MDC business plan

7/25/2019 MDC business plan

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Project Adriatic DanubeBlack Sea Multimodal Platform

SEE/C/0004/3.3/X,

WP5, Act.5.3 Designing the ADB model of MDC

DEVELOPMENT OF BUSINESS PLAN

FOR CREATION OF MDC IN BULGARIA FOR ADRIATICDANUBEBLACK SEA REGION

Release date, period: 20.11.2013

Responsible organisation: Bulgarian Chamber of Commerce and

Industry, PP9

Version: Draft version

The publication reflects the authors view and the Managing Authority of the SEE

Programme is not liable for any use that may be made of the information contained therein.


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CONTENT

1. EXECUTIVE SUMMARY ................... ...................... ...................... ...................... ...................... ............... 3

1.1. OBJECTIVES....................................................... ................................................................. ......... 3

1.2. MISSION...................................................................................................................................... 4

1.3. KEYS TO SUCCESS....................................................................................................................... 4

2. PRODUCTS AND SERVICES .................................................................................................................. 4

2.1. PRODUCT AND SERVICE DESCRIPTION.......................................................... ............................... 5

3.

STRATEGY AND IMPLEMENTATION SUMMARY .......................................................................... 7

3.1. VALUE PROPOSITION............................................................... .................................................... 7

3.2. COMPETITIVE EDGE................................................................ ..................................................... 7

3.3. MARKET ANALYSIS SUMMARY................................................................................................... 73.4. MARKET SEGMENTATION TARGET GROUPS.......................................................... .................. 11

4. SALES AND MARKETING PLAN ........................................................................................................11

4.1. MARKETING STRATEGY............................................................................................................ 11

4.2. PROMOTION STRATEGY........................................................... .................................................. 11

4.3. PRICING STRATEGY................................................................................................................... 13

4.4. DISTRIBUTION STRATEGY......................................................................................................... 14

4.5. SALES STRATEGY...................................................................................................................... 14

5.

OPERATIONAL PLAN ...........................................................................................................................18

5.1. START-UP.................................................................................................................................. 19

5.2. MDCS ORGANIZATIONAL STRUCTURE......................................................... ............................. 21

5.3. MDCS PERSONAL PLAN............................................................................................................ 22

6. FINANCIAL PLAN................................................................................................................................... 22

6.1. START-UP FUNDING................................................................ ................................................... 22

6.2. OPERATIONAL COSTS............................................................... .................................................. 23

6.3. PROFIT AND LOSS...................................................................................................................... 24

7. EFFICIENCY EVALUATION .................................................................................................................25

7.1. PROFITABILITY SUSTAINABILITY RATIOS................................................................ .................. 26

7.2.

OPERATIONALEFFICIENCYRATIOS................................................................................................ 27

7.3. LIQUIDITYRATIOS.......................................................... ............................................................. 28

8. RISKS AND ASSUMPTIONS ................................................................................................................29


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1. Executive Summary

Promotion and facilitation of intermodality is one of important trend of Europeantransport policy. European MDC network will be a platform that brings together mainactors in the transport and logistics field. A MDC is a new framework of co-operationamong different transport actors (on regional and national level) to improveknowledge, management and information system for intermodal transport , as well asto prepare and to support an effective intermodal transport solutions. A MDC isdefined as a neutral non-profit organisation acting as a catalyst to develop intermodalfreight transport solutions along European corridors showing high intermodalpotential. To achieve the self-sustainability the Bulgarian MDC will adopt a balanced

business model. This will not only contribute to achieve this goal but will alsoguarantee profitability at the third year of MDC operations.

1.1. Objectives

The main objective of the MDC will be to reach self-sustainability during its first yearsof operations.. From this business plan we can see that the MDC will be profitable atthe third year of operations. This will be achieved through the sales of products andservices to the private target group and through a contribution scheme from

stakeholders.The basic tasks of Bulgarian MDC are:

increase awareness of intermodal transport among shippers and forwarding agents

and logistic providers;

provide shippers with information on the many and varied possibilities of intermodal

transport, especially with regard to intermodal door-to-door transport;

analyze the problems which might affect intermodal transport;

set up and maintain a database on intermodal transport services;

be a source of objectives freight and transport information for trade, industry, as well

as for municipalities governmental institutions.

to take active part in the promotion of the effective intermodal transport network in theAdriatic-Danube-Black Sea Region (ADBR);

to execute scientific and apply research in the sphere of intermodal transport

development;

to disseminate information on intermodal transport developments and innovations;

to promote co-operation between intermodal transport hubs and logistic centres both

at national and at transnational level.

to prepare Bulgarian intermodal transpor strategy and present it to the governmenta

institutions for approval;

to adopt information on intermodal transport and logistics technologies development

trends as well as innovation and best practices in the EU countries;


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to support efforts of the cities and the regional administrations in establishingintermodal transport, public logistics centres (freight villages) and in developing their

network in Bulgaria;

to promote the co-operation between intermodal transport hubs and logistics centres

both on national and international level;

to take part in the establishment of the effective common intermodal transport

communication network in the Adriatic-Danube-Black Sea Region;

1.2. Mission

The mission of the MDC will be to provide excellent products and services, a sharedenvironment for MDCs stakeholders in order to pro-actively contribute to thedevelopment of multimodal transport sector in Bulgaria and Adriatic-Danube-BlackSea Region.

1.3. Keys to Success

The keys to success for the MDC will be:a. Massive promotion among Bulgarian companies

b. Well balanced business model implementationc. Professional and trustworthy Service Delivery Organisationd. Creation of the MDC stakeholders Community

2. Products and Services

The following main products, services and applications have been identified and canbe offered by MDC :Category 1:Promotion - preparation of brochures promoting Multimodal Transport

(MTT), preparation of website of MDC, conduct newsletter campaigns, organisationof workshops with target groups and government analysing problems & bottlenecks,preparing fact-sheets on individual countries (e.g. external trades, ports, hinterlandterminals,..), Establishing and maintaining a database on MMT services andtransport operatorsCategory 2:Information - provide shippers with information on the many and variedpossibilities of intermodal transport, especially with regard to intermodal door-to-doortransport; set up and maintain a database on intermodal transport services; todisseminate information on intermodal transport developments and innovations; toadopt information on intermodal transport and logistics technologies developmenttrends as well as innovation and best practices in the EU countries


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Category 3:Consultancy - strategic advice to policy makers, route or serviceprovider comparisons and evaluations for shippers, requirements and demandpotential analyses, specific feasibility and research studies.Category 4:Training - introductory lectures, familiarisation workshops or trainingcourses to users or operators, or broker training services provided by otherinstitutions

2.1. Product and Service Descript ion

Category 1: Promotion

Product 1: Preparation of brochures and leafletsThe brochures and leaflets has to be produced periodically not less than twice peryear and for some important events ( conferences, workshops and so on). They haveto provide useful and reusable information and allow people to be more informedjudgments quickly.Product 2: Annual subscription serviceIn order to reach self-sustainability, an annual subscription service to Bulgarian andforeign multimodal transport companies and shippers have to be offered. This servicewill be provided through developed MDCs Web site wherethe public area will offerfree information, but for the access to the private area of the Web site an accessiblefee should be charged to users. We understand that free services do not tend to bevalued. This product will allow users ( Bulgarian and foreign) to properly registerwithin the MDC database and to obtain a basic web presence. Furthermore theaccess to the private area of the portal will allow users to access, without anyadditional costs, various informative materials such as specialised studies andreports, business guides, news, FAQs and knowledge bases. The idea is to offer thisproduct on two different levels of access and price depending on the type andquantity of information offered. These levels will be named as basic and advanced.An additional subscription level (i.e.: top) could be tailored for foreign SMEs and largecompanies.Product 3: Workshops

One of the best ways to promote a product and service in the traditional marketing isto organize specialized workshops covered different target groups. At the beginningof MDC the massive promotional campaign with regional workshops have to beorganized. The workshops have to clarify why MDC exists and how it can help in thedevelopment of multimodal transport, what are the benefits of intermodal transportand what are the possibilities to use MDCs website. Later the annual conference formultimodal players will be a good idea as well as annual workshops with differenttarget groups.

Category 2: InformationProduct 1: Internet presence


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One of the most important things in our ages is to be well recognized in the Internetas a producer or service provider. This is a reason for MDC to create and support thedatabase on MMT services and transport operators. This registration in the databasewill be allowed for users with basic subscription and will allow them to find thepartners and to be found as a partner for multimodal transport. The database willcontain list of companies, contact details as well as the list of services provided byeach company.Product 2: Business and best practices guidesThe business and best practice guides will be priced separately depending on thequality of the material. These guides will help users to acquire knowledge and newskills on a variety of topics related to their business connected with multimodal

transport.Product 3: Research studies and specialised reportsResearch studies and specialised reports will also be priced separately. They willhave original materials relevant to Multimodal Transport sector.

Category 3: Consultancy servicesThis category of products and services will include more traditional consultancyservices strategic advice to policy makers, route or service provider comparisons andevaluations for shippers, requirements and demand potential analyses, specificfeasibility and research studies, commercial services (e.g.: marketing research andanalysis, marketing planning, sales development, matchmaking, etc.) as well as the

exploitation of services that can be produced through the use of the DMCsinfrastructure.

Category 4: TrainingThe training is other important channel is the training courses. The training coursesare obliged to increase the level of understanding of Multimodal transport as well asto provide knowledge for different possibilities for usage of Multimodal transport inBulgaria and in the Adriatic-Danube-Black Sea region. These course depending oftheir goals are divided as follows:

introductory lecturesinitial short term courses explaining the place and the role of

Multimodal transport in our region, organization of MDC and its goals and tasks, how

to participate and use the MDC.

familiarisation workshops or training courses to users or operatorsshort term

courses explaining the strategy for development of multimodal transport services

(MMTS) in Europe and our region, the possibilities to use MMTS in Bulgaria.

broker training services provided by other institutionscourses about the tools for

MMTS in the ADB region, partners for MMTS, principles for organization of MMTS

and so on.

Category 5: Collateral and additional products/services (i.e.: cross linking and

other websites integration or synergy, advertising, etc.).


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We foresee the possibility to use the MDCs to publish banner advertising or join theadvertising networks (e.g.: Google, AdSense, Yahoo Search Marketing, etc.). Theincome that can be generated via these advertising channels has not to beunderestimated and could become an additional income stream for the MDC..

3. Strategy and Implementation Summary

The MDC will adopt a consistent business model that will allow it to focus on themain target groups. To the private target group a mixed of free services (on thepublic area) and paid services (on the private area) will be offered. The public target

group involvement in the initiative will be leveraged through a contribution schemethat will clearly support the MDC during its first years of operations.

3.1. Value Propos it ion

The value proposition of the MDC is to become the single point of access and themost used organization for Multimodal Transport in Bulgaria as well foreigncompanies and organisations that would like to do multimodal transport in Bulgaria.At the same time to become the main operational and knowledge sharing center forMultimodal Transport stakeholders in Bulgaria.

3.2. Competitive Edge

By building a business based relationship with satisfied users, the service deliveryorganisation will simultaneously build defences against competition. The longer therelationship stands, the more the MDC will help companys understand what it isoffered to them and why they should both stay with the MDC, and refer it to othercompanies. In business communities like the Multimodal transport sector , reputationis and will be extremely important, and word-of-mouth advertising will be invaluable.

3.3. Market Analysis Summary

An efficient transport system is an essential prerequisite for the European Unionscompetitiveness. With the projected growth of international trade, the possibleextension of the Union to the Central and Eastern European countries and enhancedcooperation with the Mediterranean countries, the role of transport will become evenmore important. Since 1970 European freight transport has increased by about 70 %.Annual growth of about 2 % is expected for the next two decades. Present figures putthe costs of traffic congestion at 120 billion ECU or 2 % of the EU GDP. Accidents,air pollution and noise amount to a further 2 %. These costs undermine Europeancompetitiveness, when transport demand requires flexibility, reliability and cost-

effectiveness. Unless the transport sector considers mode-independent service


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requirements and utilizes spare capacities in other modes, road transport is likelyfurther to increase its present market share of 72 % (from almost 50 % in 1970). Theshare of rail transport has since 1970 decreased from about 32 % to less than 15 %in 1995. This decline is likely to continue if present trends persist.

Regarding the present situation of intermodal transport in the EU countries, thefollowing general conclusions can be made:

The intermodal flows within the EU and in relation with the CEEC are low and

concentrated on a limited number of relations (4% in the EU15, 2-4% between the

EU15 and the CEEC, 0.5% in the CEEC, 5 main corridor relations exist between the

EU and the CEEC);

The intermodal flows between EU15 and the CEEC fluctuate too much; the reason for

this is that the intermodal transport market in particular in the CEEC is not yet mature;

For RoLa (Rollende Landstrae) flows, it is expected that the volumes will decrease

in the future when border crossing problems are solved due to the EU enlargement,

or can slightly increase depending on the implementation of administrative and policy

measures;

Too many bottlenecks still hamper the development of intermodal transport in the

area;

Intermodal transport is often not taken into consideration in decisionmaking when

choosing the transport modes.

The next figure displays the evolution of railway traffic over the period 1996-2010. Interms of traffic performances, Austria, Germany, Denmark, the Netherlands, Sweden,Slovenia, and the United Kingdom have displayed annual growth rates, both infreight and passenger rail (see table IIII.1). Note that freight traffic has been positivein Estonia, Hungary, Lithuania and Latvia, even though the modal share has sharplydecreased, reflecting a possible restructuring process and/or a development ofinternational traffic to and from Russia. By contrast, both passenger and freightrailway traffic have displayed negative annual growth over the two past decades inBulgaria, Czech Republic, Poland, Romania and Slovakia.


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Railways Performance

Source: Transport, Statistical Pocketbook 2012 and Eurostat.tkm: tonne-kilometres; pkm: passenger-kilometres, infrastructure lines: length of linesin use.* Evolution of pkm in SE: 1996-2009; Evolution of infrastructure, HU: 2000-2010** Modal share, freight, in BG: 2000; Modal share, passenger, EE, LT, LV: 2000

In 2010, EU27 road freight transport accounted for almost 74% of all inland freighttransport; a share almost four times that of the second biggest mode, rail (16%)183.The modal share of road freight transport has been consistently increasing over time

as it was 67% in 1996 and 70% in 2000. The trend of the increasing dominance of


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road freight transport goes back even longer in the EU. In 1970 the tonne-kmperformance of road freight was only about 50% more than that of rail in thecountries that became the EU-15184. However, the sharp increase in freighttransport activity since then has been captured almost exclusively by road freighttransport, which has been growing both in absolute terms and in relative termscompared to other freight transport modes

Modal share* and performance of road transport

Source: Transport, Statistical Pocketbook 2012 and Eurostat.tkm: tonne-kilometres; pkm: passenger-kilometres, infrastructure: length of

motorways.


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* Modal share is percentage of inland freight transport (consisting of road, rail, inlandwaterways and pipelines). The modal share data is based on the official statisticsreported according to the relevant EU legal acts on transport statistics whosemethodology is not fully consistent across the different transport modes. See BoxIII.1 for data constraints.** Modal share, freight, in BG: 2000; Modal share, passenger, CY, EE, LT, LV, MT:2000

3.4. Market Segmentation Target groups

According the intermodal definition and technology the following target groups can beidentified:

Cargo shippers. Cargo carriers. Multimodal operators (Assignment Operations Management, Supply Chain

Relying, 4PL) Public authority (e.g. Port Authorities, Customs)

These target groups have been taken into consideration in this business plan.

4. Sales and marketing plan

4.1. Marketing Strategy

The main components in the Marketing, PR & Promotion plan are as follows:Emphasise Customer ServiceThe MDC will have to differentiate itself from other similar initiatives. The MDCorganisation will have to offer a clear and viable alternative for the private targetmarket that will have to emphasise on the customer service.Build a Relationship-Oriented BusinessBuild long-term relationships with the target groups with the goal of allowing targetgroups becoming dependent on the MDC.Focus on Target MarketsThe MDC will need to focus the multimodal services offerings on Bulgarian market tothe shippers, who would like to save time and enjoy convenience, by using multipleservices, and high level of customer service.

4.2. Promotion Strategy

The Promotion Strategy will be based on traditional offline activities and constant ad-hoc online activities.


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Under the traditional offline advertising and promotion activities the following areforeseen:

Brochures creationpreparation of start-up brochure explaining what is theMDC and what it can propose as products and services. Preparation ofperiodically brochures with news in the multimodal transport in Europe andBulgaria.

Set up the web siteThe Web allows for a cheap way of promoting productsand services. It is a great tool because it allows the target customers toeducate themselves about your products and services by reading about it,seeing a demo, and download a copy (and therefore serve as your distributionchannel). Create a sample web site with public and private part. The web sitewill provide free of charge information and news, but in the private partservices and products will be available according level of subscription and roleof the users.

Press releasespreparation of a short press release introducing MDC. Official event when MDC will be created as an organizational structure the

official event will be organized. All stakeholders will be presented at this eventas well as media representatives and interested companies dealing withmultimodal transport.

Promotional tourin order to populate the MDC promotional tour will with 4 or5 workshops.

As far as the ad-hoc online advertising and promotion activities the following areforeseen:

E-mailing campaign - An average response rate for direct mail is about 1%. Thisdepends on the offer, the mailing list, the target audience, the creative (how the directmail piece looks), and the timing of the mailing. While it's a big commitment in time,publishing a monthly e- mail newsletter ("ezine") is one of the very best ways to keepin touch with prospects, generate trust, develop brand awareness, and build futurebusiness.

Search Engine Optimisation - The most important strategy is to rank high for yourpreferred words on the main search engines in "organic" or "natural" searches (asopposed to paid ads). Search engines send robot "spiders" to index the content onyour webpage, so let's prepare your WebPages for optimal indexing

Cross linking & Link popularity campaign - Links to the site from other sites bringadditional traffic. But since Google and other major search engines consider thenumber of incoming links to the website ("link popularity" and "PageRank") as animportant factor in ranking, more links will help site rank higher in the search engines,too. All links, however, are not created equal. Links from popular information hubs willhelp the site rank higher than those from low traffic sites

Paid advertising (Pay per click (PPC), banner advertising) - The main PPC playersare Yahoo Search Marketing (formerly Overture) and Google AdWords(https://adwords.google.com/select/). The top ads appear as featured links to the rightof "natural" search engine results for keywords. The ranking is determined by how

much you've bid for a particular search word compared to other businesses. This can


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be a cost-effective way to get targeted traffic, since you only pay when someoneactually clicks on the link. Yahoo Search Marketing even offers some free credit toget you started.

Promotion in on-line forums - The Internet offers thousands of targeted e-mail baseddiscussion lists, online forums, blogs, and Usenet news groups for people with veryspecialized interests.

4.3. Pricing Strategy

The following coherent suggested pricing mix strategy (i.e.: low and competitive cost

but high quality/price ratio value) is outlined below:

Category 1: PromotionProduct 1: Annual subscription serviceFor Bulgarian companiess:

Basic - 50 Euro per year

Advanced - 100 Euro per year

For foreign businesses: Basic - 100 Euro per year

Advanced200 Euro per year

Category 2: InformationProduct 1: Internet presenceBulgarian companies 10 EuroForeign companies 20 EuroProduct 2: Business and best practices guidesDigital article: 5 Euro eachDigital book: 10 Euro eachProduct 3: Research studies and specialised reportsResearch studies and specialised reports - 50 Euro each

Category 3: Consultancy servicesProduct 1: Commercial services - 300 Euro (and up depending on the request)Product 2: Consultancy services - 200 Euro (and up depending on the request)

Category 4: TrainingProduct 1: Introductory lectures50 Euros per personduration 1 day, 10 personsper course.Product 2:Familiarisation workshops or training courses to users or operators100Euros per personduration 2 days, 10 persons per course.Product 3:Broker training services provided by other institutions300 Euros and up

depending on the requestduration 3 to 5 days, 10 persons per course.


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Category 5: Collateral and additional products/services (i.e.: cross linking andother websites/portals integration or synergy, advertising, etc.).Product 1: Banner advertising campaigns - Tentative price: 200 Euro per campaign

4.4. Distribution Strategy

The products and services proposed by MDC will use a wide range of distributionchannels. The main distribution channel will be the Internet. Rich content on the website shall attract companies to become users and will increase popularity of themultimodal transport services; am extensive e-mail campaign will provide last newsfor intermodality in Bulgaria and in the region. Stakeholders regional offices will alsobe important in distributing the message to companies of the advantages offered bythe MDC as well as promotional tour.

4.5. Sales Strategy

The Sales Strategy will rely on trying to reach as quickly as possible the "critical

mass" of annual subscribers, in order to build a steady recurring income for the MDC.During the first three years of operations it will be necessary to rely also onstakeholders contribution scheme.

Sales Forecast

The following tables and charts present the sales forecast for the MDC.


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Sales Forecas t

Unit Sales 2014 2015 2016

Cat1 - Basic subscription forBulgarian companies

600 750 900

Cat1 - Basic subscription forForeign companies

100 130 160

Cat1 - Advanced subscriptionfor Bulgarian companies

50 60 70

Cat1 - Advanced subscriptionfor Foreign companies

10 20 30

Cat2 Internet presence ofBulgarian companies

650 880 1060

Cat2 Internet presence ofForeign companies

110 150 190

Cat2 - Business and best practices guides articles ( number of articles (10) multiplied byreaders)

120 150 180

Cat2 - Business and best practices guides books ( number of books (4) multiplied byreaders)

80 100 120

Cat2 - Research studies and specialised reports( number of studies (2) multiplied by readers)

20 30 40

Cat3 - Commercial services 10 20 30

Cat3 - Consultancy services20 30 40

Cat4 - Introductory lectures 10 10 10

Cat4 - Familiarisation workshops or trainingcourses to users or operators

10 12 15

Cat4 - Broker training services 2 3 4

Cat5 - Banner advertisingcampaign

4 6 8

Total Unit Sales 1,796 2,351 2,857


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Sales Forecas t

Unit Prices 2014 2015 2016


50.00 50.00 50.00


100.00 100.00 100.00


100.00 100.00 100.00


200.00 200.00 200.00


10.00 10.00 10.00


20.00 20.00 20.00

Cat2 - Business and best practices guides articles

5.00 5.00 5.00

Cat2 - Business and best practices guides books

10.00 10.00 10.00

Cat2 - Research studies and specialised reports 50.00 50.00 50.00Cat3 - Commercial services 300.00 300.00 300.00

Cat3 - Consultancy services 200.00 200.00 200.00

Cat4 - Introductory lectures 500.00 500.00 500.00


1000.00 1000.00 1000.00

Cat4 - Broker training services 3000.00 3000.00 3000.00


200.00 200.00 200.00


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Sales Forecas t

Sales 2014 2015 2016


30000.00 37500.00 45000.00


10000.00 13000.00 16000.00


5000.00 6000.00 7000.00


2000.00 4000.00 6000.00


6500.00 8800.00 10600.00


2200.00 3000.00 3800.00

Cat2 - Business and best practices guides articles

6000.00 7500.00 9000.00

Cat2 - Business and best practices guides books

800.00 1000.00 1200.00

Cat2 - Research studies and specialised reports 1000.00 1500.00 2000.00Cat3 - Commercial services 3000.00 6000.00 9000.00

Cat3 - Consultancy services 4000.00 6000.00 8000.00

Cat4 - Introductory lectures 5000.00 5000.00 5000.00


10000.00 12000.00 15000.00

Cat4 - Broker training services 6000.00 9000.00 12000.00


800.00 1200.00 1600.00

Total Sales 92,300.00 132,300.00 151,200.00


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Direct Unit Costs 2014 2015 2016Cat1 - Basic subscription 5,00 5,00 5,00

Cat1 - Advanced subscription 10,00 10,00 10,00

Cat2 Internet presence 3,00 3,00 3,00

Cat2 - Digital article 50,00 50,00 50,00

Cat2 Digital book 1000,00 1000,00 1000,00

Cat2 - Research studies &reports

1000,00 1000,00 1000,00

Cat3 - Commercial services 200,00 200,00 200,00

Cat3 - Consultancy services 150,00 150,00 150,00

Cat4 - Introductory lecture 300,00 300,00 300,00


500,00 500,00 500,00

Cat4 - Broker training services 700,00 700,00 700,00


125,00 125,00 125,00

Direct Cost of Sales 214 215 216

Cat1 - Basic subscription 3500,00 4400,00 5300,00

Cat1 - Advanced subscription 600,00 800,00 1000,00

Cat2 Internet presence 2280,00 3090,00 3750,00

Cat2 - Digital article 500,00 500,00 500,00

Cat2 Digital book 4000,00 4000,00 4000,00

Cat2 - Research studies &reports

2000,00 2000,00 2000,00

Cat3 - Commercial services 2000,00 4000,00 6000,00

Cat3 - Consultancy services 3000,00 4500,00 6000,00

Cat4 - Introductory lecture 3000,00 3000,00 3000,00


5000,00 6000,00 7500,00

Cat4 - Broker training services 1400,00 2100,00 2800,00


600,00 750,00 1000,00

Subtotal Direct Cost of Sales 27880.00 35140.00 43850.00

5. Operational Plan

Bulgarian MDC will be a neutral non-profit organisation acting as a catalyst todevelop intermodal freight transport solutions along European corridors showing high


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intermodal potential. In order to meet these requirements Bulgarian MDC has toguarantee neutrality of information and to be financialy independent.

5.1. Start-up

MDC have to generally improve communication between stakeholders on thedemand side (shippers, forwarders) the supply side (transport operators,infrastructure providers) and the policy side (authorities and regulators). The bestway to achieve these goals is to create public private partnership for managementand operation of MDC. This will ensure political independence of MDC, its

professional management and market oriented activities. The public part will be thecommunication bridge between intermodal transport business and institutionsresponsible for transport infrastructure and national transport policy.The first task is to identify the right stakeholders for the new MDC. The potentialstakeholders are as follows:

Government and municipality institutions Ministry of Transport InformationTechnology and Communications, Ministry of Economy, Ministry of RegionalDevelopment, National Company for Railway Infrastructure, Agency RoadInfrastructure, Executive Agency for Exploration and Maintenance of the DanubeRiver, Agency for small and medium sized enterprises, Executive Agency "MaritimeAdministration", Executive Agency "Port Administration", Executive Agency "Port

Administration", Agency Road Infrastructure, big municipalities which will be incharge with development of multimodal transport services.

Bulgarian Chamber of Commerce and Industry and its members NGOs.

After identification of the stakeholders, the organizational set-up can be started. It willinclude as follows:

Establishment of stakeholders board and stakeholder distribution scheme; Approval of place for MDC by stakeholders board; Approval of business plan by stakeholders board; Approval of organizational structure of MDC by stakeholders board;

Approval of CEO of MDC by stakeholders board; Hiring the MDCs personal; Establishment of the MDCs office; Development of the web page; Draft of the brochure; Set up of official launching event; Set up of the promotional campaign; Preparation of consultants database; Starting promotion campaign.


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The MDC operations will begin with a general corporate brochure establishingoffered services. This brochure will be developed as part of the PR & Promotionactivities and distributed among institutional and business community. A traditionaldirect mailing to selected interested actors could be implemented. Literature andmailing will be very important, with the need to establish a high-quality look and feelin order to create a high sense of professionalism.The key fulfilment and delivery will be provided by MDC. The core value will be theprofessional expertise, provided by a combination of experience and hard work.The only way the MDC can hope to differentiate well from similar initiatives is toclearly define its vision offering real support and alliance. The benefits of thisapproach will include many intangibles: confidence, reliability, knowing that

somebody will be there to answer questions and help at the important times.It will be extremely important to form strategic alliances with other infomediaries,content providers and last but not least Business Service Providers.We have assumed that basic start-up expenses are foreseen as follows: stationery,offices preparation (e.g.: workings for cleaning and painting the rooms and makingthem connected to PBX and Internet, etc.), office furniture and equipment.

Start-UpStart-up Expenses

Stationery & others 2,000

Office renting for 1-st year 3,000Office preparation 3,000

Office furniture 3,000Office equipment 20,000Development of Website 2,000Hosting & connectivity 1,000Total Start-up Expenses 34,000

Start-up Assets

Cash Required 80,000Other Current Assets 10,000Fixed Assets 0Total Assets 90,000

Total Requirements 124,000


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5.2. MDCs Organizational Structure

The MDC will be organised and managed in a creative, innovative fashion togenerate high levels of customer satisfaction. A policy manual will be developed and

implemented. Job descriptions will be developed to identify necessary competenciesand skill sets. Team oriented professionals with common goals will be hired.The MDC will conduct weekly staff meetings to discuss ideas, suggestions, andoperations. An annual motivational seminar will be held. An employee recognitionprogram.will be a developmed. The MDCs will have a two level organizationalstructure:

1-st level management board formed by stakeholders representatives. The

management board will take the high level strategic decisions concerning

development of MDC.

2-nd leveloperational management. The operational management will be done by

CEO and MDCs staff. It will include day by day tasks. The CEO will be responsible tothe management board preparing and reporting monthly reports.

The consulting services will be provided through freelancers consultants andconsulting companies which will be registered in the consultants database in theMDC. This will decrese the costs for MDC and in the same time will allow provision ofhigh quality services on demand.The web site will be hosted and administrated by an expert company. The part of theresponsibilities of that specialized company will be: provision of high availability of thepage and content management. The materials for content of the page will beprovided by the staff of the MDC as well as administration of e-marketing campaigns,


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administration of the consultants database, administration of the subscriptionprocedure.

5.3. MDCs Personal Plan

The Personnel Plan will reflect the need to bolster the MDCs capabilities to match thestated positioning. The main characteristic of personal plan is to establish highlyeffective structure and number of persons in the MDC. positioning. Total headcountshould increase to 5 the first and the second year and 6 in the third year.

6. Financial Plan

We emphasise that the following figures are based on the assumptions andexperience from previous similar projects. At the beginning of the project thesefigures will have to be revised in relation to the strategic choices which will be taken.

6.1. Start-up Funding

This chapter illustrates the Start-up Funding situation through the table below.

Start-UpStart-up Funding

Stationery & others 2,000

Office preparation 3,000Office furniture 3,000Office equipment 20,000Development of Website 2,000Official event 2,000Total Start-up Expenses 32,000

Personn el Plan persons

Position 2014 2015 2016

CEO 1 1 1

Administrative officer 1 1 1Marketing expert 1 1 1

Total 3 3 3

Personn el Plan salary

Position 2014 2015 2016

CEO 15000.00 15750.00 16538.00

Administrative officer 7800 .00 8190.00 8600.00Marketing expert 9600.00 10080.00 10600.00

Total salary 32400.00 34020.00 35738.00


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6.2. Operational costs

The table bellow shows how operational costs will be distributed for MDC during thefirst 3 years.

Operational costs in Euros

Operational costs 2014 2015 2016

Ofice rent 3000 3000 3000

Hosting & connectivity 1000 1000 1000

Subtotal 4000 4000 4000

Salary

CEO 15000 15750 16538

Administrative oficer 7800 8190 8600

Marketing expert 9600 10080 10600

Subtotal 24600 34020 35738

Direct cost of sales

Cat1 - Basic subscription3500 4400 5300

Cat1 - Advanced subscription600 800 1000

Cat2Internet presence2280 3090 3750

Cat2 - Digital article500 500 500

Cat2Digital book4000 4000 4000

Cat2 - Research studies & reports2000 2000 2000

Cat3 - Commercial services2000 4000 6000

Cat3 - Consultancy services3000 4500 6000

Cat4 - Introductory lecture3000 3000 3000

Cat4 - Familiarisation workshops or trainingcourses to users or operators 5000 6000 7500

Cat4 - Broker training services1400 2100 2800

Cat5 - Banner advertising campaign600 750 1000

Subtotal 27880 35140 42850

Marketing costs

Preparation of brouchers 500 500 500

Promotional tour 2000 2000 2000

Web marketing 2000 2000 2000

e-mailing campaign 300 300 300


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6.3. Profit and loss

Pro Forma Prof i t and L oss2014 2015 2016

Sales 92300 132300 151200

Direct Costs of Goods 27880 35140 42850

Payroll 24600 34020 35738

Housing 4000 4000 4000

Marketing 4800 4800 4800

Start-up funding 32000

Gross Margin -980 54340 63812

Gross Margin % -1,06% 41,07% 42,20%

Incidental expenses 5000 5000 5000

Corporate tax 0 4934 5818,2

Gross Margin after taxes -5980 44406 63812

Gross Margin % -6,48% 33,56% 42,20%

Stakeholders distributionscheme

0 10000 15000

Net Profit -5980 34406 48812

Net Profit/Sales % -6,48% 26% 32,28


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7. Efficiency Evaluation

A sustainable business and mission requires effective planning and financialmanagement. Ratio analysis is a useful management tool that will improveunderstanding of financial results and trends over time, and provide key indicators oforganizational performance. Managers can use ratio analysis to pinpoint strengthsand weaknesses from which strategies and initiatives can be formed. Stakeholdersmay use ratio analysis to measure the results against other organizations or make

judgments concerning management effectiveness and mission impact.


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For ratios to be useful and meaningful, they must be: Calculated using reliable, accurate financial information Calculated consistently from period to period Used in comparison to internal benchmarks and goals Used in comparison to other companies in your industry Viewed both at a single point in time and as an indication of broad trends and issues

over time Carefully interpreted in the proper context, considering there are many other

important factors and indicators involved in assessing performance.

Ratios can be divided into four major categories:

Profitability Sustainability Operational Efficiency Liquidity Leverage (FundingDebt, Equity, Grants)

The ratios presented below represent some of the standard ratios used inbusiness practice and are provided as guidelines

7.1. Profitability Sustainability Ratios

.

The meaning of these ratios is to measure how well the business is performingover a specific period, as well as whether the social enterprise has the financialresources to continue serving its constituents tomorrow as well as today.

Ratio Explanation and actions

Sales Growth =

(Current Period Sales

Previous Period Sales)/

Previous Period Sales

Percentage increase (decrease) in sales between two time periods.

If overall costs and inflation are increasing, then you should see a

corresponding increase in sales. If not, then may need to adjust

pricing policy to keep up with costs.

Reliance on Revenue Source

=

Revenue Source /Total

Revenue

Measures the composition of an organizations revenue sources

(examples are sales, contributions, grants).

Organizations can use this indicator to determine long and short-

term trends in line with strategic funding goals (for example, move

towards self-sufficiency and decreasing reliance on external funding).

Operating Self-Sufficiency =

Business Revenue/

Total Expenses

Measures the degree to which the organizations expenses are

covered by its core business and is able to function independent of

grant support.


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For the purpose of this calculation, business revenue should exclude

any non-operating revenues or contributions. Total expenses should

include all expenses (operating and non-operating) including social

costs.

A ratio of 1 means you do not depend on grant revenue or other

funding.

Gross Profit Margin =

Gross Profit Total Sales/Total

Sales

How much profit is earned on your products without considering

indirect costs.

Is your gross profit margin improving? Small changes in gross margin

can significantly affect profitability. Is there enough gross profit to

cover your indirect costs. Is there a positive gross margin on all

products?

Net Profit Margin =

Net Profit/Sales

How much money are you making per every $ of sales. This ratio

measures your ability to cover all operating costs including indirect

costs

SGA to Sales =

Indirect Costs /Sales

Percentage of indirect costs to sales.

Look for a steady or decreasing ratio which means you are

controlling overhead

Return on Assets =

Net Profit Average/Total Assets

Measures your ability to turn assets into profit. This is a very useful

measure of comparison within an industry.

A low ratio compared to industry may mean that your competitors

have found a way to operate more efficiently. After tax interest

expense can be added back to numerator since ROA measures

profitability on all assets whether or not they are financed by equity or

debt.

Return on Equity =

Net Profit/Average Shareholder

Equity

Rate of return on investment by shareholders.

This is one of the most important ratios to investors. Are you making

enough profit to compensate for the risk of being in business?

How does this return compare to less risky investments like bonds?

7.2. Operational Efficiency Ratios


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Following ratios show how efficiently assets are being utilized and liabilitiesmanaged These ratios are used to compare performance over different periods oftime.


Operating Expense Ratio =

Operating Expenses/Total

Revenue

Compares expenses to revenue.

A decreasing ratio is considered desirable since it generally indicates

increased efficiency.

Accounts Payable Turnover

=

Cost of Sales/Average

Accounts Payable

Days in Accounts Payable =

Average Accounts

Payable/Cost of Sales x 365

The number of times trade payables turn over during the year.The higher the turnover, the shorter the period between purchases and

payment. A high turnover may indicate unfavourable supplier

repayment terms. A low turnover may be a sign of cash flow

problems.

Compare your days in accounts payable to supplier terms of

repayment.

Total Asset Turnover =

Revenue/Average Total Assets

Fixed Asset Turnover =

Revenue/Average Fixed Assets

How efficiently your business generates sales on each dollar of assets.

An increasing ratio indicates you are using your assets more

productively.

7.3. Liquidity Ratios

Following ratios answer the question: Does your enterprise have enough cash onan ongoing basis to meet its operational obligations? This is an importantindication of financial health.


Current Ratio =

Current Assets/Current

Liabilities

Measures your ability to meet short term obligations with short term

assets., a useful indicator of cash flow in the near future.

A ratio less that 1 may indicate liquidity issues. A very high current

ratio may mean there is excess cash that should possibly be invested


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(also known as Working

Capital Ratio)

elsewhere in the business or that there is too much inventory. Most

believe that a ratio between 1.2 and 2.0 is sufficient.

Quick Ratio =

(Cash +AR + Marketable

Securities)/Current Liabilities

A more stringent liquidity test that indicates if a firm has enough short-

term assets (without selling inventory) to cover its immediate liabilities.

A ratio of 1:1 means that a social enterprise can pay its bills without

having to sell inventory.

Working Capital =

Current AssetsCurrent

Liabilities

Working Capital is a measure of cash flow and should always be a

positive number. It measures the amount of capital invested in

resources that are subject to quick turnover. Lenders often use this

number to evaluate your ability to weather hard times. Many lenders

will require that a certain level of WC be maintained.

Adequacy of Resources =

(Cash + Marketable Securities +

Accounts)/Receivable Monthly

Expenses

Determines the number of months you could operate without further

funds received (burn rate)

8. Risks and Assumptions

Any event that could potentially impede the progress of the project, causeadditional costs or reduce function or quality should be regarded as a risk andmust be processed by the risk management procedure.Risks are possible undesirable occurrences, appearing suddenly or gradually,which could result in objectives not being met. Risks are issues that did nothappen yet. Risks should be analyzed and assessed during all life cycle and

appropriate actions should be planned to eliminate them or to reduce the chancesof their occurrences.Risk management is a process to ensure that all risks are predicted and welldescribed in advance in order to either prevent their impact as issues or reducetheir severity. It contains identification and evaluation of risks, their quantitativeand qualitative analysis, action and contingency planning, tracking, reporting,assessment and resolution.Stable economical and political development is an important condition fordevelopment of MDC in Bulgaria.The main risks identified at this stage as well as the estimated level of impact,occurrence probability and mitigation actions are described below.


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Risk Impact1 Proba-bility2

Mitigation

Lack of political will todevelop the policy,legislative, andinstitutional frameworkfor multimodal transport

H M Close cooperation with other publicauthorities to lobby and advocate forthe legislative changes

International best practices presentedto decision making bodies

Agents of change selected from keydecision making bodies invited toworkshops and brainstormingmeetings will increase theirinvolvement in project support

Bureaucratic difficultiesand slow-decisionprocess of the publicinstitutions involved.

H H Create a short and fast procedure fordecision making inside MDC.

Difficulties to agree thecorrect business modelto adopt and the kind ofaction that will have tosupport the MDC dueto its mixedprivate/public role.

H M Enterprise plcs consortium willextensively support the Beneficiary forthe adoption of a winning business modeland an appropriate Service Deliveryaction.

Low interest for training H LCourses are practical and create

mandatory skills for multimodaltransport

Promotional campaigns send clearmessage on training benefits.

Frontline regionalbodies not willing toprovide first leveladvisory.

H M Work with frontline organisations willtimely address identified weaknessesand lack of commitment

Interventions will be tailored to eachregion specificity

Benefits of services delivery will behighlighted during workshops,trainings, and other meetings withfrontline bodies

Delays in launching ormajor changes in otherrelated projects(infrastructuredevelopment, commonICT tool )

H H Close cooperation with all partiesinvolved in the related projects.

Inadequate H M Very good implementation of

1

High (H), Medium (M), Low (L)2High (H), Medium (M), Low (L), Unknown (U)


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Risk Impact1 Proba-bility2

Mitigation

cooperation betweenthe differentinstitutions involvedand an unwillingnessto embrace the SMEportal as a way ofreciprocal exchangeof information.

Community building for SMEsupporting actions activities.

There are also external factors which will have direct impact to the MDC: Improvement of the energy efficiency performance of vehicles across all modes.

Usage of transport and infrastructure more efficiently through improved traffic

management and information systems

Creation of a genuine Single European Transport Area by eliminating all residual

barriers between modes and national systems, easing the process of integration

and facilitating the emergence of multinational and multimodal operators.

Setting the framework for safe transport.

Internalisation of externalities, elimination of tax distortions and unjustified

subsidies and free and undistorted competition.

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