Easy information for Public Transport Users
Great Advertising Options for Business
The business (City Journey Planners) will provide public transport managers (Governments / Local Councils / private operators) and public transport users in cities throughout Asia with a fully integrated intra-city journey planning website portal at no or minimal cost to the managers, and also offer travel related businesses with an advertising platform with large numbers of traveler visitors.
Using existing platforms and technologies, but integrating them into a comprehensive public transport on-line journey planner, the City Journey Planner websites will be customised for each city. The public transport managers will be able to promote the City Journey Planner websites to users and potential users for ease of use of their systems to patrons. The opportunity to increase usage of the public transport systems is of great importance to public transport managers world-wide, so the service will be considered of great value to these managers.
The City Journey Planner websites will derive their primary revenues from on-site advertising of travel related and other sector companies, as the Planner websites will enable not only intra-city journey planning, but will also link, through paid advertisements, to other travel related services, such as flight, accommodation and tour bookings.
Each City Journey Planner website will have the capacity to generate a minimum of USD$350,000 in annual revenues and $250,000 in annual earnings. It is planned to have 2 City sites operational by end of year 1.
An initial seed investment of USD$150,000 is sought from investors with an exit strategy that sees buy out at 3 years with significant returns for investors.
Markets for the Product and Advertising
The market for City Journey Planner websites is very large and is comprised of any city with a significant public transport system. While targeted at Asian cities initially, the concept can be extended to any city in the world that does not yet have such a journey planner portal service, or is under-serviced by the portals currently available.
Subscription Payment by Operators
Depending on individual cases, there may be a subscription fee charged to operators for the service. This will be negotiated for each city with the relevant operators.
Advertisers to be targeted (which form the bulk of the revenue projections) will initially be businesses providing products and services related to travel, such as tours, accommodation, air flights, retail shopping venues & retailers and travel accessory retailers. These include travel agencies, hotels, tourist destinations and facilities, airlines, shopping malls, retailers.
Research has indicated that the following are just some of the Asian cities do not yet have an online integrated public transport Journey Planner service or have a service that can be improved – (the region had inbound visitor arrivals of some 200 million in 2009, with expected growth of 4% across the region):
. Kuala Lumpur (Malaysia) / Jakarta (Indonesia) / Taiwan (Taiwan) / Ho Chi Minh City (Vietnam) / Manila (Philippines) / Seoul (Korea) / Tokyo (Japan) / Hong Kong, Beijing, Shanghai, Macau (China)
End User Visitor Sectors Targeted
There are 2 sectors to the target market in Asian cities – 1) foreign and domestic visitors to cities and 2) local transport users. Currently, many (if not most) Asian cities have very basic, if any, public transport journey planning information that is useful to foreign or domestic (non-city dweller) visitors.
Foreign and Domestic Visitors
Many Asian cities have large numbers of both foreign travelers and domestic (non-city dwelling) visitors coming to the city every year. As an example in 2009, the Asia Pacific region attracted some 200M foreign visitors; this does not include intra-country domestic visitors to cities.
Many of these travelers would use local public transport systems if there were a convenient method of gaining the travel information they require. The City Journey Planner website portals will provide that ease of use, and thus will be attractive to many visitors who will use the service to plan their intra-city journeys.
This provides an opportunity for travel related companies (hotels, airlines, tour/ travel agencies, vehicle transport companies, travel accessory retailers, shopping centres / malls, etc) to promote their products and services on a portal that will have significant traffic.
Local Dweller Users
In any city, there are always local city dwellers who may have need to use the public transport system, but without accurate information, many choose to not use the system services. This again provides an opportunity for local companies to promote their products and services to their target market.
Projected Visitor Traffic and Revenues
Each city will be studied to determine probable website visitor numbers, and advertisers will be targeted and priced according to projected traffic numbers.
Based on expected minimum annual site visitor numbers of 1M (considered a very conservative figure) for any of the targeted city Journey Planner sites, it is anticipated that there will be sufficient advertising demand from travel related and other companies to generate minimum annual revenues of USD$350,000 from each site from year 2 of operation, with earnings of USD$250,000 for each site.
Competition & Challenges
There is already some competition in place in the form of Google Maps but this does not contain public transport specific information. The integration process planned for City Journey Planners includes utilising freely available Google information (via API web service plugin) as well as other paid platforms and services, to provide an enhanced service and user experience.
There may also be existing competition from the public transport managers themselves via their own websites, but in most cases, this is normally a stand alone information portal for the particular mode (bus, train, etc) rather than a service wide system. The information, even when provided, is not considered particularly user friendly nor comprehensive enough for a patron to easily plan their intra-city journeys with ease.
Although City Journey Planners will not be targeting cities where there is an existing integrated Journey Planner (as found for example in Australian cities such as Brisbane, Sydney and Melbourne) if we consider our product can enhance the services offered, and will also enable sufficient advertising revenue to be gained, we believe that existing competition is no barrier to our service being offered in competition.
The primary challenges are competition (see above), access to public transport manager data and government / local authority approvals.
While competition is not viewed as a block in any given market, priority will be given to those cities with no competition. The important aspect to dealing with competition is to provide a better, more user-friendly service and to continue to enhance the Journey Planner websites with innovative services, such as mobile phone applications etc.
Access to public transport data (schedules, fares, etc) may be an issue, but it is believed that most public transport managers will be agreeable to sharing their data provided a) there is no costs to them and b) there are confidentiality and security protections built into the service.
Government / local authority approvals, particularly exclusive rights to provide the service, will be sought, as these would provide a level of competition protection, but the services can be provided even without these approvals and exclusivity conditions.
Funds Being Sought and Utilisation of those Funds
Projected Company Valuation
The valuation of the company (post-funding) based on 2 city Journey Planner sites being established by end of year 1, is USD$4M ($250,000 annual earnings x 2 sites x 4 years earnings).
Pre-commitment from Advertisers
Prior to investment being finalised, there is to be research conducted to establish likely advertisers and gain pre-commitment from those advertisers to purchase of advertising space on the Journey Planner websites in two cities. This work is underway now.
Funds Being Sought
The funds being sought from investors are USD$150,000, which will gain the investors 25% equity in the company. Based on the projected post-investment valuation of USD$4M, this is an 85% discount on the projected value for a stake of this size.
Use of Funds
The promoters will receive USD$75,000 as payment for work and services performed in the establishment and ongoing management of the business. The remaining $75,000 will be utilised to as working capital to establish the first 2 City Journey Planner websites in two cities (currently planned to be Kuala Lumpur Malaysia and Jakarta Indonesia) and to market the advertising space opportunities available. The business will be self-funded from that point from advertising revenues.
Return on Investment and Investor Exit Strategy
Potential Exit Options
It is planned to explore potential synergy partners within the first 3 years of operation to locate trade sale and other exit options for investors. These partners may be travel related companies wishing to enhance their traffic numbers, advertising agencies looking to gain additional service platforms for their advertising clients or companies from other sectors who find the traffic and the platform of value to them.
The investment of USD$150,000 will see dividends paid from year 3, with the intention at that time to retain 25% of earnings for future enhancements and expansion, while returning 75% of earnings to investors as dividends.
Also at year 3, investors may choose to utilise the entry of identified trade sale partners to exit with a projected payment of USD$1M for the 25% stake (based on projected value of $4M at that time) Alternatively, investors may opt to remain as longer term shareholders, should they see the future growth of the business as promising.
The original idea for the service was outlined by the MKey team of Malaysian university students comprising Hariz Badrulhisham, Nurul Naimah Salim, Nurzatilani Ahmad Nadzri and Siti Diana Amirah Amir during the 2010 Malaysian YES Challenge.
The further development of this brief Business Plan overview was conducted by Dennis McMahon, owner of Green Business JV Trust, and the original MKey team, and the establishment of the business and ongoing management, will be performed by Dennis and the Mkey team, along with the use of appropriate internal staff and outsourced service providers to enable the company to operate effectively.
Dennis has 25 years of experience in business management and sales, ranging across Asia Pacific and including the environmental, health, distribution and business support sectors.
Currently, Dennis is consulting to several Malaysian companies to assist them in business restructuring, regional expansion and sales improvement.