Electric Shoes

That keeps you warm in winter

Submitted To: Sir Khurram Amin Sb

Submitted By: Kishwar Sarwar

Roll Number: MCOF19MO39

Subject: Entrepreneurship

NOON BUSINESS SCHOOL

UNIVERSITY OF SARGODHA

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Contents
Executive Summary..............................................................................................................................3
Business concept...................................................................................................................................7
Product or Service................................................................................................................................7
Market research and analysis...............................................................................................................8
Market plan.........................................................................................................................................12
Manufacturing and operations...........................................................................................................13
Entrepreneurial team..........................................................................................................................14
Financial Documentation....................................................................................................................15
Important Assumptions......................................................................................................................15
Break-even Analysis............................................................................................................................16
Projected Profit and Loss...................................................................................................................17
Projected Cash Flow...........................................................................................................................19
Projected Balance Sheet......................................................................................................................22

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Executive Summary

Venture defined

It is about electric shoes with a technological heating system built in to keep feet warm in

winters especially in snow fall areas. This product is designed to provide comfort and warmth to

feet. It is going to be easy to use as it will have built in heat control system with digital display. It

will be in users control to set up the heat/ temperature accordingly. For this purpose built in

chargeable battery system is included with a capacity of 12 hours.

Product introductory

This is a product called electric shoes which is especially designed for people living in extreme

cold areas of the world. This is a new technology innovation with built in heat control system

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and digital display. Consumers will have a choice to use it as normal shoes as well as shoes with

heat control system. Temperature could be set as per choice of users. This product will be

patented and owner has a patent right according to the law prevailing in the country. No part of

this product could be replicated or reproduced without prior consent of the owner. A law suit will

be filed against an infringement. This product is at advanced engineering stage with limited

production ready to be launched in market.

 Expected demand : 60% (assumed)

 Expected competitors

There are no competitors or providers for the same product up till now. This product is

totally new and never seen before or made by any shoe company so far.

 We will target medium and high level income as they are willing to buy it.

 The estimated price of the product to cover costs and profit is 10000/Rs per unit.

Market characteristics

 This product will hit a medium size market and expected to rise to high level market in

near future.

 This business will locate in Pakistan.

 Also we can provide online service for delivery allover Pakistan and aboard in

international market. This will increase our sales.

 Ultimate customers

 People living in extreme cold areas.

 Sports player specially skating champions who perform skating at snow.

Entrepreneurial team

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As an entrepreneur I have many skills that would help me in this business as: Marketing

knowledge, planning skills, creative thinking, analytical thinking, problem solving skills,

interpersonal skills.

Also, for the part of experience, it will be supported by an expertise in the business operations

and the market some of them will be supporters in the management team and the others will be

consultants.

There are some highly qualified engineers who will design the product and develop it in order to

bring in hands of customers.

Form of ownership: sole proprietorship

The management team will include:

Marketing manager, electrical engineer, financial analyst, R&D and market research, business

analyst, accounting manager, sales manager, Executive officer.

Authority of the principle: will be on the owner of the business as it is a sole proprietorship.

Roles and responsibilities of members of organization

Design Engineer: is responsible for designing the product.

Graphic designer: prepare work to be accomplished by gathering information and materials.

Illustrates concept by designing rough layout of art and copy regarding arrangement, size, type

size and style of the product.

HR manager: is responsible for gathering the management team.

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Sales manager: is responsible for designing and implanting a strategic sales plan that expands

company’s customer base and ensure it is strong presence.

Executive officer: is responsible for keeping the ship afloat. He works with all of the teams to

create synergy and hold them accountable.

Research and development team: has the responsibility of being innovative and keeping up

with the latest trends and developments.

Operations and production team: is responsible for bringing the product to life.

Business concept

It is about electric shoes with a technological heating system built in to keep feet warm in

winters especially in snow fall areas. This product is designed to provide comfort and warmth to

feet. It is going to be easy to use as it will have built in heat control system with digital display. It

will be in users control to set up the heat/ temperature accordingly. For this purpose built in

chargeable battery system is included with a capacity of 12 hours.

We expect high demand as it is a new product with new technology.

This business is unique so there are no typical competitors or providers for the same product up

till now. We will target medium and high level incomes as they are willing to buy it.

It is forecasted that the project will receive a great acceptance from the customers as there is no

provider for their unsatisfied need.

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The government is currently supporting any new ventures that are targeting new cities by

providing the infrastructure for discounting prices. Also any new startup will be exempted from

taxes for the first 5 years.

International trend level is going to rise as it has significant technology development.

Product or Service

This is a product called electric shoes which is especially designed for people living in extreme

cold areas of the world. This is a new technology innovation with built in heat control system

and digital display. Consumers will have a choice to use it as normal shoes as well as shoes with

heat control system. Temperature could be set as per choice of users.

Apparently these shoes will be like a normal shoes but it will have some special additions in it as

it has a rechargeable battery that will support heating system which will ultimately produce heat

to keep feet warm during winter season. This product will work as indoor heating system does in

house. Consumers will be able to change or set a temperature which will be required according

to a particular weather condition. The temperature will range from 0-200 degree Celsius. A

digital display will be present on the boots which will suggest a temperature setup with the help

of automatic weather forecast. This product will be patented and owner has a patent right

according to the law prevailing in the country. No part of this product could be replicated or

reproduced without prior consent of the owner. A law suit will be filed against an infringement.

Besides this there is no law in the country that prohibits any business of this type. Government

supports such an innovative business as it is providing subsidy up to 20% to bring such a unique

technology in Pakistani market. We expect high return and sales as this product is totally new in

the market and no company has ever made such a product before. A robust increase in sale is

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expected starting with the launch. This product is at advanced engineering stage with limited

production ready to be launched in market. Our firm holds a distinct competency to produce this

type of shoes as high file engineers from different areas of Pakistan will be part of our team.

Market research and analysis

Our shoes will be targeting two distinct groups of fashion-conscious shoppers–professional

workers e.g sports persons and normal households. While both groups are interested in these

shoes, the professionals (skating players) will also be looking for these shoes they are able to

wear with their sports attire. The households might be looking for these while going on trips etc.

Market Segmentation

Our product is targeting two different population segments within the broad category of:

Professionals: these are full-time working professional players. They typically earn more than

$45,000. They will purchase shoes for the workplace, as well as for leisure time.

Households:  The household income of this group is $60k-$120k, generally toward the higher

end of this range.

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Market Analysis

Potential Customers Growth CAGR

Professionals 9% 12,457 13,578 14,800 16,132 17,584 9.00%

Housewives 8% 14,544 15,708 16,965 18,322 19,788 8.00%

Other 0% 0 0 0 0 0 0.00%

Total 8.47% 27,001 29,286 31,765 34,454 37,372 8.47%

Target Market Segment Strategy

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These markets will be targeted through an attractive, eye-catching storefront in a popular mall.

Most customers within the target market shop at malls. Malls allow them to visit many different

stores within the same vicinity. By just having a visible storefront in a well traveled mall, we will

receive walk-through customers.

While the leased space in a mall is expensive, one of the benefits that you pay for is the mall

association which spends money on marketing the mall and the stores within the mall.

Sales forecast

The first month will be used to set up the store front. The first employee will be hired and display

inventory will be purchased. There will be no sales activity during the first month. The second

month will begin to see sales activity, and it is forecasted that around month four sales will really

begin to pick up. The reason for this is that word will get out about Passion Soles and more and

more people will be coming in to check out the extensive selection. A third employee will be

hired in December for the holiday season.

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Sales Forecast

Sales

Professionals $84,402 $118,745 $135,454

Households $54,861 $89,184 $102,095

Total Sales $139,263 $207,929 $237,549

Direct Cost of Sales Year 1 Year 2 Year 3

Professionals $33,761 $47,498 $54,182

Households $21,945 $35,674 $40,838

Subtotal Direct Cost of Sales $55,705 $83,172 $95,020

Market plan

Product: it is a new product that will satisfy customer needs also customers are willing to buy it.

There is no other typical product like it in the market.

Price: 10000 per unit. That will cover costs: labor, materials and production of the product is

considered before setting the price.

Payments: will be in cash through our official websites.

Place or distribution: it will be available online, in distributers’ stores.

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Promotion: promotions will be made through following ways:

 Advertising: through appearing in TV shows that support entrepreneurs.

 Selling: use sales associates to stress the benefits of products to customers and to

overcome their concerns.

 Digital/interactive: Social media portals such as twitter, Facebook and Youtube also

provide inexpensive ways to interact with customers in real time.

Manufacturing and operations

Most of the times manufacturing plans and operations are dependent on the type of business. For

manufacturing raw material is required. There are different elements that are included in

manufacturing and operational plans.

Facilities

The sources which make the business process easy are known as facilities. These include:

Almost all of the property which is in use is personal ownership and only 2% property is on

lease.

Latest technology and innovative methods will be used.

The business which is being carried out is legal and no restriction is set up by the government.

Product will be delivered to customers with high demand.

Inventory

The inventory is core thing to continue the production and operations of the business.

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We maintain our own inventory and a portion is kept reserved to meet the emergency needs of

customer.

Transactions are mostly cash based only a few part of inventory is credit based.

The company will hire skilled and expert staff to control and manage the quantity of inventory.

The products are supplied in bulk amount and small orders are delivered through their

distribution channels.

Human Resources:

The human resources are vital to continue the operations of business.

We will hire skilled and professional staff to carry out business operations and perform the duties

effectively.

We will hire skilled full supervisor who will evaluate the production.

The main objectives of the business are to provide the valued service and core competency

services.

We will be focused on basic tasks and goals to prepare the product according to the demand of

customers.

Entrepreneurial team

All the members of the team have vast knowledge and experience. Highly qualified and

professional persons will be hired. All the members will carry out the business according to the

latest technology and modern methods of marketing.

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Following posts are included in entrepreneurial team:

Design Engineer: is responsible for designing the product.

Graphic designer: prepare work to be accomplished by gathering information and materials.

Illustrates concept by designing rough layout of art and copy regarding arrangement, size, type

size and style of the product.

HR manager: is responsible for gathering the management team.

Sales manager: is responsible for designing and implanting a strategic sales plan that expands

company’s customer base and ensure it is strong presence.

Executive officer: is responsible for keeping the ship afloat. He works with all of the teams to

create synergy and hold them accountable.

Research and development team: has the responsibility of being innovative and keeping up

with the latest trends and developments.

Operations and production team: is responsible for bringing the product to life.

Financial Documentation

The following sections will outline important financial information.

Important Assumptions

The following table details important financial assumptions.

General Assumptions

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Plan Month 1 2 3

Current Interest Rate 10.00% 10.00% 10.00%

Long-term Interest Rate 10.00% 10.00% 10.00%

Tax Rate 30.00% 30.00% 30.00%

Other 0 0 0

Break-even Analysis

The Break-even Analysis indicates that approximately $13,000 is needed in monthly revenue to

reach the break-even point.

Break-even Analysis

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Monthly Revenue Break-even $12,369

Assumptions:

Average Percent Variable Cost 40%

Estimated Monthly Fixed Cost $7,421

Projected Profit and Loss

The following table will indicate projected profit and loss. We estimate purchase of new shoe

display inventory, primarily for the seasonal changes in styles. Because these are displays, we

are tracking them as expenses. It is estimated that new styles (especially around the change in

seasons) will require regular purchase of shoe displays as part of the normal course of business.

Pro Forma Profit and Loss

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Sales $139,263 $207,929 $237,549

Direct Cost of Sales $55,705 $83,172 $95,020

Other Production Expenses $0 $0 $0

Total Cost of Sales $55,705 $83,172 $95,020

Gross Margin $83,558 $124,757 $142,529

Gross Margin % 60.00% 60.00% 60.00%

Expenses

Payroll $55,200 $78,400 $80,400

Sales and Marketing and Other Expenses $1,200 $1,200 $1,200

Depreciation $1,056 $1,056 $1,056

Shoe Display Inventory $7,000 $5,000 $5,000

Utilities $1,200 $1,200 $1,200

Insurance $1,800 $1,800 $1,800

Rent $21,600 $21,600 $21,600

Payroll Taxes $0 $0 $0

Other $0 $0 $0

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Total Operating Expenses $89,056 $110,256 $112,256

Profit Before Interest and Taxes ($5,498) $14,501 $30,273

EBITDA ($4,442) $15,557 $31,329

Interest Expense $255 $224 $37

Taxes Incurred $0 $4,283 $9,071

Net Profit ($5,753) $9,994 $21,165

Net Profit/Sales -4.13% 4.81% 8.91%

Projected Cash Flow

The following chart and table will indicate projected cash flow. We anticipate borrowing $5,000

in June to cover shoe display inventory purchases and other expenses.

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Pro Forma Cash Flow

Cash Received

Cash from Operations

Cash Sales $139,263 $207,929 $237,549

Subtotal Cash from Operations $139,263 $207,929 $237,549

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Additional Cash Received

Sales Tax, VAT, HST/GST Received $0 $0 $0

New Current Borrowing $5,000 $0 $0

New Other Liabilities (interest-free) $0 $0 $0

New Long-term Liabilities $0 $0 $0

Sales of Other Current Assets $0 $0 $0

Sales of Long-term Assets $0 $0 $0

New Investment Received $0 $0 $0

Subtotal Cash Received $144,263 $207,929 $237,549

Expenditures Year 1 Year 2 Year 3

Expenditures from Operations

Cash Spending $55,200 $78,400 $80,400

Bill Payments $78,704 $118,797 $133,576

Subtotal Spent on Operations $133,904 $197,197 $213,976

Additional Cash Spent

Sales Tax, VAT, HST/GST Paid Out $0 $0 $0

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Principal Repayment of Current Borrowing $1,260 $3,000 $740

Other Liabilities Principal Repayment $0 $0 $0

Long-term Liabilities Principal Repayment $0 $0 $0

Purchase Other Current Assets $0 $0 $0

Purchase Long-term Assets $0 $0 $0

Dividends $0 $0 $0

Subtotal Cash Spent $135,164 $200,197 $214,716

Net Cash Flow $9,099 $7,732 $22,833

Cash Balance $29,131 $36,863 $59,697

Projected Balance Sheet

The following table will indicate the projected balance sheet.

Pro Forma Balance Sheet

Assets

Current Assets

Cash $29,131 $36,863 $59,697

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Other Current Assets $0 $0 $0

Total Current Assets $29,131 $36,863 $59,697

Long-term Assets

Long-term Assets $9,368 $9,368 $9,368

Accumulated Depreciation $1,056 $2,112 $3,168

Total Long-term Assets $8,312 $7,256 $6,200

Total Assets $37,443 $44,119 $65,897

Liabilities and Capital Year 1 Year 2 Year 3

Current Liabilities

Accounts Payable $10,056 $9,738 $11,090

Current Borrowing $3,740 $740 $0

Other Current Liabilities $0 $0 $0

Subtotal Current Liabilities $13,796 $10,478 $11,090

Long-term Liabilities $0 $0 $0

Total Liabilities $13,796 $10,478 $11,090

Paid-in Capital $30,000 $30,000 $30,000

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Retained Earnings ($600) ($6,353) $3,641

Earnings ($5,753) $9,994 $21,165

Total Capital $23,647 $33,641 $54,807

Total Liabilities and Capital $37,443 $44,119 $65,897

Net Worth $23,647 $33,641 $54,807

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