Real-Time
An inventory management app for early-stage small businesses
Business case: Remarkaball
By: Garrett Forster, Joshua Maurer (Joshskijumps), Valeria Rodriguez & Bianca Sass(Group 8).
Summary
For the ENTI 407 project, our team decided to tackle the inventory management problem faced by early-stage small businesses. Being involved with small businesses/start-ups ourselves, we were passionate about solving one of the many issues founders are faced with when starting a business. After interviewing Giovanna, the founder of Remarkaball, a small business in Calgary that sells protein energy balls, our assumptions were confirmed regarding the tedious process that is inventory management for small business owners like her. Given that she is bootstrapping her business as many others do, she has limited resources and time to take care of all aspects of Remarkaball. She wants to work on growing the business and search for new opportunities, but she is stuck in the day-to-day operations prohibiting her from focusing on the future. Currently, she is tracking inventory herself by taking sales and invoice data from Shopify and Wave and inputting it into a Google Sheet. Although it has been working thus far, it is taking up too much of her time and she is constantly stressed about making a mistake since there is always the element of human error when doing things manually. To solve this business problem, our team decided to create a simple Glide mobile app, Real-Time, that displays data from Shopify and Wave generated in the Google Sheet using Zapier. This solution would allow for the user-friendly experience and simplicity Giovanna desired, as well as easy access on a mobile device. Real-Time primarily displays inventory count in real-time among other useful features for small business owners like Giovanna. After conducting a stakeholder analysis, we realized we had 4 main stakeholders with Giovanna and the Real-Time team (us) being the most influential and most impacted by this project, therefore the most involved. Using the assumptions outlined in this report our team has found that Real-Time is a feasible project in both the entrepreneurial and intrapreneurial space. As long as we can begin with at least 60 customers and have a customer growth rate of 8% a quarter then our team would be profitable within 3 years, however, given our team’s current economic status the startup costs and opportunity cost of our time and money make Real-Time a financial impossibility.
The Business Problem
When running an early-stage small business, there are seldom more than a few employees involved in its upbringing. With so many tasks and numbers to oversee, founders and managers can easily get overwhelmed and lose track. In fact, poor business planning is one of the top reasons small businesses fail (Horton, 2021). A common challenge faced by small businesses that sell consumer goods specifically is inventory management. This is due to the manual and cumbersome process that is often required to track inventory for businesses at this scale. Although different software exists to help businesses track inventory nowadays, they are usually paid programs that small businesses simply cannot afford to commit to just yet. The most common inventory management issues that small businesses face include “lot tracking, synchronization between manufacturing processes and inventory levels, remote coordination, unregular inventory inspections, lack of technology, strategies, and regular audits,”(Inventory management challenges for small businesses, 2021). After interviewing Giovanna, the founder of Remarkaball, a local small business in Calgary that produces protein energy balls, we discovered these were the problem she was currently faced with. Poor inventory management can result in a small business losing sales, cash flow certainty, and the ability to replenish stock effectively (Horton, 2021). These problems only compound over time as the business grows, and maintaining an accurate count could be the difference between whether or not a small business succeeds. Giovanna confessed to us that with her business growing, she has more and more to do every day, and keeping track of inventory was becoming too time-consuming for her to do on her own (G. Serauto, personal communication, October 1st, 2021).
Remarkaball sells its protein balls through its website online, and at various retail stores such as Co-op, Safeway, and Sobey’s, among others. Currently, like many other small business owners, Giovanna tracks inventory manually in a Google Sheet she created herself. She uses Shopify and Wave to determine how much was sold each day and discounts it manually from the inventory count. Shopify is used to track online sales and Wave is accounting software used to generate invoices for retail shop sales. Giovanna checks these two platforms regularly to ensure her inventory count in Google Sheets is up to date. On high-volume order days, this can take her up to 2 hours to do; that is up to 14 hours a week solely spent on inventory management. This is also partly due to the fact that Giovanna is not very tech-savvy and is frustrated easily by technology. This time could be better spent coming up with new products, and planning and projecting the growth of her business.
As someone who is bootstrapping her business, with little resources to help her on a day-to-day basis, she is always busy and no longer has the time to keep her Google Sheet perfectly up to date. Google Sheets currently has no simple tools that allow her to import the data from both Shopify and Wave to her liking, therefore her current options are limited. Giovanna is looking for a better solution but isn’t quite ready to commit to a costly inventory management software. We empathized deeply with her problem and wanted to develop a solution that was simple and effective in helping her keep track of inventory.
Alternatives
As a team, we came up with four alternatives that could resolve Giovanna’s business problem:
1. Our first option relies on the use of Zapier. We can use it to connect Shopify and Wave to a Google or Excel sheet. Once set up, the process allows for Zapier to filter the data in Shopify and Wave and automatically input the number of incoming orders into a Google Sheet. Giovanna will then be able to check her Google or Excel sheet every once in a while to see how her inventory and demand change throughout the week.
Benefits:
- It is easy to implement
- The cost is low; only the price of a Zapier subscription
- It creates a more hands-free experience that will allow Giovanna to free up some of her time
Weaknesses:
- Google Sheets and Excel are not user-friendly on a mobile device
- There is no notification system
- Zapier can be buggy and may take some trial and error
2. Another option is for us to create a basic mobile application that shows the current inventory count for Remarkaball. The app will be connected to Wave and Shopify and will filter through the sales and invoice data and create an in-app count of inventory. The incoming data can also be adjusted in-app for when Giovanna creates inventory. The application building software we’ve experimented with are Appsheet and Glide; both are designed to allow users to create mobile applications with no previous coding experience.
Benefits:
- A mobile application is easy to access on-the-go
- It is easy to use
- Can be a relatively low cost depending on the scale
- Is customized; has only the features Giovanna needs for her small business
- A notification system can be set up
Weaknesses:
- The set-up process is more complex due to it being a mobile application
- It can get expensive if we decide to scale the mobile application
3. Giovanna can choose to use existing inventory management software from another company. These software are designed to make connecting accounts with Wave and Shopify simple and can offer a multitude of other features such as batch tracking, automated workflows, shipping labels, and inventory valuation by location (How Boxstorm works, n.d.)(Inventory management software, n.d.). Some inventory applications we’ve come across are Zoho and Boxstorm. Zoho is a collection of different software designed to meet almost every business need imaginable. Its utility ranges from use for customer relations to IT management. While it has all the tools to make inventory management a transparent and accurate process, the cost starts at $89 per month if the business has over 50 orders a month (Inventory management software, n.d.). In contrast, Boxstorm is exclusively an inventory solution. It has many of the same features as Zoho, and starts at $79 per month and charges an additional $9 per month for each user able to access the online software (How Boxstorm works, n.d.).
Benefits:
- Can be easy to access at home and on mobile
- Each platform has lots of useful features
Weaknesses:
- The platforms have a higher cost for more features that may not be necessary for Remarkaball
- The platforms may have a steep learning curve that may be challenging for Giovanna.
4. Giovanna continues to use the manual inventory management method she uses now but uses certain Google Sheets formulas to simplify the process and lessen the workload for her.
Benefits:
- Simple to use
- No cost
- Accessibility on mobile and laptop devices
- Allows for multiple users to collaborate
Weaknesses:
- Can be difficult to access when on-the-go
- Requires extra time to keep up with
- Can be hard to remember to keep up with (no notifications)
- There is a potential element of human error
Our Solution
To solve Remarkaball’s identified business problem, we created an inventory management app, Real-Time, that primarily allows Giovanna to check her product inventory in real-time, hence its name. This easy-to-use app extracts sales data from Shopify and Wave to calculate the inventory count of all 3 of Remarkaball’s products in real-time. The reason we chose to create an app, instead of the other options, is because it addresses two of Giovanna’s critical requirements for her inventory solution, which are easy user experience and mobile-friendly access (G. Serauto, personal communication, October 1st, 2021). Given that Giovanna, like many other small business owners, usually only has her phone with her, it is crucial for her to be able to access inventory information easily on her phone at any time. Although we could have just stopped with the Shopify/Wave integration with Google Sheets, it would not have been as user and mobile-friendly as an app. An app allows Giovanna to simply grab her phone at any given moment and in just a few clicks see her inventory count. While the app itself does not have many unique features yet, since it is only a prototype, it provides a more user-friendly, visual representation of the data being generated in Google Sheets. This solution is a “lightweight” version of existing enterprise software catered to entrepreneurs like Giovanna.
The Real-Time prototype allows the user to:
- See sales coming in from Shopify automatically
- See sales data coming in from Wave (when invoices are created) automatically
- Add product quantities when a new batch of product is made, which will be added to the inventory count automatically
- See inventory on-hand, and inventory available in real-time
- Add new orders, which will be automatically subtracted from the inventory count
- Email customers in-app regarding their order
- Leave comments on production logs that they can look back at for reference
The Process:
The first task we tried was seeing if we could transfer data from Shopify and Wave to Google sheets in real-time so the user wouldn’t have to manually type it in on a daily basis. To do this, we used Zapier. To create a zap you need a trigger and an action. For our first zap, the trigger was a new order made on Shopify, and the action was the creation of a new spreadsheet row in Google Sheets. We were able to extract the date the order was made, customer email, the product ordered, and quantity from Shopify to a new spreadsheet row in Google Sheets.
For our second zap, we went through the same process, but with Wave; the trigger was a new invoice created in Wave, and the action was the creation of a new spreadsheet row in the same Google sheet, but a new tab. We were able to transfer the date the invoice was created, customer email, product ID, and quantity ordered from Wave to a new spreadsheet row in Google sheets.
Note: Shopify is a premium feature in Zapier, so a paid plan is required to do this zap. We used the free trial of Zapier to test it for our prototype.
By creating this automation with Zapier to move data from Shopify and Wave to Google Sheets, we had solved one of the issues presented to us by Giovanna. She would no longer have to open Shopify and Wave daily and input the inventory into her Google Sheet manually. This by itself would save Giovanna valuable time every day and would avoid any human-inputting errors, since data would be transferred automatically using Zapier.
We were able to extract most of the data we needed using Zapier, but it wasn’t all formatted how we wanted, and we were missing a few key inputs. Therefore, we decided to use Google Sheets formulas to calculate some of the values we were missing.
As seen in the screenshot below of the Shopify tab on Google Sheets, the columns highlighted in orange were extracted from Zapier, but the values in the other columns were calculated using “IFS’’ formulas. Shopify told us the number of orders put in by the customer, for example, 3 orders of Crunchy-Almond, but it did not say how many bags were in each order. Since Crunchy-Almond on the website is sold in sets of 3 bags, 3 orders would equal 9 bags in this case. Therefore, we created an “IFS’’ formula that would calculate the amount of bags purchased based on the product ordered. Crunchy-Almond, Crunchy-Hazelnut, and Coconuts were all sold in sets of 3 bags, but there was a Mix & Match option that came with 2 bags of each flavour, therefore, 6 bags total. This is where the “IFS’’ formula was valuable since it picked up on what product was in column C and calculated the number of bags accordingly in column D. Lastly, to determine the amount of bags ordered by flavour, we created another “IFS’’ formula with slight variation for columns F, G, and H. This allowed us to see exactly how much was ordered of each flavour, which would be used for the inventory count.
Unlike Shopify, the data extracted from Wave told us exactly how many bags of each product were ordered, so we did not need to create an “IFS’’ formula to calculate this. The only issue was that the products were labelled with product IDs, instead of their actual names. To solve this, we created a simple “IFS’’ formula that would turn the product ID in column C to a product name in column D, as shown in the screenshot below.
Since production was tracked manually for Remarkaball and could not be extracted from any other platform, we created a “production” tab in the Google Sheet which would be used in the app for Giovanna to manually input information about new batches of Remarkaballs produced. The values in this section include date, flavour, bags produced, and lot number. All the values in the sheet shown in the screenshot below came from inputs made on the app; without any inputs, this section would be blank. No Google Sheet formulas were necessary for this part.
The most important tab in our Google Sheet is the “total stock” tab, which is where the total product available is calculated; the critical value we need for our inventory management solution. In this tab, we added columns for date, flavour, total production, online sales, retail sales, and total stock available. We used a series of formulas in this tab to generate the values we needed. First, for the ‘total production’ column, we used a “SUMIF” formula which would add the values in column C of the production tab (the number of bags produced) if column B contained the corresponding flavour in the formula, in this case, Crunchy-Hazelnut. This was also done for Crunchy-almond and Coconuts in the rows below it.
To get the values for online sales, which came from Shopify, we used a simple “SUM” formula which summed all the values in the corresponding flavour columns (F, G or H) in the Shopify tab. For retail store sales, which came from Wave data, we again used the same “SUMIF” formula used for the ‘total production’ tab. This formula would add the values in column E of the Wave tab if column D contained the corresponding flavour.
Lastly, to calculate total stock available we used total production and subtracted online sales, and retail sales, as can be seen in the screenshot below.
Creating the App
After successfully transferring the data we wanted from Shopify and Wave to Google Sheets using Zapier and the formulas we created, it was time to create our app prototype. Since our team did not have any prior coding knowledge, we explored no-code development platforms such as Bubble, Appsheet, and Glide. Bubble.io seemed to be the most robust no-code platform out of the three options, allowing users to “create interactive, multi-user apps for desktop and mobile web browsers,” (The best way to build web apps without code, n.d.). Although Bubble is a great tool, we realized it had a steep learning curve and we would not be able to use it to its full potential in the time we had to build this app prototype. After experimenting for some time, we decided to abandon Bubble and test our other two options, Glide and Appsheet. Appsheet allows users to create no-code mobile, tablet, or web applications using data sources like Google Drive and Dropbox, among others. With Appsheet we were able to create an app that displayed the data we were gathering on Google sheets with less complexity than Bubble.
Although creating the app with Appsheet was relatively easy, we were not satisfied with its appearance. The app was not visually appealing and Appsheet had limited features for us to upgrade its look. Giovanna stressed how important user experience was for her so we knew our app had to be well-designed. For this reason, we turned to Glide. Glide took the idea of turning spreadsheets into apps, that Appsheet had pioneered, and elevated it. We noticed Glide had more of a focus on modern app design and usability, which is exactly what we were searching for. After testing its features, we decided that Glide was the better choice to create our app. Glide was easy to learn, had more design features, and updated in real-time as data was edited, unlike Appsheet that required users to manually sync changes. Furthermore, Glide apps open with a link and can be added to a phone’s home screen easily, unlike Appsheet which requires users to download a host app first (Glide vs AppSheet, n.d).
Glide: App creation and features
To create our app prototype we used the free Glide plan which is utilized for personal apps with a mobile layout. For larger amounts of data input and features like web and tablet layouts, there are monthly subscription plans available, shown in the screenshot below.
After creating a free Glide account, we connected our Google Sheet to it and started experimenting with the different features the platform had to offer. We were able to change the design of the app by adding a colour theme that matched the Remarkaball logo and even added the Remarkaball logo itself as the app icon. Furthermore, we could choose what data we wanted to appear on the main section of each tab. For example, for the Shopify tab, we chose to only display the date and product purchased on the main screen; more details can be found when the user clicks into a specific list item. Glide also allows you to choose what kind of sign-in options you want. We chose to add a Google sign-in option, on top of the common email sign-in, which would make it super easy and quick to enter the app while still having protection.
Perhaps one of the most valuable features on Glide we discovered is the “allow users to add items” feature pictured in the screenshot below. By enabling this option, it allowed for the user to add data onto the app directly, which would also be added automatically to the Google Sheet connected with the app. This was the same for when a new value or row of data was added to the Google Sheet, it would appear in the app automatically. This feature is particularly valuable for Remarkaball because Giovanna can input production information directly on the app, such as date, the flavour produced, and quantity produced, which would then be counted towards the total stock available calculations, as explained previously. Furthermore, with this feature, Giovanna can add orders she sells in-person, which are not shown in Shopify or Wave, directly into the app. If she makes a random sale to a friend or customer, she can pull up the app, add in the order, and it will discount it from the inventory count right away versus having to remember the order and input it later in the day on her computer.
An add-on we included in the app is the ability for the user to add comments in production inputs in the ‘production’ tab. As seen below in the screenshot, when a user is inputting information about production, they can add any relevant comments. This is particularly useful for Giovanna because her production employees can leave important comments about a specific batch there for Giovanna to review and reference in the future. By adding this feature to the app on Glide, it created a new tab in our Google Sheet, so the information would also be stored therein the tab ‘App: Comments.’
If the user would like to only see the production and total stock tabs in the app, they have the option to hide the Shopify and Wave tabs. There is the option on Glide to show or not show data depending on what the user needs; another valuable feature in this platform. We felt that showing the Shopify and Wave tabs would be valuable for Giovanna since she can quickly see the most recent orders coming in from online or retail stores without having to open each app. Furthermore, she has the ability to see customers’ emails by clicking inside a specific order and will be redirected automatically to her phone’s emailing application when she clicks on a specific email. This can be valuable if Giovanna wanted to email a customer regarding their order directly from the app.
Here you will find a demo video of the completed app on Glide: click here
This prototype is merely a Minimum Viable Product (MVP) to test our solution prior to expanding its capabilities and features. Additional features could include, but are not limited to:
- Notifications of inventory shortages when inventory falls below a certain threshold
- Direct linkage between the app and other platforms like Shopify and Wave instead of using Zapier
- Ability to note if orders have been fulfilled or not.
Stakeholder Analysis
To conduct a thorough stakeholder analysis, we decided to use a stakeholder analysis matrix to understand how much influence each stakeholder has and how much they are impacted by the project. We found this stakeholder analysis matrix template from tools4dev.org, a site that provides tools such as templates and how-to guides for international development. Furthermore, we used the influence/interest map, found in this Medium blog post by Robbin Schuurman, which classifies stakeholders into groups to determine how to manage them. Robbin defines interest as the positive or negative concern or interest a stakeholder has in your product/service, and influence as the power/influence a stakeholder has over your product/service (Schuurman, 2019). As seen in the matrix below, we have outlined 4 main stakeholders; the internal stakeholders are the Real-Time team developing the solution (us), and the external stakeholders are Remarkaball’s founder, Giovanna, Remarkaball’s employees, and lastly, Remarkaball’s customers. We can also classify our stakeholders as direct, indirect, and users:
Direct Stakeholders:
- Real-Time team
- Remarkaball founder, Giovanna
Indirect Stakeholders:
- Remarkaball’s customers
Users
- Remarkaball founder, Giovanna
- Remarkaball’s employees
The matrix shows us that the Real-Time team (us), and Giovanna are the stakeholders who have the highest influence over the project and are impacted the most. This is due to the fact that we are the developers of the app, and Giovanna is the primary user whose pain point we are trying to solve. In the influence/interest map, we have placed both of these stakeholders in the high-influence, high-interest section, which asks for active collaboration. As stated in the matrix, our plan was to engage with Giovanna on a weekly basis or more, as needed, and engage among ourselves, the Real-Time team, on a regular basis while developing our app.
Remarkaball’s employees, as secondary users of the app, were given a medium impact level and low influence. Since Remakaball’s production employees may use the app to input production information, they are impacted by it, but not as highly as Giovanna, who would be utilizing it daily for inventory tracking. Their influence is low because ultimately, it is Giovanna who is experiencing the inventory management problem directly and has the most power in the company; employees have little power over the business’ technology adoptions. They can, however, take part in the testing process and provide valuable feedback. They were placed as medium-influence, high-interest in the influence/interest map, which tells us they should be kept informed for the most part, and semi-actively engaged.
Lastly, Remarkaball’s customers were ranked as being the lowest impacted by the project, and least influential since they are not directly affected by this app. They were placed in the low-interest, low-influence section of the influence/interest map which indicates not much time should be spent on them, but they should be monitored, not ignored. Remarkaball’s customers are indirectly affected by the Real-Time app because if the business has a good inventory management system, it is more likely to always have inventory available, and therefore customers are guaranteed the products they purchase. If a business has a bad inventory management system and does not know how much inventory is available, it is likely to have shortages and may not be able to deliver its products to its customers when promised. Therefore, customers indirectly benefit from businesses having a good inventory management system in place, even if it is not visible to them.
Implementation and Feasibility Analysis
Real-Time is an example of a product that is, as we have proved in the Remarkaball case study possible to be implemented in an intrapreneurial venture that brings more value than the total cost and effort that it took to design and implement. We can confidently claim that having spent 30–35 hours researching tools and how they interact with one another in the technology space and the fact that we were able to maintain the ability to keep all of the tools free for the scope and expected product scalability for the foreseeable future in the case of Remarkaball that this case study was a success. We can also come to the conclusion that had we received reasonable compensation for our efforts this would have cost Remarkaball less than the value it brings to the business. However, as an entrepreneurial venture for the 4 members of our team, or for even one of us to pursue with our given skillsets and expertise we would likely struggle to be competitive on price and product with other existing solutions for various reasons we will explore in the following analysis. Firstly we will look at what would be required for implementation that is not only scalable but also realistic, and secondly, we will look as to what causes our problems with feasibility and the conditions that would be required to make it feasible for our team to pursue this as an entrepreneurial venture.
Ensuring our customer’s data is secure is paramount when handling sensitive consumer and business data. In order to securely manage the data inputs of our application, we would require a secure network. Security, however, does come at a cost, with estimates ranging from $70 to $320 a month based on your contracted network service provider (Lahn, 2019). Having the data on a server of our own and not on a platform such as google sheets is fundamental to our ability to be able to attract customers as no reasonable small business would be interested in paying a subscription to a product that doesn’t securely store their information. This realization is the ultimate justification for our team needing to use private servers, with the end-user on an app that we design and maintain.
The no-Code aspect of our prototype app has allowed our team to implement a functional beta version of our product. Any technology with the focus of implementing further iteration would require outsourcing to a professional coder as it falls beyond the scope of our team’s expertise and the ability to reasonably take to market. The cost of outsourcing coding costs on average from $60,000 to $80,000 for a simple interface. Furthermore, as complexity increases so do costs, medium complexity is expected to cost between $81,000 to $141,000 (Dogtiev, 2021).
To keep our finished product competitive with what’s currently available in the market we would need to implement additional features to set ourselves apart from the competition. This would drive up development costs of our final product as well as mean that we would need a quality software engineer or equivalent position to maintain, update and troubleshoot problems within our app.
For the aforementioned reasons the process of taking our app from where it is now on 3rd party code-free software to an entrepreneurial venture that we are exploring would be not only a costly venture but would also take a good chunk of time to successfully execute. Firstly we would have to have the app designed, debugged, and launched, a process we have found to be very costly and often is not a short process. Once we have an operational product the team would need to build a customer base and marketing platform to gather enough customers to be able to make it to at least break-even revenues while still providing the level of service and security we would expect if we were business owners using our own platform.
The goal of our team is to bring our inventory management application Real-Time to market with and subsequently grow our client subscription base. In order to achieve our goals, our team has estimated the design costs to be $80,000 CAD based on the lower level of complexity that our application requires to be fully functional (Dogtiev, 2021). Furthermore, in order to maximize our clientele, we have decided to list our application on both the IOS and Google Play store. The utilization of both platforms will be a $99 annual fee for the Apple IOS ecosystem while the Google play store offers a one-time $25 dollar fee to host our application. However, before we are able to offer our application on both the IOS and Google ecosystem, we will require a 3rd party host to provide our network server (How much does it cost to publish an app on the app store, 2020). The cost of a 3rd party network are as discussed above fairly variable, but due to our low network capacity demand, we believe we could secure it at around $1200 per annum (Lahn, 2019). Moreover, with the focus of incorporating our business to avoid optimizing our taxation structure and avoid excess liability we expect it to cost our business $1000 to incorporate and $300 a year in liability insurance (“How Much Does it Cost to Incorporate in Alberta?,” n.d.). Additionally, we have consulted available sources to try and mitigate any unforeseen startup costs that we may have forgotten to account for, therefore $5,000 must be allotted into our projections to handle the initial startup, while a recurring quarterly charge of $2,500 must be accounted for, to compensate for any unforeseen expenses in the start-up and operations process. Although our team has been successful at designing the MVP app with little to no outsourcing, as our client base grows, a full-time software engineer will need to be on retainer to deliver the needed software updates to keep our end product market viable. A full-time software engineer will cost $100,000/year, for the time horizon of 3 years that we are examining the feasibility of our project; we would expect to only need him for 0.25 of a full-time position. The assumption is that our team would be doing the sales and support for our platform so the numerical figure we attached to the cost is $0 as owners we would take any profits and no salaries. We assume labour expenses would be indexed to 3% (Expected average inflation from 2022–2024 + 0.5%) to keep our employees from having any turnover (O’Neill, 2021).
Finally, to market our product we would use a platform such as Facebook where you can put a maximum ad allowance; we figured a good starting place for such a cost would come to $1000 a quarter to remain viable as a company, we will be receiving a $70 monthly subscription fee for the use of our application. Our team has accounted for the Apple IOS and Google play store commission fees in the pricing of our inventory management system meaning that the end-user will be paying approximately $85 a month while we would be receiving the aforementioned $70, a figure 15–25% less than our closest competition (Uzialko, 2021). Furthermore, our minimum viable forecast has accounted for the federal and provincial tax rates (Government of Canada, 2021) (Tax Tips, 2021). We figure as a team we would be able to get 60 clients to commit to using our app when we launch.
Using the assumptions outlined in our model above in conjunction with a limited understanding of forecasting subscription growth, and given our team’s minimum acceptable rate of return of 8% (20-year average opportunity cost of capital investment in the S&P 500 rather than this venture), we were able to find a net present value near 0 (due to rounding in the customer section this value could not be 0). This is in a 3-year time horizon to find the subscription growth rate required for Real-Time to break even over our forecast period. Our findings lead us to an 8% quarterly subscription growth rate (2.6% a month) for this project to be feasible for us to pursue and create real profits after 3 years. This 2.6% monthly subscription growth rate seems fairly reasonable as it represents a 36% annual subscription growth rate. The only thing we as founders would have to keep in mind is that even though this is a feasible project on paper given the assumptions we were able to come up with, this would likely not be sustainable for anyone on our team to pursue as an entrepreneurial venture. Changing it so that one of us can make a reasonable salary ($50,000 annually) and take on a sales and support role full time to bring success to the business brings the subscriber growth rate to 5.4% a month (88% a year), a growth rate this high we found as a team to be unfeasible given our current positioning to pursue this venture. In this scenario we would be able to increase the 3-year time horizon to 5 years as it would allow us to pursue other ventures or employment and mitigate our economic status problem, this would bring the required break-even growth rate down, however it increases owner risks.
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