1.0 Executive Summary
The purpose of this business plan is to showcase the continued development and launch of a unique application suite that provides information regarding the current time and date. Deutsch & Thomas LLC (“the Company”) has fully developed its DayRR application (for both iOS and Android devices). The Founder, Matthew Deutsch, is currently seeking $1,550,000 in order to establish the initial revenue generating operations of the business.
The Technology
Many people struggle to know the current day and time. Although people have wristwatches, this type of functionality has not yet been integrated into smartphones. The DayRR application solves this problem by providing the current time, date, and a basic calendar for users. This type of application will find a large audience domestically and internationally.
The business will charge a flat fee of $8.99 per month in order to access all functionality offered. This one-tier approach will facilitate rapid onboarding. The business will also generate secondary income from placement of advertisements.
Chapter three of this document will further discuss the operations of the business.
Funding
Management is seeking $1,550,000, via Series A funding, in order to establish the initial operations of DayRR. The terms of this investment will be determined at a later time. The Company will primarily allocate the funding towards the following:
• Office development
• Launch of the DayRR application and marketing
• General working capital
• Initial payroll
As the business expands its MRR, the Company can easily secure ongoing rounds of capital in order to expand the operations of the business. Additional series of capital may be secured on an as needed basis.
Expansion Plan
Deutsch & Thomas will continually expand the marketing capital that is allocated towards increasing the visibility of the DayRR application suite. The business will also add other types of date and time features in order to maintain an ongoing user basis. The Company may also integrate new types of functionality that improve a person’s understanding of time zones.
Revenue Projections
2.0 The Financing
2.1 Use of Funds
Management is seeking $1,550,000 to establish its SaaS operations. The funds are to be allocated as follows:
2.2 Use of Funds Timeline
2.3 Management Equity
This will be determined during the capital raising process.
2.3 Exit Strategy
Given the highly recurring streams of revenue generated from the use of the DayRR application, the business could receive a sales premium of eight to twelve times earnings. The demand for the types of functionalities offered within the DayRR suite remains strong in any economic climate. Should Management find it financially prudent to do so, a qualified business brokerage firm would be hired to manage the sale of the business to a third party. This event is not expected to occur within the first five years of operation.
As it relates to working with a business brokerage or M&A focused investment bank, the Company anticipates it will incur an expense equal to 10% of the total transaction. A retainer may be required to complete a valuation as well as the development of sales materials specific to the sale of the business.
2.4 Proforma Valuation and Rate of Return
3.0 Operations
The DayRR application suite will provide its users with comprehensive information regarding the current date and time. This is a function that is needed by all adults. Surprisingly, there is no current application for iOS and Android devices that currently operate in this capacity.
In regard to pricing, the Company will charge $8.99 per month for usage of the suite. To keep the operations of the business straightforward – there will only be one tier of service. This will provide complete access to all functions of the DayRR application suite. By operating in this capacity, it will ultimately lead to a faster adoption rate among users. To drive downloads of the application, the first 14 days of service will be provided for free.
The Company’s secondary revenue center will come from the sale of advertising as well as data sales among individuals that have opted-in to data collection. Advertisements on the DayRR platform will not obstruct the user experience. Among individuals that have opted in for specific types of data collection, the Company will work with data brokers that will acquire this information en-masse. At all times, the Company will comply with all regulations that guide the sale of user information.
4.0 Overview of the Organization
4.1 Registered Name
Deutsch & Thomas LLC. The business is registered as a limited liability company in the State of New York. The Company will conduct business under the DayRR brand name.
4.2 Commencement of Operations
The business will commence revenue generating operations in the fourth quarter of this year.
4.3 Mission Statement
DayRR’s mission is to provide users with the ability to instantaneously know the current time and date through its affordable application suite for iOS and Android devices.
4.4 Vision Statement
The Company will generate $89 million of revenue by the fifth year of operation.
4.5 Organizational Objectives
• Properly launch the application suite within all marketplaces once the capital sought in this document has been secured.
• Use multiple online channels including social media to increase brand name awareness.
• Maintain a low-cost operating infrastructure so that the DayRR application can reach profitability within the first six months of operation.
• Provide proper financial incentives for employees that further the mission of the business.
• Implement state-of-the-art analytics and KPIs to ensure that the DayRR application is meeting its enrollment targets.
• Maintain a corporate culture of innovation as it relates to integrating new functionality into the suite.
• Remain within the letter of the law regarding the marketing the application.
• Ensure that all user data is properly protected through state-of-the-art security measures.
• Implement marketing strategies that properly brand the DayRR application suite as the preeminent time and date platform in the market.
5.0 Strategic and Market Analysis
5.1 External Environment Analysis
This section of the analysis will give an overview of the general economic climate, the industry, the user profile, and the ongoing competition that the business will face moving forward.
At this time, the economic outlook is positive. Despite issues with inflation, unemployment rates have remained at historical lows. Asset prices continue to increase, and as interest rates continue to decline – the overall economy is expected to grow as capital becomes less expensive. The issues pertaining to the COVID-19 pandemic have been resolved.
The DayRR application suite will enjoy substantial economic stability given that all people need a continued knowledge of the current time and date. The cost of becoming a user is relatively low as compared to the income of the target market. As this business is operating in a SaaS capacity, once profitable – the economic risks for this business will be further abated.
5.2 Industry Analysis
The software-as-a-service (SaaS) industry has undergone rapid growth and transformation over the past ten years. The principal reason why many technology driven enterprises have adopted this business model is that it produces recurring streams of revenue. This not only contributes to the ongoing economic stability of these enterprises, but it also substantially boosts their valuation. For small to medium sized ecommerce businesses, typically the sales premium is two to four times the previous year’s earnings in regards to their valuation. For a SaaS driven enterprises, these valuations are typically five to eight times earnings. As of this year, the software industry is poised to generate $1.3 trillion. This figure includes application suites that employ this type of business model. The compounded annual growth rate of the industry is expected to remain at 11.5% over the next five years.
5.3 User Profile
The Company will implement the following demographic profile in conjunction with marketing operations:
• Household income ranging from $50,000 to $125,000
• Uses an iOS or Android device
• Is seeking an easy-to-use application that allows them to know the current date and time.
• Will spend $8.99 per month for usage of the DayRR application suite
Within the United States, the following TAM, SAM, and SOM metrics are noted regarding market size:
Below is a breakdown of the age demographics that are expected to use the DayRR application:
5.4 Competition
At this time, the ongoing competition that the Company will face is modest. There are only a handful of businesses that operate in a similar but not identical to that of the DayRR platform. The business will maintain an extensive differentiating factor given the affordability and unique design to the user interface. This will create an easy-to-use experience for both iOS and Android users, which will further ensure that users continue to subscribe on a monthly basis.
In order to retain its competitive advantage, the Company will continue to add new features and functions into the application suite. This will allow DayRR to remain at the forefront of this type of technology. Most importantly, the Company will engage in a multi-pronged marketing strategy that will brand the application as the preeminent date and time application on the market. The business will engage aggressive marketing strategies throughout the life of the business.
The ongoing competition that the business will face include the following companies:
6.0 Key Strategic Issues
6.1 Sustainable Operations Overview
The Company will be able to maintain successful business operations because of the following:
• Very limited competition among application suites that specifically provide the current date and time.
• A Management Team (led by Matthew Deutsch) that has created the MVP of the DayRR application, and they will be able to quickly bring the operations of the business to profitability.
• Recurring income will provide an immense valuation for the Company while concurrently providing stable income.
• Low operating costs will continue to ensure that the application remains affordable to its users.
• The Company’s revenues are immune from negative economic climates as people will continually need time management applications.
6.2 Basis for Growth
The Company will grow through four primary avenues:
• Continued increases in the amount of capital allocated towards marketing (with a substantial focus on social media).
• Development of new functionality that will enhance the application users’ experience, which will ultimately lead to higher retention rates.
• Hire social media influencers that will promote usage of the DayRR application suite.
• Continue to work with financial partners to source additional funding as the Company expands.
7.0 Marketing Plan
7.1 Marketing Objectives
• Use multiple social media platforms to promote the DayRR application.
• Implement an affiliate marketing campaign that will provide financial incentives to webmasters to drive enrollment.
• Leverage video platforms to showcase the application.
7.2 Revenue Forecasts
7.3 Revenue Assumptions
Year 1
• Deutsch & Thomas will launch the DayRR application suite in the third quarter of this year.
• First year revenues will reach $4.9 million.
• By the end of Year 1, the Company will have 120,000 users.
Year 2
• Revenues will increase by 260% as more people become DayRR users and as existing users renew their subscriptions.
• Aggregate income will reach $17.9 million.
Years 3 to 5
• During these years, the Company will make substantial reinvestment into the Company’s marketing campaigns.
• The application will have 1.3 million users by Year 5.
• Revenue will reach $89 million by the fifth year of operation.
7.4 Customer Acquisition Cost and Lifetime Value
7.5 Marketing Strategies
The Company will use multiple forms of advertising in order to drive interest and adoption of the DayRR application. Foremost, the Company intends to use multiple social media platforms to create brand name awareness. The business will use targeted advertisements on these platforms among people that fall into the demographic profile discussed earlier in this document. The business will retain a social media advertisement placement firm at the onset of operations to manage this facet of operations.
As it relates to app store marketing, the Company will use keyword optimization to ensure that when relevant searches are completed – the application will appear quite frequently. The Company will work with its retained graphic designer in order to ensure that there are high quality icons and screenshots for the DayRR app.
The Company’s website will showcase the DayRR application suite, and it will provide direct links to application stores so that users can install the app on their mobile devices and tablets. The application will have review functionality embedded so that users can leave positive reviews once they experience the broad range of date and time modules.
The business will have a number of videos created that showcase the application, its uses, and how to become a subscribing user. Management will place these videos on YouTube while also uploading them to all social media pages. In time, the Company will use targeted advertisements on YouTube to further drive downloads.
Given the immense demand among people to know the time and date, it is fully expected that users will like and share the Company’s social media address on their respective pages. This viral method of marketing will further facilitate the adoption of the technology.
7.6 Traffic Breakdown
8.0 Organizational Plan
8.1 Corporate Organization
8.2 Organizational Budget
9.0 Financial Plan
9.1 Underlying Assumptions
The financial projections showcased in this document have the following underlying assumptions:
• The business will have a capitalization of $1,550,000.
• Deutsch & Thomas, through the DayRR application suite, will have a compounded annual growth rate of 106% during the first five years of operation.
• Management will allocate 45% of its after-tax cash flow toward the expansion of this business.
9.2 Financial Highlights
• Profitability and a positive cash flow will occur in the sixth month of operation.
• The business, once profitability is achieved, will be valued at ten times its income.
9.3 Sensitivity Analysis
DayRR’s operations will remain profitable in any economic climate given that all adults need to know the current date and time. The cost of becoming an application user is relatively low as compared to the incomes of the target market. Additionally, the Company is expected to have year-on-year retention rates which exceed 80%. The recurring income streams generated from application usage will expand on a monthly basis. This will further contribute to the ongoing stability of the business.
9.4 Source of Funds
9.5 Financial Proformas
A) Profit and Loss Statement
B) Common Size Income Statement
C) Cash Flow Analysis
D) Balance Sheet
E) Expanded Sensitivity Analysis
9.6 Breakeven Analysis
9.7 Business Ratios
Appendix A – SWOT Analysis
Strengths
• There is an immense demand among all people within the United States to know the current date and time.
• The DayRR application suite has easy to use functionality and will find an immense audience.
• Low operating costs will allow the business to achieve profitability quickly.
• No similar application suite currently exists in the market.
• A highly experienced Founder/CEO (Matthew Deutsch) that has ten years of professional software development and entrepreneurial experience.
• The revenues of DayRR are not swayed by negative economic climates.
Weaknesses
• Competitors could replicate the business model shown in this document.
• Moderately low barriers to entry.
Opportunities
• Development of new functions that can be integrated into the DayRR suite.
• Continued expansion of the Company’s marketing campaigns with a focus on social media marketing.
• Potential acquisition of applications that can be acquired by Deutsch & Thomas to increase revenues through non-organic means.
Threats
• Changes in the way that major application stores operate could impact revenues (limited risk).
Appendix B – Risk Analysis
Development Risk – Low
The technology suite showcased in this document has reached its MVP phase. The Company is fully ready to launch its revenue generating operations once the capital sought in this document has been acquired. The secondary development risk will come as the business rolls out its expansive marketing campaigns.
Financing Risk – Low/Moderate
The Company is seeking $1,550,000. These funds will be principally used for marketing purposes and for ongoing expansion of the Company’s technology stack. The risks related to this investment are ameliorated by the fact that the business will generate subscription fees through the DayRR application suite. This will allow the business to quickly reach profitability while ensuring a significant valuation.
Marketing Risk – Low/Moderate
Management will use multiple forms of online advertising to create substantial interest among the targeted user base within the United States. The Company will focus heavily on using high-impact social media marketing strategies, which will cost effectively allow the business to develop its subscriber base.
Management Risk – Low
The Company’s Founder (Matthew Deutsch) has years of experience in the software industry in both development and managerial capacities. The Founder will be able to properly establish the operations of DayRR.
Valuation Risk – Low
The valuation risk for this venture is offset by:
• Low operating costs will allow the business to achieve profitability within the sixth month of operation.
• Immense demand among individuals to know the time and date, which will be seamlessly provided through the DayRR application suite.
• As all people need to know the current time and date, the revenues of the Company are not swayed by challenging economic climates.
Exit Risk – Low
SaaS driven application suites carry substantial valuations given the recurring nature of subscription fees. As discussed earlier, the Company will hire a qualified business broker or technology focused M&A firm to market the DayRR suite to a potential buyer.