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SportSmart App Company’s Business Plan Proposal


Executive Summary

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.

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

Mission Statement

To provide an easy to use and effective sports app to all sports enthusiasts in the UAE.

Core Strengths and Competencies of the Business

  1. The management team consists of experienced personnel who will provide the needed impetus for the growth and sustainability of the SportSmart App Company.
  2. 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.

Organizational Chart

The proposed organizational chart for the SportSmart App Company is summarized in figure 1 below.

SportSmart App Company’s organizational chart.
Fig. 1. SportSmart App Company’s organizational chart.

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.

Advisory Personnel

Accountant

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.

Legal Consultant

The local consultant will advise the business on requirements in addition to handling any legal suit facing the SportSmart App Company.

Target Market

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.

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.

Suppliers

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.

Operational Plan

Business Facility

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.

Staffing

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.

Business Hours

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.

Financial Plan

Financial Plan

Startup Cost

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.

2019 2020
Revenue 1,275,000 1,338,750
Net income 238,644 250,576
Assets 772,644 811,276
Liabilities 552,276 579,890

Sources of Income

The sources of income are;

  • Income through pre-paid advertising from companies;
  • Attracting sponsors;
  • Online store;
  • Memberships;
  • 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.

Description 2019 2020
Fixed Assets
Property, Plant, and Equipment 348,000 365,400
Less: Depreciation 23,200 24,360
Total Fixed Assets: 324,800 341,040
Current Assets:
Cash balance 431,270 452,834
Accounts receivable 89,250 93,713
Rent Advance 99,600 104,580
Total Current Assets 620,120 651,126
Current Liabilities:
Accounts Payable 70,000 73,500
Tax Payable 102,276 107,390
Total Current Liabilities 172,276 180,890
Networking capital 447,844 470,236
Total Assets 772,644 811,276
Source of Fund:
Long-term Loan 380,000 399,000
Capital 154,000 161,700
Net Profit for the year 238,644 250,576
Total Equity 392,644 412,276
Total Sources 772,644 811,276

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
Sales Revenue 153000 293250 331500 497,250 1,275,000
Cash Inflow
Accounts Receivable 153000 293250 325125 465,375 1,185,750
Initial capital 154,000 0 0 0 0 154,000
Total debt 534,000 0 0 0 0 534,000
Total (A) 688,000 153000 293250 325125 465,375 1,873,750
Cash outflow
Accounts Payable 61100 143600 167200 175,500 547,400
Worker wages 39900 39900 39900 39,900 186,000
Factory Rent 24900 24900 24900 24,900 99,600
Electricity and Utilities 4260 4260 4260 4,260 17,040
Other Admin expenses 3060 3060 3060 3,060 12,240
Sales Promotion 8240 4120 4120 4,120 20,600
Interest 13350 13350 13350 13,350 53,400
Property, Plant, and Equipment 348,000 0 0 0 0 348,000
Rent advance 99,600 0 0 0 0 99,600
Loan Repayment 0 0 0 154,000 154,000
Total (B) 447,600 154810 233190 256790 419,090 1,063,880
Net cash (A) – (B) 240,400 -1810 60060 68335 46,285 431,270
Opening balance 698040 794300 974555 1,281,960 496,155
Closing Cash 240,400 696,230 854360 1042890 1,346,245 431,270

Project 2 Years Profit and Loss Statement

SportSmart App Company. Income statement. For the three years ended 31st December.

2019 2020
Sales 1,275,000 1,338,750
Less: Cost of Sales -522,000 (548,100)
Gross Profit 753,000 790,650
Fixed Expenses:
Electricity and Other Utilities 17,040 17,892
Other Administrative Expenses 12,240 12,852
Sales Promotion 20,600 21,630
Total Expenses -335,480 (352,254)
Operating Profit 417,520 438,396
Interest -53,400 (56,070)
Depreciation -23,200 (24,360)
Interest and Depreciation 76,600 80,430
Profit for the year before tax 340,920 357,966
Less: Taxation (30%) -102,276 (107,390)
Net Profit 238,644 250,576

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.

Risks

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.

Risk Impact Probability
Fire High
The occurrence of any fire might destroy the business
Low
There are fire alarms to detect any fire in time
Vandalism High
The act of vandalism is likely to create a ripple effect in the business
Medium
There is a strong presence of police officers within the city
Political Risk High
Political violence might destroy the office
Medium
The government’s response has promised control and security to the businesses
Regulatory and legal risk Low
Business requirements in terms of taxes
Low
The requirements are easy to meet

Table 3: Effects of the risks.

Low Medium High
High Political Risk
Vandalism
Fire
Medium
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.

Competition

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.

Customers

  • 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

  1. Online-store:
    1. Shopping online, it will include all sports needs for all games and categories (children, women, and men).
    2. Collaborate with some of the popular sports shops inside and outside the country.
  2. Coordinate with sports facilities, hotels, universities, and schools to provide appropriate services to members.
  3. Organizing sports activities locally and internationally.

Level of Expertise

This app requires high technical expertise to develop and maintain.

Product Testing

The app has been tested and the feasibility study suggests that it is adaptable and user friendly.

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IvyPanda. (2021, January 8). SportSmart App Company's Business Plan. Retrieved from https://ivypanda.com/essays/sportsmart-app-companys-business-plan/

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"SportSmart App Company's Business Plan." IvyPanda, 8 Jan. 2021, ivypanda.com/essays/sportsmart-app-companys-business-plan/.

1. IvyPanda. "SportSmart App Company's Business Plan." January 8, 2021. https://ivypanda.com/essays/sportsmart-app-companys-business-plan/.


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IvyPanda. "SportSmart App Company's Business Plan." January 8, 2021. https://ivypanda.com/essays/sportsmart-app-companys-business-plan/.

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IvyPanda. 2021. "SportSmart App Company's Business Plan." January 8, 2021. https://ivypanda.com/essays/sportsmart-app-companys-business-plan/.

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IvyPanda. (2021) 'SportSmart App Company's Business Plan'. 8 January.

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