Introduction
Bottlieb Innovations, Inc. is a start up company that produces a product that will change the landscape of land assessment. Bottlieb’s Digital Geographer device is a simple device that computes the area for a walked perimeter using patented technology.
This plan serves as a guideline to help management when the company enters its first fiscal year. The plan uses conservative projections and numbers.
The Company
Bottlieb Innovations, Inc., is located in Escondido, CA. The facility covers approximately 1,500 feet and is located close to freeways. It includes office, workshop, and assembly spaces as well as plenty of parking.
George S. Bottlieb, president and CEO, is responsible for product design, development, sales, and overall business management. Jay Rosenburg Jr. shares responsibility for business administration, with a particular emphasis on finance, marketing and operations. The company’s size means that both the president (and vice-president) will initially need to concentrate on product assembly, packaging and order processing. As the company grows, additional management personnel will be hired. To reduce overheads and to provide benefits, initial production personnel will be hired through temporary employment agencies.
The company will offer a competitive bonus plan to reward outstanding company performance. It is possible to work for an organization with so much growth potential. The bonus plan can help you attract and retain your key personnel.
The Product
The company has developed, and is preparing to manufacture, a simple device, the Digital Geographer, which will compute the area of a walked perimeter in a fraction of the time required by current area measurement techniques, which rely on distance measuring wheel technology. Because the Digital Geographer contains few components, its manufacturing process is expected to be relatively simple.
Bottlieb’s Digital Geographer has a unique functionality that is unmatched by distance wheels from other manufacturers. The Digital Geographer simplifies complicated area measurements. It used to take several measurements, a high degree of estimation and complex geometric calculations. Now, all you need is the ability to walk and press a button. Contractors are well aware of the importance of precise area measurement. A better understanding of the scope of the job will help you avoid underestimating costs in a market.
Bottlieb Innovations, Inc. builds its products using local suppliers for materials and services. The company has molds to produce plastic components such the wheel, encoder box, and other parts.
Plans are underway for a follow-up product called the DG-3000. The DG-3000 will have two wheels and a differential based system for determining directional shifts. It will not use an electronic compass. Bottlieb Innovations plans future products with software interfaces. Future iterations of DG-3000 may also use a Global Positioning Satellite, (GPS), system.
The Market
Analyses of the measuring wheel market have revealed that there is an annual global revenue of approximately $100M. The average price of the wheels is around $50 (U.S. dollars). Worldwide, approximately two million distance measuring wheels are sold each year. Bottlieb Innovations conservatively estimates that within this market, one-third of the demand is generated due to customer need to calculate area and distance versus distance measurement only. This estimate suggests that there could be a demand for 600,000.+ units annually in the area measurement segment.
Bottlieb Innovations could capture 1% in this segment. This would mean that the company can sell 6,000 units each year. As long as the market recognizes and values the superiority of the Digital Geographer and customer buying habits can be changed, the market potential is very strong.
The current distance-wheel market has three main segments:
- Construction, which includes appraising, engineering and smallscale surveying.
- Agricultural, with large-scale surveys.
- Niche.
Bottlieb Innovations will target existing buyers from 10 to 18𔈁.
Distance wheels are used in construction, surveying, and small-scale appraising industries. More specifically, the Digital Geographer is targeted specifically at buyers who use their distance wheels to measure area. Bottlieb’s initial sales will be to California’s construction industry. But the company intends to expand quickly and increase its domestic sales.
Bottlieb’s product is a technological leap, so there are no direct competitors to the Digital Geographer product. However, Bottlieb expects to sell the Digital Geographer to a significant portion of the current distance wheel market. The current distance wheel market: Rollertape, Measure Man, TruMeasure, and Rollersure can be considered Bottlieb’s competitors.
The tool distributors are often used by distance wheel manufacturers. A few of the larger wheels can also be sold through agricultural supply dealers. Distributors can handle product placement issues and the problems that arise when dealing with customers. Large retail stores that sell home improvements products (e.g. Home Depot) also sell distance wheels. Home Depot
The large number of private-owned companies involved in the industry makes it difficult to forecast the current industry growth. Bottlieb Innovations expects to grow its market share and not only is there strong evidence of a growing market for measuring wheels, but also worldwide construction growth. Bottlieb’s growth depends less on the total market size expanding than it is on generating excitement and interest for the Digital Geographer.
Bottlieb expects direct marketing and product reputation, as well as sales through major distributors and home improvement stores, to briskly expand market demand throughout the state, region, and nation within the next five years. Bottlieb Innovations is likely to be successful in domestic sales and have favorable Web-based sales.
Financial ForecastionsBottlieb Innovations’8217’s forecast assumes constant, nonseasonal growth and an annual revenue of $425 per unit. Because of volume requirements, production will be driven and our suppliers offer significant discounts on larger volumes, it’s possible that the Digital Geographer will be priced lower if sales volume rises significantly. However, the price will not be reduced to lower our profit margin.
We don’t know how many people will pay around $600 to get a Digital Geographer. However, we anticipate doubling our production to 100 units per year within the first one-year. If there is a greater demand for the product than expected, Escondido can produce 500 units per months. The company is expecting to earn huge profits by Year 2.
1.1 Objectives
Bottlieb’s management seeks to make the business profitable within one year of the start of production, scheduled to begin early in the third quarter of Year 1. As production capacity increases, it can be quickly increased. If there is enough demand, it could be increased to 500 units per month at the existing facility.
Management’s challenge is to generate enough demand for the product on local and regional distance-wheel market to achieve sales of 100 units per monthly by the end of Year1. This will ensure profitability and enable further expansion into national or global markets.
1.2 Mission
Bottlieb Innovations seeks to “through relentless innovating and creativity, extend the overwhelming power and technology to practical time-saving, accurate, and time-saving tools that enable increases customer productivity.” Bottlieb’s mission statement reflects this blend of creativity that Bottlieb’s management believes is necessary for creating, marketing, producing, and selling breakthrough products.
Bottlieb Innovations’’s only product, Digital Geographer. But the founders and management are continually evaluating the market feasibility and a range of groundbreaking product ideas.
The Digital Geographer product is expected to generate revenues of approximately $2.5 million. It will also be used for future improvements and funding research and development of new products, even in unrelated fields.
1.3 Keys to Success
- Bottlieb’’s Digital Geographer product has been so revolutionary that it effectively creates a segmented market. Bottlieb’s management has targeted existing distance-wheel buyers, and needs to convince these customers of the Digital Geographer’s added value.
- Product quality must be exceptional, since the company’s reputation will initially be driven by the experiences of users as well as word of mouth advertising.
- Financial health is dependent on accurate production planning, cost control, budgeting, and financial forecasting.
- Avoid the temptation not to pay attention to profitability but only growth.