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Investment and Money Management

“Magazine Start-up Venture”

Objective:

The objective of this paper is to restructure financial arrangements for the start-up venture of an investment

and money management regional magazine due for release in Central Florida. There has been a loss of capital from

one of three investment partners. The two that remain are prepared to move forward with the business start-up and

marketing plans but are left with a 65% margin of capital and must find replacement cost savings of 35% or more.

We have agreed to change our business plan by scaling back expenses, consider outsourcing processes, and using

alternatives as we rethink our plans. This paper will cover the initiatives taken to reach our goals.

Magazine Start-up Research:

The cost for a regional magazine in 2006 was around $100,000 to launch and about $15,000 for the first

issue (Cooper, p 1-2), we feel we need at least $150,000 and about $10,000 an issue (Daniel). The largest source of

financial need is for “printing, paper, and postage” (p 2). Cash flow is very tight the first 6 months to a year and 70

percent of new magazines fail (p 1). A 40 percent sell-through rate on the newsstands is considered remarkable (p

1). Funding is easier if a prototype is set up for potential advertisers to review. The prototype is considered a

necessary expense as quite often it is required by many advertisers (p 2). Regional magazines are more cost-

effective as start-ups and can always be expanded on a national or global level later (p 3). Regional magazines are

also more capable of developing the niche for the particular start-up magazine (p 3). A good start for a regional

magazine is around 10,000 issues (p 3) but to gain national advertisers which are the core profits and backing to a

magazine Samir Husni (known as “Mr. Magazine”) recommends no less than 100,000 issues (p 3).

Calls to potential advertisers can help offset some financial strain if they are willing to make commitments

(Cooper, p 2) but a magazine can take millions to run says Neil Perlman, CEO, for Entrepreneur.com magazine (p

4). Perlman says expect to lose money in the first four or five years (p 4). Perlman further stresses that “being able to

sell advertising, is your most critical task” so experienced salespeople who can sell ads are imperative to the success

of a magazine (p 4). Publisher and VP for Entrepreneur.com magazine, Carrie Fitzmaurice, states that circulation is

an important key that will draw advertisers to an attractive market and that offering charter rates will promote ad

sales (p 4). Mike Ludlum, Senior VP President of Operations for Entrepreneur.com magazine offers cost reduction

advice on printing for start up magazines: a) trimming sizes of the pages to the printer’s press, b) consider where the

location of the printer is with regard to postage that can be saved on mailing costs, c) consider reducing costs for

pre-press operations by doing it in-house, and d) buy your paper through the printer you use (p 4). Vice President of

Circulation, Mike Tavarozzi suggests outsourcing whatever possible within budget to maintain focus on being a

publisher rather than taking on the fulfillment end in-house because experts in this industry are more likely to

improve how your magazine looks and you will be more successful in the end (p 4).

A final word of advice was given by a leading magazine expert recognized by Forbes ASAP magazine

(Magazine.org), Samir Husni, Ph. D., says to “use the three F’s for finding investment money: family, friends, and

fools” and “be prepared to ask even Grandma for a loan” (Cooper, p 2).

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Checklist:

Revise Budget Plan

Demographics – (no change)

Benchmarking – (no change)

Marketing Strategy – (Sally’s connections)

Advertising Strategy (pre-sales & barter)

Circulation Strategy – (new additions)

Cost Reduction – (maximum reductions)

Outsourcing – (limited financial ability)

Company Location – (revise plan)

Employee Benefits – (self-funded plan)

Digital Publishing – (me)

Magazine Layout – (me)

Customer Relations – (partner)

Printing & Distribution – (outsource)

Other resources – (existing equipment)

Payroll & Tax – (outsource)

Each heading represents a 5% process. A minimum savings cost of 35% is needed to make up for the third

investor loss. We have revised the budget and part of our plans to accommodate this loss with details that follow.

1) Facility for Operationa. Office

2) Equipmenta. Computersb. Software

3) Publishinga. Pre-press Operationsb. Productionc. Editorial d. Writers: In-Housee. Design & Layoutf. Subediting & Proofreading

4) Legala. Researchb. Copy Writing

5) Accountinga. Payrollb. Taxes

6) Salesa. Advertisingb. Marketingc. Subscriptionsd. Newsstands

7) Human Resourcesa. Recruitmentb. Benefits c. Safety & Health Managementd. Commissioning External Writers

8) Fulfillmenta. Printingb. Distribution

9) Mailing & Trackinga. Postageb. Subscription, Newsstand, Ad, Sales Software

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1) Facility for Operation:

Working out of my partner’s three car garage rather than rent an office space as planned reduces expenditures

by $15,000 per year or 10% of the $150, 000 needed; we stand at $97,500 between us (65%).

2) Equipment:

My existing software and computers give us a 5% savings rather than buy new equipment, change in plan.

3) Publishing:

My degree in Finance, along with my background in writing, layout, and publishing with Business Focus

and Forbes bring graphic design skills, editorial, and writing skills, combined saving 5%, change from staffing idea.

Pre-press operations should be kept in-house for cost reduction (Cooper) which includes how the magazine evolves

up to print and distribution. This is the core business process, being a publisher (Cooper). The editorial staff along

with the layout staff typeset articles written using QuarkXPress, PageMaker, or InDesign (City). Time is saved while

dual processes are being performed; cosmetic appearance and editorial arrangements are worked on together (City).

Writers are needed on site for additions, improvements, and changes after proofing while proofreaders are needed

for the perpetual ongoing processes (City). I can handle these tasks in conjunction with external writers as needed.

Publishing in-house strengths: 1) enables responsiveness to change without limitations of contract adjustments

and costs for contracts, 2) minimizes risk of managing vendor relationship, 3) maintains control over core projects, 4)

utilizes and develops existing competencies, 5) costs are more defined and controlled, and 6) uses existing leverage of

IT equipment and skills which make up for the loss of the third investor (Appendix 3).

Further cost cutting can come through digital technology by purchasing innovative software like Q2ID

(QuarkXPress to Adobe InDesign) and PUB2ID (Microsoft Publisher To Adobe InDesign) which become converter

bridges among the graphic design lay out of the magazine, various formats that may need to be used, all the way to final

printing conversion, eliminating costs for typesetting at the printers or changes to use files (Markzware.com). Benefits of

digital technology preserve intellectual property investment, enable the ease of data migration for printing, eliminate

duplicate work of re-creating content, and offer the freedom to choose the authoring system (Markzware.com). Gretchen

Peck, industry reporter of international graphic arts and publishing and printing communities recommends this

methodology for time reduction (Peck), low cost of $1,500 each for 10 users (Markzware.com); this software limits costs

and improves efficiency, and allows for growth of staff.

It enables graphic designers to convert a QuarkXPress document to an InDesign file with a single click. All of the file’s original attributes and elements are preserved, including page positioning, color models, fonts and styles, images, copy and more (Peck).

4) Legal:

Craig as a lawyer (my partner) will handle legal processes to cut costs, a 5% savings. Legal parts of the

magazine industry involve research of copyrights and watching for defamation at the time of editing and subediting;

done in-house this provides Just-In-Time services reducing time costs to improve efficiency (City). Another reason

to keep the lawyer in-house is to handle contracts with external writers for rights to ownership of the articles written

and for contracts with regards to outsourced processes (City). Legal fees are expensive. The weaknesses of

outsourcing legal processes create 1) loss of control in decision making and 2) higher costs (Appendix 3).

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5) Accounting:

My husband, Ivan, is a CPA and has agreed to handle billing, payroll and taxes, outsourcing reduces costs

5%. Free for the first six months, he will get free ad space in our magazine as barter for services with a stipulation

we keep him on paid for at least two years after. Trustworthiness for our minimal funds is solid, he has our back.

Outsourcing advantages: 1) costs are free while our business builds, 2) does not require management

supervision by knowledgeable staff, 3) existing IT technology, 4) foregone contract expense, and 5) the probable

quick growth of the company allows change flexibility (Appendix 3). With a target for national expansion and plans

for the online arena along with the knowledge that magazine growth can be very rapid (Cooper, p 2), it is best to

keep this process more flexible within our ability to make changes as we grow and we can avoid costs for RFP.

6) Sales:

MPA 2007 shows the magazine ad boom took in $8,150,196,471 in the last quarter compared to $73,959.67

in 2006 (Revenues), an overall growth from 1996 to 2006 of 24 billion in magazine advertising rate card revenue

(The Magazine). Growth this intoxicating needs an ever watchful executive eye inside the company.

Magazine advertisements have the highest impact across the purchasing tunnel at 45% compared to TV at

38% and Online at 17% (Accountability, p 9). There will be professionals for the VP of Sales and Advertising to

foster relationships that require satin glove attention. Fortunately, my partner’s wife, Sally, left her position as VP of

Sales and Advertising at Marchex, Inc. to work with us. Given the critical nature of selling advertisements to

support continued growth for a magazine, an expert is needed (Cooper, p 4). Rarely does a company outsource their

VP of Sales & Advertising (Rowe).

Marchex, Inc. believes connecting the consumer with local businesses via the Internet is important from a

Local-Centric viewpoint not just a global one (Marchex.com). Our magazine idea originated from this premise. Too

many businesses are linking up on the Internet without ‘a Net plan’ so we came up with Internet Business World as

our theme. Businesses don’t utilize area connections to forge business prospects for profitability ‘because they don’t

know how’. Research has shown that Florida businesses are losing money to out-of-state Web companies

(Benumberone.com) and one primary focus will be teaching Florida businesses how to invest in the movement of

Web technology by linking their businesses along the best networks state-wide for more productive and profitable

outcomes. We will address green investing too, a hot point for investors this year (CNN). We think these topics will

be a great niche for marketing to draw 1) readers of similar interests and desires, 2) easily identified subject matter,

and 3) a target that can be easily reached (Williams). Nine out of ten magazine start-ups fail and “70 percent never

make it past their first issue” (Cooper, p 1). We, however, have one indispensable element—Sally’s contacts—a

broad base of clientele and potential advertisers for this niche (Williams). Sally brings a tremendous client base with

her and Marchex, Inc., has agreed to exchange free links to our magazine for their free ads in our magazine.

Using a prototype—“a mock-up of how the actual magazine will look” (Cooper, p 2), Sally pulled in 20

full page ads for six issues a year at $4,800 each (Williams). She has already set up Web subscription links from

WebMag.com for a start-up of $50 and YourFloridaNetwork.com for free. Advance advertisements to-date provides

a year of cash flow to hire an office assistant who will cover subscriptions and newsstands. This also affords

commissioning external writers as needed while still reducing costs by 5%.

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7) Human Resources:

Under Florida law for small businesses, if you have more than four employees you must provide Workers

Compensation Benefits unless the corporate officers are listed as exempt (FloridaSmallBusiness.com). Listing our

company as an LLC will accomplish several things.

1) First, an LLC cuts costs for providing Workers Compensation under Florida law (FloridaSmallBusiness.com).

As a non-construction LLC, “There is no limit to the number of corporate officers eligible for exemption” and

Internet Business World will start with four employees on staff: Craig, Sally, new assistant, and me.

2) Second, an LLC protects our liability from debts and obligations from which we could potentially lose

everything in a worst-case-scenario situation. The dangers of sole proprietorships or partnerships are becoming

“legally liable for all the debts of the business” (Nelson) and this helps mitigate risk.

3) Third, an LLC averts paying a second heavy tax on business profits from being self-employed and new tax

laws give tax flexibility and can be set up as either a C or S corporation (Nelson), further cost savings.

Regarding health benefits we have decided to use Section 105 Medical Reimbursement Plans rather than

hiring an outside provider while our employee numbers are small. All of us have medical coverage anyway. Ivan

brought us information from his friend’s business and we will apply the “most common type…a self-funded health

plan, where the employer has chosen not to insure health care benefits and to self-fund these benefits rather than pay

premiums to an insurer”: http://www.emcentrix.net/adminhr/caf/section125_reimbursement_faq.htm .

Research further shows applying our LLC partnership allows us to use section 105 in conjunction with tax

benefits for the employer and the employee, “Pursuant to the code, eligible and qualifying paid-for benefits are tax-

free to the employee” (Tasconline.com), adding supplemental insurance to regular carriers but allows tax breaks.

We have agreed to use a staffing agency for temporary recruitment when we become exceptionally busy

but for now we don’t need an outside agency. In addition to my articles, we have confirmed commissioned writers

(City) for periodic submissions. Gary R. Crum (MBA, BSBA) is an expert financial writer, mortgage expert, former

chairman for the Florida State Board of Administration Investment Advisory Council, and a member of Society of

American Business Editors and Writers (financial-writer.com). Bob Yetman who has published several books, More

for Your Money, Money Management for Those Who Don’t Have Any, The 30-Day Quick Start to Mutual Fund

Investing, and The 100 Best Investments for Your Retirement, and Your Daily Financial Minute and owns Premier

Financial Communications, Inc., a Florida-based freelance writing service specializing in financial services and

securities investments (Thefinancialwriter.com). Also, we’ve been referred by sources in the industry that we can

obtain reputable financial writers as needed from the NUJ Freelance Directory of the National Union of Journalists

(Freelancedirectory.org). January issue will be complimentary to promote circulation and subscriptions.

Next month we have an appointment with OSHA for an on-site consultation. This is a free service to help

prevent potential hazards, improve occupational safety, and health management systems that may qualify us from

routine yearly inspections (OSHA.gov).

These combined efforts have reduced our costs another 5% for Human Resource processes.

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8) Fulfillment:

We have no equipment to print, no staff to run it, and no additional funds to buy it. Even if we did, it will

be cheaper, faster, and better quality to outsource to professionals. We already know we must use outside services

for fulfillment (printing and disbursement) so we can focus on publishing. It would require too much training, costs

for space, and money to hire press operators. The printing end of the magazine is the most expensive cost because of

equipment, copy paper, typesetting, color separations, salaries, and real estate costs to do it all (Daniel). This pushed

us to investigate other resource alternatives. We found three printers that do both services for less than separately.

One of our mutual friends started his magazine by trading a certain amount of stock for “six issues worth of

typesetting, a different amount for six issues worth of color separations, and a different amount for six issues of

printing and paper” (Daniel). This gave his vendor a discounted price for stock in the first year of print with an

agreement to continue using the vendor under contract for at least another year (Daniel). We will proceed to follow

his lead because “cash flow is key” (Cooper, p 2). We will compare partnership terms in an RFP from our narrowed

down vendor list of fulfillment companies: Océ Business Services, Xerox Corporation, and Trend Offset Printing.

All have offices local to our Central Florida location with national coverage capabilities and offer printing

and distribution packages, digital processes, and recognized in the industry. I have already used Océ Business

Services and found them to be excellent on quality, great performance and have an amiable negotiation stance. They

are already interested in our bartering proposition but we still need to make comparisons.

We want to exchange ad space and company stocks for costs of paper and printing while paying for

distribution; this methodology can reduce costs 10% if they barter or outsourcing to one company can still reduce

printing and paper costs 5%; distribution costs 5% if we revisit our idea to attain investors for buying our stock if

they aren’t interested (Daniel).

10) Mailing & Tracking:

Sally is contributing The Magazine Manager software system which has the capability to monitor sales and

assistance for ads, subscriptions, and newsstands (Ivan can also use this for billing, payroll, and taxes). This system

has a 100% usage continuance rate with savings of $25,000 to $35,000 per year noted that streamlines:

…contact management, ad order entry, ad tracking, subscription management, online subscription orders from the website, proposal generation, sales tracking, salesforce management, billing and accounts receivable management and reporting…{The} whole service costs less than it would cost to Outsource a professional for a week (Magazinemanager.com).

Further, postage costs can be exorbitant so Craig bartered a deal with the Post Office for a reduction off our

postage in exchange for ad space in our magazine.

Finishing touches on our plan have reduced our costs another 5%, I think we’re on a roll!

Five Year Outline:

1) Regional circulation to start with 33,000 issues, printed every 2 months.

2) Projected target of sales to double in the first year (Cooper, p 3).

3) Expand to Internet production through The Web Marketing Group (WebMags.com.co.uk) year three.

4) National production to start thereafter with a plan for full saturation at the end of 5 years.

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Cost Reduction Services Retained In-House Cost Reductions Services Outsourced

Process Reason for Retaining Process Reason for Outsourcing

Facility for Operation

Cost Reduction 10%

Partner - Existing Real Estate Accounting

Cost Reduction 5%

CPA – Husband

First Six Months Free, 2 year contract

Exchange ad spot-discount rate after

Contract Time & Fees Saved

Equipment

Cost Reduction 5%

Me - Existing Computers, Software Fulfillment

Bartering Plan

Barter Print & Paper

Pay for Distribution

Cost Reduction 10%

Printing/Paper – more cost efficient,

more professional appearance

Exchange ad space and stocks

Distribution – more time efficient, less

inconvenience

Publishing

Cost Reduction 5%

Me - Existing Experience All Areas

Legal

Cost Reduction 5%

Partner - Licensed Attorney

Sales & Advertising

Cost Reduction 5%

Pre-Sales Advertising in Magazine

Barter Net Investment links via Net

Covers Staff Assistant Salary

Covers External Writer Costs

The Magazine Manager Software

Saves from outsourcing by

$25,000 - $30,000 per year

Human Resources

Cost Reduction 5%

Reductions Include:

Worker’s Compensation

Self-funded Health Plan, Section

LLC Avoids Second Tax

Mailing & Tracking

Cost Reduction 5%

Existing The Magazine Manager

Software Saves from outsourcing by

$25,000 - $30,000 per year

Ad barter with Post Office

TOTAL - 40% INSOURCE REDUCTION TOTAL - 15% OUTSOURCE REDUCTION

We discussed key criteria to evaluate in RFP: 1) Select key criteria (1-7, follows). 2) Rank vendors (Me). 3)

Establishing a scoring system (asterisks). 4) Weighting the key criteria (* is 10%, ** is 20%, *** is 30%, **** is

40%, ***** is 50%, up to 100%). 5) Implement final sign-off procedures – partners agree on final information

reviewed but partner will polish wording in RFP, final negotiation contract, and any amendments there after.

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1. ***Bartering – With no plan for other investors, essential for survival. Will vendor barter fulfillment services for

shares in stock, ad space, and paid second year agreement for services with buy back plan for stocks?

2. * Financial History – Request statements. How secure are they to partner with?

3. ** Printing and Distribution Costs – This was the primary stipulation for qualifying in the RFI. Printing and

distribution processes offer a combined 10% cost reduction if outsourced to companies that do both but

only a 5% reduction using separate companies; consider/compare prices, packages, and volume discounts

(City) for second year of paid services if they bite on partnering exchange for first year.

4. * Digital Processes (City) – Our pre-press operation is set up for digital printing, a quantity saving concept

because no films or plates will be involved and each copy will cost the same price (City). Is their software

compatible? Obtain experience of the vendor: awards and quality references.

5. * Performance Efficiency – Obtain roll out, get customer base references, and backup alternative site location.

6. * Pricing Structure – Contract type, Cost-Plus-Incentive-Fee Contracts (flexible for growth/vendor incentive).

7. * Third Party Vendors/Subcontractor – Decision is no third party vendor, ensure they do not use one.

_____________________________________________________________________________________________

Request for Proposal

April 13, 2008

TO: Executive Joe, Jerry, and John Printer

FROM: Ginger Rey, Editor and CEO

SUBJECT: REQUEST FOR PROPOSAL – Fulfillment Partnering

Dear Executive,

I am pleased to send you the attached Request for Proposal from Internet Business World’s for fulfillment outsourcing.

I would ask that you submit the proposal to me no later than May 4, 2008.

Please forward your proposal to:

Ginger Rey, Editor and CEO

Internet Business World

Written Questions: gingerrey@hotmail.com

_____________________________________________________________________________________________

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I. Background:

Internet Business World is a money and investment magazine servicing Central Florida with a primary focus on

helping local-centric businesses learn how to integrate the latest Web technology into better business connections on

the Net Roadway. Articles by financial and technical writers will forge money ideas into magic, increasing business

savvy through mini-training and tips while averting the Net trails of money peril.

Internet Business World follows the latest green investments (environmental), keeping investors informed.

Our mission is to be the ‘Internet Money Scouts’ for business owners through exploration regionally, state-wide, and

on a global platform for more productive and profitable outcomes and investment opportunities.

II. Statement of Purpose:

The purpose of this procurement is to pledge a fulfillment partnering vendor to support the first year of print and for

Internet Business World’s 200 pages, six issues a year magazine. The more detailed business plan for your review

along with a prototype is attached (pretend it’s attached). We have a solid niche, achievable client base, qualified

financial and technical writers, and most importantly an expert team backed by pre-sold advertisers through the first

year of publishing.

Our advertiser base is substantiated through relations with our new VP of Sales and Advertisement whom you may

recognize as the prominent Sally Mustang, former VP of Sales and Advertisement, Marchex, Inc. Advertisers

solidly fund our endeavor through the first year of print.

III. Procurement Method: Multiple Bids

IV. Procurement Timetable:

Activity Date

Due date for Written Questions – Method Email to: gingerrey@hotmail.com 05/05/08

Access to Client Financial Data – Method for Appointment: email above 05/17/08

Response to Written Questions – Include Vendor Contact info and email address in RFP 05/19/08

Proposal Submittal Deadline 07/14/08

Proposal Evaluation Period 08/15/08

Proposal Final Revised Proposals (optional) 09/15/08

Provider Selection and Notification – Mail. 10/15/08

Contract Negotiation Completion 11/25/08

Contract START DATE: 12/01/08

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DISCLAIMER:

The RFP and data that follows is believed to be accurate. Each vendor is responsible for their own evaluation and

responses. If an error is found notify client but neither the client nor any of its officers shall be held liable.

V. Scope of Work:

The scope of work includes print and distribution of Internet Business World described below:

1. Magazine release date: January 1, 2009.

2. Printer Services: Print 33,000 issues, 6 issues per year, 200 pages. Bartering and non-bartering bids see

“Evaluation of Criteria” that follows.

3. Paper size, 11 x 16 (pre-trimmed standard stock), Vendor provides copy paper.

Interior pages - Matt varnish. Cover - High gloss NC (nitrocellulose) 12 color printer CMYK SWOP guidelines for color (BNET, p 3)

4. Provide: proofs—photocopies of the mechanicals and ads for each issue for approval (BNET, p 4).

5. Postmark magazines, client will supply postal equipment cost, vendor will supply staff cost.

6. Distribute to Post Office for bulk mailing each respective issue the first day of the following months: January,

March, May, July, September, and November.

7. Digital print conversions see “Evaluation of Criteria” that follows.

Deliverables: Time-Line

Digital Full-Submission to Vendor 12/01/08

First Proof Prototype Submitted to Editor 12/08/08

Proof Return from Editor 12/14/08

Print & Distribution Processes Begin 12/14/08

Completion of Distribution, no later than 01/07/08

VI. Audits:

Audits will be conducted by client at regular intervals without notice.

VII. Financial Reports:

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Client to provide financial information pertinent to customer’s publication business, asset listings, and third party

contracts that verify start-up standings at contact address on May 17, 2008, see Procurement Timetable.

VIII. Working Relationship:

Bids submitted without Bartering:

[Stocks can be sold to other investors, then pay

cash without great impact on cash flow (Daniel)].

1. Quote per issue full print costs per run of six issues.

2. Quote full paper costs per run of six issues.

3. Quote full distribution costs per run of six issues.

4. One year contract only.

Bids Submitted for Bartering:

Partnering request is for the approximate

exchange of 60,000 in company stock for

each approximate $10,000 spent per issue

in the first year for the outlay of printing

and paper costs (Daniel) to be considered

on an individual bid submission.

List any nonstandard service costs (Bottomly, p 2).

5. Quote 1, 2, and 3 above AND interested terms

Vendor receives discount price on stocks, at $1.

6. Vendor receives one full page advertising space in

each of the six issues in first year, a $28,800 value.

Vendor covers all paper costs in first year.

7. Second year contract, at full cost to client. Vendor

allows buy back at original purchase value (Daniel).

See specifications that apply in Terms of Contract.

IX. Service Specification

Distribution Coverage: List sources for delivery, number of trucks and routes

Geographic Service Coverage:Include insurance carriers and coverage.Include copies of truck driving licenses and

number of drivers needed to perform.Include accident records.Include citizenship records or work permits for non-citizen.Provide site location and contingency plan.

Central Florida:Seminole CountyOrange CountyHillsborough CountyPolk CountyOsceola CountyBrevard CountyIndian River County (GreenPagesFlorida.com)

X. Terms of Contract (s)

Initial term: 2 yearsFirst year exchange: 1 Year exchange printing services and costs of

paper for stocks and 6 full page ads one per issue in Internet Business World.Client pays distribution costs.Year 2 client pays full services.

Length of each extension: 1 year.Maximum length of contract: 5 years.Conditions for Extensions: Must be in writing, executed prior to expiration.

Internet Business World permitted to buy back shares

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(Daniel) at no more than .01 per share by end of 5th year.Taxes: Vendor pays all taxes.Indemnification: Vendor responsibility.Pilot Test Period:

January 2009 issue.Unsatisfactory first issue bears no-fault termination for client without penalties.

First year:

Cost-Plus-Fixed-Fee Contracts:

(a) Description. A cost-plus-fixed-fee contract is a cost-reimbursement contract that provides for payment to the contractor of a negotiated fee that is fixed at the inception of the contract. The fixed fee does not vary with actual cost, but may be adjusted as a result of changes in the work to be performed under the contract. This contract type permits contracting for efforts that might otherwise present too great a risk to contractors, but it provides the contractor only a minimum incentive to control costs (Farsite).

Second year:

Cost-Plus-Incentive-Fee Contracts:

(a) Description. The cost-plus-incentive-fee contract is a cost-reimbursement contract that provides for the initially negotiated fee to be adjusted later by a formula based on the relationship of total allowable costs to total target costs. This contract type specifies a target cost, a target fee, minimum and maximum fees, and a fee adjustment formula. After contract performance, the fee payable to the contractor is determined in accordance with the formula. The formula provides, within limits, for increases in fee above target fee when total allowable costs are less than target costs, and decreases in fee below target fee when total allowable costs exceed target costs. This increase or decrease is intended to provide an incentive for the contractor to manage the contract effectively. When total allowable cost is greater than or less than the range of costs within which the fee-adjustment formula operates, the contractor is paid total allowable costs, plus the minimum or maximum fee (Farsite).

Terms of Exit:

Terms are 1 year contract with option for renewal after benchmarking set forth in Evaluation Criteria. Under barter

agreement vendor and client agree to terms as set forth in Evaluation Criteria. Should either party terminate prior to

one year contract in either barter or non-barter agreement a penalty of 20% cost for one magazine issue will be paid

to the other party. Any unresolved issues between the said parties with the intent to continue a relationship will be

handled in a mediation court through an outside third party mediator without court costs.

XI. Vendor Response

Attached please find a letter of transmittal, forms to use for a full description of your approach to the project with

descriptive measures of time performance projected for all phases, and attach brief resumes of key personnel

assigned to the project. Enclose pertinent information requested including any requested financial data, licenses,

records, and references and return to contact’s mailing address that follows by July 14, 2008. Do not use references

that we cannot contact. To be considered as part of the final vendor proposal all aspects of the vendor’s proposal

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must be submitted in writing and include all aspect of the Request for Proposal. Vendor is to incur all costs of the

proposal. The RFP does not assure any acceptance by the client. Late submissions are not accepted.

XII. Confidentiality Agreement:

A Confidentiality Agreement was signed in the RFI prior to receiving this RFP and the vendor will be held fully

liable for divulging any part of this RFP. No information from this RFP or any customer outsourcing processes can

be shared or copied in any way nor made public without the client’s written permission.

XIII. Evaluation Criteria

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Financial History Provide financial statements for past 3 years.Printing and Distribution Costs:

Truck and Staff Cost……..………………....Provide experience……….………………...Regional Distribution References…….……Magazine Customers…….…………………

Finishing Processes…….…………………..

Paper size……………….…………………..

Varnishes and Seals…...………………...…

Impositions (City)…….………...…………..

Standard Folds (City)….……………………Printer specs………….……………………..Printer Site Location………………………...

Back-up Site Location………………………

Provide pricing terms, packages. 33,000 issues per run200 page magazine, 6 issues per year

Volume Discounts for Distribution.Provide awards and quality references.Provide customer base references. Applicant to include points of contact, addresses, e-mail/phone numbers. Trimming to size – cut down to fit your printer (City)

Strip binding11 X 16 inches(Standard Pre-trimmed size of stock, City)Matt varnish interior of magazineHigh gloss NC (nitrocellulose) Cover 32 and 16 page signature

Saves cost on print runs the higher imposition (BNET, p 2).

Single Fold (4 pages), 12 color, type/age of equipmentFull address

Saves costs closer site is to bulk mailing (Cooper, p 4).

Full address – include any process/price changes.Digital Processes:

Compatibility Requirements……………….

Digital Proofs………………………………Integral Proofs……………………………...Color reproduction…….………………...….

Q2ID, PUB2IDPhotoShop, PageMaker, IllustratorMagazine Manager softwareIRIS proofs (City)Cromalins and MatchprintsCYMK

Performance Efficiency: Roll Out…………………………………….

200 page magazine, 6 issues per yearSubmit Estimated Times To:

Print Prototype for ProofingProof to PrintPrint to DistributionDistribution Finish

Quality Levels: (Bottomly, p 2-3) Below 90% in an issue may constitute termination.Remedies: (Bottomly, p 2-3) Editor and Printer will spearhead face-to-face meetings,

Unresolved issues to include third party designee.Confidentiality: Signatures required prior to reading prototype proofs.Benchmarking: Yearly by third party vendor. Shared cost, prices will be

reflective of fair market value for client and adjusted fair increase for cost of living for vendor, prior to renewal of contract.To promote continued working relations with reasonable consideration to both parties (Fox).

Third Party Vendors/Subcontractor None to be used.

XIV. Contract Negotiation

Agreement among stockholders and ad financiers are important to our selection processes. Proposals will be viewed

by several main contributors that support our endeavor who may include businesses you work with; we therefore

suggest you present fair proposals in a professional and timely manner.

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RA2 - Rey

All contracts shall be signed by both partners of Internet Business World, Craig Bernstein, Attorney at Law

and Ginger Rey, Editor and CEO.

Please include responsible parties for contract signatures on your behalf. Include name, address, phone, and email

addresses.

Selection of RFP will be responded to in the date set forth above by mail.

XVI. Point of Contact for Future Correspondence

Ginger Rey, Editor and CEO:

Office: 803-123-3456

Due date for Written Questions may be received before or up to May 5th 2008.

Written Questions: gingerrey@yahoo.com

PROPOSAL SUBMISSION DATE:

JULY 14, 2008

SUBMIT WRITTEN RFP VIA MAIL:

Internet Business World

Ginger Rey, Editor and CEO

123 Lady Lake Terrace

Kissimmee, Florida 34741

Proposals MUST be submitted on form provided,

include all requests for additional records, references,

licenses, key employee resumes, equipment specs, and

received before or on SUBMISSION DATE to be

accepted.

Internet Business World promotes an equal opportunity outsourcing potential for proposals and do not base

concerns on ONLY the lowest bidder but the best working relationship for successful outcomes regarding

technological compatibility, managerial innovation and methodology, as well as fair market pricing policies.

Thank you in advance for attention to details and your interest in this proposal.

References

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Accessed 02 April 2, 2008 from < http://www.benumberone.com/ >.

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BNET. Solving the Imposition Puzzle. CNET Networks, Inc. (2008). Accessed 09 April 2008 from

< http://findarticles.com/p/articles/mi_m3065/is_v15/ai_4352020/pg_2 >.

Bottomly, Leslie G. Outsourcing Administrative Functions: Employee Roundtable. 21 October 2004. AfterWynne

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Cooper, Steve. Mags to Riches. (June 2006). Entrepreneur.com, Inc. (2008). Accessed 27 March 2008 from

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< http://www.magazine.org/content/Files/magHandbook07%5F08.pdf >.

---------- Revenues & Pages by Magazine Titles (quarterly). October – December 2007 vs. 2006. Magazine

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http://www.magazine.org/Advertising_and_PIB/PIB_Revenue_and_Pages/

Revenue___Pages_by_Magazine_Titles__quarterly_/25717.cfm

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---------- Accountability II: How Media Drive Results and Impact Online Success. Magazine Publishers of America.

(2006). Accessed 30 March 2008 from

< http://www.magazine.org/content/Files/AccountabilityII.pdf >.

Magazinemanager.com. (2007-08). Accessed 30 March 2008 from < http://www.magazinemanager.com/info/ >.

Markzware.com. (2008) Accessed 28 March 2008 from < http://www.markzware.com/ >.

---------- Q2ID v3 (QuarkXPress to Adobe InDesign) < http://www.markzware.com/q2id/ >.

---------- PUB2ID (Microsoft Publisher to Adobe InDesign) < http://www.markzware.com/pub2id/ >.

---------- Peck, Gretchen A. Fluid Content: Breaking Down the Barriers of a Single-Application Workflow

< http://www.markzware.com/q2id/items/Gretchen_Q2ID.pdf >.

Nelson, Stephen L. CPA, MBA, MS (tax). LLC Formation: Advantages of Forming a Limited Liability Company.

Bellevue CPAs Stephen L. Nelson (2008). Accessed 04 April 2008 from

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NUJ Freelance Directory. Find a Freelance. National Union of Journalists (2001-2007). Accessed 04 April 2008

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Rowe, Andrew. Outsourcing Sales & Marketing: When Does It Work? EzineArticles.com (2008). Accessed 01 April

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&id=140836 >.

Sink, Alex, CFO State of Florida. Division of Workers’ Compensation. Key Coverage and Exemption Eligibility

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< http://myfloridacfo.com/WC/keycoverage.html >.

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17