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Ting Yin, Mobile Learning Recommendation Application, Year 2016, March 14

Business Plan for Mobile Learning Recommendation Application

[Generated by Educational Mobile Software and Technology Consulting Firm (EMST)]

by Ting Yin

Information Technology and Data Analytics

MASY1-GC1240, by Professor George Pefanis

March 16, 2016

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Executive Summary

Introduction

Educational Mobile Software and Technology Consulting Firm (EMST) is a small K-12

education technology consulting firm focused on creating a more cost-effective teaching and

learning environment for the American K-12 school systems through the use of technology.

EMST services extend from the recommendation of mobile teaching or learning applications for

K-12 systems to the continual after-purchase support of those applications. EMST has developed

a standalone mobile application that can recommend suitable mobile applications both to

individual learners and school systems. The current paper will discuss the business plan for the

mobile learning recommendation application.

The Company

Educational Mobile Software and Technology Consulting Firm (EMST) is committed to

being aware of the educational market and the potential future direction of the education

industries. EMST’s key to success is its relationships with the K-12 educational systems in the

United States.

EMST is a startup, a small company comprised of five executives and sixty employees.

The company leaders and managers encompass all functional areas. The company leaders and

managers have more than 10 years of experience in the software development industry. Adam

Becker and Benjamin Carson own 65% of the company. Other investors own relatively smaller

stakes or shares of the company. Most of the company funding is raised through legitimate

borrowing and sales. EMST is not going to public trading at this point in time.

Product

Educational Mobile Software and Technology Consulting Firm (EMST) can do research

on a school’s needs and its Recommendation Application can suggest a family of K-12

educational software mobile applications. These families of suitable mobile education

applications have been discovered through collaboration with major educational technology

companies with whom EMST has established strategic business collaborations.

EMST provides ongoing consulting support for the mobile learning application even after

the transaction is completed. The services are provided as part of each mobile software

application package purchase.

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The Market

The competitive marketplace includes a relatively small number of competitors within

the educational consulting segment. Educational Mobile Software and Technology Consulting

Firm (EMST) not only can recommend the right set of software mobile application products, it

also can help the schools to install the appropriate applications. EMST cooperates with software

companies offering mobile educational software to the K-12 educational school systems.

The K-12 school systems haven’t been active in looking for technical consulting firms

when searching for educational services to improve the current educational processes. EMST has

utilized a more educating type of marketing strategies in the educational marketplace. The K-12

school communities need to be supported by EMST or like firms, who provide the opportunity to

utilize educational mobile applications to enhance the K-12 educator and student learning

processes.

Since relatively fewer number of educational software counseling firms is competing

with EMST in this market, it needs to achieve a market share of 15% at the end of three years. In

addition to the advising part of the consulting service, EMST provides software applications

installation and customization afterward. EMST has developed relationship with a large number

of educational institutions in the United States. EMST has made a significant resource

investment to understand the specific needs of the current educational processes in the K-12

school systems.

Financial Considerations

Educational Mobile Software and Technology Consulting Firm (EMST) is expected to raise a

modest amount of capital and it is able to borrow a comparable amount in a 10-year loan. EMST

can deliver generous sales in the first year.

Mission

EMST Recommendation Application aims to provide mobile learning application to K-12

students within the United States market. EMST will continue to search, design, develop, and

provide technological solutions to support the K-12 school systems.

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Keys to Success

Educational Mobile Software and Technology Consulting Firm (EMST)

EMST’s keys to success include:

1. EMST has successful relationships with a large number of educational institutes.

2. EMST is committed to study the current education institute and future potential direction

of the educational processes.

3. EMST is committed to remaining up-to-date with the current technological situation in

the K-12 school systems and interested in the future direction of educational progress.

Company Summary

Adam Becker is the chief financial officer for this and other software development

companies. He has many years of experience in business planning and financial in software

development industries. Benjamin Carson has many years of experience in marketing,

advertising, and public relations. Adam Becker and Benjamin Carson are the two major

shareholders of the company. They own 65% of the company.

Company Ownership

Educational Mobile Software and Technology Consulting Firm (EMST) has been

licensed to operate in the state of New York. The two founders incorporated it, and other

shareholders own a relatively small percentage of the total shares. EMST doesn’t plan to go

public at this point. Most of the company resources come from sales. EMST is a small company

that will be registered by the end of 2016.

Service Description

EMST describes, develops, and maintains a mobile application that can recommend a

suite of mobile learning applications for all types of students in K-12. The EMST Mobile

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Learning Recommendation Application is developed in collaboration with United States

Department of Education. These are developed in collaboration with the school systems.

Market Analysis Summary

EMST targets more of their efforts to the K-12 schools in the United States market.

1. The schools that need the support from EMST business partners.

2. The schools that have been using EMST Mobile Learning Recommendation Application.

MARKET ANALYSIS

YEAR 1 YEAR 2 YEAR 3 CAGR

POTENTIAL CUSTOMERS

Growth

Urban K-12 Schools 0.05 2125 2231 2342 5.00%

Rural K-12 Schools 0.05 1275 1338 1406 5.00%

Total 5.01% 3400 3569 3748 5.00%

Market Segmentations

Urban Schools

A higher percentage of the United States K-12 students are located in the urban school

systems, which have more classes that require greater educational technological support.

Rural Schools

A smaller percentage of the students reside in the rural parts of the country. The rural

school systems contain a lower number of classes and fewer types of classes. The need for

educational technological support is relatively less than in the urban school systems.

Target Market Segment Strategy

The target market creates the highest level of possible opportunity in terms of revenue

gained. The consulting firm may need to provide consulting service to support the installation

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and customization of the mobile applications in terms of technical efficiencies. The consulting

firm is more likely to happen in this market. The consulting firm has been established with a

large number of educational institutions across the school districts in the United States. The

consulting firm has made significant investment to understand the specific needs and modest

improvement to the current educational systems. The consulting firm collaborates closely with

the school administrators in efforts to optimize the educational learning process, and to develop

stronger relationships among school partners.

Target Market Segment Strategy

The urban educational market is currently among the market sectors that can generate a

higher potential level of revenue. In the urban educational market, an enterprise level of software

application installation, customization, and ongoing support is more feasible in terms of technical

efficiencies. Higher return on investment is more likely to take place in the urban education

marketplaces.

Market Needs

Educational Mobile Software and Technology Consulting Firm (EMST) believes that the

educational process is in need of improvement. The K-12 students prefer to have on-the-go

mobile learning applications so that they can learn whenever and wherever they can. These

mobile applications should be used under the support of teachers, school administrators, and the

consulting firms. The EMST mobile learning recommendation application can definitely help the

learners to select which suite of mobile learning software is suitable for his/her academic needs.

Service Business Analysis

Major competition comes from book publishers. The Educational Mobile Software and

Technology Consulting Firm (EMSTC) Recommendation learning mobile application is to

inform students of which mobile learning application is more suitable for his/her academic

needs. The recommendation of mobile applications can help teachers to become more efficient

and or even be effective in helping the students to reach their academic goals.

Competition and Buying Patterns

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Relatively fewer companies are competing directly with ABC in this educational

technology market. ABC wants to gain 5% of the market by the end of three years. ABC can

potentially gain due to research and development efforts and partnership with the educational

communities.

The school systems have not been effective and efficient in searching out technical

enhancements. The school systems need to “educate” themselves on the opportunities of using

which mobile learning application is suitable for them in order to enhance the learning processes

for K-12 students.

EMST Mobile Learning Recommendation Mobile Application is not in competition with

other educational applications. The Mobile Learning Recommendation Application helps to

promote all types of mobile learning applications to the K-12 learners.

Strategy and Implementation Summary

EMST Mobile Learning Recommendation Mobile Application offers K-12 schools

educational technological tools to assisting educators in making the learning process for the

students more cost-effective and efficient.

Competitive Edge

EMST Mobile Learning Recommendation Mobile Application is news, and it is one of the early

adopters in the educational technology markets.

Sales Strategy

The table and charts indicate the level of sales that EMST may deliver first to third year

of sales plan.

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YEAR 1 YEAR 2 YEAR 3

UNIT SALES 0 0 0

Software Systems 84 96.6 110.95

Installation & Customization

84 96.6 110.95

Other Consulting 42 48.3 55.65

Total Unit Sales 210 241.5 277.9

SALES FORECAST


UNIT SALES 0 0 0

Software Systems 84 96.6 110.95

Installation & Customization 84 96.6 110.95

Other Consulting 42 48.3 55.65

Total Unit Sales 210 241.5 277.9

UNIT PRICES Year 1 Year 2 Year 3

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Software Systems $8,750.00 $8,750.00 $8,750.00

Installation & Customization $5,250.00 $5,250.00 $5,250.00

Other Consulting $1,750.00 $1,750.00 $1,750.00

SALES 0 0 0

Software Systems $2,100,000 $2,415,000 $2,777,250

Installation & Customization $1,260,000 $1,449,000 $1,666,350

Other Consulting $210,000 $241,500 $277,725

Total Sales $3,570,000 $4,105,500 $4,721,325

DIRECT UNIT COSTS Year 1 Year 2 Year 3

Software Systems $700.00 $700.00 $700.00

Installation & Customization $3,500.00 $3,500.00 $3,500.00

Other Consulting $700.00 $700.00 $700.00

DIRECT COST OF SALES 0 0 0

Software Systems $168,000 $193,200 $222,180

Installation & Customization $840,000 $966,000 $1,110,900

Other Consulting $84,000 $96,600 $111,090

Subtotal Direct Cost of Sales $1,092,000 $1,255,800 $144,417

Management Summary

Adam Becker is the chief financial officer for other software development companies. He has many years of experience in business planning and financial in software development industries. Benjamin Carson has many year of experience in marketing, advertising, public and relationship.

Personnel Plan

EMST Mobile Learning Recommendation Mobile Application will currently focus on product development and marketing of the Mobile Learning Recommendation Application. This is the areas where over 65% of the resource investments and training will invest into. The table below, shows the company's personnel plan for the 3 years.

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Financial Plan

EMST (Mobile Learning and Educational Technology) will raise it funding and capital through

acquirement of a SBA 5-year loan.

Project Profit and Loss

The project Profit and Loss is presented in the following table. The 3 yearly totals are shown below.

YEAR 1 YEAR 2 YEAR 3$0

$500,000

$1,000,000

$1,500,000

$2,000,000

$2,500,000

$3,000,000

$3,500,000

Gross Margin Yearly

Gross Margin

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PRO FORMA PROFIT AND LOSSYEAR 1 YEAR 2 YEAR 3

SALES $3,570,000 $4,105,500 $4,721,325Direct Cost of Sales $1,092,000 $1,255,800 $1,444,170Other $0 $0 $0Total Cost of Sales $1,092,000 $1,255,800 $1,444,170Gross Margin $2,478,000 $2,849,700 $3,277,155Gross Margin % $0 $0 $0EXPENSES $0 $0 $0Payroll $1,144,500 $1,201,725 $1,261,811Sales and Marketing and Other Expenses $33,600 $52,500 $92,750Depreciation $8,400 $9,660 $11,109Utilities $420 $525 $595Payroll Taxes $171,675 $180,259 $189,272Other $0 $0 $0TOTAL OPERATING EXPENSES $1,358,595 $1,444,669 $1,555,537Profit Before Interest and Taxes $1,119,405 $1,405,031 $1,721,618EBITDA $1,127,805 $1,414,691 $1,732,727Interest Expense $6,545 $5,740 $4,900Taxes Incurred $282,850 $349,823 $436,332NET PROFIT $830,010 $1,049,468 $1,280,385Net Profit/Sales 8% 9% 9%

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Project Cash Flow

PRO FORMA CASH FLOW


CASH RECEIVED

Cash from Operations

Cash Sales $1,213,800 $1,395,870 $1,605,251

Cash from Receivables $1,970,045 $2,651,707 $3,049,463

Subtotal Cash from Operations

$3,183,845 $4,047,577 $4,654,713

Additional Cash Received 0 0 0

Sales Tax, VAT, HST/GST Received

$0 $0 $0

New Current Borrowing $0 $0 $0

New Other Liabilities (interest-free)

$0 $0 $0

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New Long-term Liabilities $0 $0 $0

Sales of Other Current Assets

$0 $0 $0

Sales of Long-term Assets $0 $0 $0

New Investment Received $66,500 $0 $0

Subtotal Cash Received $3,250,345 $4,047,577 $4,654,713

EXPENDITURES Year 1 Year 2 Year 3

Expenditures from Operations

0 0 0

Cash Spending $1,144,500 $1,201,725 $1,261,811

Bill Payments $1,459,988 $1,820,484 $2,141,441

Subtotal Spent on Operations

$2,604,488 $3,022,209 $3,403,252

Additional Cash Spent 0 0 0

Sales Tax, VAT, HST/GST Paid Out

$0 $0 $0

Principal Repayment of Current Borrowing

$4,200 $4,200 $4,200

Other Liabilities Principal Repayment

$0 $0 $0

Long-term Liabilities Principal Repayment

$4,200 $4,200 $4,200

Purchase Other Current Assets

$0 $0 $0

Purchase Long-term Assets $47,250 $78,750 $103,250

Dividends $0 $0 $0

Subtotal Cash Spent $2,660,138 $3,109,359 $3,514,902

NET CASH FLOW $590,207 $938,218 $1,139,811

Cash Balance $653,207 $1,591,425 $2,731,236

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Projected Balance Sheet

PRO FORMA BALANCE SHEET

YEAR 1 Year 2 YEAR 3

ASSETS

Current Assets

Cash $653,207 $1,591,425 $2,731,236

Accounts Receivable $386,155 $444,078 $510,690

Other Current Assets $26,250 $26,250 $26,250

Total Current Assets $1,065,612 $2,061,753 $3,268,176

Long-term Assets 0 0 0

Long-term Assets $82,250 $161,000 $264,250

Accumulated Depreciation $8,400 $18,060 $29,169

Total Long-term Assets $73,850 $142,940 $235,081

Total Assets $1,139,462 $2,204,693 $3,503,257

LIABILITIES AND CAPITAL

Year 1 Year 2 Year 3

Current Liabilities 0 0 0

Accounts Payable $127,452 $151,615 $178,193

Current Borrowing $13,300 $9,100 $4,900

Other Current Liabilities $0 $0 $0

Subtotal Current Liabilities $140,752 $160,715 $183,093

Long-term Liabilities $48,300 $44,100 $39,900

Total Liabilities $189,052 $204,815 $222,993

Paid-in Capital $128,800 $128,800 $128,800

Retained Earnings ($8,400) $821,610 $1,871,078

Earnings $830,010 $1,049,468 $1,280,385

Total Capital $950,410 $1,999,878 $3,280,264

Total Liabilities and Capital

$1,139,462 $2,204,693 $3,503,257

Net Worth $950,410 $1,999,878 $3,280,264

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Business Ratios

Year 1 YEAR 2 Year 3 INDUSTRY PROFILE

Sales Growth 0.00% 5% 5.25% 3.40%

PERCENT OF TOTAL ASSETS

0.00% 0% 0.00% 0.00%

Accounts Receivable 11.86% 7% 5.10% 7.53%

Other Current Assets 0.81% 0% 0.26% 16.00%

Total Current Assets 32.73% 33% 32.65% 24.57%

Long-term Assets 2.27% 2% 2.35% 10.43%

Total Assets 35.00% 35% 35.00% 35.00%

Current Liabilities 4.32% 3% 1.83% 14.84%

Long-term Liabilities 1.48% 1% 0.40% 6.72%

Total Liabilities 5.81% 3% 2.23% 21.56%

Net Worth 29.19% 32% 32.77% 13.44%

PERCENT OF SALES 0.00% 0% 0.00% 0.00%

Sales 35.00% 35% 35.00% 35.00%

Gross Margin 24.29% 24% 24.29% 35.00%

Selling, General & Administrative Expenses

16.11% 15% 14.76% 27.79%

Advertising Expenses 0.21% 0% 0.52% 0.46%

Profit Before Interest and Taxes

10.98% 12% 12.76% 0.77%

MAIN RATIOS 0.00% 0% 0.00% 0.00%

Current 264.95% 4.49 6.25 52.85%

Quick 264.95% 4.49 6.25 40.60%

Total Debt to Total Assets

5.81% 3% 2.23% 21.56%

Pre-tax Return on Net Worth

40.98% 24% 18.32% 1.23%

Pre-tax Return on Assets

34.18% 22% 17.15% 3.22%

ADDITIONAL RATIOS

Year 1 Year 2 Year 3 0.00%

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Net Profit Margin 8.14% 9% 9.49% n.a

Return on Equity 30.57% 18% 13.66% n.a

ACTIVITY RATIOS 0.00% 0% 0.00%

Accounts Receivable Turnover

2.14 2.14 2.14 n.a

Collection Days 19.95 19.60 19.60 n.a

Accounts Payable Turnover

4.36 4.26 4.26 n.a

Payment Days 9.45 9.80 9.80 n.a

Total Asset Turnover 1.10 0.65 0.47 n.a

DEBT RATIOS 0.00 0.00 0.00

Debt to Net Worth 0.07 0.04 0.02 n.a

Current Liab. to Liab. 0.26 0.27 0.29 n.a

LIQUIDITY RATIOS 0.00% 0% 0.00%

Net Working Capital $924,859.60

$1,901,038.30

$3,085,082.70 n.a

Interest Coverage 59.86 85.67 122.97 n.a

ADDITIONAL RATIOS

0.00% 0.00 0.00

Assets to Sales 0.11 0.19 0.26 n.a

Current Debt/Total Assets

4.20% 2.45% 1.75% n.a

Acid Test 1.69 3.52 5.271 n.a

Sales/Net Worth 1.316 0.72 0.50 n.a

Dividend Payout 0.00% 0.00 0.00% n.a

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