities |
2.Negotiate a contract with Universities |
3. Sell the STB |
Adapt product based on needs |
1. Survey customers about STB |
2. Examine the results |
3. Based on the results improve STB |
Market development |
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Goals |
Procedures |
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Achieve market share of 14% in one year |
1. Market research of given segment and niche |
2. Planning algorithm of actions for one year |
3. Implementation of the work under this plan |
Achieve total of 53,000,000 tg of sales in 3 years |
1. Study of the volatility of the market for this product |
2. The development of raw material
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3. The sale of raw materials developed |
Achieve the total amount of customers equal to 77,500 in 3 years |
1. Planning a marketing move (advertising, etc.)
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2. Implementation of a marketing move
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3. Permanent monitoring
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Increase the amount of customers each year by 20% |
1. Permanent marketing company
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2. Planning sorts of promotion to attract new customers |
3. Change in price depending on the volatility of the market |
Build brand awareness of STB by 80% |
1. Maintaining external relationships with Universities
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2. Networking with other educational institutions
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3. Search for opportunities of cooperation at the governmental level (Ministry of Education) |
Create 70% customer retention |
1. Survey customers about STB |
2. Examine the results |
3. Based on the results improve STB |
Expand the market of the product by targeting a different segment |
1. Planning expansion of the market of the product by targeting a different segment
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2. Expansion of the affected segment
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3. Further search of opportunities to expand the audience and the subsequent expansion based on the analysis |
Organizational development |
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Goals |
Procedures |
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Register business entity |
1. Gather the necessary documents for registration of individual business |
2. Registration in the tax department of this organization |
3. Entry in the Chamber of Entrepreneurs
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Recruit qualified employees for different departments |
1. Creating recruitment ads on various sites (ex. Head Hunter)
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2. Conduct interviews with potential future employees
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3. Hiring for a trial period employees with further consideration of permanent employment |
Acquire technological skills for the product development |
1. Search for the possibility of qualification for the development of this product and software |
2. Practical training qualifications
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3. Obtaining certification of the qualification
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Sign up a contract with Universities (primary, KIMEP University) |
1. Contact with the external relationship department |
2. Building mutually beneficial relationships with universities |
3. Loyalty cooperation
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Gain a governmental support in 3 years |
1.Summing up the work done, and the provision of information |
2.Building relationships with government development funds |
3.Getting the material and immaterial support |
Scheduling
In this part, we establish time frames for all tasks and subtasks. Below in the table you can find a schedule, with all goals and necessary dates, including start and stop date.
Product development |
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Goals |
Start date |
Stop date |
Create an overall concept and a prototype of the product idea |
15.10.15 |
20.12.15 |
Identify the target market for the product |
20.10.15 |
21.12.15 |
Customizing first 5000 eBooks |
10.04.16 |
10.05.16 |
Implementation of 150 electronic books into the eBook |
10.05.16 |
10.06.16 |
Test STB for any faults or defects |
10.06.16 |
10.08.16 |
Promote STB among target customers |
10.08.16 |
15.12.16 |
Deliver product to the Universities |
15.01.17 |
10.01.19 |
Adapt product based on customer needs |
15.07.17 |
15.09.17 |
Market development |
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Goals |
Start date |
Stop date |
Achieve market share of 14% in one year |
15.01.17 |
25.12.17 |
Achieve total of 53,000,000 tg of sales in 3 years |
15.01.17 |
30.12.19 |
Achieve the total amount of customers equal to 77,500 in 3 years |
15.01.17 |
30.12.19 |
Increase the amount of customers each year by 20% |
15.01.17 |
30.12.19 |
Build brand awareness of STB by 80% |
15.11.16 |
15.11.17 |
Create 70% customer retention |
15.01.17 |
30.12.20 |
Expand the market of the product by targeting a different segment |
20.01.20 |
20.01.22 |
Organizational development |
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Goals |
Start date |
Stop date |
Register business entity |
22.11.15 |
02.12.15 |
Recruit qualified employees for different departments |
03.01.16 |
30.01.16 |
Acquire technological skills for the product development |
01.01.16 |
01.04.16 |
Sign up a contract with Universities (primary, KIMEP University) |
10.08.17 |
20.12.17 |
Gain a governmental support in 3 years |
05.06.18 |
25.08.18 |
Development Budget
Type |
Cost (in tenge) |
Planning and Development |
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Customizing 5 000 eBooks |
50 000 000 tenge |
Payment to the authors of books |
5 000 000 tenge |
Office rent (1 year) |
840 000 tenge |
Equipment |
4 300 000 tenge |
Total development cost |
60 140 000 tenge |
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Marketing |
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Advertising |
25 000 tenge |
Packaging |
10 000 tenge |
Social media posting |
0 (for free) |
Public relations (presentation at KIMEP) |
35 000 tenge |
Total marketing cost |
70 000 tenge |
Overhead expenses |
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Warehouse rent (1 year) |
360 000 tenge |
Transportation of eBooks |
30 000 tenge |
Utilities (office and warehouse) |
640 000 tenge |
Insurance (3 years) |
1 800 000 tenge |
Taxes |
300 000 tenge |
Total overhead cost |
3 120 000 tenge |
As we can see total overhead expenses are 3 120 000 tenge. Also company has another costs for different purposes, which are also important, but they may not be included into the operational expenses. The future expenses of our company will be determined by the first sales and demand of our product.
G & A costs |
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Office workers |
550 000 tenge |
Marketer |
150 000 tenge |
Web designer |
100 000 tenge |
IT managers |
600 000 tenge |
Total G&A cost |
1 400 000 tenge |
Professional services |
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Accountant |
120 000 tenge |
Lawyer |
150 000 tenge |
Business consultant |
140 000 tenge |
Total professional services cost |
410 000 tenge |
Capital requirements |
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Investor 1 |
32 000 000 tenge |
Investor 2 |
33 000 000 tenge |
Total investment |
65 000 000 tenge |
Personnel
Name: |
Position: |
Responsibilities: |
Azhar Kuanysheva |
Operation manager |
1. Searching new ways to enter the market; 2. Responsible for daily operations. |
Aisha Seisenbayeva |
Financier |
1. Make profitable investments; 2. Assessing risks and income of the company. |
Dinara Ishanova |
Accountant |
1. Forming the financial statements; 2. Responsible for the money of the company. |
Zeinel Abisheva |
Marketer |
1. Promoting the product; 2. Implementing new ideas for the company |
Assessing Risks
In the process of implementing new technology such as eBooks into the society, our company may face different kinds of risks that may lead to big problems. First of all, the main risk concerning the product is that people of Kazakhstan may not have enough faith for this product, because they are used to tangible books and eBooks may be too difficult in using. In addition, our target population may not be ready to use such kind of product, because it is new and they have not used the eBook for the purposes of studying.
The next risk is concerning the marketing. In the promotion of our product we need to include all the information, which will be useful for the customer and which will attract their attention. It must contain all points, which are needed in order for our client not to have misunderstandings.
In addition to other risks our personnel must be qualified enough in this sphere. Nevertheless, as we already mentions it is new technology and our staff may not know many things in order to make our company successful. To prevent such problems we should provide proper education to our staff, such as trainings for the personnel and skills development resulting in certificates of qualification.
And the last and the main risk of our company is the financing sphere. As we already mentioned, the product is new and not all people are going to buy it, as a result demand of our product may be not enough to cover all our expenses. Nonetheless, we believe that specific goals and procedures mentioned earlier will help us to minimize risks and overcome future problems.
Operations and Management Plan
To begin with, operations and management plan is a crucial part of any business plan. It highlights the logistics of the company and usually begins with the organizational structure.
Organizational structure
Organizational structure of the company shows what kind of departments we have, who is assignable for what and what are the expenses associated with running of these departments. First of all, we will not produce STB ourselves, because we are going to buy EBooks directly from the supplier and then implement online versions of the paper books. Thus, the organizational structure of our company will not have a production department. Secondly, our company will start from the administrational department, including such workers as head manager and two project managers. Thirdly, we will have a sales and marketing department, consisting of marketing strategies manager and two sales managers. Fourthly, due to the fact that our product development is connected to technological parts, we will need to have a technological development department. This department will consist of head engineer and two quality managers, because quality of the product is a crucial part of the production. Fifthly, department of finance will consist of a financial manager and a chief accountant.
Company executive
Administration
Sales and marketing
Technical development
Finance
Operations manager
Marketing strategies manager
Head engineer
Financial manager
Project manager (two persons)
Chief accountant
Quality manager (two persons)
Sales manager (two persons)
Based on the structure we assume that during first year the number of personnel will be equal to eleven people and with time this amount will increase with the number of sold products and gained experience. With the established organizational structure we can combine goals from the design and development plan, new tasks and link them to different departments and employees. The table below illustrates how different tasks are connected to the departments and the type of personnel required in performing each task.
Personnel |
Type of goal |
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Administrative department: |
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Head manager |
Registration of business unit |
Recruiting qualified employees |
Gaining governmental support |
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Project manager |
Creating concept of the product |
Negotiating contracts with Universities |
Scheduling the product development |
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Marketing department: |
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Marketing strategies manager |
Creating strategies to attract customers |
Create 70% customer retention |
Build awareness of STB by 80% |
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Sales manager |
Achieing market share of 14% in one year |
Achieving total amount of customers equal to 77,500 in 3 years |
Increasing amount of customers each year by 20% |
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Technical department: |
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Head engineer |
Create an overall technological system |
Customization of first 5000 eBooks |
Acquire technological skills |
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Quality manager |
Test STB for any faults or defects |
Ensure high quality of the product |
Adapt STB based on customer feedback |
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Financial department: |
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Financial manager |
Determine the price of STB |
Determine the budget of the project |
Achieving total of 53,000,000 tg of sales in 3 years |
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Chief accountant |
Account costs associated with STB. |
Creating financial tables |
Calculating personnel numbers |
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Calculation of personnel numbers
As it was mentioned earlier, during the first year we are going target only students of KIMEP University and if currently there are 12,463 erolled students, we assume that in 2017 this number will be equal approximately to 13,000. In this part of the business plan we are going to determine the number of employees needed for our business. The following equation will be used in our calculations: C/S = P, where C is the total number of customers, S represents the total number of employees that can be served by each employee and P is the personal requirements.
The following calculations are based on our predictions, therefore it may include some minor errors. Still, we assume that our departments will be able to serve big numbers of customers during one year, because customers are very similar in their characteristics and it serving them will not be difficult. For this reason we think that administrative department will serve approximately 5000 customers, which is 13,000/4000 = 3.25 (approximately 3 employees). Marketing department will play one of the major roles in the product development, therefore one employee can serve up to 5000 customers using targeting, segmenting, positioning and different advertising campaigns. The equation is following: 13,000/5000 = 2.6 (approximately 3 employees). Technical department will be the busiest department, therefore it will be able to serve only 3000 customers: 13,000/3000 = 4.33 (approximately 4 employees). The last deprtment – financial, will be able to serve 5,500 customers: 13,000/5,500 = 2.36 (approximately 2 customers). Estimated calculations show that we should include one more employee for the technical department and other departments will have enough workers. For this reason in the next table we will have not 3, but 4 employees in the technical department.
In order to determine labor expense, first we need to calculate total wages per year:
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Personnel requirements |
Average wage/month, tg |
Average wage/year, tg |
Administrative department |
3 |
170,000 |
2,040,000 |
Marketing department |
3 |
160,000 |
1,920,000 |
Technical department |
4 |
180,000 |
2,160,000 |
Financial department |
2 |
170,000 |
2,040,000 |
Total |
12 |
680,000 |
8,160,000 |
Based on the calculations, we can estimate labor expense using the equation LE = P * SL, where P is the personnel requirements, SL is the salary level and LE is labor expense. In the administrative department LE = 3 * 2,040,000 = 6,120,000. In the marketing department LE = 3 * 1,920,000 = 5,760,000. In the technical department LE = 4 * 2,040,000 = 8,160,000. Lastly, in the financial department LE = 2 * 2,040,000 = 4,080,000.
Overhead Expenses
As we can see in the table below, total overhead expenses are the sum of all expenses and equal to 4 820 000 tenge.
Name of expense |
Amount in tenge |
Insurance (3 years) |
1 800 000 |
Depreciation:plant, building and equpment
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700 000 |
Warehouse rent (3 years) |
450 000 |
Utilities (office and warehouse) |
640 000 |
Transportation of eBooks |
30 000 |
Maintenance and repair (3 years)
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400 000 |
Supplies
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50 000 |
Payroll taxes and benefits
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300 000 |
Advertising & promotion |
180 000 |
Packaging & shipping
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120 000 |
Uncollectible receivables (3 years)
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150 000 |
Total overhead cost |
4 820 000 |
Capital Requirements Table
The projected sales concerning the first purchase of 5 000 eBooks of our company is 60 000 000 tenge. We are planning to make additional purchase after the first sale; the amount of additional purchase will depend on the demand. Our overall costs without the second purchase of books is 64 720 000 tenge. That means that we will need the first investment of 65 000 000 tenge.
Capital requirements |
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Investor 1 |
32 000 000 tenge |
Investor 2 |
33 000 000 tenge |
Total investment: |
65 000 000 tenge |
Short-term liabilities |
0 tenge |
Accounts payable (overall costs) |
(64 720 000 tenge) |
Notes payable |
0 tenge |
Long-term liabilities (to Investors) |
(65 000 000 tenge) |
Total Capital (after costs) |
280 000 tenge |
Projected sales |
60 000 000 tenge |
Total capital before the second purchase |
64 280 000 tenge |
Cost of Goods Sold Table
Cost of Goods Sold |
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Number of eBooks (first purchase) |
5 000 units |
Cost of each eBook |
10 000 tenge |
Cost of Goods Sold (first purchase) |
50 000 000 tenge |
Markup price for each eBook |
12 000 tenge |
Total revenue (first purchase) |
60 000 000 tenge |
Financial components