Got roasted for this, so I'll post here. The original plan had graphs and charts.
Business plan
1. Summary
Essentially, No Stress Success (NSS) provides an opportunity for groups of aspiring athletes to insure their future earnings by binding themselves to others of a similar skill/progress level. Typically, a group of four or five will enter into a contract (provided by No Stress Success) which will potentially insure themselves for life, even in the event they are unsuccessful in their chosen discipline.
Consider this scenario. Five players at Arsenal’s academy, who are at a similar skill level (presupposed since a reputable academy houses all five) decide to enter into a No Stress Success contract for the total sum of £200. At the time, one or two may well be perceived to be more likely to achieve success, but it is in no way guaranteed. The NSS contract states that in the event one or more of the athletes earns equal to or over £250,000 (gross), they will share 25% of their earnings with all those who participated in the contract. Therefore, whilst one person may be aggrieved at this culling of his wages, three or four are delighted; and in any event, the person who earns £250,000 could just as easily have been one of the benefactors.
In the above example, the athlete drawing £250,000 will give £62,500 away, which is split four ways (or three). Each member of this specific group will therefore earn £15,625 per annum. On top of the jobs they are now doing (as opposed to the athlete that made it), this is no mean figure.
This business will list reasons both why athletes will use this service, as well as the academies that house these athletes. There are multiple revenue streams as well as an underlying benefit which ensures the business grows each year. There are tens of thousands of opportunities for potential contracts within sport across the globe.
NSS does not just cater for athletes. This insurance is of use to high level 3rd year students at Oxbridge, intending to go into banking/finance; and students at RADA (acting school).
2. Business overview
Introduction
At the beginning of his professional career, Djokovic mainly played in Futures and Challenger tournaments, winning three of each type from 2003 to 2005. His first tour-level tournament was Umag in 2004, where he lost to Filippo Volandri in the round of 32. He made his first Grand Slam tournament appearance by qualifying for the 2005 Australian Open, where he was defeated by eventual championMarat Safin in the first round.
I was trawling through the unfortunate story of a serbian match-fixer (Tennis) who played with the likes of Djokovic, Troicki and Tipsarevic when he was 15. His career did not take off and he ended up on the ITF Futures Tour, earning a comparatively miniscule wage. It occurred to me that at the age of 15, he was likely to have been at a similar skill level to those athletes (which I later confirmed). But for a variety of reasons (not least random factors), he never made it. If he had struck a deal with a similarly unknown Novak Djokovic at the time, he would have had a share of his average yearly earnings of $7 million (tournaments only). And yet, Djokovic himself was not always destined for great things as the above shows.
This scenario has played and will continue to across every major sport in the world. Youngsters are primed for the big-time but very few make millions of pounds. Nevertheless, there are a considerable number of athletes who earn colossal wages, 25% of which would not be missed, but would make a huge impact on others.
No Stress Success is both an insurance and pension fund, which rewards those who sacrificed a small sum of earnings they couldn’t even have dreamed about, for the chance of living well in the event of (comparative) failure. For every ex-footballer earning minimum wage due to a career-injury, or a golfer who missed the cut in his one chance at the Open, there is now a chance for others to not make the same mistake.
In 2004, Gael Monfils was the No.1 Junior in the world, whilst Andy Murray was No.2 at one point, but No.6 before that. See how their earnings have differed. Whilst Gael Monfils is not doing too badly, it is clear that youth success does not guarantee greatness. There are of course tens of thousands of examples within Baseball, NBA, NFL, Hockey, Cricket, Football, Aussie Rules etc.
Current position
N/A
Competitive advantage
There is no direct competition to this idea. Agents, who have already signed the prodigies, will be reluctance to enter into deals as it affects their bottom line. However, through education, it will be made clear that it is in fact in their interest to enter into such a deal. In addition, parents who believe their child is the next djokovic will not want to share future (in their mind) colossal earnings with three or four others. They too will be educated.
The business model is effective because NSS earns a set rate (£200) for every new contract signed. This contract drawn up by lawyers is custom made for their particular scenario and cannot be copied easily, certainly not for less than the one off cost they are paying (which is split four or five way). Most importantly however, NSS takes 5% of earnings from each of the three or four benefactors of the contract. I.e. When one from the group begins to earn £250,000 or more, the rest of the group will split 25% of these earnings but NSS will receive 5% from each member. Therefore essentially, NSS is gaining 1.25% from each athlete earning £250,000 or more. This would be £3125 from exactly £250,000 per year. Since the average figure earned (of those who made it) would be far higher than £250,000 p.a. we can begin to see that NSS has massive earning potential. In addition, the assets are visible, real and therefore commercial to any future investors.
Growth plan
Growth will be made with every single new contract signed (£200 per contract split between four or five athletes) + 1.25% of earnings over £250,000 (as explained). It is important to note that this 1.25% is not coming directly from the athlete (as he would be thinking ‘why should I give my wages away?’). It happens because but for the fact NSS had provided the means to the other athletes, they would not be earning from the 25% of the main athlete’s earnings, from which we deduct 5% each.
We intend to sign 100 contracts in Year 1 (£20,000 revenue) – 450 athletes (based on 4.5 athletes per contract 4 or 5
300 contracts in Year 2 (£60,000 revenue) – 1350 athletes (based on 4.5 athletes per contract – 4 or 5)
And 500 contracts in Years 3, 4, 5, 6, 7, 8 etc £100,000 revenue) – 2,250 athletes (based on 4.5 athletes per contract – 4 or 5).
On the basis of just ten, Million Pound a Year Athletes, (from a pool of 4050 – 900 contracts signed over three years, NSS will receive £125,000 per year. This does not include any of 899 potential 1.25% of sums over £250,000.
3. Business strategy
Tactics
As stated, we need to educate the guardians and the athletes themselves as to why they need to insure their future. Success is at times a product of randomness and there is myriad of studies on the subject. This combined with specific case studies (tailored to the individual athletes’ scenarios) will show why NSS provides an excellent opportunity.
We also need a coherent strategy for delivering the pitch to athletes. NSS could apply to:
Athletes in academies
2:1 or higher Oxbridge Final Year Students intending to go into banking
Students at RADA (acting school).
Miscellaneous groups (five friends, four music bands, five racehorse owners, five tournament poker players)
It is essential to NSS to begin to and to continue to sign new contracts. Without new contracts, the initial source of revenue ceases to exist and the potential source for %s of future earnings is cut dry. 100 contracts a year in Year 1 is manageable,; but 300 in Year 2 and 500 in Year will require extra staff or considerable time committed.
The law behind the contract must be watertight. If the possibility of reneging exists, there is no NSS. Therefore Under 18 and guardianship laws must be thoroughly investigated, along with tax issues, death issues etc.
Those supervising the academies, RADA, Oxbridge may initially be reluctant to allow such deals. However, again, it must be pointed out that NSS will actually benefit each of them. If five athletes sign an NSS contract at 15 years old, they are now investing IN EACH OTHER. This leads to commeradery, and the hope that each of them becomes a success.
Core values
Our core value is ‘hope for the best, prepare for the worst’. We want all recipients of the NSS contract to buy into the philosophy that although they are likely destined for great things, injuries happen, failure can occur. But they may cash in on their potential now by aligning themselves with players of a similar skill level.
4. Marketing
Strategic alliances
There is the potential to align ourselves with other agencies. Since we will have access to thousands of talented youngsters, we would be in a strong position.
E-commerce and technology
This is not an e-commerce business and technology plays very little part. There is of course the need for a website where we could in fact promote our own clients.
Tactical promotion plan
I feel this needs to promoted personally. We need to approach academies, Oxbridge colleges, write emails rather than advertising. We need to target specific customers since 99% of the world do not have the credentials to sign an NSS contract.
Marketing budget
The website is the only marketing cost. £3000 (quote).
Credibility and risk reduction
One brings many when it comes to this sort of business. A whole academy could potentially sign (in groups of four or five) when their friends have. An excellent law brief, preferably co-signed by a reputable law firm would be helpful. In addition, if we were to gain the backing of a reputable football agent, our access widens and our credibility grows.
5. Financial budgets and forecasts
Year One - On the basis of 100 contracts signed in - £20,000 revenue.
Therefore a loss is imagined, if wages are drawn. If no wages are drawn, £12,000 gross profit after travel, lawyer fees. However, this figure does not include the potential drawing of 1.25% of future earnings.
Year Two - On the basis of 300 contracts signed in - £60,000 revenue.
Therefore a loss is imagined, if wages are drawn. If no wages are drawn, £53,000 gross profit after travel, lawyer fees. However, this figure does not include the potential drawing of 1.25% of future earnings.
Year Three - On the basis of 500 contracts signed in - £100,000 revenue.
Breakeven if wages are drawn. £91,000 profit if no wages are drawn. However, by this time, 4050 contracts have been signed (900 contracts with 4.5 persons signed to each contract).
Since these contracts are signed by athletes of a reasonable caliber in Football, Tennis, NFL, NBA, Baseball, Golf, a reasonable estimate is that one in 5 groups will show contain one athlete earning £250,000 or more.
Therefore NSS will have (900/5)= 180 athletes drawing a wage of £250,000 or more per year. The average will be higher as £250,000 is the minimum for an NSS contract to be valid. £330,000 is a reasonable figure.
Each athlete in a £330,000 wage earning group will earn collectively, 25% of £330,000=£82,500. The average group size is 4.5 and therefore each athlete will earn £23,571 per year (82,500/3.5 (as there are on average 3.5 persons not earning 330,000). 5% of each of these athletes’ £23,571 is £1178. NSS would earn 1178x180=£212,040 per year.
Assuming no more contracts have been signed, NSS would earn £212,040 per year. However, more contracts, would mean more revenue in addition to the extra 1.25% banked for future years. By the time certain players have retired in Years 10, 11, 12, NSS would have new blood.
Finally, when the number of contracts obtained is known, NSS can predict future earnings more realistically. This will aid with an exit strategy if needed.