Business Plan:3D Additive Manufacturing Technologies, Co. – 3-DAMTM Starting A New Venture – MGMT 6630 Joe Ott 7-18-2012
BUSINESS CONCEPT • 1. INTRODUCTION • 1.2. BUSINESS IDEA • 1.3. BUSINESS MODEL • 1.4. BUSINESS GOALS • 1.5. KEYS TO SUCCESS • 2. THE COMPANY • 2.1. LEGAL STRUCTURE AND OWNERSHIP • 3. PRODUCTS / SERVICES • 3.1. PRODUCT AND SERVICE SUMMARY • 3.2. CUSTOMER • 3.3. TECHNOLOGY • 3.4. REGULATORY ISSUES • 4. THE MARKET • 4.1. MARKET ANALYSIS • 4.2. TARGET MARKET SEGMENT • 4.3. GROWTH POTENTIAL • 5. THE INDUSTRY • 5.1. COMPETITION • 6. SALES • 6.1. SALES STRATEGY. • 6.2. PRICE STRATEGY • 6.3. PROMOTION STRATEGY • 6.4. SALES FORECAST • 7. THE MARKETING PLAN • 8. MANAGEMENT AND EMPLOYEES • 9. ACTIVITY PLAN • 10. FINANCE AND ECONOMY FIGURES • BACK UP SLIDES
1. INTRODUCTION - “With 3-DAMTM comes manufacturing freedom!!” • 1.2. BUSINESS IDEA • The business idea behind 3-DAMTM is to cross additive manufacturing technology with the “KinkosTM” concept. • Customers contact store by appearance, email, web submission • Business would staff trained engineers and technicians to assist customers in selecting the correct technology to manufacture their hardware. • 1.3. BUSINESS MODEL • Sole Proprietorship during the initial start-up phase • Would initially target a small volume of jobs, applying a medium margin. • Diversification Growth Strategy - 3-DAMTM would practice Forward Integration by getting in front of the customer
1. INTRODUCTION - “With 3-DAMTM comes manufacturing freedom!!” • From ASTM Designation: F2792 – 10 - Standard Terminology for Additive Manufacturing Technologies2 • Why pursue additive manufacturing? There are many benefits in using additive manufacturing to make hardware over conventional manufacturing5: • Design flexibility • No tooling constraints • Allows complex models • No hard tooling required • No material lead time • Automated process • Reduced development expenses • Faster concept design to functional component • Reduced manufacturing costs • Near wrought material properties • Reduced product life cycle cost • Reduced manufacturing time: hours/days/weeks vs. months • Minimal secondary machining - near-net shape part • Additive manufacturing is an emerging industry. • Some of the difficulties with additive manufacturing are: • New technology – not everyone is familiar, technology evolving • High barriers to entry – initial high start-up costs for equipment • Material properties are still being defined • Technical and process models are limited Picture courtesy of Rapid Quality Manufacturing5
1. INTRODUCTION - “With 3-DAMTM comes manufacturing freedom!!” • 1.4. BUSINESS GOALS • 2 years of operation: • Increase market share – establish 4 stores in largest US manufacturing locations (Houston, TX; Milwaukee, WI; Seattle, WA; San Antonio, TX)4 • Increase market penetration over time –grow each store’s revenue at least 12.5% yearly • Establish new pricing incentives and promotions • Build long lasting quality partnerships • Advertising • Join Committee F42 on Additive Manufacturing Technologies1 • 6 years of operation: • Increase market share – establish a store in 10 major US cities. Have plan developed to have 50 stores in major US cities by 10 years of operations. • Increase market penetration over time – continue to grow revenue at least 12.5% yearly, per store. • 1.5. KEYS TO SUCCESS • Flexibility – providing solutions for variety of customer and their unique requirements. • Adaptability – have technology and capability for variety of needs. • Sustained Growth – have capacity where and when a customer needs it. • Technical “Know-how” – have understanding of how to use additive manufacturing technology to provide best results. • Speed – providing solutions faster and more efficient than anyone else. • Funding – have cash and capital to sustain growth and profit.
2. THE COMPANY - “With 3-DAMTM comes manufacturing freedom!!” • 2.1. LEGAL STRUCTURE AND OWNERSHIP • 3-DAMTMwill be listed with the Internal Revenue Service as a sole proprietorship • The principle owner (and equity shareholder) will be Joe Ott. • Minor equity shareholders (<49%) will be silent partners Figure 1. – Basic Organizational Structure
3. PRODUCTS / SERVICES - “With 3-DAMTM comes manufacturing freedom!!” • 3.1. PRODUCT AND SERVICE SUMMARY • Plastic and metal parts and concepts, produced in a few hours or days, using additive manufacturing technologies • Evaluation and modification of designs/CAD and concepts for application to additive mfg. • Coordination of post processing. • Metrology center – accurate measurement evaluation • 3.2. CUSTOMERS • The target customers are everyone from local hobbyist and enthusiast to large Fortune 500 companies needing unique part developed and produced. • The current market doesn’t have local “to-go-to” places to get all your materials and additive manufacturing methods and post-processing under one roof. • All competition is located in a few select areas • 3-DAMTMwould provide a place for customers to have one-stop-shopping for their manufacturing. Customer(s) can contact the business center by phone, web, or face-to-face. Sales engineers would be available to help customers work through product development and iteration until the final product is ready. Pricing would be evaluated based upon the necessary amount of engineering and development to make hardware, material considerations, and post processing requirements.
3. PRODUCTS / SERVICES - “With 3-DAMTM comes manufacturing freedom!!” • 3.3. TECHNOLOGY • Powder Bed Technologies - Powder Bed is the distribution of thin layer of powder (metal or thermoplastic) and uses an energy source to sinter/melt the powder into solid form. Powder Bed Technologies offer high resolution, medium volume, small to medium sized part capabilities.Two common methods are: • Selective Laser Melting – laser beam power source in an inert atmosphere (nitrogen or argon) • Electron Beam Melting – electron beam power source in a heated, vacuum environment • Deposition Technologies – Metal is introduced via powder nozzle or wire feed into an energy source directly at the build location, which melts to metal into solid form. Deposition Technologies offer lower resolution, lower volume, larger sized part capabilities. 3 common methods are: • Laser Powder Deposition – laser/power nozzle combination • Laser Wire Deposition – use of a continuous feed wire and laser energy source • Electron Beam Wire Deposition – use of continuous feed wire and EB energy source • Specialized Software – (CAD/CAM, 3D model analysis, project/customer management) will be required to seamlessly integrate customer models between additive mfg. platforms and required post processing technologies. • 3.4. REGULATORY ISSUES • "Green Technology" • PPE • Inert Gases • Intellectual Property7 • Product Liability7 Pictures courtesy of EOS (http://www.eos.info/en/home.html), Arcam (http://www.arcam.com/), and Optomec (http://www.optomec.com/)
4. THE MARKET- “With 3-DAMTM comes manufacturing freedom!!” • 4.1. MARKET ANALYSIS • Wohlers Associates Inc. - Additive manufacturing had a total of market size of $1.7 billion worldwide in 2011. • Emerging Industry - Additive manufacturing can be considered an emerging industry in the US12 • 4.2. TARGET MARKET SEGMENT • Small Businesses - • 2+ years old (generally wouldn't be start-ups in their first year) • Income - Have manufacturing costs >$1000 per part. • Need - need fast parts made, short runs • Education - need to understand hardware end requirements. • Work - manufacturing, research, engineering, automotive, etc. • Geographical location - in key starting cities, some internet sales. • Large Business - • 2+ years old • Income - Have manufacturing costs >$1000 per part. • Need - need fast parts made, short runs, development iterations • Education - need to understand hardware end requirements. • Work - manufacturing, research, engineering, automotive, etc. • Geographical location - in key starting cities, some internet sales. • Hobbyists - • Age - 16 years or older • Income - able to afford part costs between $100 and $2000. • Need - generally have a concept they want to make or need a replacement part for one that broke • Gender - male and female • Education - majority expected to have some college and / or trade school • Work - professionals and trades • Geographical location – key US manufacturing centers / cities, some internet sales. • 4.3. GROWTH POTENTIAL • Additive Manufacturing, aka 3D Printing, will reach $3.1 billion worldwide by 2016 and $5.2 billion by 20208. • If 3-DAMTM can capture even 1% of this market that would be $31 million dollars in revenue. 5% growth in revenue the next year would result in $32,550,000 of revenue, per store. CAGR- Compound Annual Growth Rate
5. THE INDUSTRY - “With 3-DAMTM comes manufacturing freedom!!” • 5.1. COMPETITION - Other companies trying to adopt the “Kinkos” model are: • MydeaTechnologies – digital model shop and an additive manufacturing and rapid prototyping provider. http://www.mydeatechnologies.com/ • Owners: Michael Siemer • Annual Sales: $520K • Competitor’s distribution channel: Internet • Competitor’s marketing strategy: Internet Sales • Products and Services: Product Development & 3-D CAD Modeling, Rapid Prototyping/Additive Fabrication, Subtractive Rapid Prototyping, Rapid Tooling & Manufacturing • Competitors price strategy: mid to high cost. • Shapeways– 3D Printing company for designers and Do-It-Yourselfers. Helps people make and sell their items. http://www.shapeways.com/ • Owners: Peter Weijmarshausen • Annual Sales: $1.90M • Competitor’s distribution channel: Internet • Competitor’s marketing strategy: Internet Sales, Arts and Crafts forums, Web sales of clients’ products, Do-It-Yourself market. • Competitors price strategy: Low to mid cost. • Products and Services: Tutorials, Shapeways Lab, Software, Metals and plastic fabrication, Online Sales. • The following companies are a selection that specialize in additive technology and would be competition for their prospective sub-fields: • Morris Technologies - http://www.morristech.com/ – Selective Laser Sintering (SLS) metals • C&A Tool - http://www.catool.com/ – SLS metals and machine shop • Paramount Industries – http://www.paramountind.com/ - Stereolithography (SLA) and SLS of plastics • Materialise - http://manufacturing.materialise.com/ - a Belgian firm that uses additive manufacturing to make a range of products, including medical devices.
6. SALES - “With 3-DAMTM comes manufacturing freedom!!” • 6.1. SALES STRATEGY • It is envisioned that customers would contact a local 3-DAMTM business center to initiate a job. • 6.2. PRICE STRATEGY • Pricing would factor in the costs of overhead, materials, and per hour cost for machines and personnel. • A profit mark-up of 30% will be added to each job. • 6.3. PROMOTION STRATEGY • Sales will be generated through advertisement and campaigns. The campaign will utilize TV, trade journals, and the internet (web pages, FaceBook, etc.). • 6.4. SALES FORECAST • Based 3 major products/services: Sales Engineering, Fabricated Metals, and Fabricated Plastics. • Projected the amount of sales revenue generated by the average increase in customers each month times the expected revenue each customer would generate. YR 2 accounts for 4 stores in key cities. YR 3 accounts for 5 stores in key cities. Expect average growth of 12.5% per year for each store. • Cost of sales is the overhead for the sales engineers and technicians plus an estimated monthly operating cost for the metal machines of $4000 and plastic machines of $3000. • These numbers are based upon a best scenario. Sales monthly
7. THE MARKETING PLAN - “With 3-DAMTM comes manufacturing freedom!!” • As part of a Diversification Growth Strategy 3-DAMTM would practice Forward Integration. • As the customer is the focal point for the business model, 3-DAMTM offices will be targeted close to the customers. • Customers will be contacted through advertisement and campaigns. • The campaign will utilize TV, trade journals, and the internet (web pages, FaceBook, etc.). • Highlights of ads will target design freedom, no or low tooling, and speed. • Additionally, small to large manufacturing companies will be approached. • A marketing group will be selected to assist in the marketing campaign on a yearly contract. • A $100k budget will be set for marketing. The marketing campaign will start in June 2013 and continue through December 2013.
8. MANAGEMENT AND EMPLOYEES - “With 3-DAMTM comes manufacturing freedom!!” • CEO / CTO - complete oversight and responsibility for the company as well as technical authority. • CFO - direct oversight of the following reporting line: Accounting, Patient Accounts, Communications, Purchasing, Printing & Duplicating, Information Management, Management Information Systems. • Accounting and Human Resources - Accounting and Human Resources will be outsourced to a 3rd party company and overseen by the CFO. • The company will be responsible for all day to day accounting and human resources activities, including accounts receivable and payable, health and dental care, 401k management, and taxes, etc. The company should have experience with accounting and HR in all US states. It would be preferred if the company has experience with start-up companies. • Technology Team – Materials Engineer, Technology Researcher, Training/Quality • Responsibility for moderately complex engineering projects, • Serves as consultants, providing technical information and engineering recommendations that assist various projects and processes and materials. • Coaches and trains less experienced engineers and technicians. • Branch Manager(s) – oversee branch offices and perform sales • Employees • Sales engineers – customer interface, engineers marry up technology to customer needs. There will be 2-3 per store. • CAD and Build technicians – modify designs to make technology friendly, operate and run machines. There will be 1 per machine and two CAD operators per store. • Post processing technicians - provide any necessary post processing and coordination. There will be one per store. • Shipping/Receiving – ship and receive hardware, supplies, etc. There will be one per store.
9. ACTIVITY PLAN - “With 3-DAMTM comes manufacturing freedom!!” • This section describes some activities that will be needed to implement the whole or parts of the business plan. • Order and Install Machines – machines and installation at $1,000,000 a-piece. 1 plastics, 2 metals, 1 metrology and inspection, 1 oven and autoclave = $5,000,000 • Store – 15,000 sq. ft. * $3.523 per foot per year = $52,800. Plus $1,000,000 for upgrades and office requirements. Equals $1,052,800.00 • Hire Accounting / HR - $100,000 • Supplies - $100,000 • Advertising Campaign - $100,000
10. FINANCE AND ECONOMY FIGURES - “With 3-DAMTM comes manufacturing freedom!!” • The following are “Seed Capital funding expenses” that will be incurred prior to the business starting: • The following describes all the “Start-up through Second Stage” funding (existing and needed) for the project: • Bank Loans – $3,000,000 – Secured against the procured equipment. Equipment, Real-estate, and Long-term loans. • Angel Investors – $2,000,000 • Other Investors – $2,000,000 – Informal Risk Capital, Venture Capital • Grants – $2,000,000 – SBIR - Phase I and Phase II, Fed, State, Local. • Government Loans - $1,000,000 – SBA (504, SBA), etc. • Total: $10,000,000 • Third stage (growth) funding would be necessary for expansion beyond the first store and would be necessary at last quarter 2013.
10. FINANCE AND ECONOMY FIGURES - “With 3-DAMTM comes manufacturing freedom!!” Net profit monthly PROFIT & LOSS TABLE Net profit yearly
10. FINANCE AND ECONOMY FIGURES - “With 3-DAMTM comes manufacturing freedom!!” Balance Sheet YR1 YR2 YR3 Current Ratio = 0.16 -1.08 -1.33 *indicates low liquidity Debt Ratio = 6.43 -0.92 -0.75 *indicates business while taking on more debt is working out of debt Debt to Equity = 1.32 *High capital industry/business Net Profit Margin = -11.78 4.28 0.10 *indicates high initial risk but business becoming more stabile. ROI = -0.63 0.52 0.02 *indicates high initial risk but business becoming more stabile.
10. FINANCE AND ECONOMY FIGURES - “With 3-DAMTM comes manufacturing freedom!!” CASH FLOW ANALYSIS
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One Store (Houston, TX) Ratios YR1 YR2 YR3 Current Ratio = 0.16 -0.10 -1.5 *indicates low liquidity Debt Ratio = 1.62 3.34 0.76 *indicates store is working out of debt Debt to Equity = 1.32 *High capital industry/business Net Profit Margin = -11.78 -11.74 -10.42 *indicates high initial risk but business working toward stabilizing. ROI = -0.63 -2.34 1.78 *indicates high initial risk but business becoming more stabile.