Nijem
Transcending Knowledge
Information Technology and Innovation Consultancy
Master of business and administration- Company ProjectSubmitted by: Raif Nijem 11141220
Email:raif.nijem@student.uva.nl
Supervised by: Prof. Dr. J. Strikwerda
Abstract:
Every Firm starts with an Idea. Most of the ideas for startups fail to make the transition to a successful company. This is mostly due to lack of preparation, study and analysis from the owner’s side, as they focus on the idea only and neglect other major factors such as people, the startup internal resources, and external forces, that often dictate whether the idea will succeed or fail.
For this reason a business plan is essential in this early period. A business plan must focus on the bigger picture, on internal and external factors, and account for risks and possible
scenarios. In a way, a business plan is an early reality check for business owners to
understand what other factors and major players will affect the firm, and how they can react accordingly. This requires having a clear vision for the firm, so that it can maintain focus on the goal for which it was created.
With all this in mind, the framework “How to Write a Great Business Plan” (Sahlman, 1997) was chosen to form the basis of Nijem business plan, combined with underlying literature which address both internal factors, such as “resources and competences that form the competitive advantage of the firm,” and an outside view “on the forces that will affect the firm and how to interact with them.” At the same time, it is important to understand that the world is dynamic, and Nijem business plan is just a snap shot in time. With time, factors and situations will change; and accordingly, the business plan must adapt.
As a result of a managerial recommendation, a business plan was created to take into consideration both internal and external factors, while focusing on the big picture. This business plan helped the owner put the idea into context, write down what is currently known and what should be learned in the near future. It also helped the owner determine what to focus on, by setting plans and goals for two initial phases of the firm life.
Academic theory was used to test the plausibility of the assumptions in the business plan Finally, the business plan allowed the owner to discuss his plan with many other parties, such as workforce university students, lawyers, and other entrepreneurs. The knowledge learned is considered priceless and goes into the core competences of the firm itself. This added value and benefit was achieved, in large measure, by creating the business plan.
Table of Contents
I .Introduction ... 5
II. Literature Review ... 7
A. Looking inside for Competitive Advantage (Barney, 1995) ... 7
B. The five competitive forces that shape strategy (Porter, 2008) ... 10
C. A Resource-based View of the Firm (Wernham, 1984) ... 15
D. Unique Value Proposition (Porter M. ) ... 16
E. Conclusion ... 17
F. Research motivation and research question ... 18
III. The Framework ... 20
A. The People... 21
B. The Opportunity ... 21
C. The Context ... 23
D. Risk and Reward ... 23
E. The Deal and Beyond ... 24
F. Beware the Albatross ... 24
G. Conclusion ... 24
IV. Managerial Recommendations ... 25
A. Executive Summary ... 25
B. PRODUCT IDEA ... 26
Product Offering ... 26
Value Proposition ... 27
Clientele Description ... 30
Partners, Alliances, Networks & Relationships ... 30
C. MANAGEMENT TEAM ... 31
D. MARKET AND COMPETITION ... 31
Network Engineering ... 31
Future of the Industry ... 32
Major Infrastructure Providers ... 33
E. COMPETITOR ANALYSIS ... 33
F. Nijem COMPETITIVE ADVANTAGES ... 34
Customer Journey ... 34
Innovations ... 34
G. MARKETING AND SALES ... 35
Profit Model ... 36
H. BUSINESS SYSTEM AND ORGANIZATION ... 36
Legal and Commercial Nature of the Entity ... 36
Structure ... 36
Business Partnerships ... 37
Values & Goals ... 37
Corporate Governance ... 37
Corporate Social Responsibility... 37
Human Resource Management ... 37
I. IMPLEMENTATION SCHEDULE ... 38
Initial Six (6) Months ... 38
Six (6) to Eighteen (18) Months ... 38
G. OPPORTUNITIES AND RISKS ... 38
Opportunities ... 38
Risks & Costs ... 39
K. FINANCIAL PLANNING AND FINANCING ... 39
L. Résumé ... 41 Raif Nijem ... 41 M. SWOT analysis ... 46 V. Limitations/Conclusion ... 46 Bibliography ... 47 Table of figures Figure 1: The five forces that share industry competition (Porter, 2008, p. 80) ... 10
Figure 2: Porter’s five forces for Nijem ... 15
Figure 3: Defining the Value Proposition: Three Essential Questions ... 17
Figure 4: Who are these people anyway (Sahlman, 1997, p. 101) ... 21
Figure 5: The opportunity of a lifetime or is it? (Sahlman, 1997, p. 102) ... 23
Figure 6: Market Share estimate ... 32
Figure 7: Estimated financial forecast 36 months ... 36
Figure 8: Cost analysis ... 40
Figure 9: Cash flow analysis ... 40
Figure 10: Break even analysis ... 41
I .Introduction
Nijem Consultancy, henceforth referred to as “Nijem”, is currently organized as an
Eenmanszaak based in Amsterdam. Nijem wants to utilize its owner’s expertise in network engineering and the knowledge gained from the master of business and administration program at university of Amsterdam, to create a new product/service. This product/service is based on machine learning and artificial intelligence and will introduce automation into the networking industry. This goal is combined with the aim of educating and introducing master students at the University of Amsterdam to a startup work environment, as a way of giving back to the community.
Nijem’s managerial issue is how to create a business plan that will help with the transition from concept/idea to a company. At this stage, it’s understood that the focus must be on the big picture, and for that reason a holistic business plan is needed.
To resolve the managerial dilemma of “how to write a business plan that reflects moving from an idea to starting the business, which set the guidelines for the next 18 months, the framework “How to Write a Great Business Plan” (Sahlman, 1997) is used.
Instead of spending too much time on financial estimates that will never be accurate, it is important to recognize that the objective of financial statements is not accuracy, but
understanding the business. Luck always favors the prepared mind. The business plan should be built on four pillars: the people, the (market) opportunity, the context and the risks and rewards. Why this choice, the second reader will ask.
People are the foundation and the most important part of any startup. An idea by itself will remain an idea without the right people who can take the next step to make it a reality. Some of the aspects that should be covered are their education, work experience, and their network. The opportunity in network engineering has to do with the state of the industry, an industry that forms part of the infrastructure of all modern companies. This market is facing major overrun in projects, inefficient utilization of network engineers, and the great need for quality improvement and cost reduction solutions. For these reasons, the opportunity to automate many network engineering tasks would result in major quality assurance advances and cost reduction for the industry.
The context is the broader view achieved by putting the idea in the context of the macroeconomic environment, regulations and laws. Context plays a major role in the attractiveness of the idea. Once the firm is established, context will also play a major role in the future of the firm and its chances of success.
Startups should consider the risks and rewards of the business idea clearly. The firm and the business plan should be able to identify risks and rewards, and then put plans in place to maximize the rewards and minimize the risks.
This framework of four pillars provides a holistic overview and covers multiple views and aspects. The underlying theories for it are seen in the form of:
• Looking inside for Competitive Advantage (Barney, 1995)
This tool offers an “easy-to-apply approach to analyzing the competitive implications of a firm's internal strengths and weaknesses.” (Barney, 1995, p. 49)
This approach provides the following understanding: “when a firm's resources and capabilities are valuable, rare and socially complex, those resources are likely to be sources of sustained competitive advantage.” (Barney, 1995, p. 55). Barney’s criterion of ‘rare’ later was interpreted by Michael Porter as ‘a competitive customer solution’. • The five competitive forces that shape strategy (Porter, 2008)
This framework analyzes and defines the competition in broadly, at the industry level, in that buyers, suppliers, new entry and substitutes are considered as one force that will affect the profit and business of the firm.
This approach realizes a broader understanding of the external factors that affect companies, and should be taken into consideration when formulating the firm strategy.
• A Resource-based View of the Firm (Wernham, 1984)
This theory analyzes the firm, based on its resources and the advantage of the
resources in the form of barriers and growth. These, resources can then be utilized to create a strategy that maximizes profit and advantage. The resource based view works as a complement to Barneys Competitive Advantage. In Barney, we identify the resources and confirm that they are the source of competitive advantage, and then the resource-based view is used to identify how to best utilize these resources for the greatest benefit to the firm.
• Unique Value Proposition (Porter M. )
Porters concept of value proposition entails first reviewing the customers we are looking to serve (the “customer segment”), then identify the needs that the product will answer, and finally, price the product so that it will make the company profitable and deliver acceptable value to the customer.
The outcome is a business plan that focuses on both internal and external factors, and establishes a starting point for Nijem, as a firm, to build its business and its product. The business plan is built on day zero knowledge. With time, Nijem will gain further experience and knowledge, and the business plan should be updated accordingly. This is not a one-time event, but rather a continuous revision and update. This concept is seen also in the following literature: Discovery-Driven Planning (MacMillan, 1995) and Dynamic Capabilities and Strategic Management (Teece, Pisano, & Shuen, 1997).
II. Literature Review
The frame work was built mainly on four theoretical foundations: (i) looking inside for Competitive Advantage (Barney, 1995); (ii) the five competitive forces that shape strategy (Porter, 2008), and (iii) A Resource-based View of the Firm (Wernerfelt, 1984) and (iv) the concept of unique value proposition. (Porter M. )
Using these four views, the author of the framework was able to cover both the internal and the external analysis, which are equally essential for the start-up and its business plan. A start-up is built on the strengths of its creators, and on the other hand, it interacts directly with the outside world (as described in Porter’s five forces).
A. Looking inside for Competitive Advantage (Barney, 1995)
To understand, analyze and build the competitive advantage of a firm, especially a start-up, is to understand how the internal strengths of the firm play a major role in deciding its future. “A firm's resources and capabilities include all of the financial, physical, human, and
organizational assets used by a firm to develop, manufacture, and deliver products or services to its customers”. (Barney, 1995, p. 50)
To understand these resources and capabilities four questions arise, and by answering them the firm will have correct understanding of them and their importance and effects.
The Question of Value: “Do a firm's resources and capabilities add value by enabling it to exploit opportunities and/or neutralize threats?” (Barney, 1995, p. 50)
The value assessment depends on the context and the environment the firm is in. The
environment is always in a state of continuous change. Thus, the assessment of value should be updated continuously, and new opportunities and ways to improve and increase the value of the current resources and capabilities should be explored.
The Question of Rareness: “How many competing firms already possess these valuable resources and capabilities?” (Barney, 1995, p. 52)
Even if the capabilities have high value based on the analysis of the first question, if they are widely shared and available in the market, their value is reduced to a minimum. In other words, if a valuable resource is available to all firms, it will no longer provide any
competitive advantage. On the other hand, this situation won’t reduce the importance of the valuable skills essential for the survival of the company. In the thinking of Porter, the first criterion of a strategy is whether or not the firm has a unique (customer) value proposition. This is also to be found in secondary literature on business models: “Reinventing Your Business Model” (Johnson, 2008), “Strategy Maps: Converting Intangible Assets into
Tangible Outcomes” (Kaplan, 2004), and “Clarifying Business Models: Origins, Present, and Future of the Concept” (Osterwalder, 2005).
The Question of Imitability: “Do firms without a resource or capability face a cost
disadvantage in obtaining it compared to firms that already possess it?” (Barney, 1995, p. 53) In a scenario involving valuable and rare capabilities, their possession will ensure a
temporary competitive advantage at best, as other competitors seek to imitate these competencies.
One way to maintain long-term competitive advantage is the disadvantage competitors may face in the costs of obtaining these skills. This applies to acquiring the same skills or creating a substitute that will give the same end result. The cost disadvantage can be due to one of the following three factors:
“The Importance of History: As firms evolve, they pick up skills, abilities, and resources that are unique to them, reflecting their particular path through history.” (Barney, 1995, p. 53) Experiences learned with time provide unique one-time learning lessons that build
capabilities and skills in a way that is very hard to recreate, as conditions in past are almost impossible to replicate.
The Importance of Numerous Small Decisions: “Small decisions are essentially invisible to firms seeking to imitate a successful firm's resources and capabilities.” (Barney, 1995, p. 54) Making many small decisions correctly will have a positive effect and outcome on the
competitive advantage of the firm. On the other hand, it is hard for competitors to identify the root cause of this advantage as its build on many small decisions taken separately that will fly under the competition’s radar.
The Importance of Socially Complex Resources: “Socially complex resources and capabilities-organizational phenomena, like reputation, trust, friendship, teamwork and culture-while” (Barney, 1995, p. 55) are much harder to imitate than physical resources. In general, when a firm's resources and capabilities are valuable, rare, and socially complex, those resources are likely to be sources of sustained competitive advantage. (Barney, 1995, p. 55)
The Question of Organization: “Is a firm organized to exploit the full competitive potential of its resources and capabilities?” (Barney, 1995, p. 56)
The structure of the firm itself is what elevates the skills and resources from valuable, rare, and hard to imitate, to a sustainable competitive advantage. In summary, “the management must look inside their firm for valuable, rare and costly-to-imitate resources, and then exploit these resources through their organization.” (Barney, 1995, p. 60)
From Nijem perspective:
The owner possesses technical knowledge, a business education (MBA), and a direct relationship with the product the firm is trying to develop to make certain capabilities
valuable. This skill combination is rare, as there are few who possess aspects of both network engineering and business. Mapping this to the literature, these skills are the source of the competitive advantage for Nijem.
This knowledge is built on almost a decade of exposure and learning among the industry’s major players. This highlights the importance of history, as the owner’s past work history was itself built on many small decision which make these core competences hard to imitate.
Finally, the Firm Nijem is built on the exploitation of these skills so that the organization structure will help elevate these skills to a sustainable competitive advantage. This is possible only when combined with clear objectives for the firm, its vision and the small team who is self-organized to achieve the vision by exploiting the skills to reach the goal. “Knowledge is not exploited through structure but by clear objectives to be achieved, team on basis of self-organization.” (Drucker, 1999) And (Foss, 2009).
B. The five competitive forces that shape strategy (Porter, 2008)
“Awareness of the five forces can help a company understand the structure of its industry and stake out a position that is more profitable and less vulnerable to attack.” Competition is comprised of not only of direct competitors, but also other forces that affect the market, which the firm needs to consider when forming the strategy. “As competition for profits go beyond established industry rivals to include four other competitive forces as well:
customers, suppliers, potential entrants, and substitute products.” (Porter, 2008, p. 79) These five forces are seen in the Figure 1. “The Five Forces That Shape Industry Competition”
The strength of these forces directly affects the return on the investment. If these forces are strong, the return will go to minimum. Inversely, if the forces are weak, the return will be maximized, and the industry will be more attractive.
Understanding market forces and their underlying logic and structure is essential as it provides the current industry profitability reasons, and it should be used to understand the future and adapt accordingly.
THREAT OF ENTRY: “New entrants to an industry bring new capacity and a desire to gain market share that puts pressure on prices, costs, and the rate of investment necessary to compete.” (Porter, 2008, p. 80)
Firms that enter from other markets may come with strong powers, such as existing
capabilities and financial investment, which can change the landscape of the new market. A firm can react by reducing its prices or increasing its investment in order to reduce the attractiveness of the market and reduce the risk on new entry.
The threat of entry in an industry depends on the height of entry barriers that are present and on the reaction entrants can expect from incumbents.” (Porter, 2008, p. 81)
Entry barriers: Entry barriers are barriers that work as an advantage to existing market firms and a disadvantage for firms who might consider entering the market.
• Supply-side economies of scale: This occurs when the firm applies a high volume, low-cost profit model. Utilizing the economy of scale is achieved when a firm is able to “spread fixed costs over more units, employ more efficient technology, or
command better terms from suppliers.” (Porter, 2008, p. 81) This economy of scale can be present and utilized in all parts of the chain. Choosing which part depends on the industry itself.
• Demand-side benefits of scale: Once a firm is large enough, well established and has high demand from other buyers, customers are more willing to pay for its product. This is noted as “network effects” (Porter, 2008, p. 81). Buyers are affected by network effects, and as a result, they are less willing to buy from the new firms as they don’t yet have a large enough customer base. (Porter, 2008, p. 81)
• Customer switching costs: “Switching costs are fixed costs that buyers face when they change suppliers”. (Porter, 2008, p. 81). Changing the supplier or vendor will cause
added costs for many reasons, such as the integration of other parts with the new product and training of the employees to the new vendor.
• Capital requirements: Many industries require huge capital investment, and thus directly affect the attractiveness of the market for new entry.
• Incumbency advantages independent of size: The existing firms in a market have an advantage due to the learning and experience they have already gained in the market. “These advantages can stem from such sources as proprietary technology, preferential access to the best raw material sources, and pre-emption of the most favorable
geographic locations, established brand identities, or cumulative experience that has allowed incumbents to learn how to produce more efficiently.” (Porter, 2008, pp. 81-82)
• Unequal access to distribution channels: distributions channels are already tied to the existing firms in the market, thus new entrants face this disadvantage.
• Restrictive government policy: Government policies may also play a role by regulating or restricting a new entry to the market.
THE POWER OF SUPPLIERS: “Powerful suppliers capture more of the value for
themselves by charging higher prices, limiting quality or services, or shifting costs to industry participants.” (Porter, 2008, p. 82)
The power of suppliers can come from one of the following reasons:
• “It is more concentrated than the industry it sells to.” (Porter, 2008, p. 82) • “The supplier group does not depend heavily on the industry for its revenues.”
(Porter, 2008, p. 82)
• “Industry participants face switching costs in changing suppliers.” (Porter, 2008, p. 82)
• “Suppliers offer products that are differentiated”. (Porter, 2008, p. 83)
• “There is no substitute for what the supplier group provides.” (Porter, 2008, p. 83) • “The supplier group can credibly threaten to integrate forward into the industry.”
(Porter, 2008, p. 83)
THE POWER OF BUYERS: “Powerful customers–the flip side of powerful suppliers–can capture more value by forcing down prices, demanding better quality or more service
(thereby driving up costs), and generally playing industry participants off against one another, all at the expense of industry profitability”. (Porter, 2008, p. 83)
The power comes from the bargain leverage that buyers have, which can be due to one of the following:
• “There are few buyers, or each one purchases in volumes that are large relative to the size of a single vendor.” (Porter, 2008, p. 83)
• “The industry’s products are standardized or undifferentiated.” (Porter, 2008, p. 83) • “Buyers face few switching costs in changing vendors”. (Porter, 2008, p. 83) • “Buyers can credibly threaten to integrate backward and produce the industry’s
product themselves if vendors are too profitable”. (Porter, 2008, p. 84) Price sensitivity of the buyers group can be due to one of the following reasons:
• “The product it purchases from the industry represents a significant fraction of its cost structure or procurement budget.” (Porter, 2008, p. 84)
• “The buyer group earns low profits, is strapped for cash, or is otherwise under pressure to trim its purchasing costs.” (Porter, 2008, p. 84)
• “The quality of buyers’ products or services is little affected by the industry’s product” (Porter, 2008, p. 84)
• The industry’s product has little effect on the buyer’s other costs. (Porter, 2008, p. 84) The power of buyers applies for all types of customers ‘end customer and intermediate ones’. THE THREAT OF SUBSTITUTES: “A substitute performs the same or a similar function as an industry’s product by a different means.” (Porter, 2008, p. 84)
Any product will have multiple substitutes. And to fight back, the firm must distinguish its product so that the substitutes become less attractive or desirable to the buyers.
The power of the substitutes will be high if it meets one of the following conditions:
• “It offers an attractive price-performance trade-off to the industry’s product.” (Porter, 2008, p. 84)
• “The buyer’s cost of switching to the substitute is low”. (Porter, 2008, p. 85)
RIVALRY AMONG EXISTING COMPETITORS: Rivalry can be in the forms of “price discounting, new product introductions, advertising campaigns, and service improvements”. (Porter, 2008, p. 85)
The rivalry will be high if one of the following situations is met:
• “Competitors are numerous or are roughly equal in size and power.” (Porter, 2008, p. 85)
• “Industry growth is slow.” (Porter, 2008, p. 85) • “Exit barriers are high.” (Porter, 2008, p. 85)
• “Rivals are highly committed to the business and have aspirations for leadership, especially if they have goals that go beyond economic performance in the particular industry.” (Porter, 2008, p. 85)
• “Firms cannot read each other’s signals well because of lack of familiarity with one another, diverse approaches to competing, or differing goals.” (Porter, 2008, p. 85) With the above five forces the firm also must take into consideration factors such as Industry growth rate, Technology and innovation, Government, Complementary products and
services. The firm must redo the assessment periodically, as the forces and factors will change with time. A reassessment allows the firm to change the plans in accord with the new situation (Porter, 2008).
From Nijem perspective
As Nijem is a start-up that is causing the disruptions to the market. As a new entry, Nijem is trying to offer a substitute—not to the product itself but the man power used—by introducing the automation. With time however, new entry and new substitutes will arise, so Nijem should closely monitor the market so it can respond accordingly as its position and the market evolves.
Figure 2: Porter’s five forces applied on Nijem
Reviewing the five forces situation in the industry reveal that the attractiveness of the
industry is “truly attractive”, with an anticipated positive shift in the both long and short term. When the executives or investors review this analysis, an optimistic view about both Nijem and the industry is established as having high growth potential with low overall threats. C. A Resource-based View of the Firm (Wernham, 1984)
This paper takes a deep dive into the firm from a resource perspective rather than the products it produces. This method helps with setting new strategic paths based on the firm resources.
Considering firms from a resource-based perspective provides four main advantages: • “Looking at firms in terms of their resources leads to different immediate insights
than the traditional product perspective”. (Wernerfelt, 1984, p. 172)
• “One can identify types of resources which can lead to high profits”. (Wernerfelt, 1984, p. 172)
• “Strategy for a bigger firm involves striking a balance between the exploitation of existing resources and the development of new ones”. (Wernerfelt, 1984, p. 172) • “An acquisition can be seen as a purchase of a bundle of resources in a highly
RESOURCES AND PROFITABILITY:
“A firm's resources at a given time could be defined as those (tangible and intangible) assets which are tied semi permanently to the firm.” (Wernerfelt, 1984, p. 172)
First-mover advantages and resource position barriers:
A resource combined with first-mover advantage can provide an advantage for a firm, by increasing the barriers for new entrants that still need to gain and develop resources. This advantage can be translated into higher returns.
Attractive resources:
“Most resources can be used in several products. As a result, a given resource position barrier will often have consequences for several products, each yielding part of the resulting return.” (Wernerfelt, 1984, p. 174)
Mergers and acquisitions:
Mergers and acquisitions (M&A) is a shortcut for a firm to either buy or sell resources and gain synergies by consolidating firms and their resources to achieve higher profit and return. The resources gained from M&A can be: “supplementary (get more of those resources you already have)” (Wernerfelt, 1984, p. 175), or “complementary (get resources which combine effectively with those you already have)” (Wernerfelt, 1984, p. 175).
D. Unique Value Proposition (Porter M. )
The unique value the company is established by looking at the demand side. The unique value proposition can be determined by answering the 3 questions below and understanding their cross interactions, as seen in the below graph.
Figure 3: “Defining the Value Proposition: Three Essential Questions”. (Porter M. ) “Which customers are you going to serve”? (Porter M. )
This question is answered by identifying the customer segment and the channels to reach them
“Which needs are you going to meet”? (Porter M. )
The company has a unique ability to serve the customers’ needs because it designed a service with those in mind? If you are, this still doesn’t answer the question of determining what needs you are going to meet.
“What relative price will provide acceptable value for customers and acceptable profitability for the company”.(Porter M. )
If the industry offering is overpriced, the company could offer a cheaper product that answers the customer needs, by eliminating extras and non-essential costs. If the industry offering is underpriced, enhancing the product or service and asking for a premium will enable the company to have a unique value proposition.
By combining the above theoretical foundations, the framework is able to cover both the main driver of start-up, the core competences and skills of the founders, and the outside forces that affect the start-up. The goal is to create a business plan that covers all aspects based on the snapshot of time in which it was written.
F. Research motivation and research question
Nijem as a firm has established a business idea, and next step on its agenda is to build a business plan. This business plan is seen as the first step in moving from an idea to an established firm. Making this transition brings many questions and areas of focus that the business plan should address.
This thesis is about addressing the urgent need to create a business plan. It will do so on basis of the literature mentioned and on the basis of acquired facts about the perceived market. A note needs to be written about the difference between a conventional science-oriented thesis and a thesis based on a business plan model. There are some examples of theses based on business plans, which have lead to successful businesses. One Dutch example is the thesis Goldschmeding wrote about the labor market in the seventies. On the basis of his thesis, he founded Randstad, which is now a leading firm in temp work and has made Goldschmeding a multibillionaire.
One distinction of the science-based thesis is that science is about testing a hypothesis against existing facts that can be uncovered through research, as Simon explained in “The Sciences of the Artificial (third ed.)”Chapter 5 (Simon, 1996).
In contrast, entrepreneurship is about what should or can be done to create new products, create new markets, discover new opportunities, envision new and more efficient solutions and manufacturing processes, and then turn these into profitable investments that contribute to economic growth. This has been documented in multiple publications like:
“Entrepreneurship in Economic Theory” (Baumol, 1968), “The Effect of Entrepreneurial Activity on National Economic Growth” (Stel, 2005), and “Linking Entrepreneurship and Economic Growth” (Wennekers, 1999).
The basis of entrepreneurial thinking is abductive thinking, not deductive thinking or inductive thinking, as is the case in science and science-based MBA theses. However, abductive thinking cannot deny that new business is subject to a number of laws in the economy and other domains in real life. So abductive thinking, supported or not with design
tools like “Blue Ocean Strategy” (W. Chan Kim, 2005), may generate new ideas. These ideas need to be tested for plausibility, but not for being true as in science. This avoids the trap of evidence based management, as described in works like “The Innovators Dilemma: When New Technologies Cause Great Firms to Fail” (Christensen, 1997). For new market opportunities, there is no data to confirm a plan, but that is not the whole story. Estimates need to be made about the size of the market, required investments, possible pricing, possible competition, cash flows, etc. Whereas a science-oriented thesis is tasked to test a hypothesis and produce verifiable statements, a thesis based on a business plan should focus on testing the plausibility of objectives, assumptions and financial projections. It should also provide a SWOT-analysis underlying the business plan.
This is where Porter’s research on plausibility comes in. Porter acknowledges that his
theories on strategy do not have the power to generate new competitive ideas. Other concepts and theories may be helpful to generate new, innovative business ideas, but Porter’s
frameworks and concepts can be used to test the plausibility of the new business idea, including its defendability (Strikwerda, 2016).
The theoretical challenge is to interpret or adapt Porter’s frameworks and concepts properly for the industry and its developments of which this business plan is a part.
With that the research question of this thesis is:
Nijem is in critical stage of moving from an idea to an established startup, and needs to know what to include and what to focus on in the business plan. The business plan will be the outcome of studying the firm’s internal resources, as well as external factors. This makes it a summary for what we already know, combined with the goals and vision for the firm’s near future. In an academic sense, concepts and tools from the field of strategic management will be used to test ex-ante the plausibility of the business plan.
The setup of the thesis is about: (i) idea generation, as elaborated in a business plan, and (ii) testing the plausibility of the business plan in terms of market size, attainable market size, turnover, costs, profitability, financing and liquidity planning, including a SWOT analysis.
III. The Framework
The framework chosen for this task is “How to Write a Great Business Plan” (Sahlman, 1997). This framework was a Harvard Business Review bestseller, which addresses how to write a business plan for a start-up. As Nijem is a new start-up, it needs to build a business plan based on such frameworks in order to address all the main aspects of, and focus on the important issues. In other words, this framework provides a holistic view on what to focus on to create a well-crafted plan.
Conducting a review of old fashioned business plans, it became clear that they “waste too much ink on numbers and devote too little to the information that really matters to intelligent investors.” (Sahlman, 1997, p. 99). Not to mention the fact that a startup “faces far too many unknowns to predict revenues, let alone profits.” (Sahlman, 1997, p. 99) Keeping these two principles in mind, a Startup business plan should be built around the following dimensions: The People:
“The men and women starting and running the venture, as well as the outside parties providing key services or important resources for it, such as its lawyers, accountants, and suppliers.” (Sahlman, 1997, p. 99)
The Opportunity:
“A profile of the business itself—what it will sell and to whom, whether the business can grow and how fast, what its economics are, who and what stand in the way of success.” (Sahlman, 1997, p. 99)
The Context:
“The big picture—the regulatory environment, interest rates, demographic trends, inflation, and the like—basically, factors that inevitably change but cannot be controlled by the entrepreneur.” (Sahlman, 1997, p. 99)
Risk and Reward:
“An assessment of everything that can go wrong and right, and a discussion of how the entrepreneurial team can respond.” (Sahlman, 1997, p. 99)
A. The People
Any Business plan should include a résumé section and give more details about the team, as the right team is the main pillar for successful startup, otherwise none of the other parts matter.
The goal is to get an understanding “What do they know? Whom do they know? And how well are they known?” (Sahlman, 1997, p. 101)
This part is very important as startup success is built on an inside-out perspective. In order to believe in the startup, one must first believe in the capability of the people—the owners, the staff, the suppliers— and their skills, which are essential to the success of the idea upon which the startup is built.
The Business plan should answer fourteen questions, which are shown in Figure 4: Fourteen “Personal” Questions Every Business Plan Should Answer.
Figure 4: “Who are these people anyway”. (Sahlman, 1997, p. 101) B. The Opportunity
After addressing the people part, the business plan should address two major questions: “Is the total market for the venture’s product or service large, rapidly growing, or both? Is the industry now, or can it become, structurally attractive?” (Sahlman, 1997, p. 101)
These are two important questions as a growing market is easier to be part of rather than saturated market with high competition and low growth.
The entrepreneurs should confirm that the industry they are trying to enter is an attractive one from the perspective that it’s growing or large enough. Then, they should state that using well established facts in the business plan.
After detailing facts about the market itself, the “[business] plan must describe in detail how the company will build and launch its product or service into the marketplace”. (Sahlman, 1997, p. 102). However, these aspects are not enough. The business plan should also address access to customers. You can build a product, but without viable access to the customer, you will not be able to sell it.
The last part of the opportunity is the competition. Any product in the market will face competition, so the business plans should cover this issue and analyze the competition as the market is a dynamic one, and the actions of the competition will affect the business itself. A Good business plan should prove “that the entrepreneurial team knows the good, the bad, and the ugly that the venture faces ahead” (Sahlman, 1997, p. 104), as “All opportunities have promise; all have vulnerabilities.” (Sahlman, 1997, p. 104)
So the business plan should at least answer nine questions about the opportunity, which are seen in Figure 5: The opportunity of a lifetime or is it?
Figure 5: “The opportunity of a lifetime or is it”. (Sahlman, 1997, p. 102) C. The Context
Any opportunity must be put in context to ensure correct and realistic understanding. The context can be identified on three levels:
The macroeconomic environment as revealed in “the level of economic activity, inflation, exchange rates, and interest rates.” (Sahlman, 1997, p. 104)
The government rules and regulations “that affect the opportunity and how resources are marshaled to exploit it.” (Sahlman, 1997, pp. 104-105)
And finally, the technology “that define the limits of what a business or its competitors can accomplish.” (Sahlman, 1997, p. 105)
The business plan should include, and entrepreneurs should be aware of the need for, solid evidence about the context in which the startup is built, and the effect of the context on the startup itself.
This by itself is not enough. Entrepreneurs should also be aware of that the context will change with time, and they must be lean enough to adapt to those changes. In the best case scenario, they have fifty-fifty chance of moving toward an unfavorable context. To prepare for this case, entrepreneurs need a strategy to write down how they will react and adapt. D. Risk and Reward
The business plan for startups is a vision of the future. As the future is an unknown scenario envisioning the business plan is harder than it seems.
To that end, a good business plan should “discuss people, opportunity, and context as a moving target.” (Sahlman, 1997, p. 105) These pillars and the interaction between them will change in time as the startup grows into a larger enterprise. The plan should address this change and the risks it will bring with time.
The business plan should be seen as a map that guides the startup to a safe future by knowing the path and the final destination, making the transitions less risky and more rewarding. In this way, the business plan reduces the startup’s overall risks and maximize its rewards.
E. The Deal and Beyond
Most business plans are built on a goal of financing the venture. At the same time, startups are risky businesses where many things will go wrong. Considering these two facts, startups should move away from unsophisticated investors, who may panic if things don’t go as planned. In such case, investors may hold the startup back by refusing to keep the company financed during its riskiest times. For that reason, the startups should seek experienced startup investors and the “deal should not be a static thing, a one-shot document that negotiates the disposition of a lump sum.” (Sahlman, 1997, p. 107).
F. Beware the Albatross
“Business plans must be a call for action, one that recognizes management’s responsibility to fix what is broken proactively and in real time.” (Sahlman, 1997, p. 108) By implementing this principle, the business plan will support the management and not work against them. The business plan should start with opportunity identification and end with the harvest. “A plan must demonstrate mastery of the entire entrepreneurial process, from identification of opportunity to harvest.” (Sahlman, 1997, p. 108) In a holistic way, the business plan provides flexibility, as “Avoiding risk is impossible. Risk management is the key, always tilting the venture in favor of reward and away from risk.” (Sahlman, 1997, p. 108)
G. Conclusion
Taking the pillars of the framework and mapping them to Nijem’s case, in which the investor aspect is seen as knowledge investment, Nijem is utilizing an exploitation and exploration approach. In other words, the startup is financed by other existing businesses. Less focus is placed on the financial aspect. More importantly, the startup’s goal is to improve peoples’ lives and create a brighter future for the field of network engineering. The primary goal of the startup is not financial gain. This again reduces the emphasis on the deal and beyond part. Moreover, artificial intelligence is a new field and market, which is not yet regulated or situated in a solid context. “The entrepreneurial team to treat the new venture as a series of experiments”. (Sahlman, 1997, p. 107) In order to do this, the team should “Build a prototype and watch it perform,” (Sahlman, 1997, p. 107) and learn and adapt accordingly. This places more emphasis on making the business plan more holistic, as there are more unknowns than knowns.
IV. Managerial Recommendations
As a managerial recommendation, a Business plan is made to set the guidance and focus for Nijem in its current phase as start-up.
This business plan is built on the current core competencies of the owner himself, combined with a task outsourcing model to reduce the cost of building the initial prototype.
The management team of Nijem should keep this business plan as guidance, while keeping a close eye on the fast changing market and industry in order to quickly adapt to the market and the industry.
In the following subsections, the business plan is stated. Nijem should utilize the business plan as whole to reach its vision, while keeping all parts open to continuous editing and revision. As the market is changing at a fast pace, Nijem should do the same in order to be competitive.
A. Executive Summary
Nijem Consultancy is an information technology and innovation based consultancy operating in Amsterdam, primarily focused on creating a platform that meets the technological
integration needs of medium and large businesses. With almost decade of experience, Raif Nijem has an extensive knowledge-base in meeting the IT Project Management demands of his clients.
Nijem Consultancy will employ a state-of-the-art technology to deliver project and network consultancy solutions to major clientele via an innovative web-based solution. By
incorporating a platform based service solution that partners with vendors and third-party providers, Nijem will be able to efficiently and effectively deliver end-to-end solutions for major banks, internet service providers, and telecommunication companies in a revolutionary way.
The current competitive environment is characterized by redundant processes, human errors, and slow delivery times. Nijem proposes to correct the aforementioned problems by creating an automated platform that allows users to monitor developments real-time, make
adjustments, and reduce complexity for end users. By employing a complete, web-based solution, Nijem will be able to serve both vendors and clients in a manner that is currently unavailable in the Network Engineering ecosystem.
The key pillars to Nijem’s offering will be the innovative combination of several new technologies, in addition to methodologies that the proprietors have gained after more than a decade of experience in the industry:
o Project Management o Process Optimization
o Big Data and Machine Learning
By leveraging these three items in an unprecedented way, Nijem will be able to quickly deliver end-to-end solutions for its clientele, with far fewer errors than human operated management, and will capture the current economic slack in the system as part of its revenue model.
Spending on Network Engineers and telecommunication Project Managers is estimated in excess of 7 million dollars in the Netherlands alone, and Nijem expects to capture a significant amount of local business before expanding to a global platform.
Initial investment estimate is around 30000 Euro which will be financed by its owner. The sales model is based on economy of scale utilizing cost plus method and spreading the product to a large customer base.
Nijem sees this project as a starting point for multiple opportunities. The knowledge and skills gained will be the building blocks for future projects across industry, as machine learning and artificial intelligence is perceived as the basis for many future businesses. B. PRODUCT IDEA
Product Offering
Nijem’s primary driver of value is the business model and operating procedure that system large scale technology network integration projects currently in use. These network
deployments routinely run over-time, over-budget, and under-deliver, due to the nature of how the work is currently being performed. It is the purpose of Nijem to redefine how these projects are executed by building an integrated solution, and delivering effective project planning and management via an interface called bob.
Nijem’s offering will streamline operational and project management aspects typically found in Client Service Level Agreements (SLAs), which will allow network engineers to focus on
points within the value chain where they can add additional value. The solution will automate project management tasks; provide end to end solution, which will change the customer journey. On top of this, Nijem will offer an automation of network engineering tasks based on big data and machine learning to get quality assurance, capability improvement with minimum human intervention.
Nijem’s product is built upon three pillars: o Project Management
The platform will be highly automated and responsive to changes within respective projects, allowing dynamic scheduling and quicker deliverables. By combining real-time updates to customers, it will allow for dynamic adjustment of the workflow and processes to deliver the projects more expeditiously.
o Process Optimization
Providing end-to-end customer process optimization solutions based on an extensive evaluation of client needs. Based on extensive experience, Nijem will be able to re-design the operations and supply chains, effectively removing economic slack in the current system. In addition, Nijem will also implement the best and most current lean methodologies for customers so that they reach their targets more effectively.
o Big Data and Machine Learning
Nijem will combine its Cisco Certified Internetwork Expert (CCIE), with a data driven analytics model, to evaluate and execute integration projects in a timely manner. The firm has already established Memorandums of Understanding with several solution providers, as well as a developer.
This product offering enable Nijem to fulfill the customer needs to deliver the service in lower cost, better quality while ensuring customer intimacy and satisfaction.
Value Proposition
Nijem’s product is focused on the automation of network engineering tasks, with automation comes cost reduction, quality/time assurance and more time for engineers to focus on
customer intimacy. By tackling the above three major areas, we improve customer retention and increase overall net revenue for the company.
1) Reduce cost of the projects by reducing both spending and the need to optimize the product offering;
2) Improve the quality and timeliness of project delivery, as the current continuous overrun in both time and money is affecting customer satisfaction and the overall net revenue from projects;
3) Improve customer relationships and focus on customer intimacy, which is considered a new duty for network engineers’, for which they lack time due to time constraints. The above jobs will be translated to the following product offering, which is the essence of Nijem value proposition. Nijem offers a unique product as the whole industry is still running on manual operations.
Cost reduction: Using automation and machine learning, up to 50% of the normal engineering tasks will be automated. Thus, man hours, also known as project expense, will be reduced. Cost reduction is achieved, and engineering tasks are still accomplished successfully. Quality/time assurance: With automation and machine learning, every activity will be tested by the software and mapped to its internal database. Hence, learning is faster and quality can be ensured. As a result, project overrun in time or money will be prevented.
Customer intimacy: The roles of network engineers are evolving into more customer-centric roles. This makes it necessary to free up the network engineers so they can focus on customer satisfaction. With automation, the engineers will have more free time to focus on important aspects of customer intimacy.
Nijem’s product offering will be the first one in the market which tackles all three major problems at the same time. This is a radical new approach to resolve inherent problems. All offerings in the market address one issue, but none address the root cause of the problem by using automation to redefine the network engineer’s role.
Considering the solution in relation to economy of scale, the overall benefit grows
exponentially, as learning has to be done only once. Then, it can be applied to all customers as the knowledge is shared, as opposed to current solutions which are fragmented. Economy of scale also provides a huge cost advantage as the CAPEX is only for the learning, which can be spread over long period. On the other hand, OPEX is only the cost of cycles spent on finalizing the solution, the cost of which is very low.
Customers are currently paying billions of dollars for unique or customized products and for experiences related to connectivity. In order to better focus on the customer, it is necessary to unburden the Network Engineer from repetitive tasks, scheduling, and bureaucracy so that they can focus on the primary value driver: the customer. Currently 60% of the network engineer’s time is spent on repetitive work, such as following up with project managers. This results in frustration, project cost overrun, and a dissatisfying experience for the customer. Economic Customer: This system will provide clarity in communications and scheduling to the economic customer, improving the whole customer journey by standardizing information and deliverables, and making them accessible on demand. By simplifying the UX, customers will get simple interface to understand, and will be able to easily navigate all of the details of their entire project. Current estimate of cost reduction is 50%. This percentage will increase with time as the product, with its machine learning and big data skills, will gain more tasks automation capability. This will result in further cost reduction once the new tasks are automated.
End Customer: By allowing end-users to access the system in a user friendly way, we will be able to provide informational updates on any network connectivity problems, take incident reports, and allow communication with other users. The economic value to the end customer is achieved by reducing the man hours lost on the legacy of non-friendly systems. The calculation method is: number of end customers * hours spent on legacy system * man hour cost.
In the first 6 months of the company, during the market analysis, exact hours spent on the legacy system will be identified along with the man-hour cost. This cost analysis will be done per firm that adopt the technology.
Engineer: Similarly, network Engineers will be able to access the system and make simple changes and updates that will automatically propagate through the entire project, also making necessary updates to the sub-components and tasks. By removing inefficiencies, the system will be able to deliver a “win-win” for both the customer and the engineers. Currently, an estimate of 50% of the engineer’s time is spent on this inefficiency. When this fact is combined with an average hourly rate of 55 euro, the cost reduction possibilities are huge. Vendors: The system will pull available component lists from vendors via publicly available APIs and other connections. When projects are finalized, the vendors will electronically
receive orders, eliminating the need for extraneous personnel and purchasing errors. It will also allow the vendors to publish available stock to the system, in the event that a shortage could cause a scheduling problem.
The benefits of the Product:
• Reduction of project costs: Via automation, we hope to achieve an ‘expected end result of 50% cost reduction on network engineering cost’; thus, the number of man hours spent on the project will be reduced.
• Improve customer journey: Consolidating the project management and engineering work will free up the network engineer time to focus on customer intimacy
• Quality assurance for the delivery: Automation built on machine learning and big data analytics gives a guarantee on project delivery and expected outcome, which gives vendors and partners the capability to focus on growth without the quality risks they usually face due to uncertainty.
Clientele Description
Potential clients that have expressed interest in the platform include regional and international Solution providers, internet service providers, and cable companies. Due to the nature of their respective businesses, these companies require extensive infrastructure and deliver six-sigma service up-times in order to effectively service their customers, and projects can range from single transactional services to perpetual service contracts. For reference the revenue of two of the biggest companies in the industry “Cisco and Huawei “is over 100 billion in 2015. In addition, the platform will also allow access to vendors, so that products and services can be effectively scheduled for delivery to the end clients. Potential vendor clients include Cisco, Huawei, Juniper, and Fortigate.
Partners, Alliances, Networks & Relationships
Nijem Consulting will be focused on creating an open innovation environment when creating the system. It will include seeking partnerships with Vendors, Internet Service Providers, Local Universities and Governmental Entities, with the purpose of analyzing all of the requirements of each, and ensuring that the system specifications meet their standards. It will also help coordinate the supply chain for all stakeholders, in relation to Network Engineering, which will encourage participation on the platform.
C. MANAGEMENT TEAM
Raif Nijem is functioning as the owner and manager of Nijem, and will be the primary source of economic value added, as well as the primary point of contact. He has a decade of
experience in implementing network engineering solutions, including for some of the largest global network and telecommunications firms. He received his MBA from the University of Amsterdam.
As demand requires, Nijem will also collaborate with its business partners to create a flexible workforce via University interns, providing useful training and skills to the local labor market while simultaneously delivering economic value to its client firms.
A detailed résumé of the owner is included in this paper (section L. Résumé). Once Nijem adds new members to its team, the résumé section will be updated accordingly.
The résumé section provides full details about education, professional experience, and the relationship between the professional experience and the product itself,
D. MARKET AND COMPETITION Network Engineering
The foundation of global connectivity between devices is the Internet Protocol (IP), which provides a universal standard for communication. The Internet is a system of end users, exchanges, and relay agents, all of which are connected and maintained by Network Engineers. Network Engineering is the process of designing the data communication
network, so that information sent over the internet arrives to the correct destination, building a dynamic link between the sender and recipient of the data via a system of routers. These routers vary in size from a small and simple home internet router, to complex industrial device systems that fill entire warehouses.
Market size of the two biggest companies in the industry, Cisco and Huawei, is over 100 billion dollars in 2015. Network engineering resides in the heart of this business model, as network engineers are responsible for product configuration and management over the whole life cycle.
With the explosion in the numbers of connected devices, the underlying infrastructure, or backbone, of the internet requires constant upgrading and expansion. A Network Engineer is
responsible for building and maintaining the infrastructure that carries all the information between connected devices.
Currently, it is estimated that 25% of the big firms’ revenue comes from the services done by network engineers, deducting further the regions which Nijem will not cover and the market which substitute will control. The market estimate for Nijem is 1% of the total market.
Figure 6: Market Share estimate
Future of the Industry
The telecommunications industry has been evolving at a rapid pace and has ushered in the Information Age. There are now so many connected devices, the previous IPv4 standard has run out of available addresses (3,7 billion), and has necessitated an upgrade to the new IPv6 (4.2 * 10^37) addresses, making it not only functionally unlimited, but also a massive undertaking for communications infrastructure projects. Coupled with this is the next step in communication, The Internet of Everything is defined as all devices capable of connectivity, everything from a light bulb to HVAC systems for large buildings, each with its own IP address.
The Internet of Everything brings together people, process, data and things to make networked connections more relevant and more valuable than ever before, by turning information into actions that create new capabilities, richer experiences and unprecedented economic opportunity for businesses, individuals and countries.
Network engineering industry currently has 25% of its revenue based on the network
engineering services. Our product goal is to optimize the engineering service by 50%. These savings will be divided between Nijem and the existing big players, who will be our partners in encouraging the adoption of this new model and making it most attractive for the big firms. Major Infrastructure Providers
Cisco
Cisco Systems, Inc. is an American multinational technology company headquartered in San Jose, California, that designs, manufactures and sells networking equipment. It is the largest networking company in the world, with 113 billion USD in total assets 2015.
Huawei
Huawei Technologies Co. Ltd. is a Chinese multinational networking and
telecommunications equipment and services company headquartered in Shenzhen,
Guangdong. It is the largest telecommunications equipment manufacturer in the world, with revenue of 60 billion in 2015.
Verizon
Verizon Communications, Inc. is an American broadband and telecommunications company, the largest U.S. wireless communications service provider and a corporate component of the Dow Jones Industrial Average, with 244 billion USD in total assets 2015.
E. COMPETITOR ANALYSIS
There are currently no direct competitors for Nijem Consultancy, though there are several substitutes:
o Customers can opt for the traditional model, which would rely heavily on human interaction with 3 or more parties.
o There are some project management software suites available, though none are tailored to Network Engineering, such as Wrike, Freshdesk and Easy Projects. o Some customers have the ability to handle these requirements in house. As for high
risk industry such as government and financial trade firms they will prefer to keep the network engineering in house.
Once Nijem has a valuable product, it will focus on partnership with the major industry players to reduce the future competition possibilities.
This section will be one of the major focus areas of the initial 6-month plan. Further analysis and study is needed to have more realistic understanding of the competitors.
F. Nijem COMPETITIVE ADVANTAGES
Nijem’s competitive advantage is based on its interaction on the customer journey level, the innovation levels involved in the product, its unique openness and adaptation for new business models, which old well-established companies are unable to apply.
Customer Journey
The customer journey for telecommunications customers is quasi-cyclical; the rapid improvement in equipment and the exponential growth of user data requires that customer have to periodically upgrade their systems. A key component behind the system is to improve the customer journey, which should make it the preferred service provider for future
requirements. Due to the large capital expenditures required to upgrade, the customer journey should focus on providing longer lasting value than the industry currently provides. The customer journey should end on a “high note”, by making sure that customers understand the value of the platform, enticing future business.
The platform will provide additional automated touch-points, which will communicate the exact status of the projects to the engineers, the customers, and the vendors. This will
alleviate anxiety and confusion among the three user bases. However, based on the nature of the customer, the user experience will be different. CXO, IT, and Business units will be presented with information that only they will find usable, to prevent information overload and to enhance their particular customer journey.
Innovations
o This product is new to both the Netherlands, and on a global scale. It will be
developed in-house, and use a unique combination of features to deliver value to the customer’s initiatives in an expeditious manner.
o This platform involves new technology for production and distribution; Nijem’s offering will supplant the currently employed methodologies for Network Engineers, and will be delivered digitally.
o Nijem has an innovative organizational set-up and working method which will reduce company overhead, as well as customer down-time and errors. Nijem will leverage its professional networks to create a scalable solution for staffing, including partnering with students, ZZP’ers, and recent graduates to create a flexible solution.
o The platform will create a single, automated, touch point for the clients, which will be available 24/7 and allow for real-time updates. This is a departure from the “high-touch, high-cost” model in use by other firms.
o The platform will gather real-time feedback from clients and incorporate it into the service model, creating a learning algorithm. By leveraging real-time updates from customers, up and down stream vendors, and service level delivery, the platform will be able to effectively schedule service and parts deliveries, and predictively analyze current and future customer needs.
o The platform will be able to deliver similar final results at a much lower cost by removing unnecessary down-time from the delivery process. Currently, employee utilization in the industry is less than forty percent (40%). This represents an
economic opportunity for both clients, as well as Nijem, which can deliver the same service at a lower cost.
o Customers will be charged based on computer resources (CPU Cycles) required, instead of by the hour/project that other firms employ. As previously mentioned, employee utilization is very low, which means that clients are not effectively employing their resources, which lowers their overall productivity.
o The platform will essentially combine the workload of two persons, and deliver it more efficiently.
o Nijem will employ a multi-channel marketing and customer engagement strategy to reach both its clientele and vendors.
Multi-Channel Model
Nijem will provide access to customers and create touch points with a multichannel strategy, engaging customers via the internet, email support, telephone, and in person, when required. Some channels will be available continuously to improve customer satisfaction.
G. MARKETING AND SALES
For marketing and sales, Nijem will depend on the owner’s industry extensive history and connections—acting as a customer of the product himself at the start. Secondly, he will
utilize his direct ties with the biggest companies in the industry, gained through “past work experience”. The list of colleagues and friends already acquired through his work experience will enable Nijem to have solid Market reach.
As the product is based on machine learning and artificial intelligence, the outcome of the product will be sold as service.
Profit Model
Nijem currently favors a cost-plus model, as well as seeking additional revenue as a share of operations and supply chain management savings. Additional revenue streams may be considered, as warranted. Current estimate for ROI is within 24 months to gain revenue of € 30,000 from early adopters.
Figure 7: Estimated financial forecast 36 months H. BUSINESS SYSTEM AND ORGANIZATION Legal and Commercial Nature of the Entity
Nijem Consultancy, henceforth referred to as “Nijem”, is currently organized as an Eenmanszaak based in Amsterdam, the Netherlands.
The organization will be highly meritocratic and will challenge any potential employees to not only challenge the status quo, but also encourage them to branch out on their own should the conditions warrant.
The company will organize itself with a horizontal organization, with the focus on the customer experience. Any management functionality will exist solely to facilitate the customer’s journey through the process.
Business Partnerships
Nijem is creating a semi-open innovation platform, and will be able to react to customer developments to adjust the operational model. The firm already possesses business contacts with several large banks, telecommunications providers, and universities, which represent both a pool of available resources, as well as potential customers. In addition, Nijem will also crowd-source talent from the local universities, start-up accelerators, and cowering spaces to deliver its process of continuous innovation.
Values & Goals
Nijem prides itself on integrity, and will conduct its business in a similar manner. The principal firmly believes that the current competitive environment is plagued with
inefficiency, outdated methodologies, and workers who are not able to complete the tasks required. He seeks a solution that would offer a “win-win” solution for both Network Engineers and Customers alike.
Corporate Governance
Nijem is currently an Eenmanszaak, with aspirations to change to a B.V. structure. Corporate governance considerations will be addressed at that time.
Corporate Social Responsibility
Nijem’s primary focus regarding CSR will be the on-boarding and training of interns, with the intent of broadening their education, as well as providing useful, practical skills. Human Resource Management
Nijem doesn’t have employees; it has partners, who are deserving of equal treatment, and useful and constructive feedback. Nijem aims to function as leadership support and empower any potential partners by offering experience, insight, and business educational concepts that will assist with delivering an excellent experience to customers.
Personal development is a key aspect that the company wishes to promote. Investing in employee partners improves not only the marketability of individuals, but for the company as a whole...
I. IMPLEMENTATION SCHEDULE
It is expected that the nature of Nijem Consultancy and its respective business activities will change over time and as the market requirements change. The initial timeline for primary business activities is below:
Initial Six (6) Months
o Research and analysis of business environment
o Survey of technologies utilized in Big Data and machine learning o Creation of value proposal(s)
o Market validation
o Creation of initial platform prototype o Competitor analysis
o Building financial statements Six (6) to Eighteen (18) Months
o Minimum Viable Product launch
o Evaluation of platform efficacy and potential “pivots”
o Consolidation of project management and delivery into single process o Initial team build-out, targeting Master Students with exposure to the latest
technology
o The software building payment: the code delivered is priced on the code size and importance calculator, i.e., the student agrees on the idea + the time needed to build the code while obeying the general guideline and compatibility spirit
o Students helped and supported to become self-employed and start their own businesses
G. OPPORTUNITIES AND RISKS Opportunities
