tyler hutchens dave ryan gary tobin carrie xing business plan presentation
TRANSCRIPT
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Tyler HutchensDave RyanGary TobinCarrie Xing
Business Plan Presentation
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Agenda
The Problem Giraffe Rack Solution Marketing Strategy Operations Strategy Financial Plan Questions
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Bicycle Rack Market trends
SUV Sales are increasing as a percentage of total vehicle sales.
Sales of racks to SUV owners are increasing by 15% annually.
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People Want Roof Racks
“Most people would rather use a roof rack, but can’t because of the vehicle size”
Bobby Noyes, founder, Rocky Mounts, Inc.
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Roof Racks can be tough to use
“I get hurt far more often loading and unloading my bike than riding it.” Pam Simich, Director, VeloNews Magazine.
“I’ve seen people use ladders…” Margaret Principe, Counselor, Englewood High School.
“I constantly struggle to get my bike on and off of my car.” Christy McDevitt, Physician, Kaiser Permanente.
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Our Solution
Get the rack to the bike, not the bike to the rack!
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Giraffe Rack
Rack Design
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Giraffe Rack
Rack Design
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Giraffe Rack
Rack Design
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Giraffe Rack
Rack Design
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Giraffe Rack
Rack Design
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Giraffe Rack
Rack Design
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Giraffe Rack
Rack Design
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Giraffe Rack
Rack Design
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Giraffe Rack
Rack Design
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Giraffe Rack
Rack Design
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Giraffe Rack
Rack Design
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Giraffe Rack
Rack Design
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Giraffe Rack
Rack Design
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Giraffe Rack
Rack Design
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Giraffe Rack
Rack Design
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Giraffe Rack
Rack Design
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Giraffe Rack
Rack Design
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Giraffe Rack
Rack Design
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Giraffe Rack
Rack Design
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Giraffe Rack
Rack Design
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Innovative Design
Yakima and Thule complementary No need to design to vehicle types Easy to use
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Marketing Strategy
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Market Size
2005 SUV rack market = $215M
Total Market Potential = $630M
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Focused Strategy
Roof rack accessory Compatible product SUVs
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Customer
Survey Findings Bike enthusiasts SUV owners Women Vertically Challenged Already own/shopping for roof rack
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Pricing Strategy
MSRP = $150.00 Retail discount = 45%
65% surveyed will pay $150
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Retailer
Specialty Stores Good discount for merchant – 45% Can sell to existing rack customers Additional installation revenue opportunity
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Rollout Year One - Colorado
Great Market! Most SUVs per capita High concentration of bicyclists Wealthiest counties in Rockies
Sales, Sales, Sales
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Ongoing Rollout
Year Two Colorado mountain towns California, Portland, Seattle
National Rollout in Year Three 180 stores by Year Five
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Brand Image
Targeted Advertising Print ads, point-of-purchase displays
Guerilla Marketing Demo units Events
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Giraffe Rack Advertising
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Brand Image
Targeted Advertising Print ads, point-of-purchase displays
Guerilla Marketing Demo units Events
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Talented Management
Dave Ryan – President 10 years experience in early-stage companies Experienced Sales and Marketing
Management Tyler Hutchens – Vice President
7 years experience in Marketing, Promotion, Operations, Finance
Experience with early-stage companies
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Operations Strategy
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Operations Plan
Major Features: Complements Sales and Marketing Low fixed costs Outsource
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Scope of Operation
Outsource design Contract out to manufacturers for
tooling and production Minimal assembly and packaging
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Key Success Factors
Strong supplier relationships Strong retailer relationships Management involvement
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Development Timeline
Concept R&D (30 days) Product Development (55 days) Product Release to Manufacturing (50 days) Manufacturing Ramp-up (85 days)
Total Duration 220 Days
(Dec ’01 – Oct ’02)
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Financial Plan
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Giraffe Rack Gross Margin
Selling price of $82.50 Cost of goods sold $41.80 Our Gross Margin is 49.3%
Outdoor Products average = 38.8% Higher for Marketing Costs
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Giraffe Rack Revenue
30 retail outlets in Year 1 Average 100 units per location
Year 1 Revenues = $247,500 Year 1 Operating Expenses = $182,675 Year 1 Earnings = ($180,776)
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Revenue Growth
$0
$500,000
$1,000,000
$1,500,000
$2,000,000
$2,500,000
Annual Revenue $247,500 $544,500 $998,250 $1,536,150 $2,168,100
1 2 3 4 5
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Giraffe Rack Cash Flow
($200,000)
($100,000)
$0
$100,000
$200,000
$300,000
$400,000
$500,000
Cash Flow ($158,861) ($130,126) ($5,539) $183,873 $454,338
1 2 3 4 5
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Giraffe Rack Cash Flow
Highly seasonal sales 75% coming between April and September
Cash need early, excess later
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Giraffe Rack Funding
Owners will contribute $60,000 Raising $200,000 in debt
Repaid $500,000 at the end of Year 5 Offers a 20.1% compounded return
Interest expensed and accrued each year
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Giraffe Rack Cash Flow (b)
$0
$50,000
$100,000
$150,000
$200,000
$250,000
$300,000
$350,000
$400,000
Cash Flow $101,139 $127,099 $225,506 $391,768 $57,262
1 2 3 4 5
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Giraffe Rack Growth
($200,000)
($150,000)
($100,000)
($50,000)
$0
$50,000
$100,000
$150,000
Earnings ($180,776) ($19,546) $76,601 $119,771 $119,675
Net Margin 7.67% 7.80% 5.52%
1 2 3 4 5
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Giraffe Rack Exit
Acquisition by a larger company
Licensing agreement with a larger marketing/manufacturing organization Manufacturing and distribution turned over Marketing and royalties negotiated
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Wrap Up
Market need Strategy Investment
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Questions?
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Cost of Goods Sold
Component Quant Cost TotalPivot Plate 4 $1.50 $6.00Outer Bars 2 $1.75 $3.50Inner Bar 1 $2.75 $2.75Mount Bar 1 $2.00 $2.00Piston/spring assembly 1 $12.00 $12.00Handle Assembly 1 $5.50 $5.50Bushings 8 $0.25 $2.00Hardware 12 $0.15 $1.80Packaging 1 $0.25 $0.25Labor 0.5 $12.00 $6.00Total $41.80
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Giraffe Rack Growth
Year 1 Year 2 Year 3 Year 4 Year 5Units per outlet 100 110 121 133 146 Outlets 30 60 100 140 180Selling Price $82.50 $82.50 $82.50 $82.50 $82.50Revenue $247,500 $544,500 $998,250 $1,536,150 $2,168,100
AssumptionsYr.1 Locations 30Yr. 1 Units Per Location 100Sales growth/yr 10%
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Giraffe Rack Growth
Year 1 Year 2 Year 3 Year 4 Year 5Revenue $247,500 $544,500 $998,250 $1,536,150 $2,168,100Gross Profit $122,100 $268,620 $492,470 $757,834 $1,069,596Operating Expenses $182,675 $239,885 $357,883 $568,422 $789,131EBIT ($140,575) $28,735 $134,587 $189,412 $280,465Net Earnings ($180,776) ($19,546) $76,601 $119,771 $119,675% of Revenue 7.67% 7.80% 5.52%
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Giraffe Rack Cash Flow
Year 1 Year 2 Year 3 Year 4 Year 5EBIT ($148,861) $28,735 $134,587 $189,412 $280,465Investing Activities ($10,000) - ($10,000) - ($10,000)Net Cash Build (Burn) ($158,861) $28,735 $124,587 $189,412 $270,465Beginning Cash Balance - ($158,861) ($130,126) ($5,539) $183,873Ending Cash Balance ($158,861) ($130,126) ($5,539) $183,873 $454,338
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Giraffe Rack Cash Flow (b)
Year 1 Year 2 Year 3 Year 4 Year 5Cash Flow From Ops ($148,861) $25,960 $108,407 $166,262 ($124,506)Investing Activities ($10,000) - ($10,000) - ($10,000)Net Cash Build (Burn) ($158,861) $25,960 $98,407 $166,262 ($134,506)Increase (Dec) in Debt $200,000 - - - ($200,000)Beginning Cash Balance $260,000 $101,139 $127,099 $225,506 $391,768Ending Cash Balance $101,139 $127,099 $225,506 $391,768 $57,262
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Giraffe Rack Repayment
Year 1 Year 2 Year 3 Year 4 Year 5
Beginning Debt Balance $200,000 $240,225 $288,540 $346,573 $416,277Interest Rate 20.1% 20.1% 20.1% 20.1% 20.1%Interest Expense $40,225 $48,315 $58,033 $69,704 $83,724
New Debt $240,225 $288,540 $346,573 $416,277 $500,000