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
Indiana. (2000). Retrieved Novemeber 29,
2010, from Census Bureau: http://factfinder.census.gov/servlet/QTTable?_bm=n&_lang=en&qr_name=DEC_2000_SF1_U_DP1&ds_name=DEC_2000_SF1_U&geo_id=04000US18
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.
