Human Capital Maximizers (HCM) is a human resource consulting company based in Portland, Oregon. HCM specializes in various HR areas and targets the emerging company market. They offer clients the opportunity to compensate employees with stock options, which is particularly attractive to start-ups facing limited capital.
The founder and owner, Major Adversity, will utilize his personal and professional relationships to bring in business for HCM. Initially, Major will be the only employee, but in month six, he plans to hire a human resource specialist/manager to assist with consulting. Over the next three years, HCM is projected to experience increasing profitability.
1.1 Keys to Success
To succeed, provide a needed service with flexible compensation.
1.2 Mission
Human Capital Maximizers provides HR consulting for emerging companies. We exist to attract and maintain customers. By adhering to this maxim, everything else will fall into place. Our services will exceed customer expectations.
1.3 Objectives
The objectives for the first three years of operation include:
– Create a service-based company that exceeds customer expectations.
– Increase the number of clients served by 20% per year through superior performance and word-of-mouth referrals.
– Develop a sustainable start-up consultancy firm with cash flow and significant equity holdings in emerging companies.
Human Capital Maximizers is an HR consultancy serving the Portland area market. HCM is an Oregon Corporation owned by Major Adversity, focusing on emerging companies.
2.1 Company Ownership
Human Capital Maximizers is a privately held Oregon corporation founded and owned by Major Adversity.
2.2 Start-up Summary
Human Capital Maximizers will incur the following start-up expenses:
– Two desks, chairs, and lockable file cabinets.
– Computer systems including a CD-RW, printer, and server.
– DSL router and connections.
– Telephones, fax machine, and copier.
Please note that long-term assets will be depreciated using G.A.A.P. approved straight-line depreciation method.
Start-up Requirements
Legal: $1,000
Stationery etc.: $150
Website development: $0
Other: $0
Total Start-up Expenses: $1,150
Start-up Assets
Cash Required: $10,050
Other Current Assets: $0
Long-term Assets: $4,800
Total Assets: $14,850
Total Requirements: $16,000
Start-up Funding
Start-up Expenses to Fund: $1,150
Start-up Assets to Fund: $14,850
Total Funding Required: $16,000
Assets
Non-cash Assets from Start-up: $4,800
Cash Requirements from Start-up: $10,050
Additional Cash Raised: $0
Cash Balance on Starting Date: $10,050
Total Assets: $14,850
Liabilities and Capital
Liabilities
Current Borrowing: $0
Long-term Liabilities: $0
Accounts Payable (Outstanding Bills): $0
Other Current Liabilities (interest-free): $0
Total Liabilities: $0
Capital
Planned Investment
Major: $16,000
Investor 2: $0
Other: $0
Additional Investment Requirement: $0
Total Planned Investment: $16,000
Loss at Start-up (Start-up Expenses): ($1,150)
Total Capital: $14,850
Total Capital and Liabilities: $14,850
Total Funding: $16,000
Services
Human Capital Maximizers provides human resource consulting to emerging companies in the Portland/Vancouver market. They charge below market rates and take stock options in the company. The consulting services offered include:
– Human resource management
– Organizational management
– Professional development
– Employee relations
– Labor relations
– Benefits and compensation
– HR policy and procedure
– Executive search
– Sexual harassment
– Position classification
– Personnel management systems
– Performance evaluations
– Diversity
The pricing structure will be determined through negotiation with the client, either an hourly rate or a per project fee. Human Capital Maximizers aims to be as flexible as possible.
Market Analysis Summary
Emerging companies are the target market for Human Capital Maximizers for several reasons:
1. They require HR services as they are experiencing rapid growth.
2. Often, they lack a large enough in-house HR solution to support their growth.
3. Capital is limited for emerging companies, so the option to accept stock options instead of cash is appealing.
The emerging company market can be divided into two categories: technology and non-technology. However, many networking activities occur in settings that do not differentiate between the two.
Market Segmentation
Human Capital Maximizers’ market can be further segmented into emerging high-tech companies and emerging non-high tech companies. The larger segment is the emerging high-tech companies, even with the recent burst of the Internet bubble. In fact, 18 out of the top 25 fastest growing companies listed by the Business Journal of Portland this year were technology companies.
There are also non-technology companies emerging in the Portland area, and Human Capital Maximizers can serve them as well.
Market Analysis:
| Market Analysis | |||||||
| Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | |||
| Potential Customers | Growth | CAGR | |||||
| Emerging technology companies | 10% | 345 | 380 | 418 | 460 | 506 | 10.05% |
| Emerging non-technology companies | 9% | 225 | 245 | 267 | 291 | 317 | 8.95% |
| Other | 0% | 0 | 0 | 0 | 0 | 0 | 0.00% |
| Total | 9.62% | 570 | 625 | 685 | 751 | 823 | 9.62% |
4.2 Target Market Segment Strategy:
Human Capital Maximizers’ two markets will primarily be targeted through networking activities. Some networking will be conducted through the Oregon Entrepreneur Association, an association that supports entrepreneurial ventures in the local area. This organization has monthly round-table meetings for members to socialize.
Human Capital Maximizers will also network through personal/professional contacts that Major has developed in the last five years in the HR/start-up industry. HCM will rely on word of mouth to grow its customer base.
Strategy and Implementation Summary:
Human Capital Maximizers will use their competitive edge of compensation flexibility to attract emerging companies. This advantage is especially valuable to emerging companies who struggle to find enough capital to grow their business. Accepting stock options as compensation is useful because equity is something these companies have lots of (that is, if they haven’t given it all away to Venture Capitalists).
5.1 Milestones:
Human Capital Maximizers will have several milestones early on:
1. Business plan completion: This will serve as a roadmap for the organization and an indispensable tool for ongoing performance and improvement.
2. Office setup.
3. HCM’s first five customers.
4. Profitability.
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Milestones:
| Milestones | |||||
| Milestone | Start Date | End Date | Budget | Manager | Department |
| Business plan completion | 1/1/2001 | 2/1/2001 | $0 | ABC | Marketing |
| Set up office | 1/1/2001 | 2/1/2001 | $0 | ABC | Department |
| HCM’s first five customers | 1/1/2001 | 3/31/2001 | $0 | ABC | Department |
| Profitability | 1/1/2001 | ****** | $0 | ABC | Department |
| Totals | $0 | ||||
5.2 Sales Strategy:
As mentioned earlier, marketing and sales will primarily be done through networking. This means most leads will have been developed through personal/professional relationships that Major has established in his previous work or through activities with the Oregon Entrepreneurs Association and similar associations. The sales pitch will be based on Human Capital Maximizers’ experience in the field and their compensation flexibility. Major will explain to prospective clients the areas he has experience in and the solutions he can offer.
Major will also highlight Human Capital Maximizers’ ability to accept options instead of cash, which will be appealing to companies, especially in the current scarce capital market. Emerging companies will be excited about this option.
5.2.1 Sales Forecast:
The first month will be used for office setup. Additionally, during the first month, Major will work hard on developing contracts. The second month will see some activity, but it won’t be until month six when business picks up at a higher rate. Sales will continue to grow through year three.
Sales Forecast
Emerging technology companies:
– Year 1: $41,500
– Year 2: $78,455
– Year 3: $92,541
Emerging non-technology companies:
– Year 1: $16,600
– Year 2: $31,382
– Year 3: $37,016
Total Sales:
– Year 1: $58,100
– Year 2: $109,837
– Year 3: $129,557
Direct Cost of Sales
Emerging technology companies:
– Year 1: $2,075
– Year 2: $3,923
– Year 3: $4,627
Emerging non-technology companies:
– Year 1: $830
– Year 2: $1,569
– Year 3: $1,851
Subtotal Direct Cost of Sales:
– Year 1: $2,905
– Year 2: $5,492
– Year 3: $6,478
5.3 Competitive Edge
Human Capital Maximizers’ competitive edge is their flexible compensation structure. They can accept stock options instead of cash, allowing them to reduce their overhead costs. Major, the owner, does not need a high monthly salary, as his wife contributes financially to the household. This enables him to accept options as payment in anticipation of future growth. (Note: The HR industry does not face conflicts of interest in accepting equity as compensation.)
Web Plan Summary
The website serves as a resource for prospective clients to learn more about Human Capital Maximizers. It provides information about the management team, their experience, past and present clients, fee structure, and willingness to accept equity stakes.
6.1 Website Marketing Strategy
The website will be submitted to popular search engines for increased visibility. It will primarily serve as an information tool for prospective clients, rather than a lead generation platform.
6.2 Development Requirements
To develop and produce the website, an individual (preferably a cost-saving student) will be hired.
Management Summary
Major Adversity, the founder and owner, holds an undergraduate degree in marketing from Reed College. After working in a bicycle store for four years, he pursued his MBA at the University of Portland. Following his MBA, Major worked at Nike and then a HR consultancy boutique that primarily served technology startups. With his wife’s financial support and the flexibility of his compensation, Major decided to open his HR consultancy, Human Capital Maximizers.
7.1 Personnel Plan
Major will initially work full time for Human Capital Maximizers. By the sixth month, he will hire an additional HR consultant to assist with the workload. This employee will receive a salary and will not be eligible for equity options.
Personnel Plan
Major:
– Year 1: $24,000
– Year 2: $24,000
– Year 3: $24,000
Full-time employee:
– Year 1: $24,500
– Year 2: $42,000
– Year 3: $42,000
Total People: 2
Total Payroll:
– Year 1: $48,500
– Year 2: $66,000
– Year 3: $66,000
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