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Note: In order to protect the confidentiality of our clients, we have created a fictitious name for each. BACKGROUND This is an entrepreneurial start up based in California. The market focus is board sporting enthusiasts, such as skateboarding, surfboard, and snowboarding. The firm has a world wide trade mark protection for its distinctive logo showing the board rider carving a trial down a mountain, or a wave, and is in the process of building significant consumer interest in its community of board riders. The product line consists of various articles of apparel with the logo ID prominently displayed. The basic selling proposition is that board sports enthusiasts gather in ‘communities’ (whether real or virtual) to exchange stories and ideas related to shared interests and activities, and that they will identify themselves as the ‘in crowd’ through their apparel. Sales efforts will target both on line buyers and bricks and mortar sporting goods stores that cater to the board sports trade. CURRENT SITUATION The firm is seeking start up capital of approximately $300,000 which will be used to activate an e-commerce portal for the already up and running company website (which currently contains an extensive line sheet showing the entire apparel offering), the set and field a store contact sales force, and to further develop the line through new creative designs. In addition, funds will be applied to the creation of new ‘communities’ both online and real to develop and build customer interest in the company and its products. OUR WORK Our initial work was to evaluate the business plan as it was presented by the company founder and CEO. The plan included several noteworthy elements, such as overall market size (several firms participating in this trade in the area of Southern California best known for board sporting recorded volume in the $1 billion range) and profit potential. The major strength and market position of these leading firms was in their high profile presence in their served market, supported by prominent spokespersons and an active community of followers who wore their trade marked apparel. A critical factor for CAR is the ability to gain market traction through the attractiveness and awareness of its ‘brand’. When questioned on this topic, the CEO assumed that the ‘brand’ was gaining market acceptance, but little evidence of that support was available. Our recommendation was that immediate efforts should be made to build brand awareness through virtual communities using social networking tools such as Facebook and Myspace, among others. Using social networks to build brand awareness is a low cost and effective method to reach the target demographic of the market for board sport apparel. A second recommendation was to develop designs that exploited some of the unique characteristics of textile fibers for certain applications, such as either the cooling (for summer wear) or warmth retention (for cold weather). As it now stands the line is almost exclusively based upon standard cotton construction T shirts and hoodies. A third recommendation was to develop a two pronged approach to the start up and its associated financial and task/timing relationships. Two essential tools to carry out these recommendations are 1) Cash Flow Projections and 2) Project Management Gantt Charts. A cash flow projection is ideally suited to this application inasmuch as there is existing debt, there is uncertain incoming cash flow (whether operational or new capital investment), and there is a current need for community building and sales development. This needs to happen on some level with or without the sought after new capital investment. A cash flow projection is crucial showing both the level and timing of all outflows (debt repayment, promotional efforts, new expenditures for trade mark protection, etc, and setting up the corporate structure), as well as inflows (product sales, small investor remittances, etc). We offered to help prepare this CFP inasmuch as we have developed a unique tool (proprietary to EMRACORP) for this task. The Project Management Gantt Chart and Timeline (more commonly referred to as Schedule) is a method that links tasks and scheduled completion dates. Obviously the required task list needs to be developed and the associated dates, but what is equally important is that most PM software will allow the project builder to insert milestones, that enable the PM to track the progress of work while it is being done, rather than focusing only on task completion dates. This is a powerful control tool for the entrepreneur. SUMMARY The CEO at CAR will be working on these recommendations over the next month or so, with our help, and further progress will be reported in this column. By Richard Walton, President, ERMACORP 3/5/09
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Elizabeth Mauk - (301)
432-0079