COMPREHENSIVE CASE DAN KIM: PART 2 Although the numbers Dan put together indicate that the Ladder Helper business might face several challenges, he decides to devote all his spare time to the venture. This is primarily because of the positive response that he has received from his co workers and the local Home Hardware dealer, as well as numerous comments on the Internet, all agreeing that the product has potential. Dan is particularly excited about some of the positive comments on crowdsourcing sites, as they had come from all over the world, and he is convinced the product could have global appeal. Dan was so enamored by the response that he decided to put up a few units for sale using Kijiji and some Internet sites used by inventors. He quickly had to pull the ads down, as he sold 10 units within a few days, essentially running out of product Feedback from customers has been positive. and this is encouraging Dan One of the decisions that Dan is concerned about is whether to keep manufacturing at home or rent a facility. Dan's wife, Suzie, has been pressuring Dan to consider manufacturing the product in China to reduce costs, but Dan insists that the product be made in Canada Regardless of how he establishes the manufacturing facility, one thing that Dan learned in his small business management class was that he should prepare a business plan. He therefore sets to work preparing the plan. The outline of Dan Kim's business plan for the Ladder Helper follows: Introduction My objective in starting this business is to become independent and develop a business that will provide an adequate living for my family and me. I anticipate that within three years, the product will experience high awareness and demand throughout Introduction My objective in starting this business is to become independent and develop a business that will provide an adequate living for my family and me. I anticipate that within three years, the product will experience high awareness and demand throughout Canada if not North America. At that time, I will look to expand globally. I have considerable expertise in construction and roofing, which has allowed me to be knowledgeable about the safety and convenience concerns associated with the use of ladders. 1 Marketing The product is a light metal handrail that will attach to most aluminum extension ladders commonly used in the construction industry and many homeowners. It can be made inexpensively (estimated at $10 per unit) and has great profit potential selling price estimated at $40 per unit or a 300 percent markup). I anticipate that anyone who owns a ladder would see the Ladder Helper's benefit and would be interested in purchasing it intend to promote the product on the Internet during the early days of the company, making use of social media sites, sites that allow for free advertisements such as Kyy, and perhaps make use of some traditional promotion, such as newspapers and perhaps television advertising. I am also considering a crowdfunding campaign as a way to generate some initial sales and publicity. I am also hopeful that I will be able to generate some additional publicity for the product in newspapers and on the radio, because there is currently no other product like it on the market. Physical Facilities Althnunn i now can manufacture the Ladder Helper in my garage. as sales increase, I will need to build, purchase or lease a 4 Physical Facilities Although I now can manufacture the Ladder Helper in my garage, as sales increase, I will need to build, purchase or lease a small factory to meet the demand. I estimate that an adequate production facility, including the required equipment will cost approximately $170,000. Since I have inherited land, I would ideally build my own plant on this property Financial I currently have $20,000 of my own money to invest in the business and will need to raise the rest of the money, Ideally would borrow the money from a bank. I am certain that the business will be able to generate the required income to make the Interest payments on the loan plus provide a good living for my family, Legal plan to operate the business as a private corporation to protect myself from any liability issues, Personnel The business will employ three people initially, including me. I will be in charge of the production process, assisted by two nthers I will also handle the marketing and financial aspects of the Ladder Helper, with the help of my wife, Suzie. Questions 1. Evaluate the business plan that Dan has prepared. Suggest improvements 2. Where do you think Dan will be able to secure the funds required to start the business? Do you think the bank will lend him money? Why or why not? 3. How would you market the Ladder Helper? List some of your best ideas and share them with the class