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The sales for the business will be tracked with a QuickBooks accounting system integrated with an ACT! CRM database which will track leads generated. Each associate must enter their own information into the system. Kolem Plynthe will review the numbers weekly, looking specifically at the Gap dashboard (presented in the appendix).

The sales forecast and marketing expense budget show the critical numbers for Plynthe Insurance to achieve over the next three years.

Sales Forecast

Property insurance and life insurance will be the main drivers of business. Customers who use other products will typically be customers who have first purchased property or life insurance. Cost of sales is low as the revenues earned come directly from the insurance providers generally as a commission on the policies sold and renewed. The commissions will range between 4% and 7% depending on the insurance provider, but estimates are an average of a 5% commission on policies sold, leading to the per unit commissions listed in the forecast.

Cost of sales consist of the fees involved with submitting and processing a client's paperwork and the costs of travel (gasoline/tolls) that can be directly attributed to sales calls at client homes and is estimated to start at 16% of sales in the first year and to drop to 15% in future years as travel costs can be saved due to the volume of sales calls being made as well as some clients who do not need sales visits due to renewals.

By building business through Kolem Plynthe's own sales and marketing work and then through an additional associate, the business is expected to significantly grow its revenue streams, especially in the target market of younger clients, in these first three years of operation.

Sales Forecast

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Sales Forecast
Year 1 Year 2 Year 3
Unit Sales
Propery Insurance 682 955 1,336
Life Insurance 318 445 624
Long Term Care/Disability 26 46 80
Valuable Items 363 509 712
Personal Liability 57 100 175
Total Unit Sales 1,446 2,055 2,927
Unit Prices Year 1 Year 2 Year 3
Propery Insurance $100.00 $100.00 $100.00
Life Insurance $150.00 $150.00 $150.00
Long Term Care/Disability $150.00 $150.00 $150.00
Valuable Items $75.00 $75.00 $75.00
Personal Liability $75.00 $75.00 $75.00
Sales
Propery Insurance $68,200 $95,500 $133,600
Life Insurance $47,700 $66,750 $93,600
Long Term Care/Disability $3,900 $6,900 $12,000
Valuable Items $27,225 $38,175 $53,400
Personal Liability $4,275 $7,500 $13,125
Total Sales $151,300 $214,825 $305,725
Direct Unit Costs Year 1 Year 2 Year 3
Propery Insurance $16.00 $15.00 $15.00
Life Insurance $24.00 $22.50 $22.50
Long Term Care/Disability $24.00 $22.50 $22.50
Valuable Items $12.00 $11.25 $11.25
Personal Liability $12.00 $11.25 $11.25
Direct Cost of Sales
Propery Insurance $10,912 $14,325 $20,040
Life Insurance $7,632 $10,013 $14,040
Long Term Care/Disability $624 $1,035 $1,800
Valuable Items $4,356 $5,726 $8,010
Personal Liability $684 $1,125 $1,969
Subtotal Direct Cost of Sales $24,208 $32,224 $45,859

Marketing Expense Budget

This budget reflects the regular ongoing costs of marketing, separate from one-time costs listed in the milestones of the marketing calendar.

Informational booklets will be reprinted twice a year. Seminars will run every other month. Expenses will increase by 4% each year, except for thank you gifts which will rise more quickly with the number of current clients.

Marketing Expense Budget

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Marketing Expense Budget
Year 1 Year 2 Year 3
Direct Mail $6,500 $6,760 $7,030
Print Advertising $1,200 $1,248 $1,298
Flyers $600 $624 $649
Seminars $6,000 $6,240 $6,490
Thank You Gifts $2,520 $3,780 $5,670
Pay-Per-Click Advertising $6,000 $6,240 $6,490
Informational Booklets $2,000 $2,080 $2,163
Other $6,000 $6,240 $6,490
------------ ------------ ------------
Total Sales and Marketing Expenses $30,820 $33,212 $36,279
Percent of Sales 20.37% 15.46% 11.87%

Key Marketing Metrics

Leads generated will include the referrals listed. Referrals and testimonials will increase sharply after the business gets off the ground, but will take time to develop at first.

On average, a customer will yield 1.5 transactions per year (a first purchase and one upgrade or additional policy for 50% of customers) When these transactions occur, they will yield commissions from the insurance providers averaging $150 per transaction.

Key Marketing Metrics

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Key Marketing Metrics
Year 1 Year 2 Year 3
Revenue $151,300 $214,825 $305,725
Leads 3,232 1,589 2,270
Leads Converted 20.50% 22.00% 22.00%
Avg. Transactions/Customer 1.50 1.50 1.50
Avg. $/Customer $150 $150 $150
Referrals 463 695 1,042
PR Mentions 17 20 25
Testimonials 322 350 375
Other 0 0

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