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Sponsored Sections
60-Second Business Plan: The Butts Stop Here
How's this for a breathtaking market? The 35-million Americans who try to stop smoking every year.
Published March 2002
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BUY A REPRINT60-Second Business Plan
THE PITCH: Sure, Web-based businesses are risky. But QuitNet president Chris Cartter does happen to have a breathtakingly big market: the estimated 35 million U.S. smokers who try to quit in any given year.
QuitNet is a for-profit smoking-cessation program that's run exclusively on the Web. The site, which is free for users, offers a full range of diagnostic and quitting tools, including a system to match smokers up with quitting buddies and a "quit-date wizard" that helps smokers choose the optimal day to stop. It also provides free round-the-clock live chat rooms, message boards, and instant messages. And according to Cartter, it's the most active community of nicotine addicts on the Web. "Every day there are about 2,500 support messages posted by users," says Cartter. "There's not a minute of the day or night that the site is empty."
QuitNet's site, which claims an average of 50,000 visitors a month, began life in 1995 as a nonprofit run by the Boston University School of Public Health. The company, which is still based in BU's offices, incorporated as a business two years ago in hopes of expanding revenues beyond foundation grants. One big source of income: the $200 billion plus in tobacco-litigation-settlement funds that became available to the states starting in 1999. Cartter expects that at least 10% of tobacco-settlement dollars will fuel smoking-prevention and -cessation programs during the next 25 years. "Decision makers with pots of money to spend on helping people quit smoking are looking for cost-effective ways to address this problem," says Cartter, who previously headed up online services for a Boston University-based nonprofit.
New Jersey has already laid out $59,000 to have QuitNet build a customized Web site for the state's health department and will pay an additional $30 for each registrant to the site. So far, roughly 5,000 New Jersey smokers have signed up. The five-employee QuitNet has also landed contracts to build sites for the state of Colorado and for three county health departments in Maryland and Illinois and is now targeting managed-care companies and major health plans.
Down the road Cartter hopes to pull in more revenues by charging QuitNet users for a premium package of services, such as access to online counselors. And he sees an even heftier payoff in plans to offer direct sales of nicotine gum, patches, and other FDA-approved smoking-cessation aids. QuitNet is negotiating with pharmaceutical giant GlaxoSmithKline to serve as an online retailer of the company's nicotine-replacement products and hopes to line up other pharmaceutical companies as suppliers in the year ahead. Indeed, QuitNet projects that online sales of stop-smoking products alone will bring in $2.1 million in revenues by the end of 2003. "The vendors need our service to sell the next box," says Cartter. And QuitNet needs vendors like Glaxo to help keep the company from, well, going up in smoke.
The Quick Once-Over
Formal Projections *: $1 million in revenues, $823,000 net loss in 2001; $4.4 million in revenues, $534,000 net profit in 2002; $9.7 million in revenues, $2.6 million net profit in 2003; $21 million in revenues, $6.4 million net profit in 2004; $36 million in revenues, $11 million net profit in 2005
Total Capital Raised: $450,000 from angel investors and Boston University. QuitNet has an agreement with BU to use its offices and computers in exchange for equity in the company.
Biggest First-Year Expense: Sales and marketing, totaling $573,500
First-Year Operating Expenses: $1.3 million
* Based on numbers provided in the business plan. According to Cartter, revenues for 2001 were $475,000, and projected revenues for 2002 are now $3 million.
The Weigh-in: Our Panel Rates the Plan
Hot Property or Flameout?
WHO: Dr. David B. Nash, professor of health policy at Jefferson Medical College in Philadelphia
RATING: 7.5 to 8 (on a scale of 1 to 10, with 10 being the highest)
"Overall, QuitNet is original, intriguing, and clever -- as well as first to market -- and probably would appeal to a fairly broad number of people who smoke. But its revenue projections, which show a 400% increase in two years, are very ambitious. Nothing works that way. BU is a blessing and a curse. The academic roots provide access to talent and great ideas, and the company has a strong scientific advisory committee. But where's the board of directors -- the businesspeople that could help it?
