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1.0 Executive Summary
Concrete Carbon Parts (Concrete Carbon) is a California-based company that designs and sellsa variety of carbon fiber seatposts for road and mountain bicycles. The company was formed asa California L.L.C. and has operated out of the owner’s home for the last year. Thecompany has sold the seatposts via the Internet to individual customers, and the owner wantsto take the company to the next step.
The ProductsConcrete Carbon sells high-end carbon fiber seatposts. The shafts will be made out of customdrawn carbon fiber and the head unit will be CNC machined out of 6000 series aluminium.Through extensive torture testing, Josh has developed a design of posts that achieve a barrierof safety that has yet to be reached by any competing product. Concrete Carbon is able to offera high-end seatpost for both road and mountain cycling applications that are among the lightestavailable, quite comfortable due to carbon fiber’s natural ability to disperse vibrations, and arecompletely safe. Concrete Carbon has yet to have a seatpost fail.
Concrete Carbon’s competitive edge is based on its product, it is able to offer a range of poststo properly fit each individual rider. The range of posts are based on rider weight. There are noother manufacturers offering custom fitting. This is quite valuable as the ride, safety margin,and weight are all significantly effected by the way the post is tuned. With the post customtuned to a rider’s weight range, the weight will only be as much as it needs to be in terms ofsafety and the ride quality will be optimized by allowing a sufficient amount of flex to occur,dampening road and trail vibrations. The flex associated with the post is so much that it ispositively likened to a form of suspension.
Concrete Carbon will employ an outsource model for production to allow Concrete Carbon toconcentrate on what it does best, serve the customer. Production will be outsourced to twoleaders within their respective industries. Josh provides the subcontractors will all the designdetails and they will make the parts to specification. The subcontractors were chosen in part onJosh’s networking contacts established with them prior to Concrete Carbon. They were alsochosen on their ability to scale production when needed.
The MarketConcrete Carbon currently sells seatposts directly to individual consumers. In order to grow thebusiness, Concrete Carbon needs to begin selling to new customers. It has decided to beginselling to distributors. The annual growth rate for individual customers is 10% with 343,009potential customers. The growth rate for distributors is 4% with 14 potential customers. Whilethe growth rate of distributors is not that high the sheer volume that distributors will sell andbuy relative to the individuals makes the potential market very exciting.
Concrete Carbon will employ two somewhat distinct marketing strategies to reach itsperspective customer segments. The first strategy uses the website to raise awareness ofConcrete Carbon’s parts to individual consumers. The website has been up for a year and therewill be continual improvements made to it. Concrete Carbon will be quite active at the variousindustry trade shows to develop sales relationships with the different distributors. The tradeshows are the most effective place to develop close relationships with new and perspectivedistributors. Since the business relationships are based on trust, participation at the shows willallow Concrete Carbon to invest a lot of trust into many different relationships.
Sales will reach $119,000 in Year 1, rising to $332,000 by Year 3. Over the next three years,Concrete Carbon Parts will steadily increase profitability and gross margins.