A Delicious Business
Plan
To: MPAcc Investors
July 13, 2011
Sweet Sweat Inc. & Co.
Keira Balderston
Mallory Denniston
Adrian Pape
Ishan Singh
Sweet Sweat Inc. Business Plan: Underarm Icing
Contents
1.0 Executive Summary ................................................................................................................................ 4
2.0 Introduction ............................................................................................................................................. 4
2.1Product & Objectives ........................................................................................................................... 4
2.2 Mission................................................................................................................................................ 5
2.3 Key to Success .................................................................................................................................... 6
2.4 Value Proposition................................................................................................................................ 7
3.0 Company Summary ................................................................................................................................ 8
3.1 Background ......................................................................................................................................... 8
3.2 Ownership ........................................................................................................................................... 8
3.3 Location and Facilities ........................................................................................................................ 8
4.0 Operations Plan ....................................................................................................................................... 8
4.1 Description of Operations ................................................................................................................... 8
4.2 Organizational Structure and Floor Plan ............................................................................................. 9
4.3 Board of Directors............................................................................................................................. 11
4.4 Average Business Day ...................................................................................................................... 12
4.5 Working Capital Forecast ................................................................................................................. 13
4.7 Operating Expenses .......................................................................................................................... 13
4.8 Quality Control ................................................................................................................................. 14
4.9 Website- ............................................................................................................................................ 14
5.0 Marketing Plan ...................................................................................................................................... 15
5.1 Market Analysis ................................................................................................................................ 15
5.2 Competitive Analysis ........................................................................................................................ 16
5.3 Product .............................................................................................................................................. 18
5.4 Pricing ............................................................................................................................................... 19
5.5 Promotions and Advertising ............................................................................................................. 19
5.6 Place .................................................................................................................................................. 20
5.7 Segmentation..................................................................................................................................... 22
5.8 Target Market.................................................................................................................................... 22
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Sweet Sweat Inc. Business Plan: Underarm Icing
5.9 Positioning and Strategy ................................................................................................................... 22
5.10 Sales Projections ............................................................................................................................. 23
6.0 Human Resources Plan ......................................................................................................................... 23
6.1 Job Descriptions ................................................................................................................................ 23
6.2 Planned New Positions ..................................................................................................................... 24
6.3 Wages and Benefits........................................................................................................................... 24
7.0 Financial Plan........................................................................................................................................ 25
7.1 Projected Profit or Loss .................................................................................................................... 25
7.2 Projected Balance Sheet .................................................................................................................... 26
7.3 Projected Cash Flow ......................................................................................................................... 26
7.4 Business Ratios ................................................................................................................................. 26
7.5 Business Valuation............................................................................................................................ 26
8.0 Risks...................................................................................................................................................... 26
8.1 Outline of Risks ................................................................................................................................ 28
8.2 Exit Strategy...................................................................................................................................... 28
9.0 Summary ............................................................................................................................................... 29
Appendices.................................................................................................................................................. 30
I Operations Diagram........................................................................................................................... 31
II Floor Plan .......................................................................................................................................... 32
III Website .............................................................................................................................................. 33
IV Market Research Survey .................................................................................................................... 34
V Value Curve ....................................................................................................................................... 36
VI Sample Logos .................................................................................................................................... 37
Financial Appendices – see Excel Attachment
I
II
III
IV
V
VI
VII
Income Statement
Balance Sheet
Cash Flow Statement
Long Term Debt Amortization
Variable Cost Analysis
Salaries and Wages
Financial Ratios
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Sweet Sweat Inc. Business Plan: Underarm Icing
1.0 Executive Summary
Sweet Sweat Inc. is competing in the business of manufacturing and distributing natural female
deodorants; uniquely and playfully branded as “Underarm Icing”. Our brand has a descriptive
synergy with icing due to its delicious smell, resemblance through packaging, and creation from
natural ingredients that would not be harmful to ingest orally. We focus on an aggressive
marketing strategy to increase brand awareness amongst our target consumers and cement a
strategic position in the market. Our operations have started small-scale, manufacturing our
product out of our Controller’s basement. Our primary sales channel in the future will be through
our larger grocery stores; however we have already enjoyed small-scale success through direct
marketing in specialty eco-friendly stores, open markets, farmer’s markets and breast cancer
awareness events. Our marketing research so far includes family and friends who are committed
to using our natural deodorant. We will not be looking for further distribution channels until after
the next one to two years of operations. Our executive team is currently able to effectively
manage manufacturing and distribution, and is expected to be able to handle capacity for the next
two years. After two more years we will have stronger market and sales information upon which
to forecast sales volume and necessary capital investments. Our current financial plan includes a
forecast for both small-scale and large-scale operations into the future.
2.0 Introduction
2.1 Product & Objectives
“Underarm Icing” is a natural female deodorant, as compared to antiperspirants that contain
proven health harming substances such as aluminum and parabens. Marketing research indicates
that there is an increasing acceptance rate of deodorant over antiperspirants amongst women;
however, there is a limited selection of such natural deodorants and they often fail to adequately
cover body odors. Sweet Sweat Inc. is capitalizing on this opportunity in the market by creating a
strong product line offering a variety of pleasant deodorant scents.
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Sweet Sweat Inc. Business Plan: Underarm Icing
Sweet Sweat Inc.’s objectives:
1. Become a recognized brand in the female cosmetic industry; known for our commitment to
meeting the daily needs of women without compromising their health.
2. Increase sales exponentially in the next 2 years through aggressive marketing techniques and
a strong internet presence and website community.
3. Obtain financing to increase manufacturing capacity and distribution, through increased
investment in marketing and capital resources.
4. Continue to focus on customer satisfaction and loyalty through quality products, quality care,
and a true commitment to the brand identity.
2.2 Mission
Our mission is to run a profitable business by providing women of all ages with products that
will not harm their bodies. We have started our company through offering a completely natural
deodorant, without hazardous materials that have been research proven to harm women. We will
be promoting the importance of using natural ingredients on women’s bodies rather than taking
the fear tactic of focusing on the harm caused by antiperspirants.
Our goal is to care for women by providing them with a healthy alternative; with an edgy and
recognizable brand. We are always open to customer feedback through a commitment to
obtaining specific comments on what our clients like and dislike about our deodorant. We have
ensured that adequate channels are available to obtain such feedback, and will design a special
dialogue and community comment section on our website. We want to ensure that we are known
for quality and care; being seen as a friendly and approachable brand for women. Although we
have started with one product line, “Underarm Icing”, our long-term vision is to grow to a
capacity and revenue volume with which we could use internal financing to offer a variety of
products (soaps, creams, and shaving gels) that are all natural to a widening customer base. This
future market would include men as well as babies. Although this is a 5-10 year plan, we believe
that dreaming big is extremely important to our visionary success as a small company. This
vision is also contained in our vision statement and is in line with our third objective of obtaining
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Sweet Sweat Inc. Business Plan: Underarm Icing
financing for future growth. Our vision is “Noticeable annual growth through a passion for
business, healthy products, and a commitment to the needs of our customers.”
Our mission statements as we establish ourselves in the market are: “Promising to protect the
health of women’s bodies through a commitment to quality all-natural products” and “For every
woman caring about her body”.
Our slogan, which has already been quite complementary to our fun and flirty brand name, is
“From sweat to sweet”. This slogan has been successfully used in all of our marketing campaigns
to date. There was an article in a local Vancouver newspaper that took a play on our slogan – “A
company successfully proving that sweating can be sexy” and “You could take this company’s
name to bed with you”.
2.3 Key to Success
1. Marketing, Marketing, Marketing: Each member of our executive team holds true passion for
the business. We all strive to get out into the community and showcase our commitment to both
our product and our customers. Marketing and significantly increasing brand awareness is our
primary step to success and will allow us to establish a competitive edge in the market.
2. Brand: Our brand is connected with the Breast Cancer Foundation and is keen on assisting in
any way possible in the prevention of breast cancer through increasing research. We hope that
this commitment will connect with customers and solidify the identity of our company and our
products.
3. Website: We will be driving sales by first getting our brand into the market and then directing
customers to our website. Essentially our website will include a forum to customers for
providing feedback, as well as additional information on regarding the benefits of our product.
Through our website we will be able to showcase our commitment to women. On our website we
will also direct associate our company with the Breast Cancer Foundation providing a donation
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Sweet Sweat Inc. Business Plan: Underarm Icing
homepage where support can view upcoming charitable events, obtain more information about
current research, make personal donation as well as communicate with other regarding the topic.
4. Loyalty: A foundation of our promotion will be through word of mouth. Our desire is that
women will want to share our product with their friends and family. Our product has already
proven to be the kind that brings people back to us, and encourages them to recommend our
product to friends and family. We know this as our customer return rate has been greater than
90% to date and 50% of new customers have been through referrals. This indicates to use the
importance of ensuring that people speak from the heart when talking about our brand.
5. Natural Ingredients: Our product contains 100% natural ingredients, without harmful
substances or fabricated chemicals. All of the ingredients have been chosen with the following
mantra in mind: if you can’t bake it, we won’t make it. And this has appealed to our target
market. It is also in line with current trends towards organic alternatives and a greater
commitment to health. This also is why our marketing focus has been through smaller farmers
markets and campaigns where product offerings are often specialized and home-made. However,
as our brand awareness increases, our distribution will be equally as successful through local
retailers such as Capers, IGA and Whole Foods. In Vancouver, all of these locations have special
cosmetic and organic areas where our product would be able to find shelf space.
2.4 Value Proposition
The true value proposition of our product is in the entire experience that it embodies. Our
product not only offers women a healthy alternative to other deodorants and anti-per spirants in
the market, but connects them to the fight for women’s health and the commitment to their
bodies. Through our connection with the Breast Cancer Foundation, and a commitment to
marketing and distribution through channels that promote healthy living, our view is for our
brand to be what inspires women to buy our products. Similar to the concept successfully enable
by Tom’s Shoes, which has enjoyed incredible success in the past few years, we want the brand
experience to be what drives women to pick our deodorant off the shelf. We will be one more
podium on which women take a stand to demand the highest quality 100% natural products.
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Sweet Sweat Inc. Business Plan: Underarm Icing
3.0 Company Summary
3.1 Background
Sweet Sweat Inc. is a new company, with a humble beginning in one of the executive member’s
residential homes. This workplace has allowed us to manufacture our deodorant and distribute it
to a small but satisfied client base. We have been in operation for almost one year and our
feedback so far has been overwhelmingly positive, with women preferring the scent over
antiperspirants and other deodorants in the market.
3.2 Ownership
Sweet Sweat Inc. is small corporation (CCPC), with equal investments made by the four
members of the executive team. Currently we have each invested $5,000, allowing us to
successfully commence and continue operations. Mallory Denniston has been manufacturing this
product for over five years prior to incorporation, and all members of the team have strong
backgrounds in business with CA designations. We are currently able to finance our operations
through internally generated revenues and our initial investments, however in order to expand a
capital injection will be necessary.
3.3 Location and Facilities
As stated, we are currently operating out of a home but as our financial forecasts will show, we
plan on expanding which could include leasing or buying a larger space to meet increased
production demand. The space would be located in a lower-rent area of Vancouver, BC, as we do
not require promotion directly through our location. We will require some investment in
manufacturing and packaging equipment, potentially doubling the current assets that we hold.
4.0 Operations Plan
4.1 Description of Operations- Appendix of operations
Please see Appendix I for the diagram of operational flows. The overall capacity of production
will increase from year 1 to year 2, due to the planned expansion of operations. The main
constraint to capacity will be labour hours and machinery. Assuming Mallory produces each
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Sweet Sweat Inc. Business Plan: Underarm Icing
batch using one blender at a time (which is the case during the first year of operations), each
batch takes one hour to produce (including measurement of raw materials and mixing in the
blender) and generates 30 units of underarm icing. Therefore, during the first year of operations
Mallory will only have to invest only 33 hours of labour, which can be easily achieved on a parttime basis.
During the second year of operations, we will increase capacity to two blenders and an additional
manufacturing employee. Therefore, total capacity will be greater than the planned production
during the second year, as per the attached financial plan.
4.2 Organizational Structure and Floor Plan
Sweet Sweat Inc. is an incorporated company, taking advantage of the small business deduction
limit, along with the lifetime capital gains exemption offered to shareholders of the business.
This tax minimizing corporate structure provides an added incentive to potential future investors
of the company. In addition, incorporating has provided limited liability to owners of the
business, and helped facilitate the generation of additional financing in the future through the
ability to issue share capital for growth and expansion. Please see Appendix II for our floor-plan
layout.
The current shareholder ownership is as follows:
Mallory
Denniston
25%
Keira
Balderston
25%
Adrian
Pape
25%
Ishan
Singh
25%
Sweet Sweat Inc.
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Sweet Sweat Inc. Business Plan: Underarm Icing
Management:
In the next year of operations, Mallory Denniston will continue to be in charge of all
manufacturing and distribution operations. During this period, Mallory will continue to operate
out of her basement, due to the cost advantages and relatively small scale of production. Given
Mallory’s extensive experience and product knowledge, she can successfully manage this
business and the responsibilities that it entails, including acquiring all raw materials, putting
them together to create the saleable product and packaging them for delivery to customers. As
she will create this product in batches, the time commitment required to make the product can be
flexibly scheduled, thus allowing Mallory to operate the business part-time. Mallory is not taking
a salary during the first few years of operations, as the objective is purely promotional and
awareness-generating.
Considering that the next two years will be focused around marketing and promotion, we will
hire a marketing assistant to help promote the product. This individual will likely be a student
who is passionate about healthy living, has strong communication and interpersonal skills, and
has a desire to mitigate carcinogenic materials used in deodorants and antiperspirants. The
marketing assistant will be paid on an hourly basis, and will be utilized during trade shows,
concerts, cancer-awareness campaigns, and other events. Mallory will be in charge of hiring the
assistant and managing him/her on a go-forward basis.
As indicated in the Marketing Plan, Sweet Sweat Inc. will have a website, to allow for online
sales and promotion. The IT component of website operations will be outsourced to an external
expert, to handle online sales transactions, client technical issues, and website operation/design.
Mallory Denniston will be an administrator to the website, and will actively post in the blog and
answer e-mails. In addition, any orders received through the website will be processed by
Mallory, as she will ship the products to the customers directly from her basement. Any shipping
and handling costs incurred will be passed on directly to customers, thus resulting in no
additional costs to the company.
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Sweet Sweat Inc. Business Plan: Underarm Icing
In the second year of operations, we anticipate a significant increase in sales. After this increase,
we will look for a larger area to lease (warehouse) from which to produce our product, in
anticipation of increased product demand. We will purchase our raw materials in bulk, thus
reducing our costs due to economies of scale (please refer to Financial Appendix I for the
Income Statement- indicating reduced unit costs in 2012 versus 2011). Mallory will then
transition into a full time role with Sweet Sweat Inc., and will be directing operations. At this
point, the Board of Directors will become more involved in the business, the details of which
will be discussed below. We will hire one full-time staff member to assist Mallory with all
aspects of production, with the potential of additional members in future years depending on
capacity and overall demand. Even though we will not have an office space at this point due to
cost minimization, we will rent offices as we need in order to meet with potential clients,
creditors, and market representatives. This will be achieved through the use of daily office
leasing services, and will enable Sweet Sweat Inc. to maintain a level of professionalism when
conducting business while minimizing fixed costs and overhead.
4.3 Board of Directors
The Board of Directors will be comprised of four individuals: Mallory Denniston, Keira
Balderston, Adrian Pape, and Ishan Singh. Mallory Denniston has direct expertise with the
product, as she has been developing her own deodorants for the past five years. Given her
extensive experience with developing the ideal product mix, including extensively researching in
the very best ingredients to be included, she provides valuable operational and product
knowledge to the Board. All four Board members are CAs, and have previous experience
working for international professional services firms. Each board member provides differing
insights due to having been exposed to various industries through their experience at these firms.
Each Board member also possesses a Masters of Professional Accounting degree.
Beginning in the second year of operations, the Board will take more of an active role in the
business by assisting with strategic planning, as well as marketing and financing initiatives. The
Board will also be involved with preparing financial statements, tax returns, as well as
determining operating budgets, sales targets, and working capital management. The Board will
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Sweet Sweat Inc. Business Plan: Underarm Icing
be actively involved with the promotion of products by tapping into their existing networks, and
seeking out new networks through which to promote the product. They will meet monthly to
discuss any significant operational issues, along with marketing, strategic, and financing
opportunities.
4.4 Average Business Day
Seeing as this is a small business early in its business cycle, there are no structured activities for
the operation of the business during the first year. In general, common activities during the first
year are as follows:
-
Daily:
o Respond to e-mails and monitor customer blog on the website
o Experiment with the ingredients mix based on customer feedback (scent)
o Conduct market research and identify if there are any potential venues or events
for product promotion
o Contact local small businesses to sample and sell product
-
Weekly:
o Purchase of raw materials, manufacture product, package, and store
o Receipt of customer orders, package, and organize shipment
o Co-ordinate with marketing assistant, and attend events where product promotion
will take place
-
Yearly:
o Prepare the corporate tax returns
o Overall review of strategy, mission statement, and overall objectives
o Re-evaluate progress towards goals and re-assess vision if necessary
o Create formal forecasts to provide to potential investors
Common Activities during the second year will be as follows:
-
Daily:
o Same as during the first year
o Purchase of raw materials, manufacture product, package, and store
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Sweet Sweat Inc. Business Plan: Underarm Icing
o Receipt of customer orders, package, and organize shipment
-
Weekly:
o Co-ordinate with suppliers and distributors to determine levels of inventory
required along with orders needed to be fulfilled
o Prepare staff schedules
o Market research and product development initiatives
-
Monthly:
o Bank reconciliations
o Compare target to actual sales
o Review of budget to actual
o Determine any additional staffing/labour requirements
o Review of working capital levels, and determination of the need to acquire
additional financing
-
Yearly:
o Salary assessments and potential bonus payouts
o Dividend pay-out determination when profitable and able to distribute earnings
o Tax returns preparation
o Overall review of strategy, mission statement, and overall objectives
4.5 Working Capital Forecast
In 2011, Sweet Sweat Inc. has financed operations through a bank loan of $50,000 (backed by
personal guarantees) as well as from initial capital contributions by the executive team totaling
$25,000. In the second year, an additional capital investment will be needed to sustain operating
cash flows totaling $50,000. It is expected that at the end of the first year when sales have been
achieved, equity financing would be sought, subject to due diligence being performed and
additional financial forecasting based on updated sales and cost of sales figures. See Financial
Appendix III for further details.
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Sweet Sweat Inc. Business Plan: Underarm Icing
4.7 Operating Expenses
The majority of expenses relate to wages paid to marketing and production assistants to help
facilitate the high volumes of sales required to build the brand recognition and develop a
customer basis. In addition to employees, a strong marketing effort through event promotions
and the online website make up the remaining significant expenses incurred on an annual basis.
See the Financial Appendices for further details as well as the discussion in the Financial Plan
below.
4.8 Quality Control
Ensuring a consistently high level of quality is an integral component to the success of Sweet
Sweat Inc.. Mallory, who has extensive experience with making the product, will be measuring
and mixing the ingredients for each batch herself. There will be customized measuring cups for
each ingredient to ensure a consistent amount is used each time and that none of the ingredients
are mixed. In addition, Mallory will use her professional judgment to test each batch for quality
control after it is made to ensure integrity of ingredients as well as appropriate proportions used.
This will be performed by assessing the scent of each batch as well as ensuring the consistency
and texture is appropriate. Having separate custom-made measuring cups for each ingredient
used would provide an effective control to ensure all necessary ingredients are used, along with
the appropriate amounts. These controls, along with specific instructions, will allow for future
employees to follow these simple steps to make the perfect Underarm Icing product. If any
complaints are ever received from customer due to a lack of quality, our policy will be 100%
refund or direct shipment of a new product. Although this could be costly we believe that this
optimal service and quality care is part of the brand.
4.9 Website
As described in many parts of our report, the website will be an integral component for both
sales distribution and also our overall relationships with our customers. It will be very vital to
promoting our brand identify and providing a forum for customers to express opinions, provide
feedback all well as obtain updated information regarding product promotions, upcoming
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Sweet Sweat Inc. Business Plan: Underarm Icing
campaigns and new articles in the development of research for Breast Cancer. Please refer to
Appendix III for a snap shot of the website.
5.0 Marketing Plan
5.1 Market Analysis
Marketing Research
Market research has allowed us to gain valuable insight on the identity that customers currently
associate with our brand, allowing us to better tailor our marketing strategy. Our survey has
been, and continues to be conducted, along with samples provided to customers. When a sample
is given, we provide the survey and then direct the customer to our website. This is dually
beneficial as it has provided us with actionable feedback and increased our presence on the web
through customer hits. Our website, as explained earlier, provides the customer with further
information regarding our brand and our overarching commitment to women’s health. The
survey can also be directly accessed through the website, and is visible on the homepage.
Overall, customers are encouraged to provide feedback both through the survey as well as
through discussions on our community social network on the site. We have a “Facebook” wall
feature on our page which allows for immediate feedback and customer interaction with both us
and each other. Please refer to Appendix IV for a copy of the current market research survey. We
will continue to adjust the survey for new information that we believe the me important for
future marketing promotions and sales tactics.
The market research survey elicited a 60% response rate, and responses received were positive
and encouraging; with reinforcement that we are promoting the brand that we want. Of the total
responses to date, 68% indicated that they connected with the brand and prefer our product to
alternatives on the market. Of those that were already loyal customers, 75% replied that they had
successfully encouraged friends and family to try the product, many by showing them ads and
informational blogs on our website. Discussions conducted through our wall suggest curiosity
and excitement at the prospect of increasing distribution of our product as well as potential other
future offerings in the future (with high demand around face and body lotion).
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Sweet Sweat Inc. Business Plan: Underarm Icing
Based on the marketing research conducted and the demographics of our target market in
Vancouver, we are confident that demand for our product will only continue to increase
contingent on continuous promotional community campaigns. Our target market is “all women
who care about their body” and this is definitely represented through our site and survey
responses. Our future promotions and weblogs will specifically target these women, continuing
to enhance our brand. The details on bringing the “Underarm Icing” brand to a greater market are
outlined in the marketing operations below.
5.2 Competitive Analysis - Appendix with SWOT
Strength
The executive team and Board of Directors have strong cumulative business knowledge and
expertise since they are all Chartered Accountants with varying backgrounds in economics,
marketing, finance, accounting, and tax. In addition, the executive team has connections with
professionals in the accounting and finance industries when financing is required to grow in the
future.
“Underarm Icing” has the strategic value proposition to customers of offering better scents, a
greater variety of scents, and superior bacteria killing abilities; all bundled in an attractive and
unique package.
Sweet Sweat Inc. will be aiming to develop a brand akin to LuLu Lemon where the customers
perceive the company as having coinciding values to their own. Sweet Sweat Inc.’s brand will
embody the notion that we care about women’s holistic health and not just about producing
profits. Other natural deodorant companies have not succeeded in their attempt to extend their
brand beyond anything more than a name that represents natural products.
Being a small company, Sweet Sweat Inc. is able to quickly adapt to customer suggestions as
well as to quickly implement necessary strategic changes to initiate industry trends. Per
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Sweet Sweat Inc. Business Plan: Underarm Icing
Appendix IV at the end of the report, the value curve outlines that we have the highest quality
ingredients that will not potentially harm our customers.
Weaknesses
This is the first business venture for the executive team, so we do not have direct experience with
starting a company. Being a small company, there is a small pool of human capital to rely on for
new ideas. Additionally, as a startup company, the cash flow from operations is not as steady and
established as compared to our major competitor, Secret. Deodorants do not prevent sweat, so
antiperspirant companies offer their customers sweat-free underarms. We are entering a large
market so we need to aim marketing very directly at our target market in order to be successful.
Opportunity
An increasing number of women are concerned about the potentially harmful effects of
antiperspirants and are therefore willing to sacrifice the benefit of sweat prevention. Also,
deodorants do not cause yellow stains on shirts that are a result of the aluminum in
antiperspirant. Through market research, we have found that these women are generally
disappointed with the current selection of female deodorants and their ability to kill bacteria and
mask odors, which are the qualities that Underarm Icing possesses.
Adidas has a female deodorant in two scents but both smell very similar to the male deodorants,
which is not desirable among women. Dove and Secret have the largest share of the
antiperspirant market, and they are very reputable and established companies; however, they do
not sell deodorants since this is direct cannibalizing of their antiperspirant sales. Also, to
effectively market the benefits of the deodorant they would have to admit to the harmful
substances in their antiperspirants. Therefore we have the opportunity to enter into a very open
niche market, in a somewhat concentrate industry. Although it will require dedication and drive,
this is a definite opportunity in this market. Additionally, if successfully in establishing a strong
brand, we will be able to offer new products in the future and leverage the brand reputation in
order to be successful.
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Sweet Sweat Inc. Business Plan: Underarm Icing
Threat
Dove and Secret have the largest share of the antiperspirant market and are very reputable and
established companies that could have the resources to create a new brand and break into the
deodorant market if a sufficient number of women were to switch to deodorant. Only savvy
customers would know that the new brand is really owned and operated by antiperspirant
companies. This is a threat of which we will mitigate through the fact that customers will buy our
product not only for the health benefits but for the overall experience that the brand provides.
The ingredients are printed on the packaging so customers could attempt to make their own
rather than paying for our pre-made deodorant. This would erode our sales. However we believe
again that customers will pay for the overall experience of the brand and not just want to create it
themselves.
5.3 Product
The Problem: Body odor is problematic for women because it is unpleasant and not culturally
accepted. The commonly accepted fix over the years has been antiperspirant, but this has created
a new problem. Antiperspirants contain both Aluminum and parabens. Aluminum is a neurotoxin
and it has been linked to Alzheimer’s disease, respiratory illnesses, reduced renal function, and
DNA damage. The parabens in many antiperspirants may be linked to breast cancer since it is
found in tumors that have been removed from patients. The current alternatives to antiperspirants
are female deodorants but there is limited scent selection and the scents available fail to mask the
odors. The question posed: Can we mask underarm odor without harming women’s health?
Our Product, The Solution: We have created a competitively priced natural deodorant that kills
odor-causing bacteria, smells amazing, is available in a wide variety of scents, and doesn’t
contain health harming ingredients. The ingredient mix includes:
1. Baking soda
- a natural bacteria killer that kills the odor-causing bacteria
2. Arrowroot powder
- a pure and natural starch that is more sensitive on women’s skin
than other starch equivalents
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Sweet Sweat Inc. Business Plan: Underarm Icing
3. Coconut oil
- a natural oil proven to be an effective and skin-sensitive
moisturizer
4. Tea tree oil
-a natural disinfectant that works in tandem with the baking soda
5. Essential oils
-grapefruit, vanilla, lemon, peppermint, and coconut
5.4 Pricing
Underarm Icing is priced at $5.99, a premium over the indirect antiperspirant competition and
approximately average as compared with the direct natural deodorant competition. This is priced
at a 170% mark-up over the variable cost of the product leading to a margin of 63% on each unit
sold. In the first five years, while unit sales are expected to be relatively low in comparison to the
market as a whole, these margins will be important for recovering the high fixed costs of the
heavy marketing and promotion costs and are expected to improve with economies of scale.
5.5 Promotions and Advertising
The overall promotional strategy for the first three years is to execute low cost promotional
activities to generate a word of mouth promotional campaign. The activities that will be included
are as follows:
Events: Aligning ourselves with the Breast Cancer Foundation, by sponsoring individuals in The
Walk to Cure Breast Cancer event and having them display our logo on their shirts. At these
events we will also have a booth to educate potential customers on our product, give out samples
and business cards with our website address, as well as to sell our product in larger containers as
well. We will have a kiosk at other events as well such as sporting tournaments to target athletes
and farmers markets to target organic consumers.
Website: Sweet Sweat Inc. has a website that highlights the benefits of our product with full
disclosure of our ingredients. The website allows people to provide their feedback as well as
order our product. Sweet Sweat Inc. has a website application that allows customers to set up an
account and design their personalized perpetual “Underarm Icing” orders so that they don’t need
to reorder. Customers are able to change their orders if their preferences change. Customers are
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Sweet Sweat Inc. Business Plan: Underarm Icing
also able to subscribe to our monthly e-mail updates if they so desire. These email updates will
provide discounts on products, monthly specials, what events we will have our kiosk at and other
information regarding health living and taking care of your body.
Blog: Sweet Sweat Inc. has blog that provides an informal method of communicating with
current and potential customers. This blog is located on our website (in addition to the
“Facebook” wall) and is manages by Mallory Denniston who posts customer testimonials and
updates on new products.
Online Advertisements: Online advertisements will be placed on Facebook and other social
media websites to direct potential customers to our website. This will be initiated in the next
year, with the assistance of our website developer.
Other activities: Sweet Sweat Inc. is identifying celebrities that care about natural products and
are sending them free products samples. We have also sent some products to smaller local artists
in the Vancouver area. The objective of this initiative is to impress these higher-profile
customers in the hope that they communicate their satisfaction with our product to the media.
Labels and Logo
Refer to Appendix VI for a sample of the labels to be used (sexy and edgy design). Please note
that our logo appears exactly as the labels but without any words. Our brand will be recognized
simply through the curves outlining the shape of whipped icing; using many fun and bright
colors associated with each scent:
Vanilla
- White
Grapefruit
- Neon Pink
Mint
- Neon Green
Coconut
- Blue
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Sweet Sweat Inc. Business Plan: Underarm Icing
5.6 Place
First, we must decide in which countries women use antiperspirants or deodorants. We have
identified these countries as predominantly Canada, Australia, and the US. In the first two to five
years, we will focus on Canada because this is where we are located. This will assist with easy
distribution as we have a strong network which will assist with initial sales. We are located in
Vancouver, a city with relatively high income earners that value organic items as evidenced by
the number of successful organic grocery stores such as Capers and Whole Foods; all charging a
significant premium for natural products.
We will also initially target the Greater West Coast Area which includes Vancouver Island,
Sunshine Coast, and the Gulf Islands. These areas value local products as evidenced by their
support for local products such as Salt Spring soaps and Holy Crap cereal, similar companies
which have succeed in recent years. To grow the business, we will expand into the East Coast,
followed by the US and then Australia. This expansion will be assisted through our website
which can be visited all over the world. After we have initiated sales, obtained proof of price and
product, and perfected the product based on our initial sales we are confident that such expansion
is possible. Antiperspirants and deodorants are not common in European and Latin countries so
we would avoid these areas in our long-term strategy.
For the first two to five years, we will have a distribution line that is close to the end customers
so that we can immediately respond to the feedback by adjusting the product to best suit the
customers’ needs. These direct lines are simpler to manage which allows the executive team to
establish an operationally effective distribution system on a small scale before expanding.
Our targets for distribution lines include small local businesses, farmers market, organic food
grocery stores, events (as noted in the promotion section), and direct online orders. After the
establishment of a distribution process and customer base, we would seek to expand to larger
chains such as grocery stores and beauty product retail stores such as London Drugs. We are
hopeful that through our well-established brand theses distributers would seek out our product
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Sweet Sweat Inc. Business Plan: Underarm Icing
and make shelf space available. At the point of expansion, we would need to decide if the
benefits of continuing the initial distribution lines would outweigh the costs.
5.6 Segmentation
Our consumer segment is women in Canada, the US, and Australia because “Underarm Icing” is
for women who wear deodorant. Our research has shown that 91% of woman in the abovementioned geographic areas use deodorant on a daily basis. Users apply between one and three
times each day depending on their level of physical activity. The users range in age from 12 to
the elderly since this age bracket both produces sweat and is cognoscente of and concerned with
the effects of the resulting unpleasant odor.
5.7 Target Market
We have two main target markets:
1.
Deodorant users: woman who are already using deodorants because they prefer natural
products and recognize its benefits. Our marketing will therefore be focused on
communicating why “Underarm Icing” is superior to other deodorants; enticing them through
our unique scents and brand commitment to overall health.
2. Antiperspirant users: Women who use antiperspirant and whose genetics put them at a
higher risk of breast cancer, Alzheimer disease, or the other aforementioned health risks.
Also, antiperspirant users who are not educated on the benefits of deodorants and the options
available. Therefore, our marketing will communicate the benefits of our deodorant over
antiperspirants. We will also recognize that antiperspirant users could ease into deodorant use
by continuing to use antiperspirants on those sweatier days such as an important presentation,
interview or high level of physical activity while using “Underarm Icing” on a more daily
basis.
5.8 Positioning and Strategy
Direct competition: Positioned amongst the direct competition (i.e. female deodorant products)
as trendy because of its catchy name and funky brand, slogan, logo, and packaging. It is 100%
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Sweet Sweat Inc. Business Plan: Underarm Icing
natural option because all of the ingredients are natural and organically provided by the earth
with no human alteration needed. As a result, it is positioned as not potentially harmful on your
body. It provides customers with more options than the direct competitors because of the variety
of scents. Sweet Sweat Inc.’s scents are just that - sweet.
Indirect competition: Amongst our indirect competition (ie. Female antiperspirant and other
beauty products used to cover up and or prevent unwanted underarm scents), we are the all
natural option. We are perceived as local, not part of a large chain such as Dove so that our
customers can trust that our decisions are in their best interest and not those of the shareholders.
We are perceived as producing a higher quality product since we charge a higher price. We are
aluminum and paraben free; therefore, we are not potentially harmful. Underarm Icing does not
test on animals, it is vegan and celiac friendly, and does not have any genetically modified
organisms (GMOs).
5.10 Sales Projections
A significant metric for the long-term success of the Underarm Icing product and Sweet Sweat
Inc. as a whole is the number of units sold each year. In 2011, we are forecasting a modest 1,000
units, increasing that figure to 4,000 by 2012 to prove the value of Underarm Icing to larger
retail stores. In the third year of business, Sweet Sweat Inc. plans to expand into grocery chains
such as Urban Fare and Whole Foods, with a more long-term goal of entering into Costco. These
larger distributors will help achieve sales targets of 30,000, 60,000, and 100,000 in years 3-5.
Please refer to Financial Appendix I- Income Statement for projection of sales.
6.0 Human Resources Plan
6.1 Job Descriptions
In our first few years of operations there are very few requirements in terms of human capital.
Mallory Denniston, original founder and CEO, is currently managing the operations. She is
personally able to organize the promotional campaigns (farmer’s markets, charity runs, etc) on
the evenings and weekends with very little operational assistance. Keira Balderston, Adrian Pape
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Sweet Sweat Inc. Business Plan: Underarm Icing
and Ishan Singh are in charge of assisting with strategic decisions and obtaining future financing,
as well as any financial reporting that is deemed to be necessary by potential investors.
Currently there are two other employees, one marketing intern to assist with promotional
campaigns and an IT expert who is outsourced to manage the website. Both of these positions are
supervised by Mallory, and the two individuals have been with the company since inception.
6.2 Planned New Positions
Once the necessary financing is obtained, and we can move operations into a larger facility, the
growth in capacity will require increased human resources. Planned positions for future
operations include:
1. Operations: We will require one additional staff member to assist with the production of
deodorant in our new facility when we begin moving into larger retail distribution channels. We
hope to see increased production levels of 30,000 units in the third year and additional
operational staff may be required to produce the deodorant. This will also allow Mallory to stop
working in direct production of product and focus her attention on supervision and quality
control.
2. Marketing Personnel: Although we are currently managing with one intern and Mallory, as
capacity increase additional marketing personnel will be necessary. These employees will be
able to manage extended marketing endeavors such as print advertisement and media campaigns.
We would also like them to be involved in looking for additional PR opportunities, above and
beyond our current association with the Breast Cancer Foundation. They will be the leaders of
our brand, enhancing the representation on the marketplace through continuous innovational
pathways on how we access our markets.
6.3 Wages and Benefits
Currently the only fixed wages are those being paid to the marketing intern and website manager.
The summer intern would be hired for 1,000 hours per year at $15.00/hour, with a focus during
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Sweet Sweat Inc. Business Plan: Underarm Icing
the busy summer months. During the winter our company has not been as busy in terms of
promotional campaigns since there are few community runs and the markets are closed. The
website construction cost was $10,000 for the initial set up and is now paid a monthly fee of
$200 to manage the site data and streamline the orders to Mallory. There is constant and direct
communication between Mallory and the web designer; however he is able to operate out of his
own facilities. As this is a startup company, Mallory has taken limited remuneration choosing
rather to re-invest her capital in the operations of the company.
In the future, we will be paying for additional operations staff ($30,000 for the production
assistant) as well as the additional marketing personnel ($15,000 per additional intern required).
The accounting role will be as filled by Mallory depending on the time available, but will likely
shift to the production assistant when she transfers operational duties to the new team.
Benefits will be in line with industry standards, providing paid vacation of 3 weeks per annum, a
flexible medical plan ($1,200 per employee), etc. We will also be providing product discounts
for family and friends as an added bonus ($1,000 per employee), and also as a way to further
expand our brand identity through word of mouth.
7.0 Financial Plan
7.1 Projected Profit or Loss
As per Financial Appendix I, Sweet Sweat Inc. expects to incur losses for the first three years of
operations while marketing and promotions begin to fuel sales and develop the customer base.
The company should turn a profit in its fourth year and achieve exponential increases in profits
from that point forward.
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Sweet Sweat Inc. Business Plan: Underarm Icing
2011
2012
2013
2014
2015
Units Sold
1,000
4,000
30,000
60,000
100,000
Revenues
5,990
23,960
179,700 359,400 599,000
Net Income
(25,769) (33,234) (2,974)
63,139
201,321
7.2 Projected Balance Sheet
See Financial Appendix II for an estimate of balance sheet figures at year end for the first five
years of operations. Negative retained earnings will be sustained over the first four years of
operations; however in the fifth year are expected to reach around $200,000.
7.3 Projected Cash Flow
See Financial Appendix III for cash flow projections over the first five years of operations. As
mentioned previously, equity or debt financing will be required in the second year of $50,000.
This financing will help pay back the long-term debt incurred in the first year as well as facilitate
the losses incurred in relation to heavy onset years of marketing and promotion.
7.4 Business Ratios
As per Financial Appendix VII, financial ratios are expected to improve over time. A healthy
current ratio will be important to ensure the short term viability of operations. Debt to equity
ratios will be negative while losses are incurred over the first two years, but will return to
healthier levels following the third year. The return on equity will be negative for the first three
years. It is expected that once Underarm Icing enters large grocery chains, sales will skyrocket
while maintaining relatively low fixed costs. This should lead to much stronger ROE figures
beginning in the fourth and fifth years.
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Sweet Sweat Inc. Business Plan: Underarm Icing
2011
2012
2013
Liquidity Ratios
Current Ratio
3.01
2.64
1.23
7.39
28.57
Solvency Ratios
Debt to Equity
(51.93)
1.86
1.63
0.15
0.04
$ (0.44)
$ (0.04)
Profitability Ratios
Return on Equity
$ (1.03)
2014
$
0.84
2015
$
2.68
7.5 Business Valuation
As per Financial Appendix VIII, the business is currently valued at about $300,000 based on the
forecasted years of net income, ignoring the onset years spent building brand awareness and a
customer base. This forecast weights future years more heavily due to the more accurate
representation of sales and income, and uses a 3x multiplier due to the high-risk nature of the
business. The required capital investment of $50,000 would therefore represent a 16% interest in
the total value of the company.
8.0 Risks
8.1 Outline of Risks
As a small start-up company we definitely need to be aware of potential risks in the business.
Thus we want to highlight that we have considered the significant risks to the business as well as
effective ways to mitigate them.
Financing
Sweet Sweat might be unable to secure equity financing in second and third year or to obtain
more bank debt due to the risk associated with this new venture. We are thus considering
alternative sources of financing, as well as further personal investments into the business. If
neither is possible then we would be happy to continue the business at a smaller scale through
internal financing from revenues generated.
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Sweet Sweat Inc. Business Plan: Underarm Icing
Feasibility of the Plan
Larger companies might recognize the profitability of our product and create their own flashy
brand of deodorant which would cannibalize our sales. There is a risk that they are large enough
to offer a lower price at first to attract our customers long enough to put us out of business. Once
we are no longer competition, they would be able to increase their price to a more sustainable
level. This is mitigated through our brand. It is our brand that will be difficult to replicate and
not simply the product itself.
There is the risk that the management team could be unable to manage operations with minimal
staffing levels if the capacity and productivity assumptions are not accurate for larger scale
production. This would be mitigated through the regular risk assessment and planning meetings
held by the BOD. These meeting will look at and discuss items such as profits and costs and
make financial forecast to determine how to sustain increasing capacity while keeping costs in
line.
Product Acceptance
There is the risk that the market will not accept Underarm Icing as they may prefer the more
basic branding and scents available from current natural deodorant companies. There is also the
risk that not enough women will make the switch from antiperspirants to deodorants to sustain
our operations. Women may be sensitive to the ingredients we use and may therefore not
purchase our product which would put us below our sales target. We believe that the likelihood
of this risk is low. However if we do encounter this risk then again we may have to re-set our
strategic and overall corporate goals to include a less aggressive growth target. We believe that
even if there is lower acceptance there will be enough to enjoy profitability into the future. And
the development of new products could increase our market and capitalize on our brand.
8.2 Exit Strategy
If a third party or a competitor were to offer to buy us out after five years, we would only do so if
we could remain on the board of directors as well as collectively maintain 25% ownership of the
company. This is important to us because we would be able to influence the strategic direction
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Sweet Sweat Inc. Business Plan: Underarm Icing
of the company and ensure that it continues to use high quality natural products. Our personal
reputations would therefore not be tarnished by the potential of the new owners not following
through with the original mandate of Sweet Sweat Inc.
The price would also need to compensate us for the goodwill value of our brand and must also
incorporate the future growth potential.
The valuation done would need to be performed
assuming that revenues would continue to grow exponentially since 91% of females in the
identified areas used antiperspirant so there is a large potential market base as these customers
shift to deodorant.
Ideally we would like to continue to run the company and own it for a lengthy period into the
view. However we are aware that if synergistic profitability can be obtained or if we are
struggling to reach our sales targets but could easily do that through a profitable acquisition then
we would consider a reasonable offer.
9.0 Summary
We have a plan for the next five years with a passion to continue into the indefinite future. With
the proper financing we are confident that our targets will be met, if not exceeded.
With the increasing focus that women place on healthy and natural products, and the untapped
niche in the deodorant market segment “Underarm Icing” is in a prime position to succeed. By
leveraging off of their strategic marketing plan, uniquely scented and effective new product, and
dedication to quality care, Sweet Sweat Inc. can handle any threats or mitigate any potential
risks, namely increasing competition and substitute products.
Sweet Sweat Inc’s customers are heath conscious individuals looking for a unique product that
ensure their well-being. While deodorants are widely used, we are targeting women with a
commitment to health. Our competitive advantage can be maintained and our strategic objectives
achieved if we remain in line with our five key success factors: aggressive and unique marketing,
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Sweet Sweat Inc. Business Plan: Underarm Icing
ensuring brand alignment and consistency, focusing on customer loyalty by obtaining constant
feedback, providing quality products and capitalizing on an interactive website. Mallory, Keira,
Adrian and Ishan have a strong set of skills, passion and energy to take this business to a position
that makes healthy products a fundamental component in many women’s lives.
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Sweet Sweat Inc. Business Plan: Underarm Icing
Appendices
I
Operations Diagram
Baking Soda
Arrowroot
Powder
Heated
Blender
Coconut/Tea
Tree/Essential
Oils
Shipping
Packaging & Storage in a
temperature-controlled
environment
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Sweet Sweat Inc. Business Plan: Underarm Icing
II
Floor Plan
Front Door
Washroom
Office
Mixing & Packaging Centre
Raw
Materials
Finished
Goods
Storage Area
Promotional
Materials &
Supplies
Blender
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Sweet Sweat Inc. Business Plan: Underarm Icing
III
Website Layout
“Promising to protect the health of
women’s bodies through a commitment to
quality all-natural products”
Thoughts and Comments
FACEBOOK WALL
“I love your products. My boyfriend
says I have never smelt so delicious”
“Will you please make some
deodorant for my boyfriend?”
“When is your next promotional
campaign?”
HOME
OUR PRODUCT
HOME
ORDER
EVENTS
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Sweet Sweat Inc. Business Plan: Underarm Icing
IV Market Research Survey
Underarm Icing- “Sweat to Sweet” in the eyes of our customers
1. Which of the following do you usually use? (circle all that apply)
a. Deodorant
b. Antiperspirant
c. None
2. Where do you usually purchase these?
a. Grocery store
b. Market
c. Drug store
d. Specialty store
e. Online
f. Other
3. Do you like to test products prior to purchasing?
a. Always
b. Sometimes
c. Never
4. What amount do you generally spend on the above product(s)?
a. Under $5
b. $5-$8
c. $8- $10
d. Over $10
5. Are you willing to spend more for a premium product?
a. Yes
b. No
c. Maybe
6. How did you hear about Icing?
a. Media
b. Promotional campaign
c. Community run
d. Friends or family
e. Other
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Sweet Sweat Inc. Business Plan: Underarm Icing
7. Are you aware of the sponsorship lines with Breast Cancer?
a. Yes
b. No
8. What words would you associate with the Icing brand? (circle all that apply)
a. Health
b. Quality
c. Care
d. Comfort
e. Effectiveness
9. Have you visited the website before?
a. Yes
b. No
10. Have you ordered Icing online?
a. Yes
b. No
11. What is your favorite scent?
a. Coconut
b. Vanilla
c. Shea
12. Would you recommend Icing’s products?
a. Yes
b. No
Other comments?
Thank-you very much for your time and help!!!
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Sweet Sweat Inc. Business Plan: Underarm Icing
V Value Curve- Competitive Dimensions
Secret
Adidas
Toms Natural
Sweet Sweat
Price
Variety of
scents
odour
prevention
quality of Brand appeal Harmful
inputs
ingredients
Analysis: The Value curve reveals that Underarm Icing is capitalizing on Secret's main weakness
of not using natural ingredients. When compared to the deodorants, it is evident that Underarm
Icing is superior in offering a greater variety of fragrances as well as the quality of the
fragrances. The value curve reveals that there is a market for Underarm Icing as there are
qualities that consumers care about that are not being currently being offered in any single
product. As Underarm Icing continues to develop their brand and reputation in the market, they
will also have a strategic advantage over the current deodorants that have not developed a
dynamic brand in the market.
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Sweet Sweat Inc. Business Plan: Underarm Icing
VI Sample Labels – Logo is the same but without words
37