Target Geographics

Target Geographics

Feasibility Plan Feasibility Plan Prepared By Linda Smith, President

1234 Main Street Anytown, ST 55555 (999) 999-9999

Date Prepared November 10, 200A

Target Geographics Feasibility Plan

Table of Contents Executive Summary

4

Product/Service

6

Purpose of the product/service

6

Stage of development

7

Product limitations

7

Proprietary rights

7

Governmental approvals

7

Product liability

7

Related services and spin-offs

7

Production

8

Marketing Plan Industry profile: Current market size Growth potential Industry trends Competition profile Customer profile Customer benefits Target markets Market penetration Price and Profitability Price list Sales estimate Cost of product/service Gross margin Three-year operating expenses Three-year operating statement Start-up costs Start-up expenses Capital expenditures

9 9 9 10 10 11 11 12 12 13 13 14 15 16 17 21 22 23 25 26 26

Plan for Further Action Strengths Positives Needed capital

26 26

2

Entrepreneur’s role

26

Business plan

26

License potential

27

Corporate partners

27

Proprietary rights

27

Infrastructure members

27

3

Target Geographics Feasibility Plan

Executive Summary December 12, 200A

Jodie Zimmerman Owner Z Mapping Company New York, New York

Dear Ms. Zimmerman: Target Geographics (TargetG) is a service business that provides mapping solutions to companies and organizations that lack in-house resources. These solutions include maps that enhance sales presentations, research reports and business proposals by displaying information in an attractive, easy-to-interpret format. TargetG will give companies the ability to apply mapping technology to business problems such as geographic segmentation, site selections and trade area analysis. We will also offer customized software and will assist in training and onsite technology evaluations. We are currently a start-up business. The market for geographics is growing. As recently as last year, GeoMarketers International reported that 49.3% of businesses were performing geographic segmentation, 42.4% were performing site selections and 33.5% were running trade area analysis. The CAD/ CAM/CAE (computer-aided design, computer-aided manufacturing and computer-aided engineering) sector of the computer software market is comprised of four major segments including Geographic Information Systems (GIS)/Mapping. Overall this segment is expected to experience the fastest growth with levels of 14% annually over the next 3 years. Key markets include the trucking industry, advertising and marketing agencies, health care companies, and nonprofit organizations. We will penetrate these markets using direct mail with timely follow-up to the marketing directors of these organizations. We will pursue one industry at a time, but will add others as we grow. Target Geographics will use approximately $45,000 of start-up capital, broken down as follows: $28,000 to cover four months’ operating expenses and $17,000 for start-up expenses.

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Thank you for taking the time to review this feasibility plan. I appreciate your willingness to consider joining Target Geographics’ advisory board. Please feel free to contact me with any questions that you might have. I look forward to meeting with you soon. Respectfully submitted,

Linda Smith Linda Smith President, Target Geographics

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Target Geographics Feasibility Plan

Product/Service Purpose of the product/service Target Geographics believes that a little map goes a long way to help businesses make strategic decisions. Eighty percent of data has some geographic component, according to industry research; therefore, it can be displayed on a map. Since "a picture is worth a thousand words," a map helps data come to life. From simple location maps to detailed proximity studies, maps hold the power to enhance communications and improve overall productivity. Maps offer visual solutions to a number of challenges that businesses face today. Some of these challenges include

➔

choosing better retail locations through well-thought-out site selection,

➔

optimizing sales productivity by targeting profitable territories and regions within trade areas,

➔

looking at different route areas, and

➔

assessing different options for demographic profiling.

Using desktop mapping and graphic design software, TargetG will create maps and demographic reports for companies involved with trucking, advertising and marketing, nonprofit groups, and health care. More companies are recognizing the need for mapping software, but do not have the time to train staff to use software properly. Customers may include maps in the following variety of publications:

➔

Presentations

➔

Business Plans

➔

Proposals

➔

Annual Reports

➔

Sales/Media Kits

➔

Newsletters

➔

Brochures

➔

Web pages

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Stage of development Target Geographics, a consulting firm, is in the model stage of development. Linda Smith, president, is in daily contact with other mapping professionals in other markets via e-mail and telephone and will begin to makes site visits when possible to learn about new technology, business opportunities, and changes in the market. TargetG is currently working with the XYZ Freight Carriers. XYZ is a leader in the trucking industry and this association will assist TargetG in landing future clients.

Product limitations Keeping up with the volume of geographic and demographic information is tedious. Renewing data can be costly, so it is important for Target Geographics to seek out suppliers that offer a variety of pricing structures and quality data.

Proprietary rights Target Geographics has not obtained any patents, trademarks, or copyrights.

Governmental approvals Target Geographics has registered the company name with the Secretary of State.

Product liability TargetG makes every attempt at accuracy, and it requires clients to sign-off on work; however, there is always the chance that a mapping error might occur. Therefore, Target Geographics will be covered by professional liability errors and omissions insurance in a business policy.

Related services and spin-offs Target Geographics will begin developing relationships with suppliers such as InfoMap to be a software trainer of new geographical analysis packages when they are released. Linda Smith will work with customers as a consultant to teach them to use the software they purchase. Time spent in training allows TargetG to develop other business and serve current clients while providing TargetG a lucrative contracting opportunity. Another service considered beneficial to Target Geographics and its clients would be mapping solutions for a customer to use in-house. TargetG will form an alliance with mapping programmers who will sub-contract with TargetG to provide tailored applications for clients.

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These applications might be a macro to produce reports automatically for a real estate firm or an algorithm to figure the closest delivery terminal for a trucking company. Location Based Services is a technology by which consumers can retrieve and view information about companies in their vicinity over cell phones or palm pilots. This service enables companies to focus on consumers geographically. TargetG is investigating this technology.

Production All projects will be performed internally, except overflow. When necessary, the type of work will determine the subcontractor. TargetG will use subcontractors with a degree in geography, who have extensive software map experience, and who can work independently. Hourly rates may vary but will average approximately $35. Initially no other work will be contracted out.

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Target Geographics Feasibility Plan

Marketing Plan Industry profile Current market size Target Geographics is classified as a software programming business, SIC code 7371. According to U.S. Industry and Trade Outlook the market size is well over $23.7 billion. Specifically the CAD/CAM/CAE market, which includes Geographic Information Systems (GIS)/Mapping, is approximately $2.8 billion. According to Business Geographics: 19.9 percent of respondents to last year’s survey conducted by GIS World said their organizations spent more than $100,000 on business geographics. Business geographics’ previously predictable application use is also changing. GeoMarketers International reported that 49.3 percent of businesses were performing geographic segmentation, 42.4 percent were performing site selection, and 33.5 percent were running trade area analysis. Today, perhaps spurred in part from the awareness of digital mapping from the earlier generations of geographic information systems (GIS), there seems to be a burgeoning interest in routing, nearest-to and direct mail applications — areas that would have been previously perceived as secondary concerns. (July 200A)

Growth potential According to U.S. Industry and Trade Outlook, the GIS/Mapping Segment of the CAD software market continues to expand. The GIS industry has moved well beyond its initial niche based on land management and environmental tools. Many functions now supported by this type of system were formerly done manually. Increased corporate use of GIS technology to improve customer service and cut costs is expected to propel overall market growth in the next 5 years. The GIS/Mapping application sales estimates and forecasted amounts, according to U.S. Industry and Trade Outlook are as follows: In millions 200A 200B 200C 200D 200E

587 672 769 881 1,008

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Industry trends Trends, as highlighted by 10 industry leaders (Business Geographics, July 200A), include:

➔

Increases in Internet applications get the data to the client faster for more timely maps (quicker time to market).

➔

Integration of vehicle tracking and GIS field data collection/update functions ("combined" systems) makes it easier to build and maintain GIS databases that can support robust GPS-based vehicle tracking applications.

➔

Access to more sophisticated spatial models and a customized GIS toolbox for the business geographer provides faster service to anxious customers.

This business is all about technology, and it is important to stay on top of the latest software releases and hardware developments.

Competition profile Direct competitors, such as MapSearch.com, are available over the Internet and are fairly easy to find. Unless a company is extremely sophisticated and can handle total online communication, however, it may rather utilize someone regionally. Direct competition for consulting and software development includes companies trained in computers, but not experts in the geographic field, such as Infosearch, Inc. Indirect competition will come from other sources that display information in a different format at a reduced price, such as DandyMaps. These companies will not be geographic experts and will not be able to perform as sophisticated and extensive data analysis as TargetG. Other indirect competition includes "do it yourself" software that companies try to learn on their own. Target Geographics’ competitive advantage is based on its credentials, service, and business knowledge. Highlights of its competitive edge follow:

➔

TargetG will provide professional maps for client’s needs and provide them with new information on other uses of maps for specific business objectives. It is the only company in the area owned by a professional cartographer.

➔

TargetG delivers client's maps in a more timely fashion than out-of-town companies.

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➔

TargetG remains well networked in the geographic and demographic community to guarantee the most appropriate solution for the client.

➔

TargetG will be available to work on site with new users of software to help them be more efficient with new programs.

➔

TargetG is expert in customizing software. It will use a network of other experts in business geographics—those with degrees or with extensive experience in the field.

➔

TargetG will be able to show patterns and trends in data that businesses provide that may otherwise be difficult for them to see.

➔

TargetG will perform sophisticated and extensive data analysis.

TargetG’s location in Anytown where major firms in its specific niche market are located will be extremely beneficial. Trucking, health care, nonprofits, ad agencies all have corporate headquarters here. New enterprises are currently treated well in the geographics industry. Nationally, geographers are close-knit. The more businesses beginning in this area, the more potential customers will be educated to the benefits of applying mapping technology to business problems. This education will increase sales for all of us.

Customer profile The intended customers for TargetG’s products are the marketing and graphics departments within the niche market. In addition, operations department managers are key contacts, especially in the trucking industry. Advertising and marketing account managers are important because they sell their proposals to clients and do not have any expertise in GIS mapping. Vice-presidents of large retailers are also key contacts because they are very interested in demographic information when choosing new sites.

Customer benefits Maps from Target Geographics help businesses in the following areas:

➔

Choose better locations through site selection and competitor analysis.

➔

Improve retail profits by illustrating market research.

➔

Optimize territories and regions with trade area analysis.

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➔

Build better sales forces by targeting prospects and defining territories.

➔

Focus advertising more effectively through distribution studies.

The additional customer benefits from on-site training will provide companies with in-house expertise in using software purchased for mapping solutions. Many times companies will simply use an administrative assistant or an information technologist employee and expect them to teach themselves the software, which is next to impossible in this highly specialized field. Site evaluations benefits to customers are many. The most evident one will be higher sales, because of well-thought-out demographic, geographic, and psychographic mapped evaluations. Customized software for companies with specific ongoing needs will allow users to save time and be more efficient in their day-to-day operation and usage of GIS software. This service will assist clients with projects they do internally over and over. They will have software that will be easy to maintain and use.

Target markets The niche markets for Target Geographics include the trucking industry, advertising and marketing agencies, health care companies and nonprofit entities. We plan to focus on organizations like Yellow Freight, BRB Advertising, Hospital Health Care, and Big Brothers and Sisters.

Market penetration 1.

TargetG will hand deliver to marketing directors, throughout a specified time period, a professional direct mail piece, with creative external packaging. The inside will display TargetG-generated information and the same information by traditional methods (charts, etc.). This comparison will make very evident what format is the most inviting. We will also include a promotional item related to the mapping industry that clients may use on their desks.

2.

When it is ready, we will send a postcard to announce TargetG’s website to about 60 contacts who have responded to the above marketing kit and existing clients.

3.

Follow up is important, so we will call everyone to whom we sent the above marketing kit and ask him or her for an appointment to show some of our work.

4.

TargetG plans to join professional organizations and associations where the target market population will be members. We will make fun, innovative presentations on the power of mapping.

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Target Geographics Feasibility Plan

Price and Profitability Price list Products/services

Price

High Quality GIS Mapping

100/hr

Training

75/hr

Site Evaluation

75/hr

Customizing Software

125/hr

Price assumptions: Target Geographics has decided to charge hourly for its services. In time, it may change the pricing structure to per project. TargetG has also set hourly rates to reflect the demand on more deadline-driven projects as in the GIS Mapping. The most expensive per hour fee will be for customized software because of the level of expertise required. We have looked at industry pricing and feel that we offer our clients a high-perceived value for our services.

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Sales estimate Product/service

Year 1

Year 2

Year 3

High-quality GIS Mapping (1)

66,000

72,600

72,600

One-on-one training (2)

33,000

36,300

36,300

6,600

7,260

7,260

55,000

67,760

67,760

166,000

183,920

183,920

Site evaluation (3) Customized software (4) Total sales

Sales assumptions: (1) High-quality GIS Mapping: 15 hours/week, 60 hours/month for 11 months at $100/hour. (2) One-on-one training utilizing client’s facilities and data: $75/hour, 10 hours/week, 40 hours/month for 11 months. (3) Site evaluations: $75/hour, 2 hours/week, 8 hours/months for 11 months. (4) Customized Software: $125/hour, 10 hours/week, 40 hours/month for 11 months. The second year reflects a 10% increase in sales. The third year we have not projected an increase primarily to maintain the pace of the first two years and to work out any operational issues. We will be very pleased if we can maintain our high sales numbers for the second and third years. We will then start planning more aggressive growth. We have calculated to bill 37 hours/week, utilizing a 50-hour work week, and an 11-month work year. The remaining hours will be used for administration and marketing.

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Cost of product/service Product/service

Year 1

Year 2

Year 3

Product/service item 1 Product/service item 2 Product/service item 3 Product/service item 4 Product/service item 5 Total cost of goods sold

Cost of goods sold assumptions: Target Geographics is a service provider and does not have a cost of goods sold.

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Gross margin Product/service

Year 1

Year 2

Year 3

High-quality GIS Mapping (1)

66,000

72,600

72,600

One-on-one training (2)

33,000

36,300

36,300

6,600

7,260

7,260

55,000

67,760

67,760

166,000

183,920

183,920

Site evaluation (3) Customized software (4) Total sales

Gross margin assumptions: We have calculated a 100% gross margin because TargetG is a service business with no cost of goods.

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Three-year operating expenses Marketing expenses

Year 1

Year 2

Year 3

Advertising – brochures/posters (1)

4,000

3,500

5,000

Advertising – direct mail (2)

1,600

Advertising – other (3)

5,000

Marketing – print (4)

1,640

Marketing – samples/trade shows (5)

1,500

Salaries & wages – marketing Benefits & taxes – marketing Commissions, reps & contractors Advertising – broadcast

Other marketing expenses (6) Total marketing expenses

13,740

5,500 5,000

6,000

12,000

6,000

20,500

22,500

Marketing expense assumptions: (1) We plan to produce a four-color brochure with samples of our work. The budget for this at startup includes enough for future seminars and sales calls. We have priced printing, paper, design and art direction. The piece will be designed so that we can produce various inserts to communicate to different markets. We will produce 500 of the main piece at approximately $5/each. The remaining $1,500 will be used for the four inserts. (2) We plan to buy lists from various organizations and mail out a less expensive direct mail piece as a teaser to encourage people to call and find out what TargetG is all about. We have priced a unique postcard mailer made of rigid translucent plastic to introduce our website. These cards are $2.20/each plus 35 cents for postage. A mailing of 600 will use half of the budgeted amount. (3) This budget is for promotional products. We will spend $1,250/per quarter on items to give to prospective and existing clients. We would also like to purchase a less expensive item to distribute at seminars. Keeping our name in front of clients will help build brand

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identity. We will also buy corporate apparel to wear while working on site with clients. Holiday thank you gifts also come from this budget item. (4) We would like to purchase ads in local trade associations’ newsletters, including the chambers of commerce. A quarter-page ad usually costs between $250-400. (5) Samples will include larger, more extensive maps for trade shows and seminars. They will be laminated and appropriate for large groups. The cost is approximately $190/each. (6) TargetG will incur this expense in years two and three. We will commission an outside marketing person to plan and execute an extensive marketing plan, estimated at 50/hour for 20 hours/month. Once we have a plan in place, we will cut the hours to 10/month in year three.

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Administrative expenses

Year 1

Year 2

Year 3

Salaries & wages (1)

40,000

48,000

60,000

Benefits & taxes

17,600

20,400

24,600

Meals & entertainment (3)

900

1,000

1,200

Dues & subscriptions (4)

250

450

600

Professional fees (5)

500

600

850

Accounting/bookkeeping (6)

800

800

800

Travel/automotive (7)

775

960

1120

Other administrative expenses (8)

11,550

24,700

33,000

Total administrative expenses

72,375

96,910

122,170

(2)

(1) Salaries and wages are based on one full-time salary. (2) Benefits and taxes include a health insurance premium of $300/month and 35% for taxes. (3) This figure is low at $75/month and will include lunches with prospective clients, food brought to presentations, and any small gifts or tickets bought for clients. (4) We plan to subscribe to Business Geographics, Geo World and Mapping Awareness. We will also join the Society of National Cartographers. (5) Legal services are included in this item (6) We have decided to outsource all accounting functions and have received a bid of $200/quarter. (7) This figure is based on .32/per mile with approximately 2,400 miles the first year, 3,000 miles the second year, and 3,500 miles the third year. Included in this amount are all deliveries of materials in addition to the everyday mileage to conduct business. (8) This expense is for outside contract labor. The first year is budgeted at 30 hours/month at $35/hour. The second year will have 45 hours/month at $50/hour, and the third year will be 60 hours/month at $50/hour. We have also decided that we will only pay for 48 weeks of contracted help. The increase in hourly wage will reward those contractors that become part of our outsource team, and we hope they will give us preferential treatment when deadline-driven work arises. Hours increase substantially the third year, even though sales don’t increase, because the owner plans more administrative work and less hands-on work. Second- and third-year administrative expenses will rise, because the owner will take a higher salary and will hire more contract labor.

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General expenses

Year 1

Year 2

Year 3

Bank charges (1)

150

165

180

Credit card fees (2)

664

736

736

Insurance (3)

4,000

4,000

4,000

Office supplies (4)

1,000

1,000

1,000

Other supplies (5)

4000

4400

4840

250

250

250

1200

1320

1452

12,000

12,000

Interest

Postage (6) Telephone (7) Utilities Rent (8) Repairs & maintenance (9)

150

150

150

Taxes & licenses (10)

100

100

100

24,121

24,708

Other general expenses (11) Total general expenses

1050 12,568

General expense assumptions: (1) Minimal bank charges for business checking account (2) Credit card fees of 4%; approximately 10% of sales purchased by corporate credit card (3) Errors and omissions insurance in addition to basic liability insurance on equipment (4) Basic office supplies for day-to-day operations (5) Updating software, presentation materials, stenciling supplies, binding materials, copies (6) Stamps, packaging (7) Two phone lines, internet access, and cell phone (8) Rent for second and third year only, including utilities (9) Basic maintenance (10) Business licenses (11) Incidental unplanned expenses including anything that can’t be put into a category

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Three-year operating statement Product/service

Year 1

Year 2

Year 3

166,000

183,920

183,920

166,000

183,920

183,920

– Marketing expenses

13,740

20,500

22,500

– Administrative expenses

72,375

96,910

122,170

– General expenses

12,568

24,121

24,708

= Gross profit*

67,317

42,389

14,542

Sales – Cost of goods sold = Gross Margin

*Before taxes, amortization, and depreciation

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Start-up costs Start-up costs

Year 1

Petty cash Register cash Opening inventory Rent (last month's) Security deposit Telephone deposit Utilities deposit Other deposits and start-up costs Total start-up costs Start-up costs assumptions: The first year TargetG will be a home-based business; so typical start-up costs will be low. The plan, however, is to have office space the second and third years, so we will incur deposit costs then.

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Start-up expenses Start-up expense

Year 1

Fictitious name costs Corporation filing fee (1)

250

Corporate tax prepayment Activation fee Legal & consulting fees (2)

850

Accounting fees (3)

600

Federal tax ID Sales tax permit Salaries & wages -training/setup Benefits & taxes - training/setup Office supplies (4)

450

Business supplies (5)

3,300

Printing- cards, stationery, brochures (6)

125

Pre-opening advertising (7)

4500

Other start-up expenses (8)

800

Total start-up expenses

10,625

Start-up expense assumptions: (1) State filing fee to register an LLC, $250 (2) Attorney fees to set up LLC—5 hours at $170 per hour (3) Accounting fees to set up accounts, etc.—10 hours @ $60 per hour (4) Basic office supplies (file folders, paper, pens, etc.)

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(5) Software purchases--Maptitude 4.2, IcoMap, 3.0 and GeoMedia 4.0 (6) Business cards, stationery, and envelopes (7) Pre-opening advertising will be broken down as follows:

➔ 300 promotional items at $5/per item ($1,500) ➔ Presentation box at $3/ea ($900). Inside, a promotional item, sample maps, a basic brochure outlining our services, and an invitation to an informational breakfast ➔ Brochures estimated at $4/ea, including printing and paper ($1,200), hand delivered to targeted potential customers ➔ Informational breakfast at $900 (8) Four-day seminar of extensive training on the new geographic software

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Capital expenditures Capital expenditures

Year 1

Equipment (1)

4,000

Furniture (2)

1750

Year 2 1500

Leasehold improvements Vehicles Buildings Land Total capital expenditures

5750

1500

Capital expense assumptions: (1) Two computers in year one; computer updates in year two (2) Desk, chair, file drawers, drawing table and files for disc storage

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Year 3

Target Geographics Feasibility Plan

Plan for Further Action Pitfalls ➔

Perceived need for the product. TargetG will have to continually show potential clients why mapping is a better visual presentation of data than traditional delivery systems.

➔

Keeping up with work flow. TargetG may have to hire more subcontractors than originally intended.

➔

Recession’s impact on business when marketing budgets get cut. TargetG will need to network with other departments in a company to maintain a variety of client sources.

Strengths ➔

Business with great news value. Mapping is an interesting way to view information.

➔

Product is workable and feasible. Software is continually coming out that highlights what businesses are looking for.

➔

High gross margin. At this point, TargetG has no cost of goods.

➔

Exit potential. As long as TargetG works towards getting a strong network of independent contractors, it should be a viable business to sell.

Needed capital This venture will be self-funded.

Entrepreneur's role The entrepreneur will be president, salesperson, cartographer, trainer and office manager during the first year of business.

Business plan A business plan should be written to prepare three-year operating budgets and operating systems. TargetG would also like to further define its target markets; they might be too broad.

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License potential License potential is minimal since much of the work is customized. Should TargetG develop software that can be used in several applications and industries, this possibility may be explored.

Corporate partners The only corporate partners that would be viable would perhaps be software retailers.

Proprietary rights TargetG uses commercially available software and purchases demographic data or uses what is publicly available. Our clients will own the maps produced. Proprietary rights will be limited to software that TargetG may develop in the future.

Infrastructure members At this point the key advisors are, as needed, an attorney and accountant, paid on an hourly basis. An advisory board is being considered. In addition, a close network of geographers in the country, a continual source of information about new technologies and new markets, provide information on how and where to outsource different functions at no cost. The president of TargetG has taken FastTrac New Venture and Planning and has a network of classmates for entrepreneurial support. She plans to use their expertise for her business and in return show them the power of maps for their entrepreneurial ventures.

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