Farm Machinery Manufacturer Business Plan
Kouros Brothers Ltd. is an agriculture machinery and implements manufacturer importer and authorized reseller that sells A-Z series of heavy machinery and systems for Potatoes, Vegetables, Cereals, Stubble, and beach cleaning turn key projects and machinery. We have also patented and piloted four innovative machinery and systems the last 6 years for Vegetable and Cereal productions. Is also the sole and exclusive agent and dealer of 10 main agriculture manufacturers in Europe. It has managed to create communication links and to export its series of machinery in Middle East and Syria the last 3 years.
Kouros Brothers Ltd. has an experienced management team with direct knowledge of the industry, extensive research experience, and unique administrative skills. Its team includes Mr. Kouros and Mr Panikos Stella live in Larnaca, Cyprus. Both Owners have compiled an extensive list of customers/potential customers, vendors, and contacts for equipment consignment.
Last week it was announced by the Ministry of Agriculture, Natural Resources and Environment that EU has available 256 million Euro for funding from 65%-80% of all units or producers intending to modernize and use technological advances in order to improve customers’ (Agriculture Producers’) product quality and to be able to export goods into European markets at competitive prices.
We have a good reputation locally, but sales are slow because local farmers cannot buy new equipment every year. With Cyprus’ admission to the EU, this large amount of funding will let farmers buy more and newer equipment. However, the local farmers will only buy equipment they know to be effective; the best way to convince them, in our experience, is to bring a sample of equipment to their fields to demonstrate.
Kouros Brothers Ltd. has good earnings and assets, but we do not have enough cash on hand to buy the wide range of demonstration equipment we need to meet the sales potential created by the upcoming Government funds to our customers. The company intents to employ local individuals and to provide extensive training about its products and services in order to promote its sales. Loyal customers help to expand the company’s business area by word-of-mouth.
We have already identified a list of potential customers and communities that are willing and able to try its new product series. Even more so, the pilot equipments will be used for the upcoming October International fair for Agriculture and Livestock that will take place, at Nicosia, Cyprus. And also, the company plans to participate in the Thesalloniki state Agricultural fair that will take place on the 28th January next. As a sole agent and sales representative for Cyprus, Greece and Syria for some series of Wheat planting systems, the company needs to promote its series of products to all available marketing opportunities.
The company is seeking funding of the amount of £50,000 for the purpose of expanding the business. Expansion plans include the purchase of additional equipments allowing the company to promote and to demonstrate its products and services, and also by hiring additional personnel. This loan will be paid back in 6 years, with principal payments of £5,833/year, at 8.5% interest. This is on top of the existing 10,000 loan, which will be paid back on the same time frame, at roughly £1,666/year.
With this new demonstration equipment, and well-funded customers, our projected revenues for Year 1 are expected to reach £274,200, and up to £400,000 by Year 5.
The Kouros Brothers Ltd. directors believe that, there is a current untapped market opportunity for agriculture machinery because, existing providers of agriculture machinery and implements are too diversified to serve the increasingly specialized needs of the potato segment, by ignoring the crop needs for mechanization of Vegetables, Cereal, wheat and livestock sectors.
The company’s coverage area is constantly increasing, as customers are becoming aware of the company’s presence. European community offers a real business opportunity for such expansion, because now, there are 256 million Euro available for agriculture funding and support by EU agriculture committee, left to the Cyprus Government, to fund the Local Farmers and Agriculture producers for upgrading their production effectiveness and efficiency.
Kouros Brothers Ltd. mission is to become THE exclusive full-service equipment manufacturer and authorized importer, sales, and service company in agriculture machinery and implements in Cyprus and to expand its business to Middle East, with the ability to satisfy all needs of Livestock farmers and Agriculture producers.
Therefore, the company’s strategy is to create a limited geographical niche for itself, where there will be no potential competitors. Kouros Brothers Ltd. aims to offer high-quality agriculture equipments and machinery for crop mechanization of potato, vegetables and wheat crops at a price which is competitive in comparison to other premium-quality commercial machinery manufacturers in the local market.
1.3 Keys to Success
Kouros Brothers Ltd.’s keys to success will include:
- A high level of quality in its product line.
- A-Z equipment mechanization series for Vegetables, Cereals, Potatoes & Livestock.
- Maintaining and growing its referral networks to generate new and repeat sales.
- Significant investments in research and development of machinery with the aim to focus on precisely controlled equipment (Coriander seed, carrot machines etc.).
- Improving efficiencies of operations and to reduce the crop producers operating costs.
- Link with Consulting offices for Agriculture and Scientific support to its Customers.
- The machinery and Systems of Kouros Brothers Ltd. aim to help Cypriot farmers and Agriculture producers to export their products in the European market and to obey all European directives for product quality.
Kouros Brothers Ltd. is a manufacturer of heavy Agriculture equipments and Euro, with one location in industrial Estate area, Larnaca. The company began its operations since 1963 with little capital investment. The company combined 40 years of experience in the Agriculture machinery and Implements field to generate a large customer base, where until recently owned 80% of the local Potato machinery market.
The company is specialized into Potato planting and mechanization. After Cyprus accession into EU the company’s Directors decided to expand their field of products and to diversify into Cereal, vegetables and livestock. Kouros Brothers Ltd. hopes to initially make a successful effort to secure start-up financing to implement a new business opportunity.
2.1 Company Ownership
Kouros Brothers Ltd. is a limited liability company. Mr. Kouros Stella Zither, Mr. Panikos Stella, and Mr. Andreas Stella are the shareholders, owning 66%, 26% and 8% of the share capital, respectively.
2.2 Location & Facilities
The company has one office currently located in Industrial Area, at Our Town. The factory is only 3.5 kilometers from the center of town and is located on the front line of the industrial area. It has a 500 sq. meter showroom and is visible from the main road.
The factory has 3000m2 of shop floor area, where all manufacturing equipments and facilities are located and used for either maintenance or manufacturing of equipments and implements.
The factory facilities are open from 07:00 – 17:00 hours, Monday to Friday. The company does receive after hours calls or on weekends and provides assistance as needed.
2.3 Company History
Kouros Brothers Ltd. was founded in Our Town, Cyprus in 1963, to manufacture and to sell a complete A-Z series of potatoes crop mechanization. The company was formed by the Stella Zither family: Mr. Kouros Stella Zither, Mr. Panikos Stella, and Mr. Andreas Stella.
Kouros Brothers Ltd. has its principal offices and manufacturing unit of 3000 m2 , located at Our Town, Industrial estate area, Cyprus.
We have good earnings and Capital Assets (the value of the land and store), but do not have enough cash on hand to buy new samples of the equipment to demonstrate their effectiveness to farmers.
Products and Services
Kouros Brothers Ltd. is a manufacturer and Authorized dealer of imported Agriculture machinery and implements. The company is a manufacturer of the Potato A-Z mechanization such as Potato Planters, Diggers, Harvesters, Inter row cultivators, Taper Machines and Potato Fork-lift tractor mounted machines, Soil Preparation Machinery and Implements, Cereal Machinery and Implements, Transplanting machinery, Irrigation systems, Vegetable small seed planting machines, Wheat and Barley mechanization, Animal food factory and packing systems and Fire Fighting units designed for Agriculture areas.
Kouros Brothers Ltd. takes pride in having brought several new items for Livestock and Vegetable equipments that were otherwise unknown, such as the manure spreader machines, Cereal mechanization, and soil preparation machines. We also have designed and patented a new vegetable seed planting machine for Coriander, Onions, Beans, peas, broad beans, ground nuts, garlic, etc.
Kouros Brothers Ltd. has obtained the authorization to be a distributor for Beach Cleaning machines (French Patented systems). We are also a sole agent for beach creating technology and systems implementation.
In the case of cereals, the farmers plant 50-120 kgs of seeds per hectare, while they could have the same results and even more production with 18 kgs seed per hectare. Cereal planting systems can save up to 70-100 kgs seed that is wasted in each hectare without reason.
Stubble Cultivator Implement
Stubble is an easy and inexpensive food for cows, sheep and other animals, and it decreases the use of fertilizers by 50%. Farmers who acquire the knowledge to increase stubble create their own forage, with the utilization of stable and barley.
If stubble is left in the fields, it can cause serious problems to the Wheat producers. The result is that soil is overloaded, there is a decrease of the fertility of soil and there is a continuous danger of fires which can burn hundreds of hectares of virgin forests and cause disasters to the environment as happens very ofter in summer. (EU directives have forbidden field-burning.) Our unique Stubble cultivator machine can increase Wheat production and also can decrease the producer’s operating costs. By not exploiting stubble, farmers waste of tens of millions of pounds per year.
The potato producers lose huge quantities of potatoes that are abandoned in the fields without being collected, because they are only 5-10 cm below soil surface. From research, we found out that more than 1-1.5 tonnes of potatoes are abandoned in the soil in each hectare (1,000 t. meters), and in monetary terms we can say that the profit of the producer is abandoned in the field.
Our unique series of Potato mechanization systems and hectare that are exclusively manufactured into our Factory are tested for simplicity and are made with the best materials can warranty the potato quality and Low operating costs to the potato producer. These machines are satisfying the European directives requirements for Potato quality.
The cows in Cyprus produce 4-5 tonnes milk per year instead of 10-12 tones per year. For solving such problems our company has created last year a Pilot System of Cereals that can increase cereal production up to 1,000 -1,500 kgs per hectare clover for the livestock-farming and mixing of hay and pellets.
Our company has all the mechanization series and the associates with technology and know-how for animal food preparation and production from Cypriot materials such as Lolium, Loutex, Maze, Vetch, AA and trefoil. Compost Machinery and Manure Spreader. Our Company has well-established European associates with the know-how and the technology to create compost, helping not only in farming sewage problems but also in quality of soil fertilization.
Wheat Planting Machines
The Wheat producer, in order to plant seed into 100 hectares, needs to use 250 kgs of Seed and to go to his field at least 4 times. This means 4 times more operating costs and even more so, Wheat prices dropped by 40% with the Cyprus accession into EU.
Our machine is designed such that it can do all four processes–soil cultivation, fertilizing and planting on line, seed cover with soil and corrugation–in one go. The producer needs only 80 kgs per 100 hectares, instead of 250 kgs. Fertilizer is dropped just 1 cm from soil surface, reducing fertilization costs by 50%, because the fertilizer is not moved away by wind or rain.
Seed Vegetable Planting Machines
Through research and development over the last 3 years, we have managed to create and to patent a unique Seed vegetable machine for a variety of vegetables such as onions, beans, garlic, coriander, etc. This machine is capable of planting all mentioned Vegetables by minimizing operational costs by up to 70% and can have the products made as per European Union directives as concern Size, Weight and Quality.
The company has already tested this machine for 3 years with several Cypriot vegetable producers and the results were beyond expectations. The machine has already been registered and patented rights are exclusively owned by our company. (Patent No. CY2351)
Market Analysis Summary
The overall market for agriculture machinery and implements is immense.
This business plan has identified over 1,800 agricultural producers and farmers in the local market that have a potential need to maintain and/or win customers or even more so are striving to survive. The funding schemes for agriculture and livestock support set by EU will allow them to stay competitive and this business opportunity is all about it.
Last week it was announced by the Ministry of Agriculture, Natural Resources and Environment that EU has available 256 million Euro for funding from 65%-80% of all units or producers intending to modernize and use technological advances in order to improve customers’ (Agriculture Producers’) product quality and to be able to export goods into European markets at competitive prices.
In reality, all agriculture and livestock businesses are in need of our products, because there are only 3 potential competitors locally who import or manufacture agricultural machinery and implements. Those involved with Potato mechanization have copied some of our unique series of products, whereas only 2 of them are involved with Cereal and Wheat implements. Kouros Brothers Ltd. has all machinery and implement series of equipments that will allow the Cypriot agriculturer and Livestock producer to stay competitive into European markets.
4.1 Market Segmentation
Our market segmentation scheme is fairly straightforward, and focuses on all agricultural and livestock sectors. The information contained in our customer analysis table is taken directly from the last statistics report published by the Ministry of Commerce and Industry and Tourism website and clearly shows that our largest market potential is more concentrated on the following sectors:
- Potato Crop Mechanization
- Cereals Crop Mechanization, including Wheat and Barley
- Vegetables crop Mechanization
- Packing Technology
- Livestock Machinery
- Beach Cleaning Machines and Beach Creation methodologies
- Fire Fighting Systems for rural areas
For more than 35 years, the company has owned almost 80% of the potato mechanization market. However, due to negative growth opportunities in this sector the last years, the prospects of this sector were unclear. Therefore, the company in order to survive has decided to invest in sectors such as new vegetable machine designs that will satisfy the vegetable producer needs (lower operational costs, low investment costs, simple machines, etc.) and also simultaneously through dealership of the main European agriculture machinery and implements manufacturers to become their sole agent and promoter in Cyprus and the Middle East area.
After 40 years of experience in agricultural machinery and implements manufacturing and design, the company has identified its strengths and weaknesses and has focused on vegetable, Cereals, Livestock and Beach Cleaning implements and technologies, allowing it to offer the same quality of service and support as are afforded by the larger businesses.
The strategy used for years was to bring in selected products, and then attempt to find a buyer. This resulted in inventory overstock, and obsolescence. The company already knows the customers’ needs and wants, therefore, as part of its marketing mix has decided to use the start up funding for buying a series of 6 main machinery that will have the most predicted demand and via marketing and promotion will try to promote its complete series of products.
After sales, services and spare parts provision to repeat customers is also part of our new Marketing strategy. The aim of the new marketing approach is to keep the existing customers and not to start building a new market share. Long-term relationships with customers is one of the key-success factors mentioned earlier and was one of the reasons that company survived and earned their business. The company expects that by implementing a correct marketing mix, we will increase our share in this market segment by offering the same value-added service and support benefits that its commercial clients demand.
4.2 Target Market Segment Strategy
Our choice of target markets is based on comprehensive experience within the agriculture industry coupled with an in-depth understanding of the customers’ needs for more than 40 years.
We have taken a unique approach to satisfy our customers needs and wants and also simultaneously to answer all their questions and to air their fears about the effectiveness and efficiency of our products. The company identified that only the on-site testing of the agriculture machinery in the customers’ fields could calm down even the most resistive and questionable customer.
The company cannot be successful by just waiting for the customer to come for ordering. Instead, we must focus on the specific market segments whose needs match more to our series of products. Focusing on targeted segments is the key to company’s future. Therefore, the company’s focus and marketing message will be not only the customer needs but also the after service and spare parts services offered. A good marketing mix will develop company’s message, communicate it, and fulfill its commitment to excellence.
Developing a market strategy is a departure from the way the company has been managed in the past. We will change the paradigm of being a product- and price-focused sales organization, to that of becoming a customer- and market-focused organization, aiming in sharing responsibility for customer satisfaction. We will accomplish this paradigm shift through the implementation of a balanced and continuous market research for agriculture needs and technology demands. Planning and implementing specific strategies for each of the seven identified segments will be an ongoing process, and we will will consult with marketing specialists, and our manufacturers, to further refine these efforts as we develop an effective marketing plan.
4.3 Competition and Buying Patterns
Our customers want equipment that works well. They are paying a great deal of their annual income to purchase a machine, and will not buy anything unless they have a clear demonstration that it works, or a recommendation about buying from another farmer they trust. The Cypriot farmer and agriculture producer is the last minute man. He plans to buy a machinery only when it is critical and necessary, and when he identify the need, he wants immediate delivery.
Kouros Brothers Ltd.’s closest competitors are located in Next Town, Other Town and Our Town. They include the following five companies:
- IJK. Ltd.
- UVX. Ltd
- ABC. Ltd
All above listed competitors are offering standardized agriculture forbidden and implements for the potato industry and only 2 seek to satisfy somehow other sectors of the agriculture and Livestock Industry.
Furniture Manufacturer Sample Business Plan
In order to start up your furniture manufacturing business you are going to require a business plan similar to this.
Furniture Manufacturer Business Plan
Trestle Creek Cabinets will be formed as a cabinet company specializing in custom cabinets for the high-end residential, resort, and commercial market. Its founders have extensive experience in the construction and cabinet industry.
Trestle Creek Cabinets will operate under the umbrella of Trestle Creek, Inc., a construction company sharing staff, office space, and administration costs. However, for the purpose of business planning, we are treating Trestle Creek Cabinets as a separate company.
Over some years of being involved with the construction of luxury homes, the company owners have seen a need for a cabinet line with a broad selection of design choices, high-end finishes, along with top of the line organization, customer service, and quality.
Trestle Creek Cabinets will meet those customers needs. Building a strong market position in the high-end residential, resort, and commercial development segments, the company projects revenues to grow substantially between FY1 and FY3. By maintaining an average gross margin of over 25%, the company estimates handsome net profits by FY3.
The company owners have provided the capital to cover the start-up expenses. The company currently seeks a 3-year commercial loan to cover the operating expenses.
The company objectives are:
- To be a top cabinet supplier to luxury homes in the regional market.
- Revenues to more than double Year1 levels by the end of Year2.
- Aim to have 70% of sales in high-end residential customer segment.
- 20% of sales in mid-range residential customer segment.
- 10% of sales in commercial development segment.
- To have a showroom within 3 months in a prominent retail space.
To deliver a high-quality product, on time and within budget while also providing a fast, error free ordering system.
Trestle Creek Cabinets is a new company that will provide expertise and quality in the cabinet supplier market while meeting the demanding organizational, scheduling, and quality needs of architects, owners, and construction professionals.
2.1 Start-up Summary
Total start-up expenses, including tools, software, stationery, and related expensesare shown below. Two co-owners, Martin Kribs and Brent Palmer, will provide the bulk of the start-up financing.
At the same time, the company plans to receive a 3-year commercial loan facility, which will help meet the cash flow requirements.
Our product is essentially made with two main components.
- The boxes and shelves will be ordered from two different suppliers (Cab Parts, Scheers), and will be delivered in kitset form. They can be finished with custom veneers.
- The doors, panels, and drawer fronts will come from four different suppliers: Bergmeyer Manufacturing, Homestead Woods, Decore, and Southwest Door Company. We will have 4-6 custom designs, with unlimited different custom finishes, available from Bergmeyer Manufacturing. The other suppliers will provide their stock products.
Here are some practical tips for creating a ‘high tech/high touch environment’.
Market Analysis Summary
Trestle Creek Cabinets will be focusing on architects, owners, and contractors in the regional area who are involved in high-end residential, resort, and commercial development segments.
In 2000, a total of 219 new residential homes worth $168 million were constructed in the Teton County, WY. If we take an average of $40,000 per kitchen, (probably conservative), and multiply that by the 219 homes, that gives us a total of $8,760,000 in kitchens installed for the year.
We plan to acquire 4-5% of the market share of this residential segment in our first year. We do not think this is unreachable, especially in a still growing market.
Teton County, Idaho has great potential as three new resort developments, Teton Springs Golf & Fishing Club, Grand Targhee Resort Expansion, and Teton Country Club, come on line.
The following table outlines to total market potential of the three major customer segments in the Teton County.
4.1 Target Market Segment Strategy
Trestle Creek Cabinets will be focusing on contacting contractors and architects that deal with the luxury home market.
Making ourselves known to these entities will generate some strong leads, along with getting personal recommendations to the home owners.
There are plans to upgrade office space to a showroom in a high visibility location. This will give us exposure to new home builders that are looking for our product.
4.2 Industry Analysis
There are two main types of cabinet suppliers in the industry.
Resellers of complete cabinet sets using stock items where the cabinets turn up completely built. Usually have no shop facilities but do have show rooms.
Custom shops with full, in-house fabrication facilities. They are usually very product orientated and under-perform with customer support.
Trestle Creek Cabinets can provide high volume work, superior project management, and excellent quality while maintaining a low overhead.
4.2.1 Competition and Buying Patterns
The high-end cabinet market understands the concept of service and support, and is more likely to pay for it when the offering is clearly stated.
There are many competitors in the local market. Although each of them deliver a quality product, we feel they fail to deliver a full turnkey package.
There are four factors that govern the cost of all kitchen projects: Scope, Product, Design, and Services. Most people mistakenly think that the size of the project and the choice of brand name products will make for the best results.
But it is the design and a company’s services that will have the greatest impact on the quality and value of the customers investment.
Soap Manufacturer Business Plan Sample
This sample business plan will provide you with the ideal guidelines for starting your soap manufacturing business.
Tracking Device Maker Sample Business Plan
If your business will be offering tracking devices to your customers then starting off with a business plan such as this is ideal.
Tracking Device Maker Business Plan
RQM Technologies (RQM) is an exciting start-up company in the newly emerging field of Personal Tracking Devices; respected industry analysts such as Ovum and ABI Research predict this will become a $22 billion market within the next five years.
Products and Services
RQM will develop and distribute miniaturized Personal Locator Devices (or Personal Tracking Devices). Initially, the manufacturing of our devices will be subcontracted, while we develop the supporting software and systems internally, although we plan to manufacture our products in-house in future years. Unlike our competitors, we have military-inspired proprietary technology (patents applied for) which allows many of our systems to work with or without the presence of cellular towers, enabling their use anywhere in the world, including cities, deserts, oceans, lakes, mountains, or anywhere else adventurous travelers find themselves. Our products are also distinct in that they are small and fully programmable. Our systems can be customized by the end user for his or her unique, individual applications – for example, maritime applications which include a water-activated signal (as when a crewman falls overboard) are different from those required in business applications.
Our primary target markets include, but are not limited to, the family consumer, channel sales to original equipment manufacturers (OEMs), businesses tracking shipments or vehicles, the military, and the political arena. Because of our unique proprietary programming capabilities for each individual unit, we have already received indications of interest from several of these target markets, including one branch of the U.S. Military.
We predict our systems will also appeal strongly to families concerned about the safety of their loved ones. Sadly, child abduction is on the rise globally. More than 2,100 children are reported missing each day in the U.S. alone (FBI National Crime Information Center). At the other end of the age spectrum, there are 4.5 million Alzheimer patients in the U.S., 60% of whom (2.7 million adults) wander away from their homes at some point, unaware of their surroundings. We believe our devices will greatly reduce these figures in both cases, while potentially saving lives.
The combined number of “potential” customers for our products is well over 500,000,000; we will focus on a more realistic and attainable three-year sales goal of roughly 99,000 users worldwide, which will generate many millions of dollars in sales revenues.
The founders of RQM Technologies, Steven M. Bloome and Andrew F. Siska, have been associates for over 20 years; they create the perfect synergy to ensure the success of our company. Steven M. Bloome is a Sales and Marketing Management veteran with more than 25 years of successfully penetrating previously unseen markets niches, partnering with other companies in win-win scenarios, and creating national presence for companies. He is also, accomplished in launching new products. Andrew F. Siska is a Chief Electronic Engineer with 20 years experience, and is considered an expert in his field, having previously designed devices for military applications, medical imaging systems, computers and more.
By focusing on our strengths, our key customers, and our customers’ needs, RQM Technologies will increase sales to several millions of dollars within two years, while also improving the gross margin on sales, cash management and working capital.
RQM Technologies’ mission is to become the leading vendor of Personal Locator Devices worldwide. Through a combination of evolving technologies, miniaturization, affordability for the end-user, programming capabilities and ease of use, RQM Technologies will be known as the premier developer/supplier of potentially life-saving Personal Locator Devices.
1.2 Keys to Success
The keys to success in this business are:
- Product quality and efficacy in real-life situations.
- Utilizing next-generation technology in order to improve upon current systems, while differentiating ourselves from our competition.
- Marketing: either dealing with channel issues and/or barriers to entry, or solving problems with major advertising and promotion budgets in order to penetrate our target markets.
- Management: products delivered on time, costs controlled, marketing budgets managed. There is a temptation to increase growth at the expense of profits; we will keep a close eye on this temptation in order to live up to our plan.
- Sustaining controlled growth in order to manage start-up costs more efficiently.
To maintain these key factors, RQM Technologies’ needs include start-up funding, partnering with value-added investor/partners, aggressive marketing, quality sales professionals, accomplished C-Level management, product branding, increasing reach into target markets, affiliating with the right channel partners, competitive intelligence and appropriate use of evolving technologies.
RQM Technologies has identified three types of objectives that will serve as challenging but attainable goals for the organization. They are:
- To become the premier vendor in the new and evolving Personal Locator Device industry.
- To reach profitability within one year of the company’s launch.
- To develop additional profit centers such as programming, training, seminars, ancillary equipment, etc. within the first two years.
- Increase product sales to several million dollars annually by the end of the second year.
- Bring gross margin up and maintain that high level by the third year.
- Improve inventory turnover on an ongoing basis, until “just-in-time” inventory is standard by the third year.
- Focus on target marketing to increase market penetration and domination.
- Expand target markets with controlled growth.
- Establish brand awareness for the RQM Technologies’ name and products.
- Position ourselves as the leading Personal Locator Device company in the world.
RQM Technologies is a privately owned start-up company, located in Bolingbrook, IL, a western suburb of Chicago.
RQM Technologies was formed as a company committed to developing next-generation remote Personal Locator Devices in order to immediately locate and aid in the timely rescue of:
- missing children
- the active elderly (including Alzheimer’s patients)
- soldiers in the field and at sea, mariners lost at sea
- and even pets
while also serving the business arena, as a way to better manage the logistics of:
- outside personnel
- fleet vehicles
- valuable parcels
- and deliveries
The company’s management philosophy is based on responsibility and mutual respect, while encouraging ownership of responsibilities to help foster personal and professional growth. RQM Technologies focuses on productivity for growth and profitability, and respect for its customers and employees to increase repeat and referral business while minimizing employee turnover. Additionally, the company encourages employees to have fun by allowing creative independence and providing professional challenges that are realistic, attainable and rewarding.
2.1 Start-up Summary
Our plan begins with a two month start-up period during which we will focus primarily on setting up our offices and developing our system designs, but also including significant initial marketing work. Our start-up expenses for these first months will be used for further product development, legal costs, payroll, marketing and typical expenses associated with opening our first office. The founders will provide the first round financing to launch the company, initiate a small production run of our Personal Locator Device(s), and initiate further product development, while marketing and pre-selling our devices.
In addition, we will need another investor/partner to provide funds to cover the cash necessary to see us through our first year in business, as we begin to make and sell our products. We plan to fund future growth from sales revenues.
Initially, we will be leasing a relatively small office space for administrative functions and an electronics bench lab in order to keep our first year expenses to a minimum, as we continue product development while marketing and pre-selling our Personal Locator Device(s) prior to production. We will consider a larger office space only when we have outgrown our current facility, dependent on sales, budgets and personnel needs.
We have identified the following equipment needed for opening our first office:
- Engineering lab equipment.
- Software and hardware development tools.
- Office furniture for three (sales and administrative) workstations.
- Dell Computer Systems – three desktop computers, two laptop computers, laser printer, color printer, digital camera, scanner, GPS cell phones and a broadband internet connection.
- Telephone system, and two GPS cell phones.
- Copier and fax machine.
- Additional costs for assorted professional service providers’ fees including business, development, legal and accounting providers.
- Professional website development and maintenance.
- Two leased company vehicles and associated costs.
2.2 Company Ownership
RQM Technologies is owned and operated by its founders, Steven M. Bloome and Andrew F. Siska. We are currently in search of an investor/partner(s) who will bring more to RQM Technologies than just financing. The ideal Investor/Partner(s) we are seeking should bring expertise in the areas of legal, financial, and international regulatory issues, as a portion of our target market(s) will be international in scope in the near future. The Investor/Partner(s) will receive an equity position in the company and sit on the Board of Directors.
Products and Services
RQM Technologies develops, markets and sells miniaturized, low-cost, electronic, remote Personal Locator Devices using unassisted GPS/GSM technology, which is not reliant on cellular towers to relay data. The remote Personal Locator Device system includes a small programmable external device (approximately 2″ x 2″ x 3/8″) fitted with GPS/GPM transceivers, which can be activated from a remote location anywhere in the world to instantaneously pinpoint the wearer’s location, speed and direction of travel, accurate to within 3 meters in real-time. This will prove an invaluable tool in helping families and law enforcement agencies locate missing persons within seconds, with the distinct potential of saving lives by finding missing persons much faster than any other current technology available to an end-user.
Our remote Personal Locator Device(s) immediately locate and help rescue lost or missing children, teens, the active elderly (including Alzheimer’s patients) pets, military personnel in the field or at sea, with a simple cellular phone call or computer key stroke. These same Locator Devices can be used in the business arena in order to better manage the logistics of outside personnel, sales people, deliveries, fleet operations, valuable packages or equipment in transit, helping to increase their business efficiency and thus improve profits.
Phase 1 Personal Tracking Device (PTD) will be cellular-tower-reliant, in order to offer the lowest price point product to the end-user. These will work well in areas where cellular towers are present, such as most cities across the continental U.S., still accurate in real-time to within about 9 feet.
Phase 2 PTD will utilize military technology not reliant on cellular towers, but rather linking directly to the GPS satellite network in orbit. These will be effective anywhere in the world, for applications where cellular towers are not present, such as mountains, lakes and oceans, deserts, and small or remote cities where cellular towers are not present. Although slightly more expensive to the end-user, we feel this product will address the problems associated in areas without cellular coverage, not currently available outside the military. The Phase 2 PTD is a unit designed for the military, sportsman, hikers, campers, boaters, and other adventurers.
Both units are being developed simultaneously, and will be available for pre-sale orders in the Fall of 2004.
As RQM Technologies grows, we will be defining and developing additional profit centers for our company and investors by offering value-added services such as training classes, seminars, on-site programming, private labeling for our channel market resellers, and other ancillary revenue streams based on individual client needs.
Market Analysis Summary
The Personal Locator Device (or Personal Locator Service) industry is fairly new in the consumer market, but as most analysts agree, this is the beginning of a brand new industry with the potential for explosive growth due to the rapidly decreasing technology costs, which will allow consumers to afford and utilize a technology which was originally developed by, and for, the military in the 1970’s.
Ovum Research states that “Location Services” revenues will grow to $18 billion by 2006. ABI, a NY based technology research firm states that the global personal GPS market will be propelled to more than $22 billion by 2008. While there is a market potential for more than a billion users worldwide, we are estimating a more realistic long-term market for Personal GPS/GSM technology, initially marketed within the United States.
Our Market Analysis focuses on five key potential customer groups:
- Family Consumers
- Original Equipment Manufacturers (OEMs)
- The Military
- Political and other Government Consumers
4.1 Market Segmentation
Our market segmentation focuses on five key areas of potential customers. Our targeted market segments have so far failed to meet their own needs for low-cost, programmable tracking devices by developing such systems internally. While it is difficult to make an exact classification of the market needs for such a new electronics product, our research suggests the following (full market analysis details can be found below in the Detailed Market Breakdown topic):
- Family Consumers: With over 875,000 children reported missing in the United States in just the last year, this low-cost device will help families concerned about the whereabouts of their children, teens, elderly parents (including Alzheimer’s patients), and pets, by enabling them to keep tabs on their loved ones’ locations at any given time. One of the many programming capabilities of this device will allow the family to set distance parameter guidelines, such that once the wearer of the device (for example, a young child) travels beyond a set distance from the “base” unit, the remote unit is automatically activated to alert the “home base” unit (a cell phone, pda or computer) of the child’s location, direction and speed of travel. This will be a great asset in assisting law enforcement agencies in recovering missing persons within minutes. Statistics from the FBI indicate that missing children who are murdered are usually killed within three hours of abduction. The RQM Technologies Personal Tracking Device (PTD) will save lives, by immediately alerting the “base” unit, aiding in timely tracking and rescue by law enforcement agencies. Another programming capability is the ability to download all medical information, contact information, emergency numbers, etc., in the event an individual is found incapacitated, allowing emergency teams to treat a patient effectively, while alerting the guardian of her child’s, parent’s, or pet’s whereabouts.
- Channel Sales to Original Equipment Manufacturers (OEMs): As the heavily saturated markets of cellular phone carriers and computer manufacturers grow more competitive each year, both segments are continuously looking to add new technologies and systems to draw consumers to their specific and sometimes proprietary products and services. The RQM Technologies remote devices are designed to be used with a “home base” unit, (a PDA, most cell phones or computer), and we see great potential to partner with cellular providers, cell phone manufacturers, computer manufacturers and resellers. This natural synergy between our product’s capabilities and this market segment’s needs should prove to have a large and positive impact on the awareness of the RQM Technologies name and products, as well as increasing revenues through positioning our products with the leaders of this market segment. It is our understanding that cellular phone providers will be incorporating the technologies used in our “home base” units into their cell phones within the next three years. This will prove invaluable for RQM Technologies, as we position ourselves as the leader in this remote technology, which will work with almost every new cell phone manufactured by 2006 – 2007.
- Businesses: Our product enables a business location to keep real-time tracking of company vehicles, valuable packages, outside employees, deliveries, etc. We believe our device will be viewed by businesses as an economical way to increase productivity, giving them real-time data on the locations of their field employees and vehicles at all times, and helping to better manage fleet and deliveries logistics. One of our key strengths in this market segment is the low one-time cost, rather than a recurring fee for usage, adding to the business’s ROI for our products.
- The Military: According to recent Department of Defense press releases, the military appears to be searching for a device such as ours. The United States Coast Guard, for instance, is called upon for Search and Rescue missions more than 40,000 per year, on average. The problem with the currently used “beacon system”: Since 121.5 MHz beacons transmit anonymously, the only way to ascertain the location is to dispatch expensive resources to investigate. Current beacon systems can take up to an hour to translate information, while only providing vague location data, forcing time intensive and expensive Search and Rescue (SAR) missions. In the field, the RQM Technologies’ remote unit will save lives, finding those missing in action, and locating sailors lost at sea. Their use will also taxpayer dollars, making Search and Rescue missions shorter and less expensive. A consultant to the U.S. Navy has indicated solid interest in two of our devices for use in the military.
- The Political Market: According to statistics from specialized insurers like Hiscox (UK), political kidnappings are prevalent in restive countries such as Colombia, Mexico, and the Philippines; they are also on the rise in smaller countries such as Turkey and Trinidad. The governments of these countries are spending millions of dollars in ransom each year in order to minimize publicity and embarrassment. By fitting political figures, captains of industry and high profile businessmen with our device, we believe this trend will decrease in the countries which use our product, proving its efficacy in the field and sparking interest from other countries.
Our research shows that all current competitors with similar products require the user to log on to the competitors website (or phone into call-centers) to actually locate the missing person, while incurring monthly fees ranging from $20.00 – $40.00 per month. In essence, their systems dictate that the users must be located at their internet-accessible computer in order to use the competitors’ systems. Imagine that you are a mother, visiting a park with your child. Suddenly, you turn around and cannot see him – he has disappeared! With our competitors’ systems, you would have to run home to log on to your computer, losing valuable time and probably increasing the distance between yourself and your child. With our system, however, you simply turn on your PDA or cell phone while still at the park, and view your child’s location, direction and speed of travel while you are still in close proximity. The RQM Technologies systems will allow a user to locate the missing person(s) from potentially any cell phone, wireless Palm Pilot, or PDA, freeing them from the need to be in front of a fixed computer, while increasing real-time efficiencies. This important difference of a few minutes will literally translate into saving lives.
In addition, we project the following secondary long-term markets:
- Maritime Market: Personal Flotation Device (PFDs) and Life Boat companies are typically manufacturers of textiles, and do not generally have the expertise to develop high-end global positioning satellite electronic tracking systems. We are planning on lobbying the Senate, through our consultant to the U.S. Navy (and Coast Guard), to enact laws mandating that these life-saving devices be fitted in all Personal Flotation Devices. This would save lives, and save taxpayers hundreds of millions of dollars in costs associated with traditional U.S. Coast Guard Search and Recovery methods. The Coast Guard admits that radio beacons are outdated technology, and they are currently implementing a program called Rescue 21, searching for better ways to locate missing persons at sea in a more timely and efficient manner.
- Pet Supply Chain Stores: RQM Technologies Personal Locator Device is small enough to fit onto a pet collar. We are planning to partner with large pet-supply chains such as PetCo, PetSmart, etc., as well as pet collar manufacturers, to make this technology more accessible to consumers worried about their pets wandering off.
4.1.1 Detailed Market Breakdown
Family Consumer Segment
We predict our systems will appeal strongly to families concerned about the safety of their loved ones. According to the FBI’s National Crime Information Center (NCIC), 85% to 90% of the 876,213 persons reported missing to America’s law enforcement agencies in 2000 were juveniles (persons under 18 years of age). That indicates that 2,100 times per day, parents or primary care givers felt the disappearance was serious enough to call law enforcement. In addition, 152, 265 of the persons reported missing in 2000 were categorized as either endangered or involuntary. The number of missing persons reported to law enforcement has increased from 154,341 in 1982 to 876,213 in 2000. These figures represent an increase of 468%, and the numbers sadly continue to rise. According to the Missing Children Society of Canada (MCSC), in 2002 there were 66,532 children reported missing in Canada alone. And even more frightening, the National Center for Missing and Exploited Children (NCMEC) reports that 74% of abducted children who are murdered are dead within three hours of the abduction.
These figures indicate the strong market need for a method of quickly and reliably locating missing children. This so-far untapped market is quite large, even just within the U.S. According to the 2002 U.S. Census Bureau reports, there are 60,492, 447 are under 14 years of age in the U.S., including:
- 33,050,162 children in elementary school (grades 1-8)
- 4,005,938 children in kindergarten
- 4,613,179 children in nursery/preschool
But the family market also has to worry about its elderly loved ones. According to the same census report, there are 40,144,000 adults over 62 years of age in the U.S., 4.5 million of whom have Alzheimer’s disease. With a median income in the U.S. of $51,742 per family, our family consumer market in the U.S. has the potential for selling our affordable devices for over 60,492,447 children under the age of 14, in addition to over 4,500,000 active senior citizens afflicted with Alzheimer’, based on the above figures, for a combined target market of over 64,992,447 consumers.
It is more difficult to determine exact numbers for the business segment, as specific data is not as readily available. However, as of 2001 (latest census data available) there were 12,753,076 businesses operating in the U.S. which fit our target market, meaning they have a strong or immediate need for our products; this number excludes others, such as retail sales, wholesale traders, information management, education, public administration, or other services not defined.
Business breakdown by employment in specific industries:
- 2,405,825 Americans work in agriculture, forestry, fishing, hunting and mining.
- 9,161,256 work in construction.
- 17,067,103 work in manufacturing.
- 6,884,607 work in transportation, warehousing and utilities.
- 12,486,846 work in professional, scientific, management, administrative and waste management services.
The price points for similar Personal Locator Device systems using GPS/GSM technologies in the business segment are currently in the $200 – $2000 range, and in most cases, do not offer the remote abilities or programming capabilities for specific businesses needs in managing logistics and tracking. We believe our low prices, combined with these features and the autonomous internal tracking ability (not reliant on a vendor’s website with monthly fees) will be very attractive to the business segment.
Military and Government
On an average day, the United States Coast Guard assists 192 people in distress, and conducts 109 search and rescue cases. In 2000, the Coast Guard responded to 40,264 calls for assistance – from a broad spectrum of the public ranging from recreational boaters in distress to the captains of freighters sinking in gale-force winds. During that same year – on a share of its operating expenses, totaling $342 million – the service saved more than 3,400 lives and saved over $80 million in property. Our system will shorten the duration of current Search and Rescue missions, which in turn will allow rescuers to locate victims at sea faster. This will not only save more lives, but will cut costs for the United States Department of Defense.
This same system used at sea would immediately alert the deck’s computers if a serviceman at sea fell overboard, once the remote unit is programmed to be water activated. We have a preliminary interest from the U.S. Navy, thanks in part to our ability to program individual remote units with medical histories and other pertinent information for each serviceman’s remote unit. By using our system, coupled with encrypted signals for the military, our programmable PTDs also work in deserts, jungles, mountains, etc., showing longitude, latitude, altitude, speed and direction of travel, representing “eyes in the skies” for the military to know exactly where their field personnel are located at any given moment.
We have also developed a lower-cost unit for the U.S. Navy which relies on “line of sight” technology, which is affordable enough to equip every seaman in the U.S. Naval fleet. We have already received an indication of interest from the U.S. Navy, through our consultant, due to the extremely low cost and efficacy of the product.
4.2 Target Market Segment Strategy
Our choice of target markets is strategic, and reflects our strengths and weaknesses.
- The Family Consumer Market is key for RQM Technologies for several reasons. First, as a system that works anywhere in the world, (versus all of our competitors’ cellular tower reliant systems), our potential market is 8 billion people worldwide. Capturing a market share of only 1/10 of 1% of this potential, we would realize the sale of 8 million units. As we enter this market segment, we will be aggressively seeking partner companies such as cellular phone providers and computer OEMs (included in channel sales to further penetrate the consumer market) and associations such as The National Center for Missing and Exploited Children, The National Alzheimer’s Association, Amber Alert Network, etc. An alliance with any of these type of organizations will add significant credibility, branding and positioning, thus generating sales for RQM Technologies.
- The Channel Sales to OEMs segment will be strong for several reasons. By positioning our product for cellular providers, cell phone manufacturers, and computer manufacturers as an ancillary item to help them market their own products, we will effectively increase our sales force substantially, without the expenses of payroll, benefits, etc., because their sales force(s) will sell our products for their respective companies. This would also positively impact branding, making our name more commonplace in all the markets discussed herein. By securing alliances in this market, we also position ourselves as the leader in this new technology and its associated applications. This will foster confidence in the RQM Technologies’ product, increase sales dramatically and help our company break into the global market.
We will also be seeking entry into the automotive market to compete with LoJack. Our system is more effective than the current LoJack system, and with a lower price point, we feel we will be able to partner with the automotive manufacturers. The RQM system will allow them to offer a more efficient product to their customers, while increasing their profit margins for this type of technology.
The Business Market is more difficult to estimate. RQM Technologies’ products will benefit any business that depends on knowledge of the whereabouts of their products, services, vehicles, valuable parcels or outside personnel are on a real-time basis. The keys to success in this segment are threefold:
- An affordable, one-time cost per unit for the business, instead of our competitors’ higher-priced units with recurring monthly charges.
- The ease and ability to self-manage this program internally without the necessity to use call centers or websites for a monthly fee.
- The programming capabilities of our units, which allows businesses to easily customize each individual unit based on their unique needs for each individual application.
The Military Market: We have a strong contact with a consultant to the U.S. Navy, who feels, based on recent DOD press releases, coupled with previous projects on which he has successfully consulted, that we are developing a product the military would greatly desire because of its purpose, abilities and low price point. One of the benefits to the programming capabilities of our PTD is the ability to program each soldier’s medical information and history into their remote units, so that any medic attending to them in the field would immediately have this valuable information. The U.S. Navy will be very interested in two of our locator systems.
The Political Market may be more difficult to penetrate because of the complexity of foreign governments, and international laws, and wide variations in cultural approaches to safety and government oversight of individuals. However, we feel we will still be able to enter into agreements with several smaller countries that are in the throws of political turmoil. We project that the benefits our products provide will quickly foster confidence in their potential, and will not be seen as a “Big Brother” device. Once our products have proven their efficacy by saving individuals from kidnappings, especially high profile officials, we believe markets in other countries will quickly open up to RQM Technologies.
4.3 Service Business Analysis
We are part of the life-saving electronic devices industry, specifically Personal Locator Device(s), an industry projected to grow to over $22 billion dollars within the next five years. Market leaders in this small but growing personal locator industry are iTrack, Wherify and uLocate, and LoJack for the automotive industry. RQM Technologies’ Personal Locator Devices (PLDs) are smaller and more easily concealed, less expensive, uniquely programmable for individual needs, and more user-friendly than our competitors’ products.
RQM Technologies will continue to conduct industry analysis to stay current on the nature and dynamics of this new and evolving technology (and emerging target markets) which, while in its infancy, is poised to experience explosive growth. This focus will help management develop insight and devise sustainable business and marketing strategies to assure future success and avoid making decisions based on blind assumptions, while continuing to develop next generation technologies to remain the leader in this industry.
4.3.1 Competition and Buying Patterns
In the Personal Locator Industry, consumers are searching for the most effective product at the lowest possible price; different market segments will put different emphases on ease of use versus reliability or cost, depending on their needs and budgets. Although we will emphasize some aspects of our products differently for the distinct market segments described above, our products beat the competition on all grounds.
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