Section 5

Team 9

Fall 2021

Business Plan

Business Name: Malosi Maxx

Business Idea: Caffeine/Energy Boost Sublingual

Team Members: Signature: Email Address:

Angela Saccaro 𝒜𝓃𝑔𝑒ℓ𝒶 𝒮𝒶𝒸𝒸𝒶𝓇𝑜 saccaram@dukes.jmu.edu

Dane Palmer 𝒟𝒶𝓃𝑒 𝒫𝒶ℓ𝓂𝑒𝓇 palmerde@dukes.jmu.edu

Dillon Green 𝒟𝒾ℓℓ𝑜𝓃 𝒢𝓇𝑒𝑒𝓃 greendf@dukes.jmu.edu

Hassan Elhadad 𝐻𝒶𝓈𝓈𝒶𝓃 𝐸ℓ𝒽𝒶𝒹𝒶𝒹 elhadahx@dukes.jmu.edu

Jacqueline Nguyen 𝒥𝒶𝒸𝓆𝓊𝑒ℓ𝒾𝓃𝑒 𝒩𝑔𝓊𝓎𝑒𝓃 nguye8jd@dukes.jmu.edu

Jacob McCown 𝒥𝒶𝒸𝑜𝒷 𝑀𝒸𝒞𝑜𝓌𝓃 mccownjt@dukes.jmu.edu

Mary D’Lugos 𝑀𝒶𝓇𝓎 𝒟’𝐿𝓊𝑔𝑜𝓈 dlugosmg@dukes.jmu.edu

0
 Executive Summary
Malosi Maxx
Team 9
5540 N Lamar Blvd, Austin, Texas, 78751
Phone: (512)-514-3316
E-mail: MalosiMaxx@jmu.edu Web Address: www.malosimaxx.com

Management:
President, Operations Manager, Sales
Manager, HR Director
Business Description: Malosi Maxx is a
Industry: NAICS 446191 – Supplement sublingual manufacturing business which
Stores specifies in caffeine supplements.

Number of Employees: Eight full-time Products/Services: Our business will

salary, one outsourced employee and one
commission-based employee
Amount of Financing Sought:
$350,000 from founders (39%), $300,000
from SBA loan (33%), and $251,058 from
outside investors (28%)
Investment Sources:
Each founder will invest $50,000 into the
business. We will get the remainder of the
money from outside investors at $251,058 and
an SBA loan for $300,000 at 5.5% interest for
a 6- year term.
Use of Funds: We will use our funds to pay
salaries and commission, purchase equipment,
raw materials, rent, and expenses.
Product/service selling price: $10.95
through retail. $12.95 through website.
provide caffeine sublingual’s for individuals.
Our product will sell for $10.95 through
retailers and $12.95 through web sales. We
anticipate revenue of $1,339,573 by year 2
with sales of 114,518 units with an annual
growth rate of 3%.
Competitive Advantage:
Malosi Maxx sublingual technology sets the
business apart from other competitors as it
provides instant results as it enters the blood
stream immediately.
Markets: We are targeting young adults
between the ages of 18-34 years old in middle
to high class households. These individuals
regularly consume energy drinks at an average
of 2-3 times a week, looking for an immediate
boost of energy.

Distribution Channels: We will distribute our products directly to customers through web sales and to
consumers through popular retailers such as CVS and Walgreens. We plan to expand our business by
securing more retailers such as Walmart in future years.

Competition: Our main competitors consist of Monster, 5 Hour Energy, and C4. All these companies
specialize in creating products with an energizing effect. They are our main competition because of their large
market share, locational excellence, and strong brand reputation, which includes their customer loyalty.

Financial Projections (Unaudited):

2021 2022 2023 2024 2025
Revenue: 1,091,176 1,339,573 1,609,221 1,905,689 2,299,222 (dollars in millions)
EBIT: (106,085) (23,037) 115,145 270,567 437,356 (dollars in thousands)

1
 According to the Occupational Health and Safety Society, 76% of people report

excessive tiredness when trying to tackle their daily tasks (43 Percent, 2017). Energy drinks

and coffee still aren’t getting people through their day. You can help to solve this problem

by investing in Malosi Maxx. Our brand name translates to maximum energy in the Samoan

language. Our fast-acting caffeine strips, once placed on the tongue, are absorbed directly

into the blood stream quicker than any digested supplement or energy drink. Not to

mention, it lasts way longer than your typical energy drink. Our energy-boosting product is

great for young people on the go, whether it be from work or school, looking for that kick of

energy without having to wait for it to take effect. Malosi Maxx offers you a high reward

opportunity that you want to get involved in before it’s too late.

Malosi Maxx offers investors new and groundbreaking technology for a fast boost of

energy. Our sublingual strips can be placed on the tongue and the active ingredients are

quickly absorbed into the blood stream to provide a boost of energy instantly unlike any

other product on the market. Malosi Maxx prides themselves on offering top-notch, user

friendly as well as budget friendly products.

The mainstream sources of caffeine are known to be slow acting and ineffective.

Malosi Maxx has solved this problem through their sublingual technology that allows for

immediate effects. Our product has 200mg of caffeine in each strip giving customers long

enough energy boosts to get them through their day. Our product comes at a competitive

price as we source our ingredients based on price. Malosi Maxx’s message to customers

is great tasting and long-lasting energy within minutes.

Our company adds value because it is diving into an unexplored space in the

available market. Unlike competitors, Malosi Maxx offers instant results by placing the

caffeine strip directly on the tongue. We plan to overcome the challenge of competition by

using a market penetration strategy. Our low prices, starting at $10.95 offer value to the

consumer while still striving for competitive advantage.

By developing an advanced and effective product, Malosi Maxx will be utilizing a

differentiation strategy. Compared to alternative products which take a period of time to

kick in, our sublingual strips provide immediate results. We also plan to provide short

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process and shipping times. Additionally, our marketing strategy will set us apart as we will

mainly focus on getting our products into big name retail stores and partnering with them to

promote our product.

We will be starting our LLC in Austin, Texas. We found that the demand for energy

drinks was evenly distributed between the east and west coasts (The premier source,

2021). Austin, Texas allows us to have a central location, few licensing fees, no mandatory

workers compensation, and a below average cost of living. We plan to rent a facility where

we will manufacture, ship products, and hold offices. We are located at 5540 North Lamar

Blvd, Austin, Texas 78751 Building B. In this 3,640 square foot facility we will house both

our manufacturing facilities and offices.

Our company will be outsourcing our raw material suppliers as well as our

distributors. By obtaining our ingredients from other suppliers as opposed to manufacturing

them ourselves, we are lowering costs as well as increasing efficiency. We chose to

outsource our shipping and distribution because our degree of complexity within the

company is not high enough for us to hire full-time distributors. By outsourcing

our distributors, we add more flexibility within the supply chain and the transportation

network.

In our first year we estimate a gross profit of almost $600,000 which is because of

entering a competitive market. During the first year the cost of goods sold was around

$350,000. That number rises each year due to the company slowly expanding. From year

one to year five, the gross profit increases by more than half a million dollars, and the cost

of goods sold nearly doubles by year five. Overall, once our company gets the attention of

our target audience we will perform strongly financially because of our low pricing and a

fast-growing market.

3
Exhibit 1: Organizational Chart
Timeline
Malosi Maxx plans to secure key leadership at day -29. By day -27 we plan to consult with a chemist to perfect the
formulation and ingredients for our sublingual. We will apply for a federal ID number on day -14 and a week later
we will apply for our business license. Day -4 we will begin the hiring process for management and supervisors,
and by day 65 all supervisors and management will be onboard. This includes outsourcing our advertising
manager. By day -5 we will have secured our location in Austin, Texas, and we will begin the hiring process for
salary positions such as operators and logisticians. Day 1 we will open bank account, deposit funding, and stat
books. Day 2 we will purchase machinery and equipment so by day 8 we will begin building the production line.
Day 50 will be allocated to producing the first prototype. After Management in onboard, day 70 will be the
development of our sales and marketing plans. We will begin promotions from those plans on day 150. Day 165 we
will officially kick-off business and our product. Lastly, day 180 we will deliver the first order of our product.

Critical Employees and Growth:

In Year 1, Malosi Maxx will have a total of 8 employees with the addition of 1 sales agent and advertising
manager that will be outsourced. By Year 5 we plan to have 16 employees with the addition of 2 sales agents and
an advertising manager outsourced. Our advertising manager will be outsourced to keep costs low for our
company. They will oversee creating advertisements, promotions, sponsorships, and gaining our consumers
attention. In Year 1 we will have one president, bookkeeper, sales manager, advertising manager, developer, and
operations manager. The HR Director will not be added until Year 2. We also plan that management positions will
not be added to after Year 2. Sales agents will work on commission with one sales agent hired in year one. There
will be an additional sales agent added during Year 2 to upkeep with increase in sales. In Year 1 we will hire 1
operator and every year after we will hire an additional operator to assist in handling the increased
demand. Within Year 1 we will also hire 2 logisticians and every year after we will hire one additional logistician.
They will evaluate how each department is meeting their goals. Our operators and logisticians are short staffed
because our machine physically does all the steps to make and package our product. It is smarter for us to keep
employment low in those areas as majority of work relies on the machine. The sales manager will be responsible
for marketing strategy development and pricing strategies. They will supervise the sales agents, establishing a
sales target for them and frequently evaluating their performance. The operations manager’s responsibilities
include managing inventory purchases, the efficiency of the manufacturing process, and developing the overall
operational strategy. They will also supervise both the logisticians and operators. The operators are the most
knowledgeable person about how to handle the equipment. Their responsibilities include ensuring the equipment is
operating efficiently and correctly and performing quality checks at certain points in the process. Logisticians,
which also work underneath the operations manager, are responsible for the distribution process. They oversee
purchases, package orders, ensure transportation is correct and timely, and assist in managing
inventory. Developer is important to the formulation of our product. Their position responsibilities include
formulating the ingredients to make the most effective product. We plan to keep our starting salaries lower for
employees, as we have implemented a 10% increase in pay each year to motivate and encourage employees.

Safety and Certifications:

Our product contains caffeine, which can be a highly addictive substance for some individuals. To refrain customers
from addiction, Malosi Maxx will include a disclosure of the amount of caffeine within our product, label advisories
for conditions of use, promote to those only over the age of 18, and include serving size and daily intake
recommendations. Our product is an energizing supplement, containing caffeine powder, with less than 400 mg of
caffeine in each strip, so our product does not have to be FDA approved. Since our company is also creating a
product that is being ingested, we will be following the Food Safety and Modernization Act by implementing a
Hazard Analysis and Critical Control Points management system within our facility. The people regulating these
systems and ensuring they are in check are the Texas Health Department.

4
 Exhibit 2: Pay

Position Salary & Wage Projected Mandatory Benefits Individual Position Employee/
Range Second Year Payroll (Total Per Total Total Total Cost
Salary/Wage Deductions Employee)
President $89,350 - $208,000 $89,350 FICA: $6,835 $17,272 $114,120 $114,120 18.74%
FUTA: $420
SUTA: $243
WC: $0
Operations Manager $60,160 - $158,380 $60,160 FICA: $4,602 $22,272 $87,697 $87,697 14.40%
FUTA: $420
SUTA: $243
WC: $0
Sales Manager $63,170 - $143,000 $63,170 FICA: $4,833 $22,272 $90,938 $90,938 14.93%
FUTA: $420
SUTA: $243
WC: $0
Bookkeeper $30,000 - $60,000 $30,000 FICA: $2,295 $22,272 $55,239 $55,239 9.07%
FUTA: $420
SUTA: $243
WC: $0
Logisticians (3) $18,720 - $34,410 $18,720 FICA: $1,432 $22,272 $43,087 $129,261 7.08%
FUTA: $420
SUTA: $243
WC: $0
Operators (2) $18,720 - $34,410 $18,720 FICA: $1,432 $22,272 $43,087 $86,174 7.08%
FUTA: $420
SUTA: $243
WC: $0
HR Director $60,000 - $115,000 $63,780 FICA: $4,879 $22,272 $91,594 $91,594 15.04%
FUTA: $420
SUTA: $243
WC: $0
Designer/Developer $56,000 - $115,000 $56,000 FICA: $4,284 $22,272 $83,219 $83,219 13.67%
FUTA: $420
SUTA: $243
WC: $0
Totals: $399,900 $35,896 $173,176 $608,981 $738,243 100%

Benefits:
- Health Insurance – company responsible for 80% and employee 20%; $25 copay; $1,500 deductible
- 401k Retirement Plan – 3.5% matching with a $12,000 cap
Standard Time Off Benefits: Mandatory Payroll Deductions:
- Holidays (New Year’s Day, New Year’s Eve, Christmas Day, Christmas Eve,
Independence Day, Thanksgiving, Memorial Day, Labor Day) FICA: 7.65%
- 2 weeks (10 days) paid vacation for salary and hourly employees FUTA: 6% cap at $7,000
- 1 week (5 days) paid sick leave for salary and hourly employees SUTA: 2.7% cap at $9,000
Other Benefits: WC: n/a
- Direct Deposit
- 30 minute paid lunch break
- Rewards Program: those who attend the most training within the month receive a gift card
- Performance Based Bonus Program: cash bonus reward for individual who packages, creates, or sells the most in the
month
- All wages and salaries are automatically adjusted for inflation each year
- Pay raise of 10% each year for all employees
- Free samples as well as 40% off Malosi Maxx products
- EAP Program for those who have an addictive personality to caffeine; can also be used for those who have issues at
home and seek assistance

5
Exhibit 3: Market Segmentation

Notes:
-Taking the population of young adults in the age range of 18-34 in the US, roughly 75 million, we multiplied the
percentage of individuals who are health conscious and regularly consume energy drinks at least 3 times a week (21.5%)
and then further narrowed down our target market by multiplying that number by 81%, which was the percent of people
living in our desired geographic zones, which was urban areas (United States Census Bureau, 2019).
- Arriving at our larger target market of around 13 million, we decided to split it up into two different segments, as shown
above, by using the census information to determine how many individuals are in each segment; 33% individuals aged 18-
23; 67% individuals aged 24-34 (United States Census Bureau, 2019).
-This table provided an estimate of how many people are enrolled in college undergraduate years (United States Census
Bureau, 2019).
-This growth rate takes into consideration the average growth rate of the young adult population for ages 18-34 and
average growth rate of percentage of people participating in exercise, sports, and recreation for the young adults’
population (Frey, 2021).
-As only 19% of the country is within rural areas, our main geographic interest would be urban areas as we would have a
larger range market of 81% of individuals (Bureau, 2021).
- According to the “Healthy Lifestyles” article, the market for vitamins and minerals has grown steadily and continues to
grow, increasing its value and the needs of consumers (Mintel , 2019).
- Average hours per day spent participating in sports, recreation, or sports for the young adult age range of 18-34 (U.S.
Bureau of Labor Statistics, 2017).
- The growth rate considers the average decline in enrollments in college (National Center for Education Statstics, 2019).
- 99% of Segment 1 has reported using at least one social media site or app (Mintel, 2021).

6
Exhibit 4: Market Quantification

Our starting target market

was around 75 million
individuals ages 18-34. We
then narrowed this down
by only considering those
individuals who were
health conscious and those
individuals who consumed energy drinks on average 3 times a week. This came out to be 21.5% of
the 75 million. Further narrowing down our target market, we chose to only consider those who were
located in urban areas which was 81%, bringing us to our total market potential of 13,235,998. We
used the growth rate of 3% for the Health-Conscious young adults and Social College Students, which
takes into consideration the growth of the
population in the age range of 18-34 and
the growth of the percentage of people
who are partaking in exercise activities
(Frey, 2021).
For our market share we
researched our proxy firm, Monster, and
determined their 2nd year market share
was only .1% (Conway,2020). We then
conducted our survey and determined that out of 75 responses there was .02% of people that fit the
segment age range, drink energy drinks, and selected that they were extremely likely to buy and
switch to our product. We determined that this would be an inappropriate first year market share,
since only 22 responses fit in our segment. This was determined to be an insufficient amount of
responses that fit our need therefore these percentages were not used in determining our first-year
market share. To justify this number, we went back to our raw market potential of 75 million and
multiplied it by the .02%. The results we got from this reflected our decision to go with Monster’s 2nd
year market share as our 5th year. We determined the growth of our market share by comparing it to
our proxy, Monster. On average Monster’s market share increased by 1% in the first five years
(Conway,2020).
According to Statista, the majority of individuals over the age of 18 consume energy drinks at
least 3 times a week. 55% of people from the Statista survey, said they consume energy drinks 3 to 5
days a week (Kunts, 2016). Replacing the consumption of energy drinks with the use of our product
would result in around 3 strips per week. With 4 weeks in a month, we calculated an average of 12
strips per month would be consumed. Therefore, 144 strips consumed per year brought us to 14
boxes yearly on average. We wanted to have a more conservative annual purchase amount, so we
rounded it down to 12 boxes a year.
Considering our competition, we have decided to split retail and web sales into a 75 to 25
split. Our competition stands at a 90 to 10 split with retail holding the majority (Dux, 2021). With that
we wanted to start off lower to have the potential to grow. Our web sales and retail prices take into
consideration competition pricing, costs, and profit margin we are trying to obtain. The wholesaler
prices are marked up by 25% from our 5.80 price (Blatcher, 2021). From the wholesale price,
retailer’s markup the price by 50% (Bond, 2014). The web sales is higher to adjust for fulfillment
costs while retail does not have the same cost which is why we are able to keep it lower. We plan to
see a continued 3% increase in both retail and wholesale price each year. We plan to have a steady
web sales price to stay competitive.
Since caffeine is almost an everyday
need for most people, we assumed that there
the demand would generally be steady
throughout the year. In our first year we
assumed a steady growth in demand until
January which we forecasted a jump in demand
based off the assumption that most finals, and
work projects happen or end during that time
(Plewman & Zucker).

7
Exhibit 5: Positioning/ Competitive Analysis

Attributes Justification: We positioned our competition based on reviews we found of their products
that were similar to ours. We conducted a survey to see if consumers were likely to try our product.
Within the survey we asked several questions regarding our competitors’ products in comparison to
our product. Using the relevant results from the survey (ie. Those respondents who were within our
target market) we positioned ourselves accordingly. The attributes that we chose were effectiveness,
taste, and duration. Effectiveness can be described as how quickly the product kicks in, duration is
how long the product lasts, and taste is how good the flavoring is to the consumers.

Positioning Statement: For consumers looking for an energy boost, Malosi Maxx sets itself aside
from the competition with its great tasting sublingual strips that release caffeine into the bloodstream
quicker than any drinking liquids or pill.

SWOT Analysis:
Strengths: Strengths of our companies include our great tasting flavors, along with our natural
ingredients. Therefore, our product can be seen as healthier compared to competition, such as sugary
energy drinks. Our company also has a lower price compared to our competition.
Weaknesses: Weaknesses of our product are we are focused on such a very specific target market
that specifically drinks energy drinks; it can be hard to reach other markets.
Opportunities: Opportunities of our product include the possibility of investing in research and
development in order to launch new product lines in the future with the same fast acting effect. For
example, we plan to explore the idea of different flavoring in the future, as well as the possibility of
new product lines such as pre-workout sublingual strips, and CBD sublingual strips. We also could
expand worldwide, resulting in a larger profit and customer audience for our business.
Threats: Threats of our product are COVID-19 and the weak economy as of right now. With such an
unstable economy, demand and buying of consumers is highly unpredictable, which can lead us to
over or under production. Both are very costly for our company.

8
Exhibit 6: Marketing Mix
Malosi Maxx plans on branding with a personal and fun style. We want to address the consumer
directly, and casually. We want the consumer to feel like we are their friend, and we have their best
interest in mind, and that it’s a given that they should already be using our product. We will build this
brand through web design, text font, messaging style, and advertisements. We will communicate with
the consumer in a structured way that builds a personality of friendliness and trust. We are positioned
as the most unique energy product, so a fun, modern brand fits that positioning.

Malosi Maxx will use a market

penetration strategy. We will begin
with our price set at 10.95 retail,
then slowly increase each year, as
we gain market share. Once people
develop a taste and habit for a
specific energy product, they tend to
stick with it regardless of price. This can be seen in daily coffee drinkers, tea drinkers, and energy
drink drinkers. We are setting our price relatively low when it comes to price per serving. Compared to
Redbull and Monster, we are the cheapest option, but we will slowly increase to take advantage of
current market share. This in essence, is the perfect circumstance for a market penetration strategy,
because we are surrounded by giant firms.
Malosi Maxx will sell our products from our online website directly to customers. Additionally,
we plan on getting our product into smaller drug stores such as CVS and Walgreens. By doing this, our
product gains exposure towards our target market. We chose these particular retailers due to the fact
that they have a consistent and loyal customer
base which encompasses both of our target
markets. CVS and Walgreens have more
regular customers when it comes to energy
drink/supplement purchases as opposed to gas
stations and convenience stores who normally
have one-time buyers. Regarding distribution,
we will be utilizing a wholesaler as well as sales
agents to get our product into retail stores. We will use FedEx to ship our products directly to
customers due to their reliable reputation and cheap costs.
To get our year 1 IMC budget we used 30% of our net income, which we found using our
competitor Monster as a proxy firm. The following years we increased our budget by 10% every 2
years. As our target market is young adults, research shows that the media most often used by these
individuals are YouTube and Instagram which we will be spending most of our advertising expense on
(Statista Research Department, 2021). In order to gain customer interest and desire, we plan to have
interesting and attention-grabbing advertisements on their social media platforms. The other portion
of our advertising expenses will go to television ads on channels such as FOX and NBC as it is
consumed by majority of our target (Julia Stoll, 2021). We hope to have influencer ads costing at
around $5 per thousand followers it reaches. Our goal is to have at least one within the first year and
to add a new one on each of the following years. We will also increase spending on sales promotion
through seasonal sales around Christmas, in January as there is a peak in fitness journeys beginning,
and in August as individuals are going back to school and have a lack of energy. We will also include a
free sample for first time users to guarantee our advantage over competitors and gain customer
satisfaction and loyalty. Other promotional expenses we would attain are direct marketing expenses.
With our website, we are able to gather customers e-mails, which we will use to promote our business
by sending new products or even sales going on to gain consumer attention.
Our company will be outsourcing our advertising manager. Our company will be outsourcing
our sales representatives, since it is the most cost-effective option. They will be working for
commission, earning $1,000 for every store that
they secure our product being sold in. In our first
year we will use one sales representative and
then increase it in the second year to two. For
the following years, our number of sales
representatives will stay constant at two. Their
main priority is to get our product into stores
such as CVS and Walgreens, which is incentivized
with the commission earned for each store.

9
Exhibit 7: Flowchart

Quality What is measured?
Step
Q1 We will inspect the batch of
strips.
Q2 We will test that the ingredients
are evenly distributed.
Q3 We measure the expiration
dates of ingredients and ensure
that they are the correct
materials.
How often?
Every time a batch is done.
Every time a batch passes
the first quality check.
Each time assembly starts.
How will you ensure quality?
We will have operators go through a checklist to ensure each
batch is thoroughly looked over.
We will have operators go through a checklist to ensure that the
batch has evenly distributed ingredients. Checklist ensures that
operators weigh, measure, and look for discoloration/unevenness.
We will have operators go through a checklist of ingredients to
ensure they are the correct ones, and they will match the date on
the packing with the current date to ensure they are not expired.

Critical Brief Description Unit Cost (in appropriate How

Resource unit) many?
CR1, CR2, CR3, The critical resources in these steps are the $80,000 1 machine
CR4 specialized equipment to make and package
the sublingual strip. Each step is taken
within this machine and is critical in the
production of our product.
CR5 The step is a critical resource as it has our $99,695 of wages for 2 logisticians at 2 logisticians
specialized personnel, logisticians, to end of year 1 end of year 1
efficiently package orders and increases
each year.
CR6 This step includes our specialized personnel $56,000 for 1 developer at end of year 1 1 developer
(developer) that formulates our product
ingredients to make sure it is safe and
effective.

Our facility is located in Austin, Texas. It is a 3,640 square foot warehouse with space for our machine as well as storage of our
finished goods. The storage room is sufficient to our requirements of a constant room temperature and no outside light due to the
perishability of our product. This facility provides us with enough space to pack and fulfil orders as well. Our operational process is
categorized as product oriented. Our warehouse set-up will mimic the flow shop layout due to the fact that our product is
manufactured in a progressive and repetitive process. Our facility will be regulated by Texas Department of State Health Services to
ensure we are meeting Texas health and safety codes. Our facility also has an area outside to house our hazardous waste which will be
regulated by Waste Enforcement Branch in Texas.

10
Exhibit 8:Quality
Indicate the Why is this dimension important, given your Identify the Quality
Dimensions of industry & target market? Step(s) on the Process
Quality on Flowchart / Service
which you will Blueprint to which this
focus. corresponds.
Conformance Meeting needs set by industry is paramount for Malosi Q2, Q3
Maxx as it is being digested by consumers. The product
must fulfil standards or else it is incapable of being sold to
the public due to health concerns.
Performance The performance of Malosi Maxx is critical to our target Q2
market as the standards are a fast-working and long-lasting
energy booster. If Malosi Maxx does not meet these
standards, we will suffer a loss of consumers.
Reliability Reliability is crucial for Malosi Maxx as we need to ensure Q2
that since our product is a strip, and it is mixed from a
liquid state, that there is always an equal amount of
caffeine distributed in each strip.

When products are ordered, if ingredients are hazardous, we would have to assure we have the
proper protective face wear and clothing before continuing with our process. If we do not have the
protective equipment, we will have to place an order for that before beginning.
Describe any reactive quality assurance plans. Include a recovery plan should a customer
receive poor quality goods and/or services.
Refund Decision – (1) refund money OR (2) create sales order (replacement) OR (3) refund money
and replace

If you will utilize a quality/process improvement methodology, indicate which:

☐ NA ☒ TQM ☐ Six Sigma ☐ ISO ☒ Benchmarking
☐ Other (specify what):
Provide a specific explanation of how your chosen quality methodology relates to your
business and how it will be applied:
Bench Marking- As Malosi Maxx is working with supplements, we can compare ourselves to
companies working with vitamins and supplements. These vitamin and supplement include: C4 and
Nature Made. Using lean manufacturing, we can see how they produce the minimum amount of
waste, resulting in a reduction of our costs and having sufficient outputs.
TQM- Malosi Maxx would implement TQM as our customer is our main priority for our goods since
they are determining the overall quality of it. If our product is not energizing enough, we would have
to improve our product to meet their standards. Our company would eliminate variability, especially
when creating our product since we are able to use an assembly line process to create it. This would
result in lowering our costs with minimum variability. Malosi Maxx would have total involvement of
the firm always working together as our business is constantly stemming from one another in order
to create our good.
Our product will be designed as follows: mixing the ingredients together, drying the strips out,
compressing it down, coating the strips, and lastly packaging them. Our plan to innovate our
product will be having a variety of flavors, such as strawberry, blueberry, and orange. Also, we plan
to innovate by offering diverse types of strips serving unique needs such as: immune system
boosting, different vitamins, and even pain relief strips.

11
Exhibit 9: Inventory

12
Exhibit 10: Capacity

How will you manage seasonality?

We will manage seasonality by forecasting our demand in those months and increasing the supply we
have held in stock. We will increase our inventory during the months with lower demand in
preparation for the months with highest forecast demand.

13
Exhibit 11: Income Statement

14
Exhibit 12: Balance Sheet

15
Exhibit 13: Cash Flow Statement

16
Exhibit 14: Finance Assumptions:

• Note 1: Our company uses straight line depreciation on our fixed assets consisting of
equipment and building.
• Note 2: The initial startup costs are funded with a $300,000 SBA loan at 5.5% interest per
year, and this loan is paid off within 6 years. The 5.5% comes from adding 3.25% (prime
rate) and 2.25% (interest rate). Other startup costs are assumed to be funded with $350,000
of equity capital from founders. Each founder is investing $50,000. $251,058 will be funded
from outside investors.
• Note 3: Accounts receivable is derived from assuming 40% of our consumers will be
purchasing with credit sales, and 60% will be purchasing with debit or cash sales. Based off
research, credit card transactions costs equal 2.5% of credit card purchases. Our average
credit card purchases to be collected will take 5 days. We assume that of the 40% credit sales,
5% will be outstanding at the end of the year.
• Note 4: Cost of goods sold are calculated by 46.6% of revenues.
• Note 5: We are hiring one sales representative in our first year who will be paid a
commission. Their commission is set to $1,000 for every store they get our product into. We
assume that they will get our product into 40 stores, so their total commission has been
estimated at 40,000 per year. Starting in year 2, we will add one additional sales
representative to bring our commission expenses up to $80,000 for year 2 and forward.
• Note 6:There are 2 weeks of salaries that will not be recorded.
• Note 7:Utilities expense is calculated from an average of $2.10 per square footage and our
building is 3640 square feet. Website expense is calculated as domain name renewal is $12 a
year and a flat rate of $348 each year for website builder startup cost.
• Note 9: Average cost per employee office expense is $77-$92 per month, when there are 1-4
office employees. A full suit is $180, and a respirator is $172 for one employee. Our office
equipment has a salvage value of $5,000 and a residual life of 5 years.
• Note 12: Risks our business partakes in are stated below:
o Risk regarding patent. This is not a patentable product, leading to a risk of
being duplicated by competitors and take market share.
o Risks relating to the economy. COVID-19 has put a dent on
the economy, and we are not 100% certain when it will fully recover. Our
product fully relies on our consumer spending to receive a profit.
o Risk related to unit sales. Projections were made based off the assumption
that energy drink consumers were willing to switch to caffeine strips. There
is uncertainty regarding these numbers which can end in either
overproduction or underproduction – both being costly to our business.
o Risk of available skilled labor. Considering the increase in desire to
work from home and fear of getting sick there is a risk that labor will not be
available or require higher salaries or wages. 

17
Exhibit 15: Financial Ratios

18
Exhibit 16: The Malosi Maxx Financial Analysis of Pro Forma Financial Statements

Liquidity
The company maintains a current ratio that is above the industry average for all five years.
The quick ratio also exceeds what is typical for the industry, indicating little investment in
long-term assets and a high amount of cash reserves. We believe this will be a positive for
the firm in allowing us to be more opportunistic in our early company development. The
operating cycle is higher than the industry median.

Financial Leverage
The company’s debt-equity ratio is lower than the industry which shows that the company’s
ability to pay debts is higher than average, since most of our funding came from equity. A
sizable portion of this debt is in the form of Convertible Debt being offered and we believe a
substantial portion will convert to equity at some time in the future.

Asset Management
The inventory turnover decreases each of the five years. Unfortunately, our fixed asset
turnover is more variable, suggesting that the effective employment of fixed assets is a
point of concern.

Profitability:
The company’s gross profit margin exceeds the industry margin in all years, which is a
strength. The operating profit margin is below the industry average of the first three years
but approaches and exceeds that of the industry after the third year. The return on assets is
close to the industry median after the third year. From these three ratios, we conclude that
the company is expected to have profitability like that of the industry after three years.
Over time we expect to fine tune our manufacturing process thereby driving costs out and
improving profitability.

Dupont Analysis:
The profit margin is lower than the industry average because the company needs time to
grow revenue and market size. Low sales combined with high startup costs leads to our
margin starting low and slowly growing. The equity multiplier is similar to the industry
average. The return on equity starts below the industry average, meets it, then exceeds it
in the later years which shows our growth in net income and retained earnings. Our asset
turnover is significantly below that of the industry which is a concern for the future.

Valuation Method
The valuation is based on the book value method. Which is based off assets minus
liabilities. We used this method because without reliable history of sales, this is the most
accurate way for us to show the companies value for investors.

19
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 Meet the Team Section 5, Team 9
Hi, my name is Dane Palmer. I am from Lewes, Delaware. I
am a junior majoring in Finance. Outside of class I enjoy
watching sports and also playing golf. During the summer I
work on the beach doing beach rentals and I am hoping to get
an internship this upcoming summer. I expect to graduate in
spring of 2023

Hi, my name is Dillon Green. I am from Fairfax, Virginia. I

am a Junior at James Madison University, studying
Management, with a concentration in Innovation, and
Entrepreneurship, and a minor in Russian Language. I am a
Student Ambassador on the Student Advisory Council for the
College of Business, a member of the Club Management
Association of America, and a member of the Make Your
Mark on Madison leadership group. I will be graduating in
May 2023

Hi, my name is Mary Dlugos. I am from Fredericksburg,

Virginia. I am a junior majoring in Business Management
with a concentration in Business Analytics and Consulting at
James Madison University. I am a member of the Women in
Business Club, Global Commerce Club, and work as a tutor
for Student Athlete Services at JMU. I also am a part of the
DoD Acquisition Internship Program for Marine Corps
Systems Command in Quantico, Virginia. I expect to
graduate in the spring of 2023.

Hi, my name is Jacob McCown. I am from Richmond,

Virginia. I am a junior majoring in business management and
minoring in sports communications. Outside of class I like to
enjoy my free time by watching or playing sports, going to
the gym and reading. I’ve had a lot of experience in the
workforce as only a junior and am looking to get another
opportunity at another internship this summer. I’m also a
member of Sigma Nu at JMU.
Hi, my name is Angela Saccaro. I am from Phillipsburg, NJ
and I am a junior majoring in Accounting and minoring in
Economics. I am a member of the American Institute of
CPAs, Women in Business, Financial Professionals Club,
and the Economics Club. I expect to graduate with a B.B.A.
in the spring of 2023 and receive my Master of Science in
Accounting in the spring of 2024.

Hi, my name is Hassan Elhadad. I am from Norfolk, Virginia

and I am a junior majoring in Management and a
concentration in innovation and entrepreneurship. I enjoy
playing and watching soccer in my free time. I hope to get an
internship this summer that helps me figure out what path I
want to go to in management. I expect to graduate Spring
2023.
Hi, my name is Jacqueline Nguyen, but I go by Jackie. I am
from Nokesville, Virginia and I am a junior majoring in
International Business. Outside of class, I really enjoy
traveling and I am planning on studying abroad in Spain next
semester. I expect to graduate in the spring of 2023 with a
B.B.A. I am also a member of the sorority Alpha Sigma
Alpha on campus.

25