1.0 Executive Summary
The purpose of this business plan is to showcase the continued development and growth of a freight brokerage based in Providence, Rhode Island. Deutsch Northeast Logistics Group LLC (“the Company”) was founded by Matthew Deutsch. The Company will specialize in sourcing regional and national level transportation for companies that have freight that needs to be brought to their destinations. At this time, the Company is seeking a $100,000 revolving credit facility in order to establish operations. The Company will commence operations in the first quarter of next year.
Operations
The primary revenue center for the Company will come from the ongoing arrangement of freight transportation throughout the Northeastern United States as well as the continental United States. The Company will work with numerous companies within the greater Providence area that have ongoing needs for domestic freight transportation. The Company will also have the ability to arrange for ocean freight transportation for international shipments as well as air freight transportation.
On each order, the Company will receive a fee equal to 15% of the face value of the transportation transaction. Matthew Deutsch will initially serve as the initial staff broker while concurrently on boarding numerous other agents that will drive revenue in the coming years.
The third section of the business plan for further discuss the operations of this freight brokerage.
The Financing
As noted above, the Company is currently seeking a $100,000 revolving line of credit in order to commence operations. Matthew Deutsch will contribute $25,000 towards venture.
Given the highly predictable nature of revenue is produced by the freight brokerage, the Company will be able to acquire additional capital on an as-needed needed basis as it expands.
The Future
Deutsch Northeast Logistics Group will continue expand its operations by establishing ongoing relationships with companies that have product distribution needs. Given the large number of transportation providers that the Company will maintain relationships with – the business will be able to operate as an end-to-end solution for any entity’s transportation needs. The Company will expand the scope of its direct outreach operations throughout the life of the business.
Market Overview
Revenue Forecasts
2.0 The Financing
2.1 Funds Required
The funds discussed in the executive summary will be used for the following:
2.2 Management and Investor Equity
Matthew Deutsch retains to 100% ownership interest in the business.
2.3 Exit Strategies
Although this is not expected to occur for a substantial period of time, the Company could easily be sold to a third-party who is looking to get into the freight brokerage industry or to a larger company already engaged in this capacity. Generally, it can be expected that an established brokerage will have a price to earnings multiple of three times the prior year’s EBITDA. Based on the financial result showcase in this document, Deutsch Northeast Logistics Group may have a value of up to $1 million by the fifth year of operation.
3.0 Operations
Through its highly developed supply chain operations, Deutsch Northeast Logistics Group will be able to provide complete end to end solutions for any type of freight transportation domestically or internationally. It is expected that approximately 90% of the Company’s operations will involve arranging for freight transportation within the continental United States. The Company will work with numerous long haul transportation providers as well as regional transportation providers so that cost-effective transportation solutions can be offered to clients.
The Company will also maintain ongoing relationships with ocean freightliners as well as air freight carriers so that international and time sensitive freight can be transported appropriately.
The Company will generate its revenues exclusively from broker trees. As noted earlier, the business will produce a fee equal to 15% of the face value of the transportation order.
4.0 Overview of the Organization
4.1 Registered Name
Deutsch Northeast Logistics Group LLC. The business is registered as a limited liability company in the State of Rhode Island.
4.2 Commencement of Operations
Revenue generating operations will commence in the first quarter of next year.
4.3 Mission Statement
To provide and end solutions on a cost-effective basis among companies that need freight transported through United States.
4.4 Vision Statement
To become a widely recognized brokerage that offers seamless transportation solutions.
4.5 Organizational Objectives
• Properly on-board staff freight brokerage agents that will increase the Company’s book of business in the coming years.
• Establish ongoing relationships with freight transportation providers so that cost-effective solutions can be provided.
• Engaged in a wide-ranging direct outreach campaign among companies that frequently have freight transportation needs.
• Implement appropriate fiscal policies to ensure that Deutsch Northeast Logistics Group remains profitable even during challenging economic climates.
• Provide staff with a rewarding career that provides significant financial incentives among those at further the growth objectives in the business.
• Potentially expanded to other markets within the Northeastern United States as the Company grows.
5.0 Market and Industry Analysis
5.1 External Environmental Analysis
This section of freight brokerage business plan will discuss the industry, the competition that the business will face, the current economic climate, and the Company’s demographic profile.
At this time, the economic climate with the United States is moderate. As a result of continually changing trade policies, the economic dynamics of the country have changed moderately over the past year. The US Federal Reserve as well as major central banks are implementing appropriate measures to ensure that the inflation rate remain in control while also ensuring steady employment.
It should be noted that the business will be able to maintain its revenue and profitability, even during challenging economic climates, as the business will operate across a number of diverse industries that have ongoing transportation needs, regardless of how the economy is doing.
5.2 Industry Analysis
Within the United States, there are 80,000 companies that operate in a freight brokerage capacity. These businesses generate $165 billion of revenue while providing jobs for 500,000 people.
This industry will continue to undergo changes as a result of improved technology that guide the operations of freight brokerages. Machine learning and artificial intelligence are expected to be integrated into the industry given that they can effectively provide route optimization for freight transportation. Furthermore, numerous online application suites are used in order to facilitate the freight transportation process. Deutsch Northeast Logistics Group will integrate the latest in technology into all facets of operation in order to provide cost-effective solutions to its clients.
5.3 Customer Profile
The following demographic profile will be used during the course of marketing operations:
• Annual revenue of $1,000,000
• Will spend $2,500 to $10,000 per engagement
• Operates within 250 of the Deutsch Northeast Logistics Group location
5.4 Competitive Analysis
This freight brokerage business plan has been written as a sample. If this was done as an engagement for an actual client, a substantial competitive analysis would have been done among regional freight brokerages as well as national level competitors. This would have included an examination of how long they have been in business, their annual revenues, and ways in which this brokerage would be able to remain competitive.
6.0 Key Strategic Issues
6.1 Sustainable Operations
Deutsch Northeast Logistics Group will have sustainable operations as a result of the following:
• The Company does not need to take a risk as a relates to the transportation freight.
• The Company will be able to quickly onboard companies within Providence and Rhode Island that have ongoing freight transportation needs.
• The ability to provide transportation solutions for the entirety of the continental United States, as well as for international fright needs will provide a substantial differentiating factor.
• The Company can provide arrange arrangements for any type of freight, including refrigerated and perishable goods.
6.2 Basis of Growth
The Company will expand via the following methods:
• Continued expansion of the number of agents that work on behalf of the business.
• Expansion to include other types of freight that have complex handling needs.
• Expansion of operations to include dispatch services on an outsourced basis.
7.0 Marketing Plan
7.1 Marketing Objectives
• Engage in a wide-ranging direct outreach campaign companies within Providence.
• Maintain an expansive online presence, including the use of social media in order to drive interest among product-based companies.
• Market the Company’s services within trade journals in order to foster ongoing relationships with transportation providers.
7.2 Revenue Forecasts
7.3 Revenue Assumptions
Year 1
- First year revenue will reach $418,000.
- During this year, one staff agent will be hired.
Year 2
- Revenue will reach $523,000.
- Revenue will increase by 25%.
Years 3-5
- By the fifth year of operation, total revenue will reach $904,000.
- The Company will continue to expand the types of freight transportation services offered.
7.4 Marketing Strategies
Most importantly, Management will actively engage in direct outreach with Company’s throughout the greater Providence metropolitan area. The business will engage in face-to-face interactions in order to showcase the wide range of freight brokering operations and solutions that can be provided to its partners. This is going to be the most effective way of establishing relationships with companies that require ongoing freight transportation.
In addition to these direct outreach initiatives, the Company will maintain an expansive online presence through its proprietary website. This platform will showcase the end-to-end freight transportation solutions offered to its clients. The website will undergo search engine optimization specific for Providence, the State of Rhode Island, and the Northeastern United States. This will allow for greater visibility of the website.
In addition to these operations, the company will also maintain a presence among all social media platforms. Although the business will not use targeted advertisements on these platforms – they are useful assist in expanding brand new visibility for Deutsch Northeast Logistics Group.
The Company will also take out print advertisements in trade journals are specific for the freight brokerage industry as well as for freight transportation providers. This will elevate the Company’s profile within the industry which will lead to a greater degree of on boarding as well as receiving referrals among entities that have ongoing freight transportation needs.
8.0 Organizational Plan
8.1 Organizational Hierarchy
8.2 Personnel Costs
9.0 Financial Plan
9.1 Underlying Assumptions
• The company will secure $100,000 revolving line of credit to launch operations.
• Matthew Deutsch will contribute $25,000 towards the venture.
• This freight brokerage will achieve a compounded annual growth rate of 21%.
9.2 Financial Highlights
• A business can easily scale it operations by hiring staff agents that will increase revenues.
• By operating in an end-to-end capacity, including for international freight transportation, the business will be able to rapidly onboard clients.
• The business will use the latest in my brokerage technology in order to keep cost controllable.
9.3 Sensitivity Analysis
In the event of severe economic recession, Deutsch Northeast Logistics Group may have some downward pressure on his revenues. However, the Company intends to work with numerous industries, including healthcare focused entities, that will allow the Company to receive orders regardless of challenging business climate. The substantial contribution margins from each placed for transportation order were full for further ensure the profitability of business.
9.4 Source of Funds
9.5 Financial Proformas
A) Profit and Loss Statement
B) Common Size Income Statement
C) Cash Flow Analysis
D) Balance Sheet
9.6 Breakeven Analysis
9.7 Business Ratios
Appendix A – SWOT Analysis
Strengths
• Substantial demand on a regional basis for freight brokerages that provide comprehensive solutions
• An experienced owner, Matthew Deutsch, that has extensive experience in the logistics industry.
• The Company is able to provide ground-based freight, air freight, and ocean freight arrangements.
• The Company can scale into other logistic services seamlessly.
Weaknesses
• Changes in energy pricing can impact the commissions that are generated by the business.
• This is a highly competitive industry with many operators that have been in the business for several decades.
Opportunities
• Continued to expansion of the number of staff agents that work for the business.
• Expansion to include other types of freight that have complex handling and transportation needs.
• Integration of additional services, such as dispatching, that can increase revenues.
Threats
• A severe economic recession could impact the operations of the business.
• Ongoing issues with inflation could cause the underlying operating cost of business to increase, especially as it relates to marketing.
Appendix B – Risk Analysis
Development Risk – Low
The service architecture that will be used within the course of Deutsch Northeast Logistics Group’s operations has been developed. The primary matter that needs to be addressed is Management securing of the revolving credit facility discussed this document.
Financing Risk – Low/Moderate
The $100,000 of working capital will be principally used to support the early operations of the business as it establishes its client base. The business will generate highly predictable streams of revenue from freight brokering engagements.
Marketing Risk – Low
Management intends to use the direct outreach initiatives discussed in earlier in this document in order to drive client engagement. Matthew Deutsch is well noted with this industry and he will be able to leverage his existing contacts from the onset of operations.
Management Risk – Low
The Founder has more than ten years of experience indirect logistics management operations. He will be able to quickly establish a wide-ranging client based for Deutsch Northeast Logistics Group.
Valuation Risk – Low
The valuation risk is offset by:
• The Company will offer its services on a nationwide basis.
• Limited financial risks as the Company only operates in a brokerage capacity.
• The business can scale its operations by retaining staff agents.
• New services can be integrated at a very low cost.
• The business can further scale its operations by offering a greater degree of international freight brokering services.
Exit Risk – Low
Although it is not expected to happen for a minimum of ten years, this business could be sold for a substantial profit to a third-party. In this event, a formal valuation regarding the value of this brokerage would be conducted prior to marketing the business for sale.