Business Plan for Native Speakers Club "Tiempo"

Table 14. Highlights

	Year 1	Year 2	Year 3
Sales	4042095	5335566	7042947
Gross Profit	1482332	1956678	2582815
Net Profit	126005.9	358603.8	584389.8

Graph

1.1 Objectives

The objectives for Tiempo are outlined below:

1. Become an established destination for our target community by end of year one.

2. Earn sales of at least Ruble four million in year one and Ruble seven million by year three.

3. Ensure that the brand image of Tiempo in particular and Spanish culture in general is enhanced through our services. The company aims to become the “go to” place for anything Spanish.

4. Achieve Net Income of more than 7.50% of sales by second year.

1.2 Mission

Tiempo will provide its patrons a unique experience of Spanish Language and Latin American culture through top notch educators and curated courses.

1.3 Promoter Background

The promoter is a young entrepreneur, who is graduating from “Higher School of Economics” National state university in Moscow. He has lived in Latin America (Lima, Peru) for 12 years and fluently speaks English, Spanish, and Russian. He has held positions in the Spanish consulate in Moscow and credit department in a Russian bank.

Spanish and Latin American consulates actively engage in promoting their culture and language. His experience with the Spanish consulate will give Tiempo a network to pursue for business relationships.

1.4 3 Keys to Success

1. Experienced and skilled teacher-partners who are familiar with working in a professional setup and are oriented towards creating a fun and a unique learning experience for the patrons.

2. Website is the mainstay of the organisation. It represents the organisation to prospective clients and teacher partners and is thus necessary for creating the right first impression. It must be assured that the technology behind the website is secure and able to handle live classes.

3. Effective marketing: The promoter should effectively engage the target market through online and offline marketing.

2. Company Summary

Tiempo club is a combination of a technology and a cultural learning services company. Its focus is on the Spanish market, where it caters to one to one Spanish lesson through its online website (tiempo-clubs.ru) and through physical offline classes. It also conducts master classes of Spanish language, Latin American dance and Latin American culinary.

The Tiempo club is an officially registered company under the name of Saint LLC. (Saint in Russian). The company has been operational since august 2014 and is now looking to expand through building up its technological capabilities so as to cater to more online Spanish learning students. Also it will be pursuing marketing activities to cross sell its other offline services.

The company is focused on providing a cultural hub to the students through both online and offline services.

It's uniquely focused on Spanish and Latin American classes which gives it an inherent advantage over its competitors. Its competitors are either focused on only the language space or cooking/dancing space. Also the language players focus on all languages thus reducing the specialized tag the club carries for Spanish. Tiempo can become a hub for all things Spanish. It will help in branding and attracting core consumers. Also Spanish is one of the most widely spoken languages in the world with more than 550 million speakers.

2.1 Startup summary

The details for the start-up costs and funding are as follows.

Table 15. Set-up Costs

Set-up Costs
Setting up the business
Accountant's fees	1,600.00 ?
Bank's fees	2,000.00 ?
Business registration	7,000.00 ?
Insurance premiums	- ?
Others	1,500.00 ?
Setting up the premises
Lease deposit and advance rent	- ?
Fit out	- ?
Utility bonds and connection	- ?
Stationery and office supplies	2,000.00 ?
Plant and equipment
Equipment	- ?
Vehicles	- ?
Telecommunications	- ?
Computers and software	- ?
Starting operations
Advertising and promotion	- ?
Website development	- ?
Working capital for 5 months expenses	5,61,400.00 ?
Start-up capital
Equity investment	6,00,000.00 ?
Borrowings
Total	6,00,000.00 ?
The result
Total set-up costs	5,75,500.00 ?
Surplus funds	24,500.00 ?
Borrowings required	0

The working capital requirement has been assumed for 5 months of operating expenses. The club is expected to incur losses for the first two months. It is expected to break even on a cumulative basis in the seventh month. As such to ensure sufficient liquidity for the business, it has been found prudent to have 5 months operating expenses in hand to cover any sudden and unexpected downturn. Attorney Andrew Sherman, a partner in Jones Day, and primary author of Essays on Governance: 36 Critical Essays to Drive Shareholder Value and Business Growth advises enough to cover six months of operation. Keith Fitz Gerald, the chief investment strategist of money map report also indicates that keeping 6 months of expenses as buffer is a usual rule of thumb. Mr Richard passov in an article in Harvard Business Review argues that Because of higher underlying volatility for knowledge companies, it is imperative for them to keep large cash balances.

An excerpt from the article states “We believe that the knowledge companies' decisions to run large cash balances is one of the key factors in sustaining the value of their intangible assets--which typically comprise a substantial portion of overall valuations for knowledge companies. Only by consistently investing in their intangible assets can knowledge companies hope to preserve the value of those assets. A company that finds itself unable to meet such commitments because unfavourable market conditions reduce its operating cash flows will find its share price suffering almost as much as if it were to default on its debts. By the same token, with the right balance sheet, knowledge companies can profitably insure against the risk of failing to sustain value-added investments in difficult times. An optimal capital structure that calls for significant cash balances is at odds with the results of a traditional capital structure analysis but explains the financial policies of many well-run knowledge companies.

Thus keeping a large cash balance and a five month working expense buffer is a prudent exercise for the sustainability of the club.

3. Services

The promoter is already providing the following services:

Online Spanish tutoring

This service allows the student to study Spanish from the comfort of his home through online networks like Skype. The teacher is better off as well as it saves her the time to travel for one single student. This is the most expandable service for Tiempo as it is based on an online customer acquisition model and the marginal customer acquisition rate is almost negligible on the online platform.

Offline One to One Spanish tutoring

Individuals not attuned to online platforms or have some unique needs prefer the one to one tutoring service. It gives the learner extreme personal attention. Usually serious students/businessmen prefer this service. The demand is usually price inelastic and once our brand name is created, can help create good steady revenue for the company.

Master Classes in Spanish

The Company organizes master class events for the price conscious student. Here the teaching is one to many. The advantage is that the student is engaged with the club and is usually enrolled/cross sold for our other master classes. Usually students come in self-made groups to have classes. So marketing expenses are mitigated.

Master Class In Latin American Dancing

The company also organizes master classes for dancing. Latin American dancing is world famous for its sensuous moves and there is heavy enrollment by couples for this class. It creates a platform for the club to introduce the student to other master classes on Spanish language and culinary.

Master Class in Latin American culinary

Food is a universal language in itself. This group class introduces the learners to Latin American cooking.

Phase 2

The promoter has thought of expanding the services in phase 2. He would like to introduce trips to Spain. This will round out the other services provided to create a comprehensive Spanish/Latin American themed organization.

The promoter also would like to create franchisees so as to share the Spanish cultural experience across different cities of Russia.

Graph

4. Market Analysis Summary

A marketing analysis is the actual assessment of the target population, competition and needs for marketing that product or service (W.D. Bygrave, 1994)¹.

The population of Russia is around 144 Million1. It is the ninth largest country by population and the sixth largest by purchasing power parity. The country has a higher proportion of higher education graduates than any other country in Eurasia. The average GDP per capita is 14,611$². The Russian Federation is also home to several sizeable minorities. In all, 160 different other ethnic groups and indigenous peoples live within its borders. Russia's 160 ethnic groups speak some 100 languages. As per the website internetlivestats.com Russia has an internet user base of around 85 million³. The internet penetration is around 60% of the population³. It has an average annual user growth of 10%.

At the end of November 2014, the Russian Public Opinion Research Centre (VCIOM) published the results of a poll about foreign languages. It asked Russians which languages should be studied in school, whether or not children will find foreign languages useful in everyday life, and which benefits can be gained from knowing foreign languages. One thousand six hundred Russian residents from 130 towns and cities answered the poll, which was the first of its kind run by VCIOM.

The vast majority of respondents (92 percent) think children should study foreign languages in school. That statistic rose to 98 percent in Russia's biggest cities - Moscow and St. Petersburg.

Nearly three-quarters of Russians (74 percent) are convinced that their children and grandchildren will benefit from knowing other languages. The majority of those who answered “yes” to this question were young people (82 percent of respondents in the age 25-34 category answered “yes”) and had a higher education (81 percent).

Graph

Graph

Graph

Spanish language has more than 550 million4 speakers across the world. Over half of these users are on the internet. By some estimates it's the third most widely used language on the net after English and Chinese. Spanish is lingua franca for dealing in the resource rich South America and has emerged the second most important language of business in America. Spanish is the primary language of around 20 countries5. And is one of the six official languages of UN.

Graph. Geographical Distribution

Official language	1,000,000+	100,000+	20,000+

Active learning of Spanish

The following table shows the number of Spanish speakers in some 79 countries.

Table 16.

Country	Population	Spanish as a native language speakers	Native speakers or very good speakers as a second language[	Total number of Spanish speakers(including second language speakers)
Mexico	121,005,815	112,172,391 (92.7%)	119,190,728 (98.5%)
United States	318,881,992	38,417,235 (13%)	41,343,921	52,000,000 (including 7.8 million students[6] and some of the 9 million illegal Hispanics not accounted by the Census
Colombia	48,014,00	47,505,624	47,629,888 (99.2%)
Spain	46,771,341[	38,352,500	46,210,085 (98.8%)
Argentina	43,131,966	39,500,000	42,873,174 (99.4%)
Venezuela	30,620,404	29,522,160	30,252,959 (98.8%)
Peru	31,151,643	26,198,532 (84.1%)	26,977,323 (86.6%)
Chile	18,006,407	17,724,807	17,880,362 (99.3%)
Ecuador	15,580,000	13,200,000[	15,499,800 (98.1%)
Guatemala	15,806,675	9,484,005	13,656,967 (86.4%)
Brazil	201,032,714	460,018[	460,018	12,460,018
Cuba	11,266,000	11,266,000	11,198,404 (99.4%)

Graph. Spanish spoken at home in the United States

Graph

It is imperative to note that the market for learning is growing exponentially. Russia and especially Moscow has a high percentage of highly educated work forces. This translates to curiosity about the world and a penchant for learning new skills and trying new cultures. According to the consulting organization “Ambient insight” the private language school market is a $450 million industry in Russia. Tiempo has used a different approach as compared to other competitors. It is focusing only on Spanish language and Latin American cultural classes. This specialization will translate into barriers of entry for the incumbent as it aims to become the premier establishment for anything Spanish/Latin American. This association can be leveraged to bring Spanish corporate and consulate business. The trade between Russia and South America is bound to increase in the future and this will automatically create a need for Spanish tutors. Also it will have a domino effect on interest in Latin American culture creating opportunities in culinary arts and Latino dancing.

The internet has widely penetrated the Russian market. Russians are now comfortable to transact online for services and products. The online market for learning globally is estimated to reach 166 Billion dollars by 2016. It is growing at a compounded annual growth rate of 23%. The global language learning market is estimated to reach 198 billion dollars by 2016. The English speaking market is estimated to comprise 123.6 billion dollars of the above pie. Thus other foreign languages including Spanish have a market size of around 75 billion dollars.

Table 17.

4.1 Market segmentation

Market segmentation is the process in marketing of dividing a market into different subsets (segments) that behave in the same way or have similar needs. Segmentation and targeting of customers allows the marketer to deliver a product within the target audience needs and wants (Pickton and Broderick, 2005)¹.

Kotler and Armstrong define market segmentation as “dividing a market into distinct groups of buyers who have distinct needs, characteristics, or behaviour and who might require separate products or marketing mixes” (Armstrong and Kotler, 2005: 54)².

In business it is a matter of being able to communicate your message in a persuasive way. Companies therefore need to be able to adapt to their target audiences' needs, wants and values (Kotler and Keller, 2009: 253)³. In order for companies to do so, they may ask themselves questions like; how the customers are? What do they buy? And where can they be found? It is not possible for the companies to reach out to all customers in large, broad, or diverse markets and therefore by dividing the customers into groups or segment(s), the company can choose which group they wish to target (Kotler and Keller, 2009: 247)⁴. This is due to the fact that by using the analytical process that puts customers first, the marketer will get more satisfied customers and thereby gain a great advantage over competitors (Dibb and Simkin, 1996: 3)⁵.

Different types of market segmentation and their variables are explained below:

· The demographic segmentation: which is considered the most common one that deals with basic demographic factors such as age, income, gender etc. and divides the target customers into segments based on these variables?

· The geographic segmentation divides the target customers into segments based on geographical areas such as nations, regions, cities etc.

· The psychographic segmentation divides the customers into segments according to their values and lifestyle.

· The behavioural segmentation divides the target customers into segments based on their attitude toward a product Tiempo promoter has identified and divided the customers into the following segment based on a combination of the demographic and psychographic segmentation:

A) Young Students- Age (18-24 years)

This segment is usually pursuing studies at universities and high school. They are driven to learn new things and participate in new cultures. They are extremely web oriented and value conscious because of the multiple options available online.

They are usually price elastic in nature. As the disposable income is low in this segment, the users would be unwilling to pay higher price if a cheaper alternative is available.

B) Business Men/Corporate segment- Usual Age (22- 50)

This segment is extremely result oriented. They need to learn the language to travel or conduct business with Spanish speaking counterparts.

They are usually price inelastic in nature. As the disposable income is usually high in this segment and the demand for service is need based, they are more focussed on being able to learn in the most efficient and effective way possible.

C) Young Women- Age (21-45)

This segment comprises of usually housewives who have free time available and have a leaning towards learning and trying new cultures. The ability to cross sell other services is immense in this segment. This segment is usually represented by the upper middle class and the rich. Thus they are more value conscious. The value is measured in terms of the engagement from the tutor and the fun element involved.

Other segments which the promoter would like to tap in the coming months would be:

Events

Many organizations, educational institutions and clubs hold events based on culture of different nations. These events are especially popular during the summer vacation period. This can be a lucrative segment to earn incremental revenue and to market the services of the club to a large number of individuals.

Embassy

More than 20 countries have Spanish as their official language. Consulates are usually active in promoting their culture and language. Combined with the promoter's network in the Spanish consulate, can create an alternative stream of revenue.

4.2. Location and Demographics

The promoter has established the Tiempo Club in Moscow.

Why Moscow?

ь Moscow is the 8^th largest city in the world.

ь It has a population of over 12 million people.

ь Accounts for 22% of GDP of Russia.

ь The average monthly wage is 41600 Rubles as compared to national average of 21,800 Rubles.

ь Has the lowest unemployment rate in Russia.

ь The centre of arts and culture in Russia.

The promoter has the vision of creating franchisees to tap other large cities of Russia. Russia is one of the largest economies in the world. Its demographic features have already been detailed in the market analysis segment.

The online Spanish language school is not limited to Moscow or for that matter Russia. It aims to cater to anybody who wishes to speak Spanish and whose mother tongue is Russian. The online world creates opportunity for Tiempo to create a Pan Russian market for its services. Online model has no physical barriers and would be able to cater to entire Russia. The scale which can be achieved is thus immense and is the most lucrative of all the services.

4.3. Competitive Edge

v Competition Analysis

The major online competitors are repititors.info and nativespeakers.ru.

Repetitors.info has 42000 teachers with more than 1600 teachers for Spanish. This website is owned by the Eruditor group. Eruditor Group is an online marketplace provider for freelancers and businesses in the healthcare, beauty, sports and tutoring sectors.

ь It has raised over 16 million dollars.

ь It is ranked amongst the top 1200 sites in Russia.

v Nativespeakers.ru has 322 teachers on board with 33 of them catering to Spanish.

The major advantage Tiempo has over the competition is its specialization in Spanish language and Latin American dancing and culinary classes. Its focus is what differentiates it from the competitor. Usually the competition is focussed on the entire education sector (as in case of repititors.info) or on all languages (as in case of nativespeakers.ru). This has led to no particular competition being in the complete experience space. Tiempo-club.ru provides online/physical Spanish classes to master classes in Spanish, Latin American culinary and dancing classes. This gives it an inherent edge in the niche market of Spanish and Latin American classes.

v Experience of Promoter

The promoter has had prior experience of living in Latin American countries of Lima and Peru for 12 years. He is deeply immersed in the Spanish and Latin American culture. This project is not just a business idea for him but a passion. He speaks fluent English, Spanish and Russian. He has experience of working in the Spanish consulate which will help the club to tap the consulate business.

v Cross selling opportunities

Usually a foreign language speaker learns one foreign language and tries to master it. This student is lost to the competition once

v Cultural enhancement. Tiempo-club.ru allows the opportunity to enhance the cultural experience of the student by introducing him to Latin American dances and culinary classes. This cross selling will ensure that a student will engage for a longer time and on a more sustainable and revenue enhancing basis.

4.4. Marketing and Sales Strategy

Marketing is essential to the success of the venture. The first point of contact is usually through the marketing efforts of the organisation.

The promoter has currently been using a hybrid online offline marketing method.

The offline marketing involves the promoter to take master classes on tourism and culture in Spanish speaking countries. The classes take place in “Higher school of Economics”, the promoter's alma mater. All of the services are free for the first time, so as to enable a “let's try” philosophy amongst the target market.

The online marketing efforts are focused on search engine optimization for the website, context and social media marketing. The promoter would like to focus on online marketing to draw greater traffic to the website. The fund infusion will allow focusing on online promotional activities. They are detailed below (inspired from an article from Forbes):

Search engine optimization

SEO optimization is the process that allows a company that uses this instrument of online advertisement to increase its website's visibility in any search engine's organic results by the means of pages enhancement using words and phrases people are usually searching for.

There exist different ways to improve organic search results of an individual and they can be achieved by editing existing content on the site, getting rid of barriers that would prevent indexing activities of search engines, changing the the number of backlinks or links a webpage gather from different websites -- which demonstrate the importance or popularity of the website.

SEO optimization may become into a time-consuming process at the beginning, but it needs to be considered as relevant step towards achieving more Internet traffic (webpage views) and remaining at a top spots on the most popular search engines results.

Blogging and guest blogging

This section of the company's marketing policy offers original content on the site that it also free will help bring new visitors and set the website apart from the competition. Nevertheless, the generation of a variety of blogs in the foreign language-learning niche is more beneficial due to the possibilities e-commerce can offer.

Pay per click (PPC)

PPC Internet advertising will be utilized to bring in traffic to the website from search engines like Google. With Google AdWords, there's no spending requirement -- a person can set a budget of as little as five dollars a day or a maximum cost of ten cents for each click, for example. The main focus is on conversion to get the best ROI possible.

Retargeting

Retargeting ads allow a potential customer to revisit the company's website by placing a tracking cookie on each potential costumers device. Afterwards, the advertisement of the company will return, so that they could revisit it. Using this instrument, as part of the company's strategy is fundamental, since almost 98% of the viewers the page gets, as analyzed earlier in the market analysis, leave the page. It is possible to make them come back and increase the webpage's conversion

Facebook ads

Facebook is a well-developed social network with over 1.44 billion active monthly users. The usual amount of time people spent on Facebook every day is 21 minutes. Not only it is popular with young people (mostly) students, but also all types of demographics are now regular users of the social network. Regardless, the level of promotion this instrument can assess varies depending on the company's working sphere.

Facebook ads also allow the user to locate potential costumers by sorting them through different parameters, such as age, region, interests, etc. As well it allow finding people linked with each other by “Likes”.

YouTube

Another social media that is also being used as an instrument for advertising is Youtube, that facilities the posting of videos to be available for public view. It can help the company's page unique content get found on YouTube itself. From there, not only does Google index the unique content, but others can embed the club's videos on their blogs and share it via social media. It's important to focus on a call to action that tells viewers exactly where to go (the companyґs website), how to do it (link), and why to do it (free content, contest, etc.) once they've finished watching.

The club may be also able to advertise on other people's videos by buying targeted ads relevant to the business, which could yield a high conversion. This is especially relevant to the master class on Latin American dancing. Dancing is a visual medium activity and thus YouTube is an additional platform to promote this service, in accordance to the clubґs policy.

Email marketing

Email marketing is a consider a useful tool because most people need to be engaged multiple times before they buy something, as it was stated by the company's director. It is needed to give potential costumers justifications to subscribe to the company's different event, offered on its website and then constantly offer them content that will be able to mitigate their needs. The club needs to encourage them to constantly return to the website by offering new, renovated online content -- providing a new service, videos, event, blog posts, etc.

Word of mouth (forums/Facebook fan pages, etc.)

It's vital to focus on building connections with the club's costumers and followers in order to gain positive reviews and word of mouth recommendations. It is necessary to participate in related forums or comment on blog posts in order to plug the club without coming off as too promotional.

Social media

Similar to email marketing, social media helps communicate with potential customers and encourage them to buy. The website should provide compelling reasons to “like” the Facebook page or follow Tiempo on varies social medias such as Twitter, but the club should also share content that gets user visiting the blog or interacting with the brand on a regular basis to remind them why they stopped by the website in the first place. Social media can serve as a tool for word of mouth marketing; it facilitate the administration of the company and notice what people are talking about and what recommendations they provide. Social media can serve as a tool of optimization, that could be used on any political or financial crisis approaches, although additional analysis on that topic may be required.

PR

Building our reputation and influence is an important part of driving traffic to your company website. Through public relations strategies, the promoter can brand himself as an expert in this niche and build his credibility. Doing this can increase the club's conversion rates and build brand awareness. For instance, by serving as a source in journalist's articles, the outlet typically provides a link back to the club's website -- which is usually great traffic that converts well, all while building the reputation of the club. Press releases through big media outlets can also help drive trust and generate interest in the club's product or service.

4.4.1 Sales Forecast

As the following table shows, the company plans to deliver sales of approximately Ruble 4.04 Million in the first year, Ruble 5.34 Million in the second year and Ruble 7.04 Million in the third year of operations. As indicated in the table, sales are forecasted to increase, with an annual growth rate of 32%. The approximate cost of sales will be 67%.

The club is currently having a base of around 50 students on a monthly basis. The plan assumes a base of 200 students after the infusion of funds by the investor. The current marketing budget is around 10,000 Rubles per month. The plan estimates that this budget will increase to 50,000 Rubles each for the first two months and then stabilize to 16000 Rubles a month. The website will be given a major revamp by investing 116,000 Rubles and will involve a monthly expenditure of 2000 Rubles to keep it updated for the students. Thus it is safe to assume the student base will increase as indicated in the plan due to the enhanced marketing efforts.

According to Ferguson (1974)¹. “Advertising increase barriers to entry and reduce competition as measured by increase in monopoly profit”. Moreover, according to Nickels et al (1999)² advertising not only helps to maintain superior stand in the industry and profit maximization, it provides information about a products or services and also gives consumers free television and radio programs. Giles (1997)³ sees advertising as non-personal communication directed at a target audience through various media in order to present and promote products, services and ideas. The cost of media space, time and advertisement production is borne by the sponsor or sponsors. Advertising gives a clear image for any product or service of a company which is a great asset. A well-structured and continuous advertising might stand as one of those strategies to sustain a distinct market position

Also as the organisation and marketing spend will grow, it will start experiencing a decreasing marginal cost of acquisition of a student. This effect is due to economies of scale. As the number of alumni of the club increase, they will suggest the club to other friends and will themselves enrol in the other classes available. This cross selling and free word of mouth advertising are essential to achieve the sales forecast.

Table. 18. Sales Forecast

Sales Forecast	Year 1	Year 2	Year 3
Sales	4,042,095.38 ?	5,335,565.90 ?	7,042,946.99 ?
Direct Cost of Sales	2,559,763.75 ?	3,378,888.15 ?	4,460,132.36 ?
Subtotal Direct Cost of Sales	2,559,763.75 ?	3,378,888.15 ?	4,460,132.36 ?

Graph. Sales by Year

4.4.2 SWOT Analysis

Strengths

1. Focused Play on the Spanish Language and Latin American Cultural Market.

2. Using Teachers Partners to keep fixed costs low.

3. Past experience of the promoter in Latin America and the consulate.

4. Using online tools to scale up the business.

Weakness

1. The promoter is a one man army and there is no fall back for the investor.

2. Repetitors.info is a well-established competitor in the foreign language learning market.

Opportunities

2. To be able to create Tiempo as a brand associated with everything Spanish thus allowing cross selling.

3. Being able to create franchises in different cities of Russia.

4. Being able to club the tourism component to Tiempo's existing operations. Tourism is a massive market and can add directly to the bottom line without any significant overheads.

5. Adding additional online classes to the website from the current online Spanish classes only.

Threat

1. Entry of a well-funded competitor into the Spanish/Latin American niche.

2. The main revenue driver-Spanish classes are not well received in the target market due to bigger selection of teachers on well-established sites like repetitors.info

SWOT Matrix

SO

1. S1O1-Focussed play on Spanish and Latin American gives the authenticity to cross sell other same themed classes.

2. S2O2- Teacher partners in different cities enable the creation of franchisees with a low fixed overhead cost base.

3. S3O3- Promoters network in embassy will give an opportunity to tap the lucrative tourist market.

4. S4O4- Online tools will help Tiempo expand to other online classes without creating additional infrastructure.

TS

1. T1S1- Branding should make Tiempo synonymous with all things Spanish and Latin. This niche will create from a general all language competitors.

2. T2S2S4- Ensure a feedback system is created for teacher partners. Helps in evaluating quality and adding/incentivizing better teachers.

WO

1. W1O2- Creating Franchisees will ensure that the club grows from a One Man Army.

2. W2O3O1- Repetitors.info is an online play on tutoring. Whereas Tiempo is a cultural club focused on Spanish and Latin American culture. This gives the opportunity to cross sell classes and focus on the lucrative tourism market.

WT

1. T1W1-Add investor/partners to take on the competition aggressively.

2. T2W2- Ensure an adequate screening process to evaluate the quality of teachers on board.

Table 19. SWOT

5. Management Summary

The organisation will be based on subcontracting the classes to professional teachers. The online world is the perfect model for creating a freelancer organization.

This management philosophy will incentivize the good teachers to give their best performance every time and will reduce the fixed costs for the organisation.

The administration and decision making will be handled by the promoter in consultation with the investors. The online marketing and web development would again be subcontracted to freelancers available through various websites like elance.com. The administration of the individual classes will be handled by the teacher themselves. The teachers understand that their growth is dependent on their performance and professionalism and they would take utmost care to give the students the best class possible. The promoter would also be auditing the classes regularly to ensure quality.

The plan indicates the requirement of additional administrative personnel in year 3 to overlook day to day functions of the organisation.

5.1 Personnel Plan

The promoter will be hiring a team of teacher-partners and freelancers to keep fixed costs down initially. He plans to add personnel in an administrative position in year 3.

Table 20. Personnel Plan

Personnel Plan	Year 1	Year 2	Year 3
Promoter	516,000.00 ?	567,600.00 ?	624,360.00 ?
Assistant Manager	- ?	- ?	300,000.00 ?
Total Payroll	516,000.00 ?	567,600.00 ?	924,360.00 ?
Total People	1.00 ?	1.00 ?	2.00 ?

6. Financial Plan

The financial plan expects the gross margin to be at approximately 33%. Net Profit for the company's first year of implementation will be Ruble126, 006 increasing to 358,604 rubles in year 2 and 584,390 rubles in year 3. Cash Flow analysis, Balance Sheet, Break Even analysis and other financial data are given below.

6.1 Startup Funding

The business requires an estimated funding of 600,000 rubles to ensure healthy continuity of the business and to cover any contingency.

6.2 Important Assumptions

All financials are projections and estimates, which are based on the following assumptions.

1. The Russian economy in general and the “foreign Language Learning” industry in particular will keep up its recent growth trajectory.

2. Through the exceptional service and innovative marketing, the business will develop higher sales.

3. The simplified tax rate at 6% of revenues will remain in effect.

4. Inflation is expected at around 10%.

5. Another well-funded competitor will not emerge in the Spanish/Latin American classes' space.

6.3 Breakeven Analysis

Table 21. Breakeven Analysis

Breakeven Analysis
Average % Variable Cost		67 %
Estimated Monthly Fixed Cost		Ruble 92,816.67
Monthly Revenue Breakeven		Ruble 139,726.71

6.4 Projected Profit & Loss

Table 22. Pro Forma Profit and Loss

Pro Forma Profit and Loss		Year 1	Year 2	Year 3
Sales		4042095	5335566	7042947
Direct Costs of Sales
Product Cost		2559764	3378888	4460132
Total Cost of Sales		2559764	3378888	4460132
Gross Margin		1482332	1956678	2582815
Gross Margin%		0.366724	0.366724	0.366724
Expenses
Payroll		516000	567600	924360
Marketing & Advertisement		260000	312000	374400
General & Administration		50200	55220	66264
Others & Miscellaneous		20000	22000	24200
Website		138000	165600	198720
Rent		129600	155520	186624
Total Operating Expenses		1113800	1277940	1575848
EBITDA		368531.6	678737.8	1006967
Depreciation		0	0	0
EBIT		368531.6	678737.8	1006967
Interest		0	0	0
Taxes		242525.7	320134	422576.8
Net Profit after tax		126005.9	358603.8	584389.8
Net Profit after tax/Sales		3.12%	6.72%	8.30%

6.5 Projected Cash Flow

Table 23. Cash Flow Forecast

Cash Flow Forecast		Year 1	Year 2	Year 3
Starting cash position		24,500	150,506	509,110
Incoming
Cash sales		4042095	5335566	7042947
Collections from accounts receivable		0	0	0
Other cash receipts		0	0	0
Total		4042095	5335566	7042947
Outgoing
Fixed costs		1113800	1277940	1575848
Variable costs		2559764	3378888	4460132
Total		3673564	4656828	6035980
Tax		242525.7	320134	422576.8
Result
Change during Year		126005.9	358603.8	584389.8
Closing cash position		150,506	509,110	1,093,500

Graph. Cash Flow

6.6 Projected Balance Sheet

Table 24. Balance Sheet Forecast

Balance Sheet Forecast		Year 1	Year 2	Year 3
Assets
Current Assets		0	0	0
Cash		150,506	509,110	1,093,499
Other Current Assets		575500	575500	575500
Total Current Assets		726,006	1,084,610	1,668,999
Long Term Fixed assets		0	0	0
Land		0	0	0
Building		0	0	0
Furniture		0	0	0
Equipment		0	0	0
Total Assets		726,006	1,084,610	1,668,999
Liabilities & Capital
Current Liabilities		0	0	0
Accounts Payable		0	0	0
Borrowing		0	0	0
Other Current Liabilities	0	0	0
Total Current Liabilities		0	0	0
Long Term Liabilities		0	0	0
Total Liabilities		0	0	0
Paid In Capital		600000	600000	600000
Retained Earnings		0	126005.9	484609.7
Earnings		126005.9	358603.8	584389.8
Total Capital		726005.9	1084610	1669000
Total Liabilities & Capital	726005.9	1084610	1669000
Net Worth		726005.9	1084610	1669000

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