Eco Room Final P Pt

ECO-ROOM

Business Plan Presentation

The

Will NelsonPeter BatesTamara FerdmanAlex FeldmanKyle Abshoff

AgendaThe Eco-Room Mission and Values

The Objective

The Eco-Industry

PEST Analysis

Target Market

Location

Demographics

Benefits of Going Green

Product Categories

Competitors

Differentiation

Marketing Plan

SWOT Analysis

Financial Statements

The Eco-Room

Mission• To provide exclusively eco-friendly household products for the rapidly

growing environmentally conscious segment in the Toronto area

Values• Provide consumers with readily available eco-friendly products• Become an active member of the eco-friendly community • Educate consumers about the benefits of thinking green when it comes to day-to-

day living• Changing the way consumers shop for household items and reduce our impact on

the environment

The Objective

• To penetrate the eco-friendly retail market• To gain a majority market share in Bloor West Village and the surrounding

area• To offer customers quality products that will make a difference in reducing

their carbon footprint and impact on the environment• To develop long lasting relationships and loyalty with our customers by

offering superior products and customer service• To provide customers with an easily accessible retail location to satisfy

their eco-friendly shopping needs• To promote and support the growing eco-friendly trend in Toronto

The Eco-Industry

• 53% of Canadians purchase eco-friendly products• Eco-friendly product labels are very important to consumers• Growing change towards products that are environmentally friendly• Environmental goods and services industry

– In 2010 is estimated to be worth $688 billion– In 2015 is estimated to grow to $800 billion

• Changing consumer trends have lead to an increase in consumer demand for eco-friendly products– Increased pressure on retailers to carry eco-friendly products

• Canadian government invests millions in environmental initiatives and incentives for going green ie. tax credits

PESTPolitical• Increased popularity of the Green Party and NDP have brought environmental issues into

the Canadian political discourse• Global initiatives eg: Kyoto Protocol Economic• Eco/non-eco product prices (changing stereotype)• Going green focuses on efficiency which saves money in the long-term• Business and personal tax breaks• Recession and growth of the eco-industrySocial• Going green has become a “cool” trend and part of everyday vocabulary• Global Earth Day and the power of collective action, word of mouth, social networkingTechnological• Internet growth as an environmentally friendly way to advertise• Global surge in renewable energy funding• Increased surge in the last 5 years in eco-friendly technology (ie. fuel cells)

Target Market

• Young, affluent professionals with young families

• Those who have a keen interest and commitment to the betterment of:

The communityThe environment

• Local businesses and environmentally and socially conscious individuals

• Have disposable income to pay the premium for a “greener lifestyle”

Location• 1000 sq foot retail space located on Bloor Street between Jane and

Runnymede:2195 Bloor Street WestToronto, ON.M6S 1N2

•Urban chic retail store in the heart of Bloor West Village

• Chosen based on the target demographic and lack of direct competitor activity in the immediate area

• Ideal for maximum walk and drive-by traffic

Demographics

• More than 43% are couples with children

• 34% are between the ages of 25 and 44

• 48% have a university diploma or degree

• More than 55% own their homes

• 28% have an annual income of $100,000 or more

Those Who Live In Ward 13 of Toronto (Parkdale, Bloor West Village, South Kingsway)

Benefits of Going Green

1. For Your Environment

• Paper Products: Paper waste is the largest component of municipal waste in Canada

• Plastic Bags: Normal plastic bags take 1000 years to biodegrade, ours take 12 to 24

months

• Cleaning Products: Natural substances as their active ingredients rather

than toxic chemicals

2. For Your Wallet

• Water Products: Low Flow Showerheads, Aerators and Toilet Tank Bank lowers utility

bills

• Lighting Products: CFL bulbs use 70% less electricity and last 4 to 10 times longer

• Home Renovation Tax Incentives

Product Categories

• 100% Recycled Paper

• Water Saving Products

• CFL Light bulbs

• Niagara Conservation Kits

• Natural Cleaners

• Beauty

• Biodegradable Plastic Bags

• Office

Competitors

Direct

Independent Retailers

• Grassroots

• Green Design Studio

“Big Box” Stores

• Wal*Mart Home Hardware

• Home Hardware

• Canadian Tire

• Home Depot

• Rona

Indirect

“Big Box” Stores

• Wal*Mart Home Hardware

• Home Hardware

• Canadian Tire

• Home Depot

• Rona

• Location - Heart of Bloor West Village (No direct competitors in the area)

• Exceptional Customer Service - Emphasis on making life-long customers, in-store demonstrations

• Product Uniqueness - Procured products from suppliers in close proximity to the GTA

• Memorable Shopping Experience - Purchases positively impact our customer’s lives

• Interactive Catalogue - Current promotions, information on Toronto’s eco-community

• Storefront - Marketing tool, solar powered signage, CFL lighting, memorable window displays

How The Eco-Room Differentiates Itself

Marketing Plan Market penetration will be focused on not only Bloor West Village, but thesurrounding area as well, a total working age population of potentialcustomers numbering 217,650.

Marketing Channels Include:

•Target Market

• Web/Internet

• The Retail Store

• Print

• Strategic Partnerships

• Competitors Response

SWOT

Strengths• Location• Products• Staff• Availability

Opportunities• Growing Trend• Cross-promotion• Expansion

Weaknesses • New Industry• Experience• Starting a Small Business

Threats• Commercial Costs• Competitors• Economic Environment

Year 3Q1 Q2 Q3 Q4

% of Market Penetrated 1.45% 1.65% 1.95% 2.10%# of Customers 3156 3591 4244 4570 # of Repeat Customers (Based on 75% Repeat) 2204 2367 2693 3183# of New Customers 952 1224 1551 1387 Average Sales Per Customer

$ 25.00 $78,900.0

0 $89,775.00 $106,100.00 $114,275.00

$ 27.50 $86,790.0

0 $98,752.50 $116,710.00 $125,702.50

$ 30.00 $94,680.0

0 $107,730.00 $127,320.00 $137,130.00 Total Working Age 25-64

217,650

Percentage of Market Penetration Average Expenditure per Customer

Sales Forecast

Financial Statements

The middle estimate for sales forecasting was used with the average consumer basket being $27.50;

Based on our Middle Estimate for the financial forecast:

• Year 1 we expect to see a total of 5,767 sales with revenues of $158,592;

• Year 2 we expect to see a total of 9,686 sales with revenues of $266,365;

• Year 3 we expect to see a total of 15,562 sales with revenues of $427,955.

Start Up ExpensesRent/Utilities* 8,400.00$ Advertising 1,500.00$ Marketing 2,500.00$ Business registration fees 1,500.00$ Insurance 7,500.00$ Supplies 500.00$ Total Start up Expenses 21,900.00$

Assets RequiredLeasehold improvements 5,000.00$ Purchase of Equipment 10,000.00$

Purchase of inventory** 5,000.00$ Total Assets 20,000.00$

Total Start up Cash Required 41,900.00$

*Two months of rent before opening

** Approximately 20% of projected Cost of Sa les

Startup Costs

Six Month Cash Flow

Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Total

Start up Expenses 41,900$ -$ -$ -$ -$ -$ 41,900$

Lease of Premises -$ 4,200$ 4,200$ 4,200$ 4,200$ 4,200$ 21,000$

Purchase of Inventory* -$ 1,962$ 1,962$ 1,962$ 1,962$ 1,962$ 9,811$

Sa laries 4,167$ 4,167$ 4,167$ 4,167$ 4,167$ 4,167$ 25,000$

Advertis ing -$ -$ -$ -$ -$ 1,500$ 1,500$

Marketing -$ -$ -$ -$ -$ 2,500$ 2,500$

Suppl ies -$ -$ -$ 56$ 56$ 56$ 167$

Cash used in operations 46,067$ 10,329$ 10,329$ 10,384$ 10,384$ 14,384$ 101,878$

Sa les 9,973$ 9,973$ 9,973$ 11,972$ 11,972$ 11,972$ 65,835$

Cash from (used) in operations (36,093)$ (356)$ (356)$ 1,587$ 1,587$ (2,413)$ (36,043)$

Partner Loans 50,000$

Cash at beginning of month -$ 13,907$ 13,551$ 13,196$ 14,783$ 16,370$

Cash at end of month 13,907$ 13,551$ 13,196$ 14,783$ 16,370$ 13,957$

*Tota l inventory purchased in year = $23,789 + $4,758 - $5,000 (purchased for s tart up) = $23,547/12

Six Month Cash Flow

2010 2011 2012Revenues (Gross Sales) 158,592.50$ 266,365.00$ 427,955.00$

Cost of Goods Sold 23,788.88$ 39,954.75$ 64,193.25$ Gross Margin % 85% 85% 85%

Gross Profit 134,803.63$ 226,410.25$ 363,761.75$

Operating Expenses

Rent/Utilities 50,400.00$ 50,400.00$ 50,400.00$ Salaries 50,000.00$ 125,000.00$ 275,000.00$ Insurance 7,500.00$ 7,500.00$ 7,500.00$ WSIB* 700.00$ 1,400.00$ 2,800.00$ Advertising 3,000.00$ 4,000.00$ 5,000.00$ Marketing 5,000.00$ 6,000.00$ 7,000.00$ Legal 1,500.00$ -$ -$ Supplies 1,000.00$ 1,000.00$ 1,000.00$

Depreciation of Assets** 3,000.00$ 3,000.00$ 3,000.00$

Operating Income 12,703.63$ 28,110.25$ 12,061.75$

Taxes 2,540.73$ 5,622.05$ 2,412.35$

Net Income 10,162.90$ 22,488.20$ 9,649.40$

*WSIB = $1.40 per $100 of insurable earnings up to $74,600.00 x 5 employees**Assets = Shelving, Tables, Leasehold Improvements, Offi ce Equipment Depreciated over 5 years

The Eco-RoomIncome Statement

Income Statement

2010 2011 2012Operating Activities

Net Income 10,162.90$ 22,488.20$ 9,649.40$ Add Back Depreciation 3,000.00$ 3,000.00$ 3,000.00$

Additional Purchases of Inventory* (4,757.78)$ (7,990.95)$ (12,838.65)$

Cash From Operating Activites 8,405.13$ 17,497.25$ (189.25)$

Investing Activities:Purchase of Capital Assets (15,000.00)$ -$ -$

Financing ActivitiesPartner Loan 50,000.00$ (25,000.00)$ (25,000.00)$

Total Cash (Used) Provided By Operations 43,405.13$ (7,502.75)$ (25,189.25)$

Cash at Beginning of Year -$ 43,405.13$ 35,902.38$ Cash at End of Year 43,405.13$ 35,902.38$ 10,713.13$

The Eco-RoomCashflow

*Additional Purchases of Inventory = Year one Cost Of Goods Sold x 20% with the assumption that 20% surplus inventory is required

3 Year Cash Flow

Break Even Point

The Break Even Point was determined by taking the total annual operating expenses and dividing it by a markup of 85%;

Based financial statements the 3 year Break Even Points are:

2010 - $143,647.06

2011 - $233,294.12

2012 - $413,764.71

Break Even Point

2010 2011 2012Operating expenses 122,100.00$ 198,300.00$ 351,700.00$ Margin 85% 85% 85%Break Even 143,647.06$ 233,294.12$ 413,764.71$

Key Highlights

1) In order to begin executing The Eco-Room business plan we will require $41,900 of startup cash;

2) Partner investment of $10,000 each ($50,000 total) to offset startup costs;

3) Positive cash flow is anticipated for each month of operation with increasing sales and market penetration each quarter;

4) Partner investments will be completely paid out by year 3 ($25,000 year 2 and $25,000 year 3);

Organizational Chart

Kyle Abshoff

Finance and Accounting

Customer Service and Day-to-Day

Operations

Kyle Abshoff

Finance and Accounting


Operations

Tamara Ferdman

Administration and Creative/Web


Operations

Tamara Ferdman

Administration and Creative/Web


Operations

William Nelson

Marketing and Promotions


Operations

William Nelson

Marketing and Promotions


Operations

Peter Bates

Operations


Operations

Peter Bates

Operations


Operations

Alex Feldman

Inventory and Supplier

Management


Operations

Alex Feldman

Inventory and Supplier

Management


Operations

Documents

Eco Room Final P Pt