Inline Skating Products Business Plan

Pegasus Sports International is the premiere inline skate accessory manufacturer for the inline skate industry. Pegasus has developed three innovative skate accessories. Pegasus produces worthwhile products because the company is composed of skaters making products for skaters. Pegasus will quickly gain market penetration and establish themselves as an innovative inline skating product company.

Pegasus is a limited partnership located in Venice, CA. Venice was strategically chosen to provide Pegasus with credible product feedback since Venice is considered the inline skating capital of the world.

The Products

Pegasus currently has three unique products available or soon to be released. The first is BladeBoots™, a fabric wheel cover that allows skaters to enter retail establishments or travel with their skates on while protecting the skates and the surface. Pegasus’ second product is SkateSail, a product that combines inline skating and windsurfing. Not only has Pegasus released this innovative product, but they are supporting and growing the niche sport as a legitimate extension of inline skating. Their last product is SkateAid.

The Market

Pegasus will supply the rapidly growing inline skating market with useful accessories. The market has been established with over 31 million pairs of skates sold already. Of this number, 26 million have been sold to recreational and fitness skaters, the primary segment that Pegasus will target. Pegasus’ market can be broken down into five segments: recreational, fitness, speed, hockey, and extreme skaters.

Management Team

Key to Pegasus’ success is the fact that the entire company is skaters. Sal Chavez, CEO, has 23 years of skating experience. He no longer has an automobile, commuting by inline skates. Sal has worked for three different companies in the design department. Sal has also spent years in retail environments giving him first-hand knowledge of skater’s preference.

Sandi Arnold is Pegasus’ Vice President and is also a true enthusiast. Sandi has seven years of product experience at Rollerblade. Lastly, Beth Laird, Administrator and Web Master support Pegasus. Beth’s computer skills will support Pegasus’ internet effort. Beth has come from Inline Skating Today, the premier internet-based industry newsletter.

Pegasus is an exciting business that leverages employees’ passions for the greater good of the company and the sport of inline skating. Pegasus will reach profitability quickly, by month three. Sales are forecasted to be healthy for year one and rise to several fold by the end of year three. Pegasus will generate respectable net profits for year one through year three.

1.1 Objectives

• Fulfill the after-market skate accessory demand with top-quality products.
• Develop and manufacture SkateAids by month three.
• Develop Skate tours by Spring of next year.
• Break even by the end of the first year in business.
• Encourage customers to live healthy lives by making skating more fun and convenient.
• Offer skaters support through our web page, such as interviews with Doctor Kaye, Podiatrist, addressing skater-specific foot problems.
• Develop a solid e-commerce market and maximize profit margin. We make full retail profit through e-commerce.

1.2 Mission

Pegasus Sports International plans to fulfill the need for after-market products, a market identified based on the large volume of skates sold in the last five years.

Pegasus Sports International will establish a service network for in-line skaters by providing products that help people incorporate more skating into their daily lifestyles. Our goal is to:

• Expand skating as an alternative to driving for local errands.
• Form a network of skating enthusiasts with an emphasis on health and fitness.
• Encourage SkateSailing as a new international sport.
• Develop SkateAids and other new products.

1.3 Keys to Success

– Develop quality in-line skating accessories through feedback from skaters.

– Establish a niche market for our unique skating accessories.

– Maximize profits by selling at full retail price on the Internet.

– Maintain low overhead costs by monitoring and scheduling production.

– Build a network with other businesses and experts, such as Podiatrist and skater Dr. Kaye, through interviews on our website.

Company Summary

Pegasus Sports International was founded by skaters with practical ideas and designs for in-line skating accessories. We promote in-line skating as a lifestyle, advocating for health and fitness.

Our products make trips to the store or coffee shop easier and more enjoyable, eliminating the stress of driving and parking.

A common issue for skaters is poor fit. Lateral ankle support is crucial due to the narrow wheel footprint of in-line skates. Our solution to this problem can be applied to other footwear as well. Additionally, there is a lack of affordable accessory products, creating opportunities for new products to meet other needs.

2.1 Company Ownership

Pegasus Sports International is currently a Limited Partnership, with Sal M. Chavez as the CEO and owner of 80% of the company. Sandi M. Arnold is the Vice President and owns 20% of the company. Upon incorporating, their partnership agreement will change to a profit division of 45% to Sandi and 55% to Sal. Ten percent of Internet sales will go to Beth Laird, our Web Master and Office Administrator.

2.2 Start-up Summary

Our start-up costs amount to $10,000, primarily for prototypes, product development, trademark acquisition, rental equipment, operating and administrative expenses, and website establishment. With the first month’s loan, we plan to heavily advertise through the Internet, skating publications, and on-site events such as skating races. Detailed start-up costs are presented in the following tables and illustration.

Start-up Funding:

Start-up Expenses to Fund: $9,204

Start-up Assets to Fund: $11,496

Total Funding Required: $20,700

Assets:

Non-cash Assets from Start-up: $1,500

Cash Requirements from Start-up: $9,996

Additional Cash Raised: $0

Cash Balance on Starting Date: $9,996

Total Assets: $11,496

Liabilities and Capital:

Liabilities:

Current Borrowing: $4,500

Long-term Liabilities: $0

Accounts Payable (Outstanding Bills): $200

Other Current Liabilities (interest-free): $0

Total Liabilities: $4,700

Capital:

Planned Investment:

– Paul Neugas: $3,000

– Garry Waldie: $3,000

– Mrs. Arnold: $2,000

– Beth Laird: $3,000

– Lamiah G. Arnold/Trower: $3,000

– David S. Chavez: $2,000

Additional Investment Requirement: $0

Total Planned Investment: $16,000

Loss at Start-up (Start-up Expenses): ($9,204)

Total Capital: $6,796

Total Capital and Liabilities: $11,496

Total Funding: $20,700

Company Locations and Facilities:

At present we are located in Venice, California. We warehouse, package, and ship our products from this location. We will find a larger site as the business expands.

We have manufacturers lined up to sub-contract our large production jobs. We plan to produce products on a monthly basis to reduce our need for large inventory space.

Products:

Pegasus Sports International now offers several products:

– BladeBoots™: A cover for the wheels and frame of in-line skates, allowing skaters access to areas that would normally prohibit them. BladeBoots™ come with a small pouch and belt that converts to a skate carrier.

– SkateSails: Sails designed for use while skating. Feedback from skaters indicates a potential high demand for this product. We are currently in the process of trademarking it.

– SkateAid: A new product that will be in production by December.

Other product ideas are under development, pending patent applications.

Product Description:

We currently have two products being marketed on our website, with two more products to be introduced soon.

– BladeBoots™ are made from durable Cordura nylon composite cloth. Our cost to manufacture is $10.00 per set, and they retail for $24.95 per set.

– SkateSails are made of Dacron and feature a carbon fiber-reinforced Mylar window. Our sails come in various colors and sizes, with prices ranging from $350 to $500.

– SkateAids are in the advanced development stage. The estimated cost to manufacture each unit is $10, and they will retail for $45.00.

– Skate Tours: A service offered in partnership with Terry’s Cafe, a skate outlet shop on Santa Monica Beach, and a major skate manufacturer. This tour allows skaters to sail with our SkateSails.

Competitive Comparison:

Our products are unique in the skate accessory market. While there are other accessory companies, none offer products as versatile as ours. Our ideas come from listening to skaters’ feedback.

Sales Literature:

We are developing a company brochure for 1999 that will feature our products.

We are targeting our market through Internet sales and advertising. We will allocate a significant portion of our advertising budget to Internet advertising, including banners and site-promoting services.

We also plan to conduct a mass postcard mailing to skate shops and advertise in major in-line skate magazines by springtime.

Sourcing:

Our Venice, California location is ideal, as it is considered the center and birthplace of roller skating. Local skate shops in the area are now carrying our products.

We have established suppliers for Cordura, Dacron, and aluminum.

Technology:

Pegasus Sports International combines hi-tech materials and innovative ideas to produce unique products with no current competition. We have trademarked BladeBoots™ and are in the process of acquiring trademarks for our other products, along with corresponding patents. Our SkateSails are made of aircraft-quality aluminum, the lightest and strongest sail materials.

We have plans for future product generations to stay ahead of potential competitors.

Future Products:

We are constantly talking with skaters to develop unique products. We believe that the new products we are developing will be practical and useful. We have a few more concepts in the works, including SkateAids, which will be in production by December 1999. We are collaborating with a foot doctor who is also an avid skater.

Market Analysis Summary:

With 31 million skates sold and no support products available, we have the opportunity to reach approximately 26 million recreational and fitness enthusiasts.

There is a growing trend towards fitness skating, and our products are designed to meet the needs of this large potential market.

Market Segmentation:

With a world skating market of over 31 million and steadily growing, our niche has been created. We aim to expand this market by promoting SkateSailing, a popular new sport at Santa Monica and Venice Beach in California.

In-line skating now has more participation than football, softball, skiing, and snowboarding combined, with 7 million participants in the fitness category alone. Our products target the fitness and recreational groups, which are the fastest growing segments of the market. These groups have a potential to reach 85% or 26 million of the market within the next five years.

Market Analysis

Potential Customers

Growth

Year 1

Year 2

Year 3

Year 4

Year 5

CAGR

Recreational

10%

18,910,000

20,801,000

22,881,100

25,169,210

27,686,131

10.00%

Fitness

15%

6,820,000

7,843,000

9,019,450

10,372,368

11,928,223

15.00%

Speed

10%

387,500

426,250

468,875

515,763

567,339

10.00%

Hockey

-5%

2,480,000

2,356,000

2,238,200

2,126,290

2,019,976

-5.00%

Extreme

-10%

2,170,000

1,953,000

1,757,700

1,581,930

1,423,737

-10.00%

Other

10%

232,500

255,750

281,325

309,458

340,404

10.00%

Total

9.13%

31,000,000

33,635,000

36,646,650

40,075,019

43,965,810

9.13%

4.2 Target Market Segment Strategy

Our target market is the recreational skater and the health and fitness enthusiast. This segment can be reached over the Internet and through skate magazine advertising.

We plan on developing the skate shop market through an inexpensive postcard method.

BladeBoots™ and SkateSails are sold at the two major skate shops in Santa Monica and Venice, California. Surveys indicate that in the fitness and speed market, the average age is 34 years old, with 48% women and 52% men, an average of 1.8 years of college education, an average household income of $52,600, and 71% skate on four-wheel in-line skates.

4.2.1 Market Needs

We recognize the need for accessories for the growing skater market.

We promote SkateSailing as a new sport by providing excursions to wide-open areas. A major skate company is willing to lend us the new large-wheel skates for our SkateSailing excursions. However, conventional in-line skates will work just as well.

Soon we will offer SkateAids. The sheer number of existing skates purchased has created a whole new market for products to help increase the life of skates.

We have learned skaters’ accessory needs by interviewing experienced skaters.

A person does not have to make time to exercise if skating becomes a lifestyle and is worked into daily activities. Skating is fun and a great cardiovascular workout, and this is something everyone is looking for.

4.2.2 Market Trends

We will distinguish ourselves by marketing products not previously available to skaters. The emphasis in the past has been to sell skates and very few replacement parts.

The number of skaters is not restricted to any one single country, continent, or age group, so there is a world market. We have products for virtually every group of skaters.

The fastest-growing segment of this sport is the fitness skater. Therefore, our marketing is being directed to service this group. BladeBoots™ will enable them to enter establishments without having to remove their skates. BladeBoots will be aimed at the recreational skater, the largest segment. However, SkateAids are great for everyone.

There is one more way the sport of skating will grow, and that is through SkateSailing. This sport is primarily for the medium to advanced skater. The growth potential for this sport is tremendous. The sails we’ve manufactured so far have ended up in Europe. More and more groups are getting together on skate excursions in cities all over the world. For example, San Francisco has night group skating that numbers in the hundreds of people. The market trends are showing continued growth in all directions of skating.

4.2.3 Market Growth

With the price of skates going down due to competition by many skate companies, the market has had steady growth throughout the world, from 22.5 million in 1995 to over 31 million in 1997.

By January 2000, we will get the growth statistics for this year; it is estimated to be over 35 million. More and more people are discovering the health benefits and fun of skating.

4.3 Industry Analysis

Skate sales have undergone tremendous growth and distribution throughout the country.

Presently, we will concentrate on Internet marketing. This will maximize our profit.

The Internet is probably the best communication medium for skaters all over the world, and we believe this is the best way to retail our products. The sales on the World Wide Web are now over $28 billion, as quoted by Forester Research, on e-commerce.

4.3.1 Distribution Patterns

We plan on shipping our products using express mail at the U.S. Post Office as our way of distribution, as it is the least expensive way. However, some credit companies demand a shipping receipt, and those will be handled by established shippers.

We are also in touch with a few foreign distribution companies that have contacted us and are interested in our products.

4.3.2 Industry Participants

The number of skate companies is very large as many shoe companies have joined in. However, the major companies are Rollerblade®, Roces®, Solomon®, and K2®.

Some companies make skate bags priced around $20. None of them address the problem of entrance to areas that will not allow you to enter while wearing skates, and those products are for the most part bulky and impractical to skate with.

4.3.3 Competition and Buying Patterns

Each segment of skating has its own buying patterns depending on its own needs. The pertaining table in the Market Segmentation topic illustrates this.

4.3.4 Main Competitors

Pegasus Sports International is forming its market. While a few companies make sails and foils that some skaters are using, ours is the only one truly designed for and by skaters. Our few competitors’ sails are not designed for skating but for windsurfing or skateboards. In the case of foils, storage and carrying are not practical.

We need capital to protect our inventions through patent application and trademark registration. Our other products do not have competition at this time.

Strategy and Implementation Summary

Our involvement in roller skating goes back 25+ years in Venice, California. We have the reputation and skill that has gained respect from skilled skaters. We remain close to the skating community through contact with local skate shops and by giving lessons. Close contact with the public has put us in a unique position to be able to get feedback from skaters of all types on our products and ideas designed for them.

5.1 Value Proposition

At Pegasus Sports International, our emphasis is on quality at a fair price. Our pricing is determined by the cost of production and customer demand, so we pace production by need.

The demographics of speed skating show affluent and prime candidates for our higher ticket items. We develop our products for all skaters, but some of our products are more segment-specific, such as our SkateSails, which are more for the experienced to expert skater. For example, the speed skating segment is only 1.5% of the entire market, but this is roughly 7 million skaters.

5.2 Competitive Edge

Our company’s competitive edge exists because we are the only company addressing the needs resulting from the extensive sales of in-line skates. We wish to fill the need for items that could double the life of a pair of skates.

Accessories such as BladeBoots™ encourage people and make it more convenient to include skating in their lifestyles.

We are currently working on other projects that will broaden our product line and open up our market even more.

5.3 Marketing Strategy

The key to our marketing strategy is focusing on speed, health and fitness, and recreational skaters. We can cover about 80% of the skating market since we produce products geared towards each segment.

The speed and fitness skaters have an average age of 34 years old, a salary of about $54,000/year, and an average of two years of college. This is our SkateSail market. We are designing more advanced safety equipment suited for skate sailing in the future.

Our BladeBoots™ and SkateAids are useful to all segments of the market.

5.3.1 Pricing Strategy

Pegasus Sports products are priced to encourage impulse buying, experimentation, and repeat buying.

SkateSails are priced from $350 to $500. Lower-priced items are BladeBoots™ at $24.95 and SkateAids for $45.00.

5.3.2 Promotion Strategy

Our long-range goal is to gain enough visibility to expand the product line into other industries and regions and generate inquiries from potential inventors. To do that, we need $50,000 or a Line of Credit.

We also plan on promoting our goods at various skating races held throughout the country.

5.3.3 Distribution Strategy

We plan to enter the extensive specialty skate shop market with SkateAids. We feel this is the competitive edge skate shops need to compete with large chain discount distributors. The additional products, such as BladeBoots™ and SkateSails, should also help stimulate skate shop sales.

5.3.4 Positioning Statement

We design our products for the skaters who depend on their skating products to be well-designed and practical. We want to help lengthen and improve the life of our customers’ skates.

The present skate companies concentrate on new skate sales with no support for products already sold, and that is our forte.

5.4 Sales Strategy

For now, our products are sold through our web site, earning us full retail price.

In nine months, we will gear sales towards the skate shops with SkateAids. Through retail skate shops, we will increase our sales.

Visibility will be very important, and we will gain exposure at skate racing events. We will target our advertising through major in-line skate magazines and on the Internet.

5.4.1 Sales Forecast

We feel that our sales forecasting is conservative. We will steadily increase sales as our advertising budget allows. Please refer to the Sales Forecast Chart in the Appendix portion of this plan.

5.4.2 Sales Programs

Our sales program includes Internet advertising and skating magazine ads to target our market. Banner advertising through link exchanges and high search engine placement will be our primary method of selling on the internet.

We currently accept credit card orders on our website, targeting impulse buyers who make up 80% of all internet sales.

5.5 Strategic Alliances

Pegasus Sports International has good cooperation with local skate shops in Venice and Santa Monica, California. Our growth is expected to be mutual since some of our products are designed for these skate shops.

Terry’s Cafe in Santa Monica is located in a parking lot, providing the perfect place for teaching skate sailing and selling SkateSails. This can also serve as our home site for skate sailing excursions.

5.6 Milestones

Sal M. Chavez will focus on sales, promotion, and teaching skate sailing lessons, as well as overseeing product development.

Sandi M. Arnold will be in charge of production, ensuring smooth operations by managing product orders and shipment.

Beth A. Laird will handle administrative functions and serve as our webmaster, maintaining and updating our website.

As a team, we will work together to ensure the success of Pegasus Sports International.

Management Summary

Our group has diverse talents that complement each other well, united by our love for skating and fitness. We will create small businesses by teaching independent producers how to make our products. We have developed partnerships to maintain production quality and exclusivity.

6.1 Organizational Structure

Pegasus Sports International is organized into three main functional areas: production, sales, and administration. We all have assigned jobs but will support each other in other areas as needed.

Sal and Sandi will continue to collaborate on product development. As owners, Sal Chavez and Sandi Arnold are willing to accept the wages shown in the Personnel Table for the first year, with the expectation of salary increases as our company grows.

6.2 Management Team

Sal M. Chavez, CEO, has over 23 years of skating experience and is highly respected in the skating community. He has dedicated himself to skating for transportation, improving his health and becoming an expert in product development. With his background in chemistry and physics, he excels in identifying and developing products that meet our needs.

Sandi M. Arnold, Vice President, brings her passion for skating for fitness and speed to the company. She is invaluable in the invention process, providing input for product development and production procedures.

Beth Laird, our Administrator and Web Master, has been skating for many years and has been instrumental in making Pegasus Sports International a reality. Her computer and organizational skills are essential to our development.

6.3 Management Team Gaps

To keep start-up costs low, Sal and Sandi will be the only salaried employees for at least the first nine months. We aim to bring Beth into a salaried position as soon as possible, offering her a 10% commission on website orders until then. Beth will also receive 10% ownership of Pegasus Sports International.

6.4 Personnel Plan

We plan to increase our headcount by one employee by April 2000 to support forecasted sales growth. As sales and profits increase, we will adjust salaries and compensation accordingly. The following table shows our personnel costs for the first 12 months, including only the principals. The figures are subject to change based on business demands.

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