XYZ Solutions as a Search Engine Optimization Organization - Case Study Example

Business Plan 0 Executive Summary XYZ solution is a Search Engine Optimization organization based in UK and enjoying a capital base of more than £100,000. The organization will offer SEO services to all kinds of clients ranging from personal websites, small scale organizations to large companies interested in increasing their web presence. It will provide affordable and customized internet market solutions to a myriad range of clients. In essence, it market includes small and large businesses as well as individual website services. Owing its origin from a team of entrepreneurs and professional in web design and marketing, the organization will operate a URL. As already mentioned, the business will serve organizations interested in optimizing their web rankings. It services will cover an extensive range of activities including on-site and off-site SEO services. During the first year of operations, focus will be on marketing aimed at building a strong client base. Other than conventional market practices, quality services to existing clients will form the basis of our services marketing initiative. The business will then expand to attain regional status and eventually global over time. During the first three years, the business will direct lots of resources towards marketing. A large portion of the content will be done in-house during these 3 years. This will however not be a problem considering that the stakeholders are experts in the field of the business. It major source of revenues will be offering of SEO services to website owners. However, it will also earn some revenues through advertisements and affiliate programs. The will officially be launched on the 16th of august with an initial capital investment of £100,000. The projected sales revenue for the first 3 years will be £10000, £30000 EUR, and £50000 in year 1, year 2 and year 3 respectively. These will however be discussed in detail in the financial section of the business plan. 1.1 Products and Services As already mentioned, XYZ Solutions will provide website owners with high impact e-marketing strategies. These services are meant to help organizations increase their web presence and reach out to more of their target audience. XYZ Solutions does not just attract traffic to the respective websites but rather attracts the right traffic with a potential of turning them into sales where sales is the prime objective of a site. The services are purely aimed at having client’s websites ranked high on search engines based on specific keywords. The organization applies both conventional and technical skills to achieve this, including the use of specific algorithms for appropriate content. XYZ Solutions will also assist clients in management of their advertisement expenditures through its pay-per-click advertisement service which helps websites to immediately feature on top of their relevant web category. In essence, XYZ Solutions offers white-hat SEO techniques to help websites getter better ranking on search engines, enjoy increased web presence, and attract relevant traffic (Susan, 2011). This will be further explored in the latter sections of the report. 1.2 Financing The business aims to raise a loan of £100,000 from a bank. The interest to be accrued on the loan is set at 10% fixed interest for the 10 year loan. 1.3 XYZ Solutions’ Mission Statement The organization’s mission is provision of an integrated SEO menu to clients. The business is committed to offer SEO services which will increase web presence of its client’s websites through continuous and appropriate integration of web marketing techniques within its services menu (Elliot, 2006). 1.4 Management Team The company brings together a team of experts who enjoy over 5 years of experience in SEO industry. Through their expertise, the team will be able to merge its business operations and make profit while at the same time offering quality services to the clients. The team is expected to steer the business to profitability in its first year of operation. 1.5 Sales Forecasts The company expects strong growth over the first 3 years. These are shown by the forecasted sales for the next three years as shown below: Pro-forma profit and loss (£) Year 1 2 3 Sales 10,000 30,000 50,000 Operating costs 4,200 8,560 12,150 EBITDA 5,800 25,440 43,850 Taxes, Interest and depreciation 340 5,300 9,500 Net Profit 5,460 16,140 28,350 Figure 1: Sales, operating costs and net profit 1.6 Expansion Plan The management intends to put in place intensified marketing campaigns in the first three years. This is expected to see a steep rise in small and medium sized business websites which will be the hub of the SEO business. 2.0 Organization and its Financing Summary 2.1 Registered Name and Corporate Structure XYZ Solutions is a registered company in UK offering SEO services to business interested in increasing their web presence. 2.2 Funding required Presently, XYZ Solutions will acquire £100,000 for its operations funding. Below is a breakdown of how these funds will be used: Costs (£) Startup lease payments and deposits 13,000 Working capital 50,000 Equipment 15,000 Improvements 5,000 Supplies 10,000 Marketing 2,000 Miscellaneous 5,000 3.0 Detailed description of products and services Below is a description of the search engine optimization and pay per click marketing services offered by the Company. 3.1 Search Engine Optimization Services The main service/product offered by XYZ Solutions is search engine optimization services. The service involves professional examination of a website’s keywords, and applying the keywords to search engines from where the company enrolls traffic to its website. Basically, service providers offer web users ability to make appearance on direct search engine results for chosen keywords. These will be the major source of revenue for the company. 3.2 Pay per Click Marketing Services and affiliate services Although not a major source of revenue, the business will offer clients continuous pay-per-click advertising campaigns through which websites will obtain immediate front page appearance on search result. Through this strategy, the company will charge clients for each time the advertisement is clicked. 4.0 Strategic and Market Analysis 4.1 Economic Analysis This section details the economic environment within which the business operates, that is, internet services industry. Additionally, it discusses the consumer profile, as well as the competitive forces within the market. Currently, UK is in the post-recession period and the economy is beginning to pick up. Sales are on a steep rise as business focus on going online. Many economists project that the Eurozone economy will continue to rise and business will continuously seek to boost their online presences, implying increased market. In essence, SEO services will continue to generate recurrent revenue streams and ensure continuous profitability of the sector. 4.2 Industry Analysis SEO as an industry has largely expanded over the recent years. This has largely been facilitated by the steep rise in computer technology and e-readiness of the general population. Many people now rely on computers for literally everything. In response, more and more companies are seeking a stake in the booming online market. In UK, and the larger Europe, internet remains a major avenue through which clients interact with manufacturers and service providers. Nonetheless, despite the ever growing client base for SEO services, businesses offering these services is also growing at a very fast pace. In 2012, the economic census revealed that more than 20,000 service providers offer similar or identical services in UK, not to mention the larger Europe. Consequently, as time passes, the number of businesses offering similar services is expected to continue to grow and so will the demand for SEO services. In general, this segment is expected to continue to rapidly grow as more corporations, large and small realize the importance of hiring professional SEO services if they are to successfully compete. Thesis best illustrated by sky-rocketing need for these services over the last two years, more especially after most directories disallowed special placement. Additionally, introduction of pay-per-click advertisement services has made it possible for many smaller businesses to find a place in the large web platform. The company will capitalize on the increased need for SEO services by smaller and medium sized companies. These businesses will offer a continuous XYZ Solutions. 4.3 Consumer Profile Every single business organization keen on expanding its online presence is a prospective client of XYZ Solutions. Consequently, its target client demographics is extensive and include many businesses keen on e-commerce and hence in need of strong business presence. 4.4 Competitive Analysis Research on SEO services in UK and the large EU zone reveal existence of hundreds of thousands of providers. In essence, this implies high levels of competition underlying the importance of strong market and enhanced quality service delivery to ensure retention of clients. Considering that SEO optimization does not require physical presence of the SEO provider at the company offices, XYZ Solutions finds itself pitted against leading SEO service providers from across the world. In essence, XYZ Solutions operates in an environment where the risk of losing a client is so high. Pricing and quality service delivery are therefore of extreme importance given the high number of SEO providers popping daily and the cheap prices offered by new entrants into the market, who are by no means lesser than those already in the market. This is a market where barriers to entry are so limited, exposing it to competition from new entrants each day. However, other than quality service delivery and affordable prices, the pay-per-click service acts as customer retention plan. 5.0 Marketing Plan XYZ Solutions seeks to persistently engage in an elaborate and continuous marketing plan that will see it get from clients not just from UK but also from other parts of the globe (Rosso & Jansen, 2010). Its marketing objectives and strategies are outlined below: 5.1 Marketing Objectives XYZ Solutions has set a number of objectives reviewable after every financial year to ensure its continued success. The objectives are listed below: Increase client base by 25% at the end of every financial year. Expand operations to international level by the end of the first three years of operation. Lower operational costs by 10% by the end of the first 3 years. Expand the affiliate program by 20% at the end of the first 3 years. 5.2 Marketing strategies The management intends to employ multiple marketing strategies to ensure the aforementioned objectives are accomplished. Aggressive internal SEO campaigns to ensure increased online presence of XYZ Solutions A continuous referral relationship with other internet marketing organizations and web programming entities. It is expected that such organizations can outsource SEO services from XYZ Solutions at a discounted rate for purposes of resale to their clients. Face to face interaction with companies in UK Use of email marketing on basis of existing directories   Offering quality services Offering discount coupons to new customers Availing after-sale services and discounts to returning customers 5.3 Pricing Pricing has been identified as a very important factor in a market crawling with competitors from all corners of the world. However, the costs incurred by the organization and the need for delivery of quality services must be factored in during pricing. While low prices are customer winners, the organization cannot compromise its service provision at the expense of offering consumers low prices. A balance must therefore be struck between the two. 6.0 Organizational Plan and Personnel Summary 6.1 Corporate Organization 6.2 Organizational Budget 6.2.1 Personnel plan Year 1 2 3 Management £ 1,500 £ 3,000 £ 6,000 Operations staff £ 1,500 £ 2,000 £ 6,500 Administrative staff £ 1,000 £ 1,500 £ 4,000 Total £ 4,000 £ 6,500 £ 16,500 6.3 Management Biographies The business brings together a team of professional in web management and SEO services. However, administrative and accounting experts will be hired to help in areas where the stakeholders are not expert in. In essence, each section will be managed by a professional. 7.0 Financial Plan 7.1 Underlying Assumptions XYZ Solutions enjoy a yearly revenue stream growth rate of 15% annually. A funding of £100,000 will be acquired to fund business operations The acquired loan will accrue an interest rate of 10% on a 10 year term 7.2 Sensitivity Analysis Considering the changing economic fortunes in target market, the company’s revenues are sensitive to the economy just like companies would want to minimize their expenditure as economy slumps and spend more as economy grows strong. However, as more and more businesses seek to enhance their web presence, demand is bound to record a steep increase. The demand of traffic is continuously on the rise irrespective of economic changes. 7.4 General Assumptions General assumptions (HMRC, 2014). Short-term interest rate 9.5% 9.5% 9.5% Long-term interest rate 10% 10% 10% tax rate 20% 20% 20% State tax rate 5% 5% 5% Personnel taxes 12% 12% 12% References HMRC. (2014). Corporate tax rate. http://www.hmrc.gov.uk/rates/corp.htm Rosso, M., & Jansen, B. (August 2010). SEO Challenges. Communications of the Association for Information Systems, 27 (1), pp. 81–98 Susan, W. (2011). "Social Media Marketing". consumerwebwatch.org. Elliott, S. (2006). "More Agencies Investing in Marketing with a Click". New York Times. Retrieved 2007-06-07. Appendices Appendix 1: Income statement     1  % 2 %  3 %  Net Sales (less returns & allowances) 10,000 100.0% 30,000 100.0% 50,000 100.0% Cost of Goods Sold 4,200 42.0% 8,560 28.5% 12,150 24.3% Gross Margin 5,800 58.0% 21,440 71.5% 37,850 75.7% Operating Expenses Advertising 1,500 15.0% 4,500 15.0% 7,500 15.0% Depreciation & Amortization 150 1.5% - 0.0% - 0.0% Licenses & Fees 100 1.0% 100 0.3% 100 0.2% Marketing & Promotion 500 5.0% 1,500 5.0% 2,500 5.0% Meals & Entertainment - 0.0% - 0.0% - 0.0% Miscellaneous 1,000 10.0% 3,000 10.0% 5,000 10.0% Office Expense 200 2.0% 300 1.0% 500 1.0% Salaries & Wages 4,200 42.0% 6,000 20.0% 6,500 13.0% Rent 500 5.0% 500 1.7% 500 1.0% Telephone 100 1.0% 250 0.8% 500 1.0% Total Operating Expenses 8,250 82.5% 16,150 53.8% 23,100 46.2% Operating Income (2,450) -24.5% 5,290 17.6% 14,750 29.5% Interest Expense - 0.0% - 0.0% - 0.0% Other Income - 0.0% - 0.0% - 0.0% Income Before Taxes (2,450) -24.5% 5,290 17.6% 14,750 29.5% Income Taxes (if C Corp) - 0.0% - 0.0% - 0.0% Net Income (2,450) -24.5% 5,290 17.6% 14,750 29.5% Appendix 2: Balance sheet Balance Sheet (Projected) Year 1   Year 2 Year 3 Assets Current Assets Cash & Equivalents 49,800 (1,587) (6,012) Accounts Receivable - - - Inventory 43,000 90,090 120,000 Total Current Assets 92,800   88,503 113,988 Fixed Assets Property, Plant & Equipment 4,900 4,900 4,900 Less: Accumulated Depreciation (150) (150) (150) Net Fixed Assets 4,750 4,750 4,750 Other Non-Current Assets - - - Total Non-Current Assets 4,750   4,750 4,750  Total Assets 97,550   93,253 118,738 Liabilities Current Liabilities Accounts Payable - - - Line of Credit - - - Other Current Liabilities - - - Total Current Liabilities -   - - Long-term Liabilities Loans 100,000 80,000 60,000 Total Non-Current Liabilities 100,000   80,000 60,000  Total Liabilities 100,000   80,000 60,000 Equity Equity Investments - - - Retained Earnings (2,450) 2,840 16,003 Less: Owners & Investors Draws - (1,587) (4,425)  Total Equity (2,450)   1,253 11,578 Total Liabilities and Equity 97,550   81,253 71,578 - 12,000 47,160   Appendix 3: First year cash flow statement Monthly Cash Flow Projection Year 1 Aug Sep Oct Nov Dec Jan Feb Mar April May June July Beginning Cash Balance £ 54,000 £ 47,124 £ 49,347 £ 50,406 £ 50,862 £ 50,596 £ 44,611 £ 38,098 £ 35,309 £ 33,028 £ 33,276 £ 33,535 Cash Receipts Cash Sales £ 10,000 £ 10,000 £ 10,000 £ 10,000 £ 10,000 £ 10,000 £ 10,000 £ 10,000 £ 10,000 £ 10,000 £ 10,000 £ 10,000 Collect Accounts Receivable £ - £ 8,333 £ 8,333 £ 7,733 £ 6,867 £ 7,000 £ 2,333 £ 8,333 £ 10,800 £ 13,533 £ 13,767 £ 13,767 Loans or Other                         Total Cash Receipts £ 10,000 £ 18,333 £ 18,333 £ 17,733 £ 16,867 £ 17,000 £ 12,333 £ 18,333 £ 20,800 £ 23,533 £ 23,767 £ 23,767 Cash Disbursements Cost of Goods £ 9,886 £ 9,720 £ 10,584 £ 10,512 £ 10,368 £ 11,340 £ 12,456 £ 14,357 £ 16,391 £ 16,895 £ 17,118 £ 15,894 Gross Wages £ 1,850 £ 1,850 £ 1,850 £ 1,850 £ 1,850 £ 1,850 £ 1,850 £ 1,850 £ 1,850 £ 1,850 £ 1,850 £ 1,850 Payroll Expenses £ 185 £ 185 £ 185 £ 185 £ 185 £ 185 £ 185 £ 185 £ 185 £ 185 £ 185 £ 185 Outside Services £ 100 £ 100 £ 100 £ 100 £ 100 £ 100 £ 100 £ 100 £ 100 £ 100 £ 100 £ 100 Supplies (Office & Operating) £ 300 £ 300 £ 300 £ 300 £ 300 £ 300 £ 300 £ 300 £ 300 £ 300 £ 300 £ 300 Repairs and Maintenance £ 300 £ 300 £ 300 £ 300 £ 300 £ 300 £ 300 £ 300 £ 300 £ 300 £ 300 £ 300 Advertising £ 1,000 £ 400 £ 400 £ 400 £ 400 £ 4,555 £ 400 £ 400 £ 400 £ 400 £ 400 £ 400 Car, Delivery and Travel £ 150 £ 150 £ 150 £ 150 £ 150 £ 150 £ 150 £ 150 £ 150 £ 150 £ 150 £ 150 Accounting and Legal £ 375 £ 375     £ 375       £ 375 Rent £ 750 £ 750 £ 750 £ 750 £ 750 £ 750 £ 750 £ 750 £ 750 £ 750 £ 750 £ 750 Telephone £ 125 £ 125 £ 125 £ 125 £ 125 £ 125 £ 125 £ 125 £ 125 £ 125 £ 125 £ 125 Utilities £ 216 £ 216 £ 216 £ 216 £ 216 £ 216 £ 216 £ 216 £ 216 £ 216 £ 216 £ 216 Insurance     £ 300     £ 300     £ 300     £ 300 Taxes (Real estate, etc.)           £ 800           £ 800 Total Cash Disbursements £ 14,862 £ 14,096 £ 15,260 £ 15,263 £ 15,119 £ 20,971 £ 16,832 £ 19,108 £ 21,067 £ 21,271 £ 21,494 £ 21,745 Net Cash Flow -£ 4,862 £ 4,237 £ 3,073 £ 2,470 £ 1,748 -£ 3,971 -£ 4,499 -£ 775 -£ 267 £ 2,262 £ 2,273 £ 2,022 Adjustments to Net Cash Flow (-) New Debt-Loan Paymts £ 1,014 £ 1,014 £ 1,014 £ 1,014 £ 1,014 £ 1,014 £ 1,014 £ 1,014 £ 1,014 £ 1,014 £ 1,014 £ 1,014 (-) New Owner Withdrawals £ 1,000 £ 1,000 £ 1,000 £ 1,000 £ 1,000 £ 1,000 £ 1,000 £ 1,000 £ 1,000 £ 1,000 £ 1,000 £ 1,000 Adjusted Net Cash Flow -£ 6,876 £ 2,223 £ 1,059 £ 456 -£ 266 -£ 5,985 -£ 6,513 -£ 2,789 -£ 2,281 £ 248 £ 259 £ 8 Ending Cash Balance £ 47,124 £ 49,347 £ 50,406 £ 50,862 £ 50,596 £ 44,611 £ 38,098 £ 35,309 £ 33,028 £ 33,276 £ 33,535 £ 33,543 Read More