Business Plan Presentation
Tyler Hutchens
Dave Ryan
Gary Tobin
Carrie Xing
Agenda
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The Problem
Giraffe Rack Solution
Marketing Strategy
Operations Strategy
Financial Plan
Questions
Bicycle Rack Market trends
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SUV Sales are increasing as a percentage of
total vehicle sales.
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Sales of racks to SUV owners are increasing by
15% annually.
People Want Roof Racks
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“Most people would rather use a roof rack, but
can’t because of the vehicle size”
Bobby Noyes, founder, Rocky Mounts, Inc.
Roof Racks can be tough to use
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“I get hurt far more often loading and
unloading my bike than riding it.”
Pam Simich, Director, VeloNews Magazine.
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“I’ve seen people use ladders…”
Margaret Principe, Counselor, Englewood High School.
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“I constantly struggle to get my bike on
and off of my car.”
Christy McDevitt, Physician, Kaiser Permanente.
Our Solution
Get the rack to the bike,
not the bike to the rack!
Giraffe Rack
Rack Design
Giraffe Rack
Rack Design
Giraffe Rack
Rack Design
Giraffe Rack
Rack Design
Giraffe Rack
Rack Design
Giraffe Rack
Rack Design
Giraffe Rack
Rack Design
Giraffe Rack
Rack Design
Giraffe Rack
Rack Design
Giraffe Rack
Rack Design
Giraffe Rack
Rack Design
Giraffe Rack
Rack Design
Giraffe Rack
Rack Design
Giraffe Rack
Rack Design
Giraffe Rack
Rack Design
Giraffe Rack
Rack Design
Giraffe Rack
Rack Design
Giraffe Rack
Rack Design
Giraffe Rack
Rack Design
Giraffe Rack
Rack Design
Innovative Design
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Yakima and Thule complementary
No need to design to vehicle types
Easy to use
Marketing Strategy
Market Size
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2005 SUV rack market = $215M
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Total Market Potential = $630M
Focused Strategy
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Roof rack accessory
Compatible product
SUVs
Customer
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Survey Findings
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Bike enthusiasts
SUV owners
Women
Vertically Challenged
Already own/shopping for roof rack
Pricing Strategy
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MSRP = $150.00
Retail discount = 45%
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65% surveyed will pay $150
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Retailer
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Specialty Stores
Good discount for merchant – 45%
Can sell to existing rack customers
Additional installation revenue opportunity
Rollout Year One - Colorado
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Great Market!
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Most SUVs per capita
High concentration of bicyclists
Wealthiest counties in Rockies
Sales, Sales, Sales
Ongoing Rollout
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Year Two
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Colorado mountain towns
California, Portland, Seattle
National Rollout in Year Three
180 stores by Year Five
Brand Image
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Targeted Advertising
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Print ads, point-of-purchase displays
Guerilla Marketing
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Demo units
Events
Giraffe Rack Advertising
Brand Image
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Targeted Advertising
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Print ads, point-of-purchase displays
Guerilla Marketing
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Demo units
Events
Talented Management
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Dave Ryan – President
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10 years experience in early-stage companies
Experienced Sales and Marketing
Management
Tyler Hutchens – Vice President
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7 years experience in Marketing, Promotion,
Operations, Finance
Experience with early-stage companies
Operations Strategy
Operations Plan
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Major Features:
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Complements Sales and Marketing
Low fixed costs
Outsource
Scope of Operation
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Outsource design
Contract out to manufacturers for
tooling and production
Minimal assembly and packaging
Key Success Factors
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Strong supplier relationships
Strong retailer relationships
Management involvement
Development Timeline
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Concept R&D (30 days)
Product Development (55 days)
Product Release to Manufacturing (50 days)
Manufacturing Ramp-up (85 days)
Total Duration 220 Days
(Dec ’01 – Oct ’02)
Financial Plan
Giraffe Rack Gross Margin
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Selling price of $82.50
Cost of goods sold $41.80
Our Gross Margin is 49.3%
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Outdoor Products average = 38.8%
Higher for Marketing Costs
Giraffe Rack Revenue
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30 retail outlets in Year 1
Average 100 units per location
Year 1 Revenues = $247,500
Year 1 Operating Expenses = $182,675
Year 1 Earnings = ($180,776)
Revenue Growth
$2,500,000
$2,000,000
$1,500,000
$1,000,000
$500,000
$0
Annual Revenue
1
2
3
$247,500
$544,500
$998,250
4
5
$1,536,150 $2,168,100
Giraffe Rack Cash Flow
$500,000
$400,000
$300,000
$200,000
$100,000
$0
($100,000)
($200,000)
1
2
Cash Flow ($158,861) ($130,126)
3
4
5
($5,539)
$183,873
$454,338
Giraffe Rack Cash Flow
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Highly seasonal sales
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75% coming between April and September
Cash need early, excess later
Giraffe Rack Funding
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Owners will contribute $60,000
Raising $200,000 in debt
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Repaid $500,000 at the end of Year 5
Offers a 20.1% compounded return
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Interest expensed and accrued each year
Giraffe Rack Cash Flow (b)
$400,000
$350,000
$300,000
$250,000
$200,000
$150,000
$100,000
$50,000
$0
1
Cash Flow $101,139
2
3
4
5
$127,099
$225,506
$391,768
$57,262
Giraffe Rack Growth
$150,000
$100,000
$50,000
$0
($50,000)
($100,000)
($150,000)
($200,000)
Earnings
Net Margin
1
2
3
4
5
($180,776) ($19,546) $76,601 $119,771 $119,675
7.67%
7.80%
5.52%
Giraffe Rack Exit
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Acquisition by a larger company
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Licensing agreement with a larger
marketing/manufacturing organization
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Manufacturing and distribution turned over
Marketing and royalties negotiated
Wrap Up
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Market need
Strategy
Investment
Questions?
Cost of Goods Sold
Component
Pivot Plate
Outer Bars
Inner Bar
Mount Bar
Piston/spring assembly
Handle Assembly
Bushings
Hardware
Packaging
Labor
Total
Quant
Cost
Total
4
2
1
1
1
1
8
12
1
0.5
$1.50
$1.75
$2.75
$2.00
$12.00
$5.50
$0.25
$0.15
$0.25
$12.00
$6.00
$3.50
$2.75
$2.00
$12.00
$5.50
$2.00
$1.80
$0.25
$6.00
$41.80
Giraffe Rack Growth
Units per outlet
Outlets
Selling Price
Revenue
Year 1
100
30
$82.50
$247,500
Year 2
110
60
$82.50
$544,500
Assumptions
Yr.1 Locations
Yr. 1 Units Per Location
Sales growth/yr
Year 3
Year 4
Year 5
121
133
146
100
140
180
$82.50
$82.50
$82.50
$998,250 $1,536,150 $2,168,100
30
100
10%
Giraffe Rack Growth
Revenue
Gross Profit
Operating Expenses
EBIT
Net Earnings
% of Revenue
Year 1
$247,500
$122,100
$182,675
($140,575)
($180,776)
Year 2
$544,500
$268,620
$239,885
$28,735
($19,546)
Year 3
Year 4
$998,250 $1,536,150
$492,470
$757,834
$357,883
$568,422
$134,587
$189,412
$76,601
$119,771
7.67%
7.80%
Year 5
$2,168,100
$1,069,596
$789,131
$280,465
$119,675
5.52%
Giraffe Rack Cash Flow
EBIT
Investing Activities
Net Cash Build (Burn)
Beginning Cash Balance
Ending Cash Balance
Year 1
($148,861)
($10,000)
($158,861)
($158,861)
Year 2
$28,735
$28,735
($158,861)
($130,126)
Year 3
$134,587
($10,000)
$124,587
($130,126)
($5,539)
Year 4
$189,412
$189,412
($5,539)
$183,873
Year 5
$280,465
($10,000)
$270,465
$183,873
$454,338
Giraffe Rack Cash Flow (b)
Cash Flow From Ops
Investing Activities
Net Cash Build (Burn)
Increase (Dec) in Debt
Beginning Cash Balance
Ending Cash Balance
Year 1
($148,861)
($10,000)
($158,861)
$200,000
$260,000
$101,139
Year 2
$25,960
$25,960
$101,139
$127,099
Year 3
$108,407
($10,000)
$98,407
$127,099
$225,506
Year 4
$166,262
$166,262
$225,506
$391,768
Year 5
($124,506)
($10,000)
($134,506)
($200,000)
$391,768
$57,262
Giraffe Rack Repayment
Year 1
Beginning Debt Balance
Interest Rate
Interest Expense
New Debt
Year 4
Year 5
$200,000 $240,225 $288,540 $346,573
20.1%
$69,704
$416,277
20.1%
$83,724
$240,225 $288,540 $346,573 $416,277
$500,000
20.1%
$40,225
Year 2
20.1%
$48,315
Year 3
20.1%
$58,033