AppMate Business Plan
Ryan Burke, Edwin Giraldo, Alexandra Leon,
Carlos Tirado, and Aaron Westbrook
AppMate
265 Blue Course Drive
State College, PA 16803
(814) 555-1345
(570) 570-1578
Admin@appmate.io
I.
Executive Summary
Between THON organizations, fraternities, sports clubs, and academic groups, there are
hundreds of student-run organizations here on campus. These groups may have anywhere from
just a handful of members to hundreds of them. Between numerous surveys and conversations
with a diverse collection of these groups, we found that they have problems retaining member’s
participation, delegating responsibilities, organizing events, and being repetitive on various
forms of social media. Many of these club leaders have indicated that a personalized app would
alleviate the majority of their biggest headaches, but many would not know where to start to
create a personalized app for their group.
This is precisely where AppMate comes to save the day. AppMate provides a mobile
phone application template that is customizable enough to suit each of these groups with an array
of various functions. AppMate users will have access to a user friendly and aesthetically pleasing
platform that will allow them to easily create a personalized app. We won’t stop at only Penn
State, our future will include spreading to other universities as well and then on to professional
organizations!
II.
General Company Description
AppMate is in the application development business. The functionality of AppMate is to
provide a service for organizations in an effort to not only allocate their most vital functions, but
also to maintain an organized approach in a single platform.
Mission Statement: The mission of AppMate is to facilitate the gathering of organizations
and combine their communication into a single platform. The service is adjusted to the needs of
the consumer and will look to evolve and adjust to their every need.
Company Goals and Objectives: The goal of AppMate is to provide a service that will
allow organizations to facilitate their communication. Ideally AppMate will provide service to
users in the Pennsylvania State University and expand to locations across the nation. Ultimately
the goal is to obtain users worldwide. AppMate looks to generate 1.5 million USD in revenue
after 3 years of business. Considering the fact that the epicenter of the business concentrates on
the targeted audience, AppMate looks to obtain the highest customer satisfaction maintaining an
elevated standard.
AppMate believes in an organized structure that provides clients with the functionality to
perform and excel in their tasks with a user-friendly aesthetic platform. Client satisfaction,
organization, and adaptability are of uttermost importance for AppMate. After completing an
external search in the industry the team believes that placing an emphasis on the previously
mentioned factors will create a successful enterprise.
The product will be initially marketed to organizations throughout the Penn State
University Park campus. The targeted organizations include a large amount of members and have
national recognition. A meeting will be scheduled with these groups in order to pitch the product
and the benefits that it will represent to both their leaders and members. Once the local
organizations have been approached, the creators of AppMate look to contact and expand to
organizations around the nation. Finally Seeing as teamwork is crucial in today’s multi-dynamic
disciplines, AppMate looks to be a key player in ensuring a seamless approach to synergy.
AppMate is critically addressing two industries that are currently requiring service. The
world currently possesses a high demand for application developers and a dearth of individuals
competent to complete the task. This is where Appmate will be useful in terms of facilitating the
generation of an application through fully coded templates that still allow the user to create
modifications and personalize their end product. Following the same train of thought Appmate is
tapping into the industry of organizations by addressing an organizational issue that will improve
groups as a whole.
The most important company strengths are the fact that AppMate is solving a real
problem in a niche market, utility, and overall user-friendliness that it provides to organizations.
The key factor in ensuring the success of Appmate is the fact that it is an innovative unrivaled
idea. The creators of AppMate are Engineers in different disciplines that bring a diversity of
ideas to the table and look to achieve a consensus from different point of view. Additionally the
Appmate team possess organization experience relevant the product and have all identified the
problems that is being solved.
Legal form of ownership: AppMate will be established as a general partnership that
is composed of 5 Engineers that are equally responsible for business debts and overall
company standing. The general partnership was chosen as the initial best fit legal formation
for the following reasons:
● AppMate as a partnership does not have to pay income taxes; each partner files the
profits or losses of the business on their own personal income tax return.
● AppMate will be inexpensive and easy to establish compared to an S or C corporation
● There is an increased ability to raise funds when there is more than one owner
● Wider pool of knowledge, skills, and contacts.
● AppMate will have improved management with more than one owner
III.
Products and Services
The products that AppMate is selling are mobile phone application templates to fit the
needs of many diverse groups and organizations. Templates are highly customizable to each
group’s identity and needs. The colors, logos, pictures, bios, and icon can all be changed to fit
the personality of any organization. Inside the created app, there is the ability to add a variety of
functions, and each with different options.
The services that AppMate will sell all center around application creation and use. Each
app will need to be hosted on a server, which AppMate would do for each customer. To help
the user create their personalized app, AppMate provides a consulting service to assure the app
is ready for the market. AppMate also can put the created app on the mobile downloading stores
(Apple store, Google Play store, etc.). Another service is the consulting and development
involved with updating a current app.
The market for creating an app is relatively difficult to get in. There are individual
programmers that develop apps as a business. This can often be an expensive service and the
quality is determined by the skills and creativity of this programmer. Those with the dedication
to learn how to develop app will find it a tough and time consuming education. Even if you
know how to make a mobile app, it still is a time consuming and difficult process.
Our product and service makes app development unique. The process keeps the customer
involved in personalizing their app the way they want. We appeal to customers by providing a
product that they can put their name on and feel as though they made it.
Some advantages to our product are complete customization, ease of development, high quality,
and time and money saver. One disadvantage to our product is that it is limited to creating an
app best suitable for groups. Things like games and movies are not available at the time as an
add-on to a created app. For those looking to make apps with functions yet untouched would not
find our software helpful.
Pricing Structure will be as follows:
*Some of these can be packaged together
Fixed cost to develop app with 3 functions
Each function addition will be associated with a fixed cost
Adding new app to mobile store will be associated with a fixed cost
Updating existing AppMate app will be associated with a fixed cost
Professional Consulting will be associated with a fixed cost per hour
Hosting an app on our server will be associated with a fixed cost per year
There will also be host advertisements on developed apps. These can generate revenue
for both AppMate and the app developer. To remove advertisements from the app, an upgrade to
premium will be associated with a fixed cost.
*Each developed app will be available for purchase of the full rights from AppMate,
allowing the purchaser to use the app as they wish
IV.
Marketing Plan
Economics
Today 91% of the U.S. adult population owns a cell phone; 61% of these are
smartphones. By 2016 it’s predicted that the ratio of the world population vs. mobile device will
be of 1.4 devices per person on the planet. The App average use per mobile user is of 26.8
apps/month, this means that the average person spends 30 hours and 15 minutes per month on
apps. On 2013 Google’s Android market passed 50 billion app downloads and on 2014 Apple
reached on 75 billion app downloads. Our main initial target customers are college students and
according to UAB Collat School of Business, the average app use for 18-24 year olds is of 28
apps per month spending 37 hours and 6 minutes per month.
The main barrier we’re facing entering this market is consumer acceptance and brand
recognition. Since primarily AppMate will provide service to users in the Pennsylvania State
University, we plan on acquiring brand recognition by partnering with the Associated Student
Activities office, which is an entity that all student organization frequent. After acquiring
recognition through all the organizations at The Pennsylvania State University and their
members, we plan on expanding to locations across the nation and ultimately worldwide.
The fact that technology is always changing and improving will make us stay up to date
so that we don’t fall behind in the app developing business and therefor we will keep delivering
the best services that we can to our customers.
Product
Mobile application templates: The application templates are highly customizable to each
customer's identity and needs. The colors, logos, pictures, bios, and icon can all be changed to fit
the personality of any organization.
Consulting services: This feature will allow the customer to not only be sure that the app
they just created is ready for the market place, but it will also help their apps maintain
technological credibility since we would help them with the possible updates they will want to
add to the app they‘ve created.
A marketplace for the apps created through the website: Getting a new app into a
marketplace like the Apple App Store and Google Play is expensive. The Apple Store charge a
$99 annual developer fee and Google Play charges a $25 one-time fee. Our customers wouldn’t
have to worry about this fees since AppMate will put their apps in the mobile downloading
stores.
Customers
Our initial target customers are Student Organizations and their members at The
Pennsylvania State University and other top 10 Universities in the U.S, between the ages of 1824 years old.
● Amount of Student
The Pennsylvania State
Organizations: 650+
University
● Location: University Park
University of Chicago
and Branch Locations
● Location: Chicago, Illinois.
● Amount of Student
● Amount of Student
Organizations: 1058
Organizations: 350+
Princeton
Massachusetts Institute of
● Location: Princeton, New
Technology
Jersey.
● Location: Cambridge,
● Amount of Student
Massachusetts.
Organizations: 300+
● Amount of Student
Organizations: 380+
Harvard
● Location: Cambridge,
Duke University
Massachusetts.
● Location: Durham, North
● Amount of Student
Carolina
Organizations: 400+
● Amount of Student
Organizations: 400+
Yale
● Location: New Haven,
University of Pennsylvania
Connecticut.
● Location: Philadelphia,
● Amount of Student
Pennsylvania
Organizations: 350
● Amount of Student
Organizations: 450+
Columbia
● Location: New York City,
California Institute of
New York.
Technology
● Amount of Student
● Location: Pasadena,
Organizations: 500+
California
● Amount of Student
Stanford
● Location: Stanford,
Organizations: 300+
California.
Competition
The main products and companies that will be competing with us are application
developer websites, application developing companies and mainly any person able to code and
develop mobile applications.
Major competitors:
● Buildfire, U.S.
● Pixate, Palo Alto U.S.
● Appsbuilder, Milan Italy
All of our major competitors serve as a platform to develop, publish and manage apps.
Their customers are mainly businesses, professionals, and retailers that want a professional tool
to develop apps to enhance their businesses. In the other hand, our company is focus on
connecting organizations and facilitating the communication between them into a single
platform. Our service is adjusted to the needs of the consumer and will look to evolve and adjust
to their every need.
Another major difference between our competitors and AppMate is the price. Our
competitors prices are much more higher than ours, and the free version of their services are
limited. For example, the free version of Pixate only lets you work on 1 project and it gives you
limited use of their features.
Niche
Our niche market is student organizations at The Pennsylvania State University and the
top 10 universities in the U.S. According to the Office of Student Activities, Penn State’s
University Park Campus has 1058 recognized student organizations. We talked to 10 different
organization leaders and they all agreed that having the ability to create their own organization
app will make their role easier, it’ll be useful to their organizations, and they would definitely
allocate funds towards the creation of the App.
Strategy
Promotion
Since primarily AppMate will provide services to users in the Pennsylvania State
University, we plan on acquiring brand recognition and promotion by partnering with the
Associated Student Activities office, which is an entity that all student organization frequent, by
having brochures of our services available there for student organizations. We want our
customers to see us as a tool that they have to make their organization’s communication more
effective. After acquiring recognition through all the organizations at The Pennsylvania State
University and their members, we plan on expanding to locations across the nation and
ultimately worldwide.
Pricing
Our services will have 3 different packages for organizations to choose from.
● Basic cost: $200
Features: 3 functions to choose from, in app ads, hosting cost of $10 per month.
● Plus cost: $ 600
Features: 6 functions to choose from, no ads, hosting cost of $5 per month, free publish to
1 app store.
● Premium cost: $1000
Features: 10 functions to choose from, no ads, free hosting per month, free publish to 2
app stores, 2 free hours of consulting.
Sales Forecast
V.
Operational Plan
AppMate will operate out of the home of an administrative team member. This facility
will be the base of operations for AppMate located in State College, PA. Since this is an
online business, this facility will house only the computer equipment needed to reach the
Internet and the company records.
Location
Initially, the business will be located at 265 Blue Course Drive, State College, PA. It
will be located in the residence of the Carlos Tirado, thus minimizing the startup costs. As the
business grows, there is no geographic advantage to locating it at one location over another.
This is because the business is a completely online business with no requirements to be tied to
a specific physical location. As such, it can be managed and operated from any global
location.
Production
In order to mitigate costs where possible, we will be producing our website in-house.
In areas where we have limited skills, or where it can be performed more efficiently elsewhere
we will hire local university students as interns for development.
 Website Development and Updates. HTML5 based code will be developed inhouse. The application creation interface will be PHP based and be developed by our
consultants.
 Search Engine Optimization (SEO). All SEO activities will be performed in-house
except for link building. Link building will be developed in house but through the
local university students.
 Application Templates. All application templates will be designed in-house and
developed by interns.
Personnel
AppMate will employ roughly ten people to start. There will be five consultants to
develop, manage, and improve the website software. The other five will be the managers who
developed the idea. The role of the managers will be discussed in detail later in this document.
We will search the surrounding state college area from experienced website developers and app
builders. These consultants will receive $40/hr compensation for their services for the first three
years.
VI.
Management and Organization
There are currently five members on the AppMate development team. Each member will
be in charge of a separate part of the business so we will not get in each other’s way. This model
will keep everyone involved equally and our ideas diverse enough to ensure AppMate’s success.
Each of the managers has a very different background and therefore can bring something
different to the table. We all have a very large network of friends and connections that will be
beneficial to our company. At the same time, no single person in our group is critical to the
operation of the company. As our business grows, a few of these five managers will express
more interest in owning and operating AppMate than others. A reorganization of the company
may be in our future, but that will only be healthy for AppMate. This “only the strongest
survive” method of managing the company will guarantee that only the group members that are
legitimately serious about AppMate will eventually take control of the company.
An organizational flow chart of AppMate’s hierarchy is shown below. Edwin will fill the
Product Platform position. He will be in charge of managing what exactly our customers will be
receiving. This role includes maintaining AppMate’s vision while optimizing profit and customer
satisfaction. The next role is the Website Design management position. Carlos will work closely
with our software consultants to give our customers an enjoyable app creation experience.
Alexandra will fill the Sales & Customer Relations position. She will be in direct contact with
our customers. This means that she will be in charge of talking to all of the organization leaders,
receiving their feedback, and conveying it to the Product Platform and Website Design chairs.
Aaron will fill the Planning & Purchasing
role. His responsibilities include buying all
necessary materials and equipment
necessary for operating AppMate. Also
included in his responsibilities is planning
AppMate’s future and taking the necessary
steps to get there. Lastly, Ryan will be in
charge of finances. His role includes
determining pricing schemes for our
product and managing all required labor
and expenses.
VII.
Startup Expenses and Capitalization
Start-Up Expenses
Legal
Stationery, etc.
Brochures
Consultants
Insurance
Rent
Research and Development
Expensed Equipment
Contingencies (20%)
Total Start-Up Expenses
$1,000
$500
$5,000
$15,000
$250
$2500
$1,000
$3500
$5,750
$34,500
Start-Up Assets Needed
Cash Balance on Start Date
Other Short-term Assets
Total Short-term Assets
$170,000
$5,000
$175,000
Long Term Assets
Total Assets
Total Requirements
$$175,000
$209,500
Investment
Investor 1
Investor 2
Investor 3
Investor 4
Other
Total Investment
Short-term Liabilities
Accounts Payable
Current Borrowing
Other Short-term Liabilities
Subtotal Short-term Liabilities
$25,000
$25,000
$25,000
$25,000
$$100,000
$1,500
$500
$40,000
$42,000
Long-term Liabilities
$100,000
Total Liabilities
Loss at Start-Up
$142,000
$32,000
Total Capital
Total Capital & Liabilities
$68,000
$210,000
The tables above show a detailed breakdown of AppMate’s start-up expenses and the
capital and liabilities that we will need to acquire in order to begin this software company. Basic
start-up expenses are easily compared to other software companies that have started fresh. These
expenses include everything from legal, stationary, rent, R&D, and brochures [Berry]. Rent is a
seemingly low number because our location does not rely on a highly populated expensive area
of the country. In fact, we plan to start our business in State College, PA. We also will not need
to have a physical office building until right before we plan on launching. Brochures are
important to us because this will be one of our primary sources for advertisement. These
brochures are what we will be giving to each individual club.
Consultants are also included in the start-up expenses. Consultants are very important to a
software company. These are the people that are going to bring our idea to life and turn this
dream into a reality. In order to pull some of the best consultants, we are going to have to be
willing to pay them fairly. There is also a line called contingencies. This accounts for all
unexpected expenses which are bound to happen in any start-up. A general rule of thumb for the
amount of contingencies is to make them 20% of your other start-up expenses [Berry].
When starting a new business, it is important to have cash money to work with on hand in
addition to all of the physical office items. With much deliberation, we have decided that we
should have $170,000 in the bank on our start date. This will allow us to buy what we need as we
need it. This will help speed the process of starting our business so we can start making a profit
to return on investments as fast as possible.
The next aspect of this start-up that needed analyzed is how to generate enough capital
and liabilities to cover our start-up expenses as mentioned earlier. We met with a business
planning consultant to help us figure out what we would need to accomplish if this idea was to
become reality. During our meeting with him, Jack Zerby told us a number of stories about his
experiences. In a few of those stories, he mentioned how investors think and operate. In
summary, he said that it would be easy to get $25,000 from an investor if they like your idea
enough. We plan on finding four of these investors for a total investment of $100,000 as shown
above. These investors may even be hidden in the judge’s panel of this competition.
In return for their investments, our investors will want to own part of the company. We
have decided that a $25,000 contribution will buy 12 percent of the company. This means that if
we find four investors at 12 percent each, investors own 48 percent of the company. This is the
maximum amount we are comfortable with selling because it is under half. Because we as a team
own over half of the company, we can make executive decision about the future of AppMate as
necessary. Between the five of us, the remaining 52 percent would be divided as evenly as
possible.
The next few lines include accounts payable and other short term liabilities. The accounts
payable line represents our team’s combined credit card debt. This number could be higher, but
our credit lines are all fairly low because we are just college students. The other short term
liabilities include each of the investments from the founders. We estimated that we could each
contribute an average of $8,000 to our business that we would eventually get back. This would
come from our own bank accounts, friends, and family.
Long term liabilities might be more difficult to come up with, but we are confident that it
is possible. Long term liabilities include what loans we are able to get from banks. We feel that if
we are able to receive $100,000 from investors, then we can use that as collateral for the banks
and they will let us borrow the same amount. There will be a large amount of interest on these
loans, but loaning is necessary in order to start a company like AppMate.
Nearly every small business has a loss at startup. This is because AppMate will have incurred
expenses, but we will not have had sales or paid advertising yet. This causes a loss when
AppMate is just beginning, and this is okay [Berry].
VIII.
Financial Plan
The table below outlines our expected start-up costs for AppMate. These figures reference online
sources for their accuracy. We made sure to find businesses with similar functions so that we could see
what they had to spend to get off the ground. These numbers are our best estimate as to what it will cost
to start AppMate.
We then calculated how long it would take us to earn enough money to pay off our investors and
cover our operating cost. As it turns out, we break even somewhere between month thirteen and fourteen.
From then on, it is only up for AppMate. If our estimations and calculations are accurate, we will have
just over 1.5 million dollars in profit by month 36. This seems highly coincidental given our project
requirements, but we promise that this is just how things worked out. Below is a break-even graph of our
future bank statements. The math behind this takes our profits and subtracts our debts and costs for each
month. As you can see, we will have broken 2.2 million dollars by moth 48.
IX.
Refining The Plan
As shown in our financial plan, we plan to expand our business in several phases. This requires
stepping outside of Penn State to visit other universities and then professional organizations. By making a
presence in these places, AppMate is destined for growth.
According to our start-up cost spreadsheet, we will need four investors to lend us $25,000 each to
make this business possible. Investors can be confident about a quick return on this with a look at the
break-even chart. Multiple buy-out plans are available. The most preferred method would be manager
buyback. Each investor’s $25,000 investment will buy him or her 10% of the company, but no
involvement in management.
It is a fair assessment that cell phones and mobile applications to put on them will be around for a
while yet. By the time they do in fact fade away, we will already have easily paid off our investors and
bank loans. Our five consultants will be working full time in order to try to stay on the cutting edge of the
app development market. We hope to retain our intellectual property by retaining each of our five
consultants. However if one does leave, he will only have done one-fifth of the work and will not be able
to easily replicate the other four-fifths. Pay raises will be discussed if such an important member is
considering leaving. It will be some time before AppMate has anything tangible to provide to customers,
but our financial plan suggests that the payoff will be rewarding in due time.
References
Berry, Tim. "Estimating Realistic Startup Costs - Bplans Blog." Bplans Blog Estimating
Realistic Startup Costs Comments. Palo Alto Software, 12 Dec. 2007. Web. 16 Apr. 2015.
<http://articles.bplans.com/estimating-realistic-start-up-costs/>.