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Business Plan
Mogul’s Incorporated
Space Saver Technology
(570) 668-5555
Mykel Postupack, Partner / Sales Rep – 189 Ben Titus Road, Tamaqua, PA 18252
Zachary Onore, Partner / Sales Rep - 15 Walnut Lane, Drums, PA 18222
William Sharpe, Partner / Quality Control Specialist - PO Box 1134, Conyngham, PA 18219
Thomas Moglia – Founder / CEO - 22 Faith Drive, Hazleton, PA 18202
December 2010
Copy 1
This document is for professional and private use only and is intended for the sole viewing by
the financial institution only.
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Table of Contents
Executive Summary
3
Product Description
4
Market Analysis
4
-
Potential
Business Strategy
-
Revenue Strategy
Competition
-
5
5
6
Competitive Strategy
Growth Strategy
7
Financial Plan
8
-
9
Five Year Plan
Risk Assessment
-
Contingency Strategy
Management Team
10
10
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BA250
Mogul’s Inc.
At Moguls Inc. our goal is to revolutionize the refrigerator industry to allow for a more
convenient and space saving era. We have developed a product that will serve as the change
needed, while looking at household refrigeration. The space saving patented prototype will work
in conjunction with the water and ice dispenser located on the outside of your household
refrigerator. At this time I would like to pose a question, of all the items in your refrigerator
which take up the most space?… undoubtedly I’m sure you said drinks and more specifically
liquids in gallon containers. Our product will be located inside the refrigerator which you will
then pour your milk into, or drink of your own choosing, allowing you to access the beverage
while the doors are shut from the ice dispenser.
Over the years household refrigeration has come a long way, starting with modest ice
boxes of the early 20th century to the climate controlled, stainless steel, and television equipped
refrigerators of our day. However, the one idea that has seemed to escape manufacturer’s minds
is how to maximize the space available to the consumer in the refrigerator model. Luckily, for
our company we have not overlooked this concept. We would like to now start producing the
space savor and selling them to refrigerator manufacturers, i.e. Amana, Maytag, GE, LG, and
Kenmore to name a few.
Our company is completely behind making this product and company a success. We have
a vision that one day our product will be in every household. However, before that can happen
though we are requesting financial help through various financial companies.
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Product Description
The space saver is a revolutionary product that will change refrigeration forever. The
space saver is designed to not only make more room in the refrigerator, but to simplify everyday
tasks. Our product will be located inside the refrigerator which you will then pour your milk
into, or drink of your own choosing, allowing you to access the beverage without ever opening
the doors of the fridge. This product will help reduce spills, save energy, and make life easier.
The product is made mostly of plastic materials. The containers that hold liquids will be
built of plastic, and hold up to one gallon of any liquid. The liquids inside the container will then
be accessible from the outside of the fridge. A hose will transport the liquid at the push of a
button to the door of the refrigerator, into your cup or bowl. Think of how many times you have
spilled a glass of milk or orange juice while still yawning in the morning. Remember the
frustration of having to clean up a spill and then realizing that you are now completely out of
milk. These problems are now in the past, if you have the space saver on your refrigerator. No
other product currently exists that is comparable with the space saver.
The space saver will undoubtedly be a huge hit with consumers. Companies that we offer
our product to will see a spike in sales. Since we are the only developers at this time,
competition will be nonexistent allowing us to completely control the market. At $90 the space
saver is relatively cheap for refrigerator companies to buy. They will be able to make steady
profits with reasonable mark ups in price.
Market Analysis and Potential
We have considered many factors relating to our target market and possible competition
for the space saver. Everyone needs a refrigerator in their household, so the market for our
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product is stable and has high potential. We plan to make the space saver an affordable addition
to any refrigerator that customers will see value in. Our target market is large and includes
everyone looking to purchase a new refrigerator, not just the elite. Making our product
attainable to everyone is an important part of our strategy and will ensure the success of our
business. We realize that not everyone will be willing to pay large amounts of money for the
convenience of an extra beverage dispenser, especially considering the current state of the
economy. Therefore, we will offer the space saver at the lowest price that we can while still
maintaining profit.
One of the strongest aspects of our product is that competition in our market will be minimal to
start. The space saver is completely unique and will be the first of its kind. Yet, it will also be a
product that everyone will find convenient and beneficial. Once our patent expires and our
product becomes well known, it is likely that other companies will attempt to produce similar
products. At this point, we will be sure to keep a competitive advantage by offering the best
customer service in the market and prices that customers will find the highest value in. We will
continue to produce quality products that are durable and reliable through the years for a low
price to ensure that the space saver is always the best option over similar products.
Business and Revenue Strategy
During the first year of operation we will send out salesmen to all refrigerator companies
to pitch our product in the hopes that at least one of the top ten refrigerator companies will come
on board with the product, and begin to buy from us. However, Mogul’s Inc. will not sell our
product to just any company in the beginning because our success stems from the success of the
refrigerator company. During the beginning stages we will be shopping around for the best plants
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to make our product, with the possibility of having the product produced overseas. With cheaper
labor costs overseas it is a good possibility we would be able to produce them at a cheaper cost
even though we will incur shipping charges.
Cost is a major concern in deciding what the price will be for our product. Based on
production per pound for materials are $10.00 and the unit will weigh approximately four
pounds. We forecast that labor costs will average around $8 per hour with one unit taking about
2 hours from start to finished product. Along with an overhead cost that is projected to be around
$3 an hour. Based on this projected formula one unit will cost approximately $63 dollars plus
shipping costs. Obviously, for the pricing of the product it will be set at what the market will
bare, we estimate that we will get a fair price of $90 per unit on average, minus bulk purchases.
Direct material (4lbs. @ $10.00 per lb.)
$40.00
Direct labor (2hr. @ $8.00 per hr.)
$16.00
Fixed overhead (2hr. @ $3.00 per hr.)
$6.00
Competition and Competitive Strategy
The competition for this product is virtually non-existent especially while the patent is
still operational. However, when the patent expires we believe that the other companies will start
to emerge with variations of the same product. Our hope is that by the time this occurs our
product will be a household name like Heinz ketchup and any substitute will be considered
cheap. In the occurrence that competitors do arise we plan to offer incentives and discounts to
our customers who purchase from us, to use for the marketing of the refrigerators with the space
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saver installed in it. We will also offer warranties to our customers in an effort to offset
increasing costs to the manufacturer.
Growth Strategy
Our main growth strategy after the first year’s hopeful success, is to sell to more
refrigerator companies. Moguls Inc. would like to see one line of every major refrigerator
manufacturer equipped with the space saver. We will constantly be thinking of ways to improve
the space saver, the first and obvious problem with the product as it sits right now is that we need
to make the product easy to clean. Our goal is make lives easier not create a job for the
refrigerator owners. As the product stands now in order for it to be cleaned you would have to
fill the container with a cleaner and use it as a flushing process. In the future we would like to
work with refrigerator manufactures making the space saver accessible to the consumer and easy
to disassemble for cleaning purposes.
One other major goal would be to build our own warehouses so that we can store larger
quantities of product and we will be able to fill orders faster. This will help us produce custom
space savers for refrigerators which might not have the capacity to handle the standard model.
After we have sold the manufactures on the idea of one space savor our sales men will be
asked to upsell the idea to start putting 2 space savers in the refrigerator. This will allow the
consumer to put 2 drinks that can be dispensed from the outside allowing the consumer to choose
the beverage that takes up the most space and possibly his or her favorite beverage.
Also, besides the advertisement by the appliance manufacturers we would like to start
advertising and promoting our product to the consumer. To do this we will need to wait until we
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have the necessary capital. Our advertising strategy for the future would consist of the four major
media outlets, TV, radio, newspaper, and internet.
Financial Plan
The funds required to start and maintain Moguls Inc. would be $20,000. 50 % of the
funding would be through the initial investments of owners and financial partners and in turn, we
would be asking the financial institution for the remainder of the needed funds. We estimate that
the patent would cost us around $3,000, allowing us to start the production of the space saver in
the anticipation of incoming sales with $15,000 of product on hand. The remaining $2,000 would
be used for unexpected expenses, and miscellaneous expenses. We understand that the initial
startup costs are extremely low. During the first year of operation we plan on working from our
houses and using our cars in order to get the company off the ground.
The average annual refrigerator sales in the US come in about 9 million units over the
past 13 years. We expect in the first year to have a market share of .25% of all refrigerators sold
to have a space saver included, bringing the units sold at around 22,500 and generating
$2,025,000 in revenue from sales. The cost of goods sold will be $1,645,000 leaving Moguls Inc.
with a gross profit of $382,500 before interest and taxes.
Moguls Inc. estimates that there will be a .25% increase in sales each year for the first
five years. The first year we will not be taking a salary in the hopes to save up enough capital
after the 3 year mark to purchase a commercial space with 30,000 square feet of warehouse and
2,000 of office space. It’s estimated that this size building will cost a little over $800,000. At the
end of year 3 we will have an estimated sum of 785,000 in retained earnings. After careful
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consideration we believe that a loan of $300,000 is the best way to go about getting the building,
because we simply do not want to deplete our entire retained earnings account.
Moguls Inc.
Income Statement
31-Dec-11
Revenue from sales
Cost of Goods Sold
Gross Profit
Expenses
Salaries Expenses
Note Payable
Advertising Expenses
Travel Expenses
Total Expenses
$
$
$
$
$
$
$
$
2,025,000
1,642,500
382,500
10,000
158,000
20,000
188,000 $
188,000
$
194,500
Net Income
Five year Plan
Sales
Cost of Good Sold
Five Year Plan
Year 1
Year 2
Year 3
Year 4
Year 5
$
2,025,000 $
4,050,000 $
6,075,000 $
8,100,000 $ 10,125,000
$
1,642,500 $
3,285,000 $
4,927,500 $
6,570,000 $
8,212,500
Note Payable
Travel Expenses
Payroll
Marketing/Promotion
Utilities
Rent
$
$
$
$
$
$
10,000
20,000
158,000
250
$
$
$
$
$
$
net Income
$
194,250 $
20,000
175,000
158,000.00
250
$
$
20,000 $
175,000 $
168,000 $
$
250 $
150,000
20,000
325,000
168,000
5,000 $
$
411,750 $
784,250 $
862,000 $
$
$
$
150,000
20,000
325,000
178,000
5,000
1,234,500
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Risk Assessment and Contingency Strategies
Our number one risk is that the appliance manufacturers and the consumers will not take
to our product and that it will fail. If the manufactures promote the idea and the product to the
target market and see that the consumer is not interested in having any more than just an ice and
water dispenser on the exterior of the refrigerator, then our sales and profit will ultimately
decline and we will be unable to continue producing the space saver.
Another major risk is that we will not have the capital during the start up to advertise our
product. This makes us, as a company; rely on the marketing and sales of the refrigerator
manufacturer. This could substantially hurt sales if the manufacturer is not able to create the need
for the product to the consumers.
In the occurrence that only one manufacturer would like to purchase our product our
contingency strategy would be to sell the patent and exclusive rights to that company solely.
Management Team
Tom – Founder and CEO
Mykel Postupack – partner and sales representative
Zachary Onore – partner and sales representative
William Sharpe – partner and quality control specialist