2020

NECK SYSTEMS INC.

user1
[Company name]
1/25/2020
 TABLE OF CONTENTS
1 Business Overview..............................................................................................................................3
1.1 Executive Summary.....................................................................................................................3
1.2 Vision and Mission Statement.....................................................................................................5
1.3 Business Plan Purpose.................................................................................................................5
1.4 Business Objectives.....................................................................................................................6
1.4.1 Non-Financial Objectives....................................................................................................6
1.4.2 Financial Objectives.............................................................................................................7
1.5 Our Corporate Social Responsibility in Action............................................................................8
1.6 Keys to Success of Neck Systems Inc..........................................................................................8
1.7 Our Core Values..........................................................................................................................9
1.8 Business Model Canvas.............................................................................................................11
2 Company Overview...........................................................................................................................12
2.1 Registered Name and Corporate Structure.................................................................................12
2.2 The Financing............................................................................................................................12
2.3 Investor Equity..........................................................................................................................12
2.4 Company Location and Resources.............................................................................................13
2.5 Demography Analysis of the United States...............................................................................14
2.6 Risks and Risks Mitigation Processes........................................................................................16
3 Products and Services Description.....................................................................................................18
4 Market Analysis.................................................................................................................................20
4.1 Industry Overview.....................................................................................................................20
4.2 ERP Systems Analysis...............................................................................................................22
4.3 ERP Software Market................................................................................................................24
4.3.1 Top Impacting Factors.......................................................................................................24
4.3.2 The surge in Adoption of Cloud & Mobile Applications...................................................24
4.3.3 Technological advancement in ERP...................................................................................25
4.4 Cloud Collaboration Market......................................................................................................26
4.4.1 Market Trend.....................................................................................................................26
4.4.2 Competitive Landscape......................................................................................................29
5 Porters’ Five Forces...........................................................................................................................30
5.1 The threat of New Entry............................................................................................................30
5.2 Competitive Rivalry...................................................................................................................30
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 5.3 Buyer Power..............................................................................................................................31
5.4 Supplier Power..........................................................................................................................31
5.5 Threat of Substitution................................................................................................................31
6 SWOT Analysis.................................................................................................................................32
6.1 Strength......................................................................................................................................32
6.2 Weakness...................................................................................................................................33
6.3 Opportunities.............................................................................................................................33
6.4 Threat.........................................................................................................................................33
7 Strategy and Implementation Summary.............................................................................................34
7.1 Execution Strategy.....................................................................................................................34
7.2 Operational Analysis..................................................................................................................35
7.3 Marketing Plan..........................................................................................................................36
7.4 Marketing & Communication Execution Recommendations.....................................................38
7.5 Social Media Strategy................................................................................................................39
8 Management Summary......................................................................................................................40
8.1 Management Profile...................................................................................................................41
8.2 External Professional Resources................................................................................................42
8.3 Contingency Plan.......................................................................................................................42
9 Financial Plan....................................................................................................................................43
9.1 Important Assumptions..............................................................................................................43
Table: General Assumptions.............................................................................................................43
9.2 Startup Analysis.........................................................................................................................43
9.3 Financial Overview....................................................................................................................44
9.4 Profit and Loss...........................................................................................................................45
9.5 Cash Flow Statement.................................................................................................................47
9.6 Balance Sheet............................................................................................................................49
9.7 Break Even Analysis..................................................................................................................51

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1 BUSINESS OVERVIEW

1.1 EXECUTIVE SUMMARY

The fundamental goal of a computer system is to execute user programs and to make tasks

easier. Various application programs along with hardware systems are used to perform these

tasks. Towards this goal, computer hardware is constructed, since bare hardware alone is not

particularly easy to use, application programs are developed. These programs require certain

common operations, such as those controlling input-output devices. The common functions of

controlling and allocating resources are then brought together into one piece of software: the

operating system. All proprietary software (e.g., PC operating system, ERP system, and Private

cloud solution) is costly, but the majority of companies are paying for it, as there is no feasible

alternative. Classic open-source products are very fragmented, not user-friendly, and taking

significant resources to manage and maintain them. These, among many other reasons, are why

we have come to establish our company,

Neck Systems Inc. is a startup company based in 1850 Lake Dr, Delray Beach, FL 33444, United

States. The company is actively involved in the provision of integrated, user-friendly, and

complete set of open-source instruments; all of which are deeply customized and adjusted,

improved, and completed with new modules and functions with similar or better functionality as

proprietary software rivals to the bigger brands like Microsoft, Dropbox, among other top

companies at a price that is 20%-40% lower.

Our open-source software is geared toward enabling our customers to increase productivity,

reduce costs, improve quality and enhance safety. We focus on the opportunities that are most

relevant to them. Then we achieve technological excellence by delivering results and financial

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benefits to our customers. We look at the installed base, the capabilities of the customer’s

technical team, the features and capabilities of the technology, and the intended use and lifespan

of the ERP solution. That is our approach to delivering the right automation solution, and over

time our customers have shown it is one they endorse.

We adapt to the continuously changing market environment, we are fast, efficient, reliable, close,

and above all committed to our clients. Their company's success is our greatest reward. The

personalized service and expertise, added value so each of our clients is satisfied. The formula is

simple: we are always close and available. Our present and our future are made up of exchanges

in the real and virtual worlds. The digital revolution has forever changed the way we live and

work every day, but the digitization of the living space has generated new demands for men, new

challenges for organizations, new constraints for operators.

To serve men and organizations, Neck Systems Inc. is as enthusiastic as positively engaged in

the development of the individual in the digital space. This includes the enhancement of the

place of man, freedom of choice, initiative and action by the performance of enhanced

interactions, in real-time. We intend to release the operators of the most thankless digital,

repetitive and non-value-added tasks, through our open-source software, we affirm the infinite

combinations and skills.

The purpose of Neck Systems Inc. is the research and development of software whose purpose is

to produce and generate clever, nimble and efficient open-source software to serve as a better

alternative to the more established brands. The promise of our software and private cloud

collaboration system is the performance, ergonomics or time gain, aiming for operational

excellence. We affirm it in the thought of virtue, freedom, and prosperity. We do so in respect of

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all staff, customers, and partners. We are aware of our social, economic and environmental

responsibility.

1.2 VISION AND MISSION STATEMENT

We are dedicated to providing consistent, pleasant deliverables to each and every customer

through our open source software and private cloud collaboration system. Close cooperation with

our users helps us understand their needs and challenges, and allows us to adapt and innovate

according to their needs. We cooperate closely with our community in setting standards, shaping

market practice and developing new services. We mobilize our resources, collaborate to define

our strategy, to solve problems, and to stimulate dialogue to address the business challenges of

today and tomorrow. We think and act long-term. As a progressive company, we look beyond

quick fixes and try to craft affordable, sustainable solutions.

We are out to direct all our organizational efforts in building existing technical strengths and

brand recognition to achieve enhanced levels of profitable growth in the core business and

diversify into new areas that complement and supplement the core business, aiming to achieve

excellence and industry leader status in the new areas. We are on a mission to connect and

sharpen the best of strategic and technical skills with a view to address real-life business issues

and develop innovative e-business solutions for optimizing organizational growth.

1.3 BUSINESS PLAN PURPOSE

This business plan is intended to secure funding for the operations of the company. This will

afford us the opportunity of getting an allocation of adequate capital for the operations of the

company. The funds so acquired will also assist the company in building the software, the

building of the company website, marketing, and promotions and other required logistics. With

the establishment of the company as a corporate brand as well as patronage from all private
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individuals and businesses all over the United States and the global market, which we plan to

achieve through our various marketing strategies, we expect to generate a high revenue at the end

of the first business year with a steady increase in subsequent years.

This business plan relates to the business activities of Neck Systems Inc. The purpose of this

plan is to lay out a clear and decisive path of action in order to achieve sustainable and successful

business collaboration with investors and simultaneously create and maintain frequent returns on

the adopted business model. However, this document is confidential and has been made available

to the investor; strictly on the understanding that its contents will not be disclosed or discussed

with third parties except for Neck Systems Inc.’s own professional advisors.

Generally, investment in the business is synonymous with risk and returns. Therefore, this plan is

strictly for information purposes only and does not constitute a prospect or invitation to subscribe

for shares. This business plan also highlights our operational plan, our vision and mission

statements, the business objectives, our products and services, market analysis as well as the

financial projections among other contents of the business plan.

1.4 BUSINESS OBJECTIVES

The following are the corporate objectives of Neck Systems Inc.:

1.4.1 Non-Financial Objectives

The following are out non-financial objectives:

 Provision of the best integrated, user-friendly, and complete set of open-source

instruments to serve as a better alternative to the bigger brands.

 To become the market leader in open source software services within five years.

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  To become the lowest cost provider and drive an aggressive pricing model through the

industry.

 To design and develop ERP software and private cloud collaboration system that have the

best, most efficient, and the best turnaround time for users.

 Establish a minimum of 95% customer satisfaction rate to establish long-term

relationships with our clients and create word-of-mouth marketing.

 To develop systems of service offering for each service category that is easy to replicate

with new clients to keep it simple and fun.

 Aim to increase profitability through an increase in sales, frequency of sales, volume of

sales through attractive packages as well as other promotional initiatives and offers.

 Develop/Re-structure, upgrade and enhance our website, build an online presence and

build online reviews and ratings

 Continuously measure, monitor and evaluate marketing metrics, loyalty program, and

Sales KPIs to make tweaks, improvements and refine processes

1.4.2 Financial Objectives

 Increase the number of clients by 40% over the next 3 years of operations

 To generate about $500,000 at the end of the first business year.

 To maintain the monthly and yearly increase in revenue generated from the business

 To achieve a modest initial gross profit margin, increasing that by at least 20% per year

until reaching our final target.

 To maintain a solid growth rate per year for the first five years.

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  To achieve an annual growth rate of 10% in the second year, 20% in the third year, 25%

in the fourth year and 20% in the fifth year.

 Continue to drive down the costs associated with investment research as it relates to

investment criteria.

1.5 OUR CORPORATE SOCIAL RESPONSIBILITY IN ACTION

At Neck Systems Inc., we understand that our business decisions and the methods by which we

engage our key stakeholders affect not only our organization, but also in a profound way, the

communities, and environment that support our lives and businesses.

With this firm knowledge and a determination to ensure that our efforts to meet the needs of the

present do not deprive future generations of their ability to meet their own needs, our Corporate

Social Responsibility strategy demands that we run our business in a responsible manner while

simultaneously ensuring long-term sustainability.

We believe that the communities in which we operate should benefit from our presence. We

operate an inclusive strategy and therefore encourage our employees to volunteer towards

community activities that align with our CSR pillars.

1.6 KEYS TO SUCCESS OF NECK SYSTEMS INC.

We have come to make this business a long-term successful business as we plan to record a

landmark success in the auto parts business within the first two years of operation. The following

are what we believe are the keys to our success.

 Maintaining and expanding the current user base

 Good customer service and value

 Creating high morale by rewarding employee success with monetary compensation.

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  Reaching the target market.

 Ensuring customer satisfaction by encouraging the three most important values – quality,

honor, and integrity.

 Friendly relationships with consumers.

 Maintaining a respectable and untarnished reputation with the community of users.

 Encouraging customer input.

 Superior Customer Service

 Encouraging programs that will create customer loyalty.

 Advertisement.

 Knowledge of the market.

 Picking the right advertising platform for the business.

 Ensuring sustainable profits.

1.7 OUR CORE VALUES

Our business is underpinned by three core values that have been in place since our Company's

foundation:

Customers

We put our customers' needs at the heart of everything we do, building trusted, long-term

relationships and working together to create innovative solutions that improve people's

connected lives. These relationships are fundamental to all of our open-source software, and our

users know they can trust us to enhance their digital experience based on an advanced operating

system, ERP and Private cloud collaboration system. Their needs are integral to our product
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innovation and we use the newest technology system to meet these needs. To help us measure

our performance and satisfaction levels with clients and shape our strategic direction, we will run

an annual customer-listening program that also offers insight into their own vision and

challenges using Neck Systems Inc. 

People

Our people are the foundation of our success. We strive to attract, nurture and retain a talented

and diverse workforce while maintaining a strong culture of ethics and innovation. We focus on

hiring the best and most creative people in their respective fields and giving them the opportunity

to grow and develop their careers within the company. We are committed to providing an

environment in which our employees can flourish by supporting their well-being and work-life

balance through programs like remote working. Employee satisfaction is also measured on a

yearly basis so that we can monitor how we are doing and create action plans on specific topics

or areas for improvement.

Innovation

Innovation is key to meeting the future needs of society and securing long-term business growth.

Each year, Neck Systems Inc. invests a huge amount of money in R&D activities for our Neck

Systems projects. We continually develop valuable new ideas and creative approaches to

business and technology challenges. We accelerate our digital transformation through the use of

agile methodologies. Moreover, we are transforming our working methods by using an

innovation process to manage the constant flow of new ideas from across the Company. This

process includes all steps of innovation: from triggering creativity to nurturing ideas and

developing innovative solutions for our traditional and adjacent businesses.

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 1.8 BUSINESS MODEL CANVAS
Key Partners Key Activities Value Proposition Customer Customer
 Investors  PC and Server operating  Technology- Relationship Segments
systems with a complete centric; limited or  Company The United
 Companies set of applications no physical website States
 Fully functional ERP infrastructure Global
System  Social
 The private cloud  Increase networks:
collaboration system performance and
productivity Facebook, Twitter,
 Extreme user-friendly through cross- Instagram,
interface to promote functional Snapchat, etc.
efficient service delivery business and
information
 License-free open source technology
software which does not initiatives – fast
require renewal and at low risk
 Scalable Cloud
Key Resources Infrastructure Channels
 Human resources: Platform  Online
Distribution:
Edgars Cinins  Local
Nicholas M. Loeb administration  Company’s
Normunds Krumins website
 Computer/Technological
resources:  Connection
with various
Computer institutions
Internet
Mobile phone
Cost Structure Revenue Streams
 Marketing (mid-level budget)  Subscriptions
 Software Design (High-Level Budget)  Merchandise
 Computer, Mobile phone (High-Level budget)  Other sources as determined by the management
 Data (High budget)

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 2 COMPANY OVERVIEW

2.1 REGISTERED NAME AND CORPORATE STRUCTURE

Neck Systems Inc. will be incorporated in Florida. Our plan is to be a public company in the near

future and listed on the New York Stock Exchange and other major exchanges. As a new

corporate entity, Neck Systems Inc. will be treated as a start-up in this business plan. We intend

to apply for trademark protection in other countries as we secure funding.

2.2 THE FINANCING

To launch the research and development of Neck Systems Projects, as well as maintaining

forward operations, adequate funding is needed. All potential avenues to funding will be

approached, to achieve funding will involve soliciting a bank loan, approaching third-party

investors, or applying for open lines of credit. We intend to leave the options open in order to see

that all the services highlighted for each of the subsidiaries come to fruition.

Over the next two years, the company will be growing its operations from a locally based digital

service platform to a global network. The funding obtained will be crucial in the payroll,

marketing, maintenance, and administration costs that keep the company in operation.

2.3 INVESTOR EQUITY

All funding acquired will be in exchange for an equity stake which will be determined by the

management. Additional incentives of a seat on the board of directors can be offered with a

lower equity stake of 3.45% instead of the higher equity offer.

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2.4 COMPANY LOCATION AND RESOURCES
Neck Systems Inc. is based in 1850 Lake Dr, Delray Beach, FL 33444. Our base does not really

have much impact on the success of our company as there are no resources that are instrumental

to our service that cannot be obtained elsewhere. The business terrain is very friendly and the

company is bound to grow at a significant pace even in years to come. The company’s website

will also be designed and will afford the company the opportunity of marketing its services to

other countries of the world. Below is the image obtained from Google Map of the company’s

location:

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2.5 DEMOGRAPHY ANALYSIS OF THE UNITED STATES
According to the US Census Bureau's population clock, the estimated 2019 United States

population (August 2019) is 329.45 million. This is a bit higher than the 329.06 million

estimated by the United Nations. By population, the United States of America is the 3rd largest

country in the world, falling far behind China (1.39 billion) and India (1.31 billion). Its most

populous states are California (states are California (39.5 million) and Texas (28.7 million), and

its most populous city is New York City (8.4 million).

The largest state in the USA by population is California, which is estimated to be home to just

over 39.5 million people. If California were a country, it would be the 36th most populous in the

world, slightly larger than Iraq and [Poland]. Its economy would be the eighth largest in the

world, with roughly the same GDP as [Italy], a European country of 61 million people.

Interestingly, although California is the largest state in the United States of America, it isn't the

largest state in the Americas - that honor goes to [Brazil]'s state of [Sao Paulo] with over 45

million residents.

The largest city in the USA is New York City. The city's population is estimated at an impressive

8.4 million, which makes New York City larger than the second and third most populous cities in

the United States (Los Angeles and Chicago) combined.

By 1930, New York City was the largest city in the world, holding the title until 1980 when three

worldwide cities surpassed its numbers. The stunning growth of cities elsewhere in the world

means that today, New York is not even in the top 20 when ranking by city proper. It is,

however, the world's second-largest city by GDP - its nominal GDP of $1.55 trillion puts it

second only to the Japanese city of Tokyo.

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Although no US cities compare in either size or density to New York City, Los Angeles in

California is the second-largest city in the nation with roughly half the population - around 4

million.

Currently, the United States is 60.4% white. According to the Pew Research Center, the

country's racial profile will be vastly different, by 2055. Whites will remain the single largest

racial group in the US, but they will no longer be the majority. Growth in the Hispanic and Asian

populations in the US is predicted to almost triple over the next 40 years. By 2055, the

breakdown is estimated to be 48% White, 24% Hispanic, 14% Asian, and 13% Black.

As of 2015, 14% of the United States population is foreign-born, compared to just 5% in 1965.

Nearly 39 million immigrants have come to the US since 1965, with most coming from Asia and

Latin America. Behind Mexico, China and India have the second-highest populations in the

United States. The current Chinese population in the USA is 3.8 million, and the Indian

population is 4.4 million. The 2015 Census Report predicts that the percentage of the US

population that is foreign-born will continue to increase, reaching 19% by 2060. This increase in

the foreign-born population will account for a large share of the overall population growth.

The average US citizen of 2060 is likely to be older than the average citizen of today, and almost

one in four people will be 65 or older. At the same time, the percentage of people who are

working age (18-64) is likely to fall from 63% today to 52% in 2060. This will have huge

implications for society as younger people work to fund the pensions and healthcare of the older

generation.

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2.6 RISKS AND RISKS MITIGATION PROCESSES
Risk is the potential for uncontrolled loss of something of value. Values (such as physical health,

social status, emotional well-being, or financial wealth) can be gained or lost when taking risks

resulting from a given action or inaction, foreseen or unforeseen (planned or not planned).

Uncertainty is a potential, unpredictable, and uncontrollable outcome; the risk is an aspect of

action taken in spite of uncertainty. Risks come in the way of businesses too. The following table

analyses the possible risks and the mitigation strategies adopted by the company:

TYPE OF RISK RISK MITIGATING STRATEGY

COMPETITIVE Declining business revenue or
RISK margins due to the actions of
competitors since the company is
engaged on many fronts through
its three products
 Invest in intelligence tools e.g.
social media monitoring
 Improve competitive analysis
 Offer superior service that will
build loyal clients

 Implement effective marketing

strategies to attract clients

 Build networks and spur

strategic partnerships with
relevant companies in Tunisia
and abroad.

DIGITAL Technical break down of the  Follow recommended servicing

PLATFORM RISK company’s platform and maintenance schedules

 Have a contract with a tech

company that offers 24/7
maintenance service

 Train employees on basic

maintenance and employment of
in-house tech expert

HEALTH AND Exposure to hazards during work  Create a health and safety policy
SAFETY Identify hazards

 Evaluate the risks and complete

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 a risk assessment

 Provide staff training e.g. on

work environment and
equipment, personal protectives,
etc.

 Have procedures for reporting

incidents.

COMPLIANCE Exposure to legal penalties,  Employee training and refresher

RISK financial forfeiture, and material courses
loss an organization faces when it
 Seek legal advice on new
fails to act in accordance with
legislation, market-specific
market laws and regulations,
regulations
internal policies or prescribed best
practices.  Create a quality assurance team

 Implement more quality and

safety checks

CASHFLOW  Insufficient fund to meet financial  Improve cash flow management

obligations
 Review costs and inventory

 Accountancy software
use/replacement

 Careful use of long- and short-

term financing

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3 PRODUCTS AND SERVICES DESCRIPTION
The company’s product is segmented into three:

 PC and Server operating systems with a complete set of applications

The Neck OS is designed to serve as the better alternative to Windows and macOS and designed

to make the clients’ computers faster, more powerful, secure, and privacy-respecting. Neck OS

doesn't collect personal data, so advertisers and governments cannot spy on the users’ activities.

Because Neck OS is Open Source, anyone can view its source code to ensure its security. It will

also come with a firewall, so the client can stay safe from attempts to compromise their

information. The operating system also comes with its own applications and a store will also be

created for the users to download any app of their choice.

We are out to bring the most advanced technology into the hands of everyone. We believe in

creating a product which is open, so the users can take back control of their technology and not

the other way around. By maintaining a clear focus on simplicity, we will create a powerful

computing experience that countless people will love to use every day.

 Fully functional ERP System

The Neck ERP system allows the users to store data about their daily business tasks in one

central location. It provides essential insights into their company - including areas for

improvement - and ensures they comply with financial regulations. Access to real-time data will

streamline daily operations and make it easier to run their business. The users can efficiently

collaborate across all departments, at the same time.

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ERP software from Neck Systems Inc. will allow the clients to consolidate daily operations so

that they can maximize efficiency and cut costs. Our easy-to-use business management solutions

adjust to their company’s unique rules and procedures, making it easier to manage crucial

aspects like human capital management, CRM, fixed assets and more. Our fast, simple and

flexible cloud-based ERP software will also help the clients expand their business around the

world.

 The private cloud collaboration system

Neck Cloud is a cloud collaboration system that offers cloud storage, file synchronization,

personal cloud, and client software. Neck Cloud brings files together in one central place by

creating a special folder on the user's computer. The contents of these folders are synchronized to

the Neck System's servers and to other computers and devices where the user has installed the

Neck Cloud, keeping the same files up-to-date on all devices. This service is available on a

subscription basis.

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4 MARKET ANALYSIS

4.1 INDUSTRY OVERVIEW

Operating systems (OS) are programs that act as an interface between a computer’s hardware and

its user. Subsystems are a part of larger systems such as operating systems; multiple subsystems

can be loaded in the operating system. It bridges the gap between the users and the computer

hardware. There are different types of operating systems based on their usage such as real-time,

multi-user, distributed, embedded, single-user single-task and single-user multi-task. Operating

systems are required in all electronic interactive systems such as mobile phones, washing

machines, and computers. Various types of OS include Microsoft Windows, Linux, UNIX,

Symbian, Android, and Apple Mac OS among others.

Technological advancements and rising awareness among consumers have led to increased

demand for computer systems, consequently increasing the demand for operating systems and

driving the market. However, the growth has been hampered by the rapid usage of pirated

versions of operating systems. Moreover, the development of different applications in mobile

phones mainly due to android OS among the youth will open the opportunities of operating

system market in the upcoming years.

The U.S. is the largest market for operating systems due to technological advancements and the

trend is expected to continue over the forecast period. OS such as Windows has achieved a

remarkable position ever since the inception of personal computers. Its latest version is Windows

8. Presently, the android operating system has been widely popular in the mobile market. Due to

its rising demand for android mobile phones, android is expected to boost the market of

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operating systems. Microsoft is the leading company in this market. Some other key players of

this market include Apple, AT&T, and Linux among others.

Over the five years to 2019, computer products have become a more ubiquitous feature of daily

life, propelling the Operating Systems and Productivity Software Publishing industry to new

heights. Companies in this industry develop and publish operating systems and productivity

software products that are necessary for computer usability. Industry products often come

preinstalled on most new computers. As a result, industry revenue is highly correlated with new

computer sales. Over the past five years, total industry revenue grew as sales to both consumers

and businesses increased, driven by rising disposable income levels and extensive private

investment in computers and software. Overall, industry revenue grew at an annualized rate of

7.9% to $87.7 billion.

The global Linux operating system market is expected to exhibit a solid 18.5% CAGR over the

forecast period from 2018 to 2023, according to the latest research report from Market Research
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Future (MRFR). The global Linux operating system market is mainly driven by the growing

demand for secure operating systems and the growing demand for the open-source OS. The

global Linux operating system market is expected to reach a valuation of more than USD 7

billion by 2023.

The nature of Linux OS as an open-source operating system is likely to be a major driver for the

global Linux operating system market over the forecast period. Open-source software is in

demand currently due to benefits such as flexibility, agility, speed, and cost-effectiveness. The

high operational performance of the Linux operating system is likely to be a major driver for the

global Linux operating system market over the forecast period. Linux operating systems are also

better at handling multiple users than other operating systems, which is likely to be a major

driver for the global Linux operating system market over the forecast period.

The higher security of Linux operating systems is also likely to be a major driver for the global

Linux OS market over the forecast period. Currently, Linux faces tough opposition from

Microsoft’s Windows OS, which is widely used in the corporate sector and enterprises.

However, Linux presents significant security advantages over Windows OS. This could lead to

steady growth of the Linux operating system market over the forecast period. The increasing

need to manage the security of online operations despite high traffic is likely to be the major

driver for the global Linux operating system market over the forecast period.

4.2 ERP SYSTEMS ANALYSIS

The global ERP software market was valued at $35.81 billion in 2018 and is projected to reach

$78.40 billion by 2026, growing at a CAGR of 10.2% from 2019 to 2026. Enterprise resource

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planning (ERP) is business process management software, which allows an organization to use a

system of integrated applications to manage the business and automate many back-office

functions related to services, technology, and human resources. ERP software integrates all

facets of an operation, including product development, product planning, manufacturing, sales,

and marketing in a single database, application, and user interface. In addition, this software

offers some degree of synchronized reporting and automation. Instead of forcing employees to

maintain separate databases and spreadsheets that have to be manually merged to generate

reports, ERP solutions enable staff to pull reports from one system.

The finance business function was the highest contributor to the ERP software market in 2018

and is projected to remain dominant during the forecast period, due to an increase in adoption of

finance module in most of the organizations to reduce complexity in financial functions and to

achieve overall competency in business. However, the human resource (HR) module is expected

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to witness the highest growth, owing to ongoing business expansion in developing economies,

which compels businesses to deploy ERP HR modules for easy integration and management of

all the required information of the present and additional workforce.

The manufacturing industry dominated the ERP software market share in 2018 and is expected to

continue this trend during the forecast period. This is attributed to the rise in the number of

entrants in the pharmaceutical, automotive, garment, and consumer electronics manufacturing

markets. Moreover, a surge in the adoption of cloud solutions and a rise in focus on the

accumulation of customer data to aid in the decision-making process fuel the growth of the

market. However, the human resource (HR) module is expected to witness the highest growth,

owing to ongoing business expansion in developing economies, which compels businesses to

adopt ERP HR modules for easy integration and management of all the required information of

the present and additional workforce.

4.3 ERP SOFTWARE MARKET

4.3.1 Top Impacting Factors
An increase in the adoption of ERP software to boost transparency and operational efficiency of

organizations, the surge in demand for data-driven decision-making, as well as rise in the

adoption of cloud and mobile applications are some of the important positive impacting factors

on the growth of the ERP software market. However, higher investment and maintenance costs

and availability of open source applications are expected to limit the ERP software market

growth. Furthermore, an increase in demand for ERP among small & medium enterprises and

technological advancements in ERP are providing ample opportunities for the ERP software

market size growth.

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4.3.2 The surge in Adoption of Cloud & Mobile Applications
Cloud computing is an emerging technology that allows enterprises to store and access data

through the internet. Agility, scalability, reliability, and flexibility are some of the major

characteristics of the cloud technology attributing to its popularity. Software as a service (SaaS)

or on-demand is one of the service models of cloud computing based on the pay-per-use fee

model. Cloud-based applications reduce IT infrastructure costs of the enterprise to a certain

extent. This is the prime reason for the increased adoption of cloud-based applications among

enterprises. As mobiles have become an integral part of working culture, the enterprises invest in

cloud-connected mobile applications, as they allow access to information anytime and anywhere.

This help organizations to maintain the work-life balance of their employee as well as to enhance

productivity. These benefits are expected to drive the demand for cloud and mobile applications

in the coming years.

4.3.3 Technological advancement in ERP

Traditional ERP technology has been deployed for several decades, however, increased adoption

of advanced technologies such as IoT, AI, and big data analytics has led to the growth of the

industry. An increase in technological innovations in Asia-Pacific countries, such as India,

China, Australia, and Singapore are expected to create several opportunities for the ERP

software market. The integration of ERP with IoT-based devices allows organizations to identify

and eliminate issues such as unnecessary assets. In addition, automation of processes by IoT

technology keeps the plant operations running on time without any human intervention.

Similarly, multiple benefits of integrating ERP software with wearable technology, such as real-

time information transmission, minimized errors, real-time access to data, and faster decision-

making create several opportunities for market growth.

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4.4 CLOUD COLLABORATION MARKET
The Cloud Collaboration market was valued at USD 29.62 billion in 2019 and is expected to

register a CAGR of 13.43%, over the forecast period (2020-2025). Employees across

organizations use a cloud-based collaboration platform to share and work together on projects at

once. Cloud collaboration enables to achieve high productivity with access to real-time data.

Cloud collaboration offers high agility to companies and enables easy data sharing among

remote and virtual users. With changing business requirements, companies are now looking for

services, which offer easy access and increased productivity, thereby supporting the growing

need for agile support.

 With increasing automation trends, along with the changing mobility, it has become

increasingly important for industries to look for solutions that can offer services, thereby

reducing the overall infrastructure costs.

 Moreover, businesses adopting mobile services and implementing new policies to

increase employee interaction and ease of use, have become important to provide access

to data across multiple end-point devices.

 These services allow the client and employees to access files and data who are working

on offsite locations, which makes operations much more accessible. It also lets users with

BYOD (bring your own device) to take full advantage of accessing data over the cloud.

4.4.1 Market Trend

Demand for Enterprise Social Collaboration is on the Rise

In recent years, enterprise social collaboration (ESC) solutions have been able to connect people

around the world effectively. Social applications have been limited by technology and may work
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fine for one department, but not for another. With the advent of the cloud, the integration of

social collaboration solutions is easier than ever.

The demand for enterprise social collaboration is on the rise and with good reason. With the

millennials becoming an increasingly large part of the workforce, CIOs will be forced to face

enterprise social collaboration (ESC) in the future. Intelligent CIOs who are ahead of the trend

have already embraced it, leading to staggering results.

When properly integrated, ESC solutions empower both employees and employers. It can instill

the intimacy and fun of social media into work-related communications, and lead to

accomplishing tasks in new and more efficient ways. Trusted partners and valued customers can

also be integrated directly into the network to everyone’s mutual advantage.

Cloud Collaboration in North America is Driven by the Adoption of Cloud Computing

Cloud collaboration in the region is mainly driven by businesses that are adopting cloud

computing to increase capacity and productivity. Companies in the region are moving beyond the

public cloud and stepping into a new era of hybrid IT that combines public cloud, private cloud,

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and traditional IT. These organizations have implemented a hybrid cloud strategy as it is helping

them to improve the way they run their business and deliver services to customers.

As per the RightScale’s State of the Cloud Report 2018, over 80% of the North American and

European companies were using a complex deployment model in the cloud, i.e., 51% of the

hybrid and 21% implementing a multi-cloud strategy, with an average of five cloud providers.

The aforementioned factor has further stimulated the cloud collaboration demand. With

automation trends prominent in the region, it has become increasingly important for industries to

look for solutions that can offer services to reduce infrastructure costs.

Also, the increased electronic device penetration has resulted in the high adoption of BYOD,

which has forced companies to adopt cloud collaboration to address employee needs.

Furthermore, the presence of prominent startups with an aggressive BYOD policy and freedom

for employees has augmented the growth of the cloud collaboration market. 

To understand geography trends, Download Sample Report.

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4.4.2 Competitive Landscape
The cloud collaboration market is highly competitive and consists of several major players. In

terms of market share, few of the major players currently dominate the market. These major

players with prominent shares in the market are focusing on expanding their customer base

across foreign countries. These companies are leveraging strategic collaborative initiatives to

increase their market share and profitability. The companies operating in the market are also

acquiring start-ups working on cloud collaboration technologies to strengthen their product

capabilities. In February 2018, Cisco completed its acquisition of BroadSoft, which accelerated

Cisco's cloud strategy and collaboration portfolio by adding the industry's leading cloud calling

and contact center solutions to Cisco's leading calling, meetings, messaging, customer care,

hardware endpoints, and services portfolio.

4.5 OPEN SOURCE SOFTWARE INDUSTRY

Open-source software (OSS) is a catalyst for growth and change in the IT industry, and one can’t

overestimate its importance to the sector. Apart from independent OSS projects, an increasing

number of companies, including the blue chips, are opening their source code to the public. They

start by distributing their internally developed products for free, giving rise to widespread

frameworks and libraries that later become an industry standard (e.g., React, Flow, Angular,

Kubernetes, TensorFlow, V8, to name a few).1

Adding to this momentum, there has been a surge in venture capital dollars being invested into

the sector in recent years. Several high-profile funding rounds have been completed, with

multimillion-dollar valuations emerging (Chart 1).

1
http://www.zdnet.com/article/its-an-open-source-world-78-percent-of-companies-run-open-source-software/
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But are these valuations justified? And more importantly, can the business perform, both growth-

wise and profitability-wise, as venture capitalists expect? OSS companies typically monetize

with a business model based around providing support and consulting services.

4.5.1 OSS Monetization Models

By definition, open source software is free. This of course generates obvious advantages to

consumers, and in fact, a 2008 study by The Standish Group estimates that “free open source

software is [saving consumers] $60 billion [per year in IT costs].”

While providing free software is obviously good for consumers, it still costs money to develop.

Very few companies are able to live on donations and sponsorships. And with fierce competition

from proprietary software vendors, growing R&D costs, and ever-increasing marketing

requirements, providing a “free” product necessitates a sustainable path to market success.

As a result of the above, a commonly seen structure related to OSS projects is the following: A

“parent” commercial company that is the key contributor to the OSS project provides support to

users, maintains the product, and defines the product strategy.

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Latched on to this are the monetization strategies, the most common being the following:

 Extra charge for enterprise services, support, and consulting. The classic model

targeted at large enterprise clients with sophisticated needs. Examples: MySQL, Red Hat,

Hortonworks, DataStax

 Freemium. (advanced features/products/add-ons) A custom licensed product on top of

the OSS might generate a lavish revenue stream, but it requires a lot of R&D costs and

time to build. Example: Cloudera, which provides the basic version for free and charges

the customers for Cloudera Enterprise

 SaaS/PaaS business model: The modern way to monetize the OSS products that assumes

centrally hosting the software and shifting its maintenance costs to the provider.

Examples: Elastic, GitHub, Databricks, SugarCRM

Historically, the vast majority of OSS projects have pursued the first monetization strategy

(support and consulting), but at their core, all of these models allow a company to earn money on

their “bread and butter” and feed the development team as needed.

An interesting recent development has been the huge inflows of VC/PE money into the industry.

Going back to 2004, only nine firms producing OSS had raised venture funding, but by 2015,

that number had exploded to 110, raising over $7 billion from venture capital funds (chart 2).

Underpinning this development is the large addressable market that OSS companies benefit

from. Akin to other “platform” plays, OSS allows companies (in theory) to rapidly expand their

customer base, with the idea that at some point in the future they can leverage this growth by

beginning to tack-on appropriate monetization models in order to start translating their customer

base into revenue, and profits.

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At the same time, we’re also seeing an increasing number of reports about potential IPOs in the

sector. Several OSS commercial companies, some of them unicorns with $1B+ valuations, have

been rumored to be mulling a public markets debut (MongoDB, Cloudera, MapR, Alfresco,

Automattic, Canonical, etc.).

With this in mind, the obvious question is whether the OSS model works from a financial

standpoint, particularly for VC and PE investors. After all, the venture funding model

necessitates rapid growth in order to comply with their 7-10 year fund life cycle. And with a

product that is at its core free, it remains to be seen whether OSS companies can pin down the

correct monetization model to justify the number of dollars invested into the space.

Answering this question is hard, mainly because most of these companies are private and

therefore do not disclose their financial performance. Usually, the only sources of information

that can be relied upon are the estimates of industry experts and management interviews where

unaudited key performance metrics are sometimes disclosed.

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Nevertheless, in this article, I take a look at the evidence from the only two public OSS

companies in the market, Red Hat and Hortonworks, and use their publicly available information

to try and assess the more general question of whether the OSS model makes sense for VC

investors.

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P a g e 35 | 60
5 PORTERS’ FIVE FORCES
Porter's Five Forces Framework is a tool for analyzing the competition of a business. It draws

from industrial organization economics to derive five forces that determine the competitive

intensity and, therefore, the attractiveness of an industry in terms of its profitability. The

following represent the Porters’ Five Forces of the company:

5.1 THE THREAT OF NEW ENTRY

The business is a start-up company and may be regarded as a neophyte in the industry. The

company competes on various fronts in the tech industry with giants such as Microsoft, Linux,

and Dropbox. The competition on the three fronts is enough to nip the company in the bud due to

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the presence of these industry giants. This implies that the company cannot only adopt a basic

marketing approach at the startup stage. This is so in order to ensure that the company mitigates

the impact of the threats that come up with being a startup.

5.2 COMPETITIVE RIVALRY

In that our business is modeled to build on the existing system of the use of Operating system,

cloud collaboration, ERP for uptime requirements by SMEs and other large businesses, we have

identified some platforms like Microsoft Windows or MAC OS as direct competitors to the Neck

OS, Microsoft Navision, SAGE, Oracle NetSuite to our ERP system and Google Suite, Dropbox,

Microsoft SharePoint to our cloud collaboration system. All these systems have actually been in

the industry before us and are way ahead. We will ensure that we remain innovative in our

service offering and marketing to ensure we gain a sizeable chunk of the market.

5.3 BUYER POWER

Our prices are reasonably structured to be within the confines of fair prices chargeable in the

industry. We have no plan to increase these charges but rather to promote the enrolment of our

target market with us. A monthly subscription fee (based on a fee per user for an ERP system

and Cloud solution) or a one-time fee (in case of PC/server operating system) with payment

options 1x per quarter, 1x per 6-month or 1x per year. Initially, all new customers are also

charged for ERP system implementation and training process (on average – one additional yearly

subscription payment). For the PC/server operating system and Cloud solution, there is no

implementation fee. Today companies want to buy from one source. Therefore, we have good

chances of having part of this growing market segment. Such companies as Facebook, Twitter,

Google, IBM, Amazon, and McDonald's use Linux based operating systems in their daily

operations – this is a compelling sales argument to prove credibility and efficiency of the

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carefully managed open-source approach, like our offer. This threat is a medium for our

business.

5.4 SUPPLIER POWER

Our suppliers in the industry are the companies that supply our logistics. These companies

supply the needed materials that we utilize in our service delivery. The companies that supply

these materials are scattered all over our location and there is also stiff competition in their

industry. No one company can hold our college to ransom as we will easily choose to patronize

their competitor if our major supplier’s prices are unreasonably high.

5.5 THREAT OF SUBSTITUTION

The threat of substitution cannot be overlooked in analyzing the possible success or otherwise of

our company. There is hardly a substitute service for all our services all we have are competitors.

6 SWOT ANALYSIS
Neck Systems Inc. is set to become one of the leading open-source tech companies in the whole

of the United States which is why we will ensure that we are well trained and equipped to carry

out our duties. We want Neck Systems Inc. to be the number one choice of resident-companies in

the United States and other neighboring countries.

We know that if we are going to achieve the goals that we have set for our business, then we

must ensure that we build our business on a solid foundation. We made sure that we hire the

services of business consultants that are specialized in setting up new businesses to help our

organization conduct a detailed SWOT analysis and to also provide professional support in

helping us structure our business to indeed become a leader in the industry.

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This is the summary of the SWOT analysis that was conducted for Neck Systems Inc.:

6.1 STRENGTH
Our strength is in our brand. We have an executive team that is vast and adequately equipped to

run the business needs of the company. Our brand is also strategically structured to give it the

recognition it deserves. Due to the many advantages that come with the open-source operating

system, the Neck OS remains one of the most secure and user-friendly operating systems in the

world and the fact that the clients do not have to renew their licenses yearly counts as a strength

for the product when compared to the competitors. Of course, our location in Florida is another

strength as the economic condition and government economic policies aid our quest for rapid

expansion.

6.2 WEAKNESS
This is a new program and will require a lot of attention and nurturing. The following represent

the weaknesses of the company:

 Lack of a reputation in comparison to our competitors. This is due to the fact that we

are still new on the market. However, this shall be addressed as shown in the

marketing section of this plan.

 The introduction of new organizational practices and personnel who have not

previously worked together presents a challenge to the organization.

 A limited financial base compared to the major players in the industry.

6.3 OPPORTUNITIES
 High demand by top companies and techies for open source software

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  Despite the dominance of Windows and Linux, the global market is still up for grabs

 High fees in the private sector

6.4 THREAT
Changes in the external environment also may present threats to the firm. Some examples of

such threats include:

 Shifts in consumer satisfaction away from our products

 The emergence of substitute technological services.

 New regulations.

 Increased trade barriers in the future

7 STRATEGY AND IMPLEMENTATION SUMMARY

As a forward-thinking institute, there are viable plans already in place for the running of the

business. We have outlined several plans to announce our introduction into the market as well as

create massive awareness in our immediate environment:

 Fees lower than the industry (in the private sector).

 Use of technology to reduce spending on human resources and to enhance

administrative/management and teaching and learning processes.

 Centralized digital platform for the monitoring of the company’s performance.

7.1 EXECUTION STRATEGY

Our execution strategy incorporates proven methodologies, extremely qualified personnel, and a

highly responsive approach to managing deliverables. We are implementing methods with

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timelines, relevant events, and important principles that suggest alternative solutions. We are

using quick hits that move us toward effectuating the best solutions in the quickest possible time

frame.

In order for us to implement our business plan over the next twelve-month period, we have

identified the following milestones that we expect to achieve:

 Increase Operation Capacity – We intend entering into strategic

partnerships with relevant companies for the implementation of the

company services.

 Addition of Support Staff - In order to support expansion efforts and to

continue the training and support of our network, we will need to hire

more people on the corporate level, which will be hired for the specific

purpose of supporting the technological, and logistical requirements. We

continue to seek and interview candidates to fill our growing need for

additional staffing.

Capital Considerations – Our business plan can be adjusted based on the

available capital to the business.

7.2 OPERATIONAL ANALYSIS

We believe that cash flow from operations will not meet our present and near-term cash needs

and thus we will require additional cash resources, including the sale of equity or debt securities,

to meet our planned capital expenditures and working capital requirements for the next 12

months. We will require additional cash resources to achieve the milestones indicated above. If
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our own financial resources and future current cash-flows from operations are insufficient to

satisfy our capital requirements, we may seek to sell additional equity or debt securities or obtain

additional credit facilities.

The sale of additional equity securities will result in dilution to our stockholders. The incurrence

of indebtedness will result in increased debt service obligations and could require us to agree to

operate and financial covenants that could restrict our operations or modify our plans to grow the

business. Financing may not be available in amounts or on terms acceptable to us, if at all. Any

failure by us to raise additional funds on terms favorable to us, or at all, will limit our ability to

expand our business operations and could harm our overall business prospects.

7.3 MARKETING PLAN

The medium through which we intend to market our brand is social media which includes

Facebook, Instagram, Youtube, and LinkedIn.

We would mainly be focusing on Facebook and Instagram paid advertisements and influencer

marketing to drive traffic to our website because they are interest-based platforms, therefore, the

reach and the target market is huge to create an impact. Influencer marketing, on the other hand,

is a very strong medium itself because the strongest medium of reference is word of mouth

which is very well conveyed through it.

The following are the marketing strategy options we will employ:

 Leverage on the internet-of-things to promote our business: SEO MARKETING to

increase the traffic to the online website; Social media updates, posts, and uploads; Blog

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Creation; Blog Posts; E-mails; YouTube; Facebook; Twitter; Instagram; LinkedIn; and

Pinterest.

o Utilize Search Engine Marketing and Optimization: We plan to utilize Search

engine marketing and optimization to develop a strong online presence by

allowing our brand and services/products to appear on a list of search engine

results whenever a keyword search is made on major search engines such as

www.google.com, et al. With a strong SEO strategy, our company’s website will

become associated with the keywords used to find our services.

o Utilize Affiliate and Associate Programs: With an affiliate program, people

who believe in our company will be encouraged to share information about our

company to enable us to grow our market on a commission-based platform.

o Use Email Marketing: We will utilize a personalized e-mail campaign that caters

to the specific needs of our niche market and puts into consideration the

purchasing habits and buying patterns of our potential clients.

o Use an Opt-In Email List: utilizing an opt-in email list allows customers to visit

our website and sign up to receive email campaigns and correspondence. This will

allow us to connect with new customers or clients and increase our overall click-

through.

o Social media strategy: We will also maintain a strong social media campaign

with a guerilla marketing strategy. Our Facebook will serve as a second website.

We will then begin to populate the page with the photos, videos, lists and

reviews/testimonials put together independently by clients or by contents

creators/online traffic experts/design staff. We will post daily relative content on

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 our Facebook page including new clients, benefits and features. We will ensure

that we are in compliance with current trends in the social media industry by

participating and utilizing new features such as “Live Video”, “Status Update” et

al, to advertise our company and its services.

 Direct marketing.

 Word of mouth marketing (referrals).

 Install our Bill Boards on strategic locations all around our neighborhood in the United

States.

 Engage in roadshow from time to time.

 Distribute our fliers and handbills in target areas.

7.4 MARKETING & COMMUNICATION EXECUTION RECOMMENDATIONS

The myriads of opportunity that floods the cloud with the introduction of the internet is an added

advantage to our business. Apart from the fact that promotional activities will be carried out on

our website, we will equally embrace other options like mouth-to-mouth advertisement, local

advertisement strategies, reviews from customers, referrals and others. Neck Systems Inc.

embraces social media as an important tool of business engagement and encourages its

customers to use social media to reach out and connect with the company and share our good

news with friends, clients, and communities – both old and new.

Examples of social media platforms which we will utilize include but are not limited to:

 Social networking sites (Facebook, Instagram, Linkedin)

 Micro-blogging sites (Twitter)

 Blogs (including Company and personal blogs as well as comments)

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  Video and photo sharing websites (Flickr, YouTube)

 Forums and discussion boards (Google Groups, Yahoo! Groups)

 Online Encyclopedias (Wikipedia)

Our strategy is to grow the business by nurturing clients, differentiating the products from our

competitors, particularly through service and solid business ethics. All criteria from customer

satisfaction, service provision, and price competitiveness are to be looked at thoroughly in the

initial stages as areas for improvement. Strategies will be developed aimed at capturing all the

customers in our location. Researches will be conducted on a regular basis to ensure that our

services fully meet customer expectations.

7.5 SOCIAL MEDIA STRATEGY

 Facebook: Neck Systems Inc. will create a Facebook Customer page and begin to

populate the page with the photos, videos, and reviews created by the happy customers of

Neck Systems Inc. We will post daily relative content on our Facebook page including

new services, benefits, and features.

 Twitter: Neck Systems Inc. will start a Twitter account and begin to use the original

company’s content as well as marketing messages to drive interest and traffic to the site.

Tweets will also include links that educate twitter users about the reliability of our

products. We will use popular hashtags for transactional video on demand (TVoD),

subscription video on demand (SVoD), advertisement video on demand (AVoD), etc.

 LinkedIn: We will join relevant groups; discuss issues, approach professionals for

impactful discussions.

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  Blog: Neck Systems Inc. will post related articles on the blog every week and also link

affiliate related events to the blog and approach industry bloggers for endorsement.

8 MANAGEMENT SUMMARY
Edgars Cinins, Nicholas M. Loeb and Normunds Krumins are the founders of the company.

They will be saddled with the responsibility of making executive and administrative decisions as

regards the operations and functionality of the company. They are very creative, forward-

thinking and strong, hands-on team leaders, highly efficient and results-oriented with exceptional

management and organizational skills. They also have exceptional interpersonal skills combined

with proven ability to drive profitability, manage and nurture talent, deliver sales growth, form

strategic partnerships and successfully implement challenging projects. They are experts in

executing team driven process improvements to increase revenue growth, operational efficiency

and excellent stewardship of revenue. He also has strong customer service orientation to work

effectively with employees, the leadership of client companies and others.

Their responsibility is to oversee and decide what goes on in the business, which is in line with

the stated goals and objectives. They will be in full operation devising all means and strategies,

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putting their entrepreneurship skills and experience in the business world to help Neck Systems

Inc. achieve its best standard and become people’s first choice.

8.1 MANAGEMENT PROFILE

Edgars Cinins

Has worked with the establishment of one of the first private banks in Latvia after it regained

independence from the Soviet Union. After years in various positions with different European

banks, Edgars started to work as an independent asset manager with offices in Zurich and Riga,

mainly serving high net worth clients from Eastern Europe and Russia. He’s has built up very

close cooperation with various respectable banks, law offices, asset managers in Switzerland and

elsewhere. In recent years Edgars served in highest management positions in different oil and dry

cargo transportation and storage companies, newspapers and media groups. Founder of NECK

Systems, Inc.

Nicholas M. Loeb

Mr. Loeb has been an entrepreneur for most of his life. Previously he was the founder and CEO

of Loeb’s Crunch, a national consumer product brand, Managing Partner of Carbon Solutions
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America, a clean energy and sustainability consulting firm and CEO of Imagine Partners a

venture, consulting and banking firm. Prior to that Nick worked at Lehman Brothers in private

banking and generating deal flow to investment banking and real estate divisions. He began his

career at Universal Studios in corporate development, motion picture finance and production on

the John Travolta film Primary Colors, before forming IPC (International Production Company)

where he produced with Quincy Jones, the MGM film The Smokers and the Award-winning

PBS documentary series with Executive Producer Barbara Streisand, The Living Century.

Normunds Krumins

Almost twenty years of professional work in the transport and logistics industry. Normunds spent

a long time operating in China and Kazakhstan. He has in-depth knowledge of European and

Asian transport networks. Very well known as professionals in Europe's biggest transportation

companies. Has worked as a consultant for US government projects. Besides transportation and

logistics, Normunds has trained himself as a software developer. Normunds has numerous

software inventions for logistics management and overview systems. Currently, Normunds

serves as an external advisor to the Prime Minister of the Latvian Republic.

8.2 EXTERNAL PROFESSIONAL RESOURCES

 A corporate lawyer will be hired from time to time to offer legal advice and services to

the company. This will include the examination of each contract signed on behalf of the

company by the CEO and other delegated staff.

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  An accountant will also be hired to consider the financial viability of the company and to

offer relevant accounting services that would further propel the company to attain a

positive financial state.

8.3 CONTINGENCY PLAN

The founders have full confidence in the business and believe that it will be profitable and

successful based on the substantial market need for the business. However, if the business fails,

the following measures will be taken:

 Sell the business out to a company or individual interested in buying

 Get help from family and friends to repay all outstanding debts

 Re-strategize, analyze the reason for the initial failure and preparedly venture into it again

9 FINANCIAL PLAN
The following section contains the financial information for Neck Systems Inc.. Tables and

charts show annual projections for the first five business years.

9.1 IMPORTANT ASSUMPTIONS

The financials of this plan are predicated on the following table of assumptions. The income tax

rate for the first year is $ 38,116

Table: General Assumptions

General Assumptions
2020 2021 2022 2023 2024
Tax Rate $ 38,116 $ 24,682 $ 88,855 $ 255,407 $ 436,906

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9.2 STARTUP ANALYSIS

Neck Systems Inc.

Startup Expense

Capital Expenditure Cost

Total Startup Expenses $ -

9.3 FINANCIAL OVERVIEW

Below is the financial overview showing the profitability of the business as the sales increases

with little change in the cost. The profit is seen to increase with sales.

Financial Overview

2020 2021 2022 2023 2024

Total Revenue $ $ $ $ $
1,300,000 1,534,800 1,845,000 3,265,000 4,974,000
Total Expenses $ $ $ $ $
1,153,400 1,441,660 1,509,700 2,301,200 3,325,300
Net Profit $ $ $ $ $
108,484 68,458 246,446 708,393 1,211,795

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 Financial Overview
$5,000,000
$4,500,000
$4,000,000
$3,500,000
$3,000,000
$2,500,000
$2,000,000
$1,500,000
$1,000,000
$500,000
$-
1 2 3 4 5

Year

Total Revenue Total Expenses Net Profit

P a g e 51 | 60
9.4 PROFIT AND LOSS
The below table is the profit and loss projection for the first five business years. The sales are

seen to increase each year, causing considerable increase in the net profit too.

Profit and Loss

2020 2021 2022 2023 2024

$ $ $ $ $

Sales

Total Sales 1,300,000 1,534,800 1,845,000 3,265,000 4,974,000

Total Cost of Sales 360,000 420,000 420,000 550,000 760,000

Gross Margin 940,000 1,114,800 1,425,000 2,715,000 4,214,000

Gross Margin % 72% 73% 77% 83% 85%

Operating Expenses

Commissions 288,000 340,960 409,000 726,000 1,104,800

Advertising 100,000 150,000 150,000 250,000 350,000

Salaries and Wages 150,000 210,000 210,000 350,000 550,000

Bonuses 20,00 30,00 30,00 50,00 70,00

0 0 0 0 0
Payroll Taxes 46,00 65,00 65,00 124,000 168,000
0 0 0
Rent 36,00 36,00 36,00 48,00 48,00
0 0 0 0 0
Office Supplies 25,00 30,00 30,00 30,00 35,00
0 0 0 0 0
Telephone 4,20 5,50 5,50 6,60 9,00
0 0 0 0 0
Utilities 4,20 4,20 4,20 4,60 5,50
0 0 0 0 0
Licenses, Membership Costs and 12,00 15,00 15,00 17,00 25,00
Dues 0 0 0 0 0
Legal & Accounting 18,00 25,00 25,00 25,00 25,00
0 0 0 0 0
Automobile and Travel Expenses 75,00 90,00 90,00 100,000 150,000
0 0 0
Entertainment 15,00 20,00 20,00 20,00 25,00
0 0 0 0 0
Total Operating Expenses 793,400 1,021,660 1,089,700 1,751,200 2,565,300

Operating Income 146,600 93,140 335,300 963,800 1,648,700

Operating Margin 11% 6% 18% 30% 33%

EBITDA 146,600 93,140 335,300 963,800 1,648,700

Depreciation & Amortization 0 0 0 0 0

Interest Expense 0 0 0 0 0

Tax Incurred 38,11 24,68 88,85 255,407 436,906

6 2 5

P a g e 52 | 60
 Net Profit $ 108,484 $ 68,458 $ 246,446 $ 708,393 $ 1,211,795

Net Profit/Sales % 8% 4% 13% 22% 24%

From the above analysis a total revenue of $ 1,300,000 was made in the first year of business

activities. Every business always aspires to increase its sales. With the marketing strategy

adopted, it is assumed that this will yield an increase in the subsequent years of business

activities, causing the revenue for each year to increase too.

The volume of revenue influences the profit that will be made during the year, therefore revenue

generated in the course of running the business results in increase in profit made by the business

after taking care of all expenses.

Chart: Profit and Loss

Net Profit
$1,400,000
$1,211,795
$1,200,000

$1,000,000

$800,000 $708,393

$600,000

$400,000
$246,446

$200,000 $108,484
$68,458

$-
1 2 3 4 5

Year

P a g e 53 | 60
9.5 CASH FLOW STATEMENT
Below is cash flow statement projection for five years showing the movement of cash within the
business.

Cash Flow

2020 2021 2022 2023 2024

$ $ $ $ $
Cash From Operations
Cash Sales 1,300,000 1,534,800 1,845,000 3,265,000 4,974,000
Subtotal Cash From 1,300,000 1,534,800 1,845,000 3,265,000 4,974,000
Operations

Additional Cash Received

Owner's Investment
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 0 0 0
0 0 0 0 0
0 0 0 0 0
0 0 0 0 0
1,300,000 1,534,800 1,845,000 3,265,000 4,974,000

Expenditures 2020 2021 2022 2023 2024

Expenditures from
Operations
Total Cost of Sales 360,0 420,0 420,0 550,0 760,0
00 00 00 00 00
Total Operating Expenses 793,400 1,021,660 1,089,700 1,751,200 2,565,300
Interest Expense 0 0 0 0 0
Tax Incurred 38,1 24, 88, 255,4 436,9
16 682 855 07 06
Subtotal Spent on 1,191,516 1,466,342 1,598,555 2,556,607 3,762,206
Operations

Additional Cash Spent

Other Liabilities Principal 0 0 0 0 0
Repayment

Long-term Liabilities 0 0 0 0 0
Principal Repayment

Startup Expenses 0 0 0 0 0
Purchase Long-term Assets 0 0 0 0 0
Owner's Drawing 0 0 0 0 0
Subtotal Cash Spent 1,191,516 1,466,342 1,598,555 2,556,607 3,762,206

Net Cash Flow $ $ $ $ $

108,484 68,458 246,446 708,393 1,211,795
Cash Balance $ $ $ $ $
108,484 176,942 423,387 1,131,780 2,343,575

P a g e 54 | 60
Chart: Cash Flow

Cash Flow
$2,500,000

$2,000,000

$1,500,000

$1,000,000

$500,000

$-
1 2 3 4 5

Year

Net Cash Flow Cash Balance

The graph above shows upward movement of closing cash balance which indicates that there is
increase in cash balance at the end of every period.

P a g e 55 | 60
9.6 BALANCE SHEET
Below is the financial forecast of the balance sheet for the business. The below table shows the

steady growth in the net worth of the organization, this shows that the business is a very

profitable one.

Table: Balance Sheet

Balance
Sheet
Starting Bal. 2020 2021 2022 2023 2024
$ $ $ $ $ $
Assets

Current
Assets
Cash 0 108,484 176,942 423,387 1,131,780 2,343,575
Other 0 0 0 0 0 0
Current
Assets
Total 0 108,484 176,942 423,387 1,131,780 2,343,575
Current
Assets

Long-term
Assets
Long-term 0 0 0 0 0 0
Assets
Accumulate 0 0 0 0 0 0
d
Depreciatio
n
Total Long- 0 0 0 0 0 0
term Assets
Total 0 108,484 176,942 423,387 1,131,780 2,343,575
Assets

Liabilities
and Capital

Current
Liabilities
Accounts 0 0 0 0 0 0
Payable
Current 0 0 0 0 0 0
Borrowing
Other 0 0 0 0 0 0
Current
Liabilities
Subtotal 0 0 0 0 0 0
Current
Liabilities

Long-term 0 0 0 0 0 0

P a g e 56 | 60
 Liabilities
Total 0 0 0 0 0 0
Liabilities

Paid-in 0 0 0 0 0 0
Capital
Retained 0 108,484 176,942 423,387 1,131,780 2,343,575
Earnings
Earning 0 108,484 68,458 246,446 708,393 1,211,795
Total 0 108,484 176,942 423,387 1,131,780 2,343,575
Capital
Total 0 108,484 176,942 423,387 1,131,780 2,343,575
Liabilities
and Capital

Net Worth $ $ $ $ $ $
- 108,484 176,942 423,387 1,131,780 2,343,575

Chart: Net Worth

Net Worth
$2,343,575

$1,131,780

$423,387
$176,942
$108,484
1 2 3 4 5

Year

P a g e 57 | 60
9.7 BREAK EVEN ANALYSIS
Break-even is the point where the business neither makes profit nor loss. This means that at

break even, the business is only able to pay up its expenses both fixed and variable cost without

any excess. The essence of break-even is to determine the amount of sales that could lead to

profitability. Below is the formula for break even

Sales = total cost

Sales = fixed cost + variable cost

Sales = $ 793,400 + sales (28%)

Sales (1-0.28) = $ 793,400

Sales (0.72) = $ 793,400

Sales = $ 793,400= $ 1,097,255

0.72

This means that there must be more than $ 1,097,255 worth of sales yearly before any profit can

be recorded. The above analysis can be seen in the below graph showing the curve of sales and

total cost. Different amount of sales is assumed to show the possibility of an intersection which

indicates the breakeven point, beyond which the company starts making profit.

P a g e 58 | 60
Breakeven Analysis

Fixed cost 793,40

0
variable cost 28%
contribution 72%
Break Even 1,097,255
Fixed cost Variable cost Total cost Sales Profit
793,40 - 793,40 - (793,400
0 0 )
793,40 110,76 904,16 400,00 (504,169
0 9 9 0 )
793,40 221,53 1,014,938 800,00 (214,938
0 8 0 )
793,40 332,30 1,125,708 1,200,000 74,292
0 8
793,40 443,07 1,236,477 1,600,000 363,523
0 7
793,40 553,84 1,347,246 2,000,000 652,754
0 6
793,40 664,61 1,458,015 2,400,000 941,985
0 5
793,40 775,38 1,568,785 2,800,000 1,231,215
0 5
793,40 886,15 1,679,554 3,200,000 1,520,446
0 4

Breakeven Curve
3,500,000

3,000,000

2,500,000

2,000,000

1,500,000

1,000,000

500,000

-
1 2 3 4 5 6 7 8 9

Year

Total Cost Sales

P a g e 59 | 60