Section 1: Executive Summary
What does the project mean
The Hermes project should represent a service that should provide tourists and
travelers with places to accommodation and after a while other tourist services should
also be included in the service (tattoo salon, clubs, restaurants and so on).
How much investment need
For realizing Hermes project we need 500 000$ (2017 rate).
How much time we need to realization the project
For realizing the project we need 18 until 24 months.
How much percent will take investor from company
Investor percent in company will be 35-45%.
How much will be benefit of first year activity
The benefit of first year activity will be 186 276$ (15 000 customers).
How much will be benefit of third year activity
The benefit of third year activity will be 1 241 840$ (without Virial marketing)
How much we need staff of first year activity
40 employee.
Localization of the project
Armenia is a suitable country for the implementation of projects. Firstly, IT
technologies are well developed in Armenia and Armenian companies are able to create
service Hermes. Secondly, in Armenia the price of the project will be much lower. Thirdly,
the entrance to the Russian market will be much easier than with the help of other
countries (between Armenia and Russia strategic relations).
Contact
Phone: +374 77 35 92 92
E-mail: [email protected]
Website: www.startuphermes.com (Will start to work 04/01/2017)
Section 2: Elevator Pitch
SHORT DESCRIPTION
Date of establishment – February 17; 2017
Founder – Davit Amiryan
Field of activity - Tourist service
Stage of startup – Seed
About Hermes
Startup Hermes was developed with experience with companies that work with tourists
(booking.com, Airbnb, TripAdvisor...). Working with these companies, we noticed that they
have certain disadvantages. Using the theory and practice of these experiments, we have
found a way that can not only eliminate these shortcomings but can also turn us into an
alternative to these companies. Therefore, we created a prototype start-up “Hermes”. In the
beginning, we studied the philosophy of our competitors, the advantages and dis advantages
of their. The second move was a sociological survey of tourists in our hostels . The essence of
the survey was to identify what people like and dislike in these companies . The second stage
was to find out what people like and do not like the businessmen who work with these
companies. For this, Davit Amiryan went to Tbilisi to visit hostels and compared our opiate
with Georgian businessmen. When the data was already available we analyzed and
understood the strong and weak sides of these companies.
And already in 2017 we created a business model of Hermes that uses such innovative
functions that not only can resist these giants (Booking, Airbnb ...) but in the future can
dictate the rules of the game.
Uniqueness of Startup
The main unique functions that can provide our product is

A tremendous decrease in non-arrival in (Hostels, Hotels, Guesthouses and in other
tourist objects)

The possibility of cashback for tourists and businessmen (For businessmen there are
certain rules)





The ability to make money for tourists through travel and recommendations
Possibility in the first months to pay very small commissions for new
businessmen (these rules should apply to certain hostels and other establishments)
Exceptions from the deception of entrepreneurs who do not want to pay all
commissions
Growth programs for businessmen with small businesses
Positive influence on other spheres of the economy (A certain amount of money
will be in circulation in the investment bank)
This list did not include other features since we wrote the most important features
of Hermes
Section 3: Startup Mission Statement
Basic goals
1. Creation of software for tourists and owners of a tourist enterprise
2. The first 5 years took the leading role in the post-Soviet space on the provision of
housing and other tourist services for tourists (Key countries in the first 5 years
Armenia, Georgia, Russia, Ukraine- population more 190 million)
3. Develop tourism in key countries through innovative technologies
4. The first 5 years to reach more than 200,000 active customers who will annually
use our service
5. To achieve geometric growth of income for 5 years
Profitable mission
Notation
2020 year
2021 year
2022 year
2023 year
2024 year
Income
186 276 $
595 115 $
1 322 477 $
1 983 716 $
2 644 955 $
15 000
45 000
100 000
150 000
200 001
438 438$
1 315 314$
2 922 920$
4 384 380$
5 845 840$
Active clients
Turnover money
These goals are those that can be achieved without much hesitation. The most optimistic
developments can be seen in the diagram
From the chart, you can see two directions of
growth
The first direction is an optimistic development
forecast that implies geometric growth of
customers (Geometric growth is possible because
marketing is virial).
The second direction of growth is the most
pessimistic development of the company (This kind of
development of the company implies that viral marketing
do not work).
The difference in the company's development
forecasts between customers in 2024 is 400,000
customers
Section 4: SWOT
SWOT of Hermes
Strength

The ability to make money
using our service

Minimum number of noshows

Virial Marketing
Weaknesses
 Difficulties with entering the
market
 Audition of tourist facilities
(This means that in the beginning
it will be difficult to include all the
tourist services in the service for
tourism)
Opportunities
 Occupy a leading role in the post-soviet space
 Occupy a certain part of the tourism market
Threats
 With a bad promotion, a business may not justify itself
Strength of Hermes
The main strength in Hermes is that it includes two main business strategies: fordism
and viral marketing. Fordism will be able to provide a money cycle from the customer to
the company, then from the company to the customer. With this strategy, we are making
two important moves for business. At first the reputation of the company rises. Secondly
monetary investment in the client ensures a stable growth of customers who will join us .
The viral course of marketing is the guarantor of the company's development in geometric
growth.
Hermes also excludes a number of problematic issues for businessmen who provide
services for tourists. A big problem for businessmen is not the arrivals of tourists who
booked the service. Hermes minimizes this risk with the help of an innovative idea. Another
strong point is the involvement of businessmen in our service with the help of minimal
commissions. Determining the types of tourist services in the first months will only pay 78% of the commission (the basic commission is 13-15%. This variation is related to the type
of business services).
Hermes also excludes cheating from businessmen. This problem is mainly connected
with the activity of hostels, guesthouses and other objects.
Social benefits
Hermes will also be able to provide social development through major contributions to
the investment bank.
Weaknesses
The basis for the weak side of the Hermes will be connected in the first year of the
working. Firstly, to provide a tourist service, a basic number of tourist services will be
required which will be included in the Hermes. This is certainly a temporary weakness, but
if this issue is not resolved the company's development will be very sluggish. For this
problem, an action plan was developed.
 PR of our services in key countries
 Programs of the minimum commissions in the first 4 months
 Partner relationship with the booking.com, Airbnb, TripAdvisor
Opportunities
To achieve our goals, we must first put all the potential to invest in the post-Soviet
space. These efforts can open up new opportunities for the company. Firstly, we can open
new markets in Europe, Asia and North America. And this means that our development
opportunities in new markets will grow at a staggering speed.
Threats
The main threats are related to two aspects.
 With a bad PR development of the company can’t become possible and revenues
will not rise
 Copying our business idea and use by other companies
Section 5: Goals
Our goal countries
For our company the key countries in the first 5 years will be Russia, Ukraine, Georgia ,
Armenia and Kazakhstan. The reason is that in these countries the market is more free. Plus,
in these countries tourism is key to the development of the economy for these countries . The
total population of these countries is 215 million people.
The second part of the market entry is basically Europe. This will take 2 to 4 years to
implement. The total population is equal in these countries 717.3 million people.
And the third spurt will be in North America, Asia and Australia.
This approach is due to this statistics
Rank
International tourist
arrivals in 2015
International tourist
arrivals in 2014
France
84 500 000
83 700 000
0.9
USA
77 500 000
75 000 000
3.3
Spain
68 200 000
64 900 000
5.0
China
56 900 000
55 600 000
2.3
Italy
50 700 000
48 600 000
4.4
Turkey
39 400 000
39 800 000
0.8
Germany
35 000 000
33 000 000
6.0
UK
34 400 000
32 600 000
5.6
Mexico
32 100 000
29 300 000
9.4
Russia
31 300 000
29 800 000
5.0
Destination
Change (2014 to
2015)(%)
1
2
3
4
5
6
7
8
9
10
The main goal for 5 years to reach the turnover of more than 4 million dollars per year.
Short-term goals
In the first year of activity, we plan to enter the Russian market. It is especially
important to open an office in Moscow. From there it is easier to coordinate work in the
post-Soviet space.
Section 6: Key Performance Indicators of
Startup
March 08 2017
Status data of startup “HERMES” including only 15,000 customers per year.
Analysis of financial indicators is made in conjunction with “openbusiness.ru”company.
KEY FINANCIAL INDICATORS
Net Profit for 3 years (15 000 customers per year) – 558 814.00 $
The sales revenue for 3 years is equal to – 1 296 000.00 $
Profitability of sales – 129%
Net present value (NPV) – 438,438.00 $
DATA ON THE PROJECT "HERMES"
Sales start date- January 2020
Timeframe for planned sales – 1 month (This parameter is set by David Amiryan)
INVESTMENT COSTS
Up to 2020 January 500 000$

The largest investment- 250 000 - 300 000 $ ( Creating App)

Investments for the first year – 357 800.00$

Investments in percent (1 year) – 71.56%
CONSTANT COSTS
Name
Rent pay
Advertising
Communal
Payments
Jan.2020
500$
2000$
200$
Feb. 2020
500$
2000$
200$
Mar. 2020
500$
2000$
200$
Apr. 2020
500$
2000$
200$
May 2020
500$
2000$
200$
Jun. 2020
500$
2000$
200$
Name
Rent pay
Advertising
Communal
Payments
Jul.2020
500$
2000$
200$
Aug. 2020
500$
2000$
200$
Sep. 2020
500$
2000$
200$
Oct. 2020
500$
2000$
200$
Nov. 2020
500$
2000$
200$
Dec. 2020
500$
2000$
200$
Constant cost per year- 32 400.00$
NUMBER OF PERSONNEL AND WAGE
Administration
Position
General Director
IT Consultant
Financial Analytic
Strategic Manager
Salary
1000$
550$
550$
550$
Number of employees
1
1
1
1
Salary
450$
400$
Number of employees
2
6
Salary
300$
300$
Number of employees
6
4
Security
Salary
210$
170$
210$
Number of employees
3
3
6
Position
Others
Salary
100$
Number of employees
2
Accounting and Finance
Position
Lawyer
Accountant
Sales staff
Position
Promoter
Operators
Basic Workers
Position
Secretary
Cleaner
Salary by part
REPORT ON MOVEMENT OF CASH
Name
Income
Credit
Constant
costs
Salary costs
Taxes on
wages
(30.3%)
Operating
expenses
(interest on
the loan)
Cash balance
at the
beginning of
the period
Cash balance
at the end of
the period
Jan.2020
36 000$
0$
2700$
Feb. 2020
36 000$
0$
2700$
Mar. 2020
36 000$
0$
2700$
Apr. 2020
36 000$
0$
2700$
May 2020
11 550$
3488$
11 550$
3488$
11 550$
3488$
11 550$
3488$
11 550$
3488$
11 550$
3488$
0$
0$
0$
0$
0$
0$
0$
15 523$
31 045$
46 568$
62 090$
77 613$
15 523$
31 045$
46 568$
62 090$
77 613$
93 136$
 Profit without taxation - 18 262.00 $
 Profit with taxation – 15 523.00$

Tax percentage – 15%
36 000$
0$
2700$
Jun. 2020
36 000$
0$
2700$
Breakeven point
Breakeven point
The break-even point determines how much sales should be in order to the company could
cover all its expenses without making a profit.


Breakeven point – 2700 points per month (750 customers)
The calculation was carried – 4500 points per month (1250 customers)
4500 points – 15 000 customers per year
2700 points – 9000 customers per year
Break-even for a month is 21 600$
Section 7: Target Customers
Tourists
The most active group of tourist in Russia it is 27 until 35 years old. The first time our
target customers will been Russian tourist. For us most important customers will been
Russian tourist.
Gender
Age
Geographic
Man 52.3%
Women 47.3%
27-35 years old
23-27 years old
Moscow, Saints Petersburg
Moscow, Saints Petersburg
Section 8: Market Analysis
The tourism industry is growing every year. During the first years of activity, we
chose the post-Soviet space. Let's see what situation in the post-Soviet space. The
main tourist countries in the post-Soviet space are 7 countries: Russia, Ukraine,
Georgia, Armenia, Azerbaijan, Kazakhstan and Kirgizia.
Russia- 31 300 000 tourist
Ukraine – 12 400 000 tourist
Georgia- 6 350 000 tourist
Azerbaijan – 2 000 000 tourist
Armenia – 1 200 000 tourist
Kyrgyzstan- 1 200 000 tourist
Kazakhstan – 1 000 000 tourist
Mostly in the post-Soviet space, tourists visit Russia. And in other countries (meaning
post-Soviet), mostly tourists are citizens of Russia. For example, in Armenia 2016, visited
1 200 000 tourists and from this number 500 000 tourist came from Russia. In Azerbaijan
2016 visited 2 000 000 tourists and from this number 685 000 tourist came also from
Russia. Top 4 countries that come to Georgia are Turkey, Azerbaijan, Armenia and Russia.
In these countries there is such a cycle of tourists therefore firstly our goal as the market is
Russia, Georgia, Ukraine, Armenia and Kazakhstan. The main donor of tourists for some
countries is Russia. The average price of accommodation in the hotel post-Soviet countries
per day 89 $. Tourists from Russia come to Armenia, Georgia or other post-Soviet
countries because in the first these countries are budgetary
The second stage of the action involves entering the European market.
Section 9: Competitive Analysis & Advantage
Competitive
Booking.com
Profit - 1 100 000 000$ (2011 year)
Commission- 15-50%
Properties- 1 200 000
Reservation- 1 200 000 per day
Market- 225 countries
SWOT
The company booking the most important force is that in the service there are also
luxury hotels and there are budget options for accommodation. The second main feature
of power is that customers can book without a plastic card. They have a well developed
rapid response of requests from both clients and businessmen who have an object of
accommodation.
The weaknesses of booking in the first place are that customers can book
accommodation objects without plastic cards. This is the first threat that a client may not
appear in the facility and he will not incur any liability for this.
Since the booking very quickly changes, it always modernizes its functions and
capabilities both for customers and for businessmen. This opens up new possibilities for the
bead.
Since the bookings are developing very successfully, we can’t see basically any threats
to the company. Problems can arise when a new company appears that not only does what
the booking does but it will also use the business model that we came up with.
Airbnb
Profit- 2 800 000 000$ (forecasting 2017)
Commission – 6–12%
Properties- 2 000 000
Reservation- 10 000 000 (2008 to 2012)
Market- 192 countries
SWOT
The main advantage of Airbnb is the cost of living in properties. The second feature is
that in the Airbnb reservation you can only do with plastic cards (This is a plus and also a
minus).
The weak side of the company is first of all what customers can book with the help of
plastic cards. Firstly, this is a very big problem for both business people and clients. From
his experience and analysis, it is seen how dangerous it is to write your data in Airbnb
because a lot of hackers operate on the Airbnb website.
Airbnb has the ability to change some of the service functions. Firstly the function of
instant booking. This function is both plus and minus.
Basically, threats can be associated with the fact that the company has all the
information about the credit data and customers and business. If there is a leak of
information, this will be a big threat to the company.
Advantage
The most important advantage is first big capital which they can contribute to business
model adjustment. The second advantage is the reputation among tourists.
Section 10: Marketing Plan
In this section you can understand from where is will come the money and also you can
understand our marketing strategy.
Our marketing plan is based on Virial strategy.
Unique business model
The main money comes from clients who with the help of “HERMES” will book the
objects of accommodation. The basic commission for those businessmen who provide
accommodation will be 13% of the total amount that will be paid by the tourists. From
13% of the commission 10% of this commission will go to the customer's personal
account. The client will be able to take back this money after 1 year when he again uses
the service of Hermes. Those users who will use the Hermes service for the first time will
be provided with an ID profile in which they will be able to see all their expenses and the
turnover of their money. The client can recommend our service to others and when a
friend, acquaintance or simply the reader on the network like this recommendation he will
be able to join us on this recommendation and he will also be provided with a personal ID.
The client who, on recommendation, will use our service for him, cashback will save 15%
of the commission.
Let's make a list
1. First Rank-The client who without the recommendation uses the service of Hermes
2. Second Rank- The client who, on the recommendation of another client, uses the
Hermes service
3. Third rank- The client who uses the recommendation of another client who also
uses the Hermes on the recommendation of another
The turnover of money between the client and the Hermes Service
Position Cashback % from Third rank %from Second rank Hermes %
First
Rank
Second
Rank
Third
Rank
10%
20%
40%
90%
10%
40%
0%
54%
10%
0%
0%
43.2%
For example, client book a service with the help of Hermes. He pays for using the
service 1000$ to a businessman. The businessman sends Hermes a commission of 13% and
out of 1000$ a 130$ commission is obtained. Then from 130$ 13$ is sent to the client's
account. These 13$ customer can only receive after one year and if he will use the
Hermes service again. Net profit from the commission for the first rank is obtained 90%.
Now let's see how the order of the commission from the second rank. For example, a
customer who uses the Hermes service for 1 year spent 2000$ the total commission of this
money is 260$. From 260$ cashback of the client of the second rank makes 26$. Remains
234$ in “Hermes” company. After that, we take out of 234 $ 40% and send it to the
customer account of the first rank. The profit of Hermes is 140.4$ or 54% from the
commission.
And now let's look at the structure of profit from the third rank. For example, a third-rank
customer spent $ 5,000 per year using Hermes. After the commission, we get 650$. From
650$ “Hermes” takes 10% for the cashback. From 585$ then the Hermes sends to the
account of the first rank of 20%. Then from 468$ 40% is sent to the account of the second
rank. After that, in the Hermes there is 280.8 $.The profit from the third rank 43.2%.
Profitability Analysis
Indicators
Duration- 1 year; Customers – 20 000; Commission per customer- 65$
1st rank -3000(custome r) 2nd rank – 6000(customer) 3rd rank – 11 000(customer)
Result
Money turnover-1 300 000$
Profit- 694 980$
Sent money to an investment bank- 605 020$
Profit from an investment bank-48 401$ (8% rate)
Marketing strategy
Features that reduce the likelihood of no-shows
The most important feature of marketing Hermes is that it reduces the credibility of
no-shows and contributes to the growth of the responsibility of tourists . If the tourist
booked the object of residence and did not cancel it does not come to the object then
Hermes can take some of the money from the tourist account (money that has
accumulated from cashback or from other ranks). If other companies reduce the likelihood
no-shows using tourist card information (for example Airbnb working only with plastic
card, some hotels in booking.com working only with plastic card) which repels some
tourists then Hermes excludes the use of credit information of tourists . This is the main
feature of Hermes. The second main problem that some companies face is that in some
cases, hostel employees show that the tourist did not show up and they make an absence,
but in real life the tourist came and stayed in the hostel. With the help of Hermes, this
problem is excluded because if the employee of the Hostel does so with the consent of the
tourist, then the tourist will lose some of the money that has accumulated from the
cashback and from other ranks of tourists.
Viral Marketing
Our main marketing strategy is a viral type of action. The tourist using our service is
already motivated to use our service again in the next time and invited friends of his
acquaintances to the Hermes service so that they too could use the Hermes Service. This
can be shown in the diagram how the base of Hermes customers can grow.
This strategy can give geometric growth
to customers. And this means a geometric
increase in revenue. The second feature of
the marketing strategy is that it has the
philosophy of Fordism. Fordism provides not
only the social responsibility of the company
but also raises the company's reputation in
the mind of people. Another effect of
Fordism is that this system ensures stable
growth also. The company as though invests
some money in the budget of clients and they
start to travel more often.
Advertisement of Company
To promote the company in the beginning will need a development program. So that
viral marketing worked in the beginning we need to do a promotional product promotion.
The most promising market in the beginning is Russia. The main target audience should be
young people because they basically book with services such as booking .com, Airbnb and
TripAdvisor. We must find common threads of mutually beneficial cooperation with the
giants of this sphere of action.
Section 11: Team
Teamwork on the Hermes conditionally divided into two part. The first part of the
work is the creation of Hermes. The second part is already employees of Hermes when
Herpes has already will begun its activities. For the first part of the work, we need to have
a team to coordinate all the works that will later become managers of the Hermes with
the possibility of adding new employees.
The first part of the work will require
 Administration
 Accounting and Finance
 Sales staff
 Basic workers
 Others
Administration
Administration must first coordinate the work.
General Director- An employee who must lead all processes and monitor the situation
IT Consultant- The person who will be the adviser of the general director on IT
Financial Analytic- This employee must control the cash flow
Strategic Manager- His obligations include: creating a development strategy and the
way to create a more effective management function
Accounting and Finance
The main tasks of this office are contract creation and accounting. They will report to
the financial analyst.
Lawyer- Staff will develop a contract form
Accountant - The main objective of financial accounting tasks
Sales staff
The main goal of sales managers is to promote the service. They will be subordinate to
the strategic manager.
Promoter- The main task of employees promoting the service on the Internet, the
development of partnership programs with other companies
Operators- The main task is to work with other companies and contact clients and
businessmen
Basic workers
These employees have technical obligations.
Secretary- Technical services
Cleaner- Cleaning of premises
Security- Ensuring the safety of personnel and premises
Others
These workers must do the work on technical requests
The second part of the work should include basically the same command and
an extended command. The main task of the expanded team should include work on
the promotion of the service and the response of customers and businessmen. They
will be hired after the Service Hermes starts work
Section 12: Operations Plan
Action Plan
We divided into three parts the action plan.
1. Investment part
2. The beginning of sales
3. Virial part
The investment part is includes
 Contract with investor
 The beginning of work on the creation of the Hermes Service (1-2year)
The contractual part with the investor should include all the contractual part. How
many percent of a company should an investor have? How should the company be
guided in the future?
After the contract is signed with the investor, work will begin on the establishment
of the company. All steps to create Hermes can be seen on the diagram.
The beginning of sales
After the creation of Hermes, the period begins for the provision of our services in the
market. The main office in the beginning should be in Yerevan. After a certain part of the
market of Russia and other countries of the post-Soviet space is attracted, the main office
will be moved to Moscow to make it more convenient to manage the company.
Section 13: Financial Projections
Investment
How much investment need? – 500 000$
How much interest should an investor have in a company? – 35-45 %
How long will it take to implement the project before entering the market? - 18-24 month
How much should invest in the first year – 200 000$ - 350 000$
How much will benefit for the first year of action – 186 726$ or 37.3% (15 000 customers)
How many employees must work at the beginning of an investment - 36 workers
Where the main office will be located at the beginning of the project-Republic of Armenia