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New Venture Planning

August 22, 2010

Stepping Stones: The

Consultancy for New

VenturesBusiness Plan

ShantanuDeshpande (PGP25094)

Kanishka Jai (PGP25190)

Sumantra Mukherjee (PGP25218)

AvinashIragavarapu (PGP25293)

Denzil Thomas (PGP25299)

KarthikRegunathan (PGP25304)

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Contents

Executive Summary ................................................................................................................................. 3

Objectives................................................................................................................................................ 4

Mission ............................................................................................................................................ 4

Keys to Success ............................................................................................................................... 5

Start-up Summary.................................................................................................................................... 5

Services ................................................................................................................................................... 6

Market Analysis Summary ....................................................................................................................... 7

Market Segmentation .............................................................................................................................. 8

Service Business Analysis ......................................................................................................................... 8

Competition and Buying Patterns ............................................................................................................ 9

Strategyand Implementation Summary................................................................................................... 9

Competitive Edge .................................................................................................................................. 10

Marketing Strategy ................................................................................................................................ 10

Sales Strategy ........................................................................................................................................ 11

Pricing ................................................................................................................................................... 11

Sales Forecast ........................................................................................................................................ 12

Sales Projections .................................................................................................................................... 12

Management Summary ......................................................................................................................... 13

FinancialPlan......................................................................................................................................... 13

Start-up Funding .................................................................................................................................... 13

Projected Profit and Loss ....................................................................................................................... 14

Projection Charts ................................................................................................................................... 14

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Executive Summary

Stepping Stones will provide top-quality professional development and coaching services. The

partners of Stepping Stones believe that most small businesses and entrepreneurs suffer two major

problems. They lack training or development resources and the depth of knowledge needed to

focus on their businesses from a true "ownership" perspective. Both lead to lowered

expectations, lack of business and personal growth and frequent owner burnout. Stepping

Stones believes that it can improve upon and exploit these weaknesses to gain local market share.

The objectives for Stepping Stones over the next three years are:

y Achieve sales revenues of approximately rs 5,00,000 by end of year one.y Achieve sales revenues of approximately rs 20,00,000 by year three.y Achieve a client mix of 60% small business/40% entrepreneurialy Move into small office space by the end of the first year.

The company will provide its professional development services in the most effective manner and

with an ongoing comprehensive quality-control program to provide 100% client satisfaction. The

company's principal officer sees each contract as an agreement not between a business and its

clients, but between partners who wish to create a close and mutually-beneficial long-term

relationship. This will help to provide greater long-term profits through referrals and repeat

business.

Stepping Stones will institute the following key procedures to reach its goals:

y The creation of a unique, upscale, innovative environment that will differentiate SteppingStones from other professional consulting and development businesses

y Educating the business community on what business and strategic management has tooffer

y The formation of a learning environment that will bring people with diverse interests andbackgrounds together in a common forum to overcome challenges in entrepreneurship

y Affordable access to the resources of business and other consulting services for newventures

Stepping Stones is a start-up private limited company (Ltd.) consisting of 6 partners withdiverse industry experience. All the partners have rich learning experience at IIM Lucknow.

Denzil will be investing significant amounts of his own capital into the company to cover start-up

costs and future growth. He will be heading the financial aspects of the project. Karthik will be the

head of HR aspects of the projects; also he will be the head of recruitment. Kanishka will be the

head of marketing aspects. Sumantra will be the head of sales aspects. Shantanu will be the head

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of operations aspects of the projects. Avinash will be the relationship manager. He will negotiate

with clients and keeps in constant touch with them.

The company plans to use its existing contacts to generate both short and long-term consulting

contracts. Its long-term profitability will rely on professional contracts obtained through strategic

alliances, a comprehensive marketing program and a successful referral program.

Initially, the company will focus on professional development, strategic workshops, and special

project relationships. Beginning in year two, Stepping Stones will provide venture funding to the

prospective start-ups and networking opportunities. The company has rigorously examined its

financial projections and concluded that they are both conservative in profits and generous in

expenditures. This was done deliberately to provide for unforeseeable events. The company's

partners believe that cash flow projections are realistic.

Objectives

Stepping Stones's objectives for the first three years of operation include:

y The creation of a unique, upscale, innovative environment that will differentiate SteppingStones from other consulting and professional development businesses.

y Educating the business community on what business and strategic consulting has to offer.y The formation of a learning environment that will bring people with diverse interests and

backgrounds together in a common forum to overcome entreprenuership challenges

y Affordable access to the resources of business development services.The financial objectives for Stepping Stones over the next three years are to:

y Achieve sales revenues of approximately 5, 00,000 by end of year one.y Achieve sales revenues of approximately 20, 00,000 by year three.y Achieve a client mix of 60% small business/40% entrepreneurialy Move into small office space by end of first year.y Hire one salesperson by end of second year.

Mission

Stepping Stones offers small business owners and entrepreneurs a reliable, high-quality business

consulting and professional management development on both a local and national scale. Its

mission is to help clients develop and implement the strategy, motivation and accountability

required to succeed in their business. The company sees each contract as an agreement not

between a business and its customers, but between partners who wish to create a close and

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mutually beneficial long-term relationship. This will help to provide greater long-term profits

through referrals and repeat business. Stepping Stones must also be able to maintain financial

balance, charging a high value for its services, and delivering an even higher value to its clients.

Keys to Success

1. Excellence in fulfilling the promise--completely confidential, reliable, trustworthy expertiseand information

2. Developing visibility to generate new business leads3. Leveraging from a single pool of expertise into multiple revenue generation opportunities

by offering consultancy in various aspects: Finance, Marketing, HR, Legal, Operations

4. Consistently developing productive and thought-provoking learning experiences tomaintain growth and success with each client

5. Easy access to services6. Establishing a seasoned advisory team

Start-up Summary

Total start-up expenses (including legal costs, logo design, stationery and related expenses, and

franchise fee) comes to INR 480000. Start-up assets required include INR 100000 in short-term

assets (office furniture, etc.) and INR 200000 in initial cash to handle the first few months of

operations as sales play through the cash flow.

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Services

Stepping Stones provides strategic coaching, professional development and counseling for small

business owners, entrepreneurs and self-employed professionals. The primary forms of service

available can be categorised into two forms - Structured Services and Consulting Services. The

Structured Services are primarily services designed in the form of workshops which would help

business owners and entrepreneurs learn from best practices of successful entrepreneurs around

the world. This would be from our extensive knowledge base which we would create on research

about entrepreneurship, strategy formulation and implementation. The Consulting Services would

0 200000 400000 600000

Expenses

Start Up Assets

Investment

Loan

Startup

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be based on case by case basis with intensive client engagements and consulting services on

every aspect of starting a business. The core services that will be offered from day one will be:

Two Year Strategic Mindset Program: This is a part of the Consulting Services where Stepping

Stones will be involved with a start up for a period of two years in every aspect of starting a

business. These would be in the form of bi-monthly workshops which include strategic planning,

peer advisory counselling, marketing/sales planning, accountability processes, business planning

and work/life balance implementation. These programs are meant to improve and streamline the

functioning of start up businesses and increase their probability of success by consulting them on

best practices of the industry in every function of the enterprise.

One-on-One Coaching: The one-on-one coaching program includes ongoing reinforcement to

support Strategic Coaching program, professional development coaching, leadership, career or

management coaching. These would be specifically aimed at managers, entrepreneurs and small

business owners and would provide them structured one on one coaching on various aspects of

business and start ups. These sessions will created based on our research and knowledge

database built on it which would be customized for the industry to which the start up belongs.

On Demand Coaching (for time restricted clients) includes but is not limited to, private and

objective business or professional coaching, affordable and "on-demand," access to coaching via

phone/email. These services would largely be add-on services for existing clients to hone their skill

on certain issues on demand.

Special Projects includes strategic business planning and implementation, marketing plans and

implementation, leadership development, people management and systematizing businesses.

Beginning in year two (2006), Stepping Stones will provide a separate and comprehensive career

counseling service which will include but will not be limited to, resum assistance, interviewing

skills, job seeking strategies and networking opportunities.

Market Analysis Summary

Stepping Stones will focus on small business owners, managers and entrepreneurs who are

concerned that their businesses have not grown at the rate they want or need them to, frustrated

that they are spending too much time in their businesses and may be burning out and

worried that their business will not survive without them. These companies will have revenues of

INR 50 crore or less.

According to the July, 2002 census, there are approximately 81,600 small businesses in the 5 state

Central India area located around Mumbai. Although the majority are manufacturing based, there

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are a significant number of service related companies. Stepping Stones will not take a position of

industry expert but of leadership and development expert; therefore industry will not have an

impact on any prospective markets.

Market Segmentation

Stepping Stones will focus on two markets within Maharashtra, the small business segment

(businesses with more than one employee/owner), and the entrepreneur segment, which includes

home-based and one-person business operations. Although the company can handle larger

organizations, the greatest benefit will come to businesses with under INR 400 million in annual

sales. The majority of these companies are comprised of "technicians" who are gifted in the work of

their business, but typically do not have the resources to have in-house staff dedicated to strategic

planning, professional development and/or coaching. Our goal is to eventually obtain

approximately two-thirds of all our business from the small business segment, since this generates

the greatest cash flow. Furthermore, this segment has the lowest percentage of variable costs. The

small business segment is considered to be the company's cash cow.

Initially the company will focus on the two segments in just Mumbai, Pune and Nashik in

Maharashtra. However, by the end of the three-year projections, the company expects to be serving

the entire state. The Market Analysis table and chart show the number of small businesses in each

state

Service Business Analysis

The consulting service category for the start-ups and small business is an unorganised sector and

the different groups which we can be targeted for the business are as follows:

1. Small Businesses These are firms with fewer than 100 employees. These companies arethe ones who have specialised in their area of expertise locally but with the right kind of

guidance in terms of marketing and sales strategy can be scaled to their real potential.

These firms offer a huge potential especially in tier- 2 and tier -3 cities and are huge in

number. But analysing and churning out the real potential ones will be a huge roadblock in

this category. This category also will be able to provide the fees rather than going in for the

equity model.

2. Professional Service Firms /individuals This group includes doctors, lawyers,accountants, engineers. These firms generally operate out of small offices and will be

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established locally. With large spread use of internet and the rising cost of these services

,the team believes that this is another service category that the team can add value to, with

the services required by the firm.

3. Start-ups This is the main service category that the firm targets and provides services.Depending on the case, the team will have to rope in the entire administrative setup with

establishing the entire marketing , sales , financial, HR verticals as the entrepreneur might

in most cases be specialised in the technology only. Also according to UN statistics, India

has the largest number of entrepreneurs and with the environment getting better , the team

wants to establish itself strongly in this category. The main obstacles faced will be in terms

of the financing of the services which will have to be equity based in most cases and proper

identification of such firms where the teams expertise can be utilised is another roadblock.

Competition and Buying Patterns

The key element in purchase decisions made at Stepping Stones client level is trust in the

professional reputation and reliability of the consulting firm. The industry is pulverized and

disorganized, with thousands of smaller consulting organizations and individual consultants for

every one of the few dozen well-known companies.

Competitors range from major international name-brand consultants to tens of thousands of

individuals. One of Stepping Stones's challenges will be establishing itself as a real consulting /

professional development company, positioned as a relatively risk-free corporate purchase.

When dealing with the small or entrepreneurial business market, cost or price will be one of the

greatest obstacles Stepping Stones will face. It will be up to Stepping Stones to assist its clients in

the discovery of how much it may cost them NOT to pursue business development and establish

Stepping Stones as the most effective solution to their challenges.

With time, reputation and referrals will allow for a steady stream of new clients as well as regular

price increases. This is not a business to build brand as much as it is to build reliability.

Strategy and Implementation Summary

Emphasize Results

We will differentiate ourselves with results. We will establish our business offering as a clear and

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viable alternative for our target market, from the scores of unrefined, one-time seminar, consulting,

and "feel good motivational" companies.

Build Relationship oriented business

Build long-term relationships with clients, not single-visit deals. Become their advisor and partner

of choice. Make them understand the value of long-term relationships.

Focus on target markets

We need to focus our offerings on small business owners and entrepreneurs who have a passion

for their business and have the willingness to work for what they receive. We do not want to

compete for the buyers who seek "get rich quick" types of resources. We need to be able to sell to

smart, quality-conscious clients.

Competitive Edge

The most unique benefit that Stepping Stones offers to clients is the ability to experience ongoing,reinforcement development, versus a typical "one-time" seminar format. Stepping Stones provides

development and support for a year or more. Since each Strategic Workshop client will be

immediately qualified for one-on-one coaching, we will manage and monitor the specific progress

of each client to ensure appropriate development.

Marketing Strategy

Stepping Stones will reach their target companies by 4 methods, which have been proven earlier to

be effective. They are:

1. Lead Generation Program: Stepping Stones will do a direct mailing to 3,000 potentialcustomers in the A and B state areas. Interested companies reply by mail or phone. In

this industry, about 3% of the recipients typically respond positively.

2. Sample Previews: These are invitation-only workshops that Stepping Stones will host forreferral sources (i.e., accountants, attorneys, financial planners, insurance professionals)

as well as owners of businesses in a target market. The previews will be the actual first year

program offered to paying clients. The intent is to provide value and proof of the Strategic

Workshop process so that clients will be comfortable making referrals. Stepping Stones will

be responsible for the generation of the lists to which these invitations will be sent. Thefranchiser, Stepping Stones, recommends that one of these briefings be held monthly.

Referral sources and business owners who attend and are interested will have a follow-up

call made to them to further discuss what Stepping Stones can do for their company.

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3. Free Talks/Networking: These are talks given to Indian Chambers of Commerce, tradecouncils, professional organizations, etc. It has been industry experience that it is most

beneficial to have at least two of these talks per month and attend two networking events

per month.

4. Referrals: Referrals will not be a large part of Stepping Stones' business until late in the firstyear. In the second and third year they should account for as much as 50% of new

business.

Other Income Generators: Special Project Assistance. This includes writing private programs for

specific businesses, designing custom programs and retainer based coaching on an ongoing

basis.

Sales Strategy

SteppingStoneswill make a significantprofit through the delivery of top-of-the-lineprofessionaldevelopmentservices. Thecompany will seeprofitwithin the first year due tobeneficial word-of-

mouth advertisingand referral networking. Thecompany expectstodouble itsclienteleevery six

months, forthefirst18 months.

Pricing

ServicePacks Serviceofferings

Strategic Workshops(twoyearprogram)

Rs135000 for yearone, Rs112500 for yeartwo. Includes1 hourpermonth one-on-onecoaching

Platinum Package Rs225000 foroneyearofStrategic Workshops, 1 hourper month ofone-on-onecoaching& membershiptotheOnDemand Coaching

Gold PackageRs180000 foroneyearofStrategic Workshops, 1 hourper month ofone-on-onecoaching

Silver Package Rs135000 foroneyearofStrategic Workshops

Second yearRs112500 per year for any clientcontinuingwith StrategicWorkshops(appliestoworkshoponly)

One-on-oneCoachingRs5625/hr for any personalized coachingfornon-workshopclients.Rs4500/hr for workshopclients

OnDemand Coaching Rs11250 per month. minimum purchaseof 3 months

Special Projects Priced asneeded

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Sales Forecast

SteppingStones expects a slow start but a strong finish with referral marketing beginning to

replacehard marketingdollars. Thecorebusinesswill be theStrategic Workshops, which havea

second yeartied totheinitial purchase(twoyearprogram Rs135,000 for yearone, Rs112,500 for

year two). Based onthis, weshould beable toobtainand managea 25% increase insales. Sales

exceeding the 25% would place a tremendous burden on the acceptable delivery of

service. Consistenteffortsmadeby SteppingStonesbased onthemarketingplanwill driveenough

opportunitiestosupply both initial and ongoinggrowth. Atthisgrowth rate, SteppingStoneswill be

ina positiontohireonemoresalespersonbeginningyear four.

Potential obstaclestoachievingtheseresults:

1. Prospecting/marketing plan not followed2. Poor delivery of service3. Any health problems of owner

Sales Projections

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Management Summary

The initial management team depends on the founders themselves, with little back-up in the field

except for some of their experiences as part of start up and family owned busnesss. Their

network and the educational / work experiences from one of the most reputed institutions si going

to be the teams real strength.

Financial Plan

Our financial plan is based on conservative estimates and assumptions. We will need initial

investment to make the financials work, but the owner is prepared to contribute that funding.

We can minimize risk factors by:

1. Obtaining initial capitalization of the company to sustain operations through year one2. Maintaining low overhead through the use of shared office space and home-based office

through year one

3. Developing a strong customer base through aggressive marketing4. Creating strong community ties and involvement

Start-up Funding

The start-up costs are to be financed by the owners' personal funds.

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Projected Profit and Loss

The following table and chart shows the projected Profit and Loss for Stepping Stones. The

majority of our operating expenses are the owner's payroll, benefits and taxes. This includes a

standard PPO health plan, since the owner is sole provider of services; if he gets sick, sales stop.

The second largest category is Marketing and Promotion, necessary for establishing brand

recognition and generating new business, as a start-up.

The moving expenses in December and increased rent starting at the same time reflect the planned

move into an office space, and out of the owner's home.

Projection Charts

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In conclusion, we are confident of a growing enterprise which will not only grow but help the

entrepreneurs and small businesses of this country grow.