Friday, January 27, 2012

Business Planning - Preparing a Company and Industry Analysis

One component of the Business Plan is a Company and Industry Analysis, I like to call this describing your pecking order in the marketplace. Consider if you will that you are starting a business and will be a little fish in a big pond. Describe you, the fish and describe the pond and where you fit into it, and if seeking investor capital, be sure to tell why you are a viable fish for a pond with bigger hungry fish?

Recently the Online Think Tank prepared a rough draft business plan for a product. This is a real product invented by Charles Shooster PhD. This product is an oral hygiene product and below is a company analysis and industry analysis rough draft. A statement of fact and we have left out all the "industry data" to simplify this example:

COMPANY ANALYSIS AND INDUSTRY ANALYSIS

Teeth Wipes were originally conceived by Charles Shooster in the 90's, but due to time constraints Charles never acted upon this awesome idea. He did however make a few contacts with industry to sell the idea, which at the time never came to fruition. Years later he learned one of the companies he contacted and had a signed "non-disclosure agreement" with, stole the idea and ran with it. The company in question then sold the idea along with their whole company to Oral B for about $300 million, with Mr. Shooster's registered trademark logo and all.

Oral B in their infinite wisdom sold the Teeth Wipes, as "Brush-Ups" at an outrageous price of 12 for $8.99 and obviously it did not fly, although they did have moderate success in the beginning due to novelty and the Oral B Brand name. Recently, Oral B has dumped the "Brush Ups" and left a void in the market. Not wishing to make the same mistake as Oral B, our company will sell the Teeth Wipes at a price to buyers, which will keep the retail price around 5 for $1.00 and thus allow the Teeth Wipes the mass market appeal they deserve.

We have noted some Oral B Teeth Wipes being sold by retailers as low as $3.49 per 12 package now that they have been discontinued.

Location

Our company will originally be web-based, because we do not believe in wasting our up-front capital or renting expensive office space, when it is not necessary, nor do we expect anyone to visit us, as our buyers will be from around the world and all they really want is the product for their shelves, catalogs, restaurants, airlines or vending machines. Our sales teams will be independent contractors and we do not anticipate telling them the time, mode or manner of their sales.

Trends

We see several new trends developing in this industry sub-sector, including a new product called Proxabrush Trav-Ler by GUM www.gumbrand.com that seems to have made a serious hit with consumers. A six count is about $2.00 and we see our product as less expensive, more consumer friendly and less likely to turn customers away, as our product does not look like it will hurt the customer's gums or cause irritation in the mouth. In consumer ad hoc surveys this is exactly the response we got.

Another trend we hear from Dentists is that the soda pop, blended coffee drinks and food that the average American intakes is causing severe harm to teeth. Good for dentists, but very bad for humans. More and more people are living longer and the teeth have not evolved with the changes and increased life expectancy, thus more care, flossing, brushing will be needed. Unfortunately, brushing teeth three times a day, just is not feasible in the fast-paced society.

There is another significant trend; Water Supply Shortages. With less water available brushing is not always possible. Droughts, disasters, toxins in the water play havoc on the ability to brush teeth. Our product of course solves all these problems as well.

In high-paced, high stress societies, there is a premium on time. Those who travel cannot always find a place to brush their teeth, those leaving a restaurant are also in need of something more than a simple toothpick. Who needs wooden splinters in their mouth? Those who frequent restaurants have most likely had a bad experience with toothpick splintering.

Business Climate

We see significant warning signs in the stock market and economic indicators pointing towards a downward trend in the business cycle. We are not so concerned with this for our product, although see it will hamper some sales to restaurants and the travel industry. Still people want to look good and have clean teeth. Luckily, our product can be made for much less than anything comparable on the market, if folks want to save money, we cost less.

When the economy returns to a more robust state, more people will travel, eat out at restaurants and therefore our product will be more in demand. With a stronger economy we will be able to raise the price point and enjoy the higher profits we deserve for being the best consumer hygiene product on the market.

Position for Growth

Our company is positioned well for rapid growth due to our scaled down business model and web-based ordering system. Our product is in demand in the United States, Europe and around the world. With China's growing middle-class and the fact that 1/3 of their population smokes, Teeth Wipes is ripe for the Chinese. Due to our low costs to manufacture, we will compete in any market in the world. Due to our rapid web-based ordering process, we will run our company with little cost.

As the brand becomes more established we see opportunities for Pet Teeth Wipes and Infant Teeth Wipes, as potential add-ons to our product line. Even if these are never incorporated we will create separate marketing and business plans for them, and they will be available to the buyer of our company if sold, or as a new launch right after a Public Offering.

Future of Industry

We believe that UV Light systems wrapped in plastic will eventually be the way that humans clean their teeth to prevent decay and this will be used in conjunction with between teeth cleaning procedures in the home. We will be looking into these new technologies to augment our product line and also stay on the leading edge of the next new thing in personal mouth hygiene.

Currently, the Oral Hygiene market was mainly in the United States until recently; that is changing and in the future the number of world buyers will only grow. The Oral Hygiene market in many ways has become an Oral Vanity Market and therefore the lines cross and the market sub-sector is taking off, as The EuroMonitor has rightfully noted:

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