85% Grade Business Plan Example PDF

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Business Plan that scored a 85% grade....

Description

2015 - 2017

Prepared By: RICHARD CAUSTON MAXIMO DE PAOLI CHALLEN LI MYLES

Business Plan

Executive Summary The purpose of this business plan is for Breathometer to gain more distribution in North America. This will increase sales for the next three years and build brand and company awareness. Breathometer is also seeking additional funding to invest into the research and development of new products. Breathometer was founded by Charles Michael Yim in September 2012 and is based in Burlingame, CA. Sales have increased each year since being released. In 2012 there were onemillion in sales. This went up to $12 million in 2013 due to increased exposure and improved functionality. Sales are being projected at $24 million for 2014, and 15% increase each year following. Breathometer is competing in the portable breath analyzer industry, which in 2013 had total sales of $285 million according to Wintergreen Market Research. Currently Breathometer is holding a 5% market share with plans to increase to a 10% by the end of 2014. Some direct competitors of Breathometer are Alcohoot and BACtrack. Each of these companies manufactures a portable breath analyzer that plugs into smart phones. Both are making more sales of their products through 2013, but Breathometer is poised to overtake both companies by 2015. Breathometer has distribution in some of the largest online and big box retails in North America; including Wal-Mart, Best Buy, and Amazon. Expanding distribution is the main focus for the company going forward. Plans for targeting existing retail giants for distribution over the next 3 years will result in larger sales for the company and more returns for the investors. The products that are being offered right now are the Original breath analyzer product, which retails for $49 per unit, and the Breeze, which was just released and sells for $99. Production for both of these units is outsourced to a facility in China that is able to manufacture 15,000 a week. Demand is being met for the distributors but a warehouse expansion is needed to increase inventory on hand. Breathometer plans to improve the current marketing strategy over the next three years by increasing the budget for advertising, trade shows, and in store promotion. This will increase awareness of the company and encourage new retailers to distribute the product. The following are projected revenues, expenses and profits for Breathometer over the next 3 years, 2015-2017.

Sales Expenses Profit

2015 $24,000,000 $21,672,769 $2,327,231

2016 $27,600,000 $24,923,685 $2,676,315

2017 $31,740,000 $28,662,237 $3,077,763

Breathometer has several risks internally and externally going forward. Possible risk include; only carrying 2 products could affect revenue if there are issues with either, and low brand awareness may impact distribution. Responses to these risks will be addressed going forward, by releasing additional products there won’t be heavy reliance on the two products and an improved marketing campaign will raise brand awareness.

Table of Contents 1.0

Business of the Company 1.1 Business Summary & History 1.2 Industry Overview 1.3 Current Situation of the Company 1.4 Goals and Objectives 1.5 Key Success Factors (Money, Market, Management, Timing) 1.6 Structure of the Company 2.0 Product / Service Description 2.1 Detailed Description of Product 2.2 Stage of Development of Products 2.3 Certification of Regulatory Standards Required 2.4 Licensing and/or Franchising 2.5 Customer Benefits Provided by the Product 3.0 Market Analysis 3.1 Target Market Profile 3.2 Market Size 3.3 Trends 3.4 Estimated Sales and Market Share 3.5 Rules of Purchase 4.0 Competition 4.1 Direct Competitors – Present and Future 4.2 Indirect Competitors – Present and Future 4.3 Substitute Products or Services 4.4 Competitive Edge 5.0 Marketing Strategy 5.1 Positioning 5.2 Sales Strategy and Tactics 5.3 Advertising and Promotion Plan 5.4 Advertising and Promotion Calendar 5.5 Pricing Strategy 5.6 Channels of Distribution 5.7 Public Relations and Publicity Plan 6.0 The Management Team 6.1 Key Management Team Profiles, Qualifications, and Responsibilities 6.2 Board of Directors 6.3 Principal Advisors 7.0 Operations 7.1 Location 7.2 Capital Equipment Requirements 7.3 Labor Requirements 7.4 Source of Supply 7.5 Service or Production Process 7.6 Inventory Requirements 8.0 Implementation Schedule 8.1 Schedule and Timeline 8.2 Potential Problems to Achieving Deadlines 8.3 Milestones 9.0 Financial 9.1 Type and amount of Financing Required 9.2 Income Statement 9.3 Cash Flow Statement 9.4 Balance Sheet 10.0 Key Risks 10.1 External Environment Risks 10.2 Internal Environmental Risks 10.3 Marketing Risks 10.4 Human Resources Risk 11.0 Contingency Plans 11.1 Contingency Plans if Objective Not Met 11.2 Contingency Plans if Objectives Exceeded

1.0 Business of the Company 1.1 Business Summary & History Created in 2012 by Charles Michael Yim in Burlingame CA, Breathometer is a portable electronic breathalyzer that syncs with smartphones allowing users to make smart decisions while drinking1. In early 2013, Yim placed Breathometer on Indiegogo (Crowd Funding Platform) with aspirations to raise $25,000. By the time Yim’s campaign ended on Indiegogo, he had raised $138,000 from 3800 contributors. Later on in 2013 Yim pitched Breathometer to 5 investors on the hit show “Shark Tank” in September of 2013. For the first time in Shark Tank history, all five sharks came together to invest a total of $1-million for 30% equity in the company. Since Shark Tank Breathometer has progressed from sales of $140,000 to over $1 million. The production facility has progressed from manufacturing 1000 units per week to a whopping 15,000 units. In 2014 sales are projected to be between $10 million and $14 million. Currently, Breathometer has secured over $5 million in funding. $1 million from Shark Tank, $1 million from Structure Capital VC and Dillon Hill Capital, and $3 million from Stanford University2. 1.2 Industry Overview The breath analyzing market is the main industry Breathometer is competing in. As of 2012, this has been nearly a $300 million a year industry with projected growth to $3.2 billion by 20183. This increase is projected because of the potential for healthcare uses of a breath analyzer as a screener for diseases. The tuberculosis detection market is projected to show highest growth of 44.7% from 2013 to 2019. The growth in this segment is attributed to increasing incidence of tuberculosis especially in developing countries and an increasing demand for a non-invasive surgery and accurate screening tool. Computer Hardware Manufacturing, and Mobile Applications are the two secondary industries that Breathometer falls into. Computer Hardware Manufacturing is a $587 billion dollar a year industry. Dell and Hewlett Packard dominate the industry. This industry manufactures a variety of computer hardware and peripherals. This category does not include tablet computers. The tablet industry has had increased growth over the past few years, cutting into the revenues of this industry. Since 2009 the Computer Hardware Manufacturer industry has had an average annual growth rate of 0.6%4.

1 https://www.breathometer.com/about 2 http://mobihealthnews.com/33325/breathometer-tops-1m-in-sales-for-smartphone-breathalyzer/ 3 http://wintergreenresearch.com/reports/breath_analyzer.htm 4 http://www.ibisworld.com/industry/global/global-computer-hardware-manufacturing.html

A mobile application is a computer program designed to run on a mobile platform; a smartphone, tablet, or mobile device. The Mobile Application Industry is a $25 billion dollar industry in 20145. Every major mobile platform hosts their own application store. All apps must be downloaded or purchased through Apple, Windows, Blackberry, or Android. Apple is the industry leader in sales and downloads at over 60% of the industry6. 1.3 Current Situation of the Company Company Growth In the short two years that Breathometer has existed, they have increased their sales from $ 1 million in 2012 to $12 million in 2013. Breathometer has secured many powerful investments and continues to invest that money into research and development. Expanded Product Line Breathometer launched their second product, Breeze, in October 2014. An improved product from their original device, this will be their last product in the blood alcohol space. From this, Breathometer has plans to open a completely new industry in breath analysis. In 2015, they will be releasing two new products that detect halitosis (bad breath) and acetone, which is a byproduct of burning fat7. 1.4 Goals and Objectives In order for Breathometer to reach its goal of being the “World’s first portable breath analysis platform to help people make smarter decisions, improve healthcare and save lives8” the following objectives must be met: ● Complete research and development for new products by March 2015 ● Create and launch prototypes of new developed products by mid-2015 ● Obtain Food and Drug Administration (FDA) approval for new products ● Release tested halitosis and acetone-detection products by the end of 2015 ● Increase annual revenue from 12 million to 24 million by year-end 2015 ● Create the first multi-detection breath analysis device by year-end 2017 1.5 Key Success Factors (Money, Market, Management, Timing) Having successfully secured capital from multiple sources, Breathometer has the credibility of its investors backing them. The popularity of Breathometer has largely been contributed by the publicity they’ve received from Shark Tank 9. With the sales growth they have experienced in the past 2 years, Breathometer has the potential to dominate the mobile sensory market. Breathometer was the first breathalyzer to be integrated with an app, offering a sleek design and functional size unmatched by its competitors. With FDA approved technology, which is accurate to within +-0.01% Blood Alcohol Concentration (BAC). Breathometer is researching into other markets such as hydration and breath; 5 http://online.wsj.com/articles/SB10001424127887323293704578334401534217878 6 http://www.statisticbrain.com/mobile-phone-app-store-statistics/ 7 http://www.fastcodesign.com/3037036/this-breathalyzer-will-track-much-more-than-your-drunkeness 8 https://www.breathometer.com/ 9 http://mobihealthnews.com/33325/breathometer-tops-1m-in-sales-for-smartphone-breathalyzer/

Breathometer is a step ahead of their competition and hopes to continue with that progress10. The Management of Breathometer is made up of experienced professionals lead by founder and CEO Charles Michael Yim11. The timing couldn’t be more perfect for Breathometer. With smartphone use up 23% from 2012 to 2013, over 55% of Canadians now own smartphones; Breathometer’s market is continuing to grow day by day. Breathometer holds two utility patents restricting competitors from attempting to copy the Breathometer’s devices. The patents include: ● Utility patent for hardware functionally and design ● Utility Patent for entire platform (i.e. mobile/web software and hardware integration) 1.6 Structure of the Company Breathometer is a privately-held corporation headquartered in Burlingame, California. The corporation is operated through internal management and a group of advisors. The advisors are experienced professional in various fields of work, including, medicine, technology, business, investing, and marketing 12. A detailed description on each of these advisors can be found in Section 6.3 Principal Advisors.

10 https://www.breathometer.com/help/faq 11 https://www.breathometer.com/about 12 https://www.breathometer.com/about

2.0 Product / Service Description 2.1 Detailed Description of Product Breathometer is the world’s smallest smartphone breathalyzer. Unlike the typical bulky devices, Breathometer is compact enough to fit on a keychain. Paired with the Breathometer mobile application, Breathometer can synchronize with a smartphone and provide users with an instant scan of their blood alcohol concentration (BAC). Breathometer currently has two products, The Original and The Breeze. Below are the technical specifications of each product. The following table displays a breakdown of the technical specifications of both Breathometer’s products, The Original and The Breeze. The Original13

The Breeze14

Product Dimensions

2.6" x 1.33" x 0.67" (67mm x 34mm x 17mm)

2.6" x 1.33" x 0.67"(67mm x 34mm x 17mm)

Connectivity

Headphone Jack

Bluetooth

Sensor Technology

Advanced Semiconductor

Advanced Fuel Cell Sensor

Weight

0.96 oz

0.96 oz

Battery

AAA Alkaline

AAA Alkaline

Battery Life

Approx. 75 Tests

Approx. 75 Tests

Warm-Up Time

35 Seconds

0 Seconds

Test Time

5 Seconds

5 Seconds

Calibration

250 Tests

250 Tests

The Original

13 http://store.breathometer.com/products/breathometer 14 https://www.breathometer.com/tech-specs

The Breeze

2.2 Stage of Development of Products Founded in September of 2012, by Charles Michael Yim, Breathometer has continually grown since its initial crowd funding success from Indiegogo. Breathometer has many products in different stages of development. The Original and Breeze have been created, tested, and launched as of October 2014. There are several other products in the research and development stage that will be released in 2015. Acetone and Halitosis will be the initial products launched in the digital health space. Breathometer envisions an all-inclusive breath analysis that can measure a multitude of symptoms all in one breath. A prototype of this new product has not been released yet, and no date is scheduled. Large portions of the company’s revenues are put back into the development of new technology. The sensor technology being developed by Breathometer has the potential to detect readings of bad breath, sicknesses, and diabetes all on one device15. 2.3 Certification of Regulatory Standards Required FDA Breathalyzers fall under “medical devices”, therefore it is overlooked by the FDA. The process of manufacturing, performance and safety of breathalyzers all must be met by the FDA standard. The FDA has the right to issue recalls for the any and all products 16. CE Approval (European market) CE marking on a product makes it certified to be sold in the European market. Similar to FDA approval, a product that has the CE marking demonstrates that it has met the European Union consumer safety, health and environmental requirements. Company/Product Return Policies Breathometer offers a 30-day money back guarantee on all products. If the product does not meet expectations, a full refund will be issued. Purchases made through another website, or retail partner will be covered by those sites’ individual policies. This policy does not cover user damage, such as water damage or other physical damage. A defective product can be exchanged within 30 days, by mail17. 2.4 Licensing and/or Franchising Breathometer currently does not have plans to license their products. Due to the intense amount of research and development still being completed and prospective launches of new products in the coming years, the timing is not right for licensing.

15 http://www.fastcodesign.com/3037036/this-breathalyzer-will-track-much-more-than-your-drunkeness 16http://www.marketplace.org/topics/tech/medical-apps-get-once-over-fda 17 http://support.breathometer.com/customer/portal/articles/1371425-refund-policy

2.5 Customer Benefits Provided by the Product Make more informed decisions Breathometer allows users to measure their BAC level. Knowing their BAC with the use of the Breathometer app, users can make an informed decision to find alternate way of getting home, finding a hotel to stay for the night, or other specified location to “cool off”18. Back-To-Zero Breathometer has a built in, scientifically researched calculator to show how long it will take for your BAC to go back to zero. This technology allows users to know the approximate time they have until they are in a safe BAC range to drive. Accuracy As mentioned earlier, Breathometer is a FDA approved device, meaning its accuracy passes FDA’s standards19. An accurate measure is crucial, as it will influence the users’ decision to drive or not to drive. The target market needs an accurate reading as inaccuracy can result in criminal charges and massive fines. Application Features The following are the available options once the app has measured your BAC: Find Some Food: Suggestions are made based on your GPS location of a variety of restaurant options. ● Stay Nearby: Creates a list of hotels in the area and directs you to their website for nightly booking details. ● Get Home Safe: Includes three options for finding a safe ride home. “Call a Cab” can call cab drivers to your specific GPS location. “Call a Friend” is an option that links users to predetermined contacts to call. Finally users are given an option to link to their Uber account for rides home20. ●

18 http://techcrunch.com/2014/10/14/breathometer-breeze/ 19 https://www.breathometer.com/help/faq 20 http://techcrunch.com/2014/10/14/breathometer-breeze/

3.0 Market Analysis 3.1 Target Market Profile Breathometer has already secured distribution in some of the largest retail chains in North America. These include Wal-Mart, Best Buy, Fred Meyer, London Drugs and Amazon. These big box retailers make up the target market of Breathometer. Breathometer would like to gain access into some of the world largest retailers such as, Costco, Kroger, Walgreens, Dick’s Sporting Goods, Apple Store, Canadian Tire, and Sports Authority. Many of these have ranked as the top retailers in North America by sales21. 3.1.1 Target Market Description: The optimal retailers for Breathometer are stores with 50+ locations in North America, Generally these stores are departmentalized carrying everything from consumer electronics to clothing and grocery. The majority of these stores are located in high population areas throughout the USA and Canada, 60% lives within 5 miles of a big box store, and 96% are within 20 miles22 Breathometer will not target toy stores such as Toys-R-Us, as the audience is not age appropriate. Also, stores that solely carry clothing or groceries do not fit the description of the target market. 3.1.2 End User Description The primary target market for Breathometer is an individual over the legal drinking age that either drinks or knows people that drink alcohol. In a 2012 United States survey, 87.6% of people over the age of 18 had consumed alcohol in their lifetime, with 56.3% of people drinking in the past month23. Similarly in Canada a 2011 survey states 89.7% of Canadians 15 and older have consumed alcohol in their lifetime, with 78% in the past year24. Breathometer’s end user consists are smartphone users. Smartphone use in North America is constantly increasing with over 55% in Canada25 and over 58% in the USA. Putting these numbers into perspective, the total number of smartphone users in Canada 19.38 million and 163.9 million in the United States26. The Breathometer has very practical uses and a level of novelty. Segments of purchasers and end-users of Breathometer were established based on age and social classification. Below are brief descriptions of these individuals.

21 https://nrf.com/news/top-100-retailers 22 http://www.businessinsider.com/facts-about-wal-mart-to-blow-your-mind-2013-10 23 http://www.niaaa.nih.gov/alcohol-health/overview-alcohol-consumption/alcohol-facts-and-statistics 24 http://www.hc-sc.gc.ca/hc-ps/drugs-drogues/stat/_2011/summary-sommaire-eng.php#a7 25 http://catalyst.ca/infographic-2014-canadian-smartphone-market/ 26 http://www.statista.com/statistics/201182/forecast-of-smartphone-users-in-the-us/

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