Business Plan

The Driver

Business Overview Our chauffeur service shall be available to anyone who requires to be taken from point A to point B within a twenty-mile radius of downtown Nashville. Our service especially targets college-aged men and women and young professionals who prefer to consume alcohol with the promise of a safe ride home. The Driver operates as a membership-based company, as clients pay a monthly fee for six ($45), 12 ($80), or 20 ($110) rides a month. Reservations are made by clients themselves through our online reservation site, or through our App on customers’ smart phones. We aim to offer a convenient, safe, and affordable alternative to drunk driving at a competitive price. At The Driver, we hope to make a difference in people’s lives by saving loved ones from drinking and driving themselves, or being the victim of this catastrophic decision. Mission The Driver aims to prevent drunk driving by providing a convenient, safe, and affordable chauffeur service during evening and night hours.

Vision Our goal is to see the number of drunk driving arrests, accidents, and fatalities be reduced in Nashville. Need: Rationale for product/service - and how to fill The Tennessee Highway Patrol arrested 3,365 people in 2008 for driving under the influence of alcohol (www.MADD.org). These arrests from the irresponsible decision to drink and drive cost each one of those people an average of $5,000. This same year, 327 individuals were killed in drunk driving crashes in the state of Tennessee. Additionally, in all fatal crashes occurring from midnight to 3 a.m., 66 percent involved alcohol-impaired driving (http://www.edgarsnyder.com/drunk-driving/statistics.html). The state of Tennessee, and specifically the Nashville area with four universities full of students who take advantage of the nightlife scene, needs a service that’s easy, more affordable than a regular cab service, and dependable to help these young adults get from place to place safely. Every 50 minutes in the U.S. a person dies because of accidents involving alcohol (www.MADD.org), and through scheduling our service to run during the peak “party” times, offering a low monthly fee, making the reservation process easy, and targeting this nightlife crowd, The Driver aims to reduce this horrifying statistic starting with the Nashville area.

Business Model:

● Key Partners: Local universities (Lipscomb, Vanderbilt, Belmont, TSU), MADD, Sororities/Fraternities and other student organizations at these universities

● Key Activities: Offer driving services during peak “party hours” within 20 miles of downtown (includes Brentwood, Bellevue, Green Hills, Hendersonville)

● Key Resources: Safe and pre-certified drivers and their cars, a very “social” population of students and young adults, the internet/App software we’re developing, the 501(c)(3) status

● Value Proposition: Convenience- no cash needed, no tipping, reliable. Competitive advantage (more cost-efficient than a regular cab), safe, works to prevent drunk driving

● Customer Relationships: Close and service oriented: e.g. customers can request a certain driver, easy to use in both registration and in our car reservation service or App, driver will be on time, cars will be available to all members during peak times

● Channels: Marketing (Graffiti advertisements, word of mouth from satisfied customers, social networks), pairing with student organizations to gain access to more students

● Customer Segments: College students at the four local universities, young professionals in the area

● Revenue Streams: Monthly fee for 6, 12, or 20 rides, additional revenue brought in by trial fee and purchasing extra rides once the 6, 12 or 20 monthly rides run out, fundraising

● Cost Structure: See pricing model and attached Income Statement and Cash Flow Marketplace Analysis The Driver will be targeting students from local Nashville colleges including Vanderbilt, Tennessee State University, Lipscomb, and Belmont. In addition to college students, we will also target young professionals in the Nashville area. We will try to partner with organizations such as the Nashville Junior Chamber of Commerce, and YP Nashville (Young Professionals of Nashville Organization) to gain membership and awareness. According to the 2010 US Census (www.factfinder2.census.gov), the population in Nashville between the ages of 20-29 is 115,876. Fundraising We are counting on making $40,000 annually through fundraising efforts. We plan to have two semi-annual fundraisers and have designated a separate fundraising budget of $3,000 annually. We have budgeted $1,500 to throw each event and hope to bring in $20,000 at each of these fundraisers. We plan to ask for catering and location donations to host such events. Some fundraising options we have considered are:

● Gala/ ball ● Auction ● Golf scramble ● “A-thons” (dance, walk, run, sport, swim, bike, etc.) ● Sports tournaments ● Carnival

Both within and outside of these events, we plan to incorporate smaller events to aide in reaching our goal. These include:

● Raffles ● Auctions ● Bake sales ● Contests ● Donations ● Change drives ● Bingo ● Car wash

With so many of these smaller fundraising ideas being much cheaper or even free, we have some backup options to make up for any fundraising shortfalls. We considered both semi-annual and quarterly efforts, and will be able to make changes regarding the frequency of our events based on what we encounter at our first few events. Money Making Strategy Pricing model:

The Driver will offer bundle pricing for members only. The bundles will be as follows: ● $110 for 20 rides* ● $80 for 12 rides* ● $45 for 6 rides*

Members will have to pay the bundle fee in a monthly bill, however they will not provide any tips. The intention is to make The Driver as convenient and easy as possible. The only additional fees in the contract include a one-time $10 processing fee per member, and a passenger will be charged if he/her gets sick in the vehicle (a $100 fee charged to the member’s monthly bill).

If a member wants to take additional, non-member passengers, the member will be billed $2 for each individual non-member per ride. For any of the additional passengers whom are members, the ride is free and is intended to incentivize groups of friends, family, and businesses to buy memberships together.

The service will also be reservation-based. We would like to create an online platform where members can quickly and easily go online, or use a mobile app to reserve a specific time slot, which will be offered in 15-minute increments. Although most of the reservation slots will be held for members-only, we want to have availability for non-members who hear about the service and want to give the service a try. For those individuals who would like to try out The Driver for the first time, we will offer one roundtrip for $15. We wanted to ensure the introductory price was more reasonable than an average roundtrip cab ride, but also below the value saved by becoming a member. The $15 roundtrip can only occur one time and we will keep track by taking name, email, and phone number for our records.

Finally, there may be times when members use up their bundle before the month is up. If they need to add additional rides, they will have to pay $15 for one roundtrip. Again, we wanted to ensure the needs of members are met, but incentivize them to pay for the larger packages by pricing the additional roundtrip higher than the value of the bundles.

*One “ride” is defined as one-way trip, not roundtrip. Competitive Analysis The Driver pricing model offers a much better value than a regular cab service. The average cab service charges $3 for passenger pick up, $2 to each additional mile and $1 for each additional passenger. In addition, passengers must tip when using a cab service, which typically adds another 10%-15% to the final charge. As demonstrated in the pricing chart below, the larger packages offered by The Driver create the most value for the customer. Finally, the value of The Driver services increases as the miles traveled increase.

Marketing Our targeted customers are Nashville-based college students and young professionals. With a $9,600 annual budget ($800 monthly), we plan to save major marketing efforts and expenditures until we get closer to the opening date. We will begin with cheaper marketing strategies, including but not limited to:

● Booths/ Flyers (MADD events, Vanderbilt/ Belmont/ Lipscomb/TSU orientation or recruitment student events, Young Professionals Nashville/ Young Professionals Council Brentwood meetings, etc.)

● Flyers posted throughout Nashville, handed out at chapter meetings, and e-mailed out ● Social Networking (Facebook, Twitter, Linkedin) ● Create website, market through e-mails ● Speaker ● Joint marketing/ fundraising efforts ($5 raffle for a 12-ride monthly package)

Our more expensive marketing efforts will occur just before and consistently after our official opening date. These efforts include but are not limited to:

● Graffiti advertisements ($40.80 for each ad monthly, minimum of 10 monthly) ● Billboard (approximately $9,000 annually) ● Radio (60 sec- $101.67, 30 sec- $50.84, 15 sec- $25.42)

Our customer incentives will be pushed strongly through our marketing efforts. The following incentives will be strongly advertised to those in our target customer base:

· The cause (so many people affected/ can relate to the need) · Rate comparison to competitors · Convenience (paid in advance- no need for cash, all electronic- can book from phone, can sign up for specific time slot) · Very low fee for friends to join the ride · Package options Marketing Budget:

Year 1 Year 2 and On Booths/ Flyers $100 $100 Website $200 $50 Social Media $0 $0 Graffiti Advertising $0 $4,896 (10 flyers out at all

times annually) Billboard $4,000 $0 Radio $5,287.36 (208, 15- second

commercials) $4550.18 (179, 15 second commercials)

Total $9,587.36 $9596.18 Remaining $12.64 $3.82 Financials Sensitivity Analysis: In our best-case scenario we will be able to raise $40,000 before the launch of our company and will continue to raise $20,000 every 6 months. If we can realize this, we can pay back the loan of $80,000 in the middle of the third year.

The following scenario shows, that we are, in fact, heavily dependent on fundraising coming in every six months. It works like a cushion, preventing us from falling into the negative numbers. The scenario below shows the minimum amount we will have to raise in the beginning ($15,200 in month six additional to the $40,000 start-up funds from fundraising) to stay in the positive and to achieve a slow but steady growth. However, with this slow growth we would only be able to pay back the loan of $80,000 after 15 years or in very small rates.

For more information on financials, see Appendix A for Cash Flow Statement and Appendix B for Income Statement.

Assumptions All financial calculations are based on the assumptions made concerning the following pattern for member increase. As we will have done intensive marketing by the time our business launches (Fall semester of 2012), we assumed we’d begin our service with:

● 20 members for contract 1 (6 rides for $45) ● 15 members for contract 2 (12 rides for $80) ● 10 members for contract 3 (20 rides for $110)

We will continue marketing and are counting on some growth due to word of mouth of members. Therefore we assume a growth rate of:

● 110% for contract 1 ● 115% for contract 2 ● 125% for contract 3

These numbers will remain as listed above for the first three months. Then, the growth rate of the three contracts will slow to 110% for another three months. Finally, in the last three months, contract one’s member growth will have ceased, contract two will stay at 110% until we reach our cap of 1500 members (in the ninth months), and contract three will have slowed down to 105% growth. As our business launches, we want to stay small and manageable, therefore we have placed a cap on membership. However, once business has become stable and revenue is high enough, we are planning to expand to allow a greater membership base. From the weekly calculations of member growth, it was possible to calculate both the rides we would have to provide and also the drivers needed. Our hours of service are:

● Sunday through Wednesday: 6pm to 2am ● Thursday: 6pm to 5am ● Friday and Saturday: 3pm to 5am

These hours add up to 71 hours of service in 3 shifts each week.

To make a reservation on our website, people will have to insert the time they would like to get picked up, and the pickup location and end destination. The software will handle the logistical aspects of booking either one or two 15-minute slots. However, we have assumed that the driver can cover a distance of 10 miles in each 15-minute slot. Therefore, one driver can provide:

● 56 rides on Fridays and Saturdays ● 44 rides on Thursdays and ● 32 rides on the rest of the days.

In connection to the growth of our member numbers, we calculated that we would need:

● 2 drivers for each shift for month one and two (month one could suffice with one driver, but we want to be prepared for unforeseen rushes)

● 3 drivers for each shift for month three ● 5 drivers for each shift for month four ● 7 drivers for each shift for month five ● 9 drivers for each shift for month six ● 12 drivers for each shift for month seven ● 15 drivers for each shift for month eight ● 20 drivers for each shift for month nine.

After the ninth month, the number of members remains 1500 (the cap) which can be covered from then on with 20 drivers a shift.

Expenses: For each mile a driver covers while on the clock (and in his/her own car), he/she will be reimbursed 55 cents to cover gas, maintenance etc (www.money-zine.com/financial-planning/tax-shelter/mileage/reimbursement-rate). With that, we calculated the monthly amount of reimbursement to individual drivers that we would have to pay. When taking into consideration the above numbers of rides and mileage, the average hourly rate of reimbursement is $7.33 (except for the first month of business, where total miles covered per driver is expected to be less than their maximum mileage abilities).

Salaries: The hourly salary for our drivers will be $13.01, which is the average for taxi and limousine services according to the Bureau of Labor Statistics: http://www.bls.gov/oes/current/oes533041.htm. With the four of us serving as administrators to The Driver (at lease in the start-up phase), we decided we would separate the 71 hours per week and work 18 hours each as administrators for a salary of $17/hour.

Marketing/ Technology/ Fundraising We researched marketing options and decided on a $9,600 annual budget.

We contacted a programmer who made us an offer to install a database, design a website and create an App for $3,000. He added that we would need about $500 annual for maintenance. We have budgeted $3,000 annually for fundraising events.

Other Expenses: We found this website that showed getting the 501(c)(3) status is a one-time payment of $700. http://www.charitynetusa.com/price_comparison/501c3_price_comparison.php. We also assumed that this status would be granted to The Driver. The loan we took from our own funds (and families and friends) has an annual interest rate of 1%. The $800 is paid at the end of the year; in the best case we will pay back the loans between the second and the third year. We called Geny Insurance, and after giving an overview of our company, discovered that insurance will cost $280/month per car.

Revenue: We assume our own funds and friend’s and families’ support will accumulate to $80,000. We are hoping for public support of $40,000 through fundraisers in cooperation with organizations like MADD. Furthermore, we will continue our effort to raise money by holding fundraising events every six months, hoping for $20,000 each time. In addition to the monthly membership fees calculated through the membership sign-up pattern, we will charge a one-time processing fee of $10 per member which will be due at the end of the first month. There are four other fees through which we bring in additional revenue: 1. A $2 fee for each additional passenger who is not a member (which will be charged to the member’s monthly bill). In the beginning when we don’t have many members, we assume members will bring an average of two non-members on 80% of the rides. This percentage decreases with growing membership by 10 percent each month. 2. A one-time $15 trial fee for a roundtrip (two rides) service. Here, we estimated that 10% of all our members have done this trial before signing up. Also we have to assume that 10% of people who tried the company won’t sign up for the membership (so we could have 10% more members right now if all those who did the trial went on to become members). Through this option, we’ll bring in on average $492.16 every month for the first nine months. 3. To buy an additional roundtrip for $15 if a member has used all of their rides for their monthly membership. We assume that 3% of our contract one, 1% of contract two and 0.5% of our contract three customers will make use of the option once a month. 4. A $100 charge in case a customer gets sick in the car. Here we estimated that every 700th ride, this case occurs

SWOT Analysis

S W

-Convenient: no cash needed, no tipping, once a month CC payment -All electronic: online registration, online payment, app/ website for ride reservation -Offers an alternative to drinking and driving while promoting a message -Prices beat competitors -Large incentive for new-comers to try service ($15 flat rate for 2 separate rides), easy for guests -Software, social media allows for cheap costs -High need: Nashville has a large party scene, especially with multiple colleges

-More of a “hassle” than simply hailing a cab -Summers or holiday months could be very slow because of student customer base -Time slots don’t allow tardiness, could be problematic during busy times -1,500 customer cap -Highly dependent on fundraising efforts

O T

-Partnerships (i.e. MADD, Vanderbilt- Commodore Card Payment ) -Harsher DUI punishment from Tennessee Law Enforcement (more DUI checkpoints, fewer people will be inclined to drink and drive) -Improved economic conditions (people will go out more)

-Unsuccessful fundraising efforts (lack of sponsorships, not meeting monetary goals) -Vandy Vans offering shuttle services downtown -Cab companies that accept payment through Vanderbilt cards -Incoming market competitors (Ex. Dial A Designated Driver) -Dry campuses not assisting with our company promotion

Internal Outlook-

Potential opportunities for growth: Should our company make enough money for growth or should we deem a need to change the business model completely, we have considered several options which would depend on the success of The Driver. These include but are not limited to:

• Expansion outside of 20 mile radius • Extend our cap • Allow for public-hire rides (drives could be hailed) • Shuttle service (airport, senior citizen) • Change in service hours

Appendix A: Cash Flow Statement

Appendix B: Statement of Activities

Appendix C: Example of Marketing Materi

References: Drunk driving statistics: http://www.edgarsnyder.com/drunk-driving/statistics.html www.MADD.org Costs for insuring a private hire cab: Phone interview with Nathan Spears of Geny Insurance on November 29, 2011. Competitor’s price model: yellowcab.com Nashville population statistics: www.factfinder2.census.gov Costs to get the 501c3 status: http://www.charitynetusa.com/price_comparison/501c3_price_comparison.php Reimbursement rate for chauffeurs: www.money-zine.com/financial-planning/tax-shelter/mileage/reimbursement-rate Average hourly wage for chauffeurs: http://www.bls.gov/oes/current/oes533041.htm. Graffiti Advertising rates: E-mail interaction with Lars Frederiksen, Graffiti Director of Sales, on November 16, 2011. Billboard Rates: http://carboncopyconsulting.com Radio Rates: http://www.radioloungeusa.com/