Section 1

Team 6
Fall 2018

Business Plan
Business Name: Citron Styling
Business Idea: Citron Styling Forming Pomade is a hair styling product made of a specialized blend
of all-natural ingredients that has the unique ability to repel bugs. Our natural blend of essential oils
also provides consumers with the benefits of positive hair and scalp health, while holding
consumers’ hair in place without having to use harsh chemicals.

Team Members Email address

TJ Alvy ________________________ alvytj@dukes.jmu.edu
James Ehrmann ________________________ ehrmanjc@dukes.jmu.edu
Julia Francione ________________________ franc2jl@dukes.jmu.edu
Taylor Moore ________________________ mooretf@dukes.jmu.edu
Nathaniel Rabuse ________________________ rabusenj@dukes.jmu.edu
Mashiyath Zaman ________________________ zamanma@dukes.jmu.edu

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 Executive Summary
Citron Styling
Nathaniel Rabuse
2 Lewis Circle, Wilmington, Delaware, 19804
Phone: [(302)255-1209]
E-mail: citronstyling@gmail.com

Business Description: Citron Styling has

Management: developed a hair styling pomade made of a
President unique blend of all-natural oils and citronella
Marketing Director that promotes healthy hair while repelling
Operations Manager insects at the same time.
Products/Services: We are selling our product
to retailers at a wholesale price of $14.70. We
Industry: Beauty and Cosmetics Industry will be manufacturing and packaging our
product at our rented warehouse in Wilmington,
Delaware. The cost per product is $1.92, and
Number of Employees: 9
our estimated demand for year one is 218,687
units.
Amount of Financing Sought: Competitive Advantage: The unique
$2.09 million combination of the all-natural ingredients in our
product sets us apart from our competitors. Our
Investment Sources: pomade is a citronella and cedarwood oil-based
Self-Investment: $90,000 ($15,000 per person) blend, giving it the ability to repel bugs.
Venture Capital Group: $1,000,000 Markets: Our target market is men between
the ages of 18 and 59 making over $40,000, who
Use of Funds: Manufacturing, Marketing, use hair styling products at least once a month.
and Transportation costs This target market contains 32,556,230
consumers in the U.S. population and is
Product and service selling price: expected to grow 0.7% over the next 5 years.
Wholesale: $14.70 Another potential segment we considered was
Retailer Selling Price: $22.99 women that share households with men, but we
will not be spending resources targeting this
segment. We are using the channel sales revenue
model because we plan to sell our product to
distributors but do not plan to pay for shelf-
space.

Distribution Channels: FedEx is our shipping carrier service to deliver our products to wholesale buyers
and to transport our product ingredients from suppliers to us.

Competition: Our main competitors are Seattle Pomade Company, Jack Black, and Cliff Original which all
produce hair styling products targeted towards men. All of these products are all-natural and contain bug
repelling ingredients. What sets us apart from these companies is that we use 100% all-natural citronella and
cedarwood in our pomade to repel bugs while our competitors use variations. For example, many
competitors only use citronellol which is a component of citronella. This is a quality we believe will produce
added value to our product in the eyes of our customers.

Financial Projections (Unaudited):

2019 2020 2021 2022 2023
Revenue: $1,968,692 $3,686,483 $4,108,334 $4,474,196 $4,638,626
EBIT: $431,905 $1,813,514 $1,957,728 $2,248,015 $2,237,809

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1. Elevator Pitch.

In 2017, 57% of men in the United States have used hair styling products once a month and

21% have used hair styling products every day. Our product is an all-natural pomade for men that want

style without compromising the health of their hair. In addition to selecting ingredients that are good for

scalp and hair health, we specifically chose citronella and cedarwood oil for their natural insect repellent

qualities. One issue with other products is that bugs tend to be attracted to them. We are providing a

simple solution to this problem that prevents the consumer from having to put chemical filled insect

repellents on or around their head.

2. Product/Service Description.

Citron Styling Forming Pomade is a hair styling pomade made with citronella oil, cedarwood oil,

beeswax, and olive oil. Our product solves the issue consumers face in choosing products that typically

include harmful chemicals in them that also attract bugs to their head. Citronella and cedarwood oil are

both natural insect repellents, as well as good for the scalp and hair. Beeswax proves to be a practical and

earth-friendly option for the base of our pomade. Our product comes in a 3 oz. sturdy, amber container

that adds to the aesthetic and quality of the product.

3. Competitive Advantage.

Our competitive advantage is our unique blend of natural ingredients that has the ability to repel

bugs. While there are plenty of all-natural competitors, our inclusion of a citronella and cedarwood based

oil blend has never been offered in a bug repelling pomade. Citronella has only ever been used in

candles, bracelets and other bug repellent items, but we have since discovered that citronella oil also has

benefits for the hair and scalp, making it the perfect addition to a hair product’s recipe. While these

benefits can be enjoyed by consumers year round, we predict a higher demand in the bug-heavy summer

months.

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4. Value Proposition.

Despite the risks that a small business startup presents to investors, we believe that the value in

our company lies in the specialized blend of ingredients used in our product. With the cosmetic and

beauty industry growing at 3.2% per year, there are many opportunities for brands to enter the market.

We believe that being a small business will lead to high brand loyalty in the following years after ramp.

5. Business Strategy.

Our business strategy is differentiation. There are many competitors in the hair styling market

that are similar to us, as they provide a reliable hold and contain natural ingredients. However, the

inclusion of citronella and cedarwood oil in our recipe sets us apart from other brands in the market.

These oils each have multiple benefits for consumers ranging from being natural bug repellents to

enhancing hair health. Specifically selecting these two oils prevents us from having to include many

different ingredients that might only have one benefit each, dramatically reducing cost.

6. Business Location.

We will operate from a manufacturing facility in Wilmington, Delaware. We chose this location

due to the low filing fees, Delaware’s absence of franchise or sales taxes, and availability of land.

DataFox, a California-based company that analyzes finances and business data, announced that

Wilmington was the fifth best city in America to set a startup in. We were able to find a manufacturing

warehouse at a location right off Route 4 and I-95 for a very affordable price, which makes Wilmington

all the more suitable for our company.

7. Outsourcing

We have decided to buy our ingredients and packaging items from Bulk Apothecary, because it

carries everything we need to make and package our pomade. They are a U.S. company that sells quality

USDA Certified, organic products while also providing great customer service. We thought about

extracting our oil, however it proved to be very cost inefficient to buy the plant, ship it to our warehouse

and use complex machinery, instead of simply purchasing the oil directly.

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Exhibit 1: Organizational Chart

Citron Styling Organizational Chart for 2020 (Year 2)

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Exhibit 2: Employee Cost Chart

Cost of Total
Salary Actual Mandatory Mandatory Health Cost Per Employee
Position Range Compensation Benefits Benefits Insurance Employee Cost
FICA $10,771.20
WC $3,520.00
$49,181 - SUTA $264.00
President (1) $231,132 $140,800.00 FUTA $42.00 $5,678.00 $161,075.20 $161,075.20
FICA $8,415.00
WC $2,750.00
Marketing $90,485 SUTA $264.00
Director (1) $159,223 $110,000.00 FUTA $42.00 $5,678.00 $127,149.00 $127,149.00
FICA $6,120.00
WC $2,000.00
Operations $31,026 - SUTA $264.00
Manager (1) $83,070 $80,000.00 FUTA $42.00 $5,678.00 $94,104.00 $94,104.00
FICA $3,442.50
Quality WC $1,125.00
Control $43,414 - SUTA $264.00
Inspector (1) $118,749 $45,000.00 FUTA $42.00 $5,678.00 $55,551.50 $55,551.50
FICA $4,207.50
Social Media WC $1,375.00
Coordinator $38,000 - SUTA $264.00
(1) $61,000 $55,000 FUTA $42.00 $5,678.00 $66,566.50 $66,566.50
Customer FICA $3,060.00
Relations WC $1,000.00
Representative $36,000 - SUTA $264.00
(1) $112,000 $40,000 FUTA $42.00 $5,678.00 $50,044.00 $50,044.00
FICA $2,737.25
WC $894.53
Production $19,012 - SUTA $264.00
Staff (3) $40,667 $35,781.00 FUTA $42.00 $5,678.00 $45,396.77 $136,190.31
Totals $51,102.00 $690,680.51

Note 1: In recognition of company accomplishments, every year our total profit reaches or exceeds 30% of sales,
the President and Managers will receive a 10% raise and all other employees will receive a 4% raise, unless net
income is lower than the previous year.

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Exhibit 3: Market Segmentation and Targeting

Priority
Segment Growth
Segment Name Description level for Justification for Targeting
Size Projection
targeting
We have decided to make this target segment our entire target market. In
determining the segment size, three main factors were considered: age,
income level, and consumption habits. For age, the range of 18-59 was
chosen due the increased emphasis on style these men tend to have.
Men between the
These men are either in school or the workplace daily and have a desire
0.71% average ages of 18-59,
for a professional image. Additionally, the use of hair styling products
Stylish, growth rate making over
declines in men over the age of 60. Regarding income level, our product
working class, 32,556,230 expected over $40,000, who use 1
is priced at $22.99, which is above industry standard. In order to support
American Male the next 5 hair styling
the higher price, we will only target men with a yearly income above
years. products at least
$40,000. We found that 81% of men between the ages of 18-29 and 59%
once a month.
of men between ages 30-59 use a hair styling product at least once a
month and only 24% of men 60 and above use hair styling products in
general. Combining these qualities leaves us with the number of stylish,
working class, American men in our target market.
Women were initially considered as a potential target market as users of
the product as well as buyers for the men in their lives. The size of this
segment was calculated by applying the percentage of those who live in
households of at least two or more people to the total number of women
Women between in the United States. In regards to targeting women as users, we were
the ages of 15-54, unable to find enough quantifiable data to justify that there is a demand
2.4% average
Women who are in a for women in the pomade market. In fact, the only evidence of a
growth rate
purchasing relationship or women's brand of pomade on the market was made by Suavecita. Their
139,652,729 expected over 0
products for simply seeking a men's line, Suavecito, has expanded to almost 20 different pomade
the next 5
Men possible gift for products. The women's line has expanded as well, but into cosmetics and
years.
their male partner apparel instead rather than pomade. Instead, of trying to develop a
or loved ones. demand in women, we hope to develop brand loyalty with men seeking
out and buying the product regularly themselves. Targeting women would
require a completely different promotional strategy and simply focusing
on men alone would streamline and simplify our overall marketing
processes.
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8
Exhibit 4: Market Quantification

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Exhibit 5: Positioning/ Competitive Analysis

Bug Repelling
Ingredients

Citron Styling

Incognito

Seattle Pomade
Company

All-Natural
Synthetic

Port Products
Cliff Originial Jack Black

Triumph & Disaster

Baxter American Crew

Old Spice Bed Head Layrite Seven Potions

Non-Bug Repelling
Ingredients

Positioning Statement:
Our company offers a quality styling pomade, containing a unique blend of all-natural ingredients while repelling bugs at the
same time. Our product sets us apart in the men’s hair styling market because it not only promotes the health of consumers’
hair and scalp, but also is capable of repelling insects due to our unique citronella and cedarwood based mix of essential oils.

Map Notes:
For the horizontal axis, multiple variables were brought into consideration, including; quantity of ingredients, ratio of natural
to artificial ingredients in product, inclusion of fragrances or not, as well as others. Products with placements further left on
the map tend to have a high quantity of synthetic ingredients, a high chemical makeup, fragrances, and other additive
chemicals to generally improve strength of hold and functionality of their product, while products on the right side tend to
have few ingredients, more natural ingredients than chemicals and generally are fragrance free. For our vertical axis, the
bottom of the continuum refers to products that contain no ingredients with bug repelling abilities. The top of the continuum
refers to products that have several ingredients with the ability to repel bugs. Companies that fall in the middle of the vertical
axis range from having one to a few bug repelling ingredients. Our company is located on the top right-hand corner of the
map, because we provide the product with completely all-natural ingredients. As well as having a specialized blend of essential
oils that provides the unique ability to serve as a viable bug and insect repellent.

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Exhibit 6: Marketing Mix

Product/Service Branding
Our company, Citron Styling, provides a hair styling pomade that contains completely all-natural ingredients and actively repels insects.
We are proud to provide a unique, yet simple blend of ingredients without compromising on quality. Our promise to consumers is to
provide stress-free style in all environments. This is imperative in building brand loyalty and a relationship with our consumers. Our
marketing methods will be geared towards appealing to those who are willing to spend more for the benefits that come with an all-
natural, bug repelling product. We strive to produce products that align with our beliefs in doing what is right, natural, and reliable, in a
world that often sacrifices quality for profit.

Pricing
Year 1 Year 2 Year 3 Year 4 Year 5
Key competitor Customer Price $ 23.00 $ 23.00 $ 23.00 $ 23.00 $ 23.00
Key competitor Customer Price $ 19.99 $ 19.99 $ 19.99 $ 19.99 $ 19.99
Key competitor Customer Price $ 19.89 $ 19.89 $ 19.89 $ 19.89 $ 19.89
Unit Variable Cost $ 1.92 $ 1.92 $ 1.92 $ 1.92 $ 1.92
Channel/Wholesale Price $ 14.70 $ 14.70 $ 14.70 $ 14.70 $ 14.70
Retail/Customer Price: $ 22.99 $ 22.99 $ 22.99 $ 22.99 $ 22.99
Margin: $ 12.78 $ 12.78 $ 12.78 $ 12.78 $ 12.78
After creating a production process capable of manufacturing our styling pomade at a cost per unit of $1.92, we based our pricing decisions on
the added benefits our product has compared to other similar competitors and used a value based pricing strategy to do so. We wanted the high
quality of our product to show through our price without ignoring the price sensitivity of our customers. We acknowledge that hair pomade is
not a necessity and we know we can only raise our price so high before demand drops. With our main competitors’ price points landing
between $19 and $24, we selected the price of $22.99 to reflect our position in the market. We chose a wholesale price of $14.70 to
competitively price our product while simultaneously keeping the wholesale price below 65% of our retail price.

Distribution/Location Strategy
All our operations will be centered in Wilmington, Delaware, due to the low taxes for manufacturers. We will be selling our products to
wholesalers who have solid connections with big retailers like Amazon, Target, Walgreens, Walmart and CVS. To do so, we will be using a
wholesale company like Elizabeth Arden Inc. who is a prominent supplier for Target Corporation. We will also be selling our product through
our own website and Amazon as well. Our website will provide information about the purpose behind our company, brand and product, as
well as deal in direct sales. Our website will be hosted through the online marketing and web developing agency Atilus.

Promotional Strategy
Year 1 Year 2 Year 3 Year 4 Year 5
Total IMC Budget: $ 350,000.00 $ 400,000.00 $ 400,000.00 $ 450,000.00 $ 500,000.00
Sales Budget $ 157,500.00 $ 180,000.00 $ 180,000.00 $ 202,500.00 $ 225,000.00
Advertising Expense: $ 157,500.00 $ 180,000.00 $ 180,000.00 $ 202,500.00 $ 225,000.00
PR Expense: $ 17,500.00 $ 20,000.00 $ 20,000.00 $ 22,500.00 $ 25,000.00
Other Promo Expense: $ 17,500.00 $ 20,000.00 $ 20,000.00 $ 22,500.00 $ 25,000.00
Our promotional strategy mainly consists of mass media advertising, including but not limited to social media, online influencer programs,
online pop-up ads and search engine optimization. To pay for those, we allocated a total marketing budget of $350,000 for the first year,
$400,000 for Year 2 and 3, $450000 for Year 4 and $500000 for Year 5. 45% of those total marketing budgets will be given to advertising
expense and sales promotions expense each respectively, as they are our biggest driving forces. Lastly, 5% of our total budget will be given to
PR expense and other promotional expenses respectively. Our Marketing Director will be managing both our advertising and PR expense. We
are keeping the 5% of our budget each year in other promotional expenses for flexibility in case new promotional opportunities come up as the
year progresses.
# of Salespeople: 0 0 0 0 0
Compensation Method: n/a

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Since we will not be selling our products to retailers directly, we will need a wholesaler to act as our supplier. To find a potential wholesaler
suitable for us, we will be cold calling wholesalers. We will not be having any sales representatives, but will be outsourcing one employee from
the Atilus group to help manage and personalize our website year 1. The expense of using Atlius will cost $3500 year 1 and $600 per year for
the rest of the time we use Atlius’ services. Our Marketing Director and his team will be handling these activities and will also be promoting our
products through social media advertisements, broadcast advertisements and online ads. We will also be using some of our advertising budget
to make our product more searchable online and be a part of google shopping, which will also be handled by our Marketing Director.

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Exhibit 7: Flow Chart START

Q1 F1

Wax inventory
Melt down wax
140 units/hour
Bottleneck

Q1
F1
Cedarwood Oil
inventory
Mix oils and wax
140 units/hour
Bottleneck

Q1
F1
Citronella Oil
Inventory Mix in Citronella
140 units/hour
Bottleneck

Q1 F1

Water
Inventory Add in water
140 units/hour
Bottleneck

Q2 F2

Quality Check

Q1 F1
Q3 F3
Packaging Product ready
Inventory Label packaging and fill for pickup
Pack boxes for shipments
with pomade
140 units/hour END
140 units/hour
Bottleneck
Bottleneck

Quality Step What is measured? How often? How will you ensure quality?
Q1 Quality of inventory received Every time a new order comes in Quality control inspector ensures good quality of all received inventory
Q2 Quality of the mixed ingredients Before each box is shipped out Quality control inspector visually checks each box for any defects
Q3 Check quality of boxes once packed Before boxes go out to be picked up Quality control inspector approves each batch of boxes to be shipped off

Failure Point Brief description How will you prevent this failure? How will you recover if this failure occurs?
F1 Inadequate quality/ incorrect Contracts with suppliers for a Shipments are ordered far enough in advance that we would have extra inventory
quantity received for inventory consistent schedule to use immediately if there was one bad batch of inventory received. We would
also have our supplier overnight new inventory for free
F2 Mixing errors Check a small sample of each batch We would dispose of the bad batch, try and determine what went wrong and start
a new one
F3 Packaging errors Checking all orders before shipment Customer relations representative deals with complaints and sends rectified
product as soon as possible
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Exhibit 8: Quality Assurance
Indicate the Why is this dimension important, given your industry & target Identify the Quality
Dimensions of market? Step(s) on the Process
Quality on which Flowchart / Service
you will focus. Blueprint to which this
corresponds.
Consistency We apply a standard of quality upon all raw material inputs and every Q1, Q2 and Q3
unit we distribute to ensure that customer receives the exact same
product. At Q1, we inspect the quality and freshness of our inputs and
containers. At Q2, we inspect the quality of the blend once it is created
to ensure proper At Q3, we inspect each individual unit to ensure its
aesthetic consistency.
Performance We will inspect the quality of our oil blend to ensure that it performs Q2
sufficiently. At Q2, our unique blend of natural ingredients is evaluated
on strict set of performance standards. Our oil ingredients must be
mixed exactly to specification to give our product a smooth
consistency when applied to hair.
Special Features Our product acts as a natural bug repellant, due to the inclusion of Q1 (citronella oil)
citronella and cedarwood oils in our pomade’s oil blend. At Q1, we
ensure that our citronella and cedar oils meet our strict quality
standards.

Use the space below to describe any additional Proactive Quality Assurance Plans that are not connected to a specific
activity on your Process Flowchart / Service Blueprint.
We will be extensively checking every ingredient we buy from suppliers, and if it does not meet our standards, we will be
sending them back. Our unique blend of ingredients is our competitive advantage, so it is important that when these our
blend of oil meets our standards to be useful in our product manufacturing. We have spent time in our lab testing our
blend of oils and bees wax to create a product with premier consistency and functionality. We plan to have contracts
with our suppliers to ensure that the quality of the inventory we are purchasing consistently holds up to our standards.
We also plan to do routine maintenance on our machines, ensure they are performing effectively and efficiently.
Describe any reactive quality assurance plans. Include a recovery plan should a customer receive poor quality goods
and/or services.
In addition to a quality assurance plan, we are implementing a quality customer service plan. With each online order
through our website, customers are required to fill-out a valid email address. We will send a post-purchase survey to first-
time buyers to receive feedback on the quality of packaging and product and our ability to meet consumer needs. All
customer complaints will be addressed and resolved by our Customer Relations Representative. If a customer encounters
a defective product, they have the option to speak with our Customer Relations Representative during normal operating
hours or emailing the same representative describing the defect or any issues they may have. Once the representative has
identified the issue, they will ensure the customer’s needs are met by refunding or re-issuing the order, incentivize repeat
sales to the customer with coupons and information regarding upcoming promotions, and address the issue with the
Quality Control Inspector to ensure the future quality of our product.

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

☐ NA ☐ TQM ☒ Six Sigma ☐ ISO ☐ Benchmarking
☐ Other (specify what):
Note: You will not use all of them; only those with highest relevance.
Provide a specific explanation of how your chosen quality methodology relates to your business and how it will be applied:
Because Six Sigma focuses on improving quality, reducing costs and increasing customer satisfaction we feel it would be the
best quality methodology for our manufacturing needs. Six Sigma emphasizes eliminating and preventing future defects which
is the main concern of our failure points. Our company makes one product that contains only a few ingredients, which
compliments the six sigma methodology of reducing variation and having limited critical inputs. We also have specific
measurements pertaining to our ingredient blend that is extremely specific like the six sigma methodology recommends.

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Exhibit 9A: Inventory, Suppliers and Distribution
Item(s) Supplier Name & Location Reason for selecting this supplier Supplier Frequency of System of Mode(s) of
(City, State, Country) lead time replenishment Management Transportation
(in days) (in days)
White Beeswax Bulk Apothecary Great customer reviews along with affordable prices with 1-2 days 30 days Fixed Order ☒ Highway ☐ Rail
(Streetsboro, Ohio, United States) ingredients and supplies from organic and ethical producers. Interval ☐ Waterway ☐ Air
Extra Virgin Olive Oil Bulk Apothecary Great customer reviews along with affordable prices with 1-2 days 90 days Fixed Order ☒ Highway ☐ Rail
(Streetsboro, Ohio, United States) ingredients and supplies from organic and ethical producers. Interval ☐ Waterway ☐ Air
USDA Organic Bulk Apothecary Great customer reviews along with affordable prices with 1-2 days 90 days Fixed Order ☒ Highway ☐ Rail
Citronella Essential (Streetsboro, Ohio, United States) ingredients and supplies from organic and ethical producers. Interval ☐ Waterway ☐ Air
Oil
USDA Organic Bulk Apothecary Great customer reviews along with affordable prices with 1-2 days 90 days Fixed Order ☒ Highway ☐ Rail
Cedarwood Essential (Streetsboro, Ohio, United States) ingredients and supplies from organic and ethical producers. Interval ☐ Waterway ☐ Air
Oil
Water City of Wilmington We have decided not to import water from other suppliers and N/A N/A N/A N/A
(Wilmington, DE, United States) will instead use city water for cost efficiency and simplicity.
Plastic Containers Bulk Apothecary Great customer reviews along with affordable prices with 1-2 days 60 days Fixed Order ☒ Highway ☐ Rail
(4 Oz.) (Streetsboro, Ohio, United States) ingredients and supplies from organic and ethical producers. Interval ☐ Waterway ☐ Air
Custom Labels Bulk Apothecary Great customer reviews along with affordable prices with 5 -business 90 days Fixed Order ☒ Highway ☐ Rail
(2”x1.5”) (Streetsboro, Ohio, United States) ingredients and supplies from organic and ethical producers. days Interval ☐ Waterway ☐ Air
*Frequency of replenishment calculated using fixed order interval calculations.
FINISHED GOODS INVENTORY
Finished goods produced Frequency of shipping finished Average level of Finished goods inventory on Amount of safety stock on site
(per hour) goods site
At the end of Year 1 140 Monthly 11,269 1,189
At the end of Year 2 140 Monthly 21,102 2,231
At the end of Year 3 160 Monthly 23,515 2,486
At the end of Year 4 185 Monthly 25,611 2,708
At the end of Year 5 185 Monthly 26,551 2,807
Monthly Production Capacity * Monthly (Max Daily Usage * Max Lead Time (Days)) –
Capacity Utilization (found in Exhibit 10) (Average Daily Usage * Average Lead Time (Days))

What is the lifespan of your finished goods inventory? ☐NA 30 months

How will you manage perishability of Finished Goods ☐NA Production correlating in a quarterly fashion to demand in order to minimize quantity of finished goods inventory before shipping.
Inventory?

DISTRIBUTION
Name of transportation provider Reason(s) for selecting this provider/carrier Frequency of Pick Up / Drop off
FedEx FedEx stands out among other transportation providers due to its specialization in worldwide shipping at a Delivery of materials is done monthly.
competitively priced rate, with a money-back guarantee, and extensive commitment to their customers. We have
chosen them not only for their customer service and expertise, but also because of the fact that they are the most Pick up finished inventory is done daily for
reliable and expedient of US transportation providers, which would reduce the likelihood of errors made in the individual sales and biweekly for wholesales.
distribution process. Their quality stands out against all other distribution competitors including UPS or the United
States Postal Service.
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Exhibit 10: Capacity & Resources
Demand Capacity Utilization Hours of Bottleneck name and How will you manage /adjust the bottleneck to
(per hour) (per hour) (%) Operation description ensure you can appropriately serve or supply your
customers?
At the end of Year 1 65 140 46.43% 9am-5pm Labeling and filling of We will add a new warehouse staff member at the
packaging with our finished start of year 3 who can label and package at 45 units
product is our bottleneck. per hour.
At the end of Year 2 122 140 87.14% 9am-5pm Labeling and filling of
packaging with our finished
product is our bottleneck.
At the end of Year 3 136 160 85.00% 9am-5pm Melting the wax is our We will upgrade the capacity component of our wax-
bottleneck. melter at the start of year 4 in order to match our
packaging and labeling throughput rate.
At the end of Year 4 148 185 80.00% 9am-5pm Melting the wax and
packaging finished products
are currently our bottlenecks.
At the end of Year 5 153 185 82.70% 9am-5pm Melting the wax and Before the beginning of year 6, if our forecast calls
packaging finished products for increasing demand, we will consider buying
are currently our bottlenecks. another wax-melter and hiring additional employees.
Show your calculations for the following parameters at the end of Year 1.
*We use year 2 due to the increase in demand, this year is a better reflection of our company’s actual capacity and utilization.
Hours of Demand/month Demand/hour Capacity/month Capacity/hour Utilization
operation/month
Hours of Operation / # Demand per year /# of Demand per year/ Capacity per year / # of Capacity per year / # of hours Demand per hour / Capacity
of months months #of hours per year months operating per year per hour
(8*250)/12= 166.66 (250,781/12) = (250,781/2,060) = (288,400/12) = (288,400/2,060) = (122/140) =
20,898.42 121.74 24,033.33 140 87.14%

Additional resources (beyond your bottleneck) must be allocated appropriately to support operations. Identify which resources have a significant impact on capacity at start up and
describe why these are appropriate amounts of resources at start up.
As demand for our product increases, we will need more employees and more capacity in our melter to keep up. To cope with this, our plan is to add a new warehouse staff
member at the start of year 3, and upgrade the capacity component of our melter at the start of year 4. This will allow us to keep up with demand for our product, while still being
able to effectively store it in our warehouse. As we continue to expand our market share, we will eventually have to expand our warehouse space, workforce, and buy more
packing materials to keep up with demand.
Describe adjustments you will make as resource requirements vary with time. Be specific regarding which key resources (beyond your bottleneck) will be adjusted, when and how.
If you will make multiple adjustments, explain each.
Throughout the year, we may make minor adjustments in the quantities of essential oils and beeswax to ensure product freshness and keep room in our warehouse free. For the
most part, we will be buying in bulk on a quarterly basis, however if demand increases or decreases drastically or breaks expectations due to seasonality, we will adjust the quantity
of resources we purchase from our supplier or the frequency of purchases.
How will you manage seasonality? If your organization does not have seasonal demand, please check this box: ☐NA
As we generally have a considerable amount of safety stock on hand due to our production rates, we can reach into safety stock if seasonal demand varies tremendously. However, we
believe that our production rates and frequency of ingredients purchased will be enough to cope with routine changes in increased production during the summer.

16
Exhibit 11a: Income Statement

17
Exhibit 11b: Income Statement Notes

Sales Revenue: Projected from Forecast.

Cost of Goods Sold:

Direct Materials (Direct Material - Cost Per Unit):
4 oz. Container - $0.19 Beeswax - $0.33, Olive Oil - $0.24, Cedarwood Essential Oil - $0.48, Citronella Essential Oil - $0.65, Water - $0.02, Custom Label - $0.05
TOTAL = $1.92
Total Cost of Goods Sold = $1.92 per unit
Our cost of goods sold will not change over time with the market environment conditions due to clauses that will be in out contracts with suppliers and distributors.

Salaries Expense:
Data found on Employee Cost Chart. Most employees will be paid fairly for the industry standard for their work. President and Operations Manager will be paid above the
industry standard due to the extent of their job descriptions and the many hats they wear.
Starting in Year 3, we make the addition of a few staff members.
Pay raises in Year 4 and 5 continue to raise Salaries Expense.

Payroll Taxes Expense:

Data found on Employee Cost Chart. Taxes Expense increases due to new hires and distribution of raises.

Employee Benefits (Medical):

Employees are registered into a group healthcare plan. $4,244 per employee is paid per year for comprehensive healthcare coverage for our staff. This value increases in Year
3 due to the growth of staff size.

Commission Expense:
See Note 1 on Employee Costing Chart.

Depreciation Expense:
Years 1-5 include 10-year straight line depreciation for cost of a mixing machine. ($20,000/10 = $2,000)
Years 1-5 include 10-year straight line depreciation for cost of a melting machine. ($1,250/10 = $125)

Travels, Meals, and Entertainment Expense:

$1,968.69 = Year 1 for building and maintaining relationships with wholesalers and suppliers. (Sales per year * .1% = TME Expense)
Increases annually in proportion with our unit sales.

Advising and Promotion Expense:

We will use integrated marketing campaign and increase our budget as our demand and revenue increase. This is being done in an effort to retain current customers, steal
customers from our competitors, and constantly attain a higher market share.
$350,000 – Year 1, $400,00 – Year 2, $400,000 – Year 3, $450,000 – Year 4, $500,000 – Year 5

Taxes and Licenses Expense:

$99 in Year 1 for Trademark Registration. (legalzoom.com)
$75 in Year 1 for Delaware Business License.
$134933 in Year 1 for Income Tax. (Federal – 21%, State – 8.7%, Local – 1.25%)
Since we are leasing our warehouse and office space, we have no annual property tax.

Office Expense:
$5,000 = Year 1 to account for a one-time purchase of computers and printers.
$1,000 = Year 1 – 5 for standard office supplies.

Office Furnishings Expense:

$17,000 in Year 1 for 5 offices, a conference room, and a break room.
$1,500 in Year 2 – 5 for upkeep and the addition of any office spaces. We purchased all of the office furniture in the first year because we do not plan on adding many
employees to our management team.

Utilities Expense:
Electricity and Water = $15,120 in Year 1
Based on industry averages per square foot of our 6,300 square foot building. (http://www.facilityservicespartners.com/facility-costs/)
Increases annually in by 0.5%.

Rent Expense:
$47,250 in Year 1 – 5 for the renewal of our yearly lease.

Transportation Expense:
$2637.60 = Years 1 – 5 for the transportation of raw materials to our production warehouse.
This value is based on monthly orders from wholesale supplier who ships direct at $219.80 per shipment, no matter the size or weight.
$27,590.60 – Year 1, $51,608.90 – Year 2, $57,549.05 – Year 3, $62,675.95 – Year 4, $64,982.04 – Year 5 for outgoing distribution of finished goods. (Fedex.com)

Website Expense:
We have outsourced the production of our website design and usage of the domain name.
$3,500 in Year 1 for a one-time payment for the development of our company website.
$600 in Year 2 – 5 ($50 per month) for the continued use of the domain name and website serves as well as the use of their expertise in troubleshooting. (ATILUS.com)

18
Exhibit 12a: Balance Sheet

19
Exhibit 12b: Balance Sheet Notes

Cash and Cash Equivalents: $2 Million from Long-Term Debt in the form of cash from Unilever

at an interest rate of 6.25%.

Accounts Receivable: As we sell exclusively to wholesalers, all our sales will be on account, which

we plan to collect monthly.

Prepaid Rent: We will pay cash at the beginning of every year to pay for our yearly lease.

Inventory: Inventory is calculated on a FIFO basis and shows rollover from production.

Machinery and Equipment: The mixer and melter for our products will be purchased with cash in

year 1 and will depreciate over the course of 10-years.

Building: We are leasing our warehouse, thus do not own buildings.

Land: We have no land ownership because our leased building will be located in a pre-existing

commercial and industrial park, which is not owned by us.

Less Accumulated Depreciation: Years 1-5 include 10-year straight line depreciation for cost of a
mixing machine. ($20,000/10 = $2,000)
Years 1-5 include 10-year straight line depreciation for cost of a melting machine. ($1,250/10 =
$125)

Accounts Payable: Accounts payable will be accrued and paid off monthly to our supplier.

Accrued Salaries and Wages: We pay employees on the 1st of every month, so these wages

account for the month of December.

Accrued Payroll Taxes and Benefits: One month of our payroll taxes and benefits, as we pay

taxes and benefits monthly.

Notes Payable: We do not plan to have any short-term debt obligations.

Current Maturity of LT Debt: In year 2, our $2,000,000 loan with 6.25% interest will mature to

short term debt. As is the case, this will be paid off in year 3 according to the loan terms.

Principle Payments: We will be paying our loan back in full in year 3.

20
Exhibit 13a: Cash Flow Statement

Exhibit 13b: Cash Flow Statement Notes

21
Exhibit 13b: Cash Flow Statement Notes

Net Income: Calculated on income statement.

Depreciation: Years 1-5 include 10-year straight line depreciation for cost of our mixer ($20,000/10

= $2,000) and our melter ($1,250/10 = $125)

Accounts Receivable: As we sell exclusively to wholesalers, all our sales will be on account, which

we plan to collect monthly.

Accounts Payable: Accounts payable will be accrued and paid off monthly to our supplier.

Accrued Salaries and Wages: We pay employees on the 1st of every month, so these wages

account for the month of December.

Accrued Payroll Taxes and Benefits: One month of our payroll taxes and benefits, as we pay

taxes and benefits monthly.

Fixed Asset Purchases: We will purchase a $20,000 mixer and a $1,250 melter in year 1, and use

10-year straight line depreciation.

Long Term Debt: In year 1, we will take out $2,000,000 in long term debt with a 6.25% interest

rate on a 3-year term. We will pay back our $2,000,000 in full in year 3.

22
Exhibit 14: Financial Ratios & Analysis

23
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28
 Bibliographies – Section 1, Team 6

My name is TJ Alvy, I am a junior Marketing major from Herndon,

Virginia. I hope to one day pursue a career in Sports Marketing and
Analytics. I spend my free time hiking and playing keyboard with my
roommates. Ideally I would love to land in a career that enables me to
travel the world and experience what it has to offer.

My name is James Ehrmann and I am from Stafford, Virginia. I am a

Junior Finance major. I hope to have a career in Financial Advisory and
help people to effectively save money and invest for their future. I enjoy
watching football and jamming out during long car rides.

My name is Julia Francione and I am a junior Marketing major from

Green Brook, New Jersey. Living 45 minutes outside of New York City
for my entire life, it would be a dream come true to work there after
graduation managing marketing campaigns or analyzing market research.
In my free time I enjoy skiing, community service and spending time
with friends.

My name is Taylor Moore, and I am a junior Marketing major from West

Newbury, Massachusetts. My dream is to end up in Sports Marketing one
day working for one of the Boston sports teams and living in the city. In
my free time, I love playing basketball, traveling, and spending time with
my family and friends.

My name is Nat Rabuse, a junior and an accounting major from

Chesapeake, Virginia. I hope to work in Prince William County as a tax
accountant after I graduate and earn my CPA. When not in class or
working, I enjoy sailing, cooking, and car maintenance.

My name is Mashiyath Zaman and I was born in Bangladesh and raised

in various regions of the world before settling down in Vienna, VA. I am
a Computer Information Systems Major and hope to one day work for
an IT consulting firm in any one of the major cities. In my free time, I
love reading books, spending time with my friends, travelling, and
painting.

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