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Thursday, May 2, 2013

An Actual Business Plan Review

A Business Plan Review

Dear Friend:

I've enclosed an actual business plan review I completed for a young entrepeneur.

I thought you might benefit by my work and insight.

Marc Charles  

My thoughts, comments and review is enclosed below and highlighted in blue.

Hello, Marc.
The following service I would like to provide would be either a future franchise or a self run company.

The Service:
It would be a personal courier service. 

This is a good idea because it’s a hot rising trend, the postal service is bankrupt and raising prices, and for this niche UPS, FedEx and others are not interested. In most major cities around the world, and especially Asia, personal, professional courier services are in demand.

For example; You want a dozen donuts from Dunkin' Donuts before you go to work, but you're horrible at waking up early enough to pick them up. You reach me, and we have it delivered to you when you want. If you are not familiar with how Jimmy John's does their deliveries in down-town Chicago, let me tell you, it's all by foot or bike and very fast. 

I was not familiar with Jimmy John's. I had to Google them. It looks like a great service.
But there’s a big difference between what Jimmy John's does and a courier service, which I’m sure you know.

This will be the same method, no more than 5 city blocks per location to ensure fast and timely deliveries. They can order anything they want (literally) and it will be delivered. 

Okay….now I follow. It’s courier service that will deliver any food purchases, in a 5 block area, fast, right?
You’ll focus on food and drinks?

The only fee that will be paid by the customer is the complete total after tax (on the receipt which will be presented) and a small percentage that will be used for profit (15% is what I'm thinking.)

Are you saying you will add 15% to the food bill? If the meal was $26 with tax, and you add 15% -- the bill would be $30.
Would the customer be expected to tip the delivery person?
I think you could make just as much (or more) on tips, and working for the restaurants as a subcontractor, than charging 15%. But that is only my first impression.
What do food courier services charge in your area? You need this information, you can’t guess or think.

The customer:
The way I see it, everyone want's something delivered to them, but I feel that our main target will be the elderly, handicapped, and people without the time to get things themselves.

I agree most people want things delivered, and especially in major metro areas. But your customer or ideal prospect is not everybody. This is a mistake most entrepreneurs make.

There’s a big difference between a “possible” customer and a QUALIFED PROSPECT.

In this case a qualified prospect would be someone who is currently having things, and especially food, delivered on a regular basis, and is currently paying to have this service. This should be the FOCUS of your marketing and sales effort. This would be your ideal prospect.

Why the need:
I believe we are coming to an age where everything will be brought to us. People love ordering clothing, food, and products online. It's just so convenient.

Agreed. But are people willing to pay more for delivery. In most cases, I would say yes. However, restaurant food delivery is a different matter. Most restaurants, I would say 90%, offer free delivery, and even offer to deliver additional items (like beer, cigarettes, cigars, or other restaurant food!).
This is the greatest obstacle to your business model…in my opinion. And my knowledge, insight and expertise into personal courier services are limited. However, I know a little more now because I’ve had to research it for this Fiverr gig!

For starters, it will be based somewhere in the Chicago area, preferably the loop. 

This is a good location, I think for this business to work right population density helps, as well as heavy traffic and congestion.

Hopefully being able to expand throughout the entire Chicago area and then through out major cities in the US. 

The expansion of any business can be a lot of fun. It can also be very profitable. I’ve helped dozens of entrepreneurs in this area and with franchises.
However, the most important thing is the FIRST sale. I would put expansion and franchising on the backburner for now, and focus on launching your business and making the FIRST sale.
This FIRST sale will help you formulate your business structure and plan. You’ll also be able to figure out the best way to do things (delivery routes, personnel, bikes, GPS, location, fees, profit margin, etc.).
I really like the simplicity of your business, so launching it does not need to be complicated or difficult.
After you’ve tested some ways to make it work, things are in place and the venture is making money, you could consider expanding or franchising.
If given the choice I would own all of the locations rather than franchising the idea.
I would build the business to 25-50 locations, and then consider franchising it. I would franchise it like Domino’s Pizza. They give managers a percentage of the profit, and it keeps them very happy. Domino’s Pizza has the lowest manager turnover in the business.

The business will also have a website which you can place orders through a CC.

Of course! And also social media, web cams on bikes, and a mobile app for anyone with a smartphone.
The mobile app would be very attractive on the open market, for other similar businesses, as well as if you franchise the idea. This business is a perfect candidate for a GPS based mobile app.

The closest competition to this business that I could think of is something along the lines of FedEx, UPS, Pizza Hut, and Pea Pod (if you catch my drift.)

I do not think FedEx, UPS, or other delivery services are your competition. Your competition is anyone in the loop area currently offering similar courier or delivery services via bicycle, and specifically for restaurants. 

At first, I believe I will be able to self fund, but financing through an angel investor would be ideal.

I’m a BIG fan of self-funding ideas and businesses. I’ve launched more than a dozen small businesses on a shoestring. The business world and most people look down upon small, self-funded ventures. But that’s their problem. The fact is, small self-funded businesses are typically the most fun and the most profitable.
I started an office cleaning company in my 20’s with less than $100. It became the third largest office cleaning company in the area in less than 3 years.

There’s a great book on $100 startups called The $100 Startup: Reinvent the Way You Make a Living, Do What You Love, and Create a New Future by Chris Guillebeau. You can review it on Amazon.

The bigger picture of this idea is to expand as much as possible to the point where there are many locations and people will always have the option of having anything that is currently available delivered to them.

An entrepreneur’s dream! I’m a big fan of dreaming big and seeing the possibilities. Please don’t stop dreaming! This business can work if it’s tweaked, and if you understand who is making money right now, today, offering similar services. This is your homework J

I appreciate any type of critique and ideas. Even if the idea is to think of something else.
-Respectfully, Nick 

Closing Comments

Nice job Nick. I like the basis of this business. But I think it needs to be “tweaked” in order for it to be profitable in one location, before its expanded.
One issue I have is with adding 15% to an invoice when the food is delivered. Most restaurants offer free delivery, and customers usually tip delivery persons. In places like New York City and Los Angeles delivery people can make $50-$60k a year.
You also need to research, know and understand the immediate competition. Your competition is not FedEx or UPS, or even local courier services. Try to identify WHO is offering this service in Chicago, and how much they charge (and make in profit). This is the first step.
When entrepreneurs tell me there’s “no competition” for a particular business, I usually advise them to “tweak” their business so it’s in a market with fierce competition, or change the business focus.
It sounds like the wrong thing to do on the surface. But in reality it’s the BEST thing to do.
When there is healthy competition there is incredible demand, and usually a lot of money to be made.
I hope that helps!
Marc Charles
My Blog: AskMarcCharles

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