MagBox_BusinessPlan

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Entrepreneurship

ProfDrMiguelMeuleman

ProfDrJanLepoutre

EerdekensJulie

Maaike Joris

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MagBoxExecutivesummaryMagBox

is

anew

start

up

business,

active

in

Flanders

with

a pilot project in Antwerp, which has the objective to

revivethemarketofmagazines.Thelatterwillberealized

through a strategic full service solution for magazine

vending machines which will be placed at private and

public locations. MagBox will create the opportunity for

customers to buy their favorite magazine through a

convenientandaccessiblechannel.

MagBox vending machines will create an extra sales channel for Belgian magazine

publishers.Moreover

they

will

be

able

to

obtain

ahigher

margin

through

that

channel;

we

expectan increase ingrossmarginonthesalesofmagazinesofat least15%.Thebusiness

modelaimstoofferaservicetothesepublishers.

MagBoxwillbe inchargeoftheownership,the locationconsulting,theplacementandthe

maintenance

of

the

vending

machines.

All

these

activities

are

noncore

activities

for

the

publisher and the distributor. For this service we charge a fixed fee of 200 per vending

machineandavariablefeeof12%onmagazinesales.Withthispricesetting,MagBoxtries

tomaximizetheprofitforbothparties,takingallpossiblerisksintoconsideration.

MagBox is about to close a deal to form a partnership with a major Belgian publisher.

Hereafter,Magboxmaychoosetocontactotherpublishersinordertoexpandproductrange

andcostcoverage.

Tomeasureuptothenecessaryfinancialresourcesneededtostartupthisnewenterprise

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conservative forecasting and the equity should provide a sufficient cushion against

unexpected

setbacks.

P&L STATEMENT sem 1, year 1 sem 2, year 1 year 2 year 3 year 4 year 5

Turnover 70,439 184,202 607,334 907,313 965,014 965,014

Gross margin 52,289 150,402 584,801 884,780 942,480 942,480

Operating Profit 4,173 62,528 408,214 707,344 764,188 830,855

Profit before tax 964 58,558 403,245 705,656 764,188 830,855

Net Profit 964 39,031 266,142 465,733 504,364 571,031

TREASURY POSITION sem 1, year 1 sem 2, year 1 year 2 year 3 year 4 year 5

Cash Flow from operations -25,733 45,994 384,321 719,527 830,855 830,855

Cash Flow 91,058 -54,493 170,734 426,419 371,031 571,031

TREASURY POSITION 91,058 36,566 207,300 633,719 1,004,750 1,575,781

Fig.1:KeyFinancialFigures

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TableofcontentMagBox

Executive

summary

......................................................................................................

3

Tableoffigures...........................................................................................................................7

1. Companydescription..........................................................................................................8

MagBox...................................................................................................................................8

2.

Marketanalysis

and

segmentation

.....................................................................................

9

Valuechainandvalueproposition.........................................................................................9

Customerneeds...................................................................................................................10

Marketoverview..................................................................................................................11

Segmentation,Targeting,Positioning..................................................................................12

Positioning............................................................................................................................14

3. Industryanalysis................................................................................................................15

Competitors..........................................................................................................................15

Suppliers...............................................................................................................................15

Newentrants........................................................................................................................15

Substitutes............................................................................................................................16

4. BusinessModel.................................................................................................................17

InitialStage...........................................................................................................................17

Financialinformation...........................................................................................................18

Growth Stage........................................................................................................................ 22

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Productdescriptionandproperties.....................................................................................30

Price......................................................................................................................................

32

Place.....................................................................................................................................33

Promotion.............................................................................................................................33

7. Humanresources..............................................................................................................34

ExecutiveManagement

........................................................................................................

34

BoardofDirectors................................................................................................................34

Strategicpartners.................................................................................................................34

Ownershipstructure............................................................................................................34

8. Appendices........................................................................................................................35

1. Businessplanquestionnaire..........................................................................................35

2. Questionnaireresults....................................................................................................37

3. Conductedinterviews...................................................................................................39

4. DealwithINGBank........................................................................................................47

5. OfferWurlitzer............................................................................................................48

6. VarianceAnalysis...........................................................................................................49

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TableoffiguresFig.1:KeyFinancialFigures........................................................................................................4

Fig.2:ValueChainMagBox........................................................................................................9

Fig.3:Overallmarketsalesdividedinsubscriptionandsinglecopies....................................12

Fig.4:SensitivityAnalysis.........................................................................................................18

Fig.

5:

Cumulative

investments

in

vending

machines

..............................................................

19

Fig.6:Expectedutilizationrate................................................................................................19

Fig.8:Accumulatedprofitaftertaxes......................................................................................20

Fig.7:ExpectedTurnover.........................................................................................................20

Fig.9:TreasuryPositionwithoutfinancing..............................................................................21

Fig.10:

Treasury

position

including

financing

..........................................................................

22

Fig.11:Turnover......................................................................................................................23

Fig.12:DirectVariableCosts....................................................................................................24

Fig.13:CostStructure..............................................................................................................26

Fig.14:Balancesheetprojections............................................................................................26

Fig.15:P&Lstatementprojections..........................................................................................27

Fig.16:VendingMachine.........................................................................................................30

F

ig.17:Magazinepricesandtheirpublishers..........................................................................32

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1.CompanydescriptionMagBox

MagBoxisanewstartupbusiness,activeinFlanderswithapilotprojectinAntwerp,which

has the objective to revive the market of magazines. The latter will be realized through a

strategicfullservicesolutionformagazinevendingmachineswhichwillbeplacedatprivate

and

public

locations.

MagBox

will

create

the

opportunity

for

customers

to

acquire

their

favoritemagazinethroughaconvenientandaccessiblechannel.

MagBox will be registered as a CVBA (Cooperative Partnership with Limited Liability)

company.Allsixofuswillinvest20,000inequity(ofwhich5,000willbefullywiredupon

incorporation) amounting to a total of 120,000 with each acquiring a shareholding of

16.7%.Eachofthesesix,FlorisVandenBroeck,NicolasMacharis,GeorgesNde,Nathalie

Monsieur, Maaike Joris and Julie Eerdekens will be appointed as managers for undefined

terms.Themainelementsdrivingthechoiceisthedesiretolimitinvestorliabilitycombined

with the need for some control in shareholding transfer while avoiding the strict limits

imposed

in

a

BVBA.

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2.MarketanalysisandsegmentationValuechainandvalueproposition

ThemainplayersoftheMagazinesIndustryarethefollowing:

Publishers:e.g.Sanoma,Roularta,ThinkMediaMagazines,DePersgroep

Distributors:e.g.AMP

Kiosks:shopssellingnewspapers,magazines,cigarettes,candy,etc.

Endcustomers:peoplebuyingnewspapers,magazines,etc.

Locationowners:willprovidethelocationforthevendingmachinestobepresent

suchasschools,hospitals,bakeries,hairdressers,etc.

MagBox:vendingmachinessellingmagazinesfromSanoma,Roularta,ThinkMedia

andDePersgroeptoendcustomers.

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MagBoxwillsellafullservicesolutionformagazinevendingmachinestoBelgianpublishers

(Sanoma,ThinkMedia,Roularta,DePersgroep).AMPwillthendistributethemagazinesto

allvendingmachines,whichwillbeplacedonpublicandprivateownedproperty.

MagBox creates the opportunity for publishers to receive a higher margin on their

magazines, for locationowners toprovideanextraservice to theircustomersand forend

customerstoacquiremagazines inaquickandconvenientwayonnonsaturated locations

andevenafteropeninghoursofbookshops.

Unique valueproposition: Serving the right magazinesat the right placeatanyparticular

moment.

Customerneeds

An online survey was conducted over a period of ten days and was answered by 101

respondents(46%maleand54%female),ofwhich66%werestudentsand27%arecurrently

working, this to put the results into perspective. When analyzing the output we obtained

followingoutcomes;

88%ofourrespondentsareinfavorofthebusinessplanidea.

Some respondents gave insightful reasons why they would not like the idea; e.g.

someliketheexperienceofanewspapershopand likesearchinganewspapershop

for interesting magazines, others first like to browse the magazine or have a

subscription,andagainotherslookforfreeinformationontheinternet.

More than half of our respondents prefer reading their magazine after 6 pm. This

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stops,carpark,airport,beach,nightshops,petrolstation,smallsupermarkets,places

whereyoucaneasilyparkyourcar,sportclubs,publicrestrooms,doctor,carpooling

parkings, business park, sandwich bars, metro station. We also found out that a

beautyparlorwouldbeagoodlocation.

Thesurveyshowedthatpreferencesformagazinesvarya lot,whichshowsthatwe

will have to adapt the offerings to the location as the vending machine can only

containalimitedamountofmagazines.Humo(11%),Knack(11%),PMagazine(10%),

Elle (8%), The Economist (8%), Ch (7%), Trends (6%), Cosmopolitan (6%), Marie

Claire 5%), Feeling (5%) were mentioned most in our survey. This is however not

completely representative as we limited the choices in the survey and mostly

students filled out the survey. We also noticed that a couple of respondents (11)

mentionedthattheywouldliketohavenewspapersinthemachines.

41% of the respondents would use the machine weekly and 39% would use the

vendingmachinemonthly.

Customers

might

be

interested

in

buying

magazines

for

the

following

reasons:

Whenspendingleisuretime

Duringtravelling

Toacquireinformation

Togainknowledgeconcerningsubjectsofpersonalinterestsuchasfashion,cars,the

economy,finance,etc.

T th l d i iti ti

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thisgroupandwillalsoplayonimpulsebuying.Forthelatter,therightchoiceoflocationsis

ofgreatimportance.

The overall market sales are declining by 2% but this is covered through regular price

increases,sothedeclinehasnodirectinfluenceonturnover.

WEEKLYMAGAZINES

Ti t le Paid Dis t r ibu t ion Subscr ip t ions Sing le copies

DagAllemaal/Expres 431 883 n.a. n.a.

FlairNl 123 422 9,90% 90,10%

Humo 222 536 40,80% 59,20%

Knack 121 530 88,00% 12,00%

Libelle 214 254 34,00% 66,00%

Pmagazine 57 757 5,50% 94,50%

Story

156 793 13,20% 86,80%TeveBlad 152 511 28,90% 71,10%

Trends 40 792 83,70% 16,30%

TVFamilie/Blik 132 531 n.a. n.a.

Tota l 3 135 210

MONTHLYMAGAZINES

Ti t le Paid Dis t r ibu t ion Subscr ip t ions Sing le copies

Ch

22 082 2,00% 98,00%

Feeling 71 757 20,30% 79,70%

Glam*It 27 236 8,00% 82,00%

GoedGevoel 71 482 n.a. n.a.

Goedele 57 816 14,70% 85,30%

MarieClaireVlaams 10 998 4,90% 95,10%

Tota l 1 385 565

Source:FeBELMAbasedonauthenticationfromCIMnumbers20072008Fig.3:Overallmarketsalesdividedinsubscriptionandsinglecopies

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- The demographic, psychographic and behavioral characteristics of these potential

endconsumers.

- Thewillingnessofthesepassersbytopurchaseaparticularmagazine.

- The preferred magazines (sport, leisure, fashion,...) of these potential end

consumers.

Firstwedividedthemarketbyregion.Asastartupwechoosetotakeoffinoneparticular

city.

This

way,

we

are

able

to

control

the

entire

structure

of

our

business

and

adapt

if

necessary.Afterthat,wesplitupthemarketintotwomainsegments;

- Publicinstitutions

- Privateinstitutions

MagBoxwilltargetbothsegmentsandwilltrytoattractthemostinterestingplayerswithin

thosesegments.

Public institutions, which make up a very important part of the MagBox target group

containthefollowingmainplayers:

- Hospitals

- Stations

o In Belgium PressShop holds an exclusivity contract in all stations. Because

stationsareaveryimportantplayerinthissegmentwewouldliketogettoan

agreementwith

PressShop.

This

way

PressShop

will

benefit

as

well,

since

it

willbeabletosellitsmagazines24hoursaday.

- Localauthorities(streetlocations)

- Schools

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- Smallandbiggercompanies

- Bigdoctorpractices

- ...

Positioning

MagBox positioning is based on functionality and convenience. By focusing on those

positionaladvantagesMagBox isabletodifferentiatefrom itsmaincompetitors(whichare

basicallyallnewspapershops)andaddvalueforendconsumers.

MagBoxoffersitsendconsumersanaccessiblealternativeforanewspapershop.Itoffersits

endcustomers a quick and easy accessible way to buy their favorite magazines. This way

MagBox stimulates impulse purchases as well as planned purchases. Once people know

aboutthe

nearby

MagBoxes,

they

will

consider

it

as

their

place

to

buy

magazines

because

theydonotneedtoconsideropeninghours.Thisconveniencewillbeofgreatvaluetothe

endconsumerandwillthereforebeMagBoxmainpositionaladvantage.

MagBox functionality is another important advantage. Depending on the location of the

vendingmachines,

we

offer

an

adapted

range

of

magazines.

These

spots

basically

implicate

whichconsumerswillpassthevendingmachineandeventuallybuyamagazine.

Overall,wewanttoofferawideassortmentofmagazines,toreachabroadgroupofend

consumers.

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3.IndustryanalysisCompetitors

The market for magazines is already big in Belgium. The major competitors are kiosks in

every municipality, bookshops such as Standaard Boekhandel and Club and the bigger

supermarketssuchasDelhaizeandCarrefour.

Besides,

a

lot

of

magazines

such

as

Humo

and

PMagazine

provide

a

lot

of

free

online

information.Thereforeyoungerpeoplearenot thataffectedor linkedanymore toprinted

publications.

Specificallyatuniversitieswemightfacecompetitionfromorganizations,suchas4UCampus,

thatoffer

low

price

subscriptions

to

students.

Weareconsideringthecompetitionasquitebighowever,MagBoxwillrunatotallydifferent

businessmodelandvaluepropositionformagazinescomparedtothecompaniesmentioned

above.

Suppliers

The critical partners that are necessary to provide magazinevendingmachines to location

ownersarethepublishersSanoma,DePersgroep,RoulartaandThinkMediaMagazine.We

need

their

alliance

and

approval

to

sell

their

brands

in

one

dispenser.

Furthermore

we

will

include AMP as a partner, a renowned distributor for the newspaper and magazine that

worksinclosecooperationwiththeabovementionedpublishers.

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business. MagBox, on the other hand, will focus on the noncore activities of these

publishersandprovideafullservice.InadditionMagBoxisinanindependentcompanyand

thusdoesnothaveto take intoaccount the fairnessagainstallotherkiosksandmagazine

sellers.

Substitutes

We dentifiedfollowingsubstitutesforreadingmagazines:i

Watchingtelevision

Readingnewspapers

Listeningtomusic(e.g.Ipod)

Readingbooks

Browsingtheinternetforinformation

Allactivitiestospend leisure timecouldbeconsideredasbeingsubstitutes (e.g.practicing

sports,meeting

with

friends,

going

to

a

pub,etc).

However,

MagBox

tries

to

create

value

withdifferentpropertiescomparedtothesesubstitutes.

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4.BusinessModelInitialStage

In the first stage of the business plan, we will focus on the pilot project we set up in

Antwerp.Wewillconcentrateonthefollowing:

Approachthefourmainpublishersinordertoconvincethemofthebusinessmodel

andget

them

signed

the

contracts

to

work

together

with

us.

Businessdevelopment:createexcellence inallnoncoreactivitiesofpublishersand

distributorsinordertodifferentiatefromthecurrentmagazinevendors.

Create awareness at the most important locations by starting off with 40 vending

machinesacrossAntwerp.Financialfigures,whicharestatedlateroninthebusiness

plan, showed that we must immediately invest in a great amount of vending

machines.

Approachopinionleader:e.g.DeClient:afamoushairdresserthatispresentall

acrossBelgium.

They

are

known

by

customers

for

their

innovative

partnerships

and

wouldthereforebeanimportantlocationownertoboostawarenessandsales.

MagBoxwillinvestin:

Conductingmarketresearchandseekingforspecificlocationownerwhowouldbe

willingto

place

avending

machine

on

their

property

and

take

up

negotiations

with

them.Thisisashiftawayfromthecurrentsituationinwhichpublishersaskaflatfee

between200and255everytimeanewentrantwantstoselltheirproductions.

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Financialinformation

In order to assess the financial information a financial model has been setup. A fully

detailedoutcomeofthismodelcanbeseenintheExcelsheet.Theassumptionsmadeinthe

model are based on a very conservative situation. This is done in order to avoid

overvaluationandprovideforpossibleunexpectedsetbacks.

RiskanalysisThe most important risk factors in the MagBox business plan are the number of vending

machines, scale of operations, and the utilization rate of the vending machine. Figure 4

showsasensitivityanalysisoftheEBITDApervendingmachineofMagBoxinfunctionofthe

number of vending machines and as a percentage of the utilization rate. The analysis

indicatesthat

the

scale

of

the

operations

needs

to

be

above

40

vending

machines

to

create

sustainablevalueforthecompany.Theanalysisshowsusaswellthattheutilizationratehas

amajorimpactontheEBITDApervendingmachine.Weassumetheutilizationratetofollow

aninnovatorsadoptivecurveaswewillexplainlater.

SensitivityanalysisEBITDA/vending Utilization rate

4199,39 0,1 0,2 0,3 0,4 0,5 0,6 0,7 0,8 0,9 1

10 6320,84 4953,03 3585,23 2217,42 849,61 518,20 1886,01 3253,81 4621,62 5989,43

20 2954,84 1587,03 219,23 1148,58 2516,39 3884,20 5252,01 6619,81 7987,62 9355,43

30 1832,84 465,03 902,77 2270,58 3638,39 5006,20 6374,01 7741,81 9109,62 10477,43

40 1271,84 95,97 1463,77 2831,58 4199,39 5567,20 6935,01 8302,81 9670,62 11038,43

50 935,24 432,57 1800,37 3168,18 4535,99 5903,80 7271,61 8639,41 10007,22 11375,03

60 710,84 656,97 2024,77 3392,58 4760,39 6128,20 7496,01 8863,81 10231,62 11599,43

70 550,56 817,25 2185,06 3552,87 4920,68 6288,48 7656,29 9024,10 10391,91 11759,72

80

430,34 937,47 2305,27 3673,08 5040,89 6408,70 7776,51 9144,31 10512,12 11879,9390 336,84 1030,97 2398,77 3766,58 5134,39 6502,20 7870,01 9237,81 10605,62 11973,43

100 262,04 1105,77 2473,57 3841,38 5209,19 6577,00 7944,81 9312,61 10680,42 12048,23

110 200,84 1166,97 2534,77 3902,58 5270,39 6638,20 8006,01 9373,81 10741,62 12109,43

120 149,84 1217,97 2585,77 3953,58 5321,39 6689,20 8057,01 9424,81 10792,62 12160,43

130 106,69 1261,12 2628,93 3996,74 5364,54 6732,35 8100,16 9467,97 10835,78 12203,58

140 69 70 1298 11 2665 92 4033 72 5401 53 6769 34 8137 15 9504 96 10872 76 12240 57

#

vendings

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The first year will be marked with the installation of the machines. We foresee technical

failures upon startup regarding the technology of the vending machines. Therefore we

assume a slow implementation speed of the machines towards the beginning. Vending

machineswillbeordered inbatches

of 10 to reduce costs and will then

be installed over a period of 2

months.One

vending

machine

costs

5,000,depreciatedover3yearsand

we assume to replace them after

that period. The financial model

assumesthattherewillalwaysbe40

machines

operative,

starting

from

thesecondhalfofthefirstyear.

0

100.000

200.000

300.000

400.000

500.000

Month1

Month3

Month5

Month7

Month9

Month

11

Quarte

r5

Quarte

r7

Quarte

r9

Quarter

11

Quarter

13

Quarter

15

Quarter

17

Quarter

19

Cumulativeinvestmentsin

vendingmachines()

Fig.5:Cumulativeinvestmentsinvendingmachines

We expect the turnover to start

picking

up

after

one

year.

At

the

start we assume a machine

utilizationrateof20%.Thismeansat

first only 20% of what the machine

provideswillbesoldbeforethenext

issue of magazines is entered into

themachine.

0%

20%

40%

60%

80%

100%

Month1

Month3

Month5

Month7

Month9

Month11

Quarter5

Quarter7

Quarter9

Quarter11

Quarter13

Quarter15

Quarter17

Quarter19

Expectedutilization

rate

(%)

Fig. 6: Expected utilization rate

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This calculated utilization will result in the

following expected turnover (Figure 7).

Starting from quarter 9 no growth

assumptions are put in to keep it

conservative. Figure 8 shows the

accumulated profits and losses after taxes

duringthe

first

months.

Break

even

should

beachievablestartingtheseventhmonth.Fig.7:ExpectedTurnover

20.000

10.000

0

10.000

20.000

30.000

40.000

50.000

Month

1

Month

2

Month

3

Month

4

Month

5

Month

6

Month

7

Month

8

Month

9

Month

10

Month

11

Month

12

Accumulatedprofitaftertaxes()

Accumulatedprofitaftertaxes

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400.000

200.000

0

200.000

400.000

600.000

800.000

1.000.000

1.200.000

1.400.000

Month1

Month2

Month3

Month4

Month5

Month6

Month7

Month8

Month9

Month10

Month11

Month12

quarter5

quarter6

quarter7

quarter8

quarter9

quarter10

quarter11

quarter12

quarter13

quarter14

quarter15

quarter16

quarter17

quarter18

quarter19

quarter20

Treasurypositionwithoutfinancing()

Fig.9:TreasuryPositionwithoutfinancing

To measure up to the necessary financial resources to start up this new enterprise, the

entrepreneurswillinvest120,000ofequityandrequireashortterm1yearloanof50,000

with immediate monthly payback and a long term 3 year loan of 100,000 with monthly

repaymentsstarting

after

12

months.

A

short

summary

of

financials,

after

implementation

of

the required loans, can be found below. Regarding the current economical situation, all

these numbers are based on conservative forecasting and the equity should provide a

sufficient cushion against unexpected setbacks

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GrowthStage

InthegrowthstageMagBoxshouldenlargeitsportfolioindifferentdirections:

Byextendingthecustomerbaseinonespecificcity.Moresalespervendingmachine

aswellasanincreaseintheamountofvendingmachines.Wemusthowevertake

thecompetitiveenvironmentintoaccounttonotoverloadthemarketinonearea.

ByextendingtowardsnewcitiesinBelgium.Theonlineresearchweconducted

provideduswithsomenewpotentiallocations(e.g.nearthebeachattheBelgian

cost).Thisinformation,combinedwithpotentialfutureinsights,mighthelpusto

furtherexpandthehorizonofMagBoxfromtheinitialtestcityAntwerptowards

otherplacesinBelgium.

Byconsidering

an

expansion

towards

other

products

that

can

be

sold

in

the

vending

machines,e.g.newspapersandbyapproachingotherpublisherstofurtherextend

ourofferings,e.g.importmagazinesfromtheNetherlandssuchasEllefromQuote.

Figure10showsanexpectedsteadyincreaseincashflowasfrommonth12.The

modelassumes

the

installation

of

40

vending

machines

during

the

first

year.

The

latterwillgeneratecashthatcouldbeusedtoinvestintomoremarketstudiesin

ordertodecidewheretoplacemoremachinesandtooptimizethelocations.

1.000.000

1.500.000

2.000.000

Treasurypositionincludingfinancing

()

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5.FinancialPlanRevenuesandcostassumptions

Revenues Fixedfeeof200permonthandavariablefeeof12%marginontheendsaleprice

of magazines. Pricing mix and tactics based on sensitivity analysis and pricing

scenarios are available in the excel file attached. Turnover is expected to start

pickingupaftermonth12.

0

50.000

100.000

150.000

200.000

250.000

300.000

Month1

Month2

Month3

Month4

Month5

Month6

Month7

Month8

Month9

Month10

Month11

Month12

quarter5

quarter6

quarter7

quarter8

quarter9

quarter10

quarter11

quarter12

Turnover

Fig.11:

Turnover

Costs Variablecosts:

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0

1.000

2.000

3.000

4.000

5.000

6.000

Directvariablecosts

Vendingtax/Placement

permissionlicense

Maintenance

RentVending

Location

Fig.12:DirectVariableCosts

FixedCosts

o HR

nomanagementremuneration(managersareshareholders:sufficient

incentive; if management has to spend significant amounts, this

decisionmayberevised)

technician cost: cost of a qualified technician to repair and maintain

thevendingmachinesat3,500permonth

o Infrastructure&Operations

LogisticCenter:250asamarketaverageforaratherspaciousgarage

thatwillbeusedforbothtransportparkinganddepot

Fuel:240permonthforabout2,500kms(cityenvironment)

Transportation:fulloptionleasingofavanat600permonth

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1.000 1.0002.000 2.000

3.000 3.0004.000 4.000 4.000 4.000 4.000 4.000

208 208

417 417

625 625

833 833 833 833 833 833

200 200

400 400

600 600

800 800 800 800 800 800

3.500 3.500

3.500 3.500

3.500 3.500

7.000 7.000 7.000 7.000 7.000 7.000

250 250

250 250

250 250

250 250 250 250 250 250

240 240

240 240

240 240

240 240 240 240 240 240

600 600

600 600

600 600

600 600 600 600 600 600

1.000 1.000

1.000 1.000

1.000 1.000

1.000 1.000 1.000 1.000 1.000 1.000

0

2.000

4.000

6.000

8.000

10.000

12.000

14.000

16.000

Month1 Month2 Month3 Month4 Month5 Month6 Month7 Month8 Month9 Month10 Month11 Month12

Coststructure:fixedandvariable()

RentVendingLocation Maintenance Vendingtax/Placementpermissionlicense

Fixedremunerations Logisticcenter Fuel

Transportation Marketingexpensesandrelatedverhead

25

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Fig.13:CostStructure

Financialstatements

BALANCE SHEET sem 1, year 1 sem 2, year 1 year 2 year 3 year 4 year 5

ASSETS

Tangible fixed assets 133.333 150.000 83.333 16.667 150.000 83.333Stock and work in progress 0 0 0 0 0 0

Accounts receivable 48.201 99.928 186.769 241.253 241.253 241.253

Cash 91.058 36.566 207.300 633.719 1.004.750 1.575.78

Total assets 272.592 286.493 477.402 891.639 1.396.003 1.900.368

EQUITY AND LIABILITIESShare Capital 120.000 120.000 120.000 120.000 120.000 120.000

Accumulated P/L -1.126 37.905 304.047 769.780 1.274.144 1.778.509

Debts payable after 1 year 76.111 51.496 0 0 0 0

Debts payable within 1 year 73.889 71.515 51.496 0 0 0

Accounts payable 3.718 5.577 1.859 1.859 1.859 1.859

Negative treasury 0 0 0 0 0 0

Total equity and liabilities 272.592 286.493 477.402 891.639 1.396.003 1.900.368Fig.14:Balancesheetprojections

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P&L STATEMENT sem 1, year 1 sem 2, year 1 year 2 year 3 year 4 year 5

Vending Machine fixed fee 24.000 48.000 32.000 32.000 32.000 32.000

Vending Machine variable fee 46.439 136.202 575.334 875.313 933.014 933.014

Turnover 70.439 184.202 607.334 907.313 965.014 965.014

- Direct , variable costs 18.150 33.800 22.533 22.533 22.533 22.533

Gross margin 52.289 150.402 584.801 884.780 942.480 942.480

Human Resources 21.000 42.000 84.840 85.688 86.545 86.545

Infrastructure and operational costs 10.450 12.540 25.080 25.080 25.080 25.080

- Depreciation 16.667 33.333 66.667 66.667 66.667 0

Operating Profit 4.173 62.528 408.214 707.344 764.188 830.855

Financial charges -3.208 -3.970 -4.969 -1.689 0 0

Exceptional costs 0 0 0 0 0 0

Profit before tax 964 58.558 403.245 705.656 764.188 830.855

Tax 0 19.527 137.103 239.923 259.824 259.824Net Profit 964 39.031 266.142 465.733 504.364 571.031

Fig.15:P&Lstatementprojections

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28

TREASURY POSITION sem 1, year 1 sem 2, year 1 year 2 year 3 year 4 yea

Operational result 2.083 62.528 408.214 707.344 764.188 764.1

+ Depreciations 16.667 33.333 66.667 66.667 66.667 66.6

- Change in net working capital need -44.483 -49.868 -90.560 -54.484 0

Cash Flow from operations -25.733 45.994 384.321 719.527 830.855 830.8

- Reimbursements 0 -26.989 -71.515 -51.496 0

- Interest -3.208 -3.970 -4.969 -1.689 0

- Investments -150.000 -50.000 0 0 -200.000 - Taxes 0 -19.527 -137.103 -239.923 -259.824 -259.8

+ Share capital 120.000 0 0 0 0

+ Debt 150.000 0 0 0 0

Cash Flow 91.058 -54.493 170.734 426.419 371.031 571.0

TREASURY POSITION 91.058 36.566 207.300 633.719 1.004.750 1.575.7Fig.16:Treasurypositionprojections

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6.MarketingmixServicesoffered

MagBoxwantstosellaservicetopublishersthatwillcontainfollowingelements:

MagBox vending machines will create an extra sales channel for Belgian magazine

publishers.Moreovertheywillbeabletoobtainahighermarginthroughthatchannel;we

expectan increase ingrossmarginonthesalesofmagazinesofat least15%.Thebusiness

modelaimstoofferaservicetothesepublishers.

MagBoxwillbe inchargeoftheownership,the locationconsulting,theplacementandthe

maintenance of the vending machines. All these activities are noncore activities for the

publisherand

the

distributor.

For

this

service

we

charge

afixed

fee

of

200

pervending

machineandavariablefeeof12%onmagazinesales.Withthispricesetting,MagBoxtries

tomaximizetheprofitforbothparties,takingintoconsiderationthepossiblerisks.

Publishers:Ourservicewillfirstofallcontainmarketresearch,thismeansthatwewilllookforpossible

and profitable locations where the vending machines can be placed. Secondly, we will

approach these location owners (e.g. hairdressers, hospitals, school, etc.) and carry on

negotiationswiththem.Wewillalsotakeupthemaintenanceofallthevendingmachines.

Whenamachinebreaksdown,wewillbecontactedandwewillbeconsiderateoftechnical

problemsandmaintenance.Furthermore,wewillconductlocationmanagement,thismeans

thatwewillfollowupreactions from locationsownersandendcustomers.Thiswillcreate

thepossibilitytoadapttheofferedmagazinestothe locationofthevendingmachines.We

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Endconsumer:We

would

like

to

offer

our

customers

fast

and

easy

access

to

their

favorite

magazines

on

accessiblelocations.

Productdescriptionandproperties

VendingMachine

M B St i tl C fid ti l

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willhaveamorehighendlookandwillbemoreattractivefortheprivatelocationssuchas

hairdressers.

Themainfeaturesofthemachineare:

Illuminatedshowcasefor8differentmagazineswithacapacityof40piecesper

magazine.

Two

different

payment

procedures:

coins

or

bank

notes

with

an

integrated

return

buttonformotordrivencoinreturn.

Easyexchangeofprices.

Stainlesssteelcontrolpanel.

Programmablemicroprocessorcontrolunitwithdatastorageandtestprograms.

Quickandeasyconversionofcompartmentstodifferentpapersizes.

Productdeliverybyneedledrive.

Dimensions:

o Height:183cm

o Width:87cm

o Depth:87cm

o Weigth:318334kg

Powersupply:

o 230 Volts

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Price

ThepriceMagBoxchargestothepublishersisbasedonafixedfeepervendingmachineplus

avariablefeebasedonapercentageofsales.Sincethepricesofthedifferentmagazinesare

fixed,ouraim isto increasetheprofitsofpublishersbyprovidingwithanewsaleschannel

bywhichtheycangenerateahighergrossmarginonthesalesofmagazines.Bydeliveringthese

services

to

the

publishers

MagBox

will

take

a

risk

because

the

company

will

have

to

invest in vending machines and operations. The price setting of MagBox takes both

principles into account. Since solely focusing on a variable fee would increase the risk for

MagBoxsignificantly.

ThetradeoffbetweenthetwopossibleactionsforMagBox,beingafixedoravariablefee,

were tackled by doing a variability analysis for MagBox and the publishers. By combining

theseanalyses,plusaddingariskfactortothedifferentrevenuemodels,thepriceMagBox

will charge to the publishers, in order to maximize the value for both parties, is a fixed

monthlyfeeof200pervendingmachineandvariablefeeof12%onthesales.Thedetailsof

thepricesettingcalculationscanbefoundinAppendix5.

The prices charged to the endcustomer, being the buyer of the magazine are fixed (see

figure18).

PUBLISHERS MAGAZINES PRICES

Sanoma Humo 2.40

Flair

2.10

Goedele 4.20

Glam*it 3.25

Story 1.90

Libelle 2.15

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Place

First MagBox will address the most important publishers, being Sanoma, Think Media

Magazines,DePersgroepandRoulartainordertoconvincethemofourbusinessmodel.

MagBoxwilloperateasafullservicecompany,thisalsoincludesthemarketresearchofthe

mostrelevant locations.Fromoursurveyandthe informationwereceivedfrompublishers

we can conclude that customers would like to have their magazines available at any time

andspace.

Antwerp

however

is

yet

aquite

saturated

market

and

therefore

we

would

focus

moreonprivatelocations.Thiscanbelowendaswellashighend.

Promotion

Thevendingmachinesformagazineswillbepromotedviathefollowingchannels:

Directcontactwithpartners(publishersanddistributorbeingAMP).

Abrochureinordertoprovideadditionalinformationabouttheconcepttoour

partners.

Acompanywebsitetoreporttothelocationowners.

Facetofacevisitswiththeintentionofconvincinglocationownerstoplacethe

vendingmachinesandtotakeadvantageofourfullserviceconcept.

Atelephonelineforlocationownerstocallincaseofstockouts,changeof

assortment,

maintenance

and

defects,

etc.

ParticipationataspecialistfairsuchasDeBoekenbeurs.

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7.HumanresourcesExecutive

Management

CEO FlorisVanden

Broeck

KULeuvenMasterCommercialEngineering

VlerickMasterFinancialManagement

CFO NicolasMacharis UniversityofGhentMasterCommercialEngineering

Vlerick

Master

Financial

Management

COO GeorgesNde KULeuvenMasterCivilEngineering(MajorElectronics)

VlerickMasterFinancialManagement

VPLocations NathalieMonsieur UniversityofAntwerpMasterin AppliedEconomics

VlerickMasterinMarketingManagement

VPMarketing MaaikeJoris ArtesisHogeschoolAnterwpenMasterinProduct

DevelopmentVlerickMasterinMarketingManagement

VPSales JulieEerdekens UniversityofAntwerpMasterin AppliedEconomics

VlerickMasterinMarketingManagement

BoardofDirectors

Thecompanyboardwill includetheExecutiveManagementandStrategicPartnersthatare

interested.

Strategicpartners

SanomaisaleadingBelgianPublisherwithabroadrangeofmagazines.MagBoxhas

establishedpreliminarycontactsthatwillbedevelopedintoafullpartnership

AMP is the main distributor in the Flemish magazine market. With the support of

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8.Appendices1. Business

plan

questionnaire

1. Gender

- Male

- Female

2. Age

- ...

3. Whatmatchesbestforyou?

- Student

- Working

- Other

4. Whendoyouliketoreadyourfavoritemagazine?

- 6am9am

- 9am

11am

- 11am2pm

- 2pm6pm

- 6pmmidnight

5. Imagine magazines and newspapers would be available 24/7 through vending

machinesdeployed inpublicspaces.Example:Youare inatrainstationearly in

themorning

before

opening

hours

and

you

would

be

able

to

buy

your

favorite

magazine/newspaper.Thiswouldalsocomeinhandywhenthereisalongqueue

infrontoftheshop.Wouldyoubeinterestedinthisconcept?

- Yes

- No

6. Ifno,whynot?

- ...

7. If you think this is an interesting concept, where would you like to see these

vendingmachine?(morethanoneanswerispossible)

- School

Work

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g y

- Knack

- DagAllemaal

- Story

- Elle

- Feeling

- Cosmopolitan

- Joepie

- GQ

-

Sport

weekend

- Blik

- Autowereld

- Geo

- Goedgevoel

- Goedele

- Newsweek

- TheEconomist

- Trends

- PMagazine

- Ch

- MarieClaire

10.Othersuggestions?

- ...

11.Howfrequentlywouldyoumakeuseofsuchavendingmachine?

- Daily

- Weekly

- Monthly

- Lessthanmonthly

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2. Questionnaireresults

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3. Conductedinterviews

3.1Nora

Peeters

(Sanoma)

(InterviewconductedoverthemonthofJanuaryviatelephoneandemail)

Markettrends:

Theamountofmagazinessolddeclineseveryyearby2%.Thesaleshoweverdonotdecline

sincethere

are

regular

price

increases

and

added

products

(such

as

DVDs,

CDs,)

that

higher

the turnover. Two reasons for this decline are the extensive attachments of newspapers

duringtheweekendandthetrendofdecliningyouththatreadmagazines.Everythingthey

wanttoknowisavailableonlineforfree.

Imported

magazines:

Mrs.NoraPeetersrecommendednottoputtheseinthevendingmachine.Asalesfigureof5

to10pieceswouldnot beprofitablerelativelytoothermagazinessuchasFeeling,Vitaya,

Goedele,GoedGevoel,..

Imported Magazine Belgian sales per year (excl. Subscription)

Cosmopolitan 6,974Fancy 6,286

Conditionsofdelivery:

If you want to distribute their magazines, they will first do a market research in order to

decideif

they

want

to

provide

you

with

their

brands.

The

reason

for

this

is

the

high

cost

publishers have concerning retour, delivery,. The cost of this study equals 251.4. We

negotiated thatwedonothave topay foreachvendingmachine. Insteadwewillpay the

f d l

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A=Bestones,turnover>30,000

B=Turnover20,000 30,000

C=Turnover

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3.2Peter Bouckaert(DePersgroep)

(Interview

via

telephone

19th

of

January

9.30)

DePersgroepalreadytriedtheideaofvendingmachines,theystoppedthishoweverfortwo

reasons;

MachinesboughtinGermanythathappenedtohavealotoftechnicalproblems.

(Peoplewho

still

have

vending

machines,

built

it

themselves.)

Thosemachineswere filledbystorekeepers. Itwashard to finda locationandyou

createcompetition.Ifyouareapublisheryoushouldbeabletoofferthesevending

machinestoallyourclientsandnotjustbyone.Thiswouldcreatedisparitybetween

shopkeepers.

Conditionsfordelivery:

If you want to distribute their magazines, they will first do a market research in order to

decideiftheywanttoprovideyouwiththeirbrands.Thecostofthisstudyequals220.We

negotiated thatwedonothave topay foreachvendingmachine. Insteadwewillpay the

fixedamount

only

ones.

Ifyougettherighttodelivertherearetwopossibleoptions:

1. metrechtvanretour:Youareabletoreturnallunsoldmagazines inorderto limit

yourrisk,hereforeyoucouldget15%marginonthesellingprice.Thismargincanbe

higherif

you

give

them

exclusivity.

2. zonderrechtvanretour:Youarenotabletoreturntheunsoldmagazines.

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3.3JanMey(Krantenautomaat (NL))

(Information

given

by

email

on

19

01

2010)

As from April they will launch the concept of newspaper vending machines in the

Netherlands.Wesubtractedthemostimportantinformationfromhisemail;

Marketsituation:

Theprint

run

of

publishers

in

the

Netherlands

consists

of

70%

of

subscriptions.

In

the

future

this will however be in danger because of several factors. E.g. new customers look for

different resources when looking for information and this information is often for free

(internet).

Targetgroup:

Themostpotentialtargetgroupforthefuturearepeoplewhentravelingfromhometowork

andviceversa.Theydonotwanttocommittoasubscriptionbuttheydohoweverwantto

readnewspapers(lookatthesuccessoffreenewspapersdistributedinMetrostations).60%

ofthisgroup isyoungerthen35yearsoldandtheyhavearatherhigheducation.Amarket

shareof

5%

would

be

enough

to

counter

the

loss

in

subscriptions.

The

vending

machines

can

be filled with newspapers before opening hours of kiosks and attract early travelers.

ResearchinGermanyshowedthatbefore8oclockinthemorning75%ofsalestakeplace.

Locations:

When focusing on homework travelers, ideal locations would be train stations, metro

stations,etc.Bigofficesandhospitalsarealsointeresting.Weareactuallylookingforplaces

wherepeoplehavetowait/stayforawhile.

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Estimatedsales:

Theirtargetisaminimumof20newspapersadayforpopulartitels.Thosenewspapersfora

specialtargetgroupandwithahigherpricehaveanestimationof10newspapersaday.

Prices/marginsandotherrelatedfinancialinformation:

Priceswillbeinbetweenpricesforsubscriptionsandkiosks.Customerswillbeabletobuya

cardwhichwillbesomesortofasubscription.

Recoverthe

cost

of

the

vending

machines:

when

buying

or

leasing

the

machines

investments

willberecovered in3yearswhenonaverage12newspapersaresoldaday,atanaverage

priceof1.

Financing:Investmentswillbefinancedbythebankbasedonbuy/leaseagreementswiththe

publishers. For the first part of the project, credit guarantee is offered by the

Stimulatiefondsvoor

de

pers.

Distribution:

Thevendingmachineswillbefilledonceaday.Morningnewspaperswillbefilledbefore6

aminthemorning.Eveningnewpaperswillbefilledataround4pm.Thiswillbedonebythe

distribution

organization

of

the

publishers.

We

estimate

that

a

minimum

of

10

locations

mustbevisitedinoneandahalfhour.

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3.4 JohanVerrue(Professor at Hogeschool Gent)

(Interviewconductedon19/01/2010Korenlei22,9000Gent)

Students at the Hogeschool Gent (2nd

Bachelor) created a business plan concerning vending

machinesfornewspapers.Theyfoundouthowever,thatthisconceptwouldnotbeprofitable

(mainly because of the small margins). Their business plan was based on selling a concept

(creatinganoverviewofthemostimportantprocesses).

Hesuggestedustodothemarketresearchourselves(e.g.useofGoogleMapsandlookforthe

emptyspots)andtodefinethetargetgroups.Thiswaywecouldofferconsultancyservicesfor

Sanoma, Roularta, de Persgroep, etc. Secondly he suggested us to focus on the search for

potential clients (e.g. Universities), to create contacts and relationships. Furthermore, he

suggested

to

work

as

a

contact

person

;

e.g.

if

the

machine

breaks

down,

the

clients

contacts

usandwearrangereparations.

Someattentionpointswecouldderivefromthisinterview:

ContactSovoreg(socialevoorzieningHogeschoolGent).Theywereinterestedin

his

concept!

t Whatcanmakeyouasacompanyunique?

Howtomakeitdifficultforcompetition?

ComparisonCocaCola/Cigarettes/Magazines

Exploitationbusiness

PortGhent/

Antwerp?

But

we

must

take

other

elements

into

account!

Sanoma:askfortheirMarketResearch

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3.5 Filip Hebb (ownerofKioskBredakrantin AntwerpMerksem)

(InterviewviaemailconductedonTuesday19th

ofJanuary2010)

Momenteel zijn er slechts 2 grote verdelers van tijdschriften op de markt namelijk AMP en

Imapress.

ErvindteenjaarlijkseherzieningplaatsbijAMPvanhetzakencijfervanelkedagbladhandelaar

(alsstarterwordtereenschattinggemaakt).Startersbeginnenookaananderevoorwaarden,

deze regeling werd genomen door de uitgevers die de wildgroei in de sector wouden

afremmen. Als starter krijgje 5% minder korting op alles wat geleverd wordt door AMP. Dit

zakencijfer wordt gedeeld door 12 en hiervan wordt er wekelijks een voorschot op dat

maandcijferafgehoudenvande leveringengedurendediemaand.Concreet,jebenteenklant

van

10,000/maand

dan

betaal

je

als

dagbladhandelaar

wekelijks

een

voorschot

van

2,500.

Op

het einde van de maandkrijgje uw credit endebeten wordtop het 1stevan de maandhet

saldoverrekendvandevoorbijemaand.

Metanderewoordenikbetaalde8,15,22ende28steeenvoorschotvandegeleverde,indit

geval van de maandjanuari, eind februari krijg ik mijn overzicht met de daarop betaalde

voorschotten,envermeerderingofverminderingvanjanuari,

de1stemaartbetaalikoftrekik

terug,opdezemanierheeftAMPzekerzijncentenvanwatzeleverdenenvoldoendetijdom

allesteverrekenenquaaanvoerenretour,sommigecollegasopterenvoor3voorschottenen

1grotereafrekening,dezemoeteneenwaarborgbetalenvan1maandgemiddeldeomzet, in

vormvanbankwaarborg,ookkanergenegotieerdwordenomtrentdezeregelingen,degrotere

klantenhebbenbv.demogelijkheidom1xtebetalen,30dagennahetgeleverde,warenhuizen,

ketense.d.,dezelfstandigeuitbatersontkomennietaandemonopoliepositiewatAMPinfeite

heeft.

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3.6 Mr.De Vos(DeVosDagbladen)

(Interviewviatelephone12thofJanuary15h10)

Mr.DeVosoperatesabout15machinesinBrugesandnearbyvillages.Throughthesevending

machineshesellsbreadandnewspapers.Heownsanewspapershopandtourthatis

responsibleforabout3000newspapersubscriptions.

Themarginhereceivesfromnewspaperpublisherontheendsalepriceis25%.Heindicated

thatsimilarmarginsaremaintainedonmagazinesale.

Hisaverageincomeamonthfromsalesisabout40eurospermachinewhichmoreorless

covershisotherexpenses(electricity,locationrent&tax)relatedtothemachineoperation.

Thevendingmachinesarefilledeverymorningbytheguysresponsible.Oneofhismainissues

isthefactthatheneedsthenewspapersfromthepublisherbefore04am.

Hemoreoverdoesnotbelievethattheconceptofvendingthroughmachineswillbesuccessful

aslongaspublishersripoffsmallnewspaperstoresandpressrepresentatives.Formagazines

hesawmorepotential,thehigherincomeshouldbeabletomoreeasilycoverfixedcostswhile

sufferingfrom

less

logistic

complications.

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4. DealwithINGBank

GeorgesenNathalie,

Ikhebhetbusinessplanevensneldoorlopeneninmijnogenzithetconceptgoedinelkaar.

Ikmisechterwelwatinfooverhetgebruikvandegevraagdebankfinancieringen...Waarvoor

gaandezeleningenspecifiekgebruiktworden??

Ikneemaandatdeleningop3jaarbedoeldisvoordeaankoopvandeeerste40vending

machines?Inditgevalzouikaanradendezemachinesteleasenop4jaar.Leasingisimmerseen

assetbasedfinancieringwaardoorhetrisicovandebankbeperktwordtenvoorjullieheelwat

flexibiliteitinhoudt.Eenleasingkanzoweloff alsonbalancegenomen,inheteerstegeval

wordendefinancielelastenrechtstreeksinderesultatenrekeninggeboektwaardoorde

solvabiliteitvandeondernemingnietwordtaangetast.

De50.000isbedoeldalswerkkapitaal?Inditgevalzouikvoorstellenomeenstraightloan(of

INGOpticash)van50.000toetekennen.Dezewordttoegekendtotnaderbericht.

Hetfeitdatdezaakvoerderseeneigeninspanningleverenvan120.000bevestigdhet

vertouwenvandezaakvoerdersenstaatmooiinverhoudingmetdegevraagde

bankfinanciering.Inprincipeverwachtdebankeenminimumeigeninspanningvan20%.

Watbetreftdezekerhedenstelikvooromeen1erangsinschrijvingtenemenophet

handelsfondsvandeondernemingtbv.50.000igvdevendingmachinesgeleasedworden.

Wordende

machines

gefinancierd

met

een

klassieke

financiering,

dan

stel

ik

voor

om

naast

de

1erangsinschrijvingophethandelsfondstbv.50.000,eenbijkomendeinschrijving/lastgeving

ophethandelsfondstenementbv.100.000.

Mawpositiefadviesvoordegevraagdefinancieringen.

Alsjullienogvragenhebben,aarzeldannietommijmorgenophetwerkeventebellen.

0499/86.04.53.

groeten!!

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