Business Plan
gbomsom
sample_business_plan.docx3. Market Analysis
3.1 Description
Hypernatremia and Hyponatremia, in other words, dehydration and over hydration are caused by the low hydration or sodium levels in blood plasma. Study has shown that 13% of the 2002 Boston Marathon completed runners had hyponatremia. The dehydration levels after exercise for 2135 athletes are shown in figure 3.1(a). The result clearly states that many of the athletes are either dehydrated or overhydrated at the end of the exercise.Moreover, studies conducted on the collapsed marathon runner in Boston marathon 2003 also highlight that 30% of the collapsed runner are either hypernatremia or hyponatremia.
(a) (b)
Figure 3.1: (a) Results showing hydration status, weight change and serum sodium level of athletes (b) Causes of collapsed runners in Boston marathon 2003
Many studies have emphasized the incidence of dehydration and over hydration in collapsed marathon runners are significant. The reason could be the guidelines for fluid intake are either not adequate or the athletes are not following the guidelines closely. The significant incidence of both hyponatremia and hypernatremia highlights the need for hydration level detector for the athletes.
3.2 Target Market
Our target markets are event organizer such as Singapore Sports Council, Spectrum, Standard Chartered and SAFRA. Our goal is to focus on high sales and low prices. The use of our product will help marathon or other event organizers to reduce risk of having dehydrated or over dehydrated participant as the device can indicate the hydration level of the individual. In this way, marathon or event organizers can reduce the liability insurance for the event. The data from Boston Marathon 2003 is used to calculate the amount of liability insurance that can be saved by using Aurum Z. The result shows that USD$343,791 can be saved when Aurum Z is used. It is stated that there were 65,000 runners in 2011 Standard Chartered Singapore marathon for all categories. Therefore, 120,000 pieces are targeted to be sold in the 1st two year of market penetration in Singapore.
Figure 3.2: Target of Aurum Z
3.3 Testing the Market
A survey was carried out to test what kind of product individual would like in order to test the niche market. Three options such as sensor-integrated shin guard, smart swimming suit and hydration monitoring device with detailed descriptions were given to choose. The results showed that 53% chose Hydration monitoring device, 26% chose sensor-integrated shin guard and 21% chose smart swimming suit. The results prove that our device could even be sold more than our targeted market.
Figure 3.3: Survey Response Percentage
3.4 Global Market Development
After successfully breaking through Singapore market, US and European markets will be explored. Recorded data has shown that many of the major marathon events in US and Europe had at least 20,000 participants. London marathon 2013 alone had over 34,000 participants and Boston marathon 2013 had over 23,000 participants. Therefore, our device has a very high market potential. The projected sale is 300,000 pieces per year for the next 3 years. Our goal is to become a vital device for all Major Marathon events in the world in the next ten years.
4. The Technology
4.1 Technical Description
Sweat concentration will be varied when one’s under over hydration, normal hydration or dehydration. Our patented platform technology of hydration level detector, Aurum Z will be responding to human hydration level by demonstrating color change of our wristband. It shows excellent sensitivity to sweat concentrations. This new invented device provides high accuracy, fast detection and portable.
Sodium diffuses into sweat absorbent with gold nanoparticles
Figure 4.1: Schematic of Aurum Z
Forearm has been chosen for wearing the wristband as it represents the average sweat rate of the whole body. Aurum Z will work in a way where three distinction colors will be revealed on a wristband in different status of hydration level. The indicator pad will be shown in yellow colour initially. When one is undergone over-hydration, it shows color change from yellow to colorless. On the other hand, it shows colour change from yellow to red-wine when the person dehydrates.
Colourless
Initial colour of indication pad
Red-wine
Over-hydration Dehydration
Figure4.2: Colour changes due to hydration level
4.2 Competitive Advantage
The key advantages in this platform technology are the ability to detect hydration level in short time and give accurate results of one’s hydration level. Nowadays, there is no similar product introduced in the market that can perform this function. Therefore, this platform will give rise to a world’s first technology. As the materials, components and manufacturing costs are relatively low; this would allow the device to be sold in bulks at a reasonable price. Mass adoption by the medical community and marathon organizations can be achieved, making it the industry-standard in hydration level detection.
4.3 Manufacturability
Aurum Z is a hydration level detecting device in reasonable price and can be mass produced easily. The detector comprises of indicator pad and adjustable wristband. Materials used for processing are commonly available. In addition, materials and manufacturing are in low cost, with high reliability of these components.
Figure 4.3 below shows the schematic of the transparent indicator pad. The gold nanoparticles (AuNPs) are diffused homogenously into polypropylene sheet by dipping. After dipping, the polypropylene sheets will be thoroughly rinsed with distilled water to remove any loosely bound AuNPs, and the papers will be air-dried and stored under humid environment.
Transparent polystyrene
Nonwoven polypropylene with AuNPs
Nonwoven polypropylene with AuNPs
Pulp + Sodium Polyacrylate
Temporary polyethylene sheet (Optional)
Figure 4.3: Schematics of the transparent indicator pad
5. Implementation & Growth Strategy
Gary Hamel’s business model is adapted to explain Z-Tech business model. There are four major components: customers, core strategy of the company, customer interface and partner network.
Figure 5.1 Aurum Z Business Concepts
We target to implement this product by the sports community to avoid over-hydration and dehydration during exercise using 4-pronged approach.
5.1 Marathon Organizer Adoption
Z-Tech will provide a competitive product pricing to the marathon organizers so that they can distribute Aurum Z to the participants of the marathons without increasing the sign up fees for the marathon. We will work to achieve collaboration with Singapore Sports Council to promote Aurum Z as an essential device for endurance sports. Moreover, using Aurum Z in public events will highlight the risks of dehydration and dehydration and also promote the product.
5.2 Liability Insurance Risk Mitigation
Z-Tech will collaborate with the General Insurance Association of Singapore to make this technology a guideline indicating individuals’ hydration level while exercising in order to reduce the risk that the liability insurance company might face. The leveraging on the health insurance company’s awareness will increase the market demand for the technology.
5.3 Continued Innovation
By broadening the networking and constantly reviewing customers’ feedback, we will continue in developing its performance and function. Further research and development will be done in order to improve the technology so we can expand the target users as well as to extend it into the detection of others such as blood pressure, cramp, etc.
5.4 Goals & Milestone
Our goals and milestones are as described in the diagram below.
Product Launch
Product Development
Laboratory Trials
Year 3
Year 5
Year 7
Year 1
Singapore & Global Market
Figure 5.2 Goal & Milestones
Laboratory Trials: Designing and testing the prototype of Aurum Z
Product Development: Finalizing the technology & design
Product Launch: Mass production of the product
Singapore Market: Established market with good customers relationship within Singapore
Global Market: Collaboration of companies and institutions from Asia Pacific, US and Europe
5.5 Growth Strategy
As innovation is the key to success in this era, Z-tech will continue develop a series of devices to detect other important problems that are common in sports such as cramps, blood pressure level, and heartbeat. Z-tech will continue to apply the developing technology and the knowledge of the members of the scientific committee to continue to design more advanced devices.
Figure 5.3 Product Growth Strategy of Z-tech
6. Financial Plan
6.1 Cost & Revenue Analysis
Appendix B displays the detailed breakdown for both the cost and revenue forecast of the business plan. Sales quantity is predicted to rise significantly from year 2 onwards due to market expansion to overseas such as US and Europe.
6.2 Breakeven Analysis
The spending of Research and Development is S$100 thousands and it will break even in the 2nd year after the market launch with the sales of 170.000 pieces at S$2 per piece.
6.3 Investment Highlights
Our business will breakeven in the 2nd year after the market launch and gain a return of over 90% after a three-year period. The key capital requirement is S$100 thousands for the Research and Development. Our business plan has an outstanding investment due to the potential listed below:
· High Return – Due to the World’s First device, the Gross Margin of the product is over 90%.
· Low Risk – Research and Development are carried out in recognized institution.
· Society benefit – The vision of this project is to enhance sports by caring people through detecting the hydration level during endurance sports activities. Investment in our business plan has a high potential for the society benefit.
· Government Support – Singapore Sport Council and other national sports institutes are actively supporting in our product innovation and development.
· Industrial Expertise – We are collaborating with well-known technology companies in Singapore such as Nano Globe and Nano Materials Technology, to continuously develop our product.
· Clear Exit Strategy – Positive Net Present Value for investment at each state of the product development processes.
Figure 6.1 Decision Tree (Exit Strategy)
References
Business model: a box of bricks for strategists . (n.d.). Retrieved from http://www.the-essence-consulting.nl/pdf/business model a box of bricks for strategist.pdf
Appendix A
Details calculation for amount saved when Aurum Z is used by using Boston Marathon 2003 data.
According to BFL Canada, for medium risk sport like marathon, the typical average insurance rate is about $9.00 per hour per runner. However, for the low risk sport, the typical average insurance rate is as low as $5.6 per hour per runner. A typical marathon event last for five hours. This rate and duration will be used to calculate the data from Boston Marathon 2003.
|
|
Insurance Rate |
Duration |
Participants |
Insurance |
|
Without Aurum Z |
$9 |
5hrs |
20223 |
$910,035 |
|
With Aurum Z |
$5.6 |
5hrs |
20223 |
$566,244 |
|
Amount saved |
$343,791 |
Marathon is regarded as a medium risk sport as there will be athletes who suffer heat stroke, hydration problem, muscle cramp, tendonitis, fatigue and sprain. Therefore, by using Aurum Z hydration status monitoring wristband, the risk of sustaining hydration conditions will be eliminated up to 99.99%. Therefore, using Aurum Z will help marathon event organizers to convince the insurance as their event is at low risk and thus the insurance rate will also be lower. In Boston Marathon 2003, 140 out of 20,223 participants collapsed and it is found out that 31% of them are due to either dehydration or over hydration.
Appendix B
Financial Projections
|
Year |
0 |
1 |
2 |
3 |
|
Sales Quantity |
|
70,000 |
150,000 |
300,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Revenue |
|
140,000 |
300,000 |
600,000 |
|
Cost of Goods Sold |
|
(2,590) |
(5,550) |
(11,100) |
|
Gross Margin |
|
137,410 |
294,450 |
588,900 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Manufacturing Cost |
|
(60,000) |
(100,000) |
(140,000) |
|
Advertising & Sales Promotion |
|
(10,000) |
(30,000) |
(60,000) |
|
Other Fixed Costs |
|
(10,000) |
(10,000) |
(10,000) |
|
Total Expenses |
|
(80,000) |
(140,000) |
(210,000) |
|
Net Income |
|
57,410 |
154,450 |
378,900 |
|
Income Tax |
|
(15,400) |
(33,000) |
(66,000) |
|
|
|
|
|
|
|
Cash Flow |
(100,000) |
42,010 |
121,450 |
312,900 |
Product Development (2016)
Product Launch (2018)
Singapore Market (2020)
Global Market (2021)
Laboratory Trials(2014)
Product
Aurum Z
Place
Marathon
Sport Events
Price
S$ 2/pc
Promotion
Informing other organizations about the product
Hydration level detector strip
Collapsed Runners
25%
12%
6%
16%
Hypernatremic Hypersomolar Hyponatremic Hypo-osmolar 25.0 12.0 6.0 16.0
