For the course New Venture Creation, which I attended at BI Business School in Oslo, we created a team to write a business plan for a startup. I was the founder because I have a dream to create my own consultancy firm in HR. This opportunity seemed too good to be true and therefore I proposed to lead the team and dive into creating this startup.
The business Alpha & Omega Consulting is a service-oriented consultancy startup launching in the Netherlands and the north of France with the purpose of helping startups and micro-enterprises to solve their challenges regarding organizational climate. Our mission is to create inspiring workplace environments where employees can feel safe, is loving, trusting and consequently gives the employees the feeling of fulfilment. This will be realized by the inclusive Human Being Development philosophy.
Firstly, the chosen core activity is with the purpose of viability since organizational culture, the underlying basis of organizational climate, can be very complex to solve. Secondly, organizational climate will take a shorter amount of project time. Thirdly, there is a better competitive advantage to target smaller companies with smaller budgets.
The choice for startups with at least two years of existence and micro-enterprises is because they will have the budget for our expertise and furthermore be in the organizational phase whereby our expertise is needed.
We launch in the Netherlands and the north of France since we have a professional network which will help us to launch the business and get the first clients.
The startup consists of four individuals who have acquired their master’s diploma in business and have different background and nationality. Consequently, with this diverse team we are better to understand and collaborate for solving organizational climate, culture, and team challenges.
Our added value is in the network we establish with our clients, the expertise we bring to the companies in the form of coaching, facilitation, documents, training, and feedback.
The marketing strategy is to focus on digital marketing in the form of a website, blog, social media, and word-of-mouth to penetrate the existing market. If we deliver quality, people will give us free publicity since they enjoy our services.
With the €5.000,- equity we bring in, we will not need any investments from outside, and we will reach the break-even point in the first year by paying salaries to ourselves.
Alpha & Omega Consulting has come to birth with the idea to present ourselves as management consultants with the purpose of helping organizations to solve their problems regarding organizational climate. The definition of management consulting is according to Kubr (2002):
Management consulting is an independent professional advisory service assisting managers and organizations to achieve organizational purposes and objectives by solving management and business problems, identifying and seizing new opportunities, enhancing learning and implementing changes. (p. 10).
Since the abovementioned definition is too broadly stated, we wanted in the beginning to focus on organizational culture, but we pivoted from culture to climate. The definition of organizational culture according to Schein (2009) is:
Culture is a pattern of shared tacit assumptions that was learned by a group as it solved its problems of external adaptation and internal integration, that has worked well enough to be considered valid and, therefore, to be taught to new members as the correct way to perceive, think, and feel in relation to those problems. (p. 27)
This definition of culture implies that culture is stable and difficult to change because it accumulates the learning of a group, the ways of thinking, feeling, and perceiving the world that have made the group successful. According to Schein (2009) the organizational culture consists of three levels, which are artefacts, espoused values and underlying assumptions (see appendix 1). Without destroying and rebuilding the organization, transformation of underlying assumptions requires anywhere between five to fifteen years or more (Schein, 2009). It is exactly this realization when we pivoted from focusing on organizational culture towards organizational climate, since the climate is the organizational artefacts which are easier to adapt and have influence on the underlying levels of organizational culture.
Organizational climate is defined by scholars Ehrhart, Schneider and Macey (2013) as:
Organizational climate is the shared meaning organizational members attach to the events, policies, practices, and procedures they experience and the behaviors they see being rewarded, supported, and expected. (p. 69).
As stated above, these artefacts that are processes in the organization are rewarded, supported, and expected by leadership and we as management consultants can influence and adapt them in concordance with the leadership of the organizations. If the new processes and behavior produce better results, it will eventually lead to internalization of the values it is based on and will eventually become an element of the culture, in other words, it will lead to adaptation of the deeper levels of the organizational culture (Schein, 2009). In appendix 2 is this in a graphical way depicted, the leaves and tree branches are illustrated as the artefacts and climate and they feed with the help of photosynthesis the roots, but the reverse also plays a role; the roots feed the leaves and branches.
In conclusion, we as management consultants of Alpha & Omega Consulting are focusing on our main activity of helping employees of organizations to change, coach, and facilitate adaptations in the organizational climate.
The birth of A & O, a personal story
“When you don’t get your dream, you get your destiny” – Tony Robbins. When I started with my first professional job, I was excited. As an industrial engineer I wanted to work in high tech environments where I could be surrounded with smart engineers and impressive products. I started working for such a company and they made semi-finished products for such as ASML, Philips, and Thermo Fisher. The cleanrooms were amazing, the strict cleanroom work coat policy made it clear that people who had nothing to do with the area should stay out. As a technical production assistant I made sure that the engineers that I supported got the materials for assembling the products, that the warehouse had these materials, and that in case of quality problems the supplier would know about it.
One of the main tasks of mine was to improve the processes around the production assembly, and this was a challenge since I had to work with engineers who were about to go with pension. Any change requires adaptation and learning new work methods, it is very challenging when individuals do not want to change when they think there is no need for it. I was pressured by my manager to change processes to improve the production since the customer demanded more and faster product output, but I could not motivate my engineers to adapt, and this lead to my frustration and turnover.
In my second professional job I started as a sales engineer because I wanted to experience customer contact and to avoid working with production engineers. My main task was to sell industrial related measurement products such as water pumps, temperature meters, and pressure sensors. I entered the sales department that consisted of a total of 25 individuals, with 7 direct colleagues who were also outside sales engineers. The team consisted of all males who were between 40 and 60 years old. I had a hard time to connect with them since I knew little about the branch and had to learn a lot about the products we were selling.
The office had internal sales engineers working and I had such an engineer who did the administration and input of the orders that I sold. I did not know that he had applied twice for my job and I started to notice his interference and sabotage of my sales. My manager could not do much since he was only manager of the outside sales team. Furthermore, I noticed there was discrimination and very bad jokes about minorities, gossiping, bullying, and even a colleague who was cheating with his work hours. I was happy to be outside working with customers but every time I had to return to the office I felt bad. This all led once again to my frustration of company culture and climate and I left the company with great deal of frustration and anger; how could employees not see that they were working in a toxic work environment and furthermore did nothing about it?
This question kept me awake at night, I felt so much energy to give an answer to this question and help others see what I had seen. I made a decision to get my masters in Human Resources; this master would give me my answers. After the first year I understood thanks to the theory in psychology why individuals have a hard time to change the sequence they were used to work with and what diversity at workplace actually means. I understood what psychological contract breach meant and understood better what had happened in the last two years. With these realizations I promised myself to change these toxic work environments at its origin; when these environments have not flourished into big organizations. Consequently, after talking with my mentor who has more than 40 years of experience with mergers and company cultures, I decided to start after my master a company which will help other startups and micro-enterprises to change organizational climate and culture via coaching and facilitation of the employees and leadership.
“When life gives you an opportunity, seize it with both hands” – Anonymous. The opportunity to participate in an exchange is very special for me since my university demands high requirements and when I saw that the course New Venture Creation would give me the opportunity to start working on my future startup; I got very excited to participate. The dream feels more achievable when I and my team had the chance to pitch my dream, our dream, with other students and get feedback from them. In this business plan we will discuss the most important aspects of our consultancy startup to give an insight into our strategy. There is a long journey ahead, but the first step is always the hardest, let us begin – Essan Akbarzadeh.
Alpha & Omega Consulting is a startup that is service-oriented and focuses on organizational climate, in addition, specialized in adapting organizational processes with the needed coaching and facilitation for all the employees of the organization. We focus mainly on how to improve organizational climate which hinders the employees to be on their best.
The idea is to find startups and micro-enterprises consisting out of maximum 10 employees and pitch and talk to their leadership that there is room for improvement in their organization and we are the consultants who can get the job done. We focus on the smaller entities since they are most often still looking for organizational processes that could work and/or have already established processes which do not work out as planned by their leadership. It does not matter greatly for us in which branch the organizations are located, since we are as coaches and facilitators focusing on work psychology which can be, with the help of the leadership of the organization, applied in all organizations. For instance, we can help with conflict between employees, dysfunctions of a team, better communication processes, leadership styles, see appendix 2 for more examples.
In our market analysis there will be more in-depth information about our business support systems but it is important to know that we want to launch the company in the Netherlands and the north of France. The reason for this is that our team consists of individuals who are familiar with these two markets and can in a faster pace set up the company for operation. What sets us apart from other companies in our branch is the small diversified team who have finished their master’s with the launch of the company, and the professional work experience. We furthermore want to work onsite with our clients and therefore have no office to maintain and can therefore keep our costs low.
Our team consists out of four individuals who are all in their master’s year and have different background and nationality. Consequently, this diversity in the team leads to more productivity compared to homogenous teams. Van Knippenberg and Schippers (2007) have written about a theory which is called the information/decision making (or informational resource) perspective. This perspective does not view diversity as a liability, but rather as an asset. In this perspective, the emphasis is on diversity as a source of information, knowledge, and expertise that may beneﬁt the team. The basic premise here is that differences between people are associated valuable differences in task-relevant knowledge, insight, and expertise. Accordingly, the more diverse a group is, the larger the pool of task-relevant information and perspectives available to the group, and the better able the group will be to address the challenges and problems encountered in task performance. Thus, the differences of expertise and insights should lead diverse groups to be more creative and innovative, better problem solvers and decision makers, and overall to perform better than more homogeneous groups.
Essan Akbarzadeh – Founder:
I am from the Netherlands, I have a background in Industrial Engineering and at the moment I am finishing my masters in Human Resource Studies. With two years of professional work experience in sales and logistics, and profound interest in human psychology and entrepreneurship, I have developed myself in the last three years to design work processes, coach others in changing processes, and inspire others to see possibilities.
Mr. A – HR Business Partner:
I am from France, and I am finishing my master’s in Business. I have professional work experience in organizing music and business events. In addition, I have experience in sales and procurement in business environment. My expertise will be in finding new clients for our company and with additional training I can coach micro-enterprises in finding new prospects and broadening their client base.
Mr. B – HR Business Partner:
I am from Canada, and at the moment I am finishing my MBA and I have three years of professional work experience as business process change agent. Furthermore, I have worked in the financial sector and learned to work with mutual funds. My expertise will be in the marketing aspect of the company and figuring out how we can grow a brand. I can in addition help designing business processes which will help with increased productivity.
Mr. C – HR Business Partner:
I am also from France, and I am finishing my masters in Finance and have previously worked in projects as financial controller. Furthermore, I have experience in customer relationships in the energy sector and have know-how of clean technology. My expertise is in the financial aspect of the company and with some training I am able to coach others in the financial aspect of micro-enterprises.
The values of other organizations will always be adapted in mutual agreement with the leadership; since it is they who can set the basis for it in the organization. We Alpha & Omega Consulting have agreed upon the following values for our company which is in line with the Human Being Development (HBD) perspective:
- Integrity: fairness, respect for others and commitment to act in good faith is fundamental.
- Outstanding: delivering outstanding work by going the extra mile opens up the door for long lasting relationships.
- Inclusiveness: everyone has something valuable to add, do not criticize but be empathetic and try to see others perspective.
- Growth: be interested in other people, listen more, discuss in a healthy way, question the status quo and aim to learn from every situation so that contribution will be second nature.
- Win-win: long lasting relationships establish only when the majority is content.
The vision for Alpha & Omega is to create a consulting company that focuses on creating inspiring workplace environments where employees can feel safe, is loving, trusting, and consequently gives the employees the feeling of fulfillment. It is important that employees, particularly with the increase in market competition, can work in an environment that stimulates creativity and collaboration. Intrinsic and extrinsic motivation are both paramount but it is the intrinsic motivation which makes individuals go the extra mile and in return experience more often peak moments of flow (Csikszentmihalyi, 1990).
It is crucial that one understands that every startup and micro-enterprise tries to create an effective atmosphere according to their leader’s values and norms, but they are not always as effective as one would want. We as consultants in work psychology have the privilege and honor to help others see possibilities in creating better work environments and we can help them by promoting Human Being Development (HBD) perspective. It is paramount to understand and acknowledge, e.g., by the use of appreciative inquiry, that individuals have chosen a specific work process to achieve their goals, but with the lack of specific knowledge they do not always succeed in this. With HBD we support employees who work with business processes and coach them in different work methods and attitudes. It is the lack of knowledge, resources, motivation or any other specific reason which we can support organizations with by finding new possibilities for success.
If we want to help as many organizations as possible, we have to grow in the next five to ten years in the Netherlands and France. With the projected growth, approximately €48.000,- of net cash flow in 2022, we are able to hire more consultants who believe in our cause and can help to create the abovementioned work environments. Having a “Big Hairy Audacious Goal (BHAG)” is key for motivation and goal setting (Collins, n.d.). Our vision is to operate in every country in Europe in the next 25 years.
The consulting industry
The 2,5 million of French companies are, for the whole majority, i.e., 96,8%, small companies with a number of employees varying from 1 to 19 (INSEE, 2013). These companies are not sufficiently supported by the consultancy branch since most are located in Paris (the region “Ile de France” includes 62,2% of the consultancy jobs in 2007). Thus, there seems an opportunity for consulting in the micro-enterprises located in the provinces. Indeed, if we consider that every founder would want to be supported at least one time in his or her activity, there will be a lack of consultancy companies in the next years. The French market value represent €4,1 billion in 2015 (Source Global Research, 2016), with a forecast of approximately 3,5% in 2016, see figure 1.
To be more specific, and to focus on the functional area at stake concerning our company, we may observe that Human Resources and Change Management represent 11% of the French market, see figure 2, which represents around €451 million.
Concerning the Netherlands, we can first estimate the value market of the management consultancy industry which represent 3,62% of the European management consulting market i.e., €86,2 billion (FEACO, 2010). We see a healthy growth in the Dutch consultancy market, according to the Captains Consulting Survey 2016, “eight out of ten consulting firms achieved revenue growth, of which more than half (56%) saw double digit growth”, see figure 3. This growth could be contributed to more consultancy projects and or an increase in hourly pay rate. Thus, it looks like a healthy market for us.
The chosen market
Assessing the size of the market, we first have to look at all the potential customers in the area in which we want to set up the company. As we already said, we want to create A&O Consulting across the north of France (we want to consider the region “Hauts de France”) and the Netherlands. We decided to focus on micro-enterprises and startups (with at least 2 years of existence). We will use the following definition used by the European Union, to qualify micro-enterprises: “micro-enterprises are those that meet two of the following three criteria and do not fail to do so for at least 10 years”
- Fewer than 10 employees
- Balance sheet total below €2 million
- Turnover below €2 million
We notice that in 2013 the region “Hauts de France” hosted 282.000 enterprises (INSEE, 2014) and each year there are 23.548 enterprises emerging in this area. From these new emerging enterprises 40% are micro-enterprises which represents at least 10.000 companies (INSEE, 2013).
In the Netherlands the number of registered companies has increased by 65% in 2014 (Centraal Bureau voor de Statistiek, 2015) and nearly 1,5 million companies exist nowadays in the Netherlands. The previous mentioned data shows us that this increase is due to the rise in the number of one-man businesses, as well as the increase in the number of small enterprises. In 2015, almost 300.000 of these companies had between 1 and 9 employees (Centraal Bureau voor de Statistiek, 2015). We can also highlight the fact that more than 225.000 of one-man businesses have started business since 2010 (Centraal Bureau voor de Statistiek, 2015). It means that they could be at a higher level of development in 2018, and may have an increased interest in organizational climate issues, because of hiring process.
Thus, we can assume that the potential volume of our target market seems considerable enough to enable us to succeed in this market segment.
The target location and market
First, we want to implement A&O Consulting across the north of France and the Netherlands because of the network that Essan and Mr. A already have in these areas. Because of their professional work experience, they are able to take advantage of their connections to launch the company.
Secondly, we defined the segment target according to the European Union’s micro-enterprise classification. Since, as mentioned in the chapter “The birth of A&O, a personal story”, helping smaller companies will result in more successful mid-life organizational phase, before they have grown into large ones. Furthermore, micro-enterprises have organizational issues which are easier to handle by four of us; since they are smaller and less complex.
Thirdly, since we are a smaller entity compared to the “big four” we have less bureaucracy and more face to face contact with our clients. Furthermore, we do not have an office, thus, we are more inclined to be at the clients’ office. In addition, the “big four” is less inclined to work with micro-enterprises who do not have the preferred budget, since, big fish go after big fish.
Fourthly, websites like e.g. www.petite-entreprise.net, illustrates the difficulty which enterprises and experts have to meet face to face outside the capital. The big consultant firms located in capitals may be more reluctant to move long distances in order to intervene in small companies.
Finally, the experience of the company was also part of our target choice. Companies with more business experience will have the budget to invest in organizational climate issues. Moreover, they are at a stage of development which makes them realize the need for outside help. In addition, it is in a later stage of the organizational life when there is a need to hire more employees which brings in more complexity to organizational climate. During our research, we discussed with some small companies, in order to have feedback on our business idea. We met the CEO of GOBI, a company which develops an app helping people to connect with their community in Norway. He explained to us that he could require the type of services we propose, but only when his company has the budget for outside consultants. At that time, he may need help to define for instance a better hiring policy which fits with the company’s future objectives.
The market need
As mentioned in the chapter “The birth of A&O, a personal story”, there are companies with problematic organizational climate and need our help to figure out better solutions to resolve issues e.g. team discrepancies, communication styles, inclusiveness. Furthermore, we attended in the course New Venture Creation a guest lecture by Trond Riiber Knudsen, wherein he as an angel investor showed us his portfolio of startups. He mentioned in one of the answers to our question; there is indeed a need for startup and micro-enterprise consultancy. Last but not least, companies like GOBI confirm that there is a need for our expertise if there is a budget for it and outside expertise is needed.
Let us focus first on the competition in the north of France. Considering the specific segment in which we want to compete, in the whole France only a few consulting firms exclusively focus on corporate culture, which climate is part of. In table 1, we briefly describe them.
These companies are not located in the north of France, and above all, except for Parrhèsia, they do not address small companies but bigger enterprises. As previously mentioned, the “big four” will target companies with bigger budgets instead of working with our target clients. In addition, the lack of data concerning the area we selected makes it difficult to establish an overview of the competition. We did not find a competitor which targets the same specific customers like us.
Let us have a quick look at the consulting market in the Netherlands. In 2012, the number of consulting firms was up to 66.950, with 87,7% of them composed by sole practitioners (ABN Amro, 2011). This market is also characterized as innovative, “Dutch firms seem to show the courage to experiment in order to improve the business value they add” (Management & Consulting, 2011).
With this tool we want to analyze our internal strengths and opportunities. It will furthermore enable us to understand better the forces at stake concerning the organization itself and its environment.
- Key partners
As can be seen in table 3, Tilburg Center of Entrepreneurship and Kedge Business School, which are our former schools, will help us to set up the company thanks to their expertise and network.
- Key activities
As a service-oriented company, our aim is to create value by solving customers’ issues regarding organizational climate. Our key activities will be consulting, coaching, maybe implementation of the new processes, and the “maintenance” of the new processes in the form of checkups.
- Key Resources
Our key resources are laptops, and software tools (e.g. Google analytics). But the most important key resource is the diverse team itself, and all the knowledge and pedagogical skills we have.
- Value Proposition
We want to solve organizational climate issues in companies through consulting: this is the answer to the need for a fulfilling corporate culture. We will provide guide & documents, feedbacks (i.e. internal processes), training (i.e. new skills and competencies), coaching (e.g. leadership) and facilitate team processes (e.g. how to brainstorm the right way).
- Customer Relationships
We want to create a strong and less formal relationship with our customers if we want to be seen as coaches and facilitators. Because of the chosen segment, we can assume that these small companies expect us to bring a personalized solution which takes into account their particularities.
To reach our customers we will use our personal network through the word of mouth, the virtual presence through the digital marketing, prospecting through cold calls and finally we will be present on entrepreneurship events to meet founders and to have a first contact with them.
- Customer Segments
We decided to focus on micro-enterprises from 1 to 9 individuals and startups with enough business experience in the Netherlands and in the north of France.
- Cost Structure
The biggest costs are the salaries and the digital marketing. There is no need for superfluous investment except for laptops, because we choose not to have an office in the first place.
- Revenues Streams
Customers will pay us for our capacity to bring solutions and solve problems. We will propose custom hours for consulting in order to have personalized answers and the companies will pay us regarding the hourly rate applied. In the second stage of our company, we will also accept equities. These revenue stream contribute 100% to overall revenues.
Via marketing we make products in the form of documents and services which attracts the interest of clients, as well as the selling style to our segment. Moreover, we create value for our clients and build strong customer relationships in order to capture business from them (Court, Elzinga, Mulder & Vetvik, 2009). Building strong customer relationships means having satisfied clients for us, which leads to greater life-time value (LTV).
Segmentation and positioning
Market segmentation is part of marketing strategy which lets us provide the relevant information for our chosen market segment. From the evaluations of our clients we can expect to adjust the marketing strategy to the needs of the targeted segments. For the segmentation, we will focus mainly on micro-enterprises and startups which have at least two years of existence and which are relatively profitable. Our clients are those that want to seek to build a better organizational climate and underlying culture and solve issue in these areas.
Positioning refers to how an organization compares with competitors who are the closest providers of alternative product offerings (Kumar, 2006). Alpha & Omega Consulting is positioning itself as a niche company who want to help smaller companies with providing value in the form of knowledge and expertise. By doing this, we will create a network of smaller companies wherein we can play as knowledge mediator and provide coaching, documents, guides and even more. The main point by doing this is to offer added value by being able to interchange knowledge and know-how.
Developing a market strategy
Developing a marketing strategy is based on extensive marketing analysis and the strategic objectives are based on the results of the analysis. There are numerous strategies that may be employed depending on the strategic objectives of the organization (Norton & Kaplan, 2007). It is known that organizational climate plays a critical role in the success of the organization (Blair, 2012) and it is our mission to put organizational climate in the spotlight for success in micro-enterprises and startups.
Prior to World War II, Japan had a positive experience with their vehicles in North America. The purchasers were impressed by the quality and were loyal to them, and that generated positive word-of-mouth promotion for these manufacturers. Our strategy is to focus for a part on Total Quality Management which refers to management methods used to enhance quality and productivity in organizations, particularly businesses (ASQ, n.d.). We will use parts of what Joseph Jablonski, author of Implementing Total Quality Management, created which include participative management, continuous process improvement and the effective utilization of teams which are inputs that help to make organizations more competitive (Jablonski, 1990). These are factors that produced a better climate in the past and are still relevant today.
In addition, HR has High Performance Work Systems which some of them emphasizes on positive psychology and we can use them to inquire, change and maintain the organizational climate. For instance, appreciative inquiry can be used to check the current processes, strength-based HR philosophy for hiring policy, and resource based view for putting the strength of the organization on the map.
Firstly, we want to be online present via our webpage and integrated blog, since this will make it easier for our potential clients to find us. We can use content-management systems and online targeting engines to track our website visitors so that we can better serve them the information they are looking for via context placement and page behaviour of the visitors. Furthermore, advertisements can be cost effectively deployed via tools like Google Ads or Facebook Ads.
As illustrated in figure 4, 21% of initial consideration is via consumer-driven marketing. Online search and word-of-mouth is what Alpha & Omega Consulting will focus on at the beginning. It will be hard to sell our services based on past experience because it is not yet well known. There is also a cost management reason, but mostly we are looking to reach our audience with specific content, quality work and in a later stage deploy company-driven marketing.
This strategy, if done well, will pay off since videos on landing pages increase conversions by 86%, customer testimonials, with 89% effectiveness, have the highest effectiveness rating for content marketing and B2B companies that blog gain 67% more leads than those that do not (Sukhraj, 2017). Making adjustment to the website will be part of our activities and monitoring of our conversion rates. All the monitoring tools are free with Google and Facebook.
Secondly, we want to focus on the three most popular platforms at the beginning. Our media will be published on Facebook, Instagram and our company website. We can use live webinar shows via these platforms to spread our message and it allows potential customers to interact with us. Furthermore, we will use Google Analytics in order to collect all the data we need because it is a free and well proven tool that only requires the simple addition of a tracking code to our website.
Thirdly, digital marketing strategy is about the content. We can show how important organizational climate is and what kind of changes are possible which consequently affect in a positive manner the employees for reduced turnover, increased engagement and health benefits (Blair, 2012). Moreover, statistics to compare companies is another idea that would be great to publish on Instagram and Facebook. These are free platforms that can gather a lot of attention in a short period of time, which helps us with branding our company. Figure 5 shows us the four main categories where we can create online content. By releasing regularly online content we can reach our audience.
Word-of-mouth marketing works for us because we want to deliver outstanding organizational climates where individuals can have a fulfilled work experience. By inspiring and treating employees well during presentation, training and workshops we can build a trusting relationship inside the organization. Consequently, this will lead to free publicity since individuals talk about our services if they enjoy our help.
Our team has to be interesting and interact with potential clients about organizational issues. Organizational climate and especially culture is not easy to understand and a solution like adding a rest during the working hours or a game to solve communication issues is not simple as it may look like in the first place. Furthermore, educating our clients about the new business trends like teleworking and best practices present a great potential since it leads to information sharing and free publicity.
The Ansoff Matrix as depicted in figure 6 suggests that there are four types of growth strategies depending on existing products in new or existing markets.
Alpha & Omega Consulting will be in a market penetration segment. To make our company successful, we will need an aggressive digital marketing campaign combined with a great presence at events with micro-enterprises and startups. Competition can be tough and we will have to innovate by using digital marketing. Although we can reach our segment via online presence, word-of-mouth is still a huge factor that we need to focus on via our outstanding work and digital marketing.
The financial statement for Alpha & Omega Consulting is depicted in table 4. As our company will be a startup in its beginning, the statement is simple. We will not need investment to launch the company as we will have no office since it is important to be often present at the client’s office for employee questions and as mobile consultants we can work anywhere.
Our revenues will come from our consulting missions which will be paid on an hourly basis as it is detailed below. Our main costs, as a service-oriented company, will be the salaries and the advertising expenses we will have when launching the company and prospecting clients.
As we do not need external funding such as loans, bonds and so on, we will have no interest expenses but we will have interest income from the free cash flows that will be deposited at the risk free rate of 0,8% (Netherlands’ risk free rate).
We will reach the break-even point on our first year of activity and to avoid paying taxes we can already have salaries for all employees. The profitability percentage will be, respectively as of 2019, 12,1%, 13,9%, 10,3% and 16,3%. There will be a drop in the profitability in 2021 because we will recruit one person that year.
We decided to set the price per hour at €50,- for our first two years of activity in order to be attractive and enter the market more easily, see table 5. This rate is cheaper than the average of small consultancy firms who charge at least €1.000,- a day for junior consultants, which represents €125,- per hour if we take a base of an 8 hours-workday (Aytekin, 2015).
Changing the climate of a company is tangible with set hours in a project, but the underlying espoused values and assumptions of a culture is not something tangible that you can agree upfront like a market study. It is hard to decide upfront how many hours are needed per project, since it all depends on the complexity of the change and the size of the organization. We estimate that it will take at least an average of 200 hours, which translated to 25 working days per company per year to have an efficient result. We take an average because we can never know in advance the workload needed since it depends on the complexity of the task. We plan to have five clients in our first year of activity. Considering the number of micro-enterprises in France and in the Netherlands (see our market analysis) and our market visibility, we think this is a reasonable number.
The fact that we do not resort to external funding and that we have little costs outside the payroll expenses makes it that the money we generate is only for the company and the founders, so much so that the net income and the net cash flows are more or less the same, see table 6. The only investment made is the capital expenditure (equity injected to create the company) so every after tax euro made is available for investments, dividends, treasury or deposits, see table 7.
The balance sheet in table 8 is the balance sheet at the creation of the company. As founders we will bring €5.000,- of equity, which will correspond to our equipment for work (computers and phones) on the asset side and we will have no cash in the first year.
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Appendix 1: The three levels of culture. Retrieved from Schein (2009).
Appendix 2: Climate/Culture tree. Retrieved from Isaksen and Akkermans (2007).