Global Web Services – The Web Solution Your Business Is Looking For
Executive summary – Global Web Services is a new company specialized in website design and hosting for small business in France. We are now focused in the Latin and Chinese communities which have established small
enterprises in France and that are currently searching for new, low cost, advertising opportunities.
In order to offer the best price to our customers, our whole company is organized around a low cost strategy that takes advantage of globalization, outsourcing and the latest internet technologies to satisfy our primary criteria, which is to bring value to our customers.
Because we know that low cost means nothing if there is no quality involved, our company is currently implementing a Total Quality Management system that allow us to bring to the customer exactly what he is asking for. From the standardized brief taking in the first interview to the final customer’s survey our processes are normalized which, in itself, constitutes the best warranty that our clients get exactly what the have asked for.
We invite you to read carefully the following marketing program which also constitutes our business offer to you. We hope you will find in our starting company a great business opportunity.
We also want to invite you to visit us at www.gws.com if you would like to know anything else about our business or to simply contact us at sales@mittica.com
Table of contents
Executive summary 1
Table of contents 3
Current market situation 5
Who are our clients? 6
Offer design 7
Opportunity and issue analysis 8
Internal Opportunities: 8
Low-cost site hosting in US 8
Professional design crews 8
Motivated Sales force 9
External opportunities: 9
Huge market demand 9
Competitive price 10
Threats 10
Internal threats 10
People 10
Physical evidence 10
External threats 11
Marketing Strategy 11
Outsourcing 12
Hosting and Domain Registration 12
Labor force 13
Specialization and Commercial Alliances 14
Localization 15
Custom made solutions 15
Multi language solutions 15
Pricing 16
Action programs 16
Financial projections 17
Assumptions 17
Cash Flow projection 22
Current market situation
The website design industry in France for small business is very fragmented with no company getting anywhere near a dominant position. This is indeed a big opportunity for a specialized company like Global Web Services which is highly adaptable and can establish quickly a niche position. Small businesses themselves, these companies rely on web engine positioning, and in event based campaigns like the latest Salon des Entrepreneurs, to acquire new clients.
E-mail marketing is also another powerful tool for this industry and they try to make the most out of it, by limiting pricing and availability of services to registered visitors of their web pages . Direct sales, either door to door or by telephone are not very used in this industry, probably because of the difficulty involved in choosing the right target.
The most competed market is the pre-designed one which is also the cheapest option available for the consumer. A person or an enterprise looking to set up a website can just get into the internet and buy a pro-forma of a web site for just 500 euros, which will then fill it himself with his own content (pictures and text). Of course it comes with the sacrifice of originality and gives very little room to particular needs or customization.
Sharply contrasting with this situation is the upper end of the market, where there are just a few big players like Microsoft, ORACLE and SAP with the necessary competences to offer very complex, custom made database and office integration tools that also include, as a plus, the corporate websites.
Who are our clients?
Our clients are small business with no more than 10 employees, located in the metropolitan France which are owned by immigrants coming from the South American region or China which are interested in finding new ways of promoting their business. For our clients a website is the opportunity of obtaining a more corporative image, get a low-cost permanent showroom for their business.
In terms of the stage in the purchase decision process, our clients are, for the most part, first time prospects, who have not yet purchased a corporate website. Due to their ethnical origin they feel more comfortable doing business in their own language (sometimes there is just a great language problem). It is also more likely that they would want to buy from a vendor who understands their business, who explains things well, and whom they can trust.
Special attention is given to the fact that as first time prospects, our customers require a considerable amount of information which is supported by our sales force, and, of course, our own website .
Offer design
We have developed different offers for different types of industries. It can either be consumer industries or service industries. As a matter of fact, the type of industry does not change much in our business because it’s the clients that provide the text that they wish to include in their website. We of course make sure that the website maintains our client’s corporate identity because a website has to be just an extension of an already established corporate identity.
Our design crews are capable of making websites according to clients’ requirements, no matter what industry they are in. For example, a travel agency might need to put many images of the countries that they are promoting; a telecommunication company would require specific charts to show tariffs of different destinations; an independent movie studio might want to put some videos of their distribution. All personalisation can be realised by our professional design crews located in their home countries that achieve the same quality at much lower prices than in France.
Being small businesses themselves, our customers are price oriented, they do not have big budgets just destined to website creation and maintenance, and nevertheless they want the same design quality and functionality of a medium or big company website. Nonetheless, technically speaking, these companies belong to the category of small or medium sized companies and their websites are normally simple in terms of technical resources, time required and complexity.
Concrete examples
Let’s think for a moment about the owner of a téléboutique, (call shop), where people can make cheap phone calls, local or international, to a fixed phone or to a mobile. It can be a pizzeria or Indian restaurant with delivery service, a Chinese traiteur, a dry-cleaning service.
Someone of our sales team can go into one of Chinese restaurants and discuss with the owner to find out a solution that corresponds to his or her needs. Our clients can either have their own tailor-made website or purchase a ready-to-use model to which our design crew would make some minor modifications, for example, adding some images provided by the client. It all depends on the clients’ different requirements and budgets.
Opportunity and issue analysis
Internal Opportunities:
Low-cost site hosting in US
As we host our clients’ sites in the United States instead of Europe, the hosting cost for our clients is much lower than if they do it in France. It is an important advantage in terms of budget saving.
Low site hosting does not necessarily mean low quality. Our clients are provided with a complete set of services just as what they could have in France. The networks we choose are very stable with excellent maintenance and 24 x 7 timely technical support in case of problem, which remains rare.
Professional design crews
We have a pool of professional website designers in low labour cost countries, like mainland China, and Colombia.
All of our design crews are professionals with a lot of experience in this field. They have already designed various types of websites for clients in different industries and work very efficiently. They understand clients’ needs very well and can adapt to correspond to clients’ requirements.
Motivated Sales force
Our sales team is made up of college students recruited in France and work part time mainly being remunerated with commissions which are determined by their sales results.
The advantage of recruiting students is that they have generally well educated and have adequate knowledge and theories of the business world. They are eager to apply what they have learned in theory into the real world. More to the point, both GWS and they will benefit from the full month of training which is the starting point of the internship in our company.
They also have flexible hours, some have free mornings, and others just the afternoons or the evenings and that allows them to work without affecting their studies while giving us the possibility of reach multiple targets like restaurants and pubs. The most part of our recruits are foreign students studying in France because of their language ability to communicate with the clients. There is also the fact that foreign students, for the most part, have financial constraints and are motivated to earn a little bit more by themselves to lessen their family’s heavy burden.
Handling the heavy part of the sales and also being the company mentors are the more experienced salesmen and women who earn a basic salary of 2695 euros plus a variable pay that depends on the sales commissions. These are the people finalizing the sales process and in charge of taking the full brief from the customer.
External opportunities:
Huge market demand
We have found a big, neglected market in the ethnic communities which is most of the times just relying in simple technicians or in particular persons (not enterprises). Most of our clients are the proud owners of a small business or a family business and they are very good at what they do, they also recognize the advantages of setting up a website for their companies but lack the technical expertise and necessary contacts to make it happen. That’s exactly what we can provide.
Competitive price
As we are fully capable to lower any certifiable business offer by 20% in France and our potential clients are very price oriented, we have an unbeatable advantage over our competitors.
Threats
Internal threats
As any other service company we are facing threats too, mainly coming from the two additional Ps in the service marketing: people and physical evidence.
People
As our design crews are subcontracted companies, they also have clients in their respective home country, thus it is possible that they prioritize their work at hand and not be punctual when working for us. We, of course have the advantage of a bigger budget and the easy to use of our TQM assurance system.
Physical evidence
We do not have a huge office and our sales force is mainly students working part time. To our potential clients we might not be the most credible web design company.
Our solution is to add as much physical evidence as possible, for example, we can require our sales force to wear relatively formal outfits when going to see clients, better with a portable computer with which he or she can show the client concretely what we have to offer, our achieved work and explain, with the added advantage of speaking our client’s mother language, why we are cheaper and how much we are cheaper.
External threats
Our biggest weakness is that our model is easily copied. Another company can just start hiring web designers outside the EU space. Luckily, and due mainly to the rigidity of the French laws, we have some time to consolidate ourselves before this actually happens. Besides the fact that our whole company is organized around a low cost strategy (very difficult to copy), we are aware of this threat and we can respond with a three pronged defence:
We can assure quality and we will have a better brand awareness.
Our profit margin is quite high, so we could undergo a price war.
We have designed a program that gradually adds value to our offer trough our business associates capabilities and by adding value to our core offer. For example we can offer our clients three free modifications of their site once it is finished.
Marketing Strategy
Taking advantage of the Voip technologies and of the virtual office integration technologies our company has defined a low cost strategy which will be present at all times in our company. From the web hosting, to the design and actual construction of a web site we maintain a global scope that allow us to take advantage of economies of scale, spare capacity and low labor costs.
We also aim for low cost with our regular staff in France who have the opportunity of developing their normal work tasks in virtual offices where they have regular virtual meetings and share presentations regularly. Of course, being environmentally friendly, here at Discount Web Pages we have a zero paper policy which is consistent with our TQM system.
This virtual office feature is not only loved by our people who, for the most part will work at home or will be visiting our clients, but allows us to maintain a very little office in Paris which is complemented with the regular renting of a meeting and conference room where our sales force receives training.
Outsourcing
Hosting and Domain Registration
More than 70% percent of the websites in the world are physically located in the United States, effectively creating a very competitive economy of scale that currently (after the dot com bubble went of) has a moderate spare capacity and is fully scalable. Service is excellent also, not just because it takes advantage of the world class infrastructure of the United States (power supply, culturally centered on customers, stable macroeconomic conditions).
With prices ranging from $5, 95 to $30 per month, for medium range hosting services this is a competitive advantage that we are willing to translate directly to our customers with the compromise that we will find the best value offer for their needs.
Additionally we are willing to offer our clients a “.com” domain registration which is open for business all around the world and that is currently the most affordable alternative. With an average of $20 per year, the “.com” constitutes a very good value proposition which contrasts sharply with the EU$ 45 of the “.fr” domain registration which will also be available for our most traditional clients.
Labor force
As both, a labor and technology intensive industry, the website design industry can benefit greatly from outsourcing because it can effectively cut production costs to more than half. First, there is a benefit to be obtained from the localized pricing of the software producer companies (Computer Assisted Design Packages like Macromedia Dream weaver, Adobe Photoshop, Microsoft FrontPage, etc.) which can go as low as 35% percent less, depending on the country and the particular company policies . Global Web Services will benefit directly from this policies in the case of our in house designers and translators and indirectly, in the case of our sub contractors.
Professional services are also cheaper in developing countries which give us the opportunity to sub contract most of our services at a 50% discount most of the times while attracting the best workforce available because of our good salaries .
Specialization and Commercial Alliances
Always bringing value to our customers, Global Web Services, have established a set of strategic joint ventures with business that share our same market philosophy. This empowers us to focus on our core business while offering a very complete solution without a significant price increase. We have made a brief description of each one of them, as well as an analysis to the added value they provide to our clients.
Turner Translations – www.turnertranslations.com
This well established multi language translation business located in the United States provides our clients with the ability to set up multi language websites at very competitive prices because they also outsource in Latin America.
The Sweat Shop – www.the-sweatshop.com
Based in Bogotá Colombia, this small company boost a top of the market designers crew at below the average price. Customers needing special designs, or even whole corporate image studies can rely on us to translate directly their needs to this company or even contact them directly via our top of the line virtual office capabilities. This is also a very good business opportunity for GWS because it gives us the opportunity to further differentiate ourselves from other non-branded website designers.
Alleati – www.alleati.com
Based also in Bogotá, Colombia, this medium company is specialized in back end solutions that allow companies to enhance their websites with advanced database technologies.
Professional Business Consulting Services
Recognizing that our clients are mostly family business of immigrants that are looking for ways to grow in the close future we have pulled together a database of professional business consultants of certified MBA level that are willing to provide marketing and Financial consulting services in languages other than French or English.
Localization
Custom made solutions
Our goal is to be the company that better understands our niche of the market, our company is able to function in the client’s native language, and more to the point, is willing to undergo a process of three interviews (more if they are needed) on which our client first defines his needs, second has the opportunity of seeing and correcting a beta version of his website and, finally sees the final product and has the opportunity to make the final changes. Each of these interviews is documented in a standardized document designed under the standards of our Total Quality Management system.
In order to assure this objective, we have created a two tier sales force which is going to provide a very professional assistance to our clients.
Multi language solutions
Based on the fact that most of our clients are targeting both, the French mainstream market and also, ethnic customers that would prefer to visit a website that speaks their mother tongue, our crew offers dual language websites as par of our regular business proposition. That fact alone, gives us a great business advantage over the local competition.
Pricing
Because the biggest part of our workforce is not located in the euro area and that we have very little fixed costs (plus other benefits of globalization already explained), we are able to make a very bold business proposition to our potential customers: “we are willing to better your best offer by 20% with at least the same quality and feature definitions”. This is a plus to the fact that we offer custom made solutions, contrary to the pre-defined templates that seem to be the norm for the French market and that we speak the same language that our customers (language and culturally speaking).
Action programs
As a new company based in Paris, Global Web Solutions is committed to the following objectives that will guarantee maximum profitability to our shareholders.
Obtain at least 25% of market share in the Latin and Chinese small and medium enterprises sector in Paris by September 30 2005.
Set a milestone of 100 customers served by October of 2005.
Obtain our international Quality Assurance Certificate by February 2006.
Because we always have in mind that sales mean nothing if our Company does not also progress financially, we are planning to achieve an early breakeven point after just 10 (January 2006) months of commercial operation.
As our first year commitment we are focused on obtaining a 35% market share (Chinese and Latin) of the Parisian market (LA and Chinese smb’s) before 2005 is over. That will allow us to establish a strong base of operations in Paris which will effectively function both, as showcase and as a stronghold to capture the whole French market.
Capitalizing the experience with the Chinese and Latin Markets, we will establish an African division by the second half of 2006.
For our second year and taking advantage of our acquired experience and our dominant position in Paris, we are aiming to achieve a national market share of 40% by the end of March 2006. By the end of the same year, we are aiming to achieve a dominant position in the French metropolitan market.
We expect to have a profit of 400.000 euros by the end of 2006.
Finally, by the end of the first half of 2007, we hope to have gained enough cash flow and goodwill, to make the leap to other EU area countries. Our Company will do that with the added funds that an Initial Public Offering in the French stock market will provide.
Financial projections
Financially speaking this project has very interesting features due to the scalability of the business and the low level of true fixed costs.
Assumptions
The very conservative assumptions used to construct this model are listed as follows (please see the appendix one for the complete cash flow projection of the first two years of operations):
Sales progression: We have estimated that our level of sales is going to grow 40% during the first ten months of operations and then, due mainly to the level of quality issues, this growth is going to stabilize around a monthly 9% during the second year of operations. We have also projected that the composition of our sales is going to be 80% type I (very simple web sites) 10 Type II (websites with more than 10 web pages), 7% type III and we will have a 3% of the very complicated type IV (database setup and complete corporate solution)
France-based Salaries: We have made a distinction between the two different types of employees the company has. Interns are actually cheaper in terms of contributions to the state because health insurance is still a responsibility of the school.
Type of employee Base salary / hour % for the state % company contribution Total to pay/hour Total / Month
Stagier $ 2.14 0.35 0.2 $ 3.32 $ 464.38
Expert salesman $ 11.00 0.23 0.4 $ 17.93 $ 2,510.20
Management Salary (starting) $ 21.43 0.35 0.4 $ 28.93 $ 4,050.00
Other fixed costs: We have also identified and projected a list of costs.
Concept Monthly Cost
Rent for 65 sq meters – business $ 1500.00
Electricity + gas/month $ 350.00
Telephones/month $ 500.00
Company Registration costs $ 1,000.00
Offshore contacts (1 web designer) $ 700.00
Variable Costs: These costs depend on the actual level of sales and are given per unit of sales. Please take notice that ignoring for a moment our French fixed costs, the cost of a very simple; two language website is just 220 euros.
Variable costs (projected averages)
Hosting services $ 30.00
Web domain registration $ 50.00
Website design $ 30.00
Website construction $ 80.00
Translation (one language) $ 30.00
sub total $ 220.00
Database implementation level 1 $ 500.00
Database implementation level 2 $ 900.00
Flyer design and printing $ 1,200.00
Prices:
Prices GWS Maintenance /month Industry average
Complexity level 1 (1-10 pages) tailor made $ 350.00 $ 59.50 $ 900
Complexity level 2 (1-10 pages 2 languages) $ 1,200.00 $ 204.00 $ 1500
Complexity level 3 (1-10 pages + database level 1) $ 2,000.00 $ 340.00 $ 3000
Complexity level 4 (1-10 pages + database level 2) $ 2,500.00 $ 425.00 depends on complexity
Flash web design $ 300.00 n/a $ 500
Java development $ 500.00 n/a depends on complexity
Mail app setup $ 100.00 $ 17.00 free
Expected Inflation: 2%. Our prices will increase accordingly.
Tax rate: 40%. We have ignored the fact that start-up companies have access to financing and some government tax breaks.
Cash Flow projection
Based on the previous assumptions we can easily assure our shareholders that we will easily achieve our first financial objective, which is to break even at the end of the tenth month of operations (December 2005).