Starting a New Business

ENT09101

Business Plan

Prronto Logics

Written by: 40056529

Contents

Content Page Number

1. Executive Summary 2
2. The business 3
2.1 The business idea 3
2.2 Description of the business 3
2.3 The name and logo 4
2.4 Legal status 4
2.5 The vision and mission statements 5
3. The Market 5
3.1 Geography, Demography, Behaviour and Psychographic 5
3.2 Customer Analysis 6
3.2.1 Business Organisations 6
3.2.2 Individuals 6
3.3 Competitor Analysis 7
3.4 Marketing plan 7
3.4.1 Service 7
3.4.2 Price 8
3.4.3 Place 8
3.4.4 Promotion 8
3.4.5 Process 8
3.4.6 Physical Evidence 8
3.4.7 People 8
4. Resources 9
4.1 Management, Administration and Employees 9
4.2 Premises, Location and Equipment 9
4.3 Online Presence 10
5. Finances 11
5.1 Start-up costs and Funding 11
5.2 Estimates and Assumptions 11
5.3 Income statement and cash flow 12
5.4 Profitability 12
5.5 Sensitivity analysis 12
5.5.1 Scenario 1: No sales (zero sales) 12
5.5.2 Scenario 2: Increase in sales (100% increase) 12
6. References 13
7. Appendices 14
Appendix 1 Business plan flow chart 14
Appendix 2 Marketing mix 15
Appendix 3 Assumptions 16

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 1. Executive Summary

Prronto Logics is a web-based marketing solution aimed at Nigerian SMEs and individuals. The
idea is to provide a popular and reliable platform for Nigerians to buy and sell without worrying
so much about the perceived dangers of internet security and e-commerce. The need arose from
experience and market research which showed that over 90% of Nigerian SMEs lack online
presence and people spent significant amount of time and resources finding where to purchase
their everyday needs.

The site when set up will offer Nigerians the opportunity to buy and sell in the form of auctions
and classifieds. It will thus be designed and modelled to provide the services offered by amazon,
eBay and Gumtree in the UK. The site will allow anyone to posts free classifieds while
businesses will be expected to pay an annual subscription fee of N10,000 to set up shop fronts
and all auction sales (or quick sales) will attract a flat rate of N100 for qualifying sales. Further
revenue for the business will accrue from adverts placed by businesses and individuals on the
website.

Amazon, eBay and Gumtree do not operate in Nigeria and thus the main competitors will be
taafoo, jumia, olx, kaymu, nairaauctions, buyright, etc. Most of these businesses are stockists and
thus will not be in direct competition with Prronto. The main competitor will be olx and several
other similar websites that have been found to be virtually none existent on ground. However,
the competitive advantage of the business is embedded in the fabrics of its business strategy –
cost leadership (use of students as main promotional tools) and product
uniqueness/differentiation (offering auctions and classifieds as well as shop fronts of subscribed
businesses).

The business, like similar businesses do, will start off as a sole trader. It will cost N880,000
(about £3,520) to start up. This amount has been fully set aside from personal savings. Prronto
Logics is projected to have a turnover of over N11.3 million in its second year and over N16.5
million in its third year. Projected net profits are 72.4% and 75.2% of annual turnover in the 2nd
and 3rd year respectively. This will represent a growth in turnover of about 46% and a 50%
growth in net profits.

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2. The business
2.1. The business idea

The business is a web-based marketing solution aimed at both business organisations and
individuals. It aims to bring in close proximity a large community of customers (buyers and
sellers) by offering a platform upon which businesses (and individuals alike) can market their
goods and services in the form of auctions and or classifieds. Individuals will be able to post free
classifieds either for goods they wish to sell or services they render while businesses can also post
free classifieds or subscribe to set up a shop front on the site.

For a start, the business will focus on the Nigerian market as the market research showed a huge
and urgent demand for the services proposed. In the long term though (and this is depending on
how popular and successful the business becomes), the model will be replicated in the UK in
2018/19 where the main target customers will be Africans and African-owned businesses.

The business will provide a robust online platform with massive bandwidth to accommodate
huge traffic, ensure a huge traffic through the site by embarking on effective publicity and by
providing tailored services to gain the trust and patronage of its customers.

The whole idea is to make it very easy and simple for ‘anyone’ in Nigeria to find whatever
he/she seeks so long as it is legitimate and also allowing businesses to cut down the costs of
advertising while increasing volume of sales by leveraging on the access to the large community
through the site, and a mobile app that will be made available for download to provide on-the-go
access.

2.2. Description of the business

As stated above, Prronto Logics will be a web-based marketing solution aimed at business
organisations and individuals. The main sources of income will be subscription fees paid by
businesses that set up shop fronts on the Prronto website, revenue from adverts and auction
fees. The success of the entire business plan thus depend largely on site traffic (the number of
people who visit the website) and the popularity. However, everyone knows that it is never easy
to bring a huge traffic to a new website. I have thus put in place a plan (see Appendix 1 below)
to circumvent this challenge.

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There are about 365 HEIs (Higher Education Institutions) in Nigeria scattered across the 36
states and Abuja, the Federal Capital Territory (FCT). These HEIs played host to about 2million
students in 2008/09 (Unesco 2010). My objective is to use my experience (having studied in a
Nigerian University before moving to the UK) and my existing network of friends, colleagues
and professionals in Nigeria to get students in the various higher institutions to promote the
business website by enabling students to post free ads and sell stuff for free on the site. This will
generate the initial online traffic required and a good chunk of word-of-mount advertising for
Prronto. This will then be followed by a publicity drive using other media such as TV
advertising, radio jingoes, celebrities, and of course good will and repeat custom from those that
have used our services.

2.3. The name and logo

The business will trade under the name Prronto Logics (www.prronto.com and
www.prronto.co.uk). The name was chosen to encapsulate the whole essence of the business
idea and what it aims to achieve. Prronto (from the word ‘pronto’) meaning - promptly, quickly,
without delay and Logic meaning – ‘the quality of being justifiable by reason’ and ‘reasoning
conducted and assessed according to strict principles of validity. So by following sound
reasoning and offering business solutions that are based strictly on valid principles, Prronto
Logics aims to help its customers achieve their objectives promptly in a reasonably justifiable
way.

Fig 1: Prronto logo

The logo shows that Prronto is a web business reliant on internet

connectivity, network and technology placed perfectly to serve the vast majority of Nigeria. The
colours, typified by the green and white of Nigeria show that it is proudly a Nigerian entity.

2.4. Legal status

The business will remain a Sole Trader in the first 2/3 formative years due to the nature of the
business. In that time, it hopes to grow its customer base and traffic through the site to enviable
figures, upon which it can negotiate its next phase of economic existence and operations.
Research has shown that most businesses of this type start up as Sole Traders or partnerships

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but grow to become Limited Liability Companies or Public Limited Companies (PLC). A good
example is gumtree which was started by 2 friends and was later bought over by eBay in a
multimillion pounds deal.

The business is thus not a separate entity from me, the owner and I am thus fully liable for any
losses accruable to the business. There are however no regulatory requirements to publicly
publish operating accounts of the business. These conditions will play to my advantage if and
when I decide to sell all of or parts of the business.

2.5. The vision and mission statements

The vision of the business is to create a unique place where virtually anything legitimate could be
bought and sold by anyone legitimate. It is the long term vision of the business which it aims to
achieve by continuously striving to bring together, a large pool of sellers and buyers offering a
wide variety of goods and services. The vision statement is thus: ‘everything you seek’.

The mission of the business within its first 3 to 5 years of operation is to be the site or place of
choice for every Nigerian looking to buy or sell a product or service. In order to accomplish this
mission, the business aims to make it easy and cheap for people to buy and sell. The mission
statement will be: ‘helping you seek for less the usual effort’.

3. The Market

3.1. Geography, Demography, Behaviour and Psychographic

Nigeria is a West African country and the most populous black nation. It is located in the gulf of
Guinea and shares land borders with the Republic of Benin, Cameroon, Chad and the Niger
Republic. It is typically a tropical nation with distinguishable variations as one move from South
through the middle-belt and to the North. Its total land area is over 910,000 sq km
(http://www.infoplease.com/country/nigeria.html). The 2006 National population and housing
census puts the total population of Nigeria at 140, 431,790 (One hundred and forty million four
hundred and thirty one thousand, seven hundred and ninety) people
(http://www.ibenaija.org/uploads/1/0/1/2/10128027/priority_tables_volume_i-update.pdf).
The World Bank puts the population growth rate for 2009-2013 at 2.8% per annum
(http://data.worldbank.org/indicator/SP.POP.GROW) which puts the total population for
2013 at well above 170million people. A BBC report in June 2013 informed that there were over
48.1million active internet subscriptions through mobile networks
(www.bbc.co.uk/news/business-24381684). These groups of people are economically active and

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will constitute the bulk of our customers. However, due to past experiences and the prevalence
of fraud in the economic sphere of the society, it is even more difficult for people to commit to
online purchases. Nigerians though like to patronize things they see as their own and the strategy
of using students to promote Prronto will serve perfectly well as students are largely received as
the darlings of the society. These situations point to a huge market for Prronto in Nigeria along
with the fact that over 90% of Nigeria SMEs lack online presence (Punch 2013).

3.2. Customer analysis

The main group of customers for the business will be business organisations and individuals.

3.2.1. Business Organisations

Over 90% of Nigeria businesses do not have any online presence (Punch 2013). Their only
contact and source of custom are thus walk in customers. For these businesses, advertisement is
by word of mouth as they cannot afford huge advertisement costs. Research and experience also
show that most of these businesses are very sceptical of the internet as availability bias ensures
adverse stories about the web loom large.

Prronto aims to bring the limitless advantages of the internet to these businesses without the
inherent risks by affording them the opportunity to make their products and services available to
a large (online) community at a fraction of the costs. The registration process on the website will
be the main tool limiting the risks.

3.2.2. Individuals

Before Jumia.com.ng and the likes, anyone looking to buy an item will have to go the shops.
First you have to find a shop that sells what you want to buy and at a price you are willing to pay
for it. If you wish to rent a place, you have to make phone calls to all the ‘agents’ you know and
peruse available information from friends and family to find a suitable place to let. If you do buy
something and later found you do not need it anymore, you are left at the mercy of the seller to
get a refund or exchange when you return such items. In fact 99% of the times, you have to keep
whatever it is you bought or find someone else willing to pay you for it. These processes are
extremely time consuming and expensive. Prronto will offer individuals the unique possibility of
buying and selling from the comforts of their homes, making it easy, fast and also cheaper.

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3.3. Competitor analysis

There are several entities presently trading in the Nigeria online market but all offering very
limited scope compared to what Prronto Logics aims to bring to the table. The list include:
olx.com.ng, 3sbids.com, dealdey.com, buyam.com.ng, buyright.biz, taafoo.com, konga.com,
mystore.com.ng, kaymu.com.ng, jumia.com.ng, nairaauctions.com, firstnaija.com,
justbuyorsale.com, etc (Wordpress 2014). Each offer auction services or classifieds (none offers
both as intended by Prronto Logics) and a visit to these sites (except for jumia.com which is an
amazon modelled seller/stockist) make it more imperative that there is a huge market for
Prronto in the Nigeria online space.

Most of the businesses listed above are secondary competitors as they are stockists with a
business strategy modelled on amazon and the likes. Jumia.com.ng is popular and the leader of
the pack but the rest is virtually unknown. In direct competition with Prronto will be Olx which
appears to be owned by foreigners (not Nigerians) as it operates in about 160 countries
(www.olx.com.ng/about.php). Nigerians love their own, and will always patronise an indigenous
business over its foreign owned counterparts offering similar services (the Prronto logo and all
promotional efforts will present the business as a truly local business). Also olx is not very
popular in Nigeria (only 419,000 likes on Facebook for a business operating since 2006) and are
even non-existent in most of the states in Nigeria. They also do only classifieds and so do not
offer local businesses the chance to subscribe and sell on their website. Their main source of
income is thus advertisement revenue.

3.4. Marketing plan

The success or otherwise of Prronto Logics will largely depend on its ability to distinguish itself
and its offerings from that which is already available in the Nigerian online market place. This
task is made even more difficult by the fact that service instead of product is the main offering.
However, the entire business strategy and marketing plan is purposefully designed to highlight
the business’s unique selling proposition, shown in the marketing mix in Appendix 1.

3.4.1. Service

Prronto Logics provides its customers with access to a large community of people making it
quicker, easier and cheaper for them to buy and sell their products and services. This service is
unique in that it is otherwise not available or not affordable to these groups of customers.

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3.4.2. Price

Businesses will be charged an annual subscription fee of N10,000 (£40; £1 = N250) to set up a
shop front on www.prronto.com. Adverts will be placed for N5,000 (for specified periods or
number of clicks) and each auction sell will attract a N100 charge. Even though the services
offered are not generally available elsewhere, penetration pricing is adopted to attract as much
customers as possible and to make it seemingly unattractive to other prospective investors who
may be considering starting competitor businesses.

3.4.3. Place

The main place for executing and implementing the business solutions will be the Prronto
website thus making the internet the ultimate medium of delivery. The website will be designed
in such a way that the entire process will be self-explanatory and easy to decipher.

3.4.4. Promotion

From the start, students will be the main promotional tools. Subsequently, word of mouth,
repeat custom, fliers, radio jingoes, television advertisements and celebrities will be some of the
media used for promotion.

3.4.5. Process

The process will be very streamlined and simplified to ensure a uniform user experience
irrespective of physical location within Nigeria. The business website will be developed and
modelled to provide a combination of the services of amazon, eBay and Gumtree. The entire
process will be automated like those it is modelled upon and will require no specific monitoring
and servicing though the hosting fees paid include charges for support services if needed.

3.4.6. Physical Evidence

The physical evidence will be the brand, the logo and the excellent services that will be associated
with Prronto, the feel good factor that users will experience by using the business offerings.

3.4.7. People

The people involved in delivering excellent services will include me (working as the owner and
main strategist) and numerous students and friends who have bought into the idea and are
determined to make the brand stand out. The vision and mission of the business is the bond and
the overwhelming desire to solve an age long problem is the overriding motivation.

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4. Resources
4.1. Management, Administration and Employees

I will be the main strategist and manager of the business. However, I have built a vast network of
friends, professionals and students who are willing and committed to the project to ensure a
resounding success. All other members of my team are based in Nigeria and so the main medium
of communication will be through company email and occasional telephone calls.

Because I have done this before with the previous business which I set up, I know exactly what
is required to ensure success. I have a team of students in each Higher Education Institution in
Nigeria, with one of the students serving as the main point of contact and overseeing the
attraction of many more students to the project. The more students involved in a particular
institution, the more traffic attracted to the website, and the more popular it becomes. Unlike in
the UK were students often hold part time jobs as a source of additional funds, there are no such
opportunities in Nigeria and thus the opportunity to promote Prronto will come very handy to
students in Nigeria.

My learned friend doubles as the company lawyer and representative and will provide support to
the students if the need arises. He is also an important source of contact with several of the
businesses we are looking to attract to use Prronto. He will draft the company documents and
will sign contracts on behalf of the company.

Everyone involved in the business is happy to work based on commission for the first 5 years
pending when the business will be fully established as a profitable organisation. There are no
formal contracts but the design of the website and the referral systems will ensure no one will
lose out on a successful recommendation. Twenty percent commission is paid on all
subscriptions attracted and 5% on adverts.

4.2. Premises, Location and Equipment

There is no requirement for a business premises but the company lawyer has a spare office
where Prronto will have a functioning computer system that can be used by any member of the
team. The business however has ambition to expand into other areas that will complement its
core services such as logistics and parcel delivery, and will make adequate plans before rolling out
such services.

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Every member of the team will be required to own a type of computing equipment with access
to the internet. Because of the nature of the business and the design of the website, a mobile
phone with internet access will suffice for all tasks.

Depending on the success of the business and future plans, the business hopes to establish a call-
centre type of office in certain regions to oversee the management of the website, carry out
routine maintenance, and serve as liaison office.

4.3. Online presence

The business will be predominantly online based so the need for a sophisticated, robust and
dynamic but easy to use website cannot be overstated. www.prronto.com and
www.prronto.co.uk have been reserved and hosting fees for 5 years fully paid at
www.Godaddy.com. The website will be designed and ready for business operations in June
2014.

The site will have a massive bandwidth (150GB) and will have the capacity to handle limitless
amount of data. Because everyone will be able to post an ad or list something for sell on the site,
special attention is being paid to the encryption and security features to ensure safety of all users.
Business organisations that are subscribed to Prronto will be issued log in details to access their
shop fronts on the site. They will be able to log in anytime to update their products and services
as well as prices, delivery charges, etc. Individuals will be able to create a user account for free
and post free classifieds but all auction sells will attract charges.

The design of the site will incorporate the different locations, cities and towns in Nigeria as well
as villages hosting Higher Education Institutions. This will make it easy for any seller to indicate
the location of the goods or service being offered for sell. The seller will also know from the
buyer’s indicated address (from the user account created) where to send the product or where
the service is required. There will be different sections for products and services ranging from
cars, food items, clothing, freebies etc. to land for sale, dating, letting, taxi, fast food, etc.

Other features of the website will include the terms and conditions, a section describing the
entire process and what is required of a user, a section providing answers for frequently asked
questions, a description of the business and the people behind it, contact details, payment
methods, how to open a shop on the site and requirements, and any other relevant information.

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5. Finances
5.1. Start-up costs and funding

The total start-up costs for the business is estimated to be Eight Hundred and Eighty Thousand
Naira (N880,000.00). This is about £3,520 (based on exchange rate of £1 = N250). This figure is
low compared to start-up costs for several other types of businesses. As such, all the initial
funding required has been set aside from personal saving. No loans will be required. Table 2
below shows a breakdown of the start-up requirements and costs.

Table 2: Start-up requirements and costs

Start-up Web Website Travel Telephone Legal fees Computer

requirement hosting design Communication systems
Costs N300,000 N100,000 N200,000 N30,000 N50,000 N200,000
(£1200) (£400) (£800) (£120) (£200) (£800)

5.2. Sales estimates and Assumptions

All the estimates are based on worst-case scenario situations with regards to telephone
conversations with prospective businesses, members of my team and past experience. Care has
been taken to ensure all targets upon which the estimates are based are well below what is
comfortably achievable within the time frames.

There are no revenues expected in the first 9 months after launch of the website. Afterwards the
working estimate for auction sales is 600 per month rising to 700 per month in the second year
and 800 per month in the 3 year. No subscriptions are expected in the first year. The business
hopes to have 1000 subscriptions in the second year and rising to 1500 in the third year.
Likewise, no revenues are expected from adverts placement in the first year. The business
expects to have 100 adverts placed in the second and third year respectively (Note no expected
increase in the number of adverts placed as the business employs a worst-case scenario strategy
considering changing advertising habits with technology).

The annual figures are spread over the months with January/February expected to be lowest
point and November/December the busiest, coinciding with the peak and trough of seasonal
sales.

Appendix 2 show details of the assumptions.

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5.3. Income statement and cash flow

There is a negative cash flow for year one as sales are not expected until the 10 th month after
launch. Subsequently, all costs accruable to the business are tied to sales and positive cash flow is
maintained over the second and third years.

5.4. Profitability

The business will begin to make profits in the second year. This trend will continue in the third
year provided the sales targets are reached.

Note: Further details on all finances and forecasts are provided in the Winforecast document
attached and the relevant pages affixed within this plan.

5.5. Sensitivity Analysis

Most business environments are very volatile. It is thus very useful for businesses to carry out a
sensitivity analysis to identify what impacts a negative (reduced sales) and positive (increased
sales) environment may have on the business in relation to expected results.

5.5.1 Scenario 1: No sales (zero sales)

Because of the nature of the business, the only scenario that may force the closure of the
business will be a ‘no sales’ or near zero sales situation whereby there will be no income at all.
This situation may force the team to invest their times in other economic endeavours. For
instance, a 50% reduction in auctions and no other incomes at all will mean an annual income of
N420000 (£1680) in year 2 and N480000 (£1920) in year 3. The business may continue to
operate because no further costs will be accruable to the business if only auctions were sold (the
website is equipped with all required processes to handle auction sales without further human
input).

5.5.2 Scenario 2: Increase in sales (100% increase)

This will result in annual profits of over N18million (more than £72,000) in year 2 and
N26million (£104000). The business may thus hasten some of its plans to expand into logistics
and delivery services, launching of the UK website, etc. The business may also go public and
thus change its legal status.

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6. References
BBC 2013 - Nigerian shoppers warm to online retailers.
www.bbc.co.uk/news/business-24381684 . 02/2/14
Infoplease 2014. Nigeria. http://www.infoplease.com/country/nigeria.html
National Population Commission 2009-
http://www.ibenaija.org/uploads/1/0/1/2/10128027/priority_tables_volu
me_i-update.pdf
Olx 2014. About Olx. http://www.olx.com.ng/about.php
Punch. (2013). 90% of Nigerian SMEs lack online presence – Ehimuan.
Available at: http://www.punchng.com/business/technology/90-of-
nigerian-smes-lack-online-presence-ehimuan/.
Unesco 2010 -
http://www.uis.unesco.org/StatisticalCapacityBuilding/Workshop%20Doc
uments/Education%20workshop%20dox/2010%20Windhoek%20-
Regional%20Workshop%20on%20Education%20Statistics%20for%20Sout
h%20and%20Eastern%20Africa/NIGERIA-
Higher%20education%20statistics-%20National%20experience.pdf.
10/2/14
Wordpress 2014- Top Online Store/Shopping Sites Nigeria.
http://shopnigeria.wordpress.com/2013/08/13/top-online-storeshopping-
sites-nigeria/. 02/2/14
World Bank 2014- Population growth (annual
%).http://data.worldbank.org/indicator/SP.POP.GROW . 11/2/14

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7. Appendices

Appendix 1: Business Plan flow chat

Year/Timeline Action Outcome/Status

2014 Start up, build new website www.prronto.com
established and ready to
provide services
2014/15 to 2015/16 Target 2m plus students www.prronto.com is
and other individuals to popular, generating over
buy/sell on 2m plus traffic per annum
www.prronto.com for free (some businesses could
as classifieds e.g subscribe to set up shops,
unwanted goods, room auction sales for
share, services e.g saloon, businesses not subscribed
car hire, etc; word of and individuals will start
mouth advertising generating income)
2016/17 Public relations, tv Target 1000 businesses set
commercials, Nollywood up shops on
promotion, mobile app www.prronto.com, more
ready revenue from auction sales
2017/2018 Business in full swing; More businesses subscribe;
excellent services plus advertising revenue from
more word of mouth adverts on website (google
advertising pay per click, etc)

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Appendix 2: Marketing mix

Source: http://mbamk.blogspot.co.uk/2013/07/7ps.html

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Appendix 3: Assumptions

The full business website will be ready for launch in June 2014

I will travel to Nigeria to meet with my team in June 2014

I will be working with an army of around 1825 students (averaging 5 per Higher Education
Institution)

It will take about 6 to 9 months (starting June 2014) for the website to become really popular
especially amongst students (1 million visits targeted).

This will translate to an average of about 111,100 visits per month. At least 0.5% of the visitors
will buy/sell by auction in months 10, 11 and 12 after the launch (600 auctions per month).

In the second year, I expect the number of visitors to increase but my estimates are based on
about 0.63% of the 1st year traffic figures and about 0.7% for the 3rd year. These are very realistic
targets. Each auction will cost N100 (40p). On eBay the minimum auction rate is 99p plus a
certain percentage of the final price of the item sold. The virtually unknown sites operating in
Nigeria charge for the token required to bid on auction sales plus N150 fixed charge on the sale.

Each member of the team will be expected to reach out to about 10 different businesses. If 1 in
20 of the businesses subscribe, the second year target will be met. For the third year target, if
50% of the existing businesses that subscribed renew their subscription and 1 in 20 of new
businesses reached out to subscribed, the third year target will be met.

If 1 in 10 businesses subscribed to Prronto also placed an advert, the targets will be met.

Everyone connected to the business will continue to work on commission bases for the first 3
years. This will ensure morale remains high and team members will work hard to win custom to
the business in order to earn their commissions.

All fixed and overhead costs for the 1st year are included as part of the start-up cost.

The 2nd and 3rd year costs are dependent on the success of the business i.e. at the end of the 1st
year, if set targets are not met, the business will be wound down and no further costs will be
incurred.

I will still be based in the UK in the 2nd and 3rd year so the travel and telephone costs will apply if
the business remains in operation.

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If the business meets its target in year one, Prronto and its unique processes will be patented in
Nigeria at a cost of N100000 (£400) {figure is within range of possible costs obtained by
telephone chat with company lawyer}.

Prronto will invest N200,000 on promotion in year 2 and N250,000 in year 3.

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