xyz, llc business plan€¦ · 2.2. company description & history ... 4.1. target consumer...

XYZ, LLC

BUSINESS PLAN

JULY 2020

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TABLE OF CONTENTS

1. EXECUTIVE SUMMARY ........................................................................................................................................... 4

2. COMPANY OVERVIEW ............................................................................................................................................ 4

2.1. MISSION STATEMENT ...................................................................................................................................... 5

2.2. COMPANY DESCRIPTION & HISTORY .......................................................................................................... 5

2.4. GROWTH STRATEGY ........................................................................................................................................ 5

3. THE APPLICATION .................................................................................................................................................... 7

3.1. DESCRIPTION ..................................................................................................................................................... 7

3.2. PRODUCT CATEGORIES ................................................................................................................................... 7

3.2. FEATURES ........................................................................................................................................................... 8

3.3. DEVELOPMENT .................................................................................................................................................. 9

3.4. REVENUE MODEL & PRICING ........................................................................................................................ 9

3.4.1. PHONE CARRIER PARTNERSHIP ............................................................................................................. 9

3.4.2. TRANSACTION FEES ................................................................................................................................. 9

3.4.3. ADVERTISING SALES ................................................................................................................................ 9

4. THE MARKET ........................................................................................................................................................... 10

4.1. TARGET CONSUMER PROFILE ..................................................................................................................... 10

4.1.1. OVERVIEW ................................................................................................................................................ 10

4.2. U.S. SOCIAL NETWORKING SITES MARKET ANALYSIS ......................................................................... 11

4.2.1. FIGURES & TRENDS ................................................................................................................................. 11

4.2.2. INDUSTRY ANALYSIS ............................................................................................................................. 12

4.6. U.S. SOCIAL MEDIA USAGE BY AGE STATS .............................................................................................. 12

4.3.1. OVERVIEW ................................................................................................................................................ 12

4.3.2. PEOPLE AGED 13 - 29 ............................................................................................................................... 13

4.3.3. PEOPLE AGED 30 - 49 ............................................................................................................................... 13

4.3.4. PEOPLE AGED 50 - 64 ............................................................................................................................... 14

4.3.5. PEOPLE AGED 65 & OVER ...................................................................................................................... 14

4.4. U.S. SOCIAL MEDIA USAGE STATS ............................................................................................................. 14

4.5. GLOBAL SOCIAL MEDIA USAGE STATS .................................................................................................... 14

4.6. PROFILE OF DIRECT COMPETITORS ........................................................................................................... 15

4.6.2. XYZ ............................................................................................................................................................. 15

4.6.2. XYZ ............................................................................................................................................................. 16

4.6.3. XYZ ............................................................................................................................................................. 16

4.6.4. XYZ ............................................................................................................................................................. 16

4.6.5. XYZ ............................................................................................................................................................. 17

4.6.6. XYZ (XYZ) .................................................................................................................................................. 17

4.7. COMPETITIVE ANALYSIS .............................................................................................................................. 18

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5. MARKETING PLAN ................................................................................................................................................. 19

5.1. MARKETING OVERVIEW & STRATEGY ..................................................................................................... 19

5.2. INTERNET MARKETING ................................................................................................................................. 19

5.2.1. OVERVIEW ................................................................................................................................................ 19

5.1.2. SOCIAL MEDIA MARKETING ................................................................................................................. 19

5.2.3. CELEBRITY/INFLUENCER ENDORSEMENT ........................................................................................ 20

5.3. PRINT ADVERTISING ...................................................................................................................................... 20

5.5. TELEVISION ADVERTISING .......................................................................................................................... 20

5.6. PUBLIC RELATIONS ........................................................................................................................................ 20

5.7. PROMOTIONAL MARKETING ....................................................................................................................... 20

6. OPERATIONAL PLAN ............................................................................................................................................. 21

6.1. OPERATIONAL OVERVIEW ........................................................................................................................... 21

6.1.1. HOURS OF OPERATION ........................................................................................................................... 21

6.1.2. LEGAL STRUCTURE ................................................................................................................................ 21

6.1.3. OPERATIONAL GROWTH PLAN ............................................................................................................ 21

6.2. COMPUTER HARDWARE & SOFTWARE ..................................................................................................... 21

6.3. LEGAL & INSURANCE .................................................................................................................................... 21

6.4. ACCOUNTING ................................................................................................................................................... 21

6.5. LICENSES & PERMITS ..................................................................................................................................... 21

7. MANAGEMENT & STAFF ....................................................................................................................................... 22

7.1. EXECUTIVE MANAGEMENT ......................................................................................................................... 22

7.1.1. JOHN DOE, CHIEF EXECUTIVE OFFICER ............................................................................................ 22

7.1.2. JOHN DOE, CHIEF OPERATING OFFICER ............................................................................................ 22

7.1.3. JANE DOE, CHIEF BRANDING OFFICER .............................................................................................. 23

7.2. BOARD MEMBERS ........................................................................................................................................... 23

7.2.1. JOHN DOE, BOARD MEMBER ................................................................................................................ 23

8. FINANCING & GROWTH STRATEGY .................................................................................................................. 24

8.1. CAPITAL REQUIREMENTS ............................................................................................................................. 24

8.3 RISK ANALYSIS ................................................................................................................................................ 24

8.3 EXIT STRATEGY ............................................................................................................................................... 24

9. FINANCIALS ............................................................................................................................................................. 25

9.1. SALES ................................................................................................................................................................. 25

9.1.1. SALES ASSUMPTIONS ............................................................................................................................. 25

9.1.2. SALES PROJECTIONS .............................................................................................................................. 26

9.2. OPERATING EXPENSES .................................................................................................................................. 26

9.2.1. GENERAL & ADMINISTRATIVE EXPENSES ........................................................................................ 26

9.2.2. MARKETING EXPENSES ......................................................................................................................... 27

9.2.3. STAFF HEADCOUNT & SALARIES ........................................................................................................ 27

9.3. PRO-FORMA ANNUAL FINANCIAL STATEMENT SUMMARIES ............................................................. 28

9.3.1. PRO-FORMA INCOME STATEMENT ..................................................................................................... 28

9.3.2. PRO-FORMA STATEMENT OF CASH FLOWS ...................................................................................... 28

9.3.3. PRO-FORMA BALANCE SHEET ............................................................................................................. 29

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1. EXECUTIVE SUMMARY

OVERVIEW

▪ XYZ, LLC

▪ Founded in XYZ 2020

▪ XYZ will be a social networking

app that REMOVED INFO

▪ Owned and led by John Doe

(CEO), John Doe (COO), and John

Doe (CMO), who collectively have

xx years of executive experience.

▪ Has already developed marketing

materials, secured seed financing

of $xxx,xxx, and developed a

functional beta version of the iOS,

Android, and online app

THE APP

▪ Enables XYZs to post XYZ for sale

for a one-time purchase

▪ XYZ can depict his/her XYZ how

he/she chooses using XYZ as a

canvas

▪ Sellers can include XYXs and

XYZs related to his/her life

▪ XYZs can focus on REMOVED

INFO

REVENUE MODEL

▪ Users can initially sell XYZ for $x,

$x, or $x

▪ XYZ $x fee per transaction

▪ Advertising sales (CPM)

TARGET CONSUMERS

▪ Removed info

▪ Removed info

▪ Removed info

▪ Removed info

U.S. SOCIAL NETWORKING

MARKET

MARKETING

▪ Marketing materials

▪ Internet marketing (social media,

video, SEO, PPC, articles)

▪ Print advertising

▪ Public relations

▪ Television advertising

▪ Promotional marketing

FINANCING

▪ XYZ 2020: Secured $xxx,xxx

o App development

o Web design

o Soft marketing

▪ Seeks “Series A” of $3.5M

▪ Raise “Series B” of $10M in M19

▪ Might raise “Series C” financing

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2. COMPANY OVERVIEW

2.1. MISSION STATEMENT

XYZ, LLC’s mission is to become a REMOVED INFO.

2.2. COMPANY DESCRIPTION & HISTORY

XYZ, LLC (herein also referred to as “the Company“ or “XYZ“) was registered as

a limited liability company in the state of ABC on January 1, 1234 and will be

headquartered in ABC, ABC, where the Company has identifed an office to lease.

XYZ, LLC will launch a new XYZ-enabled, social networking app that enables

users to REMOVED INFO, as well as REMOVED INFO.

XYZ, LLC is owned and led by John Doe (CEO), John Doe (COO), and Jane Doe

(CMO), who collectively have over 40 years of executive management experience

within the media industry.

XYZ users will be able to use XYZ to post any XYZ for sale, which can consist of

REMOVED INFO. Examples include:

▪ XYZ

▪ XYZ

▪ XYZ

▪ XYZ

▪ XYZ

▪ XYZ

▪ XYZ

▪ XYZ

XYZs will initially be able to be sold for $x, $x, or $x per XYZ.

XYZ, LLC will target any XYZ that is an REMOVED INFO and social media user

with a major focus on social media XYZs that REMOVED INFO

Since being launched, the Company has achieved the following milestones:

▪ Developed marketing materials

▪ Developed a splash page for the website

▪ Secured seed financing of $xxx,xxx

▪ Completed development of a beta version of the app for iOS and Android

▪ Furthered development of v1.0 of the app for iOS, Android, and online,

which is scheduled for release in January 1234

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XYZ, LLC will launch an agressive marketing campaign that includes:

▪ Internet marketing (social

media, video, SEO, PPC)

▪ Celebrity/influencer

endorsement




2.4. GROWTH STRATEGY

Phase 1 (Month 1-12):

▪ Raise Series A financing of $x million

▪ Develop updated versions of the iOS, Android, and online app

▪ Launch marketing throughout ABC and ABC

▪ Aggressively market directly to XYZs and XYZs

▪ Hire and train operational and marketing staff

▪ Garner positive reviews from customers

▪ Promote the Company’s social media pages

▪ Establish an efficient operations process

Phase 2 (Month 13-36):

▪ Raise Series B financing of $x million

▪ Develop updated versions of the app

▪ Increase marketing in ABC and ABC

▪ Expand marketing to ABC, ABC, and ABC

▪ Launch new marketing initiatives

▪ Continue to aggressively market the app directly to XYZs and XYZs

▪ Hire and train additional operational and marketing staff

▪ Improve operational efficiency

Phase 3 (Month 37 - 60)

▪ Potentially raise Series C financing

▪ Develop updated versions of the app

▪ Increase marketing in focus countries

▪ Expand international marketing

▪ Continue to aggressively market directly to XYZs and XYZs

▪ Hire and train additional operational and marketing staff

▪ Improve operational efficiency

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3. THE APPLICATION

3.1. DESCRIPTION

▪ XYZ will enable XYZs to post XYZ for sale for a one-

time purchase in XYZs.

▪ Users will be able to sell XYZs for $x, $x, or $x

initially.

▪ Sellers can upload XYZs related to a particular

subject or type of XYZ.

▪ Sellers can upload XYZs (XYZsTM) or (XYZ XYZsTM)

related to the XYZ’s life.

▪ XYZ has no "XYZs" or "XYZs" features, so that users

can focus more on content, commerce, and

networking in an undisturbed environment.

3.2. PRODUCT CATEGORIES

The following are examples of categories that XYZ

users can focus on:

▪ XYZ

o Removed info

o Removed info

o Removed info

▪ XYZ

o Removed info

o Removed info

o Removed info

o Removed info

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▪ XYZ

o Removed info

o Removed info

o Removed info

▪ XYZ

o Removed info

o Removed info

o Removed info

▪ XYZ

o Removed info

o Removed info

o Removed info

o Removed info

3.2. FEATURES

▪ Interface menu has specific categories such as XYZ, XYZ, XYZ, XYZ, XYZ,

XYZ, XYZ, and XYZ enabling the user to immediately access XYZs relevant

to specific categories

▪ XYZ features that enables users to post XYZs (XYZ XYZsTM), XYZs (XYZTM),

and information related to XYZ

▪ Messaging feature THAT enables users to message either other by either

chat, video chat, or video message. Messaging will have an “unsend”

feature, which enables users to unsend a text or video message

▪ Search feature that enable users to search for XYZs, XYZs, XYZs, XYZs,

XYZs, XYZ, XYZs

▪ Audio/video editing features that enable users to enhance and alter posts

▪ Alert notification feature that alerts users when someone in their network

has posted a new XYZ

▪ Performance features that track the number of purchases, amount of

purchases, amounts, and amount of sellers’ earnings

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▪ Privacy features that enable users to block, restrict, or mute unwanted

followers

▪ Bookmarking feature that enables users to add an “XYZ” to their Favorites

list

▪ Networking features that enable users to find XYZs and bolster their

network

▪ XYZ features that enable users to edit, modify, and add XYZs to XYZ and

XYZ

3.3. DEVELOPMENT

XYZ has been collaborating with XYZ to develop the beta version of the mobile

app, which was released in June and to develop the iOS, Andorid, and online App,

which was relesed on July 2. XYZ has been and is developing the XYZ app using

Python to develop the app, which is the same platform used by Instagram and

considered the state-of-the-art social networking back-end design platform.

3.4. REVENUE MODEL & PRICING

3.4.1. PHONE CARRIER PARTNERSHIP

The Company will offer all sales via App Store and Google

Play. During year 1, App Store and Google Play fees will be a

30% commission for any content sold. After 12 months, Apple

and Google's commissions will decrease to 15% of sales.

3.4.2. TRANSACTION FEES

During the first year, XYZ will be a freemium model, in which, users will be able

to sell content with no transaction fee charged by XYZ. After 12 months, XYZ,

LLC will charge users a fee of x% per transaction in year 1. After year 1, XYZ, LLC

will charge x% per transaction.

3.4.3. ADVERTISING SALES

From inception, the Company will sell advertising to XYZs in the form of XYZ or

XYZ. XYZ intends to REMOVED INFO.

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4. THE MARKET

4.1. TARGET CONSUMER PROFILE

4.1.1. OVERVIEW

The Company will target XYZs, as well as

specifically target XYZs, which will be a cornerstone

of the Company’s userbase.

XYZs include:

▪ XYZs

▪ XYZs

▪ XYZs

▪ XYZs

▪ XYZs

The Company will also specifically target social media users, which include:

▪ Instagram Users = 1 billion users

▪ TikTok Users = 800 million users

▪ Facebook Users = 2.6 billion users

A major focus of the Company’s marketing efforts will be on XYZs, which can

REMOVED INFO. This includes XYZs, XYZs, XYZs, and XYZs with REMOVED

INFO. In addition to the XYZs, the Company will also heavily market towards

any XYZ that has XYZ. According to Mention.com, approximately x% of

Instagram users have over x followers1

1 “Instagram Follower Rates 2018”; Mention.com; 2019

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4.2. U.S. SOCIAL NETWORKING SITES MARKET ANALYSIS2

4.2.1. FIGURES & TRENDS

Mobile platforms in particular are

expected to continue to drive

revenue in the U.S. social networking

sites market as the market

penetration of devices such as

smartphones and tablets grows.

However, as growth in the

percentage of services conducted

online and the number of mobile

internet connections slows, industry

revenue growth will deaccelerate,

especially during the latter part of

the period. Consequently,

IBISWorld expects revenue to

increase at an annualized rate of

only 19.6% from an estimated $52.7

billion in 2020 to an estimated $129.0

billion over the five years to 2025.

Key players in the industry such as Facebook Inc., LinkedIn Corp. and Twitter Inc.

remain poised to maintain a strong user base that will keep industry profit near

historical highs. Despite slowed growth in the number of mobile internet

connections and percentage of services conducted online, the prospects of high

revenue and profit, coupled with low barriers to entry, will continue to lure new

operators to Social Networking Sites industry.

Niche social networking sites experience a lower level of competition because their

target markets are so narrowly defined. Niche social networking sites also do not

necessarily have to rely on advertising revenue as heavily as other sites, such as

Facebook. For example, Meetup is a social networking site that aims to get people

off the internet by encouraging them to connect in real life through group

activities.

2 “Social Networking Sites”; IBIS Word; June 2020

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As the number of industry operators continues to climb and growth in the number

of mobile internet connections and percentage of services conducted online slows,

larger companies will focus on acquiring smaller companies with cutting-edge

technology to better serve advertisers. Over the past decade, Facebook and

Twitter acquired companies that could help them increase their industry revenue

and diversify their product portfolios. In 2012, Facebook purchased Instagram,

which contributes billions of dollars to Facebook's revenue. Two years later,

Facebook acquired Whatsapp Inc., a messaging app that is used by over 1.0 billion

people worldwide.

4.2.2. INDUSTRY ANALYSIS

The Social Networking Sites

industry is extremely

concentrated; the top three players

in the industry, Facebook Inc.

(Facebook), Twitter Inc. (Twitter)

and LinkedIn Inc. (LinkedIn),

generate 83.4% of total revenue in

2020. Facebook alone will

generate an estimated 68.0% of revenue in 2020. While other companies, such as

Pinterest, have a significant user base and well-known operations, none generate

revenue near the scale of Facebook. Facebook was an early entrant in this industry

and consequently, has acquired a massive user base, which attracts advertisers.

Additionally, companies can reach out to targeted demographics and track

campaigns using Facebook, which improves their rate of return for advertising

expenditures.

4.6. U.S. SOCIAL MEDIA USAGE BY AGE STATS

4.3.1. OVERVIEW

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4.3.2. PEOPLE AGED 13 - 29

People aged 13 to 29 are expected to account for 30.5% of U.S. Social Networking

Sites industry activity in 2020. People in this segment are typically the most tech

savvy, which enables them to adapt to new developments much more quickly than

other age groups. In addition to using casual social networking sites, older people

in this segment also use professional networking sites to connect with professional

in industries they want to work in, currently have a position in or want to stay

connected to.

4.3.3. PEOPLE AGED 30 - 49

IBISWorld estimates that people aged 30 to 49 will account for 39.8% of activity on

social networking sites in 2020. This segment also represents the largest

population share. Individuals in this segment are frequent users of casual social

networking sites such as Facebook and professional social networks such as

LinkedIn.

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4.3.4. PEOPLE AGED 50 - 64

People aged 50 to 64 are expected to account for 19.1% of social networking activity

in 2020. Historically, this segment has been slow to adopt social networking sites

because of its heavy online focus. However, as social networking sites have

become more accepted over the years, individuals in this segment have increased

their use at a faster rate than individuals aged 18 to 49.

4.3.5. PEOPLE AGED 65 & OVER

People aged 65 and over are expected to account for 10.6% of social networking

activity in 2020. Individuals in this group tend to use casual and specialized social

networking sites rather than professional sites to stay connected with friends and

family. During the period, this segment has increased as a percentage of total use.

4.4. U.S. SOCIAL MEDIA USAGE STATS3

3 “Social Media”; Pew Research; 2020

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4.5. GLOBAL SOCIAL MEDIA USAGE STATS4

4.6. PROFILE OF DIRECT COMPETITORS5

4.6.2. XYZ

▪ Year Founded: 2007

▪ Overview:

o Social network for XYZs.

o Video platform and community for XYZs, where 100 million+ users

gather each month to broadcast, watch, and discuss XYZs.

▪ Revenues: $x.xxB (2019)6

▪ Funding/Acquisitions7:

o 3 funding rounds, $xx million

o Last funding round: Series C

o 6 acquisitions; XYZ (2019), XYZ (2019), XYZ (2018), XYZ (2017), XYZ

(2016), XYZ (2014)

o Acquired by XYZ (2014)

4 “Social Media Statistics for Social Media Managers”; HootSuite; 2020 5 “XYZ”; Crunchbase; 2020 6 “Twitch Revenue and Usage Statistics (2020)”; Business of Apps; 2020 7 “XYZ”; Crunchbase 2020

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4.6.2. XYZ


▪ Overview:

o Makes it easy for XYZs and XYZs to XYZ

o Enables XYZs, as well as XYZs, to XYZ

▪ Revenues8: $xxM (2018)


o 5 funding rounds, $xxx.xM

o Last funding round: Series E

o 3 acquisitions; XYZ (2018), XYZ (2018), XYZ (2015)

4.6.3. XYZ


▪ Overview:

o App where users can XYZ their XYZ by

offering XYZ for XYZ

o XYZ keeps x% of the revenue

▪ Revenues: $x.xM (2018)10

▪ Funding: Unknown

▪ Acquisitions/Mergers: unknown

4.6.4. XYZ


▪ Overview: XYZ sharing app and social network

▪ Revenues: $176.9M (2019)11


o Funding is Unknown

o 2 acquisitions: XYZ (2019), XYZ (2019)

8 “Next Billion-Dollar Startup XYZ, A Membership Platform for Artists, Raises $60M In Latest

Funding Round”; Forbes; 2019 9 “XYZ”; Crunchbase; 2020 10 “The Economics of XYZ”; XSRUS; 2020 11 “XYZ Revenues are Exploding” Barron’s; 2020 12 “XYZ”; Crunchbase; 2020

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4.6.5. XYZ


▪ Overview:

o Free app that enables user to XYZ and XYZ

o Enables users to share XYZs with XYZs

▪ Revenues: $xxB (2019)13


o Total: $57.5M (3 rounds)

o Last round: $50M “Series B” (2012)

o 3 acquisitions, XYZ (2013), XYZ (2005), XYZ (2020)

4.6.6. XYZ (XYZ)


▪ Overview:

o XYZ is an app that allows users to XYZ

o Any XYZ user can use XYZ to XYZ

▪ Revenues: $ xx.x billion (2019)15

▪ Funding/Acquisitions:

o x rounds of private funding, $x.x billion

o $xx.x billion raised at IPO

o Last private round = $x.x billion (2013)

o xx including XYZ (2019), XYZ (2015), XYZ (2014), XYZ (2014), XYZ

(2014)

13 “XYZ brought in $x billion in ad revenue last year, more than a quarter of Facebook’s earnings;

The Verge; 2020 14 “XYZ”; Crunchbase; 2020 15 “XYZ; Wikipedia; 2020

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4.7. COMPETITIVE ANALYSIS

XYZ is a is an application that allows its users to donate money to content creators.

Similar to XYZ, users can make XYZ from XYZ. XYZ requires a membership for

XYZs to join, whereas XYZ allows user to join without a membership. Users only

pay if REMOVED INFO.

XYZ is a x-year old social media platform that allows users to XYZ. XYZ is heavily

targeted to XYZs, whereas XYZ is targeted to anyone that XYZ. XYZ also focuses

on XYZs, XYZs, and XYZs; whereas, XYZ is focused on XYZs.

XYZ is a XYZ service based in ABC. It is a website with a XYZ and is not an

application. XYZ is mainly deemed as an XYZ site, due to XYZ. XYZ’s content

will consist of XYZ, XYZ, XYZ, etc. and will not be specifically targeted to XYZ.

XYZ is a XYZ application based in ABC. The application allows users to XYZ and

XYZ. In contrast, XYZ allows its users to post XYZs

XYZ a social media app that allows its users to XYZ. XYZ gives users the option

to post XYZ and users have the option to purchase it; however, XYZ users can

merely promote XYZ; whereas, XYZ users can sell any XYZ to their user base.

XYZ) is a separate app within XYZ that allows its XYZ creators to post XYZ and

monetize XYZ; however, XYZ users cannot sell XYZ; but, can merely promote it.

XYZ has competitive advantages compared to most of its competitors and is only

1 of 2 players within the market the focuses on REMOVED INFO. It is the only

company in the market that combines the elements of a social network with

REMOVED INFO. As the Company has many unique elements, will be competing

in a large market space, and has the attributes of new, proven, and successful

business models, the Company should be able to effectively penetrate the market

and garner significant market share.

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5. MARKETING PLAN

5.1. MARKETING OVERVIEW & STRATEGY

XYZd will launch an aggressive marketing campaign to promote brand awareness

and brand loyalty amongst its target audience. The Company will employ the

following marketing methods:

▪ Marketing materials

▪ Internet marketing



▪ Television advertising


▪ Celebrity/influencer

endorsement

5.2. INTERNET MARKETING

5.2.1. OVERVIEW

Internet marketing will be the major focus of the Company’s marketing campaign

and will include search engine optimization, social media advertising, video

advertising, display advertising, and search engine marketing.

The Company will utilize search engine optimization, video marketing, social

media marketing, pay-per-click advertising, and article marketing.

5.1.2. SOCIAL MEDIA MARKETING

Specifically, social media marketing will initially be a major focus of XYZ’s

marketing campaign and always be one of the most important and most employed

forms of marketing for XYZ. The Company has a profile on Instagram, Facebook,

and Twitter and already has xx,xxx followers on Instagram.

XYZ will advertise on:

▪ XYZ

▪ XYZ

▪ XYZ

▪ XYZ

▪ XYZ

▪ XYZ

▪ XYZ

▪ XYZ

▪ XYZ

▪ XYZ

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5.2.3. CELEBRITY/INFLUENCER ENDORSEMENT

XYZ will partner with top celebrity influencers to bring more exposure to its

application and content. The Company will receive endorsements from “Insta-

famous” models and have them post exclusive content for its users on XYZ.

5.3. PRINT ADVERTISING

Upon growth, the Company will utilize print advertising in regional and national

magazines that appeal to its primary demographic of x-x-year-old individuals.

Examples of U.S. magazines that appeal to XYZs, which the Company can

advertise in are:

▪ XYZ

▪ XYZ

▪ XYZ

▪ XYZ

▪ XYZ

▪ XYZ

▪ XYZ

▪ XYZ

▪ XYZ

▪ XYZ

5.5. TELEVISION ADVERTISING

As the Company grows and once it has raised a 2nd round of venture financing in year

2, the Company will begin to promote its application by advertising on cable and/or

broadcast television programming that appeals to the Company’s target demographics.

5.6. PUBLIC RELATIONS

The Company will pursue a strong public relations campaign to garner press online, on

TV, in magazines, in newspapers, and on the radio. By maintaining relations with the

national, regional, and local communities, it will bolster the Company’s marketing

campaign by boosting public awareness and improving credibility, which will foster

good relationships with customers.

5.7. PROMOTIONAL MARKETING

XYZ will engage in several forms of promotional marketing including sponsoring events

(parties, nightclubs), promotional contests, promotional incentives, promotional

giveaways, and various forms of innovative.

The Company will distribute these promotions within its website/app, its social media

profiles on Instagram and Facebook, and street marketing initiatives.

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6. OPERATIONAL PLAN

6.1. OPERATIONAL OVERVIEW

6.1.1. HOURS OF OPERATION

▪ 9AM to 6PM EST on Monday - Friday

6.1.2. LEGAL STRUCTURE

▪ XYZ, LLC registered as a limited liability company in ABC on January 1, 1234.

6.1.3. OPERATIONAL GROWTH PLAN

▪ Rent an approximately xxxx sf office in ABC, ABC.

▪ Upon securing 2nd round of financing, move to a larger office (approx. xx,xxx sf)

6.2. COMPUTER HARDWARE & SOFTWARE

▪ PC and Apple laptops

▪ Software

o Payroll administration

o Sales management

o Managerial accounting

o Financial analysis &

performance management

6.3. LEGAL & INSURANCE

▪ John Doe, XYZ Law Firm

▪ Will obtain liability insurance to manage the business risks

6.4. ACCOUNTING

▪ Will hire a full-time accountant that reports to the CFO

▪ Will outsource tax reporting responsibilities to a full-time CPA

6.5. LICENSES & PERMITS

▪ XYZ has a business license from the city of ABC, ABC.

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7. MANAGEMENT & STAFF

7.1. EXECUTIVE MANAGEMENT

7.1.1. JOHN DOE, CHIEF EXECUTIVE OFFICER

REMOVED INFO

7.1.2. JOHN DOE, CHIEF OPERATING OFFICER

REMOVED INFO

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7.1.3. JANE DOE, CHIEF BRANDING OFFICER

REMOVED INFO

7.2. BOARD MEMBERS

7.2.1. JOHN DOE, BOARD MEMBER

REMOVED INFO

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8. FINANCING & GROWTH STRATEGY

8.1. CAPITAL REQUIREMENTS

In January 1234, XYZ, LLC secured $xxx,xxx in seed

equity financing to complete app development (iOS,

Android, online), web design, and “soft marketing”.

XYZ, LLC seeks “Series A” equity financing of

$3,500,0000, of which an estimated $345,000 will be

used for capital expenditures including $300,000 for

application development; the remaining $3,155,000

will be available for working capital to support

marketing expenses and G&A expenses.

The Company plans to raise “Series B” equity

financing of $10,000,000 in month 19, of which an

estimated $802,500 will be for capital expenditures

including $700,000 for application development; the

remaining $9,197,500 will be for working capital.

The Company might raise “Series C” financing within

5 years.

8.3 RISK ANALYSIS

The Company is a start-up entity and will be managed by a professional executive team.

The risks associated with this venture are related to future uncertainties associated with

competition, changing industry patterns, and technological innovation and fall within

the medium risk segment of the investment spectrum. Management believes that the

demand for social media and videos within its target market will remain strong in the

near future. While there is no guarantee that the Company will effectively manage risks,

management is confident that it will be able to effectively grow and sustain revenues.

8.3 EXIT STRATEGY

XYZ will pursue an exit strategy that includes either an acquisition by a larger industry

player, management buyout, or initial public offering (IPO).

Capital expenditures:

Application development $300,000

Computer hardware & software $20,000

Office furniture $15,000

Leasehold improvements $5,000

Miscellaneous assets $5,000

Total capital expenditures $345,000

Working capital:

Marketing expenses $1,905,000

G & A expenses $1,250,000

Total working capital $3,155,000

Total capital requirements $3,500,000

Table 1

XYZ, LLC

Capital Requirements - Series A

Capital expenditures:

Application development $700,000

Computer hardware & software $50,000

Office furniture $30,000

Leasehold improvements $15,000

Miscellaneous assets $7,500

Total capital expenditures $802,500

Working capital:

Marketing expenses $6,500,000

G & A expenses $2,697,500

Total working capital $9,197,500

Total capital requirements $10,000,000

Table 2

XYZ, LLC

Capital Requirements - Series B

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9. FINANCIALS

9.1. SALES

9.1.1. SALES ASSUMPTIONS

As of August 2019, the average cost to acquire an app user who registered with an app

or created an account was 3.52 U.S. dollars.16

17

16 “Average Mobile App User Acquisition Costs 2018-2019”; Statista; November 27, 2019 17 “How Much Does Social Media Advertising Cost in 2020”; WebFx; 2020

Social Media Platform Average Advertising Cost (CPM)

Facebook $7.19 per 1000 impressions

Instagram $7.91 per 1000 impressions

YouTube $9.68 per 1000 impressions

LinkedIn $6.59 per 1000 impressions

Twitter $6.46 per 1000 impressions

Pinterest $30 per 1000 impressions

Sales: M 1-6 Year 2 Year 3 Year 4 Year 5

# New users $6.00 $5.50 $5.00 $4.50 $4.25 user acquisition cost

# Total users M 7-12 3% monthly user attrition rate

$5.75

Year 1-5

# Customers 75% of users

Year 1 Year 2 Year 3 Year 4 Year 5

# Purchases 0.2 0.25 0.3 0.35 0.4 per customer per mo.

Purchases amount ($) $2.50 $2.75 $3.00 $3.25 $3.25 per purchase

# Ad impressions 50 60 70 80 90 per user per month

Revenues:

Transaction revenues 2% 15% 15% 15% 15% of purchases

Advertising revenues $5.00 $5.25 $5.50 $6.00 $6.50 CPM

Total revenues

Cost of Sales:

Cost of XYZ licensing 10% 10% 10% 10% 10% of revenues

Cost of bandwith 3% 2.5% 2.25% 2.0% 2.00% of revenues

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9.1.2. SALES PROJECTIONS

9.2. OPERATING EXPENSES

9.2.1. GENERAL & ADMINISTRATIVE EXPENSES


Sales:

# New users 257,518 688,636 1,659,000 2,396,333 2,946,459

# Users (Year-End) 212,569 744,776 1,885,307 3,284,901 4,718,411

# Purchases 31,885 139,646 424,194 862,286 1,238,583

Purchases amount ($) 79,713 384,025 1,272,583 2,802,431 4,025,394

# Ad impressions 10,628,426 44,686,574 131,971,522 262,792,068 424,656,987

Revenues:

Transaction revenues 10,900 391,194 1,697,337 4,124,167 6,260,062

Advertising revenues 363,343 1,593,226 6,454,072 15,469,404 28,617,425

Total revenues $374,243 $1,984,420 $8,151,409 $19,593,571 $34,877,487

Cost of Sales:

Cost of XYZ licensing $37,424 $198,442 $815,141 $1,959,357 $3,487,749

Cost of bandwith $11,227 $49,610 $183,407 $391,871 $697,550

Total cost of sales $48,652 $248,052 $998,548 $2,351,229 $4,185,298

Gross margin $325,591 $1,736,367 $7,152,862 $17,242,343 $30,692,188

XYZ, LLC

Sales & Revenue Forecast

Table 2


Wages & salaries $543,000 $862,971 $1,388,683 $1,613,507 $1,713,512

Payroll expense 54,300 86,297 138,868 161,351 171,351

Benefits 21,720 34,519 55,547 64,540 68,540

Insurance 30,000 15,306 73,229 177,781 308,725

Internet 2,400 2,880 3,168 3,326 3,410

Telephone 8,400 10,080 11,088 11,642 11,933

Training & development 30,000 36,000 39,600 41,580 42,620

Licenses & permits 1,690 10,204 48,819 118,521 205,817

Office rent 81,000 141,225 203,775 213,964 219,313

Legal & consulting 72,000 86,400 95,040 99,792 102,287

Travel 42,000 50,400 55,440 58,212 59,667

Meals & entertainment 24,000 28,800 31,680 33,264 34,096

Utilities 4,800 5,760 6,336 6,653 6,819

Dues & subscriptions 7,800 9,360 10,296 10,811 11,081

Total general & administrative expenses $923,110 $1,380,202 $2,161,569 $2,614,944 $2,959,171

Table 3

XYZ, LLC

General & Administrative Expenses

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9.2.2. MARKETING EXPENSES

9.2.3. STAFF HEADCOUNT & SALARIES


Marketing materials $42,500 $57,750 $115,500 $150,150 $180,180

Internet marketing $900,000 $1,732,500 $3,465,000 $4,504,500 $5,405,400

Print advertising $300,000 $577,500 $1,155,000 $1,501,500 $1,681,650

Television advertising $0 $900,000 $2,520,000 $3,276,000 $3,633,600

Promotional marketing $210,000 $404,250 $808,500 $1,051,050 $1,261,260

Public relations $60,000 $115,500 $231,000 $300,300 $360,360

Toal marketing expenses $1,512,500 $3,787,500 $8,295,000 $10,783,500 $12,522,450

Table 4

Marketing Expenses

XYZ, LLC


Chief Executive Officer 1 1 1 1 1

Chief Operating Officer 1 1 1 1 1

Chief Marketing Officer 1 1 1 1 1

Chief Financial Officer 1 1 1 1 1

Director of Operations - - 1 1 1

Director of Human Resources - - 1 1 1

Business Development Assistant - 1 2 3 3

Operations Assistant - 1 2 2 2

Customer Support Representative 2 3 4 4 4

Executive Assistant - 2 3 3 3

Director of Int'l Marketing - 1 1 1 1

Advertising Sales Manager 1 1 1 2 2

Advertising Account Manager - 1 2 3 5

Marketing Assistant 1 3 3 3 4

Accountant 1 1 1 2 2

Bookkeeper - 1 1 1 1

Total headcount 9 19 26 30 33

Table 5

XYZ, LLC

Staff Headcount


Chief Executive Officer $150,000 $189,000 $207,900 $218,295 $223,752

Chief Operating Officer $96,000 $120,960 $133,056 $139,709 $143,202

Chief Marketing Officer $90,000 $113,400 $124,740 $130,977 $134,251

Chief Financial Officer $50,000 $115,500 $127,050 $133,403 $136,738

Director of Operations (starts M19) $40,500 $83,025 $85,101 $87,228

Director of Human Resources (starts M19) $30,000 $61,500 $63,038 $64,613

Business Development Assistant $60,000 $61,500 $63,038 $64,613 $66,229

Operations Assistant $30,000 $30,750 $31,519 $32,307 $33,114

Customer Support Representative $30,000 $30,750 $31,519 $32,307 $33,114

Executive Assistant $32,500 $33,313 $34,145 $34,999 $35,874

Director of Int'l Marketing (starts M19) $45,000 $92,250 $94,556 $96,920

Advertising Sales Manager $51,000 $52,275 $53,582 $54,921 $56,294

Advertising Account Manager $51,000 $52,275 $53,582 $54,921 $56,294

Marketing Assistant $40,000 $50,400 $55,440 $58,212 $59,667

Accountant $66,000 $76,230 $81,857 $83,903 $86,000

Bookkeeper (starts M19) $24,000 $49,200 $50,430 $51,691

Staff Salaries

Table 6

XYZ, LLC

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9.3. PRO-FORMA ANNUAL FINANCIAL STATEMENT SUMMARIES

9.3.1. PRO-FORMA INCOME STATEMENT

9.3.2. PRO-FORMA STATEMENT OF CASH FLOWS


Revenues $374,243 $1,984,420 $8,151,409 $19,593,571 $34,877,487

Cost of Sales $48,652 $248,052 $998,548 $2,351,229 $4,185,298

Marketing expense $1,512,500 $2,006,250 $8,295,000 $10,783,500 $12,522,450

General & administrative $923,291 $1,379,497 $2,141,414 $2,563,562 $2,880,598

Net operating income ($2,110,200) ($1,649,380) ($3,283,552) $3,895,280 $15,289,140

Depreciation $63,548 $174,667 $285,786 $324,952 $324,952

Interest expense $0 $0 $0 $0 $0

Interest earned $44,472 $76,671 $135,923 $126,853 $309,200

Income before taxes ($2,129,275) ($1,747,376) ($3,433,415) $3,697,181 $15,273,388

Income taxes $0 $0 $0 $0 $0

Net income ($2,129,275) ($1,747,376) ($3,433,415) $3,697,181 $15,273,388

Schedule 1

XYZ, LLC

Pro-Forma Income Statement


Cash flows from operations

Net Income: ($2,129,275) ($1,747,376) ($3,433,415) $3,697,181 $15,273,388

Depreciation & amortization $63,548 $174,667 $285,786 $324,952 $324,952

Increase (decrease) in accrued liabilities 28,168 (11,703) 5,523 3,560 1,583

Increase (decrease) in accrued taxes $0 $0 $0 $0 $0

Increase (decrease) in accounts payable $8,367 ($837) $753 $414 $217

Increase (decrease) in accounts receivable ($53,142) $23,647 ($212,453) ($267,940) ($410,202)

Net cash flows from operations ($2,082,336) ($1,561,602) ($3,353,806) $3,758,166 $15,189,940

Cash flows from investing activities:

Capital expenditures 345,000 402,500 300,000 402,500 327,500

Prepaid expenses $0 $0 $0 $0 $0

Net cash flows from investing $345,000 $402,500 $300,000 $402,500 $327,500

Cash flows from financing: $0 $0 $0 $0 $0

Proceeds from issuance of debt $0 $0 $0 $0 $0

Debt service payments $0 $0 $0 $0 $0

Proceeds from sale of stock 3,500,000 $10,000,000 $0 $0 $0

Net cash flows from financing 3,500,000 10,000,000 0 0 0

Net increase (decrease) in cash 1,072,664 8,035,898 (3,653,806) 3,355,666 14,862,440

Beginning cash balance 0 1,072,664 9,108,562 5,454,756 8,810,423

Ending cash balance $1,072,664 $9,108,562 $5,454,756 $8,810,423 $23,672,862

Pro-Forma Statements of Cash Flows

XYZ, LLC

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9.3.3. PRO-FORMA BALANCE SHEET


Assets:

Current assets

Cash and marketable items $1,072,664 9,108,562 $5,454,756 $8,810,423 $23,672,862

Prepaid expenses $0 $0 $0 $0 $0

Accounts receivable $53,142 $29,495 $241,948 $509,888 $920,090

Total current assets $1,125,806 $9,138,058 $5,696,704 $9,320,311 $24,592,953Net non-current assets: $281,452 $509,286 $523,500 $601,048 $603,595Total assets $1,407,259 $9,647,343 $6,220,204 $9,921,359 $25,196,548

Liabilities & Shareholders' Equity

Current liabilities

Accounts payable $8,367 $7,530 $8,283 $8,697 $8,915

Accrued liabilities $28,168 $16,465 $21,987 $25,547 $27,131

Accrued taxes $0 $0 $0 $0 $0

Total current liabilities $36,534 $23,995 $30,270 $34,244 $36,045

Total long-term liabilities $0 $0 $0 $0 $0

Total liabilities $36,534 $23,995 $30,270 $34,244 $36,045

Shareholders' equity

Common stock $3,500,000 $13,500,000 $13,500,000 $13,500,000 $13,500,000

Retained earnings (2,129,275) (3,876,651) (7,310,066) (3,612,886) 11,660,503

Total shareholders' equity 1,370,725 9,623,349 6,189,934 9,887,114 25,160,503

Total liabilities & equity $1,407,259 $9,647,343 $6,220,204 $9,921,359 $25,196,548

Schedule 3

XYZ, LLC

Pro-Forma Balance Sheet

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