Delia Edwards & Jenn Egroff

aTraction

aTraction

Our Business Plan

Delia Edwards & Jennifer Egroff

Executive Summary

“To the individualist who loves to be bold and stand out from the crowd, aTraction turns unfortunate injuries into a personalized statement.”

Every year, approximately 250,000 Canadians fracture their bones, which is a key component to our business’s success. Excluding fractures, there are also many more opportunities for cast coverings for medical as well as personal reasons. No one enjoys wearing unsightly casts or splints for prolonged periods of time; Injuries are bad enough without have the added unwanted attention to the medical apparatus on your arm or leg. Our cast covers seek to address this unfortunate timing, and make it a positive experience for everyone.

aTraction’s customized and handmade cast covers for arms and legs will offer a variety of options for all of those who are injured. The most profitable segment of our target market will be children. Our kids’ covers will be bright, fun and full of life. Another segment our cast covers will cater to is young females, who always want to be on the cutting edge of fashion. Trendy patterns and changeable fabrics will allow every young adult to stand out. Injuries are a significant component of upper level athletes, who will make up our third targeted line. These covers will largely be customized for those players wanting to cheer on the team and proudly display their team spirit on their covered arm or leg while recovering from an injury.

Currently, the only cast cover companies are located in the United States. aTraction will be the first Canadian cast covering company, strategically offering customers the lowest prices for high quality, handmade products. It will use an interactive website for customers to place orders, submit measurements and request customized embroidered designs.

Two highly qualified individuals who will have Bachelor of Commerce degrees in April and have sewing experience will manage aTraction. Jenn Egroff will be the Marketing Manager as she is a marketing major and Delia Edwards will be the Sales Manager as she is a management major. They will both use their previous sewing experience and practical business knowledge to run this operation out of their own homes while managing their full-time positions throughout the week.

With an initial investment of $5,250 each (for $10,500 total), as well as 4 hours for production and administration duties each week, aTraction will be a flexible part-time business with lots of financial potential. With low initial capital costs of approximately $6,000 and little risk, it will earn an internal rate of return of 23% and will achieve annual profit margins between 58% and 67% over the next five years. In order to expand operations and achieve significant returns on our investment, aTraction hopes to establish a partnership with a retail department store or pharmacy.

aTraction’s business plan follows, detailing the operations, human resources, marketing and financial components of the business.

Table of Contents:

1.0 Introduction 1

1.1. Industry Overview 1

1.2. Mission Statement 1

1.3. Goals and Objectives 1

2.0 Operations Plan 1

2.1 Building and Floor Plan 1

a. Current Site Plan 1

b. Future Site Plan 2

2.2 Flow of Organization 2

a. Work Plan and Flow of Work

2.3 Quality Control Programs 3

2.4 Organizational Tasks 3

a. Daily 4

b. Weekly 4

c. Quarterly 5

d. Annually 5

2.5 Supply Analysis 5

2.6 Service Providers 5

2.7 Capital Budget 5

2.8 Cost of Sales 6

2.9 Operating Expenses 7

2.10 Working Capital 8

a. Cash 8

b. Inventories 8

c. Accounts Receivable 8

d. Accounts Payable 8

3.0 Human Resources Plan 8

3.1 Organizational Structure 8

a. Advisory Board 9

3.2 Job Descriptions/Qualifications 9

a. Marketing Manager 9

b. Sales Manager 10

c. Additional Seamstress 10

d. Training Programs 10

3.3 Human Resources Strategy 10

4.0 Marketing Strategy 11

4.1 Target Market 11

4.2 Positioning Statement 11

4.3 Marketing Mix 11

a. Products 11

i. Product Design 12

b. Price 14

c. Promotions & Advertising 15

d. Place 16

4.4 Competitive Analysis 16

4.5 Marketing Expenses 17

5.0 Financial Plan 18

5.1 Capital Requirements 18

5.2 Summary of Projected Income Statement 18

5.3 Summary of Projected Balance Sheet 19

5.4 Risk Analysis 19

a. Critical Variables 19

b. Contingency Plan 19

5.5 Dividends Policy 19

5.6 Economic Forecasts 20

5.7 Ratio Analysis 21

5.8 Break-Even Analysis 22

6.0 Summary 22

Figures

1 Site Location

2 Floor Plan

3 Work Flow Chart

4 Organizational Chart

5 Arm Product

6 Break-Even Graph

Tables

1 Fixtures and Equipment

2 COGS

3 Margin Comparisons

4 Operating Expenses

5 Arm Measurements

6 Leg Measurements

7 Pricing

8 Competition

9 Marketing Expenses

10 Capital Requirements

11 Income Statement Summary

12 Balance Sheet Summary

13 Best Case Scenario

14 Worst Case Scenario

15 Ratios

Appendices:

1 Future Expansion Site Plan

2 Income Statement

3 Ratios

4 Break-Even

5 Investment Analysis

6 Base Case Financial Statement

7 Best Case Financial Statement

8 Worst Case Financial Statement

Works Cited

aTraction

Delia Edwards & Jenn Egroff

1.0 Introduction

1.1. Industry Overview

According to the Canadian Institute for Health Information, in 2008-09 there were approximately 60,000 hospitalizations in Canada (excluding Quebec) for lower limb fractures, and 30,000 for upper limb fractures (Health Zone). Within four months, 60,000 fractures were treated in emergency rooms in Ontario alone. These numbers do not include sprains, burns, or those people who were treated in clinics. Looking at the country as a whole there are approximately 250,000 fractures in Canada each year. For each of these injuries, a cast or other medical apparatus may need to be worn for up to 6-8 weeks, and many injuries will require an additional 3-4 months of physiotherapy before the injured limb becomes fully functional again (ABC News).

It is important that medical apparatus’s are kept clean, dry, and protected. This will not only reduce patient’s discomfort, but it is also easier for the medical practitioner to examine a clean, well kept cast. For many people there is an unpleasant association with their medical apparatus, since it can draw unwanted attention to a painful or embarrassing memory. It also requires a shift or change in regular activities and tends to make simple tasks much more difficult.

1.2. Mission Statement

At aTraction, our mission is as follows:

“Covering medical apparatuses with a bold Canadian-made accessory in order to have fun with an injury and stand out from the crowd.”

1.3. Goals and Objectives

There are several goals and objectives that aTraction would like to accomplish within the next five years. Our operational and profitability goals include:

· To become an operationally profitable part-time business by the third year

· To establish a market presence for Canadian products

· To become the main provider of cast covers for children and athletes in Canada

· To break-even sales by the second year of operations

· To achieve sales of $50,000 by the fifth year

· To sign a distribution agreement with a large retailer

2.0 Operations Plan

aTraction is a co-owned Canadian-controlled private corporation. This will give the company limited liability and will defer taxes so that we can reinvest in the business.

2.1 Building and Floor Plan

a. Current Site Plan

The current site plan is in Jenn’s spacious basement of approximately 15’ by 35’. This space will give us a maximum capacity of producing 80 arm covers and 64 leg covers for one work weekend (16 hours). This means that the full capacity of the current site will be 4,160 arm covers and 3,328 leg covers in the first year, with this number increasing during the next five years as our sewing efficiency increases.

Figure 1.

b. Future Expansion Site Plan

If we manage to obtain a retail contract and orders exceed our present capacity, we might need to expand. We would need a larger space with more storage room, as well as space for more machines and additional seamstresses. If we were planning on taking on employees, we would also want to include separate working spaces for Jenn and Delia to perform their management and marketing tasks. This space could be anywhere in the city and we could aim for the cheapest location as we would not need to be downtown properties. Ideally, we would look for a building to lease in a residential area. A larger space could increase production up to a level that could meet the sales targets for year five in the best case scenario (if 40 hours were put into production each week). Best case scenario shown in Economic Forecasts 5.6. See possible layout in Appendix 1.

2.2 Flow of Organization

a. Work Plan and Flow of Work

We will focus on producing one design at a time, which includes using the same fabric and thread and varying pattern sizes after every ten covers are created. This will save time and be much more efficient. In this way we will produce the covers in batches organized by fabric so we can also ensure that there are a range of sizes available in every fabric type. In the best case scenario, this will be an assembly line process, and will be laid out according to the Future Floor Plan above.

Figure 3

2.3 Quality Control Programs

While operations are small, we will perform quality control programs ourselves. We will inspect each other’s work for straight seams, uniformity of sizing, loose threads, and check that the elastic is completely covered. A Stretch Test will be performed after every ten covers, which involves testing it on a mannequin with a mock cast. We will also perform Batch Tests on new fabric to ensure that the fabric stands up well to washing without losing shape, stretch, or color. A sample will be created for every design, and one sample will be washed and stretched to see if it stretches properly or contorts after washing.

2.4 Organizational Tasks

As it is currently a very small business, we will co-manage the company. Delia will be the Sales Director, handling tasks such as calling retailers, distributing products and taking orders. Jenn will be the Marketing Director, and will handle all of the promotional strategies, product packaging and manage the brand. Since it is just the two of us, we will both be seamstresses, producing our own designs and products to meet demand. See Job Descriptions in 3.2.

Once the company expands and orders reach approximately 8,000 per year, we will hire additional seamstresses. In the Human Resources section of this plan we have a projected future organizational chart should the company need to expand past just Jenn and Delia.

Average Business Day

Managers will work part-time on the weekends depending on sales demands. In one weekend we can make 5 arm and 4 leg covers per hour each. At this rate we will only need to work 163 hours in the first year to finish the planned production. The low time commitment will allow us to work on the business from 9 am to 5 pm Saturday and Sunday for 20 weekends out of the first year, which would include both production and management hours. This means that the hours will be extremely flexible and production can be done whenever it is convenient for us. If the demand exceeded what is anticipated there will be plenty of time available to fit in more production hours.

a. Daily or One Shift

Production Shift:

· According to order, set out pattern

· Find or buy fabric to meet order

· Begin production

o Depending on availability one of us might cut while the other sews, or some other mixing of the tasks required might be done

Administration Shift:

4 hours of administrative tasks such as financials, sales calls and marketing strategies.

· The first fifteen minutes will be spent checking emails and attending to the very important or urgent matters.

· Later in the day, there is time set aside for administrative duties such as pursuing sales calls or purchasing more supplies

· Update Facebook page and website, respond to orders made online

· Verify custom orders with customers

Production:

For current operations, the first hour will be spent pinning patterns onto fabric and cutting out designs. During this time, the co-managers would be able to cut out approximately 20 patterns. The second hour will be spent sewing elastics into seams and serging together. The third hour will be spent embroidering the logo and packaging the covers onto the sock hangar, attaching the price tags, or customizing the order as requested.

After production duties, the managers will sweep up the floors and put all of the leftover materials away for the following day, as well as send off any outgoing orders.

b. Weekly

· Inventory will be taken every second Wednesday and purchasing and orders will be made every other Thursday or once a month as required

· Ensuring posters and brochures are fully stocked at various locations

· Website maintenance

· Fabric research

c. Quarterly

· Budget checks

· Balance sheet and income statement

· Develop promotions (based on seasons, around holidays)

o update posters

o promotional contests

· Routine maintenance on sewing machines, laundry machines, etc.

d. Annually

· Feasibility analysis to conclude whether business is still profitable

· Plan tradeshows and conferences for following year

· Pay and organize taxes

· Evaluate the success of different designs, fabrics and promotions

2.5 Supply Analysis

Our main supplier of fabric will be Fabricland in Saskatoon, but as the business grows we will travel to places such as the Garment District in New York City for some more unique fabrics. We will also browse online for bulk sewing supplies of needles and thread.

Sewing items such as scissors and fabric cutting mats, as well as office supplies will be bought at Wal-Mart when available. However: