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npeg
6. NPEG Financial Feasibilty Assessment
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Cycko
    Member since: Feb 5, 2007 Rank: Warrior (161 Posts) |
[Quote Member] |
Assumptions on the Income Statement
1. Selling of New Virtual Wallet (NVW)accounts = P4800 or $100
1.2 Cost:
1.2.1 Franchisee : 20% of revenue
1.2.2 Agent: 20% of revenue
1.3 Gross Margin: 60%
1.4 Operating Expense
1.4.1 Back Office operations: 10% of Gross margin
1.4.2 Marketing: 10% of Gross margin
1.4.3 SaaS Platform Solution Provider: 20% of Gross Margin
1.4.4 Admin and others: 20% of Gross margin
1.5 Net income before tax: 40% of Gross Margin
2. E-Purchase:
2.1 Revenue: Sales Commission Merchants: 5% of sales
2.2 Cost:
2.2.1 Franchisee : 20% of revenue
2.2.2 Agent: 20% of revenue
2.2.3 I-cafe: 40% of revenue
2.3 Gross Margin: 20%
2.4 Operating Expense
2.4.1 Back Office operations: 10% of Gross margin
2.4.2 Marketing: 10% of Gross margin
2.4.3 SaaS Platform Solution Provider: 20% of Gross Margin
2.4.4 Admin and others: 20% of Gross margin
2.5 Net income before tax: 40% of Gross Margin
3. E-remittance
3.1 Revenue: Service charge: 5% of money remitted
3.2 Cost:
3.2.1 Franchisee : 10% of revenue
3.2.2 Agent: 12.5% of revenue
3.2.3 Sending I-cafe: 30% of revenue
3.2.4 Receiving I-cafe: 30% of revenue
3.3 Gross Margin: 17.5%
3.4 Operating Expense
3.4.1 Back Office operations: 10% of Gross margin
3.4.2 Marketing: 10% of Gross margin
3.4.3 SaaS Platform Solution Provider: 20% of Gross Margin
3.4.4 Admin and others: 20% of Gross margin
3.5 Net income before tax: 40% of Gross Margin
4. E-collect
4.1 Service charge to payor: Php 12
4.2 Cost:
4.2.1 Franchisee : 15% of revenue
4.2.2 Agent: 15% of revenue
4.2.3 I-cafe: 50% of revenue
4.3 Gross Margin: 20%
4.4 Operating Expense
4.4.1 Back Office operations: 10% of Gross margin
4.4.2 Marketing: 10% of Gross margin
4.4.3 SaaS Platform Solution Provider: 20% of Gross Margin
4.3.4 Admin and others: 20% of Gross margin
4.5 Net income before tax: 40% of Gross Margin
5. E-banking
5.1 Withdrawal/Deposit Service Charge: P12
5.2 Cost:
5.2.1 Franchisee : 15% of revenue
5.2.2 Agent: 15% of revenue
5.2.3 Sending I-cafe: 50% of revenue
5.3 Gross Margin: 20%
5.4 Operating Expense
5.4.1 Back Office operations: 10% of Gross margin
5.4.2 Marketing: 10% of Gross margin
5.4.3 SaaS Platform Solution Provider: 20% of Gross Margin
5.4.4 Admin and others: 20% of Gross margin
5.5 Net income before tax: 40% of Gross Margin
6. E-donation
Service charge to donor: free
Next Input: Sales Volume and Income Projections
1. Selling of New Virtual Wallet (NVW)accounts = P4800 or $100
1.2 Cost:
1.2.1 Franchisee : 20% of revenue
1.2.2 Agent: 20% of revenue
1.3 Gross Margin: 60%
1.4 Operating Expense
1.4.1 Back Office operations: 10% of Gross margin
1.4.2 Marketing: 10% of Gross margin
1.4.3 SaaS Platform Solution Provider: 20% of Gross Margin
1.4.4 Admin and others: 20% of Gross margin
1.5 Net income before tax: 40% of Gross Margin
2. E-Purchase:
2.1 Revenue: Sales Commission Merchants: 5% of sales
2.2 Cost:
2.2.1 Franchisee : 20% of revenue
2.2.2 Agent: 20% of revenue
2.2.3 I-cafe: 40% of revenue
2.3 Gross Margin: 20%
2.4 Operating Expense
2.4.1 Back Office operations: 10% of Gross margin
2.4.2 Marketing: 10% of Gross margin
2.4.3 SaaS Platform Solution Provider: 20% of Gross Margin
2.4.4 Admin and others: 20% of Gross margin
2.5 Net income before tax: 40% of Gross Margin
3. E-remittance
3.1 Revenue: Service charge: 5% of money remitted
3.2 Cost:
3.2.1 Franchisee : 10% of revenue
3.2.2 Agent: 12.5% of revenue
3.2.3 Sending I-cafe: 30% of revenue
3.2.4 Receiving I-cafe: 30% of revenue
3.3 Gross Margin: 17.5%
3.4 Operating Expense
3.4.1 Back Office operations: 10% of Gross margin
3.4.2 Marketing: 10% of Gross margin
3.4.3 SaaS Platform Solution Provider: 20% of Gross Margin
3.4.4 Admin and others: 20% of Gross margin
3.5 Net income before tax: 40% of Gross Margin
4. E-collect
4.1 Service charge to payor: Php 12
4.2 Cost:
4.2.1 Franchisee : 15% of revenue
4.2.2 Agent: 15% of revenue
4.2.3 I-cafe: 50% of revenue
4.3 Gross Margin: 20%
4.4 Operating Expense
4.4.1 Back Office operations: 10% of Gross margin
4.4.2 Marketing: 10% of Gross margin
4.4.3 SaaS Platform Solution Provider: 20% of Gross Margin
4.3.4 Admin and others: 20% of Gross margin
4.5 Net income before tax: 40% of Gross Margin
5. E-banking
5.1 Withdrawal/Deposit Service Charge: P12
5.2 Cost:
5.2.1 Franchisee : 15% of revenue
5.2.2 Agent: 15% of revenue
5.2.3 Sending I-cafe: 50% of revenue
5.3 Gross Margin: 20%
5.4 Operating Expense
5.4.1 Back Office operations: 10% of Gross margin
5.4.2 Marketing: 10% of Gross margin
5.4.3 SaaS Platform Solution Provider: 20% of Gross Margin
5.4.4 Admin and others: 20% of Gross margin
5.5 Net income before tax: 40% of Gross Margin
6. E-donation
Service charge to donor: free
Next Input: Sales Volume and Income Projections
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Cycko
Member since: Feb 5, 2007 Rank: Warrior (161 Posts) |
[Quote Member] |
Assumptions and Projections
1. New Virtual Wallet Account
There are around 8,000-12,000 internet cafe in the Philippines. Most of them are seeking new sources of revenues to augment the viability of the business.
Assumption: Pre-operations promotions and selling will result to at least 4000 I-cafe have purchased NVW accounts at the onset of the operations. Another 2000 representing online merchants, billing companies (power and water utility firms, appliance firms, schools, banks, charity organizations, etc).
Price of NVW account: P4800 or $100. Payment will be spread over 12 months or P400 auto deducted from their NVW.
2.E-Purchase
Assumptions:
Number of I cafe: 4000
No of Shopping hits/Icafe/day: 10
No of Shopping hits/Icafe/month: 300
No of shopping hits/icafe/ year: 3,600
Total shopping hits/year: 14,400,000
Average Purchase/hit:500
Total Purchases: 7,200,000,000.00
Xkonek Commission from Merchants: 5%
3. E-Remittance
People sending money thru a receiving Icafe1 and being collected by a recipient I-cafe2.
Assumptions:
No. I caf?: 4000.00
No of Transactions/icafe/day: 10.00
No of Transactions/icafe/month: 300.00
No of Transactions/icafe/yr: 3,600
Total Transactions/yr: 14,400,000
Average Amt / Transaction: 1,000.00
Total Sales: 14,400,000,000.00
Xkonek income from Remittance Fee: 5%
4. E-collect
I-cafe thru NPEG serve as bill collection agent of firms:
Ex. Telephone Companies, Light and Water Utility Firms, Appliance Shops Selling on Installments, Lending agencies, Schools collecting tuition fees, etc. Fees will be collected at P12 per transaction. Less P2 from the minimum PUV fare if the client decided to pay directly to the main collection office.
Assumptions:
No. I caf?: 4000
No of Transactions/icafe/day: 5
No of Transactions/icafe/month: 150
No of Transactions/icafe/yr: 1,800.00
Total Transactions/yr: 7,200,000.00
Transaction Upfront fee: 12.00
5.E-banking
Client placing deposit or withdrawals thru the internet. Service charge is P12.
Assumptions:
No. I cafe: 4000
No of Transaction/icafe/day: 10
No of Transactions/icafe/month: 300
No of Transactions/icafe/yr: 3,600
Total Transactions/yr: 14,400,000
Transaction Fee: 12
1. New Virtual Wallet Account
There are around 8,000-12,000 internet cafe in the Philippines. Most of them are seeking new sources of revenues to augment the viability of the business.
Assumption: Pre-operations promotions and selling will result to at least 4000 I-cafe have purchased NVW accounts at the onset of the operations. Another 2000 representing online merchants, billing companies (power and water utility firms, appliance firms, schools, banks, charity organizations, etc).
Price of NVW account: P4800 or $100. Payment will be spread over 12 months or P400 auto deducted from their NVW.
Total Sales Revenue:...........28,800,000.00
Less: Cost of Sales
20%Share of Franchisee:................5,760,000.00
20% of Agents:.........................5,760,000.00
Gross Margin:.........................17,280,000.00
Less: Operating Expense
10% Back-office operations:............1,728,000.00
10% Marketing:.........................1,728,000.00
20% SaaS Solution Provider:............3,456,000.00
20% Admin and other costs:.............3,456,000.00
Net Income before tax:.................6,912,000.00
2.E-Purchase
Assumptions:
Number of I cafe: 4000
No of Shopping hits/Icafe/day: 10
No of Shopping hits/Icafe/month: 300
No of shopping hits/icafe/ year: 3,600
Total shopping hits/year: 14,400,000
Average Purchase/hit:500
Total Purchases: 7,200,000,000.00
Xkonek Commission from Merchants: 5%
Xkonek Gross Revenue:.......... 360,000,000.00
Less: Cost of Goods Sold
20% Franchisee Revenue Share:...........72,000,000.00
20% Agents Revenue Share:...............72,000,000.00
40% Internet Caf? Share:...............144,000,000.00
Gross Margin:...........................72,000,000.00
Less: Operating Expense
10% Back-office operations:..............7,200,000.00
10% Marketing: ........................7,200,000.00
20% SaaS Solution Provider:.............14,400,000.00
20% Admin and other costs:..............14,400,000.00
Net Income before tax:..................28,800,000.00
3. E-Remittance
People sending money thru a receiving Icafe1 and being collected by a recipient I-cafe2.
Assumptions:
No. I caf?: 4000.00
No of Transactions/icafe/day: 10.00
No of Transactions/icafe/month: 300.00
No of Transactions/icafe/yr: 3,600
Total Transactions/yr: 14,400,000
Average Amt / Transaction: 1,000.00
Total Sales: 14,400,000,000.00
Xkonek income from Remittance Fee: 5%
Xkonek Gross Revenue:.............720,000,000.00
Less: Cost of Sales
10% Franchisee Revenue share:............72,000,000.00
12.5% Agents Revenue Share.............108,000,000.00
30%Internet Caf?1 Revenue Share..........216,000,000.00
30% Internet Caf?2.......................216,000,000.00
Gross Margin.............................108,000,000.00
Less: Operating Expenses
10% Back Office:..........................10,800,000.00
10% Marketing:............................10,800,000.00
20% SaaS Solutions Provider:..............21,600,000.00
20% Admin and other Cost..................21,600,000.00
Net Income before tax:....................50,400,000.00
4. E-collect
I-cafe thru NPEG serve as bill collection agent of firms:
Ex. Telephone Companies, Light and Water Utility Firms, Appliance Shops Selling on Installments, Lending agencies, Schools collecting tuition fees, etc. Fees will be collected at P12 per transaction. Less P2 from the minimum PUV fare if the client decided to pay directly to the main collection office.
Assumptions:
No. I caf?: 4000
No of Transactions/icafe/day: 5
No of Transactions/icafe/month: 150
No of Transactions/icafe/yr: 1,800.00
Total Transactions/yr: 7,200,000.00
Transaction Upfront fee: 12.00
Gross Revenue:......................86,400,000.00
Less: Cost of Sales
15% Franchisee Share of Revenue:...........12,960,000.00
15% Agents Share of Revenue:...............12,960,000.00
50% I-Cafe Share of Revenue:...............43,200,000.00
Xkonek Gross Margin:.......................17,280,000.00
Operating Expenses
10% Back Office:............................1,728,000.00
10% Marketing:..............................1,728,000.00
20% SaaS Solution Provider:.................3,456,000.00
20% Admin and others:.......................3,456,000.00
Net Income before tax: 6,912,000.00
5.E-banking
Client placing deposit or withdrawals thru the internet. Service charge is P12.
Assumptions:
No. I cafe: 4000
No of Transaction/icafe/day: 10
No of Transactions/icafe/month: 300
No of Transactions/icafe/yr: 3,600
Total Transactions/yr: 14,400,000
Transaction Fee: 12
Gross Revenues:...................172,800,000.00
less: Cost of Sales
15%Franchisee revenue share:..............25,920,000.00
15% Agents revenue share:.................25,920,000.00
50% Internet Caf? revenue share:..........86,400,000.00
Xkonek Gross Margin:..................... 34,560,000.00
Less: Operating Expenses
Back Office 10%............................3,456,000.00
Marketing 10%..............................3,456,000.00
SaaS 20%................................6,912,000.00
Adminand others 20%........................6,912,000.00
Net Income before tax: 13,824,000.00
Summary of Consolidated Income Statement
Total Revenues............Php1,368,000,000.00
Less:
Total Cost................Php1,100,880,000.00
Gross margin................Php267,120,000.00
Less:
Operating Expenses..........Php160,272,000.00
Net Income..................Php106,848,000.00
At $1: Php48....................$2,226,000.00
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Doymarn
Member since: Jul 11, 2006 Rank: Chief (360 Posts) |
[Quote Member] |
Hi Cycko,
I am responding here as per my reply to your VBU comment.
I haven't studied your plan in detail working calculations but compliments on the detail, workings and presentation.
I am just going to give you my initial observations as they come and please take them as constructive even if they may not be in agreement with your thoughts.
Firstly, i think you need to simplify your business model. I think it flows as would a traditional franchise model and in the Web 2.0 era this will not meet with great acceptance by consumer or agent in the world picture, in my view.
In Web 2.0, applications should have as little friction as possible to accomplish their ends.
There is much overlap with the Western Union type of model, which is successful but it is important not to financially penalise or control the consumer agent too severely in my view and in the process you will lighten your accounting system's complexity.
Your model because of the well accepted icafe and WU infrastructure may well be sell-able within the Phillipines but i do not think it will meet will great acceptance elsewhere as it currently stands... traditional franchises, sorry to say are old school in my view.
I personally think you should concentrate on providing a simple PayPal type of gateway with the feature of cash exchanged for eWallet credits at the agencies where you build in a service fee for the deposit/exchange leg and the cash withdraw leg of the transaction and build that into your system.
I think you should dispense with the franchise fee type of structure and focus your profits on just the transaction fee leaving the agent to recover a processing fee from the client if cash exchanges are required and thereby not having to provide any complex accounting and audit trails for the other types of transactions.
By leaving the agent to set their service fees on cash exchanges you also allow them the market freedom and stimulate competitive market forces which is a healthy model rather than confine them to franchise fee costs they have to factor in.
In summary your idea is good and i can see it fulfilling a need but you need to simplify it in my view if you want it to be attractive on a world wide basis.
Those are my current observations.
I am responding here as per my reply to your VBU comment.
I haven't studied your plan in detail working calculations but compliments on the detail, workings and presentation.
I am just going to give you my initial observations as they come and please take them as constructive even if they may not be in agreement with your thoughts.
Firstly, i think you need to simplify your business model. I think it flows as would a traditional franchise model and in the Web 2.0 era this will not meet with great acceptance by consumer or agent in the world picture, in my view.
In Web 2.0, applications should have as little friction as possible to accomplish their ends.
There is much overlap with the Western Union type of model, which is successful but it is important not to financially penalise or control the consumer agent too severely in my view and in the process you will lighten your accounting system's complexity.
Your model because of the well accepted icafe and WU infrastructure may well be sell-able within the Phillipines but i do not think it will meet will great acceptance elsewhere as it currently stands... traditional franchises, sorry to say are old school in my view.
I personally think you should concentrate on providing a simple PayPal type of gateway with the feature of cash exchanged for eWallet credits at the agencies where you build in a service fee for the deposit/exchange leg and the cash withdraw leg of the transaction and build that into your system.
I think you should dispense with the franchise fee type of structure and focus your profits on just the transaction fee leaving the agent to recover a processing fee from the client if cash exchanges are required and thereby not having to provide any complex accounting and audit trails for the other types of transactions.
By leaving the agent to set their service fees on cash exchanges you also allow them the market freedom and stimulate competitive market forces which is a healthy model rather than confine them to franchise fee costs they have to factor in.
In summary your idea is good and i can see it fulfilling a need but you need to simplify it in my view if you want it to be attractive on a world wide basis.
Those are my current observations.
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Cycko
Member since: Feb 5, 2007 Rank: Warrior (161 Posts) |
[Quote Member] |
Thanks Doymarn. I'd like to share a more elaborate view on certain issues. Im not sure if this is a direct answer to your opinion though. I'll just let it flow with spontaniety...
On Franchising:
Yes it is my intent that the business will be piloted in the Philippines given the favorable conditions relevant to the concept. Once the business system is already reliable and proven to be working, its time to roll it out globally first to countries that have similar situations in the Philippines. Im refering to developing countries where digital divide is strongly felt, that why Icafes thrive. The main strategy is franchising. It goes like this: Build the business model as well as its attendant applications, perfect it in the Philippines and license it for use by franchisees in other countries. The reason for adopting the franchising model are:
1. We need to delegate the market penetration to the "local army" who knows the terrain and even the nuances of their respective territories. Of course, prior to it, a market study will be conducted that would determine what kind of modification and adjustments required in the business model that fit the local conditions.
2. The franchise-approach is also a strategy for financial resource mobilization. Franchise fees will be collected and the big bulk of it will be reinvested for local campaigns to soften the market as well as to fund R&D geared towards the development of new products and services suited to the local conditions.
3. Along this line, I am also thinking of some innovative approaches to mobilize capital even in the pre-operations stage, and right here in CH. When the idea and business development matures, I might be selling or bidding out in the bazaar particularly to the nationals of respective target countries the exclusive right to sell the franchises. The objective is to raise money to conduct local market studies and to finance the further development of the business.
NVW or the e-wallet account will be sold at $100 or Php480 is quite an issue against the trend now offering web 2.0 freebies (gmail, YouTube and even CH itself). However, I also believe only by putting enough stake in the running business can make people take it seriously. A middle ground though can be reached. The Php4800 can be spread over 12 months and opening an account will only require an initial cash out of P400 or $8.33 and the rest amortized in equal amount over the remaining 11 months which will be automatically deducted from their ewallet.
I'll be going deeper in the market feasibility assessment to ascertain if the complexity and mulitiplicity of the offering will justify the business potentials.
Admittedly, I have but theories about paypal as I dont have an emperical data of its viability here in the Philippines. But Im considering it in NPEG stage 2, when NVW will be offer for sale to individual end-users (C2C) But that will be after a critical mass on NPEG is already reached via the Icafes which is B2B nature.
In summary your idea is good and i can see it fulfilling a need but you need to simplify it in my view if you want it to be attractive on a world wide basis.
Thanks again. Your opinion is highly appreciated.
On Franchising:
Firstly, i think you need to simplify your business model. I think it flows as would a traditional franchise model and in the Web 2.0 era this will not meet with great acceptance by consumer or agent in the world picture, in my view.
Your model because of the well accepted icafe and WU infrastructure may well be sell-able within the Phillipines but i do not think it will meet will great acceptance elsewhere as it currently stands... traditional franchises, sorry to say are old school in my view.
I think you should dispense with the franchise fee type of structure and focus your profits on just the transaction fee leaving the agent to recover a processing fee from the client if cash exchanges are required and thereby not having to provide any complex accounting and audit trails for the other types of transactions.
By leaving the agent to set their service fees on cash exchanges you also allow them the market freedom and stimulate competitive market forces which is a healthy model rather than confine them to franchise fee costs they have to factor in.
Yes it is my intent that the business will be piloted in the Philippines given the favorable conditions relevant to the concept. Once the business system is already reliable and proven to be working, its time to roll it out globally first to countries that have similar situations in the Philippines. Im refering to developing countries where digital divide is strongly felt, that why Icafes thrive. The main strategy is franchising. It goes like this: Build the business model as well as its attendant applications, perfect it in the Philippines and license it for use by franchisees in other countries. The reason for adopting the franchising model are:
1. We need to delegate the market penetration to the "local army" who knows the terrain and even the nuances of their respective territories. Of course, prior to it, a market study will be conducted that would determine what kind of modification and adjustments required in the business model that fit the local conditions.
2. The franchise-approach is also a strategy for financial resource mobilization. Franchise fees will be collected and the big bulk of it will be reinvested for local campaigns to soften the market as well as to fund R&D geared towards the development of new products and services suited to the local conditions.
3. Along this line, I am also thinking of some innovative approaches to mobilize capital even in the pre-operations stage, and right here in CH. When the idea and business development matures, I might be selling or bidding out in the bazaar particularly to the nationals of respective target countries the exclusive right to sell the franchises. The objective is to raise money to conduct local market studies and to finance the further development of the business.
In Web 2.0, applications should have as little friction as possible to accomplish their ends.
There is much overlap with the Western Union type of model, which is successful but it is important not to financially penalise or control the consumer agent too severely in my view and in the process you will lighten your accounting system's complexity.
NVW or the e-wallet account will be sold at $100 or Php480 is quite an issue against the trend now offering web 2.0 freebies (gmail, YouTube and even CH itself). However, I also believe only by putting enough stake in the running business can make people take it seriously. A middle ground though can be reached. The Php4800 can be spread over 12 months and opening an account will only require an initial cash out of P400 or $8.33 and the rest amortized in equal amount over the remaining 11 months which will be automatically deducted from their ewallet.
I'll be going deeper in the market feasibility assessment to ascertain if the complexity and mulitiplicity of the offering will justify the business potentials.
I personally think you should concentrate on providing a simple PayPal type of gateway with the feature of cash exchanged for eWallet credits at the agencies where you build in a service fee for the deposit/exchange leg and the cash withdraw leg of the transaction and build that into your system.
Admittedly, I have but theories about paypal as I dont have an emperical data of its viability here in the Philippines. But Im considering it in NPEG stage 2, when NVW will be offer for sale to individual end-users (C2C) But that will be after a critical mass on NPEG is already reached via the Icafes which is B2B nature.
In summary your idea is good and i can see it fulfilling a need but you need to simplify it in my view if you want it to be attractive on a world wide basis.
Thanks again. Your opinion is highly appreciated.
Posted: May 18, 2007, 4:21 am