Sports Medical Equipment Business Plan
Professional Athletic Equipment, Inc. will manufacture and market a protective device for young athletes. The trade name “Body Armor” will serve as the brand and identity for the product. It is designed to prevent injury from blunt trauma to the chest, side, and abdomen, as well as to help prevent commotio cordis (heart stoppage due to external trauma). This type of injury occurs primarily in baseball, but can also happen in soccer and other sports. A United States patent for the device is currently in the application process.
This business plan is part of our regular planning process and is revised semi-annually.
In the coming year, we plan to produce and market the initial product. No sales have been made to date.
We project selling an average of 750 units per month in the first year, resulting in sales volume of $242,550 for the year. Management predicts sales exceeding $4 million and profitability by year three, with profits expected to reach $593,570 before taxes.
Our keys to success and critical factors for the next year, in order of importance, are:
- Production of the initial product in the first three sizes.
- Test marketing and basic research to assess product acceptance.
- Testing multi-channel distribution.
- Testing media, PR, pricing, and product endorsement strategies.
- Recouping production start-up costs and first year depreciation on the initial three molds in year one.
- Limiting the loss in year two to less than $200K.
- Establishing limited retail distribution in year three (2nd sales year).
- Achieving profitable operations by year three.
Professional Athletic Equipment, Inc. has set a modest sales goal for year one, which, when achieved, will bring us close to break-even and allow for limited business expansion in year two. The sales targets by size are:
Small – 4500 units
Medium – 2250 units
Large – 2250 units
Reaching these targets will result in year one sales volume of $242,550 and confirm a successful test.
Costs will be controlled to maintain projected margins at these modest sales levels. If sales exceed these goals, additional production and marketing activity can be implemented quickly, although additional capital will be required. On the safe side, some sales may be missed in order to gear up for year two.
Professional Athletic Equipment, Inc. is dedicated to protecting young athletes from injury and death. We aim to make quality products that generate a fair return for investors. Our initial product, the “Body Armor,” targets parents of youth baseball participants. It is designed to prevent injury and improve athletic performance. We intend to grow the business and establish our brand as a product leader and innovator in its niche. We will conduct our business in accordance with Christian values and strive to maintain a friendly, fair, and creative work environment.
The keys to success for Professional Athletic Equipment, Inc. are product quality, marketing, and management. We must prove the salability of our product within certain price points, margins, and distribution channels before focusing on controlled expansion.
Professional Athletic Equipment, Inc. is a privately held Georgia Corporation founded by Dr. Jim Smith. The “Body Armor” has been tested and prototypes have been produced. All development costs to date have been covered by Dr. Smith personally. He intends to invest further in expansion and seek limited initial investment via private placement.
Dr. Jim Smith currently owns 100% of the common stock of Professional Athletic Equipment, Inc. Limited ownership will be sold to outside private investors in the first round of external financing. Further offerings to individuals and institutions are planned. Stock option plans totaling no more than 15% of equity will be made available to key company management personnel.
The start-up costs for Professional Athletic Equipment, Inc. are $250,000 to $500,000. All assumptions are based on an infusion of $250,000 in new capital. These funds will be used to procure molds, raw materials, and initial inventory. If $500,000 in capital is secured, the overage will be allocated to cash surplus and used to accelerate marketing plans.
A company office is currently maintained by Dr. Smith in Anytown, GA. The office may be relocated to the Atlanta market area after funding. Distribution will initially be handled by the contract manufacturer, ABC Plastics, with orders drop shipped directly from the plant. Additional office and/or distribution facilities may be expanded as needed.
Professional Athletic Equipment, Inc. provides protection against injury for youthful sports participants, with a focus on preventing commotio cordis in youth baseball and softball. The “Body Armor” is designed to absorb impact and improve performance without hindering mobility. It has been worn in competition for over a year and has received positive feedback from players.
Product production costs have been estimated in collaboration with ABC Plastics. Capital equipment costs for molds and other equipment will be $65,000. Variable costs for materials and labor will vary by size. The average weighted unit cost will be $7.94.
The sporting goods market and the market for baseball equipment are large and provide opportunities for Professional Athletic Equipment, Inc. The “Body Armor” represents a new subcategory in the baseball products market. There are currently no competitive entries in this segment. Our target customer is any batter or position player in youth baseball. The buyer is the parent, with the mom being our targeted consumer.
The potential market size can be defined by the universe of participants in youth baseball, which exceeds 8 million users. We will concentrate heavily on the local, Georgia market segment with direct marketing efforts. Other market areas may be targeted using overlapping media that does not incur incremental cost.
Year 1 Year 2 Year 3 Year 4 Year 5 CAGR
Potential Customers Growth
Little League 3% 2,700,000 2,781,000 2,864,430 2,950,363 3,038,874 3.00%
All Other Leagues 3% 5,500,000 5,665,000 5,834,950 6,009,999 6,190,299 3.00%
Georgia Residents 8% 400,000 432,000 466,560 503,885 544,196 8.00%
Other 0% 5,000 5,000 5,000 5,000 5,000 0.00%
Total 3.25% 8,605,000 8,883,000 9,170,940 9,469,247 9,778,369 3.25%
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