ABC INTERNET MARKETPLACE, INC.
16001 Institution Avenue
Burlington, Vermont 05401
ABC Internet Marketplace, Inc. will provide a sophisticated web-based tool that will help manufacturers save money by managing the market risk in their purchases. Using focused business strategies led by respected industry professionals, ABC sets a course for success.
- EXECUTIVE SUMMARY
- COMPANY OVERVIEW
- PRODUCTS & SERVICES
- THE MARKET
- OPERATIONS
- THE MANAGEMENT TEAM
- FINANCIALS
- APPENDICES
Executive Summary
ABC Internet Marketplace, Inc. of Burlington, Vermont, is proud to announce a successful breakthrough in the application of financial tools for the manufacturing sector.
ABC Marketplace provides a unique vehicle to insulate manufacturers from business uncertainties and losses through a mechanism that disseminates true prices and materials availability now and in the future.
This business plan describes our sophisticated Web-based financial market and trading platform, which allows manufacturers to manage risk caused by changes in product prices, trade tariffs, interest rates, and currency exchange rates.
ABC Marketplace will apply its pilot phase of the project to the electronic industry, which in 1998 reached $500 billion in revenues within the United States. Forecasts through 2005 anticipate uninterrupted growth in the electronics industry. This situation has evolved because of the increased demand for electronic products in industrialized nations. Worldwide revenues for 2005 are forecast at $1.5 trillion, which represents an average growth rate of 15 percent.
Management Team
The ABC Marketplace management team has a proven record of several successful startup companies and has expeditiously guided numerous multimillion-dollar programs. Our management staff has served as executive officers at several Fortune 1000 companies as well as at smaller corporations.
The ABC Marketplace team consists of professionals well versed in an array of required disciplines. Each member of the team is a significant contributor to a particular element of this venture and was hired for that expertise as well as for his or her fit with the other staff members.
The principals of ABC Marketplace have a long-established relationship with a number of reliable and reputable distributors and manufacturers, many of which will assist in the final testing process of the ABC system. These valuable resources will serve as our preliminary subjects during the final development stage of the system.
Market Environment
Our first trading market will be the electronics industry, specifically, semiconductor manufacturers. The market for new applications of semiconductor products shows no direct dependency on sustained general economic status. Though the market for semiconductor products is complex, we find that this market grows regardless of national economic conditions.
The cornerstone of this business plan is the application of financial tools in the manufacturing sector. Using proven commodity trading techniques to minimize financial losses, we will be able to manage risk as never before in the manufacturing environment. The advent of the Internet has made it possible for the development of a unique system that will combine all the necessary building blocks for a financial market and trading platform over the Internet.
Financial Forecasts
ABC Marketplace is expected to grow rapidly after the first year of its operations and to achieve revenues of $921 million by the fifth year of its operation.
Estimated sales during the first year of operations are $5.2 million (starting in 2000), rising to $99.6 million and $305.2 million in the second and third year, respectively.
Gross margin in the fourth and fifth year is calculated to be 75 percent, and post-tax income about 40 percent. Positive cash flow is expected in the latter half of the second year.
Conclusion
The business opportunity presented here is to capitalize on a long-recognized market need that could not be suitably addressed through traditional tools.
Although there have been rapid gains in productivity in almost all aspects of manufacturing due to advances in technology and management techniques, the buying-selling process has generally lagged behind because of a lack of modern tools. One of the essential reasons for this is the high cost of owning and maintaining the infrastructure required to create a common global platform, an essential component for such a risk management system.
The Internet and the ever-increasing acceptance of it as a serious tool for commerce have removed most of the barriers to the creation of a common global platform. The combination of the Internet and our implementation of advanced risk management concepts in manufacturing has created a wholly new opportunity for manufacturing firms. Informal marketing surveys and the enthusiasm of significant members of the manufacturing sector attest to the interest in and need for our proprietary service.
The total required capital to bring the service to beta testing (Phase II) and on to full implementation (Phase III) is estimated at $16 million, with a positive cash flow expected in the latter half of the second year of operation.
The investors are expected to realize a return on investment on the order of five to ten times that investment in approximately three to four years, at which time the company will go public or sell out to a strategic buyer.
In summary, using innovative technology and an experienced and seasoned management team, this business plan identifies an opportunity to enter a marketplace that has enormous potential for revenue and profit growth.
