opim final submission (1)
TRANSCRIPT
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Matt Dixon [matthew.dixon-‐[email protected]]
Parker Varner [[email protected]]
Hank Joyce [[email protected]]
Kacey Highland [[email protected]]
[ B C O R 2 5 0 0 ]
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Table of Contents
1. Executive Summary…………………………………………………………………………..5
2. Introduction………………………………………………………………………………………7
2.1 Our vision & mission
2.2 How We Work: Overview
2.3 Target Market & Demographics
2.4 Competition
2.5 Our Competitive Advantage
3. Overview of Data Used in Analysis………………………………………….………..18
3.1 Data Sources
i. External Source
ii. Internal Sources
3.2 Data Contents
3.3 Data Analysis
4. Physical Location, Lease Terms & Financing Plan………………………………29
4.1 Warehouse & Office Space
4.2 Lease Terms
4.3 Infrastructure
4.4 Warehouse Setup
4.5 Financing Plan
5. Product plan………………………………………………………………………………………46
5.1 Overview
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5.2 Product Catalog
5.3 Our Brands and Why
6. Supply Chain and Inventory Management……………………………….………52
6.1 Added Value Through Supply Change
6.2 Supplier
6.3 Supply Chain Management and Organization
6.4 Inventory Management
6.5 Forecasting
6.6 Importance & Key KPI
6.7 Delivery Schedule
7. Human Resource Staffing Plan & Cost Analysis………………………………...65
7.1 Job Descriptions
7.2 Hiring Process
7.3 Salaries & Health Benefits
7.4 Off-‐season Staffing
8. Non-‐Human Resource Cost Analysis………………………………………………...72
8.1 Utilities
8.2 Warehouse Maintenance
8.3 Shipping
9. Revenue Analysis………………………………………………………………………………78
9.1 Forecasting Methods
9.2 Wholesale Cost & Retail Price by SKU
9.3 First Year Sales by Month
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9.4 Yearly Projections by Quarter
10. Three Year Financial Analysis……………………………………………………………….88
10.1 Income statements
10.2 Balance sheets
11. Process Maps……………………………………………………………………………………..95
11.2 Relationship Process Map
11.3 Cross-‐Functional Relationship Map
11.3 Online Store Flowchart
12. Final Summary…………………………………………………………………………………103
13. References……………………………………………………………………………………….113
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1. Executive Summary
The Complete Clean Club is an innovative business that brings a subscription
package of toiletry products to consumers without leaving the comfort of their home. Not
only are we going to eliminate the hassle of running to the store once you finish your last
bit of shampoo, but we are also trying to change the way you think about buying all of your
hygienic necessities. Our online platform is an easy to use customer-‐friendly ecommerce
venue that allows you to customize your perfect package featuring the most popular
toiletry products and brands in the US.
Headquartered in North Las Vegas, Nevada we are focusing our market in Los
Angeles, California. Specifically, we are targeting men and women who are both college
undergraduates and graduates to eradiate the action of running to the store, having more
time to study and relax. We decided to market our service in the three most popular
schools in LA.
We share the industry of a home-‐delivery service with four major competitors.
Although big-‐name companies such as Amazon and Wal-‐mart are included in our
competition, The Complete Clean Club has a competitive advantage in purely focusing on
customer value – distinctively through timeliness and innovation. We are measuring our
processes on a day-‐to-‐day basis through various key performance indicators to
continuously improve our business operations and optimize our performance.
The subscriber is presented with multiple options of America’s most popular
brands, among the categories of shampoo and conditioner, body wash, deodorant, dental
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hygiene, face wash, and common miscellaneous necessities. We are teamed up with a
reliable and experienced supplier, MVP Trading Company that will provide us with ease
through our supply chain process. This route is then followed through with UPS Smart
Pickup delivering our customers’ packages directly to their door.
The Complete Clean Club is initially financed from a 70-‐30 debt to equity ratio in
order to get us off the ground. Entering the health and beauty industry we knew that the
profit margin for selling toiletry products was diminutive. Therefore, our expenses are
controlled at the most efficient rate for operations at the benefit for both our employees
and customers. After forecasting our sales for three years at a 35% increase in revenue per
year, we were able to earn sales revenue of $403,552.39. Even with this large sum of
revenue we were not able to fully cover general and administrative expenses, consequently
resulting in a loss of $48,200.11 for our third year’s net income. Regardless of operating at
a loss, The Complete Clean Club strives to offer the best service while promoting extreme
customer value. If our growth rate stays the same and we expand into larger markets The
Complete Clean Club will be a major competitor in the personal care industry while
revolutionizing the way America buys products.
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2. Introduction
The Complete Clean Club is a business-‐to-‐consumer company, that through an
online platform, will offer a variety of name-‐brand toiletry products to chose from that will
be packaged and delivered monthly to your home. Our domain address to locate us is
www.TheCompleteCleanClub.com to represent the commercial aspect of our company.
Although not a included in our company title, we decided to structure our business as a
limited liability company to ensure we would not encounter double taxation like a
partnership, as well as have limited liability like a corporation. An L.L.C structure is the best
for our small company allowing us flexibility with the ownership only being divided by four
people
2.1 Our Vision & Mission
The Complete Clean Club is an ecommerce company who strives to offer the
convenience of a monthly delivery service of a customizable package consisting of the basic
hygienic necessities. Toiletries are household essentials, but also bestow a burden upon
consumers with constant tiresome runs to the drug store to replace used-‐up products. With
a monthly delivery of items of your choice there is no more having to worry about
restocking or having to make last-‐minute runs to the store. Our vision is to eliminate
toiletry products from the standard grocery list by automatically supplying our customers
monthly.
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2.2 How We Work: Overview
On our website www.TheCompleteCleanClub.com there will be a variety of products
to choose from featuring shampoo and conditioner, body wash, deodorant, dental care and
much more for both men and women. Once the customer selects their desired package our
website will compute the total of price of the combined products and take the customer to
the shipping and billing information page. Once they are both filled out entirely, the
customers payment information will need to be provided. For our packages there is a
standard charge for processing and shipping that will be added to the total price of
products the customer selects. The total price will then be an automatic charge every
month to their choice of payment. Once the customer chooses their monthly delivery date,
their information will be processed and inputted into our database so we can keep track of
their individual order. We have the option of selecting a one-‐month trial before committing
to the automatic monthly payments. If our services are not up to par with what the
customer expected, the cancellation process will be a one-‐click option to discontinue the
payments and deliveries to eliminate any possible fears, uncertainty or doubts.
2.3 Target Market & Demographics
In order to select the optimal target market, we had to take into consideration which
prospective customers would benefit most from the services The Complete Clean Club
provides. From personal experiences of being four college students who have lived on
campus, we realized the perfect market would be men and women college attendees.
The majority of students, in-‐state or out-‐of-‐state, must be enrolled in on-‐campus living for
their first years of school. Living in college dormitories often eliminates the possibility to
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keep a car on campus, making it hard for the individual to make trips back and forth to the
convenience store. Even in the event that the student is in their latter years of college and
living near campus, the need for a car is not imperative therefore still making those last
minute runs a hassle. College students are also very preoccupied individuals whether it is
dealing with academic or social activities. The average amount of time allocated for
studying for a college attendee is 2-‐3 hours for each hour they spend in class. With 15
credit hours being the average course load for students in America that equates to 45 hours
each week on academics (College Parents of America). Therefore, The Complete Clean Club
wants to ensure that students have the most time they can to focus their minds’ on
academics and be able to relax when they need to by eradicating the need for inconvenient
trips to the store. Figure 2.1 provides a visual showing the distribution of time in a day for
an average college student for activities such as academics, sleeping, eating, traveling,
leisure and more. With our services we will hope to eliminate that two hours needed to go
run out to the store and allow for more leisure or studying time.
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Figure 2.1 Pie chart depicting the amount of hours the average college student spends on various activities each day.
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The second thing to consider was pinpointing a city where we could address the
most amount of people within our target market. Los Angeles, California is home to many
Colleges and Universities with thousands of students enrolled in every one of them. The
University of California, Los Angeles, The University of Southern California, and Loyola
Marymount University are the three universities in LA that stood out the most when
considering undergraduate and graduate attendance. As a small start-‐up company we had
to make sure that our target market and location of targeted consumers was not too
ambitious, optimizing our ability to easily market the awareness of our company.
Figure 2.21 UCLA logo
Figure 2.22 USC logo
Figure 2.23 LMU logo
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The following information is listed to provide a quick background on the number of
students at each school, tuition price and demographics of each University. Loyola
Marymount University is made up of 6,064 undergraduates, and 2,089 graduate students.
Undergraduate tuition at LMU is $41,372. Latinos and Whites make up about 70% of the
ethnicity at the school. The University of California, Los Angeles holds 29,663
undergraduate students and 12,212 graduate students. Tuition for Undergraduates is
$12,696 for in state and $35,575 for out of state. UCLA is made up of only 6,638 out of state
students, showing that the majority of attendees are from California. Demographic wise
UCLA is made up mostly of Pacific Islander and White Students. University of Southern
California has 19,000 undergraduate students and 23,000 graduate and professional
students. Like the other two colleges it is made up of slightly more females than males, with
53 % females and 47% Males. Demographically USC is made up of 33% White, 23%
international and 18% Asian students. Undergraduate tuition is $48,347 for USC (College
Data). Combining just these three Universities presents us with the opportunity to reach
out to a total of 92,028 people. Figure 2.3 is a pie chart depicting the numbers described
above, showing the percentage each school holds in our target market, as well as the
percentage of graduate and undergraduate students hold in our target market.
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All of these schools are relatively expensive and full of international and out of state
students. In order to attend these schools coming from out of state, it is logical to assume
that the individual is well-‐off and able to afford the convenient luxury of registering with
The Complete Clean Club. An Article From UCLA news shares, “The nation’s college
freshmen are more financially advantaged today then they have been at any point in the
last 35 years” (Wyer). This research identifies the availability in disposable income for
7% 2%
32%
13%
21%
25%
Undergraduate and Graduate Attendence
LMU Undergrad
LMU Grad
UCLA Undergrad
UCLA Grad
USC Undergrad
USC Grad
Figure 2.3 Pie chart depicting the demographics of the three schools and breaking them apart by Graduate students and Undergraduate students. As shown above UCLA and USC are our biggest markets.
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college students attending the University of California, Los Angeles and supports their
ability to spend the extra money for the convenience of our service.
2.4 Competition
o Uber
o Sudzclub.com
o Wal-mart to-go
o AmazonFresh
Businesses that pose a threat to the Complete Clean Club who are in the market for
toiletry home-‐delivery are Uber, Sudzclub.com, Wal-‐mart to-‐go, and AmazonFresh. Uber
has recently branched out to more than just a taxi service. Already worth $18 billion, Uber
decided to expand their services by offering an application to select toiletries and other
drugstore products that they will pick up and deliver to your home called “UberFRESH”. All
purchases are then charged to an Uber account where the individual’s credit card
information is processed. This is just one area from a range of delivery services that Uber is
currently trying. At this point, this service is currently in the trial phase therefore not
operating at maximum efficiency (McGregor).
Sudzclub.com is our main competitor seeing that they are also a monthly
subscription service sending out packages of toiletries to both men and women. This
company launched recently at Arizona State University and offers both basic and premium
packages to men and women. A basic package includes White rain sensations shampoo,
conditioner and body wash for either gender. The package also includes Colgate brand
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toothpaste, and toothbrush along with a gender specific Speedstick brand deodorant.
SudzClub.com charges $20 a month for this basic package. The premium subscription for
$35 a month contains 13oz bottles of Garnier Fructis Pure Clean shampoo and conditioner
for men and 13oz bottles of Garnier Fructis Sleek&Shine conditioner and shampoo for
women. The package also includes an 18oz Old Spice body wash for men and Dove Deep
Moisture for women. Similar to the basic package the same toothbrush, toothpaste, and
deodorant is included. They offer the option for a one-‐time delivery elevating their prices
by $10 and $15 respectively (SudzClub.com). With a modern and user friendly website as
well as some publicity SudzClub.com does pose a threat as competition but lack our option
of customizing your package, as toiletries are a very personal purchasing decision.
New delivery and pickup services are being implemented at many grocery stores,
the main one being Wal-‐Mart and their to go service. Wal-‐mart first requires you to make
an account and then directs you to an online grocery store where you can select from
hundreds of items to put in your virtual shopping cart. The items range from dairy, to
meats, and into beauty and personal hygiene products. The service fee is an initial cost of
$5 with a requirement of a minimum order of $30. The problem with Wal-‐Mart to-‐go is that
it is still in a test phase. It was first implemented in San Jose, California and has branched
out to cities like Denver and Philadelphia, but has yet to go nation wide. Wal-‐mart is
currently showing losses due to the new expenses dealing with training, paying new
delivery drivers, as well as gas and maintenance of the trucks (Perez).
Our final big competitor is the king of the e-‐Commerce industry, Amazon. They offer
same day delivery, or next-‐day early morning delivery on your orders of fresh groceries,
everyday essentials, and more on their website AmazonFresh.com. In order receive this
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deal you have to be an Amazon Prime Fresh member that costs $299 a year in addition to
the price of your groceries. Amazon’s service is a large commitment and is seen by many as
ridiculously expensive, and because of this their current customer satisfaction is less than
mediocre (Profis). On Yelp, an online rating service that cannot be swayed or manipulated
through money or power by the companies being rated, Amazonfresh received a 3.5 out of
5 stars. One reviewer even went on to say that this service is unworthy of the Amazon
brand name. Many customers described missing items, as well as stale produce and even
mishandling of delicate groceries – all adding a negative image to Amazon’s delivery
service. On the other hand both Wal-‐mart and Amazonfresh offer hygiene and other
personal products but are not marketing their service as this, they are solely advertising
the delivery of produce, something we are not interested in doing.
2.5 Our Competitive Advantage
Although we have multiple forms of competition, our Business plan and overall
company goals prove why The Complete Clean Club will outperform our competitors. Our
operations are all about adding customer value through quality, timeliness, flexibility and
innovation. Since a company cannot possibly excel in every aspect of performance, we
based our company goals to add value for our customers through timeliness and
innovation. With a lead-‐time strategy of assembling to order our warehouse setup -‐
described later in the document, will provide our workers with the ease of simply picking
the correct item from the bins, scanning them and placing them in the proper box. This
process eliminates any searching or guessing where the needed product will be and will
allow us to keep track of stock and stock shipments with the scanning system. Our
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innovation is that unlike our competition Sudzclub.com we provide our customers the
option of selecting the exact products they want in their package, and our in-‐house IT
system generates a price to charge depending on the items they selected.
Key performance indicators for an ecommerce company are most easily measured
through sales and marketing. Since we are a subscription-‐based company, it is important
we measure new sales and customers as well as the retention of old customers by
providing them with the expected service excluding any incorrect, late or damaged
shipments. Below are a few KPIs The Complete Clean Club focuses on in order to run our
business efficiently, as well as surpass our competitors’ margins.
o Total available market relative to a retailer’s share of market
o Product affinity (seeing which brands are commonly purchased together)
o New customer orders versus returning customer sales
o Site traffic
o Time on site (making sure bandwidth is large enough)
o Day part monitoring
o Social media followers & sharers (via Facebook, Twitter, Pinterest)
o Number and quality of service & product reviews
o Quick and quality delivery time
o Customer service phone call count
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3. Overview of Data Used
When collecting data for our business there were many things to consider. First we
needed to come up with possible ideas and items we needed to search for and find out
more about. Items we needed to search for were things like facts about our competition,
facts about our utilities, data to support our target markets, and even information about
what exact products we should sell. Secondly, it was important that the sources we found
seemed to be consistent in order to support our points strongly. Once the sources were
seen as dependable and trustworthy we needed to make sure that the data we collected
was relevant and reliable, not just unimportant facts that did not support our main ideas.
Not only was primary and secondary external data important, but internally developed
quantitative and qualitative data regarding sales and inventory stock allowed us to forecast
our sales for the next three years. Another key process in collecting the data was the step-‐
by-‐step analysis method such as multidimensional analysis and cross-‐referencing different
sources of data. It was also important specifically for our revenue and financial analysis
projected later on to roll-‐up our data into quarters, and then even more into total sales per
year. Regardless of the analysis method used, the Business Intelligence Cycle -‐ the process
of analyzing, using employee insight, action of implementing the strategy, and measuring
each movement was always in play. Figure 3.1 is the cycle The Complete Clean Club refers
to in order to measure and make sure that our company is not only operating properly, but
constantly improving.
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Figure 3.1 Business intelligence cycle The Complete Clean Club focuses all business decision on.
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3.1 Data Sources
There were multiple sources that contributed to the data collection for our
company. Both primary and secondary external sources were used mainly in the form of
websites, including basic company websites, opinionated articles and reviews, public
opinion polls, and indexes. Another very important source of data was internally generated
data. This processed data came in the form of both quantitative numbers through sales,
prices and inventory count as well as qualitative comments posted on multiple forums
from our customers.
i. External Sources
Simple company websites that provided us with direct first-‐hand information are
examples of primary external sources. Websites such as “UPS.com”, “DirectTV.com”,
“AT&T.com” and “commercialcleaningvegas.com” provided us with data and allowed us to
process it, to make decisions on which type of packages to purchase to maintain our
monthly utilities such as shipping, cable, phone and internet, and cleaning our warehouse.
Without these sources we would not have been able to gather exact price information to
include for our financial analysis. Less popular company websites such as our supplier’s
“MVPtrading.com” and how we bought our warehouse through “loopnet.com” allowed us to
make decisions on our supply chain management and operations management platform.
After searching multiple different sources for the perfect supplier, the data from
“MVPtrading.com” allowed us to compare and make a final decision that they had the best
selection of products, prices, quantity of wholesale bundles, as well as overall service for
delivering our inventory. “Loopnet.com” provided us with data about hundreds of possible
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warehouse locations in Nevada, permitting us to compare the prices by square feet to
choose the best location – the Petersen Industrial center.
Another type of primary external source used in a less basic manner were websites
and polls to see which toiletry products are the most popular among Americans.
“top10for.com”, “ranker.com” and “therichest.com” all shared information about the most
sold brands with the best reviews. These were primary sources because they were written
by people with firsthand experience with the products. Once the overall brands were
chosen it was important to go to the individual websites to look at which exact model of
that brand had the most amount of reviews along with the highest ratings, such as
“oldspice.com”. After setting our product catalog, we referenced sites such as
“walmart.com” to see retail prices of our products, and for us to reduce those costs for the
convenience and value of our customers.
In order to look at possible competitors in our market we needed to first search for
the names of the companies and their websites describing their exact services, as well as
possible articles with data suggesting customers’ opinions about the services. These
reviews about such services are secondary sources. “’Sudzclub.com” and “Amazon.com” are
actual domains that provided us with concrete details about their services, including
products, prices, delivery fees and possible delivery locations. In order to gather more
information about each of our competitors we looked at sources like “forbes.com”,
“cnet.com” and “techcrunch.com” that all contained articles about the possible future for
each of these companies like Uber, Wal-‐mart to-‐go and AmazonFresh. The data collected
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from these articles was somewhat unstructured as we had to read and analyze it in order to
interpret certain information.
The most abstract and random secondary sources used to interpret data into
information were helpful in determining how to specifically run our business. Before
determining the location of our warehouse we figured determining our target market is
most important. Described in more detail under section “2.3 Target Market &
Demographics” we first thought to search for the largest group of people who would
receive the most convenience and use out of our service – such as college kids.
“collegeparents.org” granted us with statistics to interpret with how many hours a day a
student spends studying along with other various activities in the average college student’s
schedule. We then needed to search for a city with a high volume of students and money to
afford our service. “heri.ucla.edu” presented us with more statistics stating that college
attendees have more disposable income now than ever before. After pinpointing our target
market we thought to search for data that will show us which state we should locate our
warehouse in not only considering the distance to our target market, but also tax burdens
and property prices. Sources such as “money.cnn.com”, “taxfoundation.org” and
“sbecouncil.org” allowed us to accumulate data to determine that Nevada was the best
option. The last step in determining how to properly manage our business was establishing
set wages and benefits for our employees. “simplyhired.com” listed wage rates for CEO’s of
small businesses for which we determined our rate off of. The Agency for Healthcare
Research supplied us with data to translate into appropriate healthcare packages for our
employees.
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ii. Internal Sources
Internally generated data allowed us to see our actual business operations and
forecast for future growth, sales revenue and inventory
management. The main format in which we kept our
quantitative data located and organized was Microsoft Excel.
Excel provided us with convenience in developing spreadsheet
layouts to easily visualize our SKUs per product, quantity
of product in inventory, wholesale and retail price, along
with quantity sold and sales revenue from that. This source of data allowed us to see how
we were doing revenue wise each quarter, projected for three years. Under subheading “9.
Revenue Analysis” you can see our growth averaging 34.5 % increase in sales per year.
An alternate form of an internal source was the qualitative information we got from
customer reviews. With this unstructured form of data our employees had to monitor
comments posted on our website as well as business review websites such as “yelp.com” to
see how our business was performing in the market’s opinion. These comments and ratings
were processed and analyzed through our various employees and considerations from the
comments on how to improve were taken. This source of information was mainly
processed by employee insight seeing which comments, if any, were in need of being
considered in order to improve our customer value.
Figure 3.2 Microsoft Excel logo
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Types of Sources o Primary External Sources
o Basic sources for direct data Ups.com Directv.com Att.com Commercialcleaningvegas.com Loopnet.com Mvptrading.com
o Sources to develop product catalog (Public Opinion Polls & Ratings)
Top10for.com Ranker.com Therichest.com Oldspice.com Walmart.com
o Secondary External Sources
o Sources to compare competition Sudzclub.com Amazon.com Forbes.com Cnet.com Techcrunch.com
o Sources to develop overall business
Collegeparents.org Heri.ucla.edu Money.cnn.com Taxfoundation.org Sbecouncil.org Simplyhired.com Agency for Healthcare research
o Quantitative Internal Sources
o Microsoft Excel Quantity Sold Sales Revenue Inventory Management
o Qualitative Internal Sources
o Customer Comments
Online review bored Ratings Yelp.com
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3.2 Data Contents
In order to use data it must be relevant and reliable. Whether the data gathered is
structured or unstructured, we used our insight to transform each data point into
information we can use to develop and optimize our business operations. The main types of
data we used were quantitative and qualitative data derived from both external and
internal sources.
Qualitative Data we collected varied from external sources of the Internet to data
originating from operating our business. Comments were captured about certain products,
including ratings, consumer polls, and quality performance in order to develop our product
catalog. Once all the data points and tally system we used was complete the subjective data
taken from the Internet was transformed into useful information to help us make the
decision on which products to market. After running our business for a couple quarters we
were able to collect customer feedback. Whether this feedback came directly though our
website or we had to search “The Complete Clean Club” for trends over social media or
business rating sites, every bit of it was taken into consideration to improve operations.
Comments will range from good to bad about product price, quality, and time-‐span of
delivery. If by chance there was a mistake on our part, we immediately took control over
the situation and improved upon it like forgotten items or incorrect items in the
subscriber’s box.
Throughout researching different qualitative items we realized that not all data
from the sources we used were relevant to support our ideas. When conducting research
about our competition there was unusable information about AmazonFresh and Wal-‐mart
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to-‐go because they majority of their sales come from selling produce, a market that we are
not looking to partake in. Therefore the data that represented their sales was not too
important in determining how strong of a competition they were against The Complete
Clean Club.
Quantitative data was more easily stored and processed to format business
decisions from. Solid numbers and percentages were easily captured and had less need for
detailed interpretations. Data collected from basic company sites such as prices for cable
and Internet packages was easily converted into useful information in regards to our
company expenses. Hard numbers representing the demographics for our target markets
were also easy to develop into information to how many people we can possibly market to,
as well as the likelihood of them buying our packages. Numbers created internally were
organized in multiple excel spreadsheets. Price Allocation, Revenue Analysis, Expenses and
many other sheets were compiled with multiple points of quantitative data to represent
meaningful statistics for our business. These numbers allowed us to see where we could
cut down expenses and how we can improve on sales.
Unnecessary collected numbers were those primarily dealing with
demographics. Conducting research on the three universities we are targeting lead us to an
assortment of unnecessary numbers such as the in-‐detail demographics including race,
gender, age etc. The only important numbers were displayed by the overall attendance of
undergraduate and graduate students. Those numbers compared with our revenue analysis
allowed us to reach more data by seeing what percentage of our overall target market did
we reach.
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3.3 Data Analysis
The process of analyzing data depended on the type of data we were presented with
and how we desired to use it. Some data such as the data collected about specific utility
packages was very easy to analyze because for the most part is structured with specified
prices per certain quality of package. Data about our competition was analyzed along the
same lines with a little more need for interpretation, as the data was not actual numbers
per say but people’s opinions too. Developing our product catalog and projecting sales
reflected the most use of multidimensional analysis. Every piece of data collected
contributed to a bigger concept then itself, such as structured data collected from
“walmart.com” about the retail prices of products allowed us to develop our prices. This
then lead us to make our own form of structured data by constructing an excel sheet of
each product by SKU number, price, and quantity bought from supplier. We used this excel
sheet to forecast our sales by quarter for three years to project overall revenues for the
company. Data collected from “walmart.com” was not the only source used in developing
our personal document of structured data. We used multiple sources for that file
considering each product listed came from researching which products were the best
selling in the US. Then more research determining which model of each brand should be
used. Also structured data taken from our supplier’s product catalog allowed us to use the
same stock keeping unit numbers in order to simplify our inventory management process.
All of this is done by using multidimensional analysis – summarizing data across multiple
levels and presenting them in a multidimensional format such as excel. This format was
used when determining which products to sell as the information was collected, inputted
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into an excel spreadsheet and noted how many reviews were given for each product brand
as well as model. Once this process was done we were able to interpret the data to make
decisions about our personal product catalog.
In order to project our sales revenues and profit margins we used a “rolling up”
strategy of analysis. We tracked our monthly sales for year one, then rolling it up into sales
by quarter. This allowed us to present the information in a more conventional approach for
top management to oversee. After breaking year one’s sales down by quarter we were able
to forecast the next to years by quarter taking into consideration the trends of our down
time, the months of May through August. Presenting our sales in 12 quarters and summing
each to 3 years allows us top management to see growth more conservatively opposed to
having 36 months or even 1,095 days worth of information.
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4. Physical Location, Lease Terms & Financing Plan
Before determining the location of our warehouse we wanted to research factors
such as tax burdens per state, price comparisons of warehouses, size of warehouses with
included amenities, location in relation to our target market to decrease shipping costs and
much more. After we decided Nevada was the prime location for our company’s warehouse
we researched four different locations described in Figure 4.1. We calculated the price per
month and per year along with the aesthetics and amenities of the warehouse. We also
wanted to make sure it was easy to get to for our delivery trucks for both our personal
shipments and the shipments we will receive from suppliers. For financing all these costs
we wanted to make sure we had a measurable amount of debt to equity financing, dividing
our ratio into a Loan from a bank as well as money from personal investors.
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Space Size Price Description
Petersen Industrial Center
4535 Statz Street, North Las Vegas, NV 89081
-‐3,828 SF
-‐0.46/SF/Month $1,760.88/Month -‐$21,130.56/Year
-‐3,084 SF of total warehouse space -‐744 SF of office space, which includes an open office area, 2 private offices, reception area, and 1 restroom -‐3 loading garage doors
West Lake Mead Business Park
3425 W. Lake Mead Unit 110, North Las Vegas, NV 89032
-‐3,200 SF -‐$0.68/SF/Month -‐$2,176/Month -‐$26,112/Year
-‐2,860 SF of total warehouse space -‐340 SF of office space -‐2 loading garage doors
Craig-‐Losee Business Park
4310 Losee Rd., North Las Vegas, NV 89030
-‐5,050 SF -‐$0.44/SF/Month -‐$2,222/Month -‐$26,664/Year
-‐3,568 SF of total warehouse space -‐1,482 SF of office space, with 2 private offices, reception area, open cubicle area, and 2 restrooms -‐ 1 loading garage door
2516 Business Parkway, Minden, NV 89423
-‐4,200 SF -‐$0.47/SF/Month -‐$1,974/Month -‐$23,688/Year
-‐3,000 SF of total warehouse space, with 600 SF of Mezzanine space -‐600 SF of office space -‐2 loading garage door
Figure 4.1 Description of four possible warehouses we thought to purchase, showing the Petersen Industrial Center was the best option
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4.1 Warehouse & Office Space
From the options listed in Figure 4.1, The Petersen Industrial Center located on
4535 Statz Street, North Las Vegas, NV 89081 it is the best space available to start our
business because of its price, dimensions, and the convenient location to our market in Los
Angeles. It will also offer a great hub for our business when we decide to expand into more
markets. Total square footage for the accommodations are 3,828, giving our small business
has plenty of space to run day-‐to-‐day operations. The building is split, allocating 3,084
square feet for warehouse space with the remaining 744 square feet for office space. The
office space includes two private offices and an open office area creating adequate room for
our employees. The building also offers three large loading garage doors permitting easy
access for incoming inventory and outgoing shipments to the consumer. The warehouse
size will work perfectly for what we are looking to accomplish. With it’s wide open floor
plan, the warehouse guarantees us the ability to organize our equipment and products
proficiently. The location of this warehouse also allows us to perform our operations
efficiently as it is right off Highway 93 in Las Vegas, therefore our delivery drivers from
both our suppliers and our personal choice of delivery to our customers will have no
problem getting to our warehouse or leaving it. Figure 4.2 is a map that highlights the route
the drivers will be following, as they are out to deliver our customers’ packages to them on
time.
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Figure 4.2 The Petersen Industrial Center is located just off Highway 93 in North Las Vegas, a convenient location for employees to get to, as well as UPS drivers picking up our packages
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Distributing our products with fast and reliable delivery service is a KPI that is
imperative for ensuring that our customers will be satisfied, and guaranteeing us long-‐term
memberships. UPS Smart Pickup will be handling all of our deliveries. It is a great service
that will help to keep our shipments organized and on time. This specific shipping option
includes same day pickup of packages from our facility for a $10.30 a week, saving us
money in the long run. Having a Smart Pickup account also provides us with a discount of
31% off of ground shipping which will be the primary delivery option we will use.
Keeping costs low is vital when looking for a location to start a business. For our
Internet based company we decided to have warehousing and offices within the same
facility in order to avoid paying unneeded overhead for separate offices. Saving money is
not the only reasoning behind having warehouse and offices under the same roof however;
there are several advantages to having it set up this way that help to build our business
culture. The combination of offices and warehouses makes it more convenient for our
employees to communicate with other departments within the business. It will also allow
all of our employees to have an opportunity to work closely with management, giving them
a chance to address any issues that may arise and be able to share input. With that being
said management can also watch over all aspects of daily operations making it easier to
notice any problems and improve on these issues that could range from finding a
malfunctioning piece of equipment or discovering the need to train the employees to
improve the speed of operations. The benefit of having all of our employees work in a
combined warehouse and office will maximize our operating efficiency by making it easy
for them to communicate between different departments, creating an environmental
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culture that employees can enjoy working in and will want to contribute in achieving our
company goals.
Since our target market is in Los Angeles, California we searched for warehouses in
surrounding states to minimize possible shipping costs. After doing extensive research it
was decided to look in Nevada for a location to start our business because of its close
proximity to California, in particular Los Angeles. As a state, Nevada offers one of the top
environments to start a small business, according to Fortune Small Business it is the second
best state to start a small business in. Nevada exempts all businesses from paying personal
income tax, corporate income or capital gains tax (Keating). Saving money on taxes will
allow us to retain more of our profits, giving us more flexibility with business decisions and
reinvest capital into the company to ensure the business continues to run efficiently. Also,
the excess money we save on taxes will permit us to seek new investments and
opportunities that we normally wouldn’t have been able to pursue.
Figure 4.3-‐ Map of the tax burdens in each state allows you to see the significant tax
discrepancy between Nevada and California. Our company gains a clear advantage by being
located in Nevada since it is in the top ten best states for lowest tax burden opposed to
being located in California, holding a position within the top five highest tax-‐burdened
States.
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Figure 4.3 Map of tax burden of each of the fifty states, showing the clear tax advantage of locating our warehouse in Nevada opposed to California
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Overall Benefits of Our Warehouse
o Price for dimensions was least expensive
o 3,084 sq. ft. for warehouse operations & storage
o 744 sq. ft. for office space
o Two personal offices
o Three loading garage doors
o Easy access from Highway 93 for our drivers
o UPS Smart Pickup as our delivery service
o No functional silos (openness allows increased communication among departments)
o Management can directly oversee everything
o Extremely close proximity to Los Angeles, California
o No personal income tax, capital gains tax or corporate income tax
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4.2 Lease Terms
As a small start-‐up business in the ecommerce industry, leasing a warehouse with
included office space is the most cost-‐effective decision. Being an ecommerce company
warehouse location and aesthetics are not significant factors because our services are
provided through an online catalog. Leasing the Petersen Industrial Center will allow us to
have more money to invest for start-‐up costs including initial inventory and infrastructure
opposed to the substantial expense of buying the entire building. In contrast to buying,
leasing offers us more mobility in a situation for needing a larger space, or different
location due to expanding our operations outside of our target market of LA. Buying the
building in this situation is also risky considering the possibility of bankruptcy and having
to deal with the commitment of reselling. The total cost to buy the building would be
around $360,000, which would limit our ability to finance the small start-‐up as a whole.
Therefore, leasing allows us to take out a loan for a smaller amount of money to cover both
warehouse costs and overall company costs. The Petersen Industrial center requires an
initial payment of a security deposit and first month’s rent. The security deposit of $2,000
is in place to compensate the landlord in the event that we are unable to pay rent and need
to terminate the lease. The rental rate is determined by a set price per square foot of the
facility. The lease agreement is a gross lease, meaning that the rental rate of $0.46 per
square foot per month covers all payments necessary for the property such as
maintenance, insurance and, taxes. The total square footage is 3,828 sq. ft. bringing the
monthly payment to a practical $1,760.88. This low price formulates a total cost of
$21,130.56 per year. With such a fair price per month, leasing will give us the opportunity
to hopefully finance this cost from our generated revenues. The initial lease agreement is
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for a three year period, therefore we will need to take out a loan of at least $67,391.68 in
order to ensure we have enough to finance our warehouse for the following three years.
Price Breakdown
o Security deposit
o $2,000
o Monthly payment
o $1,760.88
o Price per year
o $21,130.56
o Minimum loan amount to cover 3 years rent
o $67,391.68
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Figure 4.4 This is a flyer for the Petersen Industrial Center, which shows the specifications about the warehouse.
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4.3 Infrastructure
Infrastructure is the basic structures and facilities needed for a business to operate
smoothly and in an organized matter. Even though our sales happen online, in an
ecommerce business the backbone of a warehouse and all of its office supplies inside are
what keeps the business afloat. For our business we made strategic purchasing decisions
that we think will not only help our business start out but will bring us the longevity
needed to sustain an office for years to come. We designed our warehouse in a way that it
will also work as an office space saving us money on overhead. We furnished the inside of
our office warehouse for a workspace that can accommodate many when needed but on the
day to day operations we foresee that we will have three workers staffed in the warehouse
as we start the company. This being said we will be purchasing three computers and one
printer to facilitate the people working in the office along with workstations for these
employees. These workstations include desks, chairs, file cabinets and many more office
supplies. To start off we are going to use Husky Pallet racks where we will store our
product before shipping it out to consumers. Although small in price and large in quantity,
things like pens, papers, and clipboards don’t appear to be a vital part in an online company
but these utensils will help us stay organized and reach our goal of one hundred percent
customer satisfaction. In order to optimize our efficiency and organize our purchasing
decisions for our office equipment, we put together an excel sheet comprised of the number
of units needed of each item as well as the total prices. Figure 4.5 is a spreadsheet that lists
the quantity, price per unit and total cost of each item we purchased to maximize our
operating efficiency.
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Figure 4.5 Excel spreadsheet showing each office supply, quantity and price
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When It comes to designing and implementing our website, are primary goals are to
make it easily accessible to our customers and functional regarding our operations system.
We will have an IT director staffed in our office ensuring that our website meets those
goals. We will only have to outsource the cost of the website template, but the design and
maintenance will be expensed and managed in-‐house. In order to make sure the website
runs proficiently for our customers, the proper bandwidth will be purchased to ensure the
website won’t crash with excessive traffic. The website will be set up so each category of
our products available will be visible, as well as regarding the different genders. Below
each item will be the listed price and a check box to click, and once clicked will be placed
into your virtual shopping cart. You will be able to see your entire order before checking
out and agreeing to the terms of your subscription and payment. Once the order is placed
on the customers side of operations, it will immediately be uploaded to our inside
operations system. Not only will the order be recorded to update or inventory, but their
address, payment information, and specified products will be inputted into our online
database of customer information. Our IT director well make sure that these transactions
between the customer’s view of the website and the translation into our personal database
will work efficiently and transcribe no dirty data.
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4.4 Warehouse Setup
Given the open area of the warehouse we will have flexibility in the way we set up
our warehouse. This flexibility will bring us long-‐term benefit when finding out the best
way to set up our warehouse to be most efficient. With the offices only being in a select
location within our warehouse this gives us an open space to work with that will contribute
to the success of operations that happen within the warehouse itself. Figure 4.6 shows that
outside of the offices in our warehouse we have a rectangular shaped open floor space. In
this space we will be able to set up shelves and racks that we can store the products we will
be selling. These racks will be lining the walls which will allow us to move throughout the
warehouse will ease while filling boxes for delivery. With the simple task of just walking
down an isle and finding what you need for a particular box we will expedite the packaging
process which will cut down on time and cost when we need to deliver orders on time for
customer satisfaction.
Figure 4.6 Warehouse blueprint
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4.5 Financing Plan
The initial investment required to get The Complete Clean Club off of the ground
totals $300,000. Our lease over the three years that we will be using the facility is
$63,391.68 with an additional $2,000 security deposit in place to safeguard the landlord
against circumstances where we are unable to make a monthly payment. Location is where
the majority or the startup costs are allocated to leaving the remaining $35,000 towards
our equipment, inventory – net capital spending to run our daily operations. The
equipment cost totals to $6,000 shown in Figure 4.5 under infrastructure. We project our
initial inventory cost to be $30,000 for on the first year of operations, making sure that we
have enough to support our customers needs but not too much to impede upon our
operations by causing too much clutter. This puts our total net capital spending at $36,000.
We are going to go with a 70-‐30 debt to investment split to fund the initial costs. The
$210,000 we will be receiving in a loan from the Nevada State Bank, on a 36-‐month loan
with 12% interest on the loan, there is also a 2.99% origination fee associated with this
particular loan. The $90,000 coming form investors we have secured from relatives. In
three years we project to be profitable enough to payback our loans and expand to new
markets and locations.
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Financial Breakdown o Initial investment
o $300,000
o Facility costs for three years
o $65,391.68
o Net Capital spending
o $6,000 (equipment)
o $30,000 (initial inventory)
o Loan (36 months, 12% interest, 2.99% origination fee)
o $210,000
o Investors
o $90,000
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5. Product Plan
The Complete Clean Club will offer a variety of items from six different categories of
toiletry products. The basic categories are listed as:
o Shampoo & Conditioner
o Body Wash
o Deodorant
o Face Wash
o Dental Hygiene
o Miscellaneous products for everyday use
Within each category listed above there are products for both men and women with the
exception of the “Face Wash” and “Dental Hygiene” categories due to those items being fit
for both genders.
5.1 Overview
The company decided on these six categories on the premise that individuals go
through these products on a monthly basis. Taking into consideration the normal wake-‐up
ritual, to bathing, and getting ready for bed we thought about the most common products
consumers use. Of course there is variation between men and women dealing with the
actual daily hygiene routine, we only looked into the most basic categories therefore
decreasing our chances of having unwanted products and unnecessary inventory. Personal
hygiene is in fact very personal; therefore, one product will not be sufficient for thousands
of potential customers. In order to decide which brands and even exact model of that brand
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research was done to come up with a list of the most recent popular brands in the United
States. The Complete Clean Club decided that offering a standard of three products to
choose from for hair care, two choices for body wash, deodorant, and face wash will allow
us to promote to a wider range of consumers. Along with bathing products, we thought best
to offer the complete package for dental hygiene including toothpaste, mouthwash, floss,
and even a toothbrush to guarantee optimal freshness every month. Miscellaneous
products that can be used on a monthly basis such as feminine hygiene products for
women, q-‐tips and condoms are also included in our product set. Figure 5.1 reflects the
layout of our product catalog featuring the exact model of each brand we offer.
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5.2 Product Catalog Shampoo & Conditioner
Female
Head & Shoulders Green Apple 13.5 oz
Pantene Repair and Protect 12.6 oz
Dove Daily Moisture 13.5 oz
Male
Head & Shoulders Refresh 2-‐in-‐1 13.5 oz
Old Spice Wolfthorn 2-‐in-‐1 13.5 oz
Dove Men + Care Fresh Clean Fortifying 13.5 oz
Body Wash Female Male
Dove Deep Moisture with Nutrium Moisture
Olay 2-‐in-‐1 Advanced Ribbons
Old Spice Classic
Dove Men + Clean Comfort Body and Face Wash
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Deodorant Female Male
Secret Powder Fresh
Degree Dry Protection
Old Spice Denali
Degree Dry Protection
Dental Hygiene
Crest Cool Gel 6.4 oz
Listerine Cool Mint 250 mL
Glide Floss Original Flavor 50mg
Oral B Advance plus 35 soft
Miscellaneous
Kotex Usleek Tampon Regular 36 ct
Trojan Enz Lubricated 3 ct
Q-‐tip 36 ct
Face Wash
St. Ives Apricot Scrub 6 oz
Clearasil Ultra Rapid Action
Figure 5.1 Product Catalog featuring exact brand and model
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5.3 Our Brands & Why
When choosing which brands to offer our customers their were a couple factors we
had to consider. We first wanted to offer brands that everyone was familiar with as well as
holding a high standard of popularity with all residents in the U.S. Another consideration
was making sure that all products we chose were able to come from one supplier and
wholesaler. In order to research and compile information about the most prominent
brands bought in the U.S. we cross-‐referenced a couple of different cites to see which
products were present on multiple lists. Cites such as top10for.com, therichest.com, and
ranker.com are recent lists of the most popular toiletry brands, and allowed us to choose
our brands such as Head&Shoulders, Pantene, Dove and Degree. Once the individual brand
was chosen for each category of our inventory, we needed to narrow them down the
specific scent, flavor, and size. In order to do so we went to each brand’s website and
determined the product with the most amount of customer reviews along the highest rated
star, out of a five-‐star scale. After completing the extensive amount of research we were
able to compile our twenty-‐six-‐item product catalog featured previously. Within the
twenty-‐six items we incorporated sixteen different brands. For men a lot of the popular
brands for each product category fell under Old Spice and Dove. There are even
commonalities in brands between genders, such as Dove, Degree Deodorant, and
Head&Shoulders.
Completing the product catalog lead us to our second step of research – finding a
distributor that carried our major brands as well as individual products within the brand
name. MVP Trading Company is a distribution and global export center that is a wholesaler
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for thousands of brands. Luckily their personal product catalog included every one of the
products we chose for our inventory. Their product category is easily searchable as each
item is defined by its category, Stock keeping unit number, description of item, and units
per case. Each item they have has a stock keeping unit number that allows us to track our
inventory through numbers opposed to the long product names. In order to make our
operations run efficiently we can keep the same SKU used by MVP Trading Company and
transcribe it directly into our company’s database. This will allow the inventory
management system to run proficiently with no dirty data encrypted into our database. The
inventory management system is described in more detail in section 6 of our business plan.
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6. Supply Chain and Inventory Management
The Complete Clean Club is an online monthly subscription business so we needed a
reliable supplier that can offer the products we are selling all in one place. Even though
several different companies manufacture the products we plan to sell, we were able to
locate a supplier named MVP Trading Company that can provide us with every product we
planned for our company to sell. Having one supplier for our products will help simplify
our supply chain process and maintain the supply chain in the most cost effective manner.
The next step in our supply chain after we receiving our items we will organize them
within our warehouse and prepare them to be packaged for orders. Once an order is placed
we prepare the packages with the exact products our customers selected and perform
quality checks to be sure it contains the proper items before shipping it to the customer
using UPS Smart Pickup. Delivering our products through UPS Smart Pickup is the final
stage of our supply chain. They are a fast reliable service that will deliver products
consistently on time and to the correct address, so by using them we can guarantee our
customers their packages to be delivered on time each month. UPS will also provide a
tracking number for every box we deliver so we will know where each customer’s package
is and can provide them with updates on when they should expect it to arrive. Another
useful aspect of using UPS are the different shipping speeds that will help us to reduce costs
by sending boxes earlier and giving customers the chance to have their products delivered
the next day if they want.
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MVP Trading Company
• MVP Trading Company is our sole supplier. They have competetive prices and also offer all the products we want to sell on our website.
Complete Clean Club
• We will store and package our products within our warehouse. Cost effective and simple so we can bring as much value as possible to our customers
UPS Smart Pickup
• Fast and reliable service thawe can count on the handle our packages. Allows us to track the location of our packages to reasure the customer its on the way.
Figure 6.1 The chart shows the flow of our supply chain, from our wholesaler down to the delivery of our products.
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6.1 Added Value Through Supply Chain
This supply chain will help provide extra value for our customers in a number of
ways. It first starts with our supplier MVP Trading Company. We will be keeping our
supply costs down by having all our products sold by one company and delivered by only
one truck each month. Having more than one supplier would have driven our costs up by
having to pay separate delivery and handling costs. This would in turn make our prices rise,
taking value from the customers who then would have to spend more for our products. Our
customers will also never need to deal with missing a delivery due to the exceptional
service provided by UPS Smart Pickup -‐ every delivery has a guarantee of reaching its
destination and if not or customers will be reimbursed. This allows us to possess extreme
confidence in our distribution
system expanding on a sense of
reliability in two directions; our
company to UPS, as well as
customers to our company. Fear
of not receiving a package will
not be a problem so we will be
giving them peace of mind with
guaranteed delivery. Figure 6.2
refers to the cycle we rely on to
make certain our customers Figure 6.2 Picture detailing how we plan to administer value
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receive maximum satisfaction. The system that will be used to track the items within our
warehouse will also assure that we have correctly packaged each box with the exact
products the customer has picked out. The system will notify whoever is packaging boxes if
they scanned the wrong item or left one out, so the chance of delivering a box with a single
incorrect item is close to impossible. Tracking items en route to their delivery destination
will also allow us to notify our customers of any possible delay due to weather conditions,
traffic, or possible road closures. We will set up our system so if any red flags arise with
delivery, we will be notified immediately and an email will be sent to the customer.
6.2 Supplier
We made the decision to go ahead with MVP Trading Company as our sole supplier
because we believe it is the perfect organization to help bring our company’s goals to life.
We want our customers to create a box of the ideal health and beauty products they want
to receive each month from a wide variety of brands and MVP Trading co. gives us the
ability to do so, while keeping cost of supply low. MVP offers distribution on hundreds of
health and beauty product as well as personal care products in wholesale quantities at
great prices. The wide range of inventory allows us to alter our product offerings to meet
the needs of our customers, such as discovering if one product is preferred over another.
MVP has shipping services that can restock our inventory in as little as two days, so we can
adjust to an influx of orders in a month of any particular product without having to delay
the delivery to our customers.
MVP also offers us very cheap prices on products and delivery helping keep our
prices low enough for our customers to see value in making the purchase. They sell all the
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products we need in bulk and at prices cheaper then what a consumer would be able to
find in the store. For example, they sell each product at an average of twenty-‐four units per
case at a wholesale price. The retail price for one of our products, such as men’s Old Spice
Classic Clean body Wash ranges from $3.97-‐$4.99 from stores like Walgreens and Target
(OldSpice.com). We can buy a case of twenty-‐four units for $49.99, which is almost 40%
cheaper than the price at which a consumer could purchase it at a retail location. This will
enable us to set our prices as low as we can for our customers, while still maintaining a
high profit margin for each individual product. MVP’s delivery charges are determined by
the distance covered to get the delivery to us in Nevada. Since the distribution warehouse is
in New Jersey our delivery charge will be included in the overall purchase of inventory and
should add around an additional $50.00 to each order.
Figure 6.3 MVP Trading Company Logo
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6.3 Supply Chain Management and Organization
How we plan to organize our supply chain management is important because it can
often be complicated to properly manage. Management requires overseeing the flow of our
products from supplier to our customers, information for orders, and the finances involved
in our supply chain. Our Warehouse manager/ COO will be working in conjunction with
our Chief Financial Officer to handle all of these tasks to ensure a strong and well-‐
organized supply chain. The Warehouse manager will be responsible for overseeing the
physical flow of our products from the time they are delivered to our warehouse to when
they are delivered to the customers. They will also track the flow of information that is
involved with placing orders to our supplier and tracking the status of deliveries in transit
to customers. The Chief Financial officer will be taking care of all payments and credit plans
with our supplier and keeping up with our bills owed to UPS each month. The Warehouse
Manager and Chief Financial officer will need to work very close with each other in order to
keep our supply chain running efficiently and add as much value as possible to our
customers.
Communicating all this information will be the computer program put into place by
our IT Manager. The program will assist our Warehouse Manager in tracking all the
individual units of our products and will notify him when products are running low and
need to be repurchased. Finances will be transmitted to the CFO through invoices from
MVP Trading Company each month, and payments to UPS will be made automatically from
our company’s bank account based on the number of packages we send our in that
particular month.
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6.4 Inventory Management o For reference, see page 48, Figure 5.1 for full product catalog
For our inventory management strategy we need to make certain our inventory is at
a serviceable level for the 26 products we offer on our site as well as be able to keep up
with the demand we hope to receive. Our total product offering is broken down into seven
categories that include shampoo, conditioner, body wash, deodorant, face wash, dental
hygiene, and miscellaneous items for everyday use. Being a subscription based company
maintaining our inventory levels could become tricky due to new orders and cancellations
of subscriptions. One goal of The Complete Clean Club is to never have a product
unavailable to our customers because we are lacking proper inventory levels. As a result
when ordering inventory we need to keep in mind our current orders that will be fulfilled
along with any additional orders that are placed in a given month.
To control the management strategy our IT Manager will design a computer system
that will set a minimum level for each product in inventory and when it reaches that rate,
our warehouse manager will automatically be notified. We will set one predetermined rate
for all of our 26 products, due to the fact that they will generally be sold together in
packages and will require similar levels of inventory. Our predetermined rate will need to
be high enough to allow for the time it will take to have our shipment delivered and stored
in our warehouse, so we will have it set at 40 units. Once levels for any product reach this
threshold, the IT system will communicate the information to our warehouse manager
making it easy for him to recognize the need for that specific product and to place an order
for it with our next shipment from our supplier. Having the minimum unit level at 40 may
seem a bit lofty but we will be restocking our inventory only four times a year so a rate
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lower could cause a problem and force us to make a second order in a month if we were to
run out of a product. We will forecast our expected sales for each month to try and avoid
any stock-‐out situation, as well as possibly change the predetermined rate for certain
products sold at a higher or lower volume.
We are going to organize our inventory by product category. To store our products
efficiently and organized we are going to be using a system of bins, separating each item
into there own bin. Our warehouse will be equipped with Husky Pallet Racks that will be
housing this system of bins, and we will assign each shelf to a specific product category.
The shelves will be lined up beside each other so our warehouse employees can package
boxes as quickly as possible by moving down the row of shelves grabbing the product they
need from one shelf and moving to the next. This system of operating will promote a
timeliness value saved by employees seeing that they won’t have to take unnecessary time
locating certain products.
When new inventory is delivered, the first thing we will need to accomplish is to
check the delivery to ensure everything we ordered is accounted for and that nothing is
Figure 6.4 This is an example of how the Husky Pallet Racks will be positioned, optimizing packaging ease.
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missing. The next step will involve quality control -‐ reviewing over the contents of the
order to find any damaged or defected items so we can remove them, preventing the
possibility of adding it into inventory and delivery it to our customer. Once all products are
checked for quality our warehouse employees will begin to store the new products in there
respective bins. Our inventory is tracked through the online processing system, so while
loading the products, the employees will scan each unit as it is placed in its bin. Scanning
the products is vital to keeping operations running smoothly because it will
instantaneously upload the unit into the inventory in our computer and allow us to track
the item for the remaining time it is in our warehouse. The stock-‐keeping units for our
products will be the same units that MVP Trading Company uses to track their own
inventory. We are going to use the same units because it will keep us organized and will
permit us to avoid having to translate one SKU for another, having an overall seamless
transaction. Another way we are optimizing efficiency of our inventory management
system using SKUs is pairing the shampoo and conditioner sold for females by brand in
order to decrease the amount of SKUs we need to keep track of. Refer to Figure 6.5 to see
that products under SKU numbers 10101, 10102, 10103 are grouped together.
After a customer has made a purchase or it is time to send loyal customer’s package, our
computer system will send the order in the form of an invoice to our warehouse
employees. Once the invoice is received they will begin preparing the box for delivery, this
involves selecting each product from the shelves and scanning them before placing them in
the box removing the item from our inventory stock. Once all products on the order are
scanned and packaged neatly in the box, it is ready to be out for delivery, which UPS Smart
Pickup will be handling.
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6.5 Forecasting
Above is a quantitative sales forecast of product sales between quarter one and
quarter two. There is a decrease in new subscriptions because quarter two hosts two of our
off months. We plan on being able to override the sales of our off-‐season months by at least
doubling the percent of products sold during our regular months. This decrease in quantity
demanded is the reason for only receiving one delivery at the start of the summer and
utilizing that inventory to fill our already subscribed customers with only a little excess
inventory to support new subscribers.
Figure 6.5 Excel Spreadsheet of new subscriptions ordered between Q1 (Jan-‐March) and Q2 (April-‐June)
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0
50
100
150
200
250
300
350
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23
Quantity Sold
Product by Last SKU #
New Subscribtions in Q1 & Q2
Quarter 1
Quarter 2
Figure 6.6 Visual representation of the decline in new customers and quantity sold between quarters one and two. The number on the x-‐axis refers to Figure 6.5 and represents the last two numbers of the products SKU#.
.
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A separate type of forecasting is done using qualitative information. On our website,
www.Thecompletecleanclub.com we will have a section for comments, where customers
can leave positive or negative comments about our service. We can also set up a review on
websites like “yelp.com” to track customer comments or ratings on a five star scale. This
type of qualitative analysis will require employee insight to transform the information to
project sales. Such as us getting amazing reviews will lead to an increase in sales due to
marketing by word of mouth.
6.6 Importance & Key KPI
The Complete Clean Club is going to change how people get their personal care
products, making the lives of our customers easier while saving them money. We are going
to be able to accomplish this through improving our current business processes and
continuing to find the products they desire at the most affordable prices. We will be able to
measure this by observing our growth and sales over time, which will show us if we are
gathering a larger customer base that we’re making an impact on our customers.
Establishing ourselves in the market and making a profit is very important goal for our
company, and we can measure this by checking our revenues and expenses each month and
improve operations by allocating them appropriately.
6.7 Delivery Schedule
In order to maintain inventory we will place orders at the beginning of each quarter
based on what products are necessary for our current subscriptions and the existing
inventory levels for each product. By keeping a quarterly delivery schedule we hope to
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avoid any confusion involved in stocking our warehouse, therefore only ordering products
we will require that quarter with MVP Trading Company who will have it delivered at our
specified time.
Cutting back on costs is going to be key during our down season, and to do so we
will order less inventory in the beginning of quarter one and quarter two. Before the
summer begins we will have a good idea of what products and how many are necessary to
fulfill orders May through August. Since we do not plan on having many new orders during
the summer, we will only need to deal with current subscriptions. The smaller summer
deliveries will differ each year with expected growth, but it will have all the products we
need while leaving plenty of excess units that will be able to handle any new orders we
incur over that time.
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7. Human Resource Staffing Plan & Cost Analysis
During the startup of The Complete Clean Club, the company will be staffed by a
total of six employees. To make our day-‐to-‐day operations run smoothly we will employ
three warehouse employees, an IT manager, a Chief Financial Officer also acting as a
Human Resources Director, and a Chief Operations officer who will also act as our
Warehouse Manager. All employees for the benefit of the company will take part in
marketing for The Complete Clean Club. As employees of an organization they will all know
how the business is ran therefore know how to best market our service. Whether it is to
spread it on social media trends through Facebook and Twitter or directly contact students
through advertising in different school papers or bulletins at UCLA, USC and LMU.
7.1 Job Descriptions
Warehouse employee’s hours will be Monday-‐Friday between the hours of 9a.m.
and 4p.m. They will receive 25 days off a year based around sick days and holidays, such as
Christmas and Thanksgiving. This giving them 235 days of work with seven-‐hour work
days making their yearly salaries around $18,095. Except for the one employee who will be
let go during the off-‐season whose salary will be more around $13,860. Since the
warehouse employees are only paid on an hourly basis they will not be offered any health
benefits or 401k plans. We will primarily look for hard-‐working and motivated people who
have a keen eye for organization.
Our business is small and relatively simple so customer support will be handled by
the Human Resource representative, who will be in the office Monday-‐Friday during work
weeks. Due to the fact that we are an e-‐commerce business, the HR director needs to be
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staffed full time to deal with incoming customer questions or concerns making sure we
provide our customers with as much available sources of communication as possible. They
will be in charge of responding to calls and emails at all times as well as the normal job
specifications for an HR director. The director’s services will not only be used by our
customers, but also be available full time for our employees to maintain a strong work
environment by developing and promoting a strong organizational culture. To fulfill this
position we will need someone who has extremely high interpersonal skills, a high level of
emotional intelligence, and most importantly be able to multitask. Multitasking is
important for this employee as they are also given the title of our Chief Financial Officer.
These two job descriptions can coincide because HR deals with wages and benefits of
employees and the CFO deals with all financial allowances for the company. Having this
combined position will break down the possibility of functional silos occurring since they
will know best where money is needed and how to cut down any possible costs.
IT support will be fully covered by our qualified IT Manager who will design our
website, and be on hand to fix all bugs and constantly improve upon it. He will also be
responsible for creating a system that will transform all incoming data from our customers
into usable information for our personal database. Once all information is transcribed, all
employees of the business will be able to easily read and understand the parts of our
database such as order forms, customer information, inventory stocks and more. This will
be most useful for our Chief Operations Officer in order to organize and complete all orders
through the warehouse operations. The COO/Warehouse Manager will be in charge of
making sure the warehouse employees are on task as well as supply chain and inventory
management.
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Overall Duties of Employees: Warehouse Employees
o Prepares and completes orders through processing requests by pulling materials,
packaging, and placing orders in the designated delivery area
o Maintains inventory control by collecting stock location orders and printing requests
o Maintains clean and safe work environment through keeping shelves, workstations, and
pallet areas neat, as well as maintaining an organized shipping area. Must adhere to all
company procedures, regulations and rules
HR Representative/Chief Financial Officer
o Recruitment of strong and capable future job candidates
o Hiring new employees & administering proper background checks
o Customer service by answering customer questions and complaints by email, phone call
etc.
o Pay roll and benefits for all employees
o Maintaining employee records
o Maintaining a safe work environment through administering regulations and rules for
employee interactions
o Ensuring communication among all departments of company, no functional silos
o All forecasting costs for future sales and growth
o Accounts payable and receivable
o Communication with investors and banks to ensure loans are being properly monitored
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o Allocating costs where they will be most useful in the organization
o Keeping track of expenses to see where they can be cut
IT Manager
o Accomplishes information technology staff results
o Able to transform information to be easily accessible by all other employees
o Develops and maintains website
o Utilize in-depth technical knowledge for company
o Writes code to translate data from customer side of website to easily be input into our
customer database system
o Keeps track of inventory management database
Chief Operations Officer/Warehouse Manager
o Maintains warehousing and distribution operations
o Complies with all Federal, State, and local warehousing, material and shipping laws and
regulations
o Maintains warehouse staff
o Maintains clean warehouse and improves set up of bins to ensure efficient operations
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7.2 Hiring Process
The Three warehouse jobs will be filled through searching online job sites such as
Monster.com, or by placing help wanted signs in local storefronts in Las Vegas. A minimum
of two years work experience will be preferred in order to be able to rely on proper
working habits. References will need to be provided as well as a full resume. The job itself
is not too strenuous or complicated so extensive knowledge is not needed. However we do
hope to hire employees that are motivated into committing to a healthy and enjoyable
work environment.
The top-‐level management positions will require more experience and expertise in
the field. A detailed resume with reliable references will need to be given and reviewed
closely by our HR director. For these positions we will advertise the on jobsites as well as
local ads in the newspaper. For a small start up company it is important to hire people who
know exactly how things should be done, along with a strong sense for creativity,
constantly thinking of new strategies to implement to improve our business.
Since we are small business with only six employees, it is extremely important to
hire individuals that will be able to collaborate and motivate each other. Our goal for the
Complete Clean Club is for the whole staff to maintain leadership roles, but to also be
horizontal where all employees feel equal and their opinions are heard. We will strive to
have an organizational culture that is fair and energized. We want our employees to feel
comfortable and encouraged to work towards common goals. In order to provide employee
incentive, we hope to offer bonuses and stock options in the future seeing that the economy
and our market allows it.
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Figure 7.1 Aetna logo
7.3 Salaries & Health Benefits
After researching common pay rates for each title above, we determined the below
salaries and wages for our employees.
Salaries & Wages:
o 3 Warehouse employees- $11 (hourly wage)
o Human Resource Manager/Chief Finance Officer- $45,000 (full time)
o IT Manager- $40,000 (full time)
o Warehouse Manager/ C.O.O- $45,000 (full time)
In Nevada the average single premium per enrolled employee for an employer-‐
based Health Insurance plan is a total of $5,168. Employee contribution is $1,302 and
employer contribution is the remaining $3,866. Nevada holds the position of 45th in the
nation when dealing with average single premium rates. The overall average for the United
States is $5,571, being very comparable to Nevada’s standard. Our company will be using a
small business group called “Aetna Nv Bronze PPo 4000”. This coverage plan gives our
employees 20% off our $4000 deductible. Our total allowance is around $1,400 a month
totaling about $467 for each of the three employees who hold our top-‐level management
positions.
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7.4 Off-‐season Staffing
Since our target market is to three colleges we have to forecast for a decrease in
sales as well as hours worked during the months of May, June, July and August. Our
offseason period is based around the school Calendars of UCLA, USC, and LMU who all end
their second semester in the middle of May and do not return for the new semester until
the mid-‐August. During this time many undergraduate students will be leaving to return
home or to travel. During this time the demand for our packages will decline, and new
business will be uncommon to occur. Forecasting for this decline in sales we find it
necessary to only staff two warehouse employees for a day’s work opposed to our usual
three. This will allow us to decrease our spending for employment therefore saving for
future costs.
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8. Non-‐Human Resources Cost Analysis
When starting our business we always had in mind that we would start small and
grow. With this in mind we took all measures to be very cost effective when setting up our
warehouse along with all other aspects of our company. To do this we followed a couple of
simple measures in what facility we chose along with how we are going to keep the
business operation running smoothly.
8.1 Utilities
What was great about choosing the space that we did is that the landlord and his
representatives cover most of the basic aspects of running a commercial space for a small
extra fee per month. As a start-‐up business we thought that this would aid us both in the
short-‐term aspect of not needing to hire outside services but also in the long-‐term
operations of being able to work with our landlord in ensuring that everything in our
warehouse will be in proper condition. Within this fee of $1760.88 dollars per month we
will be paying for necessary maintenance and insurance. Included in that cost is also our
property tax. What is also nice about the space that we choose is that we will not have to
outsource the cost of heating, cooling, lighting and water. This is already included in our
lease for $0.10 per square foot per month, totaling $382.80 per month, saving us the hassle
of having to find a company that will run these basic necessities for us.
Some of the utility costs that we will incur will include phone, cable, and internet
services. For phone we decided to go with AT&T Small Business because of the advantages
it will give us when starting our business. The package that we chose was four lines with
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fourteen hundred minutes per line per month. This will cost us $56.50 per month and at
this price, it would be hard to find a more affordable service with the reliable reputation
that AT&T possess(“Small Business” AT&T). When it comes to cable we will have three TV’s
set up in each one of the offices plus one in the meeting room. For cable we decided to go
with Direct TV and their top of the line premier package. This package is the best choice
because it will allow for free installation along with 3 receivers for each one of the TVs with
no additional cost. At $67.95 a month Direct TV as a cable provider will allow for us to have
every channel we need in our warehouse (“Discover the Perfect Entertainment Package).
As far as internet goes we will be using AT&T again and we will get their highest quality
internet to make sure that our day to day operations will be running smoothly and that we
will not have any trouble with getting online. The service comes with a router and free
installation and is priced at $64.95 dollars per month (“Small Business” AT&T).
Figure 8.1 Direct TV and AT&T logos
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8.2 Warehouse Maintenance
Even though some of the vital parts of Non-‐HR costs are already included in our
building through our lease contract, some of the operational elements will have to be
outsourced. We will be using a company called Jan-‐Pro who is a trusted commercial
janitorial service located in Northern Las Vegas. They will come twice a week and cover
the full janitor service including, cleaning the floors, offices, and bathrooms. The charge a
flat rate of $100 for every visit, so we will be paying $200 a month for them to make sure
our warehouse is clean, allowing the possibility for a more productive work environment
(“Commercial Cleaning Company in Las Vegas”).
8.3 Shipping
Shipping is probably one of the most important aspects of our business and we will
need to ensure that we get the product out on time and also delivered on time. We will
need to make sure that our packages do not get damaged in the shipping process. UPS is
one of the most trusted names in the
shipping industry so that is why we
are going to partner up with them and
use their UPS Smart Pick Up package.
This package includes a $10.30 weekly
fee. Additionally, this fee allows same
day pick-‐ups from UPS which will
come in handy when sending out our Figure 8.2 UPS logo
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packages. With this service we will also save 31% on every UPS ground shipment we make
(UPS Smart Pickup). Since we will primarily be using ground shipments, our total shipping
cost reaches only $7.10 per week. This will help us in the long run to increase our revenue
by decreasing our costs. With this package service we will not only get the experience and
expertise that UPS provides as a company, but they will also assurance of all of our
packages to be transported safely, so that we will not need to worry about covering costs
on damaged packages.
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Non-‐Human Resource Cost Break Down
Utilities (monthly basis)
Maintenance, Insurance & Property Tax
o $1,760.88 (included in rent cost)
Heating, Cooling, Electricity & Water
o $382.80
AT&T phone & internet
o $56.50 phone
o $64.95 internet
Direct TV cable
o $67.95
Warehouse Maintenance (monthly basis)
Jan-‐Pro
o $200.00
Shipping (weekly basis)
UPS
o $7.10
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Utilities 34%
Internet 6%
Phone 5% Cable
6%
Cleaning 17%
UPS 32%
Price Allocation
Utilities
Internet
Phone
Cable
Cleaning
UPS
Figure 8.3 This is a pie chart showing how the Non-‐Human Resource costs are allocated. Most of our costs are incurred for Utilities, then UPS weekly shipping, warehouse maintenance, and lastly evenly split among Direct TV and AT&T.
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9. Revenue Analysis
In order to calculate and forecast our sales revenue we initially projected sales for
our first year of operations, displaying each month within the year. After seeing the
performance of our company we were able to assign proper values to quantity sold and
sales revenue for the following two years. To present the information in a concise format,
the data was consolidated by quarter.
9.1 Forecasting Methods
To forecast our revenue we again used both quantitative and qualitative factors. We
had to focus on our target market and take into consideration how quickly the word would
spread about The Complete Clean Club with minimal cost allocated to mass marketing. Our
yearly forecast for the first three years is going to be inherently incorrect because a
forecast is almost always wrong but we have come up with these rough estimates based on
many qualitative and quantitative factors. For making the forecast the first data that is
important to look at is our target market. We focused our target market on Los Angeles and
more specifically college campuses within L.A. Three schools we decided to concentrate on
are University of California Los Angeles, The University of Southern California, and Loyola
Marymount University because they make the most sense based on the size of their student
bodies. The total amount of students, which includes both graduate and undergraduate
students, is 92,028 people. As a small start-‐up in the first 3 years we want to capture a
piece of that market and continually grow our market share. In the first year we project to
only capture 1.8% of that market and sell 1700 units, this number is small but relative
because of the potential skepticism about the benefits of our service. We are relying on the
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experience that on college campuses, new products and services often gain popularity by
word of mouth so it will not be a quick process to become known. Over the next 2 years our
projections have us selling 13,623 units, obtaining 14.8% of our target market, which
shows solid growth over that time. Calculating from first year to second year growth, we
increased sales by 31% and again by 38% from year 2 to year 3 sales. We hope to grow at
this average of 35% each year as our subscriptions become more popular on campus.
Selling to college students can have both advantages and disadvantages that will
greatly impact our forecasts. An advantage that affected our forecast over the first three
years is the fact that when a product becomes popular on a college campus it spreads
quickly to the rest of the student body through word of mouth and social media. If everyone
passes a message to just two people via conversation, exponential growth happens
(Marketing Made Simple). We know this through personal experience, being college
students we hear about new things both on our campus and also through campuses around
the country because friends share on social media or phone conversations when they
discover a cool new product. Figure 9.1 represents the exponential growth theory of word
of mouth marketing.
Figure 9.1 Exponential growth theory from word of mouth advertising
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Another type of qualitative forecasting was done by reading through customer
reviews for each product, in or to discover what products would sell successfully to our
customers. For example represented in figure 9.2 we have high sales for Old Spice Denali
deodorant in our forecast partly because it had all 5 star reviews and comments were very
positive while our other male
deodorant Degree Dry Protection had
good reviews but averaged 3 stars on
their reviews showing that the Old
Spice deodorant will have a higher
chance of success to sell in our market.
(Walmart.com)
9.2 Wholesale Cost & Retail Price by SKU
Organizing our products with Stock Keeping Units is very important for tracking
each product that flows through our business. Figure 9.3 shows how we set up our product
table, first listing every product by name and assigning a specific SKU to each product we
offer. This is the most vital aspect because the SKU’s are used to follow product flow from
supplier, to our warehouse, to our customer. Calculating the wholesale cost per unit was
made very easy by MVP Trading Company’s product catalog, it provided us with how many
Figure 9.2 Customer Reviews for Old Spice Denali Deodorant
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units we receive per order and the cost for one order, so we divided those to calculate the
cost per individual unit. Buying from MVP will help raise our profit margin because they
only sell in bulk, saving us a lot of money from purchasing costs. Finding our retail price
was done by comparing the retail prices for our products on Walmart.com and either
matching or listing our products cheaper then what is available at Wal-‐Mart. After
establishing our retail price and cost per unit we calculated the profit margin per unit sold
giving us a good idea how much profit we will earn from every unit sold.
9.3 First Year Sales by Month
A major factor that went into making our yearly forecast was the fact that a large
portion of our subscribers will be cancelling their subscriptions during breaks from school
when many of them are home. During May, June, July, and December we expect to see a
major drop in subscriptions as more and more students move away. We will give our
Figure 9.3 Spreadsheet displaying SKU, Wholesale and Retail price.
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subscribers the opportunity to cancel and re-‐subscribe at any time, so when they leave
school over summer and winter break they will easily be able to stop deliveries and restart
when they return. This gives our subscribers flexibility with their orders so they are never
locked down. Our revenues will suffer severely during these months but we will plan for
this ahead of time and minimize our unnecessary costs over the summer.
Figure 9.3 Spreadsheet showing monthly revenues by product line for the first year.
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In the first year we project to make $49,527 in total revenue from all of our product
lines. As seen in Figure 9.3 we separated our products into six product lines that include
shampoo, body wash, deodorant, face wash, dental hygiene, and miscellaneous. This is a
rough estimate, but we hope for it to be in the same ballpark as our actual sales revenue. In
this analysis you are able to see the decline in sales in May, June, July and December clearly.
From April to May we anticipate sales to drop nearly 50% and even farther to just a
fraction of April’s sales during July and June when almost all students are off campus. Once
school begins again in August/September we see a a heavy increase in sales as previous
subscribers renew their orders and new students discover our company and start new
subscriptions.
Revenue For each Product Line in Year One
o Shampoo -‐ $10,701.74
o Body Wash -‐ $6,414.38
o Deodorant -‐ $3,639.04
o Dental Hygiene -‐ $17,419.16
o Face Wash -‐ $7,364.35
o Miscellaneous -‐ $3,988.54
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Importantly displayed in Figure 9.4 is the trend by month, for quantity of units sold
in each product line. Each graph is titled with the product line it represents and all display
the same “J-‐shaped” curve by Month. The y-‐axis represents the quantity sold. The graphs
for Shampoo, Body Wash, Deodorant, Face Wash and Miscellaneous all top off at around
250 units sold. Dental Hygiene has a greater scale of quantity sold reaching close to 900
units sold. This is due to the fact that from each product line the subscriber will only
purchase one item for their package, but for dental hygiene there are four items that the
common person will purchase together -‐ toothpaste, toothbrush, mouthwash and floss.
Therefore products defined under our “Dental Hygiene” category will need to be regularly
managed and ordered in greater quantities from our supplier.
Figure 9.4 also shows the impact summer break has on our company’s sales. Since
they represent our first year as a business, there is a small quantity sold in January. Slowly
increasing, sales grow for the months February, March and April, then declining in May. As
stated previously May starts summer break for our market of college students, therefore
some subscribers will discontinue their packages during the summer and the likelihood of
acquiring new subscribers is low. This low quantity trend is followed for the months of
June and July, then seeing a rise in August with students returning to school. September
shows a sharp increase in products sold because along with previous subscribers, we
experience a ton of new customers due to our company’s service spread through word of
mouth advertising. Months September through December show a small variations in
quantity sold but still exhibit how our sales increased from the start of our operations.
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0 50 100 150 200 250 300
Jan
Feb
March
April
May
June
July
Aug
Sept
Oct
Nov
Dec
Shampoo
0
50
100
150
200
250
Jan
Feb
March
April
May
June
July
Aug
Sept
Oct
Nov
Dec
Body Wash
0
50
100
150
200
250
Jan
Feb
March
April
May
June
July
Aug
Sept
Oct
Nov
Dec
Deodorant
0 100 200 300 400 500 600 700 800 900
Jan
Feb
March
April
May
June
July
Aug
Sept
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Dec
Dental Hygiene
0
50
100
150
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250
Jan
Feb
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April
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Face Wash
0
50
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Feb
March
April
May
June
July
Aug
Sept
Oct
Nov
Dec
Miscellaneous
Figure 9.4 Monthly sales by quantity sold for each product line.
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9.4 Yearly Projections by Quarter
After tracking sales by month in our first year of operations we decided to “roll-‐up”
the data by quarter in order to more easily project sales for the next two years. In the
following two years, we plan on having considerable growth in all product categories. After
the first year we hope to have around 2% of our target market using our company for their
hygiene products. In the second year we feel that adding another 5% of the target to our
subscribers would be realistic growth for that year. This would have us at about 7% of our
target, which we feel as though this is a decent hold in the market by this point in our
businesses life. The third year is where we hope to at least double our market share; by this
point we assume our business will have a small following on each of the three campuses we
sell to. These loyal customers will be vital to us growing our business because we want to
have them do marketing for us. In each package we will put in a flyer that a student can
hang somewhere on campus to help get our companies name out there. The third year
revenue projections have us capturing 15% of our total target market. If we continue to
grow by an average of 35% per year we will soon be a profitable company and able to
expand to more college campuses around the world.
Each year was carefully forecasted first by units sold, then calculating sales revenue
from that. Units sold increased each quarter with the exception of the second and third
quarter of every year due to summer break. Quarter 1 includes months January-‐March,
Quarter 2 is April-‐June, Quarter 3 July-‐September and Quarter 4 October-‐December. All of
this data was formatted, organized and calculated using Microsoft Excel. There is a total of
twelve quarters of projected sales, increasing revenues immensely each year.
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Sales Revenue by Quarter
o Quarter 1 o $10,420.92
o Quarter 2 o $6,063.23
o Quarter 3 o $11,094.37
o Quarter 4 o $21,948.69
Year One Total
• $49,527.21
o Quarter 5 o $46,610.93
o Quarter 6 o $25,624.23
o Quarter 7 o $26,844.17
o Quarter 8 o $57,499.46
Year Two Total
• $156,578.79
o Quarter 9 o $107,474.18
o Quarter 10 o $56,811.41
o Quarter 11 o $59,060.26
o Quarter 12 o $180,206.54
Year Three Total
• $403,552.39
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10. Three Year Financial Analysis
Below are projections for the first three years of operations for our company. The
statements are for December 2015, December 2016, and December 2017 are represented
in Figures 10.1, 10.2, and 10.3. For the income statement all revenues and expenses are
accounted for. After proper calculations for sales revenue, cost of goods sold and selling
and administrative expenses such as rent, wages, utilizes, and shipping costs we were able
to arrive at three separate net incomes. Although the business does not reach profitable
within the three years of operations, the negative balance for net income is quickly
approaching positive values. This is because the profit margin for selling toiletry products
is not large at all, unlike selling high quality products made at low costs.
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10.1 Income Statements
Figure 10.1 Income Statement for year ending in December 2015. Net Income totaling a negative balance of $189,175.66
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Figure 10.2 Income Statement for period ending in December 2016. Net Income totaling a negative balance of $148,272.74
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Figure 10.3 Income Statement for period ending December 2017. Net Income with a negative balance of $48,200.11
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Each Value for Net Income above is listed in red due to the fact that it is a negative
cash balance. This is due in partial to the low profit margin toiletry products have because
the cost to produce and buy at wholesale values per unit provides us an average of $1.83
for our 23 available products. Knowing this, we hope to increase sales as we are -‐ by at
least 30% each year in order to profit of this low margin. Even though we are not clearing
“the red” for profits yet, The Complete Clean Club still runs efficiently with managing its
expenses, only buying and paying for what is completely necessary to offer the best deals
and service to our subscribers.
The numbers presented on the statements for sales revenue and cost of goods sold
in Figures 10.1, 10.2, 10.3 are all derived from the revenue analysis. Each product was
listed by Name, Stock-‐keeping unit number, Quantity per wholesale order, Wholesale unit
cost and retail price. Then the proper calculations were done to find the profit margin for
each unit. After quarterly forecasting for units sold of each product was done for three
years, revenues were calculated along with the cost of the units sold. The numbers under
Selling and Administrative expenses are expressed earlier under sections “7. Human
Resource Cost Analysis” and “8. Non-‐Human Resource Cost Analysis”. Without these
expenses the business would not run as smoothly as it does. The proper wages are given to
employees to promote satisfaction in the work environment as well as enhance the
organizational culture among all employees. The rent, utilities and shipping costs are a
necessity to even have the warehouse and business plan in the first place, and are actually
the least expensive options for the best quality.
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10.2 Balance Sheets
Figures 10.4, 10.5 and 10.6 represent three balance sheets for The Complete Clean
Club. Unlike our Income Statements accounting for the whole year, our balance sheets are
simply a snapshot of our Assets, Liabilities, and Stockholder’s Equity on the specific date of
December 31 for 2015, 2016 and 2017. We broke down each section to display or current
and non-‐current assets and liabilities along with our stockholder’s equity split by the net
income from our income statements and retained earnings from what we contributed to
the business. Our first years assets, liabilities and retained earnings were derived from our
initial amount of $300,000 comprised of $90,000 from private family investors and a
$210,000 loan from the bank. Since the balance sheets are presented at the end of the year
these numbers are significantly decreased after paying off some of the loan and covering
costs with some assets.
In order to cover the dramatic negative amount incurred from paying all of our
expenses, each year as owners we contributed more money into retained earnings. In 2015
we contributed $90,000 worth of personal investments, $70,000 in 2016 and only $50,000
in year three since shortly we will be able to make enough to cover our expenses through
sales, and soon after be profitable. Our cash account fluctuates with our liabilities as we use
it to pay off the 12% interest loan to our 36 month debt to the bank. We also have a liability
of Wages payable each year for the same amount as there is a delay to fully cover the
salaries of our c-‐suite employees. Our inventory asset is what is left after selling the
inventory bought from that year, which then in-‐turn rolls over to our next period. With our
projected growth of 35% per year we hope to soon provide a more even balance between
our assets, liabilities and stockholders equity.
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Figure 10.4 Balance Sheet on December 31, 2015
Figure 10.5 Balance Sheet on December 31, 2016
Figure 10.5 Balance Sheet on December 31, 2017
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11. Process Maps
We decided to do three map out three “AS-‐IS”
process maps to display the operations of our business.
Included is a Relationship process map, and cross
functional map for external supplier-‐ customer
relationships, and lastly a flowchart of our online store. We
used these process maps to help understand and improve
our company. Figure 11.1 represents the key used for all
three maps described. Operation is represented by a
normal rectangle. A decision being made is represented by
a lopsided square while starting and stopping are both
pictured by ovals. A delay in any process is characterized by
a combined rectangle-‐oval symbol. Refer to this figure to
get a better understanding for the process that take place
for The Complete Clean Club.
All maps shown are “ AS-‐IS” maps. They show how
are process is now in this current time. The “AS-‐IS” process
is hard to project with a start up company as
continuous improvements are being made, becoming
hard to decipher the exact steps each process includes. These maps do however give us an
overall view of valuable information on how to improve our company and work out current
problems. Our next step is to have “TO-‐BE” maps, taking all of our considerations and
Figure 11.1 Process Map Symbols Key
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changes, mapping them to show us what our processes will look like in the future, and
deciding on if we should pursue these changes or not. For a possible change in a “TO-‐BE”
flowchart, The Complete Clean Club can add a “look around” option that doesn't require the
customer to create an account in order to enter our website. This could help customers
browse our products and service without being fully committed. “AS-‐IS” maps are a very
important part of any business, but must not be overused leading a decrease of innovation
and grounding the company.
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11.1 Relationship Process Map
For the Relationship Process Map we decided to map out our external supplier-‐
customer relationship. Figure 11.2 visually depicts all of the “parts” of The Complete Clean
Club from supplier to organization, and organization to customer in a left to right fashion.
We chose to use this as our first process map for the investor to view the work being done
at an organizational level. It shows the input/output connections throughout The Complete
Clean Club. It also; lays out what process each part of the company contributes to, visually
Figure 11.2 Relationship Process Map
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show customer-‐supplier relationships, and highlight parts of the process that are affected
by our chosen strategy. All of these help us trim the fat in our process. It helps us identify
the non-‐essential and removable activities and manage the whole process. Our Map starts
with the MVP Trading Company, shipping products to our warehouse and deals directly
with the purchasing branch of our company. The purchasing branch also receives all sales
made by the online store to start the billing process as well as report what products need to
be replenished which they then directly communicate with MVP Trading Company. The
products arrived at the warehouse then go through our computer system which logs all
products coming in, then communicates with the online store to keep everything up to
date. The products then transfer to the quality control and categorization center where
they are tested for problems and then sorted into certain areas and bins. The sales center
then receives new orders and organizes the desired products that then go to packaging and
distribution to be sent off to the customer to complete the process.
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11.2 Cross-‐Functional Relationship Map
The Cross-‐ Functional Map of External Supplier to Customer Relationships shows
our workflow as it crosses between different functions. We decided to do a Cross-‐
Functional map to help the investor visualize the specific work that takes place in each part
of the process. Figure 11.3 helps us identify; the boundaries of the workflow, to show
customer touch points with The Complete Clean Club, and show handoffs of the products
Figure 11.3 Cross-‐Functional Relationship Map
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and information between different parts of our organization. All of this information helps
us see how to make the process more efficient and where to emphasize our work force,
such as the customer touch points, that are now easily identified.
The actual path of an order starts with the customer completing the order online
and being recorded through the online store. The order then crosses “lanes” into the sales
division which will record the order and later create an invoice and collect the payment.
Sales then sends the ready orders to service who will prepare, complete, and distribute the
orders for shipping. Last the administration side deals directly with MVP Trading Company
filing out new order forms with them and paying them directly. The products are then
shipped from MVP and are delivered back to the service area to help them complete their
needed orders.
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11.3 Online Store Flowchart
Figure 11.4 Online Store Flowchart
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The Online Store flow chart helps show exactly how the flow of the store works
when a customer comes to our website and helps us identify how to increase the flow to
maximize shopping ease and travel throughout our site. This in-‐turn helps our shoppers
have an enjoyable and efficient experience, leading to them coming back and continuing
their subscriptions. The Flow chart also helps us “Drill down” within a subset, or portion of
a larger process, to show the “ground-‐truth” reality of what actually happens” on our
website (Damelio, 95). Figure 11.4 also helps us identify what parts of the website are
valuable and which parts we can afford to lose. Our flow chart starts with the customer
coming to our site and being prompted to either sign in or create an account. From there
they can either start shopping or can look at their account for order updates or other
information. After adding items to their cart and clicking ready to checkout they will either
be prompted to pay or be alerted that the items are currently out of stock to where the
order will be delayed until the items are in stock. The payment of a credit card or debit card
will be authorized or declined. In the case of a decline they will be shown a message of the
decline and redirected to re enter a new payment. Once the payment is accepted the order
will be processed and an email will be sent to the consumer of the shipping confirmation
and tracking number. This flow seems to be straightforward and simple giving the
consumer an easy buying experience.
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12. Final Summary
Matt Dixon As the end of Sophomore year is slowly coming to a close and the threat of finals
looming overhead this project was all that remained. With almost two years under my belt
at the Leeds School of CU this project was definitely one of the most eye opening and
educational of anything I have done so far. Unlike having to take basic math or fulfill art
credits this project was an academic challenge for the “real world” as well as great practice
for it.
Group projects have never been a very big strong suit for me. In Middle school and
High School I used to complete my parts very fast and felt that most people in my group
would drag down the grade a little. Now is college, I am busy. I have a job that I work at at
least 3 days a week as well as gym, soccer and skiing. I am also handling many bills and
things since my mom is out of the country and currently in the Republic of Georgia. All of
this said in college lately my schedule is weird and I usually am completing things at odd
times or when I can. In a group project when deadlines are set it is very hard for me to
meet these sometime as well as meeting with my group. What this project has taught me
more then anything else is really about time management. I know for the rest of my life I
will be as busy or busier then I am now with alot more projects and deadlines to complete
and meet. This project got me ready for this. Luckily our group was well connected through
email and text and we were firm on setting dates far into the future to ensure that everyone
would have their stuff done. The first submission we did not scramble and we were ready
to go days before the submission was due, the second submission was a little closer. Kacey
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has an extensive knowledge of Operations Management and this project and was the one to
really take all of the pieces and place them together perfectly on the last day of preparation
for the submissions. Every group needs the crunch time person who keeps everyone on
track, and luckily Kacey was there to fill that role.
Other than time management this project has helped me look inside what really
makes a company tick and just how hard it is for a new company to thrive let alone stay
afloat.
For the first submission I was in charge of Target Market as well as Competition. Our
group decided target College Kids for our project after extensive research into our
competitors such as the already thriving Sudz Club. We then decided to target the college
kids around Los Angeles for there are three very large schools in the area with many
potential customers. The data for this was relatively easy to find. If this was a true business
plan and our company was actually real, Investing money into really seeing if this area
would be profitable would most likely be a wise move. What surprised me a lot was the
competition. There really isn't too many companies offering delivery of everyday products
such as toiletries, and is really an up and coming market that is ready to be tapped into.
Job descriptions and the Human resource side of our company I found very
interesting. The jobs we needed filled had to be able to do a lot for our small company. The
responsibility for each job is quite high and left some freedom to see how that employee
could improve the company. Salaries were one of the main topics of discussion. Looking at
national averages for many of our job openings seemed quite high for a small start up like
ours. We needed to find people who were willing to work for less but in return, like stated
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early, receive more freedom and responsibility to help make the company grow and
improve their own lives as well as the companies. I was very adamant about this part.
All of the group members put forward their most and we all seemed to agree on
most of the issues we came across. All of us had taken the previous BCORs and were
relatively comfortable with most of the information needed.
Advice for future students completing this project is to start early and then revise,
and revise again. The most important advice is to use your resources. You are a student in
the Business school full of successful business men and women who are here to help you.
The professor as well as your TA are both extremely helpful when it comes to pinning
down exactly what they are looking for and giving great feedback. When it comes to
improving this project I believe that it could be trimmed down in the number of pages both
helping to stop rambling as well as repetition on some subjects. Asking for a more concise
project will not only bring clarity but will also encourage students that every word and
decision counts. overall the help of the staff and enthusiasm by my team and the whole
bcor 2500 class made this project informative and a great look into the real business world
of operations.
Kacey Highland
Being a second semester sophomore, this project was definitely one of the most
intense and time-‐consuming assignments I have yet to deal with in my academic career.
Not only do you learn the operations and information management, data analysis and
business writing, but much more such as time management and how to work with others. I
have never been one to rely on others for my grade so obviously came into this project
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feeling nervous to do so. Approaching the first interim submission allowed me to see the
strengths and weaknesses of my team members and let us realize who can do what to
compensate for others. We assigned different subheadings of the outline to each member
in order to even out the workload. Once each member was done with their part I would
have them all email it to me so I could compile the document for each submission and make
the proper edits and add-‐ons as needed. I think one thing that could have benefitted our
group more was more team meetings to ensure everyone was on the same page, and who
ever needed help could get it right away, opposed to waiting until close to the due date.
Another challenge faced with this project was time management. As soon as one
submission was turned in my group tended to follow the more relaxed route, not working
on the project right away. That was my biggest regret in regards to this assignment, as I
believe working on it intermittently would cause a lot less stress and a lot more time for
editing and enhancement.
In lecture a big part of the content is about data. This project puts the concept in to
such a different view, as your taking those vocabulary terms learnt in class and applying
them to the actual processes of a company. I was shocked to see how much research goes
into building a business, whether It be dealing with researching competition and what to
sell – to how to organize your warehouse and optimize operation efficiency. At times the
research seemed to be a little extensive and towards the final submission a lot was not
used. It was important to pick and choose through relevant information, and what will
support your cases the most. Another concept to think about when collecting data is what
forms to use and how to present it, drilling it up or rolling it down in some cases as well as
multidimensional analysis for comparing multiple data points. The process for finding data
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is not as easy as it seems considering we don’t necessarily have access to huge databases
that can cross-‐reference five specific research points but as long as you take time to
research relevant information about each of those points you can come up with pretty
accurate estimations.
Process mapping was one of the more difficult tasks of this assignment. I am a
finance and accounting major so enjoyed dealing with the numbers and financial
projections than mapping out each and every process for our company. Referring to the
process-‐mapping guide helped a lot and allowed me to realize there could never be too
much when mapping out your operations because a lot goes into it, whether or not you see
it – such as the iceberg theory.
Suggestions for future BCOR 2500 students would start off with making sure you
pick the right group. Going into this project everyone obviously states they want an “A” in
the class but that isn’t reality. Make sure you read everyone’s short biographies in the
beginning of the semester to get a good feel of team member who might possibly have the
same goals as you. Don’t be afraid to work with people who aren’t you friends because it
may in fact work out to your benefit. Secondly, once you decide on your group make sure
you make a project management chart in excel early on, don’t just wait until the assignment
is due in recitation. With this chart you will be able to set specific due dates within your
group and list who is responsible for what, that way the project will come together
smoothly and not last minute. Lastly, use your resources. The most beneficial resource in
my opinion is your TA. They are always willing to answer any questions about the project
and will most likely give you a breakdown of what you need to do. They are here for your
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success, not to see you fail. The most helpful thing is going into office hours after each
submission and talk to them about how to improve your project and what to do differently.
In our case the TA brought to our attention a lot of things we didn’t consider prior to
submitting the project, therefore allowing us to make those edits and think about more
detail for the later submissions.
Hank Joyce
Throughout the semester I have be continually working on this project and have
learned valuable time management and team work skills. Before this project I had no
experience working with and creating a business plan so a lot of the information was new
to me. This project was extremely challenging to complete but I do believe that it is the best
way to learn these skills, it is one thing to learn them in class but having the ability to
actually go out and practice them in essentially a simulation of what it takes to create an e-‐
commerce business.
Working with a group was definitely one of the most challenging aspects of the
project. Prior to starting I thought working with a group would be one of the easier parts, I
enjoy group work and collaborating with others but it turned out to present difficult
obstacles in route to completing the project. The first challenge was getting all of work to
move smoothly and sound similar. Making sure our business plan had a consistent flow
was very important to us, so to do so after we all completed our individual sections for the
project we would have to go through them to make sure the paper had cohesive writing.
This added previously unforeseen obstacles when it came to putting the business plan
together. The next and most challenging part of working with a team was finding a time to
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meet and work together on the project. Throughout the semester we found that it was
extremely difficult to meet as a group and that made it harder to get help on a section of the
project if it was needed and gauge where everyone was at individually on their section to
ensure we were all caught up on our work. Even with these challenges it was great to work
with my group and who had the same goal of producing a quality business plan for our e-‐
commerce company.
Data analysis was very interesting because it gave me the opportunity to apply
some of the skills I learned from prior BCOR classes to a real world situation. Collecting
useful data was imperative because my group used the information to create financial
statements and graphs and tables to simplify the information and I personally used data
while completing the forecasting and revenue analysis. It was tricky at first manipulating
the data because before now I had no experience with it but I eventually was able to get a
solid grasp on working with it and applying the useful information to our business plan.
Process mapping was in my opinion was the toughest section of the project. After
working closely with them I am able to see the vital importance for a company to have
accurate and useful process maps. They keep everyone within the company on the same
page with regards to the operations of the business. It is a very useful skill to posses going
forward in the business world and I hope to learn more about them in the future.
Going into this class I knew time management was not a strong skill of mine and that
I needed to stay on top of this project to succeed. For the first submission I really struggled
with keeping up with my work and not procrastinating and was extremely rushed the week
before the due date to finish up. After that first submission I began working much farther
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ahead of the next due date so I wasn’t in that situation and helped me produce higher
quality work then prior because I had plenty of time for me make revisions and allow my
group to read through and add their own suggestions. Our project management was key to
organizing our project so none of our group members were lost or out of the loop on what
was happening with the project. Our leading team member Kacey Highland was the driving
force in keeping us organized and aware of deadlines that we needed to meet. She kept us
on top of our work so nobody fell behind which was very helpful for me because I often
times procrastinate and put work off until the end. Time and Project management are the
most important aspects of this project because if you don’t effectively manage your time
and project effectively the work will be sloppy and not up to the pint it would have been if
you were able to manage more properly.
Two major pieces of advice I would want to give future OPIM students is time
management and picking a good group to work with. Waiting to last minute on this project
is the poison pill that will sink your group. Making sure to have the whole project
completed at least two days in advance so everyone can read through it and is happy with
work is probably the most important thing to do for a good project submission. On our first
submission we were ranked 4th in our class which was disappointing and I put most of the
blame on our group finishing the project the night before it was due and not giving
ourselves time to revise it. We made a change for the next two submissions and it has
worked out very well for us. Choosing a good group that has similar goals as you would be
my next piece of advise for future students. I have seen many people group with friends
instead of focusing on joining a group that is focused on completing quality work and it has
become a major problem for them. Being sure to group with a focused team is essential to
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getting a good grade in this class and if you do choose to be grouped with friends your
grade could suffer or you will be stuck with all the work if your friends aren’t motivated. A
final thing I would recommend to students is to use your TA’s for help, meeting and
emailing with my TA has been the one of the most helpful resources for this project.
Parker Varner
Going into this project and even going in the business school I had heard about the
hundred-‐page paper that comes with the operations and management class and I was
instantly scared. I had never come close to writing that many pages let alone ever thought
that I would have to. In the first weeks of class when we were choosing groups I became
nervous at the fact that I didn’t have a group let alone have a group that I would be able to
spend the rest of the semester with creating such a big project. Once I was able to find the
group and get started on the project it became a lot clearer to me that this project would be
manageable and I would be able to create such a big project in one semester.
Working with a group over an entire semester seems like it would be a hard task
when you only have a few weeks to meet other students and agree that you would take on
the big task at hand together. After the first meeting with my new group I knew that we
would be a strong cohesive group and would be able to take this project on and do the best
that we could. We started off our project strong and were able to map out certain goals that
we would like to achieve throughout each submission. We were able to communicate well
over text message and email. We set up meeting times in the business school and took out
time each week from our schedules to do the work that was ended even if we weren’t
meeting in person as a group. At times we were crunched for getting the final project put
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together but as a group we were always able to get it done. Being with a group for sixteen
weeks seemed like it would have more bumps along the way but we were able to work
together as a unit and get done what we needed.
Working with different elements for this project at first had its ups and downs but
through putting in the time we were able to find what we needed and get it done. We found
out that data was not as easy to come by as we previously thought. Whether it was
collecting the data our selves or looking through different sites to find their data and
reference it, data was one of the hardest parts of this project. Although at times we did have
problems with time management we did not ever miss a deadline and as a team we were
able to get everything done that we needed for this project.
If I could suggest any help for future 2500 it would be to start early for everything
you do. From the first couple of days of class start networking and get out there to find
people who will work well with you and that you will be able to work with for the rest of
the semester. This continues through the rest of your project and you should be on top of
your game throughout the entire semester and not just think that because you turn in one
submission that you can take a two week break because the next submission is due in three
weeks. Overall in the end you should not be scared of this project and should take it with
open arms because when you are done you will have a hundred pages of polished work of
art ready to show future employers.
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