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ATARAXY CONSULTING, LLC at-uh-rak-see: a state of freedom from anxiety, peace of mind
A business plan "Helping Small Businesses Succeed"
CAT CLARO
SABRINA BURTON
KATIE BLACK
1920 South Third Street West Missoula, Montana 59801
406.544.8116
TABLE OF CONTENTS _
EXECUTIVE SUMMARY 1
THE BUSINESS 5
SERVICE OFFERINGS 6
INDUSTRY ANALYSIS 8
MARKET ANALYSIS 10
CUSTOMER ANALYSIS 11
COMPETITOR ANALYSIS 11
MARKETING STRATEGY 14
OPERATIONS 17
MANAGEMENT TEAM 17
FINANCIAL INFORMATION 19 Advisor Compensation _ 19 Sources and Uses of Funds _ 19 Revenue Assumptions _ 20 Cash Receipts _ 20 Income Statement _ 20 Cash Flows _ 21 Balance Sheet _ 21
Attachments/Models Resumes:
Cat Claro _ 22 Sabrina Burton 23 Katie Black _ 24
Exhibit I: Business Model 25 Exhibit 2: Value Chain Analysis _ 26 Exhibit 3: Competitive Advantage Building Blocks _ 27 Exhibit 4: Industry Forces _ 28 Exhibit 5: Revenue Model_ 29 Exhibit 6: Partnership Agreement _ 30
Appendix A: Revenue Assumptions from Seminars _ 31 Appendix B: Revenue Assumptions from Word of Mouth/Referral_ 32 Appendix C: Cash Receipts _ 33 Appendix D: Income Statement Monthly _ 34 Appendix E: Three Year Income Statement Forecast _ 35 Appendix F: Forecasted Cash Flows _ 36 Appendix G: Three Year Cash Flows Forecast _ 37 Appendix H: Balance Sheet _ 38 Appendix I: Balance Sheet Forecasl_ 39
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EXECUTIVE SUMMARY _
An entrepreneur can easily jump into a business, but before he knows it, he could be in over his head. Often, there is a gap between the skill sets that founders of new businesses possess and the skills that they will need to take the business to the next level. Ataraxy Consulting, LLC will bridge this gap. We are a business dedicated to understanding our client's vision and developing, growing and promoting their small businesses by providing would-be entrepreneurs and existing small businesses with business support services. Ataxary's management team is a synergy of human capital, comprised of three individuals with diverse expertise.
The Opportunity
In communities like Missoula, one of the major attractions is the spirit and lifestyle that its people enjoy. Because of this attractive living environment, many individuals seek ways to create jobs and businesses that allow them to be self-employed and continue to enhance the community. While there are many people that have great ideas, and the enthusiasm to start a business, they lack the business education and vision that is crucial to long term sustainability and financial success.
Additionally, these brand new companies, that may even still be only an idea in somebody's head, do not have the funds to hire the talent that is necessary to develop their business plan, get funding, and manage the business. These companies may fail because they do not consider importance of the business aspects because they are so focused on their own product or service. Critical areas that are often neglected include:
Business Development - creating a thoroughly developed plan and strategy Financing - understanding financial structure, key ratios, attaining funding Accounting - developing consistent systems, managing cash flow. Quickbooks Marketing & Sales - presentation skills, creating sales and advertising campaigns Human Resources - hiring, firing, and training employees. selecting insurance packages
The Solution _
Ataraxy Consulting is a perfect partner for these businesses because of our varied skills in the areas in which many entrepreneurs are lacking. Many new companies need guidance, but do not need a full-time employee to manage these aspects. For example, the average salary for a full-time accounting manager with an MBA and two years experience in Missoula earns $55,000 a year. A human resource manager with the same credentials earns $59,000 a year. Few startup or growing businesses can afford to hire these professionals. Furthermore, many of these businesses do not require full-time services from such professionals, but instead require assistance only on a periodic basis. Ataraxy can offer services to meet these periodic needs at roughly one half or lower than the cost of these salaries.
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Ataraxy's clients will benefit from high caliber skills at substantially lower cost than a full-time manager with the same credentials. By hiring Ataraxy on an hourly basis, instead of getting locked into a salary, the company is able to pay only for the help that they need. Our company is committed to developing long term trust relationships with these businesses, from the germination of the idea, through all growth stages.
The Business Model
The word "ataraxy" means a state of freedom from emotional disturbance and anxiety: providing our clients with this feeling is our mission and our goal. Wc want our clients to stop feeling the overwhelming anxiety of trying to do everything themselves. By partnering with Ataraxy, our clients will bc able to devote their time to doing what they do best, which ideally is creating their products, performing services and driving revenues through marketing and sales activities.
For Ataraxy Consulting to obtain economies of scale, we will focus on clusters of similar types of companies. We will develop seminars that are geared specifically to the cluster's industry and needs and offer these classes at a low cost in order to develop a client base. Our first targets will be information technology and biotechnology companies, The companies in these industries will be ideal clients for Ataraxy for many reasons, which include: lack of knowledge in business management, high growth potential, and high need for capital. We will tap into this client base through partnerships with angel investors, venture capitalists, technology incubators such as MonTEC and Tech Ranch, and exploiting existing relationships with Montana Community Development Corporation and Missoula Area Economic Development Corporation.
After the seminar, interested clients can meet with an Ataraxy advisor and have a one on one meeting free of charge to discuss their needs, This meeting will be the ideal opportunity for potential clients to layout the problems that they are facing and explain their vision for the future of their company. At the conclusion of this first meeting, both the potential client and Ataraxy can decide whether they would like to continue the relationship.
Phase One: Vision assessment and action plan development and presentation to client. Phase Two: Implementation of action plan in accordance with client's vision. Phase Three: Follow-up and maintenance.
We require 50 percent deposit of the estimated project cost upfront. The remammg balance will be collected upon completion and client satisfaction, as determined from a five day review period at the conclusion of the project.
Competitive Advantage _
Ataraxy's competitive advantage lies in a differentiation strategy that is built on our commitment to aligning with our client's vision for the future of their businesses by providing them with a highly personalized, wide range of service offerings, Where competitors focus on one or the other of these aspects, Ataraxy's strength comes from
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joining in their client's vision through the combination of high touch customer service and a wide array of services. For example, most independent consultants offer a highly specialized service in their personal expertise, but have a narrow range of services. Conversely, internet services provide a wide variety of services, but can never offer personalized service. We are a company that focuses on the entire life of the company and Ataraxy Consulting is committed to providing assistance at all stages of the business lifecycle. The most important aspects of Ataraxy's competitive advantage are the superior customer service and efficiency and the high quality of the team and its service offerings.
We believe that by fostering and supporting small businesses that are an integral part of the fabric of the Montana atmosphere. we are sustaining the community that we live in and love. This is why Ataraxy is so dedicated to the success of each 'company. Ataraxy has a range of expertise due to the individual strengths of the three advisors working together.
The Team
Ataraxy Consulting has a synergy of human capital that is created by the collaboration of its founders-three women who have all obtained a Masters in Business Administration in Spring 2007 at The University of Montana - Missoula. Each advisor has successfully completed graduate coursework in entrepreneurship, supplemented by MontanaAcademy of Distinguished Entrepreneurs (MADE) seminars which are intensive classes led by successful Montana entrepreneurs.
Sabrina Burton is the CEO of Ataraxy Consulting. Her background is in accounting and business/strategic development. While attending graduate school. Sabrina is the accounting manager for a company with annual sales of over $1 million. She works with Montana manufacturers preparing products and business strategy for market entry/development.
Cat Claro has extensive experience in marketing and sales, and she brings a creative and innovative perspective to the team. For the last seven years, Cat has worked with small, local businesses in Missoula, helping them grow. Recently, Cat has developed marketing campaigns and coordinated and promoted large scale community events.
Katie Black knows the intricacies of small business funding options and has extensive training in human resources and communications. Currently, Katie works with the Missoula Area Economic Development Corporation assisting with financing and loan programs. Katie has also been responsible for hiring and training over 36 employees during her two year tenure with a small service organization.
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Ataraxy's Promise
As described in our business model, revenues will be generated through hourly fees. Ataraxy's startup costs are minimal. due to our location in a home office, The only costs that Ataraxy will have are the legal fees to set up as a limited liability corporation and low costs of upgrades to current office equipment and supplies. Because the advisors will be paid only a small base salary until they start generating billable hours, we require a very small amount of capital to open the doors. The founders of the company will invest a total of $5,000 of personal funds and obtain a one year commercial bank loan for $10,000, at an expected rate of 5 percent, which will be secured with a mortgage. These funds will assure that Ataraxy maintains a positive cash flow in the initial months while establishing its client base. Our projected revenues for the first three years are $260,550. $296,865 and $350,611, respectively.
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THE BUSINESS
Ataraxy Consulting, LLC is a firm that offers all support activities to individuals or small businesses that do not have the knowledge and/or time to perform the necessary functions to maintain a business. We will target clusters of clients based on business types, in order to gain economies of scale. Our first target will be technology startup companies. As our business grows and is able to attract more clients, other clusters will be targeted, such as massage therapists, physical therapists, doctors, optometrists, artists and independent carpenters. Ataraxy will be attractive to any skilled individuals who would like to create or already have started a business, but have limited or no knowledge in business development, marketing, accounting, finance, management, human resources, etc.
Ataraxy's core function will be to help potential and startup entrepreneurs by preparing vision assessments with the client, developing business plans, strategic development plans and supplying knowledge on sources of funding for start-up businesses. Additionally, Ataraxy will partner with venture capitalist and angel investing organizations to help the businesses pol ish their plans and presentations. This service will benefit the business owner by increasing his or her understanding of the financing ventures and increasing the chance of receiving funding; also. the investors will benefit because they will be assured that the offerings are as clear and professional as possible. therefore reducing wasted time. With the recent increase in angel investment firms in Montana, we feel that this service is critical and one that is currently not being addressed in the market. Ataraxy will focus on small businesses, specifically individuals working on their own or with up to ten other employees. Additionally, Ataraxy anticipates reviewing its offerings every six months and evaluating what services need to be added by feedback from clients.
In addition to the core activities of generating business plans for startups and helping them secure financing through grants and loans, Ataraxy will develop long-term trust relationships with these new businesses, allowing clients to receive continual help and advice in the form of clarification and business progress evaluation. Ataraxy will offer a variety of support services for clients to select from. With experience in Human Resources, Finance, Marketing, Sales. and Accounting, the advisors at Ataraxy will be able to cover most critical aspects of business for new and growing businesses.
Though we specialize in startups, Ataraxy will work with established companies as well. We feel that it is best to initiate relationships with these companies as early as possible. While brand new companies rarely have a surplus of cash on hand to hire consultants. by having Ataraxy's expertise in the beginning, the firm will reduce anxiety and unnecessary expenditures in the future. In companies that we consider to have exceptional potential, Ataraxy will be willing to negotiate alternative forms of payment. This circumstance will be very rare, and decided on a case by case basis.
To attract potential clients, Ataraxy will host seminars in Western Montana communities. Our first seminars will be offered in Missoula, Bozeman and Flathead Valley, as these areas are hotbeds of technology innovations and new businesses. The seminars will be
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tailored depending on the cluster of businesses that is targeted. For the first three months, Ataraxy will give seminars in the topics that we find are most crucial to technology and what these startups are missing. We will determine what the small business community feels are the most pressing issues and offer low cost half-day seminars in order to both educate the participants and begin to develop long term trust relationships with them. See Exhibits I and 2.
From meeting with various members of the small business community and researching leading growth opportunities, Ataraxy has determined that the technology sector will be a profitable place to grow our client base. This segment is currently thriving both locally and nationwide, and in many cases growing faster than the founders can manage, however it is too early in their business life cycle to have the funds to hire someone full time. Montana currently is home to two technology business incubators with an average of twenty startups. The growth rate of technology jobs in Montana, which is the third highest in the nation, is currently over 20 percent and is forecasted to grow at an above average rate of II percent through 2010. This is why Ataraxy's hourly fee structure will be attractive to businesses. We feel that by focusing on high growth companies, Ataraxy Consulting will assure its investors of the most return on their investment.
Our goal is for each advisor to work ';4 to full-time, earn a competitive salary, considering advisor's credentials and to achieve positive cash flows every month from second month of operations forward. After Ataraxy has achieved its initial goals in terms of client and income levels, we expect to hire an administrative assistant and move into an office location outside of the Burton residence. Ataraxy will develop an internship program with The University of Montana. hiring interns to assist once the workload is above the level manageable for the three original partners. By bringing in interns at a low cost to the business, Ataraxy will be able to charge a reduced rate for clients needing quick services that cannot afford the base rates. By freeing the advisors' time to focus on the highest revenue drivers, the interns will be able to work with smaller, lifestyle businesses that enrich the community. We will explore expansion opportunities into other Western Montana markets as we identify attractive clusters and form relationships with potential advisors.
SERVICE OFFERINGS _
The core services that Ataraxy will offer new clients include vision assessment, business development, presentation skills and financing. Vision assessment prepares both the client and Ataraxy to work together towards a common goal. Through this process, the client can articulate to our advisors where they want their business to go. and from there Ataraxy can help determine how to get them there. Ataraxy will concentrate on attracting clients that require large projects, as opposed to many clients who need small jobs done. For this reason, the full slate of services will only be available to clients who develop a long-term relationship with Ataraxy.
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Primary Services Include: Vision Assessment/Development Business/Strategy Development Human Resource Management Marketing/Sales Support
Service Extensions Include: Business Development
• Turnarounds • Grant Writing • Feasibility Studies • Strategy Implementation • Analysis of Business Processes
Financing • Financial Analysis • Growth Projections • Financial Structure • Financial Statement Use and Analysis
Accounting
• Payroll • Systems Setup • Quickbooks Training
Marketing & Sales • Presentation Skills • Market Research • Advertising Campaigns
Human Resources • Performance Evaluations • Management/HR Training • Insurance Package Selection
Ataraxy is different from its competitors because we offer services on an ilia carte basis, where entrepreneurs, who are most often strapped for cash, can chose only the services they need. Additionally, Ataraxy is a service that works very closely with its clients; it is not a company that will teach someone how to create a business plan. We will get the needed information from the client and heavily assist in the development for them, saving them time and energy.
Ataraxy Consulting will be formed as an LLC for several reasons. An LLC will ensure flexibility in tax and ownership structure. An LLC offers the simplicity that a small business requires. This business structure will allow the company to expand and offer ownership possibilities for new management in the future. Also, the LLC structure will allow the partners to distribute the end of the year profit based on percentages of billable hours worked.
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Ataraxy will have a distinct advantage over the compctinon due to a differentiation strategy. As the competitor chart shows, Ataraxy has a unique position in the marketplace. We will be the exclusive provider of high touch, wide scope services. While our services may cost more than other companies', Ataraxy's strength lies in the team's commitment to personalized service.
Scope
H s: o ::J o f-
L
L
Independent Consultant
Banks
H
Ataraxy
MCDCI Software Packages
While there are many services and software programs that have been developed for these very small businesses, Ataraxy will offer the human element and the guarantee that each plan is developed uniquely, not only with the type of business in mind, but considering the actual individual. Ataraxy is able to offer extremely personalized service for its clients, because we want to develop lifetime relationships with our startups. We feel it is essential to Ataraxy's success that we nurture and maintain these long-term relationships because our competitive advantage comes from our closeness and personalization. Additionally, retaining current clients is much more cost effective than acquiring new ones through additional low cost clinics. Another important strength in Ataraxy lies with its management and development team. All employees are deeply committed to Missoula's small businesses and maintaining the unique feeling of the city. See Exhibit 3.
INDUSTRY ANALYSIS _
The consulting industry can be separated into three main segments: Management, Strategy and Information Technology. Ataraxy has a unique position in this industry because we will straddle Management and Strategy, combined with even more basic business functions.
Consulting is a service industry in which various types of people are employed. Consultants can range from business professionals with lots of experience and little formal education to those with MBAs and even PhDs. Consultants are hired on by companies who need additional insight and expertise that is not currently available inhouse. Also, consultants are able to provide fresh, objective opinions and observations from an outside perspective. Often the hiring company is not able to see creative
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solutions because they are too invested in the current structure and processes. In the case of startups and small companies, many times there is not a person that is able to perform these other aspects of running the business. Consultants can be hired during all stages of the business lifecycle by any type of company, for an almost endless variety of assignments. See Exhibit 4.
Currently. the consulting industry is segmented into three main categories. There are very large, national firms that are diversified in their offerings. These companies offer all types of consulting mainly to global, high profile firms. Next there are smaller firms that are specialized in their offerings, yet still appeal mostly to extremely large firms. The last segment is small "boutique" firms, which appeal to smaller, local firms and operate on a smaller scale. Ataraxy will be positioned in this segment and will represent the smallest, most focused type of consulting firm.
A current trend in the consulting industry is the advent and increase of internal corporate consulting groups. This trend is becoming popular for extremely large corporations because they can do the work in-house, lowering the costs and keeping sensitive information private. Additionally, these internal groups do not require the time to become knowledgeable about the company that external consultants would require. However, this trend is not something that we feel will have any effect on the small business consulting industry in Missoula. The reason for this is that there are simply not enough businesses that have the size or need for this type of consulting.
The consulting industry has high internal rivalry (Exhibit C). The industry is mature, yet it is dynamic and as companies needs are ever changing. Also. brand identification is low for new entrants, which makes it difficult for new consulting firms to build a client base. Also switching costs amongst companies are very high, because to change firms, the client would need to reestablish trust relationships before projects could be continued. The diversity of competitors in this industry is high, which means that consulting firms must differentiate themselves in order to gain market share.
Consulting companies also face threats from substitute products. In the consulting industry there is a growing threat of non-traditional "consulting" software and accessbased knowledge. There is a glut of programs designed to do the consultant's job for any type company imaginable. However, the threat of these substitutes is not that serious due to the fact that the customer service and personal interaction of these programs cannot compare to an actual consultant
The more real threat to the consulting industry is the trend of professionals converting to consultant in their retirement/spare time. The larger consulting companies are facing a challenge from these part-time consultants, because startup capital requirements are low and their established knowledge base is extensive.
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MARKET ANALYSIS _
Ataraxy's target market is all existing small business owners/managers and budding entrepreneurs in the Missoula area. Small business is the lifeblood of Montana's economy. According to the US Small Business Administration, in 2004 (the most recent statistics available), there are 106,789 small businesses in Montana. Of this total, 92,597 people are self-employed. This means that almost 10 percent of the population of Montana is self-employed.
The Missoula area is a perfect market for small business consulting. In 2006, there were over 4,000 business licenses granted to small businesses. The majority of these businesses will not require Ataraxy's services, but the sheer number offers a large platform for potential clients. Even if only 10 percent of these businesses consider hiring a consulting service, with 5 percent market share Ataraxy would have 20 "phase two" clients in the first year (See Revenue Assumptions From Seminars).
In 2006, there have been approximately 897 new business licenses applied for in the city of Missoula. According to Scott Paasch who is the Business License Specialist in the Finance Department in Missoula, the number of licenses applied for increases by about 100 to 150 each year. In 1997,26.9 percent of the businesses in Missoula 1997 were owned by women.
In Missoula County, the population is approximately 100,000. It is a truly unique community whose residents have a fierce loyalty to their way of life and the culture. Part of what makes Western Montana special is its thriving society of artists. academics and free thinkers. Ataraxy will emphasize to potential clients and the community that a central goal of our organization is to help keep Montana the way we love it and improve the status of its population. This mission of community improvement will be implemented in all locations when expansion occurs.
The competition in the market in Missoula currently is not fierce. There are more entrepreneurs and struggling small business owners than can be serviced through existing operations. We feel there is an opportunity to capture the clients that seek additional help above what is being offered. Since Ataraxy will be positioned in price above the free services and below current options, we will be attractive to clients that need more than the free service provides, and is able to afford $100 per hour.
While we are immediately focusing on the Missoula, Bozeman and Flathead area, as these areas lead Montana's technology growth; we have intentions to expand to other cities that we will research as the company grows and depending on what clusters we target. Some possible locations for expansion are Butte, Helena and Great Falls. Research will be ongoing as we are able to expand our target clients and areas.
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CUSTOMERANALYSIS _
Montana has 490 entrepreneurs per 100,000 people. Currently, Ataraxy is focusing on technology startups. There are 18 technology startups that are housed in MonTEC, which is a business incubator. There are approximately 20 technology startups housed in Tech Ranch in Bozeman. According to Alaskan Journal of Commerce, there are over 90 techbased companies in Bozeman, the majority of which are small.
Montana is growing high tech jobs at 20.9 percent. This is the third fastest growth rate in the nation. While high tech jobs in the nation have declined since the peak in 2000, in Montana there has been an increase of over 2,000 jobs in that same time period. Global Insight, an international research and analysis firm, predicts that high tech job growth will continue at approximately II percent per year through 2010.
According to John O'Donnell, founder of TechRange, Montana's high tech jobs can be divided into two categories: Internet, software and information based technology and life sciences, biotechnology and medical devices. There are other companies that fall outside these two categories and some that overlap into both. Western Montana in general is gaining traction in the high tech world. This is due to the fact that these jobs are not tied to location. Montana attracts people because of the lifestyle and the natural beauty. Monetary compensation cannot compete with the quality of life that Montana provides.
In addition to these tech startups, there are numerous other clusters that Ataraxy will focus on in the future.
COMPETITOR ANALYSIS _
There are four general types of potential competitors to Ataraxy Consulting. The following chart shows the differences in offerings between these competitors and Ataraxy.
-/-/-/ Personalized Services -/-/-/ ACCOUlltDlg -/ HR Management -/ Finance Resources -/ -/ -/ Support inCnder-slal'lding
the Busin..ss: Financially -/ -/ FullBU'iiness Evaluation -/ -/ -/
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Non-Profit Government Assistance Organizations The first is direct competitors in the area. There are some local companies that are devoted to helping small businesses get off the ground. Most of these businesses are fundamentally different than Ataraxy however, because their goal is to teach an individual to create business plans, etc. rather than providing them with a complete plan generated specifically for their company. Some of the competitors in this category include:
• SBDC - Small Business Development Center of Montana • MCDC- Montana Community Development Corporation • SBA- Small Business Administration of Missoula • Montana Business Connections
The organizations that are currently in Missoula that are support systems for new businesses are fundamentally different than Ataraxy. While Ataraxy offers personalized plans for each individual, these companies offer generalized help that is not tailored to each client. These companies will provide business plan outlines and financial pro forma structures and information on how to complete them, but Ataraxy takes it a step further and actually does the work for the client.
These groups are extremely overworked and cannot cater to the variety of services that are needed and also lack the resources and time to dedicate to each client. These services are for the most part very low cost or free, which could convey that their services are not as high a quality as the more expensive options. Whether this is accurate or not, many people do place perceived values based on price.
Also, since Ataraxy will service far less clients than these programs, our advisors will have more time to devote to each individual client. Our individualization is one of the key aspects of our competitive advantage and because there are not as many potential clients that are willing and able to afford our services we will attract clients that are more focused on their business's success.
Private Consultants The next category of competitors is local private consultants. There are many consultants in the Missoula area. More research is needed to determine which would truly be competitors and are targeting the same clients as Ataraxy. Also, many of the professors at the University of Montana offer services as consultants and generally work through word of mouth. The following potential competitors are all consultants in the marketing, accounting, or finance arenas:
• Black Bear Marketing: Hamilton • Maverick Marketing Group; Hamilton • ROI Direct: Missoula • WestRidge Creative; Missoula • Ripplemarketing.com
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Ataraxy also has a distinct advantage over the private consultants in the area. While these individuals do offer specialized knowledge and instruction to individuals, none of them can offer the range of expertise that we have at Ataraxy due to the strengths of the three advisors working together. Also, our customized packages are an advantage over other consulting companies. With diverse interests and specializations, Ataraxy is a "one stop shop" for all business services. Additionally, most of these consultants charge between $100 and $150 an hour in the Missoula area. We hope that our expected rate of $50 an hour places us in an affordable range both for potential entrepreneurs and existing, and even struggling, small businesses.
Software Packages Another source of competition is online services and software packages that are specifically developed to run small businesses. It seems that there are software packages that are designed for any type of small business owner that exists. These programs are specially designed with direct knowledge of the industry and help the small business person or individual in all aspects of business planning, however there are some big disadvantages involving the use of these packages which will be discussed below. Some examples of these types of competitors are:
• Successware/Proselect - Photography studios • BizPlanPro • Artscope - Artists • Everest Software Business Management - toys, hobby goods, jewelry, etc • Peachtree - accounting software for small business (under 50 employees) • WinJob - construction/carpentry • Magical Jeweler - jewelry • VSplash - jewelry • Software-Carpentry- carpentry • George - window washers
The software packages have many disadvantages compared to Ataraxy. One is that most of these programs, while they are designed for "small businesses", are in fact designed for businesses that have many employees, and are not ideal for single person businesses or businesses with five or less employees. Also, when a client has a question or problem with these technologies, they must contact the company. It is often extremely difficult to reach someone and actually solve the problem in an efficient manner. Ataraxy offers local support that is easy to contact and get things back on track. Also, the costs of these software packages are extremely high, the individual often has to purchase the software and pay a monthly fee to maintain the service. However, the most important problem is that while these software packages have amazing amounts of features that could be very useful to the business owner, most do not use these features and therefore are paying for unused capacity for whatever reason. The last issue is that the entrepreneur must learn to use the system, often paying to go to conferences to learn the software that adds to total cost. In summary, these software programs are generally designed for larger businesses than our target market and there are many reasons, financially and time-wise, that make Ataraxy a smarter choice for the small entrepreneur in Western Montana.
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This competitor is very easy for us to compete with. The whole mission of our business is to develop relationships with clients. These packages, while they can be extremely helpful, do not offer the personal contact Ataraxy provides. Additioanlly, we have the ability to adjust rapidly to unexpected changes. It is impossible for a software package to have this level of flexibility.
Do It Yourselfers The last type of competition that Ataraxy will face is a somewhat nontraditional one - the potential clients themselves are indirect competitors. A large portion of entrepreneurs attempt to develop their business plan themselves, even though many do not have the knowledge and insight that is needed to make it effective. Any individual who believes that he or she can "do it themselves" is also a competitor--one that we hope to convert into an Ataraxy client!
The key challenge that Ataraxy faces is to convince these would be entrepreneurs that our services are worth the fees that we will charge. By working with Ataraxy to manage the aspects of the business that the client is unable for whatever reason to handle, the client will have more time available to use to generate business, whatever their business may be. An example is a computer programmer who desires to take a program to market. Anytime that she spends managing the business is wasted in two ways. Most importantly, this is time that could be used to develop software. Another key point is that if the individual does the business functions themselves they consider it to be "free," however, depending on how much they value their time, this is actually very expensive. The time it takes them is much longer than it would take a professional and they also have no guarantee that the work was done correctly. Ataraxy can guarantee that these aspects are performed accurately and efficiently. Ataraxy will lower the workload for the client and increase profits and probability of long term success due to our experience and knowledge.
MARKETING STRATEGY _
Ataraxy will meet the needs of its clients by our unique service offerings and the expertise of the management team. Ataraxy's phase structure offers the clients flexibility and gives us the opportunity to prove the quality of our work before a major financial obligation is made.
As stated above, Ataraxy is different than competitors in many ways. One important service is the preparation instruction in order to secure venture capital funding or angel investment funding. This is crucial to many of small businesses being able to launch.
Clients will switch to Ataraxy because of our commitment to quality and individual, customized action plans. Ataraxy will be able to best our competition because we offer such a personalized service. Ataraxy is a high touch enterprise. Our clients will have face to face meetings with our management after plans are prepared and have everything explained to them in a way that they can understand.
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Our pricing strategy is as follows:
Phase One: After agreeing to partner, we will develop an action plan for each individual company and its specific needs. This phase will take approximately five hours to analyze the firm and identify where problems exist and how to attack them. This phase is billed at $60 an hour and ends when the plan is presented to the client.
Phase Two: This phase is when problems identified in Phase One will be addressed and solved. The length could be anywhere from ten hours to a hundred or more depending on the scale and scope of the project. Billable rates will vary between $40 and $100 an hour depending on type of service. This phase concludes when the action plan has been completed.
Phase Three: During this phase, clients can seek additional clarification on services rendered. Additionally, Ataraxy will maintain any Phase Two operations that are continuing services and bill clients at an hourly rate. If new issues develop, the client will return to Phase Two.
We require 50 percent deposit of the estimate project cost upfront. The remaining balance will be collected upon completion and customer satisfaction, as determined from a five day review period at the conclusion of the project
The billable rate communicates to clients the quality of our work. We set the rate at an average of $75 an hour for our main services, which is below some firms in the Missoula area. This is because these firms already have an established reputation and have a more extensive sample portfolio. See Exhibit 5.
A major marketing activity for Ataraxy is the seminars that have previously been discussed. We have decided to cap class attendance at 20 students, because we want to emphasize our commitment to personalization and also have the chance to interact directly with each individual. Since we are not generating any profit from these seminars it is crucial to attract paying clients through these classes and the best way to ensure that these participants seek a continuing relationship with us is to showcase our knowledge and create personal relationships with each attendee.
In order to cover the costs of the space, refreshments, and printed materials, we decided on a price of $50 per person for a half day seminar, which will last approximately 4 hours. The food provided during a break will give attendees time to socialize and network with the advisors and other entrepreneurs. These costs do not include an allowance for the time of the directors, as discussed earlier, this is considered a marketing cost of the business and the management feels that it is imperative to keep the cost to the client extremely low. The price was chosen based on the assumption that our classes will have a 75 percent fill rate. Charging $50 a person allows us to breakeven on costs with 15 attendees. We feel this is a safe assumption based on our research of business classes that are taught in the Missoula area, both through SCORE and Continuing Education being filled at 100 percent very often.
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Location Options:
Name Price for Space Food Costs' Supplies' Total Quality Inn $90 $200 $140 $430 Inn on Broadwav
$125" $160 $140 $425
Hilton Garden Room
$200 $240 $140 $580
Best Western $95 $200 $140 $435 Average $110 $200 $140 $467
, Food and Supply Costs based on 20 people "Discounts available for multiple day contracts/long term agreement
Based on this research, we have selected Inn on Broadway as our potential seminar location. The location is convenient, affordable for us and is clean, pleasant and modern. This location also is attractive to us because it is a local hotel and not a chain, which we feel reinforces our commitment to the Missoula economy.
The topics will be determined at first from the results of the survey and in the future, taken from needs and suggestions of current clients or word of mouth and feedback that we receive from previous seminar participants. Potential topics include How to Hire the Right Employee, Why Strategy and Structure Matter, and The Necessity of Financial Controls. These seminars are limited to "new" students, meaning that we are not interested in an individual taking advantage of numerous low cost seminars and never hiring Ataraxy to do additional work for him or her. Also, we do not want existing clients to attend these seminars, as once they are clients, the work that we do with them will be one on one and subject to being billed hourly.
We intend to offer two seminars in the first month of business, three for the following two months and one seminar offered per month after that time. This number of seminars is subject to evaluation and change depending on the retention rate of clients and seasonal demand. If Ataraxy reaches the top capacity for clients, we will stop the seminars until they are again necessary to generate new clients.
We assume that from these seminars will generate clients that will be interested in meeting with Ataraxy for additional assistance. Of the attendees, we can assume that many of them are "tire kickers", people who are not serious about their business, but will attend a very low cost seminar just to get basic information. We expect that from the twenty people at the seminar, ten will request a one on one meeting. From the 50 percent retained from the seminar, we expect that between 60 and 70 percent will hire Ataraxy, we consider these "phase one" clients. This is where we begin to generate revenue from billable hours. We anticipate spending approximately five billable hours on each client during this phase.
16
-----------------------
Additionally, we plan to advertise in technology journals, such as Montana Associated Technology Roundtables (MATR). As we expand to other clusters, we will focus on advertising in their trade newsletters and journals. We plan to join the organizations that these clients belong to make Ataraxy's presence known at no cost. Some organizations that Ataraxy advisors will join are the Chamber of Commerce. Missoula Businesswoman's Network, and MATR.
We will create a tri-fold brochure that highlights our services and also includes a success story. This brochure will be easy to distribute at these group meetings and answer all of the perspective client's questions. This personal selling method will be effective because it will reinforce our commitment to individualism and client focus.
OPERATIONS
Ataraxy will complete all work from the home office, which is fully equipped as a professional office. When a client based is established we look to expand into an outside office location. Work will be delivered to clients personally when applicable, or otherwise through e-mail.
Initially, the three founding advisors will complete all work. When an increasing revenue stream and workload create the opportunity, we will expand our employee base by adding an administrative assistant and University of Montana interns. We hope to hire both undergraduate and graduate interns to provide firsthand experience for them at a low cost benefit to us as well as reducing the founders' workload.
This design will benefit Ataraxy by lowering cash flow requirements while in the startup phase of our business. In addition, the design will reinforce our competitive advantage with our commitment to individualized service to our clients.
Our synergy of human capital and wide array of services will make Ataraxy a desirable consulting partner for startup and established businesses. We will reinforce our presence in the marketplace with high quality work and with genuine ongoing commitment to the success of each individual client.
MANAGEMENTTEAM _
SABRINA BURTON CEO & ACCOUNTING & BUSINESS DEVEOPMENT ADVISOR Sabrina has a Bachelors Degree from The University of Montana-Missoula in Business Administration with an emphasis in accounting (2006). Currently, she is working towards obtaining an MBA from U of M,
17
Sabrina's interest in accounting is uniquely matched with her interest in business development. Sabrina has had business development, strategic development, and marketing experience while helping Montana Manufacturers and Entrepreneurs prepare to take products to market. She has also had experience in general accounting practices including tax. Sabrina enjoys helping business owners develop and evaluate various decisions that involve tax, financial planning, and business-wide implications. Sabrina has made a personal commitment to use her knowledge to help entrepreneurs reach their personal and company goals.
KATIE BLACK HUMAN RESOURCE & FINANCIAL PLANNING ADVISOR Katie graduated from The University of Nebraska-Lincoln with her Bachelor of Science in Business Administration in 2004. Currently she is in the process of obtaining her MBA from U of M. Katie has had recent experience working with The Missoula Area Economic Development in researching the areas need for a small business loan program. This has been done in conjunction with Montana's Small Business Administration 504 Program. Through this experience, Katie has learned the intricacies of small business funding options. Katie has had extensive training in Human Resources and Communication while working with troubled youth in upstate New York.
CAT CLARO SALES & MARKETING ADVISOR Cat graduated in 2002 from The University of Montana-Missoula with a Bachelors Degree in Fine Art. She is currently completing an MBA at U of M and will graduate in Spring 2007. Her varied background gives her a unique position, balancing creative vision with business knowledge. Cat has had extensive experience in local small businesses and has gained many insights that will benefit Ataraxy's clients. Cat has firsthand knowledge of small businesses in Missoula through an internship where she did "housekeeping" activities as well as being the Sales and Marketing Manager. Because of this job, Cat saw a need for a service tailored to skilled individuals who wanted to run their own businesses, but simply did not have the knowledge or the time required to learn how to sustain a business. By working together with her partners, Cat feels that Ataraxy Consulting will provide the guidance and support to these budding small businesses that will allow them to grow and flourish and in tum, enrich the community in Missoula.
In addition to the three advisors, Ataraxy will develop informal partnerships with seasoned consultants in order to provide our clients with the best services possible.
Initially, Ataraxy advisors will be paid based on monthly net income. Total net income (less cash needed to maintain positive cash flow) will be divided based on a weighted average determined from billable hours per person and company pooled time. Two situations that will be accounted for differently will be seminar/initial meeting times and internal accounting.
18
FINANCIAL INFORMATION _
Advisor Compensation _
Advisors' pay will be based on hours worked during each month. It is more important to each advisor that Ataraxy has a solid financial standing than receiving a fixed advisor salary. Therefore, compensation level will be secondary while having monthly positive net income and cash flow is most important.
Each advisor understands that this pay scale will result in lower overall annual salaries compared to peers with similar qualifications. For example. during the first year of operations we anticipate grossing under $40,000 per advisor. During the second year, fringe benefits for advisors including 40lk and health insurance will be added. Owner draws will be possible depending on the financial stability of the business and unanimous advisor consent. See exhibit 6.
We believe the long term value of building a financially strong company outweighs the benefits of higher annual salaries. Advisors will capitalize on the company's intrinsic value as acquisition/merger options and offers become available. Potential acquisition and merger opportunities include other consulting businesses as well as firms outside the consulting industry, such as accounting firms.
Sources and Uses of Funds _
Ataraxy will be started with $5,000 of owner's capital and a $10,000 one-year commercial loan. A small portion of the startup money will be used for legal fees, business licensing, and permits. The remaining funds will be the working capital for the first few months of operation.
Sources 1 Founder Capital 5,000 2 Commercial Loan 10,000
Total 15,000
Uses Upfront Costs
3 LegalFees 750 4 License Permits 250 5 Working Capital 14.000
Total 15,000
1 Each advisor willcontribute 1/3 of founder capital.
2 Commercial loan willbe for 1 year at an mterest rate of approximately 5%.
3 Legal fees include setting up legal entity.
4 Missoula County business license 5 Working capitalwillensure that Ataraxy will have positive cashflowin month 1.
19
Revenues Generated by Seminars, Word of Mouth/Referrals, _
Appendix A & B depicts how Ataraxy will generate revenues from seminars. Estimations for prices, retention rates, and approximate hours per phase were calculated from the results of surveys and discussions with consultants.
Revenue A ssum ti SemmarsIWord 0 fMouthouons Average Approx. Retention Rate Retention Rate
Activity Rate Hrs/Project Seminars Word of Mouth I
Initial Meeting - 1.5 30% 30% Phase One $60 50% 70% Phase Two
5 $75 150 40% 60%
Phase Three $75 5 85% 85%
Monthly revenue projections for year one have been estimated by determining the number ofclients, billable hours, and revenues generated.
The seminar revenue assumptions were calculated based on the full capacity of twenty people per seminar and the number of seminars a month, which fluctuates based on seasonality and demand. Breakdown of first year revenues is shown below.
AU~.
Month 1
Sept. Month
2
Oct. Month
3
Nov. Month
4
Dec. Month
5
Jan. Month
6
Feb. Month
7
March Month
8
April Month
9
May Month
10
June Month
11
July Month
12 Totals
Year 1 Year 1 Year 1 Year 1 Year 1 Year 1 Year 1 Year 1 Year 1 Year 1 Year 1 Year 1
Seminars
---;~eminar Clients Word of Mouth/Referral Clients
1,000
900
0
2,000
13,050
0
2,000
24,675
0
1,000
24,525
0
0
13,125
0
2,000
4,050
0
2,000
26,550
300
1,000
26,025
11,550
1,000
14,775
11,625
1,000
14,025
11,700
1,000
12,900
11,775
1,000
12,150
11,850
15,000
186,750
58,800
Total Revenues 1,900 15,050 26,675 25,525 13,125 6,050 28,850 38,575 27,400 26,725 25,675 25,000 260,550
Cash Receipts, _
Ataraxy will collect 50 percent of estimated charges before beginning the project. The balance win be due upon the completion. We expect to collect 30 percent of unpaid balances in the month following the due date and an additional 14 percent in the following 30 days. The final 6 percent will be uncollectible. Appendix C shows monthly collection projection figures based on the revenue assumptions in Appendix A & B.
Income Statement. _
Appendix D is the forecasted monthly income statement. The first month is the only month with a net loss, in the amount $892. Throughout the rest of the first year, we will
20
be making solid positive net incomes each month, with a net income of $ 11,353 for the final month. The monthly income statements are based on the following assumptions:
• Salary will be based on monthly net income for the first year. • Advertisement for the first set of seminars will be in Technology Journals, startup
incubators and through networking events. • Home office setup reduces operating expense. o Ataraxy will lease computers for approx $33/month total tthree computers). o Payroll Taxes are assumed to be 20 percent of wages. o Loan rate (5 percent) based on realwebfunds.com; I yr. commercial loan rate.
Appendix E is the forecasted three-year income statement. The following assumptions. in addition to those previously stated, were used to forecast the yearly income statements:
o Projected growth rate for seminars is 10 percent year two, 15 percent year three. o Projected growth rate for word of mouth/referral clients is 30 percent in year two
and three. o Fringe benefits will include health insurance and 401k, available to advisors
starting year two. o Capital expenditures for computers in year 2.
Cash Flows, _
Year 0 of Appendix F represents the startup phase of the business. For a detailed outline about Year 0 see above "Sources and Uses Section." The monthly cash tlows show that with the initial commercial loan and advisor capital, Ataraxy will have positive cash flows from month one forward. Starting as early as month three, Ataraxy will have increasing end of the month cash flows. This is a direct result of our revenue assumptions outlined in Appendix A & B.
The three year cash flow forecast can be found Appendix G.
Balance Sheet _
The monthly balance sheet is located in Appendix H and Appendix 1 contains the yearly balance sheets. The absence of investment in property, plant and equipment is a result of the low operating cost structure.
At the close of the first year, there will be $15,669 in assets comprised of cash and accounts receivable. Ataraxy will have a total net worth of $15,669, which reflects a $25,000 draw at the close of the year for each of the three founding advisors.
21
CAT CLARO 1028 SHERWOOD STREET' MISSOULA, MONTAN1\ . 59802
CATCL\RO@GM.\ILCOM 40(,-544-8116
EDUCATION
The University of Montana Missoula Masters of Business Administration
OlltJtanding MBA 5tudent, seleaed by/amity Dean'f i.\1aJler.r of BUJineJJ .Administration .scholanhip Dean'sU.Jt
2007
Bachelor of Arts, Fine Arts 2002
CIVIC ,\ND ACADEMIC ENGAGEMENT
• Docent, Missoula Art Museum • Member, Student Advisory Committee, The University of Montana-Missoula • Member. Graduate Business Students' Assoc., The University of Montana-Missoula
TECHNICAL PROFICIENCIES
Computer. Word, Excel, Outlook, Project, Access, AS/400, Fortis Imaging Station
Sofl 5killf. Solid interpersonal and written eommuniea tion, Sales and Marketing
MANAGEMENT Mm MARKETING EXPERIENCE
School of Business Administration, University of Montana-Missoula Teaching Assistant
• Research for preparation of professional journal articles • Assist in grading exams and papers, proctor exams and maintain grade rosters
2006-2007
Crackle Photography, Missoula, Montana Office Sales / Marketing Manager
• Developed sales and marketing promotions and analyzed profitability • Conducted sales meetings with clients to select products and packages • Managed day-to-day activities of the business, including customer service
2006
Truckers Express, Inc., Missoula, Montana Administrative Assistant / Accounts Receivable Clerk 2005-2006 /2003-2005
• Provided third-party' mediation involving truckers and customers • Transferred, verified and reconciled records from AS/400 to Tl., 2000 • Scanned and electronically indexed documents utilizing Fortis Imaging Statjon • Extended credit to customers and managed customer's Issues as they occurred • Managed collection on 150-300 accounts, dramatically reducing uncollectible funds
22
SABRINA M. BURTON 248 A NORTH HIGGINS MISSOUw\, MT 59802
406.240.9106
PROFESSIONAL PROFILE
• Offer a unique combination of ability to work as a team member or independently • Committed to efficiency, integrity, and task completion in a thorough and detailed manner • Self-confident, motivated, with interest to accept challenges, responsibilities, and desire to learn • Possess strong human relation skills and ability to effectively communicate orally and in writing
EDUCATION The University of Montana-Missoula
Masters in Business Administration 2007 Outstanding MBA Student, selected by peers
Bachelor of Science, Business Administration, Emphasis: Accounting 2006
University College Cork, Cork, Ireland Spring 2003
DePauw University, Greencastle, Indiana 2001-2002
CAREER PROGRESSION
RESEARCH AssIsrANT
Montana World Trade Center, Missoula, Montana, May 2006-current • Conducted multiple stage feasibility and market research studies for Montana manufacturers • Aided in market/business development for various sized companies
ACCOUNTING AssIsrANT
CartriCharge Inc., Missoula, Montana, May 2006-current • Responsible for weekly commission calculations and payroll • In charge of monthly account reconciliations • Accountable for accounts payable completion
ACCOUNTING INTERN
Anderson ZurMuehlen & Co., Missoula, Montana, January 2006-current • Prepared Corporate, Partnership, and Individual Tax Returns in accordance to IRS standards • Compiled information and created effective work papers that correspond to tax return • Worked with clients to research missing information so that appropriate tax credits were utilized
OWNER'S Assrsrxerr
Twin Lakes Resort, Bridgeport, California, Summers 2003/2004
• Accountable for making sure each guests needs were being met • Booked and confirmed cabin reservations and checked in guests • Trained employees on computerized reservation system and cash register • Performed daily duties including night auditing and deposits using Excel • Assisted with maintaining inventory and processing grocery and gift orders
23
KATHERYN A. BLACK 406.240.1898
katheryn. black@umontana,edu 1975 Flynn Lane (rear), Missoula, MT 59808
Education Masters of Business Administration
The University of Montana, Missoula (May 2007) Universidad de Catholica, Santiago, Chile (January 2007)
Bachelor of Science, Business Administration Dual Minors: Political Science and Communication University of Nebraska-Lincoln (August 2004)
Professional Experience Missoula Area Economic Development Corporation; Missoula, MT (2006 - Present) MAEDC is non-profit, community-based, and is designated by the City of Missoula and Missoula County as the "lead agency" for economic development under the State of Montana Certified Communities Program.
Loan Program Assistant Facilitate dissolution of nonprofit 504 loan program with SBA office in MT and Washington D.C.
• Market, create brochures for Community Development Block Grants, IRP, EDA-RLF, and Community Reinvestment Fund loan programs to community and county Implement demographic income survey of Seeley Lake to determine Low to Moderate Income eligibility Compile Missoula's community profile of Missoula services, # of law enforcement, # of schools & students, companies providing utility services for the visitors center once a year.
Adirondack Leadership Expeditions; Saranac Lake, NY (2004 -2006) Adirondack Leadership Expeditions is a character development wilderness program for troubled teens that promotes personal growth through a focus on insight-oriented experiences.
Master Head Field Instructor • Led professional and safe environment wilderness expeditions for "at risk youth" • Recorded students' daily progress through the program; for use by the students and therapists
Designed, instructed hiring seminars to determine potential employee fit within organization Supervised, trained new field instructors' to establish an effective instructor team Oversaw distribution of student medications at proper times
• Created weekly itineraries for students keeping them occupied 24/7 Monitored day-to-day health and safety concerns of students and staff Taught primitive living skills, proper use of field equipment, and program curriculum
Outdoor Adventures-Campus Recreation; University of Nebraska-Lincoln (2001 -2004) Campus Recreation has one of the largest and finest collegiate recreation programs in the United States. The facility is recognized on a national level for program quality and innovation, over 25,000 students annually.
Adventure Trip Leader • Coordinated, guided, organized logistics of multi-day wilderness trips throughout the US • Planned, budgeted nutritious and cost efficient menus for backcountry trips
Organized, processed participant health forms, risk management plan and trip insurance • Instructed 80+ youth and adults in canoeing trips/programs on rivers and lakes
Trained general staff in logistics, setting gear, teaching activities, interpretative instruction, and activity specific techniques for them to successfully become outdoor trip leaders Directly supervised apprentices, general staff, assistant leaders, and participants ensuring safety and group cohesiveness
Educational Class Instructor Revised existing class material into an instructor class packet for future continuity of instruction Coordinated the logistics, class material, and topics between two backpacking classes and the climbing class ensuring all information was covered and gear was available Developed, implemented Backpacking II class, which travels to Snowmass, CO, for the Universities fall semester classes; included logistics, budget analysis, and writing lesson plans
24
Exhibit 1 Business Model
Slakeholders Small Business in Missoula
New Business Established Small Business Unknowledgeable Business OWners Potential Entrepreneurs High SkililNarrow Focus Business Venture CapitalistsJAngei Investors
The Community University of Montana Missoula, Montana Bozeman Westem Montana
Capital Market Sabrina Burton I ATARAXY CONSULTING I Katie Black is a small business con- ICat Claro Montana Small Business Association I suiting firm serving small I
I Montana businesses with I Resources
Tangible resources Location In Montana
I a widL e array of business
services. I Personal Savings Mortgage Home Office -..,,
Intangible resources Low Overhead Quality !Efficiency SBA Experience Accounting Experience Small Business Expertise Sales Experience Marketing Experience Contacts with Investors
S1akeholder Needs Small Businesses
Business Plans Save Time and Energy Focus on Business Expertise Financial Funding Information Marketing Information Accounting Services Outsourcing BUSiness Needs Performance Evaluation Grants Available Marketing Alternatives Business Performance Evaluation Presentation Assistance
The Community Increased Tax Base Individuals Staying In State
Capital Market Salary for Owners
Capabilities
See Value Chain
I I ~
25
Exhibit 2 Value Chain Analysis
Company Infrastructure Our main office will be out of the Burton Home Office. We will use this location for daily activities but will meet our clients on-site if possible. We will lease our computers and supply cost will be low This structure allows us to keep our fixed cost at a minimum
Human Resources Our employee structure will be based on using each others individual talents to collaborate with one another offering the client unmatchable service We plan on developing an internship program We will hire an administrative assistant in the second year
Materials Management/Technology We will be aware of business management software that is available to the different niches our clients are involved in. Provide up to date knowledge on different financing options available. Provide new and resourceful ways to market client services and products.
Ataraxy also helps entrepreneurs understand what business functions with which they need assistance.
Service We provide the following benefit to entrepreneurs:
Financing Guidance Marketing Services Business Plan Development Business Planning
Mailers to all people applying for a new
business license
Targeting cluster markets
Advertising in Tech journals, local public.
Sales & Marketing Seminars hosted to targe specific small business
needs
Direct contact with business owners
Financing, Marketing, Accounting Services, Business Development, Business Planning and
Strategy Implementation, Analysis of Business Processes, Website Development, Grant Writing, and
Presentation Development
Operations Allows entrepreneurs access to business professionals for aid in:
Be able to show the Cost Benefit of our services
Providing presentation Instruction in order to Secure financing
Outbound Logistics Providing Mgmt.,Fin.,Mkting., Accl., and Bus. Dvlp. Service will allow entrepreneur to focus on building business.
Provide Analysis for current procedures
Margins
Exhibit 3 Co:mpetitive Advantage Building Blocks
Superior Efficiency • Fast response time • Efficient project completion • Tailored innovation
Superior Quality • Low cost, customer need specific seminars • Proven results based on previous clients • Customized plans made after initial contact • High contact, involvement between parties
• Synergy of human capital
Customer Responsiveness • Exiremely high customer service • Flexible plans tailored to each individual
clients needs • Ability to meet with advisors in person
+----1. Fast response time • Face to Face advice • Personal relationship with advisors • Dynamic reaction time
Competitive A.dvantage: Differentiation
ATARAXY will gain competitive advantage by the level of customer service, commitment, and per
sonalization we deliver with our services.
"LIVING COLLABORATION"
,------- 1'--_--. Superior Innovation Professional Advisors rely on one another for collaboration. This results in the best possible solution for our clients.
27
---
Exhibit 4 Industry Forces I
High Threat ofNew Entrants
Expected Retaliation: Low, many options are available
Proprietary Product Differences: Medium, Local SBA is territorial
Capital Requirements: Entry Deterring Price: Low, startup costs are minimum Low, time and knowledge are the key factors
Marketing and Office are needed switching Costs: Cost Advantages: Low
Low, should focus on differentiation Threat of non-traditional consultant's rather than price l.e software, retirees, part-time consultants
Low Supplier Power Accounting and Finance needs are necessary, but often seen as an area to save money
Can obtain the services from f------+many area, but not necessarily under one roof
Substitutes seen as inexpensive solution, but ignore the lost opportunity costs due to time lost
1 High Industrv Rivalry Industry Gro'Mh
Mature Industry, but dynamic Fixed (or Storage) CostsNalue Added:
Low Fixed cost, High Value Added Intermittent Overcapacity: Medium, work can be steady
Product Differences: L ow, other companies similar, but with fewer services
Brand Identification' Low, especially when starting SWitching Costs. High, loose continuity & est.ablished relationship Concentration and Balance: High, especially in high growth area Informational Complexity: Medium, varies among services offered Diversity of Competitors:
High, services offered is the main differentiation Corporate Stakes: Medium. SBA is a large factor Exit Barriers: Low
+--
IHigh Threat ofSubslilules Internet DVDs Self-help Books In House Bookkeeping Companies Slow to Change
i Low Buj-er Power
Buyer Switching Costs: Buyer Concentration vs. supplier concentration
Low when changing firms Buyer Volume:
Buyer Information: High in Montana
Medium, easy to obtain information, Estimated 106,789 Small Businesses in Montana In 2004
but time is a constraint Of that, 97.8% or 33,801 were small firms
Substitutes:92,597 were Self-Employed
HighNumber continues to increase in Montana
2~
Exhibit 5 Revenue Model
Entrepreneurs
~"" /
Phase 1: $601hour, approximately 5 hours: analyzing company and creating an action plan for future work.
Small Business Owners Initial Meeting
with an advisor
Phase 2: II$40-$100Iho"" approx. 30-100
hours: Outlined work from action plan will be completed.
I Startups I -> '--... Phase 3: $40-$1001hour, approx. 5 hours per month: Ongoing work from Phase 2. will continue approx. 5 months.
29
Exhibit 6
ATARAXY CONSULTING, LLC at-uh-rak-see: a state of freedom from anxiety, peace of mind
PARTNERSHIP AGREEMENT This document defines the relationships by the listed parties in relation to Ataraxy Consulting, LLC. Katheryn Black Sabrina Burton Catherine Claro
ARTICLE I - GENERAL PROVISIONS
1.1 Formation of Partnership:
The parties here agree to form a Limited Liability Company subject to the following guidelines.
1.2 Ownership Share Proportions of ownership would be determined by amount of initial investment, resulting in an equal thirty three percent share for each founding advisor. When new partners are brought on a renegotiation of partnership agreement will occur.
1.3 Profit Distribution Compensation will be based on the billable hours worked per advisor. Additional considerations for compensation will include hours committed to internal startup and seminar. Advisors are expected to work approximately equal casual hours which will not be compensated. These hours are considered to be required as a part of ownership duty.
Internal Accounting will be handled by Sabrina Burton and will be compensated at a rate of $25/hour.
Advanced Ownership draws will be considered in rare circumstances when financially feasible for the business and upon unanimous partner agreement.
1.4 Audit Review An external audit review will be performed once a year for the first three years of operation and every other year thereafter in order to ensure trust and accuracy of internal records.
1.5 Exit Strategy
1.5.1 Single Partner Exit Upon a partner's exit a severance packaged will be determined based on original investment and financial status of the company, ownership will be redistributed amongst remaining partners.
1.5.2 Sale or Dissolution of LLC In the event of a sale/merger/dissolution profits and/or assets will be split according to current ownership.
30
Appendix A
ATARAXY CONSULTING Revenues Assumptions from Seminars
Activity Avg. Rate Phase 1 $ 60 Phase 2 $ 75 Phase 3 $ 75
Seminar Cost $ 50 Seminar Capacity 20
Seminar Assumptions Retention Approx. HrsIProject
Initial contact/meeting No Cost 3D°,-b 1.5 Phase 1 50% 5 Phase 2 40°,t, 150 Phase 3 65% 5 100'110 Qtj)hase 3 d,enls ....11 be camecl fG(S months, ttle~ SO% drop otI'lind ere ~ined fO(3 rn:n1t1~ before drqlpng orr CCI<TIPelllly
We expect to have a Iongterm relationship with 10% of the clients from each seminar
Seminar Client Projections
Clients Met w
Aug. Sept. Oct. Nov. Dec. Jan. Feb. Mar. April May June Month Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month B Month 9 Month 10 Month 11 Year Vear 1 Year 1 Year 1 Year' Year 1 Year 1 Year 1 Year 1 Year 1 Year 1 Year 1 Mig per month 1 2 2 1 2 2 1 1 1 1 Seminar 20 40 40 20 0 40 40 20 20 20 20 'nllial ~Ig 6 12 12 6 0 12 12 6 6 6 6 Phase 1 3 6 6 3 0 6 6 3 3 3 3 Phase 2 1 2 2 1 0 2 2 1 1 1 Phase 3 1 3 5 6 6 7 7 5 2
Projected Billable Hours
Phase 1 15 30 30 15 0 30 30 15 15 15 15 Phase 2 0 150 300 300 150 0 300 300 lSO 150 150 PhaSE 3 0 0 5 15 25 30 30 35 35 25 10 Total Billable Hours 15 180 335 330 175 60 360 350 200 190 175
ApproJ<. &llabJe hours per person 5 80 112 110 58 20 120 117 67 63 58
Revenues Phase 1 900 1.800 1,800 900 0 1,800 1.BOO 900 900 900 900 Phase 2 0 11.250 22,500 22.500 11 ,250 0 22,SOO 22,500 11,250 11.250 11,250 Phase 3 0 0 375 1,125 1,875 2.2SO 2,250 2.625 2,625 1,875 750
Total Revenues 900 13050 24675 24525 13125 4050 26550 26025 14775 14025 12900 Clients Originating from Seminars
July TotalMonth 12
Year 1 1 15
20 300 6 90 3 45 1 '4
42
15 225 lSO 2,100
0 210
165 2,535
55 845
Total 900 13,500
11.250 157.500 0 15,750
12150 186750
I~ .J.,) ..)
AppendixB
ATARAXY CONSULTING Revenue Assumptions from Word of MouthlReferrals
Activity Avg. Rate ~~el $ M Phase 2 s 75 Phase 3 $ 75
Word of Mouth/Refernil Assumptions Initial contact/meeting No Cost
Phase 1 Phase 2 Phase 3
Word of MouthrRefernl Client Projections
Clients Met Aug. SepL Oct.
Month Month 1 Month 2 Month 3 Year Year 1 Year 1 Year 1 Number referred Initial Mtgs 0 0 0 Phase 1 0 0 0 Phase 2 0 0 0 Phase 3 0 0 0
Projected Billable Hours Phase 1 0 0 Phase 2 0 0 0 Phase 3 0 0 0
Total Billablo Hours 0 0 0
Approx. BilJab'e hours perperson 0 0 0
Revenues Phase 1 0 0 0 Phase 2 0 0 0 Phase 3 0 0 0
Total Revenues 0 0 0 Clients Originating (rom Word of Mouth/Referrals
Retention 30% 70% 60% 85%
Nov. Month 4 Year 1
1 1 0 0 0
0 0 0
0
0
0 0 0
a
Approx. Hrsn:'roject 1.5 5
ISO 10
Dec. Jan. Month 5 Month 6
Year 1 Year 1 1 1 1 1 0 0 0 0 0 0
0 0 0 0 0 0
0 0
0 0
0 0 0 0 0 0
0 0
Feb. Mar. Month 7 Month 8 Year 1 Year 1
3 4 3 4 1 1 0 1 0 0
5 5 0 150 0 0
5 155
2 52
300 300 0 11,250 0 0
300 11,550
April Month9 Year 1
4 4 1 1 1
5 150
10
165
55
300 11,250
75
11,625
May Month 10
Year 1 4 4 1 1 2
5 150
20
175
58
300 11,250
150
11,700
June Month 11
Year 1 4 4 1 I 3
5 150
30
185
62
300 11,250
225
11,775
July Month 12
Year 1 4 4 1 1 4
5 ISO 40
195
65
300 11,2SO
300
11,850
Total
26 26
6 5
10
30 750 100
880
294
Total 1.800
56,250 750
58,800
AppendlxC
ATlIRAXY CONSULTING Cash Receipts
Proj.ctltd Rev.hues ~rom Seminar Clients Aug. Sepl Ocl Hov. Dec. Jan. Feb. Mar. April May June July
Month 1 Month 2 Month 3 Month 4 Monttl5 Month 6 Month 7 MorUh 8 Month 9 Month 10 Mond111 Mond112 Phase 1 900 1,800 1,800 900 Q 1,800 1.800 900 900 900 900 900 P"ase 2 0 11,250 22,500 22,500 11,250 0 22,500 22,500 11,250 11,250 11.250 11,250 Pr,as.e3 0 0 375 1,125 1,875 2,250 2,250 2,625 2,625 1,875 750 0
ProlKted Monthly Blllabkls 900 13,050 24,675 24,1525 13,125 4,050 26.550 26,025 14.775 14,025 12,91)0 12,150 186,750
Projected Revenun From Word or MouthlRel'elT1lll Clienl,s Aug. Sepl 0Cl Nov. Dec. Jan. Feb. Mar. April May Jun. July
Monltt 1 MOhth 2 Month 3 Month 4 Montn ~ Month e Month 7 Month 8 Month 9 Month 10 M\Jnth 11 Month 12 Phase 1 0 0 0 0 0 0 JOO 300 300 300 300 JOO Phase 2 0 0 0 0 0 0 0 11,250 11,250 11,250 11,250 11,2SO Phase 3 (] (] 0 0 0 0 0 0 75 150 225 300
Projected Monthly Billable- 0 0 ° 0 0 0 300 11,550 11,62~ 11,700 11,775 11,850 58,800
AIR Collections Upfronf Payment SOOk of eslimate Upon CompleliorJ
net 3D SO%
'" 31-60 d3Ys 3D% W 81·90 days 14%
Unoolleclible 6%
ProJected Collections Aug. Sepl OCl NON. Doc. Jan. Feb. Mar. Ap" May Juml July Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 1:2 Year 1 Year 1 V..,., Year 1 Year 1 Year 1 Ye.' vear 1 Year 1 Year 1 Year 1 Year 1
seminar Fees 1,000 2,000 2,000 1,000 0 2,000 2,000 1,000 1,000 1,000 1,000 1,000 Up front (50%) 4SO 6,525 12,338 12,263 6,563 2,025 13,275 1:3,013 7,388 7.013 6,450 6.075
C",sh Collections 1,450 8,525 14,338 13,263 6,563 4,025 15,275 14,013 8,388 8,013 7,450 7,075
Credit Al1"IClllllls 4SO 6,525 12,338 12,263 6,563 2,025 13,275 13,013 7,388 7.013 6,450 6,075
net 3() days 22' 3,263 6,169 6.132 3,282 1,013 6,636 6.507 3,594 3,S07 3,225 3,038 31-60 days 13' 1,958 3,701 3,679 1,969 6<l6 3,983 3,904 2,216 2,104 1,935 61-90 days 63 91' 1,727 1,717 919 264 1,859 1,822 1,034 902
Credit Collections 22' 3,398 8.190 10,7<l7 ',688 4,699 8,165 10,17.01 9,457 1,54. 6,363 5,955
Sources of Cash 1,675 11,923 22,528 24,010 15,251 8,724 23,440 24,187 17,845 15,558 13.813 13,030
Total
108,378
~4,206
192,58iI
Bild Debt E~n:se 27 392 740 136 :l94 122 797 781 443
Accounts Receivable Opening 225 3,352 7,500 6,989 6,472 3,058 7,432 9,277 7,086 5,757 5,063 + Billed 1.900 15,050 26,676 25.526 13,126 6,050 21\,550 27.026 15.776 15.026 13.900 13.150 -conectee 1,675 11,923 U,528 24,010 15,251 8,724 23,440 24,787 17,845 15,558 13,813 13.030 -eeo Debt Expense 27 392 740 736 30' 122 797 761 443 "'ClOSing 22' 3.352 7.500 8,989 6,472 3,056 7,432 9,277 5,06.3 4,74071085 51757 Change in Ac:covnts Receivable (225) (3,127) (4,148) (1,469) 2,517 3,414 (4,374) (1,845) 2,191 1,329 694 323
Appendb: D
ATARAXY CONSULTING Monthly Income Stalement Cu"sasls - 'l'earO ......_'"Yar1
...."' .. "' ...-Q Seminars 1.000 Seminar Clients 900 Word of MoulhlRefelTCl! Clients 0
Total Revenues 1....
Expo...s
W""""Payrotl T8lICes 0 Marketing 500 Serrinar Expeflse 1.000 RenVUblilies 300 Supplies 500
re teeeec EQup-nenl ,00
" Bad Debt 8q:)ense 0
" oeer Total Ooeratino ExDeru,..
1.000
"..., 350
2750
OperaUmJ Profit (1,000) (850)
" _. Net Income
• Interesl Expense
11000j
.2
(..,)
Sem,,'3r3 ....i. not 00 3 re.wlUB GlrwIrn The '5OJper800 .."ill CO""" &emIllarOJGIB
See Append;'" A Re-,ue Aa6u~ rom Seow1..rt>
S- AppendLX B Re"""'ue Assu~llonI rom Word of MoullVFlefemil
S;lIilnea..... toeboIli8don mon""~ 'MOlh:1l<foe lOt ~nl)"E"
PayrOll rases are aUUme<110 be 20"," of WotQf!S
AdI/llrbse".....,ts"" be .. Tedlrdogy JOU'TI3I&.Qruanlul ~
SemIna"" will "01 be .. "",",w eeeem, The S6OIPBr.IO" 1cove, se-nlna, 1;Q5!:s
Re<1t11...U;'"" low doe to hOtIll' effIce utl.lp, t!'IISfeewil poly'o- lel..pt1~lemi!'l
SUPJl"le$'" ~"'t month Indude phon~",pr!nl~ In add~1(ln to gener1l1 oftI<;eSUppll6S
10 £S1II1l3!&r.s:nlrnYlN'l per canpullll1JJ -<:leI rom, pl:ln 10 J)YIr.!lau In '1Mr 2
II seeA!>pencj~C:C31.,R~J)ls
12 Qlhe, hCkJOOS fuewavel relmourselTleflt, aOOolh(lf \Ienel'3l11llj)lllnse$
lJ 5% ... te based on CI'Ie 'I' commel'Cb! biln ,.,IBo-source· re3lwabloxJlls,C\JlO1
"IG ir">mme laxes Wlo.d'l!ed becau,,", 1;>4 ""lIoInlahonal strudurll
Sept. Mont" 2 'l'ear 1
2.000 13,050
0
15050
5.000 1.000
500 2.000
300 75
,00 0
500
1475
5,575 38
5 <37
Col Month 3 'l'ear 1
2.000 24.il75
0
26675
12,500 2.500
600 2.000
>00 75
'00 0
750
18825
7,850 35
7815
Nov, _... 'l'ear 1
1.000 24,525
0
25525
12,500 2.500
600 1.000
300 75
100 27
750
17 .52
7,673 31
7642
De<. Month 5 'l'ear 1
0 13.125
0
13125
8,500 1.300
750 0
>00 75
100 '92 >00
g 717
3.406 20
, 390
Jan. Month a 'l'ear t
2.000 4,050
0
6,050
1.000 200 500
2.000 300
75 '00 740 750
5'"
385 2'
sse
F... Month 7 Year 1
2.000 26,550
300
28850
15,500 3.100
500 2.000
300 100 100 736 750
" .... 5,764
21
57043
Mar. Monlt1 B Year 1
1.000 26,025 11,550
38,576
17,500 '.500
500 1.000
300 100 '00 304 500
" ... 14,681,. 14,863
April Month 1 Ye,u1
1.000 14,n5 11,625
27_
11.500 2.300
500 1,000
300 100 '00 122 500
16422
10,978,. "964
May Month 10
vear t
1.000 14,025 11,700
26,725
11,000 2.200
500 1.000
300 100 '00 797 500
16497
10,228 11
10,217
""".Month 11 veer t
1.000 12,900 11.775
2&,675
10,000 2.000
500 1.000
300 ,00 ,00
7" 1.000
15781
9.ese 7
...7
July Monlh 12
Yeu1
1.000 12,150 11,650
25,000
••500 1,700
500
..1.000
>00 100 100 ,
1.000
13,8043
11,357
• 11,353
Total.
15,000 186,750
5O.BOO
260 .sso
111.500 22,300 6.450
15,000
'.600 1,475 '200 4,432 7,650
173,607
ee.aas m
86,669
AppendixE
ATlUUlXY CONSULTING 3 Ye~r Income Stlblment Forecast
,,,,gil 6lInenlllll """ Indude heatll1ln!M.l"llnal· ~Olk. Es~maled for 3 plIOPIeal 25OCVmonlh C(rIIlllnecl· available s!art/ng l"lsr 2
Cash Basis
FooO:;l.... Year 1 Year 2 Vear) Re..,.enuee
Seminars 15,000 15,000 15,000 ProJocted Growth Seminar Clients 186,750 205,425 236,239 Seminar: 10"/0 year 2; 15% year 3 Word 01 Mouth/Referral Cli&nts se.soo 78,4-40 99,372 Worn of MO\l\t\/Referral: 30% in year 2&3
Tobll Revenues 260,550 296,865 350,611
Expense. Wages 111,500 111,500 128,225 Fringe Benefits 30.000 30,000 Other Personnel 15000 25000 Payroll Taxes 22,300 25.300 30,64~
MarkeUng 6,450 6,773 1,112 Seminar Expense 15,000 15,000 15,000 Renl!UUlities 3,600 3,600 3,600 Supplies 1,475 1,549 1,626 teaeec Equipment 1.200 5,000 5,000 Bad Debt Expense 4,432 7,047 8,390 Other: 7,650 6,033 8,435
Totll Operating Expenses 173,607 228802 263,033
OperatIng Proflt 86,943 68,063 87,578 • lntereet Expense 274
N,t Income 86.669 68.063 67,578
FOO........~
Salilfy WIll t>e based on monLhly roel",come lor year'
FnoQe Benelib!l (FootnoLe 2) .. ill be added In )'fiIr2
Salary Inal!llllee or 16% WlIf be added in yew 3
2
) Pan ~II'IePll..annei will be tiled ~ or ye&f 1
• Pa)WIITun a'lIJllBd n 20% gfWagea ~ The need lorIn 001 or I'onI otlice wi! be _Iualed t1 ~r :2
8 Computers loill be purch.sYd 1n)'N' 2
Bed deol eoper1se... 11 be e5~maled ,I 2.5% or Semltl,r C~l!f1lS sr.d Word or uou~elerr81 CJieI1l Re~l!f1ues, Ye,r 1:1 e%
Expenses ... lhoul loolnoles era pro,e<:l8d 10,ncrene at 5'1oJytrar
35
Appendix F
ATAR1IXY CONSULTING Forecasted Cash Flow
Yelle-O Aug. Month 1
Sept Month 2
Oct. Month 3
Nov. Month 4
Doc. Month 5
Jan. Month 6
feb. Month 7
Mar. Month 8 """IMonth 9
May June July Month 10 Month 11 Month 12
......... ,..• --_. Vear 1
14.000
Year 1
12,069
Year 1
13,661
Year 1
16,507
Year 1
21,835
Yur1
26,904
veer 1
29,846
Year 1
30,380
veer 1
42,360
Year 1
54,672
Yell!" 1
65,312
Year 1
75,103
w Q\
Openltlng ActIvities Net Income (rncrsaseybecrease In Aco'XJnts Recei vable
Total Cash Flow from Operations
Flnandng Actlvltle.. Increase in 8olTOW'oo Funds (Loan Principal Payments) ONnerDraws
.'ac!< Burton Claro
(1,000)
10,000
5.000
(892) (225)
('."7)
(B14)
5,537 (3,127)
2,410
(B1B)
7,615 (4,148)
3,667
(821)
7,642 (1,489)
6'53
(B25)
3,380 2,517
5 B97
(B2B)
360 3,414
3774
(B32)
5.743 (4,374)
1369
(B35)
14,663 (1,845)
12,818
IB38)
10,9642,191
13,155
(843)
10,217 1,329
11 S46
(B46)
9,687 694
10.581
(850)
11,353 323
11,676
(BOO)
(25,000) (25,000) (25,000)
Total Cash Flow from Financing Acttvltles '5.000 IS'.' fS1BI /S211 fB251 /S28\ 1832\ fS351 fB38) 1843) 18461 IS501 /75.850)
Net Cash Flow 14.000 (1,931) 1,592 2,846 5,328 5,069 2,942 534 11,980 12,312 10,700 9,731 (601,174)
Closing Cash '4,000 12,069 13,661 16,507 21,835 26904 29846 30 380 42360 54672 85,372 7$103 10929
Total
14,000
86,669 (4,740)
81,929
(10,000)
(25,0001 (25.000) (25,0001
/85.000
(3,071)
10.929
AppendixG
ATARAXY CONSULTING Forecasted Cash Flow
OpenIng Cash
Year 1 14,000
Year 2 10,929
Year 3 13,992
Operating Activities Net Income 66,669 66,063 67,578 (Increase)fDecrease inAccounts Receivable (4,740) (5,000) (5,000)
Total Cash Flow from Operations 61,929 63,063 82,578
Financing Activities Increase inBorrowed Funds (Loan Principal Payments) (10,000) Owner Draws
Black (25,000) (20,000) (26,000) Burton (25,000) (20,000) (28,000) Claro (25,000) (20,000) (26,000)
Total Cash Flow from Financing Activities (85,000) (60,000) (84,000)
Net Cash Flow (3,07\) 3\063 (1,422)
Closing Cash 10,929 13,992 12,570
37
Appendix I
l\Tl\RAXY CONSULTING Balance Sheet Cash Basis
ASSETS Current Assets Cash Accounts Receivable
Total Current Assets
Year1
10,929 4,740
15,669
TOTAL ASSETS 15,669
LIABILITIES Current Liabilities
Short-Term Notes Payable Total CUlTOnt Liabilites
o o
NETWORTH Paid in Capital Black- Paid in Capital Burton - Paid in Capital Claro- Paid in Capital
OwnerDraws Black Burton Claro
Retained Earnings TOTAL NET WORTH
1,666 1,667 1,667
(25,000) (25,000) (25,000)
85,669 15,669
TOTAL LIABILITIES & NETWORTH 15,669
39