2. Reidy 1
I. Introduction:
Human Potential Athletics
Winding Brook Way
Holmdel, NJ 07733
www.HumanPotentialAthletics.com
Co Owners:
Alex Reidy
Anna Reidy
Nina Kalaschnikow
Description of Business:
Human Potential Athletics’ mission is to inspire people to help them reach their full potential.
We are an internet based health and wellness company that sells our own clothing line,
supplements, and workout equipment. Through our quality products we are trying we are
trying to help our customers reach their goals and improve their lives at an affordable price.
Target Market: Human Potential Athletics targets the athletes trying to improve their
athleticismfor their specific sport and the everyday person just trying to have a healthier
lifestyle.
Financing:
Initial financing required is $17,439.40, and will be received from the investments from all co-
owners. Alex will put up $10,000, while will both Anna and Nina put up $5,000 each from their
own personal savings accounts. Alex will hold 70 percent of the company and both Anna and
Nina will receive 15 percent of the company. The invested money will cover inventory, website
costs, shipping, clothing tags, and utilities.
This report is confidential and is the property of the co-owners listed above. It is intended only
for use by the person to whom it is transmitted and any reproduction or divulgence of any of its
contents without the prior written consent of the Company is prohibited.
II. Executive Summary
Human Potential Athletics is an internet based company that sells quality health and wellness
products which include their own clothing, supplements, and workout equipment. Through
their products they are trying to help their customers reach any goals they set out and at the
same time improve their wellbeing. HPA’s mission is to inspire people to help them reach their
full potential. HPA chose to be an internet based company because of the rapid and continuing
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growth of internet shoppers and thought it would be the best way to reach their target market.
In 2013, 191.1 million U.S. citizens were online shoppers and had browsed products, compared
prices or bought merchandise online at least once. These figures are projected to surpass 200
million people in 2015. HPA is trying to target athletes but is mainly focused on combatant
athletes for the first couple years. They are also targeting anyone who is looking to get in shape
or just live a healthier life style.
HPA is selling products that are in three different industries, active wear, supplements, and
work out equipment. Health and wellness is already considered by many as an unavoidable
necessity and top priority so it is no surprise that sales in each of these industries are increasing
every year and don’t show any signs of slowing down. According to The NPD Group, active
wear sales accounted for $33.7 billion, representing 16 percent of the total apparel market, and
have played a significant role in the overall success of the total apparel market for the last two
years. Consumers are wearing active not only to work out in, but also to wear out when going
out with friends. According to Euromonitor International, multivitamin sales reached about
$4.9 billion in 2013. An advantage for selling supplement products is that they are consumable
so if you treat your customers well, they may habitually re-order from you whenever they run
out. . According to Statista.com sales of fitness equipment for home use in the U.S. has grown
from 3.18 billion U.S. dollars since the economic recession in 2008 to an all-time high in 2013 of
3.58 billion U.S. dollars. Nutrition and exercise are already well integrated into our mainstream
culture and is still increasing in popularity. People like the convenience of working out in the
comfort of their own home and need specific workout equipment for their homes.
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HPA plans to make all sales via the internet. The website will allow customers to browse for
their needs, as well as learn about the products they purchase and their proper use. The
products that HPA sells will help customers live a healthier lifestyle. Products that HPA sells
include active wear apparel, supplements, and workout equipment. As of now the active wear
we sell includes cotton T-Shirts, Sport-Tek Competitor shirts, and Sport-Tek Micro-Mesh
reversible shorts. The current supplements we sell is a multivitamin for men and women, and
the supplement brainpower. Kettlebells are the initial workout equipment we sell.
A major social media site that will be vital for promoting HPA’s products will be Twitter because
of the large amount of people that can be reached instantly at any time. HPA has strategic
partnerships with Mixed Martial Artists and Brazilian Jiu-Jitsu legends Renzo Gracie and Rolles
Gracie. Renzo Gracie has 160,000 Twitter followers and Rolles Gracie has almost 26,000
followers. That means that about 186,000 potential customers from the target market can be
reached instantly. Both Renzo and Rolles can tweet about special deals, promotions, or just
letting people know that HPA is in business. In return for these promotions HPA will have
promotional links to their websites and promote any upcoming events and seminars for them.
In order to start up the business financing required is $17,439.40, and will be received from the
investments from all co-owners. Alex will put up $10,000, while will both Anna and Nina put up
$5,000 each from their own personal savings accounts. Alex will hold 70 percent of the
company and both Anna and Nina will receive 15 percent of the company. The invested money
will cover inventory, website costs, shipping, clothing tags, and utilities.
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III. Industry Analysis
Future Outlook and Trends
Development of more stable and reliable online platforms has improved online shopping
significantly. Additionally, online shopping saves money for many customers by leaving out
physical retailing costs and saves them time by allowing the customer to make an order from
their phone or any other capable device wherever they are. According to statista.com, in 2013,
191.1 million U.S. citizens were online shoppers and had browsed products, compared prices or
bought merchandise online at least once. These figures are projected by statista.com to surpass
200 million people in 2015. Human Potential Athletics saw this as a big factor in why they
wanted to be an internet based company.
Health and wellness is already considered by many as an unavoidable necessity and top priority.
What started off as a trend is now becoming an important part of the daily life for many people,
and as they get older, people are buying health and wellness products and working out as an
investment in their future health. An improving U.S. economy will aid growth of the health and
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wellness products over 2013-2018 as higher disposable incomes allow for greater spending on
health and wellness categories. According to blog.euromonitor.com, Health and Wellness can
be a trillion dollar industry by 2017.
Health and wellness gets well-deserved support from medical and scientific studies, and the
media is also doing its part to educate and inform the public. Nutrition and exercise are already
well integrated into our mainstream culture; it is growing rapidly and will continue to do so in
the future. People like the convenience of working out in the comfort of their own home and
need specific workout equipment for their homes. According to Statista.com sales of fitness
equipment for home use in the U.S. has grown from 3.18 billion U.S. dollars since the economic
recession in 2008 to an all-time high in 2013 of 3.58 billion U.S. dollars.
The Health and Wellness Industry has several other advantages. One advantage is that health
products are consumable so if you treat your customers well, they may habitually re-order from
you every month. Another advantage is that an increase in wellness product sales always leads
to an increase in customers and likely distributors. Over 87 percent of U.S. consumers take
some form of dietary supplement. According to Euromonitor International, multivitamin sales
reached about $4.9 billion in 2013.
Growth in active wear buoyed the total U.S. apparel market in the 12 months ending June 2014
(July’13—June’14), helping total apparel sales reach $206.3 billion, a 1 percent increase over
the prior year, according to The NPD Group. Active wear sales accounted for $33.7 billion,
representing 16 percent of the total apparel market, and have played a significant role in the
overall success of the total apparel market for the last two years. Consumers are wearing active
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wear not only to the gym, but also in the gym, from the gym, while they are working out, going
out, and even hanging out. Consumers are drawn to its comfort and versatility, and the fact
that it still makes a fashion statement. Active wear, by nature, also evokes a sense of
athleticismand wellbeing, adding to its appeal.
Analysis of Competitors
HPA’s direct competitor would be a private company, Onnit Labs LLC. Onnit is an Austin, Texas
based company focused on the sale of health and nutrition related products including
supplements, foods, and fitness equipment. One of the strengths of Onnit is the amount of
exposure they get from sponsoring the Joe Rogan Experience podcast. The podcast reaches
millions of loyal listeners worldwide. They also sponsor professional world class athletes in a
variety of sports such as combat sports, football, and hockey. All this exposure for the past
three years has made them relatively well-known in the health and fitness industry. They may
also have established brand loyal customers.
Market Segmentation
The health and wellness industry can be broken down into three major segments: price, age
and purpose of purchase. We can better focus our marketing efforts if we understand these
market segments.
Price is a main factor in the buying decision for anything. HPA believes in selling quality apparel,
supplements, and workout equipment for the competitive athlete and the average person at a
value price. Our prices will be lower than our competitors without sacrificing quality.
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Age is another factor on how we segment our markets. Age is important because people of
different ages may be looking for different products that they might need at that point in their
lives. A customer over the age of forty could be looking for a daily multivitamin to substitute
what they are not getting in their diet while a twenty-year old may look to put on muscle from
working out with a kettle bell.
The reason for the customer purchase is another factor in how the market can be segmented.
One reason for purchasing is to help improve customers’ athleticismin their chosen sport while
another purchase reason is simply to help customers live a healthier life. These two
subcategories can initially be treated as one category because of our limited product variety,
but as we grow we will add more products to target different purposes. For example, HPA is
currently only selling a multivitamin which can be marketed both to help athletes and also
marketed to someone trying to improve their health. In the future, HPA expects to have a wider
variety of supplements such as a protein powder for athletes to help them recover from a
workout.
Industry and Market Forecasts
HPA is selling products that are in three different industries, active wear, supplements, and
work out equipment.
According to The NPD Group for the 12 months ending June 2014, total apparel sales reached
each $206.3 billion. Active wear, representing 16 percent of that total apparel market,
accounted for $33.7 billion. We assume its increasing at 7 percent a year so we project active
wear sales in the U.S. to be at $38.58 billion in 2015.
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Euromonitor International has described the total multivitamin sales for 2013 at about $4.9
billion, and sales are expected to increase another 4 percent through 2013 to 2018. We
estimate a one percent increase in sales each year, so in 2015 we project approximately $5
billion in sales in the U.S.
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According to Statista.com, U.S. consumer fitness equipment wholesale sales for home use
reached $3.54 billion in 2012 and grew to $3.56 billion in 2013. We project $3.6 billion in sales
in 2015 (growing 0.5% annually) and the 2015 online portion of sales to be about
$468,000,000.
IV. Description of Venture
HPA is an internet based company founded by the owner Alex Reidy and has two other co-
owners of the company. HPA plans to make all sales via the internet. The website will allow
customers to browse for their needs, as well as learn about the products they purchase and
their proper use. For example, if a customer buys a kettle bell we will provide information on
proper workout techniques via email and will have videos uploaded to the website.
The products that HPA sells will help customers live a healthier lifestyle. The products include
active wear apparel, supplements, and workout equipment. As of now the active wear we sell
includes cotton T-Shirts, Sport-Tek Competitor shirts, and Sport-Tek Micro-Mesh reversible
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shorts. The current supplements we sell is a multivitamin for men and women, and the
supplement brainpower. Kettlebells are the initial workout equipment we sell.
V. Operations Plan
When a customer visits the HPA website and makes a purchase, the owner, Alex Reidy, will be
on call and ready to get the product shipped out as soon as possible. HPA will use Alex Reidy’s
home and garage for holding inventory. Inventory will be stocked based on how much a
particular product is selling.
HPA will start with 100 units in their active wear inventories, including 20 in size small, 20 in
medium, 20 in large, 20 in x-large, 20 and xx-large. When one of the sizes runs low, HPA will
make another 100 unit order that will consist of the most popular sizes. It will take two weeks
with free shipping from their supplier, CustomInk.
HPA will have starting inventory of 48 bottles of their multivitamin for both men and women
and 48 bottles of Brain Power. When there are 24 bottles left in inventory, HPA will make an
order for more 24 bottles from their supplier, NHS Labs Inc. It will take three to five business
days for the vitamins to be delivered from their U.S.- based supplier and will cost be $6 for
shipping.
HPA will have starting inventory of 20 kettle bells in the 4, 6, 8, and 10 kg. When there are 5
remaining in which ever weight, that weight will be restocked within seven business days. HPA
will use workoutzwholesale.com as their supplier.
VII. Marketing Plan
Pricing
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HPA’s pricing strategy is to provide value pricing for our products, but at the same time still
receiving a quality product. This advantage should not negatively impact our profit and we have
enough margins built in to also allow us to absorb costs of any possible customer discounts and
promotions.
Distribution
HPA will distribute its products to its customers using the U.S. Postal Service. They will be using
a one-stage distribution channel, where the product goes from manufacturer to retailer to
consumer. The owner, Alex Reidy, will be the one packaging and shipping its products. Using
the USPS for shipping, a 1lb package will cost $6.51 and 2lb package will cost $8.26 to ship
anywhere in the U.S. Delivery should arrive to the customer in one to three business days.
HPA’s return policy is 20 day full refund guaranteed (customer will pay shipping for returns) and
HPA will also pay for the shipping to deliver to the customer. HPA will monitor shipping costs
and use alternate shipping providers including USPS and FedEx when it is cost effective.
Promotion
HPA will start promoting using social media sites. A major social media site that will be vital for
promoting HPA’s products will be Twitter because of the large amount of people that can be
reached instantly at any time. HPA has strategic partnerships with Mixed Martial Artists and
Brazilian Jiu-Jitsu legends Renzo Gracie and Rolles Gracie. The owner, Alex Reidy, is a student
under Rolles Gracie and sees him on a weekly basis. Alex Reidy also trains with Renzo’s son,
Ruran Gracie. Renzo Gracie has 160,000 Twitter followers and Rolles Gracie has almost 26,000
followers. That means that about 186,000 potential customers from the target market can be
reached instantly. Both Renzo and Rolles can tweet about special deals, promotions, or just
letting people know that HPA is in business. Renzo and Rolles Gracie being some of the best Jiu-
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Jitsu fighters in the world have contacts with some of the best Mixed Martial Artists in the
world. This connection can be help HPA sponsor recognizable fighters. In return for these
promotions HPA will have promotional links to their websites and promote any upcoming
events and seminars for them.
Product Forecast
Of the $468,000,000 in sales projected for 2015 online purchases for consumer fitness
equipment for home use HPA’s goal is to get a market share of 0.0000024 percent of those
projected sales. This translates to about $1,123.20 in domestic gross sales revenue in the first
year. HPA also expects to double sales revenue each year for its first three years.
Projected2015 Projected2016 Projected2017
Total Revenues 1,123.20 2,246.40 4,492.80
Cost of Goods Sold 915.65 1,831.30 3,662.60
Pre-tax Income (Loss) 207.55 415.10 830.20
Of the $5,000,000,000 in sales projected for 2015 in Multivitamins, HPA’s goal is to get a market
share of 0.00000041 percent of those projected sales. This translates to about $2,050 in
domestic gross sales revenue in the first year. HPA also expects to double sales revenue each
year for its first three years.
Projected2015 Projected2016 Projected2017
Total Revenues 2,063.28 4,126.56 8,253.12
Cost of Goods Sold 1,444.80 2,889.60 5,779.20
Pre-tax Income (Loss) 618.48 1,236.96 2,473.92
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Of the $38,580,000,000 in sales projected for 2015 in active wear apparel, HPA’s goal is to get a
market share of 0.000000105 percent of those projected sales. This translates to about
$4,050.90 in domestic gross sales revenue in the first year. HPA also expects to double sales
revenue each year for its first three years.
Projected2015 Projected2016 Projected2017
Total Revenues 4,048.50 8097.00 16,194.00
Cost of Goods Sold 3,037.50 6,075 12,150
Pre-tax Income (Loss) 1,011 2,022 4,044
VIII. Financial Plan
Human Potential Athletics, Pro Forma Income Statement, First Year by Month
Jan Feb. Mar. Apr. May June July Aug. Sept. Oct. Nov. Dec. Total
Sales 149.17 238.6
8
358.0
2
522.
11
658.
86
745.
87
745.8
7
745.
87
602.92 602.9
2
895.
05
969.
64
7,234.98
Less:Cost of
GoodsSold
111.29 178.0
8
267.1
2
388.
54
491.
57
556.
49
556.4
9
556.
49
449.83 449.8
3
667.
79
723.
44
5,397.95
Gross profit 37.88 60.60 90.90 133.
57
167.
29
189.
38
189.3
8
189.
38
153.09 153.0
9
227.
26
246.
2
1,837.03
Operating
expenses
Utilities 100 100 100 100 100 100 100 100 100 100 100 100 1,200
Advertising 0 0 0 0 0 0 0 0 0 0 0 0 0
Supplement
label fee
225 0 0 0 0 0 0 00 0 0 0 0 225
Wovenlabels 145 0 0 0 0 0 0 0 0 0 0 0 145
Website cost 6,000 6,000
Site
maintenance
250 0 250 0 250 0 250 0 250 0 250 250 1,750
Total
operating
expenses
6,720 100 350 100 350 100 350 100 350 100 350 350 9,320
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Human Potential Athletics, Pro Forma Balance Sheet, End of First Year
Assets
Currentassets
Cash $6,548.80
Accountsreceivable 237.75
Inventory 503.46
Total currentassets $7,290.01
LiabilitiesandOwners’ Equity
Currentliabilities
Accountspayable $313.15
Total liabilities $313.15
Owners’equity
Alex Reidy 10,000
AnnaReidy 5,000
N.Kalaschnikow 5,000
Retainedearnings (13,023.14)
Total owners’equity $6,976.86
Total liabilities andowners’ equity $7,290.01
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Human Potential Athletics, Pro Forma Sources and Applications of Funds, End of First Year
Source of funds
Personal fundsof founders $20,000
Netincome (loss) fromoperations (7,482.97)
Total fundsprovided $12,517.03
Applicationof funds
Inventory $503.46
Total fundsexpended 503.46
Netincrease inworkingcapital 12,013.54
$12,517.03
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The average selling price of an item from HPA is $29.99
The average variable cost of making an item is $23.01
The total fixed cost is $9,320
In order for HPA to break even they will need to sell about 1,335 units at $29.99 to break even.
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