Soap Manufacturer Business Plan Sample

Soap Manufacturer Business Plan Sample

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This sample business plan will provide you with the ideal guidelines for starting your soap manufacturing business. Use this example to compile your own.

1Executive Summary

SAFEassure, LLC has designed a new product that provides managers with a quick, easy, and affordable method to effectively monitor employee hand washing. Proper hand washing is the most effective preventative measure available to combat communicable diseases.

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Improper hand washing contributes to more than 130,000 deaths in the U.S. each year through the transfer of communicable diseases in restaurants, day cares and hospitals (more than AIDS and breast cancer combined). Studies have shown that proper hand washing procedures in these environments could cut down the spread of disease by up to 75%. The greatest contributing factor to this problem stems from the inability of supervisors to monitor and control employee hand washing. Existing products offer no effective or affordable solutions for enforcing and ensuring hand washing compliance. Treatment of preventable diseases costs Americans over $95 Billion in direct costs each year.

SAFEassure, LLC is the first producer that answers this problem and provides indisputable proof every time a person washes his or her hands. After washing occurs, the unique dye in our soap remains on the hands and fades to the skin’s natural color in under six minutes. This would allow supervisors to conclusively verify at a glance whether hand washing has taken place. No other product on the market offers such a high level of assurance of sanitation compliance.  The product is safe and meets all current FDA regulatory requirements for soap.

The Market

Although restaurants and hospitals have tremendous market need for a product such as ours, day cares represent the best opportunity for our initial target market. Day cares are an ideal market because they have a vested interest in reducing disease transfer amongst children, and have adamant support from their clients [parents] to create as clean an environment as possible. As stated by Family Practice News,

 

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“Most day care centres are sophisticated little germ factories, exchanging bacteria and viruses with the shake of a hand or the sharing of a toy. And many of those nasty bugs travel home where they can infect the rest of the family.”

The Company

SAFEassure, LLC boasts a strong founding team and experienced board of advisors. Our primary advisor, Jack Soap, brings twenty years of industry experience and networked relationships to accelerate market penetration of the product line. SAFEassure, LLC will outsource the production of its soaps to an existing soap manufacturer. The executive team will first target the Portland Metro area and eventually the greater Northwest using direct sales and existing distributor channels to penetrate the market. Initial capital will be used to test, patent, approve, produce, and market SAFEassure, as well as provide working capital for the first year.

SAFEassure, LLC will follow three concise strategies to achieve our desired growth:

  • Exploit first-mover advantage in a highly fragmented market with a unique and differentiated product.
  • Develop a strong branding campaign to build awareness, positive perception and sales of our products within our target markets.
  • Continue to develop new products to satisfy an ever growing set of markets.

Mission

Our mission is to create value for customers and shareholders by continually improving health and reducing preventable illnesses through the use of our soap.

Keys to Success

  • A first-mover branding campaign to build awareness of SAFEassure’s products as the standard for ensuring hand washing compliance.
  • Patent protection to defend our time-sensitive dye and product concept from competitors.
  • Complementary relationships with organisations interested in increasing hand washing compliance.

Objectives

  • Develop a complete prototype which meets regulatory standards by February of Year 1.
  • Become the specialty soap of choice for day cares across the Northwest by December Year 2.
  • Achieve sales of $5 million by the end of Year 6.

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2Company Summary

soap-manufacturing-company-summary

SAFEassure, LLC was founded in Portland, Oregon, and created as a Limited Liability Corporation. SAFEassure, LLC develops and markets soaps utilising time-sensitive dyes promoting sanitary and safe environments to businesses and parents interested in maximising cleanliness. The company will initially be based out of a residential apartment in Portland.

Company Ownership

The executive team will retain at least 70% of the equity in the company. Every $2,500 dollars of investment in the company will secure up to 1% equity in the company. Assuming 30% of the company is owned by investors, Devon Nevius will retain 40% ownership, with Kevin Meinert retaining 30%.

Start-up Summary

Total funding required to get the business started is estimated at $250,000, of which the executive management team – Devon Nevius and Kevin Meinert – will invest $100,000 and $75,000, respectively. An additional $75,000 investment necessary to develop a product and effectively bring SAFEassure’s products to an initially limited geographic region is sought from other investor(s).

The key elements in the start-up plan for the company are:

  • Development of a working prototype.
  • Funding of working capital requirements and promotional materials for the principal operating activities of the company.
  • Gaining patent approval.
  • Establish a strong brand image early to position ourselves in the market.

The founders have already developed a rough prototype of the product. Our start-up period includes 5 months of work by an independently-contracted chemist at a local lab who will perfect this design into a finished prototype, with the correct balance of soap and dyes in four colours. The final two months of this start-up period include safety tests per government regulations to assure high quality.

Company Locations and Facilities

The management team of SAFEassure, LLC will initially use a residential apartment in Portland to run operations. In Year 2, we will move to a rented office. Distribution will remain outsourced.

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3Products

soap-products

SAFEassure’s product line provides a unique control level to managers, supervisors and parents alike. We have two basic product lines: CHILDassure, intended for day care facilities, and an antimicrobial-based product for hospitals (HEALTHassure) and restaurants (FOODassure) – the antibacterial products are not yet in development. The various product lines, competitors and future product possibilities for SAFEassure, LLC will be outlined in the following section.

Product Description

SAFEassure, LLC will produce a line of institutional liquid soaps with a time-sensitive dye blended into the mixture.

The dye reacts with the hands during the lathering process, staining the hands a distinct colour, then fading in under six minutes.

The product will sell for approximately $90/case. (4 gallons/case)
The packaging will be compatible with existing soap dispensers mounted in washing stations and be available in a variety of sizes.

Initially, SAFEassure, LLC will produce products with child care acquirers in mind, utilising the brightest colours possible. This product line, called CHILDassure, will consist of four colours: red, blue, pink and green.

Competitive Comparison

SAFEassure’s products offer a high value alternative to other hand washing compliance products.

They provide an unprecedented level of control, allowing these managers to monitor and follow hand washing frequency and habits of both child-care workers and children. Ultimately this can lower costs for all users, either in a workplace or private environment by reducing the risk of disease outbreaks and/or health code violations.

As the first fading dye hand soap in the market, SAFEassure, LLC will build brand identity, establishing the company as the standard for improving hand washing compliance.

As SAFEassure’s products become more familiar in a workplace environment, the product will begin to produce a pressure on employees, whereby they feel compelled to wash their hands out of a consciousness about the perception of all employees, not just managers. This “peer pressure” effect will further fuel the use of our products and the recognition of the benefits they deliver.

Sales Literature

In order to sell our product while creating familiarity and a positive brand image, it will be necessary to develop brochures and literature to emphasise the safety and beneficial attributes of fading dye soap, many of which may not be readily apparent to an interested party. These will be delivered both in person during a sales presentation and by direct mail.

Sourcing

The key to our success is the time-sensitive dye. Once the proper ratio of dye to base soap is isolated, the fragmented nature of the soap industry provides many options for outsourcing production.

Similar to any commodity, economies of scale require the soap to be produced, packaged and distributed in large batches. Initially, the soap base will be purchased in quantities of at least 38,000 gallons for approximately $50,000. Once the relationship with the manufacturer is established, our subsequent purchases will be approximately for $20,000.

These inventory amounts should be sufficient to for SAFEassure, LLC to meet the customer demand. Utilizing his production and distribution knowledge, Rick Brown will use existing established relationships in the industry to help us mix, package and distribute the product line.

Technology

The technology of our fading dyes will be pivotal in the success of our company.  The interactions between fading dyes and antibacterial or anti-microbial bases suitable for use in restaurants or hospitals are more complicated than the interactions with the glycerin or lotion soaps utilised in the CHILDassure line.

As soon as cash flow permits, projected to be in 2008, SAFEassure, LLC will employ a professional chemist with experience developing dye products to further the research into technological innovations that may produce antibacterial and anti-microbial versions of the soap to address additional markets.
Future Products

Additional soap products, manufactured to comply with regulatory minimums for strength and effectiveness in their respective target markets will be developed to address restaurants and hospitals. These soaps will be trade marked under the names FOODassure and HEALTHassure, respectively.

Perhaps the most promising future market opportunity for fading dye soap is the retail market. This product line will include soaps using the same or similar dye colours as the day care to encourage children to wash their hands more often at home. This will be a top priority when the company develops the financial resources enough to mount a national advertising campaign and distribution system.

A complete line of fading dye products could potentially be developed, including floor, counter and body cleaning products that use fading dyes to indicate places on a surface that may not have been cleaned.

Related: Free SWOT Analysis Template


4Market Analysis Summary

soap-market-analysis-summary

There is tremendous potential for a product that provides supervisors and parents with the control to monitor and encourage hand washing. Considering the large scope of our potential markets, we feel it is imperative to focus our limited resources on a particular geographic region where we can establish demand for our product. After successful market penetration, we will begin implementation into the restaurant and hospital markets.

Market Segmentation

SAFEassure’s first product line addresses the day care market. CHILDassure will first be introduced in the Portland, OR area, before sequential expansion to additional day care markets. There are currently 516 day care facilities in the Portland Metro area. After successful implementation in Portland, we will begin expansion into the greater Northwest. There are 3,414 day care facilities in the greater Northwest.

Successful penetration into the day care market will be followed by implementation into the restaurant and hospital markets. There are currently 19,362 restaurants in the Northwest, followed by health care services, which includes 23,108 organisations in the Northwest.

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Industry Analysis

The Industrial and Institutional soap industry, of which we are a part, is quite fragmented, but contains several well known main competitors: Gojo, Kimberley Clark, Dial, Provon, and SoftSoap, as well as generic brands that provide to distributors like Massco and Sysco. The industry is stable and growing; between 1998 and 2003 it grew by an average of 4% annually. Within the I&I sector there is fierce competition for market share among the existing popular soap offerings, leading to lean profits on soap sales.

Distribution Patterns

Distribution in the soap industry is provided by regional providers. These distribution companies usually serve a large portion of the market based on the respective size of the market, delivering to the organisations monthly or bi-monthly depending on demand and usage patterns.

Food services typically receive deliveries of cleaning products once a month. Hospitals typically have a distribution system that operates on monthly deliveries of large quantities. Restaurants typically have a weekly delivery schedule.

Competition and Buying Patterns

Commercial customers select soap based on the necessary minimum safety regulations for the intended user; restaurant and hospital regulations require anti-bacterial/microbial. Customers will typically select a product based on price, distributor availability, and convenience.

Distributors will deliver a complete order of cleaning and maintenance products to customers. Major competitors sell to a variety of customers, including distributors like Sysco, who receive generic soap from bulk producers, then repackage and deliver it along with other products it sells, utilising the same distribution systems.

Main Competitors

Traditional soap producers

Soap is a common and familiar the commodity of necessity to every company. Traditional soaps employ pleasant scents and dyes to encourage hand washing compliance. However there is no way to verify if hand washing has occurred and traditional soaps do little beyond the pleasant scents to encourage hand washing.

The largest current soap producer, Dial Corp, consistently achieves strong sales, and has enjoyed strong market share in the commercial markets. Producing a wide variety of soap products, Dial has maintained 18% in market share over the last decade. The other largest commercial soap providers include Kimberly Clark, Gojo, SoftSoap, Provon and NXT.

Alternative hand washing compliance systems

HyGenius, a product produced by Compliance Control Inc., is a complete hand washing compliance system that is installed (and leased) in businesses like restaurants, hotels, hospitals and receive. The system includes a small control box that controls water temperature, pressure and run time. By systematically controlling these factors, employees can be both trained and monitored in their hand washing frequency and technique. Periodic reports stored on the computer and linked to the Internet can be produced to indicate the number of times per month employees have been washing their hands, and the estimated savings that the system has created through efficient water use.

This system has limited value to business managers because they are expensive to install and lease, and do not necessarily increase employee compliance. They provide managers the ability to track usage, but do not help control day-to-day hand washing compliance individually or immediately.

Disposable Gloves

Hypo-allergenic gloves are the solution provided by some organisations to combat the threat of hand washing non-compliance. To limit the risk of hand contamination, many restaurants and all hospitals require the use of gloves. Although gloves eliminate the risk of direct hand contamination they are not without downfalls:

  • Gloves can carry bacteria in-between fingers, and on the glove surface, causing similar cross contamination to that of bare hands.
  • Disposable gloves can cost a location upwards of $5,000 each year.
  • Gloves can provide a false sense of security, causing employees to substitute gloves in place of proper hand washing.
  • Gloves rip and tear.

Industry Participants

The soap industry is highly fragmented. There are more than forty different Institutional soap products that compete in the market.

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Target Market Segment Strategy

soap-target-market-segment-strategy

  • Our initial day care market will consist of medium to large day care organisations, consisting of twenty or more children. Organisations such as Kindercare and La Petite Academy represent very attractive opportunities for our products.
  • Organisations of this type are attractive because they are well managed, successful, health conscious and nationwide. Within these organisations we will target decision level managers with the power to implement use of our product in those locations.

Market Needs

According to a study published in the medical journal, Infectious Diseases in Children, researchers in hand washing recovered fecal coliforms from the hands of one out of every five staff members, citing that more than 33% of day care facilities “had poor hand washing techniques and no policy for hand washing before eating or after playing outside.

In spite of all the studies about the benefits of hand washing, improper or infrequent hand washing continues to be a major factor in the spread of disease in day-cares.”

Hand washing in child care facilities is an ideal initial target market for several additional reasons:

  • Child care facilities have rampant illness and germ problems that can be directly reduced through frequent child and worker hand washing.
  • Child care facilities have strict, government mandated rules that require frequent hand washing.
  • Parents are particularly interested in reducing child illness, making them one of our strongest advocates for the use of CHILDassure in environments they cannot directly monitor.

In a study cited by Family Practice News in 1996, “Scientists had kids wash their hands when they arrived at school, before lunch then again after lunch time, recess and one more time before heading home every single day.”  As a result of these ‘scheduled’ wash times, researchers found that “a month later, these kids had 24 percent fewer days off from colds, sniffles and flus and a whopping 51 percent fewer sick days because of gastrointestinal complaints like stomach cramps or diarrhea.”

With nearly 12 million children in child care facilities across the nation there is a clear need for CHILDassure, our first product, that can both encourage and help monitor child and employee hand washing to ensure a safe, clean environment for children.

Additional future target markets also have significant need for fading dye products:

  1. Hospitals:  “In health care, nurses and doctors wash only 30% of the required time between patient contacts and procedures. Each year, an alarming 2,400,000+ nosocomial infections occur in the U.S. alone. They are estimated to directly cause 30,000 deaths and contribute to another 70,000 deaths each year. Nosocomial infections cost over $2,300 per incident and $4.5 billion annually in extended care and treatment.”
  2. Restaurants:  “Food borne illness kills over 10,000 people each year. Over 70% of all outbreaks originate in food service operations and, as many as 40% are the result of poor food service and cross-contamination. Each year over 80 million estimated cases of food poisoning occur in the United States alone. The U.S. spends between $7.6 and $23 billion annually on health care and lost productivity resulting from food borne illness. The average incident costs the food service company over $75,000 and results in significant future sales losses.”

Market Trends

There has been a recent effort by the Food and Drug Association, the Centre for Disease Control, the National Restaurant Organisation, and others to promote education to increase hand washing compliance in target markets.

The focus of these programs is to educate and encourage preventative control measures for children and workers to help reduce diseases and lawsuits. This has led to greater awareness in our target markets about maximizing cleanliness and minimizing preventable illness.

There is an additional trend in both our target markets and industry towards organic based soaps. Organic products have become increasingly associated with safety and health in a variety of different markets. Our completely organic soap is complementary to this growing market trend.

Market Growth

The demand for child day care services will continue to grow. As the labor force participation of women between the ages of 16 and 44 remains high, parents of preschool and school-age children are expected to seek more day care arrangements.

As parents continue to work during weekends, evenings, and late nights, the demand will grow significantly for child day care programs that can provide care during nontraditional hours. School-age children, who generally require child day care only before and after school, increasingly are being cared for in child care centres.

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