2. 1
Executive Summary
Insolar Apparel is a startup photovoltaic apparel company based in Providence,
RI that seeks partnerships with manufacturers and retailers. Insolar Apparel aims to
create high quality, fashionable clothing and accessories that harness the power of the
sun through the use of photovoltaic technology. All of the items in the Insolar Apparel
line are capable of storing enough power to charge small electronic devices daily. When
consumers use Insolar Apparel to charge their devices, off grid power is provided.
Insolar Apparel also aims to increase awareness of environmental issues by
demonstrating that fashion and environmental consciousness go hand in hand.
Key Goals:
To be profitable by year 3
To repay investors by year 10
To achieve high brand equity by year 3
Strategic Priorities:
Fashion
Quality
Convenience
Off-Grid Power
Awareness
Financial Highlights:
Internal rate of return for first 5 years is 54%
Breakeven occurs at year 2.7, with net present value at year 3 equal to $40,857.72.
Net present value at year 5 is $146,624.41.
3. 2
Table of Contents
The Business
A. Description of Product or Service ………………………………………………………….….3
B. Market and Marketing Plans……………………………………………………………………….5
C. Competition…………………………………………………………………………………….………….8
D. Management and Personnel …………………………………………………………………....10
E. Manufacturing and Operations………………………………………………….……………...11
F. Location…………………………………………………………………………………………………….12
G. Summary…………………………………………………………………………………...………………13
Financial Data
H. Capital Equipment list for first 12 months………………………………………………13
I. Other Startup Expenses……………………………………………………………………………13
J. Cash Flow Estimate Assumptions…………………………………………………………….14
K. Breakeven Analysis…………………………………………………………………………………..15
L. Funding Information………………………………………………………………………………..15
M. Returns to Investors…………………………………………………………………………………15
N. Exhibits
I. Exhibit A: Year 1 Cash Flow ………………………………………………………….17
II. II. Exhibit B: Year 2 Cash Flow ……………………………………………………...17
III. Exhibit C: Year 3 Cash Flow ………………………………………………………….18
IV. Exhibit D: Year 4 Cash Flow …………………………………………………………18
V. Exhibit E: Year 5 Cash Flow ………………………………………………………….19
VI. Exhibit F: Production Schedule ……………………………………………………19
VII. Exhibit G: Production Cost and Retail Determination ………………....20
VIII. Exhibit H: Breakeven Analysis ………………………………………………………21
IX. Exhibit I: Examples of Apparel……………………………………………………....22
O. Works Cited ……………………………………………………………………………………………23
4. 3
The Business
A. Description of Product or Service
Insolar Apparel, LLC is a fashionable, affordable line of solar apparel and
accessories. Insolar Apparel aims to bridge the gap between rugged sports gear and
absurd runway looks in the realm of environmentally conscious clothing while raising
awareness for environmental issues and making a profit.
The Strategic Priorities of Insolar Apparel are:
Fashion
Quality
Convenience
Off-Grid Power
Awareness
Fashion, Quality, Convenience
Three main strategic priorities of Insolar Apparel are fashion, quality, and
convenience. Insolar Apparel aims to produce fashionable clothing that is
environmentally friendly. These will be items a normal person could wear there will not
be runway looks included in the line. Quality is also extremely important. To maintain a
positive image, and have less impact on the environment, Insolar Apparel will opt for
the highest quality materials and use the least materials possible for its products. Care
will also be taken to incorporate fair trade practices into sourcing the materials the
manufacturer will use to fabricate the products. Insolar Apparel will focus on materials
like recycled polyester, organic cotton, and linen (14). Leather will not be used in the
designs and plastics will be used only at necessity (15). Convenience is also a strategic
priority. Insolar Apparel Products are convenient in that they provide off grid power that
is portable and easily accessible and can save both time and money.
5. 4
Power Grid Burden
Currently, 147.9 million U.S. individuals own smartphones (2). Using average data
for the iPhone 5 and Samsung Galaxy S III, two of the most popular smartphones, each
year charging a smartphone costs approximately 4.2 kWh of electricity (3). This value is
not alarming by itself. However, it does indicate that in the U.S. around 621.18 GWh per
year are used aggregately for this purpose. This value does not include the impact of
traditional cell phones. In addition using an iPad as an estimate for energy costs of all
tablets, a tablet costs around 12 kWh of electricity per year for charging (5). At the
moment, 34% of the U.S. population owns a tablet computer (6). This means an
estimated 106.73 million out of 313.9 million people own tablets (9). As a result about
3766.8 GWh per year of electricity are spent annually for tablet charging. The typical
laptop uses nearly 72kWh per year for charging (10). Since 76% of the U.S. population
owns at least one laptop, this indicates approximately 17,177 GWh, or 17.18 TWh, are
used per year for laptop charging (1,10). If consumers used Insolar Apparel to charge
these products as much as 21565 GWh of electricity burden could be lifted off of the
power grid.
Awareness
Even more than mitigating burden on the power grid, Insolar Apparel aims to
encourage changes in lifestyles that are healthy for both individual and environment.
This will occur because the use of Insolar Apparel product mandates spending lots of
time in sunlight. When people spend more time outside they are more likely to be
physically fit and less likely to operate appliances in their homes that make a larger dent
on household electricity consumption such as televisions, air conditioners and lighting
6. 5
fixtures. In addition, these individuals will develop more of an appreciation for their
local ecosystem through their time spend outdoors (14). According to 2012 U.S. Energy
Information Administration estimate, an average U.S. household consumes 10,837 kWh
per year (12). The possession and use of Insolar Apparel products will necessarily reduce
this value by an amount more than foregone electricity cost of smartphone or tablet
charging.
Moreover, Insolar Apparel aims to raise awareness by reminding consumers that
their daily activities have an impact, no matter how large or small. While portable device
charging makes up less than 5% of yearly household electricity consumption, the use of
Insolar Apparel products will keep the reality that every kWh of electricity used has a
cost. This consciousness will encourage individuals to more closely watch the varied
ways in which they use electricity and other forms of energy (14).
The Products
Insolar Apparel plans to launch a comprehensive year round line consisting of a tote,
blouse, light jacket, dress, and coat. In addition, a fashionable dog coat will be
produced. Every product will be made with strategically placed photovoltaic strips and
circuitry that allows the energy stored to be accessed through USB charging extensions.
It is estimated that each Insolar Apparel product can store up to 8 Watts at a time. This
will require approximately 3 hours in full sunlight. Exhibit I includes detailed sketches of
some Insolar Apparel, LLC products.
B. Market and Marketing Plans
Target Market
7. 6
The target market for Insolar Apparel is comprised of environmentally
conscious women between the ages of 15 and 35 who live in areas that get lots
of sunlight, or are known for environmental consciousness. Within this subset,
individuals from households with annual household incomes between $ 80,000
and $ 250,000 will be targeted (1,7). Individuals in this bracket like to be
associated with high-quality, innovative products but may not want to pay a
premium price for a certain brand (2). This bracket includes high school age girls,
college students, and young educated professionals. In the U.S., this market is
comprised of approximately 128.7 million people (7). Clearly, this bracket
includes Brown and RISD students.
Marketing Strategy
Given the nature of Insolar Apparel and the fact that it is a startup,
innovative, low cost marketing tactics must and will be utilized. Sponsorship and
participation in competitions and awareness campaigns will double as marketing
opportunities. Giveaways will also serve as a marketing platform. Insolar Apparel
plans to give away mostly totes and dog coats, as these products are extremely
useful and have lower production costs than other products in the line.
Advertisement and Public Image
Initially, most advertising will be done via the brand website,
InsolarApp.com, social media, and word of mouth. This will be supplemented by
partnerships with environmental advocacy groups in Los Angeles, CA, Phoenix,
8. 7
AZ, Austin, TX, as well as Providence, RI to increase positive visibility of the brand.
The image Insolar Apparel wishes to present is one of positivity and responsibility
(14). These two factors will attract customers and encourage them to purchase
our products.
After fiscal year 7, expansion into existing boutiques in populous U.S. cities
that get a high amount of solar insolation will occur. Following year 7, Insolar
Apparel’s net present value will be $278,271.34 and revenue from that year will
be nearly $98,000.00. This will indicate to boutiques that Insolar Apparel is
profitable and a brand that will bring customers to their shop. Following 2 years
of steady growth in boutiques, Insolar Apparel will launch its own shops.
Ultimately more focus will go to areas where higher concentrations of people
express interest in Insolar products or could be potential consumers.
Pricing
Pricing of Insolar Apparel products is reasonable. After a standard 60%
markup from production costs, certain items undergo higher markups due to
their seasonality or other market factors. For instance, the coat has a much higher
markup because of market pricing of similar coats (14). In addition, the dog coat
has been marked up higher because market analysis demonstrates that
individuals purchasing clothing of this caliber for their dogs are willing to pay a
significantly more (20). Final retail prices for dog coat, tote, blouse, jacket, dress,
and coat are $15.00, $12.99, $20.99, $27.99, $34.00, $62.99 respectively. Exhibit G
shows more about the method of retail pricing.
9. 8
C. Competition
Competitors
While no apparel companies currently fill the niche Insolar Apparel occupies,
there are several in existence that offer photovoltaic apparel or similar portable devices
and would be able to start a similar line. These include Wearable Solar, Zegna, Soletics,
and Solio.
Company Product Price Range Target
Market
Description
Wearable
Solar(16)
2014
Oloid
Collection
$400-$1500 Ages 18 to 40 Specializes in high end,
photovoltaic infused women’s
apparel.
Zegna (17) Echotech
Solar
Jacket
$100-$700 Men ages 16
to 34
Specializes in high end,
ecofriendly, trendy menswear
Soletics(18) Smart
Jacket
Smart
Gloves
$100-$700 Ages 14 to 50 Offers jacket and gloves that
use solar panels and
piezoelectrics to convert
sunlight and motion into
energy.
Solio(19) Bolt
Portable
Solar
Charger
$50-$150 Ages 16 to 55 Specializes in handheld or
portable solar technology.
Analysis of Potential Competition
It is important to be aware of competition and make efforts to most effectively
compete against it. Wearable Solar, Zegna, Soletics, and Solio all pose a threat of
competition.
Wearable Solar is a high priced brand that produces runway looks that are
outfitted with photovoltaic cells or strips. A typical item from the 2014 collection is
10. 9
capable of charging a smartphone completely with 2 hours of sun exposure. It should
also be noted that Wearable Solar utilizes leather and polyvinyl chloride in its designs.
Zegna is a men’s wear producer that has created a jacket outfitted with
photovoltaic strips and capable of charging small electronic devices. While the concept
for this jacket has been renewed, Zegna has not demonstrated success in bringing any
other clothing items with similar functions to market. Nevertheless, Zegna is well
respected for its pioneering efforts in developing eco-friendly men’s clothing.
Soletics is a startup that has developed technology that converts insolation and
motion into stored energy with the use of photovoltaic panels and piezoelectric
materials. Currently, Soletics is not fully funded, but the developers have put a great
deal of research into their product thus far.
Solio specializes in handheld portable devices that use solar panels to collect and
store solar energy. While Solio does not produce clothing, they are a leader in the realm
of portable solar products and could easily put capital into a clothing line.
Situational Analysis
Strengths:
Good quality and good for
environment
Trendy and Useful
Target market is well understood
Network of potential consumers
has already been established
Strategic Response
Enhance strategic strengths by
aggressively marketing and maintain a
positive public image and high quality
production.
Weaknesses:
Newcomer to market
Limited cash flow
Using conventional solar
technology
Strategic Response
Stay cognizant of market trends, cut costs
where possible and invest in solar
technology research.
11. 10
Opportunities:
Gaps exist in market that can be
filled by Insolar Apparel products
Room to expand in U.S. markets
and abroad
Opportunities for low cost
marketing
Strategic Response
Demonstrate to consumers that Insolar
Apparel is a product they need and stay on
top of global trends. In addition, deepen
connections with environmental advocacy
groups worldwide.
Threats:
Competitors are able to put
capital into a similar brand
Competitors have high brand
equity
Strategic Response
Differentiate Insolar Apparel products from
the products of competitors, keep prices
reasonable emphasize the lifestyle the
product implies.
D. Management and Personnel
Messhia Young is one of two members of Insolar Apparell, LLC. She is a mechanical
engineering concentrator at Brown University who wishes to apply her skills and
knowledge to solve environmental issues and be profitable. At Insolar Apparel, LLC, Ms.
Young is both CEO and CFO.
Stephanie Haro is the second member of Insolar Apparel, LLC. She is an electrical
engineering concentrator at Brown University who is passionate about animal rights and
environmental activism. In addition, Ms. Haro enjoys designing clothing in her spare
time. Ms. Haro is the chief designer at Insolar Apparel, LLC.
Insolar Apparel is incorporated as an LLC in which Messhia Young possesses 75%
ownership. In exchange for her design input, Stephanie Haro, a fellow colleague at
Brown, has been given 25% ownership of Insolar Apparel.
12. 11
To keep startup costs low, there will not be any new hires until year 3, at which net
present value will be $90,985.98. At this point the company will be profitable and able
to hire individuals that will move the company forward. Hiring will focus on college
interns from Brown and RISD who are interested in environmental issues, electrical
engineering, or photovoltaics. College interns can be paid significantly lower wages
than their graduate counterparts. In addition, interns will bring fresh trains of thought to
the design and marketing approach of Insolar Apparel.
E. Operations and Manufacturing
Initially, all designs and protoypes will be developed as a collaboration
between Ms. Young and Ms. Haro. Both will contribute to product design,
fabrication, and testing to ensure safety. Prince Laboratory at Brown University
will be utilized as a base location for these operations.
Insolar Apparel will not conduct its own manufacturing. Rather, rigorous
testing on all prototypes will be conducted in order to ensure the product can be
manufactured without setbacks. The designs will be manufactured by a U.S.
manufacturer that is capable of producing smaller batches. Again, to keep startup
costs low, Ms. Young has arranged for her parents to store merchandise in their
home in Dallas, TX. Ms. Young’s parents will also facilitate shipping to customers,
which will be absorbed into their purchase amount when they order Insolar
Apparel products online.
The forecasted production schedule includes heavy production of seasonal
wear centered around February, August, and October. Non seasonal items, like
the dog coats and totes, will be manufactured equidistantly throughout each
13. 12
year. The production schedule for year 1 has been included as Exhibit F. Given
the production schedule, production costs will be more highly concentrated in
the second half of the year. This will be necessary to meet the consumer demand
that comes with holiday shopping in November and December. As an example :
F. Location
Locations of current partnerships include Providence, RI, Austin, TX, Phoenix, AZ,
and Los Angeles, CA. Austin, Phoenix, and LA all receive copious amounts of sunlight
and have thriving environmentalist communities. Providence, RI does not receive quite
as much sun, but has a student body that is very environmentally conscious. In addition,
Ms. Young is a Brown University student and has many connections with student groups
on campus.
Currently, there is no physical location of the business. However, when cash flow
is sufficient an office space will be purchased in Austin, TX. Out of the four focus cities,
Austin, TX has the lowest cost of living, which will mean it will be easier to find a good
$-
$2,000.00
$4,000.00
$6,000.00
$8,000.00
$10,000.00
$12,000.00
0 1 2 3 4 5 6 7 8 9 10 11 12
ManufacturingCost
Month
Manufacturing Costper Month
14. 13
deal on a modest office space for rent. At that time, Austin will become the new base of
operations for Insolar Apparel.
G. Summary
In Summary, Insolar Apparel, LLC is a clothing company that aims to be profitable,
fashionable, high quality, and convenient. In addition Insolar Apparel clothing provides
off grid power and raises awareness for environmental issues linked to electricity
production and consumption. While there is a great deal of innovation in photovoltaic
consumer goods, there are few brands that offer reasonably priced clothing that a
typical person would wear. Insolar Apparel intends to bridge the gap that exists in this
field between sports gear and high priced runway looks. The market is ripe for this type
of product, as a result, profitability is projected by year 3.
Financial Data
H. Capital Equipment list for first 12 months
Since the Insolar Apparel will not perform its own manufacturing, capital
equipment necessary is mostly for design and prototyping activities. This includes 10
pairs of scissors, 100 spools of industrial strength thread, one Juki sewing machine, 500
square yards of linen, organic cotton, and recycled polyester, 100 yards of flexible
photovoltaic strips or panels, and assorted circuit elements. In total, this list is valued at
an estimated $2260.00.
I. Other Startup Expenses
15. 14
Other startup expenses include the cost of incorporating as an LLC. This
cost is estimated at $1500. In Exhibit A, capital equipment and unforeseen startup
expenses have been reflected as lost revenue in months 1 and 2 of year 1.
J. Cash Flow Estimate Assumptions
In estimating monthly and quarterly cash flow a production schedule was used to
determine revenue and production cost for each period. Revenue is projected to be
higher around October and November, while lower near January and February as a
combination in less demand and less production at this time of the year. In estimating
cash flow it was assumed that variable costs, the cost of manufacturing, increased 15%
per year. Sales are also projected to increase 15% per year. For year 1, the total
manufacturing cost is $32,400. In addition, fixed costs increased at 3% per year. Fixed
costs included costs for general running of the business:
Website Development: $1400
Research and Testing: $2500
Shipping: $200
Marketing: $750
Another assumption made in calculating cash flow is that the market will
continue to follow current trends and that consumer’s demand for ecologically friendly
apparel will increase according to projections. Yet another assumption is that all
products produced at the beginning of a month will be sold by the end of the month.
This simplifies the analysis and alleviates the need for depreciation analysis. Since a low
volume of products are being manufactured, this is a reasonable assumption. Exhibits A
through E demonstrate monthly cash flow for year 1 and quarterly cash flow for years 2
16. 15
to 5.
Total cash flow for year 1 amounts to $27,184. For year 2, this is estimated at $44,268.70,
while for year 3 this value is $51,878.98.
K. Breakeven Analysis: When the net cash flow will exceed initial investment
Breakeven time was determined by taking the average of the years leading up to
and including the first year of positive cash balance, and applying the typical breakeven
equation to this value. As a result: Breakeven Time =
((70,000/(AVERAGE(27,184.17+44,268.70+51,878.98)/12))/12)+1 = 2.7 years. The net cash flow
will exceed the initial investment of $70,000.00 in year 2.7. More specifically around
mid-August of year 2. At this time, the company will technically be profitable. Exhibit H
demonstrates the method used to conduct breakeven analysis.
L. Source of Funds Amount of Equity asked for, Percentage of Ownership offered
The source of funds for Insolar Apparel are family and friends. The amount of
equity asked for is $70,000.00. This amount will be sufficient to cover all startup costs
and also allow for unexpected changes in the market of production costs. However, it
will not offer so much financial cushioning that Insolar Apparel will not be able to waste
these funds. Since these angel investors are family and friends, no percentage of
ownership will be offered. However, the loan will bear a 5% interest rate.
M. Returns to Investors
Insolar Apparel will break even in 2.7 years. At year 4, the plan is to begin paying
investors back. Interest on the loan has been taken into account in estimating cash flow.
However, actual repayment of the loan has not been accounted 4. At year 4, cash
17. 16
balance is projected to be $90,895.98. Starting in year 4, at least 12% of yearly earnings
will be set aside for repayment to the investors until the full $70,000.00 amount plus
interest has been paid back.
18. 17
N. Exhibits
O. Works Cited
1. http://www.pewinternet.org/fact-sheets/mobile-technology-fact-sheet/
2. https://www.comscore.com/Insights/Press_Releases/2013/11/comScore_Reports_
September_2013_U.S._Smartphone_Subscriber_Market_Share
3. http://lifehacker.com/5948075/how-much-energy-a-smartphone-uses-in-a-year-
and-what-it-means-for-your-budget
4. http://www.tech-pundit.com/wp-
content/uploads/2013/07/Cloud_Begins_With_Coal.pdf?c761ac
5. http://gigaom.com/2012/06/21/so-how-much-does-it-cost-to-charge-an-ipad-
every-year/
6. http://www.forbes.com/sites/benedictevans/2012/10/02/how-many-tablets-are-
in-the-usa-and-does-it-matter/
7. http://www.forbes.com/sites/benedictevans/2012/10/02/how-many-tablets-are-
in-the-usa-and-does-it-matter/
8. http://www.pewinternet.org/files/old-
media/Files/Reports/2013/PIP_Tablet%20ownership%202013.pdf
9. http://www.census.gov/popclock/
10. http://www.forbes.com/sites/christopherhelman/2013/09/07/how-much-energy-
does-your-iphone-and-other-devices-use-and-what-to-do-about-it/
11. http://www.eia.gov/cfapps/ipdbproject/IEDIndex3.cfm?tid=2&pid=2&aid=2
12. http://www.eia.gov/tools/faqs/faq.cfm?id=97&t=3
13. http://www.eia.gov/forecasts/aeo/er/early_consumption.cfm
14. Dietz, Thomas, G.T. Gardner, J. Gilligan, P.C. Stern, and M.P. Vandeburgh. 2009.
Household Actions Can Provide a Behavioral Wedge to Rapidly Reduce U.S.
Carbon Emissions. PNAS 106:18452-18456
15. http://www.natural-environment.com/blog/2008/04/10/17-eco-friendly-fabrics/
16. http://www.WearableSolar.nl
17. http://www.Zegna.com
18. http://www.teamSoletics.com
19. http://www.Solio.com
20. http://www.doggievogue.com
