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COB 300 Business Plan

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COB 300 Business Plan

  1. 1. Section 1 Team 5 Summer 2016 Business Plan TreeTop, LLC BabyPack is TreeTop’s flagship product. It is a portable cooling/heating system for baby bottles. John Beer beerjf@dukes.jmu.edu Rob Farrell farrelrt@dukes,jmu.edu Samantha Kynett kynett@dukes.jmu.edu Patrick Moran moranpc@dukes.jmu.edu Alex Peery peeryab@dukes.jmu.edu Emma Sawyer sawyerec@dukes.jmu.edu
  2. 2. Executive Summary Treetop LLC Alex Peery 1048 Lois Lane,Harrisonburg,VA,22901 Phone: 1 (434) 987-9327 E-mail: Peeryab@dukes.jmu.edu Management: Titles: General Manager,General Marketing Manager,General Operation Manager Industry: 44813 -Children's and Infants' Clothing Stores Number of Employees (year 1): 48 Amountof Financing Sought: $2,000,000 Debt-0% Equity -100% InvestmentSources: ● Venture Capital:(100%) -$2,000,000 Use of Funds: Equipment,materials,marketing,facilities,utilities, salaries,distributionsetupcosts,SG&Aexpenses Productselling price:$40.00 to distributors (wholesale) $59.99 online(retail) Business Description: TreeTop is an LLC operating out of Tualatin, Oregon. Our product is the BabyPak, a portable heating and cooling device forinfant milk. Our goal is to provide time-saving products to parents on the go,thus saving ourcustomers time and energy. We will partner with distributors such as Target and Amazon as well as conducting businesson our website.This willallow us to reachourtarget markets of parents nationwide. Products/Services: The BabyPak,our primary offering,is an all-in-one portable baby bottlewarmerand cooler.By utilizing a reusable ice pack and a rechargeablebattery,the BabyPak will eliminate the need to keep track of multipleitems related to the same parenting task, making it the first product ofits kind.We estimate that our cost per unit on average will be $20.93. Competitive Advantage: Our patented design does what no other market offering does by combining two separate products into one convenient package at a reasonable cost. Markets: Our primarytarget market is mothers of children under one year of age in the U.S.and Canada.This is an estimated 4,500,000 people, with an annual growth rate of10% over five years.Oursecondarymarket is fathers in a male only household, currently at a figure of 2,600,000 people and a 0.63% growth rate over five years. Distribution Channels: We willsellthroughour onlineecommerce store,as wellas through partnerships withTarget and Amazonas distributors. Competition: Our direct competition is othersuppliers ofportablebaby bottlesystems.Munchkin,Medela,and TommeeTippee are among the largest contenders inthat market.Indirect competitors are thosewith stationary bottlewarmers such as First Years and Dr.Browns,as well as motherswhoprefer to breastfeeddirectly. Financial Projections (Unaudited): 2017 2018 2019 2020 2021 Revenue $4,759,483 $6,519,817 $7,910,082 $9,822,839 $11,166,346 EBIT $(131,201) $324,579 $673,691 $1,375,193 $1,481,270
  3. 3. Elevator Pitch Portability and convenience are essential features for today's customers. TreeTop’s aim is to provide both features for mothers and fathers around the world with our patented, one of a kind heating and cooling system, the BabyPak. Parents will be able to quickly warm milk for feeding time and store any unused milk in a cooled environment to prevent spoilage. This product can be used anytime, anywhere, creating significant value for the consumer. Being a parent is hard enough! Our hope is to ease their strain and reduce the chaos in their day to day lives. Product Description (See supplement on Exhibit 16) TreeTop, LLC’s product is the BabyPak, which is a small pouch for mobile cooling and heating of milk (or infant formula). The pouch is in a rectangular shape and has two sealable compartments, one for cooling and the other for heating. The cooling side has a removable and reusable ice pack surrounded in insulation to ensure cool temperatures are maintained. The heating compartment contains battery powered heating coils, and a rechargeable battery equipped with a USB port. Also provided with the purchase are three convenient, serving size (7fl.oz.) baby bottles and two ice packs. This product will be offered in Target as well as through online orders via Amazon and TreeTop’s website. The price of the product, direct to customers, is $59.99. Competitive Advantage Our patented design does what no other market offering does by combining two separate products into one portable package, without substantial increase in cost to consumers. This provides us with a short-term advantage. Long-term, we plan to research and develop even smaller and more portable products capable of heating any type of liquid, keeping us competitive and relevant in the market. We will also find an advantage in our employees by hiring and retaining those who share our company values. Value Proposition The major advantage of our product is that of convenience. With current market offerings, parents have to keep track of multiple, bulky items to accomplish the task of travelling with milk or formula. Our product will eliminate this hassle by combining two separate functions into one
  4. 4. package. Parents value ease and functionality, and so reducing the number of steps that it takes to accomplish a given task gives our product an edge. Business Strategy TreeTop is a niche startup operating in the baby product industry. We separate ourselves from our competition through our process efficiency, cost control, and our patented design. In order to differentiate ourselves in an industry dominated by low-cost, high production giants, TreeTop delivers a fresh new approach to portable infant care. In keeping with our superior product, we will be utilizing a value-based costing system. As a make-to stock organization, we will hold inventory short term for weekly shipping to local distributors as well as constant, long-term inventory for online sales. To avoid supplier shortages or excess demand, we will keep a safety stock of 5% of estimated sales on hand. Business Location TreeTop, LLC will be located in Tualatin, Oregon. All of the purchased materials needed for the BabyPak will be shipped from China. Therefore, having our facility next to a major port – Portland - that offers fast shipping times from China is essential. In the case of unexpected circumstances in this port, our sales and logistics teams will be prepared to transfer shipping to the port of Seattle. In case of issues with suppliers in China, our secondary purchasing partners in North America would be utilized. The majority of our sales are projected to be through online orders, but about 30% of sales will be through our main brick and mortar partner – Target – which has distribution centers within 200 miles of our facility. Outsourcing Logistics include delivery of materials from the Portland or Seattle ports to the factory as well as being responsible to deliver finished goods to our local Target distributor and handle all shipping for orders online.
  5. 5. Purchasing Associates 1 Customer Service Representatives 2 IT Specialists 2 * All employees will be full timeemployees in the company. * Year 2 and 4 will add 11 full-timeworkers and 1 manager. * Year 3 and 5 will add 8 full-timeworkers, Year 5 would havean additional manager. * Year 5 will see the addition ofa R&D specialist. Footnotes: 1. General Manager will have manyyears of experience working in thebaby-product industrythat has managed product divisions for otherbaby product companies and is well versed in managing and expanding thecompany. 2. Market Manager will create marketing strategies and develop new or modified versions oftheproduct. Hewill be responsible for conducting market research, identifying theneeds and wants oftheconsumers, and develop forecasting figures to which he/shemust attain using theresources at his/herdisposal. 3. General Operation Manager will implement, direct, and coordinate with his/herstaffin order to be as efficient and effective as possiblewith thematerials that are provided, but maintain thequality, functionality, and safetyof the products and the workers. He/shewill be responsibleforinventorying ofproducts and working with distributors and supplychain to insurethat products can bemadeand that orders can be filled. Exhibit 1: Organizational Chart
  6. 6. Position Title Salary Wage (Range) Actual pay Projected Mandatory payroll taxes Benefits Total Taxes and Benefits Total Cost Cumulative Year 1 Cost General Manager $150,000-$200,000 $150,000 $10,731.40 $23,272.30 $34,003.70 $184,004 $184,004 Accountant $60,000-$70,000 65,000 $6,509.90 $13,936.90 $20,446.80 $85,447 $85,447 Marketing Manager $110,000-$120,000 $113,000 $10,277.90 $22,092.10 $32,370.00 $145,370 $145,370 Sales Associates (Sales Representative) $60,000-$70,000 $63,500 $6,392.15 $13,685.44 $20,077.59 $83,578 $167,155 Customer Service Representative $30,000-$40,000 $34,840 $4,088.78 $8,092.10 $12,180.88 $47,021 $94,042 Marketing Associate $60,000-$70,000 $64,500 $6,470.65 $13,853.08 $20,323.73 $84,824 $169,647 Information Technology Specialist $55,000-$60,000 $59,960 $6,114.26 $13,091.99 $19,206.25 $79,166 $158,333 Operations Manager $95,000-$105,000 $99,920 $9,251.12 $19,886.81 $29,137.93 $129,058 $129,058 Shipping and Logistics Manager $70,000-$80,000 $71,010 $6,981.69 $14,944.42 $21,926.11 $92,936 $92,936 Purchasing Associate $50,000-$60,000 $50,950 $5,406.98 $11,581.56 $16,988.54 $67,939 $67,939 Shipping and Logistics Team Member $33,000-$43,000 $33,160 $3,913.22 $7,848.50 $11,761.72 $44,922 $44,922 Assembly Line Manager $50,000-$60,000 $55,330 $5,750.81 $12,315.82 $18,066.63 $73,397 $146,793 Assembly Line Worker $16.62/hr $30,581 $3,643.69 $8,166.87 $11,810.56 $42,391 $1,229,349 $2,714,994 Notes for Cost Chart 1) All salaries are averages from http://www.bls.gov/oes/current/oes_or.htm#13-0000-0000. 2) Total Salary increased in year 2 because we hired 11 additional factory workers and 1 additional manager. 3) Total Salary increased in year 3 because we hired 8 additional factory workers. 4) Total Salary increased in year 4 because we hired 11 additional factory workers and 1 additional manager. 5) Total Salary increased in year 5 because we hired 8 additional factory workers and 1 additional manager. 6) All workers are required to pay mandatory payroll taxes: FICA, FUTA, SUTA. 7) 3 levels of Benefits. -Top tier: 3 weeks paid Vacation, 1-week unpaid vacation, 401(k) with 6% contribution rate, 6-month maternity leave, and holidays. -Middle tier: Full benefit package with reduced contribution rate on 401 (k)- 4.4%. -Lower Tier: full benefit package with paid vacation reduced to 2 weeks, and no company 401 (k) plan. 8) Tax rates were based on the 2016 tax rates 9) Maternity leave value was found by taking 10% of the total semi-annual salary average across the company, and spread across all employees 10) Life insurance is costed at 8.4% of total annual income 11) 401 (K) is estimated at an employee savings rate of 6% of annual income, and we contribute 4.4% for middle tier benefits, and 6% on top Tier benefits. 12) Workers compensation is costed at 2.1% of total annual salary across the company. 13) Listed pay is for 12 months 14) We received our health insurance quote from Bankrate.com, and provided health insurance because we see it as a necessary benefit for workers in our industry. 15) The Medicare rate is 1.45% and the social security rate is 6.4% on the first $118,500. These figures were used to find tax expense. 16) Training costs are included in annual salary. Year Social Security Medicare Workers Comp FUTA SUTA Health Benefits 401(k) 3 Weeks Paid Vacation 6 Month Maternity Leave Total $106,371.20 $24,099.73 $34,903.05 $17,024.00 $32,155.24 $139,612.20 $2,514.00 $98,396.60 $115,531.40 $570,607.41 $181,954.43 $41,224.05 $59,703.80 $33,600.00 $61,902.57 $238,815.19 $2,806.14 $169,255.88 $228,022.50 $1,017,284.56 $286,895.23 $64,999.70 $94,137.50 $56,896.00 $103,576.41 $376,549.99 $3,098.28 $267,637.88 $386,118.10 $1,639,909.09 $368,723.20 $83,538.85 $120,987.30 $75,264.00 $136,339.84 $483,949.20 $3,244.35 $344,351.60 $510,770.40 $2,127,168.74 $506,562.69 $114,768.11 $166,215.88 $105,728.00 $190,899.59 $664,863.53 $3,682.57 $473,576.12 $717,510.80 $2,943,807.29 Exhibit 2: Employee Costs Chart: Salaries, Benefits, Taxes, and Totals 2017 2018 2019 2020 2021
  7. 7. Exhibit 3: Market Segmentation and Targeting Target Name Size (# of People or Households in Segment) Growth Projection Description Priority level for targeting Justification for Targeting Mothers of children 1 year and younger 4,500,000 people1 10% in 5 years2 This segment consists of mothers of infants who are 1 year or younger, and thus, need milk constantly. Due to the American way of life many parents lead a mobile lifestyle, which allows for the need of an easy and effective way to feed their infant. This segment will mostly be middle class or higher. 1 The members of this segment are constantly on the go. 80% of families have at least one member employed, and 69% of mothers with children under 18 are in the labor force (BLS, 2016). Among mothers, 85% have used a breast pump, and 25% use a breast pump regularly (Campbell, 2014). The focus of the promotion for this target will be convenience and size. Whether the parent (mother or father) have to take their baby on the go, or leave it home with a babysitter, this product will help it be easy for them to do so. This segment is our first priority because it is the most directly related to this product, and thus has the most need for it. Male only household 2,600,000 people .63% in 5 years3 This segment consists of single fathers, whether they are the only parent in the household, or have a male partner. They would be a smaller segment, but still could use the product for formula and keeping bottles warm. 2 Members of this segment would still likely be on the go, and appreciate this product. The number of single-father households has increased fromless than 300,000 in 1960 to 2.6 million in 2011. 24% of all single parent households are headed by fathers. (Livingston, 2013) Due to these statistics, they are an obvious and possibly profitable target. 1. There were roughly 4,000,000 births (CDC, 2014) in 2014, and numbers in years surrounding are similar. From the 4,000,000, 77% of new mothers breastfeed (CDC,2013), thus, roughly 3,080,000 mothers breastfeed. In addition to this number is births in Canada, which average in the range of 500,000 to 700,000 per year according to the Government of Canada’s website. 2. U.S. native births are projected to increase by 22% by 2020 (U.S. Census, 2015), thus for 5 years it would increase 10%. 3. There has been a 7% increase from 1960 to 2016, thus a .13 increase a year. Projecting for 5 years would be .63%.
  8. 8. Year Tot Mkt Potential (# Customers)1 Mkt Growth Projection2 Market Share3 Product Channel Annual Unit Sales4 Unit Price (Less Markup) Annual $ Revenue Year 1 4,100,000 --- 2.150% BabyPak Direct (B2C) 61,705 $59.99 $3,701,683 Retail (B2B) 26,445 $40.00 $1,057,800 Totals 88,150 $4,759,483 Year 2 4,543,425 0.965% 2.660% BabyPak Direct (B2C) 84,527 $59.99 $5,070,775 Retail (B2B) 36,226 $40.00 $1,449,040 Totals 120,753 $6,519,817 Year 3 4,586,385 0.946% 3.197% BabyPak Direct (B2C) 102,552 $59.99 $6,152,095 Retail (B2B) 43,950 $40.00 $1,758,000 Totals 146,502 $7,910,083 Year 4 4,629,636 0.943% 3.933% BabyPak Direct (B2C) 127,350 $59.99 $7,639,727 Retail (B2B) 54,578 $40.00 $2,183,120 Totals 181,928 $9,822,839 Year 5 4,672,414 0.924% 4.430% BabyPak Direct (B2C) 144,768 $59.99 $8,684,633 Retail (B2B) 62,043 $40.00 $2,481,720 Totals 206,811 $11,166,347 1 US Census Population Reports on the number of new babies born (Colby, 2014) and foreign adopted children under 1 (Bureau of Consular Affairs - travel.state.gov); and QuickFacts for fertility projection (U.S. 2015). In year 2, our online campaigns will launch in Canada (births in Canada per year - Government of Canada) 2 Population projections as well as US demand factors,i.e. Increased employment, improving economy, optimism ("Baby", 2016) 3 Industry giants dominate the share (P&G,J&J,KC) with 9% - 18%. Our share of the market as a whole would be small, but we are profiting in the niche market (Company Shares,2016) 4 Because our top target market operates primarily online, we project that 70% of our sales will be through online channels Forecast by month Units Revenue ($) Jan '17 5,245 $283,250 Feb 6,171 $333,235 Mar 6,665 $359,894 Apr 6,788 $366,558 May 8,146 $439,870 Jun 6,612 $357,037 Jul 9,257 $499,852 Aug 10,579 $571,260 Sep 7,405 $399,882 Oct 6,480 $349,897 Nov 7,714 $416,543 Dec 7,097 $383,220 Exhibit 4: Market Quantification
  9. 9. *Monthly demand includes the slight increase in births in the summer months
  10. 10. Exhibit 5: Positioning/Competitive Analysis Positioning Statement: For parents living in today's high pace world, the BabyPak is the most convenient and portable baby bottle system on the market. By combining a cooler to keep milk or formula cool until use and a warmer to ensure optimal drinking temperature, the BabyPak eliminates the need for carrying separate, bulky products all related to the same task. Where convenience and ease-of-use are a must, the BabyPak will be a one stop solution to a core parenting task. While there are separate products designed to warm or cool milk and formula, the previously unpatented Babypak will combine both functions into one streamlined product.
  11. 11. Exhibit 6: Marketing Mix Product/Service Branding Our name, TreeTop, is positive anddistinctive. We also wanted to use a name that allows for growth and diversification. Our logo is clean and simple, yet memorable and easily recognized. Our motto, "Giving to Grow", symbolizes our desire to aid parents in raising happy, healthy children. As a whole, our brand is designed to instill thoughts of caring and positivity while avoiding limitations in the child care industry. Pricing 2017 2018 2019 2020 2021 Unit Variable Cost: $21.46 $21.53 $23.07 $21.42 $21.47 Wholesale Price: $40.00 $40.00 $40.00 $40.00 $40.00 Retail Price: $59.99 $59.99 $59.99 $59.99 $59.99 There is a wide range of prices on products in this market. Competing products range from $10 for very basic insulated bottles to over $200 for high end specialty warmers or coolers. Our product, with a retail price of $59.99, employs psychological pricing by using a number that includes nines and is below the major price point of $60. This is a price point that is still well within the price range of our competition, and reflects the significant added value of our product. Our variable cost should remain fairly constant, as our materials are non-specialty and our suppliers well established. Amazon fees and fulfillment will cost an estimated 25% of the sale price (Amazon Fees and Fulfillment, 2016) andwe estimate Target to have a markup of 35% (Target Corporate, 2013). We are assuming an average of 30% markup on our product, giving a wholesale price of $40.00. Distribution/Location Strategy We will be utilizing both direct and indirect distribution methods in order to maximize our customer base. The majority of our products will be sold online. We will also maintain our own ecommerce site to capitalize on those consumers who prefer to purchase directly from the manufacturer. Our location in Tualatin, Oregon is ideal for our business, as it is in close proximity to all of the major landmarks necessary for a manufacturing company. Nearby Portlan d is home to a major port with one of the shortest shippingroutes to China, making sourcing materials cheap and timely. Our major distributors (Amazon, Target) all have facilities within 200 miles of our location, and we are in a location with easy access to experienced executives and manufacturing workers. Promotional Strategy (,000) 2017 2018 2019 2020 2021 TotalIMC Budget (100%): $380.8 $522.1 $633.3 $589.9 $670.6 Production Exp (9%): $34.27 $46.99 $57 $53.09 $60.35 Advertising Exp (75%): $285.6 $391.58 $474.98 $442.43 $502.95 Sales Promo Exp (6%): $22.85 $31.33 $38 $35.4 $40.24 PR Exp (10%): $38.08 $52.21 $63.33 $58.99 $67.06 Other Promo Expense We will be advertising exclusively through the internet and social media to target our customer demographic (primarily young adults), and on a constant basis with pulses in spring to account for an increase in births in the summer months. Our advertising budget is designed to reach approximately two million potential consumers in the first year across YouTube, Facebook, and Pandora. With a conversion rate of 0.25%, we should be able to acquire 50,000 customers from advertising alone. Word-of-mouth and impulse purchases should let us surpass our sales target of 88,000. We will spend $12,900 to produce Pandora ads in year one, and an additional $19,360 to produce video ads for YouTube. Facebook ads are generally short and photo based, and so we are budgeting only $2,000 for research into what makes an effective Facebook ad. We assume that ad production costs will rise slowly through the years,to account for refreshing ads and increasing quality as audience increases. Our sales are primarily through our online store,and so sales promotions will be limited to discounts on our website and promotional giveaways, which will be targeted around Mother's day and Christmas. We are allowing 10% of our promotional budget for public relations each year. # of Salespeople: 2 2 2 2 2 Compensation Method: $63,500.00 $63,817.50 $64,136.59 $64,458.28 $64,780.59 Our sales associates are responsible for maintaining connections with our retail businesses and suppliers. Since they’re not responsible for making sales, the compensation methodreflects the cost of salaries. Interpersonal skills and a history in sales relations will be highly desired. The marketingassociates will need to have experience in internet marketing to maximize conversions while staying within our marketing budget. The marketing manager should be well versed in both fields in order to manage resources effectively. We will keep a close eye on advertising effectiveness and sales figures to ensure that we reach our goals. Advertising budget, year one: Pandora: $133,518 for an estimated 30,487 views per day YouTube: $76,027 for an estimated 4,166 views per day Facebook: $76,027 for an estimated 18,329 views per day Pandora Ads(n.d.), Youtube Advertising (n.d.), Facebook Ad Manager (2016)
  12. 12. Exhibit 7: Process Map Major qualitysteps: Quality Step What is measured? How often? How will you ensure quality? Q1 Check that the seams are up to Standards,that the zipper is functional. 1 out of 10 units If the seams are not within the standard range and/or the zipper, the stitching will be removed and new stitching will be applied. Non-functional zipper will be replaced. Q2 Shielding and solder is installed 1 out of 5 units If any of the components are not functioning, the unit will be re-soldered and tested. Q3 That the interior lining fits correctly. 1 out of 10 units If the interior lining doesnot fit thestandardcase the oldlining will removed from the case and a new one will be sewed. Criticalfailure points: Failure Point Brief description How will you preventthis failure? How will you recover if this failure occurs? F1 Non-Standard made cases will not leave enough roomforthe bottles Quality control check point before the case moves in the assemble process. This willbe correctedby removal from theassemblylineand anew unit will be manufactured inits place. F2 Inadequate flux appliedto the wires can lead to loss of powerand potential fire hazard. Adequate training andqualityreview by supervisors. The failurewillbe addressedand theoldsolderremovedfrom the component(s) and new flux will beappliedto the connection untilasolid connectionis made.Continuous failurewilllead to retraining. F3 Inadequate flux appliedto the wirelead to fire hazard and lossefficiency in heating. Adequate training andqualityreview by supervisors. The failurewillbe addressedand theoldsolderremovedfrom the component(s) and new flux will beapplied to the connection untilasolid connectionis made.Continuous failurewilllead to retraining.
  13. 13. Exhibit 8: Quality Assurance Indicate the Dimensions of Quality on which you will focus. Why is this dimension important, given your industry & target market? Identify the Quality Step(s) on the Process Flowchart / ServiceBlueprintto which this corresponds. Performance Quality in performance for young parents is very central. The BabyPak has to be able to perform quickly, easily, and without complicated processes. Purchasing Materials Assembly Convenience The convenience factor of theBabyPak is imperative. Our market, young families, needs theproduct to fit in a diaper bag for on the go. They need it to be compact and portable. Design Reliability BabyPak’s reliability dimension refers to its safety features, which are priority one in a parent’s mind. The bottles are breast milk and formula safe; the plasticis BPA free; the battery is rechargeable and contained in hard plastic. Purchasing Materials Assembly Use the space below to describe any additional Proactive Quality Assurance Plans that are not connected to a specific activity on your Process Flowchart / Service Blueprint. Other specific proactive plans for BabyPak include maintaining qualityrelationships with suppliers and distributors; hiring and training superior Assembly Line managers; and cultivating incentive programs for Assembly Line workers. Describe any reactive quality assurance plans. Include a recovery plan should a customer receive poor quality goods and/or services. If a defective unit is purchased, the LLC will provide easy returns and refunds. The unit will be inspected and researched to find the other units its batch. If the defect is dangerous, the batch will be recalled. If the source of the fault (dangerous or not) is with our processes or suppliers, an extensive investigation will be made priority. If you will utilize a quality/process improvement methodology, indicate which: ☐ NA ☒ TQM ☐ Six Sigma ☐ ISO ☐ Benchmarking Note: Youwill notuse all of them; onlythose withhighest relevance. Provide a specific explanation of how your chosen quality methodology relates to your business and how it will be applied: As a relatively small startup operation with only one product, Total Quality Management, while intensive and costly, will be the most relevant quality/process improvement methodology. As safetyand performance are high priorities forourcustomers, theextra cost will be offset by the improvement of assembly processes, thereby avoiding inefficiency cost. Each process in the flow will be fully tested and analyzed every few months to determineissues in quality as well as determine from which process the quality issues stem. We will control TQM to keep costs low.
  14. 14. Exhibit 9A: Inventory Supplier and Distribution Material Inventory & Supplier Selection If your organization does not have raw material inventory, please check this box: ☐NA *Data is an estimation from Supply Intermediary and Certifier Alibaba.com Secondary suppliers in U.S. and Mexico will be on hand in case of emergencies, and we will have a long term goal to shift all operations to these suppliers. These suppliers include Novatex, Axiom, SANYO energy corporation. Finished Goods Inventory If your organization does not have finished goods inventory, please check this box: ☐NA Time Period Finished goods produced (per hour) Frequency of shipping finished goods Amount of safety stock on site (5% of estimated demand per year, divided by 12) At the end of Year 1 51 Once a day 408 At the end of Year 2 69 Once a day 552 At the end of Year 3 84 Once a day 672 At the end of Year 4 104 Once a day 832 At the end of Year 5 119 Once a day 952 What is the lifespan of your finishedgoods inventory? ☐NA Nonperishable How will you manage perishability of FinishedGoods Inventory? ☒NA Distribution If your organization does not require distribution, please check this box: ☐NA Name of transportation provider/carrier Reason(s) for selecting this provider/carrier Frequency of Pick Up / Drop off May Trucking Company (provider) - Our facility to distributer They are located in Oregon; their rates are competitive; as a company, they are established in the region; and their mission is people and planet oriented, which aligns with our long-term quality goals. Once a week for the first two years, twice a week for the next three as the business expands. After five years, once a day. May Trucking Company (carrier) - Newport Dock to our facility See above About once a month Item(s) Supplier Name & Location (City, State, Country) Reason for selecting this supplier Supplier lead time (in days) Frequency of replenishment (in days) System of Management Mode(s) of Transportation Canvas Fabric and Zippers Ningbo UniCord Imp & Exp Co. (Zhejiang, China) Cost per meter is competitive; shipping is quick; payment, shipping, and quality is certified. >30 37 ABC System ☒ Highway ☐ Rail ☒ Waterway ☐ Air IcePack Jack Zhang Shanghai Huizhou Industrial Co. (Shanghai, China) While minimum number of units is high, customizable options (color, size, material) and food safety outweigh outright cost and storage. >30 234 ABC System ☒ Highway ☐ Rail ☒ Waterway ☐ Air Batteries (rechargeable) Ningbo Bodawutong Battery Co. (Zhejiang, China) Minimum purchase is flexible, battery produced is rechargeable, powerful (5 yr longevity), and safe. Shipping is fast. 21 35 ABC System ☒ Highway ☐ Rail ☒ Waterway ☐ Air Bottles Guangzhou Laodou Baby Commodity Co. (Guangdong, China) Bottles are BPA free, lead free, nontoxic, inexpensive per unit, and the dimensions are customizable. >30 33 ABC System ☒ Highway ☐ Rail ☒ Waterway ☐ Air Insulation Shaoxing Zhizi Textile Co. (Zhejiang, China) The insulated fabric is stretchable, water resistant, and uses eco- friendly dyeing. Cost per Kilogram. 45 37 ABC System ☒ Highway ☐ Rail ☒ Waterway ☐ Air Mesh Fabric Jinjiang Huayu Weaving Co. (Fujian, China) Design, color, and weight is customizable. Company is environmentally green. Product is shrink resistant and moisture proof. 25 140 ABC System ☒ Highway ☐ Rail ☒ Waterway ☐ Air
  15. 15. Exhibit 10: Capacity Time Period Average Production (units per hour) Hours of Operation (per day) Capacity (units per hour) Utilization per hour At Start Up 0 0 0 -% At the end of Year 1 48 8 51 30% At the end of Year 2 66 8 69 30% At the end of Year 3 80 8 84 30% At the end of Year 4 99 8 104 30% At the end of Year 5 113 8 119 30% Bottleneck Brief description of Bottleneck How will you manage the bottleneck identified on your Process Map to ensure you can appropriately serve or supply your customers? B1 The bottleneck is the assembly of the components and manufactured parts into the final product. Efficient sewing machines, employee training with a set procedure on how to assemble the product, and higher percentage of workers located at this station. Additional resources (beyond your bottleneck) must be appropriately allocated to support operations. Identify which resources have a significant impact on your capacity at start up and describe why these are appropriate amounts of resources to start up your organization. Workforce: At start up, our workforce will include high level management (General Manager, Marketing Manager, Operations Manager), 29 Assembly Line workers and basic support staff (to maintain supplier relations and to continue hiring assembly line labor). Supplies inventory: The first supplies purchase will be an investment. It will maintain inputs for at least a month, but can last longer depending on year one demand. Facility: Our intended facility includes office space, an assembly floor, an input warehouse, a finished good warehouse, and a loading bay. There is enough space to start up, and expansion would not involve moving operations to a new facility. Describe all/any adjustments you will make as resource requirements vary with time. Be specific regarding which key resources will be adjusted, when and how. If you will make multiple adjustments, explain each adjustment. Our most prominent adjustment will be for expansion. In the 5th year, our resource orders will need to increase as well as our equipment. How will you manage seasonality? ☐NA There is a slight increase in children born in the summer months, especially July and August. By over producing and keeping a larger safety stock in less profitable months, we will have the inventory to cover high demand months without increasing production.
  16. 16. Exhibit 11: Income Statement TreeTop, LLC For the Year Ended Month 31, 12/31/2017 % 12/31/2018 % 12/31/2019 % 12/31/2020 % 12/31/2021 % Sales Revenue $4,759,482.95 100.00% $6,519,816.73 100.00% $7,910,082.49 100.00% $9,822,838.50 100.00% $11,166,346.32 100.00% COGS Direct Labor $997,503.20 20.96% $1,416,829.80 21.73% $1,798,282.68 22.73% $2,274,280.44 23.15% $2,803,762.35 25.11% Direct Materials $931,133.48 19.56% $1,275,517.46 19.56% $1,547,509.68 19.56% $1,921,711.50 19.56% $2,184,549.12 19.56% MOH $23,139.50 0.49% $31,697.75 0.49% $38,457.00 0.49% $47,756.25 0.49% $54,288.00 0.49% Total COGS $1,951,776.18 41.01% $2,724,045.01 41.78% $3,384,249.36 42.78% $4,243,748.19 43.20% $5,042,599.47 45.16% Gross Profit $2,807,706.77 58.99% $3,795,771.72 58.22% $4,525,833.13 57.22% $5,579,090.31 56.80% $6,123,746.85 54.84% General and Administrative Expenses Salaries and Wages* $1,028,640.00 21.61% $1,049,212.80 16.09% $1,070,197.06 13.53% $1,091,601.00 11.11% $1,177,943.02 10.55% Payroll Tax Expenses $220,016.00 4.62% $271,164.96 4.16% $304,613.82 3.85% $355,078.32 3.61% $394,393.20 3.53% Employee Benefits and Retirement $480,646.00 10.10% $582,797.00 8.94% $656,299.00 8.30% $766,617.00 7.80% $852,435.00 7.63% Shipping Expense (3PL) $528,900.00 11.11% $724,518.00 11.11% $879,012.00 11.11% $1,091,568.00 11.11% $1,240,866.00 11.11% General Insurance Expense $147,045.36 3.09% $147,780.59 2.27% $148,519.49 1.88% $149,262.09 1.52% $150,008.40 1.34% Equipment Expense $4,550.00 0.10% $24,399.00 0.37% $6,100.00 0.31% $4,550.00 0.06% $0.00 0.04% Depreciation Expense $47,929.80 1.01% $48,839.80 0.75% $53,719.60 0.68% $54,939.60 0.56% $55,849.60 0.50% Amortization Expense $2,416.00 0.12% $2,416.00 0.09% $2,416.00 0.07% $2,416.00 0.06% $2,416.00 0.05% Rent Expense $62,565.00 1.31% $62,565.00 0.96% $62,565.00 0.79% $62,565.00 0.64% $62,565.00 0.56% Advertising and Promotion Expense $380,800.00 8.00% $522,100.00 8.01% $633,300.00 1.00% $589,900.00 6.01% $670,600.00 6.01% Manufacturing License $400.00 0.01% $400.00 0.00% $400.00 0.01% $400.00 0.00% $400.00 0.00% Server/Website maintenance Expense $15,000.00 0.32% $15,000.00 0.23% $15,000.00 0.19% $15,000.00 0.15% $15,000.00 0.13% Office Expense $20,000.00 0.42% $20,000.00 0.31% $20,000.00 0.25% $20,000.00 0.20% $20,000.00 0.18% Total General & Administrative Expenses $2,938,908.16 61.75% $3,471,193.15 53.24% $3,852,141.97 48.70% $4,203,897.01 42.80% $4,642,476.22 41.58% Earnings Before Interest and Taxes ($131,201.39) -2.76% $324,578.57 4.98% $673,691.16 8.52% $1,375,193.30 14.00% $1,481,270.63 13.27% Interest Expense $0.00 0.00% $0.00 0.00% $0.00 0.00% $0.00 0.00% $0.00 0.00% Earnings Before Taxes ($131,201.39) -2.76% $324,578.57 4.98% $673,691.16 8.52% $1,375,193.30 14.00% $1,481,270.63 13.27% Income Tax Expense ($8,659.29) -0.18% $21,422.19 0.33% $44,463.62 0.56% $90,762.76 0.92% $97,763.86 0.88% Net Income (Loss) ($122,542.10) -2.57% $303,156.38 4.65% $629,227.54 7.95% $1,284,430.55 13.08% $1,383,506.77 12.39% Beginning Balance of Retained Earnings $0.00 ($122,542.10) $180,614.29 $809,841.82 $2,094,272.37 Net Income (Loss) ($122,542.10) $303,156.38 $629,227.54 $1,284,430.55 $1,383,506.77 Dividends to Stockholders $0.00 $0.00 $0.00 $0.00 $0.00 Ending Retained Earnings ($122,542.10) $180,614.29 $809,841.82 $2,094,272.37 $3,477,779.14
  17. 17. Exhibit 11A: Income Statement Notes - Sales Revenue isbased on the channel, unit sales, and unit price (less markup). Exact figures can be found on the market quantification. - COGS is based on product cost, which includesDL, MOH, and DM. Year 1 Product cost is $21.09. Year 2, $27.28. Year 3, $22.00. Year 4, $22.22. Year 5, $23.22. - Salaries/Wages: 30 factory workersand 2 managers added in year 1, 11 Factory workersand 1 manager added in year 2, 9 factory workersadded in year 3, 12 factory workersand 1 manager added in year 4, 9 factory workersand 1 manager added in year 5. Pay roll and tax expense is derived from both administrative and direct labor salaries. In years 3 and 5 Admin employees get a 5% raise based on good job performance (we expect half of employees to get raise in year 3 and other half in year 5). Factory Workers receive a cost of living adjustment on their wagesof $1 in years 3 and 5. In years 3 and 5 all Factory Managers receive a 5% cost of livingadjustment on their salaries. All salaries are adjusted for inflation, cost of living adjustments, and raises. - Payroll tax expense is based on a combination of Medicare, SS, FUTA, SUTA, and income taxes for each employee. - Employee benefits andretirement is based on the data from the cost chart. - General Insurance Expense is based on data from the benefit cost chart. - Depreciation Expense is based on straight-line depreciation. - Rent Expense is based on a distribution warehouse located in Tualatin, OR, that is currently available for rent. There are 12,513 Sq. Ft. available, with a negotiable rate. We looked up the average and made an estimate of $5.00 per square foot. Rent stays constant for all 5 years. - Website Expense is based on an estimate of a flat fee for annual maintenance. - Advertising and Promotion Expense is based on obtaining50,000 salesas a result of pure marketing in year one. Costs rise at a steady rate as our advertising budget and sales figures increase. - Manufacturing License is $400, and has to be renewed on a yearly basis, because it expires on September 30, annually. - Office Expense is based on an estimate of a $20,000 flat yearly expense. This will be our budget to stay within for office supplies/ongoing expenses.
  18. 18. Inception Date Ending Date Ending Date Ending Date Ending Date Ending Date % Year 1 % Year 2 % Year 3 % Year 4 % Year 5 % ASSETS Current Assets Cash and Cash Equivalents $1,485,706.00 74.29% $1,335,723.62 55.82% $1,654,937.11 55.67% $2,262,039.19 59.08% $3,463,638.18 64.49% $4,781,159.53 68.26% Rent $62,565.00 3.13% $62,565.00 2.61% $62,565.00 2.10% $62,565.00 1.63% $62,565.00 1.16% $62,565.00 0.89% Accounts Receivable $0.00 0.00% $475,948.30 19.89% $651,981.67 21.93% $791,008.25 20.66% $982,283.85 18.29% $1,116,634.63 15.94% Inventory $0.00 0.00% $92,951.76 3.88% $222,675.35 7.49% $383,848.94 10.03% $585,944.89 10.91% $826,078.62 11.79% Short Term Investments 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% Total Current Assets $1,548,271.00 77.41% $1,967,188.68 82.21% $2,592,159.14 87.20% $3,499,461.38 91.41% $5,094,431.92 94.86% $6,786,437.78 96.89% Fixed (Long-Term) Assets Machinery and Equipment $239,649.00 11.98% $264,048.00 11.03% $270,148.00 9.09% $274,698.00 7.18% $279,248.00 5.11% $279,248.00 3.99% Buildings $0.00 0.00% $0.00 0.00% $0.00 0.00% $0.00 0.00% $0.00 0.00% $0.00 0.00% Servers, Computers, and Networking $200,000.00 10.00% $200,000.00 8.36% $200,000.00 6.73% $200,000.00 5.22% $200,000.00 3.72% $200,000.00 2.86% Land $0.00 0.00% $0.00 0.00% $0.00 0.00% $0.00 0.00% $0.00 0.00% $0.00 0.00% Total Gross Fixed Assets $439,649.00 21.98% $464,048.00 19.39% $470,148.00 15.82% $474,698.00 12.40% $479,248.00 8.92% $479,248.00 6.84% Less: Accumulated Depreciation $0.00 0.00% $47,929.80 2.00% $96,769.60 3.26% $150,489.20 3.93% $205,428.80 3.83% $261,278.40 3.73% Net Fixed Assets $439,649.00 21.98% $416,118.20 17.39% $373,378.40 12.56% $324,208.80 8.47% $273,819.20 5.10% $217,969.60 3.11% Other Long Term Assets Long Term Investments $0.00 0.00% $0.00 0.00% $0.00 0.00% $0.00 0.00% $0.00 0.00% $0.00 0.00% Patent, Net of Amortization $12,080.00 0.60% $9,664.00 0.40% $7,248.00 0.24% $4,832.00 0.13% $2,416.00 0.04% - 0.03% Total Other Long Term Assets $12,080.00 0.60% $9,664.00 0.40% $7,248.00 0.24% $4,832.00 0.13% $2,416.00 0.04% $0.00 0.00% Total Assets $2,000,000.00 100.00% $2,392,970.88 100.00% $2,972,785.54 100.00% $3,828,502.18 100.00% $5,370,667.12 100.00% $7,004,407.38 100.00% LIABILITIES Current Liabilities Accounts Payable $0.00 0.00% $465,566.74 90.31% $637,758.73 80.51% $773,754.84 75.96% $960,855.75 75.28% $1,092,274.56 71.55% Accrued Salaries and Wages $0.00 0.00% $41,145.60 7.98% $113,721.52 14.36% $179,309.52 17.60% $230,452.00 18.05% $316,601.68 20.74% Accrued Payroll Taxes and Benefits $0.00 0.00% $8,800.64 1.71% $40,691.00 5.14% $65,596.00 6.44% $85,087.00 6.67% $117,752.00 7.71% Notes Payable $0.00 0.00% $0.00 0.00% $0.00 0.00% $0.00 0.00% $0.00 0.00% $0.00 0.00% Current Maturity of LT Debt $0.00 0.00% $0.00 0.00% $0.00 0.00% $0.00 0.00% $0.00 0.00% $0.00 0.00% Total Current Liabilities $0.00 0.00% $515,512.98 100.00% $792,171.25 100.00% $1,018,660.36 100.00% $1,276,394.75 100.00% $1,526,628.24 100.00% Long-Term Liabilities LT Debt Less Current Maturities 0.00% $0.00 0.00% $0.00 0.00% $0.00 0.00% $0.00 0.00% $0.00 0.00% Total Liabilities $0.00 0.00% $515,512.98 100.00% $792,171.25 100.00% $1,018,660.36 100.00% $1,276,394.75 100.00% $1,526,628.24 100.00% STOCKHOLDER'S EQUITY Shares Outstanding $2,000,000.00 100.00% $2,000,000.00 83.58% $2,000,000.00 67.28% $2,000,000.00 52.24% $2,000,000.00 37.24% $2,000,000.00 28.55% Retained Earnings $0.00 0.00% ($122,542.10) -5.12% $180,614.29 6.08% $809,841.82 21.15% $2,094,272.37 38.99% $3,477,779.14 49.65% Total Stockholders' Equity $2,000,000.00 100.00% $1,877,457.90 78.46% $2,180,614.29 73.35% $2,809,841.82 73.39% $4,094,272.37 76.23% $5,477,779.14 78.20% Total Liabilities and Stockholders' Equity $2,000,000.00 100.00% $2,392,970.88 100.00% $2,972,785.54 100.00% $3,828,502.18 100.00% $5,370,667.12 100.00% $7,004,407.38 100.00% Exhibit 12: Balance Sheet
  19. 19. Cash and Cash Equivalents: -Inception balance is a $2 mil loan less machinery and equipment, and prepaid rent. All other years are from the changes in cash flows. Accounts Receivable: -AR balance is based on an optimisticestimate that 10% of sales are credit purchases. Inventory: -Value of unsold stock at the end of each year. Machinery and Equipment: -For each typeof equipment:Number of worker stations using equipment, times the number of machines they need, times the price per machine. Buildings: -We pay $62,565 yearly, prepaid rent. Land: -We own no land. Less: Accumulated Depreciation: -Straight-line deprecation for five years on all new purchases, added deprecation from previous year Long Term Investments: - No long term investments Intangibles, Net of Amortization: - Straight line in the amount of $2416 Accounts Payable*: - 50% of supplies expense in the only purchase we intend to make on credit. Accrued Salaries andWages: -TreeTop pays out wages and salaries on the 1st and the 15th. So accrued salaries are calculated based on 4% (last two weeks of the year) of their annual salary. Accrued Payroll Taxes and Benefits: -TreeTop pays out wages and salaries on the 1st and the 15th. So accrued taxes and benefits are calculated based on 4% (last two weeks of the year) of their annual salary. Accrued Salaries andWages: -TreeTop pays out wages and salaries on the 1st and the 15th. So accrued salaries are calculated based on 4% (last two weeks of the year) of their annual salary. Accrued Payroll Taxes and Benefits: -TreeTop pays out wages and salaries on the 1st and the 15th. So accrued taxes and benefits are calculated based on 4% (last two weeks of the year) of their annual salary. * Supplies Expense: Our production capacity in years 1 through 5 is 51, 69, 84, 104, and 119 units per hour, respectively. Using the capacity figures, growth rateis 111.76% for year 1 to 2, 83.33% for year 2 to 3, 36.36% year 3 to 4, and 43.33% for year 4 to 5. Total cost of our year one supplies multiplied by 1 plus thegrowth rateis roughly each years' supplies expense. Exhibit 12A: Balance Sheet Notes
  20. 20. 12/31/2017 12/31/2018 12/31/2019 12/31/2020 12/31/2021 Cash Flows From (For) Operations Net Income ($122,542.10) $303,156.38 $629,227.54 $1,284,430.55 $1,383,506.77 Amortization $2,416.00 $2,416.00 $2,416.00 $2,416.00 $2,416.00 Depreciation $47,929.80 $48,839.80 $53,719.60 $54,939.60 $55,849.60 Changes in Current Assets Accounts Receivable ($475,948.30) ($176,033.38) ($139,026.58) ($191,275.60) ($134,350.78) Rent Expense ($62,565.00) $0.00 $0.00 $0.00 $0.00 Inventory ($92,951.76) ($129,723.59) ($161,173.59) ($202,095.94) ($240,133.74) Changes in Current Liabilities Accounts Payable $465,566.74 $172,191.99 $135,996.11 $187,100.91 $131,418.81 Accrued Salaries and Wages $41,145.60 $72,575.92 $65,588.00 $51,142.48 $86,149.68 Accrued Payroll Taxes and Benefits $8,800.64 $31,890.36 $24,905.00 $19,491.00 $32,665.00 Cash From (For) Operating Activities ($188,148.38) $325,313.48 $611,652.09 $1,206,148.99 $1,317,521.34 Cash Flow (For) From Investing Activities Fixed Asset Purchases ($464,048.00) ($6,100.00) ($4,550.00) ($4,550.00) $0.00 Short Term Investments $0.00 $0.00 $0.00 $0.00 $0.00 Long Term Investments ($12,080.00) $0.00 $0.00 $0.00 $0.00 Net Cash Flows (For) From Investing ($476,128.00) ($6,100.00) ($4,550.00) ($4,550.00) $0.00 Cash Flow From (For) Financing Activities Short Term Debt Borrowings $0.00 $0.00 $0.00 $0.00 $0.00 Long Term Debt Borrowings $0.00 $0.00 $0.00 $0.00 $0.00 Short Term Debt Payments $0.00 $0.00 $0.00 $0.00 $0.00 Long Term Debt Payments $0.00 $0.00 $0.00 $0.00 $0.00 Dividends Paid to Stockholders $0.00 $0.00 $0.00 $0.00 $0.00 Issuance of Common Stock $2,000,000.00 Cash Flows From (For) Financing $2,000,000.00 $0.00 $0.00 $0.00 $0.00 Net Change in Cash $1,335,723.62 $319,213.48 $607,102.09 $1,201,598.99 $1,317,521.34 Beginning Cash Balance $0.00 $1,335,723.62 $1,654,937.11 $2,262,039.19 $3,463,638.18 Net Change in Cash $1,335,723.62 $319,213.48 $607,102.09 $1,201,598.99 $1,317,521.34 Ending Cash Balance $1,335,723.62 $1,654,937.11 $2,262,039.19 $3,463,638.18 $4,781,159.53 Exhibit 13: Statement of Cash Flows
  21. 21. - Cash flow for net income and depreciation comes directly from the income statement. - The change in Accounts Receivable is found by subtracting the end of year balance for the target year from the year before (or inception date in the case of Year 1 AR) - The Inventory is found by subtracting the current year's inventory by the previous year's inventory. - Accounts Payable is referenced from the balance sheet in year one, and in all other years it is the difference between the current AP and the previous AP. - Accrued salaries and wages and accrued payroll, taxes, and benefits is referenced from the balance sheet, with each years' cash flow as the difference between the current years' accrual and the previous years' accrual. - Fixed Asset Purchases for year 1 is referenced to the balance sheet, where we are buying fixed assets for both year 1 and year 2, and every year after that is buying the fixed assets needed for the next year. - Long Term Investments is the one time purchase of our patent. Exhibit 13A: Statement of Cash Flows Notes
  22. 22. Year 1 Year 2 Year 3 Year 4 Year 5 Benchmarks1 Liquidity Working Capital $1,451,675.70 $1,799,987.89 $2,480,801.02 $3,818,037.17 $5,259,809.54 $1,075,923.00 Current Ratio $3.82 $3.27 $3.44 $3.99 $4.45 $1.79 Quick Ratio $3.64 $2.99 $3.06 $3.53 $3.90 $0.84 Efficiency Gross Profit Margin 58.99% 58.22% 57.22% 56.80% 54.84% 26.47% Op. Profit Margin -2.76% 4.98% 8.52% 14.00% 13.27% 43.70% Net Profit Margin -2.57% 4.65% 7.95% 13.08% 12.39% 29.90% Productivity Inventory TO 20.9977 12.2333 8.8166 7.2426 6.1043 7.9900 A/R TO 10.0000 10.0000 10.0000 10.0000 10.0000 10.4200 Fixed Asset TO 10.2564 13.8676 16.6634 20.4964 23.2997 36.7400 Total Asset TO 2.3797 2.1932 2.0661 1.8290 1.5942 2.9500 Financial Leverage Debt Ratio* NA NA NA NA NA 0.5890 Debt-Equity Ratio* NA NA NA NA NA 0.6960 Equity Multiplier 3.815 3.272 3.435 3.991 4.445 2.436 Times Interest Earned* NA NA NA NA NA 11.8726 Cash Flow to Debt -$0.36 $0.41 $0.60 $0.94 $0.86 $0.03 Owner Book Value per Share $1 $1 $1 $1 $1 * Market to book 1 1.26 1.67643 2.05476975 2.283876577 * Dividend Payout3 NA NA NA NA NA * Dividend Per Share3 NA NA NA NA NA * Price-Earnings Ratio -65.28 26.38 12.71 6.22 5.78 15.042 * TreeTop has a zero-debt structure, so some ratio comparisons are not able to be performed. 1 Benchmarks were calculated using a report from BizMiner outlining the average financial ratios from 17 baby product companies making about the same as us in terms of revenue (http://reports.bizminer.com/temp/pdf/6073349550.pdf) 2 Mean of Fortune 500 P/E ratios according to Investopedia 3 TreeTop does not have plans to distribute dividends in our beginning 5 years. Exhibit 14: Financial Ratios and Analysis 21
  23. 23. Year 5 Sensitivity Bust Estimated1 Boom -20% 0% 20% Market Share 3.544% 4.430% 5.316% Demand (Units) 165,449 206,811 241,280 Revenue $8,933,077 $11,166,346 $13,027,404 COGS2 -$3,639,874 -$4,549,842 -$5,308,149 Gross Profit $5,293,203 $6,616,504 $7,719,255 Fixed Costs -$4,577,966 -$4,577,966 -$4,577,966 EBIT $2,354,295 $3,677,596 $4,780,347 1 Estimated numbers are from year 5 on the Income Statement 2 Average COGS is $22 per unit Equity - Shareholders will buy in at $1.00 per share with an expected return of 78% in 10 years. - We determined this price and return was appropriate because similar speculative grade investments are in the same range (found on finra.org). Cost of Capital - Our budding organization has a zero debt capital structure and a plan to withhold equity dividends in our first years in order to focus on growth stimulation. - Without a cost of debt or a cost of equity, a WACC is unlikely to be calculated reliably. Sensitivity - Even if our estimated market share is off - therefore changing our demand and our revenue, TreeTop's EBIT by year five will still sustain our operations and growth. Exhibit 15: Valuation
  24. 24. Exhibit 16: Product Design 1. Battery 5. Interior Water Proof Canvas lining 9. Controller Board 2. Interior Insulation Lining 6. Heating Pad 10. Power Button 3. Zipper Lid 7. Water Proof Canvas 11. Micro-USB Charging Port 4. Rubberized Handle 8. Temperature Sensor 12. Wiring
  25. 25. Exhibit 17: Online CVP
  26. 26. Bibliography Amazon Fees and Pricing. (2016). Retrieved July 5, 2016, from https://www.amazon.com/gp/help/customer/display.html?nodeId=1161240 Amazon Fullfillment. (2016). Retrieved July 5, 2016, from https://sellercentral.amazon.com/fba Application For Registration. (2014, July). Retrieved June 10, 2016, from https://www.oregon.gov/pharmacy/Imports/ManufacturerApplication7.14.pdf Average Startup Expenses - Are you Spending Too Much? - ProjectionHub. (2013). Retrieved June 12, 2016, from http://blog.projectionhub.com/average-startup-expenses-are-you-spending-too-much Axiom Manufacturing. (n.d.). Retrieved July 10, 2016, from https://www.axman.com/"Baby and Child-Specific Products in the US" (Apr 2016). Beauty and Personal Care, EuroMonitor International. Web. 05 June 2016. Bahadır, Senem K. (2011). Assembly Line Balancing in Garment Production by Simulation, Assembly Line - Theory and Practice, Prof. Waldemar Grzechca (Ed.). Births and Seasonally Adjusted Birth Rates, by Month. Rep. no. 12. Table 1-2 ed. Vol. 64. Atlanta: Center for Disease Control, 2015. Print. Calculation of FICA Withholding - Worked Example. (n.d.). Retrieved June 12, 2016, from http://www.xperthr.com/worked-examples/calculation-of-fica-withholding-worked-example/6049 CDC: Breastfeeding rates rise to 77 percent of U.S. moms. (n.d.). Retrieved June 12, 2016, from http://www.cbsnews.com/news/cdc-breast-feeding-rates-rise-to-77-percent-of-us-moms/ CDC.gov (2015, November 6). Birth Data. Retrieved June 12, 2016, from http://www.cdc.gov/nchs/nvss/births.htm Cohn, D., Livingston, G., & Wang, W. (2014). Chapter 1: Comparing Stay-at-Home and Working Mothers. Retrieved June 12, 2016, from http://www.pewsocialtrends.org/2014/04/08/chapter-1-comparing-stay-at-home-and- working-mothers/ Colby, Sandra L. and Jennifer M. Ortman, (2014). Projections of the Size and Composition of the U.S. Population: 2014 to 2060, Current Population Reports, P25-1143, U.S. Census Bureau, Washington, DC. Web. 05 June 2016. Company Shares (Global - Historical Owner) | Historic | Retail Value RSP | % Breakdown. EuroMonitor International, n.d. Passport. Web. 5 June 2016 Current Tax Rate & Filing Due Dates. (n.d.). Retrieved June 6, 2016, from https://www.oregon.gov/EMPLOY/Businesses/Tax/Pages/Current-Tax-Rate.aspx
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  29. 29. Team 5 John Beer, hailing from Alexandria, Virginia, is a Senior Accounting major at James Madison University. His family moved to Longmont, Colorado two years ago and he travels there twice a year to snowboard and engage in other outdoor activities. From Harrisonburg, VA, Patrick Moran is Senior Computer Information Systems major and a Telecommunications minor. He is currently a Lab technician and teacher assistant at JMU’s 3-Space Lab as well as IT Intern at Leidos working on enterprise infrastructure and engage in IT supporting functions. He enjoys working on computers, servers, and networking equipment from a variety of different vendors (Cisco, Dell, IBM, ect.). He enjoys the outdoors and doing activities such as tennis, golf, and skiing. Raised in Roanoke, Virginia, Emma Sawyer is a Management major at James Madison University. Emma is the Vice President of Service for a national service organization, and is employed in the Human Resources Department for the JMU Libraries. Her free time is devoted to the JMU Marching Royal Dukes as well as child care for the Science Museum of Western Virginia. Born and raised in Charlottesville, Virginia, Alex Peeryisworking towards a Computer Information Systems degree at James Madison University. An entrepreneur at heart, Alex currently holds licenses for three different businesses. When he’s not working, Alex can usually be found under the hood of a car or snowboarding on the slopes, weather permitting. Robert Farrell, born and raised in Reston, Virginia, is a junior Marketing major. A transfer from Northern Virginia Community College, Robert spent three years working Administration in a law firm located in Fairfax, Virginia. He enjoys sports, music and shenanigans with friends. His goal in life is to retire abroad at the age of forty-five. Samantha Kynett, from Virginia Beach, Virginia, is majoring in International Business and minoring in Spanish at James Madison University. She is interested in travelling within and beyond the scope of business, as she has been to over 7 countries for both leisure and volunteer work. In her spare time, she volunteers with various youth organizations, and works at Black Sheep Coffee in downtown Harrisonburg, VA.

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