Beruflich Dokumente
Kultur Dokumente
To:
StarVenture,Inc.CompanyCEOSavannahBowers,VicePresidentof
ResearchSkylarHsu,CommunityRelationsDirectorTyraWhynat
From:
GreenRideTeamBobbySchreiber,CaseyHawkins,DennyRoth,
SamMunk,VinceCurl
Date:
November21,2014
Subject:
GreenRideShowsViabilityandValuewithBusinessModel
_____________________________________________________________________
GreenRideWillBeSuccessfulDuetoValueOfferedtoPublic
TheGreenRideelectricbuscompanywillthriveduetothevalueprovidedtothemarket
throughconvenience,customization,andenvironmentalresponsibility.Theobjectiveof
GreenRidewillbetotransportcustomers/attendantsofeventsandbusinessesfromone
location(suchasparkinglots)toanother(venuesorbusinesses).Potentialcustomers
alreadyexist,whichisshownbycompetitionandothersimilarservicesthatare
prevailing,alongwithreviewsthathavebeenconducted.This,alongwithsurveysthat
havepromisingresults,showsGreenRidehaspotentialtobesuccessfulinthelocal
areaofBaltimore.Problemsconcerningparkingandenvironmentalresponsibilitywillbe
addressedbyofferingtransportationfromparkinglotsfartherawayfromeventsand
havinggreenvehicles.TherearemanyadvantagesGreenRidehasovercompetitors,
withoneexamplebeingtaxincentivesforgreenvehicles.Thisisnottheonlyfinancial
advantage,asGreenRidebuseshaveloweroperatingcosts.Furthermore,GreenRide
offersproductdifferentiationthatisproventobebeneficialthroughpersonalinterviews
withpotentialcustomers.NotonlywillGreenRidebeavaluablecompanytothemarket,
butitwillalsobeviable,asisproventhroughitsbusinessmodel.
TheBusinessModelofGreenRideIsRealisticandShowsPotential
GreenRidehasaworkingbusinessmodelthatprovesitwillbeasuccessfulcompany
throughfeasiblekeyactivities,selectivemarketingchannels,strongcustomer
relationships,aresponsiblecoststructure,andaprofitablerevenuesystem.
GreenRide
mustestablishkeyactivitiesthatprovidestructureandreliabilitytotheservices.Inorder
todoso,GreenRideskeyactivitieswillbeacquiringbuses,settingemployee
requirements,deliveringthebuses,maintenance,permitting,andobtaininginsurance.
OnceGreenRidegetsthebusinessoperational,itmustmakeitsservicesknowntothe
public.GreenRidewilluseanumberofmarketingchannelstoincreaseandexpandits
customerbasespecificallysmallbusinessesandevents.Thethreechannelsthatwill
beutilizedaretradeshows,socialmedia,andeventplanners.Thesechannelswillallow
GreenRidetoeffectivelytargetthekeymarketsegments.
Oncethepotentialcustomers
arereached,GreenRidewillestablishcustomerrelationshipsbycreatingacustomized
service.Customizingthebusanddrivertospecificeventthemesencouragesbrand
loyaltyandareputablestatus.Wellinformedcustomers,throughtheuseofmultiple
formsofcommunication,willmaintainpositiverelationshipsandloyalty.Personalizing
communicationswiththeuseofsalesrepresentativeswillensurethatGreenRides
clientswillreceiveaservicethatisbestfortheirpersonalneedsandmeetstheir
expectations.Whilecateringtocustomerneeds,costswillbeincurredtooperate.There
areavarietyofcostsneededatGreenRidetoallowthebusinesstobeginandcontinue.
ByimportingtheGreenRidebusesfromChina,therewillbesavingsof$16,790onstart
upcosts.Increasingstartupcostsinotherareaswillactuallyreducefuturecosts.
Purchasingavinylcutterwillincreasestartupcostsbutsave$60perjob,after
performing23jobs.Also,investinginatruckandatrailerwillreducevariablecostsafter
170jobs.Anotherwaycostswillbereducedisbyhavingtheowner(Mr.Curl)bean
activememberofthebusiness.AfterreducingmanycostsofGreenRide,somecould
notbereducedmore,suchasinsurance,utilities,officeexpenses,andmiscellaneous
fees.Tocoverandpayoffallofthesecosts,arevenuestructuremustbeimplemented.
ThepricingofservicesatGreenRidewillcreateenoughrevenuestogenerateaprofit
comparablewithcompetitors,showingtheviabilityofthecompany.Thepriceof$80an
hourwillcoverthecostswhilestillprovidingalargeprofitmargin.Thislargeprofit
margingivesGreenRidetheabilitytobreakeveneveryyearafterabout667service
hours.Notonlydothelowcostsprovidelargeprofits,butalsokeepsthepricelower
thancompetitors.Notonlyisthepriceofhighvalue,buttheyarealsorealistic,asis
shownbyasimilargreentransportationcompany.Finally,therevenuewillbecollected
inallformsofpayment(cash,check,credit)forthecustomersconvenience.
GreenRidesbusinessplanprovidessufficientinformationshowingthatitwillbea
successfulcompany.Successdoesnotonlyincludeaviablestructure,butvalueto
society.
ValueProposition
GreenRideProvidesValueWorthyofInvestment
TheGreenRideelectricbuscompanyisaninvestmentworthlookinginto,asitoffers
valueandpotentialinthemarketbyprovidingconvenient,customized,andgreen
transportation.Thisvaluewillbeproven,whetheritbebytheconvenience,
personalization,orenvironmentalresponsibilityofthecompany.Potentialcustomers
alreadyexist,whichisshownbycompetitionandothersimilarservicesthatalready
exist(suchasbusesorotherelectronictransits),alongwithreviewsthathavebeen
conducted.This,alongwithsurveysthathavepromisingresults,showsGreenRide's
potentialtobesuccessfulinthelocalarea.GreenRideaddressesissuessuchas
parkingandenvironmentalresponsibilitybyofferingtransportationfromparkinglots
fartherawayfromeventsandhavinggreenvehicles.Havingthesevehiclesallowtax
incentivestobeofferedtoGreenRide.Thisisnottheonlyfinancialadvantage,as
GreenRidebuseshaveloweroperatingcosts.Furthermore,GreenRideoffersproduct
differentiationthatisproventobebeneficialthroughpersonalinterviewswithpotential
customers.
MultipleMarketSegmentsTargetedbyGreenRide
GreenRidewillservicemultiplemarketsegmentssuchasbusinessesandpersonal
venuesthatwantsafe,reliable,andgreentransportationtoeventswhilepreventing
businesscustomersandvenueattendantsfromwalkinglongdistances.Thebusiness
marketsegmentcouldpotentiallyhireGreenRidetocreatemorerevenueandincrease
customersatisfaction.Thissegmentincludesbars,conventions,sportingevents,fairs,
andmore.Theothermarketsegmenttoapproachwillbepersonalvenuessuchas
weddings,religiousevents,largeparties,andotherspecialoccasions.Thesehavebeen
targetedbyothertransitcompanieslikeBusBank,showingtheviabilityofthemarket
(WeddingShuttle,n.d.).Theviabilityofthebusinesstothemarketisoptimistically
showninasurveyGreenRideconducted.
SurveyTakenShowsStrongInterestInGreenTransportation
ConsumersareinterestedinGreentransportationservices.Inasurveytakenby129
people,amajorityareinterestedinagreenformoftransportationthatsolvesparking
issues.Accordingtofigure1,Onascaleof1to5(1beingleast,5beingmost),
respondentsshowedtheirconcernfortheenvironmentwiththemediananswerbeing4,
leavingustobelievethatmanypeoplethinktheenvironmenttobeaconcerningissue.
Additionally,morethan75%ofthosesurveyedpreferanelectricvehicleforlocal
transportationversusagasolinepoweredvehicle.Furthermore,figure2showswhen
askedifparkingwasanissue,82.68%ofpeopleanswered3orabove(onascaleof
15).Thisissignificantbecauseitshowsthatamajorityofpeoplefindparkingtobean
issuewhenattendingevents.Tofurthershowthedemandfortheservice,88.37%of
thosesurveyedsaidtheywouldparkfurtherawayfromanevent,ifprovidedfree
transportation.Thisprovesthatparkingisanissueamongstthepeoplesurveyed.
Figure1EnvironmentalConcern
(GreenRideSurvey,2014)
Figure2ParkingConcern
(GreenRideSurvey,2014)
ParkingIssueSolvedbyGreenRide
Inbothruralandurbanareas(especiallydensemetropolitancities),limitedparkingin
urbansettingsisanissuethatisaddressedbyGreenRide.Theparkingissueoccurs
whenthereisnotenoughparkingcloseenoughtoyourevent/business.TheMAPC
(MetropolitanAreaPlanningCouncil)says,[parkingshortages]
canmeanthat
shoppersandvisitorscomingtopatronizedowntownbusinesseshavetroublefinding
parking,discouragingthemfromcomingback,meaningalossofcustomers/revenue
(2010).Thisleadstotheproblemofpeoplearewillingtowalkoncetheydofindparking.
PeoplearenotWillingtoWalkFarDistancesFromParkingLots
Peoplearenotwillingtoparkfarawayfromeventsbecauseoftheincreasedwalking
time.AccordingtoasurveyconductedbyGreenRidein2014,90%ofpeoplewhopark
foreventssaidthattheywerenotwillingtowalkmorethan15minutestothe
destination,while57%ofthemwouldnotwalkmorethan5minutes.Alongwithwalking
distances,thepublicfindsvehicleemissionstobeanissue.
GreenRideisEnvironmentallyResponsible
Withtheconcernfortheenvironmentontherise,GreenRideprovidesazeroemission
alternativeformoftransportation.Mostformsoftransportationrunoffoffossilfuels,
whichisaleadingcauseofairpollution.Whenpeoplehavetroublefindingclose
parking,peoplewillcirclearound...congest[ed]roadsandpollutingtheairneedlessly
(MAPC,2010).Thisisamajorissue,becausecarsandbussesaccountforonefifthof
allemissionsinthecountry(and333milliontonsofcarbondioxide),whichcontributes
toglobalwarming(CarsandGlobalWarming,n.d.).Atvenueswherepresentationis
important(suchasawedding),onewouldnotwantemissionsfromvehiclescreating
unwantedodorsandsmog.Theseemissionsarenotjustanaestheticissue,butitalso
increaseschancesforhealthissuessuchasrespiratoryandcardiovascularproblems
(likeasthma).Evenworsethanthis,30,000peoplearekilledannuallybycaremissions
inAmerica(JacobS.,2010).WithGreenRide'szeroemissionsvehicle,allofthiscanbe
avoidedbykeepinggaspoweredautomobilesawayfromeventsandvenues.This
environmentalresponsibilitywillnotbehardtopromote,asitisalreadypopular.
GoingGreenisaPreExistingTrend
Americansareincreasingtheirconcernwiththeenvironmentandarewillingtopay
moreoutoftheirownpocketstousegreenerproducts.Ina2010surveyofconsumers
fromMintel,35%ofconsumerssurveyedwerewillingtopaymoreforenvironmentally
friendlyproducts(Demandfor,2010).Thistrendwillcontinuetogrow,asaTime
Magazinepolldetermined,thatalmost50%ofAmericansvaluedenvironmental
protectionovereconomicgrowth[and]morethan60%hadpurchasedorganicproduce
withinthepreviousyear(Sena,2014).Goinggreenisalsofinanciallybeneficial
becausethegovernmentprovidesincentives.
TaxIncentivesOnlyOfferedtoElectricVehicles
GreenRideisabletoreceivethreestatetaxincentivesduetotheuseofelectricityas
thesourceofenergy.Sinceusingfossilfuelsaredeemedtobeharmfultothe
environment,Marylandofferstaxcreditsthatareshownintable1.First,thePlugin
ElectricVehiclecreditrequiresabusinesstohaveanelectricvehiclethatdoesnt
exceed55mphandiscalculateduponthebatterycapacity.(MarylandLawsand
IncentivesforElectricity,2014).Next,theAlternateFuelVehicleisofferedtocompanies
thatuseanelectricvehiclethatisover8,500lbs.andhasacapof$12,000anda
minimumof50%ofthecostofthevehicle(MarylandLawsandIncentivesforElectricity,
2014).Lastly,theElectricVehicleSupplyEquipmenttaxcreditisofferedtocompanies
thataddelectricvehiclestotheirbusinessesandabusinessiscappedata$5,000
credit(MarylandLawsandIncentivesforElectricity,2014).SinceGreenRideisgoingto
onlyhaveelectricvehicles,thesetaxincentiveswillgiveGreenRideanunfairadvantage
overcompaniesthatdontofferelectrictransportation(MarylandLaws,2014).Other
financialadvantagesincludethelowercostofoperation.
ELECTRICSTATETAXINCENTIVES
PlugInElectricVehicle(PEVCREDIT)
Upto3,000Credit
AlternateFuelVehicle(AFV)
50%ofVehiclePurchase
upto12,000
ElectricVehicleSupplyEquipment
5,000
Table1StateTaxIncentives
(MarylandLawsandIncentivesforElectricity,2014)
ExpensesAreLessComparedtoGasBuses
SinceGreenRidewillofferelectricbuses,itwillhavedrasticdifferenceinexpenses
comparedtogas.Figure3showsthatelectricbusesaresubstantiallylowerthangas
permile.First,thepriceforenergypermileforgasis5.7timesgreaterthanelectricper
mile(WhatyouNeed,2011).Secondly,thetiresare33%cheaperpermileforelectric
busesthangas(WhatYouNeed,2011Suzhou,N.D).Finally,gasbusesrequireoilto
bechangedwhereelectricrequiresnooiltobechanged(WhatYouNeed,2011
Suzhou,n.d).Thisexpenseisjustaddedcostpermilethattheelectricdoesnthaveto
worryabout.Itisevidentthatelectricbuseshavegreatervaluethangaswhenitis
comparedtotheexpenses.Withoutrevenue,expensescannotbepaid,whichiswhy
havinganestablishedmarketissovital.
Figure3Gasvs.ElectricExpensePerMile
(WhatYouNeed,2011)(Suzhou,n.d.)
EstablishedMarketCreatesPotentialCustomers
ThecityofBaltimoreinMarylandisalreadyanestablishedmarketforGreenRide,thus
providingalargecustomerbase.AccordingtoTripadvisor,thereareover100events
andbusinessesofferedinBaltimore(Tripadvisor,2014).Theseevents/businessesare
potentialcustomersthatGreenRidesservicecouldbeofferedto.Havingapopulous
marketinthecityofBaltimorewillallowforamoreconcentratedmarketingcampaign
thatwillbemoreaffective.AfocusedmarketingstrategyinthecitywillsaveGreenRide
moneyanddevelopabetterservicebasedonconsumerneeds.Withsomany
possibilitiesforcustomers,similarservicesaresuretoalreadyexist.
SimilarServicesAlreadyThriving
ServicesthataresimilartoGreenRidehavealreadybeenaround,showingthatthe
businessmodelisvaluableandviable.Companiesusingsimilartypesofelectricvehicle
arebeingutilizedacrossthestate.TheseservicesareofferedtopeopleontheOcean
Cityboardwalk,amusementparkparkinglots,andsportsgamesinthecity.Auser
reviewpostedonTripadvisorabouttheOceanCityelectricbussaid,Ithoughtthetram
waswonderful.Itsavedmefromhavingtolistentomylittleonecomplain(2014).
Thisshowsthatthedemandfortheserviceisthere,butisnotbeingofferedtothelarger
market.SinceGreenRidehasproductdifferentiation,thiscausesittobefavorableover
existingservices.Liketheothersimilarservicesthatexist,certainkeyactivitiesare
pertinenttotheexistenceofGreenRide.
KeyActivities
GreenRidesFunctioningActivitiesEnsuresViability
Inordertobeaviablebusiness,GreenRidemusthaveestablishedkeyactivitiesthat
providestructureandreliabilitytotheservices.Inordertodoso,GreenRideskey
activitieswillbebusacquisition,setemployeerequirements,busdeliveryservice,
maintenance,permitting,andinsurance.Investmentsinequipment,maintenanceand
humanresourcearenecessarytoensureaviablebusinessandthatcustomersreceive
thesamequalityofserviceeverytimetheyuseGreenRide.Thisstartswiththebusses
wechoosetouse.
GreenRideImportsforBusAcquisition
GreenRideneedstoacquirequality,reasonablypriced,openair14passengerelectric
buses.ThesebusseswillbeacquiredfromanoffshorecompanyinSuzhou,China
(SuzhouEagle,2014).GreenRidechoseSuzhouEagleastheircompanyproducesthe
exactvehiclewearelookingfor,hasastateoftheartproductionfacility,carriesfiveof
Chinasmajorproductioncertificates,hasbeeninbusinessfor15years,andprovidesa
oneyearwarrantywithtechnicalsupport.ThecompanyalsoprovidesFOBshippingto
ThePortofBaltimorewhereGreenRidesinhousedeliverysystemwillpickthemup.
ThemainsellingpointforGreenRidetogowiththiscompanyistheirwiderangeof
electricvehicles.AsGreenRidegrows,therewillbeaneedtowidenitsproductline,
SuzhouEagleisbestequippedtomeetthosedemandsastheyproduceover50other
electricvehiclemodels.However,bussesalonewillnotsupportGreenRide.The
businessmusthavequalityemployeestooperatethemandprovidetheservicetoour
customers.
InHouseEmployeesareVitalforProductivity
GreenRidemusthaveemployeesskilledinsafedrivingforbothdeliveryvehicleand
bus.GreenRideemployeeswillberequiredbylawtohaveavaliddriverslicenseanda
DepartmentofTransportation(DOT)physical(MVA,2014).ADOTphysicalisrequired
foroperatorsofvehiclesthathaveaGrossVehicleWeightof10,000LBSorgreater
(DOT,2014).GreenRidewillalsorequirethatalldriversofthebusandtransportation
vehicletakeadefensivedriverscourseandgothroughGreenRidesinhousetraining
coursewhichfamiliarizesalldriverswiththeirvehiclesandtheproperuseofallsafety
equipment(GreenRide,2014).ItisstatedbytheNationalSafetyCouncilthatmotor
vehiclecollisionsaretheleadingcauseofdeathandinjuryintheworkplaceandthe
costofasingleaccidentcouldeasilyexceed$1.4million.Adriversafetyprogramcan
reducetheriskandkeeppeoplesaferontheroad(DefensiveDriverTrainingSaves
Lives,2014).AsGreenRideistransportingpeople,itisthecompany'sbeliefthatsafety
shouldbethetoppriority.Keepingcustomerssafeandhappyisalsoanotherkey
elementinprovidingqualitycustomerservice.
GreenRideProvidesQualityCustomerService
GreenRideisacustomerbasedbusinessandthereforemustprovideexceptional
customerservice.Employeeshiredmustbeabletoprovidethatexceptionalcustomer
service.Asarequirement,allemployeesofGreenRidewillcompleteacustomerservice
trainingwebinaronceeveryquarterwhichwillbedonethroughTheCarnegieInstitute.
InasurveyconductedbyKissMetrics,ablogsiteaboutanalytics,marketingandtesting,
consumerswereaskedaboutimportantfactorsindecidingwhetherornottodo
businesswithacertaincompany.98%ofrespondentssaidthatcustomerexperience
wasamongthetop3factorsTheirstudygoesontofurtherconcludethattowinback
customersafterabadcustomerexperienceissixtimeshigherthantheoriginal
acquisitionofthatcustomerinthefirstplace(HappyCampers,2011).Thepreliminary
andcontinualcustomerservicetrainingthatGreenRidewillberequiringemployeesto
participatein,isvitaltoestablishingandmaintainingcustomersatisfaction.Thereturn
businessofGreenRidescustomersisessentialforitsviabilityasabusiness.Thegoalis
tohaveexemplarycustomerservicebeforethebusesareevendelivered.
GreenRideDeliveryWillSaveTimeandMoney
Inordertoprovideservices,GreenRidewillbedeliveredthroughaninhousedelivery
system.Thecompanywillownitsowntruckandtrailertodeliverbussestothe
customersdesiredlocation.ThisgivesGreenRidetheflexibilitytomakeitsown
schedulesandadjustmentsasneededshouldthedeliveryparameterschange.Costs
associatedwithlastminutechangesoridletimecanbecostlywhendealingwithan
outsidetransportationcontractor.Accordingtoaregionaltowingcompany,Chips
Towing,theminimumchargeforthetransportationofonebustoandfromalocation
within10mileswouldbe250.00dollars.ByGreenRidehavingthisserviceinhouse,the
deliveryfeeisincludedinthehourlychargethatcustomerspayandnotinadditionto.
Havinganinhousedeliverysystemhelpslowertheoverallcoststothecustomer.
Furthermore,havingourowndeliverysystemallowsGreenRidetotransportthemback
totheshopformaintenanceshouldproblemseverarise.
MaintenanceonVehiclesWillEnsureSafety
GreenRidesmaintenancewillalsobedoneinhousebythehireddrivers.
Each
employeehiredtodrivethevehicleswillberequiredtohaveanacceptablelevelof
mechanicalcompetence.Thiswillenablethemtomaintainthevehiclestheydrive,and
fixtheminthefieldshouldanyproblemsarise.
Adailyoverallmaintenanceinspection
willberequiredofallvehiclesleavingtheshop.Asampleofthechecklist,labeledDaily
Inspection,canbefoundfollowingthesourcespage.AccordingtoArchInsurance
Group,preventativemaintenanceprovidesthebenefitsofreducingaccidents,reducing
downtime,reducingmaintenance,improvingdrivermorale,bettersalesandpublic
relations(FleetLossControlManagement,2014).Furthermore,inadditiontodaily
generalinspections,arigorousmonthlyinspectionwillberequired,whichgoes
throughouttheentirevehicletoSuzhouspecifications.Greenridesinhousesafety
precautionswillbeinplacetotoensureitsoverallsafetyforitsoccupants.Anotherway
thatGreenRidewillensurethesafetyofthecompanyanditsoccupantsisbyhavingthe
correctlevelofinsurancecoverage.
InsuringGreenRideProtectsTheCompanyanditsCustomers
Inordertoproperlyprotectcustomers,employees,andthecompany,GreenRidemust
acquirecommercialinsurance.GreenRidehaschosentogothroughNationwide
InsurancesCommercialdivision.ThreepolicieswillbenecessaryforGreenRide.The
firstwillprovidethecompanywithgeneralliabilitypolicy.Thesecondpolicywillcover
thetransportationvehiclewithanonhookendorsementtocoverbusseswhileintransit.
Finally,thethirdpolicywillprovidecoveragewhilethebussesaretransportingout
customers.GreenRidewillneedaLiverypolicywhichistoprotectthosebeing
transportedandthevehicletransportingthem.Thesethreepolicieswillensurethat
GreenRideanditscustomersarecoverageincaseofalossForExample,
The
NationalSafetyCouncilstatesthatthecostofasingleaccidentcouldeasilyexceed
$1.4million(DriverSafetyProgramsSavesLives,2014).Withoutpropercommercial
insurance,thisriskifincurredcouldbankruptGreenRideandleaveaninjuredcustomer
withdetrimentalmedicalbills.ItisessentialforGreenRidetohavetheadequatelevelof
insurancenecessaryforthebusinesstomaintainitsviabilityforyearstocome.In
additiontotheproperinsurancecoverage,GreenRidemustalsohavetheproper
permittingfromthelocaltrafficauthority.
SpecialPermittingforLowSpeedVehicles
GreenRidewillalsoneedtohavepermitstooperatetheelectricbusesonpublic
roadways.ThebusesarerequiredtoberegisteredwithMVAasaLowSpeedVehicle,
whichisaspecialpermit.AccordingtotheMVAwebsite,anyvehiclethatoperates
between20and25mphisrequiredtofileforaslowspeedvehiclepermit.(SpecialUse
VehicleRegistration,2014).ThiswillallowGreenRidesbussestolegallydriveonroads
30MPHandbelowwhichisidealforGreenRidesuniquelocalizedservices.However,
establishedkeyactivities,
structure,andreliability
cannotmakeacompanyviableonits
own.Theyareonlythekeyelementsinprovidingaservicethatmustbeproperly
marketed.
MarketingChannels
ChannelsAllowGreenRidetoReachSmallBusinessesandWeddings
GreenRidewilluseanumberofmarketingchannelstofurtherincreaseandexpandits
customerbase,specificallytosmallbusinessesandevents.Thethreechannelsthat
GreenRidewillbeusingaretradeshows,socialmediaandeventplanners.These
channelswillallowGreenRidetoeffectivelytargetkeymarketsegments.
TradeShowsTargetSmallandMediumSizedbusinesses
Tradeshowsareanimportantchannelforreachingsmallandmediumsized
businesses.Itisagreatchannelforbusinesstobusinessmarketingbecause,
accordingtoadage.com,
tradeshowsandeventsarethesecondmostcitedsourceof
newproductandnewvendorinformationafterpeersandcolleaguesamongsmall
tomediumsizedbusinessowners.(Stevens,2014).Thebusinessesthataretryingto
bereachedarebars,with37,000nightlifeoperatorsattendingtheNightclubandBars
ConventionandTradeShoweveryyear(Nightclub,2014).However,itisthemost
expensivechannel,costingaround$4,500pertradeshow(Tradeshow,n.d.).Whilethis
isagreatwaytoreachbusinesses,GreenRidewillstillwanttoreachpersonalevents
specificallyweddings.
EventPlannersAllowGreenRidetoTargetSpecialEvents
EventPlannerswillbeusefulwhenreachingouttopeopleplanningspecialevents,such
asweddings.Accordingtoasurveyconductedin2012,19%ofcouplesusedevent
plannerstoplantheirweddings(Alterman,2012).Also,accordingtosheknows.com,a
websitededicatedtothingssheknows,ashuttleserviceisrecommendedfor
transportingattendeesfromthereceptiontothehotel,thusalleviatingtheneedforthem
todrive(Hitchin,2010).ToallowcustomerstofurtherresearchGreenRidebeyondthe
EventPlanner,socialmediawillbepursuedasachannel.
SocialMediaisanInexpensiveWayToIncreaseBrandLoyalty
Socialmediaisthemostcosteffectivechannelbyincreasingbrandloyaltyamongst
customers.Accordingtoarecentstudy,53%ofpeoplewhofollowbrandsonsocial
mediaaremoreloyaltothosebrands(Baer,n.d.).Therefore,socialmediainteractions
betweenbusinessesandcustomersareessentialinmaintainingbrandloyalty,
especiallywhentargetingpotentialsmallbusinessowners.Marketingisjustthefirst
stepinestablishingcustomerrelationships.
CustomerRelationships
CustomizedServiceImprovesValueofCustomerRelationships
GreenRidewillestablishcustomerrelationshipsbycreatingacustomizedservice.
Customizingthebusanddrivertospecificeventthemesencouragesbrandloyaltyand
areputablestatus.Wellinformedcustomers,throughtheuseofmultipleformsof
communication,willmaintainpositiverelationshipsandloyalty.Personalizing
communicationswiththeuseofsalesrepresentativeswillensureGreenRidesclients
receiveaservicethatisbestfortheirpersonalneedsandexpectations.Theunique
mannerinwhichGreenRidecreatesandmaintainsitscustomerrelationshipsallows
GreenRidetoimprovethequalityoftransportationofferedtoitscustomers.
CustomizableServicesPromoteBrandLoyalty
CustomizingGreenRidesservicesforindividualeventscreatesacompetitive
advantagebyimprovingbrandloyaltyandopeningmarketopportunities.GreenRidewill
providevinylwrapsthataredesignedbytheclient,topersonalizetheappearanceofthe
busses.Drivercustomizationisalsoavailable,givingclientstheopportunitytoselectan
outfitforthedriversthatfitsthethemeoratmosphereoftheevent.Notonlywill
personalizationimproveriderexperience,butitwillalsoimprovecustomerloyalty.Erik
Eliason,cofounderandCEOofStorefront,recognizedthatproductcustomizationleads
customerstorepeatpurchasesandgivehigherratesofrecommendation(Eliason,
2012).Customizationcreatesstrongcustomerrelationshipsthatmustbemaintained
throughconstantcommunication.
ConstantCommunicationKeepsCustomersDevoted
Allowingcustomerstobeinconstantcommunicationwillbuildstrongrelationshipsand
increaseloyaltybydiversifyingtheoutletsofcommunicationwithcustomersbefore,
during,andafterpurchases.Afewimportantwaystobuildcustomerloyaltyarethrough
thankingcustomers,presentingupcomingevents,givingclientsmorethantheyexpect,
addingpersonaltouches,welcomingcriticism,andremindingclientsofcompetitor
differentiation(Clay,2013).GreenRideplanstoimplementallofthesestrategiesafter
theeventthroughtheuseofnewsletters,Facebook,Twitter,andpersonalizednotes.
Beforeandduringtheevent,acustomerwillhavetheopportunitytomeetwithpersonal
salesrepresentativestocreateapersonalandidealexperience.
CustomerSatisfactionIncreasedbyPersonalInteractions
Salesrepresentativesimprovetheoverallsaleexperiencestoclientsbycreatinga
personalexperience.Personalrelationshipsbetweensalesrepresentativesandclients
willallowsalesrepresentativestodeterminetheclientspersonalitytypesandtailorthe
experienceforthewantsandneedsoftheirpersonalities.AUKbasedcompanywas
abletoreducerepeatcomplaintcallsby40%whenitbeganreadingpersonalitytypes
(Dixon,2010).Everyclientisunique,sopersonalizingcommunicationsfordifferent
personalitieswillleadtoeasiertransactionsandhappiercustomers.Thiswillalsohelp
createtheserviceeachclientdesires.Ratherthanusinganautomatedservice,sales
representativeswillwalkclientsthroughtheplanningprocesstoensureclients
expectationsaremet.Changingfromanautomatedsystemtousingpersonalsales
representativesincreasescustomersatisfactionbyeliminatingconfusion.Usingthis
method,BellCanadareducedtheirresolutioncallsby10%(Dixion,2010).Sales
representativesareoneofmanycoststobeincurredatGreenRide.
CostStructure
ViabilityEnsuredWithRealisticCosts
ThereareavarietyofcostsneededatGreenRidetoallowthebusinesstobeginand
sustainoperations,andallofthesewillbefeasible.ByimportingtheGreenRidebuses
fromChina,therewillbesavingsof$16,790onstartupcosts.Byincreasingstartup
costs,futurecostswillbereduced.Purchasingavinylcutterwillsave$60perjob,after
performing23jobs.Also,investinginatruckandatrailerwillreducevariablecostsafter
170jobs.Anotherwaycostswillbereducedisbyhavingtheowner(Mr.Curl)bean
activememberofthebusiness.AfterreducingmanycostsofGreenRide,somecould
notbereducedmore,suchasinsurance,utilities,officeexpenses,andmiscellaneous
fees.AsummaryofallofGreenRidescostsisprovidedintable2.
ImportingBusesReducesCost
GreenRideplanstosave$16,790byimportingtheelectricbusesfromChinaratherthan
buyingthemlocally.MotoElectric,locatedinMaryland,sellsthebusfor$16,495,withan
estimatedthreeweekshippingarrival(ElectroTransit,n.d).ImportingfromSuzhou
Eagle,acompanyinChina,wouldcost$8,100,withanestimatedfourweekshipping
arrival(Suzhou,n.d).Byimporting,thebuseswillbe49%cheaperandwouldonlyhave
towaitanadditionalweek.Anotherwaytocutcostswillbetobuyavinylcutter.
InvestinginaVinylCutterWillSaveMoney
GreenRidewillpurchaseavinylcutterthatwillpayitselfoffwithin23jobs.Thereare
twooptionsthatGreenRidehasfortheVinylWrappurchasetheequipmenttocreate
thewrapinternally,orhireotherstomakeit.Theinitialinvestmentofthevinylcutteris
$1,400,thentherewillbeavariablecostof$5perjobtocreatethewrap(Sega,
2014UsCutter,2014).Accordingtoaquotefromcustom.carsticker.com,thecostofa
vinylwrapwouldbe$65perjob(CustomCar..,2014).Thisinvestmentwouldsave$60
perjobafterpayingofftheequipment.Anotherinvestmentthatwillreducecostsinthe
futurearethepurchasesofatruckandatrailer.
InvestinginTruckandTrailerisCostEffective
Investinginatruckandatrailerwillbecosteffective,asitwillpayitselfoffin170jobs.
Transportationofthebusesisvitalbecausethebusescanttravelonroadsover35
mph.AccordingtotheownerofTaurusTowing,thechargeoftowingthebuseswillbe
$65,plusthreedollarspermiletraveled.Withahypothetical10milestraveledper
towing,thecostwillbe$190(roundtrip).Thepurchaseofthetruckandtraileris
$26,200combined,with$3,600forinsuranceyearly,andmiscellaneousexpensesof
$15perjob(AppalachianTrailer,2014Carmax,2014Nationwide,2014WhatYouNeed,
2011).Bybuyingthisequipment,after170servicesprovided,therewillbe
miscellaneousexpensesof$15perjob,ratherthanspending$190toTaurusTowing.
Theseinvestmentscombinedwithownercontributionswillsavemoneydrastically.
OwnerContributionSubstantiallyReducesCosts
Mr.Curl,GreenRidesowner,planstobeanactiveemployeeofthebusinesstocut
expenses.Mr.Curlstatesthatheiswillingtobepaid$15perhourtodriveandmaintain
thebuses.Inaddition,hementionedthathehadanassociatethatwouldbeinterested
inoperatingthesecondelectricbusforthesamewage.Alongwithoperatingbuses,Mr.
Curlwillmarketforthebusinessusinga$12,720budget,fornoadditionalpay.This
budgetincludesamarketinginterntrainedbyMr.Curl(at$12perhour),$1,000for
websitecreation,$4,500fortradeshows,and$1,000forbusinesscardsandflyers.
OtherFixedCostsMustbeAccountedForToProvideOperations
Thereare$16,600worthoffixedcoststhatneedtoberegardedforthebusinessto
operate.Thelargestoftheseexpensesistheinsuranceforthebuses,whichaccounts
for57%oftheremainingcost.GreenRidewasgivenaquotefromNationwidefor$400
permonthperbus(Nationwide,2014).Utilitiesarebudgetedat$166permonth(based
onMr.Curlshomeutilities),andofficeexpenseswillbebudgetedat$1,000peryear.
Theremaining$4,000consistsofexpectedlegal,accounting,titleandregistrationfees.
Toanalyzeallcostseffectively,asummaryisprovided.
ExpensesareBrokenDownintoFixedCosts,StartUpCosts,andVariableCosts
TheexpensesforGreenRideconsistsof$47,808forstartupcosts,$36,650fixedcost,
and$25perhourvariablecosts.Belowontable2,thecostsareshownforeasier
comprehension.Althoughthestartupcostsaresubstantial,theywillnotoccuragainin
thefuture,unlikethefixedandvariablecosts.Tocoverthesecosts,arevenuestructure
mustbecreated.
Fixed
StartUpCost
CostPerHour($)
Cost
($)
Bus1
8,100
Electric(Bus)
$5
BusLoans
2,95
4
Bus2
8,100
Maintence(Bus)
$1
TruckLoan
3,64
6
Truck
20,00
0
TransportBus
$3
TrailerLoan
1,13
0
Trailer
6,200
VinylWrap
$1
Utility
2,00
0
VinylCutter
1,408
DriverWage
$15
Office
1,00
0
Miscellaneous
4,000
Total
$
25
Insurance
13,2
00
Total
47,80
8
Marketing
12,7
20
Total
36,6
50
Table2StartUpCosts,FixedCosts,andVariableCosts
(SuzhouEagle2014,Carmax2014,Vinylcuttersticker....2014,Appalachian2014,72
MonthNew2014,TradeshowExhibit2014,NationWide2014,Uscutter2014,Diesel
Truck2014)
RevenueStructure
GreenRideRevenueStructurewillAssureProfitability
ThepricingofservicesatGreenRidewillcreateenoughrevenuestogenerateaprofit
comparablewithcompetitors,showingtheviabilityofthecompany.Thepriceof$80an
hourforservicewaschosenbecauseitcoversalloftheexpensespreviouslydiscussed,
whilestillprovidingalargeprofitmargin.ThislargeprofitmargingivesGreenRidethe
abilitytobreakevenafterabout667servicehoursperyear,whichisverypractical.Not
onlydothelowcostsprovidelargeprofits,butalsolowerpricesthancompetitorslike
busesandtrolleys.Notonlyarethepricesofhighvalue,buttheyarealsorealistic,asis
shownbyasimilargreentransportationcompany.Finally,therevenuewillbecollected
inallformsofpayment(cash,check,credit)forthecustomersconvenience.
ServiceChargewillGenerateProfits
AtGreenRide,servicechargeswillcreaterevenue,whichwillturnintoprofitable.
GreenRidewillbechargingan$80hourlyratewitha5hourminimum.Thebus,driver,
delivery,andcustomizationofthebusesareincludedinthecharge.Accordingto
tristatetransportation,mosttransitcompaniescannotmakealargeprofitmargin
becauseoftheirlongdistanceandheavyoperatingcosts(Transportation101,n.d.)
Withshortdistancestraveledandlowcostelectricvehiclesimplemented(prices
discussedpreviously),GreenRidehasanhourlyprofitmarginover50%.Thisallowsfor
thebreakeventobereachedinashortamountoftime.
GreenRideWillPassBreakEvenPointEveryYear
GreenRidewillcoveritsexpenseseveryyear(breakevenpoint)toturnaprofit.A
breakevenpointof667servicehoursor$53,360inrevenuewascalculatedusing
expensesandpricing.Thisis134days(5hourdays)ofservice,whichisrealisticwith
twobusesprovidingtheservice.Afterreachingthisgoal,yearlyexpenseswillbemet,
andtheremainderofservicesfortheyearwillbeprofit.Thisabilitytobeprofitablequick
allowsGreenRidetokeeplowerpricesthanthecompetitors.
PriceSuperiorityAmongCompetitorsShowsValue
HavinglowcostsgivesGreenRidetheopportunitytooffercheaperpricesthanother
competitiveformsoftransit.TherearemanyvehiclescompetingwithGreenRide,but
themostrelatableareshowninfigure4(BusRates,2012).Thesevehiclesallcharge
accordingtothedistancetraveledina6hourday.GreenRidewillchargeabout$480in
a6hourday,makingitcheaperthaneventhecheapestcompetitorshownby31%(but
with14passengers).Notonlyisthepricingvaluableforcustomers,butitisalsorealistic
andviable.
TransitTypeRidersDailyPrice
Figure4DailyTransitPrices
(BusRates,2012)
GreenRidesHourlyPricingisRealisticandViable
PricingofotherhourlytransportationservicesiscloselyrelatedtoGreenRides,showing
viabilityinthepricestructure.Toshowthatthecheaperpricingisnotunrealistic,a
competitorcalledGreenShuttlecharges$75perhour(GreenShuttle,2013).Most
competitorsarenotthischeap,asTrinityTransportationswebsitesaystheyhavea
minibusthatisavailableforanhourlyrateof$140,makingGreenRide57%cheaper
(MiniBus,2014).
Toobtainthisincomefromcustomers,manyformsofpaymentwillbeavailable.
PaymentMethodsProvideConvenienceforCustomers
Customerconveniencewillbeassuredwithmultiplepaymentmethods.Thecustomer
mayusecash,check,orcredittopayfortheamountofhourstheywant,ashasbeen
donebyothercompanies(TrinityTransportation,2014).Ifusingcredit,theSquarewill
beused,addinganadditional2.75%chargetothecustomerontheamountofthebill
(Square,2014).Thebillcanbepaidinasmanypaymentsasthecustomerwouldlike,
aslongasitisallpaidbeforethedayoftheevent(norefunds).