Business_Plan (Pegasus)

643PegasusTravel.com:FastenYourSeatbelts!*ABusinessPlanAnalysisandSimulation*BostonCollegeProfessorsMichaelPetersandGregoryStolleradaptedthisbusinessplanandpreparedthiscaseasthebasisforclassdiscussionratherthantoillustrateeithereffectiveorineffectivehandlingofanadministrativesituation.644645I.IntroductionPegasusTravel.com1975BeaconStreetBrookline,MA02446P.O.Box1234,U.S.A.(617)PegasusCo-owners:KimberlyPetersJ.H.WelchChristaBentleyYorikoNomoSandrineBouchetDescriptionofBusiness:ThisCompanywillcatertotheneedofpeopleage55andoverwhowanttheflexibilityintravelingbygroupsorindividually.Serviceswillincludeawebsitewherecustomerscancreatetheirowncustomizedvacationpackageorchoosefromthepre-settravelpackagesoftheweekandchatwithpeoplewhoarealsointerestedintravelingwiththem.Customerswillalsobeabletolocatetravelbuddiesiftheyhaveanideaofadestination,butdonothavealargeenoughgroupfortraveling.Financing:Initialfinancingrequiredis$2,105,185,andwillbereceivedfromventurecapitalistsandbankloansthatwillbepaidoffover12years.TheinvestedmoneyfromventurecapitalistsandbankloanswillallowPegasusTravel,Inc.(“Pegasus”)tocoverofficespace,officeequipmentandsupplies,advertising,technologydevelopment,salariesandwagesandutilities.Thisreportisconfidentialandisthepropertyoftheco-ownerslistedabove.ItisintendedonlyforusebythepersontowhomitistransmittedandanyreproductionordivulgenceofanyofitscontentswithoutthepriorwrittenconsentoftheCompanyisprohibited.646II.ExecutiveSummaryPegasusTravel.com(“Pegasus”or“theCompany”)isanicheonlineoperatorspecializingincustomizedandpackagetoursfortheagegroupof55andover(referredtoasseniors).Itisbasedonthebeliefthat,asanincreasingnumberofseniorsbecomeusersoftheInternet,combinedwithaninterestintraveling,theywillprovidealucrativemarketforPegasus.TheCompanyprovidestheoptionforflexibilityinitstours,allowingtheconsumertodecideonlengthofstay,budget,destinationandsoforth.Apartfromthecustomizedtours,tourpackageswillalsobesold.Throughitswebsite,seniorsareabletogaininsightintotourstheymightbeinterestedinaswellaschatwithothersimilarlyorientedpeople.Thecomprehensivewebsiteprovideslinkstorelevantsites,freee-mailaddressesandasenseofcommunity.Pegasuswillalignitselfwithawell-knowntravelagency,CarlsonWagonlitTravel.ItsreputablenamewillgivePegasus’customersassuranceandtrust.TheCompanycanalsotakeadvantageofCarlson’sexpertiseandoperationsinmanypartsoftheworld.Pegasusbelievesthatnowistherighttimetobeenteringthetravelindustry.Currently,travelisthelargestsectorofe-commerce,accountingfor32%oftotalsales.HalfoftheserevenuesaregeneratedfromonlinetravelagenciessuchastheproposedCompany.Theonlinetravelindustryisexpectedtoexplode,from$8billionthisyeartoabout$20billionin2002,andpredictionsofabout$29billionin2004.Apartfromtheindustryitself,thetargetmarketofseniorsisgrowingsignificantly.Theadditionofbabyboomersinfiveyearsmeansthatseniorswillcontinuetobethefastestgrowingdemographicgroup.In2004,about27%ofallseniorswillhaveaccesstotheInternet.Currently,researchindicatesthatseniorsspend8.3hoursaweekonline,moretimethantheaveragecollegestudent.Furthermore,seniorshavemoredisposableincome,andtimeontheirhands,duetothelackoffinancialoremploymentcommitments.Seniorsspendmostoftheirrecreationalbudgetontravelingandwanttoexplorenewopportunitiesthathaveescapedtheminthepast.Pegasusplanstoattractandretaincustomersthroughitsadvertisingandservices.Banneradswillbeplacedonthetop-tenseniorandbabyboomerswebsitesinordertogeneratetrafficandcreatebrandawareness.Printadsinleisureandseniormagazineswillsupplementonlineadvertising.Adirectmailcampaignincludingpromotions,discountsandupcomingtoursisalsoplanned,forseniorswhohavebecomemembersofthewebsitecommunity.Inordertostart-upthebusiness,theCompanyforeseesthatitwillrequire$2.1millioninventurecapital.Thehighstart-upcostsareattributabletotheaggressivemarketingtheCompanywillundertake.Themainshareholdersofthegroupwillnotbedrawinganysalary,butsalaryexpensewillcomefromthecustomerservicerepresentativeshired.SincetheCompanywillactasanoutsourceagenttoCarlsonand647receiveacommissioninreturn,theCompanyexpectstobreakeveninfouryears.AsmoreexpertiseisgainedfromCarlsonandtheCompany’soperationsexpand,theneedforoutsourcingwillbeminimized.FutureprospectsfortheCompanyareveryattractive.Withthegrowthofthemarketandindustry,Pegasusplanstograduallyexpandintothenextlargestmarketwiththemostpotential–Europe,andwillcontinuetoofferthesamequalityservicetothesenewcustomers.Pegasuswillalsocontinuetopleaseitscustomersbyofferingspecialeventpackages,suchasbirthdaysandgoldenanniversaries.Furthermore,theCompanywillbeginprovidingtoursforthedisabled,believingthatthereareveryfewplayersinthemarketwhichtargetthisparticularsegment.ThediverseservicethatPegasusofferswillattractanichemarket.Thegrowthoftheonlinetravelindustry,coupledwiththepotentialofthetargetmarket,highlyincreasestheCompany’schancesofsuccess.Byfocusingonquality,serviceandvalue,theCompanywillbeabletoattractandretainitscustomerbase.TheCompanybelievesthatitwillsucceedinthismarketsegment,andgrowsubstantiallyasmoreexper