1. shopping
2. auctions

BUSINESS PLAN
BIDBASS.COM
“PENNY AUCTION SITE”
COMPANY, LLC
Contact: Cleint
3883 W Century Blvd. suite 63
Englewood California, 90303
Office Phone: 330-3392
Email: [email protected]
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CONFIDENTIALITY AGREEMENT
This agreement is to acknowledge that the information provided by Cleint Customer for CLIENT
DBA - BIDBASS (An On-line Penny Auction Company) in this business plan is unique to this
business and confidential; therefore, anyone reading this plan agrees not to disclose any of the
information contained herein without the express written permission of COMPANY. It is also
acknowledged by the reader that unauthorized dissemination of the information furnished in
this business plan, other than information that is in the public domain, may cause serious harm
or damage to COMPANY, and will be kept in the strictest confidence.
Upon request, this document is to be immediately returned to COMPANY.
Signature _____________________________________________________________
Name (typed or printed) __________________________________________________
Date __________________________________________________________________
This is the business plan for BIDBASS (Penny Auction Site). The presentation of this business
plan does not imply an offering of securities.
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TABLE OF CONTENTS
1.0
1.1
1.2
1.3
1.4
1.5
1.6
1.7
1.8
1.9
2.0
EXECUTIVE SUMMARY ............................................................................................................................. 5
PURPOSE OF THE PLAN .....................................................................................................................................5
INTRODUCTION ...............................................................................................................................................5
MARKET OPPORTUNITY ....................................................................................................................................7
BUSINESS MODEL ............................................................................................................................................9
SERVICES AND PRODUCTS ................................................................................................................................11
GROWTH OPPORTUNITY .................................................................................................................................12
FINANCIAL PROJECTIONS .................................................................................................................................12
FINANCIAL NEED AND USE OF FUNDS ................................................................................................................13
LENDER RETURN STRATEGY .............................................................................................................................13
THE ENTERPRISE ..................................................................................................................................... 15
2.1
MISSION STATEMENT .....................................................................................................................................15
2.2
BUSINESS OBJECTIVES ....................................................................................................................................15
2.3
ORGANIZATION .............................................................................................................................................15
Legal Structure ...................................................................................................................................................15
Company Ownership ..........................................................................................................................................15
Location and Premises .......................................................................................................................................16
Intellectual Property ...........................................................................................................................................16
2.4
HISTORICAL BACKGROUND ..............................................................................................................................16
2.5
FUNDING ANALYSIS ........................................................................................................................................16
3.0
THE BUSINESS CONCEPT AND NEED ....................................................................................................... 18
3.1
THE MARKET NEED ........................................................................................................................................18
3.2
PRODUCTS AND SERVICES ................................................................................................................................18
3.1
DELIVERY MODEL ..........................................................................................................................................19
Sales Media ........................................................................................................................................................19
Sourcing and Fulfillment.....................................................................................................................................19
3.6
REVENUE MODEL ..........................................................................................................................................19
4.0
THE MARKET .......................................................................................................................................... 21
4.1
INDUSTRY OVERVIEW .....................................................................................................................................21
Market Size.........................................................................................................................................................21
Market Trends ....................................................................................................................................................25
Market Needs .....................................................................................................................................................26
4.2
INDUSTRY PARTICIPANTS AND COMPETITIVE ANALYSIS ..........................................................................................26
Industry Participants ..........................................................................................................................................26
Competitive Analysis ..........................................................................................................................................26
5.0
GROWTH STRATEGY ............................................................................................................................... 28
5.1
STRATEGIC INITIATIVES ...................................................................................................................................28
5.2
BRAND STRATEGY ..........................................................................................................................................28
5.3
MARKETING STRATEGY ...................................................................................................................................29
Positioning Statement ........................................................................................................................................29
Pricing Strategy ..................................................................................................................................................30
Promotion Strategy ............................................................................................................................................30
Marketing Programs ..........................................................................................................................................30
5.4
SALES STRATEGY............................................................................................................................................32
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Sales Forecast .....................................................................................................................................................33
Sales Programs ...................................................................................................................................................33
5.5
STRATEGIC ALLIANCES ....................................................................................................................................33
5.6
MILESTONES.................................................................................................................................................34
6.0
6.1
6.2
6.3
7.0
WEB PLAN SUMMARY ............................................................................................................................ 36
WEB MARKETING STRATEGY............................................................................................................................36
SEARCH ENGINE OPTIMIZATION........................................................................................................................36
AFFILIATE PARTNER........................................................................................................................................37
MANAGEMENT SUMMARY .................................................................................................................... 38
7.1
ORGANIZATIONAL STRUCTURE .........................................................................................................................38
7.2
GOVERNANCE ...............................................................................................................................................38
Management Team ............................................................................................................................................38
Management Team Gaps ...................................................................................................................................38
7.3
PEOPLE........................................................................................................................................................38
7.4
PROCESS ......................................................................................................................................................39
7.5
TECHNOLOGY................................................................................................................................................39
8.0
8.1
8.2
8.3
8.4
9.0
9.1
9.2
9.3
9.4
9.5
9.6
9.7
9.8
10.0
9.1
RISK FACTORS ........................................................................................................................................ 40
DISTINGUISHING PRODUCTS AND SERVICES .........................................................................................................40
ATTRACTING AND RETAINING QUALIFIED STAFF ...................................................................................................40
RETAINING LOYAL CUSTOMERS ........................................................................................................................40
NO BARRIERS TO ENTRY ..................................................................................................................................40
FINANCIAL PLAN .................................................................................................................................... 42
KEY ASSUMPTIONS ........................................................................................................................................42
KEY FINANCIAL INDICATORS .............................................................................................................................42
EXPLANATION OF BREAK-EVEN ANALYSIS............................................................................................................43
EXPLANATION OF PROJECTED BALANCE SHEET.....................................................................................................43
EXPLANATION OF PROJECTED PROFIT & LOSS ......................................................................................................43
EXPLANATION OF PROJECTED CASH FLOW ..........................................................................................................44
BUSINESS RATIOS ..........................................................................................................................................44
LONG-TERM PLAN AND FINANCIAL HIGHLIGHTS ...................................................................................................44
NOTES .................................................................................................................................................... 45
NOTES............................................................................................................. ERROR! BOOKMARK NOT DEFINED.
FINANCIAL APPENDICES ....................................................................................................................................... 46
PRO FORMA BALANCE SHEET .........................................................................................................................................46
Beginning Balance Sheet ....................................................................................... Error! Bookmark not defined.
3-Year Balance Sheet .........................................................................................................................................46
PRO FORMA PROFIT & LOSS STATEMENT .........................................................................................................................47
PRO FORMA CASH FLOW STATEMENT..............................................................................................................................48
12-MONTH PROFIT & LOSS STATEMENT ..........................................................................................................................49
12-MONTH CASH FLOW STATEMENT ...............................................................................................................................50
12-MONTH REVENUE PROJECTIONS ................................................................................................................................51
Analysis
48
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1.0 Executive Summary
1.1
Purpose of the Plan
The purpose of this plan is to provide investors with the information necessary to evaluate the
merits of the value proposition and growth strategy of BIDBASS. Additionally, it will serve as a
guide for management by establishing goals against which performance can be measured.
1.2
Introduction
BIDBASS (ZUZATI or the Company) is a start-up specializing in on-line penny auctions. The
Company is the business of auctioning retail consumer products via the internet using a state-of
the-art web site that is designed for fun, excitement and to tap into the frenzy of the on-line
gambling and auctioning universe. This site will take full advantage of the available internet
technologies that have created a new business lifestyle that lends itself to the excitement that
the internet can provide to the end user that has been demonstrated with other new
technologies that encompass the telecommunications frontier of cell and satellite and wireless
systems.
Online penny auction sites (a.k.a. entertainment auctions, entertainment shopping sites) are
becoming more popular due to their ability to provide incredible bargains.
Real penny auction sites are quickly becoming the new craze in the internet world, and trechies
are scooping up some incredible deals for unbelievable prices. We’re not talking about standard
garage sale junk; we’re talking about hot products that are currently in demand. Some products
are retail closeouts forced to sell on a penny auction site. Other items may be from government
auctions that can include popular electronics, games, movies and practically anything you can
think of.
Ever wonder where the merchandise goes after a retail store shuts down? It’s likely the
products went either to a liquidator or an auction to be purchased for only a percentage of the
actual suggested retail value. It may be bad news for the retail store that went out of business,
but for anyone who knows how to be on the right end of this transaction can benefit.
Computers, video game consuls, digital cameras and nearly every electronic item can be
included in this transfer. The question is, how can you be on the right end of this transaction
and benefit by picking up these items at discounted prices?
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read more: http://tomuse.com/penny-auctions-entertainment-shopping-sites-reviewcompare/#ixzz14iWadb7q
Since penny auction sites have emerged, there has been a lot of talk about them. This talk has
been able to attract a large number of followers. Penny auction sites have become sources of
entertainment, big money and new merchandises for people. It is exciting for people to bid for
products that they have been looking for and be able to purchase at the most insanely low
prices.
Some auctions allow you to purchase some of the most useful items at the price of just a dollar.
You will be able to find all sorts of products on these sites ranging from PlayStation, Xbox games
to a brand new Kindle, high quality digital camera. You could also purchase MP3 players or
appliances you use on a regular basis in the kitchen like blenders, knives; perfumes and lots of
other necessary goods. The possibility of buying an Xbox for just $10 is bound to tempt you.
DealDash (as an example) also comes under the category of penny auction sites. Customers
can register on it free of cost. Like all other email websites, you will only need to create a
unique username for yourself and set a password. You will need to give a valid email address as
reference and if your email is verified through Facebook, you have an added advantage of
getting free $5 for the purchase of bidding credits.
The first thing that might be popping up in your mind is that this is a scam. But it is not. This is
how it works. You will need to first sign up with the penny auction site. After you have
registered, you will be able to buy bidding credits at $1 each. The next step requires you to look
for an interesting item that is being auctioned. Once you have found a product of yourself, start
bidding. For example, if you have bid credits of $5, you are allowed to bid for five times on an
item. Every time you make a bid, the price of the item raises $.05. The timer at the bottom of
every auction ends after 30 seconds but when another person bids on the same item, the timer
resets and gives you another 30 seconds. All you need to do is press the ‘bid button’ for the
auction. If the timer ends after you bid on an item, you get to purchase the item for the price
that came up when you bid for the last time. That’s all you need to do.
In case you are not able to win the auction, you get a second chance to purchase the product at
a discounted price. Each bid is for one dollar and now you are entitled to use the total amount
of all your bids towards the price listed for ‘buy it now’. This means that bidding 5 times at an
item of $25 will enable you to purchase it for just $20. But it is important to remember that in
order to get the deal, you have to buy the item before the first 24 hours of the auction end.
BIDBASS will launch its new real time penny auction bid site in January of 2011 with a state of
the art site that will encompass all the of the best techniques to entice and hold the attention
of the bidder for auction after auction at great discounted prices. The auction site will be
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named BIDBASS.com. The Company is looking for five million (5,000,000 USD) dollars to launch
the site. The owner founder will be investing $350,000 dollars in the venture and demonstrates
his belief in the outcome of the venture. The founder is expecting a multi-level return on his
investment and a possible IPO at the end of year three and after grossing over 400,000,000 in
that same year. Yes, there are big dollars in the successful development of an on-line penny
auction.
To capitalize on this explosive growth, BIDBASS will earn revenue from the following activities:
•
Penny auction sales,
•
Free BIDBass.com rewards, and frequent bidders.
•
Advertising derived from BIDBass.com
Additionally, BIDBASS will tenaciously look for creative ways to monetize a product and service
portfolio.
Penny site applications are undoubtedly becoming the next phase of e-business: m-business.
Because of their always on, just about any time, any where capabilities, Penny Site applications
are a possible revenue source in its own right. Mobile apps will reinforce trends favoring
mobile internet devices and driving penny auction entertainment.
The founder of the Company, Cleint Customer has invested many hours of personal
development time and money thus far. The Total amount needed for the business to
accelerate its strategy and drive towards an aggressive launch date is ten million. The basic
premise for BIDBASS is that the current universe of on-line penny site auctions is just the tip of
the ice berg in the coming on-line penny site auctions that will be springing up to take
advantage of the mobile entertainment world. The founders combined talents promise
products that are elegantly designed and appeal to tech-forward individuals.
1.3
Market Opportunity
How Safe Are Penny Auctions For Consumers?
For a consumer to keep a check on his safety for penny auctions, he needs to take care of many
things. Penny auctions are new for the online groups and it is a topic of concern for most
speculators. There are a number of auctioning sites online but most of them don’t stay for very
long and disappear soon. These sites come and go just after they are launched. There may be a
few of the big sites that actually stay on and who operate an honest method of business.
Operating a penny auction site is a very difficult job as it is very difficult to be fair and this clears
a doubt amongst many consumers who worry a lot about the thinking that are penny auctions
safe?
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The concept of penny auctions is difficult to grasp for some, yet it gets easy and simple when
you get to know it in detail. Consumers generally buy products online in a bidding spirit through
a winning bid. There is a lot more to the method than just being able to buy a hundred dollar
product at five dollars. The auction companies which offer this form bidding charge a price for
every bid depending on the source. You can get bids for just sixty cents and should be bought in
bulk amounts using MasterCard or Visa. Bidders may gain experience and use a specific strategy
but there is no guarantee about the winning of the product.
The whole idea of penny auction sites came into being in 2009 from Europe and has developed
over the years into a business for making profits for people who have been successful in their
ventures. Websites provide a variety of products from gaming consoles to household
appliances to video games to products that have just hit the market at a very tempting price.
These persuasive prices are what excites customers and incites them to invest.
The basic idea behind the method is simple. When a user pays for a bid, the end price of the
item increases and the time duration of the auction also increase though in small increments.
After the time for the auction is over, the last user to bid is capable of purchasing the product at
an incredibly low price. However, the question that arises here is, how do these companies
manage to make profits when they are offering brand new products at a price of less than 1%
of their market value. The answer to this is simple. Every bid costs and the average number of
bids in every auction will be high. The cost of the item will thus get subsidized by the bids of the
users. The cost of every bid is enough for business to be successful at making profits after
buying quality goods and paying overhead costs.
There are a number of safe auctions out there but just like any other business, there are also
some scams to cheat people of their money. It is wise to do a check about penny auction sites
by reading their reviews online before investing money.
Recent Funding for MADBID
MADBID is a fast growing “pay-to-bid” auction site has secured £4 million in a Series A funding
from Atomico Ventures. Launched in 2008, MadBid is one of a number of pay-to-bid auction
sites which have appeared in the last couple of years, with Swoopo among them. CEO Juha
Koski says the Atomico investment will be spent on technology and expanding in Europe.
Mattias Ljungman of Atomico has joined the board.
MadBid is claiming 1 million users since launch and says customers are attracted by brand
products with the possibility of saving of 80% on the RRP (Regular Retail Price) of an item. That
drives people to bid of course and so the site makes its money off the customers who are not
successful, not unlike a casino.
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In fact some gambling experts such as Professor Mark Griffiths of Nottingham Trent University,
have called “penny auctions” similar to lotteries and called for similar regulation. However The
Gambling Commission has not ruled on the matter and Koski insists that penny auctions are a
“game of skill”. MadBid says in its defense that many penny auction sites are registered abroad
in countries such as Malta and do not deliver on what they promise.
How does it work? The sites auction new
items, often for a fraction of their retail
price, and bidders pay up to £1.50 (Euro) for
each bid. Unlike eBay, where you can bid
for free, users have to pay between 40
pence and £1.50 to place a bid. Bids
automatically rise by 1p at a time, and some
people make repeated bids. The last person
to bid gets the item, for however much it is
worth after what can be hours of
monitoring.
Atomico founder Niklas Zennström, best
known as a cofounder of Skype, says
MadBid “allows the most skillful to get
amazing bargains” and it had gained a lot of
traction “in a short period of time.”
The site has 22 employees and is based in
the UK.
That model is a license to print money.
MadBid says it generated over £2.5million
in the first year of operation and it’s sold
over £5million worth of products and
80,000 auctions have been won. Turnover is
projected to reach over £20 million by the
end of 2012.
Swoopo.com, another leading penny auction site has earned over 18 million dollars in the past
three years in the market. There auction model has not changed over this period as they feel
that they are very successful. They typically run 1500 auctions with 20 million unique users per
week.
1.4
Business Model
BIDBASS (An On-line Penny Auction Company) will conceive,
design, create, and market RRP products via on-line penny
auctions using a state-of-the-art web site. The Company
believes that a strong technologic presence will gain a fast
foothold with bidders and create a “stickiness” that will insure
success from day one and continue to grow geometrically as the
site brings bigger and better target retail products to the
bidding environment.
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Our design ethic revolves around a clean look with a user-friendly interface and thoughtful
features. We will capture the value we create through a variety of pricing models from the
existing successful bidding sites and the BIDBass.com self style market approach that will
appeal to more bidders and create traffic that will generate steady revenues.
1.5
The Service
It is useful to briefly describe the rules of the penny auction. First, players are restricted to bid a
fixed bid increment above the current bid for the object, which is zero at the beginning of the
auction. For example, if the current bid is $10.00 and the bid increment is $.01, then the next
bidder must bid 10.01, the next 10.02, and so on. The auction is commonly referred to as a
"penny auction" as a result of the common use of a one penny bid increment. Second, players
must pay a non-refundable fixed bid cost ($.50 in this example but could be any value) to place
a bid. The majority of the auctioneer’s final revenue is derived from the bid costs collected
throughout the auction. Finally, the end of the auction is determined by a countdown timer,
which increases with every bid (by approximately ten seconds but could be any value).
Therefore, a player wins the object when his/her bid is not followed by another bid in a short
period of time. Of traditionally studied auctions, the penny auction is most closely related to
the War-of-Attrition (WOA).
BIDBass will follow the traditional penny auction model as described above with strategic
differences applied at launch and throughout the business model in order to stay competitive
and/or gain a competitive advantage either perceived or demonstrated via empirical market
data.
The penny auction as noted in the paper written by Ned Augenblick, Stanford University
(Consumer and Producer Behavior in the Market for Penny Auctions: A Theoretical and
Empirical Analysis) demonstrates the feeding frenzy of the bidding public and the success of
penny auctions.
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“My first main empirical result is that the average revenue from these auctions significantly
exceeds the easily-obtainable value of the goods. Although Swoopo makes negative profit on
more than half of the auctions in the dataset, the average profit margin is 52%, which has
generated 20M in profits over a four year period. In an illustrative example, my dataset
contains over 2,000 auctions for direct cash payments, in which the average profit margin is
104% of the face value of the prize. This finding contributes to an unambiguous field
example of overbidding in auctions to a large literature on the subject, which includes
experimental work and a number of recent field studies.”
1.6
Growth Opportunity
BIDBass’s growth opportunities are unlimited. First, the web site needs to have beta third
party testing with recognized endorsement like a known penny auction watch dog like
pennyauctionwatch.com and then establish a web presence with a roll out to the internet end
user market. BIDBass’s customers will come to rely on the Companies ability to create a useful
and fun product coupled with a clean, user-friendly design and thoughtful features available
across a variety of platforms. Growth will follow naturally from our design ethic and reputation
for customer honesty and responsiveness.
1.7
Financial Projections
BIDBass’s financial projections show that the Company can utilize the requested funding to
continue start-up activities and launch our enterprise. The Company projects a steady growth
with significant revenue over the next three years as its business plan is implemented.
Financial Highlights
Year 1
Year 2
Year 3
Revenue
$
2,801,398
$
4,669,420
$
Direct Costs
$
367,557
$
441,085
$
533,442
Gross Margin
$
2,433,841
$
4,228,335
$
5,110,158
Total Operating Expenses
$
4,085,754
$
1,618,543
$
1,747,006
$
2,609,792
$
3,363,152
$
2,711,792
$
3,465,152
87%
Operating Profit
$
(1,651,913)
EBITDA
$
(1,549,913)
91%
-59%
5,643,600
91%
56%
60%
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1.8
Financial Need and Use of Funds
BIDBass (An On-line Penny Auction Company) will execute this business plan from the
founder’s investment-to-date and a $5,000,000 equity investment, as well as internally
generated $350,000. The funds will be used to complete development work on the product and
establish the marketing plan, and for working capital during the initial phases of our enterprise.
Some of the working capital will be used to finish any web development and marketing
infrastructure
1.9
Investor Return Strategy
An equity investor will share in the increased valuation of the Company as revenues grow, the
balance sheet becomes stronger, and the Company attains a market leadership position.
The pro forma projections indicate that the business will have sufficient excess cash and
expense maneuverability to cover operations should sales not materialize as quickly as planned.
In conjunction with investors, BIDBass (An On-line Penny Auction Company) management will
pursue viable exit strategies once the Company reaches a critical mass. Management believes
that it can attain an attractive outcome for all shareholders as seen in the financial highlights.
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Financial Highlights
$7,000,000
$6,000,000
$5,000,000
$4,000,000
$3,000,000
$2,000,000
$1,000,000
$$(1,000,000)
$(2,000,000)
$(3,000,000)
Yea r 1
Yea r 2
Yea r 3
$2,801,398
$4,669,420
$5,643,600
$367,557
$441,085
$533,442
Gros s Ma rgi n
$2,433,841
$4,228,335
$5,110,158
Tota l Opera ti ng Expens es
$4,085,754
$1,618,543
$1,747,006
Opera ti ng Profi t
$(1,651,913)
$2,609,792
$3,363,152
Revenue
Di rect Cos ts
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2.0 The Enterprise
2.1
Mission Statement
BIDBASS will become an on-line penny auction site providing a platform for retail auctions of
consumer goods to the best bidder. BIDBASS’s interactive web site will be state-of-the art and
designed to create business, education, and networking opportunities. Because we take the
time to first research the needs of our users, the on-line auction will offer those products that
are highly desirable by the consumer. The web site application we have created will be both fun
and innovative, guaranteed to stimulate the user’s interest in the auction process!
2.2
Business Objectives
BIDBASS has definite objectives in order to fulfill its desire to participate and achieve an evergrowing market share of the exciting industry that it is entering. What follows is a brief
summary of the key objectives of BIDBASS:
1.
2.
3.
4.
2.3
Establish ourselves as a preferred provider of on-line penny auctions.
Utilize creative, first-class public relations, advertising, and marketing to raise public
awareness of our products, our websites, and our products and services.
Develop management capabilities to ensure a strong foundation for participation in a
rapidly growing company.
Increase sales and revenue according to the goals projected in this plan for the next
three years.
Organization
Legal Structure
BIDBASS is a limited liability Delaware Corporation.
Company Ownership
Ownership is held by Mr. H. Michael Cao – 100%. This current 100% total interest will be
diluted by equity funding and by future employee stock. Any and all questions relative to
ownership should be directed to ZUZATI.
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Location and Premises
BIDBASS is founded and based in Inglewood, California. The Company operates virtually at
present. Office space will not be needed to launch the beta site.
Intellectual Property
BIDBASS is seeking copyright and patent protection for its brand and penny auction site
application. We also maintain a website at www.bidbass.com to market our product and
service.
2.4
Historical Background
BIDBASS is a start up company and has no operational history. The founder has performed
extensive market research to determine the viability of the venture and the prospective return
on investment as well made careful research into the risks of the investment.
The impetus for the creation of BIDBASS is the potential return on investment and opportunity
to provide a much in demand option for consumers to purchase retail products and services at
a deep discount. There is a lot of opportunity for a company that is destined to be a dedicated
provider of a penny auction site in the global market. BIDBASS has been organized for
important reasons. Most notably, the founder is proud of his vision and insight; that is to
provide users access to pragmatic products that will enhance their daily lives in an Interactive
honest on-line manner.
2.5
Funding Analysis
To date, the founders have provided all funding for BIDBASS. In order to launch our business
and fund its initial operations, BIDBASS needs a total of $10,350,000. The money will mainly be
allocated in the following way:
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DETAILED START-UP EXPENDITURES FOR
BIDBASS (AN ON-LINE PENNY AUCTION COMPANY)
Equipment
Computer Server, other
Mobile Devices
Other Investments
Website Development
Startup Inventory
Software Other Services
Phone and internet services
Start-up services
Attorney Fees and Professional Start Services
Marketing
Marketing
Working Capital
Personnel (12 months payroll)
Lease N/A
Miscellaneous Working Capital
Total
$10,000
$2,000
500,000
500,000
$1,500
$2,500
$5,.000
$3,000,000
$180,000
$,000
$1,149,000
$5,350,000
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3.0 The Business Concept and Need
3.1
The Market Need
The competition in the global marketplace is intense, but user experience is clearly secondary in
the rush to bring consumer retail products and services to the market using the penny auction
platform. Our unique value proposition emphasizes a web site application with clean interfaces
that are intuitive and easy to use with thoughtful features. Though there are many other penny
auction sites, we will seek to provide uniqueness and ease of use to distinguish and
differentiate our BIDBASS brand on the market. Additionally, BIDBASS will offer our custom
penny auction web site and application for use across all the major operating system platforms
with language translation ability so customers are not tied to a particular hardware platform or
a language to use the web site.
3.2
Products and Services
Easy to use! Exciting! Fast-paced, with immediate response!
BIDBASS is designed to harness the power of end users desiring to enter the exciting auction
world of product shopping and purchasing with the element of gaming and gambling rolled into
the electronic technology of the internet and that can be performed from a handheld device or
phone.
This is a truly disruptive shopping experience.
Because consumers are always looking for deals and discounts the driving force is already
present and the vehicle for the consumer to exercise his/her purchasing right and power is
available via the BIDBASS penny auction web site, a natural act. We expect significant revenue
through disintermediation and use of the auction process.
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3.1
Delivery Model Example
Sales Media
BIDBASS is committed to preparing sales media that highlight all of the most important benefits
and features we offer in the form of a penny auction site. This information presents a
compelling point of view regarding the features and benefits of our products and subscription
services.
Sourcing and Fulfillment
BIDBASS will employ a virtual team of developers to write a state of the art penny auction web
site using off shore resources. The end product will be developed to delivery the best auction
features that lend credibility and comfort to the end user and to assure the user that the
auction is honest and is straight forward without concern for possible miss conduct and abuse
by BIDBASS auctions. Customer satisfaction does not end with the winning of an auction. We
will employ a high performance customer service strategy, and we expect this feature of our
service to foster brand loyalty and great ideas for improving existing auction policies and
creating new auction products and services.
3.6
Revenue Model (Customer Service)
We are excited about our prospects, and we project incremental growth in sales over the next
year and beyond as we execute our strategy.
Revenue Projections: Three Years
6,000,000
5,000,000
4,000,000
3,000,000
2,000,000
1,000,000
0
Year 1
Year 2
Year 3
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Monthly Revenues
$350,000
$300,000
$250,000
$200,000
$150,000
$100,000
$50,000
2
Mo
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th
1
1
Mo
n
th
1
0
th
1
Mo
n
th
9
Mo
n
th
8
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n
th
7
Mo
n
th
6
Mo
n
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5
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n
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4
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n
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3
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Mo
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$-
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4.0 The Market
4.1
Industry Overview
Market Size
The saturation point penny auction sites is not even close as new sites are utilizing the power of
creative marketing and the ever increasing desire of the consumer to purchase retail products
and services at a considerable discount. The industry is of very new and yet matured quickly as
most all markets do on the internet.
The consuming public is the market and the internet brings that public to the global market
place no matter where the consumer is. As long as he has the ability to credit card purchase
and has access to the internet then the consume is part of this global market place and thus the
total market size in terms of the using public is around 1 billion.
Swoopo.com is generating over 1500 auctions a week and this equates to 20 million unique
users a week. This site is growing at 10% per year.
Another new site is enjoying success: PennyWarriors.com owned by a former Army sergeant.
“Sgt. Summers/PennyWarriors: When I understood the Penny Auction market and model, it
was obvious that there was an enormous potential for growth within the industry because
the average consumer has not been educated as to what a penny auction is and how they
can benefit from our industry.
At the same time, it occurred to us that certain inefficiencies existed in the market,
including:
1. A consistent theme of poor execution on most sites
2. A lack of attention to detail
3. An abundance of illicit activity
Sgt. Summers/PennyWarriors: First and foremost, we offer whatever the hottest items are
on eBay and Amazon.com. A typical line-up will have lots of electronics, (TV?s, computers,
and Apple products) along with some fashion (handbags, sun glasses) and gift cards.”
Read what other media outlets are saying: (below)
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By Jacqueline Sit, NEWS 9
OKLAHOMA CITY -- Times are tough and every penny counts. Some people are
taking that idea to a new level through auction sites where pennies could get you
a camera or even a laptop.
If you are willing to wait for a great deal, penny auctions are a great solution to
saving a few bucks. There's an online penny auction based in the metro that's
growing by the day where you can bid on everything from gift cards to MacBooks.
The Oklahoma City-based company Quibids started just a few months ago and it's
gaining popularity.
Think of it as an online auction but you're bidding by the penny. And even though
each bid costs 60 cents, you can still grab a good bargain because it can save you
from paying the full value of an item.
"My best deal was MacBook Pro for $19.62, took three hours to get through, but
definitely worth it," said penny auction user Justin Bruschi.
Another customer got a $300 digital camera for only $50.
"It really gives people the opportunity just to buy the items at the price they want
and not have to pay the full amount they can't afford to pay right now in this type
of economy," said Matt Beckham, Quibids CEO.
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So far there are about 500 customers in Oklahoma who use the penny auction
at Quibids.com.
Although, there has been some debate on whether online auctions could lead to
a gambling addiction.
Psychologist Stewart Beasley said when it comes to shopping or bidding online,
moderation and awareness is key.
"Anything can be adrenaline producing, even this bidding could be addictive for
people who get caught up," Beasley said. "People will buy things they don't need
because it's so cheap. It becomes a rush.
Penny Auctions are addictive
Penny Auctions are also much more exciting and inclusive to the user. Unlike the
standard eBay auction where a user places a bid and either wins or not, a penny
auction keeps the user actively engaged, with numerous opportunities to win
their item of choice for a great bargain.
Source: Thehubpages.com
Penny auction sites are poised to take advantage of the
recent growth in social networking and mobile Internet
access.
With more users now having access to broadband internet from their mobile
devices, consumers are more inclined to shop from the comfort of home, or
anywhere else they may have high speed Internet access. By incorporating a
social network within a purely shopping environment, and adding the benefit of
buying premium products for pennies on the dollar, Social Entertainment
Shopping has all the right elements to become one of the preferred online stores
among e-commerce titans such as Amazon, and eBay. Mobile internet users are
exploding and are predicted to reach more than one billion by 2013! Plus,
shopping is predicted to become even more popular with mobile users and
people will find that penny auctions are a fun way to shop.
Source: Prnewswire.com
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Sales are the direct purchase of a mobile application and revenues include additional money
made from things like imbedded ads.
Mobile App Market
($Bn - sales and reveues)
35.0
29.5
30.0
25.0
21.6
20.0
18.1
15.0
12.8
11.1
10.0
5.0
6.8
4.2
7.6
4.5
2.5
0.0
2009
2010
2011
2012
2013
Source: Gartner1
In 2009 there were over 45,000 downloads per application available on Apple’s App Store.
While the number of apps is growing faster than the predicted number of downloads, there will
still be over 30,000 downloads per application available in 2013.2 This will enhance the number
of users and measured traffic to the penny auction sites.
Market Trends
BIDBASS is confident and excited about the timing of our business in its industry. As video chat
technology becomes more pervasive, BIDBASS will be there to embrace the emerging
technology.
It is the company’s position that this is the ideal time to be on the move in this ever-growing
market. By maintaining professional networks in our industry we will always keep abreast of
changing styles and modalities of service. At the same time, there is a classic aspect to what we
do that is timeless. To this extent we believe we are safe and secure from the negative threats
posed by changing market trends in other industries. In other words, we are at the fore front of
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the this trending industry and their will always be a need to fulfill the consuming publics need
for discounted products and services and that need is not likely to change in the near future.
Our BIDBASS users will always need and love what we do.
Market Needs
BIDBASS evaluates its market primarily from the standpoint of what the needs are of the
individual consumer. In today’s global online market there is a massive trend toward the usage
of mobile devices, cell phones, smart phones, iphones, etc., as well as the promotion of
efficient and user friendly ways to access information – especially using applications. This trend
bodes well for the future of our company. We will capitalize on the growing awareness of these
devices for the everyday consumer and offer unique services for those who value these
offerings the most. This company understands and appreciates the varying perspectives among
consumers as individuals. The needs of our target users will be well-fulfilled because we provide
high demand products to the consumer at heavily discounted prices. BIDBASS understands that
to realize the opportunity in this market requires an ongoing effort to satisfy the industryrelated needs of potential BIDBASS users seeking a high level of quality – and this is what we
will do best.
The penny auction market is currently experiencing amazing growth - sites are fast becoming a
popular commodity consumers are relying on for everyday purchases. BIDBASS recognizes the
popularity of this technology trend and intends to capitalize on it by creating a unique user
friendly web site application written for English, Spanish, French, Italian, German and Japanese,
and for all major operating system platforms currently on the market.
4.2
Industry Participants and Competitive Analysis
Industry Participants
BIDBASS has done extensive market research to investigate and understand all aspects of the
competition in the online penny auction market. Mr. Cao knows that there are numerous penny
auction sites and he knows that with great product offerings that he will build a robust auction
site that will be frequented on a regular basis.
Competitive Analysis
BIDBASS has done a thorough study of the state of its industry. It presents an ever-increasing
market, a very healthy bottom line, and excellent opportunities for growth. The industry itself
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is creating its own buzz in two ways: [1] The mobile app industry is drawing consumers by
introducing modern, advanced smartphones that consumers want, as well as [2] other retail
products that the consuming public desires to purchase that add value to the consumer’s life they help fill a high performance human need. The global market place demands easy-to-use
bid sites with consumer-centric features and benefits. BIDBASS can take advantage of this ever
expansive market as the management team has its finger on the pulse of market demands. This
industry is not sufficiently filling the needs of the consuming public.
Our desire is not to become just a product line, but rather to become a credible brand enabling
users to achieve results. BIDBASS believes 1) strategic planning, 2) tactical, smart sourcing, and
3) superior customer service are the key to serving our target customs and netting a healthy
profit margin.
Here are the top penny auction bid sites: (See Penny Auction Site Analysis in Appendix)
Swoopo.com
Bidradio.com
Dubli.com
Igotthischeap.com
Jackinabid.com
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5.0 Growth Strategy
BIDBASS centers its strategy on the premise that the company resonates with consumers who
are looking for popular retail products at heavily discounted prices and because it offers critical
networking and interactive information exchange opportunities that allow for honest auction
operation. Always keeping that in mind, we maintain a focus on creating positive customer
relationships, while keeping expenses very modest. BIDBASS is diligent in dissecting every
aspect of this business to ensure that each component remains popular and contributive to the
goal of a highly profitable enterprise. We want to think strategically and proactively about
everything we do so that all business actions are geared toward providing needed services for
target users resulting in an exciting experience for the bidding. BIDBASS is adopting a portfolio
approach to its business. We will develop numerous versions rather than betting our business
on one single auction style to resonate with the marketplace. In this manner, we expect to
mitigate the risks of any single version failing to live up to expectations.
5.1
Strategic Initiatives
Our overall strategy will encompass the following objectives:
1. Online internet exposure through search engine optimization
2. Viral marketing via the networking elements of the site and via the tendency
of users to forward more interesting retail products to their friends
3. Encouraging celebrities to use the site through contacts in the music and
entertainment worlds
5.2
Brand Strategy
Building a strong company brand will require a coordination of many factors. As such, BIDBASS
will focus on several core elements that will help build and strengthen the backbone of the
brand.

BIDBASS creates a honest auction with good business standards practices and seals of
approval from the Better Business Bureau and other seals of approval from retailers
them selves. The trends indicate a segment of the market is concerned with the
“Integrity” issue of using penny auction sites.
BIDBASS capitalizes on this already developing market!
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 Customer satisfaction and responsiveness are points of pride at BIDBASS.
 BIDBASS brand will be honest and free from corruption.
5.3
Marketing Strategy
BIDBASS is aware of all the choices we face in relation to our marketing strategy. Because of its
research and recommendations from contributing consultants it has chosen to market what it
does through a comprehensive marketing plan including SEO, online advertising, viral
marketing, networking, blogs, various industry magazines, search engine articles, radio spots,
podcasts, press pieces, even pieces in interest-specific magazines, e.g. “Top 10 mobile Apps”. It
will also emphasize spreading important messages through mobile e-mail and mobile cell
phone transmissions to users.
It has chosen this strategy because it represents the most efficient correlation of costs,
communication to our target market, and brand recognition. We will continue to monitor how
this translates to web traffic and always be open to experimenting with opportunities for
increasing our web traffic. We also place a great emphasis on our ability to generate a great
word-of-mouth business among our target demographic.
Social Networking Sites contemplated: (Not Yet Established)
http://www.linkedin.com/in/BIDBASSsuite
http://twitter.com/BIDBASSsuite
http://www.facebook.com/pages/BIDBASS /129640667074965
http://www.youtube.com/user/BIDBASSsuite
Skype: BIDBASSsuite
Positioning Statement
BIDBASS takes the position that its primary role in the marketplace is being a provider of an
intuitive, easy to use interactive interface that will be created to run on all major platforms and
languages on the market.
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This is how BIDBASS distinguishes itself in the marketplace. We want our demographic users to
think about BIDBASS whenever they think about penny auction sites or finding retail products
at a discount. We want them to choose to visit with us because it will facilitate their social
productivity and love of the penny auction process in innovative ways.
Pricing Strategy
BIDBASS seeks a balance between quality of offering, price, and the value that may be derived
from the consumer’s perceived value and honest purchase via an auction. We believe we offer
the best balance of these aspects in the minds of our target users. We make it easy for the
users interested in an online penny auction to make a smart decision because our offering is so
unique. In other words, our pricing strategy is linked to our value proposition and our sales, and
marketing strategies highlight this connection in ways that are easy for target users to
understand. Ultimately, we want to ensure that all of our target users equate BIDBASS with
great value.


Popular Retail products auctions with potential real value.
Popular Lifestyle service auctions with potential savings and use.
Promotion Strategy
The management of BIDBASS believes very strongly in finding the most cost-effective ways to
market and promote the offerings. We will base our promotion strategy on a combination of
online marketing strategies. We will utilize internet presence in conjunction with search engine
methodology and great word-of-mouth advertising. We will emphasize mobile e-mail and cell
phone transmissions of important messages to users. The company also places great emphasis
on the training of key personnel and employees such that they represent a continual promotion
opportunity for the company. Our single greatest promotional tool will be the good will and
positive word-of-mouth advertising we generate among our individual users and our
businesses. Our promotion strategy is based in serving our target users. If we always make sure
that our target users are fulfilled and satisfied with their purchase, then every marketing or
sales program we utilize will resonate with our ethics of service.
Marketing Programs

Pre-launch promotions. We plan to start building up anticipation for the company
penny auction launch. Attempt to create a buzz about BIDBASS and will be done via
write-ups.
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 Special promotional offers. We will offer certain BIDBASS bid package’s at a discounted
price or for free or provide free or “lite” versions of our BIDBASS auctions, which
will garner interest in the full version and increase the likelihood of purchasing the full
bid package.
 Integrating with social network. Some of the sites we envision integrating with are
Facebook, Twitter, YouTube, Flickr, etc. For users who happen to make a special wining
purchase or some other notable event from the use of the auctions, we will make it
possible for users to post it to Facebook, Twitter, etc.
 Mobile app advertisements. Advertisements within other established mobile
application (banner ads, redirects, etc).
 Publishing. Online white papers, blogging, podcasting, press releases / social media
releases, YouTube commercials with customer testimonials, product-review site
submissions, such as CRAVE, CNET, instructional video.
 Digital Marketing. Pay-per-click text ads, search engine optimization (SEO), sponsored
tweets, banner ads, mobile app ads, sponsored tweets.
 Public relations/word of mouth
Outline of Expectations for the Marketing Strategy
I. Branding:
a. Creating taglines and slogans
b. Developing a branded logo (BIDBASS)
c. Establishing ourselves as a company that offers a solution that is fun, intuitive,
and easy to use.
II. Website copy:
a. Creating headlines with a “hook”
b. Creating the necessary copy that does the following:
i. Personalizes the message
ii. Explains that BIDBASS offers an auction solution
iii. Provides clear and easy to use auction that can be trusted to action
through benefits of the site
c. Creating the actual marketing message that will be compelling enough for the
user to purchase the bid package and move to the auctions – a movement needs
to be created.
III. Blogging section for BIDBASS.
a. Creating a guideline of rules for blogging
b. Providing instruction on promoting posts
IV. SEO campaign:
a. Keyword development, to include URLs
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b. Optimizing gadget
c. Broken links
d. Content clusters
e. Link building
V. E-mail marketing:
a. Creation of a specific e-mail database that would be applicable to the target
market – Not a generic database
b. Creation of content and layout of e-mail
VI. Social media marketing:
a. Creation of campaigns for the following:
i. Facebook
ii. MySpace
iii. Twitter
iv. LinkedIn
v. YouTube
b. Bookmarking
c. Discuss creating connections relevant to BIDBASS with all social networking sites
VII. Publicity:
a. Create a media list that would be applicable and the effectiveness tangibly
measured
b. Creation and submission of press releases
c. Creation of list of news and tech outlets
d. Create answers for possible negative receptions
e. Publish white papers that discuss our company and our penny auction site.
5.4
Sales Strategy
BIDBASS has one channel of sales: online. We will grow our sales force to meet our sales and
revenue goals. We will consider our website, and other participating web stores to be a critical
direct sales channel for our Company. Finally, we will also view our sales strategy as being
partially fulfilled through the implementation of our marketing plan, which includes print ads
and internet advertising. We will always consider [1] our key personnel and employees, as well
as [2] our existing clientele, to be the most important assets of our sales strategy.



From our company website: www. BIDBASS .com
Penny Auction Web Portals
Windows Marketplace
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 Blackberry App World
 Palm App Catalog
 Android Market
 Handango
 Handmark
Sales Forecast
BIDBASS has developed a projected sales forecast for the next three years of operations.
BIDBASS knows that in order to make its business plan succeed, everything has to flow in a
logical manner from management visions, to personnel training, to customer fulfillment. At
BIDBASS, we are committed to continue making sound monetary decisions and reasonable
market assumptions about the way we do business.
Revenue Streams
Auction sales
Retail Sales
Ad revenue Total revenue
Revenue Forecast -Annual
Year 1
Year 2
$2,527,634
4,192,200
$252,763
419,220
$21,000
58,000
$2,801,398
4,669,420
Year 3
5,076,000
507,600
60,000
5,643,600
Sales Programs
BIDBASS has sales programs that ensure that its revenue forecasts are realized completely and
on schedule. The Company has set deadlines with targeted amounts as well as budget
restrictions for a highly profitable sales program. With its comprehensive marketing program
and competitive positioning, BIDBASS is confident to forecast, in concrete terms, the realization
of its sales milestones.
5.5
Strategic Alliances
BIDBASS is constantly working to build a network of key individuals and companies that work as
alliances to accomplish its major strategies. We are also committed to networking with any and
all individuals that may have a favorable impact on our business. A great strength of this
company is its vast understanding of the penny auction potential for the consuming public.
BIDBASS hopes to form strategic alliances with the following web sites:
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PennyAuctionWatch.com
Pennyauctionguide.com
Myauctionwebsite.com
5.6
Milestones
For the first three months of Year One, BIDBASS will strive to pass the following milestones:
Timeline Business Start-up:
 Legal procedures – Patents - filing papers of incorporation Month 1
 Getting all necessary licenses and permits
Month 1
 Penny Auction app & website development: finalize branding
Month 2 - Month 3
 Establishing key people and points of contact
Month 1 - Month 2
 Purchase of materials: office hardware, software
Month 1 - Month 2
 Start date for marketing activities
Month 1
 Opening date for business
Fall 2011
Task 1: Legal procedures: to establish BIDBASS (An On-line Penny Auction Company) as a
California business
 Register website domain name; find affordable, reliable web host. (Done)
 Open bank accounts and credit/debit Merchant, PayPal, and mobile payment systems.
Deadline: January 28, 2011
Task 2: Work on Marketing Plan
 Decide initial marketing channels and strategy; emphasize thrift.
Deadline: Month 1-2, 2011
Task 3: Licenses and Permits
 Further business permits or licenses may not be required, but due diligence must be
done.
Deadline: Month 1-2, 2011
Task 4: Penny Auction App & Website Development
 Establish workflow turnaround time for placing and receiving inquiries and orders from
users, ensuring all linkages are fluid.
 Test and finalize methods of user interaction.
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 Test and finalize implementation of branding with website.
Deadline: Month 2-3, 2011
Task 5: Marketing Activities (key actions planned for the 3 months preceding launch)
Item
Develop BIDBASS initial marketing mix
Develop BIDBASS websites (See
Section 8.0)
BIDBASS US launch
Month 1
Month 2
Month 3
BIDBASS is very pleased with the accomplishment of this business plan as the achievement of a
significant company milestone. The next goal is to plan a meticulous launch of the business.
After that we will begin working to achieve our sales and financial goals.
Essentially our goals are:
6 months (February to December 2011):
High level:
 Close initial angel funding
 Complete Penny auction and Web development
 Achieve product wholesale link /market fit.
 Beta- test roll out.
One year:
Achieve initial revenue numbers
Three years:
Achieve “take-off,” IPO
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6.0 Web Plan Summary
The Company has already stated the web site development and is poised to be hosted with the
proper bandwidth server: This demonstrates the conviction of the founder in this pursuit.
www. BIDBASS.com
The scope of this business is to develop an exciting, comprehensive web site, where interested
consumers can discover information about our retail and service product offerings. The
functionalities are registering and purchasing a bid package and bidding on product and service
auctions available on the web site. Visitors will be able to post comments to blogs and various
social media sites (i.e. Facebook, Twitter), read about the BIDBASS brand, and receive special
no phone promotional offers, tee-shirts, etc.
Website Features
Cool new exciting web presence with easy navigation
Trendy – setting trends for BIDBASS products and services.
6.1
Web Marketing Strategy
BIDBASS recognizes that there are at least four aspects of our company’s success relevant to its
involvement in the internet: [1] a sophisticated website that allows accessibility and free flow of
information to any constituent within our alliance of consumers, management, and investors,
[2] a program of search engine optimization to ensure that penetration of the marketplace is
vast and consistent, [3] the facilitation of our website for internal banking, training, and
organizational procedures, and [4] utilizing the website to facilitate transactions.
6.2
Search Engine Optimization
Goals

Strategize use of the right words to ensure website is created correctly so we can
coordinate all marketing with tactical use of keywords.

Be open to creatively envisioning new keywords for the ongoing SEO strategy, which is
to allow target customers to find us easily.
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 We have already employed professionals in order to maximize the Company’s
advantage through SEO ” best practices”
6.3
Affiliate Partner
We need to always pay attention to Affiliate Partners. Using Cost Per Acquisition marketing, a
company may place an ad on our site, and when someone clicks on it we can get paid. When
the click results in a sale, we can get a commission.
Likewise, we will want to position ourselves as affiliates on other websites as well.
This is a phenomenon of new media marketing that should always be encouraged to grow. Why
not? We can never lose by growing our Affiliate Partner network. Also, there are more and
more sites that host nothing but these kinds of offers, along with special discounts.
Potential Affiliate Partners: (Others to be determined)
TopPennyAuctions.com
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7.0 Management Summary
Management is the core of any organization. It is not just personnel and individuals’ resumes
but vision, talent, and commitment that lead to success. BIDBASS is led by Mr. H. Michael Cao,
who is the pivotal key player providing all the talent necessary to complete every aspect of this
business plan.
7.1
Organizational Structure
BIDBASS knows how important the organizational structure is to the success of a company.
Each position within this company will have a detailed job description as well as a well-defined
relationship to the whole. At the head of the company will be Mr. Cao.
7.2
Governance
Management Team
Management Team Gaps
BIDBASS recognizes that in any growing company, management personnel often have to wear
more than one hat, so to speak. As a result a gap or gaps may exist until the company is
developed enough to have a specific person for every task required. BIDBASS currently has
everything covered and feels confident that each task is being handled competently by
management. As we hire more employees the company will always be sensitive to this issue
and prevent any weaknesses by planning a contingency program that overlaps job
responsibilities.
7.3
People
BIDBASS encourages its total work force to protect the success of its business plan. All aspects
of the business have been sufficiently analyzed to determine every position required to run a
fully functioning operation that can complete all of the strategies and programs to be
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undertaken. We emphasize a lean, low-overhead business model that out sources whenever
possible.
PERSONNEL / KEY PLAYERS
BIDBASS PENNY AUCTION
Category
Founder / CEO /Principal
Combined Totals
7.4
Total in
Category
1
3
Individual
Compensation
$180,000
Admin
Compensation
Total
$180,000
$100,000
Process
Customer service, product research, marketing, company management, and program
management are the key processes in our business. BIDBASS is committed to executing these
processes superbly and efficiently, and we will look for opportunities to improve our
performance along these dimensions continually.
7.5
Technology
BIDBASS has positioned itself in such a way as to take full advantage of all the technology
available for its particular industry. Management has determined that state-of-the art software
and appropriate hardware will be implemented whenever necessary to ensure proper client
fulfillment, as well as business organization. In particular, the company will be utilizing
accounting procedures both off-line and online to monitor daily, weekly, monthly, quarterly,
and annual results of all aspects of day-to-day operations.
More broadly, the Company is completely premised on an appreciation of modern technology
and the need for high-tech communications aficionados to be able to organize their daily lives
with interactive communication methods.
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8.0 Risk Factors
8.1
Distinguishing Products and Services
BIDBASS generates the bulk of its revenues from hosting penny auctions. The Company must
be able to reach our customers in an economical fashion and convince potential clients of our
value proposition to generate these revenues.
Mitigation Strategy:
Execute our marketing plans outlined in this plan.
8.2
Attracting and Retaining Qualified Staff
BIDBASS must be able to attract qualified professionals. This is critical to the growth and
reputation of the business. It will be imperative that we develop loyalty among our network of
professionals, alliance partners, and employees.
Mitigation Strategy:
Provide interesting work. Provide excellent working conditions. Provide competitive pay.
Implement an industry competitive benefit plan. Compensate employees fairly and timely.
Implement employee recognition programs.
8.3
Retaining Loyal Customers
BIDBASS must be able keep the customers it attracts.
Mitigation Strategy:
Exceed customer expectations to assure retention. Continue to introduce new products.
Mitigate customer issues fairly and expeditiously
8.4
No Barriers to Entry
Competitors could enter the market.
Mitigation Strategy:
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Execute business plan. Produce a superior on-line penny auction where there are ample
customers to service the penny auction products. Provide high quality and the best service
with brand recognition of being known as a penny auction site of honesty and integrity. Offer
superior retail products making it difficult to compete without a high entry cost for inventory.
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9.0 Financial Plan
BIDBASS is utilizing owner’s equity to launch the Company, and now seeks $5,000,000 in equity
investment to set the stage for a meticulously planned launch. We have developed this
financial plan to cover our next three years in business and to spotlight our business sales and
revenue during these next three years. The purpose of our financial plan is to survey solid
growth through our exciting business model punctuated by a healthy relation between
continually increasing revenues, and diligent monitoring of an optimum cost structure.
9.1
Key Assumptions
Combined state and federal taxes – 35%
Rate of inflation assumed over yearly expenses – 3%
Payroll tax – 13% of payroll as a high estimate of all possible payroll taxes
Bank fees – 2.8% of gross sales for merchant accounts
Cost of Goods – Held at approximately 40%, this could be much higher
One of the reasons that the leadership of BIDBASS has chosen this industry is that we are
business experts who will minimize as many variables as possible in Our Company’s Business
Equation. We base our financial plan on one fundamental assumption.
Increasing numbers of consumers are open to networking opportunities, as well as new ways to
access interactive web sites that offer retail products conveniently online. Our website will
empower the consumer community in this day and age, which is challenging, when it comes
time to locate the best resource for serious penny auction consumers. This entire Business Plan
is a presentation of the methods and strategies whereby our Company will capitalize on the
millions of users in the English, Spanish, French, Italian, German and Japanese-speaking market
that desire the services we market, and provide a tremendous service to these users. This is our
target market and they will be happy to find out about our Company.
9.2
Key Financial Indicators
BIDBASS recognizes that the most important financial indicators are cash and bottom line.
BIDBASS will constantly monitor the flow of revenue to the company as well as the expense
requirements that deplete the company of its cash. BIDBASS will always try to improve the
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ratio of revenue and expenses to generate a healthier bottom line in addition to a healthier
cash base.
9.3
Explanation of Break-even Analysis
The break-even analysis for BIDBASS calculates at what point the company becomes profitable,
and also at what point the company will be operating at a loss. The analysis takes into
consideration forecasted revenues as well as regular running fixed costs and average per unit
sales price also known as per unit revenue. We surpass break-even in the first Year 1 as we
achieve “take-off” and achieve the next level of business – full establishment and expansion.
Break-Even Analysis
Category
Sales
Net Projected Monthly Sales
Monthly Cost of Sales
Monthly Fixed Costs
Break-Even Monthly Sales
9.4
st
nd
1 Year
2
Year
$233,450
$30,630
$73,625
$84,744
$389,118
$36,757
$94,995
$104,905
rd
3 Year
$470,300
$44,454
$105,701
$116,734
Explanation of Projected Balance Sheet
The projected Balance Sheet for BIDBASS highlights total assets, total liabilities, and owners’
equity. The salient feature of our projected Balance Sheet is that it demonstrates the
relationship between what we will own in assets and the way this is balanced by equity
investment funds and owners’ existing equity. The owner’s equity has covered - all start-up
costs so far - and we now seek equity investment of $5,000,000 (see Balance Sheet).
9.5
Explanation of Projected Profit & Loss
The projected Profit & Loss Statement for BIDBASS highlights the relation between our sales
forecast and our operating expenses. These figures are based on our experience in the industry
and our projected sales for the next three years. Please note: we make every attempt to
present conservative projections with incremental growth (see Profit & Loss Statement).
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9.6
Explanation of Projected Cash Flow
The projected Cash Flow Statement for BIDBASS represents what we believe our business will
take in and what it will spend. Cash flow will be crucial to the survival of our business. We are
confident that we will have ample cash on hand to ensure that investors can be paid on time.
We offer this statement of our business’s positive cash flow as perhaps the single most
powerful gauge of our expected financial performance (see Cash Flow Statement).
9.7
Business Ratios
At the very least, we will always subscribe three ratios as quantitative measures of our financial
health. These numbers derive from our three-year projections for Current Assets, Total Assets,
Current Liabilities, Net Profit, and Gross Sales. Of course we will be utilizing more and different
statistics, but these ratios will always be at the core of our financial reports: [1] the Current
Ratio, [2] the Net Profit Margin Ratio, and [3] the Return on Investment Ratio.
st
nd
rd
Business Ratios
1 Year
2 Year
3 Year
Current Assets
Current Liabilities
$5,464,664
$4,040
$7,263,029
$4,040
$9,551,078
$4,040
Current Ratio
Net Surplus
Gross Sales
Net Profit Margin Ratio
Net Profit
Total Assets
9.8
∞
$1,342,573
$2,801,398
48%
$1,342,573
$5,876,716
∞
$2,609,792
$4,669,420
56%
$2,609,792
$7,573,081
∞
$3,363,152
$5,643,600
60%
$3,363,152
$9,759,130
Long-term Plan and Financial Highlights
BIDBASS believes that its long-term prospects for becoming a successful business are excellent.
We believe that this industry, and the strong foundation of experience that management brings
to the company, lends itself to nothing but positive results over the long-term. With a marketsensitive management team and excellent systems in place to monitor competitive shifts or
changes, BIDBASS is ideally positioned [1] to implement its business plan through the next
three years, and execute successful payoff strategies for equity investors, [2] to become a
respected and recognized mobile app provider for more tech-savvy consumers and businesses
within three years, and [3] to continue growing on through the next decade.
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10.0 Notes
References are rolled into the body of the business plan as part of the narrative.
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Financial Appendices
Pro Forma Balance Sheet
3-Year Balance Sheet
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Pro Forma Profit & Loss Statement
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Pro Forma Cash Flow Statement
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12-month Profit & Loss Statement
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12-month Cash Flow Statement
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12-month Revenue Projections
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Penny Auction Sites Analysis:
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