D5.4: Business plan addressing start-up and spin-off SMEs​

Summary

D5.4 Business plan addressing start-up and spin-off SMEs is a two steps deliverable. A preliminary business concept addressing start-ups and spin-offs is developed based on preliminary results achieved at M30. At M48 the final research results will be used to exploit the project’s results at SME spin-off level as specified in the description of action. The identified fitting business model boosting the replicability is franchising. This business model enables SMEs to participate in the positive outcome of service and product based holistic offer provided by a leading business partner who is giving out licenses to franchise partners. Franchising in management literature is defined as a cooperation based on a fixed partnership. The partners are co-working and at the same time they are self-standing companies. The franchisor offers to the licensees a proofed successful business model often including products and services, marketing, training and continuous further development of the system. In return the franchisor receives license fees for the application of the system, the use of the developed marketing strategy and other tools provided. One important idea for an innovation of this business model for P2Endure is to realize a fee based on the turnover. The fee is based just on applying the systemic franchise model on a case. A generic fee is not requested. 

The objective is to boost the large-scale application by the involvement of many different SMEs in order to enhance the speed of the market introduction and to realise an optimised turnover and profit. Therefore, the financial barriers for joining are reduced by this turnover related fee. Nevertheless, the pre-financing burden for the franchisor is extended. The system development and the acquisition time for projects at licensee level are raised. But, as the e-Marketplace platform is providing the gate keeping, the budget of additional pre-financing demand is assured as the increased number of franchises is driving the profit.

These elaborated draft business plans for the SME spin-off companies describe now how the development and exploitation of the e-Marketplace contributes to the business and growth strategy of the different partners. The underlining business concept is to offer the P2Endure set of market-oriented solutions as a smooth, low burden franchise structure for retrofitting stakeholders (clients) and retrofitting consultants. Clients who are directly involved in the deep renovation projects might obtain the toolset as a licence. Part of the final P2Endure business plan will be the innovative business proposition on a no cure/no pay basis. The intended exploitation by the P2Endure franchise business model is fitting to the needs of SMEs. The franchise model enables a low barrier creation in terms of costs and knowledge in order to address a specific market segment need appropriately.

Especially the development and the introduction of the foreseen marketing and market diffusion strategy is ambitious as the market volume and the characteristic partner needs and abilities have to match with the efforts to introduce the solutions developed in P2Endure into foreseen market segments and niches. Regularly SMEs do not have these resources to approach a large-scale market based on complex knowledge and demanding huge financial resources as a pre-investment. 

The need for different business models developed for the single SMEs is obvious as they are used to give evidence that the franchise concept application as a whole matches with the needs of different market segments, technical or target group oriented focus, special client needs and is developing the partners’ expertise and abilities. Furthermore, even if the franchising activities are performed in an existing company additional effort is needed causing pre-financing, too. And lending institutes are requesting business plans that prove the RoI from their perspective. Nevertheless, the scheme of the business model can easily be applied for the different SME companies’ needs. 

One of the most important outcomes is the focus on a cooperative action for the business development based on the centralised e-Marketplace platform. The analysis and filtering of the collected BIM and BEM data and the foreseen monetising is ambitious and valuable at the same time. The complex project information embedded in the BIM model is precious for different exploitation efforts. Especially making use of the big data collected at the e-Marketplace platform is too complex for SMEs. Non-IT specialists and non BIM experts will not mine the data easily and therefore the filtering has to be done at franchise headquarter level providing extra value for licensees. 

Starting from the centralised knowledge about the existence of a project the detailed demand is obvious and the tendering and offering process is eased for the SME spin-offs. Nevertheless, as the centralised BIM data stock is owned by the client, the use of the data is licensed to the platform. Definitely, the development, running and maintenance of the platform is a centralised task that needs budget and other resources. Therefore, a contractual dependency between the platform and the SME spin-offs is needed to refinance the pre-investment. Regularly centralised organised business systems that make use of a systemic business model demand a payment from the user as described above.

Furthermore, the core value chain revolution providing additional profit to franchisee and licensor is realised by P2Endure by the digitalisation of the value creation process and the business model. The effects are:

• Optimum pre-fab process 
• Purchase of raw materials at a lower cost 
• Innovation process embedded in the franchise headquarter structure 
• Better manufacturing quality 
• Improved customers service 
• Shorter delivery time thanks to excellent logistical organisation. 

The organisation of such a business model is fitting to the franchising scheme and the SME spin-offs are licensees of this system.

D5.4 describes how the interaction between franchise headquarter and spin-offs is organised and how the single company is making profit applying the P2Endure systemic methodology. Nevertheless, the business plan for the different spin-offs is based on the same business model under the same umbrella of a franchise model. The assumptions about the turnover and RoI are based on regular market experiences. The calculated RoI of five years is giving evidence to the attractiveness of the P2Endure franchise system to external investors based on the profit that the licensees are realising by monitoring the data. 

As the franchising scene is volatile current trends have been monitored. Multi-unit franchising is quite fashionable. Early franchise system guides known from chains as McDonalds always insisted on the need to have the absolute influence on licensees. One aspect to keep their influence potential low was to limit the number of franchise licenses to a single company.

Nevertheless, the acquisition time and up-scaling is a problem. Nowadays multi-unit franchising is positively discussed and realised solving the up-scaling speed problem even knowing that the steering of eye to eye level partners is more complicated. 

E.g. Deutsche Bahn is currently not ongoingly renting out spaces at stations to franchisees of companies as in the past but buying bundles of licenses –multi-unit franchise- and running the outlets themselves with 100 % daughter companies to raise the RoI of their rented space. The P2Endure approach should follow both strategic ways: 

1. Acquisition of single licensed performers 

2. Apply multi-unit franchising involving the building supply and other large-scale industries that are interested to save their product placement channels and processor qualification. 

At this stage of the project the tailored solution for the P2Endure franchise model is identified and elaborated. The remaining fields of action and basic facts and figures are embedded in this deliverable. Follow-up workshops including the SMEs will help to sharpen the concept taking SME oriented feedback into account. 

The follow-up steps are: 

• To further develop the characteristics of the P2Endure franchise model 
• To develop the final P2Endure business plans for SME spin-offs. 
• To create an idea for multi-unit franchising proposition. 
• To fine tune the innovative business proposition on a no cure/no pay basis. 
• To prepare exploitation activities that will start as a follow-up of the project. 
• To prepare the outline of an additional funding request related to the follow-up at national and /or international level.