A superb business plan —
Wednesday, June 6, 2012
Kristin Allard, Owner/Project Manager
Mike Liu, Co-Owner/Web Developer
I. Table of Contents
I. Table of Contents 2
II. Executive Summary 3
III. General Company Description 4
IV. The Market 7
V. Marketing Plan 9
VII. Financial Plan 10
VIII. Timeline of Goals and Objectives 12
IX. Budget 14
II. Executive Summary
WordOfMouth.com is a new web-based company designed to promote word-of-mouth marketing in artistic communities through user-generated reviews. In its first year as an LLC, the startup recently finalized a timeline to determine the web-design, fundraising, and organizational planning, before launching in the Fall of 2013. With an initial budget of $50,000, WOM.com plans to provide services specifically to the Philadelphia area to gain interest before branching out to other major U.S. cities.
WordOfMouth.com will provide a forum for patrons and audience member who wish to review performances and events at local arts and culture organizations. Organizations will be able to create their own, unique profile that gives general visitor information, event details, and other special “breaking news.” WOM.com strives to promote the arts, culture, education, and heritage in local communities encouraging participants to voice their opinions about both positive and negative experiences. This will allow audiences to learn general information about multiple organizations, as well as read and post reviews about the latest plays, visual arts exhibits, or touring blockbuster exhibitions.
Once initial interest has been generated for the website, WOM.com will essentially be able to market itself. After organizations create their own profiles, they will encourage patrons who are attending their events and performances to join the website and rate their experience. The more ratings and reviews the organization’s events receive, the more popularity it will gain on the website. As organizations move higher up the rated scale, they will be promoting themselves through the website even more. The trick is getting the initial interest from the organizations.
A full marketing plan has been developed in order to reach a broad range of organizations, reviewers, and advertisers. Over the next few months, WordOfMouth.com’s owner plans to organize meetings with various clientele to communicate and promote the mission and makeup of the website.
Funding will be gathered from various sources including personal investments, bank loans, and government funding. In the first few months, grant applications will be sent to numerous entities promoting the pro bono service the company will be offering to local arts and culture organizations. A small portion of revenue will be acquired in advertising costs from local businesses and organizations, but the first year is devoted to launching the company than making a profit.
III. General Company Description
Over the last few years, society has developed a strong reliance on searching user-generated reviews before making consumer-related decisions. “Where to shop”, “what product to buy”, and “where to eat”—decisions once left up to the participant—are now determined by other reviewers’ opinions and experiences. This innovative form of audience participation can be an ideal way for artistic organizations to reach broader demographics and communicate with both new and returning patrons through online technology.
WordOfMouth.com was initially created in 2012 as a project in Drexel University’s Masters in Arts Administration program. The owner worked at a nonprofit ticketing agency and understood the impact of word-of-mouth marketing on ticket sales and general interest. With artistic organizations in the Philadelphia community finding it more and more difficult to meet revenue goals that correlated with ticket sales, the owner thought a review-based website (similar to that of Yelp and Epinions) could be a unique opportunity for local companies to spread the word about their talented and creative work. The owner brought the idea to a friend who had just quite their job as a Web Developer at the Travel Channel, and the two decided to form WordOfMouth.com.
Mission: WordOfMouth.com strives to promote arts, culture, education, and heritage participation in local communities offering a free, public forum that encourages patrons to voice their opinions about they’re experiences. Through staff, sponsors, and collaborating organizations, WordOfMouth.com hopes to advance word-of-mouth marketing and overall cultural participation through technology and the internet.
How it will work:
Any arts, culture, education, or heritage organization can create a free profile with such details as website, telephone number, address, photos and ticketing information. There will be another section of the site where the organization can tag specific performances or events going on throughout their season so patrons can not only review the company, but review the specific show or exhibit. Reviewers will be able to rate the organization or performance on a 1-10 rating scale. Once a show has passed, it will move into an archived section of reviews so as not to confuse interested participants.
Similar to programs like Yelp! and Epinions, users will be able to search for various companies to find general information and read patron’s consumer reviews. Different from these sites, which already have multiple arts organization profiles created, is that users can rate specific events, performances, and exhibits as well as their general experience with the company. The benefit to this difference, which sets WOM.com apart from the other review-based forums, is that if an organization gets a few bad reviews for one performance, it will not hinder the overall grading scale of the company’s profile. It will also enable all organizations to be on the same playing field because size, budget, and popularity will not matter, only the quality of the product. Participants who want to review will create a profile that will allow organizations to collect vital demographic information about their audiences, however this feature is not necessary for those who just want to view the website.
The site will also recommend various events to its users based on similar key words used in their event reviews. This will allow current participants to broaden their experience throughout their own artistic community by attending events they may not consider otherwise. WOM.com will be the ideal opportunity to allow artistic organizations to reach a broader demographic of audiences and communicate with them in an innovative and collaborative forum.
Another feature of the company that will encourage all types of arts patrons to participate in the review process is an incentive-driven program, similar to that of Opentable. The more reviews a user posts on WordOfMouth.com, the more “points” they will acquire, resulting in coupons and discounts for admission to participating arts events. Organizations will be informed of this in initial meetings with the Project Manager and will agree to or deny access to this program.
WordOfMouth.com will be initially managed by the two company owners, a Project Manager and Web Developer, in order develop the project and gain interest from community-wide organizations. While the website is being created, relationships with be developed with local organizations and business and advertisements will be collected to help finance the website. WOM.com will also apply for grants for financial sustainability while the company is still growing and getting on its feet. The staff size will expand on an as-needed basis. An application for all smart phones will also be developed for the one year anniversary of the website launch on September 1, 2014.
This will be an excellent opportunity for all participating organizations to market themselves, absolutely free of charge. WordOfMouth.com will ask these partners to encourage their audiences to share their experience after attending. The site will create such lists as “Best of Philly” and “Top 10 Museums” based on reviews and search results. Again, this brings up the point of all organizations being on the same playing field.
Wom.com will also allow organizations to collect valuable data about those searching for their organization and review their organization. Though the website will not disclose any personal or contact information about its users, it will allow people the option to take a brief survey regarding their arts participation within Philadelphia. Such questions may ask “How many times per year do you attend arts events in Philadelphia,” “What is your preferred genre of art,” “What form of marketing convinces you to go to performances most often?” etc. This information will allow organizations to learn more about their audiences and who they should work on marketing to outside of the website.
Some of these preexisting forums, such as Yelp, are already so widely used, that some may not want to change to a new site. Many people have already posted reviews about such organizations as the Walnut Street Theatre, Kimmel Center for the Performing Arts, and the Philadelphia Museum of Art on such sites as Yelp. The difference with WordOfMouth.com will be that users will be reviewing more than just the organization itself; it will focus on the performances, exhibitions, and artwork, and our designers will ensure flawless organization of this information on our website. The hope is that our users will be so interested in engaging and participating about the arts in the Philadelphia community that they will be inspired to contribute to our site and spread the word this way.
Another problem the company faces is the possibility of this forum being a bad marketing experience. Some organizations may fear that they will only receive negative criticism, giving them a bad reputation and setting them back. However, Yelp has already performed research on the topic and has seen very positive results. 38% of users give the organization a 5 star rating and 29% of people gave a 4 star rating. Only 19% of users gave a 2 star rating or lower. This is very reassuring data for our organizations who should not be afraid to utilize our services.
IV. The Market
There are three primary Target Markets for WordofMouth.com:
1. Businesses creating profiles on the website
Performing Arts Organizations
Schools that hold various events
2. Patrons participating in online review (posting and searching) process
Frequent ticket buyers
3. Businesses advertising space on the website
Organizations listed in #1
Restaurants and shops located in close proximity to artistic organizations
Investors in WordofMouth.com
Yelp recently claimed that their website hosted 71 million unique visitors in the first quarter of 2012. Users have also posted 27 million local reviews (http://www.yelp.com/about) That is an astounding number that proves review-based websites are of absolute use and need to the general public. Numerous research entities, including the Word of Mouth Marketing Association, have done research that shows rating and review sites do in fact influence consumer shopping choices.
Through a feasibility study, WOM.com concluded that the company’s biggest challenge will be to convince people to join a review-based site that only caters to artistic and education entities. As far as competitors go, the only potential adversary could be Goldstar.com. Goldstar is an online half-price ticketing agency that provides service to multiple arts and entertainment companies throughout the country. The website helps these companies reach broader audiences and organizes half-price sales for the run of a performance. The only similarity is that Goldstar has a review aspect connected to each performance that offers half-price tickets. Fortunately, WordOfMouth.com will be able to give many more services to their organizations and users and will be able to reach broader audiences as well, far beyond the half-price purchaser Goldstar reaches. Since the two websites are so radically different, a cost comparison is not necessary at this time.
As a startup company, Wom.com is fortunate to have the ability to change their process and tweak ideas as the website and product is implemented. If developers find that one aspect of the website is not going to fit into our objectives, or we could take an idea even further to provide better service, we will be able to do that immediately while the company is developed. Organizations and advertisers will appreciate this flexibility and will want to work with a company that can be tailored to a certain extent in order to fit their needs.
V. Marketing Plan
Since WordOfMouth.com was created by local arts administration students, this gives the company an edge when the time comes to begin contacting arts and culture organizations to seek interest in the website’s offerings. The company can prove they understand the struggles many organizations have faced since the economic crisis in 2008 and offer opportunities to relieve them of some of their marketing needs. WOM.com will also be able to give valuable research and statistics to each organization about reviewer demographics, frequency of attendance, and overall arts participation. This type of much desired customer information, as well as the complimentary service WOM.com provides will give organizations a reason to participate in the website.
As previously mentioned, WordOfMouth.com plans to launch the website in the Fall of 2013 so it can be launched alongside many arts and culture organizations’ 2013-2014 season. In the upcoming year, the company will slowly begin to build a relationship with the local community to develop the trust needed to create a prosperous business relationship. WOM.com plans to campaign around the city to get their voice heard. Marketing personnel will attend forums, conferences, and lectures related to the target businesses to hand out post cards and speak with administrators of the local organization. The Greater Philadelphia Cultural Alliance is a member-based service organization for many arts and culture organizations, and a relationship with this company will ensure a large market to work with.
With regards to our reviewers and website users, WOM.com hopes to utilize their relationship with the collaborating organizations in order to drive audience participation and usership. The company will provide marketing boards to be displayed before and after performances to encourage audience members to rate their show. Participants will be driven by incentives mentioned in section II of the budget proposal, and organizations will be inspired by the number of ratings and reviews they receive. A downside to this tactic is the possibility for organizations to discourage patrons from posting on the website if they have been receiving poor reviews for a show or event. WordOfMouth.com will set up advertisements with similar sites like Yelp!, Epinions, and Goldstar to help develop a broader usership outside of the organizations.
When meeting with all organizations interested in participating in the website, WOM.com will offer advertising discounts to encourage collaboration with the company. Organizations that create a profile on the website will receive a 15% (25% for nonprofits) discount for advertising space. The marketing team will also approach local businesses in the area to offer opportunities for partnership and advertising space on the website.
VI. Financial Plan
The following is a description of the first year’s projected budget for WordofMouth.com. This applies for September 1, 2012 through August 31, 2013.
The funding for WordofMouth.com’s budget comes mainly from four different sources: personal investment, government funding, personal line of credit, and bank loans. The owner of the business will dip into their savings to provide $7,500 towards the company in order to cover legal fees and take the necessary steps needed to file as an LLC. The owner also plans on opening a $10,000 credit line and taking out a $10,000 personal loan from a local bank to help cover additional costs in the first year of business.
The goal for Government Funding is $10,000. Though this amount is on the higher side, the free service this website should provide for numerous local organizations, many of which are not-for-profit, will be viewed as a strong entity worth investing in. The owner will submit all grant applications and necessary documentation.
Revenue only makes up a small portion of the funding for the first year of WOM.com’s budget. The company predicts that it will be difficult to get significant advertisement sales in the first year due to the fact that the website will not be launched until the Fall of 2013. The company will also supply significant discounts to those who invest in advertisement space up front since they are taking such a risk to be a part of the website. Relationship building is essential to the first year of the company and must come as a priority before revenue growth.
Ultimately, WOM.com will strive to have a net profit of $4,380 after the first year in case of unpredictable expenses or circumstances.
During the first year of business, WOM.com estimates many upfront expenses they will need to cover. Legal and Professional fees will be necessary when applying for an LLC, to ensure all permits, licenses, and applications are properly filled out and submitted. Since the company operates around a website in which users are allowed to post personal opinions, the company wants to guarantee that they will be fully covered in the event that an organization sues in regards to third party commentary. This will also be helpful when contracting employees and other free-lance employees.
Surprisingly the most expensive aspects of the business will be the marketing and operational expenses, and not those accrued from the website itself. Due to the cost of rent and equipment (such as computers) operational costs are as high as $24,000 for the first year of business (though technically all expenses will be depreciated over time).
The Web Designer will be contracted to deliver a design between $500-1,000. Subsequently, WOM.com will ask them to help you create graphic assets (stock photos/icons/background images/new photos/etc.) for relatively cheap as well. This enables the company to project a lower cost for the website design, and focus primarily on the Web Developer and Project Manager. Since the site will constantly change and need updates, the role of the Web Developer will be eventually be salaried, but will begin with a $5,000 flat rate, as well as stock in the company.
Additional revenue and extra income at the end of the year will go to the Project Manager/Owner.
VII. Timeline of Goals and Objectives
The following is a monthly schedule that WordOfMouth.com hopes to follow in order to accomplish the various goals and objectives set forth in the first year of business.
-Submit “Articles of Organization” document, obtain necessary licenses and permits in Philadelphia, meet with Legal team about business team: Project Manager/Owner
-Initial meeting to create website development timeline and process to hire web designer: Project Manager/Owner, Web Developer/Co-Owner
-Apply for personal loan and open line of credit: Project Manager/Owner
-Purchase Domain and server: Project Manager/Owner, Web Developer/Co-Owner
-Hire Web Designer and begin discussions about website design and development timeline: Project Manager/Owner, Web Developer/Co-Owner, Web Designer
-Begin attending events throughout the city to network and promote the website: Project Manager/Owner
-Begin Website Development: Web Developer/Co-Owner
-Submit applications for government funding: Project Manager/Owner
-Continue Website Development: Web Developer/Co-Owner
-Continue submitting applications for government funding: Project Manager/Owner
-Begin meeting about Web Design with respect to current status of website development: Web Developer/Co-Owner, Web Designer
-Finalize development of WordOfMouth.com website: Web Developer/Co-Owner
-Begin web design process: Web Designer
-Buy advertisement space with similar review based websites, ticketing agencies, arts and culture organization program books, local magazines and newspapers: Project Manager/Owner
-Continue website design: Web Designer
-Begin setting up meetings with marketing directors in organizations throughout the Philadelphia region: Project Manager/Owner
-Finalize work on WordOfMouth.com website: Web Designer, Web Developer/Co-Owner
-Continue meeting with arts organizations: Project Manager/Owner
-Begin meeting with local businesses about selling add space on the website: Project Manager/Owner
-Review web path of new website to try and catch any issues or bugs: Web Designer, Web Developer/Co-Owner
-Allow participating organizations to begin creating profiles for their upcoming seasons: Project Manager/Owner
-Start putting up advertisement space on the website: Web Developer/Co-Owner
-Continue to work out issues and bugs on the website: Web Designer, Web Developer/Co-Owner
-Prepare WordOfMouth.com to go live to the reviewing public: Web Designer, Web Developer/Co-Owner, Project Manager/Owner
-Work with organizations to ensure all profiles are ready to go live: Web Developer/Co-Owner, Project Manager/Owner
-Launch final marketing campaign to gain public awareness going into the Fall season: Project Manager/Owner