OnStar Smart Helmet, LLC
VT KnowledgeWorks
2200 Kraft Drive, Suite 1000 Blacksburg, Va 24060
MGT 4064: ITE Leadership
2:30 Section
Team 6:
Blair Priest – Project Coordinator
CJ Babb
Ryan Beach
Lindsey Cartner
Matt Shea
Submitted to:
Dr. Devi Gnyawali
ITE Leadership, Management Department
Virginia Tech
April 20, 2012
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Table of Contents
Executive Summary................................................................................................................. 3
1.0 Company Description ........................................................................................................ 4
2.0 Industry Analysis ............................................................................................................... 6
3.0 Market Analysis ............................................................................................................... 11
4.0 Marketing Plan ................................................................................................................ 18
5.0 Management Team and Company Structure ................................................................... 21
6.0 Operations Plan................................................................................................................ 25
7.0 Product Design and Development Plan ........................................................................... 32
8.0 Financial Projections ....................................................................................................... 35
Bibliography .......................................................................................................................... 39
Appendix ............................................................................................................................... 43
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Executive Summary
Our company, OnStar Smart Helmet, LLC, offers a premiere helmet to the industry by
providing OnStar capabilities which include crash detection sensors, a GPS locator, and handsfree calling. The company was formed by five entrepreneurial students at Virginia Tech; Blair
Priest, Lindsey Cartner, CJ Babb, Ryan Beach, and Matt Shea. Due to the lack of similar
products, our helmet will offer added value to the consumer, value that is not offered yet by our
competitors. In order to launch our business, we plan to establish a partnership with OnStar in
order to license the use of their equipment.
The industry for our product is directly influenced by the motorcycle, recreational
vehicle, and communication equipment industries. During the recent recession, these industries
had a significant decrease in growth due to the fact that their products are viewed as a
discretionary use of funds. Since the most significant growth decline in 2009, these three
industries have rebounded and are now experiencing moderate, positive growth. This increase in
growth indicates that the industry for our product will become increasingly more desirable as
unemployment rates continue to decrease, resulting in an increase in disposable income for
consumers. The target market for our helmet is made up of current and future motorcycle and
recreational vehicle users. Our competitors include other helmet manufacturers that sell either
standard or technology-based helmets, in addition to companies that sell helmet accessories that
have the same GPS capabilities as our helmet.
In order to create awareness about our product, we plan to utilize the motorcycle and
recreational vehicle retailers to promote and distribute our product. We will also use other
avenues including relevant magazines and periodicals and will rely heavily on word of mouth
referrals and positive public relations. The partnership with OnStar will help us to legitimize our
product ultimately building the credibility that is needed to stimulate sales. We will differentiate
our product from competitors by highlighting the value added through the OnStar and GPS
capabilities, as well as our competitive pricing.
The management team is composed of the five original founders. Our various
educational and occupational backgrounds allowed us to fill many of the necessary roles, except
for in the areas of human resources and accounting. We plan to use the President’s Council
offered through VT KnowledgeWorks as our Board of Directors in order to fill these gaps, as
well as gain professional insight and leadership abilities. VT KnowledgeWorks will also be the
location for our company, and we will outsource our manufacturing to Berlin Dynamic Industry
Company, Ltd., a helmet manufacturer with the necessary equipment to produce our product.
We are still currently in the product conception phase; therefore, the next step for our
company is to create a prototype of our product and to conduct usability testing and to assess
demand. We are also in the process of obtaining a patent to protect our intellectual property.
The full production of our helmet is contingent on the licensing agreement with OnStar because
without their services, our product is not viable.
Over the course of conducting this business plan, we encountered many uncertainties that
threatened the feasibility of our product. We feel that our management team lacks the necessary
credentials to launch a business of this magnitude. In addition, our product is based around a
service, OnStar, which is not our own, so our business cannot move forward without their
partnership. Lastly, our costs have proved to be exceedingly high due to liability insurance,
licensing costs, and manufacturing. At this point in time and with the resources that we currently
have at our disposal, we feel that the business concept is not viable, but that it has the potential to
be a very successful venture.
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1.0 Company Description
1.1 Introduction
The OnStar Smart helmet is a concept that was developed in 2012 in response to the need
for increased safety for motorcycle and recreational vehicle users. We seek to provide a costeffective helmet and offer the option of having the OnStar service included in the helmet. Our
company will partner with OnStar in order to offer their service with our helmets. The OnStar
Smart helmet increases the functionality and utility of a standard helmet by introducing OnStar
and GPS capabilities. This business concept was generated from a team of students, Blair Priest,
CJ Babb, Lindsey Cartner, Ryan Beach, and Matt Shea.
1.2 Company History
During an entrepreneurial course at Virginia Tech in 2012, the OnStar helmet idea was
developed into a feasible business concept. Our team recognized a gap in the marketplace that
would fulfill needs of the consumers. From our business idea, we conducted a feasibility
analysis which returned positive results encouraging us to develop the idea into a business
proposal.
1.3 Mission Statement
The mission of the OnStar Helmet is to protect motorcyclists and recreational vehicle
users in order to increase safety by preventing head injuries as well as providing GPS capabilities
to locate victims of an accident. The company’s tagline will be “Protecting Your Loved Ones”
which will create an emotional appeal with the consumers. The tagline will be an important
component in reaching out and establishing a connection with the target market.
1.4 Product and Services
Our product is the OnStar Smart Helmet which is equipped with OnStar and GPS
capabilities. Using impact detection sensors, the helmet will be able to notify emergency
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personnel if the user was in a crash. Due to the lack of similar products, our helmet will offer
added value to the consumer, value that is not offered yet by our competitors. The increase in
helmet use laws in the United States will aid in the growth of the helmet industry. We have
sought out two well recognized companies, OnStar and Berlin Dynamic Industry Company, Ltd.,
to assist us with the manufacturing and production of our helmet. We are in the process of
conducting a patent search and applying for a patent in order to protect our intellectual property.
1.5 Legal Status and Ownership
We plan to explore the formation of a Limited Liability Company and to assess our
options in obtaining this legal status. We plan to draft a founder’s agreement to dictate division
of equity, salaries, buyback clauses, and other issues before initiating the conversion to a LLC.
The LLC has favorable tax and liability components that would greatly enhance the profitability
and opportunity for success for our venture.
1.6 Key Partners
We also have chosen to partner with OnStar in order to obtain the rights to use their
service. After communicating with an OnStar representative, in order to obtain a partnership
agreement with OnStar, we would have to submit our service idea and wait for approval by
OnStar. If they wish to partner with us, then negotiations would take place on the licensing costs
as well as other components of the partnership agreement. In order to proceed with our business
plan, we are assuming that OnStar will agree to a partnership in order to develop the OnStar
helmet. In addition, we have chosen to outsource our manufacturing by partnering with Berlin
Dynamic Industry Company, Ltd., a well-established and successful helmet manufacturer for
brands such as Nexx and Icon. These two allies will help to launch our product quickly into the
market because they already have clientele who either use OnStar or have purchased Nexx or
Icon helmets.
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2.0 Industry Analysis
There has not been a clearly defined industry for our OnStar smart helmet because no
other similar product exists. Due to the fact that our helmet would create a new industry, we
explored the growth of three industries that will affect the success of our product the most, which
include the motorcycle industry, the recreational vehicle industry, and the communication
equipment manufacturing industry, which includes OnStar (NAICS 33422). Our product is
dependent on the growth of these three industries, especially the motorcycle and recreational
vehicle industries, because our product is merely an accessory that accompanies the purchases of
motorcycles and recreational vehicles.
2.1 Industry Size/Growth rate
The motorcycle industry has always had a strong niche following. Recently, however,
motorcycles are becoming increasingly mainstream. Since 2003, the number of American
households that own motorcycles has increased by 26%, and the number of motorcycles owned
and used in America has increased by 19%, bringing the total to approximately 10.4 million
people (Morris, 2009). There has also been an increase in the two lesser demographics of
motorcycle ownership. Female ownership of motorcycles has increased from 9.6% to 12.3%, and
women now account for approximately 23% of the 25 million Americans who rode a motorcycle
in the past year ("More people riding," 2009). The second growing demographic is Generation Y
motorcycle riders, which has increased 62% since 2003 (Motorcycle Industry Council, 2009).
This growth is further enhanced by the fact that the U.S. motorcycle market was worth $14.6
billion in 2007 and that figure has risen to over $21 billion in 2011 (“The U.S. Motorcycle,”
2011). This is an increase of approximately 30%. This illustrates the potential that lies in the
motorcycle industry, which is established yet still growing and evolving.
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Despite the increase in worth of the motorcycle market, both the motorcycle and
recreational vehicle industries took large hits in 2009 in terms of revenue growth. Motorcycle
revenue growth decreased by 21.4% compared to 32.1% for the recreational vehicle industry,
which was a result of a decrease in per capita disposable income of 3.2% (“IBISWorld: 33699a”;
“IBISWorld: 33699c”). Despite this sharp decline in 2009, the recreational vehicle industry
rebounded quickly in 2010 with 22.6% in revenue growth (“IBISWorld: 33699c”). The
economic recession had a significant impact on these two industries due to the fact that they are
discretionary products and the industry is “highly sensitive to changes in disposable income”
(“IBISWorld: 33699a”).
During this economic downturn and decrease in demand for these two industries,
motorcycle retailers decided to tailor their efforts towards the high-end market composed of
wealthier consumers who look for high-end, technology-based products. The firms that target
these high end consumers “will continue to perform well in today’s market” and will experience
higher profit margins (“IBISWorld: 33699a”). This focus on high end products and wealthier
consumers should benefit our product since it offers significant technological capabilities that
should coincide with the wants of this bracket of consumers.
In regards to the communications (OnStar) industry, the economic recession also
negatively influenced industry growth because consumers “opted to delay wireless infrastructure
improvements or [they] purchased equipment from cheaper foreign manufacturers instead”
(“IBISWorld: Communication”). Like the other two industries mentioned above, this industry
suffered a significant decline in 2009, approximately -17.6% (“IBISWorld: Communication”).
Over the past three years, the industry has had positive growth as consumers are recovering from
economic hardship which resulted in an increase in consumer spending by 6.6% (“IBISWorld:
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Communication”). All three of the industries, motorcycle, recreational vehicle, and
communication equipment, are currently experiencing positive growth.
2.2 Industry Sales Projections/Structure
The table below indicates the top five global companies and their motorcycle sales in 2011 as
well as their projected sales in 2012. These sales projections coincide with our product’s
demand because as motorcycle sales increase so will the sale of motorcycle accessories and
equipment, such as helmets.
Company
2011 Sales
2012 Sales(Projected)
D & S Cycle of Arlington Inc
3,000.00M
3,005.68M
MOTORCYCLE DISTRIBUTORS AUSTRALIA PTY LTD
2,269.59M
2,272.00M
RED BARON CO.,LTD.
793.23M
795.85M
YAMAHA MOTORCYCLE SALES JAPAN CO.,LTD.
487.85M
485.94M
YAMAHA MOTOR FRANCE
422.82M
427.23M
("Motorcycle dealers," )
The US motorcycle dealer industry includes about 4,300 stores with combined annual revenue of
$18 billion. The industry is highly fragmented: the 50 largest companies generate just 10 percent
of industry sales.
2.3 Nature of Participants
This industry has a specific set of key factors that sets a good helmet apart from a poor helmet.
Some of the major key attributes that go into a helmet are the fit and comfort and the face shield
effectiveness of keeping wind out. (JDP, 2011) There are 11 attributes to these key factors that
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can be found in the appendix (See Helmet Attributes, p. 43). The major players in the industry
rated by consumers are Arai, who has been ranked highest 13 years in a row, Shoei, Icon, and
Harley Davidson. Arai has been able to be at the top of the charts for so long because their
improvement in satisfaction is “driven mainly by increases in satisfaction with
ventilation/airflow; fit and comfort; color/graphic design; and scratch resistance of the shell”
(JDP, 2010). Harley has been able to stay at the top as well because of “increases in satisfaction
with ventilation/airflow; fit and comfort; and color/graphic design” (JDP, 2010). It has been
found that motorcycle helmet owners have been increasingly buying their helmets online. “The
percentage of helmets purchased online has increased steadily during the past 10 years. As a
result, it’s crucial to ensure that dealers have an e-commerce website available for customer use
as their preferences change” (JDP, 2011). With this in mind, consumers all start out at the brick
and mortar dealerships and once they have become accustomed with their helmet, they then buy
online.
This OnStar helmet fills a huge gap in the industry. Currently there are helmets that
reduce brain swelling upon impact and helmets that have Bluetooth technology but none have an
immediate impact response detection. Imagine the following scenario and you’ll be left
wondering if you’ll feel completely comfortable riding in remote areas by yourself again. You
take a nice ride by yourself on a beautiful day through the countryside on your ATV on a scenic
back road. You are riding along enjoying this amazing day, sun is shining, trees have blossomed
their flowers, empty farm fields with beautiful green grass is around you and the sun is
brightening all the colors around you. You didn’t tell anyone where you were going; you wanted
a peaceful ride to yourself. You didn’t even bring your cellphone because you didn’t want to be
bothered. You get pretty far out into the country and all of a sudden a deer jumps out in front of
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you and you hit it and get knocked out. Who’s there to help you? No one is around, no one
knows where you are, you aren’t even around a phone IF you gain consciousness. What will
happen to you? Now you have the OnStar helmet, they call for you, no response; they have
detected a crash and immediately send out emergency vehicles to assist you. With the OnStar
helmet, those worries of getting injured and stranded dissipate now that you have that guardian
watching you in case something happens. You can enjoy that beautiful day with no worries at all.
This industry is segmented towards product type since we are focusing on the benefit of the
capabilities of our product. There are other competitors out there that also offer helmets that can
help increase safety such as the Brain Cooling helmet and Hands free Bluetooth.
2.4 Key Success Factors
In order for a helmet to sell well, using Arai’s helmet qualities as a guideline, they must
have three key factors and 11 attributes that go along with the key factors. The three key factors
are ventilation, face shield and design and styling. The quality of these factors contributes to the
highest ratings for helmets; therefore, it is essential that we succeed in these areas not just with
our OnStar capabilities.
2.5 Industry Trends
Environmental
Economic Trends- Since motorcycles and recreational vehicles are viewed as a discretionary use
of funds, the economic recession in the United States over the past couple of years has hindered
the growth of these two industries. For the helmet industry, research indicates that the
satisfaction levels tend to rise as the price of the helmet increases. It is a product where you get
exactly what you pay for in terms of comfort and fit (JDP, 2010).
Social Trends- The use of helmets has increased over the years showing that it is more socially
acceptable, or the norm, to wear a helmet to protect yourself. “Helmet use in States that require
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all motorcyclists to wear helmets significantly increased from 78 percent in 2008 to 86 percent in
2009. The helmet use in these States continued to be higher than in those States without
universal helmet use law” (NHTSA, 2009).
Business
Harley Davidson’s stock has risen 292% since its downfall in 2008, showing an increase in the
purchasing of Harley Davidson’s products. From this information, we can base the idea that
since Harley Davidson’s stock is rising, the use of motorcycles and associated products is
increasing.
2.6 Long Term Prospects
With new innovation (Brain cooling helmet and bluetooth) this industry is ready for the next
step: OnStar helmets. Innovation in this industry is growing, and the rise of safety concerns fits
this gap by eliminating the worry of being incapacitated and not being able to get help. With the
stock market recovering and the unemployment rate decreasing, people are able to spend more
money and are able to afford this luxury helmet. It is a necessary attribute for motorcycle
helmets to ensure the safest ride possible
3.0 Market Analysis
3.1 Motorcycle Helmet and Accessories Market
Premium motorcycle helmets tend to be priced in the general range of US$375-800. Also,
according to PRWeb and IBIS World, the users of these helmets tend to have higher range
salaries in comparison to the US average. Additionally, the worldwide motorcycle market is
expected to reach sales of “$851 million by the year 2015” ("Global premium motorcycle,"
2010).
Helmet usage in the U.S. has continued to rise over the years despite ever changing
helmet usage laws. “Overall, rise in motorcycle registrations, and enactment and enforcement of
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helmet laws are providing significant market potential for manufacturers of helmets worldwide”
("Global premium motorcycle," 2010).
The demand for high end, high tech helmets such as the OnStar enabled smart helmet will
be driven by the success of the motorcycle and ATV industries.
3.2 OnStar
OnStar, a “wholly owned subsidiary of General Motors Corp”, is the nation's leading provider of
in-vehicle safety, security and information services using the Global Positioning System (GPS)
satellite network and wireless technology ("OnStar reverses," 2011). OnStar services include
vehicle crash, emergency services, and road-side assistance with location. OnStar Personal
Calling allows drivers to make and receive hands-free, voice-activated phone calls through a
nationwide cellular network ("OnStar reverses," 2011).
OnStar is a rapidly growing business that dominates the navigational communication
system industry. Ford’s Sync system is very similar to OnStar and is the only major competitor,
and it will not be released until sometime next year ("Ford technology," 2011).
OnStar’s Safe and Sound© plan is the plan most similar to what would be offered in our
high tech helmet. The safe and sound plan costs $18.95 a month. This cost will also be reduced
due to the fact that motorcyclists will likely receive substantial discounts for owning and using
this equipment ("OnStar plans and,”).
There are currently around 6 million OnStar subscribers in the U.S and Canada (“OnStar
of GM”).
3.3 Demand and Buyer Behavior
Demand for motorcycles, helmets, and accessories are affected by factors such as
changes in per capita disposable income, consumer sentiment, and unemployment because
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motorcycles are largely a discretionary product. An increase in consumer sentiment or income
can lead to a subsequent increase in demand for new motorcycles.
Other factors affecting demand include the price of products, the popularity of
motorcycle riding, and seasonality patterns. The introduction of new models can also boost
demand for new motorcycles. A large increase in the prices of motorcycles can result in
consumers choosing to defer their purchase or looking for an alternative vehicle.
In addition, the price of gasoline and fuel can benefit the motorcycle industry. As
motorcycles are cheaper to run, consumer demand for motorcycles tends to increase in line with
rising oil prices. As it becomes relatively more expensive to drive cars, consumers will switch to
cheaper forms of transportation (IBISworld).
3.4 Safety as a Demand factor
“According to a Hawaii Department of Transportation Study in 2004:

Motorcycle accidents accounted for 3,244 fatalities in the U.S.

Head injuries were the leading cause of death among the motor cycle riders.

Riders without helmets are 40 percent more likely to sustain a fatal head injury.

Motorcyclists without helmets are three times more likely than a helmeted rider to suffer
a traumatic brain injury as a result of a crash.”
(SMS Research and Marketing Services, Inc., 2003)
3.5 Industry Segmentation
Our smart helmet will serve two primary markets, the motorcycle and the recreational
vehicle, or motorized sports vehicles, consumer markets. These vehicles are designed to drive
over rugged terrain such as trails, sand, snow and hills. The most common forms of ATV’s, and
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the ones we’re primarily targeting, are four-wheelers, dirt bikes, and snowmobiles
("Ibisworld.com," 2012).
The Motorcycle and ATV industry is segmented below.
(IBISWorld.com, 2012).
3.5.1 Motorcycle Users
Motorcycle sales make up the bulk of the industry, though in the past couple of years, they have
been on a downturn due to the recent recession. The rising fuel prices are encouraging riders to
invest more in this form of transportation because it is both money saving and environmentally
more responsible. The current market share for motorcycles is 48.5% (IBISWorld.com, 2012).
3.5.2 ATV Users
Unlike motorcycles, ATV purchasing has increased in the last few years, especially dirt bikes
and four-wheelers. Racing recreational vehicles is a popular and trending hobby among the
younger population. This sport, motocross, provides for important opportunities as the industry
expands (IBISWorld.com, 2012).
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3.5.3 Demographics
Demographics of Motorcycle Users (“The U.S. Motorcycle,” 2011).
Age
20 years and younger
21-25
26-30
31-40
41-50
51-60
61-70
71 and older
1%
7%
9%
22%
30%
23%
7%
1%
Gender
Male
90%
Female
10%
According to the Motorcycle Industry Council, in 2003, Baby Boomer riders outnumbered Gen
Y motorcyclists almost four to one. “But Gen Y motorcycle ownership grew 62 percent since
2003, putting the current ratio of Baby Boomers to Gen Y at two to one” (Motorcycle Industry
Council, 2009). The ages of motorcycle riders are changing, too. “In 2003, those 40 and over
composed the majority of motorcycle riders. But from 2003 to 2008, the number of younger
riders--those under age 40--increased about 62 percent, according to the MIC” (Hartmann,
2012). As the older riders, ages 40 to 50, begin to age, “demand for these products falls because
of lessened physical ability and more safety concerns” (“IBISWorld: 33699a”). The industry
recognizes the importance of reaching out to a younger demographic since their main customers,
the baby boomers, are using their motorcycles less and less.
3.5.4 Income Brackets
The average household income of motorcycle owners tends to be slightly higher than most
Americans. The average American makes approximately $5,000 less than those owning twowheeled vehicles. Those individuals who purchased vehicles for sport spent more than those who
use motorcycles for solely transportation purposes (Motorcycle Industry Council, 2009).
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3.5.5 Preferences
Whereas older generations tend to purchase more traditional “cruiser” vehicles, younger
generations are leaning more toward sport bikes. While the older traditional riders are less likely
to buy high-tech helmets, the sport bike riders are the ideal target. Sport bike riders, on average,
are more likely to spend money for special features and additions to their motor-bike. The
primary advantages of traditional riders are that they are more likely to travel long distances, and
the GPS and crash features would be increasingly more relevant (Motorcycle Industry Council,
2009).
3.6 Positioning
OnStar helmet will position itself as a leader in motorcycle safety, comfort, and technology. We
are the first helmet of this type to be on the market and will be able to quickly establish ourselves
as industry leaders in this area. We should be very effective when it comes to establishing this
position in a consumers mind due to the fact that OnStar is already a very well-known and
established brand that is synonymous with safety and high quality service. When marketing the
OnStar helmet our primary focus will be the unique safety service we provide. The secondary
focus will be on the other high tech features and luxury that differentiates us from our
competitors.
3.7 The Competitive Market
Currently, the competitive market for the OnStar enabled helmet is fragmented into two key
areas, since the industry for technologically enhanced helmets has not developed enough. The
first area is made up of the Motorcycle and ATV industries, which include manufacturing of
vehicles and accessories. These industries have high and medium market shares, respectively.
The number one key success factor in both industries is compliance with required standards. The
motorcycle industry is dominated by Harley-Davison motorcycle products (50% market share),
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whereas the ATV industry is much less concentrated (highest market share 21%) (“IBISWorld:
33699a;” “IBISWorld: 33699c”). The other area is technology. Enabling the helmets with
OnStar and GPS capabilities brings the helmets into the technology industry. Communications
technology equipment, the industry under which OnStar falls, is a low-concentration industry
and the key success factor is a focus on quality (“IBISWorld: Communication”).
3.7.1 Direct Competitors
The direct competitors are those that sell technologically enhanced helmets, such as those with
GPS and OnStar capabilities. There are few companies that currently do this, however. The
larger companies include ONeil, Vega, and HTC, which all have blue-tooth motorcycle helmets
currently being sold. While none of these companies offer specific GPS features as part of the
built-in technological option, there is a threat for future entry into this specific niche. The market
on GPS enabled motorcycle helmets is new and growing, but still difficult to assess.
3.7.2 Indirect Competitors
A very important indirect competitor to the GPS/OnStar enabled helmet are those who sell
accessories that provide similar services as those built in to the helmets themselves. The
company Cardo, who is at the forefront of GPS and audio-ready helmet attachments, is the leader
in this industry. While they do not sell the helmets themselves, these attachments pose the largest
threat to our GPS enabled helmets. Cardo just released their GPS-Bluetooth enabled accessory
on March 20, 2012 (Ingold, 2011). It offers similar features to OnStar, including the GPS
directions feature, but lacks the crash-safety feature that sets OnStar products apart.
Other indirect competitors would be those companies selling high-safety motorcycle or
recreational helmets. The market for regular motorcycle helmets is well-established and will
need to be penetrated by the new technologically enhanced helmets. The combination of regular
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helmets and add-on features like those offered by Cardo pose the largest threat to the
development of the new industry.
3.7.3 Future Competitors
As health and safety awareness grows, and technology continues to advance, the industry for
technologically enhanced helmets will grow. As this technology becomes cheaper, and the
markets will open up, more companies who already specialize in recreational-vehicle helmets
will become a threat as they explore the more technological options. The companies also
specializing in wireless devices will also become a threat as they begin to develop accessories
similar to Cardo.
See Competitive Analysis Grid (Appendix, p. 43).
4.0 Marketing Plan
The overall objective for marketing the OnStar Helmet is to raise awareness of our
product with current motorcycle and recreational vehicle users. This market segment will be our
largest and easiest to reach because they are already well-educated and well-connected in this
industry. In addition to reaching out to current helmet users, a secondary target market would be
the family members or loved ones of motorcycle and recreational vehicle users who would
encourage their use of our product. We will use motorcycle and helmet retailers to sell our
product, so that our product is accessible to the consumers when they are purchasing motorcycles
or other accessories. Before we launch the full production of the product, we plan to offer
sample helmets to various retailers in order to gauge the demand for our product. This sample
offering will encourage retailers to promote our product to their customers and will expose
consumers to our product, either through viewing it in stores or through using it when they test
drive motorcycles. Using the sales personnel at the dealerships will be crucial to getting our
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name out there because they are viewed as reliable and knowledgeable about the industry. We
would offer them incentives to sell our product by offering $5 per sale up to 6 helmets, then $8
per helmet after that. This would be a limited time offer just to get the brand known. In addition
to using the retailers as distribution channels, we plan to sell directly to the customer via the
internet. Offering an online distribution channel would ultimately eliminate the middleman and
would reduce unnecessary costs that are associated with outside distributors.
To advertise the OnStar helmet, we will be distributing to motorcycle manufacturer’s
websites and to retailers that sell motorcycles and recreational vehicles. We will be attempting to
get exposed in bike magazines as well as at motocross events. At the motocross events, we
would focus on the parents and the safety needed for their children when they are out riding in
the countryside. At these various events, we would look for sponsorship opportunities of either
the riders or of the actual motocross event. We would set up a tent at these events in order to
allow consumers to view our tangible product as well as hear about the services that it has to
offer. In addition, we hope to get mentioned in trade journals by bike enthusiasts that will
emphasize our unique attributes of safety through OnStar access. Another opportunity to
advertise and market our product is to locate bloggers and other social media gurus with
expertise in the motorcycle or recreational vehicle industries and send them our helmet. With
this tactic, we would hope that the bloggers would make positive associations with our product
which would result in a reliable word-of-mouth referral to their followers.
Since OnStar is a well-established brand, we will benefit from the partnership with this
company. We plan to license the OnStar services, which was discussed in the company
description and is discussed in the product development plan section. Consumers understand the
benefits associated with having OnStar capabilities in a car, and we feel that offering that same
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sense of security to motorcycle and recreational vehicle users will result in a large amount of
word-of-mouth referrals. In addition, with the overwhelming statistics on the number of
fatalities caused from motorcycle accidents as well as the benefits of helmet use, we feel that our
product will coincide with the increased helmet use laws in the United States. This collaboration
between our helmet, which offers increased safety features, and the emphasis on promoting
helmet use will result in an opportunity for free publicity and public relations, as long as
consumers are satisfied with our product.
4.1 Methods to differentiate our product from competitors:

Promoting the OnStar and crash detection capabilities - focusing on this enhanced safety
feature
o We want consumers to recognize the value added to our product through the
increased functionality of our helmet

Only helmet to wholly encompass all of the technological components available

Competitively priced in regards to the value added

Use of the OnStar brand

In addition to highlighting the OnStar capabilities, we will also make sure to include the
value added by our warranty which we will create based on the existing OnStar warranty
as well as the warranties of our competitors (See OnStar Warranty, p. 44). Our warranty
will ensure users that their helmet will perform all of the functions of a standard helmet
while also including the crash detection and OnStar capabilities. This warranty will be
essential in legitimizing our product in the market.
In order to reduce marketing expenses, we are initially only going to use outlets that we are
confident will reach our target market, such as the use of retailers and motorcycle magazines and
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periodicals. By only using these narrow marketing techniques, we can guarantee that we are
reaching the target market without overextending our message to consumers that may not be
interested in our product. Ultimately, we want to establish our helmet as a high quality product
that offers more amenities to the consumer in comparison to our other competitors.
Price Table:
Cost to
OnStar
Manufacture
*Cost to Use Installation Total
Margin
Helmet
OnStar FMV Cost
Cost
Price
Difference %
300.00
299.99
100.00
699.99
1200.00
500.01
71%
*This is retail value, which could be reduced with the OnStar partnership.
(Ashe, 2011)
(Mellor & StClair, 2005)
Competitor Pricing Table:
Competitor
Arai- Corsair-V
Icon-Variant
Construct
Harley Davidson-half
Helmet
SHOEI- RF-1100
Competitor
Our
Markprice
Price
Difference up
919.95 1,039.95
120
13%
370
490
120
32%
90
551.99
210
671.99
120
120
133%
22%
This table reflects the prices that we would charge in comparison to our competitors.
5.0 Management Team and Company Structure
5.1 Management Team
Our management team consists of the five founders, Blair Priest, Lindsey Cartner, CJ Babb,
Ryan Beach, and Matt Shea. We have distributed the authority and responsibilities amongst the
five founders in order to establish clearly defined roles within the company (See Organizational
Chart, p. 46). The team has various educational and occupational backgrounds which allow us to
have experience in many of the critical areas that are needed to launch and lead a business. The
management team will construct a founder’s agreement that will award equal ownership and
21
compensation between the five founders for the first five years of business. After that time
period, the management team will renegotiate their ownership and compensation according to
the number of members who wish to continue on with the business. Below indicates the skills
and relevant expertise of the management team:
Management Team
Matrix
Exec
Leadership
Ryan Beach
Blair Priest
Lindsey Cartner
CJ Babb
Matt Shea
Gap 1
Gap 2
FIN
Opera
tions
X
Mktg
HR
Customer
Service
&
Relations
Information
Systems
Account
ing
X
X
X
X
X
O
O
Blair Priest, Co-founder and CEO, Age 21
As chief executive officer, Blair Priest will have the responsibility of overseeing the direction
and formation of the company. We feel that with her leadership abilities, she was the most wellequipped to lead our management team and to facilitate the process of launching our venture.
She has worked six jobs, and has experience in restaurant management, government contracts,
and sports marketing. She is a junior at Virginia tech pursuing a double major in management
and marketing as well as a Spanish minor, which has the potential to help our company expand
on an international level.

Excellent communicator and organizer

Marketing expertise

Strong leadership abilities
22
Ryan Beach, Co-founder and COO, Age 22
As COO, Ryan Beach is responsible for day-to-day operations of the company. He has
experience in supply management, albeit limited, from previous employment at an Ace
Hardware distributor. He is also graduating in December with a degree in management and a
minor in leadership studies.

Will handle daily monitoring and communication with manufacturing partner

Will be accountable for processing orders and maintaining relationship with OnStar

Possesses integrity and enthusiasm in forming and progressing business relationships
CJ Babb, Co-founder and CFO, Director of Marketing & Sales, Age 22
CJ Babb is pursuing a degree in business management and marketing from Virginia Tech. He has
acquired skills related to management administration, finance, customer service, market analysis,
and entrepreneurial ventures and operations through classes and a 10 week management
internship with Sherwin Williams.

Responsible for raising capital for production and growth of company

In charge of both short-term and long-term financial management of the company

Promotes growth of company through domestic marketing campaigns
Lindsey Cartner, Co-founder and Head of Customer Service & Relations, Age 22
Lindsey Cartner has a degree in business management from Virginia Tech. She has acquired
skills and knowledge related to management, finance, entrepreneurial ventures and consulting.
Additionally, she has experience in the field of recruiting through her internship with SieglLink,
a recruiting firm in Blacksburg, Va. She also has management and customer service experience
from her supervisory jobs at Kroger, Giant Foods, and Carvel.
23

Day-to-day liaison between management team and customer base

Handles all issues with order processing

Responsible for dealing with complaints and/or warranty issues with the product
Matt Shea, Co-founder and Head of Information Systems, Age 23
Matt Shea has a degree in business management from Virginia Tech. He has acquired skills and
knowledge related to management, finance, accounting, marketing, entrepreneurial ventures and
operations. Matt also has work experience related to the financial services industry from when
he interned at First Command Financial Services.

In charge of verifying that manufacturing order process system is in accordance with
incoming orders coming into business office

Handles any glitches or security breaches with order processing program and order
recognition program

Experienced in IS and computer security
5.2 Board of Directors and Board of Advisors
Two critical areas in which our management team lacks experience are in the fields of human
resources and recruiting as well as accounting. We plan to address these gaps by utilizing the
President’s Council which is a resource offered through Virginia Tech KnowledgeWorks for no
additional cost. Virginia Tech KnowledgeWorks will be the location of our business because it
offers a low cost facility in addition to access to essential resources that are necessary in
launching a business. The informal board of directors that will be offered through
KnowledgeWorks will consist of 8 to 10 board members who serve as executives for other
companies. The experience of these other board members will surely fill our resource needs in
the areas of human resources and accounting as well as strengthen our weak areas in information
24
systems and operations. We will also have one or two members of the management team serve
on this President’s Council as internal board members. Having members of our management
team on the board will allow for them to learn from the other board members as well as develop
their leadership skills. The President’s Council offers our company a great resource without the
extra expense incurred. To serve on our advisory board, we will ask representatives from OnStar
as well as Icon, a helmet manufacturer, to provide our company with insight about the industry.
We will also create a customer advisory board to provide feedback on our product throughout its
developmental phases.
As we have progressed through the stages of this business plan, we have discovered that
our management team lacks the experience and expertise that is necessary to launch a venture of
this magnitude. Although VT KnowledgeWorks will provide us with an informal board of
directors, we feel that in order to launch this venture successfully, our board of directors must
consist of individuals who are extremely experienced in the industry, especially since our helmet
is an entirely new product.
6.0 Operations Plan
6.1 Introduction
OnStar helmet is a fully functioning OnStar helmet that will be marketed to motorcycle, offroading, and snowmobile riders that will offer maximum safety to their riding adventures. The
following will explain operating model and procedures for the helmet.
6.2 General Approach to Operations
OnStar helmets are new to the market and will have to be delicately placed in a specific target
market. The need for safe motorcycle helmets is always a hot topic since motorcycles and off
road vehicles are much more dangerous than automobiles. The OnStar helmet takes away the
concern of getting lost while riding these vehicles because you know that you are in safe hands
25
with OnStar. Their reputation as being reliable is a guiding factor into their success and why they
are branching out to selling their equipment individually so they can be installed in non-GM
automobiles. With this reputation, we hope to solidify trust in the consumers.
Since there is definitely a need for this product, we will manufacture our product in
Taiwan using Berlin Dynamic Industry Company, Ltd. We will be basing our company however
at Virginia Tech’s VT KnowledgeWorks. This facility provides new entrepreneurs with a
physical location that serves as an office. It has many incentives that can be used to enhance the
experience of working with OnStar helmets and our potential clients.
6.3 Behind the Scenes

Manufacturer Selection: Production will be taken place at a company called Berlin
Dynamic Industry Company. Used by top competitor Icon as well.

Shipping: Shipping will be done to individual customers; pricing varies depending on
where the helmet is shipped to.

Staff Selection: With our current budget, we will be using our management team to fill in
the needed positions. If we cannot get necessary funds, for the positions not able to be
filled in by our team, our company may not be viable.

Advertising: Promoting our product through dealerships initially and with the launch of
press releases and reports about our product, we hope to expand our business.

Home Office Selection: Using VT KnowledgeWorks will be optimal until major growth is
achieved because of the corporate address and the amenities offered.
26
6.4 The Experience

Online: Easy user interface, with easy navigation throughout the website. Virtual tour of
each attribute of the OnStar helmet and virtual demonstration. Also will have size chart to
allow customer to pick appropriate size helmet.

In Store/ Retail: Try on helmets and test the OnStar when test driving motorcycles

Product: Experience having a guardian angel over you everytime you get on your
motorcycle, snowmobile, or off-roading vehicle with OnStar’s capabilities. Helmet
providing optimal comfort and safety ensures all around high quality experience.

Shipping: Quick and cheap delivery offering accurate delivery times

Customer Service: Start off with customer service as regular work hours 8-5pm and as we
experience growth and hire employees, will move to 24/7 customer service. Option of
outsourcing for cost benefits.

Warranty: Helmet warranty guaranteeing product safety and durability to consumer with
full refund with free shipping or replacement helmet with free shipping.
6.5 Inventory
We will be having just-in-time inventory for our product since it is a specialized helmet. We
want to keep inventory costs low, so the JIT inventory method seems most viable until we reach
a steady demand.
6.6 Business Location
OnStar Helmet LLC is proposing to operate a single office located in VT KnowledgeWorks at
2200 Kraft Drive, Suite 1000 in Blacksburg, VA. This location adheres to our cost-saving
initiative in the beginning phase of launching the OnStar helmet, while still offering valuable
services needed to expand the company.
27

Advantages of VT KnowledgeWorks location
o Proximity to Virginia Tech: Since our entire team is comprised of current Virginia
Tech students, this locale will cut down on transportation costs as well as allow our
team to remain in an extremely familiar area. We also have a large percentage of our
team’s collective network based in the Virginia Tech community,
o Proximity to resources offered by the Virginia Tech Corporate Research Center: VT
KnowledgeWorks is based in the Virginia Tech Corporate Research Center, which is
located approximately 5 miles from the Virginia Tech campus. The research center
offers features and support that far surpass any other facility in the extended area,
which are detailed in the facilities and equipment section.
o Economical pricing offered by VT KnowledgeWorks: Renting an office in the VT
KnowledgeWorks Suite comes to a cost of $750 per month. This is very important in
the start-up process for a company such as ours due to the high costs of licensing our
helmets from OnStar and liability insurance, among others. They also offer access to
the AttaainCl market intelligence software in a discounted package for $89 a month.
This tool will provide a distinct strategic and competitive advantage to our company,
since we are just entering the market and have limited experience.
o Proximity to target market: Based on the survey we conducted in the feasibility
analysis, approximately 15-20% of all residents of the Southwest Virginia/New River
Valley area stated that they either own or have owned a motorcycle or ATV which
makes them potential customers. This illustrates the conduciveness of the area to
launching a product in the motorcycle/ATV accessory market.
28
o Ideal physical geography: The Southwest Virginia/New River Valley region is
mostly rural, with many smaller towns and few cities. According to Virginia’s state
government statistics from 2011, the central and southwest regions had the fewest
percentage of their population in high-density areas, 22.9% and 28% respectively, in
the entire state (“Gauging Effective,” 2011). Low-density areas are more
advantageous to the use and/or ownership of off-road vehicles/ATVs, which
comprises a large percentage of our target market. Another benefit of the area’s rural
landscape and spread out population, it is more likely that if an ATV/off-road vehicle
accident occurs, there will not be someone around to render aid. This fits the purpose
of our OnStar helmet perfectly, to give the helmet owner the ability to receive help in
remote locations.
6.7 Facilities and Equipment
VT KnowledgeWorks office

VT KnowledgeWorks is located in a 45,000 square foot, state-of-the-art facility that includes
conference rooms, lab spaces for product development, and a secure server to protect
important financial information. In addition, it includes 12 monthly meetings with a
professional mentor with years of entrepreneurship experience, an invaluable resource since
our team has limited real-world knowledge in that area.

The KnowledgeWorks office makes available access to three powerful services including the
AttaainCL market intelligence software, Presidents’ Council, and StrategicStudio.
o The market intelligence software contains live updates of competitor activities, market
segments, industry reports, and other useful features.
29
o The President’s Council offers a board of 8-10 company leaders that offer confidential
meetings and act as an informal Board of Directors.
o StrategicStudio offers leadership retreats run by the WilderWeber Leadership Group.
This consulting service will further advance the leadership and entrepreneurial skills of
each individual team member, which makes our management team exponentially stronger
as a cohesive unit.
It also offers a highly legitimate street address for a start-up due to the fact that Virginia Tech is
among the premier research universities in the nation. This gives our company instant credibility.
Costs of renting facility and services:
o $750 per month for renting an office, which comes with conference rooms, lab spaces
and a secure server.
o $89 per month for Essential Marketing Intelligence Package.
o $119 per month for Advanced Marketing Intelligence Package for first year; $149 per
month for each year after.
o Cost of StrategicStudio has large range, based on custom retreat programs
(“VT Knowledgeworks”)
Production Facility
Our company will be outsourcing all production of the OnStar helmets in order to cut
costs associated with buying/leasing equipment and leasing a manufacturing facility. The
OnStar helmets will be produced by Berlin Dynamic Industry Company, Ltd. It is a Nexx and
Icon brand helmet manufacturer and distributor/wholesaler. It is located in Taichung, Taiwan.
30
This facility was established in 1991 and currently employs 50 people, with a total sales volume
of US$2.5 million (“Berlin,” 2011). It is a verified, listed manufacturer of both Nexx and Icon
brand helmets, according to the Alibaba Global Trade website (“Berlin,” 2011).
Since we are introducing a brand new product in the marketplace, the production will
start minimally, and increase as demand starts to increase. After researching several
manufacturers for Nexx and Icon motorcycle helmets, this is the best choice based on the fact
that it is not a massive facility, which keeps costs down and allows us to start production slowly.
However, it is big enough to be able to handle our order increase that is projected for the next
two years. We are currently in the process of researching bigger facilities to handle growth past
the two year period, but the main focus is to make sure we get to that point as a company where
an upgrade will be needed.
In addition to the facilities matching our needs, the country of Taiwan has the fourth
lowest manufacturing hourly compensation costs in the world at US$8.36, according to the U.S.
Department of Labor’s Bureau of Labor Statistics report (BLS, 2011). This makes Berlin
Dynamic’s wage costs extremely low, which in turn decreases our outsource production costs.
Our company is currently in the process of licensing OnStar which would allow our
manufacturer to install their technology in our helmets. We understand that this is an enormously
essential part of being able to produce our helmets. However, the reputation of Berlin Dynamic
gives our company confidence in their ability to produce our helmets for a very economical
price. The feasibility of our product depends on OnStar allowing us to license their technology,
and until that happens, our product will not be viable.
31
7.0 Product Design and Development Plan
Since our product would be new to the market, the product design and development plan
is an essential component to our business model. Currently, we are in the product conception
stage because we have not yet created a prototype of our product. Our product builds on the
original design and capabilities of a standard motorcycle and recreational helmet while also
adding the OnStar component which consists of crash detection technology and a GPS locator
(See Visual Representation, p. 46). From this product conception step, we plan to contact Berlin
Dynamic Industry Company, Ltd. in order to create a prototype of our helmet. We will have the
manufacturer install the OnStar “4 My Vehicle” equipment, also known as FMV, into our
helmets which will allow for the emergency service response as well as hands-free calling
capabilities. This new equipment from OnStar allows for the OnStar product to be installed in
products other than automobiles. After contacting OnStar, they ensured us that with this new
FMV equipment it would be feasible to install their product into a standard motorcycle helmet
and that it was “a great opportunity to reach motorcycle users” (OnStar Representative, 2012).
After we create a prototype for our helmet, we will conduct thorough tests on the product in
order to test its merit; in addition, we will allow prospective customers, who are current helmet
users, to provide feedback on the prototype. Customers will be able to offer us feedback on
areas such as the product’s functionality as well as their perceived value of our product.
Through this usability testing and feedback from the customers, we can make necessary
improvements to our product before we launch the initial production of the product.
Another important factor in bringing our product to market is to create a warranty for our
product. The express warranty will explicitly state the capabilities of the helmet as well as the
quality and capacity of the helmet to function properly.
32
Timeline
If funding is obtained, we will proceed by completing the various milestones in order to prepare
our helmet for market.
Completed Milestones:
February – March 2012:
-
Created management team
-
Product conception
-
Complete feasibility analysis
March – April 2012:
-
Selected board of directors and advisory board
-
Selected desired legal status
Milestones to Be Completed:
April – August 2012:
-
Obtain funding to support venture
-
Secure a manufacturer with the capabilities to produce helmet
-
Use initial funding to create prototype
September – November 2012:
-
Usability testing of prototype
-
Make necessary improvements to launch initial production
-
Make contacts with distributors in preparation for initial launch
December 2012 – March 2013:
-
Initial launch of product
-
Assess demand based on initial production and make improvement if necessary
April – June 2013:
-
Full production of helmet (JIT production)
7.1 Intellectual Property
The venture team has decided that the best patent for our product is a utility patent. The
definition of a Utility patent is as follows:
33
Utility Patent- “invents or discovers a new and useful process, machine, manufacture, or
composition of matter, or any new or useful improvement thereof” (Barringer, p. 394, 2010).
Our venture team focuses on the latter half of the definition: new or useful improvement. The
OnStar Smart Helmet is a new and useful improvement upon ordinary recreational and
motorcycle helmets and the original OnStar technology. By combining the already-made
software and hardware technologies offered by OnStar for crash safety, GPS, and other customer
service utilities, with the familiar design of a motorcycle helmet, the new venture team has a
unique product that plays into the newly formed and growing market for technologically
enhanced products. While similar products feature GPS or Bluetooth abilities, the OnStarEnabled helmet features all the convenient amenities that are becoming standard for most car
owners.
This patent will be good for 20 years, giving the venture team plenty of time to establish
ourselves in the market. To apply for the patent the team will write up all technological details
and include detailed drawings of the entire helmet. OnStar will be consulted as the drawings are
made up so that all features can be included. It is important that the team begins drafting the
patent immediately, as it can take an average of two and a half years to be granted a patent in the
U.S.
The team will apply for the patent jointly, sharing patent agreements with the key partner:
OnStar. The team has kept detailed records of the invention process in a logbook. We must then
hire an attorney to oversee the process. We have previously conducted a patent search, and while
a single similar product is currently patent-pending, the uniqueness of the elaborate features
included in the OnStar helmet make it unique enough that no infringement will occur.
34
While the patent is being prepared in its entirety, the team plans to file a provisional
patent application to protect the design and allow us the use of “Patent Pending.” Once the patent
is written up fully, and has been approved by our patent lawyer, it will be submitted and the team
will simply have to await the results from the USPTO.
7.2 Challenges and Risks
In order to successfully create our product, we must license the technology from OnStar.
Therefore, the success of our product is contingent upon OnStar allowing us to use their services
with our helmet. According to an OnStar representative, in order to partner with OnStar, our
company must submit our service idea to OnStar. If OnStar decides to approve the idea and
further pursue the business proposition, then negotiations would take place between OnStar and
our company. If we cannot license from OnStar, then we have ultimately hit a roadblock that
will cease our business venture.
Another challenge that hinders the viability of our business is the high costs of
manufacturing, licensing, and liability insurance. The costs associated with this business model
seem to be exceedingly high, much higher than we had anticipated in the feasibility analysis and
during the product conception phase. Through conducting this business plan, we have discovered
multiple uncertainties which we feel will reduce the viability of our business and hinder its full
development.
8.0 Financial Projections
8.1 Assumptions Sheet
The financial statements depend on assumptions influencing the outcome of our business. The
assumptions assumed are as follows:
35
General (Assumptions)
1. OnStar helmets will grow in demand as they take the market in safety and reliability over
time through user experience.
2. We assumed on a conservative note that angel investors will provide $200,000 from the
start
Financial (Assumptions)
1. Sales forecasts are viewed in both a pessimistic and a more optimistic view for
comparison. Presumably OnStar helmets will start slow with an estimate of 5 customers
the first month with growth at 6% for the second two months and then growing to 25%
for the rest of the first year. Growth will increase to 50% in the second year following PR
and news reports on our quality helmet.
2. Licensing fees vary depending on your product idea and negotiation with OnStar.
Estimates are based off licensing for Google Maps with phone applications since it is a
similar product in regards to customer service and location identification. Fees were
estimated at $10,000 a year for Google Maps, so we tripled that amount for the OnStar
helmet given that it has crash detection and Bluetooth. (Leach, 2011)
3. Owner salary is conservative and will vary depending on how well the product does and
how well our costs are under control.
36
Source of Funds
Source
Angel Investors (VT KnowledgeWorks)
7(a) Loan Program Grant
SBA Small Loan Advantage Program Grant
Line of Credit with BB&T Bank ($150,000 LOC,
$75,000 Disbursement when company starts)
Virginia Microloan Program Grant
Management Team Investment
Total Funds Committed
Total Funds Required
Total Funds Needed from Equity Investor
Amount
$
200,000.00
$
65,000.00
$
100,000.00
$
75,000.00
$
25,000.00
$
20,000.00
$
485,000.00
$
766,600.00
$
281,600.00
37
Use of Funds
Monthly Costs
Monthly
Expenses
Salary of owner-managers
Total Cost
for Year
% of
Total
Source of Estimate
$5,000
$60,000
7.8%
Low end at first, invest in company
750
9,000
1.2%
VT KnowledgeWorks site
Advertising(TV&Internet)
5,000
60,000
7.8%
Average advertising in starting new
bus.
Website Maintenance
2,000
24,000
3.1%
Cost of Nexx/Icon website main.
Sea Freight costs ($50 per order)
1,000
12,000
1.6%
US International Trade Commission
site
Customs agent (shipment over $1000)
2,000
24,000
3.1%
Approximate Taiwanese agency cost
20,000
240,000
31.3%
SAB website
1,800
21,600
2.8%
US Customs/Border Protection site
500
6,000
0.8%
US Customs/Border Protection site
10,000
120,000
15.7%
Berlin Dynamic website
$576,600
75.2%
Rent (KnowledgeWorks Office)
Insurance(Liability)
Import costs(Port fees,GST, entry/broker
fees)
Duty rate(0.035 kg/1.4% ad valorem)
Outsourcing to Berlin Dynamic
Subtotal
One-Time Costs
Projected OnStar licensing fee(TBD)
Initial inventory (50 helmets * bulk price of $200 per
helmet)
Advertising and promotion for website launch
Cash(working capital)
Subtotal
Total Required Funds
Cash
Needed to
Start
% of
Total
Source of Estimate
100,000
13.0%
OnStar website/customer service
10,000
1.3%
Base price in buying helmets in bulk
5,000
0.7%
75,000
9.8%
$190,000
$766,600
Projected based on total advertising
fee
Group estimate based on monthly
costs
24.8%
100%
See Appendix, p. 48 for pro forma financial statements and relevant ratios.
38
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http://www.mic.org/downloads/newsreleases/2008_owner_Survey_LH_5-21-2009.pdf.
NHTSA. U.S. Department of Transportation, National Highway Traffic Safety Adminstration.
(2009).Motorcycle helmet use in 2009-overall results. Washington: National Highway
Traffic Safety
OnStar of GM. What is OnStar? (n.d.). Retrieved from
http://editorial.autos.msn.com/listarticle.aspx?cp-documentid=1062268.
Onstar plans and pricing. (n.d.). Retrieved from http://www.onstar.com/web/portal/planspricing.
OnStar Representative. (2012, April 18). Interview by b Priest [Personal Interview].
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Onstar reverses decision to change terms and conditions. (2011, Sept. 27). Retrieved from
http://media.gm.com/content/media/us/en/gm/news.detail.html/content/Pages/news/us/en/
2011/Sep/0927_onstar.
SHOEI. (2012). Shoei premium helmets. Retrieved from http://www.shoei-helmets.com/.
SMS Research and Marketing Services, Inc. Department of Transportation: State of Hawaii,
(2003).Motorcycle helmet use literature review. Retrieved from SMS website:
http://hawaii.gov/dot/highways/safecommunities/safecommunities/reports/motorcyclehelmets/motorcyclehelmetslitreview.pdf/view.
Terms and conditions of your onstar service. (2010, August). Retrieved from
http://www.onstar.com/web/portal/termsconditions.
The U.S. Motorcycle Market: Motorcycle Industry Research and Statistics. Version 235. Knol.
(2011, Aug 8). Retrieved from: http://knol.google.com/k/bobbie7/the-u-s-motorcyclemarket/21yokwucnoqmb/6.
U.s. census bureau: 1997 naics definitions. (n.d.). Retrieved from
http://www.census.gov/epcd/naics/NDEF339.HTM.
VT KnowledgeWorks. http://www.vtknowledgeworks.com/.
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Appendix
Helmet Attributes
1. quietness
2. ventilation/air flow
3. de-fogging performance
4. face shield ability to keep wind out
5. face shield ability to resist scratching
6. ease of replacing face shield
7. scratch resistance of shell
8. color/graphic design
9. weight
10. ease of fastening the strap
11. fit and comfort
(JDP, 2011)
Competitive Analysis Grid
The grid above shows that the OnStar Helmet has a distinct advantage in terms of safety features
and technological capabilities. This is due to the fact that we are the only product that offers this
new and innovative service. In terms of design, aerodynamics, and comfort we are on the same
level as most premium brand helmets. An area where Onstar Helmet has a major disadvantage
is price. This is due to the fact that we will be paying more to manufacture these helmets than
any of our competitors.
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OnStar Warranty
Below are clauses related to the OnStar Warranty that we will use in order to limit our liability.
“NO WARRANTIES ON EQUIPMENT, INFORMATION, OR SERVICES. Warranties
are special kinds of promises. WE DON’T MAKE ANY WARRANTIES, EXPRESS OR
IMPLIED, ABOUT OnStar Equipmentor any other equipment used with OnStar service. You
may have a warranty on OnStar Equipmentor other equipment from the maker of your Car, but
not from us. In addition, OnStar cannot promise uninterrupted or problem-free service, and
cannot promise that the data or information provided to you will be error-free. ALL DATA
AND INFORMATION IS PROVIDED TO YOU ON AN "AS IS" BASIS. NEITHER WE,
NOR ANY OF OUR Service Providers, MAKE ANY WARRANTIES, EXPRESS OR
IMPLIED, ABOUT OnStar SERVICE OR ABOUT ANY DATA OR INFORMATION OR
SERVICES PROVIDEDTHROUGH IT. THIS MEANS, AMONG OTHER THINGS, NO
WARRANTIES OF CONTENT, QUALITY, ACCURACY, TIMELINESS, COMPLETENESS,
CORRECTNESS, RELIABILITY, MERCHANTABILITY, OR FITNESS FOR A
PARTICULAR PURPOSE. ALL SUCH WARRANTIES ARE EXPRESSLY EXCLUDED BY
THIS AGREEMENT.”
“LIMITATIONS OF LIABILITY. YOU AND OnStar ARE EACH WAIVING
IMPORTANT RIGHTS. UNLESS FORBIDDEN BY LAW IN A PARTICULAR INSTANCE,
WE EACH AGREE AS FOLLOWS:
First, WE AREN’T LIABLE FOR THE ACTIONS OR INACTIONS OF ANY Service Provider
WE CONTACT FOR YOU OR YOUR CAR, OR FOR OUR INABILITY TO CONTACT ANY
Service Provider IN ANY PARTICULAR SITUATION.”
“Second, WE AREN’T LIABLE TO YOU FOR (1) ANY INJURIES TO PERSONS OR
PROPERTY ARISING OUT OF OR RELATING TO YOUR USE OF OnStar
Equipment OR OnStar SERVICE, including but not limited to injuries to persons or property
arising out of use of Stolen Vehicle Slowdown, Remote Ignition Block or Pre-Arrival
Instructions (EMD-Emergency Medical Dispatch) capability OR (2) ANY DAMAGES
ARISING OUT OF OR RELATING TO THE INSTALLATION, REPAIR, OR
MAINTENANCE OF OnStar Equipment.”
“Third, OUR MAXIMUM LIABILITY TO YOU UNDER ANY THEORY
(INCLUDING BUT NOT LIMITED TO FRAUD, MISREPRESENTATION, BREACH OF
CONTRACT, PERSONAL INJURY, OR PRODUCTS LIABILITY) IS LIMITED TO AN
AMOUNT EQUAL TO THE PORTION OF THE CHARGES TO YOU FOR THE SERVICES
RELATING TO THE PERIOD OF SERVICE DURING WHICH SUCH DAMAGES OCCUR.”
("Terms and conditions," 2010)
Other OnStar Terms and Conditions:
“HOW
YOUR OnStar SERVICE
WORKS
AND
SYSTEM
LIMITATIONS. OnStar service is only available in the continental United States, Alaska,
Hawaii, and Canada. OnStar service works using wireless communication networks and the
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Global Positioning System ("GPS") satellite network. NOT ALLOnStar SERVICES ARE
AVAILABLE EVERYWHERE, PARTICULARLY IN REMOTE OR ENCLOSED AREAS,
OR ON ALL CARS, AT ALL TIMES.”
“OnStar is not responsible for any delay or failure in performance if such failure or
delay could not have been prevented by reasonable precautions. Additionally, OnStar is not
responsible if such failure or delay is caused by acts of nature, or forces or causes beyond our
reasonable control. Examples include public utility electrical failure, acts of war, government
actions, terrorism, civil disturbances, labor shortages or difficulties (regardless of cause), or
equipment failures including Internet, computer, telecommunication or other equipment
failures.”
“OnStar ADVISORS
CONNECT
YOU
TO
OTHER
Service
Providers. Our OnStar Advisors link you or your Car to other Service Providers such as the
police, fire department, or ambulance service. We’ll use reasonable efforts to contact
appropriate Service Providers for help as required by the situation or when the OnStar system in
your Car signals for it, but we can’t promise that any Service Providers will respond in a timely
manner or at all.”
“You promise to use OnStar emergency and roadside services only for actual
emergencies and roadside assistance needs. You promise you won’t abuse or do anything to
damage our business operations, services, reputation, employees, facilities, or Service
Providers. If you do any of these things, you agree you’ll be responsible for any amount anyone
else claims from us, plus any expenses, resulting in whole or in part from that use or your
actions.”
("Terms and conditions," 2010)
Arai Helmet Warranty:
“All Arai helmets are warranted against defects in materials and workmanship, and are
serviceable only for the properly fitted* first user for 5 years from date of first use, but no more
than 7 years from date of manufacture. It should be replaced within 5 years of first use.
*As neither Arai or the consumer can be assured that helmets sold by mail order, phone or
internet are properly fitted and delivered in original, as new condition, Arai cannot and does not
extend its warranty to helmets purchased through these channels.
The Warranty and date information can be found on your chinstrap (one of the chinstraps is
shown in the photo above). The date-of-manufacture (month / year) is on the opposite strap, for
example 08/01, 04/02, 10/02, etc.” ("Arai helmet warranty,").
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Visual Representation of the OnStar Helmet
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Organizational Chart
The senior staff reports to CEO Blair Priest. The Marketing & Sales, Human Resources, Operations, and Finance are all Senior Vice
President Positions, and Customer Service, Information Systems, and Accounting are all Vice President Positions. All other
employees will report to the VP’s of their respective departments.
CEO
Blair Priest
Human Resources
Operations
Marketing & Sales
Finance
Vacant
Ryan Beach
CJ Babb
CJ Babb
Customer Service
Information Systems
Accounting
Lindsey Cartner
Matt Shea
Vacant
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See additional Excel document for the financial statements.
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