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Plan Outline

1.0 Executive Summary o Mission 2.0 Company Summary 3.0 Services 4.0 Market Analysis Summary 5.0 Strategy and Implementation Summary 6.0 Management Summary 7.0 Financial Plan Appendix

1. Executive Summary
Promerit Advertising will offer marketing services to companies that are looking to employ email marketing techniques as the cornerstone of their marketing program. It is estimated that in Year 1, over 250 billion emails will travel across cyberspace. Email marketing is quickly becoming a cost-effective method to reach a target audience. According to Jupiter Communication research, email ad-response rates currently averages between five to 15 percent. At the same time, the report noted that only 15 percent of Web users read all email messages in their entirety. The potential is there but so is the risk that the target customer will completely reject the advertising. Email marketing is a science. There are effective strategies that will assure that the company will reach the greatest number of potential customers. Promerit Advertising specializes in successful email marketing campaigns. Its owners, Shahbaz Temkar and Shaikh Abdul Kadar have over eight years of experience in email marketing campaigns between them. Shahbaz was project leader for the successful Buy.com and Verison email marketing campaign. Abdul was technical lead of 800.com's successful email campaign before joining Shahbaz as technical lead of the Verison email campaign. Promerit Advertising will design, build, test and deploy the email campaign. It will also report the progress of the campaign in real-time to provide our customers maximum flexibility. At the end of the campaign, Promerit will analyze its success in order to improve the company's future campaigns.

1.1 Mission Promerit Advertising will offer its customers the best methods and tools in planning and implementing a successful email campaign. Our campaigns will cut through the mumbo jumbo of mass marketing, increase sales, and enhance customer satisfaction with the company. Promerit Advertising email campaigns will grab readers immediately and drive home the right message to the right audience. We will exceed our customers' expectations for campaign returns.

Rs. 22,50,000 Rs. 20,25,000 Rs. 18,00,000 Rs. 15,75,000 Rs. 13,50,000 Rs. 11,25,000 Rs. 9,00,000 Rs. 6,75,000 Rs. 4,50,000 Rs. 2,25,000 0

2. Company Summary
Promerit Advertising will design, build, test and deploy the email campaign. It will also report the progress of the campaign in real-time to provide our customers maximum flexibility. At the end of the campaign, Promerit will analyze its success in order to improve the company's future campaigns. 2.1 Company Ownership Shahbaz Temkar and Shaikh Abdul Kadar are the owners of Promerit Advertising. 2.2 Start-up Summary Shahbaz Temkar and Shaikh Abdul Kadar will invest equally in the company. They will also secure a long-term business loan. The following table and chart show projected initial start-up costs of Promerit Advertising.

Rs. 72,00,000 Rs. 63,00,000 Rs. 54,00,000 Rs. 45,00,000 Rs. 36,00,000 Rs. 27,00,000 Rs. 18,00,000 Rs. 9,00,000 0

Start-up Funding Rs. Start-up Expenses to Fund Start-up Assets to Fund Total Funding Required 15,52,500 74,47,500 90,00,000

Assets Non-cash Assets from Start-up Cash Requirements from Start-up Additional Cash Raised Cash Balance on Starting Date Total Assets 4,50,000 69,97500 0 69,97,500 74,47,500

Liabilities and Capital

Liabilities Current Borrowing Long-term Liabilities Accounts Payable (Outstanding Bills) Other Current Liabilities (interest-free) Total Liabilities Capital 0 45,00,000 0 0 45,00,000

Planned Investment

Robert Humphrey Cheryl Littlejohn Other Additional Investment Requirement Total Planned Investment

22,50,000 22,50,000 0 0 45,00,000

Loss at Start-up (Start-up Expenses) Total Capital

(15,52,500) 29,47,500

Total Capital and Liabilities

74,47,500

Total Funding

90,00,000

Start-up Rs. Requirements Start-up Expenses Legal Stationery etc. Brochures Advertising Expensed Computer Equipment/Software Insurance Rent Research and Development Other Total Start-up Expenses Start-up Assets Cash Required Other Current Assets Long-term Assets Total Assets Total Requirements 69,97,500 4,50,000 0 74,47,500 90,00,000 45,000 45,000 45,000 9,00,000 4,50,000 0 6,75,000 0 0 15,52,500

3. Services
The services offered by Promerit Advertising cover an email marketing project in its entirety, from original concept to post-campaign evaluation. The service includes the following:

Design the campaign Personalization and targeting Email list management Building deployment system Testing the plan Implementing the campaign Tracking the campaign's progress in real-time Instant measurability for ROI analysis Post-campaign analysis

4. Market Analysis Summary


It was recently reported in an eMarketeer online advertising report that online promotions are very powerful with offline companies, as well as online companies. Though offline companies are offering promotions that necessitate the customer going to one of the company's stores, consumers feel positive about the online promotions. This opens up a new avenue for these companies to target customer groups that use computers at work and at home. Consumers said they cared mostly about return policies, customer service, and product selection. A very impressive 94 percent of surveyed users reported they have shopped online before. About 76 percent of those surveyed said promotions were a positive influence on their buying behavior. Some 50 percent said online coupons were especially persuasive while 70 percent found offline coupons equally attractive. An email campaign can be used to reach target customers no matter how small a company's Internet presence is, as long as the customer wants the product. 4.1 Market Segmentation There are two distinct customer groups that Promerit Advertising is focused on:

Online companies with e-commerce Offline companies

Market Analysis Year 1 Potential Customers Online Companies Offline Companies Other Total Growth 30% 0% 0% 630,900 Year 2 Year 3 Year 4 Year 5 CAGR 820,170 1,066,221 1,386,087 1,801,913 30.00% 0.00% 0.00%

1,500,700 1,500,700 1,500,700 1,500,700 1,500,700 0 0 0 0 0

11.57% 2,131,600 2,320,870 2,566,921 2,886,787 3,302,613 11.57%

4.2 Service Business Analysis By any measure, the Internet is one of the fastest-growing commercial phenomena ever witnessed by society. Host computers, or servers, have exploded from 3.2 million in 1994 to roughly 79.2 million as of July 2001. During the same time period, the number of websites roared to more than 6 million from only 3,000. A key factor in the recent growth of the Internet is the popularity of the sub- 45,000 PC. Rapidly falling component prices have allowed PC manufacturers to pass cost savings on to their customers, resulting in a more attractively priced product. Computers sold at or below the 45,000 level have appealed to first-time PC users and lower income families. Because of the more affordable prices, PC penetration in the India is now approximately 25%, according to Dataquest, a market research firm based in San Jose, California. When consumers today are asked why they purchased a personal computer, the most common answer is to connect to the Internet to get their email.

5. Strategy and Implementation Summary

Promerit Advertising's strategy is to utilize the extensive network of contacts both Robert and Cheryl have with companies already sold on the value of email marketing. In addition, Promerit will use its internal expertise to launch an email marketing campaign directed at a select group of its target customers.
5.1 Marketing Strategy

With over two million potential customers, Promerit Advertising will focus an email campaign on a select group of 50,000 businesses each fiscal quarter. We estimate a five percent response rate to the campaign which will generate 1,250 leads. These leads will then be used to generate business contacts. Over the year, we will generate 5,000 leads.
5.2 Sales Strategy

Promerit Advertising's sales strategy is simple. We will use the email marketing campaign directed at our customer base as a model of what we can accomplish for them. We anticipate that online companies will be most accessible to our services. We will be successful with offline companies overtime, but initially sales will be weak with this group.
5.2.1 Sales Forecast

The following is the sales forecast for three years. We have no cost of sales, as all of our deliverables are electronic, and our labor costs are included in the Personnel table.

Rs. 14,40,000 Rs. 12,60,000 Rs. 10,80,000 Rs. 9,00,000 Rs. 7,20,000 Rs. 5,40,000 Rs. 3,60,000 Rs. 1,80,000 0

Rs. 2,25,00,000

Rs. 1,80,00,000

Rs. 1,35,00,000

Rs. 90,00,000

Rs. 45,00,000

Sales Forecast Year 1 Sales Online Companies Offline Companies Total Sales 80,47,350 21,15,000 1,01,62,350 1,21,50,000 45,00,000 1,66,50,000 1,62,00,000 76,50,000 2,83,50,000 Year 2 Year 3

Direct Cost of Sales Online Companies Offline Companies Subtotal Direct Cost of Sales

Year 1 0 0 0

Year 2 0 0 0

Year 3 0 0 0

5.3 Competitive Edge Shahbaz Temkar has five years of experience in email marketing campaigns and ten years of experience in direct marketing. He is a post graduate of Mumbai University with marketing as specialisation. Shaikh Abdul Kadar worked with several advertising companies before arriving at Faiz and Khan Advertising in 2004. With Faiz and Khan, Shahbaz created and grew the Internet marketing group. Shahbaz was project leader for the successful Buy.com and Verison email marketing campaign. Shaikh Abdul graduated with a B.E. in Electonics from Pune University in 2003. He immediately went to work for the Internet start-up Temple Communication as an IT administrator. He left in 2004 to join the start-up 800.com as the technical lead of its email campaign. In 2006, he joined Richard's Internet group at Faiz and Khan as technical lead of the Verison email marketing campaign. Email marketing is an emerging marketing tool with few industry experts. Shahbaz & Abduls accomplishments over the past three years has been singled out by the industry as models for successful email marketing campaigns.

6. Management Summary
Shahbaz Temkar will be responsible for tactical elements of the marketing campaign and Shaikh Abdul Kadar will manage the technical aspects of the campaign. 6.1 Personnel Plan In addition to Shahbaz and Abdul, there will be three other staff members:

Secretary/Receptionist ---- Tabassum Nagothanekar Accountant ---- Talhah Patel Salesperson ---- Faizan Tughlaq

Personnel Plan (in Rs.) Year 1 Robert Humphrey Cheryl Littlejohn Secretary/Receptionist Salesperson Bookkeeper Other Total People 14,40,000 14,40,000 9,00,000 17,10,000 9,00,000 0 5 Year 2 18,00,000 18,00,000 11,25,000 22,50,000 11,70,000 0 5 Year 3 20,25,000 20,25,000 12,60,000 24,75,000 13,05,000 0 0

Total Payroll

63,90,000

81,45,000

90,90,000

7. Financial Plan
The financial plan is presented in the following topics. 7.1 Break-even Analysis The monthly sales break-even point is is shown in the table and chart below.

Rs.5,40,000 Rs.3,60,000 Rs.1,80,000 0 Rs.(1,80,000) Rs.(3,60,000) Rs.(5,40,000) Rs.(7,20,000) 0 Rs.13,50,000 Rs.2,70,000 Rs.5,40,000 Rs.8,10,000 Rs.10,80,000 Rs.12,15,000 Rs.14,85,000 Rs.1,35,000 Rs.4,05,000 Rs.6,75,000 Rs.9,45,000

Break-even Analysis Rs. Monthly Revenue Break-even Assumptions: Average Percent Variable Cost Estimated Monthly Fixed Cost 0% 8,68,860 8,68,860

7.2 Projected Profit and Loss The following table and charts outline the projected profit and loss for three years. We estimate that the agency will not be profitable until the second year of operation. Promerit Advertising will then grow by about 9% for the second and third year.

Rs.4,50,000 Rs.3,60,000 Rs.2,70,000 Rs.1,80,000 Rs.90,000 0 Rs.(90,000) Rs.(1,80,000) Rs.(2,70,000) Rs.(3,60,000)

Rs.72,00,000 Rs.63,00,000 Rs.54,00,000 Rs.45,00,000 Rs.36,00,000 Rs.27,00,000 Rs.18,00,000 Rs.9,00,000 0

Rs.14,85,000 Rs.13,50,000 Rs.12,15,000 Rs.10,80,000 Rs.9,45,000 Rs.8,10,000 Rs.6,75,000 Rs.5,40,000 Rs.4,05,000 Rs.2,70,000 Rs.1,35,000 0

Rs.22,50,000

Rs.18,00,000

Rs.13,50,000

Rs.9,00,000

Rs.4,50,000

Pro Forma Profit and Loss Year 1 Sales Direct Cost of Sales Other Production Expenses Total Cost of Sales 1,01,62,350 0 0 0 Year 2 1,66,50,000 0 0 0 Year 3 2,38,50,000 0 0 0

Gross Margin Gross Margin %

1,01,62,350 100.00%

1,66,50,000 100.00%

2,38,50,000 100.00%

Expenses Payroll 63,90,000 81,45,000 90,90,000

Sales and Marketing and Other Expenses Depreciation Leased Equipment Utilities Insurance Rent Payroll Taxes Other

21,60,000 0 0 1,08,000 0 8,10,000 9,58,500 0

27,00,000 0 0 1,08,000 0 8,10,000 12,21,750 0

36,00,000 0 0 1,08,000 0 8,10,000 13,63,500 0

Total Operating Expenses

1,04,26,500

1,29,84,750

1,49,71,500

Profit Before Interest and Taxes EBITDA Interest Expense Taxes Incurred

(2,64,150) (2,64,150) 4,01,220 0

36,65,250 36,65,250 3,14,955 10,05,075

88,78,500 88,78,500 2,24,955 25,96,050

Net Profit Net Profit/Sales

(6,65,370) -6.55%

23,45,175 14.09%

60,57,495 25.40%

7.3 Projected Cash Flow The following table and chart highlight the projected cash flow for three years.

Rs.81,00,000 Rs.72,00,000 Rs.63,00,000 Rs.54,00,000 Rs.45,00,000 Rs.36,00,000 Rs.27,00,000 Rs.18,00,000 Rs.9,00,000 0

Pro Forma Cash Flow Year 1 Cash Received Rs. Year 2 Rs. Year 3 Rs.

Cash from Operations Cash Sales Cash from Receivables Subtotal Cash from Operations 25,40,610 56,10,825 81,51,435 41,62,500 1,12,03,695 1,53,66,195 59,62,500 1,64,62,755 2,24,25,255

Additional Cash Received Sales Tax, VAT, HST/GST Received New Current Borrowing New Other Liabilities (interest-free) New Long-term Liabilities Sales of Other Current Assets Sales of Long-term Assets New Investment Received Subtotal Cash Received 0 0 0 0 0 0 0 81,51,435 0 0 0 0 0 0 0 1,53,66,195 0 0 0 0 0 0 0 2,24,25,255

Expenditures

Year 1

Year 2

Year 3

Expenditures from Operations Cash Spending Bill Payments Subtotal Spent on Operations 63,90,000 40,69,440 1,04,59,440 81,45,000 60,21,810 1,41,66,810 90,90,000 84,93,525 1,75,83,525

Additional Cash Spent Sales Tax, VAT, HST/GST Paid Out Principal Repayment of Current Borrowing Other Liabilities Principal Repayment Long-term Liabilities Principal Repayment Purchase Other Current Assets Purchase Long-term Assets Dividends Subtotal Cash Spent 0 0 0 9,00,180 0 0 0 1,13,59,620 0 0 0 9,00,180 0 0 0 1,50,66,990 0 0 0 9,00,180 0 0 0 1,84,83,705

Net Cash Flow Cash Balance 7.4 Projected Balance Sheet

(32,08,230) 37,89,270

2,99,205 40,88,520

39,41,550 80,30,070

The table shows projected balance sheet for three years. Pro Forma Balance Sheet

Year 1 Rs. Assets Current Assets Cash Accounts Receivable Other Current Assets Total Current Assets Long-term Assets Long-term Assets Accumulated Depreciation Total Long-term Assets Total Assets Liabilities and Capital Current Liabilities Accounts Payable Current Borrowing Other Current Liabilities Subtotal Current Liabilities Long-term Liabilities Total Liabilities Paid-in Capital 3,68,280 0 0 3,68,280 35,99,820 39,68,100 45,00,000 0 0 0 62,50,230 37,89,270 20,10,960 4,50,000 62,50,230

Year 2 Rs.

Year 3 Rs.

40,88,520 32,94,720 4,50,000 78,33,240

80,30,070 47,19,465 4,50,000 1,31,99,535

0 0 0 78,33,240

0 0 0 1,31,99,535

5,06,295 0 0 5,06,295 26,99,640 32,05,935 45,00,000

7,15,275 0 0 7,15,275 17,99,460 25,14,735 45,00,000

Retained Earnings Earnings Total Capital Total Liabilities and Capital Net Worth

(15,52,500) (22,17,870) (6,65,370) 22,82,130 62,50,230 22,82,130 23,45,175 46,27,305 78,33,240 46,27,305

1,27,305 60,57,495 1,06,84,800 1,31,99,535 1,06,84,800

7.5 Business Ratios Business ratios for the years of this plan are shown below. Industry profile ratios based on the Standard Industrial Classification (SIC) code 7311, Advertising Agencies, are shown for comparison.

Ratio Analysis Year 1 Sales Growth Percent of Total Assets Accounts Receivable Other Current Assets Total Current Assets Long-term Assets Total Assets 32.17% 7.20% 100.00% 0.00% 100.00% 42.06% 5.74% 100.00% 0.00% 100.00% 35.75% 3.41% 100.00% 0.00% 100.00% 36.20% 42.20% 80.80% 19.20% 100.00% 0.00% Year 2 63.84% Year 3 43.24% Industry Profile 8.50%

Current Liabilities Long-term Liabilities Total Liabilities Net Worth

5.89% 57.60% 63.49% 36.51%

6.46% 34.46% 40.93% 59.07%

5.42% 13.63% 19.05% 80.95%

42.90% 13.00% 55.90% 44.10%

Percent of Sales Sales Gross Margin Selling, General & Administrative Expenses Advertising Expenses Profit Before Interest and Taxes 100.00% 100.00% 106.55% 21.25% -2.60% 100.00% 100.00% 85.91% 16.22% 22.01% 100.00% 100.00% 74.60% 15.09% 37.23% 100.00% 0.00% 81.60% 3.50% 2.50%

Main Ratios Current Quick Total Debt to Total Assets Pre-tax Return on Net Worth Pre-tax Return on Assets 16.97 16.97 63.49% -29.16% -10.65% 15.47 15.47 40.93% 72.40% 42.77% 18.45 18.45 19.05% 80.99% 65.56% 1.67 1.39 55.90% 5.70% 12.80%

Additional Ratios Net Profit Margin Return on Equity

Year 1 -6.55% -29.16%

Year 2 14.09% 50.68%

Year 3 25.40% 56.69% n.a n.a

Activity Ratios Accounts Receivable Turnover Collection Days Accounts Payable Turnover Payment Days Total Asset Turnover 3.79 56 12.05 27 1.63 3.79 78 12.17 26 2.13 3.79 82 12.17 26 1.81 n.a n.a n.a n.a n.a

Debt Ratios Debt to Net Worth Current Liab. to Liab. 1.74 0.09 0.69 0.16 0.24 0.28 n.a n.a

Liquidity Ratios Net Working Capital Interest Coverage Additional Ratios Assets to Sales Current Debt/Total Assets Acid Test Sales/Net Worth Dividend Payout 0.62 6% 11.51 4.45 0.00 0.47 6% 8.96 3.60 0.00 0.55 5% 11.86 2.23 0.00 n.a n.a n.a n.a n.a 58,81,950 -0.66 73,26,945 11.64 1,24,84,260 39.47 n.a n.a