The Virtual College Visit
CollegeCloseUp offers prospective college students a visually intriguing look into a University’s student life outside of academics. The service provides a unique perspective into the lives of a diversity of students from every campus. This practical tool also incorporates user-generated information for the bulk of its production. Through the generation of this information, prospective students gain an unprecedented look into student activities that go beyond the typical college tour.
Team
The team consists of Carey Hite and Edward Dinker. Carey is currently a sophomore at the College of Charleston studying Accounting along with Hospitality and Tourism Management. Edward is a junior at the College of Charleston. He is pursuing a major in Business Administration and in History.
Paula Hite, Carey’s mother, was a school board member for 13 years and also held the position of chairperson for 3 years. She will be serving as the head of our Board of Advisers. Arnold Hite will also be a member of this board. He was an Economics professor and served as Dean of the Charleston Southern School of Business.
The Service
Unique Features (Benefits): The CollegeCloseUp application has many distinct advantages over the competition. It is the first user-generated application offering in-depth college perspectives for prospective college students. Rather than being overly informational and monotonous, CollegeCloseUp exudes an intimate feeling through its various features. The user-generated videos offer a personal look into the lives of actual college students. With all the abilities to pause, stop, and rewind any video, CollegeCloseUp also has many helpful features such as suggested videos, most popular videos, and the ability to see a list of people watching the same videos as you.
Unique Features (Limitations): CollegeCloseUp is a creative combination of various types of websites encompassing sites such as Youtube.com, Facebook.com and Collegeboard.com. Due to the characteristics of these websites being mimicked by CollegeCloseUp, it is reasonable to assume these websites will be competition and even in the close future may decide to launch an application similar to CollegeCloseUp with the second-movers advantage. CollegeCloseUp as an application has limitations based on the amount it can grow. Currently CollegeCloseUp will only be available to Facebook users. Also, the owners recognize that the idea of paying for videos is not a widely exercised activity, and this may dissuade users from adding the application to their Facebook page.
Competitive Advantage Because CollegeCloseUp is a Facebook Application, prospective college students will be able to communicate with other Facebook users viewing the same videos as them. This will expedite networking between users allowing them to see what kinds of people will be going to which colleges, and group committed students into pools with other users planning to attend the same college. User-generated video is a brand new spin on the college search, giving CollegeCloseUp first-mover advantage.
Stages of Development CollegeCloseUp is currently a prospective business; this feasibility study is being conducted in order to determine the viability of such a business. If the business is determined feasible, the next set of actions will be:
1) Craft a detailed Business Plan Estimated time required: 2 Months
2) Pursue and hire website/application designers/programmers Estimated time required: 2 Months
3) Complete design/interface of application Estimated time required: 4 Months
4) Create Buzz through Word of Mouth Estimated time required: 2 Months
5) Launch Application, introduce Viral Marketing
Legal Restrictions and Rights CollegeCloseUp will operate as a General Partnership, the two owners being Teddy Dinker and Carey Hite. This form of business ownership excludes the business from taxation. The owners will receive a percentage of the total amount of money received by the application by users. The owners will pursue a Trademark for the CollegeCloseUp name.
Insurance Requirements A Terms and Conditions of Use will be drafted by the owners with the help of experienced attorneys. This is necessary to dismiss the owners from liability concerning the manner in which the application is being used. Other insurance will not be necessary for this business.
Trends Related to CollegeCloseUp The popularity of social networking websites is well known, and the amount of users participating on these sites is growing exponentially. Also, user-generated media has flooded the Internet and most of these users upload media without monetary incentives. The increasing cost of college will work in the favor of CollegeCloseUp in the sense that reducing traveling costs and fees for applications (sent in based on half-baked understandings) will appeal to parents of prospective college students throughout the country (initially Charleston, SC).
Production or Service Delivery Costs There will be very few costs incurred by the owners of CollegeCloseUp. Costs will include the cost of hiring an application designer/maintainer, bandwidth costs and the amount of money paid out to users who upload videos to the application.
The Industry and Market
Current Industry
Our industry includes the application industry and college information websites. The application industry is experiencing a huge amount of growth. With the advent of Facebook and the iPhone, the demand for applications has increased exponentially. College information websites receive consistent web traffic. The industry for college information websites experiences consistent annual growth. As high school seniors graduate, new customers are created.
Market Potential
The market potential for CollegeCloseUp’s industry is one of the main appeals in creating this business. Young adults are more adept at using the Internet for research purposes. Furthermore, sites like Youtube and Facebook receive daily traffic in the millions, the majority being 18 years old and under. There are 5.5 million high school Facebook users. Our application will be offered to the biggest market on Facebook. More than 8 million videos are uploaded each month to Facebook, and more than 850 photos are uploaded. The total number of active users among the top 50 Facebook applications is 322 million users. From June 2008 to June 2009 they experienced 15% growth. 10% of Facebook users are 14-17, and 18-24 year olds make up 34%. The market demand for college information is in constant supply. As long as colleges exist, there will be a demand for information on colleges. With college costs going up, a student’s final college decision has much more at stake. This expands the market need for college information.
The Competition
CollegeCloseUp’s competition lies in the college information industry rather than the application industry. Websites such as collegeview.com and collegereview.com offer detailed information on college across the United States. Princeton Review is also a big competitor. They provide information based on student accounts, demographics, campus activities, and quality of education. They also give school rankings for a variety of subjects, ranging from biggest party schools to most religiously influenced schools.
The competition has many advantages in the market. Their focus is on facts and statistics, which provide customers with an accurate portrayal of the general student body and its interests. They only have to address surface information on the school, which means they can give information on a greater range of schools. They also don’t have to rely on users for information. Current college information websites provide their own information on universities, so they have more control over the amount of content available.
The competition also suffers numerous disadvantages. For instance, no college information provider offers much input from current college students. Besides offering brief testimonials from alumni and currently enrolled students, information providers don’t give prospective students significant insight into day-to-day activities of college students. The new Digital Generation places more importance on the role of multi-media than any other previous generation. Written descriptions of schools don’t fulfill the needs of prospective students. Generalized facts and statistics don’t have the ability to portray the nuances of college life. Their information is not visual, and therefore not as valid as user-generated videos and pictures. Visual representation is key in a digitalized society.
Customers
CollegeCloseUp will be comprised of high school students and their parents. Parents are the indirect customers of CollegeCloseUp. We believe that parents will have some say in the decision to buy the multi-media offered by CollegeCloseUp. Some parents may also want to research what environment they are sending their children into.
High school students are the main customers of CollegeCloseUp. As aforementioned, South Carolina had 38, 024 graduates in 2007. This is only a small fraction of the prospective college student market. We expect our customer base to grow in accord with the number of active users uploading information. Initially, customers will consist of high school students interested in South Carolina and Tennessee universities. As the popularity of the CollegeCloseUp grows, we hope to see a greater range of college students react to the offered incentives by downloading the application.
Users
Users are the most important aspect of CollegeCloseUp. Without user participation, CollegeCloseUp cannot exist. Users will be current college students enrolled at various universities. Users will have incentives to upload videos and pictures through a system of payment described in the Financial Projections portion of this feasibility study. Interaction between users and customers is key for CollegeCloseUp. Users serve as virtual ambassadors of their college. By setting up a profile, users give customers enough information to decide whether they relate to the user. In this manner, customers can decide if the information represents a portion of the student body they identify with. A fraternity brother who is studying Biology will provide a much different perspective than a student who works part-time and participates in few school events. Users receive 85% of revenue produced on the site, so they will be aware that their success is dependent on CollegeCloseUp’s success.
Market Penetration
CollegeCloseUp will reach out to customers through viral marketing and word of mouth. Facebook provides a revolutionary marketing platform. This site will be the backbone of CollegeCloseUp. All distribution will take place on Facebook, as will most of the marketing. We have strong network ties with eight major universities on Facebook. We will focus on these schools initially, and work to strengthen network ties with other schools as we progress. CollegeCloseUp will be distributed to our strongest networks through Facebook, and will then market itself through user activity. We will also create a Facebook group to market the application. This group will provide details on the application and give potential customers brief clips of the videos available on the website. An initial group invitation will be sent out to one thousand college and high school Facebook users.
Mittie Hale, a member of our Board of Advisors and a college admissions counselor, will serve as a valuable source for word of mouth marketing. As a counselor, she is in superior position to recommend college research tools to prospective students. Her network ties include many other college counselors, which will further increase CollegeCloseUp’s exposure.
Financial Projections
Pricing: CollegeCloseUp will price our videos using value-based pricing. The owners believe that prospective college students will be willing to pay between 40 and 60 cents per video, which is up to 60% less than the cost of downloading a single song from the iTunes Store. The owners believe the low cost will persuade the possible college students to feel guilt-free in watching multiple videos which will allow them to focus on researching colleges which is the entire point of them using CollegeCloseUp. People who do not have to worry about the costs of performing an activity will choose to exercise that activity more often, which means more money for the owners and users uploading videos to the application. CollegeCloseUp will therefore charge 50 cents per video, one time fee and the customer will have unlimited access to watching the purchased video. The break-even analysis is such:
Total Fixed Costs = $3,799 Price = $.50/view Average Variable Costs = 0. 3799/.50 = 7598 views/year
The cost of purchasing a video for viewing will remain constant during the first year. The price will then be adjusted for growth of the popularity of CollegeCloseUp. Based on the break-even analysis, CollegeCloseUp will need to sell $316.58 worth of videos per month for the first year to break even.
Sales Revenue Forecast: In 2007 there were 38,024 high school graduates in the state of South Carolina. The owners assume at least 50% of these graduates would have Facebook accounts, and that approximately 50% of those users would be attending college and would use CollegeCloseUp as a means of researching colleges. Given these assumptions, 9506 prospective college students from South Carolina would use CollegeCloseUp during the first year of operation. Each of these prospective students would purchase rights to view 2 videos, and at 50 cents per video CollegeCloseUp would have a Sales Revenue of $9,506 during the first year of operation. The second year adjusted for growth should yield sales revenue of $18,000 and the third year should build on that number and increase to $35,000.
Cost Forecast: The cost forecast for CollegeCloseUp is simple. The costs for the first year are simply the cost of hiring a designer for the application, which is $1,399 for a premium job, plus $200/month bandwidth costs. However, the users who upload videos to the application will be paid based on a more complex system. At the end of each month the total number of views for all the videos combined will be computed. The percent of Sales Revenue needed to break even is 39.9 % for the first year of operation. The owners will take 15% of total revenues from each month to cover costs and pay their selves. The other 85% of earnings will be paid out to the users who uploaded videos. The users will be paid using the following method:
Total # user’s video views(purchases)/Total # views for the month
Using this method, the percent of views one user amassed in relation to the total number of views for the month will be calculated for each user. Each user will receive their respective percent of the 85% of Sales Revenue for each month. This creates incentive to not only upload the videos but also to upload videos that will get the most views because this will maximize the uploader’s profit. This method would produce profits for uploaders of $4,850.95 for the first year, $13,260 for the second year and $27,710 for the third year. Assuming these estimates, CollegeCloseUp will be a self-sustaining business by the third year of operations.
Gross Profit: The gross profit CollegeCloseUp is estimated to amount to $9,506 for the first year of operation, $18,000 for the second year and $35,000 for the third year.
Operating Expenses The operating expenses for CollegeCloseUp are as follows: we will incur a $200 fee/month in bandwidth costs for the uploading/downloading of the videos to the application. This cost will be the only constant operating expense that CollegeCloseUp will need to pay to keep the application up and running.
Profitability The expected net profit for CollegeCloseUp for the first year is $5,707. The profits will grow to $15,600 for the second year and $32,600 for the third year. These profits are the Sales Revenues expected to be collected minus the one time designer/programmer fee for the first year along with bandwidth costs. For the second and third years the expected net profits are the Sales Revenues minus bandwidth costs for the year.
Future Action Plan
Start-Up Capital
We need four thousand dollars to create this application. These costs include website design and programming and initial bandwidth. Additional costs include user payment, which will be a variable cost determined by total number of views.
Sources of Start-up Capital
Personal savings will cover the amount needed for start-up. Increases in bandwidth and views may require outside capital.
Further Information Needed
We need further information on pricing strategies. Our current system of charging fifty cents per video may not be popular with viewers. We may need to change to a monthly subscription based system. We could perform more inquiries into successful revenue structures of our industry. We also don’t know if current college students would find the incentives large enough. Depending on the amount of views, compensation for uploads could be very small. We also need more insight into the size of maintenance costs. Exploring the maintenance functions of sites such as youtube and facebook will help determine these costs.
Writing a Business Plan
CollegeCloseUp’s next step is creating a business plan. A business plan will allow us to develop further competitive analysis and financial forecasts. The business plan will also set up guidelines and functions in structuring CollegeCloseUp. By developing a business plan, CollegeCloseUp will be in better position to compete in the market.
Support Needed
CollegeCloseUp will seek assistance from the web design company, Network Solutions. Cari.net will provide the bandwidth needed to support CollegeCloseUp. Paula Hite, Arnold Hite, Mittie Hale, Bill Dinker, and Jack Dinker will serve on CollegeCloseUp’s Board of Advisors. Paula served as chairperson of South Carolina’s District 5 School Board. Arnold served as Dean of the School of Business at Charleston Southern. Mittie Hale is currently a college admissions advisor for the University School of Nashville, one of the most prestigious high schools in Middle Tennessee. Bill Dinker is the owner of EFT Source Inc., a small ATM processing company based out of Nashville. He will provide advice on business operations. Jack Dinker works for the EFT Source sales department. He is very knowledgeable with application development and technology trends in the market, and is currently in the process of submitting various applications to venture capital firms.
