29 Jun 2019

QUICK LAWN BUSINESS PLAN



QUICK LAWN BUSINESS PLAN




TABLE OF CONTENTS


Executive Summary                                                              3
Business Summary                                                                6
Product Summary                                                                  8
Market Analysis                                                                           13
Marketing Strategy                                                               18
Start-up Phase                                                                               22
Management Summary                                                  23
Financial Plan                                                                               26
Risk and Exit Strategy                                                          32
Appendix                                                                                             34


EXECUTIVE SUMMARY
Creating a flower garden requires too many steps. You need to research flowers that look good and are easy to grow, and then you need to design your lawn and purchase seeds, soil, fertilizer and mulch. Finally, you have to plant everything on your lawn. This is a lengthy process. Imagine how you would feel if the flower garden did not turn out the way you wanted. It is very frustrating.

Quick Lawn is here to solve this problem. We provide lawn owners the ability to create beautiful flower gardens by purchasing one item from the store: our flower sheet. It contains everything that you need to create an aesthetically beautiful flower garden. The only decision you need to make is the color of flowers that you like.

We have a founding group that will create the products and build a business around it. Our goal is to acquire startup capital to build the initial stages of this business and create a profitable enterprise.

1.1    Market Overview
Out of 31 million homes in Malaysia, 20 million of them have a yard or garden. Of that 20 million, 36% have a flower garden. Of that 36%, about 62% (22 million) created it themselves. On average, each home is spending around USD400 per year on their lawn and garden. Approximately USD75 of this is for their flower garden. Therefore, flower gardens represent USD1.65 billion of annual supply sales in Malaysia. With annual revenues of USD1.65 billion, this confirms that there is a market for flower gardens. The current market is already large enough to allow us to establish this business.

1.2    Competitive Advantage
We will apply for two patents, one covering our business method and the other covering specific products. Our business model is centered on the ease of selecting and creating a flower garden. This patent covers our unique approach to sell everything needed in one package, requiring minimal effort from consumers. Our second patent will be a set of many design patents covering specific combinations of flowers on our product.
Quick Lawn is the first service that can empower customers to design their flower garden without the hassle of measuring, weighing and purchasing the materials separately. In one year, customers are able to visit our website to select pre-determined designs or customize their desired combination and pattern.

1.3    Distribution Channel
Our products will be sold through major retailers such as Ace Hardware. There are more than 4,600 stores in 50 states and more than 70 countries. We contacted representatives from Ace Hardware and obtained information for product entry to their store. More information is located under the market analysis section of our business plan.

Some of Quick Lawn’s products will be retailed on our webpage. The webpage sells user-customized flower gardens which allow customers to design their own flower garden from their home. Consumers are able to create a pattern or specific flower preference on our website. We will ship those products to our consumers within one week.

1.4    Management Team
Quick Lawn’s management team consists of four highly passionate and driven individuals. Each individual holds a unique skill set from his/her experiences and undergraduate education in a prestigious institution. Their desire for success has been a major driving force toward multiple business endeavors in the past. Quick Lawn will be a huge success under the vision and leadership of this founding team.

1.5    Financial Projection
Year 1: Research & Development, product production and testing, improve on product details and marketing materials

Year 2: Similar with year 1 and include selling through Ace Hardware in Kuala Lumpur to test our product, obtain feedback and finalize our product

Year 3: Expansion to 3 new states, total of 4 states

Year 4: Spreading to 4 new states, total of 8 states

Year 5: Penetration into 4 new states, total of 12 states

Year 6: Penetration into another 4 new states, total of 16 states


1.6    Investment
According to our financial projection, our business will start breakeven in year 4. Our projected profit will increase exponentially in year 5 and year 6. In order to ensure smooth operations in the first three years, we are looking for a USD 550,000 investment. Quick Lawn will provide investors with a 20% equity stake for this investment opportunity.













BUSINESS SUMMARY

Quick Lawn is an early stage product development company targeting the simplification of lawn and garden creations. The company intends on creating prototypes and commercializing them. Our current source of funding are the effort put in by the founders and no capital raises. We intend on using capital raised to develop our products and to initiate our testing phase.

            2.1       Company Ownership
Quick Lawn will be registered as a limited liability company (Sdn. Bhd.) with equal share among the four founders of the company. Capital will be raised through the issuance of an equity stake.

2.2            Start-up Cost
Quick Lawn start-up costs includes all expenses needed to start the business in the first year. The Sdn. Bhd. start-up fee is required to register Quick Lawn as a Sdn Bhd Company in Kuala Lumpur. Patents and trademarks are crucial to provide uniqueness to our business. These costs are necessary and will be sufficient to file a number of claims in the first year.

The materials needed for start-up is for the research and development phase. We need a large number of materials to test and refine our product, hence a higher cost.

We plan on hiring internal computer science students from our institution to design and create our desired webpage. This cost reflects the quality of the website that we desire. The breakdown of the start-up costs is illustrated as the following:






Start-up Cost
USD
  Legal Fee
90
  Patent
15000
  Trademark
500
  Materials
15000
  Website Design
15000
Total Start-up Cost

45590



























PRODUCT SUMMARY

Quick Lawn is a convenient, easy-to-use, low cost full size flower sheet. This product allows consumers to create a flower garden with less effort compared to the traditional method. Our product requires consumers to clear the ground, place our flower sheet, cover it with soil and add water. The sheet includes fertilizers and seeds, and has the capability to trap moisture within the sheet to enhance seed germination.

3.1            Value Proposition
Quick Lawn’s product delivers value to consumers in many ways:

1.      Reduces time
Time is the only thing consumers cannot purchase. It can only be used more efficiently and allocated differently.

By utilizing our product, the only decision consumers need to make is to decide on the color and variety of the flowers. Once decided, they can purchase the flower sheet from the store shelf. Everything that they need to create an aesthetically pleasing flower garden is included in that sheet. The traditional process of creating a flower garden takes at least 5 hours, including research and travel time to purchase materials. Our product requires at most 2 hours. That saves consumers 60% of their time.

2.      Reduces stress when creating a flower garden
Creating a flower garden should be fun but the worst is when their creation did not turn out the way they wanted it to. Consumers should not be stressed or frustrated when creating a flower garden.

The flowers for our product have been pre-selected depending on the condition of the soil and temperature of that region. Further research enables an increase in probability of growth of our product. This reduces stress from creating an aesthetically pleasing flower garden. We provide a 100% satisfaction guarantee to our consumer. We will provide a new product for free to the consumer if the sheet did not work.
3.      Reduces labor workload
After purchasing all materials needed to create a flower garden, this process requires manual labor. Consumers need to dig holes in the ground, and ensure even seed distribution and space between seeds. This process is very labor intensive. Our product requires consumers to clear the ground, place our flower sheet, cover it with soil and add water. It is simpler and can be completed with less effort, relative to the traditional method.

Furthermore, consumers do not need to carry heavy bags of soil or fertilizers from the store and around the garden. Preventing this strenuous activity allows consumers to spend their energy on other daily activities instead.

3.2  Competitive Comparison
Creating a flower garden requires too many steps:
      • Creating a design
      • Selecting flowers that look good and are easy to grow
      • Purchasing flowers, soil, fertilizer and mulch
      • Applying effort to plant everything

This is a time consuming process Quick Lawn provides consumers with the ability to create an aesthetically pleasing flower garden with less effort, time and cost. The consumer only needs to make one decision: which colors and variety appeal to them. The next step is to select products with that color to create a beautiful flower garden. The types of flowers are already researched and preselected on the factors of appearance, ease of growth, and color coordination. The consumer simply purchases a package and takes it home. Consumers do not need to worry about buying additional products for fertilizing and seeds as they are already incorporated in a single product.

3.3  Technology
Our product consists of three layers. The bottom layer is an absorbent tissue-paper like material with starter fertilizers embedded at the bottom of the sheet. The middle layer is an all-natural adhesive substance to enhance germination along with the seeds. The topmost layer is a biodegradable sheet to contain moisture. Our consumers merely need to place our product on the ground, cover it with soil, and water the soil. The buds of the flowers can be seen in 4 - 6 weeks, depending on the type of flower. We are currently working on our first prototype and the goal is to produce sample products by March 2012.

Future product expansion plan calls for adding different design combinations, such as a Malaysian flag. These will allow the consumer to grow flowers in various patterns by creating a personalized flower sheet. Our vision is to enable enthusiastic lawn owners to visit our website and provide us with their desired drawings and designs. We would then develop their custom flower sheet design.

3.4  Fulfillment
Quick Lawn plans to be distributed through Ace Hardware. Ace Hardware will manage the store inventory and we will provide customer support to the customers. This is accomplished through an 800 number listed at the back of our product. We will focus on distributing through Ace Hardware because of the value and people in Ace Hardware. They focus on providing reliable service, advice and products to customers and have good relationships with their supply chain (Ace Hardware Corporate Info). Additionally, Ace Hardware is a local hardware store owned and operated by local entrepreneurs. Therefore, it is easier for our product entry to Ace Hardware compared to Home Depot.

After the first year of operations and testing, we will establish a website that enables customers to order a customized flower sheet. That allows customers to design and create a flower garden of their choice through our online platform. The fulfillment of this product is completed via shipping and handling to consumers. This website only sells user-customized products and will not sell any premade product sold in Ace Hardware. This prevents competition against our distributor and would be an additional revenue stream for Quick Lawn.


3.5 Future Products
Quick Lawn dedicates the first year of operations to testing, research and development. That allows us to test the market and to constantly change our product depending on consumers’ feedback. With that information, the following are additional products that Quick Lawn plans to innovate:

1)      Create different flower designs and arrangements
The ability to personalize a product is gaining popularity in the recent years (Retail Customer Experience, 2008). Zazzle, an online retailer that allows users to create their own merchandise, is recognized as one of the “Hottest Silicon Valley Companies” (Lead411, 2010). The website’s traffic doubled in the past twelve months. This shows an increasing trend towards personalized product creation.

Quick Lawn will introduce this product after our initial testing state in the first year. With that information, we will launch a website that allows consumers to design, create and personalize a flower sheet of their choice. An example would be a consumer who wants a Malaysian flag design flower garden. The consumer can visit our website and design it themselves or he could select a design that has been archived by another user.

2)      Herb and Vegetable sheet for home gardening
Home gardening has been trending upwards. USA Today reported that vegetable seed sales are the nation’s biggest seed sellers this year. Recent reports of salmonella and E.Coli breakouts are infecting grocery stores’ vegetables. Therefore, with the tough economy, consumers drove seed sales in 2009 (McCarthy, 2009). Furthermore, Wal-Mart reported an increasing number of sales in herb gardens, tomatoes and pepper seeds. Quick Lawn will investigate this opportunity in the future.

3)      Gardening with Minimal Water
The demand for clean water around the world is outstripping supply. This brought an emerging trend known as xeriscaping. Xeriscaping grew out of environmental concerns in Colorado, and its practice has spread throughout the U.S. Xeriscaping involves the use of native vegetation and reduced use of water in landscape design (Wilson & Feucht, 2007).

Our product captures moisture within the sheet allowing less water to be used relative to normal planting. Therefore, this would be an advantage for our product to penetrate that market.



FIGURE 1: Concept Quick Lawn Product

MARKET ANALYSIS

Lawn care is a 2 billion dollar industry with a long term annual growth of 3.7%. The industry is coming out of a struggling economic condition. This is expected to help the industry grow as consumers will have a larger disposable income as we exit the recession. Over the next 2 years, the average number of housing starts is expected to increase by 81%. That is a 385,000 increase in housing starts which correlates to a USD4.8 million dollar increase in sales in three years.

            4.1       Customer Analysis (international market)
Out of 131 million homes in the US, 100 million of them have a yard or garden. Of that 100 million, 36% have a flower garden. Of that 36%, about 62% (22 million) created it themselves (Solutions, 2010). On average, each home is spending around USD400 per year on its lawn and garden. Approximately USD75 is for its flower garden (Viveiros, 2006). Therefore, flower gardens represent USD1.65 billion of annual supply sales in the United States.

Quick Lawn target customers are new and existing home owners who do not have the time or resources to plant their own flower garden. Our customers care about the look of their home and also want to spend time with their families. The average person spent 7.9 hours a day working. The average female spent 2.6 hours on household activities and men spent an average of 2 hours. Of that, 20% of the time they are working on lawn care. That is approximately 2.8 hours a week per person (United States Department of Labor, 2010). It takes at least 5 hours to create a flower garden using the traditional method. That correlates to approximately two weeks.

Our product enables consumers to complete their flower garden creation in 2 hours. That allows consumers to create their desired flower garden in one week.

4.2            Market Segmentation
Quick Lawn market can be divided into three groups:
·         New homeowners
·         Existing homeowners: self-created flower garden
·         Existing homeowners: hire landscaper

The first group consists of homeowners who create their own flower gardens. This group consists of homeowners who know the pain of creating a flower garden and those who enjoy the process.

The second group consists of new homeowners who recently purchased their new home. They care about the appearance of their new home but are under a tighter budget due to their new home purchase.

The third group consists of homeowners who hire landscapers to create their flower garden. They could afford it and will not require our product.


4.3            Target Market Segment
Although our market segment is very large, we plan to focus our attention on new homeowners, particularly first time home buyers. Within this group, our target segment is newly married couples and single females between the ages of 24-44. We have identified this group as a segment that cares about the appearance of their new home.

In 2014 there were 2.3 million homes sold (iProperty, 2015). Of those 2.3 million about 42% were first time home buyers. That comes to 1.2 million first time home buyers. In 2010, 51% of all first time home buyers were married couples (Deis) and 25% are single females. Assuming that the percentage of buyers remains the same in 2010, our target market would consist of 1.7 million households. That is a sufficient market size to start this business

On the other hand, out of the total number of first time home buyers (1.2 million), 73% of the group belongs to our age target segment, 24-44 (Deis). This shows that a majority of new homeowners consists of people within our target age group.


4.4            Market Trends
Between 2004 and 2008, landscaping service revenue grew at a compounded annual growth rate of approximately 3.4% (Mardi, 2011). The following table provides annual revenue for landscaping services as a total, in thousands.

2004
2005
2006
2007
2008
RM217,203
RM239,266
RM254,342
RM268,207
RM248,190

There are 6 factors that primarily impact the market: Economic environment, lifestyle trends, regulation, environmental factors, competitive forces, and demographic changes. Specifically, environmental factors and regulations will be changing. There is a strong focus on conservation of resources, sustainable design, reduced use of pesticides and fertilizers, and green building. Regulation may become a big factor as well, because of immigration laws that affect the cost of labor as a component of installation and maintenance.

In addition, due to the current economic conditions, households for sale would invest in our product. According to Serbajadi Gardening, the largest manufacturer of garden care products in Malaysia, a beautiful looking lawn can increase property values by up to 15%. This is a great incentive for household owners to utilize our product.


4.5            Competition
The current competitions are seed mats that have a scattering of seeds. They do not offer intricate designs and many of them do not have the correct amount of constituents to provide for effective flower growth. Comments on their products mainly fall into a negative feedback category. Current competitors also do not provide for the opportunity for consumers to create a customized design for their lawn, instead settling on whatever limited variety of seeds are prepackaged. The following table describes our competitors, their pricing and product type:




Quick Lawn couples a superior and economically priced package at USD50 per one hundred square feet product. It provides a unique service that is not matched by any of our more expensive competitors. Each product is carefully researched for optimal results based on regional soil types, and compatible flowers species. This gives us the marketing edge that makes gardening results more effective, efficient, and pleasurable.

Quick Lawn is the best product for people to buy because our company personalizes the product for the consumer’s individual needs.

4.6            Competitive Advantage
Quick Lawn will be the first service that can empower customers to design their lawns without the hassle of having to create, measure, and purchase the materials separately. Customers are able to visit our website to select pre-determined designs or customize their desired combination. In the future, we plan to allow designs to be displayed publically on our website with our customers’ permission. Other customers would be able to select and purchase that design if they so desire. The creator of that design would be given a stipend from that sale. This would provide more incentives for consumers to utilize our webpage.

Besides that, this is the only product in this market space that produces an entire flower garden. Similar products only cover a fraction of an average flower garden (less than 10%). From our market research, we identified that our competitor’s products are not reliable and utilized ineffective marketing strategy. We plan on rebranding our product in a positive manner, providing excellent customer service and excellent product satisfaction.

We will apply for two patents, one covering our business and the other covering specific products. Our business model is centered on the ease of selecting and creating a flower garden. This patent covers our unique approach to sell everything needed in one package, requiring minimal effort from consumers. Our second patent will be a set of many design patents covering specific combinations of flowers on our product.

Besides that, the cost of utilizing our competitor’s products to create a 100ft2 flower garden is USD179. Our suggested retail price of our product is USD50 (RM185.00) and our cost of production is USD10 (RM37.00).


MARKETING STRATEGY

Quick Lawn will position itself as a reliable full size flower sheet that is convenient, easy-to-use and low cost. Due to the number of negative reviews from competitors, it is crucial for us to build our brand and gain trust from consumers. Quick Lawn will obtain endorsements from numerous plant associations and product magazines. It will also advertise positive reviews from its consumers (with their permission) in order to build its brand awareness. On top of that, it is crucial for it to participate in tradeshows to further promote its brand.

An important message that we plan on sending to our target audience is that our product has been used and proven to look good. Our research, trials and testing will provide sufficient credibility to our brand.

            5.1       Contract with Ace Hardware
Our team spoke with representatives from Ace Hardware corporate headquarters. The process of placing our product on their shelf is as the following:

·         Send product information and prototype to Mr. Lim Chee Wei in department 7D
·         Mr Lim will contact us to schedule a meeting
·         Once we receive approval, they will advertise our product on their corporate website. Here is where Ace Hardware stores around the world are able to purchase products for their store

Quick Lawn will speak with store owners in Kuala Lumpur to obtain interest before sending product information to Mr. Lim Chee Wei. This will provide him with evidence of demand from his franchise owners. Once accepted by Ace Hardware, we will speak to store owners in other states in line with our penetration rate.

5.2            Entry Strategy
Quick Lawn plans to target first time home buyer, specifically married couples and single females within the 24-44 age group. This is our most aggressive market because they are under a tighter budget after purchasing their homes and are inexperienced at taking care of their new home. Our product’s price is inexpensive and fits into their budget to make an affordable improvement on their home. Our product will be available at Ace Hardware. This would be a great place for our target market to purchase our product due to the existing large number of stores across the country.

5.3            Marketing Strategy
During our first year of operation, Quick Lawn will be in a development phase and will test our product in the market. During that period, we will be attending tradeshows to constantly keep up with the industry and new products in the field.

After our first year, we plan to obtain endorsements from multiple plant associations such as Selangor and Federal Territory Gardening Society in Malaysia. This would increase the credibility of our product and enhance our brand.

Besides that, Quick Lawn plans to promote its product using targeted internet advertisements to our website. That would increase the number of unique visitors to our website. On top of that, our ads will be featured in Better Homes and Gardens magazine and website to reach our target audience. The location to purchase our product will be listed on the website and magazine.

Furthermore, we noticed that our competitor’s products received bad reviews because their product did not work. Therefore, we plan on utilizing “groundswell” to promote brand recognition. We will do so by adding success videos of our product on Youtube, identifying customers who write reviews and providing them incentives to test our products and write more about us. Customer testimonials and reviews are very important and we plan on placing them on our packaging to enhance the product’s credibility.


5.4            Sales Strategy
As a product manufacturer, we plan on including a label on our product allowing consumers to provide us feedback. Additionally, we offer a 100% satisfaction guarantee on all of our products to ensure customer satisfaction. Our customer will be able to receive a new product for free if our product did not work.

Quick Lawn plans to distribute our products through Ace Hardware and our website. Ace Hardware has a large distribution channel in the Malaysia consisting of 30 stores and 4600 stores in the United States. It is essential for us to build continuous strong relationship with Ace Hardware to ensure our product’s shelf space in its store.

Besides that, we plan on creating an online platform that focuses on customize flower sheets with different patterns and designs. On our website, we will allow users to provide us with feedback to ensure we provide excellent customer service. We are committed to ensuring 100% customer satisfaction.

5.5            Pricing Strategy
The production cost of our product is USD10 (RM37). We will sell it to Ace Hardware for USD20 (RM74) and our suggested retail price is USD50 (RM85), in contrast to our competitors that range from USD150 to USD481. This would provide Ace Hardware with a 60% profit margin and a 50% profit margin for us.

The production cost of our internet customize product is on average, USD40 (RM148). We will be selling it to consumers for USD99 (RM365). That would provide us with a 60% profit margin.

5.6            Sales Forecast
Year
2015
2016
2017
2018
2019
2020
Unit Sold
0
4.4
22.0
61.6
134.6
239.4
Store Sales (USD)
0
88.0
440.0
1232.0
2693.0
4878.0
Internet Sales (unit)
0
200.0
600.0
1200.0
2000.0
4000.0
Internet Sales
0
20.0
59.0
119.0
198.0
396.0
Year 1: Research & Development, product production and testing, improve on product details and marketing materials. We want to refine our product to ensure successful product launch. Hence, there are no units sold yet.

Year 2: Our goal this year is to test a local market to determine how consumers react to our product. We will sell our products through Ace Hardware in Indiana before launching it to other states through Ace Hardware. Additionally, our website that allows customers to create a personalized flower sheet will be launched. This creates additional sales for our product.

Year 3: Expansion to 3 new states, total of 4 states. An increase in market awareness of our online platform sees an increase in sales.

Year 4: Spreading to 4 new states, total of 8 states.

Year 5: Penetration into 4 new states, total of 12 states

Year 6: Penetration into another 4 new states, total of 16 states

Upon expansion to a new state, we assumed that we are able to penetrate 1% of the households in that state. This percentage doubles every year that we are in that state and is capped at 6.6%.

We will grow by 4 states every year until we have penetrated the entire U.S. market. Beyond that, our growth will be determined by our ability to improve our marketing campaigns and the overall growth of the landscaping services market.








START-UP PHASE

Quick Lawn plans to dedicate our first year into research & development to test our product and obtain consumer feedback. The goal is to have sufficient time to improve on our product before selling it to the mass market. The following is the timeline and the cost required for this process:

     6.1       Timeline

It takes 3-5 years for a patent to be approved and 10 – 18 months for our trademark to be accepted by United States Patent and Trademark Office. During that pending process, we plan on developing and refining our product starting August 2015, testing the market in March when the weather gets warmer and start mass production in October 2016.

Quick Lawn will identify a number of key partners in this process, primarily in the manufacturing industry. The goal is to build key relationships in order to utilize their manufacturing capabilities for our product.

MANAGEMENT SUMMARY

Quick Lawn is a Sendirian Berhad Company that is owned by four owners at equal percentage. The organization chart of the company is as the following:

     7.1       Management Team


CEO, Founder: Malik Bin Yatam, a selling & sales management student with the certificate of entrepreneurship. David is the founder and CEO of one company with strong background in sales/telemarketing. He had experience working as a supervisor at Universal Service Concepts, realtor with Century 21 and a sales intern at Mass Mutual providing him with strong team management skills. His desire for success and his passion for starting and managing new businesses drive his motivation for this company.

CFO, Founder: Ogentheran, is a management student studying finance and accounting. Upon graduating in May 2011, he will be eligible for the CPA and CFA certifications. His experience includes creating and selling a business similar to an ISP and making court fillings in the Six Flags Chapter 11 corporate restructuring. He is currently on the board of directors at Purdue Student Publishing Foundation. In May 2008, he created a prototype for a new invention that dispenses liquids in the microliter range and completed a request for a round of investment. In pursuit of his passion in accounting, he was an International Financial Planning Intern at Hershey Foods last summer. He created forecasting reports for international businesses at Hershey. His experience starting businesses and managing financials brings great value to this company.

COO, Founder: Idraaki Azlan, a chemical engineering student with the certificate of entrepreneurship. Alvin is the inventor of HydroGreenTM (a product to reduce hydroplaning), has had experience in manufacturing as an intern at Frito-Lay with a strong background in product development, and has participated in chemical engineering research for the past two years. He is currently the Chairman on the board of directors at Purdue Student Publishing Foundation, a Staff Resident at Hawkins Hall and a team leader for multiple projects including Trust by Danone, a student business challenge. His passion in product development along with a high degree of self-motivation allows him to develop new and innovative product for Quick Lawn.

Research & Development Director, Founder: Safarina Mawar, an environmental engineer and the inventor of SwirlzTM, a nutritional color dispensing flavored straw and SoyaTM, a clothing protector. Her experience participating in innovative competitions and engineering projects in the community has provided Quick Lawn with great insight towards solving environmental concerns. On top of that, Safarina has six years of lab experience working as a research assistant in multiple college-level projects with pending publications. Her goal to provide innovative solutions to solve environmental concerns and her experience in the research world enables her to create new products and applications for Quick Lawn.

For legal advice, we will be consulting Puan Nurbani, the Principal at Law Faculty, Universiti Malaya.


7.2     Board of Advisors
Technical Advisor: Dr. Karim Abdullah is an Associate Professor in the Department of Agriculture and Biological Engineering at Universiti Kebangsaan Malaysia, owning several patents in his research field. He earned his BS in BioSystems Engineering from the University of Nebraska, and his M.S. and Ph.D in Purdue’s School of Agriculture and Biological Engineering. Dr. Karim was also a Ph.D. fellow in the Innovation Realization Laboratory at the Stanford School of Management.

Marketing Advisor: Mr. Ujang Hassan, also the proud owner of his own patent, is an instructor in the Certificate in Entrepreneurship Program, Open University for Entrepreneurship. He earned his B.S and M.S. degrees both in Purdue’s Krannert School of Management. Mr. Ujang is the creator and owner of the successful consulting firm: Kencana Consultant.

7.3     Personnel Plan
Quick Lawn plans on hiring two new people per year starting year 2013. The new hires will support our expansion in operations and manufacturing.


FINANCIAL PLAN

The following sections lay out the details of our financial plan for the next six years. Quick Lawn’s projected financial statement is based on Scotts Miracle-Gro’s financial information. Scotts Miracle-Gro is the largest manufacturer of garden care products in the United States.

The following assumptions were made:
  • The penetration rate of our product for every state is 1.0% out of the all households with flower gardens in that state
  • The penetration growth doubles every year until it reaches a maximum of 6.6%
  • In our second year of operations (year 2016), we will be selling our product in 1 state (Kuala Lumpur) for beta-testing purposes
  • In our third year, we will expand our business to a total of four states
  • In our fourth year, we will expand our business to a total of eight states. This will expand to twelve and sixteen states in the following years.
  • Our supplier will provide us 50% of the inventory at credit and another 50% immediate payment

8.1 Start-up Funding
Quick Lawn hopes to obtain financing in the amount of USD300,000. This amount would provide us with sufficient financing to start-up this business for our research & development period. We will issue equity stake worth 20% of the company for the funding above.

           





USD
Start-up cost
63.9
Research and development for year 2015
21
Expenses for year 2015
133
Research & Development for year 2016
60
Expenses for year 2012
89
Total Funding Required
367.6
*Numbers in thousands


In our first year of operations, we plan on establishing the company by registering the Sendirian Berhad. On top of that, we would file for patents and trademarks and develop a small lab for research and development purposes.

In our second year of operation, we will be selling our products to the Indiana market for beta-testing. We will improve on our product based on the feedback that we receive. Therefore, we will not be earning a large enough profit to support our operations at that point. The USD550,000 will be utilized to support our first and second year of operations.


8.2            Break Even Analysis
Our projected profit and loss statement, balance sheet and cash flow statement are located in part A of the reference section. By looking at our projected profit and loss, we are projected to break even in year 2014. The boost in projected sales from year 2013 (USD 499,000) to 2014 (USD 1,351,000) is the main contributor to our analysis. The large increase is due to:

·         Expansion to four more states and in sales in one state in 2016 and three other in 2017 (USD792,000)

·         projected increase in internet sales from 600 unit in 2017 (USD59,400) to 1,200 unit in 2018 (USD118,800)


8.3            Projected Profit and Loss
The following is a list of projected expenses in the company:

Payroll Expense: The founders of Quick Lawn will receive a total salary of USD80,000 for year one and two. The total salary will increase to USD100,000 in year three and four, USD150,000 in year five and USD300,000 in year six. In order to expand at our projected rate, we will hire two employees every year starting year 2017. The projected total cost is USD35,000 per employee per year.

Marketing Expense: Quick Lawn will allocate USD50,000 in marketing materials starting year three. This amount will be used primarily to build customer awareness using multiple sources such as Better Home and Garden magazine and other groudswell techniques. The amount allocated will increase at the rate of USD30,000 every year.

Rent Expense: Quick Lawn will allocate USD600/month to rent an office space. This location will be used primarily to develop our product and to store our inventory. We assume that the rental price increases by 10% every year.

Utility Expense: The only utilities expenses that Quick Lawn has to pay are electricity and phone bill. We allocate a maximum of USD100/month for this purpose. We assume that the rental price increases by 10% every year.

Manufacturing Expense: Quick Lawn plans to partner with a manufacturing facility to meet its production demand. This partnership will start in year 3 when we expand our coverage into four states. We assume that we would need to pay the manufacturing facility 5% of our total sales annually.

R&D: In our first year, we will focus on improving our product before launching it to the market. The materials purchased (USD15,000 included in our start-up cost) will be utilized for R&D purposes. We will research on the states that we plan on expanding one year before penetrating to those states. This correlates to an increase from USD21,000 in 2011 to USD60,000 in 2012 as we will expand to 3 additional states in 2013.

Tax: Taxes are only on profit. Therefore, we will not be taxed in the first, second and third year. Furthermore, we will receive tax credits for the losses in the first three years, which should carry forward to future years.

     Projected Profit and Loss Statement

2015
%
2016
%
2017
%
2018
%
2019
%
2020
%
USD

USD

USD

USD

USD

USD













Sales
-
-
108
##
499
##
1351
100
2891
100
5183
100
Cost of goods sold
-
-
52
48
244
49
664
49
1426
49
2554
49
Expenses












Payroll
40

80
74
170
34
240
18
360
12
580
11
     Marketing
-

-

50
10
80
6
110
4
140
3
     Rent
7.2

7.9
7
8.7
2
9.6
1
10.5
0
11.6
0
     Utilities
1.2

1.3
1
1.5
0
1.6
0
1.8
0
1.9
0
     Manufacturing
-
-


25
5
68
5
145
5
259
5
     Start-up Cost
64











R&D
21

60
56
60
12
90
7
120
4
150
3
Earnings before taxes
(133)

(93)
(86)
(92)
(18)
133
10
609
21
1271
25
Tax
-

-

-
-
47
3
213
7
445
16
Net Income

(133)

(93)
(86)
(92)
(18)
86
6
396
14
826
16

Revenue projections are derived from 2 main variables: The number of states that our product is sold, and the how long we have been in that market. In year 2015, we will be in only 1 state; however in year 2017, we will be in 4 states. Our penetration rate in individual market will grow with time spent in the market, correlating to an increase in market share. The penetration rate in a new state increases from 1% in year 1 to 2% in year 2, and 4% in year 3. The maximum penetration rate in each state is set at 6.6%.


8.4            Projected Cash Flow

2015
2016
2017
2018
2019
2020
USD
USD
USD
USD
USD
USD
Net Income
(133)
(93)
(92)
86
396
826
Change Acts. Pay.
10
39
89
161
230
256
Change Inventory
(19)
(77)
(174)
(321)
(461)
(511)
Cash Flow from Operations
(143)
(132)
(179)
(74)
166
570
Issuance of Stock
550
-
-
-
-
-
Total cash flows
407
(132)
(179)
(74)
166
570
*Number in thousands

From our projected cash flow statement, we will be cash flow positive in year 2019. Quick Lawn will break even in 2018 but will be profitable in 2019 because we will be purchasing inventories for the next year.

            8.5       Projected Balance Sheet

2015
2016
2017
2018
2019
2020
USD
USD
USD
USD
USD
USD
Cash
407
275
96
22
187
758
Inventory
19
97
271
592
1053
1564
Total Assets
426
372
367
614
1241
2322
Accounts payable
10
48
136
296
527
782
Common Stock
550
550
550
550
550
550
Retained earnings
(134)
(227)
(319)
(233)
163
989
Total Liabilities and equity
426
372
367
614
1241
2322
*numbers in thousands
           
Our assumptions include 50% credit on inventory from our suppliers. This allows us manage our cash flow and required capital to operate the business. We included USD550,000 in cash needed to be raised through equity sale to fund our operations in 2017 and beyond.

A comparison between the profit loss and cash flow statement will indicate a large, and growing, gap between the two reported numbers. This occurs because our inventory is initially growing very rapidly, and this is a use of cash. Over time, this gap will converge due to matured growth and increased trade credits available, which frees up cash for shareholders.


RISK AND EXIT STRATEGY

            9.1       Risks
            The following are the risks involved with Quick Lawn:
·         Increasing number of competitors and imitators
·         Competitors creating similar sized product
·         Bad weather conditions throughout the year preventing home owners from growing flowers
·         Insufficient market demand for product
·         Seasons in different states


9.2            Risk Mitigation
There are a number of competitors in the market that have similar product types. The issues with our competitors are the unreliability of their product, bad brand image, lack of marketing and poor customer relationships. Furthermore, our competitors fail to recognize the different element involved in creating this product, primarily, weather and soil conditions.

To ensure product reliability, Quick Lawn is currently researching on:
·         different soil conditions in different states and different weather conditions
·         different product materials to further enhance germination
·         warmer states to be able to market our product throughout the entire year

Besides that, Quick Lawn plans to:
·         Apply for patents to prevent similar product ideas in the market
·         Establish brand image with endorsement from national gardening associations
·         Utilizing “groundswell” to further enhance brand image and reliability
·         Provide excellent customer service to every customer
·         Beta-testing to refine product to meet market demand
·         Attend tradeshows to learn more about other products in the market
·         Review and refine business model weekly to avoid complacency and obsolescence

9.3            Exit Strategy
The exit strategy in place is to sell our business to larger companies such as Scotts Miracle-Gro or Centarus. As soon as Quick Lawn starts profiting, other companies will see the value of this company and will be interested in either partnering or acquiring our company.

REFERENCES

2010 Housing Forecast. (2010, January). Retrieved November 29, 2010, from Builder Online: http://www.builderonline.com/housing-starts/2010-housing-forecast.aspx

Ace Hardware Corporate Info. (n.d.). Retrieved Novemeber 30, 2010, from Ace Hardware: http://www.acehardware.com/corp/index.jsp?page=faq

AlterNet.Org. (2009, October 8). Our Love Affair with our Lawn is Hurling the U.S. Toward Water Crisis. Retrieved January 18, 2010, from Sustain Lane: http://www.sustainlane.com/reviews/our-love-affair-with-our-lawns-is-hurling-the-u-s-toward-water-crisis/US18WK9Y9VW98XCSCHVZVZ28VO3A

Cappello, D. (2009). Lawn and Garden Products in the U.S. . Maryland: Packaged Facts.

Census. (2000). Retail Sales and Household Participation in Lawn and Garden Activities. Retrieved October 31, 2010, from US Census 2000: http://www.allcountries.org/uscensus/425_retail_sales_and_household_participation_in.html

Deis, K. (n.d.). First Time Home Buyer Statistics. Retrieved January 10, 2011, from My Home Uptown: http://www.myhomeuptown.com/foreclosures/smart-moves/43-first-time-home-buyers

Euromonitor International: Country Sector Briefing. (2009). Gardening - US.

Excisting Home Prices. (2010, December 22). Retrieved January 11, 2010, from Realtor: http://www.realtor.org/press_room/news_releases/2010/12/existing_prices

Flower & Nursery Stock Wholesaling in the US. (2010). Retrieved October 16, 2010, from IBISWorld: http://www.ibisworld.com.login.ezproxy.lib.purdue.edu/industryus/default.aspx?indid=996

Housing Data. (n.d.). Retrieved November 28, 2010, from National Association of Home Builders: http://www.nahb.org/page.aspx/landing/sectionID=113


Lead411. (2010, May 25). Lead411 Launches "Hottest Silicon Valley Companies" Awards. Retrieved January 14, 2011, from Lead 411: New Opportunities. Market Knowledge.: http://www.lead411.com/silicon-valley-companies.html

McCarthy, M. (2009, March 4). Vegetable Seed Sales Spike in Tough Economy . Retrieved January 14, 2011, from suite101: http://www.suite101.com/content/vegetable-seed-sales-spike-in-tough-economy-a100183

National Gardening Association. (2008). How Many Organic Gardeners Are There? National Gardening Association.

National Gardening Association. (2007). Survey Reveals What Consumers Think. PROSolutions Marketing.

Products and Markets. (2010). Retrieved October 16, 2010 , from IBISWorld US Landscaping : http://www.ibisworld.com.login.ezproxy.lib.purdue.edu/industryus/productsandmarkets.aspx?indid=1497

Retail Customer Experience. (2008, April 4). Personalized Products to Become Major Trend in Coming Years. Retrieved January 15, 2011, from Retail Customer Experience: http://www.retailcustomerexperience.com/article/4256/Personalized-products-to-become-major-trend-in-coming-years

Solutions, C. G. (2010). How much do you spend on your lawn? Retrieved October 31, 2010, from Backyard Nature: http://www.backyardnature.com/cgi-bin/gt/tpl.h,content=381

TrekDesk. (2010, November 10). 75% of U.S. Adults Report High Stres Levels; TrekDesk Helps to Lower It. Retrieved January 12, 2011, from PRWeb: http://www.prweb.com/releases/2010/11/prweb4774124.htm

U.S. Census Bureau. (2010). Housing Vacancies and Homeownership . U.S. Census Bureau.


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