Edge Sports of Cochrane Business Plan

Edge Sports of Cochrane
Business Plan
Prepared for Outwest Properties Inc.
Prepared by Mark Lootens
5/20/2014

Who is Edge Sports of Cochrane?
Edge Sports of Cochrane is a sporting goods business Established in July of 2005 by two brothers, Mark
and Darren Kondrat, who were lifelong sports “junkies” with a dream of owning a sporting goods store.
The business grew quickly growing from $250 000 in sales to over $750 000 in sales in five short years.
Unfortunately the young store was not prepared for the rapid growth. This combined with the recession
left the business cash strapped and struggling to stay current with many of its suppliers. In July of 2011 it
was decided that it was in the best interest of all parties involved for Mark Kondrat to leave the
business.
For the next two years a team of managers led the business with Darren filling the role of President in a
part time capacity. While the business was able to survive and improved at controlling its costs and
buying practices, it never truly thrived and sales took a step backwards.
In May of 2013 a management and ownership change took place in an effort to rejuvenate the business
and allow it to be a profitable. Mark Lootens was brought in as manager and a minority owner. Mark
brought a unique blend of experience and education to the table which seemed to be an ideal fit for the
needs of Edge Sports. Mark studied and completed a kinesiology degree at the University of Lethbridge,
after which he followed up with a Master’s in Sport & Athletic Administration at Gonzaga University. His
work experience included retail and sales experience including spending three years working in the
Western Hockey League (WHL) for both the Spokane Chiefs and the Lethbridge Hurricanes.
Under the new management a more dedicated focus has been applied to two key areas, inventory
turnover and cash flow management. Focusing on these two critical categories has allowed Edge Sports
to make significant improvements in profitability and helped it to significantly improve its relationships
with suppliers as bills were now paid in substantially more timely manners.
While the previously outlined events tell you the story of Edge Sports it does not tell you who Edge
Sports is. Edge Sports is a family owned business committed to promoting and encouraging active living
by specializing and providing expertise on teams sports equipment and training merchandise. It is
committed to giving back to the Rockyview community by supporting the sports associations and teams
in the area by providing a premium level product and service typically only found in the most elite
independent sporting goods stores in major centers.
What makes Edge Sports Unique?
Edge Sports is a vital member of the Rockyview community. Edge Sports is the local business that knows
it’s customers by name as they come in for their weekly skate sharpening and members of Cochrane
Minor Hockey know that there Association color socks are stocked. Edge Sports is the store where team
managers feel comfortable coming in for donation and sponsorship requests for fundraising because

they know the owner and management by name and have a personal relationship with them. Edge
Sports is a business that understands the needs of the local association and goes out of its way to ensure
that it is able to supply equipment and apparel which are congruent with their colors, rules and needs.
Edge Sports is the place local’s go when a helmet screw needs to be replaced, their skates need to be
sharpened, they need to outfit their child for her first soccer practice, or they need some advice on what
new equipment actually needs to be purchased for their son’s lacrosse tryout. Most importantly Edge
Sports prides itself on being a business which always strives to give advice in the best interest of the
customer.
Where is Edge Sports?
Edge Sports does business in Cochrane Alberta, a thriving town of 18 000 people in the foothills of
Alberta located 15 west of Calgary. With some experts predicting the town to reach as many as 30 000
people in the next 5 years it has seen a recent boom in commercial development with developments
such as The Quarry attracted several big box stores including Wal Mart, Staples and Sport Chek.
Cochrane is attractive to retail business thanks to its growth trends and higher than average household
income. It has a strong reputation for supporting small business and until recently did not allow “big
box” stores into the community. Stores such as Mackays Ice Cream shop, Addies, and Bike Bro’s have
provided an example of model of what small family owned businesses with a focus on quality and
customer service can do in this town, despite being in industries with competitors who are much larger.
When Does Edge Sports Operate?
Edge Sports is open seven days a week. Weekdays it operates from 10 am to 8 pm and weekends it
operates from 10 am to 6 pm Saturdays, and 11 am to 5 pm Sundays. With Cochrane being primarily a
bedroom community for people who commute to Calgary for work it is critical that it is open hours
which allow people to get home from work, have dinner and have their skates sharpened or whatever
errands need to be run.
Years of experience has taught us when our busy times and key times of business are. We understand
that Monday morning and Friday afternoon is a critical time to be for a heavy skate sharpening load. We
understand when local tryouts are and know that it is critical to have the essentials in appropriate sizes
for first time participants.
The foundation of our business has been built heavily on Canada’s favorite sport, hockey. As a result our
peak season and best financial months are September, October, and November. Our spring sports peak
in March and April as soccer, baseball and lacrosse all run start in the month of April.

Why is there a need for Edge Sports in Cochrane?
Edge Sports current lease expires at the end of the August. As with most small businesses there have
been good years and bad years. With Canada’s largest sporting goods retailer, Sport Chek, planning to
open in the near future it would appear that now may be a logical time to make a graceful exit.
First and foremost the management and ownership of Edge Sports of Cochrane believes that we have
the potential to have healthy profits moving forward despite a major competitor moving into the
market. We believe this for the following reasons:
 Currently there are three Sport Chek locations within 25 km of Cochrane, and another right in
the heart of downtown Calgary. With most of Cochrane commuting to Calgary for work are we
not already competing with Sport Chek on a daily basis?
 Does Sport Chek have the knowledge or care enough to provide equipment specifically for the
local association’s needs? Items such as hockey socks in the Cochrane Rockies colors, helmet’s
and lacrosse masks in the Rage Lacrosse colors, the soccer associations required socks and
shorts for games, and the proper pant color for girls’ softball are things that Edge Sports prides
itself on being able to deliver.
 Our goal is to be a high end equipment provider. Sport Check has chosen to dominate the
apparel and footwear aspects of the business, and provides mid-level equipment (where the
margins are best). We see ourselves as a specialty store, where hard goods are our area of
expertise. Soft goods are simply a bonus sale with only carefully selected items and brands being
carried. OUR STRENGTHS ARE SPORTS CHEK’S WEAKNESSES
 We provide and will continue to provide first rate customer service
We believe in what we do. We believe that equipment which is high quality, and fitted properly
significantly enhances the enjoyment of sport. We believe that having an expert on hand to help choose
the proper equipment is critical to wise investments. We believe that by helping our customers to enjoy
sport we are promoting a lifetime of active and healthy living. We believe that we are enhancing the
level of play, the safety, and the overall experience of athletes in Cochrane. We believe that over the
past nine years that we have developed a client base which appreciates our efforts, likes that we can call
them by name as they walk in, and will remain loyal to us even if there is a Sport Chek a few blocks
down the road. We also believe that the new residents of Cochrane who are moving in on a daily
business will choose to support a local family owned business that caters to their needs, learns their
names, and provides a superior level of expertise and service.

How will Edge Sports grow the business?
Below we have outlined the four “P”’s of marketing and how we plan to grow our business.
Product:
First and foremost we want to have a “wow” factor to our product mix. Your product mix is perhaps the
most important factor in a sporting goods store. We want to carry a certain amount of products that are
just “cool”. We want people coming in regularity just to see what we have, what new thing is out there
that they haven’t seen yet, and what new things they might be able to try.
Our second priority in our product mix is ensuring that we have an excellent selection and stock of items
that are consumable, break, wear out and need to be replaced often. Hockey sticks are an excellent
example of this as they break often and wear out over time. It is not unusual for a competitive player to
purchase six to eight sticks a year (at $300 a stick). For this reason we intend to build the best selection
of sticks in our market. Items such as lacrosse shafts and heads, soccer socks, baseball bats, cleats and
helmets all share the same quality of “consumability”. Items such as these will receive a priority on
providing a broader selection and deeper inventory. These items also have the ability to be cleared out
in the off season if need be thus minimizing the risk that can come from a “bad buy”.
In contrast items such as shoulder pads, skates, shin pads and baseball gloves tend to last a long time
and not need to be replaced very often. Consumers don’t purchase an extra shoulder pad just because it
is on sale, which means that inventory which isn’t sold in season often has to sit for the entire off season
and makes “bad buys” much more costly to the business and can really hurt cash flow and lead to
problems with payables if sell through percentage is poor. Items such as these are critical to sport and
critical to being a premium sporting goods store, but due to the risk factor that comes with them a
smaller inventory will be carried with increased attention to sell through and turnover.
As previously alluded specializing in higher performance products than our larger competitors is the
plan. Big box stores tend to focus much more on price point and high margin items. Our focus will be on
having the highest performing items in the store with the best product knowledge in the area.
We are a business that supports people who want to live an active lifestyle. We do this primarily through
providing team sports equipment and apparel. However categories such as training, sports nutrition,
and individual sports are all within the scope of our business and could be catered to if their proved to
be adequate demand.
Hard Goods (typically equipment) is the core of our business. Soft goods (clothing & shoes) that are
carried will be done so with the intention of complementing our hard goods selection. Footwear will be
focused on shoes which are designed to be played in (with a big emphasis on cleated and court shoes) or
trained in. We know that we cannot carry the size, color and number of styles that Sport Chek carries so
we will focus on the technical aspects as opposed to the fashion side of the business.

Niche sports such as curling, competitive and fitness swimming, ringette, rugby and lacrosse are all areas
which are often overlooked by big box retailers, but have proven to have a healthy market in the
Cochrane area. Niche sports have a customer base which appreciates someone who cares about their
needs. A very good selection can often be provided for these sports with very little in terms of
investment and space requirements for the business. These niche sports tend to be very tight knit
communities and word of mouth spreads quickly when you provide a decent selection for their
participants. We will ensure to provide a good selection of a handful of carefully selected niche sports
which are popular in the community.
Currently we carry a full selection of hockey, baseball, soccer and lacrosse equipment and provide a
skate sharpening and hockey pro shop service. Typically approximately 75% of the revenue has been
generated by hockey equipment sales and skate sharpening. We will focus our buying efforts and
marketing strategy on creating more balance. Our goal is to grow our “non-hockey” categories while
maintaining our hockey business until we reach the point where hockey accounts for 50% of our annual
revenue. By focusing on sell through, and turnover of our hockey business and growing are spring sports
in particular it will help to improve profitability and cash flow throughout the year.
Price
We are fortunate to be members of the Sports Excellence buying group. Established in 1950 and with
over 110 members across Canada this gives us the buying power of a big box store, which allows us to
reach discount levels that normally would require significantly more volume that we do. Being a
member of the Sports Excellence group allows us to be competitive on price while still maintaining a
healthy margin.
We are committed to being priced at our below the MSRP on all of our regular priced items.
Furthermore we plan to price our “big ticket” items (skates, top end sticks) a few dollars below what our
largest competitors (Pro Hockey Life & Sport Chek) are priced. We believe that these items attract a lot
of attention and the consumer tends to be very aware of price on these big ticket items.
Pricing big ticket items slightly cheaper will help create perception and word of mouth advertising. As
customers come it to look at, test, and purchase these items we expect sales of accessories and smaller
items (stick tape, wax, socks, helmet repair kits, t-shirts, shorts, jock straps etc.) to improve. These items
have the best margins are and are critical to improving profitability. They also tend to be not as price
sensitive and are less often price shopped by the average consumer.
Many small retailers are hesitant to put items on sale fearing that they are not making any money if they
discount, however Edge Sports does not want to have their capital sitting on the shelf in items that it do
not have a chance to sell in the upcoming season. We would rather move the product and re-invest in
inventory that is current and has a chance to sell for a healthy margin. To do this sales and clearance
promotions may be occasionally utilized to help ensure turnover.

We want to avoid having large quantities of inventory on sale if possible as we don’t want to create
buying patterns with our customers where they are waiting for the sale. Careful analysis of previous
sales and attention to industry trends to help allow for accurate buying practices is essential to avoid
this. Also early intervention through improved merchandising and incentives to help move products
which are not on pace to sell through by the end of the season is critical.
Place
Currently Edge Sports of Cochrane is located in a strip mall near Cochrane’s downtown. It is a relatively
busy center with a Shoppers Drug Mart and Starbucks as key tenants. Our direct neighbors are a liquor
store and a dentist office. Most of the tenants are restaurants and medical offices.
Some of our current frustrations are a cramped parking lot which is difficult to get in and out of, and
none of the current tenants providing any complementary services or products. Particularly during
hockey season with so many of our customers dropping off skates on a regular basis for sharpening ease
of access is critical. Also our signage and storefront is currently hidden behind other businesses which
are directly off the main access road. We are currently land locked with no ability or potential to expand
(which we feel is critical if we are to compete and beat Sport Chek). The new management also would
like to significantly improve the image, look, and merchandising of the store and substantial investment
and possibly a disruption in business would be required to make this happen.
Finding a location with improved signage and ease of access is the best investment Edge Sports can
make to improve top of mind awareness in the community. Additionally having a space which is large
enough to accommodate interactive features such as artificial ice and turf which would allow for the
customer to try demos of sticks, bats, shafts, and cleats would go a long ways in helping to differentiate
from Sport Chek and improve consumer confidence in the product. Allowing the customer to feel and
use the product in game like simulations will go a long way to establish customer loyalty and decrease
buyer’s remorse and returns. High end sticks, cleats, shafts and bats can be purchased with confidence
as the customer knows first-hand how the equipment feels and performs. These items have the best
combination of volume and profit for Edge Sports and by providing a storefront which is designed to
help highlight and sell these products is one of the best marketing investments that can be made.
Promotion
How and where to invest in advertising is one of the hardest and most critical decisions a small business
can make. In the past Edge Sports has invested heavily in traditional advertising mediums like the local
newspapers and magazines. This investment failed to produce the necessary ROI to justify the size of
investment being made.
With so much clutter and competition in the advertising world providing first class customer service
which produces customer referrals is the key to every business with long term health and profit in mind.
However for Edge Sports to grow there needs to be frequent reminders to come see us for your sporting

goods needs. There are three primary ways that we intend to focus on for the next two years which will
help us to maintain a high level of top of mind awareness in Cochrane.
The vast majority of retail purchases involve some type of online search. Developing a user friendly and
easy to use website which provides the key information about our business is critical to our marketing
plan. Our current website has a lot of area for improvement and dedicated maintenance and updates
with an emphasis on SEO can go a long ways to improving website traffic. Sales are often a numbers
game and the more people that visit your site and the more often they visit tend to have a strong
correlation with in store traffic. We believe that sporting goods are best purchased after handling the
product and speaking with an expert about the equipment. Because of this and because of the price
sensitive nature of online shopping we have no intentions of expanding into e-commerce or online sales
in the short term. However the customer should be able to find critical information about our products
and services on our website. Also we need to make sure the SEO is adequate that we are one of the first
listing any time a search for sporting goods in the Rockyview area is made.
Social Media can also be an extremely effective tool in driving website and store traffic. By providing
consistent and relevant information about the store that actually benefits the customer will allow us to
develop these mediums to communicate directly with our customers. Facebook and Twitter will be our
main area of focus with messaging that is simple and useful. Periodically promotions and sales may be
used to help drive followers for these platforms.
The third and perhaps most critical promotional strategy will be focusing on relationships and
sponsorship with local associations. Key partnerships include Cochrane Minor Hockey, Cochrane Minor
Soccer, Cochrane Minor Baseball, the men’s and mixed slow-pitch leagues, The Cochrane Generals
Junior Hockey Club, The Cochrane Lions Football Club, The Cochrane Rangers Senior Soccer Club,
Cochrane and Bow Valley High Schools, and the Rockyview Lacrosse Association.
Developing a first name basis relationship with the Presidents and Equipment Managers of these
associations is critical to securing team orders, jersey orders, and sponsorships which help us to market
directly to their members. This is an effective tool to help brand us as the option for community
members who feel it is important to “support local”. And it is a critical tool for helping to differentiate us
from big box competitors. Providing custom apparel, equipment orders, jerseys and donations for
fundraisers all go along way making connections and building customer loyalty. The associations also
allow us to communicate directly with our target market.
Summary
To sum it up quickly, the plan is simple. Customer service and products tailored specifically for the
Rockyview community. We want to embody all the qualities that people love about shopping locally and
apply them to sporting goods. If our customer service is the best, our product knowledge superior, and
our inventory appropriate we feel that there is no way we can step backwards no matter what other big
box store is in town.

We believe if we invest our time and money into the community that the community will invest in is
with their time and ultimately financially. We want them to at least believe that they should always
check our store first, knowing that even if we don’t have exactly what they are looking for that they will
get some good advice on what to get and where to find it.

Appendix I: Financial Goals, Forecasts & Plan
Mnth Op
Costs
Ann Op Costs Growth
Projected
Revenue
Gross Profit Net Profit
Profit Re-
Investment
2015 $ 20,000.00 $ 240,000.00 15% $ 632,500.00 $ 265,650.00 $ 25,650.00 $ 7,695.00
2016 $ 21,215.10 $ 254,581.25 15% $ 727,375.00 $ 305,497.50 $ 50,916.25 $ 15,274.88
2017 $ 23,336.61 $ 280,039.38 10% $ 800,112.50 $ 336,047.25 $ 56,007.88 $ 16,802.36
2018 $ 25,670.28 $ 308,043.31 10% $ 880,123.75 $ 369,651.98 $ 61,608.66 $ 18,482.60
2019 $ 28,237.30 $ 338,847.64 10% $ 968,136.13 $ 406,617.17 $ 67,769.53 $ 20,330.86
$ 4,008,247.38 $ 1,683,463.90 $ 261,952.32 $ 78,585.69
(*Projected revenue for the 2015 fiscal year was generated by taking 2013 projected revenue and
showing a 15% increase. Operating costs were generated by using the 2014 operating costs and
factoring in the additional rent that would be paid for a new location. Gross Profit was calculated using a
42% margin (based on previous year’s averages).)
Edge Sports of Cochrane plans to take a sustainable and measured approach to growing revenue with an
emphasis on long term and sustainable profitability. We believe that we can reach revenue levels
reached at the businesses peak in three years. The difference being that by taking care to ensure proper
turnover, sell through and appropriate inventory levels it will allow Edge Sports to be profitable at this
revenue level.
The five year goal is to grow the business to a million dollars of annual revenue. They key to this growth
is remaining profitable in every fiscal year as we grow to this. Given the anticipated growth of Cochrane
combined with Edge Sports entering into its second decade of business in 2016 we believe that these
goals are very conservative and attainable, and very possibly beatable. We are committed to re-
investing in the business with 30% of net profit being reinvested into the business for marketing and
development of potential new revenue streams.
Inventory Management Strategy
Revenue
Sales per sq.
ft.
COGS/sq.
ft. Annual COGS
Average
Inventory
2015 $ 632,500.00 $ 152.93 $ 88.70 $ 366,850.00 $ 183,425.00
2016 $ 727,375.00 $ 175.86 $ 102.00 $ 421,877.50 $ 210,938.75
2017 $ 800,112.50 $ 193.45 $ 112.20 $ 464,065.25 $ 232,032.63
2018 $ 880,123.75 $ 212.80 $ 123.42 $ 510,471.78 $ 255,235.89
2019 $ 968,136.13 $ 234.08 $ 135.76 $ 561,518.95 $ 280,759.48
(*The above chart shows key metrics and dollar values per square foot which will act as guides and
budgets for purchasing of inventory and merchandising strategy. Turning the inventory over twice per
years is assumed for all figures.)

Appendix II: Sample Floor Plan
The diagram below shows a sketch of how Edge Sports would like to use the space and helps illustrate
some of the key concepts in the business plan such as demo areas. We want to create a space which is
planned and designed so that we can execute all of our key areas proficiently while still remaining
flexible enough to allow for growth and change in the future.

Appendix III: Custom Programs for Local Associations
The package below is an example of a custom clothing program that we are currently partnering with
Bardown Hockey Apparel to offer for the local hockey association. We believe that by combining a name
brand custom apparel program we can offer a product which none of our competitors can compete
with.

Edge Sports of Cochrane Business Plan

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