Informal Business Plan for

flexible-mortgages.co.uk

Version 0.6 Tim Joyce 06/07/1998

Contents:

1. Introduction
2. Structure
3. Business Management
4. Cash Flow
5. Communications
6. Time Accounting and Revenue Sharing
7. Outline of Tasks with estimates
8. Way Forward.

1. Introduction

This document has been written following a meeting between Danny O'Sullivan of Sterling Asset Management and Tim Joyce of HOOP Ltd. It proposes a business model for the next 12 months based around a web site called flexible-mortgages.co.uk.

Danny has struck an exclusive deal with a major mortgage supplier (name withheld for commercial reasons). This means that Danny is the 'Packager' for this particular mortgage, which is one of the best and certainly most flexible on the market. The typical mortgage flows like this:

Customer ---> IFA ---> Packager ---> Bank

The bank pays the packager £150 for each mortgage sold. The IFA will receive in the region of £500 commission on each mortgage.

The site will target both customers and IFAs. Direct customers will need advice from an IFA in order to obtain the mortgage, Sterling Asset Management will contact direct customers who use the site in order to offer their services. The relationship between Sterling and Customers is outside the scope of this business plan.

flexible-mortgages.co.uk will therefor essentially play the role of the Packager, and will generate revenue based on the £150 fee paid by the Bank. A typical transaction will simply involve an online mortgage form being emailed to the bank, who have promised to respond within hours. Out role will simple be to monitor these emails.

2. Structure

flexible-mortgages.co.uk will be an independent entity from both HOOP and Sterling Asset Management, and will trade as a partnership between Danny O'Sullivan and Tim Joyce. The setting up of a Limited Company has not been ruled out, and will probably be required as the project progresses.

Set-up capital will be kept to a minimum by using Tim's Web skills and Danny's Financial Services skills free of charge. Each transaction will generate £150, of which £50 will be reinvested, £50 will go to TTJ and £50 will go to DOS. Neither partner will draw and money from the partnership until we are in profit.

3. Business Management

The business will be managed by the partners, with the following breakdown of responsibility:

3.1 Tim Joyce's Responsibilities

1. Design, Build and Maintenance of the Web site
2. Monitoring of emails sent from Customers or IFA's to the bank.
3. Support for customers relating to the technical nature of the site
4. Management of the business (time recording, accounts)
5. Online promotion and advertising

3.2 Danny O'Sullivans Responsibilities

1. Support for all queries generated by the site relating to Mortgages or other financial matters
2. Monitoring of emails sent from Customers or IFA's to the bank.
3. Maintenance of the relationship with the bank
4. Compliance with financial Regulations and Laws
5. Off-line Promotion and advertising

The business will have it's own bank account, from which both parties will be able to draw money. This is important due to our physical separation. There is an issue of trust involved, and it would be perhaps wise to keep the balance in the account reasonably low.

4. Cash Flow

We hope to launch the business in early July, and start generating revenue by August. Cash flow predictions are notoriously dodgey for web related businesses, but here are some sample figures for the 1st year:

In order to achieve 100 sales per month, we need about 10,000 visitors per month. This is significant, but not massive, and can be achieved.

5. Communications

As Tim and Danny are based in different parts of the country, smooth, transparent communication is essential. Tim will set up some web space where all documents can be posted, and an online Time Recording system where hours worked can be entered. For day-to-day communication email should be used as this provides a detailed record of events. It is anticipated that a physical meeting should take place once per month between Tim and Danny.

6. Time Accounting and Revenue Sharing

Where possible records will be kept of all time spent on the project in an online database. Revenue will be shared evenly between reinvestment, Danny and Tim. Although the cash flow figures show significant profit, we should at all times look to invest in the business rather than draw large incomes. It must be remembered that nothing makes money for ever, and, as middlemen, we will eventually be pushed out. We should therefor use spare finance to explore other online financial service areas, and watch out of the competition.

7. Outline of Tasks with Estimates

The tasks listed here are required to get the business up and running

8. Way Forward

The immediate tasks involve establishing the Partnership and building the website. A meeting should be held late next week to review progress. Suggested time is 1pm on Friday 25th. By this time, we should have a site design to sign off, and be in a position to sign the partnership agreement.