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Homeschool Catalyst Business Plan

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I wrote this business plan as part of the "It's Your Time" Entrepreneur Training Program offered by the Inland Empire Women's Business Center and sponsored by Citibank.

Out of 70 participants and 21 submitted business plans, this one was chosen by a panel of judges as the first place winner, and I received a prize package of over $2500 in consulting services.

I eventually determined that the idea behind Homeschool Catalyst no longer resonated for me, and I moved on to a different start-up idea.

Writing this was a great learning process, and I put it up here to share with other aspiring entrepreneurs who need inspiration and examples of an award winning business plan.

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Homeschool Catalyst Business Plan

  1. 1. HomeschoolCatalyst BusinessPlan January2012 Homeschool Catalyst 7230 Cedarwood Place Highland, CA 92346 Email: info@homeschoolcatalyst.com Website: www.homeschoolcatlayst.com Telephone: 909-907-1772 CONFIDENTIAL This document is confidential and may not be revealed, reproduced or disclosed in any way without prior written consent from Homeschool Catalyst.
  2. 2. Table of Contents Executive Summary………………………………………………………….......... 3 Business Description…………………………………………………………...…... 4 Overview……………………………………………………………………… Mission……………………………………………………………………….. Goals and Objectives…………………………………………………………. 4 4 5 Industry Analysis………………………………………………………………....... 6 Overview…………………….………………………………...……………… Opportunities ……………………………………………...………….……… Threats…………………………………………….…………….……….…… Summary……………………………………………………………………… 6 7 8 8 Marketing Strategy…………………………………………………………............ 9 Overview…………………….………………………………...……………… Target Market…………………..…………………………………………….. Products Offered……………………………………………………………… Promotional Tools………………………………………………………….… Budget Details………………………………………………...……………… Key Competitors……………………………………………………………… Summary……………………………………………………………………… 9 9 10 12 13 14 16 Organization Plan……………………………………………………………...…... 17 Owners’ Background…………………………………………………………. Key Mentors..…………………………………………………………….…... Outside Resources...………………………...………………………………... 17 18 18 Financial Projections…………………………………………………………..…... 19 Key Assumptions……………………………………………………………... Financial Projections………...(See Excel Spreadsheet HSC Financial Projections.xls) 19 Appendix A……………………………………………………………………..…... 20 Survey Results………………………………………………………………... 20 - 2 -
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  4. 4. Executive Summary Homeschool Catalyst (HSC) is a home-based family-run company currently in start-up phase and is the brain-child of Jamil and Jonell Alvi. Homeschool Catalyst is a premium online subscription service that provides tools to home educators for automating the organization of homeschool activities and resources. It’s a digital day-planner, automated lesson organizer, record keeper, and resource database customized specifically for homeschoolers. HSC will give homeschooling parents the confidence to succeed in the difficult and time- consuming task of educating their children outside of the traditional school system. Consider that for each student, a homeschool parent must schedule a minimum of six subjects across a 36-week year, record attendance and grades for each subject, and track field trips, co-ops, sports practice, music lessons, park days and more. Add the fact that over 60% of homeschool families have three or more children, and the magnitude of the organization required becomes apparent. HSC will guide its subscribers through the planning and scheduling process, and use the benefits of computing to automate lesson scheduling, record keeping, and resource tracking, saving homeschoolers time and helping to ensure organizational and educational success. HSC will create brand recognition for its target market—homeschooling mothers—using Google AdWords and Facebook Ads, as well as print ads in popular homeschooling magazines. By creating a pervasive online presence through its website, blog, Facebook page, and Twitter account, HSC will foster open communication with customers, maintain a responsive customer support system, and use customer feedback to drive future product development. Jamil Alvi is an application architect and project manager at Esri, where he has worked for more than twenty years. His experience in areas as diverse as technical support, software development, user interface design, and IT, will provide a solid foundation for the technical side of HSC. Jonell Alvi has more than five years experience as a software technical support analyst and technical writer, and over seven years of homeschooling experience. She previously owned and ran a successful MLM business, and is currently enrolled in the IYT business program through the Inland Empire Women’s Business Center (IEWBC). The combined experiences of the owners create a powerful foundation for establishing and growing a profitable business that fills an important need in the homeschooling community. HSC will be self-financed by the owners who will inject $11,000 divided as follows: Legal and Accounting Fees ($1500), Ads and Promotions ($6000) and Working Capital ($3500). HSC is forecast to break even in the first six months following product launch (May 2012) and to generate $68,303 in revenue and $37,724 in profit by the end of the first year after launch (May, 2013). - 4 -
  5. 5. Business Description Overview Homeschool Catalyst (HSC) is a a home-based Micro-ISV1 that will be established in 2012 by the owners, Jonell and Jamil Alvi, as a Limited Liability Company (taxed as an S Corporation). HSC is located at 7230 Cedarwood Place, Highland, CA 92346. Product Homeschool Catalyst is an online software product currently being designed and developed by the owners using the Software as a Service (SaaS) business model.2 Customers will pay a monthly subscription to access the product online from any Internet-enabled platform (desktop, laptop, tablet, mobile phone). The product will provide several tools in a set of modules that homeschoolers can use to plan and schedule lessons, record grades and credit hours, and track activities and resources for multiple students across different grade levels and school years. The product is currently under development and is being shaped by feedback from homeschoolers, the owners’ personal experience, and research on existing offerings in the homeschooling market. While user needs and functional requirements have been determined and the basic groundwork of the product has been created, HSC is currently working on specific details of implementation and developing use cases.3 A more detailed description of product features is available in the Marketing Strategy section. Mission: HSC values openness and transparency with those who may use its work, driving development through customer feedback and nurturing relationships through responsive customer service. HSC exists to delight customers, create innovative products, and build a sustainable business. 1 An Independent Software Vendor with fewer than 10 software developers. en.wikipedia.org/wiki/Micro_ISV 2 A software delivery model in which software and its associated data are hosted centrally (typically in the (Internet) cloud) and are accessed through a web browser over the Internet. en.wikipedia.org/wiki/Software_as_a_service 3 A list of steps defining interactions between a role or actor and a system to achieve a goal. www.en.wikipedia.org/wiki/Use_case - 5 -
  6. 6. Goals and Objectives Goal #1: To launch Homeschool Catalyst successfully on May 15th, 2012 Objectives: 1. To build a beta group through HSC’s website, blog, and Facebook page. 2. To create a count-down campaign on Facebook, Twitter, & Google Adwords. 3. To have a beta version available for testing by February 29, 2012 4. To optimize the product by rapidly implementing user requests. Goal #2: Increase income to $7K / month to allow full-time work on the product. Objectives: 1. To continue promotions with Facebook Ads and Google Adwords. 2. To post regularly on the HSC blog (bi-monthly), Twitter (daily), and Facebook page (bi-weekly), driving traffic to the HSC product website. 3. To add features based on user feedback to incrementally improve the product. 4. To retain these customers with excellent customer service. 5. To have at least 400 consistent subscribers by the end of the first year. Goal #3: To expand on first year success and grow to $30K net income / month. Objectives: 1. To promote HSC as a vendor and speaker at homeschooling conferences. 2. To create relationships with homeschool curriculum vendors to create templates that will save even more time planning. 3. To become a vendor for charter schools. 4. To become the standard for reporting to school and state authorities. 5. To reach a global audience by expanding into homeschool-friendly countries. Goal #4: To develop HSC to be sold to or managed by a third party in 7 to 10 years. Objectives: 1. To create an online community where customers can support each other. 2. To create a document outlining how the systems in the business work 3. To keep accurate and complete financial documents. 4. To create systems and process flows that are easily understood. 5. To outsource customer support, marketing, feature updates, etc. as needed. - 6 -
  7. 7. Industry Analysis Overview Homeschool Catalyst is part of the Software-as-a-Service industry (an outgrowth of the Application Service Provider Industry, NAICS: 518210). SaaS is a recent development in the software industry, having been around for just over 10 years.4 In the SaaS business model, Web-based software is owned, hosted, delivered, and managed on the Internet in the cloud 5 by the provider (in this case, HSC), rather than by the subscriber, who pays a subscription fee to “rent” access to the application. According to Gartner, Inc.6 worldwide SaaS revenue reached $12.1 billion in 2011, a 20.7 percent increase from 2010 revenue of $10 billion.7 The US share of revenues in 2011 is $7.7-billion. International Data Corporation (IDC)8 claims the industry will jump from $13.1 billion in global revenues in 2009 to $40.5 billion by 2014, a compound annual growth rate of 25.3 percent.9 HSC belongs to a much smaller segment of the SaaS industry: companies offering homeschool planning software. The oldest companies in this industry were established less than ten years ago, so there are few statistics available. However, HSC has done extensive independent research to grasp the opportunities and threats it faces as it prepares to launch into this industry. Validating HSC’s Assumptions HSC turned to many sources to determine the viability of its proposed product, including industry data and research, census data, and primary research based on questionnaires. Below are some of the findings: Homeschoolers are pressed for time. HSC conducted a survey of homeschoolers and determined that of the respondents, only 3% use an all-in-one curriculum which covers all subjects and scheduling, while 97% use different curricula for each subject or create their own plans and schedules. (Table 1, Appendix A). The U.S. Census Bureau reports that 58% of homeschooling families have two parents in the workforce, and 60% have three or more children.10 Based on these findings, HSC assumes that a majority of homeschooling families create their own schedules and are pressed for time. 4 SaaS Coming of Age www.peer1.com/resources/questions/56/ 5 Cloud computing: www.en.wikipedia.org/wiki/Cloud_computing 6 Gartner, Inc. (NYSE: IT) is the world's leading IT research and advisory company. gartner.com/technology/about.jsp 7 gartner.com/it/page.jsp?id=1739214&M=6e0e6b7e-2439-4289-b697-863578323245 8 IDC is a global provider of market intelligence for the IT market. idc.com/about/about.jsp?t=1321997469278 9 www.flexerasoftware.com/solutions/challenge/growing-saas-revenues.htm 10 U.S. Census Bureau, Students Who Are Homeschooled by Selected Characteristics: 2007 www.census.gov/compendia/statab/2012/tables/12s0240.pdf - 7 -
  8. 8. Homeschool Catalyst will actually save homeschoolers time. HSC’s initial research found that for many homeschoolers, entering lesson data was a barrier to adopting a software system for planning because it took too much time. HSC will mitigate this concern with pre-loaded lesson lists and tables of contents from popular curricula. Customers can use these templates to create a rough schedule with little or no data entry required. When HSC asked homeschoolers if they would like the option to have Homeschool Catalyst suggest a schedule, 80% said such a feature would make planning easier and would save them time. (Table 2, Appendix A) Homeschoolers plan out their schedules at least a few weeks in advance. HSC’s survey revealed that more than 60% of respondents who are willing to use software plan several weeks to a year in advance: 41% reported that they plan the whole school year at a time; 20% reported they plan one term at a time; and 20% reported that they plan a month at a time. (Table 3, Appendix A) Opportunities The SaaS business model. There are few homeschool planning software programs that take full advantage of the SaaS business model (see the Key Competitors section). An existing company that wanted to switch from the software download model to SaaS would have to design, program, beta test, and launch a new product, making it easier for new entrants to the industry like HSC to compete with established companies. Access. HSC’s customers will be able to access their data from any Internet enabled device; desktop, laptop, tablet, or phone. They will be able to share educational experiences with loved ones who live far away, a parent who travels for business or is in the military. HSC will be able to communicate daily and weekly tasks (and reminders) to older students via their mobile devices. A downloaded program cannot offer these benefits. Unique product feature—modeling schedules. At present, it appears no existing homeschool planning application offers the ability to model a schedule. HSC will use the power of the computer to automatically assign dates to individual lessons, chapters, music classes, sports, and other activities according specific criteria chosen by the user. Start dates, vacations, and end dates can be entered and changed, allowing customers to experiment with different scheduling scenarios. HSC sees an opportunity to offer the homeschool market a unique productivity tool that isn’t currently available. See the Products Offered section for more information about the Scheduling Module. - 8 -
  9. 9. Threats Free SaaS planners. HSC’s research unveiled two free online homeschool planning websites that use the SaaS business model.11 Because they are free, they could pose a threat by attracting potential HSC customers. Both sites use an advertising business model to generate revenue, selling advertising spots on the pages of their websites. Free sites must commit resources to selling advertising to turn a profit, resources which could be used to improve the product or increase customer loyalty. HSC’s subscription model, in which revenue flows from monthly subscription dues, rather than from third-party advertisers, will allow HSC to focus on creating a positive customer experience. And while some customers will never pay for what they can get for free, others will pay to avoid advertising. New entrants to the industry. New competitors can enter the industry at any time. However, developing a SaaS application takes months of designing, developing, and testing before launch and before income is generated. Any competitor would need to rely on a second income or venture capital for financial support during this phase. HSC is relying on income from a day job during its development phase. Venture-backed startups require vast numbers of users to justify a good return on investment, and while the homeschool industry is expanding and becoming more main stream, it is likely too obscure for such large-scale investors. At the current time, the industry is large enough for a small start-up like HSC to create value, but not yet large enough to be the target of venture-funded startups. Security concerns. As SaaS applications become mainstream, consumers are becoming increasingly comfortable storing their data online (consider the popularity of Gmail and Flickr). HSC will provide security through data encryption and frequent backups to mitigate customer concerns. Information about data security will be provided on the sign-up page as well as security badges such as VeriSign and McAfee. Summary Based on extensive industry research and customer surveys, HSC believes there is opportunity in the homeschool planning application industry. Through careful planning, progress tracking, and results analysis, HSC has the capability to overcome potential threats, penetrate the market, obtain and maintain subscribers, and become profitable. 11 Homeschool Skedtrack www.homeschoolskedtrack.com and HomeSchool Inc. www.home-school-inc.com - 9 -
  10. 10. Marketing Strategy Overview Homeschool Catalyst (HSC) will concentrate on building brand recognition to attract new customers to the website, and will work to convert those visitors into subscribers by developing a strong image of openness and a shared journey. HSC recognizes the effect of the economy and competition on customer acquisition so will focus on differentiation, customer relations, brand recognition, and continuous product improvement based on customer feedback to attract and maintain subscribers. Target Market The general market for Homeschool Catalyst consists of parents who educate their school-aged children outside the traditional public school setting. The size of the homeschool market is estimated to be between 1.5 and 2.35 million students, and growing at a rate of 2% to 8 % per year. 12 According to census data, homeschool families are typically married (89%); more than half have a median income greater than 50K (60%); and just over half of homeschool parents have a Bachelor’s degree or higher (50.9%).13 The National Center for Education Statistics describes the “typical” homeschooling family “….with a stay-at-home mom, or mother-educator. It consists of a two-parent household with three or more children, in which the parents are highly educated and the father is the breadwinner.” 14 Based on this data, HSC’s target market is stay-at-home and work-at-home married mothers between the ages of 25 and 55 who are homeschooling their children and who have a degree or higher education and may have once worked in a professional field and would be familiar with digital productivity and organizing software. HSC is an online product, so potential reach is limited only by Internet availability. However, because the majority of homeschoolers reside in the US, initial online and print marketing efforts will concentrate on homeschoolers in the United States. After the initial start-up phase, HSC will consider focusing on broader markets in various countries with large populations of homeschoolers—namely Australia, Canada, New Zealand, and the United Kingdom.15 HSC plans to concentrate real-world marketing efforts in the Southern California area—this is where the company is based and the area has a relatively high concentration of homeschoolers. 12 www.census.gov/compendia/statab/cats/education.html 13 www.census.gov/compendia/statab/cats/education.html 14 Homeschooling in the United States: 1999 nces.ed.gov/pubsearch/pubsinfo.asp?pubid=2001033 15 en.wikipedia.org/wiki/Homeschooling_international_status_and_statistics#Homeschooling_status_tables - 10 -
  11. 11. Product Offered The software program Homeschool Catalyst will be offered online as a monthly subscription service. The Scheduling Module will be the heart of the program and homeschoolers will use it to automate their lesson scheduling. First they will enter the number and/or names of lessons or chapters from their curriculum; a start date; an end date; the number of lessons per week; holidays; and vacations. The module will then calculate the schedule, assigning each lesson to a date based on the criteria provided. For example, if a curriculum with 100 lessons is begun on September 1st , can it be completed by June 1st if lessons are held four days per week, allowing for traditional holidays and two weeks of vacation? To find out how the end date would be effected by three weeks of vacation is a simple matter of changing the vacation dates and running the module again to compare. Tables of contents and lesson lists from popular homeschool curricula will be available in the system, saving the customer time that would otherwise be spent on data entry. The Scheduling Module will also automatically schedule recurring activities such as classes, sports practices, field trips, tutoring sessions, co-op meetings and more. As the school year progresses, the Scheduling Module will automatically move lessons to a later date if a lesson is missed, or move subsequent lessons forward if a lesson is skipped. The Visualization Module will display the daily, weekly, biweekly, monthly, term, or yearly schedule, allowing colors to be assigned to different subjects and students, and will display the daily number of lessons to avoid over-scheduling. The Recording Module will track accomplishments by providing a place to record lessons completed, books read, grades or marks earned, credit hours completed, etc. Finally, the Resource Module will be a customer-created database for tracking resources such as books, texts, science equipment, craft supplies, school supplies, as well as digital resources such as e- books, audiobooks, podcasts, websites, videos, photographs, and software. Pricing Homeschool Catalyst will be offered as a subscription service at $27.97 per month. At present the market offers no high-end products focusing on customer service, functionality, development driven by customer feedback, and marketing to the educated professional homeschooler. HSC intends to fill this niche. HSC chose to use a value-based pricing strategy, as cost-based pricing is difficult in a SaaS business model and competitive pricing depends on many competitors offering similar products, which is not the case for HSC. Putting a value on time saved by homeschoolers using HSC is difficult, as it is difficult to monetize homeschoolers’ time. However, there are several non-competing homeschooling services (magazines, worksheets, online lessons) that charge a similar monthly fee; this is taken as evidence that homeschoolers are willing to purchase subscription style homeschool products and services in this price range. - 11 -
  12. 12. As more features are added to the product, HSC will consider moving to a tiered pricing system, offering more functionality at higher tiers, but with a basic tier for those to whom cost is prohibitive. HSC is also considering different payment time frames—monthly, quarterly, or yearly. Feedback from customers will drive any changes to the pricing. However, in the beginning, HSC plans to offer a single price. Benefits to the Customer Homeschooling parents who are tight for time will be able to use Homeschool Catalyst to schedule their homeschooling lessons, record their homeschooling activities, and organize their homeschooling resources. In a survey sent to potential customers, HSC found that 56% spend up to two hours per week planning, and 31% spend between two and six hours per week on planning. This amounts to 87% of respondents spending between 4 and 24 hours per month planning and scheduling their homeschool time. (Table 4, Appendix A). HSC reduces this planning time by automating the scheduling and re-scheduling of lessons; by visualizing progress through the curriculum to ensure the lessons are on track; by organizing all materials in a searchable database; and by providing a one-stop place to keep track of all records required, including attendance, credit hours, grades, field trips, books read, classes attended, etc. By providing a planning and organizing framework for the large endeavor that is homeschooling, HSC helps homeschooling parents feel confident and professional. By coming across as competent at this monumental task, customers are more likely to obtain support and respect from family and the community at large, which in turn leads to a more successful outcome for the student. If homeschooling “fails”, the best-case scenario is the student simply returns to school. In the worst case scenario, the student fails to obtain the education they deserve, and is unable to reach their potential as they grow older. Homeschooling involves a huge amount of organization, planning, scheduling, record-keeping, and time. Homeschool Catalyst will provide a one-stop place to plan, schedule, record, and keep track of homeschooling activities and resources, saving time otherwise lost by disorganization, lost books, etc. No parent wishes to give their child a sub-par education. Homeschool Catalyst will help to prevent a negative homeschooling outcome. - 12 -
  13. 13. Promotional Tools Online and Real World Marketing Channels HSC will be an online product, and will focus initial marketing on Facebook Ads and Google Ads. HSC will use social media marketing tools to help reach customers. HSC currently has a website (www.homeschoolcatalyst.com), Facebook page (www.facebook.com/HomeschoolCatalyst), blog (www.homeschoolcatalyst.com/blog), and Twitter account (www.twitter.com/HSCatalyst). Potential customers can sign-up for the Homeschool Catalyst e-newsletter via the website or Facebook page. HSC will also be promoted by the owners with comments on blogs, on Yahoo groups, and on homeschool forums, to create a visible, online, and approachable presence. HSC’s real world marketing presence will include a vendor presence at the California Homeschool Network (CHN) Family Expo in Ontario, CA July 19-22, 2012 and at the Homeschool Association of California 2012 conference in Sacramento on August 2nd – 5th . No information as to costs is available at this time. In addition to conferences, HSC plans to attend various weekly homeschool park days across Southern California, bringing laptop and promotional materials along to demonstrate the product. Print Media HSC will place print ads in two of the top homeschooling magazines: Practical Homeschooling Magazine http://www.home-school.com/advertising/phs/ , and The Old Schoolhouse http://thehomeschoolmagazine.com/. These ads will run in the late- summer and early fall issues to coincide with the start of the school year. Homeschool Catalyst Budget Overview - 13 -
  14. 14. Homeschool Catalyst Budget Details The advertising budget can be divided into two phases, pre-launch and post-launch. Launch date is May 15th , 2012, when Homeschool Catalyst will become available to the public. Pre-launch budget The owners have budgeted $6000 for pre-launch advertising. HSC is planning to release a beta version of the program for testing on February 29, 2012. Prior to February, HSC will use $2300 of the budget for logo creation, graphic design, branding consultation fees, and promotional materials such as business cards and brochures. Starting in February, HSC will begin advertising with Google Adwords, spending $300 per month ($10 per day) through the end of May. HSC will do the same with Facebook Ads, again spending $10 per day and $300 per month. This leaves approximately $500 for increased Facebook and Google Adwords marketing in May when HSC launches. HSC plans to advertise in two of the most popular homeschooling magazines: Practical Homeschooler, and The Old Schoolhouse Magazine. HSC has a budget of $700 to advertise in the issues leading up to the start of the 2012-2013 school year. Post launch Budget Homeschool Catalyst is scheduled to launch to the public on May 15, 2012. Once launched, HSC has a monthly budget of $400 for advertising, sales, and marketing, to be spent based on results of the pre-launch marketing campaigns. Some of these funds will be added to the $480 per year budgeted for attending conferences. HSC may decide to inject more cash come August and September to coincide with the beginning of the school year. This will be determined by the initial subscription rates during the first two months of business. Advertising Budget Breakdown Advertising Calendar and Budget Pre-Launch Post Launch Medium Jan Feb Mar Apr May Jun Jul Aug Sep Logo & Graphic Design $1000 Branding $1000 Promotional Materials $300 Google AdWords $300 $300 $300 $600 $200 $200 $200 $200 Facebook Ads $300 $300 $300 $600 $200 $200 $200 $200 Magazine Ads $600 Conferences $240 $240 Totals $2300 $600 $600 $600 $1100 $400 $640 $640 $400 - 14 -
  15. 15. Key Competitors HSC has identified three key competitors: Homeschool Tracker, Homeschool Skedtrack, and MyHomeschoolPlan. 1. Homeschool Tracker (parent company: TGHomeSoft)16 Homeschool Tracker is a downloadable software product that costs $49. Based out of Orlando Florida, Homeschool Tracker is one of the “oldest” homeschool planning offerings, having been founded in 2003, and is therefore the best known. Homeschool Tracker has current annual revenues of $340,000 with 20,000 customers worldwide.17 According to Compete.com, Homeschooltracker.com had 1342 unique visitors in the month of October, 2011. Strengths Visibility. Homeschool Tracker is probably the best known, with wide-ranging advertising and brand awareness both online and in the real world. Its greatest strength is in its relative longevity in the market. HSC will need to have an aggressive marketing strategy to gain visibility in the market. One-time fee. Some customers prefer to pay once for a software product that they can run locally on their computers. HSC’s subscription model won’t suit everyone, but if there is demand, HSC has the flexibility to offer a yearly fee in its pricing structure. Weaknesses Customer service and access. Homeschool Tracker offers no refunds for its product. It has no version for the Mac computer, nor a mobile version. HSC can be accessed from all internet enabled devices, including Macs and mobile phones. Outdated business model. Homeschool Tracker is sold as a software download, a business model that is being rapidly overtaken by SaaS. HSC offers a product built with newer technologies and modern interface design, providing customers with a more appealing alternative. As the SaaS business model becomes more prevalent in the homeschooling consumer market, its will slowly shift the market away from the more traditional software model. HSC’s newer technology and modern interface will provide customers a more appealing alternative. 16 www.homeschooltracker.com 17 www.anta.com/c/mr0dxxb/tghomesoft-llc - 15 -
  16. 16. 2. Homeschool Skedtrack (Parent company: iRT Web Solutions (sic))18 Unlike Homeschool Tracker, Homeschool Skedtrack is online and uses the SaaS business model. Based out of Frederick, MD, it was launched in 2007. Unlike HSC, it uses a revenue model based on donations and advertising; use of the product is free. As of January 11, 2011, they had 286 followers on Facebook. Strengths Access. Because Homeschool Skedtrack uses the SaaS business model, it will run on any internet enabled device. Price. Many homeschoolers who use Homeschool Skedtrack love that it is offered for free.19 Homeschool Catalyst will be offered at $27.97 per month and will focus on attracting a different market segment—those who prefer less advertising and better customer service. Weaknesses Market share. Homeschool Skedtrack is offered online at their website, www.homeschoolskedtrack.com. Because the product is accessed through that website, HSC assumes that the number of unique visitors per month to be an indication of the number of “customers” using the free product. According to compete.com, www.homeschoolskedtrack.com had 3657 unique visitors in October of 2011, with an average of 2325 unique visitors per month for the last calendar year.20 This is a relatively small market share. Customer service. Because they must rely on advertising, there is less incentive to offer quality customer service to those who use their site. Their focus and resources are diverted from customers to selling advertising. 3. MyHomeschoolPlan21 MyHomeschoolPlan is based in St. Paul Minneapolis, and is more similar to Homeschool Catalyst than the other two competitors listed. MyHomeSchoolPlan uses the SaaS business model, offering a paid subscription with three tier choices: $30 annually, $10 quarterly, or $4 monthly. They also offer a 30-day free trial. MyHomeschoolPlan was launched in July 2009 as a “soft launch”, meaning it was not widely publicized by the developers, who appear to view their product as a hobby. However, if they decide to focus on commercializing their product, they have the potential to become a major competitor. 18 www.homeschoolskedtrack.com 19 According to comments in forums and Yahoo groups. 20 www.siteanalytics.compete.com/homeschoolskedtrack.com/ 21 www.myhomeschoolplan.com - 16 -
  17. 17. Strengths Price. MyHomeschoolPlan is comparatively cheap. Many homeschoolers will be attracted by this low cost. HSC decided to price their product at a premium level to differentiate themselves from MyHomeschoolPlan, and to offer continual upgrades and better customer service. Experience. Judging by their websites and blogs, the developers of HomeschoolPlan appear to be well experienced in web technologies and social media marketing. They use UserVoice to communicate with users, and Techrigy (now called Alterian SM2) to track what customers are saying about their product across the Internet. HSC is currently researching these tools to determine how these might fit into HSC’s marketing strategy. Weaknesses Development.. MyHomeschoolPlan’s greatest weakness is that it isn’t being promoted in any way, and is more of a hobby created for use with the developer’s own children, by the owners admission.22 MyHomeschoolPlan is not being actively developed, though customers can pay the inexpensive monthly fee to access the tool. It appears there are no new features being offered or planned. Functionality. Because MyHomeschoolPlan is not being actively developed, the functionality will be limited. Despite these weaknesses, this competitor has the potential to be a major competitor and HSC will need to watch them closely. HSC will need to differentiate itself by offering a better interface design, functionality, and customer service, and to institute a strong advertising push to inform consumers of their choices. Marketing Summary To become the market leader in homeschool planning software, HSC will focus on building brand recognition with online advertisements and social media marketing. HSC will differentiate itself by using personal experience as homeschoolers to identify with potential customers and provide excellent customer service. HSC’s lead developer has more than 23 years of software and web development experience. HSC’s marketing lead has more than 7 years experience as a homeschooler in and with the homeschooling community. This potent combination means HSC is in a unique position to offer the homeschool market a product well-suited to their needs. However, strong communication with customers is required to obtain feedback that will drive HSC’s development. Between the owner’s experience and strong customer relations, HSC is in a position to provide a top-notch product and create a sustainable and profitable business. 22 www.blog.myhomeschoolplan.com/2009/06/myhomeschoolplan-update/ - 17 -
  18. 18. Organization Plan Jamil Alvi, Co-Founder Jamil Alvi is currently working as an Application Architect and Project Manager at Esri located in Redlands, CA. He has 23 years of experience in many areas of software development and management, including technical support, customer service, software design and engineering, user interface design, benchmarking, management, and IT. For the last two years he has been studying entrepreneurship in his off hours, reading books and blogs, watching videos, researching technologies, and learning all he can. Jamil Alvi will be responsible for overseeing all development and technical operations of the company, including writing code, developing and maintaining the website, researching new technologies, and implementing new features. Jonell Alvi, Co-Founder Jonell Alvi is currently enrolled in the “It’s Your Time” program offered by Citibank through the Inland Empire Women’s Business Association. She is receiving training in managing finances, customer relations, business plan writing, marketing, and general entrepreneurial topics. Jonell Alvi is currently homeschooling her two children. She has seven years of experience in homeschooling, and has been involved in running a successful homeschool co-op and an online homeschool group. Because she belongs to HSC’s target market, she has a direct and personal understanding of the needs of potential and actual customers, and legitimate means for developing strong communications with homeschoolers and potential customers. Her experience aids in establishing HSC’s credibility with the homeschool market. From 2007 - 2008, Jonell ran a Pampered Chef home-based business. Pampered Chef is a multi-level marketing company that helps Consultants sell kitchen products through in- home cooking shows. As a Pampered Chef Consultant, Jonell gained experience running her own business—cold calling, sales, customer relations, marketing, and time management. In 2008, Jonell attended the Pampered Chef National Conference in Chicago, where she learned even more about running a business. She quit Pampered Chef to start HSC. Jonell Alvi will be responsible for overseeing the accounting, sales and marketing, and customer service aspects of HSC. - 18 -
  19. 19. Key Mentors At this time, HSC is obtaining mentoring and guidance from experts through the Inland Empire Women’s Business Center. HSC has consulted with Kim Rohn, (Legal Issues), Barry Davis (Marketing, Ecommerce, SEO Optimization), Eydie Stumpf (Social Media Marketing) and Nicole Kinney (General Business and Entrepreneurship). HSC has continued to meet with Barry Davis and will likely continue to consult with him in future. HSC’s owners follow several blogs to find encouragement and knowledge in the areas of entrepreneurship, technical issues, industry news, and small business ownership. These include: Software by Rob (Lessons Learned by a Solo Entrepreneur – Rob Walling),23 Michelle Shaeffer (Social Media Marketing and Homeschooler),24 Unicorn Free (thoroughly non-magical advice for creating & selling your own products—Amy Hoy),25 Startup Lessons Learned (The Lean Startup – How Today’s Entrepreneurs Use Continuous Innovation to Create Radically Successful Businesses—Eric Reis).26 Outside Resources Accounting: HSC will outsource accounting needs to a CPA firm and is currently on the hunt for a CPA experienced with SaaS businesses. Attorney: HSC will use Jeremy Aber of Aber Law Firm, an attorney specializing in Software, SaaS, and IT Companies.27 Branding consulting: HSC will consult with Liz Goodgold for advice on branding. Logo Design: HSC is consulting with Wendy Sue Hunt. Strategic Partners: After launch, HSC is planning to partner with curriculum vendors to develop a database of pre-loaded tables of contents from popular curricula. Once established in the marketplace, HSC will apply to become a vendor for charter schools with homeschool programs, so that parents who homeschool through the charter school would have HSC available to use at no cost, while HSC will get paid by the charter school. 23 www.softwarebyrob.com 24 www.michelleshaeffer.com 25 www.unicornfree.com 26 www.startuplessonslearned.com 27 www.aberlawfirm.com - 19 -
  20. 20. Financial Projections The financial projections for Homeschool Catalyst are included in the Excel spreadsheet HSC – Financial Projections.xls. Total Project Cost: $11,000 Owner’s Contribution: $11,000 Amount Financed: 0 Key Assumptions: When researching the financial projections, HSC learned that the accounting for SaaS projects is quite different than that of traditional software products. “A traditional software vendor makes and sells perpetual license copies, whereas a SaaS business makes and sells ongoing service subscriptions. Each new SaaS customer brings a new thread of recurring revenue and cost which are woven into the larger tapestry of customers to create the total SaaS recurring revenue stream and associated SaaS cost of service. This fundamental shift in the unit of value from copies to customers turns the economics of licensed software upside down, and is still an elusive financial concept for the industry when evaluating SaaS costs, profitability, business valuation and capital efficiency.” 28 Bearing this in mind, HSC makes the following points and assumptions: Salaries and Wages (Sheet 2): Salaries: Once HSC breaks even, the owners will take a salary that is 10% of net income. The Salaries and Wages sheet does not reflect this due to the way it does calculations, so HSC assumed a $400 per month salary split between the owners as a starting point. Fixed Operating Expenses (Sheet 3) 1. Hosting Fees are fixed until HSC has more than 2000 customers, or more than 200 customers accessing the servers simultaneously (as per Amazon Web Services Cloud fees). 2. Legal and Professional Fees includes attorney and accounting costs. 3. Online payment processing is a variable cost accounted for on sheet 4 as part of the Variable Cost Per Unit. 28 SaaS Business Model: On the Cloud, The Customer is King chaotic-flow.com/saas-business-model-on-the-cloud- the-customer-is-king/ - 20 -
  21. 21. Projected Sales Forecast assumptions (Sheet 4): 1. The number of “sales” for each month represents a combination of new subscriptions and recurring subscriptions. For example, in the first month of business (May), HSC assumes four subscriptions will be sold, and these will all be new subscriptions. In June, the sheet indicates 8 subscriptions; however, four of these are new and the other four represent recurring income from the four subscriptions acquired in May. Thus the difference between the number of “sales” in one month and the number of sales in the previous month represents the new subscribers, and the remaining are recurring payments from existing subscribers. 2. The Variable Cost per Unit is assumed to be the Cost of Goods Sold (COGS) also called direct costs. HSC’s research shows average Gross Margin for SaaS businesses fall in the region of 95% - 97%.29 HSC assumed an average variable cost of 5%, based on a Gross Margin of 95%. 3. The Overhead Exp. Allocation was automatically set to 50% by the sheet. HSC used the following formula to calculate an appropriate percentage (17%):30 Overhead Expense Allocation = monthly direct costs / average monthly sales * 100 Overhead Expense Allocation = $985 / $5692 * 100 Overhead Expense Allocation = 17% Average Monthly Sales were determined by taking the total income from sales in the first year ($68,303) and dividing by 12 to get $5692 This percentage (17%) is used in cell E22 to calculate Overhead Expenses by multiplying .17 by the yearly total indirect costs plus the yearly total salaries. Note: this formula came with the spreadsheet. This works out to: $11,820 + $5909 * .17 = $3,014 4. HSC assumed an increased rate of subscriptions in July, August, and September as homeschoolers prepare for the upcoming school year, and a similar, smaller jump in April and May. 5. HSC does not show unsubscribes—the total number of subscription payments for each month is assumed to represent the net number of subscription payments. 6. HSC conservatively estimated 2000 subscribers by the end of our third year based on data from HSC’s closest competitor (MyHomeschoolPlan) which was able to obtain more than 330 customers in 6 months with no marketing, and Homeschool Tracker which has over 20,000 customers. See the competitors section of the Marketing Strategy section for more information. Appendix A: Survey Results 29 Gross Margin and SaaS www.startvi.com/2010/08/gross-margin-and-saas/ 30 How Do I Calculate Overhead Costs? www.smallbusiness.chron.com/calculate-overhead-costs-3481.html - 21 -
  22. 22. HSC used Wufoo to create several online questionnaires which were sent out to members of its e-newsletter group. Below are some of the responses. Table 1: Types of curricula preferred by homeschoolers. Table 2: Levels of automation preferred by homeschoolers. Table 3: Time frame preferences for homeschoolers planning their school year. - 22 -
  23. 23. Table 4: Amount of time homeschoolers spend planning their schedules. - 23 -

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