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EXECUTIVE SUMMARY

IV Supplements will be the only local supplier of name brand supplements in the Isla Vista/UC Santa Barbara community. Instead of a storefront, IV Supplements will allow customers to order off of our website. Not only will we carry quality products at a discounted price, but we will also have a quick and efficient delivery service that will separate us from the competition. IV Supplements will carry a wide range of products, including general fitness products, and more specialized supplements. Because our company buys the supplements in bulk, we are able to afford to discount prices, which will make our company even more attractive to college students. Because the UC Santa Barbara and Isla Vista communities emphasize fitness, and an active life style, we are confident that our company will thrive in the Isla Vista and Goleta areas. The market we are targeting is Isla Vista, California, a bustling college town full of students from Santa Barbara City College and the University of California, Santa Barbara. Almost the entire population of Isla Vista is college students, whom we have found to be big consumers of nutritional supplements. There are currently no supplement shops in Isla Vista, which provides us with an opportunity to seize the market. Our competition includes GNC, Complete Nutrition, and BodyBuilding.com, however with our low prices and provided services we will be able to sway customers from these competitors and eventually take control of the market.

Our target audience is males and females in the Isla Vista and UC Santa Barbara community, aged 18 – 25. Our company will implement a thorough and creative marketing strategy aimed not only at attracting our target audience, but also ensuring that IV Supplements is ultimately part of the Isla Vista community. The marketing strategy contains a heavy stress on peer-to-peer and online marketing, as well as more traditional forms of marketing, such as print advertisements, and mailings. Over all, the marketing strategy aims to reach a diverse array of students, ensuring the future success and expansion of IV Supplements.

Our company believes in a strong management style that will aid in the success of our company. The Chief Executive officer and president is a joint position that will provide proper management, and will determine the short term and long term vision of IV Supplements. The management team will also consist of the Marketing Director and Executive Director, two essential positions that will aid in the long term growth of our company. This section of the plan lays out the hiring practices, benefits, and working conditions of the two employees that will be hired.

The financial section of the plan provides a projected financial outlook on the first three years of IV Supplements. The financial character of the business, IV Supplements, is easy to start, and investors are able to break-even in profits quickly. The business can easily be

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duplicated through the same operation model, thus there is great potential for the investors to expand the business into a larger geographical area. The financial analysis is broken down into four different sections including the startup costs, projection of three-year financial statements, taxes, and profitability. The business will be funded in full through contributions of investors; this amount is expected to be around $20,000 at the beginning of the first year.

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1.0 INTRODUCTION The presence of nutritional supplements has revolutionized the fitness world, making goals even more reachable and possible for many athletes and weekend warriors. Starting from basic vitamins and protein shakes to monohydrate creatines, nutritional supplements have become synonymous with every success story that walks out of the gym.

1.1 THE BUSINESS IV Supplements prides itself in the fact that we will be a local supplier of name brand nutritional supplements at discount prices to the Isla Vista/UC Santa Barbara area. Rather than a physical store, our business will function and complete transactions through a website – to make products more accessible to customers. IV Supplements will go the extra mile for convenience and will deliver products to customers door to door within the same day that they are purchased.

1.2 THE PRODUCTS

Our business will specialize in distributing popular nutritional supplements to our customers, such as generic fitness products (vitamins, proteins, energy boosters, etc.) to more specialized supplements (creatines, mass builders, weight loss, etc.). Using larger internet supplement stores such as BodyBuilding.com and MuscleandStrength.com will allow us to receive feedback from a bigger customer base on what products are popular, so that our business can know how many of each product to order. More specifically, IV Supplements will carry products found in the top sellers lists of the online stores mentioned above. Usually these products consist of supplements shown in Figure 1-1 from companies such as Gaspari Nutrition,

Figure 1-1. Nutritional Supplement Product Line Up

Source: http://www.steroidsources.com

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Optimum Nutrition, Maximum Human Performance, etc. According to extensive drug research, the “shelf life was extended for at least one year beyond the originally indicated expiration date—and by an average of 66 months” for many of these nutritional products; therefore, IV Supplements will not lose money if there are leftover supplements for each time that we order new products to restock inventory.

1 The long shelf life of these

products means that if we don’t meet sales or accidentally overstock our inventory, we will not jeopardize our financial situation for that month. These extra products will just be sold along with the new inventory because the product will not spoil or go bad.

1.2.1 Product Pricing

Our business will be able to resell products to potential customers for discount prices because IV Supplements will purchase from supplement warehouses in bulk. Buying such a large number of products will be profitable for the warehouse and it will give our business a profit margin, allowing us to sell supplements for better prices than other stores.

1.3 POTENTIAL CUSTOMERS

IV Supplements will mainly focus on the Isla Vista/UC Santa Barbara area where “students aged 18 – 22 will be the general make up of the customer base.”

2 Fitness plays

a large role in this environment, making UC Santa Barbara one of the fittest colleges in the country, full of individuals who are trying to stay healthy through diet and exercise. Based on recent articles focusing on health and fitness, doctors agree that nutritional supplements recently have become “more attractive to college students and are becoming an essential part of a successful workout routine” for athletes and gym rats, alike.

3

Therefore, it would be safe to assume that the majority of potential customers for IV Supplements are already regular consumers of the nutritional products that we will offer through our website.

1.3.1 Rewards Program

Also, our business will have a “rewards program set up to create more incentive for our customers to keep ordering their nutritional supplements” from IV Supplements.

4 We will

have promotional discounts for many of our customers after they purchase a certain number of supplements from our business so that they will return back to IV Supplements for all their nutritional needs. In the long run, we hope to have our potential customers

1 Lyon R.C, Taylor J.S, Porter D.A, Prasanna H.R, Hussain A.S. “Stability profiles of drug products

extended beyond labeled expiration dates”. J Pharm Sci, July 2006: 1549-1560. 2 “Isla Vista, CA Population and Demographics Resources,” accessed May 15, 2011,

http://islavista.areaconnect.com/statistics.htm. 3 Roosevelt, Max. “When the Gym Isn’t Enough.” The New York Times, January 13, 2010.

4 Donnelly, Tim. “How to Start Customer Reward Program.” Inc., August 17, 2010.

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order from our business even when they move out from the Isla Vista/UC Santa Barbara area.

1.4 POTENTIAL COMPETITORS

The greatest potential competitors for IV Supplements are online stores and nearby nutrition chain stores located in Goleta, California. Many potential customers regularly purchase from chain stores nearby because of the “reputation that the name of these stores carry, but recently ordering from online supplement stores has become more affordable and convenient,” making it a growing market.

5

1.4.1 IV Supplements vs. Online Competitors

The Isla Vista/UC Santa Barbara area currently does not have a local nutritional supplement distributor; therefore, many of the potential customers for IV Supplements order products from other online stores (BodyBuilding.com, MuscleandStrength.com, etc.), which for the convenience of the customer, ship their purchases directly to the customers. These larger supplement superstores offer their products at a competitive price; however, on top of these prices they include shipping costs and an average wait of two to five days to receive the order.

6 IV Supplements will take an approach that is more

affordable and convenient, offering supplements for discounted prices and cutting out shipping costs by delivering the order to the customers within the same day.

1.4.2 IV Supplements vs.

Nearby Nutrition Shops

Another potential competitor for IV Supplements is Complete Nutrition and GNC that are located relatively close to the Isla Vista/UC Santa Barbara area. A quick review of Complete Nutrition’s catalog and prices shows that it has a limited inventory, specializing in vitamins and

dietary pills as seen in Figure 1-2; rather than, offering a wide array of nutritional supplements that will be offered by IV Supplements.

5 Maxwell, Chickie. “In Search of the Best Nutritional Supplement Store.” ArticleFeeder, June 14, 2009.

6 “BodyBuilding.com Supplement Store,” accessed May 12, 2011, http://www.bodybuilding.com/store/.

Figure 1-2. Complete Nutrition in Goleta, California

Source: http://www.independent.com

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With that note, GNC currently offers the same products that we will be selling through our business’s website; however, their prices contain overhead costs and are too expensive for many customers. Also, neither competitor provides delivery for purchases and many times will charge a premium price for supplements in their store because they do not distribute products from other companies; instead they focus on selling supplements made by their own private-owned company.

7

1.5 MARKETING PLAN The location of IV Supplements requires our business to have a unique marketing strategy in establishing ourselves as a successful business of the community. Therefore, to appeal to our market and potential customers, IV Supplements will advertise to attract attention on the local level. At the same time, our business will advertise online where we can reach a larger customer base.

1.5.1 On-Campus Advertising

Since our business is mainly focused on a very student-oriented environment, we can use the campus as our advertising ground. IV Supplements will invest money to print our business logo on gym clothing and hand out flyers to potential customers on campus and near the gym. Along with these strategies, we will also advertise through UC Santa Barbara’s newspaper, The Daily Nexus, to achieve maximum outreach to all students and the community. Also, establishing a relationship with the UC Santa Barbara Recreation Center by sponsoring some of their programs will make IV Supplements a trusted and active community member.

1.5.2 Online Marketing

By marketing online, IV Supplements will create a reputation with many students at a faster pace, especially since in 2009 “46% of students prefer to get information on goods and services over the Internet,” which is up 26% from 2000.

8 Therefore, our business will

take advantage of established online marketplaces, such as SBMenus.com, that will allow customers to directly purchase our products and will enable our business to advertise to more local customers who prefer shopping online.

9

1.6 STARTING IV SUPPLEMENTS Our business, like many other startup businesses, has various initial obligations and costs that need to be mentioned. We will need to obtain licenses and permits to legally allow IV

7 “Complete Nutrition,” accessed May 13, 2011, http://www.completenutrition.com/.

8 Horovitz, Bruce. “Marketers get creating targeting hard-to-reach college students.” USA Today, October

3, 2010. 9 “Santa Barbara, CA Online Menu Resource,” accessed May 15, 2011, http://sbmenus.com/.

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Supplements to distribute and sell nutritional supplements to potential customers. Also, capital will be needed to fund purchasing the new inventory and paying for many operational costs before IV Supplements begins selling any products to its potential customers.

1.6.1 Initial Obligations

IV Supplements will need to apply for a “seller’s permit and a DBA (“Doing Business As”) registration before legally selling any products.”

10 The seller’s permit will allow us

to sell our products to our customers. Our business also needs to register the “IV Supplements” name to be able to use it on behalf of the company.

1.6.2 Startup Costs

Besides licensing and registration, initial costs will be needed for our business to jump right into the market and begin distributing products to the Isla Vista/UC Santa Barbara area. For example, IV Supplements will need to stock inventory before we even make any sales and our business will need money for marketing. Due to the discounted prices of our products, our business will be able make enough profit from sales to slowly pay back these startup costs.

1.7 FUTURE PLANS After successfully operating IV Supplements in the Isla Vista/UC Santa Barbara area, our business will expand to other campuses in California, as shown in Figure 1-3, similar to our target market in this business plan. Also, we will begin to offer our products to individuals who would like to purchase supplements from us online so we can broaden our customer base. Our future businesses at other campuses will use the same model as our original business to make IV Supplements known in other parts of the state.

10

“5 Steps to Registering Your Business,” accessed May 19, 2011, http://www.sba.gov/content/5-steps-

registering-your-business.

Figure 1-3. Univeristy Campuses in California

Source: http://www.ncousino.com

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A goal for IV Supplements is to become large enough and popular enough to be able to put our name on nutritional supplement products. We will be able to open up doors to new markets and become a distributor of our very own line of brand name nutritional supplements to individual potential customers and other nutritional chain stores.

1.8 CONCLUSION Our business’s competitive prices, emphasis on convenience, and unique marketing plans give IV Supplements an advantage over internet-based nutritional superstores and other chain stores. Although there are startup obligations and costs that need to be taken care of in the beginning, our business plan is a promisingly successful model for a small business.

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2.0 MARKET ANALYSIS

2.1 OVERVIEW

Although many facets of the American economy have fallen on arduous times due to the economic recession, the nutritional supplement industry has continued to consistently grow. In fact, Packaged Facts, a leading provider of market research, forecasts a 7% annual growth for the next three years, with sales in excess of $13 billion in 2014.

11 With

sales increasing each year, one can see that there is potential money to be made in this industry. The specific market that we intend to penetrate is Isla Vista, California. Isla Vista is a small but densely populated college community, housing students from both Santa Barbara City College and the University of California at Santa Barbara. Our competitors for this market include three major firms; GNC, BodyBuilding.com, and Complete Nutrition. Research will show that we can successfully take control of the Isla Vista market from our competitors.

2.2 TARGET MARKET

Our target customers are the residents of Isla Vista. Isla Vista is a unique community because it is made up of almost entirely college students. College students are an ideal target for our products because, according to Mary Dimmick regarding studies conducted on the dietary supplementation practices of college students, “Generally, those studies have indicated that the rate of dietary supplementation in the college population is higher than that of the general population…”

12 Further, according to Dimmick, a survey at

Washington State University showed that 48.5% of the students had taken a dietary supplement in the last 12 months.

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2.3 DEMOGRAPHICS

The demographics of Isla Vista provide solid evidence of why it is a favorable market for our business. According to the United States Census Bureau, there are 22,751 residents in Isla Vista.

13 Although this may seem like a small market to limit ourselves to if we

11

Veronica Franco. “Nutritional Supplements Market to Exceed $13 Billion in 2014,” Marketresearch.com

(September 2010). 12

Dimmick, Mary, "An Investigation of Dietary Supplementation as a Potential Source of Nutrition

Misinformation Hindering the Development of Healthy Eating Habits in the College Population,"

Undergraduate Honors Theses, Paper 44. (May 2010): 24

13

United States Census Bureau, “Isla Vista CDP, California,” US Census Bureau (2005-2009)

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believe that the bulk of our customers will be college students, it is sufficient due to the fact that of the 22,751 residents, 18,830 are college students. Figure 2-1 gives a breakdown of the population by age for Isla Vista and some of its surrounding areas. The numbers are slightly skewed because they include parts of neighboring cities that do not have a predominantly college population. Even with this discrepancy, the category of ages 18 to 24 is the overwhelming majority.

Figure 2-1. Age Breakdown For Isla Vista and Surrounding Areas

Source: www.CLRsearch.com

2.4 MARKET SHARE AND GROWTH POTENTIAL

It would be unreasonable to think that a new company can start up and immediately take control of their market. The customers we will be targeting have a previous relationship with one of our competitors and will need to be convinced to give us their business instead. If we apply the previously mentioned study done at Washington State University,

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we can assume that about 50% of the market uses nutritional supplements. 14

In the near future we look to obtain at least half of the supplement users, or about 25% of the total market. Achieving this goal will rely heavily on how well we market ourselves to the community. Once we become known, though, we expect to see immense growth in our market share due to the advantages of buying from our company. Our competitors will not offer lower prices than us and we provide free shipping to our customers because of our proximity to Isla Vista.

The potential for growth is an enticing aspect of the nutritional supplement industry. Annual industry growth is expected to continue, which will undoubtedly affect the Isla Vista market positively as well. Growth will continue as word of mouth continues and more residents learn of our business. The market will continue to expand in the future as the industry itself gains more notoriety and expands itself. Figure 2-2 shows a spending breakdown of Isla Vista and some surrounding areas. Note the “Health

and Personal Care” category under which nutritional supplements fall under. These make up about five percent of

14

Dimmick, Mary, “An Investigation of Dietary Supplementation as a Potential Source of Nutrition

Misinformation Hindering the Development of Healthy Eating Habits in the College Population,”

Undergraduate Honors Theses, Paper 44. (May 2010): 24

Figure 2-2. Spending Breakdown for Isla Vista and Surrounding

Areas

Source: www.CLRsearch.com

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expenditures, or roughly $41.7 million. 5

2.5 COMPETITOR PROFILES In the town of Isla Vista itself there are no other nutritional shops. However, there are three major competitors that are outside of Isla Vista.

2.5.1 GNC

GNC is one of the biggest names in the nutritional supplement industry. They sell their products both online and in their stores. GNC offers a wide variety of products and continues to be a leader in the supplement business. The nearest GNC to Isla Vista is fifteen minutes away in downtown Santa Barbara.

2.5.2 Complete Nutrition

Complete Nutrition just recently opened its doors in the nearby town of Goleta, California. They do not sell products online, but rather exclusively in-store. Complete Nutrition is not as well known as GNC, but they are still a recognized name, owning 35 stores nationwide.

6 The nearest store to our market is a five-minute drive away.

2.5.3 BodyBuilding.com

Arguably our biggest competitor is BodyBuilding.com. The website was started by Ryan DeLuca and remained private until Liberty Media bought a controlling stake in 2008.

7

BodyBuilding.com is exclusively online and has a loyal customer base. They do not only sell nutritional supplements, but also provide exercise and health articles and gives examples of different workouts. Their prices are historically lower than GNC’s and Complete Nutrition’s.

2.6 COMPETITOR COMPARISON

Unlike our three competitors, we target a specific market that we believe we can cater to more effectively than anyone else. Although GNC and Complete Nutrition are well- known brands, their products are usually expensive. BodyBuilding.com offers lower prices than GNC and Complete Nutrition and gives the customer the convenience of

5 “Isla Vista, CA 93117 Retail Sales Statistics,” CLRsearch.com (2010).

6 Pete Hardie, “Complete Nutrition Comes to Goleta,” Santa Barbara Independent (August 2010).

7 Ritsuko Ando, “Liberty Media buying Bodybuilding.com stake: report,” Reuters (January 2008)

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purchasing at home on the computer. It is because of this that we consider bodybuilding.com to be our strongest competitor. Similarly to bodybuilding.com, our company offers customers lower prices than other competitors. What sets us apart, though, is the fact that BodyBuilding.com chargers customers for shipping while we provide that service for free. We are solely targeting Isla Vista, which allows us to set up close to our market and entice consumers with no shipping payment. All of our orders are taken online, which provides convenience. Online shopping has become a staple of supplement purchasing. Figure 2-3 illustrates the decline in jobs in nutritional supplement sales. If overall sales are continuously increasing but sales jobs are decreasing, that could only mean that online shopping has become the preferred way to purchase supplements.

2.7 RISK

As with every new company, there is risk. Two years ago a supplement store opened its doors in Isla Vista. A year later they closed their doors. This shop was unable to draw consumers away from the companies they already purchased from, a risk that we will have to overcome. In a small community such as Isla Vista, the biggest hurdle in tapping into the market will be marketing. If we do not effectively get our name out into the community, we could face hardship as well. This is a risk, though, that every new business takes and is not exclusive to us.

Figure 2-3. Job Trends in Supplement Sales

Source: www.simplyhired.com

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2.8 CONCLUSION

The industry of nutritional supplements is expanding rapidly and showing no signs of slowing down. Isla Vista presents a market that is unchartered. We intend to capitalize on the immense college student population in Isla Vista and offer customers services they would not otherwise have. We believe we can offer customers more than our competitors and in doing so take over the Isla Vista market.

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3.0 MARKETING STRATEGY

3.1 OVERVIEW

This section will introduce the marketing strategy that IV Supplements will utilize in the Isla Vista area. This marketing strategy will be broken into different sections including target market strategy, pricing strategy, unique marketing tools, special promotional events, marketing goals, and risk assessment. Since our target market is college students, our company understands the need for creativity when targeting hard to reach college students

15 . Thus, we have prepared a strong marketing plan with an emphasis on peer-to-

peer marketing to ensure the success of our company.

3.2 TARGET MARKET

After researching the Isla Vista area, IV Supplements found that it would be most effective to focus marketing strategies on male and female students living in Isla Vista between the ages of 18 to 25. Our marketing strategy will appeal to capturing the attention of students in this age group. Through our various protein powders, nutrition bars, supplements, and vitamins, we will appeal to most students in Isla Vista. Because our goods are much lower priced and more quickly delivered than other supplement suppliers, we will appeal to busy students who are always strapped for cash.

3.2.1 Location

IV Supplements is located in Isla Vista, California. Isla Vista is an ideal place for our target market because the median age for this area is 20.8

16 , and the majority of these

individuals are students at Santa Barbara City College, or UC Santa Barbara. The Alloy Media + Marketing's 10th Annual College Explorer Study stated that college students have a large amount of spending power in general

17 . In addition to this, the

current college populations have jumped up an average of 6% from 2009 projections, giving college students even greater spending power. A 10% increase in discretionary spending in the budget of the average college student has come about, further emphasizing the market influence of college students. .

18

15

Horovitz, Bruce. “Marketers Get Creative Targeting Hard to Reach College Students.” USA Today,

October 3, 2011. 16

US Census Bureau, “Isla Vista CDP, California 2010,” accessed May 19, 2011,

http://factfinder.census.gov/ 17

Loechner, Jack. ““Returning College Students Spending Optimistically.” MediaPost, July 19, 2010, http://mediapost.com/publications. 18

Ibid.

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While per capita income in Isla Vista is $11,808 19

, parents often help their college students financially while they are in college. According to College Confidential, more than half of the student population at UCSB has a combined family income of $79,999 or greater, which means that the majority of students come from upper middle class or upper class families

20 , alluding to the ability of UC Santa Barbara parents be able to give more

money to their offspring. Considering that parents will give their sons or daughters money for general spending, students actually have more extra spending money than the per capita income can show. In addition to this, our marketing strategy will play into the unique Isla Vista and University of California, Santa Barbara culture, which promotes health, fitness, and outdoor activity. Our marketing strategy will emphasize how nutrition will aid in a healthier lifestyle, as well as better study habits for students. Considering this increase in discretionary spending in the college student budget, the general Isla Vista beach culture, and the emphasis on a healthy physical appearance, Isla Vista, California is an optimal location for our target market. Our marketing plan will emphasize special events, peer-to-peer marketing, promotional product marketing, and social media marketing. Because Isla Vista is a densely packed square mile, our company can reach students in an efficient way, keeping our prices substantially lower than the competitors’ prices. In addition to this, the fact that IV Supplements is a local company is more appealing to the local Isla Vista community, especially since students feel an affinity to Isla Vista. This trend is seen in general, as a survey by Time indicates that “82% of consumers actively supported local or neighborhood businesses in 2009”

21 . IV Supplements will be viewed

more favorably because it will actually be part of the community that it serves.

3.3 PRICING STRATEGY

IV Supplement’s lower than average prices gives us an advantage in the local Isla Vista and Goleta markets. Our customers will save between $8-13 per order. To a college student that has to set a lower personal budget, this savings is substantial. IV locals being able to purchase such a wide variety of goods at lower prices will draw customers to our company that might not normally purchase nutritional materials. We strive to contribute positively to the nutritional habits of the Isla Vista community by being a more accessible nutritional choice. In addition to the promotion of a positive physical image, IV Supplements will promote nutrition as something that can aid with smaller health concerns, study habits, and positive self-image. All of these goals are more attainable for college students when the nutritional products are lower priced and

19

US Census Bureau, “Isla Vista CDP, California 2010,” accessed May 19, 2011. 20

College Confidential, accessed May 23, 2011. 21

Richard K. Miller and Kelli Washington, “Consumer Behavior 2011”: Loganville, Richard K. Miller &

Associates, 2011.

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conveniently available. Our customers will be able to order the products on our website, through the SB menus website, or during our tabling sessions.

3.4 UNIQUE MARKETING TOOLS

IV Supplements will use a variety of unique marketing tools to ensure that our target audience is familiar with the wonderful services that IV Supplements can provide. These tools include a well-rounded range of typical and unique tools aimed to make our company stand out.

3.4.1 Company Image

Our company’s logo is combined with our company image, as seen below, in figure 3-1. The phrase “Get Going” is catchy, but it also communicates the main goals of our product. The logo emphasizes the ability of our products to aid our customers in the quest for a healthy body image, in becoming physically active, and in feeling mentally balanced so that academics thrive. This image also encompasses the active lifestyle required to embrace the natural adventures that this local community has to offer. This image will have a strong presence during our peer-to-peer marketing projects, on our website, and on our social media aspect. We believe strongly in repeated exposure of a company logo, as busy college students need to see these images repeatedly, and be able to tie these images to the goals of IV Supplements.

This slogan will be present on our flyers, website, social media advertising techniques, banners, and special events. In addition to this, we will partner with SBMenus to order work out tanks and sport water bottles for our company with this logo. According to the visual advertising tactics that SBMenus uses, the below color scheme blends in with the images that are on the SBMenus website, except that this logo/slogan is a lot more bold than any of the other logos presented on the website. The bold letters will allow our advertisement to stand out against other advertisements.

3.5 ADVERTISING STRATEGY

IV Supplements will spend $11,000 on advertising our first year. Our company will have to take a unique approach to reaching our target audience, as “savvy college marketers have learned that they can no longer reach students by simply putting up posters, handing out

samples and hanging ads from dorm room door handles.” College students are busy, and are “immune” to average marketing tactics. Instead, marketing tactics targeting college

Figure 3-1. Company Logo

Source: www.nhslothian.scot.nhs.uk

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students need to be tactics that are “more deeply intertwined in their lives.” This means “you have to take a brand and incorporate it into the college lifestyle by peer-to-peer marketing.” This is exactly what IV Supplements aims to do with its unique marketing strategy.

22

3.5.1 Tabling

Our company will hire two independent contractors to table on the UCSB campus Monday- Wednesday, from 11-2pm at the outdoor Arbor location. This tabling will happen every week for the first month of our company starting. After the first month, we will be tabling Monday-Wednesday the second and last week of every month. Tabling will consist of flyers, free marketing materials, music, and two knowledgeable contractors. These contractors will have general knowledge of physical fitness, as well as overall health issues that students face. These individuals will be young and energetic and relatable to the student population. With daily facts and trivia, tabling tactics aim to intertwine IV Supplements into the lives of students in a fun and positive way. The total cost of this aspect of the marketing plan will cost $4,000 for the first year.

3.5.2 Flyers, Mailings and Informational Sheets

Our company’s flyers, mailings, and informational sheets will cost a total of $2,300. These printed materials will emphasize how IV Supplements can provide a variety of nutritional products at much lower prices than their competitors. We will also have an interesting fact on these printed materials, such as ways to combat the famous “freshman 15” (see Figure 3-2). Figure 3-2 is an example of a mailing material that could be distributed to the Isla Vista community. In addition to this, these mailings can be distributed to the dormitory mailboxes on campus, as well as the Santa Catalina dorm, which houses hundreds of freshmen. These flyers will also be distributed to the downtown areas in Isla Vista, and placed on various community boards. Printed materials will include information about the variety of products that we offer, our delivery information, our phone number, our website, an interesting fact, and other key information. IV Supplements believes in the repetition and widespread influence that these printed materials can bring over time.

22

Horovitz, Bruce. “Marketers get creating targeting hard-to-reach college students.” USA Today, October 3, 2010.

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Did you Know? One pound equals about 3,500 calories, so reduce your

calories by 500 each day, and by the end of the week, you will

drop a pound. Brought to you by: IV Supplements….Get Going!

Delivery in a day and the best prices in nutrition…who can beat that?

www.IVsupplements.com

Figure 3-2. Company Flyer logo

Source: www.prospectusnews.com

3.5.3 Word of mouth

Because our target audience is college students, and college students spend a lot of time with their peers, word of mouth marketing an important component to our advertising plan. Harry Schiff, the president of Agent Anything Inc., a personal service company launched in New York City that depends on college students, mentions the importance of word of mouth advertising among student groups, “It's a great word-of-mouth community," Schiff says. "Since they see each other often, they always need new topics of conversation.”

23 We envision that the communities in Isla Vista and in the Dormitories

will communicate the convenience of delivery and the monetary discount that IV Supplements will provide to its customers.

3.5.4 Promotional Items

Word of mouth advertising can be further emphasized by free promotional items given away at special events and during tabling efforts. Promotional items are important because college students appreciate free “swag”. In addition to this, these items can provide us with advertising year round, and can aid in our goal of an active and healthy student population. IV Supplements will provide sports bottles and active tanks for men and women with our logo and website on them. Promotional items will cost $2800. See Figure 3.3 for promotional items. 23

Williams, Geoff. “Five Tips for Marketing to College Students.” Business Insider, September 24, 2010.

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Figure 3-3. Promotional Items

Source: www.discountmugs.com

3.5.5 Newspaper

A yearlong advertizing campaign in the school newspapers costs $800. The Daily Nexus is the UCSB campus newspaper that is printed daily and distributed around campus, allowing IV Supplements to reach a diverse group of students all around campus and Isla Vista. The Bottom Line Newspaper is another school paper that caters more to the activist community on campus. Reaching out to both of these papers would secure IV Supplements Isla Vista, Goleta, and on campus exposure. According to Consumer behavior 2011 reports, only 7% of individuals aged 18-34 ignore newspaper advertisements, compared to other forms of advertisements, which are more widely ignored

24 . This means that newspaper advertising will be an effective tool for our target

market.

3.5.6 Website

A major component of our business will be the website. Since there is no storefront location, the website is one of the main presentations of our business. A professional looking website will ensure us more business, and give us credibility among other local businesses. In our website, we will include an easy to navigate order form, product information, and nutritional information. We will include health and fitness tips targeted to the 18 – 25 age group, and make product suggestions based on this. IV Supplements will have an account with SBMenus to aid in the professional appeal of our website. Our company will also gain publicity simply from being tied to SBMenus through an ad and a link to our actual website. This is an intelligent plan because SBMenus’ goal is to “provide local restaurants and bars with a more efficient system in

24

Richard K. Miller and Kelli Washington, “Consumer Behavior 2011”: Loganville, Richard K. Miller & Associates, 2011.

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which to distribute and market their product” and “to add value to our clients business by increasing their exposure and distribution channels.”

25 This is necessary for a new

company to be a part of, as they are linked to major social networking sites as well.

3.5.7 Social Media Marketing

Social Media marketing will also be an essential component of our overall advertising plan. Our company will take advantage of the free and easy to use social media networks such as Facebook, YouTube, and Twitter. We will also provide a blog on our website for students to connect and share information about different supplements. This way, we are also listening to the demands of our target group so that we will be able to provide the specific products that our customers want.

3.6 SPECIAL PROMOTIONAL EVENTS

In order for IV Supplements to be truly engaged into the 18 – 25 target audience in Isla Vista, it is essential that our company take part in some of the important Isla Vista cultural events. Our annual event at Isla Vista’s Pardall Carnival will ensure that IV Supplements is engaged in the Isla Vista community starting in the fall, when new students are arriving on campus.

3.6.1 Body Building Contest

Our company will have an annual “IV Supplements Body Building Contest” that will be held at Pardall Carnival, a local carnival in Isla Vista put on every fall by the UCSB Associated Students (see Figure 3-4 for Pardall Carnival). This event will feature a stage, music, judges, and several prizes that will be given to the winners of

the contest. We will utilize our website to choose the finalists by asking them to submit photos of themselves to the website. Then

we will have our customers vote on the website for their top five contestants. The top three winners will be chosen by judges that are hired through the University’s Recreation center. All of the winners will receive prizes that are donated by our company. This

25

“Santa Barbara, CA Online Menu Resource.” accessed May 20, 2011, http://sbmenus.com/.

Figure 3-4. Pardall Carnival

Source: The Daily Nexus

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annual event will cost $1,100. Below, in Figure 3-5, is a pie chart of the advertising budget broken down by percentage out of the total $11,000 marketing budget.

3.7 MARKETING GOALS

Our company’s well planned marketing plan will boost sales, educate our customers, and ensure that IV Supplements is a well known name in the local Goleta, UCSB and Isla Vista communities. In addition to this, our company will be very engaged in the culture of Isla Vista, and will eventually become an aspect of this distinct culture. Our company will offer lower priced nutritional products, and fast and efficient delivery along with it.

3.7.1 Future Plans

IV Supplements would eventually like to expand our company to be able to serve Santa Barbara County as a whole. In addition to this, our company would like to expand to the point where we can produce our own line of nutritional products made locally.

3.7.2 Our Competition

Our company’s competition includes other retail locations for nutritional products such as Complete Nutrition in Goleta. There are also nutritional products in the drugs stores such as Rite Aid, but these tend to be higher priced than other suppliers. Online competition will always be present, but we are confident in the fact that we have the lowest prices,

Figure 3-5. Advertising Budget Pie Chart

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because we buy the products in bulk. In addition to this, no other company can compete with our delivery service, as it is fast, and can save customers a tremendous amount of money; this gives our company a competitive edge.

3.8 RISK ASSESMENT

A possible risk that may occur in our marketing strategy might include problems reaching our target audience. In addition to this, all of our promotional materials could be ineffective because they may blend in with other advertising tactics from other companies. Regardless, there are some unique aspects to this marketing plan (such as the Body Building Contest) that no other competitors will have. We must rely on the excitement and creativity of this marketing campaign to keep our customers, and attract new ones.

3.9 CONCLUSION

Our company’s quality products, discounted prices, fast delivery, and exciting image will ensure IV Supplements is a successful company. This marketing plan not only lays out a thorough plan for catching and keeping customers, but it also ties IV Supplements to the local university and Isla Vista community. Our company aims to be an essential part of Isla Vista community, as well as an important resource for student health issues. We expect IV Supplements to be a very successful investment.

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4.0 MANAGMENT

4.1 OVERVIEW

“Management is efficiency in climbing the ladder of success; leadership determines whether the ladder is leaning against the right wall,” said by Stephen R. Covey, recognized as one of Time Magazines 25 most influential Americans.

26 IV Supplements

will practice efficient and effective hiring and training procedures that will aid in the climb of the ladder to success. Accordingly, IV Supplements encompasses the right people with the right management skills to make sure that the ladder is propped against the right wall. The care and compassion that will go into hiring the right candidates will give this business the success it needs to climb the ladder with ease.

4.2 MANAGEMENT TEAM

IV Supplement Management Organization Chart i

4.2.1 Chief Executive Officer/President

The Chief Executive Officer and President will be a joint position that will have total management. This individual should have a long and short-term vision to help advance IV Supplements mission and objectives to promote revenue, profitability, and growth. Having prior experience as a CEO is a must. They will ensure the company either breaks even or is profitable by a designated date. The Individual will overlook the marketing director and manager to collect data to see if anything should be changed to increase profits.

26

Stephen R. Covey, "Leaders on Leadership." Executive Travel, May/June 2007: 72.

Figure 4-1. Management Chart

CEO President

Marketing Director

Executive Manager

Employee

Employee

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4.2.2 Marketing Director

Marketing director will be responsible for growth, by ensuring IV Supplements is providing proper advertisement where it is needed most. This person should have a background in marketing and design, while having a friendly and outgoing way about them. Candidate must have both exceptional writing and verbal communication skills since they will be proofreading and help design advertisements. Having a background of the geography of Isle Vista is a plus to help market to the right group of people. They will have monthly meetings with the CEO and the Executive Manager to see how IV Supplements stands in the market.

4.2.3 Executive Manager

The Executive Manager position will be in charge of sales generation, safety, security, hiring, training, inventory control and visual merchandise inspection. These are all important responsibilities that will help IV Supplements run smoothly and error free. The ideal candidate will have some managerial background along with good communication and vocal skills. Having a background in nutrition is a plus but not required.

4.3 MANAGEMENT TEAM GAPS The management team will play an important role in decision making but each employee will have duties that will make there part of IV Supplements significant and import for growth.

4.3.1 Employees (2)

There will be two employees to ensure there is always one employee in the office. Employees will be responsible for organizing and packaging orders, taking phone orders, delivering and must have the ability to give information regarding all the products. This person should be able to work in a fast pace environment with deadlines, and keep the Executive manager updated.

4.4 EMPLOYMENT

4.4.1 Employee Benefits

Employees will have access to wholesale cost of products and goods that IV Supplements carries or has access to.

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4.4.1.1 Holidays

All full time employees will be given 10 paid holidays a year. The holidays are all federal holidays and include:

• New Year’s Day • Martin Luther King, Jr. Birthday • Washington’s Birthday • Memorial Day • Independence Day • Labor Day • Columbus Day • Veterans Day • Thanksgiving Day • Christmas Day

4.4.1.2 Vacation

Each full time employee will have 12 full vacation days paid but must ensure the manager approves the time off.

4.4.1.3 Sick Days

Sick days are a necessity since everyone gets sick so at IV Supplements we believe it is important not to come to work and put others at risk. That is why we encourage our employees to take sick days of which they have 10.

4.4.1 Labor and Employment Laws

California has many laws in place to help protect the employees and employer against lawsuits. Isle Vista Supplements will cohere to all state and federal laws to ensure the safety of the employees.

4.4.2 Employment for IV Supplements

Mary Kay Ash once said, “People are definitely a company’s greatest asset. It doesn't make any difference whether the product is cars or cosmetics. A company is only as good as the people it keeps.”

27 That’s

why we at IV Supplements believe

27

Mary Kay Ash. Great-Quotes.com, Gledhill Enterprises, 2011. http://www.great-quotes.com/quote/602456, accessed Mon May 30 10:51:11 2011.

Figure 4-2. Interviews

Source www.singlemindedwomen.com

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interviewing candidates is one of most important things when it comes to hiring employees. That is why we believe all interviews should be done with the whole executive management team like figure 4-2. All employees will go through a rigorous set of questions during their interview to help pick the best candidate for the job.

4.4.2.1 Chief Executive Officer/President

CEO requirements:

• Prior CEO experience required • Undergrad Diploma • Self motivated and discipline to make time crunches • Be able to prove growth in past companies

Prior Knowledge but not essential: • Nutrition/Vacation supplement knowledge

4.4.2.2 Marketing Director

Marketing Director requirements:

• Portfolio of marketing materials • Proficient in Adobe Photoshop and Illustrator • Critical attention to detail • Proficient in English both written and spoken

Prior Knowledge but not essential: • Nutrition/supplement knowledge • Isle Vista demography

4.4.2.3 Executive Manager

Manager requirements:

• Prior manager experience • Communication skills • Undergrad Diploma • Proficient in English • Some nutrition/supplement knowledge

4.4.2.4 Employee(s)

Employee requirements: • Communication skills • Bodybuilding & Supplement background • Able to lift/ride bicycle • Work under time constraints

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4.4.3 Hiring Critique

Hiring employees based on their education, certifications, qualifications and experience, will ensure the right employees are hired for the job.

4.4.4 Training

Once prospective employees are hired, there will be a rigorous one-week training course to teach new employees the codes, conducts, safety regulations, customer service mission and values of Isle Vista Supplements. Employees will be divided into there respective position and the Executive manager will conduct the training courses.

4.4.5 Hourly Wages

Hourly wages will be based on the position and qualifications the applicant has along with state and federal law.

4.5 LEGAL RIGHTS AND CONTRACTS Opening a Nutrition/Supplement stores will not only focus on customer service and employee welfare, but it also raises many legality issues with the federal government regulations, employee contracts and similar agreements.

4.5.1 Health Care

IV Supplements will offer health care to all full time employees and Management. • Any Employee who passes the six-month probationary period will be eligible for

health, dental and optometry care. Each employee who agrees to the terms and condition for Isle Vista Supplement employment welfare will receive 30% compensation on the cost of their deductible. Laura Baker said, "Unfortunately, the reality is that employees are increasingly sharing in that growing cost. They are feeling the pinch."

28 By offering health coverage it will attract employees to

stay.

4.5.2 Employment Risks

IV Supplements will cohere to all federal and state laws that require employers furnish a place of employment that is free from recognized hazards that are causing or are likely to

28

Helfand Duke. “California Employers’ Healthcare Costs Rose 8.4% this Year.” The Los Angeles Times,

November 10, 2010.

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cause death or serious physical harm to employees. In most instances, an employee may anonymously complain about an unsafe work environment and be protected against employer reprisals.

4.5.3 Taxes and Additional Government Regulations

California has certain tax forms and other government regulation employers must follow to obtain to federal and state law.

4.5.3.1 Taxes

The IRS states that you must keep records of employment taxes for at least four years.

Also, keeping good records for business will help you monitor the progress of your

business, prepare your financial statements, identify source of receipts, keep track of

deductible expenses, prepare your tax returns, and support items reported on tax returns.

• Federal Income Tax Withholding (Form W-4)

o Every employee must provide an employer with a signed withholding

exemption certificate (Form W-4) on or before the date of employment.

The employer must then submit Form W-4 to the IRS. For specific

information on employer responsibilities regarding withholding of federal

taxes.

• Federal Wage and Tax Statement (Form W-2)

o On an annual basis, employers must report to the federal government

wages paid and taxes withheld for each employee. This report is filed

using Form W-2 Wage and Tax Statement. Employers must complete a

W-2 Form for each employee to whom they pay a salary, wage or other

compensation.

• State Taxes

o California has many state taxes that are taken out of the employees pay

check

4.5.3.2 Employee Eligibility Verification

Federal law requires employers to verify an employee's eligibility to work in the United States. Within three days of hire, employers must complete an Employment Eligibility Verification Form, commonly referred to as an I- 9 form. This requires you to examine acceptable forms of documentation supplied by the employee to confirm the employee's citizenship or eligibility to work in the U.S. Employers can only request documentation specified on the I-9 form. Employers who ask for other types of documentation not listed on the I-9 form may be subject Figure 4-3. Employees Unity

Source: www.alexismartinneely.com

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to discrimination lawsuits.

4.6 CONCLUSION

Good Management is all about efficiency. With efficiency, management can create success with minimal failure and stoppages. Using well-trained management skills, companies, such as ours, can rely on standard work ethics, a strong base and a “ladder” which will definitely be aiming high and positioned on the “right wall.

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5.0 FINANCIAL

Our financial analysis will begin from the point of the initial investment of startup costs. It will further explain a three-year financial projection for the sales revenue and related fixed and variable costs. In addition, we explore the net income of the investor from a tax approach. Finally, we will show the profitability of the business with break-even analysis and profit sensitivity with different projected sales levels.

5.1 START-UP COST

IV Supplements is an easy to start business because of the requirements for the initial investment is very low. The startup cost of IV Supplements is $18,200 with detailed information (see Table 5-1) for a breakdown of the costs. The $3,000 rent includes the deposit and one month’s rental of a one-bedroom apartment in Isla Vista. A company website will be created and maintained by a UCSB student employee, so the cost to set up the website is lower than the market price. Table 5-1. Startup Costs Break Down

5.2 PROJECTION OF A THREE-YEAR FINANCIAL STATEMENT

The financial reports for IV Supplements start from January 1 st of each year and end on

December 31 st . It can demonstrate a good overview for an operation period of a whole

year for ratio analysis and income tax purposes.

STARTUP COSTS

Fixed Assets 3,000

Insurance 1,500

Inventory 3,000

License Fee 500

Marketing Expenses 1,000

Rent 3,000

Software 1,000

Stationery 200

Website Creation and Maintenance 3,000

Others 2,000

Total $18,200

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5.2.1 Balance Sheet

The Balance Sheet for IV Supplements demonstrates the basic financial situation for the first three years. The detailed information is in Table 5-2. It shows a high percentage, roughly 40%, of cash compared to its total assets. This satisfies the needs of the fast inventory turnover for this retail business. The inventory amount increases for the second and third fiscal years due to the increase of the sales level during those years. Table 5-2. Balance Sheet

IV Supplements BALANCE SHEET

2012 2013 2014

ASSETS

Current Assets

Cash and equivalent 8,500 10,200 12,240

Accounts Receivable 1,500 1,575 1,654

Inventory 9,000 12,600 17,640

Prepaid Expense 1,500 1,500 1,500

Total Current Assets 20,500 24,375 31,534

Fixed Assets

Equipments 3,000 3,600 4,320

Accumulated depreciation (300) (900) (1,400)

Net property and equipment 2,700 2,700 2,920

TOTAL ASSETS 23,200 27,075 34,454

LIABILITIES AND OWNERS'

EQUITY

Current Liabilities

Accounts payable 750 788 827

Salary & Wage Payable 1,500 1,575 1,654

Payroll Tax Payable 115 120 127

Sale Tax Payable 550 578 606

Total Current Liabilities 2,915 3,060 3,214

Owner's Equity

Owner's investment 20,285 20,285 20,285

Retained earnings 0 3,729 10,955

Total Owner's Equity 20,285 24,015 31,240

TOTAL LIAB. & OWNER'S EQUITY 23,200 27,075 34,454

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5.2.2 Sales Revenue and Costs

IV Supplements’ first year sales revenue is $160,000 or $13,333 per month. It is a reasonable projected revenue because as we mentioned earlier in the market section (see 2.3 Demographics), there are 18,830 college student residents in Isla Vista. We are targeting 25% (or 4,700) of those student buyers. The annual average consumption on our products will be $35 from each potential buyer. The sales revenue increases the second and third years about 40% and 30% respectively. Because it is a new business, the sales will be low at the beginning. As more people in Isla Vista know the business, the sales revenue continues to grow until the third year when it reaches a regular sales level. Comparing the growing sales revenue, the costs of the business do not grow at the same pace as the sales. It is because the fixed costs of the business remain at the same level, only the variable costs, such as wages and the direct cost of the sales, grow with the total sales revenue. Thus, the business will gain higher net profit for the owner during the second and third year. Table 5-3. Income Statement

IV Supplements INCOME STATEMENT

2012 2013 2014

REVENUE

Sales Revenue 160,000 224,000 291,200

Direct Cost of Sales 96,000 134,400 174,720

Gross Margin 64,000 89,600 116,480

Gross Margin % 40% 40% 40%

EXPENSES

Advertising 11,000 11,000 11,000

Depreciation 300 600 500

Insurance 1,500 1,575 1,654

Interest expense 200 210 221

License Fee 500 500 500

Office supplies 600 630 662

Payroll taxes 1,836 2,570 3,342

Rent 18,000 18,540 19,096

Salaries and wages 24,000 33,600 43,680

Software 1,000 500 500

Telephone 1,200 1,260 1,298

Web. hosting and domains 3,000 1,200 1,260

Total Expenses 63,136 72,185 83,711

Net Profit 864 17,415 32,769

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5.2.3 The Statement of Cash Flow

IV Supplements is a business with a financial characteristic of high inventory turnover. Most of the sales will be paid either by cash when delivered, or by credit cards online. The business has a very low amount of accounts receivable, so the cash inflow from sales can cover the daily operating expenses because of perfect timing between cash inflow from sales and cash out flow of costs. The company’s three-year projection of statement of cash flow is presented in Table 5-4 with an indirect method calculation. It shows that during the three years, the necessary cash required is covered under the operating activities as we showed in the income statement (see Table 5-3). There is no big investment taking place during this period. The major cash out flow is the distribution of the dividends to the owner.

Table 5-4. Statement of Cash Flow

COMPANY NAME

STATEMENT OF CASH

FLOW

2012 2013 2014

OPERATING ACTIVITIES

Net Income 864 17,415 32,769

Depreciation 300 600 500

Net Cash from Operating Activities 1,164 18,015 33,269

INVESTING ACTIVITIES

Purchase of property and equipment 3,000 600 720

Net Cash Flow from Investing Activities (3,000) (600) (720)

FINANCING ACTIVITIES

Paid-in-Capital 20,285 0 0

Dividends to the owners 864 13,685 21,814

Net Cash Flow from Financing Activities 19,421 (13,685) (21,814)

NET INCREASE IN CASH 17,585 3,729 10,735

5.3 INCOME TAX

IV Supplements is a business under a legal form of sole proprietorship. One of the advantages for this legal form of entity is a tax benefit. There is no corporation level tax for this kind of business. In other words, there is no income tax levied for the profit generated from this business.

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5.3.1 Choice between Wage Income and Dividend Income

The owner can elect to run the business by himself or herself, so the owner is subject to two types of taxes. According to the Internal Revenue Services, sole proprietorship owner is liable for Self Employment (SE) Tax and Individual Income Tax to the Federal Government. The SE tax is similar to the company proportion of the regular payroll tax which all employers need to pay for their employees. The alternative choice is that the owner can choose to hire employees to run the business without involving the daily operation. Under this situation, the owner is only liable for the Individual Income Tax

29 (IRS.gov). It is very beneficial for the owner to spend time

on other investments or expand the nutrition supply market to other areas. The owner can solely get annual profit from the initial investment.

5.4 PROFITABILITY ANALYSIS

5.4.1 Break-Even Point of Sales

The break-even sales point (Table 5-5) indicates when the sales profit margin can cover the fixed costs during the operation period. This point is the starting point that a company begins to generate net profit. If the sales revenue is under this point, the company will definitely end up with a loss due to the unavoidable fixed costs

30 . The three year break-

even sales for IV Supplements are $65,250, $62,013, and $63,673. It is about 41%, 28% and 22% comparing with its sales revenue of $160,000, $224,000, and $291,200.

Table 5-5. Break Even Sales

Fixed Costs Break Even Point in Sales Dollars

= Contribution Margin Ratio

Break Even Sales

26,100 Year 2012

40% = $65,250

24,805 Year 2013

40% = $62,013

25,469 Year 2014

40% = $63,673

29

Anonymous, “Sole Proprietorship,” Internal Revenue Service Website, <http://www.irs.gov/businesses/small/article/0,,id=98202,00.html>, April 11, 2011, May 10, 2011. 30

Ray H. Garrison & Eric W. Noreen, “Cost-Volume-Profit Relationships,” Managerial Accounting, McGraw-Hill Company, Inc., NY. 2008, P243.

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5.4.2 Sensitivity Analysis of Sales Revenue

Sales revenue is the key point for this retail business. In Table 5-6, the average three-year annual sales is calculated by the total three year revenue divided by three. The average sales revenue is set up in a range of 10% difference of each stage. The data are not indicated for any particular year of the first three consecutive operation years. It gives the user a better idea under the condition of a normal business year. As one can see, even if the sales revenue is dropped 20% less than the projected sales in the income statement, the company still can sustain from losses. Table 5-6. Sensitivity Analysis under Different Sales Assumptions

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The net profit to sales revenue ratio is around 8% under the 100% sales condition (see Figure 5-7). It goes down to 5% when the sale level is 80% from projection (see Table 5- 6). It proves that the business is a low risk investment because even when the sales revenue goes down by 20%, the profit margin only drops by 3%.

Figure 5-7. Projection of Different Sales Level

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IV Supplements is a business with a very fast payback period, as one can see in Table 5-5. Under the normal sales (100%) condition, the owner only needs one year to get the total investment $20,285 (see Table 5-2) paid off. If it is in a worse scenario, the payback period is around two years. This explains the risk for this investment is relatively low compared with the industry with a high ratio of fixed assets investments. Figure 5-8 shows the relationship between the initial investment and an annual net profit for the business. The projection is under different sales assumption from the data showed in Table 5-6.

Figure 5-8. Comparison of Net Profit and Initial Investment

5.5 CONCLUSION

IV Supplements is aiming at the market of the college students who want to have easy access and affordable daily nutrition supplies. If we can build up the trust with those customers, we can have their loyalty for a long time because of their young age. The current location is the starting point of the business. Once it gets successful, the Company will be expanded throughout all kinds of University Campuses in California. On one hand, from the financial point of view, it is realizable due to the low startup costs. On the other hand, the Company will be more efficient on costs because of the enlarged purchasing power, which will decrease the price for the inventory goods.

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CONCLUSION Our business team has been developing the preceding strategies and information from a wide array of resources focusing on the area of our business and potential market trends. The proposed plan for IV Supplements is designed to establish a local business that will be an active member in the community and successfully compete with larger businesses in the market. IV Supplements will be introduced to the Isla Vista/UC Santa Barbara area as soon as next year where our business will be delivering its products to the customers within the same day that they are purchased. As time progresses, IV Supplements will create a loyal customer following, allowing us to achieve our mission of expanding to other university campuses in California and, one day, providing customers with our very own, custom name-brand nutritional supplements. In consecutive years, UC Santa Barbara is known to be one of the fittest schools in the nation because of the large number of individuals that focus on exercise and health. Therefore, many of our potential customers are currently purchasing and consuming products that will be available to purchase through our Internet store. Nutritional supplements, until recently, had not been in high demand; however, they are now being marketed to the 18 – 25 age group, which make up the majority of our business’s location. Therefore, our presence in the market will allow these individuals to locally purchase through IV Supplements, rather than ordering overpriced supplements that require them to be shipped across the nation. Our business, like any other, requires a substantial amount of capital to be able to cover startup costs before we begin functioning at a day-to-day pace. With the needed amount of capital, IV Supplements, based on the utilization of our business plan, will achieve a customer following and will be able to compete with bigger nutritional supplement distributors through our competitive prices and unique services.

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REFERENCES

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“5 Steps to Registering Your Business,” accessed May 19, 2011, http://www.sba.gov/content/5-steps-registering-your-business. Anonymous, “Sole Proprietorship,” Internal Revenue Service Website, <http://www.irs.gov/businesses/small/article/0,,id=98202,00.html>, April 11, 2011, May 10, 2011. BodyBuilding.com Supplement Store,” accessed May 12, 2011, http://www.bodybuilding.com/store/. Complete Nutrition,” accessed May 13, 2011, http://www.completenutrition.com/. College Confidential, accessed May 23, 2011, collegeconfidential.com. Dimmick, Mary, "An Investigation of Dietary Supplementation as a Potential Source of Nutrition Misinformation Hindering the Development of Healthy Eating Habits in the College Population," Undergraduate Honors Theses, Paper 44. (May 2010): 24. Donnelly, Tim. “How to Start Customer Reward Program.” Inc., August 17, 2010. Helfand Duke. “California Employers’ Healthcare Costs Rose 8.4% this Year.” The Los Angeles Times, November 10, 2010. Horovitz, Bruce. “Marketers get creating targeting hard-to-reach college students.” USA Today, October 3, 2010. “Isla Vista, CA 93117 Retail Sales Statistics,” CLRsearch.com (2010). “Isla Vista, CA Population and Demographics Resources,” accessed May 15, 2011, http://islavista.areaconnect.com/statistics.htm. Loechner, Jack. “Returning College Students Spending Optimistically.” MediaPost, July 19, 2010, http://mediapost.com/publications/?fa=Articles.showArticle&art_aid=132165 Lyon R.C, Taylor J.S, Porter D.A, Prasanna H.R, Hussain A.S. “Stability profiles of drug products extended beyond labeled expiration dates”. J Pharm Sci, July 2006: 1549-1560.

Mary Kay Ash. Great-Quotes.com, Gledhill Enterprises, 2011. http://www.great-quotes.com/quote/602456, accessed Mon May 30 10:51:11 2011.

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Maxwell, Chickie. “In Search of the Best Nutritional Supplement Store.” ArticleFeeder, June 14, 2009. Pete Hardie, “Complete Nutrition Comes to Goleta,” Santa Barbara Independent (August 2010). Ray H. Garrison & Eric W. Noreen, “Cost-Volume-Profit Relationships,” Managerial Accounting, McGraw-Hill Company, Inc., NY. 2008, P243. Richard K. Miller and Kelli Washington, “Consumer Behavior 2011”: Loganville, Richard K. Miller & Associates, 2011. Ritsuko Ando, “Liberty Media buying Bodybuilding.com stake: report,” Reuters (January 2008) Roosevelt, Max. “When the Gym Isn’t Enough.” The New York Times, January 13, 2010. “Santa Barbara, CA Online Menu Resource,” accessed May 15, 2011, http://sbmenus.com/ Sherpa, Coupon. “Six must-know nutrition facts for college students.” Prospectus News, 2010. Stephen A. Ross & Randolph W. Westerfield, “Risk Analysis, Real Options, and Capital Budgeting,” Corporate Finance , the McGraw-Hill Companies, Inc., New York, 2010, P211. Stephen R. Covey, "Leaders on Leadership." Executive Travel, May/June 2007: 72. US Census Bureau, “Isla Vista CDP, California 2010,” Veronica Franco. “Nutritional Supplements Market to Exceed $13 Billion in 2014,” Marketresearch.com (September 2010). Williams, Geoff. “Five Tips for Marketing to College Students.” Business Insider, September 24, 2010.

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