Pentastic
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PENTASTIC
1. The Executive Summary
Pentastic is a company dedicated to the advancement of writing technology for the convenience of the customer. Since the introduction of the pen, writing technology has remained relatively unchanged. People have been budding with new ideas faster than ever, and the pen industry needs to accommodate to this by making the transition from idea to paper completely effortless. Unfortunately, pen companies have been incredibly lacking, making writing a meticulous task in itself. In a time of innovation, Pentastic is striving to simplify writing by making it as simple and efficient as possible by cooperating with these companies. In our union, Pentastic can revolutionize the stationary industry so future history writers can focus on what they do best without having to deal the tedious writing processes of the past.
The stationary business has been a profitable market for ages. It has proven time and time again that it is a stable source of income. Even the impact of the recent U.S. recession has not hampered profit. For example, in 2009 the company Bic had an increase in annual revenue from the year before.
Goals:
· Procure a partnership with leading stationary company (ie. Bic and Papermate)
· Expand by aligning with various companies and creating patents in other markets
Source of funds
· The founders of the company will invest their own money at a total of $30,000
· Receive $270,000 of investment from Angels
Use of funds
· Provide $200,000 to our product design engineers and development
· Spend $50,000 for legal fees and patents
· $50,000 for marketing our product
Financial Summary
Our company believes we can earn an estimated $600,000 to $1,000,000 annually in the first two years based on how many users potentially buy our pen.
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Sales
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$600,000
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$750,000
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Operating Profit
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$300,000
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$650,000
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Cash Flow
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$200,000
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$445,000
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Assets
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$300,000
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$950,000
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Shareholders’ Equity
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$270,000
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$427,500
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2. Company Profile and Identity
Name: Pentastic
Mission Statement: Pentastic is a company dedicated to the advancement of writing technology for the convenience of the customer.
Nature of Business: Creating patented pen technology
Goals: To begin generating revenue within our first year and continue to expand our pen based on patents.
3. Details of Company
Registered Names: Pentastic, group proprietorship
Mission Statement: Pentastic aims to simplify the customers’ everyday tasks in a compact, easily accessible package.
Date of Formation: January 1, 2011
Company ownership: flat distribution; each member owns 14.3% of the company
Key Milestones Achieved To-Date:
· Research about our market and general prices in stores
· Drafting of business plan
· Market study and competitive analysis.
Description: Pentastic revolutionizes the standard pen with a forward thinking flair. As students ourselves, we understand that writing can be a time consuming task, which is why we want to make it as painless as possible. By selling our patents to large pen companies, we will expand the capacity of writing utensils and grow our business.
Potential Growth Areas:
· Expanding to pencils and other writing equipment
· Integrating the computer and pens
· Create other accessories for the pen
4. Market Analysis
Our target markets are pen companies that want to buy our patents for new office supplies that they can then in turn sell to businesses and offices.
The big office supply companies want items that can increase speed and efficienty and our product gives them a pen that has white-out attached to it that helps them quickly correct their mistakes without having to waste time looking for white-out. There are many pen makers, allowing us to pitch our patents to more than one company and branch out.
We will win business away from competitors by designing patented products that can be exclusively used with permission from us. The companies will have to buy from the patents from us to sell the product.
We will reach our target market by going to the offices and selling pens to them to establish our company in the beginning. After we establish our name among the offices, we will no longer need to sell it door to door.
Pens are always in demand, so there are not many purchasing cycles.
There aren’t many barriers to entry, so it should be relatively easy for us to enter the market. However, Bic (and other large pen makers0 will be a very big competitor for office supplies, so we will have to establish some kind of relationship with them to continue.
5. Team and Organization
Andrew Bentley, president
Kayleen Fang, director of sales and marketing
Vinh Doan, vice president
Matthew Hwang, director of finance
Remy Smith, director of operations
Nathan Wong, director of business
Ruby Zheng, secretary
Andrew is a senior at Burlingame High School. He has opened a recording studio and owns a clothing label called Usasi Clothing. He has had an astounding three years of experience as an entrepreneur. He is involved in all key aspects of decision making.
Kayleen enjoys interacting with people and working with them to better their lives. She has helped create a website for a Stanford professor, Guowei Fang. She is involved in Model United Nations and won the research award at the 58th Berkeley Conference. She has worked as a swim instructor, which will help her reach out to new markets.
Vinh Doan is a junior at Aragon High School, where he enjoys taking classes on leadership. He has taken part in Model United Nations since 2009 and enjoys creating new ideas for the benefit of mankind. He is the head of the creativity department.
Matthew is a sophomore at Aragon High School and is very interested in accounting and finance, which he learned from his father.
Remy is currently a sophomore at Burlingame where he excels at his various math classes, earning A+’s in the classes. He is involved in a small scale loan business that he operates throughout h is school.
Nathan is a sophomore at Mills High School. He has volunteered for Kelly Wong at Manning Trading Company where he was educated in various business aspects. He is the most qualified individual for this highly esteemed position.
Ruby Zheng is a junior at Burlingame High School. She has a 4.0 GPA and is academically successful. Her main attributes are organized and sharp, making her an ideal secretary.
6. Operating Strategy
The operating strategy of Pentastic is that we will sell our idea to receive royalties. We will be putting 50,000 into marketing our pen product. After marketing the product we plan to sell the idea. Our growth strategy is to create new product ideas in this industry. We will produce this product by putting $200,000 into the design for the pen and then patent the product. We will hire lawyers and engineers to do our legal work and create the pen design.
7. Financials
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Source of Funds
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Use of Funds
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Owner Capital - $30,000
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Marketing - $50,000
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Outside Investors - $270,000
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Legal - $50,000
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Engineering - $200,000
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Total - $300,000
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Total- $300,000
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Our company’s break-even point is, if we get another company like Bic to buy our patent, selling 667,000 pens to break even. After about three months of this operation, we should be able to pay off our debts and receive about $625,000 a month without needing to spend additional money.
8. Funding Requests
Pentastic is seeking $270,000 in funding for development, marketing and legal. Owners of Pentastic are contribution $30,000.
The main use of our funds will be to purchase professional consultants to design and market our product to pen makers interested in using our patented technology.
The source and use of funds statement is as follows:
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Source of Funds
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Use of Funds
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Owner Capital - $30,000
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Marketing - $50,000
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Outside Investors - $270,000
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Legal - $50,000
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Engineering - $200,000
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Total - $300,000
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Total- $300,000
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We believe this is all the capital needed to start our company, as cash flow will become positive in a short time period.
9. Critical Risks
Pentastic believes these are the risks regarding our company.
1) Competition from other pen makers: Without proper patenting and legal protection, we risk having our design being stolen, making our development useless.
2) Our product does not catch with consumers: it is possible that consumers are not ready to adopt our technology. Without consumer buy in (generated by effective partnerships with pen makers), it will be impossible for our business to grow.
10. Future Plans
Our business, “Pentastic,” believes it has a large enough market in America, as well as the world, to sell its patents. Since we are confident in our business, we have plans in the future to branch out to other companies interested in purchasing our patents. We hope that over time, we will be able to create new patents to interest small companies in as we continue our objective to keep growing. Our goal also includes making more patents for pen accessories to sell.
Tue, 2010-11-09 09:13
#1
Offline
The business idea developed well over the course of the class. I like that you shifted to developing something and then licensing it or selling the patented idea to one or more pen companies.
For a business whose success rests on the ability to create a new product, more attention could have been put into the design process, what the product would look like, how it would be made, etc. I also think that speaking with one or more of the pen companies would have made the idea seem more realistic (i.e. at least giving some background about what they think of the idea or if they’ve tried it before).
You have a good idea, but the difficulty is that the current team cannot create the business on its own: It relies upon a more important group of engineers to create the product (which begs the question of why the engineers would need you); outsourcing such a critical component of the business creates a lot of unnecessary risk.
Tue, 2010-11-09 09:12
#2
The business idea developed well over the course of the class. I like that you shifted to developing something and then licensing it or selling the patented idea to one or more pen companies.
For a business whose success rests on the ability to create a new product, more attention could have been put into the design process, what the product would look like, how it would be made, etc. I also think that speaking with one or more of the pen companies would have made the idea seem more realistic (i.e. at least giving some background about what they think of the idea or if they’ve tried it before).
You have a good idea, but the difficulty is that the current team cannot create the business on its own: It relies upon a more important group of engineers to create the product (which begs the question of why the engineers would need you); outsourcing such a critical component of the business creates a lot of unnecessary risk.
