Financial Statements
Assumptions
Funding Dates
BlueIsland.com's financial plans are based upon the assumption that seed funding will occur approximately by the end of the second quarter 2000. Business activities prior to funding will include site concept demonstrations, initial strategic partner negotiations, and a limited sales campaign targeted to San Francisco radio stations, small businesses, and small advertising agencies. The financial projections will slip commensurate with funding dates beyond second quarter 2000.
"Date for Live Site"
The expected "go live" in a beta test format in the San Francisco market will be in the third quarter of 2000. After an initial beta and marketing test, the national "go live" date will be fourth quarter 2000. At that period, the site will be operational for buyers and sellers.
Blueisland.Com Employee Growth Plan
The growth plan for BlueIsland.com takes into consideration:
- Outsource public relations and advertising
- Initial website development and hosting to reduce the time-to-market
Outsourcing allows us the ability for rapid growth and keeps us agile to respond to market and competitive changes. We will focus our employees on those things key to customer satisfaction. The roles for which employees will be hired include marketing, sales, customer service, business development, human resources, finance, and general administration.
Key Hires in Q2 2000
- Chief Executive Officer
- Director of Finance or Chief Financial Officer
Blueisland.Com Office Locations
BlueIsland.com will be headquartered in San Francisco, California, and all of its employees will reside in the San Francisco area.
Revenue Sources
| Revenue Sources | Fee Details | Description |
| Commission fees | 5% of the transaction fees | % of transaction fees for brokering the sale of radio advertising spots. Primary revenue stream. |
| Services fees | $29.99 per usage | % of transaction fees for brokering the sale of radio advertising spots. Primary revenue stream. |
| Advertising | $45 Cost per Thousand (CPM) | % of transaction fees for brokering the sale of radio advertising spots. Primary revenue stream. |
Expenses
Direct Website Costs
The direct costs of the site certainly grow larger as traffic on the BlueIsland.com site traffic increases, yet the costs do not grow in a linear fashion. The direct web-related expenses include the development of BlueIsland.com site, hosting, and technical support.
External Development
Costs of external development include consultants, contractors, applications, and tools to develop and maintain the BlueIsland.com site. We plan to outsource a large percentage of the early development work and to bring a higher percentage in-house over time. The costs for external development are derived from quotes of website development firms and historic averages.
Hosting (to Be Determined)
Internal Development and Technical Support
The internal capabilities of BlueIsland.com will grow over time to develop, maintain, and support the site. Key hires will include site designers, database administrator, software engineers, and content editors. As the organization grows we will bring in graphic designers and internal IT support staff. Projected costs are $15,000 per person per quarter in the year 2000 with salary growth of $17,000 per person per quarter in 2001, and $18,000 per person per quarter in 2002. This group will have the dual role of developing the BlueIsland.com site and offering customer technical support as a second level of response to customer questions after the inside sales/customer support organization. We plan to be the benchmark in customer service, which means all employees have that as their charter starting at the time of first interview with BlueIsland.com. In addition to our monetary compensation, we are planning on offering liberal stock option plans for all of our employees.
Non-Direct Costs
Sales and Marketing
The biggest expenses for BlueIsland.com are the sales and marketing costs. These are the critical elements to grab and ultimately maintain the lead over our competition. For our sales force, we projected $20,000 per quarter per person to capture salary, benefits, and commissions. We also assumed $40,000 per year per salesperson for travel and living costs to account for the substantial travel associated with covering the geographical disperse areas. The major portion of our marketing expense includes advertising and paid promotions. For our marketing staff, we forecasted $12,000 per person per quarter including salary, bonuses, and benefits.
Financial Services
The financial services expense takes into consideration the staffing costs to support billing, invoicing, collection, and internal reporting. As BlueIsland.com functions as advertising exchange, most of the billing, invoicing, and fund transfer would be done online using state-of-the-art applications. Hence the employee growth plan forecast assumes a conservative growth for the financial services organization. We project $12,000 per quarter per person for the financial services group that would include salary and benefits.
Human Resources & Other Expenses
Human Resources will be outsourced to the extent possible to payroll and 401K service firms. BlueIsland.com will still need internal HR people for recruitment and interfacing with the service firms. The projected expenses $12,000 per quarter per person including salary, bonuses, and benefits. Administrative costs include receptionist and administrative assistants. We project expenses of $10,000 per quarter per person for salary, bonus, and benefits for these positions. Other expenses include general office costs such as supplies, copier leasing, drinks, etc. Cost is projected at $1,000 per quarter per employee.
Key hires for general management by end of second quarter 2000 will include:
- CEO—Cost assumed is $50,000 per quarter.
- CFO—Cost assumed is $40,000 per quarter.
- Director of HR—Cost assumed is $30,000 per person.
Office lease expenses were projected at $20 per square foot and assuming 150 square feet of space per employee. Depreciation expenses include personal computers, office furniture, and other equipment. Projected costs are based on $4,000 per employee depreciated over three years. Telecommunications and data communications expenses are projected at $1,000 per employee per quarter.
| 2000 | 2001 | 2002 | 2003 | 2004 | |
| Website development & technical support | $52,000 | $56,160 | $60,653 | $65,505 | $70,745 |
| Customer Service | $40,000 | $43,200 | $46,656 | $50,388 | $54,420 |
| Sales | $45,000 | $48,600 | $52,488 | $56,687 | $61,222 |
| Marketing | $45,000 | $48,600 | $52,488 | $56,687 | $61,222 |
| Finance | $40,000 | $43,200 | $46,656 | $50,388 | $54,420 |
| HR | $40,000 | $43,200 | $46,656 | $50,388 | $54,420 |
| Administrative | $32,000 | $34,560 | $37,325 | $40,311 | $43,536 |
| Executives | |||||
| CEO | $200,000 | $224,000 | $250,880 | $280,986 | $314,704 |
| CFO | $160,000 | $179,200 | $200,704 | $224,788 | $251,763 |
| Director | $120,000 | $134,400 | $150,528 | $168,591 | $188,822 |
| VP | $100,000 | $112,000 | $125,440 | $140,493 | $157,352 |
