SoftwareBusiness BusinessPlan for food industry
Content
1
The Course Exercise
BUSINESS PLAN: FOOD ORDERING APPLICATION
TLO-35247 Software Business
Group # 5
Heikkinen Mireilla, 219093,
[email protected]
Mazhar Usama, 232753,
[email protected]
Poutanen Joona, 233553,
[email protected]
Waris Ali, 238939,
[email protected]
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TABLE OF CONTENTS
EXECUTIVE SUMMARY ................................................................. 3
1. INTRODUCTION ....................................................................... 4
2. BUSINESS IDEA....................................................................... 5
3. MARKET, MARKETING AND PRODUCT DEVELOPMENT ..... 9
3.1. Competitors and substitutes ................................................................. 9
3.2. Potential market segments ................................................................. 11
3.3. Product development .......................................................................... 13
4. REVENUE MODEL, FIGURES AND FINANCING....................14
4.1. Revenue model .................................................................................. 14
4.2. Figures................................................................................................ 17
4.3. Financing ............................................................................................ 18
5. ORGANIZATION ......................................................................20
5.1. Management team .............................................................................. 20
5.2. Organization and resource allocation ................................................. 20
6. RISKS ......................................................................................22
7. EXIT PLAN ...............................................................................24
Selling the whole business:........................................................................ 24
Dissolving the business: ............................................................................ 24
REFERENCES ...............................................................................26
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EXECUTIVE SUMMARY
Our main business idea is to provide a service based application for users and the
main idea is to create a food ordering application for mobile phones, tablets and
other smart devices and which will also be useable through laptops, notebooks and
personal home computers by using the internet and location based services using
GPS (Global positioning systems). This application will allow customers to order
food easily and quickly from various restaurants from the user defined location
and will contain the list of names, menus, services, pricelist and the restaurant locations, users would be able to either order a food delivery if restaurant itself does
provide this possibility for home delivery or go and pick it up by themselves from
the restaurant. All types of most common payment methods will be supported by
the app, such as credit cards and e-bank. This whole as a service will allow users
to order food from local restaurants within their reach easily with a push of a button
on the app.
We have performed an initial research and an initial market study on the internet
that depicts that there aren’t many substitutes or competitors in this particular service so there exist a good market segment, good number of potential customers
and we do have a good differentiation strategy for our services offered by the app
that are further explained later in the plan. For the revenue models we have planned
to use software pricing strategy and pay per use model and we do have a good
financing plan that supports our business plan.
The main area which need good efforts from our team would be marketing and
development of the app so our management team would mainly consist of people
who are experienced in terms of marketing, finance and software industry. We do
have a good analysis of the risks involved in the plan and main focus would be the
customer’s feedback, revenue and financing needed to runt eh business effectively.
In the end we have clear alterative exit plans for the effective business needs in
terms of operations of the company and revenue generated from the services we
plan to offer.
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1. INTRODUCTION
This report describes in detail our business idea that is Food ordering app and some
extra features, potential customers, targeted market and risks involved in it. The
main idea is to create a food ordering app for smartphones which allows the user
to order food from local restaurants easily with a push of a button. The first part
of our report is focused on explaining the main idea behind our business plan and
creating a whole and clear picture of our idea, what are the leading features and
what is our main focus, which is customer satisfaction.
In the second section we have discussed our marketing strategies further in detail
that are needed essentially for this sort of business plan to become successful. In
modern days the social media and spreading any word thorough it is a very powerful ally or enemy so marketing is one of the key components needed for the successful implementation of our business plan. We have also provided in depth-analysis of the current competition in the field and potential rivalries. We have explained that our product will be superior over those existing competitors and therefore have substantially large potential for success on the markets.
The third section focuses on the most important part for venture capitals the revenue models. We have provided comprehensive analysis on why our revenue model
is suitable in these sort of business and in this situation and how our venture benefits from it. The advantages and disadvantages of our revenue model compared to
other models are provided in detail with the help of clear examples.
In the fourth section we have mentioned our planned management team and organisational structure. A detailed list of work force needed to operate our venture
efficiently is provided along with calculations to support these estimates. In the
fifth section we address the matter of risks involved in our business idea and how
we are prepared for them. We also discuss how the risks can be minimized or even
eliminated completely.
Last but not the least our final section consists of detailed analysis of our exit strategy. This will involve real life example of how our business will be made profitable for both ourselves and more importantly, for the venture capitals that have invested in our venture. This section will also include solid arguments why investment in our venture is a remarkable opportunity backed up by consistent data.
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2. BUSINESS IDEA
Our business idea is a food ordering application for mobile phones, tablets and it
can also be used through laptops and PCs with the help of internet connection. This
food ordering application will allow customers to order food easily and quickly
from various restaurants all over the country. They can either order a food delivery
if restaurant does provide this possibility for delivery or go and pick it up by themselves from the restaurant. There won’t be any need to go through multiple websites to check the food offerings of different restaurants because all the needed
information is integrated into one food ordering application that will serve as a
platform offering services. Customers will save a lot of time and effort. Through
this application customer also have the opportunity to directly pay for the food and
delivery just by tapping a button in the application confidentially and safely. All
types of payment methods will be supported, such as credit cards and e-banking
payment systems.
A graphical user interface will be constructed in a way that the customer feels
comfortable using the application and therefore continues to use it in the long run
after the first use and becomes familiar with most of the features. An easy to use
and self-explaining user interface will be developed to reach this goal. New customer surface allows the restaurants involved to increase their sales and also is
good platform to give special offers the customers using the application. User
friendly graphical interface brings in a lot of application users, which in turn creates wide customer base for the restaurants. Because of this the application attracts
other restaurants that are not yet involved. This domino effect ensures that customers using the app have variety of restaurants to choose from and the restaurants
will have the opportunity to reach wide customer base easily and aim for increased
sales and effective marketing.
Because of the payment feature in the app, money and transactions are involved
on daily basis. This creates huge demand for efficient customer support, which will
be one of the cornerstones of the service. Customers can send feedback directly
from the application to the developers concerning software malfunction. It can be
for example failure in money transaction or feedback about restaurants (e.g. deals
not what promised). Also the overall experience about the service/application can
be submitted through a feedback.
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We also want to endorse customers to submit reviews of the restaurants so that the
other customers can choose restaurants based on customer feedbacks and ratings.
There will be a rewarding system implemented for these reviews for the users.
When customers are active for submitting reviews of restaurants (other users can
give likes/dislikes), they can get special offers which can be used to any restaurant
they want. This will encourage the users to use application more actively when
they notice that they will receive nice benefits back when giving feedbacks.
The social media is more popular than ever. The adult users of social media in the
US have gone up 800% in eight years (Forbes, 7.1.2015). Therefore social media
will be fully integrated to the application allowing the users to share their experiences about the services and restaurants with their social circle easily. This feature
will allow the restaurants to get publicity outside the applications users since the
shared experience will be shown also to those not using the application yet. The
service will be even more attractive for restaurants to use.
All registered restaurants in one application just only as far as few clicks. No more
need to spend time on researching several restaurant’s homepages for food ordering. Through this application customer feedbacks and ratings can be easily reviewed and a decision made if the restaurant is worth of trying. All needed information in one place, and on the top customer can also check the estimated delivery
time directly from the app when an order have been submitted. Good food at customers’ fingertips and on the top, they save money by getting the best deals.
Table 1 below explains how the service would be provided for service providers
and what are the main benefits from the customers’ point of view. There are three
different account service levels provided for restaurants that are Basic, Pro and
Super accounts.
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Table 1. Service structure from the service provider’s point of view and benefits for
customers
Service providers (aka restaurants)
Basic
Benefits for customers
Possibility to get free market space
and provide up to date information
of the restaurant.
Customers can directly see through one
app various types of restaurants located
nearby. All restaurants can be sorted by
type, location, rating, opening hours and
Information that restaurant can add: pricing. Through all restaurants’ so
1. Restaurant description
called profiles, can be seen accurate
2. Location in a map
waiting and/or delivery time that will be
3. Opening hours
updated by the restaurant every hour.
4. Contact information
Based on this customers can also decide
5. Waiting time (if eating in or if choosing that specific restaurant or
taking out, how much time
not.
does it take for the restaurant to serve the food)
Customers will be rewarded when giv6. Delivery time (if food deliv- ing feedbacks and ratings through the
ery ordered,, how much
app. When enough rewards are gathtime it will take)
ered, they will get bonuses to their ac7. Homepage
count which can be used for discounts
8. Social media pages
when ordering food through the appli9. Menu & price list
cation.
Restaurants can receive:
1. Feedbacks from the customers
2. Reviews and ratings done
by customers
3. Social media sharing will be
supported for customers to
share recommendations of
the restaurant
All feedbacks and ratings can be reviewed for a reference for qualifying if
the restaurant meet their expectations or
not. Social media shares (facebook,
twitter) can be done for the recommendations.
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Pro
With this account level restaurant
will offer the possibility to order
food for takeaway and/or home delivery. This will also include the
possibility for customers to do table
reservations. For table reservations
also pre food ordering can be made
if wanted, not required. No payment submissions via app provided.
No need for customers to contact restaurant via other connections. Applications will provide intuitive and user
friendly user interface for food ordering. With just few clicks food order will
be submitted to the restaurant. Ordering
requires customers to create an account
(no fees included) for the service. Account is required to identify the person
to be a real person and that he/she can
be contacted by the restaurant in any
concerns. When restaurant has received
the order, they will confirm it and update the latest waiting/delivery time
with that confirmation.
Super
Super account includes all the services provided in Pro account. In
addition to this, Super account offers the possibility to submit payments through the application with
all the payments types (credit card,
e-bank, klarna).
When forwarding orders through the
app customers has the possibility to also
submit the payment directly through the
application so later they don’t need to
think for the payments when picking up
or receiving the food.
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3. MARKET, MARKETING AND PRODUCT
DEVELOPMENT
3.1.
Competitors and substitutes
Based on the current research in the internet and checking the application offering
in Application stores (AppStore, GooglePlay) there aren’t many substitutes or
competitors available in Tampere. There used to be a Astronautic company offering the similar kind of service years ago but the business has been stopped already
due to low profitability. The difference in between our and Gastronautti’s service
is that they took care of the food delivery themselves for all restaurants. The main
reason for the business to go down was the high delivery costs. Demand was not
enough high to keep the pricing attractive. (Huusko, 2012) The difference to our
service is that we offer the possibility for restaurants to offer their own food delivery service if they have one. If not restaurants can either provide the possibility to
order takeaway through the app, reserve a table from a restaurant or just provide
restaurant information for marketing purpose. This application will hold all the
needed information and features for easy and intuitive food ordering. This information that are provided through the application are opening hours, menu and pricing, waiting time (how long does the food preparation take when eating in), delivery time (how long does the food delivery take), general description of the restaurant, ratings, link to the homepage and contact information. Especially nowadays,
consumers prefer to find information easily as we have reached the internet decade.
Even better if there is an application providing the needed information easily and
quickly that can be used via mobile device. Society has been driven towards into
app-driven world. Consumers spend now more time on their mobile apps than ever
before. (Nielsen, 2015)
Substitutes that can be found and discovered are restaurant’s own home pages and
food ordering by calling. These are the traditional ways to order food from a restaurant. Competitors that can be found are food ordering web pages that serve all
around the country. These are pizza-online.fi and eatit.fi which both have the same
owner. Also a restaurant application can be found from AppStore which is available also through web browser that is eat.fi. These competitors are compared in the
table 2 below with SWOT-analysis to give better understanding how these services
work and what our software’s benefits when comparing to these are.
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Table 2. Competitor comparison with SWOT-analysis
pizza-online & Eatit
(https://pizza-online.fi &
https://eat.fi) same owner, same
service)
eat.fi
(www.eat.fi)
Service description
Pizza food ordering website.
Search all registered pizza places
with a search by location or locate
yourself. Order and submit the
payment through the website.
Restaurateurs who would want
their restaurant to be available
through the service would need to
open an account by submitting an
assigned contract.
Provides information (opening
hours, menu, pricing, link to
homepage, customer feedbacks/ratings) of all restaurants
all around the country. All restaurant locations gathered into a map
from which users can directly see
if a restaurant is open or not.
Strengths
Bonus system provided for loyal
customers
Direct payment supported with
various payment types
Delivery time estimation given
Follow up if 30 minutes response
time for the food ordering from
the restaurant exceeded
Users can create accounts for the
service that will take track of the
orders made and will save customer information
Ratings available for customers
All restaurant related information
provided through one app
Restaurants can be searched and
filtered by location, category, or
rating
Mobile application provided
Restaurateurs get free marketing
space and possibility to update
their restaurant information for
free
Weaknesses
Only available in Finnish
Only pizza places available
No mobile application
Quite costly for restaurateurs to
open an account for the service
Restaurateurs who has committed
to this service are not allowed to
open accounts for competitors’
services
Only available in Finnish
No food ordering
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Opportunities
To expand the service to mobile
application
Provide food ordering service
Give users the possibility to make
table reservations through the application
Provide waiting time information
Integrating social media to reviews - Possibility to share feedbacks and reviews through Facebook, Twitter or other social media
Threats
Other competitors
High costs might avoid potential
restaurants to join the service
Application might include old
data which might affect the reliability
Other new entrants
When comparing our food ordering application to these competitors the benefits
that our application will offer when comparing to these are the availability in English and Finnish. As the amount of foreign inhabitants are growing in Finland every
year, this service should be available also in English that will also give positive
impact to demand. As highlighted in the competitor comparison table there are
only two online food ordering places that are concentrated in pizza places which
has home delivery services. Our application would also provide the possibility for
other types of restaurants (e.g. Indian, Chinese) to add their information to the application. These restaurants can be any that provide the possibility to order takeaway. Restaurants can be filtered by category or searched by location and these
restaurants locations can be shown in a map if wanted or just view as a list with
ratings and latest feedbacks.
3.2.
Potential market segments
This service will serve a wide variety of customers who are interested in finding
information about restaurants nearby in Tampere, order takeaway, home delivery
or make a table reservation. The scope of the service is wide which covers all willing to eat customer’s needs. Also the other way round, our other customers, restaurateurs, will benefit in many ways if creating a service account to our software
application. This restaurants can be any in Tampere who does serve food.
First of all our potential food ordering customers are all willing to eat something
from a restaurant. These can basically be students, workers in a hurry or looking
for a nice lunch place and even families who want to order pizza home delivery.
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We can describe few different use cases to clarify how our potential market could
locate. First are busy people who don’t have time to waste. They are in hunger and
willing to just get something quickly on the way to the office from a client meeting,
they would just check the restaurants through the applications, add the preferred
location, compare the available restaurants, check the current estimated waiting
time and based on this choose the most appropriate one. After the decision, an
order needs to be submitted and payment if wanted. A confirmation message will
be received in a minute from the restaurant with the accurate time estimate based
on which the busy worker can schedule his visit in the restaurant to pick up the
food.
Other potential customer case would be a couple who are willing to eat out on a
Friday evening but they are having difficulties to decide where to go. This couple
will add the preferred location for the restaurant in the application and now when
they are looking more into fancier restaurant they will sort the located restaurants
by average price. But this is not still enough because they want to ensure that the
restaurant has received good feedback so they will filter the restaurants by ratings
also. Now they have a list of potential restaurants that meet their needs. They decide to go with the Italian restaurant for tonight and they were lucky because the
application description of the restaurant says that they still take table reservations
for tonight. Just with few clicks also a table is reserved for them.
These customer cases gave quite broad perspective, how large scale of potential
customers this application could have. Our other potential market segment is all
different kinds of restaurants who are willing to advertise and provide their services through the application. When they notice that users are getting more interested about the applications they would be more than willing to get their restaurant
visible also in the application. And this wouldn’t be a huge barrier to go through
the account creation as the prices will be set attractively for them.
Especially because of the application’s dynamic search and filtering features, it
allows the users to filter restaurants exactly according to their needs. Also the
server levels improve the service levels for the customers. These are the main
reasons why we are expecting our market segment to become big. We are also
expecting that the growth perspectives can be set to high. These kind of application will easily attract users as this is easily applicable to their daily lives.
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3.3.
Product development
This food ordering service will be based on a software that can be used either
through a web browser or mobile application (all browsers and operating systems
will be supported). A demo version of this software will be developed by internal
resources with no salary defined in the beginning. This development work will be
based on dedication for establishing a potential business in near future. With this
business plan and a demo version, this business idea will be tried to be sold further for trying to seed findings for the company establishment and further development. People who has devoted their time on developing this software and business plan will be considered as founders and shareholders of the company.
We also see that when developing by ourselves, the maintenance would be easier
to handle and costs kept low. The user interface would be one of the very important objectives that would take most of the development efforts to get it precisely designed with a nice flavour. User experience would be showing a core
role in the development. Application has to be self-explanatory, easy to use and
intuitive.
For further development plans, if the application will be receiving interest widely
and demand is high enough to cover the costs, the restaurateurs account profile
features can be expanded so that they can personalize their own profiles. Kind of
having a social media platform for restaurants. Restaurateurs could give daily updates of the menu or something else related to the restaurant activities in a status
update form if wanted. Users could start following restaurants and adding them
to favourites. Push notifications can be sent to users if the enable the notifications. This app can be also easily extended to cover other cities in Finland.
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4. REVENUE MODEL, FIGURES AND
FINANCING
4.1.
Revenue model
In order to make our venture successful we have two strategies in terms of
revenue models that are pay per use model and software pricing structure
both have their pros and cons these both are defined in this sections as follows:
Pay – per use model:
Pay – per use model is used a revenue model for our food ordering application. As
there no such application exists in the market, also many of the food restaurants
have not targeted the customer base which is not comes to their restaurants. To
convince the restaurants to use our application they can pay for the number of units
the application used for their specific restaurants i.e. number of orders made. This
will allow them to see their potential customers who not come to their restaurants
or unaware of the offerings the restaurants is making. The model also promotes the
network externalities effect, meaning that the increased number of buyers increases knowledge of the product among potential customers, lowers customers’
search costs, and makes the product well known in the market.
Though the model has the disadvantage of the data security but as far as Tampere
is concerned there is not much competition among the restaurants So can be seen
as the advantage that restaurant can see which restaurants is providing the services
that will compliments there business. It will enhance customers as the restaurants
customers becomes their customers.
From the customer perspective, for smaller companies lacking a budget for the
kind of investments required by traditional software licensing, the pay-per-use
model is a good option. Customers can purchase the software without making special budgeting arrangements or undertaking long decision-making processes.
Thus, the software usage resembles an operational cost rather than a capital investment.
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The pay-per-use model also has advantages over other models if customers need
the software only occasionally, because this decreases costs and lessens the need
for customers to set up their own IT infrastructure. It’s easier to change vendors if
the software’s quality or functionality isn’t appropriate. Thus, in this model, it’s
possible to test and evaluate the software to see if it suits the company’s needs. It
also frees the customer from the need to install, maintain, and update the software,
and it lessens the need to have IT personnel.
Customers who use the software for their core business, the continued existence of
the cloud provider is vital. If a cloud provider disappears from the market, the
effect on the customer will be immediate and possibly catastrophic.
Dealing with any new product development brings uncertainty to the business,
thus, management of R&D project portfolio is needed in order to answer if company, first of all has necessary capabilities and resources, and secondly if it is going
to make good business for the company (Artto et al., 2011). Project portfolio management concentrates on applying certain knowledge, skills and tools in order to
match or to surpass requirements and opportunities of company’s investment
(Artto etal., 2011). The main goal project portfolio is to:
Maximize the value of the portfolio
Balance the portfolio
Link projects with its strategy
Engage your audience with frequent updates and promotions. This keeps
our audience interested and loyal
Develop cross-platform. Despite the buzz around one or two operating systems, it
is extremely effective to develop cross-platform app that supports OSes such as
Symbian and BlackBerry. In fact, we have found that these platforms have higher
CTRs, as users are not as “ad-blind” as iPhone or Android users. Generally speaking, we have found that the early adopter tech community pays less attention to
ads than other types of users.
Create web and native apps. While native apps are often more robust and responsive, Web apps using HTML5 can also yield a positive response from your audience. However, we have found that for games, the native model works better with
faster response times and an overall more robust experience
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Enable sharing. Give users tools to easily share your app across their social platforms. Add some integrated options to tweet or share the app on Facebook. This
will provide a very effective method of spreading the word about your app. Some
good examples of this are news and info apps that have an option to tweet the
article and the tweet then includes the name of the app.
Software Pricing Structure
Another option for the revenue model can be to opt for software pricing structure
that enables customers not to get committed for longer time period more detail
description is described as follows:
Advantages:
No need for customers to commit for a longer time period to make an investment
decision (if we don’t go with option 3). Customer would only need to pay a
monthly rental fee.
1.
2.
3.
4.
5.
6.
Pay only for the features needed
No long time commitments
Flexible pricing system
No need for separate budgeting
cost- and demand based pricing
Application free for customers from App store and via internet
Account fees for restaurants:
1. Basic account for sharing and maintaining the restaurant information - 1
month for free, after 4,99e/month.
2. Food ordering takeaway - no payment submissions through the app - 1
month for free, after 9,99e/month.
3. Food ordering takeaway - payments enabled through the app - 1 month for
free, after 9,99e/month + 15% of the food price.
4. Food ordering takeaway + home delivery - no payment submissions through
the app - 1 month for free, after 14,99e/month.
5. Food ordering takeaway + home delivery - payments enabled through the
app - 1 month for free, after 19,99e/month + 15% of the food price.
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4.2.
Figures
In this section we have included some figures about sales including amount of units
and the assumed revenues generated in return. We have compared the amount of
subscriptions with different options and analysed the profit keeping in mind the
interest rates also, and analysed in the graphs after the table.
Table 3. Comparisons of different subscription options
Amount
of
subscriptions/
Option
2
5
9
13
17
21
25
29
33
37
41
45
49
Amount
of
subscriptions/
Option 3
3
6
9
12
15
18
21
24
27
30
33
36
Amount
of
subscriptions/
Option
4
5
8
11
14
17
20
23
26
29
32
35
38
Amount
of
subscriptions/
Option 5
10
12
14
16
18
20
22
24
26
28
30
32
Revenue
from
food (€)
Total
revenue
All
Profit/Loss
costs statement
100 1314 788
500 2224 828
900 3133 869
1300 4043 913
1700 4952 958
2100 5862 1006
2500 6771 1057
2900 7681 1109
3300 8590 1165
3700 9500 1223
4100 10410 1284
4500 11319 1348
525.6
1395.7
2263.9
3130
3993.9
4855.5
5714.8
6571.5
7425.6
8276.9
9125.3
9970.6
Interest
rate%
0.5
2
3
4
5
8
8
9
10
10
12
13
Interest
(€)
2.63
27.9
67.9
125
200
388
457
591
743
828
1095
1296
Total
33
48
63
78
93
108
123
138
153
168
183
198
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Revenues, paid interest and total costs
12000
10000
8000
Interest
6000
Revenues
4000
Total costs
2000
0
1
2
60
3
4
5
6
7
8
9
10
11
12
Ammount of subscriptions
50
40
30
Option 1
Option 2
20
Option 3
10
Option 4
0
1
4.3.
2
3
4
5
6
7
8
9
10
11
12
Option 5
Financing
In the beginning at first when the company is set up there is some amount which
will be kept for the equity fund, so if the management of the company feels they
do not have enough funds to support the expenses they can use that or can get loan
against that equity .Our company will adopt seed financing we have the limited
partnership structure with the restaurants so it’s quite easy to follow. The growth
accelerators are formalized mentoring a network of contacts and in some cases
small amounts of financing. The company will try keep the performance active to
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avoid significant upfront losses in the beginning. In case of huge losses in the beginning it’s expected that this eliminates one of the biggest potential benefits of
the limited partnership structure. This is because there are no significant losses to
distribute and because the fund would have taken advantage of the losses pretty
quickly as their earlier exits started to be realized.
Tax Free Switching between Funds and Cross Fund Tax Deferral which has the
advantage that managers can set up multiple funds under one corporate structure
by using different classes of shares.
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5. ORGANIZATION
This section will explain the roles for the individual team members in the company and
explanation of the management team also the main structure relate to the structure of the
company in terms of organization.
5.1.
Management team
Our management team consist of people who are experienced in terms of marketing, finance and software industry. The possible team members and their roles are
as follows
Team Member
Role
CEO - Chief Executive Officer
responsible for the daily operations , support for the software development
CFO - Chief Financial Of- financing & sales
ficer
CMO - Chief Marketing Officer
marketing, branding, supporting sales
CTO - Chief Technology
Officer
software development
The management team is still in the early stages of formation all of them give input for
business development. The rest of the personnel will be hired according to the need and
their work will be valued with salary payments, organizational structure and resource
allocation
5.2.
Organization and resource allocation
Any additional hires will be part time and devoted to the expansion of any catering function, as well as increased capacity/operation of a private party function. An additional
manager will be hired to help CFO,CMO in maintaining and reviewing operations of the
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restaurant consultancy and entertainment venue / bar. Mobile developer will be hired for
the application development. An assistant finance who will be a salaried employee will
provide regular table service as well as assistance to the manager and the finance manager.
Technical Team lead will perform software development management. The marketing,
and accounting function will be handled by independent contractors/consultant but all
will be monitored by CFO.The five full-time salaried employees which are technical and
have software experience will be hired at start-up. Part time software will have to be hired
to manage approximately 135 hours of operation per week, designers will have to be hired
for approximately 120 hours of operation per week. Any additional hires will be part time
and devoted to the expansion of any catering function, as well as increased capacity/operation of a private party function.
22
6. RISKS
Although software business and especially mobile app business is booming at the
moment there is some serious risks involved. It doesn’t matter how ground breaking the idea is and how much potential it has, there’s still the risk of venture failing.
The popularity of mobile apps and the whirlpool of money surrounding app stores
make our business idea more appealing to breath into life but it also brings significant risk.
Nowadays people’s span of attention is decreasing due to the flash news, social
media feeds and the increase of smartphone usage and the need to check on it constantly. This creates a certain mind-set for people: if the app or text you are reading
isn’t a blockbuster you must abandon it soon after the first try. Therefore the risk
of one using our app once and never touching it again is very significant. Making
the Graphical User Interface (GUI) very compelling can minimize the risk of user’s
interest towards our app falling but it cannot be completely eliminated. The GUI
must also be easy to use and can’t absolutely have any bugs or malfunctions: nothing dispels potential users more effectively than a software malfunction or bug on
the first try of the app. considering this risk the medium of our software development will be user-friendliness and easy-to-use interface. Also rigorous and thorough testing will be performed to ensure the rich and positive user experience
throughout the lifespan of the app. Testing will be performed both among the developer team and also among potential users in beta testing phase to ensure that all
the malfunctions and bugs will be obliterated from the source code.
Another great risk comes with the revenue models. Although the pay-per-use
model is the most efficient and fitting and also has the lowest risk in this scenario,
it still bears some risks that need to be taken into consideration before starting the
business. The major risk in the pay-per-use model is the risk of poor popularity
and reputation of the app. Because all the revenue comes from the usage of the
app, not the acquisition of it, significant amount of active users is needed to ensure
the business ideas longevity and profitability. Minimizing this risk also involves
the user-friendliness of the app and efficient customer support. By making sure
users like to use the app we minimize the risk of them abandoning it. Also we must
make sure that the app is widely known among all the potential demographic regions so that we acquire as large customer base as possible. The more people know
about our app the smaller the risk of it fading away right after the take-off.
23
One great risk that must be taken into consideration involves the restaurants. Situations may arise where customer is unhappy with restaurants products or service
and feels that it was also our app’s fault as much as the restaurant’s. Therefore we
must make ourselves separate from the restaurants so that customers don’t associate us to the bad customer experience they receive from the restaurants. The risk
of this happening is likely substantially insignificant but must be endorsed never
the less.
24
7. EXIT PLAN
This last section provides alternative exit plans depending on what situation may
occur and timeline for results in terms of facts and figures and as a measure for the
success factor to scale the investment, money and effort invested by the management team and investors. The exit plans basically depends on the alternative situations we have planned depending on the maturity of the business and the scale
result on how successful or profitable it is at that particular stage. The two alternative exit strategies that can be the options in situations we have already planned
are defined as follows:
Selling the whole business:
If we are able to meet the sales targets and able to create a good name for our app
as planned and we become successful to run the app and company successfully
over 5 to 6 years successfully and the feedback form the customers is positive and
we see a good market in service industry, we would definitely get the good repute
at that span of time in the app market as well as in our potential market segment.
We would have a planned sales target and return on investment plan and if we feel
that the business is quite successful in terms of revenue and according to the initial
sales targeted plan then we can plan to sell the business to a public or private party
that can be an existing big company in the service industry, this will allow the
management team as business owners to gain good profit and fruitful result as
output of their efforts and good price value for investors in return of their investments as stakeholders on favourable and good terms and value shares.
Dissolving the business:
This option covers the worst case scenario for our business plan. If at some point
in time we feel that the business is not so successful in terms of revenue and we
decided to come up with a solution the best option is to try to find a company or
an individual stakeholder who can come up to buy the company name and business
plan and take some measures improve it other option would be to dissolve the
business and using company’s assets to get their current value by selling them or
liquidating them, this situation can occur if we are unable to pay our debts on time
and other expenses involved in doing the business over a certain span of time. The
first concern in this process would be definitely to solve any debts or loans we had
25
and the current value we get by dissolving can be divided on agreed terms between
the partners and stakeholders.
26
REFERENCES
http://www.forbes.com/sites/steveolenski/2013/09/06/social-media-usage-up800-for-us-online-adults-in-just-8-years/2/ [Accessed on 28 DEC 2014].
Huusko, M. 2012. Gastronautti lopetti monessa kaupungissa. Uusi Suomi.
http://www.uusisuomi.fi/kotimaa/121022-gastronautti-lopetti-monessa-kaupungissa [Accessed on: 08.01.2015].
Nielsen, 2015. Smartphone: So many apps, so much time. Media and Entertainment, http://www.nielsen.com/us/en/insights/news/2014/smartphones-so-manyapps--so-much-time.html [Accessed on : 08.01.2015].
Carlos Consylting Group Creating a Risk management plan
http://www.inc.com/guides/2010/09/how-to-write-an-executive-summary.html [Accessed
on: 08.01.2015].
Marcowitz Eric 2014 How to Write an Executive Summary
http://www.inc.com/guides/2010/09/how-to-write-an-executive-summary.html [Accessed
on: 28.01.2015].
http://www.angelblog.net/Fund_Structures.html [Accessed on: 25.01.2015].
https://www.fenwick.com/publications/Pages/Seed-Finance-Survey-2012.aspx
[Accessed on: 10.01.2015]
The Course Exercise
BUSINESS PLAN: FOOD ORDERING APPLICATION
TLO-35247 Software Business
Group # 5
Heikkinen Mireilla, 219093,
[email protected]
Mazhar Usama, 232753,
[email protected]
Poutanen Joona, 233553,
[email protected]
Waris Ali, 238939,
[email protected]
2
TABLE OF CONTENTS
EXECUTIVE SUMMARY ................................................................. 3
1. INTRODUCTION ....................................................................... 4
2. BUSINESS IDEA....................................................................... 5
3. MARKET, MARKETING AND PRODUCT DEVELOPMENT ..... 9
3.1. Competitors and substitutes ................................................................. 9
3.2. Potential market segments ................................................................. 11
3.3. Product development .......................................................................... 13
4. REVENUE MODEL, FIGURES AND FINANCING....................14
4.1. Revenue model .................................................................................. 14
4.2. Figures................................................................................................ 17
4.3. Financing ............................................................................................ 18
5. ORGANIZATION ......................................................................20
5.1. Management team .............................................................................. 20
5.2. Organization and resource allocation ................................................. 20
6. RISKS ......................................................................................22
7. EXIT PLAN ...............................................................................24
Selling the whole business:........................................................................ 24
Dissolving the business: ............................................................................ 24
REFERENCES ...............................................................................26
3
EXECUTIVE SUMMARY
Our main business idea is to provide a service based application for users and the
main idea is to create a food ordering application for mobile phones, tablets and
other smart devices and which will also be useable through laptops, notebooks and
personal home computers by using the internet and location based services using
GPS (Global positioning systems). This application will allow customers to order
food easily and quickly from various restaurants from the user defined location
and will contain the list of names, menus, services, pricelist and the restaurant locations, users would be able to either order a food delivery if restaurant itself does
provide this possibility for home delivery or go and pick it up by themselves from
the restaurant. All types of most common payment methods will be supported by
the app, such as credit cards and e-bank. This whole as a service will allow users
to order food from local restaurants within their reach easily with a push of a button
on the app.
We have performed an initial research and an initial market study on the internet
that depicts that there aren’t many substitutes or competitors in this particular service so there exist a good market segment, good number of potential customers
and we do have a good differentiation strategy for our services offered by the app
that are further explained later in the plan. For the revenue models we have planned
to use software pricing strategy and pay per use model and we do have a good
financing plan that supports our business plan.
The main area which need good efforts from our team would be marketing and
development of the app so our management team would mainly consist of people
who are experienced in terms of marketing, finance and software industry. We do
have a good analysis of the risks involved in the plan and main focus would be the
customer’s feedback, revenue and financing needed to runt eh business effectively.
In the end we have clear alterative exit plans for the effective business needs in
terms of operations of the company and revenue generated from the services we
plan to offer.
4
1. INTRODUCTION
This report describes in detail our business idea that is Food ordering app and some
extra features, potential customers, targeted market and risks involved in it. The
main idea is to create a food ordering app for smartphones which allows the user
to order food from local restaurants easily with a push of a button. The first part
of our report is focused on explaining the main idea behind our business plan and
creating a whole and clear picture of our idea, what are the leading features and
what is our main focus, which is customer satisfaction.
In the second section we have discussed our marketing strategies further in detail
that are needed essentially for this sort of business plan to become successful. In
modern days the social media and spreading any word thorough it is a very powerful ally or enemy so marketing is one of the key components needed for the successful implementation of our business plan. We have also provided in depth-analysis of the current competition in the field and potential rivalries. We have explained that our product will be superior over those existing competitors and therefore have substantially large potential for success on the markets.
The third section focuses on the most important part for venture capitals the revenue models. We have provided comprehensive analysis on why our revenue model
is suitable in these sort of business and in this situation and how our venture benefits from it. The advantages and disadvantages of our revenue model compared to
other models are provided in detail with the help of clear examples.
In the fourth section we have mentioned our planned management team and organisational structure. A detailed list of work force needed to operate our venture
efficiently is provided along with calculations to support these estimates. In the
fifth section we address the matter of risks involved in our business idea and how
we are prepared for them. We also discuss how the risks can be minimized or even
eliminated completely.
Last but not the least our final section consists of detailed analysis of our exit strategy. This will involve real life example of how our business will be made profitable for both ourselves and more importantly, for the venture capitals that have invested in our venture. This section will also include solid arguments why investment in our venture is a remarkable opportunity backed up by consistent data.
5
2. BUSINESS IDEA
Our business idea is a food ordering application for mobile phones, tablets and it
can also be used through laptops and PCs with the help of internet connection. This
food ordering application will allow customers to order food easily and quickly
from various restaurants all over the country. They can either order a food delivery
if restaurant does provide this possibility for delivery or go and pick it up by themselves from the restaurant. There won’t be any need to go through multiple websites to check the food offerings of different restaurants because all the needed
information is integrated into one food ordering application that will serve as a
platform offering services. Customers will save a lot of time and effort. Through
this application customer also have the opportunity to directly pay for the food and
delivery just by tapping a button in the application confidentially and safely. All
types of payment methods will be supported, such as credit cards and e-banking
payment systems.
A graphical user interface will be constructed in a way that the customer feels
comfortable using the application and therefore continues to use it in the long run
after the first use and becomes familiar with most of the features. An easy to use
and self-explaining user interface will be developed to reach this goal. New customer surface allows the restaurants involved to increase their sales and also is
good platform to give special offers the customers using the application. User
friendly graphical interface brings in a lot of application users, which in turn creates wide customer base for the restaurants. Because of this the application attracts
other restaurants that are not yet involved. This domino effect ensures that customers using the app have variety of restaurants to choose from and the restaurants
will have the opportunity to reach wide customer base easily and aim for increased
sales and effective marketing.
Because of the payment feature in the app, money and transactions are involved
on daily basis. This creates huge demand for efficient customer support, which will
be one of the cornerstones of the service. Customers can send feedback directly
from the application to the developers concerning software malfunction. It can be
for example failure in money transaction or feedback about restaurants (e.g. deals
not what promised). Also the overall experience about the service/application can
be submitted through a feedback.
6
We also want to endorse customers to submit reviews of the restaurants so that the
other customers can choose restaurants based on customer feedbacks and ratings.
There will be a rewarding system implemented for these reviews for the users.
When customers are active for submitting reviews of restaurants (other users can
give likes/dislikes), they can get special offers which can be used to any restaurant
they want. This will encourage the users to use application more actively when
they notice that they will receive nice benefits back when giving feedbacks.
The social media is more popular than ever. The adult users of social media in the
US have gone up 800% in eight years (Forbes, 7.1.2015). Therefore social media
will be fully integrated to the application allowing the users to share their experiences about the services and restaurants with their social circle easily. This feature
will allow the restaurants to get publicity outside the applications users since the
shared experience will be shown also to those not using the application yet. The
service will be even more attractive for restaurants to use.
All registered restaurants in one application just only as far as few clicks. No more
need to spend time on researching several restaurant’s homepages for food ordering. Through this application customer feedbacks and ratings can be easily reviewed and a decision made if the restaurant is worth of trying. All needed information in one place, and on the top customer can also check the estimated delivery
time directly from the app when an order have been submitted. Good food at customers’ fingertips and on the top, they save money by getting the best deals.
Table 1 below explains how the service would be provided for service providers
and what are the main benefits from the customers’ point of view. There are three
different account service levels provided for restaurants that are Basic, Pro and
Super accounts.
7
Table 1. Service structure from the service provider’s point of view and benefits for
customers
Service providers (aka restaurants)
Basic
Benefits for customers
Possibility to get free market space
and provide up to date information
of the restaurant.
Customers can directly see through one
app various types of restaurants located
nearby. All restaurants can be sorted by
type, location, rating, opening hours and
Information that restaurant can add: pricing. Through all restaurants’ so
1. Restaurant description
called profiles, can be seen accurate
2. Location in a map
waiting and/or delivery time that will be
3. Opening hours
updated by the restaurant every hour.
4. Contact information
Based on this customers can also decide
5. Waiting time (if eating in or if choosing that specific restaurant or
taking out, how much time
not.
does it take for the restaurant to serve the food)
Customers will be rewarded when giv6. Delivery time (if food deliv- ing feedbacks and ratings through the
ery ordered,, how much
app. When enough rewards are gathtime it will take)
ered, they will get bonuses to their ac7. Homepage
count which can be used for discounts
8. Social media pages
when ordering food through the appli9. Menu & price list
cation.
Restaurants can receive:
1. Feedbacks from the customers
2. Reviews and ratings done
by customers
3. Social media sharing will be
supported for customers to
share recommendations of
the restaurant
All feedbacks and ratings can be reviewed for a reference for qualifying if
the restaurant meet their expectations or
not. Social media shares (facebook,
twitter) can be done for the recommendations.
8
Pro
With this account level restaurant
will offer the possibility to order
food for takeaway and/or home delivery. This will also include the
possibility for customers to do table
reservations. For table reservations
also pre food ordering can be made
if wanted, not required. No payment submissions via app provided.
No need for customers to contact restaurant via other connections. Applications will provide intuitive and user
friendly user interface for food ordering. With just few clicks food order will
be submitted to the restaurant. Ordering
requires customers to create an account
(no fees included) for the service. Account is required to identify the person
to be a real person and that he/she can
be contacted by the restaurant in any
concerns. When restaurant has received
the order, they will confirm it and update the latest waiting/delivery time
with that confirmation.
Super
Super account includes all the services provided in Pro account. In
addition to this, Super account offers the possibility to submit payments through the application with
all the payments types (credit card,
e-bank, klarna).
When forwarding orders through the
app customers has the possibility to also
submit the payment directly through the
application so later they don’t need to
think for the payments when picking up
or receiving the food.
9
3. MARKET, MARKETING AND PRODUCT
DEVELOPMENT
3.1.
Competitors and substitutes
Based on the current research in the internet and checking the application offering
in Application stores (AppStore, GooglePlay) there aren’t many substitutes or
competitors available in Tampere. There used to be a Astronautic company offering the similar kind of service years ago but the business has been stopped already
due to low profitability. The difference in between our and Gastronautti’s service
is that they took care of the food delivery themselves for all restaurants. The main
reason for the business to go down was the high delivery costs. Demand was not
enough high to keep the pricing attractive. (Huusko, 2012) The difference to our
service is that we offer the possibility for restaurants to offer their own food delivery service if they have one. If not restaurants can either provide the possibility to
order takeaway through the app, reserve a table from a restaurant or just provide
restaurant information for marketing purpose. This application will hold all the
needed information and features for easy and intuitive food ordering. This information that are provided through the application are opening hours, menu and pricing, waiting time (how long does the food preparation take when eating in), delivery time (how long does the food delivery take), general description of the restaurant, ratings, link to the homepage and contact information. Especially nowadays,
consumers prefer to find information easily as we have reached the internet decade.
Even better if there is an application providing the needed information easily and
quickly that can be used via mobile device. Society has been driven towards into
app-driven world. Consumers spend now more time on their mobile apps than ever
before. (Nielsen, 2015)
Substitutes that can be found and discovered are restaurant’s own home pages and
food ordering by calling. These are the traditional ways to order food from a restaurant. Competitors that can be found are food ordering web pages that serve all
around the country. These are pizza-online.fi and eatit.fi which both have the same
owner. Also a restaurant application can be found from AppStore which is available also through web browser that is eat.fi. These competitors are compared in the
table 2 below with SWOT-analysis to give better understanding how these services
work and what our software’s benefits when comparing to these are.
10
Table 2. Competitor comparison with SWOT-analysis
pizza-online & Eatit
(https://pizza-online.fi &
https://eat.fi) same owner, same
service)
eat.fi
(www.eat.fi)
Service description
Pizza food ordering website.
Search all registered pizza places
with a search by location or locate
yourself. Order and submit the
payment through the website.
Restaurateurs who would want
their restaurant to be available
through the service would need to
open an account by submitting an
assigned contract.
Provides information (opening
hours, menu, pricing, link to
homepage, customer feedbacks/ratings) of all restaurants
all around the country. All restaurant locations gathered into a map
from which users can directly see
if a restaurant is open or not.
Strengths
Bonus system provided for loyal
customers
Direct payment supported with
various payment types
Delivery time estimation given
Follow up if 30 minutes response
time for the food ordering from
the restaurant exceeded
Users can create accounts for the
service that will take track of the
orders made and will save customer information
Ratings available for customers
All restaurant related information
provided through one app
Restaurants can be searched and
filtered by location, category, or
rating
Mobile application provided
Restaurateurs get free marketing
space and possibility to update
their restaurant information for
free
Weaknesses
Only available in Finnish
Only pizza places available
No mobile application
Quite costly for restaurateurs to
open an account for the service
Restaurateurs who has committed
to this service are not allowed to
open accounts for competitors’
services
Only available in Finnish
No food ordering
11
Opportunities
To expand the service to mobile
application
Provide food ordering service
Give users the possibility to make
table reservations through the application
Provide waiting time information
Integrating social media to reviews - Possibility to share feedbacks and reviews through Facebook, Twitter or other social media
Threats
Other competitors
High costs might avoid potential
restaurants to join the service
Application might include old
data which might affect the reliability
Other new entrants
When comparing our food ordering application to these competitors the benefits
that our application will offer when comparing to these are the availability in English and Finnish. As the amount of foreign inhabitants are growing in Finland every
year, this service should be available also in English that will also give positive
impact to demand. As highlighted in the competitor comparison table there are
only two online food ordering places that are concentrated in pizza places which
has home delivery services. Our application would also provide the possibility for
other types of restaurants (e.g. Indian, Chinese) to add their information to the application. These restaurants can be any that provide the possibility to order takeaway. Restaurants can be filtered by category or searched by location and these
restaurants locations can be shown in a map if wanted or just view as a list with
ratings and latest feedbacks.
3.2.
Potential market segments
This service will serve a wide variety of customers who are interested in finding
information about restaurants nearby in Tampere, order takeaway, home delivery
or make a table reservation. The scope of the service is wide which covers all willing to eat customer’s needs. Also the other way round, our other customers, restaurateurs, will benefit in many ways if creating a service account to our software
application. This restaurants can be any in Tampere who does serve food.
First of all our potential food ordering customers are all willing to eat something
from a restaurant. These can basically be students, workers in a hurry or looking
for a nice lunch place and even families who want to order pizza home delivery.
12
We can describe few different use cases to clarify how our potential market could
locate. First are busy people who don’t have time to waste. They are in hunger and
willing to just get something quickly on the way to the office from a client meeting,
they would just check the restaurants through the applications, add the preferred
location, compare the available restaurants, check the current estimated waiting
time and based on this choose the most appropriate one. After the decision, an
order needs to be submitted and payment if wanted. A confirmation message will
be received in a minute from the restaurant with the accurate time estimate based
on which the busy worker can schedule his visit in the restaurant to pick up the
food.
Other potential customer case would be a couple who are willing to eat out on a
Friday evening but they are having difficulties to decide where to go. This couple
will add the preferred location for the restaurant in the application and now when
they are looking more into fancier restaurant they will sort the located restaurants
by average price. But this is not still enough because they want to ensure that the
restaurant has received good feedback so they will filter the restaurants by ratings
also. Now they have a list of potential restaurants that meet their needs. They decide to go with the Italian restaurant for tonight and they were lucky because the
application description of the restaurant says that they still take table reservations
for tonight. Just with few clicks also a table is reserved for them.
These customer cases gave quite broad perspective, how large scale of potential
customers this application could have. Our other potential market segment is all
different kinds of restaurants who are willing to advertise and provide their services through the application. When they notice that users are getting more interested about the applications they would be more than willing to get their restaurant
visible also in the application. And this wouldn’t be a huge barrier to go through
the account creation as the prices will be set attractively for them.
Especially because of the application’s dynamic search and filtering features, it
allows the users to filter restaurants exactly according to their needs. Also the
server levels improve the service levels for the customers. These are the main
reasons why we are expecting our market segment to become big. We are also
expecting that the growth perspectives can be set to high. These kind of application will easily attract users as this is easily applicable to their daily lives.
13
3.3.
Product development
This food ordering service will be based on a software that can be used either
through a web browser or mobile application (all browsers and operating systems
will be supported). A demo version of this software will be developed by internal
resources with no salary defined in the beginning. This development work will be
based on dedication for establishing a potential business in near future. With this
business plan and a demo version, this business idea will be tried to be sold further for trying to seed findings for the company establishment and further development. People who has devoted their time on developing this software and business plan will be considered as founders and shareholders of the company.
We also see that when developing by ourselves, the maintenance would be easier
to handle and costs kept low. The user interface would be one of the very important objectives that would take most of the development efforts to get it precisely designed with a nice flavour. User experience would be showing a core
role in the development. Application has to be self-explanatory, easy to use and
intuitive.
For further development plans, if the application will be receiving interest widely
and demand is high enough to cover the costs, the restaurateurs account profile
features can be expanded so that they can personalize their own profiles. Kind of
having a social media platform for restaurants. Restaurateurs could give daily updates of the menu or something else related to the restaurant activities in a status
update form if wanted. Users could start following restaurants and adding them
to favourites. Push notifications can be sent to users if the enable the notifications. This app can be also easily extended to cover other cities in Finland.
14
4. REVENUE MODEL, FIGURES AND
FINANCING
4.1.
Revenue model
In order to make our venture successful we have two strategies in terms of
revenue models that are pay per use model and software pricing structure
both have their pros and cons these both are defined in this sections as follows:
Pay – per use model:
Pay – per use model is used a revenue model for our food ordering application. As
there no such application exists in the market, also many of the food restaurants
have not targeted the customer base which is not comes to their restaurants. To
convince the restaurants to use our application they can pay for the number of units
the application used for their specific restaurants i.e. number of orders made. This
will allow them to see their potential customers who not come to their restaurants
or unaware of the offerings the restaurants is making. The model also promotes the
network externalities effect, meaning that the increased number of buyers increases knowledge of the product among potential customers, lowers customers’
search costs, and makes the product well known in the market.
Though the model has the disadvantage of the data security but as far as Tampere
is concerned there is not much competition among the restaurants So can be seen
as the advantage that restaurant can see which restaurants is providing the services
that will compliments there business. It will enhance customers as the restaurants
customers becomes their customers.
From the customer perspective, for smaller companies lacking a budget for the
kind of investments required by traditional software licensing, the pay-per-use
model is a good option. Customers can purchase the software without making special budgeting arrangements or undertaking long decision-making processes.
Thus, the software usage resembles an operational cost rather than a capital investment.
15
The pay-per-use model also has advantages over other models if customers need
the software only occasionally, because this decreases costs and lessens the need
for customers to set up their own IT infrastructure. It’s easier to change vendors if
the software’s quality or functionality isn’t appropriate. Thus, in this model, it’s
possible to test and evaluate the software to see if it suits the company’s needs. It
also frees the customer from the need to install, maintain, and update the software,
and it lessens the need to have IT personnel.
Customers who use the software for their core business, the continued existence of
the cloud provider is vital. If a cloud provider disappears from the market, the
effect on the customer will be immediate and possibly catastrophic.
Dealing with any new product development brings uncertainty to the business,
thus, management of R&D project portfolio is needed in order to answer if company, first of all has necessary capabilities and resources, and secondly if it is going
to make good business for the company (Artto et al., 2011). Project portfolio management concentrates on applying certain knowledge, skills and tools in order to
match or to surpass requirements and opportunities of company’s investment
(Artto etal., 2011). The main goal project portfolio is to:
Maximize the value of the portfolio
Balance the portfolio
Link projects with its strategy
Engage your audience with frequent updates and promotions. This keeps
our audience interested and loyal
Develop cross-platform. Despite the buzz around one or two operating systems, it
is extremely effective to develop cross-platform app that supports OSes such as
Symbian and BlackBerry. In fact, we have found that these platforms have higher
CTRs, as users are not as “ad-blind” as iPhone or Android users. Generally speaking, we have found that the early adopter tech community pays less attention to
ads than other types of users.
Create web and native apps. While native apps are often more robust and responsive, Web apps using HTML5 can also yield a positive response from your audience. However, we have found that for games, the native model works better with
faster response times and an overall more robust experience
16
Enable sharing. Give users tools to easily share your app across their social platforms. Add some integrated options to tweet or share the app on Facebook. This
will provide a very effective method of spreading the word about your app. Some
good examples of this are news and info apps that have an option to tweet the
article and the tweet then includes the name of the app.
Software Pricing Structure
Another option for the revenue model can be to opt for software pricing structure
that enables customers not to get committed for longer time period more detail
description is described as follows:
Advantages:
No need for customers to commit for a longer time period to make an investment
decision (if we don’t go with option 3). Customer would only need to pay a
monthly rental fee.
1.
2.
3.
4.
5.
6.
Pay only for the features needed
No long time commitments
Flexible pricing system
No need for separate budgeting
cost- and demand based pricing
Application free for customers from App store and via internet
Account fees for restaurants:
1. Basic account for sharing and maintaining the restaurant information - 1
month for free, after 4,99e/month.
2. Food ordering takeaway - no payment submissions through the app - 1
month for free, after 9,99e/month.
3. Food ordering takeaway - payments enabled through the app - 1 month for
free, after 9,99e/month + 15% of the food price.
4. Food ordering takeaway + home delivery - no payment submissions through
the app - 1 month for free, after 14,99e/month.
5. Food ordering takeaway + home delivery - payments enabled through the
app - 1 month for free, after 19,99e/month + 15% of the food price.
17
4.2.
Figures
In this section we have included some figures about sales including amount of units
and the assumed revenues generated in return. We have compared the amount of
subscriptions with different options and analysed the profit keeping in mind the
interest rates also, and analysed in the graphs after the table.
Table 3. Comparisons of different subscription options
Amount
of
subscriptions/
Option
2
5
9
13
17
21
25
29
33
37
41
45
49
Amount
of
subscriptions/
Option 3
3
6
9
12
15
18
21
24
27
30
33
36
Amount
of
subscriptions/
Option
4
5
8
11
14
17
20
23
26
29
32
35
38
Amount
of
subscriptions/
Option 5
10
12
14
16
18
20
22
24
26
28
30
32
Revenue
from
food (€)
Total
revenue
All
Profit/Loss
costs statement
100 1314 788
500 2224 828
900 3133 869
1300 4043 913
1700 4952 958
2100 5862 1006
2500 6771 1057
2900 7681 1109
3300 8590 1165
3700 9500 1223
4100 10410 1284
4500 11319 1348
525.6
1395.7
2263.9
3130
3993.9
4855.5
5714.8
6571.5
7425.6
8276.9
9125.3
9970.6
Interest
rate%
0.5
2
3
4
5
8
8
9
10
10
12
13
Interest
(€)
2.63
27.9
67.9
125
200
388
457
591
743
828
1095
1296
Total
33
48
63
78
93
108
123
138
153
168
183
198
18
Revenues, paid interest and total costs
12000
10000
8000
Interest
6000
Revenues
4000
Total costs
2000
0
1
2
60
3
4
5
6
7
8
9
10
11
12
Ammount of subscriptions
50
40
30
Option 1
Option 2
20
Option 3
10
Option 4
0
1
4.3.
2
3
4
5
6
7
8
9
10
11
12
Option 5
Financing
In the beginning at first when the company is set up there is some amount which
will be kept for the equity fund, so if the management of the company feels they
do not have enough funds to support the expenses they can use that or can get loan
against that equity .Our company will adopt seed financing we have the limited
partnership structure with the restaurants so it’s quite easy to follow. The growth
accelerators are formalized mentoring a network of contacts and in some cases
small amounts of financing. The company will try keep the performance active to
19
avoid significant upfront losses in the beginning. In case of huge losses in the beginning it’s expected that this eliminates one of the biggest potential benefits of
the limited partnership structure. This is because there are no significant losses to
distribute and because the fund would have taken advantage of the losses pretty
quickly as their earlier exits started to be realized.
Tax Free Switching between Funds and Cross Fund Tax Deferral which has the
advantage that managers can set up multiple funds under one corporate structure
by using different classes of shares.
20
5. ORGANIZATION
This section will explain the roles for the individual team members in the company and
explanation of the management team also the main structure relate to the structure of the
company in terms of organization.
5.1.
Management team
Our management team consist of people who are experienced in terms of marketing, finance and software industry. The possible team members and their roles are
as follows
Team Member
Role
CEO - Chief Executive Officer
responsible for the daily operations , support for the software development
CFO - Chief Financial Of- financing & sales
ficer
CMO - Chief Marketing Officer
marketing, branding, supporting sales
CTO - Chief Technology
Officer
software development
The management team is still in the early stages of formation all of them give input for
business development. The rest of the personnel will be hired according to the need and
their work will be valued with salary payments, organizational structure and resource
allocation
5.2.
Organization and resource allocation
Any additional hires will be part time and devoted to the expansion of any catering function, as well as increased capacity/operation of a private party function. An additional
manager will be hired to help CFO,CMO in maintaining and reviewing operations of the
21
restaurant consultancy and entertainment venue / bar. Mobile developer will be hired for
the application development. An assistant finance who will be a salaried employee will
provide regular table service as well as assistance to the manager and the finance manager.
Technical Team lead will perform software development management. The marketing,
and accounting function will be handled by independent contractors/consultant but all
will be monitored by CFO.The five full-time salaried employees which are technical and
have software experience will be hired at start-up. Part time software will have to be hired
to manage approximately 135 hours of operation per week, designers will have to be hired
for approximately 120 hours of operation per week. Any additional hires will be part time
and devoted to the expansion of any catering function, as well as increased capacity/operation of a private party function.
22
6. RISKS
Although software business and especially mobile app business is booming at the
moment there is some serious risks involved. It doesn’t matter how ground breaking the idea is and how much potential it has, there’s still the risk of venture failing.
The popularity of mobile apps and the whirlpool of money surrounding app stores
make our business idea more appealing to breath into life but it also brings significant risk.
Nowadays people’s span of attention is decreasing due to the flash news, social
media feeds and the increase of smartphone usage and the need to check on it constantly. This creates a certain mind-set for people: if the app or text you are reading
isn’t a blockbuster you must abandon it soon after the first try. Therefore the risk
of one using our app once and never touching it again is very significant. Making
the Graphical User Interface (GUI) very compelling can minimize the risk of user’s
interest towards our app falling but it cannot be completely eliminated. The GUI
must also be easy to use and can’t absolutely have any bugs or malfunctions: nothing dispels potential users more effectively than a software malfunction or bug on
the first try of the app. considering this risk the medium of our software development will be user-friendliness and easy-to-use interface. Also rigorous and thorough testing will be performed to ensure the rich and positive user experience
throughout the lifespan of the app. Testing will be performed both among the developer team and also among potential users in beta testing phase to ensure that all
the malfunctions and bugs will be obliterated from the source code.
Another great risk comes with the revenue models. Although the pay-per-use
model is the most efficient and fitting and also has the lowest risk in this scenario,
it still bears some risks that need to be taken into consideration before starting the
business. The major risk in the pay-per-use model is the risk of poor popularity
and reputation of the app. Because all the revenue comes from the usage of the
app, not the acquisition of it, significant amount of active users is needed to ensure
the business ideas longevity and profitability. Minimizing this risk also involves
the user-friendliness of the app and efficient customer support. By making sure
users like to use the app we minimize the risk of them abandoning it. Also we must
make sure that the app is widely known among all the potential demographic regions so that we acquire as large customer base as possible. The more people know
about our app the smaller the risk of it fading away right after the take-off.
23
One great risk that must be taken into consideration involves the restaurants. Situations may arise where customer is unhappy with restaurants products or service
and feels that it was also our app’s fault as much as the restaurant’s. Therefore we
must make ourselves separate from the restaurants so that customers don’t associate us to the bad customer experience they receive from the restaurants. The risk
of this happening is likely substantially insignificant but must be endorsed never
the less.
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7. EXIT PLAN
This last section provides alternative exit plans depending on what situation may
occur and timeline for results in terms of facts and figures and as a measure for the
success factor to scale the investment, money and effort invested by the management team and investors. The exit plans basically depends on the alternative situations we have planned depending on the maturity of the business and the scale
result on how successful or profitable it is at that particular stage. The two alternative exit strategies that can be the options in situations we have already planned
are defined as follows:
Selling the whole business:
If we are able to meet the sales targets and able to create a good name for our app
as planned and we become successful to run the app and company successfully
over 5 to 6 years successfully and the feedback form the customers is positive and
we see a good market in service industry, we would definitely get the good repute
at that span of time in the app market as well as in our potential market segment.
We would have a planned sales target and return on investment plan and if we feel
that the business is quite successful in terms of revenue and according to the initial
sales targeted plan then we can plan to sell the business to a public or private party
that can be an existing big company in the service industry, this will allow the
management team as business owners to gain good profit and fruitful result as
output of their efforts and good price value for investors in return of their investments as stakeholders on favourable and good terms and value shares.
Dissolving the business:
This option covers the worst case scenario for our business plan. If at some point
in time we feel that the business is not so successful in terms of revenue and we
decided to come up with a solution the best option is to try to find a company or
an individual stakeholder who can come up to buy the company name and business
plan and take some measures improve it other option would be to dissolve the
business and using company’s assets to get their current value by selling them or
liquidating them, this situation can occur if we are unable to pay our debts on time
and other expenses involved in doing the business over a certain span of time. The
first concern in this process would be definitely to solve any debts or loans we had
25
and the current value we get by dissolving can be divided on agreed terms between
the partners and stakeholders.
26
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Huusko, M. 2012. Gastronautti lopetti monessa kaupungissa. Uusi Suomi.
http://www.uusisuomi.fi/kotimaa/121022-gastronautti-lopetti-monessa-kaupungissa [Accessed on: 08.01.2015].
Nielsen, 2015. Smartphone: So many apps, so much time. Media and Entertainment, http://www.nielsen.com/us/en/insights/news/2014/smartphones-so-manyapps--so-much-time.html [Accessed on : 08.01.2015].
Carlos Consylting Group Creating a Risk management plan
http://www.inc.com/guides/2010/09/how-to-write-an-executive-summary.html [Accessed
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Marcowitz Eric 2014 How to Write an Executive Summary
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