Northwestern University/ Kellogg School of Mangement

Project Description

The objective of the project is to prepare a Business Plan and a final presentation for the Entrepreneurship and New Business Formulation course. The project will be conducted during the academic fall quarter of 2003. The project is developed in a group a 5 MBA students oriented by hte professor of the course. The project will comprise all the steps of the development of a new venture including the concept development, opportunity evaluation, team management structuring and funds raising. At the end of the course the project will be presented to venture capital investors and will be evaluated for the final grade.

Project Abstract

The business concept: coin-counting
EuroCoins is a start-up company offering a coin-counting service through machines installed in supermarkets. EuroCoins will offer this service in France and Germany.

Market: opportunities in Europe
• In January 2002, 12 European countries have switched to one single currency: Euro. In 2003, there were 50 billions coins circulating in Europe, twice more than in the USA. The first contributors are Germany – 17bn- and France – 8bn-. Among these, it is estimated today that European citizens have 8 bn coins stacking up at home.
• With an average 1993-01 CAGR of 3%, the grocery stores market is mature in Europe. In this industry, new revenues are driven by surface increase. However, European regulations tend to restrict drastically supermarket opening/extension to protect independent stores. Thus, supermarkets owners are now looking for differentiating solutions to increase their sales.

The competitive advantage
By installing coin-counting machines in European supermarkets, EuroCoins allows Europeans to get rid of their spare coins and supermarket owners to increase their foot traffic. EuroCoins maintain all its machines and give back 10% of its commission to the supermarket. Therefore, for the supermarket, EuroCoins is a costless new service that can only increase its customers’ satisfaction. Thanks to a selected machines deployment in France and Germany, EuroCoins will build quickly a dominant position in this limited niche market.

The management team
Fabio Iwai is the CEO of EuroCoins. Prior to joining EuroCoins, Fabio was CEO of a successful dental company in Brazil where he managed 60 employees for these past 10 years. The other members of the management team are four international executives with professional skills in consulting and operations. They will be joined by two professionals with more than 10 years experience in retail. They will be our Sales & Marketing Managers in France and Germany.

Financials: revenues and profitability
This business model is generating cash from the installed machines. Therefore, the main driver –machine location excluded- is the number of new machines installed per year. In our model, we assumed that we would cover 100% of our 2,500 target locations in 5 years. We expect sales of Euro 0.7m for the first year growing to Euro 11.8m in 2008. This follows our installed base growth from 375 machines the first year to 2,500 in 2008. Our EBITDA will flip positive in 2005 with Euro 1.1m and increase to Euro 13.4m in 2008.

Surveys released for this project:
Eurocoin 25
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