PART A: Plan Name:
The Steadyflow™ Toothbrush
AKA The Steadyflow™
AKA The SFTB™
PART B: Plan Description, Location and Inspiration Behind Your Plan:
Item 1: We strive to simplify everything in life, yet, for some reason, we still have to squeeze out toothpaste onto a toothbrush. Not only is the act of squeezing toothpaste cumbersome but it also represents many other implications such as whether we used too little or too much. Even the effectiveness of a slab of toothpaste is called to question. What if the toothpaste bottle wasn’t a separate entity, but a part of the toothbrush itself? We know that dentists and parents would be interested and that alone would be enough to warrant the product. Our plan is to get this to tradeshows and into dentists’ hands before eventually expanding to every consumer who would want a innovative evolution to a crucial part of their morning routine.
Item 2: The product we have created is part of the dental industry, one of many industries helped by the recent increase in health-consciousness in America. Our two largest consumer demographics will be mothers of children, known for being very aware of health and safety for their children, and dentists themselves, whose career relies on having the best and most efficient tools for cleaning teeth. We will likely begin our marketing at trade shows for dentists, offering them our professional grade brushes at a discount and offering further discount along with other incentives if they market the consumer version of the brushes to their patients. Eventually we will go retail, hoping to get our product in major drugstore chains such as Walgreens or CVS.
We will manufacture our product domestically at the start, however, later on, we will outsource production to a foreign country; keeping our corporate office in America. Current manufacturing costs for electric toothbrushes range from $5 to $15 depending on overall quality, and with our prices being $25 for the consumer level and $50 for the more professional level, we will have sufficient profit to cover our other expenses, including labor costs for both the manufacturers and the corporate staff. Potential risks include but are not limited to major corporate competition, initial startup, and misjudgement of consumer market. Also, there is a concern about the management and quality of the production of the product since we eventually intend to use a contracted manufacturer.
Item 3: As our business begins, both the manufacturing and management aspects of our business will be stationed here in the Cleveland area. However, as our business expands it will be more cost effective to outsource manufacturing to a foreign country while the corporate office remains here. This is partly due to the fact that many manufacturers are already established overseas which handle the manufacture of dental products.
Item 4: Ever since I was little, I always had a difficult time putting the proper amount of toothpaste on my brush. Sometimes I would put too little on, while other times my mom would yell at me for wasting too much. This is coupled with another problem: every time I brush my teeth I find that nearly all of the toothpaste I put on my brush is used up within the first few seconds. Both of these problems persist to this day. I have always noticed that dentists tend to re-apply toothpaste to their brushes every few seconds when cleaning a patients teeth. I figured that all of these problems could be easily solved by a simple invention: a toothbrush that dispensed toothpaste right out of the handle: always giving the perfect amount, in a steady, controlled flow.
PART C: Market and competitive analysis:
Item 5: Oftentimes when brushing one’s teeth, the bulk of the toothpaste gets used up within the first quarter of brushing time, leaving one to brush with a practically “naked” brush, which, while not worthless, is much less effective than using toothpaste. While the general public may not fully recognize this issue, dentists are fully aware of it and are constantly re-applying paste to their brushes as they clean patients’ teeth. Our product solves this problem by allowing a constant, moderate flow of toothpaste over the course of the brushing, ensuring toothpaste is never lacking or wasted.
Item 6: Our product is simple and will be easily available to the general public in drug stores such as Walgreens, CVS, etc once we expand. One of our largest audiences will most likely be mothers, especially those of young children, as this demographic seems to be the most health-conscious. Any responsible mother wants the best for her children, and this applies to all aspects of life. The existing dental industry has already ingrained in the public’s mind the importance of dental health, along with the correlation between good teeth and smiling, connoting happiness, which is, of course, the end goal for every human being. It would also be wise not to rule out the adults who may want to use the product for convenience and/or are already currently using electric toothbrushes; especially those who live a busy life such as college students or working adults.
Additionally, a potentially even larger number of our customers will be dentists themselves. Obviously, they will have a high demand for efficient, effective, and high quality cleaning products, as their profession requires them to be extremely conscious of dental health and to thoroughly clean the teeth of dozens of people every day.
Item 7: Over the past fifteen years or so there has been a large increase in awareness of the obesity epidemic in America. Such conversations often focus on children, childhood habits being seen as a large root of the the problem. Thus, we see as a result of this trend a large number of parents with heightened desire to instill healthy habits in their children. Aside from concerns about nutrition, this has bled over heavily into all aspects of health, including dental hygiene. What arises as a result is a boom in these industries as corporations shell out slews of “magic cures,” some truly effective, some not, but all rarely unsuccessful from a business standpoint. As interest continues in this realm, we can expect continued research and discovery prompting excitement within the health community. Thus, it is fair to assume that the market will increase for this product in the near future. Despite these trends, there is still a large population with a fear of dentists that we must acknowledge. However, the dental industry is still large and profitable, and we need only concern ourselves with current dentists and their current customers. Not only are parents and families motivated to invest in the latest health products by these healthy-habit trends, there is also pressure put on dentists to keep up with the latest technology. This will ring especially true for us if many American families buy our product, as any dentist who has less advanced tools than his or her customers have in their own houses is sure to lose money.
Item 8: While the market for dental products seems to be that of an oligopoly, with corporations such as Oral-B and Colgate at the forefront, we will have a competitive advantage being the originators of this technology and holding the patent on it. This will give us a decent head start to advertise and begin to create a reputation for ourselves in the eye of the public, the dentist industry, or both. Assuming said larger corporations will eventually want in on this technology, we can offer to license the patent to them, thus creating partners out of potential competitors. If it seems to be the best option, we may even sell the technology to them altogether.
Part D: Manufacturing
Item 9: As referenced above, our product will likely be manufactured by foreign countries in order to reduce initial cost (For example: China, India, Central America), but later on we may cease production ourselves and license or sell the plans to a separate corporation if we did not do so to begin with. Our first step of production would be to develop a working prototype off of which to model production. In order to accomplish this, we would either have to hire someone or find an acquaintance that would be knowledgeable of both the manufacturing aspect and the engineering aspect. In terms of price, most of the pricing would go towards labor as well as a percent of the profits to the outsourced company. It is adjustable for inflation. As for the startup of the company, we have two choices. We can either crowdsource our idea or personally seek out investors of on our own. Such potential investors that could help us launch and bring our product to the market would be venture capitalists well known for funding businesses in either the medical or dental field. More research would be needed on those individuals and again, we will need a working prototype before seeking funding.
Since we are outsourcing the manufacturing process overseas, this company will already have the factory, along with various machinery, including plastic vacuum-forming machines and other equipment, that we will need. For our side, some form of corporate office will also be needed to house management operations. The office will manage supply, finance, marketing, etc. It need not be a large skyscraper, but large enough to house a sufficient management team. The estimated cost of these buildings can range anywhere from 75k-200k in the U.S. Basic equipment needed here will be computers as well as computer networking software.
Item 11: The cost of raw materials will be relatively low, as research indicates that the combined costs of the plastics required for a toothbrush, circuits, motors, or wiring needed totals under $5. For a higher quality, more professional-grade brush, the costs will be likely closer to $15. These figures were based off of commercially available items, so assuming we can acquire these directly from the supplier, the cost may be even lower. Labor costs would likely be the minimum wage of the respective country we are outsourcing to for manufacture. In the corporate realm, we may need minimal training for our employees to get them accustomed to our business structure, but costs for this will negligible if not nonexistent. Corporate employees would likely receive an average salary of about $20k-$30k, and thus early on we will not be able to hire very many, but will be able expand as our profits increase. Additionally, rent will be necessary for our corporate office, which will presumably be a constant rate every month. Research and development will also be necessary during the design and early manufacturing stages of our process, however these costs are variable and cannot be confidently predicted. Finally, after a working prototype of our product has been fully designed and built, we will need to apply for (a) patent(s), as well as petitioning for the approval of the FDA and any other legal mandates, which can take in some time.
Part E: Risk and uncertainties
Item 12: One of the most significant risks we take in managing the overall marketing and selling of our product is the misjudgement of consumer demand. If our predictions of the market are wrong, we would basically not be able to sell our product. For example, if mothers do not actually realize or see any concern in how their children brush their teeth, they would have no incentive to buy. Another risk is our ability to compete with major brand companies without expanding our line of products or innovation, which could force our market share to nothing. Delivering the product at a reasonable cost is not so much of a problem as it is to get the manufacturing started in the first place. Although we avoid the trouble of having to start our own manufacturing company by outsourcing, we will have a much harder time doing quality checks on our product. Also, by outsourcing, our input on the labor that is employed is minimal and we would not be able to directly control the management. As for any corporate jobs, we would be most likely hiring incoming workers, most likely college graduates. The reason for this is because only incoming workers would be able to accept a lower wage unless we can find a connection to a veteran in business. Financially, finding an investor or startup money would be the longest part of the process outside of FDA approvals and developing a prototype. We risk our company being in limbo for months or years if we can not secure financial backing. However, since we have connections through family to those who may have enough interest and money to back the company, we limit the risk of monetary limbo. As the product is relatively safe by design and not inherently dangerous, we should have minimal problem getting it pass the FDA or having it certified any other way, however there is always the chance of setbacks which require reevaluation of the product. The legality of the product should also not be a problem assuming we can secure a patent and check for any potential products that are similar enough to pose a lawsuit.
Part F: Marketing, pricing, and sales strategy
Item 13: Initially, we will be focusing our marketing strategy at trade shows to get the interests of dental hygienists and other experts in the field. We will rely on them to buy our initial products and test them out. We will most likely give free trials to the dentists as an act of appreciation to their interest in the product and if they are piqued by the product, we will continue supplying them at a cost. We will also encourage those same dentists to distribute the product among their patients (which of course, we will supply at a decreased cost) in order to branch out our consumer base. Along with direct referrals, we will launch a social media and viral campaign for the product with focus on the health benefits of the product as well as setting up a site to which anyone could be referred to. Before launching any expensive television campaign or anything of the sort, we would need to collect market data through surveys both through door-to-door and telephone, as well as through magazines (if feasible) and the internet. Again, our sales strategy will also be focused on just private supply to dentists while at the same time trying to find a retail outlet for when we expand our base. Our goal is to eventually have the product on shelves of major drug stores.
Item 14: Existing electric toothbrushes are offered in a wide spectrum of prices, ranging from about fifteen dollars to eighty. Our product is intended to be consumer level but also long lasting and durable, placing our price $25. For dentists in a professional setting we will offer a higher quality brush made of a more durable casing and better grade motor/mechanical work. This will be offered for $50. Both of these prices are below those of the closest market alternatives, which will help to increase sales along with the fact that our product is a new and unique idea. Additionally, they both allow for a large profit margin. Remembering the estimates for manufacturing costs listed earlier, there is a profit of $20 to $40 per brush. This is sufficiently high, and as our sales increase the total difference between revenue and total cost will widen, bringing in more profit and allowing us to expand.
Part G: Timeline
Initial market research
Personal initial investment
Develop a rough design for the product (Est: a few weeks)
Begin developing prototypes of the product (Est: a few months)
Get a government patent as soon as possible (Est: when we have a working design)
Concurrently seek out investors for the product (Est: a few months – years)
Also concurrently go to trade shows with our developed prototype to garner initial interest (Est: months)
Find land or building adequate enough to start the business from (either buy or rent) (Est: a few months)
After getting an investor, work to find a manufacturer overseas willing to produce samples or an initial supply of the product
Use the invested money to buy/rent the land or renovate the office (Est: a few months)
Begin initial hiring (either an accountant or financial advisor) (Est: a few weeks)
As soon as we get our initial supply we begin distribution to our initial buyers or interested parties (from trade shows) (Est: a few weeks)
As we receive feedback for our product, we either go back to tweaking the product or proceeding in ordering more stock for the dentists. (Est: a few weeks)
Start conducting market surveys. (Est: a month)
Start social media advertising.
Also start looking for retailers interested in putting the product on the shelves. (Est: a few months)
As soon as we lock a retailer, start ramping up production. (Est: few weeks after)
Begin mass advertising (Est: a few months)
Wait on sales results (Est: a year)
Either expand or reflect on results
Revolutionize the world with our product (Est: Depends)
Part H: Financial Projections:
Disclaimer: All of these numbers were either based on previous estimates or commercial pricing. There are several inaccuracies attributed to our current stage of development such as our estimates on returns and profits.
Sales and Revenue
Selling, marketing and advertising costs
Space and occupancy costs
Management and administrative costs
Total costs and expenses
Pre-tax cash profit
WH & Equipment
Start up loss
Projected Return on Investment by Year 3 = $77,000
Part I: Student Assessment:
Item 16: The strength of our plan is our vision as well as originality. We came up with modest and maybe even overshot estimations of every cost as well as detailed timeline of what we intend to do. We also have the amount of investment needed to cover our initial startup. The weakness of our plan is not enough research to back up our numbers and projections which would debase our credibility. Also, we have not indicated any specific potential buyers into our plan as well as anything beyond year three. The investment we would try to procure would have to come from a combination of trusted close family and also seeking out a venture capitalist in order to fund our startup. As it is now, the bank may not exactly want to loan to us since we still have too many losses/not enough credit. However, taking into account that we have no reliable data to project our revenue, there is hope that we may make more profit than is estimated.
BUSINESS RESEARCH SITES - Company, Industry and Market Information
BusinessUSA, //business.usa.gov/, a centralized, one-stop platform to make it easier than ever for businesses to access services to help them grow and hire.
- Bizjournals, www.bizjournals.com , offers free full-text access to news articles from business
newspapers in more than 40 regions in the U.S. You can search for articles by company, industry, or
- Free Research, www.free-research.com , requires free registration to gain access to industry reports in 27 vertical markets, from Automotive to Travel, in most countries around the world. Most reports are brief—from one paragraph to several pages. Other useful content includes trade associations in each of the global industry sectors; annual reports, 10K’s, and investor presentations for the world’s largest companies; and country guides and market insight reports.
- Hoovers, www.hoovers.com , is a robust database of company and industry information. Companies profiled by Hoover’s are both public and private with revenues of $5 million and higher. On the free side, you can get a profile of a company or industry, including financial information; view free industry video interviews with expert analysts and business leaders; and build an Excel list of the top 10 companies in a specific area.
- Industry Information Resources, www.valuationresources.com/IndustryReport.htm , is a free
resource guide to industry resources and data for over 400 industries in the U.S. Individual pages for each industry list resources and data available from trade associations, industry publications, and research firms. Information provided includes an industry overview; industry issues, trends, and outlook; industry financial information and financial ratios; compensation and salary surveys; and business valuation resources.
- Metrics 2.0, www.metrics2.com , is a site that uses publicly available data—research, surveys, stats, facts, figures, and forecasts—from thousands of authoritative sources to provide insights about business trends and markets. For example, you can find global broadband penetration numbers, trends in green business practices, consumer spending on gift cards, and trends in mobile social networking.
- ThomasNet, www.thomasnet.com /, is a comprehensive resource for finding North American suppliers of industrial products and services by company name, brand name, and location. For example, you can find suppliers for plastic bottles for hair care products or pressure-sensitive tapes. Thomasglobal, www.thomasglobal.com , provides similar information for markets throughout the world.
- Tradekey, www.tradekey.com , is essentially a marketplace linking buyers and sellers of specific products in more than 200 countries. It’s a handy way of finding out who else is in your product space. A similar database is Alibaba, www.alibaba.com , which boasts more than one million buyers from around the world and allows you to post products and leads and get trade news and insights.
- U.S. Census Bureau—Economic Census, www.census.gov/econ/census02/ , is updated every five years. 2007 reports will be available in 2009 and 2010. The 2002 industry reports are available by sector (NAICS code) and geographic region (states, metropolitan areas, counties, and cities). You can Created by Christine Hamilton-Pennell, Growing Local conomies, www.growinglocaleconomies.com , 10/08 Created by Christine Hamilton-Pennell, Growing Local Economies, www.growinglocaleconomies.com , 10/08 also access ready-made Industry Snapshots for specified industries. These reports illustrate annual data from Nonemployer Statistics and County Business Patterns as well as 5-year Economic Census data.
Competitor and Prospect Lists
- Superpages, http://www.superpages.com/?SRC=insp , allows you to search by city/state or ZIP code and then by category or business name to find U.S. businesses within a 1 to 100 mile radius. Just enter an address, use the drop down box to select a distance and click the SEARCH button.
- Manta, www.manta.com , offers data from Dun & Bradstreet. You can search for U.S. companies in a city or state, identify competitors or potential B2B customers, drill down a series of SIC categories for a specific type of business within an industry, or receive a profile that includes contact name and title, annual sales, employees and more.
- Zapdata, www.zapdata.com , provides detailed company information for creating competitor and B2B prospect lists. For each search, Zapdata will allow you to view a list of up to 50 customers or competitors by name, city and state at no charge. You are not limited on the number of searches.
- Jigsaw, http://jigsaw.com , is an online directory of more than 8 million business contacts. Every contact in Jigsaw includes full name, title, postal address, email address and telephone number. You can often find people who are buried deep in an organization. It has safeguards built in to protect qualified names and email addresses, but you can get a name around 70% of the time.
- ZoomInfo, www.zoominfo.com , is a search engine that finds, understands, and extracts the latest online information about people and companies and delivers it in concise and useful summaries. You can search for people by name and find their work history, education, and cached links to internet references on them. You can also find links to employees from the same company and link to the company’s profile, as well as search job openings on the company profile page.
- LinkedIn, www.linkedin.com , is a business-oriented social networking site with more than 25 million members. You can search the database for people, companies and keywords. The majority of members hail from the U.S. and Canada.
- Xing, www.xing.com , is the European equivalent of LinkedIn. You can search this business network of close to six million members by name, company, or search term.
- PRNewswire, https://profnet.prnewswire.com , has a searchable database of more than 25,000 experts.
Business start-up Expenses
Salary.Com: http://www.salary.com/ , compare living-cost indexes & salary differentials to make an informed decision.
Staples:http://www.staples.com/ , Staples is the world’s largest office products company and a source for office solutions.
Office Max: http://www.officedepot.com/ , Office products company and a source for office solutions.
Best Buy: www.bestbuy.com/ , Electronics, computers, appliances, cell phones, & tech products.
U.S. Small Business Administration: http://www.sba.gov/content/estimating-startup-costs US Government agency, get local assistance right in your area. Counseling, mentoring, and training from an SBA District Office, SCORE Chapter, Small Biz Development Center.
Other Valuable Sites
- Payscale.com, allows you to see what is the normal pay range for various jobs and occupations.
- Showcase.com, provides costs per square foot for leasing industrial and commercial structures.
- ehow.com, provides an entrepreneur the basic knowledge on how to price a product.
This link takes you to the template.
“At the heart of economics is a scientific mystery… a scientific mystery as deep, fundamental and inspiring as that of the expanding universe or the forces that bind matter… How is order produced from freedom of choice?”
“Allow me to lend a machete to your intellectual thicket.”
Captain Jack Sparrow
Scarcity -Why Having Too Little Means So Much by Sendhil Mullainathan & Eldar Shafir
The Black Swan by Nassim Taleb
Thinking, Fast and Slow by Daniel Kahneman
Freakonomics, Superfreakonomics, and Think Like A Freak by Steven D. Levitt & Stephen J. Dubner
The Armchair Economist and Fair Play by Steven E. Landsburg
The Invisible Heart, The Choice, and The Price of Everything by Russell Roberts
The Mystery of Capital by Hernando De Soto
Predictably Irrational and The Upside of Irrationality by Dan Ariely
Nudge by Richard H. Thaler and Cass R. Sunstein
The Commanding Heights and The Prize by Daniel Yergin
The Invisible Hook by Peter T. Leeson
The Ascent of Money by Niall Ferguson
Flash Boys, Boomerang, The Big Short, and Liar’s Poker by Michael Lewis
Outliers and The Tipping Point by Malcolm Gladwell
Murder at the Margin, The Fatal Equilibrium, and A Deadly Indifference by Marshall Jevons
Eat The Rich and On The Wealth of Nations by P.J. O’Rourke
Why Most Things Fail and Butterfly Economics by Paul Ormerod
The Distribution Trap by Andrew R. Thomas and Timothy J. Wilkinson