dehydrated business plan & progress report complete

Eng M 402 – Project Management & Entrepreneurship Dehydrated Business Plan - Group 2

November 10th, 2010

Dehydrated Business Plan

Instant Audio Translator

Team Members:

Mohammad Al-Amoudi Ahmed Ali Babar Effatsadat Faregh

Ravish Kalra Shannon MacDonald

Scott Metrunec


November 10th, 2010 Table of Contents

Overview....................................................................................... Page 1

The Business & the Concept......................................................... Page 1

The Opportunity & Strategy..........................................................

Target Market & Projections......................................................... Page 2

Competitive Advantages............................................................... Page 3

Economics, Profitability & Harvest Potential............................... Page 4

Management Team........................................................................ Page 6

The Offering.................................................................................. Page 7

Appendix A – Progress Report...................................................... Page 8


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Overview

This Dehydrated Business Plan outlines the necessary information and processes relating to designing and marketing the Instant Audio Translator. The Dehydrated Plan includes information pertaining to the business and the concept, the opportunity and strategy, target market and projections, competitive advantages, economics, profitability and harvest potential, management team, the offering and the progress report.

The Business & the Concept

“Communication – the human connection – is the key to personal and career success.” ~ Paul J. Meyer ~

Thanks to the efficiency of modern technology, it is possible to easily form business relationships with people and companies from different countries. There is one major setback to these relationships if not dealt with correctly: lack of or miscommunication. It is common practice to hire translators for these purposes but this approach can be extremely costly if used over long periods.

Through internet research, it has been determined that there are other ways of achieving translation: There are internet applets, but they are found to be very unreliable, and may be the cause of improper translation, leading to miscommunication. There are companies that will translate documents for up to hundreds of dollars with every new inquiry. The issues with both these processes are that the passages must be in text format before it can be translated and the later can be quite costly.

<Our Company Name> has considered a hand-held device that will translate between most languages, including Braille, for the ease of communication within these business relationships, as well as for personal uses (i.e. vacationing to different language-speaking areas).

The concept of this product is the following: Person A speaks into the device in language A. The device registers the information by way of speech recognition software and converts it to the desired Language B. The device will then, depending on its setting, (1) play the passage in Language B on a speaker that is attached to the device, or (2) store the information for use with computer software or a Braille printing device for the visually impaired. All translations are able to happen almost instantly, with the only wait time being the internal processing of the system, which will most likely be no longer than a few seconds.

This device holds many positive aspects: The user will only have to pay a one-time fee to purchase the product, instead of paying per translation. The user will be able to communicate efficiently and effectively in any setting. As well, the user can choose to store the information for later use of documenting purposes or Braille printing.


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The Opportunity and Strategy:

The opportunity proposed is an instant voice-language translator device which is based on the existing technologies capable of converting voice to text, translating text in one language to another, converting text to voice and converting text for the purpose of printing in Braille.

This handheld device, named TransVoText runs on battery power. It provides the user with the ability to convert voice signals in a particular language instantly into voice signals or text of another language, or translate the material for Braille printers. The device shall run on easy to use software, which will have to be developed during the product development phase.

Initially, the target market includes personnel involved in international businesses who currently require translators during conferences calls and meetings, saving these personnel for an average of 500 hours of pay per annum for each translator. The target market also includes the tourism industry, which is currently growing at an annual average rate of 4% and has an increasing demand of such a translating devices.

The product is currently expected to be sold at a price of $500 per device.

The strategy proposed by TransVoText Inc. is to develop a prototype of this product in the first six months of the company’s business. Once a prototype is developed, the plan is to get this patented, as such a device does not exist is in the market currently. This approach will minimize competition in the future and also allow us to exploit licensing opportunities. Once the patenting process is complete, a second-generation prototype will be developed and alpha and beta testing of the software would be conducted. After completion of the testing phase and a detailed analysis of the market need, the product is to be placed into production in the second year of business and shall be marketed targeted at each market seperately. A break-even point is expected in three years and six months using this strategy. In the future, markets such as universities and schools will also be exploited with a product designed specifically for use in lecture theatres. Future product ideas include addition of more languages and updating human interface and interface with computers by providing services such as Bluetooth.

Target Market and Projections

The initial market that will be targeted by our translation device will be Canadian companies that have business in any foreign-speaking country worldwide. We will also market our product to the tourism industry. This market is incredibly large, with 922 million international tourist arrivals, and an annual growth rate of 4% per year. Our marketing strategy for this initial stage will be to develop a prototype, patent our device, and begin surveying our potential market to gauge demand. Once we have a good idea of how many we will need to produce, we will begin our first production run while showing our trial product to potential customers.


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To reach our sales goals for each year, we plan to advertise our product in business and tourism magazines and websites. This will give our device a very large audience without spending a lot of money on advertisements, which will allow us to reach a breakeven point sooner. Based on our research and projected economics, we should be able to reach breakeven based on our initial investment of $330,000.

Once we have established our company and built a reserve of cash, we will be able to further expand to our secondary markets, which include educational institutions like universities, government buildings, and further expansion of our business to regions around the world. These markets are also quite large, as many students and governments frequently deal with people in a foreign language. With our device fully functional, a student would not need to even learn a professor’s language to be able to learn from them. In this same area, our device would also be marketed to the visually or hearing impaired, as it could be a great improvement in their lives. The hearing impaired would be able to convert any speech to text without having to read lips or use sign language. Visually impaired people would be able to store any lecture or meeting in the device and attach it to a unique printer that can output the contents in Braille for study later.

Competitive Advantages

Our instant translation device will immediately be able to reduce costs for companies operating internationally by having fewer translators on staff that need to be paid a consistent salary. The initial fee to purchase our translating device will quickly be offset by the savings in staff salaries. Our device would also be a great advantage for tourists or people travelling abroad for medical reasons, as it would provide one handheld tool to replace traditional books currently used for translations. It also opens new possibilities for people to fully communicate while speaking different languages. Eventually, we will expand our device to support speech-to-text for the hearing impaired and the ability to print in Braille for the visually impaired. Our device will, hopefully, be a large advantage to these groups, and help them to live more effortlessly.

Since this product has not been explicitly created yet, we should be able to patent and protect our translation device while we put it on the market. There are similar devices currently available; none of which have the range of features of our product. In the future, we will be able to license our technology to other companies, which could potentially be in markets that we are not targeting. However, as smartphones and tablets are getting more complex and prevalent, we may be able to port our software onto non-dedicated hardware that shares the necessary requirements (e.g. Quality microphone, sufficient processing power).


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Economics, Profitability, and Harvest Potential

An initial start-up of $330,000 is required for a small and expanding license business prototype lab, offices and warehouse needed for producing the components and software in the audio-text hardware. At completion, patent fees are incurred. Consultation fee is another thought, to insure intellectual property and project protection a registered agency is needed. After the completion of the patent paper work, the production of second generation prototype audio-text interface will need to be made. An ergonomic hand held design will need to be produced with the fastest and smallest microphone, processor, display, battery and input output plugs. At least 10 alpha and beta version will need to be produced for the software and will need to be test in different languages and places.

The contribution analysis (operating and the cash conversion cycles):

1. Start up (1 month) • Prototype lab, offices and warehouse (utilities inclusive): $ 12,000

($ 1000 per month for 12 months) • Attraction and collection of ‘Love money’ and Angel funding • Plastic case manufacturing unit $ 7,000 • Electrical and audio oscilloscopes and meters $ 500 • Order parts for prototype development:

⇒ software code writing software $ 200 ⇒ microphone $ 10 ⇒ processor $ 50 ⇒ display $ 20 ⇒ battery $ 20 ⇒ input/output parts $ 5

2. Prototype development (6 months) • Salary for 1 month (40 hours a week) x 2 staff (production

managers) $ 20 per hour $ 21,000 • Miscellaneous parts and shop supplies $ 500

3. Patent process (1 year) • File local (Canadian) patent $ 150 • Patent examination $ 200 • Final issuing of patent $ 150 • Maintenance fees for five years $ 75 • Registered consultant patent agent $ 10,000 • U.S. and international fillings $ 20,000

4. Search for venture capital (6 months)


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• Travel costs $ 4,000 • Presentation materials:

⇒ Projectors $ 1,000 ⇒ Laptop $ 5,000 ⇒ Meeting room rents $ 500

5. Second generation prototype development • Parts: 10 x (microphone, processor, display, battery and input/output) parts: $ 1,000 • Alpha and beta testing $ 800 • Salaries (Six people annual) $ 216,000

6. Search for license opportunities (3 months) • Travel $ 5,000 • Salary for staff promoting the opportunity ($ 10 per hour) $ 10,000

7. Contingency $ 15,000

The plan as stated above is intended to produce steady income after patent for a 20-month plan. The following details the assumptions and data needed to calculate revenue. At least one of the currently 25 conference organizing companies will implement the technology.

Total of expenses: $ 330,000.

• Retail sales: ⇒ Targeting 50 countries ⇒ 4000 in Canada alone (targeting Quebec as the biggest market) ⇒ 1/2 of them purchased translating devices to record

minutes of meeting and translate languages ⇒ An average of $ 500 retail price per equipment

Retail sales = 50 x 4,000 x 1/2 x 500 = $ 50 million

• Fraction of retail sales profited: ⇒ The license agreement earns 3% of retail sales from manufacturer

Revenue = $ 50,000,000 x 3%

Breakeven will take 3 years and 6 months, for a revenue value of $ 250,000 and an initial investment value of $ 330,000. Revenues will exceed $ 250,000 per year target as expansion is expected. Selling license will bring $

Total of revenue = $ 250,000 per year.


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10,000 per month and will grow as demands rise. The new manufacturer revenue is suggested to hold as small as 1.5% of the market.

• Growth projection: ⇒ 𝐺𝑟𝑜𝑤𝑡ℎ 𝑝𝑜𝑡𝑒𝑛𝑡𝑖𝑎𝑙 = 𝑂𝑙𝑑 𝑚𝑎𝑛𝑢𝑓𝑎𝑐𝑡𝑢𝑟𝑒𝑟 𝑟𝑒𝑣+𝑁𝑒𝑤 𝑚𝑎𝑛𝑢𝑓𝑎𝑐𝑡𝑢𝑒𝑟 𝑟𝑒𝑣

𝐿𝑎𝑠𝑡 𝑦𝑒𝑎𝑟 𝑟𝑒𝑣

where New manufacturer revenue = $ 250,000 x 3% New manufacturer revenue = $ 75,000) hence Growth potential = 1.3 in first year

This means there is a 30% growth potential in the first year after breakeven point. Full manufacturing is purchased if the technology is successful instead of license deal. This venture would provide revenue for starting and operations capital of newer projects in the future.

Management Team:

Management team will consist of six main members. Every task is assigned to each member of the management team according to his/her ability to handle the task. Management team will work in the following order.

Superintendant

This is so far the most important position in the management team. Superintendent is the leader of the team and will monitor the progress of the entire project. Shannon MacDonald with her background in BSc. Mechanical Engineering from University of Alberta is the most suitable person for this job. She also has leadership qualities and manages various tasks actively. She will be responsible for assigning tasks to managers, manage accounts and financial of the project and arrange effective meetings. Superintendent will reach the potential investors as she has the clear picture of the progress and accounts of the project.

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Critical Analyst

Critical Analyst will calculate the risks and problems and deal with all the legal issues affiliated with project. He will work with the production and marketing managers for the initial research of the device and take into account all the legal matters. Critical Analyst will also estimate the purchasing and receiving the necessary equipment and will look after the spinoff technology. Mohamed Al-Amoudi with his experience in research and back ground in BSc. Chemical Biomedical Engineering from University of Alberta is the most qualified person for this job.

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Production Managers

This task is assigned to two people in the management team. Production managers will produce the idea of Instant translating device into a working model in a reasonable price which is affordable for potential customers. This device will then be produced by the production managers on a large scale to fulfill the demand suggested by the marketing managers. Ravish Kalra and Effatsadat Faregh have perfect understanding of this task as they both are currently studying BSc. Electrical Engineering at University of Alberta and already studying and designing electrical devices in their design projects.

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Marketing Managers

Marketing managers are responsible for the marketing and advertising of the product. Initially the market will be studies by these managers and they will then suggest an estimate of units required for the production of Instant Translating Device. They will also look for present and potential customers, initially in the domestic market and later in the international market as the business progresses. Ahmed Ali Babar and Scott Metrunec with their background in BSc. Chemical Engineering from University of Alberta will be marketing managers as they both intend to study MBA after completing their Engineering. Ahmed and Scott both have good communication skill and wide social network which also makes them suitable for such a job.

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Once investors and shareholders are decided on, their compensation and ownership will have to be finalised. Appropriate salaries of management will have to be decided upon confirmation of other costs of the project.

The Offering:

The price for the Instant translating device is estimated to $400 per unit. Time estimation for production and marketing is one year. As per research, such device does not exist in the market and therefore it assumed that 1000 units will be sold in the first year of production (second year of business) generating a profit of $140,000. Six management team members working on a salary of $60,000 per person per year making a total required salary of $360,000 per year. The Capital required for purchasing equipment and required licenses for the production and marketing is estimated to be $100,000. Another $50,000 is added in the initial investment for contingency making a total required initial investment of $710,000. Each member of the management team will make and initial investment of $10,000 and rest of the investment will depend on angel investors. Total financial need from the angels is estimated to be $650,000. Assuming that the sale will grow exponentially and therefore generating double profit, the estimated payback period is five years.


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Appendix A Progress Report


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Introduction

This is a progress report for a new technology called “Instant Audio Translator”. As the device name shows, what it does is to convert audio signal to text (and vice versa) and do the translation on these files, if required. Another ability which would specify this new idea from any already existing technology is that this device would have a USB port which would enable it to connect to a special printer for printing in Braille language.

This progress report identifies all the necessary tasks for completing the business plan proposal for this device. The time period under consideration in this report is the time interval starting from September 24th 2010 till December 8th 2010. The tasks are categorized in three distinct groups: Completed tasks, tasks in progress and remaining tasks.

Discussion

So far, starting from Sept. 24th, our group has completed the following tasks:

Completed Tasks:

• Initial identification of the market size:

The tourism industry in one of the target markets for this instant translator device. “Tourism has become a popular global leisure activity. In 2008, there were over 922 million international tourist arrivals, with a growth of 1.9% as compared to 2007. International tourism receipts grew to US$944 billion (euro 642 billion) in 2008, corresponding to an increase in real terms of 1.8%. “[1] The World Tourism Organization (UNWTO) forecasts that international tourism will continue growing at the average annual rate of 4 %. [2]

All the international institutions and companies, academic institutions and universities can benefit from this new technology as well.

• Identifying the current and potential customers:

One of the main target markets for the instant voice-text convertor/translator device is the deaf (or people with severe hearing problems) and blind population.

“In the USA Based on Available Federal Data and Published Research:

About 2 to 4 of every 1,000 people in the United States are "functionally deaf," though more than half became deaf relatively late in life; fewer than 1 out of every 1,000 people in the United States became deaf before 18 years of age. If people with a severe hearing impairment are included with those who are deaf, then the number is 4 to 10 times higher. That is, anywhere from 9 to 22 out of every 1,000 people have a severe hearing impairment or are deaf. Again, at least half of these people reported their hearing loss after 64 years of age.”[3]


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• Identifying the present and potential competitors:

At this point, as our initial investigation shows no other identical product has yet been introduced to the market; however, there are other kinds of devices that can only perform one of the two tasks: converting text to voice or do the translation. An integrated device (such as the proposed one in this business plan) that would do both of these tasks almost simultaneously has not yet been developed.

• Initial research and consultation on the basic idea and its feasibility:

All the necessary technologies for producing this new idea are already available. That’s how the instant translators and Voice-text convertor devices are already introduced to market, separately.

Thus, for this new technology, there would not be much technological development, instead the main work would be to integrate all these existing technologies into one and produce a device that can replace all those devices.

• Looking at the spin off technology:

In future, this technology can be added to land line phones and cellphones. This would make the conversations between two people with different languages much more convenient. Also this way, people with hearing problems can use phones, since this technology converts the conversations over the phone to text format.

To complete the overall business plan for the proposed technology, the following tasks are still under progress:

Tasks in progress:

• looking for any possible legal problem with respect to developing such product • Setting up the basic organization/ define the key management personnel’s responsibilities • Figuring out the Critical Risk/problem & Assumptions associated with this technology and its market • Solving any possible current/ potential legal issues

We are yet to finalize the actual physical format for this device, and how it gets implemented. Also in terms of marketing, we are yet to decide what marketing strategy would best fit this technology. We also need to address all the issues with respect to the services and warranty policies, the advertising and promotions. We also need to define the management compensation & ownership in near future and finalize the suitable sale tactics.

Remaining Tasks:

One of the main remaining tasks -basically a tool which helps us to do the remaining task better- that probably would not fit in the time table ( ̴the budget) of this business plan, but would have a great effect on the resulting product, is to contact the potential markets/customers and ask for their opinion on such device. One way to do


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so is to run a survey among the potential costumers, which would ask for their degree of willingness to purchase such device and what they would think as an appropriate price for such technology. Such survey would help us to come up with a better marketing strategy as we might end up with different pricing strategies for different groups of costumers.

However, these kinds of surveys should be done in a way that it would expose as little information as possible regarding the new idea, for a better protection of the idea in future.

References

[1] "UNWTO World Tourism Barometer June 2009". UNWTO World Tourism Barometer (World Tourism Organization) 7 (2). June 2009. Retrieved August 3, 2009, from: http://unwto.org/facts/eng/pdf/barometer/UNWTO_Barom09_2_en_excerpt.pdf.

[2] "Long-term Prospects: Tourism 2020 Vision". World Tourism - 2004. Retrieved from: http://www.world-tourism.org/market_research/facts/market_trends.htm.

[3] Gallaudet University. (2010, July 6). Gallaudet Research Institute – Dawes House. Retrieved from http://research.gallaudet.edu/Demographics/deaf-US.php _ Last visit on Oct.29th 2010

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