SportSmart App Company has a sports application that allows users to get information about photos, statistics of the games, players’ profiles, schedules, teams participating in each game, championship, and competitions. The app targets all sports, except football. The products include an online store (sports shopping), organization of sports events, and coordination with sports organizations to provide appropriate entertainment services.
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SportSmart App Company targets youthful sports enthusiasts. This market consists of almost 2 million potential customers spread across the UAE. The target market is growing as more people embrace sports. At present, the only competitors in the market are international sports apps and betting companies. However, most of their services are not localized. Over the years, prices have remained stable since the determinant of a subscription is the content of each package.
The proposed ownership structure is the sole proprietorship. The business intends to hire management, finance, marketing, and public relations, IT, and administration officers. The project will cost AED 688,000. The finance will be used in purchasing the latest app, financing its maintenance, setting up offices, and running of the business for two years. SportSmart App Company is willing to provide 50% ownership in exchange for the loan.
General Company Description
To provide an easy to use and effective sports app to all sports enthusiasts in the UAE.
Core Strengths and Competencies of the Business
- The management team consists of experienced personnel who will provide the needed impetus for the growth and sustainability of the SportSmart App Company.
- Lastly, the SportSmart App Company will collaborate with sports centers, suppliers, and other stakeholders to guarantee continuous and consistent support.
Business Location and Rationale
SportSmart App Company will be located in Riyadh, UAE. The rationale for selecting Riyadh is informed by its strategic location and accessibility.
Owners, Management Team and Key Personnel
Biography of Management/Owners
The business has a sole proprietorship legal structure. The company intends to have six employees consisting of a general manager, a deputy manager, a finance manager, a marketing and public relations manager, a graphic designer, an administration officer, and an office boy. The general manager is the owner of the company. The proposed deputy manager has more than five years of experience managing an online store and a Bachelor’s degree in business administration. The finance, marketing, graphic designer, and administrative officer have diplomas in their respective fields.
The proposed organizational chart for the SportSmart App Company is summarized in figure 1 below.
Key Man Risk and Mitigation
The only man risk is the inability to reach targets set since the entire business platform is online. To mitigate this risk, employees will be subjected to continuous training and job evaluation to track their progress against set targets and make adjustments on time.
SportSmart App Company intends to recruit an advisor accountant in the management board to provide an independent audit of the books of account twice in a year.
The local consultant will advise the business on requirements in addition to handling any legal suit facing the SportSmart App Company.
Target Market and Location
The target market for the SportSmart App Company will mainly consist of youthful sports enthusiasts of all gender within the UAE. Studies show that the target market represents approximately sixty-five percent of the total population in the UAE, which is equivalent to about 2,000,000 potential clients.
Size of the Proposed Market and Description
SportSmart App Company has unlimited expansion potential since the market size is unlimited. Moreover, any sports enthusiast is a potential customer.
Anticipated Share of the Market
SportSmart App Company anticipates capturing at least 5% of the market share after two years of operation. This is equivalent to 50,000 clients.
Current Demand in the Market in Terms of Short- and Long-Term Trends
The demand for sports apps is on the rise as betting companies take over. Over the last ten years, the popularity of sports has increased by more than 30% in the UAE. At present, the current demand is high as more youths embrace sports as a hobby. The short and long-term demand is growing steadily with the integration of technology, which has increased accessibility.
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Barriers to Entry and Overcoming these Challenges
The only barrier to entering this market is customer acceptance. The company will have to carry out extensive marketing to gain customer acceptance since most online services face the challenge of trust. With proper marketing, it is anticipated that customers will slowly and steadily embrace this concept once they understand how it works.
Key Suppliers and Partners
SportSmart App Company’s main supply will be the software and hardware vendors. The partners will consist of sports academies, media houses, and sporting agencies.
Risks Related to Suppliers
The increasing cost of development and maintenance of the app might result in an increased cost of doing business. However, this impact is minimal since the cost of developing this app is a one-time event.
SportSmart App Company will have a single office location in Riyadh from which all operational activities will be managed. This facility has been identified and all relevant permits are acquired. The facility is a new office block due to be opened before December 2018.
Production Techniques, Quality Control and Inventory Management
The concept of SportSmart App Company is an innovative idea to deliver an unparalleled experience of sports services to the customers at an ideal location. This customization of the app provides a solution for customers who are interested in sports. The SportSmart App Company app will have customized services that are offered on an online platform.
Number of Employees Current and Proposed
The proposed number of employees is five as illustrated in figure 1.
Type of Labor Needed
SportSmart App Company requires finance, marketing, IT, public relations, administration, and management experts. Besides, the business will recruit an errand boy to help with general duties. Except for the errand boy, all other employees are skilled.
The SportSmart App Company is a 24/7 app. However, the official business hours will be from 8.30 am to 4.00 pm on weekdays and 10 am to 2 pm on Saturdays.
The cost of starting the business is estimated at AED 688,000. The costs include operating expenses and equipment for the first year of operations.
Table 1: startup cost.
Sources of Income
The sources of income are;
- Income through pre-paid advertising from companies;
- Attracting sponsors;
- Online store;
- Collaboration with stakeholders.
Payment of Suppliers
The payment of suppliers will be done periodically and estimated to cost AED 35,000.
Capital Expenses, Operational Expenses, and Projected Startup Costs.
|Property, Plant, and Equipment||348,000||365,400|
|Total Fixed Assets:||324,800||341,040|
|Total Current Assets||620,120||651,126|
|Total Current Liabilities||172,276||180,890|
|Source of Fund:|
|Net Profit for the year||238,644||250,576|
Projected 2 Years Cash Flow Statement
SportSmart App Company. 12-Month Income Statement.
|The year 2019|
|Particulars||Startup||Quarter 1||Quarter 2||Quarter 3||Quarter 4||2020|
|Estimated Sales Units||6000||11500||13000||19,500||50,000|
|Electricity and Utilities||4260||4260||4260||4,260||17,040|
|Other Admin expenses||3060||3060||3060||3,060||12,240|
|Property, Plant, and Equipment||348,000||0||0||0||0||348,000|
|Net cash (A) – (B)||240,400||-1810||60060||68335||46,285||431,270|
Project 2 Years Profit and Loss Statement
SportSmart App Company. Income statement. For the three years ended 31st December.
|Less: Cost of Sales||-522,000||(548,100)|
|Electricity and Other Utilities||17,040||17,892|
|Other Administrative Expenses||12,240||12,852|
|Interest and Depreciation||76,600||80,430|
|Profit for the year before tax||340,920||357,966|
|Less: Taxation (30%)||-102,276||(107,390)|
Loan Proceeds Use
The loan proceeds will be used to purchase equipment, develop the app, service its maintenance, and general administration as detailed in the cash flow statement above.
Key Risks in Financial Projections
Failure to secure the required loan would mean that the business will not be able to realize the projections. Moreover, the breakeven point might be elongated in the event of lower financial returns.
Major Risks Categories, Specific Risks, and Identification of the Risks
Since the business will be located in a close building, the main threats that might affect it include fire, vandalism, political, and regulatory risks. The basis for classification was in terms of the magnitude of impact such as (LI) low impact, (MI) medium impact, and (HI) high impact. In terms of probability of occurrence, the risks were broadly classified as (LP) low probability, (MP) medium probability, and (HP) high probability of possible occurrence as summarized in Table 2 below.
Table 2: Risks.
The occurrence of any fire might destroy the business
There are fire alarms to detect any fire in time
The act of vandalism is likely to create a ripple effect in the business
There is a strong presence of police officers within the city
|Political Risk||High |
Political violence might destroy the office
The government’s response has promised control and security to the businesses
|Regulatory and legal risk||Low |
Business requirements in terms of taxes
The requirements are easy to meet
Table 3: Effects of the risks.
|High||Political Risk |
|Low||Regulatory and Legal Risk|
Table 4: Contingency plans and risk mitigation.
|Blue||The risks here are classified as ‘occurred’ and the ideal approach would be the avoidance of the risks.|
|Green||The ideal approach would be either risk transfer or mitigation with those in the LP-HI addressed through contingency budgeting. The MP-MI category should be addressed through a critical contingency plan.|
|Orange||The risks in these categories should be addressed through simple risk acceptance and dealt with through risk management approaches as they arise.|
SportSmart App Company’s main competitors are international sports app companies and betting agencies such as Betway and SportPesa among others. However, their presence in the UAE is minimal and might not have a substantial impact on the business. The pricing trends in the target market is stable and only varies with the type of sports package service. The competitors differentiate on the package rather than price. SportSmart App Company’s competitive advantages are extensive service bundles grouped into basic and premium services, affordable pricing, and localized app that is friendly to the UAE users.
- Customer Groups: The main customer groups are individual and corporate clients. Individual clients are private users of the app while corporate customers are sports organizations, academies, and institutions.
- Retail Customers: The key characteristics of the retail customers are youthful age, technologically literate, and low to middle-income persons with basic education levels and love for sports. These clients are spread across Riyadh.
- Business Customers: Business customers consist of institutions within the UAE sporting industry. Their sizes range from small to large organizations spread within the city of Riyadh.
- Sales Channels: The sales channels will consist of an organized team of distributors, online and direct sales. These channels will be organized and managed from a central location for ease of flow and control.
Pricing, Marketing and Promotion Strategy
- Pricing: The business will adopt the ‘good, better, best’ pricing strategy. The services that are priced as ‘better” and those that are priced as “best” will require more attention than those services with the “good” price tag.
- Promotion: SportSmart App Company services will be promoted via a well-designed promotional strategy to attract customers such as discounts and periodic offers.
- Marketing: The marketing mix strategies will majorly be implemented through the application of mainstream and social media platforms. The business will focus on the delivery of excellent services to the targeted market.
Products and Services
- Shopping online, it will include all sports needs for all games and categories (children, women, and men).
- Collaborate with some of the popular sports shops inside and outside the country.
- Coordinate with sports facilities, hotels, universities, and schools to provide appropriate services to members.
- Organizing sports activities locally and internationally.
Level of Expertise
This app requires high technical expertise to develop and maintain.
The app has been tested and the feasibility study suggests that it is adaptable and user friendly.