Contents
Soap Manufacturer Business Plan
SAFEassure, LLC has designed a new product that provides managers with a quick, easy, and affordable method to monitor employee hand washing. Proper hand washing is the most effective measure to combat communicable diseases.
Improper hand washing contributes to over 130,000 deaths in the U.S. each year through the transfer of communicable diseases in restaurants, day cares, and hospitals. Studies have shown that proper hand washing procedures in these environments could reduce the spread of disease by up to 75%. The main issue is the inability of supervisors to monitor and control employee hand washing. Existing products offer no effective or affordable solutions for ensuring compliance. Treatment of preventable diseases costs Americans over $95 billion each year.
SAFEassure, LLC is the first producer that provides indisputable proof of hand washing. After washing, the unique dye in our soap remains on the hands and fades to the skin’s natural color in under six minutes. This allows supervisors to easily verify whether hand washing has taken place. No other product on the market offers such a high level of sanitation compliance. The product is safe and meets all FDA regulatory requirements for soap.
The Market
Restaurants and hospitals have a significant need for our product, but day cares represent the best initial target market. Day cares are ideal because they have a vested interest in reducing disease transfer amongst children and receive strong support from parents to create a clean environment. According to Family Practice News, “Most day care centers are germ factories, exchanging bacteria and viruses with the shake of a hand or the sharing of a toy. And many of those bugs travel home and infect the rest of the family.”
The Company
SAFEassure, LLC has a strong founding team and experienced board of advisors. Our primary advisor, Jack Soap, brings twenty years of industry experience and relationships to accelerate market penetration. We will outsource soap production to an existing manufacturer. The executive team will first target the Portland Metro area and then expand using direct sales and existing distributor channels. Initial capital will be used to test, patent, approve, produce, and market SAFEassure, as well as provide working capital for the first year.
SAFEassure, LLC will follow three strategies to achieve growth:
- Exploit first-mover advantage in a fragmented market with a unique product.
- Develop a strong branding campaign to build awareness, positive perception, and sales within our target markets.
- Continue to develop new products to satisfy growing markets.
Based on financial projections, SAFEassure, LLC will require $250,000 in start-up capital but will generate positive cash flow in October, Year 1. By the end of Year 3, the company will generate $850,000 in sales with significant net profit. SAFEassure, LLC offers investors substantial growth potential with revenue generating stability.
Mission
Our mission is to create value for customers and shareholders by improving health and reducing preventable illnesses through the use of our soap.
Keys to Success
- A first-mover branding campaign to build awareness of our products as the standard for hand washing compliance.
- Patent protection to defend our time-sensitive dye and product concept.
- Complementary relationships with organizations interested in increasing hand washing compliance.
Objectives
- Develop a prototype that meets regulatory standards by February of Year 1.
- Become the specialty soap of choice for day cares across the Northwest by December Year 2.
- Achieve sales of $5 million by the end of Year 6.
Company Summary
SAFEassure, LLC was founded in Portland, Oregon, as a Limited Liability Corporation. SAFEassure develops and markets soaps utilizing time-sensitive dyes that promote sanitary and safe environments to businesses and parents interested in cleanliness. The company will be based out of a residential apartment in Portland.
Company Ownership
The executive team will retain at least 70% of the equity in the company. Every $2,500 of investment secures up to 1% equity. Assuming 30% ownership by investors, Devon Nevius will retain 40% ownership, with Kevin Meinert retaining 30%.
Start-up Summary
Total funding required to start the business is estimated at $250,000, with Devon Nevius and Kevin Meinert investing $100,000 and $75,000, respectively. An additional $75,000 investment is sought from other investor(s) to develop the product and bring it to a limited geographic region initially.
The key elements in the start-up plan are:
- Development of a working prototype.
- Funding of working capital requirements and promotional materials for the company’s operating activities.
- Gaining patent approval.
- Establishing a strong brand image early in the market.
The founders have developed a rough prototype of the product. The start-up period includes 5 months of work by a locally-contracted chemist to perfect the design into a finished prototype, with the correct balance of soap and dyes in four colors. The final two months of the start-up period include safety tests per government regulations to ensure high quality.
Start-up
Requirements
Start-up Expenses
Legal: $15,000
Stationery etc.: $100
Brochures: $5,000
Consultants: $1,000
Insurance: $500
Rent: $0
Website Development: $450
Research and Development: $100,000
Expensed Equipment: $250
Other: $1,000
Total Start-up Expenses: $123,300
Start-up Assets
Cash Required: $76,700
Start-up Inventory: $50,000
Other Current Assets: $0
Long-term Assets: $0
Total Assets: $126,700
Total Requirements: $250,000
Start-up Funding
Start-up Expenses to Fund: $123,300
Start-up Assets to Fund: $126,700
Total Funding Required: $250,000
Assets
Non-cash Assets from Start-up: $50,000
Cash Requirements from Start-up: $76,700
Additional Cash Raised: $0
Cash Balance on Starting Date: $76,700
Total Assets: $126,700
Liabilities and Capital
Liabilities
Current Borrowing: $0
Long-term Liabilities: $0
Accounts Payable (Outstanding Bills): $0
Other Current Liabilities (interest-free): $0
Total Liabilities: $0
Capital
Planned Investment
Devon Nevius: $100,000
Kevin Meinert: $75,000
Other Investor(s): $75,000
Additional Investment Requirement: $0
Total Planned Investment: $250,000
Loss at Start-up (Start-up Expenses): ($123,300)
Total Capital: $126,700
Total Capital and Liabilities: $126,700
Total Funding: $250,000
Company Locations and Facilities
The management team of SAFEassure, LLC will initially use a residential apartment in Portland to run operations. In Year 2, we will move to a rented office. Distribution will remain outsourced.
Products
SAFEassure’s product line provides a unique control level to managers, supervisors, and parents. We have two basic product lines: CHILDassure, for day care facilities, and an antimicrobial-based product for hospitals (HEALTHassure) and restaurants (FOODassure). The antibacterial products are not yet in development. The various product lines, competitors, and future product possibilities for SAFEassure, LLC will be outlined in the following section.
Product Description
SAFEassure, LLC will produce a line of institutional liquid soaps with a time-sensitive dye blended into the mixture. The dye reacts with the hands during the lathering process, staining the hands a distinct color, then fading in under six minutes. The product will sell for approximately $90/case (4 gallons/case). The packaging will be compatible with existing soap dispensers and available in a variety of sizes. Initially, SAFEassure, LLC will produce products with child care acquirers in mind, utilizing the brightest colors possible. This product line, called CHILDassure, will consist of four colors: red, blue, pink, and green.
Competitive Comparison
SAFEassure’s products offer a high-value alternative to other hand washing compliance products.
Sales Literature
To sell our product, we will develop brochures and literature to emphasize the safety and beneficial attributes of fading dye soap. These will be delivered in person during a sales presentation and by direct mail.
Sourcing
The key to our success is the time-sensitive dye. Once the proper ratio of dye to base soap is isolated, we can outsource production to the fragmented soap industry. Initially, we will purchase the soap base in quantities of at least 38,000 gallons for approximately $50,000. Once our relationship with the manufacturer is established, subsequent purchases will be approximately $20,000. These inventory amounts should be sufficient to meet customer demand. Rick Brown will utilize his production and distribution knowledge and existing relationships in the industry to help us mix, package, and distribute the product line.
Technology
The technology of our fading dyes will be pivotal in our success. As soon as cash flow permits, we will employ a professional chemist with experience developing dye products to further research technological innovations for additional market opportunities.
Future Products
Additional soap products, compliant with regulatory minimums, will be developed for restaurants and hospitals. These soaps will be trademarked as FOODassure and HEALTHassure, respectively. We also have plans to develop a complete line of fading dye products for the retail market, including floor, counter, and body cleaning products.
Market Analysis Summary
There is tremendous potential for a product that provides supervisors and parents with the control to monitor and encourage hand washing. We will focus our resources on the day care market initially, then expand into the restaurant and hospital markets.
Market Segmentation
Our first product line, CHILDassure, will be introduced in the Portland, OR area, before expanding to additional day care markets. There are currently 516 day care facilities in the Portland Metro area. After successful implementation in Portland, we will expand into the greater Northwest, which has 3,414 day care facilities. We will then target the restaurant and hospital markets, which respectively have 19,362 and 23,108 organizations in the Northwest.
The soap industry is stable and growing, with several well-known competitors. Our target market, the Industrial and Institutional soap industry, is fragmented. We will focus on competing with traditional soap producers and alternative hand washing compliance systems.
Distribution Patterns
Regional providers distribute soap in the industry. Delivery frequency depends on demand and usage patterns: monthly or bi-monthly for day care facilities, once a month for food services, and weekly for restaurants.
Competition and Buying Patterns
Customers select soap based on price, distributor availability, and convenience. Major competitors sell to distributors who receive generic soap from bulk producers and repackage and deliver it through the same distribution systems.
Main Competitors
Traditional soap producers and alternative hand washing compliance systems are our main competitors. Dial Corp, Kimberly Clark, Gojo, SoftSoap, Provon, and NXT are the largest soap producers. Compliance Control Inc. produces HyGenius, a hand washing compliance system. Hypo-allergenic gloves are used by some organizations.
Industry Participants
The soap industry is highly fragmented, with over forty different institutional soap products competing in the market.
Target Market Segment Strategy
Our initial target market is medium to large day care organizations. We will target decision-level managers who can implement the use of our product.
Market Needs
Hand washing is essential to prevent the spread of disease in day care facilities. Our product addresses the need for frequent hand washing and provides a solution for both child and employee hand washing compliance.
Market Trends
There is a growing trend towards organic-based soaps and increased awareness of the importance of cleanliness and hygiene. Our organic soap aligns with this trend.
Market Growth
The demand for child day care services is expected to continue growing due to the high labor force participation of women and the need for nontraditional hours of care. School-age children are also increasingly being cared for in child care centers.
Strategy and Implementation Summary
Our strategy is to sell the fading dye soap in day care facilities, establish loyalty with decision-level managers, and create awareness and support for our product. We will expand into new markets and build our brand through a strong marketing campaign.
Competitive Edge
Our branding, first-mover advantage, distribution, and proprietary position give us a competitive edge. We also have a patent for our unique product.
We will target day care facility decision makers and parents of young children. A push factor campaign will convince decision-level managers, while parental support will encourage implementation in child care environments.
CHILDassure is valuable to day care managers who need effective control solutions for hand washing compliance. Our product provides conclusive evidence of hand washing and is more affordable than gloves or other hand washing compliance systems.
Pricing Strategy
CHILDassure will command a 25-30% price premium over conventional liquid soaps, justified by its differentiating benefits.
Promotion Strategy
We will develop positive publicity through government endorsements, local media coverage, and free trials, demonstrations, and direct mailings to parents in day care facilities. Stickers and pamphlets will be used to raise awareness and build feedback.
Some government programs of interest include compliance and workplace hygiene programs supported and funded by the Center for Disease Control (CDC), the Food and Drug Administration (FDA), and the National Center for Disease Control (NDIC). The Health Protection Research Initiative implemented by the CDC shows a strong commitment to improving the overall health of Americans.
Our distribution strategy involves a combination of distributor and direct sales. We will establish relationships with local Northwest distributors to increase promotional reach. The first orders will be available through direct delivery by our executive team. Outsourcing distribution in the future will allow SAFEassure, LLC to focus on marketing and expanding quickly. Distributors will pay for inventory upfront, cutting our profit margins but providing a more flexible structure. By 2007, distribution will be entirely outsourced and direct deliveries will cease.
Our most important marketing program is our branding program, targeting regional chain and franchise managers. This program aims to establish SAFEassure’s products as the soap of choice. We will emphasize the risks of hand washing non-compliance and the costs of illness and government regulations. Our written materials will convey urgency and connect users to the problem, suggesting SAFEassure’s products as the best solution.
Our sales strategy will initially focus on local and regional managers with ordering authority. Prospective clients will receive a product information packet and enter the sales funnel, followed by a direct mail brochure and a phone call. There will be no initial compensation or commission for closed sales. Proceeds will be reinvested into developing and expanding the business. As the company grows its sales force, commission-based incentive programs will be implemented.
If we can distribute our product through existing distributors, it will provide a significant financial advantage and allow us to meet the increase in demand.
| Sales Forecast | |||
| Year 1 | Year 2 | Year 3 | |
| Sales | |||
| CHILDassure soap (day care) | $237,168 | $450,620 | $856,177 |
| HEALTHassure/FOODassure | $0 | $0 | $0 |
| Total Sales | $237,168 | $450,620 | $856,177 |
| Direct Cost of Sales | Year 1 | Year 2 | Year 3 |
| CHILDassure soap (day care) | $94,867 | $178,351 | $321,031 |
| HEALTHassure/FOODassure | $0 | $0 | $0 |
| Subtotal Direct Cost of Sales | $94,867 | $178,351 | $321,031 |
Strategic Alliances
SAFEassure, LLC will initially encourage critical strategic alliances in two distinct areas:
Distributors
The relationship between SAFEassure, LLC and product distributors will be essential. A flexible distribution system will be critical to the success and growth of our product. Good distribution will allow our product to satisfy and expand to accommodate demand.
The Government
By teaming up with government organizations, SAFEassure, LLC will be able to utilize existing hand washing compliance programs to reach a larger potential audience than could be directly contacted. Government endorsement of our product, and its mention in government brochures and materials, could be a major competitive advantage and sales opportunity for SAFEassure, LLC.
Milestones
- Development of a ‘rough’ prototype by the founding team, to be further developed by professionals by September 2004.
- Attain funding to complete testing and development of a complete and working product prototype by November 2004.
- Product development is initially the responsibility of the founding team; later, we will hire a professional chemist for final testing and completion of the product. The final prototype will be completed by February 2005.
- Final safety testing of the initial product with regulatory oversight in December, January, and February.
- After the prototype is completed in February 2005, a patent will immediately be applied for by the founding team. The target date for patent process completion is January 2007.
- Promotional materials will be developed to preempt the completion of the prototype to allow for quick acceleration to market; promotional materials development will begin in November 2004.
- "Phase One" marketing will include market penetration in Portland area’s day care facilities, beginning in February 2005.
- After successful implementation within our primary market, we will begin development of new products to address the hospital and restaurant markets, targeted for June 2008.
Milestones:
Milestone | Start Date | End Date | Budget | Manager | Department
——————————————————————————————————
Develop Approximate Prototype | 7/1/2004 | 9/1/2004 |$0 | Founders | Product Dev.
Attain Funding | 7/1/2004 | 11/1/2004 |$0 | Founders | Product Dev.
Develop Final Prototype | 9/1/2004 | 2/1/2005 | $80,000 | Founders | Product Dev.
Safety Testing | 12/1/2004 | 3/1/2005 | $20,000 | Founders | Product Dev.
Begin Patent Process | 12/1/2004 | 1/1/2007 | $10,000 | Founders | Legal
Design Promotional Material | 11/1/2004 | 3/1/2005 | $25,000 | Founders | Marketing
Begin "Phase One" Marketing | 4/1/2005 | 12/31/2006 | $18,000 | Founders | Marketing
Begin R & D of New Products | 6/1/2008 | 6/1/2009 | $75,000 | Founders | R & D
Totals | | | $228,000 | |
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I’m Andrew Brooks, a seasoned finance consultant from the USA and the mind behind phonenumber247.com.
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