Showertainment
Dr. McDowell
MGMT 4252
Showertainment
Introduction
Showertainment is a product that intersects usefulness and fun. Have you ever
gotten into a shower of freezing water in the morning, or gotten burned by the water
being too hot? How many times have you wasted five minutes adjusting the temperature
in the shower until it's just right? Showertainment solves all of these problems, and has
fun while doing it. With Showertainment you can set your shower water to just the right
temperature. Also, Showertainment employs the most recent in touch-screen technology;
it is Wi-Fi capable so that you can listen to your favorite music while taking your shower.
Showertainment is truly useful and fun, it takes a daily task and makes it something that
you can wake up looking forward to.
Product Description
You may be asking yourself, “What is Showertainment?” Showertainment is a
digital device that will allow the user to set the water temperature for their shower. On
top of that, the user will be able to access entertainment applications, such as Pandora,
Angry Birds, and others. This will enable the user to have clear and concise audio while
listening to music, instead of it being muffled from outside of the shower. Also, you will
not have to jump in and out of the shower to change your music. The user friendly touchscreen system will offer a sleek and luxurious appearance. Don’t worry though, the
protective water seal casing will prevent any water damage. The temperature gauge will
allow the user to find their preferred water temperature before hopping into the shower. It
will avoid those moments of jumping into a scalding hot or ice cold shower.
Showertainment will enhance the showering experience ten-fold with the ability to set
your water temperature and enjoy your favorite music and games whilst in the shower.
Low End Competitors
Showertainment is being sold in an industry with few competitors, seeing as there
is no other products out there that boast the exact same features. The closets products that
would compete with ours would be low end versions that do not have many features.
These versions simply read the temperature of the shower water or have a light that lets
you know when it’s too hot or cold. These products are of lower quality and made out of
much cheaper materials. These products do have simple and self-explanatory installation
methods, but they are not nearly as durable and useful as Showertainment. The low end
models are generally targeted at lower income families or households and do not directly
conflict with our target market. These versions that are slightly similar to our product are
selling from prices ranging between $7.00 and $26.00, but are not nearly as well made or
capable of doing the things that Showertainment can. They are typically sold on Amazon
or EBay, as well as at Bed Bath & Beyond and Target. It appears that there are no
recognizable brand names or manufacturers for these particular products. We will not be
competing with products that have a loyal customer base or any models that have high
brand recognition.
1
Showertainment
Dr. McDowell
MGMT 4252
High End Competitors
Showertainment, also faces the threat of competition from comparable products
made by companies such as Kohl and Moen. These high-end products are extremely
expensive, costing a customer anywhere from six hundred dollars all the way to three
thousand dollars depending on the model. These products have a wide range of
capabilities that enhance the overall experience. The user interacts with the devices
through a bright LED screen. Some of these capabilities allow you to adjust the
temperature and pressure of the water. Users can also set personalize settings that can be
recalled at the touch of a button. Where these products fall short in comparison to
Showertainment, is the lack of interaction user, failing to keep the user entertained.
Showertainment will also allow the user to take efficient showers.
Financial Analysis
With our product being of high quality and intuitiveness we believe that we will
have no trouble selling Showertainment. Showertainment is a true entrant to the
marketplace because the high end competitors offer prices overwhelmingly higher and
less functionality than Showertainment as well as the low end competitors do not actually
control the temperature rather just displays the temperature. We have a truly unique
product that will do well in the market and be very profitable. The beginning sale price
will be $300 with total costs of $180 per unit that leaves $120 profit. The costs consist of
the touch display at $150, waterproof enclosure kit $10 and the electromechanical
solenoid valve $20. Showertainment will move 2,000 units in its first year of operation
for a total revenue of $600,000 and total profit of $240,000. The break-even point for
Showertainment is 1,200 units sold, this is the point that we will start to accumulate
actual profit. Showertainment is expected to sell through 1,200 units in 7 months giving
us a profitable fourth quarter of sales. With the profits being split equally between 6
owners, each owner will receive $40,000 salary the first year and with increases in sales
the following year could potentially be exponentially more profitable.
Conclusion
‘Showertainment’ is the perfect product for the middle class, combining comfort and
entertainment into a luxury product for the shower. It also serves a practical purpose in
allowing you to save time and money, without having to spend five minutes adjusting
your shower to the perfect temperature. This also prevents wasted water prior to the
actual shower. Our product will be installed into the shower wall with a waterproof
touchscreen interface, connected to the user’s Wi-Fi. This will allow the user to sing
along to their favorite songs, while enjoying their ideal perfect temperature shower. Our
product would be targeted to the middle class, as it will be considered a mid-range quality
product. We calculate that our product will cost us a total of $180 to manufacture. We
will then sell it at a markup of $300, netting us a profit of $120 per unit. We have
calculated our break-even point to be 1,200 units. If we sell 2,000 units in our first
2
Showertainment
Dr. McDowell
MGMT 4252
operational year, we will net a collective profit of $240,000. Split between all six of us,
that will be an individual salary of $40,000 apiece. We believe that this a very viable
market with increased potential and profit.
Venture Description and Marketing Plan
Company Name: Showertainment
Slogan: “The Most Fun You’ve Ever Had in the Shower!”
Location: 8601 Glenwood Avenue, Raleigh North Carolina, 27617
Type of Business: Plumbing Fixtures and Bathroom Accessories Manufacturer
Founders: Colin White, James Hunter, Daniel Laymon, Brian Howley, Aaron Keener,
and Hillary Pearce
Form of Business Ownership: Limited Liability Corporation
Description of Company:
Showertainment is a consumer product company specializing in bathroom fixtures,
specifically our premiere Showertainment system. We sell directly to consumers, to retail
stores, and business such as hotel chains.
Mission Statement
Our mission is to put a Showertainment system in every shower of middle to
upper-class households as well as higher end hotel chains in the United States, ultimately
providing the greatest and most entertaining showering experience.
Reasons for Business
Our purpose in creation of this product is to provide customers with an
entertaining twist and economic benefit to an everyday activity in which they participate.
We also hope to create a profitable business that increases the income for our members of
the company.
Why we will be successful?
Showertainment will be successful because it is a unique product that has no
current direct competitors providing the same use. This product will provide a valuable
service to users and create a new showering environment. The ability to play music,
control water temperature and flow, set and save personal settings among other abilities
creates an unparalleled product that is of great value to the consumer for the price.
Development Completed
3
Showertainment
Dr. McDowell
MGMT 4252
Currently, we have a prototype identified and the materials including prices
required to create the Showertainment system. The programming for the software has
been obtained. We have designated a location to operate. Finally, we have selected the
target market we will sell to. The next step in the process will be to actually purchase our
materials, produce the product, and sell and distribute the goods to the end user.
Product
Our product, Showertainment, is a shower fixture composed of a touch screen
LCD that has the ability to read water temperatures, program start and end times for
water flow, alert you when your water reaches the desired temperature, access the
internet and other applications, and play music through Pandora among other abilities.
Competitive Advantage
Our competitive advantage starts with the uniqueness of our product. Currently
there is no shower fixture identical to our own. We will have a first mover advantage into
this market and an opportunity to exploit untapped sales. We will be able to create our
own brand recognition for this product and make the gold standard for showering
entertainment. Another competitive advantage is the quality and price of our product.
Currently there are only higher and lower versions of shower fixtures, but they do not
contain the entertainment and technology capabilities featured in Showertainment. The
lower end fixtures simply attach to a showerhead and display an approximate current
water temperature. These products are of much lower quality. The higher end products
cost up to several thousand dollars and require expensive installation, and only have the
ability to control and read water temperature. Based on the price, quality, and features of
our product, Showertainment has a distinct competitive advantage and will carve out a
portion of the current market share.
Copyright
We hope to copyright our software programming that runs the features of
Showertainment. Since the materials that we are using to create Showertainment all have
their own patents and copyrights we cannot copyright the entire device. We do hope to
protect the software programming though, to prevent others from directly creating out
product.
Staff
Our current staff is composed of the six founding members who will do most of
the work starting off. Amongst ourselves we will take care of the purchasing of materials,
programming of the software, promotion of the product, and other administrative tasks.
We will have the product distributed from an external source such as FedEx or UPS.
4
Showertainment
Dr. McDowell
MGMT 4252
Location Info
The main location of our operations will be in Raleigh, NC. Raleigh is among one
of the top ten growing cities in the nation and a center for new, growing businesses. We
elected to rent, instead of buy, because we are at the genesis of our venture and
purchasing a location would be too costly. Renting a location allows for flexibility if
there is a need to move operations elsewhere. The commercial retail space is located at
corner of US 70 (Glenwood Ave.) & Ebenezer Church Road in Raleigh, NC. The
description states that it has great visibility and signature. It is located in a strip mall,
known as Suite D. The front of the store is accessible from the street and there is a
parking lot that has about 20-30 parking spots to accommodate our needs.
The actual address is 8601 Glenwood Avenue Raleigh, NC and is about 5,000
square feet. It is an old furniture store that offers ample amount of space to package and
store our Showertainment products. Along with the necessary amount of floor space,
there are a number of offices for management. A loading dock is located in the back of
the store to allow for easy loading and unloading products on/off trucks. This location is
restricted in its ability to expand, but there will not be a need to expand our physical
location at the beginning. If the need arises, we will be able to move our operations to
another location because of the flexibility of renting. The store itself is relatively new and
will be in no need of immediate renovations.
The actual rental price for the store is relatively inexpensive for the booming city
of Raleigh. It is sitting at $10 per square footage, which comes to $50,000 a year minus
utilities and other needs, such as internet and phone. Since, we are renting our location
we will not have to pay for property tax.
Required Office Equipment
This analysis is based on the assumption that the rental location will offer no prior
equipment for the offices and open space. The furniture, tables, and shelving will have to
be purchased. A commercial printer will have to be rented on a monthly basis. We will
supply our own personal computers for programing the Showertainment products. There
are ten computers available. Nine computers will be in use for the programing and the
other will be a back-up/business computer.
Experiences that We Bring
All of our entrepreneurs are business majors. This will allows enough baseline
knowledge to effectively execute a business. One of our entrepreneurs, Daniel Laymon,
has been a manager at Best Buy for a couple of years and brings experience with
technology and software to our team. Aaron Keener is a small business concentration
and with that; brings the additional knowledge of operating a successful business. Hillary
Pearce, in college, was the co-founder of Silent Pirates at East Carolina University. Her
5
Showertainment
Dr. McDowell
MGMT 4252
initiative will offer leadership to Showertainment. Colin White had a prior occupation
where he assisted in the financial department of BIA Financial. His attention to detail and
competence will ensure that our venture stays in line. James Hunter is a reservist in the
United States Air Force. His discipline learned from military training will make sure that
Showertainment operates smoothly. Bryan Howley is a sociable professional who will be
a great PR officer for our company. Overall our team is hardworking and motivated to
make Showertainment a successful venture.
Marketing Mix
Product
The components that we are using in Showertainment are of high quality from
Reach Technology Inc. that offers a one year manufacture warranty for the touch display
and enclosure kit. Reach Technology Inc. has a high level of consumer ratings and offers
great customer support on their products. We will use their customer support when
customers have technical issues that reach beyond Showertainment technical support
knowledge. The style of Showertainment is slim and sleek and makes the product look as
if it was part of the shower wall. Showertainment is designed to fit nearly flat against the
porcelain or tile wall in the shower to avoid looking like an eyesore. Showertainment
will provide the user with capabilities such as a cellphone without the ability to make
phone calls or take pictures/video. The end user will be able to listen to music by using
apps like Pandora or Spotify as well as look at the weather, browse the internet, play
games or adjust the temperature and pressure settings of the water. Showertainment will
offer enclosure kits that come in multiple colors to match or offset the color of the
consumers shower wall. Showertainment will be a household brand name that will use is
own name to promote our product. Within the packaging, instructions of installation and
user manual will be included as well as the touch screen display, electro mechanical
solenoid valve and temperature gauge fitting valve. At first release Showertainment will
only be available in a 4.7” touch screen display and will have plans to increase its product
line to accommodate up to a 10” screen.
Price
Showertainment will pay for itself when a customer uses the product due to its
water saving and heat reducing technologies. Showertainment will provide the customer
with the ability to preset water temperatures and not have to spend time going back and
forth to find the right temperature setting. Showertainment will hit the market at $400
dollars per unit which is an affordable cost in comparison to other competitors.
Showertainment will introduce a product new to the market that will change the way
people prepare themselves for the day going forward. The quality of the product is of the
highest quality using parts from trusted manufactures who provide support and reliability
for their products. Showertainment will provide discounts to businesses who purchase
6
Showertainment
Dr. McDowell
MGMT 4252
more than 1,000 units of 2.5% and over 2,000 units of 5% discount. This will provide a
discount of 10,000 and $20,000 for 1,000 units and 2,000 units respectfully. Businesses
that provide payment upfront and not use credit financing will also be provided a 1%
discount that can be added to a quantity discount previously noted. Showertainment will
offer payments to individual customers of four payments of $105 per month for four
months. Businesses will be offered the 1% discount in payment terms of 10 net 30.
Channels of Distribution
Showertainments channels of distribution will be vast. The channels of
distribution will include online sales, contract based and consumer retailer sales. We will
offer retailers such as Lowes Home Improvement and Home Depot discounts of 10% for
purchases over 10,000 units and a 5% discount on purchases over 5,000 units but under
10,000 units. These two major home improvement warehouse will be a great sources of
distribution for Showertainment as it will be shown directly to retailers. Showertainment
will only be selling at these two major home improvement retailers until business
provides the ability to move forward into lower markets such as mom and pop plumbing
and electrical shops. The reason we have chosen only these two retailers is because
together they offer over a combined 3,500 store front sales opportunities to sell
Showertainment. The equipment will be coming from our suppliers to our packaging
facility in Raleigh, North Carolina and shipped out of our warehouse to the end user or to
businesses across the United States. Our geographical reach will span across the United
States and Canada with a future investment going towards to overseas sales.
Showertainment will hold at a minimum 1,000 units in inventory at all times to provide
instant gratification to businesses who order more than 1,000 units so we can disperse
shipments at different times to allow time for shipment of other items and allow them to
go ahead and install 1,000 units as they wait for the others to be shipped. This inventory
will allow Showertainment to ship across the country to individuals without waiting for
ordering or manufacturing. For transportation of products the manufacture of the
products will provide delivery to our packaging location in Raleigh, North Carolina and
for our distribution to end users, businesses or retailers we will use Omega Logistics who
we have partnered with for $1.50 per package sent out.
Promotion
Showertainment will use Internet advertising for the majority of the advertising
we will do. Advertising on our own website www.showetainment.com and offering
incentives for our retailers to advertise our products in their weekly fliers as well as
online. Showertainment will be advertised in magazines featuring technology and home
improvements as well as future commercial advertising on television. The message to
our consumers will be that you improve your showering experience with a simple
installation of Showertainment and use every day. Consumers will relate to our product
because we are in a technological boom right now in our economy and consumers love
how technology can improve every part of their life, and now it can improve their
7
Showertainment
Dr. McDowell
MGMT 4252
showering experience. Showertainment has decided to spend no more than 2% of total
revenue or $80,000 if 10,000 units are sold. Showertainment will also use direct mail as
an advertising promotional tool that will allow us to reach a massive amount of potential
customers with a very low cost. The types of promotional advertising Showertainment
has chosen will provide a high level of effectiveness in advertising. The final type of
promotion that Showertainment will use is talking with utility companies and major cities
to provide insight on how much more time consumers will spend in the shower increasing
their profits. They can help us advertise though direct mail in their billing cycles and on
their website to promote our unique industry ground breaking technology.
Marketing Plan for a Consumer/Business to Business
Situation Analysis
Our product is a digital touch-screen display that is installed in a shower and gives
the user the ability to control the temperature of the water. In addition to temperature
control the user also has the ability to access Wi-Fi giving them the ability to stream
music from websites such as Pandora and Spotify.
We will be competing in the Plumbing Fixtures and Bathroom Accessories
Manufacturing Industry in the US. This industry has an average revenue/year of $2.2bn,
had an average annual growth rate from 2008-2013 -0.9% (IBISWorld, 2013). This
industry has a projected annual growth rate from 2013-2018 of -6%. Though this is a
declining market we feel that we will have an opportunity to become profitable through
our target market of homebuilders and hotel companies. Homebuilders Industry in the US
has a projected annual growth rate from 2013-2018 of 8.3% (IBISWorld, 2013) and the
Hotel & Equipment Wholesaling Industry in the US has a projected annual growth rate of
3.5% from 2013-2018 (IBISWorld, 2013). In addition we will also be selling our product
online to individual consumers.
Strengths and Weaknesses
A strength of our product is that it is innovative. There is nothing on the market
that is quite like Showertainment. There are some devices that offer temperature control
but nothing that also gives the user the ability to connect to Wi-Fi and stream music,
check email or do whatever they would like. A weakness of our product is that consumers
would possibly view it as too difficult to install or use, thereby reducing the rate of
adoption.
Opportunities and Threats
A market opportunity is the growing Home Building Industry in the US, and the
growing Hotel & Equipment Wholesaling Industry in US. It is possible that our product
could attract the interest of utility companies that would have their revenues increased by
people staying in the shower longer. They may possibly be willing to invest in our
product. Another opportunity is that there is projected increased disposable income in the
8
Showertainment
Dr. McDowell
MGMT 4252
US that would possible help the sales of our product to consumers (IBISWorld, 2014). A
partnership with Omega Logistics for shipments is also an opportunity for our venture.
A threat our venture faces is being undercut by a larger corporation with bigger
cash flows and a similar product. This company could make contracts with homebuilders
and hotels by offering a price for their product that we cannot compete with.
Competitor Analysis
The main competitors in this industry are Moen and Kohler. Both of these
companies are private and therefore acquiring information about these companies has
been a challenge. Both of these companies manufacture bath and kitchen products
(Bloomberg Businessweek, 2013). Both of these companies have a similar type of
product that our venture would be manufacturing, with not as many options however.
Fortune Brands Home and Security Inc., a publically traded company, recently acquired
Moen. Over the last year Moen has been more profitable due to innovations such as ecofriendly, spot resistant and spotless faucets and showerheads (Krapfel, 2014).
Kohler recently introduced a showerhead/speaker named Moxie. With Moxie you
can connect your phone by Bluetooth to listen to your music while you are in the shower
(Kohler, 2014). With Moxie however, you cannot change your music once you are in the
shower as there is no touch screen display or remote to do so.
Moen currently offers a showerhead and valve (sold separately) that incorporates
exact temperature control as our product would. This product is called Exacttemp, and
costs around $1000 before tax and shipping (Moen, 2014). This product does not offer
any kind of music playing capability.
Marketing Objectives/Goals
Channel Selection
We plan on reaching our customers mainly by obtaining contracts with new
housing developers and with hotel companies that are expanding and opening new hotels.
Consumers will also have the option to purchase our product directly from our online
store; this will give the average person the ability to purchase our great product at a
reasonable price for their own home enjoyment. Our goal will be to obtain contracts with
50 homebuilders and 25 hotel builders in order to make our sales quota at end of year
one. We will do this by having a strong sales force and meeting personally with clients to
negotiate deals.
Marketing Plan for a Consumer/Business to Business
We will focus our scope of the market on three major categories: homebuilders,
commercial building, and restaurant and hotel equipment wholesale. The homebuilders
market is comprised of 159,691 businesses with an annual growth history of -2.5% from
2008-2013 and a projected growth of 8.3% from 2013-2018. (US Industry Reports >
Home Builders, 2014) The commercial building market is comprised of 31,429
9
Showertainment
Dr. McDowell
MGMT 4252
businesses with an annual growth history of -0.3% from 2009-2014 and a projected
growth of 4.9% from 2014-2019. (US Industry Reports > Commerical Building
Construction, 2014) Restaurant and hotel equipment wholesaling is comprised of 3,630
businesses with an annual growth history of 1.97% from 2008-2013 and a projected
growth of 3.5% from 2013-2018. (US Industry Reports > Restaurant & Hotel
Equipement Wholesaling, 2014)
We should focus on the geographic regions close to major airports to target hotels.
The top 5 airports in the United States are Atlanta, GA; Chicago, IL; Dallas, TX; Denver,
CO; and Los Angeles, CA (Census.gov, 2009). The Atlanta airport had 41,000,000 flights
in 2009, while the other 4 airports had over 20,000,000 flights each. Overall, the median
income of families as of 2009 was $67,697. The white demographic made $70,000 and
the Asian demographic made $90,000. The income increases approximately $2,000 a
year so the current median income should be approximately $75,000. So the white
demographics’ current income should be $78,000 with the Asian demographic at
$98,000. As of 2009, more people travel and stay in a hotel for business rather than
leisure; which means they spend more on a room and stay for a longer period. So by
targeting hotels in major cities, we are indirectly targeting middle-class business
individuals. This demographic is educated, therefore they will be more in-depth with
making purchasing decisions, researching their options and costs.
The hotel chains we should focus on marketing to and securing contracts with the
following hotel chains. Choice Hotels, which owns some brands such as Comfort Inn and
Comfort Suites, with over 7,000 hotels nationwide with income of $0.64 billion. Hyatt
Hotels has over 490 hotels worldwide with income of $3.70 billion. Wyndham Hotel
Group with some brands such as Wyndham Hotels and Resorts and Ramada Worldwide,
with an income of $4.25 billion (Said, 2013). These are just a small sample of chains that
we could and should target.
The psychographic of the market prefer to stay in hotels with nicer rooms and
gives a feel of a luxurious lifestyle. The attitudes of this demographic are that they’re
tech-savvy and music lovers. Many will be members of hotels, high-end credit or rewards
cards. This market will expect a higher level of quality and service, but may not be as
price-conscious as lower-class members.
In addition to targeting bigger and higher-end hotels, we should consider targeting
members of America Express credit cards and other high-end and rewards members of
these hotels. We should also target contractors of apartment complexes and housing
developments. Raleigh, NC is a great place to start as there is a big housing boom
currently happening. Some of the developers are Drees, John Wieland, Lenar, KB
Homes, and Forever Homes. New homebuyers often will buy upgrades that are shown in
the model homes.
We can use celebrities to advertise the Showertainment as a luxury item, such as
Isaiah Mustafa, better known as the Old Spice Guy. We could also advertise the
educational benefits of the product by showing how apps could be downloaded for
studying notes for an exam, while in the shower.
10
Showertainment
Dr. McDowell
MGMT 4252
The product or services:
I.
Story of the product line, quality development, delivery and service
II.
The product line is the Showertainment, which was born out of the idea to create a
temperature-controlled shower head. In development, it has turned into a
temperature-controlled showerhead with a touch screen, Wi-Fi enabled interface
that streams music and allows for downloads of apps. The products will be
shipped from our headquarters at in Raleigh, NC.
Problems & Opportunities
Problems
Like any new business we will have to face many problems along the way.
Initially, the biggest problem we will face as a company is establishing ourselves in the
industry, which currently has high barriers of entrance. Three major companies make up
83.2 of the market share. Another problem we will face will be obtaining contracts with
homebuilders and hotel builders. Most builders work closely with regional suppliers,
while we will only one location nationwide, which will be in Raleigh. This location will
work well because of our proximity to major cities like Washington D.C., Charlotte,
Nashville, Atlanta as well as other cities along the eastern coast. Another problem we
will face is programming and writing code for our product, this comes hand in hand with
technical support for our product once it is sold and installed. Finally, obtaining capital
will be the biggest problem we will face, our startup cost are relatively high and there is
no definitive market for our products.
Opportunities
Although there is a wide range of current shower fixtures that we are competing
with, there is nothing quite like our product. With such an innovative product we see this as
an opportunity to create our very own market. Our product addresses several problems in
regards to the average showering experience. First it is an entertainment system with the
capabilities of a tablet. This will allow the user to access their e-mail, schedule, social
media, investments, news sources and music library. On top of that this will be intergraded
with the plumbing system, allowing the user to control water temperature and pressure. So
it addresses the need for a person to stay connected to the world around them as well as
letting them stay comfortable in the shower. Since we are targeting homebuilders and
hotels, these choice in distribution can be used as selling points on home as well as give us
exposure to potential customers during their stay at the hotel.
Financial, Organizational, and Operations Plan
Company Name: Showertainment
Slogan: “The Most Fun You’ve Ever Had in the Shower!”
11
Showertainment
Dr. McDowell
MGMT 4252
Location: Deep River Business Center, 2640 Willard Dairy Suite 100 Road, High Point,
NC 27265
Type of Business: Plumbing Fixtures and Bathroom Accessories Manufacturer
Founders: Colin White, James Hunter, Daniel Laymon, Brian Howley, Aaron Keener,
and Hillary Pearce
Form of Business Ownership: Limited Liability Corporation
Organizational Plan
Ownership Model, LLC: The form of ownership chosen for Showertainment is a
Limited Liability Company.
Reasons for Ownership Style: We collectively selected this form of ownership for
several important reasons. The first thing we considered was liability. In this style, the
liability for each member does not extend beyond his or her capital contribution to the
organization. This is important for our start up company by providing assurance that we
can only lose up to what we have put in. This limited liability is key in comparison to the
unlimited liability as seen in proprietorships or partnerships. The next factor in our
decision was transfer of interest in the company. If members want to get out of the
business or give up their share, there only needs to be a unanimous vote from the rest of
the members to do so. We all thought this to be beneficial in being able to let go members
who are no longer able to provide valuable input. Another important factor in this
decision was tax benefits. With an LLC, income generated from the business is treated as
personal income and not double taxed, as seen in a regular corporation.
LLC Member-managed: After researching deeper into a LLC, it appears that there are
two methods of managing a company of this nature. One is a Manager-managed company
which entails that there will be a Board of Directors. This method would not be feasible
for a company our size and our level of start-up. It would be better to take the other
option which is a Member-managed company. This will place responsibility in the hands
of the owners to ensure operations are being run smoothly. This fits our situation, like a
good glove, because we are only six entrepreneurs with no other stakeholder investments
outside of our own capital.
Organizational Structure/Design: We selected a functional structure, and grouped our
organization by task. We did this because of the strengths from grouping by task, such as
specialization and exploiting economies of scale. This style is beneficial for companies
manufacturing by units. We will use this structure to become focused on producing our
one product efficiently. This will happen by having each of our members being
specialized in one specific area of the business, and then using all those specialized areas
to create and sell our system in the most effective way possible. We will also benefit
from economies of scale. We will gain cost benefits by mass-producing Showertainment
12
Showertainment
Dr. McDowell
MGMT 4252
units. We will also increase the size of our organization as we create more contracts with
businesses to use our product, and we will increase our speed of production as well.
Management Team and Backgrounds: Our management team includes Hillary Pearce
who is the CEO, Daniel Laymon who is our Chief Technical Officer, James Hunter who
is our Chief Operating Officer, Colin White who is our Office Manager and Quality
Controller, Aaron Keener who is the VP of Logistics, and Bryan Howley who is the
PR/Marketing Coordinator. We will all collectively take part in the Financial
Management of the company.
Roles and Responsibilities of Management Team: Hillary will be responsible for
overseeing the company as a whole. She will make sure we have the resources to conduct
business, and be the face of our product when taking it to market. She will also be in
charge of making decisions about large issues, such as accepting or creating contracts
with other businesses. Daniel will be in charge of programming and maintaining the
operating system, which will run the Showertainment device. He will show all the
members how to do this and cross train every member so we can all contribute in
production. James will make sure operations within the company go smoothly and keep
things going in the right direction. He will direct tasks and make sure work is done
correctly and on time. Colin will deal with human resource aspects, and oversee
processes within the organization. He will deal with the coordination of equipment and
processes in the office and making sure everything is up and running. He will also be
involved with handling of any compliances, training of any new employees, overseeing
quality of the product, and customer service. Aaron will be in charge of keeping up with
inventory records and making sure product orders are being filled and shipped out. He
will oversee the logistics operations for the company. Finally, Bryan will deal with the
marketing and sales of Showertainment. He will provide the selling techniques for the
system and how to get it out to the public. He will also be involved in public relations and
dealing with the public. (The team’s qualifications and summaries are located in
Appendix A & B)
Check Signing Ability: Check signing ability and control will be authorized by all the
entrepreneurs. Any amount exceeding $500 must be cleared first by the CEO, Hillary
Pearce. This will ensure no large amount of money is thrown into unnecessary purchase.
Officer Salaries: For each of the founding members, first year starting salaries will be
$50,000. During the second year, we will increase that yearly salary to $60,000. For the
third year, it will increase to $70,000. Regarding the years after, we will assess the
salaries based on current income from the business overall. We see these as modest
salaries in comparison with how much the company should be bringing in each year.
13
Showertainment
Dr. McDowell
MGMT 4252
Individual Capital Contributions: Per entrepreneur, we will each contribute $10,000 as
upfront cash capital. This will come directly out of pocket from the all of the owner’s
individual savings. This money will enable Showertainment with some start-up money to
use towards raw materials and renting our location.
Other Financial Contributions: Our six entrepreneurs will be unable to fund our venture
solely on the initial capital they have contributed. We have sought a loan from BB&T to
assist us in our start-up. We will be able to take out a $500,000 Small Business
Administration (SBA) loan on a payback plan of 15 years. The interest on this loan is
around 4.5% and we have the option, in the beginning, to pay on a fixed rate or an
interest-only rate. A fixed rate implies that we will pay a monthly bill to BB&T including
the interest owed. An interest-only rate gives us a little more leeway at the beginning
because it only charges us the interest on the indebted amount for up to 3-5 years. This
will work to our advantage because it will give us time to establish our venture without
being bogged down with the more expensive fixed rate. Once we are established and
have a steady income, we will be able to pay back larger portions of our loan to make up
the years of just the interest-only rate. After weighing the two options, we elect to go with
the fixed rate because if we sell several of our products we will be able to pay our bill.
Also, the interest-only rate will, in the end, have us pay more money to BB&T in
comparison to the fixed rate.
Levels of Ownership: In the beginning, we will operate our organization under equal
shares of ownership. This is due to the even percent of initial capital contribution.
Utility Expenses: Our location in High Point, NC was selected based upon its location in
the middle of the state and its access to main highways. The office building we have
selected offers enough space to conduct our assembly and software operations, while
leaving ample room for offices and a conference room. The space is relatively
inexpensive at $10.68 a square foot. The utilities will run us at a high of 766.12 and low
of 520.58. Our management team is very frugal minded, so we will do whatever possible
to keep our utilities on the lower end.
Operations Plan - Now until Launch
We need to get many things done between now and the launch date for our business. In
the initial stages we will need to garner information from industry professionals about
how to tackle our project. For example we have a few different options of how we deal
with our clients: we could attempt to contact hotel product buyers on our own and try to
sell our product. However, more than likely we would need to hire professional
salespeople to sell our product and negotiate deals with the hotel companies. Inquiring
14
Showertainment
Dr. McDowell
MGMT 4252
from industry professionals would also give us an idea of what kinds of salespeople to
contact, perhaps some that are specialized for our industry. Given the uniqueness of our
product it has been very difficult to find information about best practices through
traditional research methods, therefore contacting industry professionals will provide us
with the knowledge we need to start off on the right foot. In terms of our ability to do
business we will need to obtain a loan of over $500,000 (see financials).
Facility Preparation
For a business as large as we plan on having, we will need a proper facility. We have
chosen a facility and we will need to negotiate a deal for our building. In addition we will
need to register utilities under one of our names. We will also need to buy equipment to
furnish our facility. The equipment that we will need is listed in the following section.
The equipment will need to be assembled such as the storage racks, workbenches,
computer desks etc. We plan on assembling all of our equipment personally. In addition
we will also be setting up our conference room/showroom to be appealing to potential
clients who would like to visit our facilities.
Product Testing
We will need to build prototypes of our product and test them to identify any potential
hindrances to production as well as any potential quality problems with our product. We
will need to assemble all of the raw materials into the finished product as well as program
the software for the product. Between all of us on the start-up team we have nine
computers available for software programming and one extra for administrative business
tasks. Building multiple prototypes of our product will allow us to perfect our process,
identify any quality issues, and take care of any problems up front before they become
bigger problems once we produce greater quantities of products.
Detailed Operations Information
Location: Deep River Business Center, 2640 Willard Dairy Suite 100 Road, High Point,
NC 27265. The location is an office in Deep River Business Center which is easily
accessible by customers, suppliers, and distributors. The Deep River Business Center
parking lot has enough space for 80 vehicles. Since we plan to use FedEx and UPS for
our shipping needs, we should easily be able to receive supplies and ship out products.
We do not need a location with a loading dock as we will not be using a large delivery
truck.
Manufacturing Operations: All operations and assembly will be completed in-house.
The software for the touchscreen LCDs will be programmed at our location on nine
computers dedicated solely to the task of programming. We are capable of program a
15
Showertainment
Dr. McDowell
MGMT 4252
maximum of 6 touchscreens per computer per hour, so 56 per hour and 448 units per
working day. Our hours of operations will be from 8 – 6pm. Once the LCDs are
programmed, they will be moved to the assembly and packaging tables, where they will
be placed into the enclosure and hooked up to the electro mechanical solenoid valve and
temperature gauge fitting valve. Once assembled, the completed product will be
packaged with the installation manual
Raw Materials: Reach Technology 4.7” Touchscreen LCD and enclosure kit, electro
mechanical solenoid valve and temperature gauge fitting valve
Equipment: Four wide span storage rack (72 x 24 x 72”) for storing completed products,
four heavy duty five-shelf storage units (36 x 60”) for storing materials, standard (30 x
60”) workbenches adjustable height (29.5 to 34.5”) three for software programming and
two for manufacturing, five work stools, one computer desk, one desk chairs, nine
computers for software programming, one business computer, one commercial printer,
and three phones.
Labor Skills: The software programming and initial assembly of the product will require
a person skilled in technology and programming. Day to day operations will require a
person skilled in management of people and time. Marketing will require a charismatic
person that is skilled in marketing and has a strong network of people in the housing and
hotel industries. Operations of the website and orders will require a person with
intermediate to proficient website design skills and ability to sell through the phone and
online. Management of the finances will require a person with strong math skills,
preferably trained in accounting and finance.
Space: We have decided to lease a location at Deep River Business Center, which is
1,820 square feet. We have determined that this amount of space is sufficient for our
needs as we only need enough space for storing materials, three workbenches for
programming the software, two workbenches for assembling and packaging the product,
storing completed products, and general operations. We will have the space divided into
6 different areas: materials storage, software programming, assembly and packaging,
completed products storage, office, and a conference-room/showroom. There will be a
phone in the office, conference room, and general production area.
Overhead:
Wide-span storage rack (72 x 24 72”) $189 for 1, $181 each for 4 at a total price of $724
from ULINE Shipping Specialists (Wide Span Storage Rack, 72 x 24 x 72" - Particle
Board, 2014)
16
Showertainment
Dr. McDowell
MGMT 4252







Hirsh Industries LLC Rivet 36x60 Heavy Duty 5 Shelf Storage Unit available
from various sources with a price range of $79-$139.09. We will purchase four of
these shelves from Cymax Stores which is Google Chrome Trusted Store with
2,197 ratings giving them a score of 4.5 stars. They sell the shelves for $79 each
with free shipping and charge no taxes. The total for these four shelves will be
$316. (Rivet 36x60 Heavy Duty 5 Shelf Storage Unit by Hirsh Industries LLC ,
2014).
Standard Workbench 60 X 30 Adjustable Height Industrial Workbench $310.05
each from Cen-Med Enterprises. We will need 5 of these, so the total amount is
$1,550.25 (Standard Workbench 60 X 30 Adjustable Height Industrial
Workbench, 2014).
Computer desk $153.91 (Contemporary Style Computer Desk in Espresso, 2014)
Flash Furniture High Back Leather Executive Chair GO-901-BK-GG computer
chair $177.79 (Flash Furniture High Back Leather Executive Chair GO-901-BKGG, 2014).
Work stools $37.76 each – total for 5 is $188.88 (Mona 24" Cushion Saddle Seat
Stool, 2014).
Commercial Printer $924.92 (HP LaserJet 500 Color MFP M570dn CZ271A,
2014)
Three RCA 25201RE1 Corder 2-Line Phones $39.99 each – total for three phones
$119.97 (RCA 25201RE1 Corded 2-Line Operation Corded Speakerphone with
Caller ID (Black) , 2014).
Total: $4105.17
Launch Date Onward
Once we open, our day-to-day operations will be from 8am to 6pm Monday-Friday. We
will keep inventory in the office for day-to-day operations and in anticipation of large
orders. Eventually we will move to just in time delivery for materials. Operations will
consist of programming the LCD touch screens. Once assembled, they will be packaged
together with the enclosure kit and instructions pamphlet. Once packaged, they will be
stored until needed to fill an order which at point they will be packaged for shipment. The
conference/showroom will be used for meetings with prospective clients from hotel
chains and home builders. The office will be used for all things related to running the
business, collecting orders, marketing, and tracking expenses and revenue.
17
Showertainment
Dr. McDowell
MGMT 4252
We will accept payments through cashier's checks or e-checks. We will require 50% paid
up-front at the time of ordering and then we will allow 30 days for paying the next 25%
and 60 days for paying the last 25%. We will offer a Net 10-30 discount, where if they
pay off the entire bill within 30 days, they will receive a 10% discount.
Manufacturing Plan
We have chosen to adopt a quality philosophy in our manufacturing process. We plan on
being proactive to identify any potential quality problems in our production process, and
if any defects are found we will stop production find out why the problem is there and
how to solve it before continuing. Our manufacturing philosophy and practice is based of
W. Edwards Deming's 14 points about quality (Deming, 2009).
We will not be responsible for all of the manufacturing process. We will be purchasing
the preassembled touch screens, enclosure kits, and electro mechanical solenoid valves.
We will be purchasing the preassembled touch screens and enclosure kits from Reach
Technology for $150 and $10, respectively. We will be purchasing premium quality
electro mechanical solenoid valves from McMaster-Carr for $104.30 each.
Production Process
Our production process will primarily consist of us programming the software for the
LED touchscreens. This will take place on a computer, we will then plug the
touchscreens individually into one of our nine computers and essentially copy and paste
the software directly to the Showertainment touchscreen display. We will then run tests
on the product to ensure that the software is configured correctly and that each function
of software runs without issue.
After production is complete, we will package the touchscreen display with the enclosure
kit (includes all fasteners, screws, etc.) and the solenoid valve along with installation
instructions.
Works Cited
(2009). Retrieved from Census.gov:
http://www.census.gov/compendia/statab/cats/information_communications/inter
net_service_providers_data_processing_libraries.html
18
Showertainment
Dr. McDowell
MGMT 4252
US Industry Reports > Commerical Building Construction. (2014). Retrieved from IBIS
World:
http://clients1.ibisworld.com.jproxy.lib.ecu.edu/reports/us/industry/ataglance.aspx
?entid=1916
US Industry Reports > Homebuilders. (2014). Retrieved from IBIS World:
http://clients1.ibisworld.com.jproxy.lib.ecu.edu/reports/us/industry/ataglance.aspx
?entid=169
US Industry Reports > Restaurant & Hotel Equipement Wholesaling. (2014). Retrieved
from IBIS World:
http://clients1.ibisworld.com.jproxy.lib.ecu.edu/reports/us/industry/ataglance.aspx
?entid=929
(2009). Retrieved from Census.gov:
http://www.census.gov/compendia/statab/cats/information_communications/internet_serv
ice_providers_data_processing_libraries.html
Contemporary Style Computer Desk in Espresso. (2014). Retrieved from BettyUSA:
http://www.bettyusa.com/servlet/the-28877/Free-Shipping,-ContemporaryStyle/Detail#.Uy0LPMtOXIU
Deming, W. E. (2009). Out of Crisis (2nd Edition ed.). W. Edwards Deming Publishing.
Flash Furniture High Back Leather Executive Chair GO-901-BK-GG. (2014). From
OfficeAnything: http://www.officeanything.com/Flash-Furniture-High-Back-LeatherExecutive-Chair-p/fl-go-901-bkgg.htm?gclid=CPvXzvvnq70CFcx9OgodfHAA9w&Click=1781&utm_source=googlebas
e&utm_medium=shoppingengine
HP LaserJet 500 Color MFP M570dn CZ271A. (2014). Retrieved from CompBizUSA:
http://compubizusa.com/hp-laserjet-pro-500-color-mfp-m570dn-cz271a122163.html?gclid=CPvoxYagpb0CFbBj7AodoDsAfg
Mona 24" Cushion Saddle Seat Stool. (2014). Retrieved from Fratta:
http://www.fratta.com/Mona-24-Cushion-Saddle-Seat-Stool-Black-Faux-Leap/2283151294064.htm?gclid=CIDhltKgpb0CFc1j7Aodbh4AUA&utm_source=google&utm_medium
=cse&utm_term=22831512-94064
RCA 25201RE1 Corded 2-Line Operation Corded Speakerphone with Caller ID (Black) .
(2014). From Newegg.com:
http://www.newegg.com/Product/Product.aspx?gclid=CIih8d_mq70CFcx9OgodfHAA9w
&Item=N82E16876206014&nm_mc=KNC-GoogleAdwords&cm_mmc=KNC19
Showertainment
Dr. McDowell
MGMT 4252
GoogleAdwords-_-pla-_-Corded+Phones-_N82E16876206014&ef_id=UrMFrQAAAGcn72Cv:20140324182954:s
Rivet 36x60 Heavy Duty 5 Shelf Storage Unit by Hirsh Industries LLC . (2014). Retrieved
from Cymax: http://www.cymax.com/hirsch-industries-llc-rivet-36x60-heavy-duty-5shelf-storage-unit-17126.htm?src=PLA&srcid=6469955&gclid=COXalOUpb0CFZRr7AodLX0A2g&gclsrc=aw.ds
Said, S. (2013, 04 05). The Top 10 Best Luxury Hotel Chains. Retrieved from The
Richest: http://www.therichest.com/business/the-top-10-best-luxury-hotel-chains/
Standard Workbench 60 X 30 Adjustable Height Industrial Workbench. (2014). Retrieved
from Cen-Med Enterprises: http://www.cenmedonline.com/standard-workbench-60-x-30adjustable-height-industrial-workbench.html?gclid=CKaJp7qPpb0CFUVp7Aod-A8A9Q
US Industry Reports > Commerical Building Construction. (2014). Retrieved from IBIS
World:
http://clients1.ibisworld.com.jproxy.lib.ecu.edu/reports/us/industry/ataglance.aspx?entid=
1916
US Industry Reports > Home Builders. (2014). Retrieved from IBIS World:
http://clients1.ibisworld.com.jproxy.lib.ecu.edu/reports/us/industry/ataglance.aspx?entid=
169
US Industry Reports > Restaurant & Hotel Equipement Wholesaling. (2014). Retrieved
from IBIS World:
http://clients1.ibisworld.com.jproxy.lib.ecu.edu/reports/us/industry/ataglance.aspx?entid=
929
Wide Span Storage Rack, 72 x 24 x 72" - Particle Board. (2014). Retrieved from ULINE
Shipping Specialists: http://www.uline.com/Product/Detail/H-1528/IndustrialShelving/Wide-Span-Storage-Rack-72-x-24-x-72-ParticleBoard?pricode=WU347&gadtype=pla&id=71303500762&gclid=CL2Rs_yMpb0CFUYV
7AodTHIAOQ
20