essay about 85c Bakery
heonvhoe
KineBusinessPlanDocument.pdf
1
BUSINESS PLAN PROPOSAL KINE PAULSEN
CAPSTONE SPRING 2014
Date last updated: Thursday, May 8, 2014 New York University School of Continuing Studies – Integrated Marketing Program
2
Table of Contents EXECUTIVE SUMMARY .......................................................................................................... 3 BUSINESS .................................................................................................................................. 4
Concept .................................................................................................................................................................... 4 Target audience ....................................................................................................................................................... 5 Value Proposition .................................................................................................................................................... 5 Project Management and Milestones .................................................................................................................. 5 Legal structure ......................................................................................................................................................... 6 Exit Strategy ............................................................................................................................................................. 6
TEAM .......................................................................................................................................... 7 Organization chart .................................................................................................................................................. 7 Administrative Team .............................................................................................................................................. 7 Strategic partners .................................................................................................................................................... 8 Advisory board ...................................................................................................................................................... 10
OPERATIONS .......................................................................................................................... 11 Location .................................................................................................................................................................. 11 Equipment and supplies ....................................................................................................................................... 11 Personnel ................................................................................................................................................................ 12 Product formula and manufacturing ................................................................................................................. 16
INDUSTRY ANALYSIS ........................................................................................................... 20 Industry Overview ................................................................................................................................................ 20 PEST ......................................................................................................................................................................... 21 Porter’s Five Forces ............................................................................................................................................. 21
COMPETITOR ANALYSIS ..................................................................................................... 23 MARKET ANALYSIS ............................................................................................................... 25
Market Overview .................................................................................................................................................. 25 Size of Potential market ...................................................................................................................................... 26 SWOT ..................................................................................................................................................................... 27
MARKETING PLAN ................................................................................................................ 28 Overview ................................................................................................................................................................ 28 Marketing Objectives ........................................................................................................................................... 28 Brand Positioning .................................................................................................................................................. 28 Marketing Acquisition .......................................................................................................................................... 29 Marketing Budget .................................................................................................................................................. 37
FINANCIALS ........................................................................................................................... 38 Sales Forecast ........................................................................................................................................................ 38 Estimated Profit & Loss Statement ................................................................................................................... 39 Projected Cash-Flow Statement ........................................................................................................................ 46 Break Even .............................................................................................................................................................. 49 Sources of Cash .................................................................................................................................................... 49 Net Present Value Calculation .......................................................................................................................... 50 Conservative and Optimistic Cases ................................................................................................................. 50 Risk factors ............................................................................................................................................................. 51
Conclusion ................................................................................................................................ 51 SUPPORTING DOCUMENTS ............................................................................................... 52
3
EXECUTIVE SUMMARY
In 2014, everyone wants to customize and slightly change the “stuff” they buy, be it socks or
water bottles1. Through the upswing of the 1980s invention of 3D printers, personalization on a larger
scale is now possible. Companies no longer have to pay large mold fees to produce a prototype or
order high quantities of an unsold product to keep costs low. Instead organizations can get feedback
from the customer during the ordering process, and then produce items with a proven demand.
Although 3D printing was invented almost thirty years ago, it was not until half a decade ago
that it started receiving commercial attention2. Unlike the normal ink printers that we all have in our
homes and offices, 3D-printers can use a variety of materials, including plastic, metals and even food3.
When a 3D model file is sent to the printer, the printer will gradually build material up, creating a three-
dimensional object, for examples see supporting document #1. Today there are an increasing number of
3D printer manufacturers and 3D modeling education programs.
3D printing has the potential to solve many challenges faced in a wide number of industries,
including the eyewear industry. One of the ongoing issues in this industry, like other retail businesses, is
the high inventory required to meet people’s needs4. The glasses might fit, but the color might be slightly
off the person's preference. As a result, each year eyewear stores are left with a high inventory of
unsold glasses and sunglasses, and not all eyewear designers will purchase these frames back.
INGRI:DAHL was founded by Norwegian twins Kine and Einy Paulsen in Los Angeles in 2011.
Through bootstrap investments the company designed and developed designer 3D glasses suitable for
the passive 3D technology found in many movie theaters and TVs. After many requests from customers,
the company also launched a line of sunglasses, a line of interchangeable 3D and sunglasses, and recently,
a line of anaglyph 3D glasses. Now the company sees an opportunity to move into 3D printed eyewear.
1 http://www.huffingtonpost.com/annie-jie-xu/7-ecommerce-trends-small-_1_b_4557164.html
2 http://www.pcmag.com/slideshow_viewer/0,3253,l=293816&a=289174&po=1,00.asp 3 http://www.3dsystems.com/press-releases/3d-systems-sweetens-its-offering-new-chefjettm-3d-printer- series 4 IBIS World Report
4
BUSINESS
Concept
INGRI:DAHL aim to launch a line of high-quality 3D printed eyewear that can be customized
through an online experience on ingridahl.com in January 2015. All the materials used are 100% made in
the U.S. and parts of the proceeds from this collection will go to the charity, Girls Effect. Girls Effect
have multiple education efforts for women in the third-world countries, but INGRI:DAHL will especially
support financial education classes.
The customer experience will begin on ingridahl.com, where there will be 15 different designs
to choose from. After picking one of the designs, the customer will be given the opportunity to change
the color, the size, and patterns. One advantage of this technology is that INGRI:DAHL can offer
virtually unlimited combinations.
In order to combat potential returns, there will be extensive size guides on the website and
customers can try on the glasses through a virtual fitting room. Once the order has been submitted,
INGRI:DAHL will send the design to the 3D printer and order sunglass lenses from the optical store.
INGRI:DAHL customs
5
The entire production will find place in the US (see illustration below).
Target audience INGRI:DAHL will launch this new line in Southern California, especially focused on women and
men aged 18-30 years. The target audience interests expand to fashion, technology and trends. From
past experience as well as observations from industry experts, INGRI:DAHL will specially target women
and men with “narrower face shapes” and specific personalization interests, such as team colors or
slogans, because of the unfilled demand5. The company will also target customers with specific, more
unusual, color preferences.
Value Proposition Through a line of customized 3D-printed sunglasses INGRI:DAHL offers high-end, personalized
comfort for less. The products address the factors that most customers look for when buying
sunglasses: fit, uniqueness and style6. The frames will be printed using PLA plastic filament, because of
this material’s resistance to wear and tear. The lenses are made of mineral, because of it’s high optical
quality and scratch resistance. The virtual online experience will enable the customer to not only take
part of the design process, but also know how he or she will wear it before buying the product.
Project Management and Milestones The company plans to launch this new product line with an extension of the website and 15 new models
finished before January 2015. If the sunglasses line is successful, the company will file for an optical
dispensers license and expand into prescription glasses. The following table demonstrates project
management and milestones:
5 Lasse Thuestad, licensed optometrist and owner of Synsenteret Opticians 6 The Vision Council Report 2011 Questionnaire about Consumer Preferences
Designs made by in-house 3D designer
Order received Designs sent to 3D printer and optical store
Supplies arrive at we work
Product is assembled and shipped out to customer
6
Before Launch Year 1 Year 2 Year 3
Oct: Hire web team Nov: Hire assembly and logistics person. Dec: Finish website
Jan: Launch party in LA at the we-inspire showroom Feb: Evaluation of operations and performance, update procedures and website accordingly Mar: Surpass $10,000 in sales June: Evaluate and update website Oct: Employee evaluations Dec: Have at least 10 showroom
Jan: Negotiate bulk discounts for frames and lenses Feb: Evaluation of operations and performance, update procedures and website accordingly June: Introduce more add-on features (nose pads etc) July: Have more than 30 showrooms Nov: Reach break- even point Dec: Reach 200,000 visits on ingridahl.com
Jan: Evaluation of operations and performance, update procedures and website accordingly Feb: Obtain optical license for dispensing prescription glasses June: Celebrate INGRI:DAHL’s 5 year anniversary Nov: Launch INGRI:DAHL customized 3D printed prescription glasses. Dec: Report first profitable year
Legal structure This will be an subdivision of IngriOlsen Inc. (INGRI:DAHL).
Exit Strategy The subdivision fits into INGRI:DAHL’s overall exit strategy to sell to a competitor. In case this
division doesn’t meet financial expectations, the division will be liquidated to avoid negative impact on
the rest of the company.
7
TEAM
Organization chart The new subdivision of INGRI:DAHL will be reporting directly to the INGRI:DAHL
administration. The organization chart below demonstrates the relationships.
Administrative Team Einy Paulsen is co-founder of INGRI:DAHL. Einy graduated from University of
Southern California with a business degree and emphasis on Finance in 2010 and with a
Masters of Accounting in 2011. She has a diverse experience with a background in sales,
marketing and accounting. Einy is a Certified Public Accountant. Her responsibilities will include
accounting and legal.
Haavard Hana is one of the partners in INGRI:DAHL. Haavard graduated from
University of Stavanger with an Engineer degree with a focus on Media Engineering in 1995
and continued at Musicians Institute in 1996. He has a diverse background in music, film and
product development, and received multiple awards for his work. His responsibilities will
include visuals, video and design.
INGRI:DAHL Adminstrative
Team
Website Experience
Web Developer
3D Graphic Designer
Marketing and Logistics
Marketing Assembly
8
Kine Paulsen is Co-Founder of INGRI:DAHL. She was born and raised in Norway before
she moved to Spain and later the US. Kine graduated from University of Southern California with
a business degree and emphasis on Finance in May 2011. After her bachelor, Kine continued her
education at New York University with a Masters in Integrated Marketing with a focus on Digital
Marketing. She has a diverse experience with a background in sales, marketing online and offline,
web development and investment management. Her responsibilities include Operations, E-commerce
and Design.
Strategic partners INGRI:DAHL aims to build strategic partnerships with the organizations listed below. For the
3D printing services and optometrists listed below INGRI:DAHL will offer promotion in return for
advice. INGRI:DAHL will also offer unique, hands-on internships to professors and teachers at the listed
education organizations in return of guest lectures and other resources that benefit the students’
education. For example, many students with a computer science background struggle to find
organizations that trust the candidates enough to program new features. INGRI:DAHL has given this
responsibility to interns in the past, and discovered that the advantages surpass the disadvantages. These
interns have become great ambassadors for the company even after they moved on.
For the remaining partners, INGRI:DAHL has designed a mutual benefit plan, where these
companies will showcase INGRI:DAHL Customs samples at their locations to increase foot traffic to
their businesses. Since the customer has to design and order the product online, these locations will
work strictly as showrooms, where customers can look at examples of the product. These partners
align with either the INGRI:DAHL brand or target audience. For example, we-inspire is a fashionable
tech company like INGRI:DAHL, while Element8 is an upscale tattoo parlor that caters to people who
want a unique, personalized product.
3D printing service
9
Optical lab and eye wear stores
Internships and employment
Showroom and mutual promotion
10
Advisory board The company is very proud of having established a very experienced advisory board with
invaluable amounts of knowledge combined.
Lasse Thuestad founded Synsenteret Opticians in Stavanger, Norway, more than 25 years ago.
Not only is he a licensed optician, but he also has several years experience designing, assembling and
repairing eyewear.
Anne Karin Asgautsen is the founder and owner of aka graphic design. She has been running the
design company for more than twenty years in Stavanger, Norway. She has a wide experience from
multiple industries, including startups.
Sigurd M Paulsen has 36 years experience gained from positions such as Investment director with
Statoil Technology Invest investing in and following up equity ownership positions in oil/gas/renewable
technology companies. Extensive investment and divestment experience as the previous Head of Statoil
Corporate M&A as well as responsibility for Statoil's pension fund investments in private equity funds.
Work experience from Norway, USA and Germany. Board member of Sekal AS, Silixa Ltd., Chairman of
Sarsia Seed AS. Education: Finance and accounting, Universität St. Gallen - Hochschule für Wirtschafts-,
Rechts- und Sozialwissenschaften
Brian Shields is co-founder of #IncubateNYC, a product development venture in partnership with
Google, Columbia University and Abyssinian Development Corporation. #IncubateNYC pairs
corporate innovation needs and mentors with entrepreneurial talent and technology to solve issues
relevant to urban communities. Prior to #IncubateNYC, Brian worked in investment banking, private
equity and business development and product development for a large corporation.
11
OPERATIONS
Location Business operations will be done out of we work in West Hollywood7. we work is a co-working
office space with the opportunity to rent a private office space with many amenities, including:
• Scanner, Printer and Copy Machine
• WI-FI Internet
• On-Site Parking Garage
• Outdoor areas
• Screening Room
• Conference Rooms
• Game Lounge
• Lounges
• Coffee and Purified Water
• Private Phone Booths
• Weekly events focused on learning new business skills and networking with other entrepreneurs.
INGRI:DAHL will initially rent a space for one person, which is $750 per month. As the
company hires more people, INGRI:DAHL will rent a larger space for three people, which is priced at
$900 per month. This space is strategically chosen, because it is close to both the 3D printing services
and the optical lab, so that the potential travel time to pick up last-minute materials are kept at a
minimum.
The office will also act as a showroom where potential customers can book appointments to try
on eyewear. If the customer would like to design his or her order at the showroom, this will be possible
as well through a designated ipad.
Equipment and supplies Since the operations will be done from a crowd-sourced workspace, the company will only need
7 www.wework.com
12
to provide office supplies. The employees will also be expected to bring their personal laptops.
Expenses that will need to be covered by INGRI:DAHL:
- iP phone services (average $10 a month, $ 200 a year8)
- Hot Air Machine for assembly of glasses
- Office supplies including ink, printer and paper
- Packaging materials in form of a bubbler wrap envelope (250 pcs/$39 9)
Personnel The customizable sunglasses line will, like previously mentioned, be a subdivision of the existing
company. INGRI:DAHL will hire one person responsible for marketing and one person responsible for
assembly. In addition, the company will contract one web developer and a 3D designer. The annual
expenses for personnel are listed below. For monthly overview, please see the Financials.
Marketing Representative
INGRI:DAHL will hire a person to assist the existing team to oversee the marketing efforts for
the new line. The Marketing Representative will be paid $10 per hour. Since this is a full-time employee,
INGRI:DAHL is required to give the person benefits, including social security, Medicare and insurance.
8 www.phone.com 9 www.uline.com
Marketing and Sales representative Assembly and Shipping (Part-time/Full-time) Assembly and Shipping (Part-time/Full-time) Total Operations and Logistics
Web Developer (Contractor) 3D graphic designer (Contractor) Total Website Experience
Total Personnel Expenses
INGRI:DAHL Personnel Expenses
Year 1 Year 2 Year 3 Total 14,400 14,400 19,200 48,000 8,400 9,600 9,600 27,600
7200 22,800 24,000 36,000 82,800
600 600 600 1,800 300 300 300 900 900 900 900 2,700
23,700 24,900 36,900 85,500
INGRI:DAHL Personnel Expenses
13
The team is seeking a person who is a fast learning multi-tasker, who communicates well. This
person will be given extensive guidelines for his or her work tasks. He or she will also be assisted by
interns that INGRI:DAHL will hire. A typical week for this employee is demonstrated below:
Monday (9-5pm) 9-9:30am: Monitor and improve Google Adwords 9:30-10am: Twitter and Google Plus 10-12pm: Write a blog post and share on social media 12-12:30pm: Lunch 12:30-1:30pm: Work on the upcoming e-mail campaign 1:30-3pm: Creating Pinterest boards 3pm-5pm: Reaching out to potential partners on Twitter
Tuesday (9-5pm) 9-10:30am: Monitor and improve Google Adwords 9:30-10am: Twitter and Google Plus 10-12pm: Reach out to bloggers and press 12-12:30pm: Lunch 12:30-3pm: Reach out to bloggers and press 3pm-5pm: Update and initiate conversations on Instagram, Twitter, Google Plus and Facebook
Wednesday (9-5pm) 9-9:30am: Monitor and improve Google Adwords 9:30-10am: Twitter and Google Plus 10-12pm: Reach out to bloggers and press 12-12:30pm: Lunch 12:30-3pm: Work on the SEO of ingridahl.com 3pm-5pm: Update and initiate conversations on Instagram, Twitter, Google Plus and Facebook
Thursday (9-5pm) 9-9:30am: Monitor and improve Google Adwords 9:30-10am: Twitter and Google Plus 12-12:30pm: Lunch 12:30-1:30pm: Work on the upcoming e-mail campaign 2pm-3pm: Plan and write a direction for the Founders YouTube video 3pm-5pm: Update and initiate conversations on Instagram, Twitter, Google Plus and Facebook
Friday (9-5pm) 9-9:30am: Monitor and improve Google Adwords 9:30-10am: Twitter and Google Plus 10-12pm: Evaluate and improve website for SEO 12-12:30pm: Lunch 12:30 -1:30pm: Outline the next months blog posts 1:30-3pm: Send out emails to PR contacts 3pm-5pm: Update and initiate conversations on Instagram, Twitter, Google Plus and Facebook
14
Assembling and shipping INGRI:DAHL will hire one person to assemble the 3D printed frames and sunglasses as the
supplies arrive, print packaging slips and pack the orders. This person will be hired as a part-time
employee and be paid $10 an hour, which is slightly more than minimum wage in the State of California.
No health insurance or benefits are required for part-time employees. It is estimated that three pairs
can be assembled per hour meaning that with the estimated 80 hours a month this person will have free
time where he or she will be given other tasks, including marketing and customer service. The number
of pairs assembled per hour will most likely decrease over time due the learning curve. Below is an
overview of how many hours the person will be using to assemble and prepare sunglasses pr. month.
The person is scheduled to work more than the minimum required assembly hours to deal with
unexpected high demands. The company will also hire an additional part-time employee when the
demand starts to near the first employees full capacity. According to the sales forecasts, the second
employee will be needed at some mid-year in year 3. To avoid a bottleneck should the part-time
employee be sick, all of the INGRI:DAHL employees will be trained for these tasks.
Web Development
The person INGRI:DAHL is looking to hire must be able to program an online personalization
platform. The company expects to pay the person $50 an hour, which is the industry average for a
Year 1 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Number of glasses 46 46 25 18 19 34 35 21 23 24 27 29 Glasses pr. hour 3 3 3 3 3 3 3 3 3 3 3 3 Hours needed pr month 15 15 8 6 6 11 12 7 8 8 9 10
Year 2 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Number of glasses 34 35 36 37 38 76 77 79 46 49 52 55 Glasses pr. hour 3 3 3 3 3 3 3 3 3 3 3 3 Hours needed pr month 11 12 12 12 13 25 26 26 15 16 17 18
Year 3 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Number of glasses 56 57 59 62 95 98 102 84 81 86 91 101 Glasses pr. hour 3 3 3 3 3 3 3 3 3 3 3 3 Hours needed pr month 19 19 20 21 32 33 34 28 27 29 30 34
15
project like this10. The total hours of this project, including wire framing, development and testing, is
estimated at 100 hours. Because this is a contract worker, no benefits will be paid. The company
predicts to be able to most of the maintenance through existing team, but will allocate one hour per
month for maintenance over the following years.
3D graphic designer
The company is looking to hire an industrial product designer with 3D modeling skills on a
project basis. The first project will include 15 designs. The industry hour rate for this type of project
lasting for more than three months is $25.11 The total hours of this project, including brainstorming
with INGRI:DAHL team, development and testing, is estimated at 120 hours. Because this is a contract
worker, no benefits will be paid. INGRI:DAHL has also budgeted for an additional hour a month for
maintenance and additional designs for the custom line.
Interns
From the beginning INGRI:DAHL has given college students an opportunity to learn the ropes
of a startup in return of academic credit. Unlike many other internships, the intern is always asked
before starting what he or she wants to learn, and their internship is designed accordingly. INGRI:DAHL
has a long tradition of always making sure that when a new routine or tool is implemented that either
the intern or another team member writes a detailed guide for future use. The company and the interns
both find these guides helpful in the intro phase. For example, instead of having to explain social media
use for the 100th time, the intern is given the “How to Use Social Media at INGRI:DAHL”-guide. This
process makes the transitions between interns more smooth.
In addition, interns are asked to work from home and asked to set their own hours, which is a
perk for the average college student. To ensure motivation and performance, INGRI:DAHL posts
assigned tasks on a digital to-do-list called Asana. Through Asana the intern can check off tasks that are
completed, ask more questions regarding the task or upload files for approval. INGRI:DAHL will
10 Rates based on current offerings from www.elance.com 11 Rates based on current offerings on www.freelance.com
16
primarily seek marketing and sales, web design and product development interns. The company will post
listings on the career forums of University of Southern California, Pasadena Art and Design School and
General Assembly, as well as share personally with selected professors at these institutions.
Product formula and manufacturing The INGRI:DAHL custom line will offer three different customized sunglass packages: Choice of
Color, Choice of Size, and Choice of Color and Size. All packages are offered with an additional
personalization feature, which allows the user to add a name, slogan or comment on the sunglasses. The
glasses are made with a very sturdy PLA plastic and mineral sunglass lenses resulting in a high-quality
product. For every pair of sunglasses sold, INGRI:DAHL will donate $1 from every sale to Girl Effect.
Domestic orders are offered with free shipping, while international shipping is $4.99. Every
order comes with a 30-day money back guarantee, no question asked. The following table shows the
price offering of the customs line:
Customized sunglasses based on color of frame $89
Customized sunglasses based on size of frame $89
Customized sunglasses based on size and color $99
Include name on frame $9
International shipping* $4.99
INGRI:DAHL customizable sunglasses pricing
*International shipping rates average at $6, but through A/B testing INGRI:DAHL has established anything above $4.99 is a deal breaker.
Because this division is centered on building a product after ordering, no inventory will be on
hand except for returned order. After an order is received, the company will send instructions to the
optical lab and the 3D printing service. The lenses will be delivered shaped to fit the ordered design
within 5 to 7 days. The delivery time from the 3D printing service is expected to be four business days.
However, due to 3D printing being a new, sometimes unstable, technology, INGRI:DAHL will estimate
the delivery time to be one week to hedge against any delays. Delivery time of the glasses will be
17
advertised as 2 weeks, but on the back end the goal will be to get the glasses out as soon as possible.
Supply chain
The supply chain for the 3D printed sunglasses utilizes materials and manpower from in-house,
suppliers, and third-party companies. The process starts with in-house 3D modeling of 15 sunglasses
that can be further customized on ingridahl.com. The shopping experience is hosted by Shopify.com,
which takes care of the ordering and payment processing as a part of the monthly subscription fee. The
unique web-experience for this project of this business case will be developed by a contracted web-
developer. TryLive, an online software developer, will deliver the virtual eyewear fitting room for 2000
euros per 10,000 try-ons12. When the order is received, the two suppliers, the 3D printing service and
the optical shop, will be notified. Both suppliers are located close to the INGRI:DAHL office in case of
unforeseen events it will be possible to visit the locations physically. When the materials arrive at the
INGRI:DAHL office a part-time worker will assemble to the frame and lenses, as well as prepare for
shipment. A logistics service will then ship out the orders. This company will also handle any issues in
regards to missing items, damaged goods or delayed delivery. Any questions regarding the product and
other customer service related issues will be handled by INGRI:DAHL employees.
12 www.trylive.com
18
3D-printing supplier
Since 3D printing is a new still-evolving technology, INGRI:DAHL will work with multiple suppliers
for the frames to avoid technology hiccups and bottlenecks. The suppliers are chosen based on quality,
experience, short delivery time and proximity to the West Hollywood headquarter.
The following suppliers all meet these criteria:
1. Primitiv3design
a. $0.50 per cube centimeter
b. 9 colors
c. Located in West Hollywood
d. 4 days delivery
e. High-quality, high print resolution
2. Harrison’s
a. $.65 per cube centimeter
b. 11 colors
c. Located in Central Los Angeles
d. 4 days delivery
e. High-quality, high print resolution
3. Martin-Chino
a. $0.65 per cube centimeter
b. 5 colors
c. Located in Central Los Angeles
d. 3 days delivery
e. High-quality, high print resolution
INGRI:DAHL will pay a significant premium at these suppliers before the company can bargain
for economic of scale discounts. If INGRI:DAHL made the investment of a 3D printer and did the
printing in-house, prices per print could be made as low as $3 per frame. However, INGRI:DAHL
19
believes that by working with multiple, experienced suppliers, the company can offer a higher quality
product and reasonable delivery times.
The price per frame is estimated on a volume per print basis:
Front: 5.5” *2” *.01” = 1.1 cubic inches
Leg: 6” *0.5” *.01” x 2 = 0.6 cubic inches
Frame: 1.6 cubic inches = 27.7 cubic centimeters
Total price per the entire frame is estimated to $16. Since the price is centered on volume and not
details, the add-on feature does not actually cost INGRI:DAHL more to make glasses with additional
features.
Lenses suppliers
INGRI:DAHL will work with Elite Optical, because of its great reputation, references and
proximity to the company’s headquarters. The optical lab will receive the order design and grind lenses
to fit the designed frames. The current pricing per lense is $10. The lenses used for this customs line is
top quality, optical correct and scratch-resistant. This quality is a higher quality than what
INGRI:DAHL’s competitors use.
20
INDUSTRY ANALYSIS
Industry Overview Currently the Eyewear and Contact Lenses industry, defined by retail establishments that
provide optical services and sell glasses, contacts and sunglasses, grosses about $9.5 billion in revenue13.
Close to 8% of this revenue is contributed by the sunglasses segment. The sunglasses industry alone is
expected to grow by 8.3% annually the next five years14. This Eyewear industry has over 7,500 vendors,
but four companies contribute to more than half of the industry earnings. Italian Luxottica S.p.A makes
up for 28.8% alone. On average an eyewear store employs five people, which can assemble more than
150 glasses in addition to foot traffic for eye exams and browsing per week. This illustrates that a great
number of orders can be processed by a smaller group of people.
In addition to the retail establishments that sell eyewear, about 14.8% of the $278.5 billion E-
commerce and Online Auction industry revenue is attributed to “clothing, footwear, accessories and
jewelry” category. There has been a slight decline in this category, because there is a desire to try on
the items before purchase. However, the incline of online eyewear companies, such as Warby Parker
and Glasses.com, indicate that people are comfortable ordering glasses if the right return system and
virtual fitting room is introduced.
13 IBIS World Report Eyewear and Contact Lenses in the US 14 Grand View Research Report on Plano Sunglasses 2013
21
PEST
Politics • There haven’t been many regulations
affecting the eyewear industry over the last few years, but Obama-care included multiple benefits for vision. 15
• The e-commerce tax laws require any sale made in the state that the business operates will be charged a sales tax. There have been proposals to require sales tax on all states, but there hasn’t been made any decisions yet. 16
Economics • Over 60% of the US needs either glasses or
lenses to correct their vision. The demand for this glasses and lenses therefore isn’t affected by an economic downturn, but the price sensitivity is increased.
• California was severely hit by the recession, but has been able to pick up a lot of the losses.
• In 2012 the state had top five GDP growth rate in the country at 3.5%.17
Social • With increased education around the
importance of protecting skin and eyes from hurtful UV-rays, there is an increased demand for sunglasses18.
• With an increased use of computers, many now require a second pair of glasses for using with computer. Many companies will cover any costs related to computer glasses.
Technological • 3D printing is a new technology, and with that
comes many advantages as well as disadvantages. By outsourcing the actual 3D printing service company that already have made and used 3D printers for many years, INGRI:DAHL will avoid maintenance and operation problems.
• The major benefit of the technological advances that are expected from 3D printers is that INGRI:DAHL can down the line introduce other materials that hasn’t been used in making eyewear yet.
Porter’s Five Forces Bargaining Power of Customers
The buyer has many alternatives to sunglasses, and therefore has a quite high bargaining power.
The INGRI:DAHL eyewear line will not be lower-end glasses, and if the market does not accept the
proposed pricing, the company will be forced to lower the prices.
15 IBIS World Report Eyewear and Contact Lenses in the US 16 National Conference of State Legislature: Collecting E-Commerce Taxes – E-Fairness Legislation 17 California Economy by The Numbers – Governor’s Office of Business and Economic Development 18 The Vision Council
22
Bargaining Power of Suppliers
The supplier for 3D printing services will have very high bargaining power, because there are a
very limited number of 3D printing services in the US. Over time as more companies offer these
services and as more people buy 3D printers for homes and offices, the bargaining power will decrease.
On the other hand, the bargaining power for optical lenses is quite low. There are many competitors in
this space, and wholesalers control their supplies.
Threat of New Entrants
The barriers to entry are not that high for sunglasses in general. However, the high quality
To set up a 3D printing services company is getting less challenging with the advance of commercial 3D
printer for home and office use. However, the maintenance and operation issues with the current
models are significant, which makes it impossible to rely on these without extensive knowledge of how
the technology works.
Threat of Substitute Products
For sun protection the substitutes would include caps and contact lenses with UV-protection. In
other words, there are not many substitutes to sunglasses.
Competitive Rivalry within Industry
There is a lot of competition in the sunglasses industry, but so far there are not much
competition in the customizable 3D printing sunglasses area. The customer will usually buy sunglasses
based on quality perception, usage, and branding.
23
COMPETITOR ANALYSIS The major competitors in the sunglasses space when considering quality, price and
customization, include OTIS, CRAP, Made Eyewear, Warby Parker, Luxottica, and Shapeways.
OTIS is an online sunglass company that was founded in Australia in 2010. The
company offers high-quality polycarbonate frames with mineral glass lenses and start at $159. OTIS finds
inspiration from the surf community, music, art and fashion. The brand sells their eyewear online
through their own website as well as through representation at 12 retailers in the US.
CRAP Eyewear was founded by a group of surfers in Los Angeles in 2009. The
beach community and slang heavily inspire the sunglasses and the brand name. The sunglasses have
polycarbonate frames and plastic lenses and start at $59. No customization is available. The brand sells
their sunglasses online and in a few select retailers in the US, Europe and Asia.
MadeEyewear was established in August of 2012. The company enables visitors to
customize the color of the frame, lense and case, and markets themselves with the possibility
of 1,000,000 unique combinations. The company website does however have a lot of images
that won’t bring the customer further after purchase. With the high number of options to customize,
the experience is very overwhelming and confusing. Their eyewear starts at $59. The company also has
a license to sell prescription glasses and sunglasses. The eye exam results have to be obtained
somewhere else.
Neil Blumenthal, Andrew Hunt, Jeffrey Raider, and David Gilboa established Warby
Parker in 2010. The company reinvented the eyewear industry by introducing high-quality designer
eyewear that was sold at an affordable price. They were able to do so by designing and manufacturing
the eyewear themselves, and therefore avoiding paying a high licensing fee to the major players in the
industry, including Luxottica. Warby Parker gives one pair of sunglasses for one pair of sunglasses sold.
Warby Parker has 12 locations in the US were potential customers can come and try on the glasses,
mostly in hotel lobbies.
24
Luxottica S.p.A., the largest eyewear company in the world, was established
by Leonardo Del Vecchio in 19611920. The company, headquartered in Milan, has
80% of all brands licenses in the eyewear industry, and has closer to a third of the of
the eyewear market in the US. Luxottica have design and licenses agreements with
some of the most famous eyewear brands, including Chanel, Prada, Giorgio Armani,
Burberry and Versace.
Shapeways was founded by Peter Weijmarshausen, Robert Schouwenburg,
Marleen Vogelaar in Holland in 200721. The company has since moved their
headquarters to New York, but remain operative in Eindhoven, as well as Seattle. Shapeways is an online
platform, where anyone can upload their 3D designs and get these design and others users designs
printed. Similar to Etsy, users can establish their own online store. Currently there are about 70
different frames sold on the site, but none of these are offered with the lenses included. Also these
designs being offered are not foldable by design, meaning you cannot close the pair of glasses. Some
designers offer a solution with instructions of glue and metal hinges. Prices range from to $12 to $200.
19 IBIS World Industry Reports - Eye Glasses and Contact Lenses 20 www.luxottica.com 21 www.shapeways.com
25
MARKET ANALYSIS
Market Overview
With a strong geographic presence in Los Angeles, INGRI:DAHL would like to pursue the
Southern California market in the first phase. This location also makes sense in terms of weather and
lack of seasonality.
A preliminary research study performed by INGRI:DAHL, showed that more than the 90% of
the seventy participants use sunglasses22. The survey also showed that in terms of customization the
majority would seek a product that was customizable, especially in terms of color and size. A few
responders also desired the ability to add details to the sunglasses, such as “diamonds” and name. The
glasses will therefore be offered in the first run with the option to customize color and size, and
additional personalization with the inclusion of a name, slogan or comment. Knowing that there is a lot
of competition in the sunglasses industry, INGRI:DAHL will launch this line targeting two unique target
groups:
Luting
Age: 25-30 years old Education: College degree Lives: Orange County, Santa Monica and Culver City Style image: Women looking for products with a smaller fit, especially sunglasses designed for a narrower face. She finds that it is a common issue that the glasses that fit are not the right design, color or customized to her style. Dan Age: 19-26 Education: Enrolled or recent alum Lives: Downtown LA, Manhattan Beach and Santa Monica Style image: Proud alum of university and would love to flaunt the colors and school name. Loves to be stylish and show what the latest technology can offer.
22 INGRI:DAHL Eyewear survey powered by SurveyMonkey
26
Size of Potential market
The demand for plano (non-RX) sunglasses is significant as illustrated by 86% of the American
population wear them23. Of these 207 million people more than sixty percent wear their sunglasses the
majority of the time spent outside in the sun. INGRI:DAHL will as previously mentioned focus on
Southern California. There are more than 22 million people in this area that includes all the areas in
California below Santa Barbara24. Overall there were 95 million sunglasses sold in the US in 2012, which
means that one of three bought sunglasses that year. Considering that the rest of the country won’t
wear sunglasses as much as people do in sunny Southern California, the average purchase per person is
slightly higher.
The INGRI:DAHL study that was previously mentioned, showed that 86.96% of the participants
would be attracted to a pair of customizable sunglasses indicating that there is a significant interest for
this new product line. According to a research study with 9,571 participants completed by The Vision
Council 70% of sunglass purchases are made based on fit. Close to 25% chose their pairs based on
uniqueness and 19.7% chose their sunglasses based on colors of their wardrobe. These are all factors
that can be customized in the INGRI:DAHL design experience. This results in a market size of 7.6 M
people, but to be conservative a 40% correlation is subtracted. However, since the average amount
spent on sunglasses is $39 dollars, INGRI:DAHL also subtracts 50% of the market who wouldn’t buy
sunglasses at $89.
With this we estimate that the potential market for sunglasses in Southern California is
14,600,000 people, in which INGRI:DAHL aims at getting a 0.03% market share within the third year.
23 The Vision Council “Sunwear Update: How does America Protect Their Eyes?” 24 U.S. Census Bureau 2010 Population Statistics
27
SWOT
Strengths - Three year old existing eyewear company with relevant experience - Website with solid traffic - Highly engaged audience through social media - Numerous established strategic partnerships - People often think of 3D printing when they hear about the existing 3D glasses - Utilizing technology to meet customer needs in e-commerce with the virtual “fitting room”
Weaknesses - Returns of goods, because of unsuitable fit - No optical license to dispense prescription eyewear - Limited customization at first - 3D printing is an evolving technology, which can be unstable - No current relationship to optical lab, which can result in higher prices for mineral lenses
Opportunities - If successful with sunglasses, INGRI:DAHL can move into prescription eyewear, including eyeglasses and sunglasses - The company can also be a pioneer in introducing other materials that haven’t been utilized in the eyewear industry (for example: recycled materials or stone) - Can offer further customization, such as additional nose bridges for people with a thinner nose wall.
Threats - Bigger existing companies could copy the business model - Barriers to enter industry are medium
28
MARKETING PLAN
Overview INGRI:DAHL has focused solely on digital strategies in the past, and will continue to do so through paid
search, eMail campaigns, search engine optimization and social media. The company’s marketing budget
will be relatively higher in the first year compared to the two consecutive years. INGRI:DAHL will aim
all marketing efforts at Southern California, but expects this marketing to “bleed” over to more markets
just because of the digital nature.
Marketing Objectives
In year 1, the goal is to raise brand awareness for the new line and convert traffic. The two consecutive
two years, the objective is to educate and convert customers.
Specific Measurable Achievable Realistic Time-sensitive
Increase engagement on social media
Look at performance number, such as number of pictures uploaded and online conversations compared previous period
Be active and visible in social media and constantly encourage customers to share their purchases, and reward the ones that do by highlighting these activities on INGRI:DAHL’s own social media.
Yes End of year 1
Increase Brand Awareness by 30%
Recall research study before and after launch in target market
Ensure you have the resources required. INGRI:DAHL will have a marketing representative and significant marketing budget to achieve this goal.
Yes End of year 2
Reach 3% of potential market
Compare number of customers to estimated potential market
The sales forecasts are based on the marketing budget, which estimates that this is achievable.
Yes End of year 3
Brand Positioning
INGRI:DAHL will offer a high-quality, tailored product at low-to-medium prices.. There are many
established sunglasses company present in the target, which makes it a competitive market for
INGRI:DAHL to compete in. However, through strategic partnerships and constant brand awareness
29
campaigns, the INGRI:DAHL brand will very likely grow stronger. In order to differentiate the company
from lower-end, mass products, such as sunglasses sold at a gas station, the pricing will be kept at the
mid-level range.
Marketing Acquisition
INGRI:DAHL will use an integrated marketing plan to acquire new customers. The marketing
representative will be responsible for all the marketing channels in the beginning, but will be assisted by
multiple interns and the management. More detailed information about how INGRI:DAHL will promote
the new line according to channel, as well as time allocation, traffic and conversions estimations, is
provided below. In addition to these marketing efforts, INGRI:DAHL expects to get traffic through
word-of-mouth, which translates into 5 sales in the first year, 12 in the second year and 19 sales in the
third year. Though the company has a historic conversion rate of 1.5%, for the sake of planning
INGRI:DAHL customs
Quality
Price
30
INGRI:DAHL has assumed a 0.8% conversion rate in the base case scenario. INGRI:DAHL’s media
schedule divided into daily, weekly, bi-weekly and monthly activities is illustrated below:
Search engine strategy
In order to be visible online, INGRI:DAHL will put a lot of effort into optimizing the sites devoted to
this new line of eyewear. In addition to making sure that the code and content is designed with search
engine algorithms in mind, the company will work hard on building links. INGRI:DAHL is an ethical
company, and will not take part in any black hat search engine optimization techniques, such as paying
for links and anchor texts. To maintain a steady organic search flow, INGRI:DAHL will also write blog
posts on relevant topics that link back to the product pages.
INGRI:DAHL will at least once a week blog about topics either directly or indirectly related to
sunglasses. All blog posts will be optimized with strategic keywords placed in the Page Title, Meta
Description, Image File Name, Alt Description, H1 and H2 titles (if suitable).
Sample blog titles:
- 5 ways to protect yourself in the sun
- How to find the right sunglasses for your face
- 7 unique customizations of sunglasses
- How to take care of your sunglasses
31
- 11 essentials for the beach
The company expects that the marketing representative will allocate 20% of his or her time to
search engine optimization. From the efforts INGRI:DAHL expects to get 1,528 vistitors the first year,
which translates into 12 conversions. It is expected that the traffic will grow search engine traffic by 15%
monthly growth rate in year 2 and 10% monthly growth rate in year 3.
Paid search
After the company has completed search engine optimization for all the relevant sites for the project,
INGRI:DAHL will launch paid search campaigns. Through paying for specific search terms through the Bing and
Google search and display network, the company will present the products when inquired about. The campaigns
will only focus on the Southern California geographic target, and the goal will to be long-tail keyword phrases that
have a low cost-per-click and medium traffic.
The campaigns will only be centered on non-branded keywords. Some of the targeted keywords and
negative keywords (keywords associations that the company doesn’t want to be associated with) are listed below:
Targeted Keywords Negative Keywords High-quality custom sunglasses High-quality 3D printed sunglasses Customizable 3D printed sunglasses Customizable designer sunglasses Customizable mineral sunglasses Customizable outside eyewear Design your own shades
Free Profanity Oakley Ray Ban Cheap Bad quality 3D printer
Mockup of a paid search advertisement is illustrated below:
The marketing representative is expected to spend 5% of his or her time on monitoring and
altering the paid search campaigns. It is expected that in year 1 the company can pay an average of 55
cents per click, in year 2 an average of 50 cents per click, and in year 3 an average of 45 cents per click.
32
The cost per click estimates are based on INGRI:DAHL historic results, and under the assumption that
the pages will be 100% optimized by the time of the paid search campaigns launches.
Email campaign
INGRI:DAHL uses the free e-mail marketing service, MailChimp, as of today, and will continue
to use this for this project. Below are some mockups of the email marketing campaign, both mobile and
desktop version. The company starts off with a list of 3,000 contacts including previous and potential
customers. Based on industry rates e-commerce e-mails have a 17.35% open rate and a 3% click-
through-rate, INGRI:DAHL expects to get close to 800 visitors and 6 conversions from email in the first
year. The company estimates that the traffic from email will grow 7% monthly in year 2 and 5% monthly
in year 3. The marketing representative is expected to allocate 6% of his or her time to email marketing.
33
Social Media
Social media has since the very beginning been a huge part of the INGRI:DAHL awareness and
acquisition costs. With over 5000 combined followers (see detailed distribution of following below),
excluding overlapping, there is an existing engaged audience. Using these channels to "leak" images of
sketches, planning meetings, etc, I:D will create awareness of the brand before launch in a very
inexpensive, yet effective way. Below is the number of followers on the different social media channels:
943 2100 47 1070 500
The company expects the marketing representative to allocate 34% of his or her time to internal social
media. From these efforts the company aims to get 406 visitors from social media, which translates into
3 sales. INGRI:DAHL expects the social media traffic to grow by 20% in year 2 and 3% in year 3.
Twitter has from the beginning of the company been a major source of traffic. Not only have
links been shared organically through this channel, but it has also been a great way to connect with
strangers. A lot of the press, for example TechCrunch and Vogue, as well as big sales, such as The Great
Gatsby World Premiere, can be contributed to Twitter. This channel presents an informal alternative to
“cold calling”. The company will therefore continue to use this channel on a daily basis.
The sample tweet below is an example of how the company would use Twitter to share the
message about the new line, asks open-ended questions to engage others and address specific Twitter
users with reference to relevant links.
34
Google+
Though Google’s announcement of their own social network and the actual engagement rate
has been somewhat controversial, INGRI:DAHL has been able to harvest quite a lot of traffic from
Google+. The channel has also proven to help with organic search traffic, so INGRI:DAHL will use this
medium to share content to the public, with individuals and existing Google+ groups.
From INGRI:DAHLs experience Facebook advertisement will not attract a lot of traffic to the
main page or even the Facebook page that has a store enabled on the platform. The company will
therefore continue to use this channel to share content that has been created on ingridahl.com. Past
analytics reports has shown that posting too many times only annoys the followers. INGRI:DAHL will
therefore only use this channel on a weekly basis. It is very important to take advantage of tags and
groups on Facebook, which the company plans to do. Below is a mockup of a Facebook banner
promotion within the Facebook guidelines for using banners for advertising.
Instagram is a growing visual medium for INGRI:DAHL, and it will be a natural element of
promoting the new line. Though historically Instagram hasn’t brought too much direct traffic to
35
ingridahl.com, it has shown to be a great brand awareness tool. With the high number of people who
search the INGRI:DAHL brand name, it is also suspected that people will access the site in different
sessions from a tablet or desktop.
Pinterest is a great visual tool, which is a great asset in marketing the new sunglass line. All
pictures from the website and blog will be pinned to the INGRI:DAHL Pinterest. In addition to the
existing boards that INGRI:DAHL currently has, the company will make one centered around beach,
crazy sunglass designs and user generated content.
All blog posts that are written on INGRI:DAHL website will be shared on LinkedIn through the
company’s profile and the employees profiles. The employees will not be forced to share the content,
but rather encouraged.
YouTube
The founders will make bi-monthly video posts from places around INGRI:DAHL. These will be
shot with the company’s Canon DSLR and will be an informal update about the company. The videos
will also showcase possible color, size and customizations in a happy, funny way. This outlet is a great
way to gain search traffic from YouTube, which is considered the second largest search engine. All
videos will be optimized with strategic keywords and will link back to specific product pages.
Social Media Partners
INGRI:DAHL will have paid and unpaid partnerships with social media influencers that align with the
brand. Paid partnerships are usually found through exploring social media channels to find the right fit in
terms of following, affinity and engagement. Unpaid partnerships are usually established through cold e-
36
mailing or through social events. For both kinds of partnerships returned goods will be used as samples.
The marketing representatives will allocate 14% of his or her time to scout and maintain relationships
with the social media influencers. Some of the social media influencers that INGRI:DAHL would like to
partner with are as follows:
Kickstarter
Through fund raising for one of the collections through the crowdfunding website in 2012,
INGRI:DAHL has access to 331 avid supporters of the company. Once the product launch, this is an
avenue to promote to the new line to already avid supporters. The marketing representative will be
spending 1% or less on Kickstarter efforts, but with an expected traffic of 315 visitors from Kickstarter
on annual basis, this channel brings 3 sales per year.
Public Relations
All press features in the past, including Vogue, TechCrunch, Glamour, have been done through
cold-emails and networking by the management team. Though the company is looking to outsource this
element to right company, this will be done by the marketing representative until that INGRI:DAHL
finds the right partner for the job. Due to bad experience with cost efficiencies with PR agencies in the
past, INGRI:DAHL knows that the right PR-representative will have to be vetted and tested for an
extensive time, before the company can fully delegate this area. The marketing person will spend 20% of
his or her time sending out emails to journalists and other media influencers. With these efforts and
paid digital press wires from PR Web, INGRI:DAHL expects to get 1979 visitors and 16 sales in the first
year from PR.
Paid Social Media Partners Unpaid Social Media Partners WeWoreWhat The Canadian Twins Camilla Pihl
Carlee Nick Sabatalo Modsun
37
Marketing Budget The following table shows a summarized marketing budget for the first three years of operation. More detailed monthly marketing budget can be located in the Financial section.
Year 1 Year 2 Year 3 Total
Paid Search 19,220 18,720 19,220 57,160 Search Engine Optimization 2,880 2,880 2,880 8,640 Social Media (INGRI:DAHL) 4,896 4,896 4,896 14,688 Social Media (partners) 3,816 4,016 4,816 12,648 PR 2,880 2,880 3,130 8,890 Word of mouth - - - - Email marketing 864 864 864 2,592 Kickstarter 144 144 144 432
Total Marketing Expenses 20,300 20,050 21,550 61,900
Expected Traffic 43,193 76,753 121,437 241,383
INGRI:DAHL Marketing Budget
Please note that the Marketing Analyst expense is allocated under Personnel Expenses in the Financial Statements, but for the above budget the time spent on each channel has been allocated in dollar amount based on the following assumptions.
Customer Lifetime Value
The average value is sale is probably a little higher than $89, but since this is predictive of what sales would be this is number is kept conservative. Since more than 50% of people own two pairs or more, we do expect there to be some repeat transactions, and have evaluated the number of repeat transactions to 1.2. The average retention time for a typical customer is set at 1 year, due to the lack of information before launching the product line.
Average Value of Sale 89 Number of Repeat Transactions 1.2 Average Retention Time in Years for a Typical Customer 1 Customer Lifetime Value 107
Customer Life Time Value
Paid search 5% Search Engine Optimization 20% Social Media (INGRI:DAHL) 34% Social Media (partners) 14% PR 20% Email marketing 6% Kickstarter 1%
Time allocated for Marketing representative
38
FINANCIALS Detailed Monthly and Yearly Financial Statements below, including Marketing Expenses, Personnel Expenses, Estimated Sales Forecasts, Estimate Profit & Loss Statement, Cash Flow Statement, and Break- Even Statement are based on the base case scenario. Conservative and Optimistic scenarios follow.
Sales Forecast The Sales Forecast shows the estimated volume of sunglasses, add-on sales and international shipping. Sales are based on a 0.8%25 conversion rate of the estimated traffic from the marketing budget.
INGRI:DAHL Sales ForecastINGRI:DAHL Sales ForecastINGRI:DAHL Sales ForecastINGRI:DAHL Sales Forecast
Customized sunglasses based on color of frame Customized sunglasses based on size of frame Customized sunglasses based on size and color Total Units Sold
Include name on frame (add-ons) International Shipping Total Add-on and Shipping
Customized sunglasses based on color of frame Customized sunglasses based on size of frame Customized sunglasses based on size and color
Include name on frame (add-ons) International Shipping
Total revenue
Number of units
Sales ($)
Year 1
69
121
155
346
138 3
142
Year 1
$ 21,627
$ 16,732
$ 19,355
$ 57,714
$ 3,006 $ 1,048
$ 61,767
Number of units
Sales ($)
Year 2
123
215
276
614
246 6
252
Year 2
$ 61,855
$ 41,118
$ 76,874
$ 179,847
$ 8,865 $ 4,716
$ 193,427
Number of units
Sales ($)
Year 3
194 386
340 676
437 869
971 1,931
493 877 493 503 986 1,379
Year 3
$ 143,112 226,594$
$ 59,630 117,480$
$ 165,825 262,053$
$ 368,567 $ 606,127
$ 19,026 30,897$ $ 5,005 10,768$
$ 392,598 $ 647,792
Number of units
Sales ($)
25 INGRI:DAHL’s current conversion rate has historically been higher, but this conversion rate reflects the introduction of a new product.
39
Estimated Profit & Loss Statement Sales
Sales are based on Sales Forecast presented in the previous section. Based on industry trends, INGRI:DAHL expects to have a 12% return of goods. Industry reports show that the ecommerce platforms that sell soft goods often experience a return rate of 20-30%, while platforms that focus on hard goods often only experience less than 10% of goods returned. Eyewear falls in the ladder category, but has adjusted for an additional 3% to include shipping costs expected with returns. The losses due to returns will include revenue gained through sunglasses, add-on sales, and international shipping. INGRI:DAHL hope to be able to decrease the return rate through the virtual fitting room and a high-quality design process. Returned products will be re-used for marketing purposes. Cost of Goods Sold
The Cost of Goods sold consists of three components, cost of mineral lenses, cost of 3D printed frames, and cost of add-on personalization for frames. Most eyewear companies only offer plastic sunglass lenses, but INGRI:DAHL Customs will be sold with high mineral glass lenses. Mineral glass lenses are not only extremely resistant to scratches and have multiple optical advantage, but being made from natural elements the lenses are more nature friendly than the typical plastic lenses.
The 3D printed frames will be printed by a 3D printing service in Los Angeles. The frames will be printed at a price of $0.5 pr cm3, which translates to an average of $15 per pair of sunglasses. This average is based on a larger-size design of the current designs that INGRI:DAHL carry, and will be used throughout the financials for conservative estimations. With the expected sales volume, this price is expected to drop significantly over the three years.
As a part of the INGRI:DAHL offering is an addition of a name, comment or slogan for the price $9. Although the add-on customization is a part of the 3D printing process, the cost is separated from the frames to create a better overview of the allocation of Cost of Goods Sold. Since the add-on feature is sold for $9, but doesn’t actually cost anything to make, this feature therefore alone brings a gross margin of $8. Expenses
The Variable Expenses include Domestic and International Freight, Packaging Costs, Virtual Fitting Room Costs, and Misc Selling Expenses. Variable Expenses
All domestic sales are offered with free shipping and all international sales are offered with a shipping of $9.99. For the financials an average price of $2.25 is used, which is based on USPS Stamps.com rates. This price is based on a weighted average of the price for 1-ounce shipments up to shipments up for 6 ounces (1.93*95% one pair buyers + 2.25*5%). Customers who buy more than 3 pairs, a weight of 6 ounces, will dealt with as they come. The international shipping expense is estimated to $. This price is based on a weighted average of the price for 1-ounce shipments up to shipments up for 6 ounces (6.16*95% one pair buyers + 10.94*5%).
Packaging costs are estimated to $0.67, which includes packaging slips, mailers, and fabric pouches for the sunglasses. The price of each packaging slip is $0.02. This price includes mailers which
40
are priced at $0.15, based on U-Line rates for 6x10” Self-Seal Bubble Mailers that can fit up to three pairs of glasses. Like the current eyewear lines by INGRI:DAHL the sunglasses will be sold with an inclusive fabric pouch, which costs $0.5 each.
Instead of building a virtual reality experience from scratch, INGRI:DAHL will outsource this service to TryLive for 2,000 euros for 10,000 tries, or in other words $.13 pr try.
INGRI:DAHL will give $2 from each sale to the charity Girl Effect. The Miscellaneous Expense will include unforeseen events related to number of units sold. Fixed Expenses
Marketing is based on the marketing budget below presented month-by-month below. Please note that the Marketing person expense is allocated to Personnel expenses. Year 1:
Paid Search (based on an average CPC of $0.625) 3,000 Search Engine Optimization - Social Media (INGRI:DAHL) - Social Media (partners) 500 PR - Word of mouth - Email marketing - Kickstarter -
Total Marketing Expenses 3,500 Total Expected Traffic Estimated Conversions
Marketing Budget for Customized Sunglasses Jan
3,000 - -
200 - - - -
3,200
Feb
1,500 - -
200 - - - -
1,700
Mar
1,000 - -
100 - - - -
1,100
Apr
1,000 - -
100 - - - -
1,100
May
2,000 - -
100 - - - -
2,100
Jun
2,000 - -
100 - - - -
2,100
Jul
1,000 - -
100 - - - -
1,100
Aug
1,000 - -
100 - - - -
1,100
Sep
1,000 - -
100 - - - -
1,100
Oct
1,000 - -
100 - - - -
1,100
Nov Dec
1,000 - -
100 - - - -
1,100
Total Budget Total Traffic 18500 33,636
0 1,528 0 406
1800 3958 0 1979 0 580 0 792 0 315
20,300 43,193
346
Year 1
Year 2:
Year 3:
Paid Search (based on an average CPC of $0.5) 1,000 Search Engine Optimization - Social Media (INGRI:DAHL) - Social Media (partners) 100 PR - Word of mouth - Email marketing - Kickstarter -
Total Marketing Expenses 1,100 Total Expected Traffic Estimated Conversions
Marketing Budget for Customized Sunglasses Jan
1,000 - -
100 - - - -
1,100
Feb
1,000 - -
100 - - - -
1,100
Mar
1,000 - -
100 - -
25
1,125
Apr
1,000 - -
300 - -
-
1,300
May
3,000 - -
300 - - - -
3,300
Jun
3,000 - -
300 - - -
25
3,325
Jul
3,000 - -
300 - - - -
3,300
Aug
1,000 - -
100 - - - -
1,100
Sep
1,000 - -
100 - - - -
1,100
Oct
1,000 - -
100 - - - -
1,100
Nov Dec
1,000 - -
100 - - - -
1,100
Total Budget Total Traffic 18,000 40,000
- 13,579 - 2,503
2,000 10,962 - 5,431 - 1,454 - 2,749
50 75
20,050 76,753
614
Year 2
Paid Search (based on an average CPC of $0.625) 1,000 Search Engine Optimization - Social Media (INGRI:DAHL)
Social Media (partners) 100 PR -
Word of mouth - Email marketing - Kickstarter -
Total Marketing Expenses 1,100 Total Expected Traffic Estimated Conversions
Marketing Budget for Customized Sunglasses Jan
1,000 -
100 - - - -
1,100
Feb
1,000 -
100 - - - -
1,100
Mar
1,000 -
100 - - - -
1,100
Apr
3,000 -
500 - - - -
3,500
May
3,000 -
500 - - - -
3,500
Jun
3,000 -
500 250
- - -
3,750
Jul
1,500 -
500 - - - -
2,000
Aug
1,000 -
100
- - -
1,100
Sep
1,000 -
100 - - - -
1,100
Oct
1,000 -
100 - - - -
1,100
Nov Dec
1,000 -
100 - - - -
1,100
Total Budget Total Traffic 18,500 34,222
- 51,242 - 6,682
2,800 14,711 250 6,785
- 2,328 - 5,288 - 180
21,550 121,437
971
Year 3
41
Salaries are based on the following personnel expenses shown month-by-month for the first three years below: Year 1:
Year 2:
Year 3:
Insurance Insurance covers the Marketing person benefits and cost $50 pr month.
Miscellaneous expenses Miscellaneous expenses includes CPA administration costs, gas for pick-up from suppliers etc.
Taxes Federal Income Tax is estimated at 35% and a Local California Tax at 7.5%.
Personnel Expenses for Customized Sunglasses Hourly rateMonthly hours Year 1 pr. monthJan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Marketing and Sales representative 11 160 1,760 1,760 1,760 1,760 1,760 1,760 1,760 1,760 1,760 1,760 1,760 1,760 21,120 Assembly and Shipping (Part-time) 10 80 500 500 500 500 800 800 800 800 800 800 800 800 8,400 Total Operations and Logistics 2,260 2,260 2,260 2,260 2,560 2,560 2,560 2,560 2,560 2,560 2,560 2,560 29,520
Web Developer (Contractor) 55 50 2,750 2,750 55 55 55 55 55 55 55 55 55 55 6,050 3D graphic designer (Contractor) 25 60 1,500 1,500 25 25 25 25 25 25 25 25 25 25 3,250 Total Website Experience 4,250 4,250 80 80 80 80 80 80 80 80 80 80 9,300
Total Personnel Expenses 6510 6510 2340 2340 2640 2640 2640 2640 2640 2640 2640 2640 38820
Personnel Expenses for Customized Sunglasses Hourly rateMonthly hours Year 2 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Marketing and Sales representative 11 160 1760 1760 1760 1760 1760 1760 1760 1760 1760 1760 1760 1760 21120 Assembly and Shipping (Part-time) 10 80 800 800 800 800 800 800 800 800 800 800 800 800 9600 Total Operations and Logistics 2560 2560 2560 2560 2560 2560 2560 2560 2560 2560 2560 2560 30720
Web Developer (Contractor) 55 1 55 55 55 55 55 55 55 55 55 55 55 55 660 3D graphic designer (Contractor) 25 1 25 25 25 25 25 25 25 25 25 25 25 25 300 Total Website Experience 80 80 80 80 80 80 80 80 80 80 80 80 960
Total Personnel Expenses 2640 2640 2640 2640 2640 2640 2640 2640 2640 2640 2640 2640 31680
Personnel Expenses for Customized Sunglasses Hourly rateMonthly hours Year 3 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Marketing and Sales representative 11 160 1760 1760 1760 1760 1760 1760 1760 1760 1760 1760 1760 1760 21120 Assembly and Shipping (Part-time) 10 80 800 800 800 800 800 800 800 800 800 800 800 800 9600 Additional Assembly and Shipping (Part-time) 10 60 600 600 600 600 600 600 600 7200 Total Operations and Logistics 2560 2560 2560 2560 2560 3160 3160 3160 3160 3160 3160 3160 37920
Web Developer (Contractor) 55 1 55 1 55 1 55 1 55 1 55 1 55 1 336 3D graphic designer (Contractor) 25 1 25 1 25 1 25 1 25 1 25 1 25 1 156 Total Website Experience 80 2 80 2 80 2 80 2 80 2 80 2 492
Total Personnel Expenses 2640 2562 2640 2562 2640 3162 3240 3162 3240 3162 3240 3162 38412
42
The Base Case Estimated Sales and Net Profit for all three year is illustrated below, followed by month- by-month estimates.
Pro Forma for Product Expansions of 3D Printed Optical Line Year 1 Year 2 Year 3
INCOME
Sales 29,541 52,494 94,381
COST OF GOOD SOLD 3,455 4,421 6,218 Lenses 3,455 4,421 6,218 Add-ons - - -
GROSS PROFIT ON SALES 26,086 88% 48,073 92% 88,163 93%
Year 1 Year 2 Year 3 VARIABLE (Selling) 1,522 2,462 4,080 a. Freight 578 875 1,476 b. International Freight 24 37 62 c. Packaging Costs 232 295 558 d. Virtual fitting room 7 44 70 e. Social Mission 346 614 971 g. Misc Selling Expenses 336 597 944
FIXED (Adminstrative) 53,936 55,147 68,994
a. Insurance 600 600 600 b. Personnel Expenses 22,800 24,000 36,000 c. Website Expenses 900 900 900 d. Rent Expense 9,000 9,000 9,000 e. Misc Fixed Expenses 336 597 944 f. Marketing 20,300 20,050 21,550
EXPENSES 55,458 57,608 73,074
NET INCOME (29,372) (9,535) 15,089
NET PROFIT (29,372) (9,535) 15,089 TAXES
1. Federal - 26 6,331 2. Local - 6 1,357
NET PROFIT AFTER TAXES (29,372) (9,535) 7,401
43
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 26,500
REVENUE 3,393 3,373 1,845 1,362 1,401 2,486 2,539 1,562 1,636 1,725 1,832 1,968 Sunglasses 3,288 3,269 1,788 1,320 1,358 2,409 2,461 1,514 1,586 1,672 1,776 1,907 Units projected 35 35 19 14 15 26 26 16 17 18 19 21 Add-on sales 95 95 52 38 39 70 71 44 46 49 52 55 Units 11 11 6 4 4 8 8 5 5 5 6 6 International Shipping 9 9 5 4 4 6 7 4 4 4 5 5 Units 2 2 1 1 1 1 1 1 1 1 1 1 RETURNS 407 405 221 163 168 298 305 187 196 207 220 236 Total Revenue 2,986 2,968 1,624 1,199 1,233 2,187 2,234 1,374 1,440 1,518 1,612 1,732
COST OF GOODS SOLD 1. Lenses 354 352 192 142 146 259 265 163 171 180 191 205 2. Frames 566 562 308 227 234 414 423 260 273 288 305 328 3. Add-on - - - - - - - - - - - -
Total Cost of Goods 354 352 192 142 146 259 265 163 171 180 191 205
VARIABLE EXPENSES 1. Freight 57 56 31 23 23 42 42 26 27 29 31 33 2. International Freight 12 12 7 5 5 9 9 6 6 6 7 7 3. Packaging Costs 24 24 13 10 10 17 18 11 11 12 13 14 4. Virtual Fitting Room 1 1 1 0 0 1 1 1 1 1 1 1 5. Social Mission 35 35 19 14 15 26 26 16 17 18 19 21 6. Marketing 3,800 3,450 1,700 1,100 1,100 2,100 2,100 1,100 1,100 1,100 1,100 1,100 5. Misc Expenses 102 101 55 41 42 75 76 47 49 52 55 59
Total Variable Expenses 4,031 3,680 1,826 1,193 1,195 2,269 2,273 1,206 1,211 1,218 1,225 1,234
FIXED EXPENSES 1. Insurance 50 50 50 50 50 50 50 50 50 50 50 50 2. Rent expenses 750 750 750 750 750 750 750 750 750 750 750 750 4. Salaries 1,900 1,900 1,900 1,900 2,200 2,200 2,200 2,200 2,200 2,200 2,200 2,200 5. Misc Adm Expenses 102 101 55 41 42 75 76 47 49 52 55 59
Total Fixed Expenses 2,802 2,801 2,755 2,741 3,042 3,075 3,076 3,047 3,049 3,052 3,055 3,059 Net Profit before Tax (4,201) (3,864) (3,150) (2,877) (3,151) (3,416) (3,380) (3,042) (2,991) (2,931) (2,859) (2,766)
TAXES Federal Income Tax - - - - - - - - - - - - Local Tax - - - - - - - - - - - -
Net profit after tax (4,201) (3,864) (3,150) (2,877) (3,151) (3,416) (3,380) (3,042) (2,991) (2,931) (2,859) (2,766)
INGRI:DAHL Estimated Sales and Net Profit Year 1
44
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
REVENUE 3,290 3,387 3,476 3,598 3,734 7,342 7,515 7,711 4,479 4,732 5,020 5,368 Sunglasses 3,167 3,260 3,346 3,463 3,594 7,066 7,233 7,421 4,311 4,554 4,831 5,166 Units projected 34 35 36 37 38 76 77 79 46 49 52 55 Add-on sales 122 126 129 133 138 272 278 286 166 175 186 199 Units 14 14 14 15 15 30 31 32 18 19 21 22 International Shipping 2 2 2 2 2 4 4 4 2 2 3 3 Units 0 0 0 0 0 1 1 1 0 0 1 1 RETURNS 395 406 417 432 448 881 902 925 537 568 602 644 Total Revenue 2,896 2,981 3,059 3,166 3,286 6,461 6,613 6,786 3,942 4,164 4,417 4,724
COST OF GOODS SOLD 1. Lenses 244 251 258 267 277 544 557 571 332 351 372 398 2. Frames 356 366 376 389 404 793 812 833 484 511 543 580 3. Add-on - - - - - - - - - - - -
Total Cost of Goods 244 251 258 267 277 544 557 571 332 351 372 398
VARIABLE EXPENSES 1. Freight 48 50 51 53 55 108 110 113 66 69 74 79 2. International Freight 2 2 2 2 2 5 5 5 3 3 3 3 3. Packaging Costs 16 17 17 18 18 36 37 38 22 23 25 27 4. Virtual Fitting Room 2 3 3 3 3 5 6 6 3 4 4 4 5. Social Mission 34 35 36 37 38 76 77 79 46 49 52 55 6. Misc Expenses 33 34 35 36 37 73 75 77 45 47 50 54
Total Variable Expenses 136 140 143 148 154 303 310 318 185 195 207 222
FIXED EXPENSES 1. Insurance 50 50 50 50 50 50 50 50 50 50 50 50 2. Rent expenses 750 750 750 750 750 750 750 750 750 750 750 750 4. Salaries 2,075 2,075 2,075 2,075 2,075 2,075 2,075 2,075 2,075 2,075 2,075 2,075 6. Marketing 1,100 1,100 1,100 1,125 1,300 3,300 3,325 3,300 1,100 1,100 1,100 1,100 5. Misc Adm Expenses 33 34 35 36 37 73 75 77 45 47 50 54
Total Fixed Expenses 4,008 4,009 4,010 4,036 4,212 6,248 6,275 6,252 4,020 4,022 4,025 4,029 Net Profit before Tax (1,492) (1,419) (1,352) (1,285) (1,357) (635) (529) (356) (595) (404) (187) 76
TAXES Federal Income Tax - - - - - - - - - - - 26 Local Tax Rate - - - - - - - - - - - 6
Net profit after tax (1,492) (1,419) (1,352) (1,285) (1,357) (635) (529) (356) (595) (404) (187) 44
INGRI:DAHL Estimated Sales and Net Profit Year 2
45
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
REVENUE 4,531 4,545 4,796 5,078 7,444 7,749 8,098 6,918 6,811 7,260 7,749 8,505 Sunglasses 4,391 4,405 4,649 4,922 7,215 7,511 7,849 6,706 6,602 7,037 7,511 8,243 Units projected 47 47 50 53 78 81 84 72 71 76 81 89 Add-on sales 127 128 135 143 209 218 228 195 192 204 218 239 Units 14 14 15 16 23 24 25 22 21 23 24 27 International Shipping 12 12 12 13 19 20 21 18 18 19 20 22 Units 2 2 2 3 4 4 4 4 4 4 4 4 RETURNS 544 545 576 609 893 930 972 830 817 871 930 1,021 Total Revenue 4,531 4,545 4,796 5,078 7,444 7,749 8,098 6,918 6,811 7,260 7,749 8,505
COST OF GOODS SOLD 1. Lenses 378 379 400 423 621 646 675 577 568 605 646 709 2. Frames 529 531 560 593 869 905 945 808 795 847 905 993 3. Add-on - - - - - - - - - - - -
Total Cost of Goods 378 379 400 423 621 646 675 577 568 605 646 709
VARIABLE EXPENSES 1. Freight 75 75 79 84 123 128 134 115 113 120 128 141 2. International Freight 16 16 17 18 27 28 29 25 25 26 28 31 3. Packaging Costs 31 31 33 35 51 54 56 48 47 50 54 59 4. Virtual Fitting Room 4 4 4 4 6 7 7 6 6 6 7 7 5. Social Mission 47 47 50 53 78 81 84 72 71 76 81 89 6. Marketing 1,400 1,350 1,100 1,100 3,500 3,500 3,750 2,000 1,100 1,100 1,100 1,100 7. Misc Expenses 91 91 96 102 149 155 162 138 136 145 155 170
Total Variable Expenses 1,664 1,615 1,380 1,396 3,934 3,952 4,223 2,404 1,497 1,524 1,552 1,596
FIXED EXPENSES 1. Insurance 50 50 50 50 50 50 50 50 50 50 50 50 2. Rent expenses 750 750 750 750 750 750 750 750 750 750 750 750 4. Salaries 2,480 2,402 2,480 2,402 2,480 3,002 3,080 3,002 3,080 3,002 3,080 3,002 5. Misc Adm Expenses 45 45 48 51 74 77 81 69 68 73 77 85
Total Fixed Expenses 3,325 3,247 3,328 3,253 3,354 3,879 3,961 3,871 3,948 3,875 3,957 3,887 Net Profit before Tax (837) (697) (311) 6 (466) (729) (761) 67 798 1,257 1,593 2,312
TAXES Federal Income Tax - - - 2 - - - 23 279 440 558 809 Local tax - - - 0 - - - 5 60 94 119 173
Net profit after tax (837) (697) (311) 3 (466) (729) (761) 38 459 723 916 1,329
INGRI:DAHL Estimated Sales and Net Profit Year 3
46
Projected Cash-Flow Statement The projected cash-flow is based on previous Sales Forecasts, Estimated Profit and Loss Statements, Personnel Expenses and Marketing. Payout time for Shopify, the e-commerce platform that INGRI:DAHL uses, is three days. From this it is expected that 95% of revenues flow in the same month. The remaining 5% is paid out the following month. Cost of Goods Sold is all 30 day payable, and therefore reflected in the preceding month’s cash outflow. All expenses are paid out the month that these occur. Taxes are transferred to a savings account the month that these occur.
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec BEGINNING CASH BALANCE 26,500 28,925 28,498 26,634 24,731 22,994 21,976 20,709 18,503 16,637 14,831 13,103
CASH RECEIPTS A. Sales/Revenues 3,967 4,142 2,364 1,711 1,724 2,992 3,118 1,982 2,012 2,118 2,248 2,413 Sunglasses 3,845 4,015 2,292 1,658 1,671 2,900 3,022 1,921 1,950 2,053 2,179 2,339 Units projected 44 43 24 17 18 32 33 20 21 22 23 25 Add-on sales 112 117 67 48 49 84 88 56 57 60 63 68 Units 13 13 7 5 5 10 10 6 6 7 7 8 International Shipping 10 11 6 4 4 8 8 5 5 6 6 6 Units 2 2 1 1 1 2 2 1 1 1 1 1 RETURNS 501 498 272 201 207 367 375 231 242 255 271 291 TOTAL CASH AVAILABLE 29,966 32,569 30,589 28,143 26,248 25,619 24,719 22,461 20,274 18,500 16,809 15,226
CASH PAYMENTS A. Cost of Goods to be Sold 1. Lenses - 435 433 237 175 180 319 326 200 210 221 235 2. Frames - 696 692 379 280 288 510 521 321 336 354 376 3. Add-on - - - - - - - - - - - -
Total Cost of Goods - 1,132 1,125 615 454 467 829 847 521 546 575 611
B. Variable Expenses (Selling) 1. Freight 70 69 38 28 29 51 52 32 34 36 38 41 2. International Freight 15 15 8 6 6 11 11 7 7 8 8 9 3. Packaging Costs 29 29 16 12 12 21 22 13 14 15 16 17 4. Virtual Fitting Room 1 1 1 1 1 1 1 1 1 1 1 1 5. Social Mission 44 43 24 17 18 32 33 20 21 22 23 25 6. Marketing 3,800 3,450 1,700 1,100 1,100 2,100 2,100 1,100 1,100 1,100 1,100 7. Misc Expenses 125 125 68 50 52 92 94 58 60 64 68 73
Total Variable Expenses 116 115 63 46 48 85 87 53 56 59 62 67
C. Fixed Expenses (Adminstrative) 1. Insurance 50 50 50 50 50 50 50 50 50 50 50 50 2. Rent expenses 750 750 750 750 750 750 750 750 750 750 750 750 4. Salaries 0 1,900 1,900 1,900 1,900 2,200 2,200 2,200 2,200 2,200 2,200 2,200 5. Misc Adm Expenses 125 125 68 50 52 92 94 58 60 64 68 73
Total Fixed Expenses 925 2,825 2,768 2,750 2,752 3,092 3,094 3,058 3,060 3,064 3,068 3,073 Total COGS and Expenses 1,041 4,071 3,956 3,412 3,254 3,644 4,009 3,958 3,637 3,668 3,705 3,751
Federal Income Tax - - - - - - - - - - - - Local Tax - - - - - - - - - - - -
TOTAL CASH PAID OUT 1,041 4,071 3,956 3,412 3,254 3,644 4,009 3,958 3,637 3,668 3,705 3,751 CASH BALANCE/DEFICIENCY 28,925 28,498 26,634 24,731 22,994 21,976 20,709 18,503 16,637 14,831 13,103 11,475
ENDING CASH BALANCE 28,925 28,498 26,634 24,731 22,994 21,976 20,709 18,503 16,637 14,831 13,103 11,475
INGRI:DAHL Estimated Cash Flow Statement Year 1
47
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec BEGINNING CASH BALANCE 10,118 9,506 10,355 11,427 12,560 14,139 17,049 19,687 21,821 24,349 27,750 31,589
CASH RECEIPTS A. Sales/Revenues 5,323 5,812 6,092 6,228 6,787 8,563 8,769 8,360 8,582 9,743 10,677 11,765 Sunglasses 5,132 5,612 5,883 6,200 6,563 8,269 8,455 8,072 8,288 9,409 10,310 11,361 Units projected 66 68 71 75 79 101 107 97 100 114 125 138 Add-on sales 174 183 191 10 203 269 287 263 270 306 335 370 Units 20 20 21 22 24 30 32 29 30 34 37 41 International Shipping 16 17 18 19 20 25 27 24 25 28 31 34 Units 3 3 4 4 4 5 5 5 5 6 6 7 TOTAL CASH AVAILABLE 15,441 15,318 16,447 17,655 19,347 22,701 25,817 28,047 30,403 34,092 38,426 43,354
CASH PAYMENTS A. Cost of Goods to be Sold 1. Lenses 686 524 543 568 599 634 806 852 776 800 913 998 2. Frames 1,440 779 808 845 891 944 1,198 1,268 1,154 1,190 1,357 1,485 3. Add-on 10 10 10 11 11 12 15 16 15 15 17 19
Total Cost of Goods 2,136 1,313 1,361 1,425 1,502 1,590 2,019 2,137 1,945 2,005 2,287 2,502
B. Variable Expenses (Selling) 1. Freight 110 95 98 103 108 115 146 154 140 144 165 180 2. International Freight 24 21 21 22 24 25 32 34 31 31 36 39 3. Packaging Costs 46 35 36 38 40 43 54 57 52 54 61 67 4. Virtual Fitting Room 2 5 5 6 - 6 8 9 8 8 9 10 5. Social Mission 69 66 68 71 75 79 101 107 97 100 114 125 6. Marketing 3,165 1,067 1,105 1,157 1,219 1,291 1,640 1,735 1,580 1,628 1,857 2,032 7. Misc Expenses 177 162 175 183 187 204 260 263 250 258 294 322
Total Variable Expenses 182 156 161 169 172 188 239 253 231 238 271 297
C. Fixed Expenses (Adminstrative) 1. Insurance 50 50 50 50 50 50 50 50 50 50 50 50 2. Rent expenses 750 750 750 750 750 750 750 750 750 750 750 750 4. Salaries 2,640 2,640 2,640 2,640 2,640 2,640 2,640 2,640 2,640 2,640 2,640 2,640 5. Misc Adm Expenses 177 54 58 61 62 68 87 88 83 86 98 107
Total Fixed Expenses 3,617 3,494 3,498 3,501 3,502 3,508 3,527 3,528 3,523 3,526 3,538 3,547
Federal Income Tax - - - - 32 366 346 308 355 574 741 940 Local Tax - - - - 7 78 74 66 76 123 159 201
TOTAL CASH PAID OUT 5,935 4,963 5,021 5,094 5,208 5,653 6,131 6,226 6,054 6,343 6,838 7,286 CASH BALANCE/DEFICIENCY 9,506 10,355 11,427 12,560 14,139 17,049 19,687 21,821 24,349 27,750 31,589 36,068
ENDING CASH BALANCE 9,506 10,355 11,427 12,560 14,139 17,049 19,687 21,821 24,349 27,750 31,589 36,068
INGRI:DAHL Estimated Cash Flow Statement Year 2
48
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec BEGINNING CASH BALANCE 36,068 39,249 42,830 46,658 50,633 54,718 59,269 63,141 67,371 71,510 75,810 80,391
CASH RECEIPTS A. Sales/Revenues 11,909 11,934 12,137 12,378 12,770 13,411 13,164 13,969 13,782 14,066 14,416 14,384 Sunglasses 11,501 11,525 11,727 11,961 12,715 12,978 12,704 13,498 13,302 13,593 13,933 13,889 Units projected 139 139 141 144 154 157 160 163 160 164 168 167 Add-on sales 374 375 375 381 19 395 421 431 440 433 442 453 Units 42 42 42 43 46 47 48 49 48 49 50 50 International Shipping 35 35 35 35 36 38 39 40 41 40 41 42 Units 7 7 7 7 8 8 8 8 8 8 8 8 TOTAL CASH AVAILABLE 47,977 51,184 54,967 59,035 63,403 68,130 72,433 77,110 81,153 85,576 90,227 94,776
CASH PAYMENTS A. Cost of Goods to be Sold 1. Lenses 1,100 1,109 1,111 1,131 1,154 1,229 1,252 1,278 1,305 1,281 1,312 1,345 2. Frames 1,637 1,552 1,555 1,584 1,616 1,721 1,753 1,789 1,827 1,793 1,836 1,882 3. Add-on 21 12 12 13 13 14 14 14 15 14 15 15
Total Cost of Goods 2,758 2,674 2,679 2,728 2,783 2,964 3,019 3,081 3,147 3,089 3,163 3,242
B. Variable Expenses (Selling) 1. Freight 199 220 221 225 229 244 249 254 259 254 261 267 2. International Freight 43 48 48 49 50 53 54 55 56 55 57 58 3. Packaging Costs 74 92 92 94 96 102 104 106 108 106 109 111 4. Virtual Fitting Room 11 11 11 11 - 12 13 13 13 13 13 14 5. Social Mission 138 139 139 141 144 154 157 160 163 160 164 168 6. Marketing 1,475 1,478 1,505 1,535 1,635 1,666 1,700 1,736 1,704 1,745 1,789 1,781 7. Misc Expenses 355 357 358 365 360 396 404 395 421 413 423 433
Total Variable Expenses 327 371 372 379 375 412 419 428 437 429 439 450
C. Fixed Expenses (Adminstrative) 1. Insurance 50 50 50 50 50 50 50 50 50 50 50 50 2. Rent expenses 750 750 750 750 750 750 750 750 750 750 750 750 4. Salaries 2,640 2,640 2,562 2,640 2,562 2,640 3,162 3,240 3,162 3,240 3,162 3,240 5. Misc Adm Expenses 119 119 122 120 132 135 132 140 138 141 144 144
Total Fixed Expenses 3,559 3,559 3,484 3,560 3,494 3,575 4,094 4,180 4,100 4,181 4,106 4,184
Federal Income Tax 1,716 1,749 1,775 1,735 2,033 1,910 1,760 2,050 1,959 2,067 2,127 2,138 Local Tax 368 375 380 372 436 409 377 439 420 443 456 458
TOTAL CASH PAID OUT 8,728 8,353 8,309 8,402 8,685 8,861 9,292 9,739 9,643 9,766 9,835 10,014 CASH BALANCE/DEFICIENCY 39,249 42,830 46,658 50,633 54,718 59,269 63,141 67,371 71,510 75,810 80,391 84,762
ENDING CASH BALANCE 39,249 42,830 46,658 50,633 54,718 59,269 63,141 67,371 71,510 75,810 80,391 84,762
INGRI:DAHL Estimated Cash Flow Statement Year 3
49
Break Even With a break-even point of total 634 units, INGRI:DAHL expects to break-even in year 2. The break- even point is based on an expected sales mix. Detailed calculations below:
Break Even Analysis Color Size Color and Size
Sales Price pr. Unit $89 $89 $99 Variable Cost pr. Unit 6 6 6 Contribution Margin Unit $83 $83 $93 Sales Mix Percentage 0.20 0.35 0.45 Weighted Average Unit Contribution Margin Weighted Average Unit Contribution Margin pr. unit $17.50 $30.63 $39.38 Total Fixed Cost
Break-Even Point in Units of Sales Mix Product Units at Break-Even Point 123 216 277 Product Sales in Dollars $10,972.06 $19,201 $27,461 Break-Even Point in Dollars
$87.50
53,936
616
$57,634
Sources of Cash INGRI:DAHL will fund this project with cash from current operations, as well as an additional capital investment from the investors.
Cash on Hand
Invested Capital Owner Loans 15,000$ Owner Equity 15,000$ Contributed Capital (Corporation) 5,000$ Total Invested Capital 35,000$
Website investment 8,500$
Total Cash Available 26,500$
50
Net Present Value Calculation Assuming a 10% discount rate (based on 3% consumer interest loan rate) , INGRI:DAHL expects a net present value of $44,583.
Conservative and Optimistic Cases The conservative case expects no economies of scale for costs of goods sold, a conversion rate of 0.5%, and remains the same expenses as the base case.
Conservative Case: Estimated Sales and Net Profit Year 1-3
Year 1 Δ Year 2 Δ Year 3 Δ Year 4 Δ Year 5
Sales (in units) 259 461 729 1,360 1,768 Sales ($) 22,156 78% 39,370 80% 70,786 40% 99,100 30% 128,830 Cost of Goods Sold ($) 2,592 42% 3,684 58% 5,829 50% 8,743.47 50% 13,115 Expenses ($) 54,993 3% 56,844 26% 71,818 25% 89,773 20% 107,727 Net Profit ($) (35,429) (21,157) (6,862) 584 7,987 Net Profit after Tax ($) (35,429) (21,157) (6,862) 368 5,032
The optimistic case expects significant economies of scale for cost of goods sold, a conversion rate of 1%, and remains the same expenses as the base case.
Optimistic Case: Estimated Sales and Net Profit Year 1-3
Year 1 Δ Year 2 Δ Year 3 Δ Year 4 Δ Year 5
Sales (in units) 432 768 1214 1,360 1,768 Sales ($) 36,927 78% 65,617 80% 117,976 40% 165,166 30% 214,716 Cost of Goods Sold ($) 4,319 14% 4,912 38% 6,800 50% 10,200.71 50% 15,301 Expenses ($) 55,922 4% 58,373 27% 74,309 25% 92,886 20% 111,463 Net Profit ($) (23,315) 2,332 36,867 62,080 87,952 Net Profit after Tax ($) (23,315) (115) 19,924 39,110 55,410
Discount rate 10%
PV Factors: Year 1 = 1 ÷ (1 + 18%)^1 ≈ 0.8475 0.91 Year 2 = 1 ÷ (1 + 18%)^2 ≈ 0.7182 0.83 Year 3 = 1 ÷ (1 + 18%)^3 ≈ 0.6086 0.75 Year 4 = 1 ÷ (1 + 18%)^4 ≈ 0.5158 0.68 Year 5 = 1 ÷ (1 + 18%)^5 ≈ 0.5000 0.62
Year 1 Year 2 Year 3 Year 4 Year 5 Net Cash Inflow (11,232) 9,187 24,211 33,896 44,064 x Present Value Factor 0.91 0.83 0.75 0.68 0.62 Present Value of Cash Flows (10,211) 7,593 18,190 23,151 27,360 Total Cash Inflow 66,083 - Intitial Investment 21,500 Net Present Value 44,583
Net Present Value Calculation
51
Risk factors
Competition: There is a possibility of other competitors coming into the market. To combat this risk,
INGRI:DAHL will have multiple additional features already planned for introduction. The day a
competitor release a similar product, INGRI:DAHL will hit the release button for these new features
including nose-pads and decorations.
Pricing strategy: The customers might not accept the price point in which INGRI:DAHL will need to
lower the price. In that case INGRI:DAHL will start by lowering the price of the add-on feature, and if
necessary the sunglasses. In the ladder case, the company will attempt to gain money from shipment that
will be free.
3D Printing issues: 3D printing has not been a commercial service for that long, so there might be some
issues with the technology that the company cannot predict. To hedge against technology risks,
INGRI:DAHL will be working with multiple 3D printing suppliers.
Conclusion INGRI:DAHL is excited to take on this new business opportunity and is confident that by taking advantage of new
technology and solution the company can solve a problem that people who wear sunglasses and glasses are so
familiar with. Following the designed base case timeline, the company is confident that it can break-even in the end
of year 2, and be profitable in year 3.
52
SUPPORTING DOCUMENTS Examples of 3D printing
Figure 1: Plastic cup made by 3D printing, Airwolf3D.com
53
Previous INGRI:DAHL features
54
