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 Confidentiality Agreement

The undersigned reader acknowledges that the information provided by

_________________________ in this marketing plan is confidential; therefore, reader agrees not
to disclose it without the express written permission of _________________________.

It is acknowledged by reader that information to be furnished in this marketing plan is in all

respects confidential in nature, other than information which is in the public domain through other
means and that any disclosure or use of same by reader, may cause serious harm or damage to
________________________.

Upon request, this document is to be immediately returned to _________________________.

___________________
Signature

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Name (typed or printed)

___________________
Date

This is a marketing plan. It does not imply an offering of securities.

 Table Of Contents

1.0 Executive Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

2.0 Situation Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2

2.1 Market Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . .2
2.1.1 Market Demographics . . . . . . . . . . . . . . . . . . . . .3
2.1.2 Market Needs . . . . . . . . . . . . . . . . . . . . . . . . .3
2.1.3 Market Trends . . . . . . . . . . . . . . . . . . . . . . . .3
2.1.4 Market Growth . . . . . . . . . . . . . . . . . . . . . . . .5
2.2 SWOT Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6
2.2.1 Strengths . . . . . . . . . . . . . . . . . . . . . . . . . .6
2.2.2 Weaknesses . . . . . . . . . . . . . . . . . . . . . . . . .6
2.2.3 Opportunities . . . . . . . . . . . . . . . . . . . . . . . . .6
2.2.4 Threats . . . . . . . . . . . . . . . . . . . . . . . . . . . .6
2.3 Competition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6
2.4 Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7
2.4.1 Service Business Analysis . . . . . . . . . . . . . . . . . . .7
2.5 Keys to Success . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7
2.6 Critical Issues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .8

3.0 Marketing Strategy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8

3.1 Mission . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
3.2 Marketing Objectives . . . . . . . . . . . . . . . . . . . . . . . . . . 8
3.3 Financial Objectives . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
3.4 Target Markets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
3.5 Positioning . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
3.6 Strategy Pyramids . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
3.7 Marketing Mix . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
3.8 Marketing Research . . . . . . . . . . . . . . . . . . . . . . . . . . 11

4.0 Financials . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
4.1 Break-even Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . 11
4.2 Sales Forecast . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
4.3 Expense Forecast . . . . . . . . . . . . . . . . . . . . . . . . . . . 14

5.0 Controls . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
5.1 Implementation . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
5.2 Marketing Organization . . . . . . . . . . . . . . . . . . . . . . . . . 16
5.3 Contingency Planning . . . . . . . . . . . . . . . . . . . . . . . . . 16
 Executive Search & Rescue Placement Firm

1.0 Executive Summary

The Executive Search & Rescue Placement Firm (Executive/ESR) is an executive search firm that
specializes in serving emerging companies with an emphasis on high technology firms.

Executive will be serving metropolitan Minneapolis, an active, growing market. Through a well
connected network of colleagues in the emerging company market niche and a sophisticated
predictive screening system, Dan Bloodhound and The Executive Search & Rescue Placement Firm
will steadily gain market share.

The Executive Search & Rescue Placement Firm's mission is to service emerging companies with
outstanding executives. We exist to attract and maintain customers. When we adhere to this
maxim, everything else will fall into place. Our services will exceed the expectations of our
customers.

The Executive Search & Rescue Placement Firm has very specialized knowledge of the emerging
company market with over ten years of work experience. Dan's insight and contacts are extremely
valuable because the main tools in executive placement are knowledge of the industry and good
contacts within. This will propel Executive into a commanding position in the executive search
industry.

Executive will reach profitability by month eight and will have $48,000 in revenues by year three.

Annual Sales Forecast

$250,000

$200,000

$150,000
High-tech firms
Non-high-tech firms
$100,000

$50,000

$0
2003 2004 2005

Page 1
 Executive Search & Rescue Placement Firm

2.0 Situation Analysis

The Executive Search & Rescue Placement Firm is entering its first year of operation. The
Minneapolis community has a need for executive placement and will utilize a professional
placement service. The basic market need is a skilled service provider that can assist in the
placement of seasoned executives.

2.1 Market Summary

ESR possess good information about the market and knows a great deal about the common
attributes of the most prized customers. This information will be leveraged to better understand
who is served, their specific needs, and how ESR can better communicate with them.

Target Markets

High-tech firms
Non-high-tech firms

Table 2.1: Target Market Forecast

Target Market Forecast

Potential Customers Growth 2003 2004 2005 2006 2007 CAGR
High-tech firms 14% 245 279 318 363 414 14.01%
Non-high-tech firms 10% 126 139 153 168 185 10.08%
Total 12.72% 371 418 471 531 599 12.72%

Page 2
 Executive Search & Rescue Placement Firm

2.1.1 Market Demographics

The profile for ESR's customers consist of the following geographic, demographic, and behavior
factors.

Geographics

• The immediate geographic target is the city of Minneapolis with a population of 1.2 million.
• A 65 mile radius is in need of the search services.
• The total targeted population is 371.

Demographics

• The typical firm has 15-350 employees.

• The companies are from six months to 35 years old.
• 66% of the firms will be high technology companies.
• 54% of the companies are funded through venture capital.
• 39% of the companies have more traditional equity/debt arrangements.

Behavior Factors

• The companies recognize the value of a specialty search firm, a recognition that companies
have specific core competencies and the individual's firm is not proficient at executive
searches.
• 54% are rapidly growing companies whose hiring needs have outpaced their internal HR
department's ability to assist.
• Desire to hire the best possible person, recognizing that human capital investments will pay
off in the long run.

2.1.2 Market Needs

ESR is providing the Minneapolis community with a sophisticated, effective, executive search
service. Executive Search and Rescue seeks to fulfill the following benefits that are important to its
customers.

• Fast Service: Often companies cannot recognize their hiring needs until it is too late.
Therefore typical customers appreciate a fast placement service.
• Accuracy: The ability to accurately find a candidate who has the necessary skills, as well a
match with the company culture.
• Customer Service: Satisfaction guaranteed.

2.1.3 Market Trends

The market trend for placement services is a specialization of the placement services.

• Specialization has occurred because of a need for more accurate or predictive placement
that occurs with specialization.
• With the booming technology sector, it is now sustainable to have a placement agency that
specializes on this sector.

Page 3
 Executive Search & Rescue Placement Firm

Market Forecast

600

500

400

300
High-tech firms
Non-high-tech firms
200

100

0
2003 2004 2005 2006 2007

Page 4
 Executive Search & Rescue Placement Firm

2.1.4 Market Growth

In 2000 the executive search industry achieved $453 million in revenue. The industry's growth is
projected to be 8% for the next five years.

Part of the fuel for this growth is the recognition that executive search firms are more efficient in
finding executives than the internal HR department of most companies. This trend of outsourcing is
not unique to executive placements, but can be seen in many different industries from payroll to
accounting.

Target Market Growth

14.00%

12.00%

10.00%

8.00%

6.00%

4.00%

2.00%

0.00%
High-tech firms Non-high-tech firms

Page 5
 Executive Search & Rescue Placement Firm

2.2 SWOT Analysis

The following SWOT analysis captures the key strengths and weaknesses within the company and
describes the opportunities and threats facing Executive Search and Rescue.

2.2.1 Strengths

• Strong networking web within the community.

• Sophisticated, predictive screening mechanisms.
• Industry insight based on pragmatic experience.

2.2.2 Weaknesses

• Weak initial cash flow.

• The lack of brand equity, a function of a start-up organization.
• The inability to scale rapidly.

2.2.3 Opportunities

• Participation in a growing industry.

• Low overhead.
• The ability to decrease fixed costs per sale as business picks up.

2.2.4 Threats

• A lack of immunity from an industry downturn.

• The attractiveness of the industry has encouraged new entrants and competition may
increase as a result.

2.3 Competition

Minneapolis currently has about six - 10 executive search firms. There are other search firms that
handle many different positions, not just executives.

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 Executive Search & Rescue Placement Firm

2.4 Services

Executive Search and Rescue will provide a wide range of placement services. Executive will
specialize in the high-tech niche of emerging companies, but is equally competent for non-high-
tech companies. Executive can place a wide range of executive positions from CEOs to CFOs.

Executive works on a contingency basis, it is paid on placement. This arrangement allows it to work
for many different clients at the same time.

Currently, there are about six different executive search firms in Minneapolis. Because Minneapolis
is a part of the silicon forest, a hot bed of emerging technology firms, the market is growing at
exciting rates.

2.4.1 Service Business Analysis

There are two business models for executive search firms:

1. Retainer Firms: These firms typically command 30-35% of the executives first year
salary. The firm is paid regardless of finding a candidate. The benefit of using this firm is
that the search firm is under extra pressure to find the right candidate and will spend extra
time to get the person that "fits the bill."

This setup also limits the number of positions that the search firm can look for at once as it
has an obligation to find the executive for the retainer fee. This is a more unusual set up.

2. Contingency Firms: This is the more common arrangement where a fee is paid when the
search firm finds an appropriate candidate. The advantage to the client is that they only
pay if services are rendered. This creates an economic incentive to perform, but when the
company is in a hurry to find someone, the incentive is lost.

This set up is advantageous to the search firm because it allows it to search for a wide
range of clients at once. The margins for the contingency model are generally the same as
the retainer firms.

2.5 Keys to Success

The keys to success are:

• Servicing the customer's needs.

• Accuracy in placements.
• Predicting future needs.

Page 7
 Executive Search & Rescue Placement Firm

2.6 Critical Issues

Executive is still in the speculative stage as an executive placement agency.

Its critical issues are to anticipate growth and scale accordingly. This must be done prudently and
analytically. If it is slow to move it loses business, if done too fast then it could suffer in an
economic downturn.

3.0 Marketing Strategy

The Executive Search & Rescue Placement Firm's marketing strategy will be based on advertising
and networking.

The advertising will be done in the several local journals that cater to emerging businesses. The
most prominent is the Business Journal of Minneapolis which Executive will often have a presence
in. The advertisement will be geared toward bringing companies on as clients, however, this will
only be a secondary goal of the advertising.

Dan will be relying on networking to set up companies as clients. As business continues,

Executive's track record will get more solid and its results will speak for itself. This is the type of
industry where associations count for a lot, and when Executive scores a few big clients, many
others will come through the door because they are impressed with who our clients are.

The marketing strategy will develop interest in the firm, while the sales strategy will then turn the
leads into customers. This will be done with superior service based on interpersonal communication
skills. The sales leads will call/inquire for more information and it will be the Dan's responsibility to
convince the lead that Executive would be a worthwhile investment of time, based on the firm's
competitive advantages and track record.

Lastly, Executive will have a website that will be a fairly comprehensive collection of information
about Executive and the services it provides.

3.1 Mission

The Executive Search & Rescue Placement Firm's mission is to service emerging companies with
outstanding executives. We exist to attract and maintain customers. When we adhere to this
maxim, everything else will fall into place. Our services will exceed the expectations of our
customers.

3.2 Marketing Objectives

• Maintain, positive, steady growth.

• Increase the number of repeat customers or referrals by 7% a quarter.
• Decrease customer acquisition costs by 8% a year.

Page 8
 Executive Search & Rescue Placement Firm

3.3 Financial Objectives

• Profitability by the end of year one.

• Increase the number of account executives by at least one per year.
• Decrease operating margins by 2% a year.

3.4 Target Markets

Our customers can be divided into two different groups:

1. High-tech Firms: The high-tech firm deals with some aspect of technology, like design or
manufacturing. These firms currently make up over 80% of the top 20 fastest growing
companies in Oregon.

2. Non-high-tech Firms: While this category of emerging companies is far smaller then high-
tech companies, it should not be neglected. There are plenty of fast growing companies in
this segment and Executive will be able to serve them.

Executive is concentrating on emerging companies for the intuitive reason that emerging
companies need executives more often than stagnant companies. As a company grows, there is an
increased demand for leadership.

Within the emerging company label, there are predominantly high-technology companies. While
this has been tempered somewhat by the recent economic slowdown, these companies are still
growing at astronomical rates.

An example at just how fast some companies are growing is a company called eBay. eBay's CEO is
Meg Whitman who used to be a executive at Hasboro Toys. After two years at eBay, Meg was
worth more (from eBay stock) than the entire Hasboro family after over 30 years of business.

These companies are growing very fast and this is the perfect time and place for an executive
search firm to fuel this growth.

3.5 Positioning

Executive will position itself as the premier executive placement agency for the high-tech sector of
Minneapolis.

Rapidly growing companies will appreciate the fast, predictive service that Executive offers.
Executive Search and Rescue will leverage its competitive edges to achieve the desired positioning.

Executive has a two pronged competitive advantage that will allow it to rapidly gain market share:

1. Networking: Dan has been in high-tech sales in Minneapolis for the last 10 years. During
this time Dan has made contacts in this intimate community. Additionally, Dan has been an
active member in the Chamber of Commerce, the Minneapolis Venture group, the
Minneapolis Angel Fund, and other organizations that are composed primarily of emerging
companies. The activity in these organizations has allowed Dan to establish personal
relationships with most of the emerging companies in the Minneapolis area.

2. Sophisticated Screening/interviewing Systems: Dan will be implementing a

structured behavioral interviewing system (SBI) to accurately screen candidates, it is
statistically far more predictive than any other system. SBI is based on several elements:

Page 9
 Executive Search & Rescue Placement Firm

• Structured: The questions are designed in advance and every applicant receives
the same questions to allow a relative comparison to be made.

• Behavioral: The questions ask the applicants how they would act in a certain
situation.

• Theory (proven empirically): If you come up with analogous situations that the
applicant is likely to encounter in the prospective position, then the answers that
you receive are indicative of how they would behave.

SBI is statistically more predictive than other interviewing methods if done correctly. One aspect of
proper implementation/usage is the quality of the questions that are developed. Dan, having
worked in the high-tech industry for 10 years, has the insight to know what is expected of an
applicant applying for the stated position.

3.6 Strategy Pyramids

The single objective is to position Executive as the most respected executive placement agency.

The marketing strategy will first seek to create customer awareness regarding the services offered,
then develop the customer base, and finally work toward building customer loyalty and referrals.

The message that Executive seeks to communicate is that its advanced screening systems are
more sophisticated and predictive than any internal HR department or outsourced competitor.

This message will be communicated through a variety of methods. The first method of
communication is advertisements in the widely distributed Business Journal of Minneapolis.

The second method of communication will be through purposeful networking activities leveraging
Dan's personal and professional contacts that were developed through years within the industry.

3.7 Marketing Mix

Executive's marketing mix is comprised of the following approaches to pricing, distribution,

advertising and promotion, and customer service.

• Pricing: The pricing scheme will be competitive relative to other executive placement
services.
• Distribution: The services are tailored to address the needs of Minneapolis.
• Advertising and Promotion: ESR will rely on an advertising campaign and strategic
networking to raise awareness and build brand equity.
• Customer Service: Executive recognizes that the only way to grow a business is to ensure
that customer's expectations are exceeded.

Page 10
 Executive Search & Rescue Placement Firm

3.8 Marketing Research

The market research that was performed to support both the business plan as well as this
marketing plan was based on interviews. Dan conducted interviews that were structured (each
interviewee was asked the same questions) and recorded for future analysis.

Dan interviewed 15 people, generally the the vice president of HR, although occasionally Dan
interviewed the COO.

The interviews provided Executive with valuable insight into the companies perceived future needs,
the thought process that is undertaken when considering hiring issues, as well as determinating
the value (quantified) associated with a predictive executive placement service.

4.0 Financials

This section will offer a financial overview of ESR as it relates to the marketing activities. Executive
will address break-even analysis, sales forecasts, expense forecasts, and how those link to the
marketing strategy.

4.1 Break-even Analysis

The break-even analysis indicates that $1,053 is needed in monthly revenue to achieve the break-
even point.

Break-even Analysis

$300,000

$250,000

$200,000

$150,000

$100,000

$50,000

$0

($50,000)
$0 $50,000 $100,000 $150,000 $200,000 $250,000

Monthly break-even point

Break-even point = where line intersects with 0

Page 11
 Executive Search & Rescue Placement Firm

Table 4.1: Break-even Analysis

Break-even Analysis:
Monthly Units Break-even 0
Monthly Sales Break-even $1,053

Assumptions:
Average Per-Unit Revenue $25,000
Average Per-Unit Variable Cost $1,250
Estimated Monthly Fixed Cost $1,000

Page 12
 Executive Search & Rescue Placement Firm

4.2 Sales Forecast

The first month will be spent setting up the office; sales activity will be slow. In addition to dealing
with legal and advertising issues, time will be spent with the physical assembly of the office and the
development of the back-end systems.

During the first month Dan will be developing the structured behavioral interview system. By the
second month the office will open and ready to go. Dan will be working with both emerging clients
as well as bringing in executives and running them through the screening process once he knows
what positions he is looking to fill.

Sales will grow steadily from month two. Executive expects to have a surge by month four and will
respond by hiring an account executive to help handle the accounts.

Monthly Sales Forecast

$16,000

$14,000

$12,000

$10,000

$8,000 High-tech firms

Non-high-tech firms
$6,000

$4,000

$2,000

$0
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

Table 4.2: Sales Forecast

Sales Forecast
Sales 2003 2004 2005
High-tech firms $96,640 $156,478 $181,547
Non-high-tech firms $22,929 $26,654 $31,254
Total Sales $119,569 $183,132 $212,801

Direct Cost of Sales 2003 2004 2005

High-tech firms $4,832 $7,824 $9,077
Non-high-tech firms $1,146 $1,333 $1,563
Subtotal Cost of Sales $5,978 $9,157 $10,640

Page 13
 Executive Search & Rescue Placement Firm

4.3 Expense Forecast

The marketing expenses will be budgeted so that they are fairly high during the first quarter. The
reasoning for this is as a start-up organization, it is important to build brand immediately.
Expenses will decrease in the summer months and ramp up for the fall hiring push.

Monthly Expense Budget

$1,200

$1,000

$800

$600 Advertisments
Networking
$400

$200

$0
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

Table 4.3: Marketing Expense Budget

Marketing Expense Budget 2003 2004 2005

Advertisments $8,250 $10,000 $12,000
Networking $2,600 $3,000 $4,000
------------ ------------ ------------
Total Sales and Marketing Expenses $10,850 $13,000 $16,000
Percent of Sales 9.07% 7.10% 7.52%
Contribution Margin $102,741 $160,975 $186,161
Contribution Margin / Sales 85.93% 87.90% 87.48%

Page 14
 Executive Search & Rescue Placement Firm

5.0 Controls

The purpose of ESR's marketing plan is to serve as a guide for the organization.

The following areas will be monitored to gauge performance:

• Revenue: Tracked both monthly and annually.

• Customer Satisfaction: This information will be captured through a feedback mechanism.
• Profit Margin: Tracked both monthly and annually.

5.1 Implementation

The following milestones identify the key marketing programs. It is important to accomplish each
one on time and on budget.

Milestones

Marketing plan completion

Completion of first advertising campaign

First major high-tech account

First major non-high-tech account

Jan Feb Mar Apr May

Table 5.1: Milestones

Milestones Plan
Milestone Start Date End Date Budget Manager Department
Marketing plan completion 1/1/03 2/1/03 $0 Dan
Completion of first advertising campaign 2/1/03 4/31/03 $3,000 Dan
First major high-tech account 3/1/03 5/31/03 $1,000 Dan
First major non-high-tech account 4/1/03 6/31/2003 $1,000 Dan
Totals $5,000

Page 15
 Executive Search & Rescue Placement Firm

5.2 Marketing Organization

Dan Bloodhound will be responsible for all marketing activities except ad copy creation.

5.3 Contingency Planning

Difficulties and Risks

• Problems generating visibility.

• An economic downturn that curtails executive hiring.

Worst Case Risks May Include

• Determining that the business cannot support itself on an ongoing basis.

• Having to liquidate equipment, or intellectual property, to cover liabilities.

Page 16
 Appendix: Executive Search & Rescue Placement Firm
Table 4.2 Sales Forecast

Sales Forecast Plan

Sales Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
High-tech firms $0 $4,500 $6,454 $7,154 $7,895 $8,125 $8,678 $9,125 $9,654 $10,854 $11,547 $12,654
Non-high-tech firms $0 $0 $2,250 $2,154 $2,500 $2,458 $2,154 $2,254 $2,414 $2,345 $2,255 $2,145
Total Sales $0 $4,500 $8,704 $9,308 $10,395 $10,583 $10,832 $11,379 $12,068 $13,199 $13,802 $14,799

Direct Cost of Sales Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
High-tech firms $0 $225 $323 $358 $395 $406 $434 $456 $483 $543 $577 $633
Non-high-tech firms $0 $0 $113 $108 $125 $123 $108 $113 $121 $117 $113 $107
Subtotal Cost of Sales $0 $225 $435 $465 $520 $529 $542 $569 $603 $660 $690 $740

Page 1
 Appendix: Executive Search & Rescue Placement Firm
Table 4.3 Marketing Expense Budget

Marketing Expense Budget Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Advertisments $800 $750 $700 $750 $600 $550 $500 $600 $700 $750 $800 $750
Networking $200 $175 $150 $200 $150 $175 $200 $225 $250 $275 $300 $300
------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------
Total Sales and Marketing Expenses $1,000 $925 $850 $950 $750 $725 $700 $825 $950 $1,025 $1,100 $1,050
Percent of Sales 0.00% 20.56% 9.77% 10.21% 7.22% 6.85% 6.46% 7.25% 7.87% 7.77% 7.97% 7.10%
Contribution Margin ($1,000) $3,350 $7,419 $7,893 $9,125 $9,329 $9,590 $9,985 $10,515 $11,514 $12,012 $13,009
Contribution Margin / Sales 0.00% 74.44% 85.23% 84.79% 87.78% 88.15% 88.54% 87.75% 87.13% 87.23% 87.03% 87.90%

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