Business Plan for Rail Savers, Inc.

1. Rail Savers, Inc.

2. Company description

Rail Savers will produce several lines of anti-skating brackets intended to be fastened along public rails, planter edges, picnic tables, and sidewalk curb ramps. These devices break up the smooth surfaces needed by skateboarders to perform tricks and deter such activity. These help prevent damage to the property such as ugly black streaks on customers' concrete. Anti-skating brackets also reduce the nuisance of skating in public areas and protect customers from legal liability for pedestrians injured from being struck by skaters.

2a1. Vision statement

Rail Savers will become a recognized brand name for anti-skateboarding brackets while beautifying the area for locals to enjoy. Rail Savers' products will be the first choice for corporate and city officers in cities across the country with the company name having a sign of quality in the industry.

2a2. Mission statement

Rail Savers will become the first choice for anti-skating brackets through superior product, cost-effectiveness and visual appeal. Rail Savers customer experience service personnel will be first-class and well trained to assist customers. Our consultants will assist customers in choosing the best choice of products for their needs as well as consulting customers on client-side activities that would also help eliminate this nuisance.

2a3. Company background

Rail Savers is a start-up company based in Houston, Texas. Its founder began the company in his garage in 2013 and was able to rapidly expand based on the local demand for his products in Houston and surrounding areas. However, Rail Savers is at a point to expand beyond a cottage industry and take on the national anti-skating bracket market by incorporating.

2b. Product/ service and industry

2b1. Product/ service description

Rail Savers, Inc. will field several lines of products. The Rail Stopper line will be cost-effective and manufactured of either machined aluminum or milled HDPE. These simple devices will come in a variety of designs to contour to most industry common dimensions for contoured edges, handrail diameters, and crosswalk entries.

The Park Saver line will feature clear coated or bare aluminum or bronze cast into beautiful area enriching forms of frogs, fallen leaves, garden gnomes, sea creatures. These will not only preserve the area from nuisance skateboarding but are ideal for city pedestrian areas intended to be enjoying by families whose children will love discovering the shapes.

Rail Savers products will affix to the surface through drilled anchors and industrial epoxy to deter even the most industrious metal thieves. The product line will be complemented by product consultants who can advise city planners or corporate officers on the best use for products. These consultants will also provide active suggestions for activities on the customer side that can further reduce their liability. These suggestions will include moving planters and tables into configurations that break up long runways to reduce skating appeal of locales and best practices for security guards to discourage skaters while maintaining a positive public image.

2b2. Industry description

Rail Savers will be entering a growing industry. For example, one competitor, Grind-to-a-Halt, Inc. reached national distribution in less than one year of business (Cleaner, 2014). The anti-skating bracket industry is still dominated by a few contractors which offer these devices as part of their infrastructure projects. However, as the number of jobs these contractors can take on is limited at any given time, a number of start-ups specializing in the sales of anti-skating brackets and devices have popped up to meet the growing demand.

3. The market

3a. Market and target customer

The market for anti-skating brackets is quite sizable. Property managers spend incredible amounts of money to combat the property damage inflicted by skaters. One property manager in Sacramento budgets $500 per month, per property (Pulley, 2005). This is very typical of the region, where a warm mild climate encourages the skateboarding culture. The town of Red Bank, by comparison, reports on their website to have spent nearly $30,000 to restore property damaged by skaters in 2011 alone (Embden, 2012). Even more extreme, local newspapers report that in Janesville, Washington several local businesses have suffered as much as $10,000 in property damages each (Nelleson, 2008). Any town or property manager with skaters is going to be in the market for a cost-effective measure to reduce these expenses. Given the high cost of repairing property from damage inflicted by skaters, skating deterrents are a very appealing product for any property owner with a publicly accessible facility.

3b. Competition and competitive advantage

There are already several companies in this industry. Some are large contractors that regularly take city infrastructure projects throughout the country, such as Berrett Robinson and Seton. These companies have an advantage in that they are established and have already mastered the intricacies of doing business with cities as customers. However, several small companies are also doing well in this market with limited national distribution. Skatestoppers, Inc. and Grind-to-a-halt, Inc. are two smaller machine shops in this category. These smaller companies may have national distribution and customer loyalty within certain regions.

Rail Savers, Inc. will have a competitive advantage by focusing energy on our consulting services. The competition has focused on pure sales. The customer would have to go to a third-party consultant to get advice on configuring park furniture to be less appealing to skaters. Additionally, skaters have been known to be extremely vengeful on a property when skateboarding deterrents are installed and Rail Savers will have an edge by advising customers on how to mitigate this unexpected after effect.

3c. Marketing strategy

3c1. Overall strategy

Rail Savers will market towards property managers and city purchasing officials through direct sales and trade journals. Rail Savers will use a four-pronged approach to build up its initial contacts in the industry. After researching the purchasing agents, the pitch will begin with a sales email, followed a day or two later by a cold call. If that does not generate a response, a consultant will send a Facebook message and a Tweet to see if our message was received.

3c2. Sales plan

Sales will be on a per-unit basis, with lower rates for volume orders, corresponding to a portion of the savings on shipping from ordering bulk from suppliers. Our consultants will work on an hourly rate, with no commissions so that our customers are never pressured to purchase a product that is not in their best interest. This way, our sales and marketing strategies are aligned by putting the customer experience first.

3c3. Competitive plan

To draw customers against the competition, the approach will be through attention to the specific needs of the client and the agility to adapt devices or make custom production runs tailored to their needs. The smaller companies in the industry tend to be in strict sales and simply sell kits. The client is often left to do the installation and determine the best use for the product. Rail Savers consultants will have an installation class curriculum available so they can train the client’s installers on the best practices for installation and distribution of the products.

3c4. Research and development or growth plan

The key to sustained growth is to develop new products in accordance with client needs through their feedback. Sales personnel will engage in follow-up calls inquiring about the satisfaction of customers as well as being open to any ideas clients have during the consultation process. These calls will be processed into data to discover trends in customer needs.

4. The organization

4a. Legal and organizational structures

Rail Savers will be founded as a corporation in Texas. The limited liability to company officers will be important as skaters could potentially sue if they engage in skating tricks and are injured by our devices. Organizationally, a simple functional layout will work best for a small company with teams working under their respective managers. Company meetings will include all personnel and all employees will be encouraged to voice their opinions and offer suggestions. A suggestion box and blank comment cards will be available for employees who wish to share suggestions but may prefer to remain anonymous.

4b. Key personnel

Rail Savers will have three main officers. These are the operations manager, purchasing manager, sales and marketing director. As a small company, complex management will only hinder creativity and results. The operations manager will be the senior officer and direct the activities of the organization within the goals of the owners. All three key officers will have hiring and firing powers.

4c. Related service providers

Due to the costs of labor in the United States, Rail Savers will have production take place offshore and shipped to its shop for packaging and distribution. A freight carrier with experience in imports will have to be contracted to handle the movement of goods to Texas. Rail Savers will also require accounts with the major logistics companies in the United States to address the movement of products to clients. As a small company, Rail Savers will have to examine to pros and cons of outsourcing payroll and accounting versus hiring a staff bookkeeper.

4d. Location

Houston, Texas will be the ideal location for Rail Savers. Texas tax rates are business-friendly and Houston has a large pool of skilled labor to draw from to staff Rail Savers as it grows (Crawford, 2013). Additionally, Houston is near an international airport, making it easy to send consultants to anywhere a client might be. Lastly, Houston is the central hub for trucking in the region, so logistics are in place to obtain products from manufacturers rapidly.

5. The financials

5a. Critical risks

Three primary financial risks confront Rail Savers as a start-up. The first is the risk of insolvency through mismanagement of our cash flow. Production of goods offshore will require a certain lead time and clients will start coming in slowly. As such, there is the risk of purchasing too many goods or spending too much on marketing and not having the resources to close the cycle and gain revenue.

A second risk is in interest rate hikes. While interest rates are relatively low right now, as the American economy continues to improve, borrowing money may become an unacceptably high expense to fuel further growth.

A third concern will be credit. If Rail Savers, Inc. is unable to obtain the credit it requires, it may not be able to grow in response to an increase in demand. Conversely if business is sluggish, there is the risk of having used too much credit early on and then experiencing insolvency when large loan payments come due.

5b. The deal

To raise the capital to incorporate and begin business in a larger market, Rail Savers, Inc. will undergo two rounds of fundraising spaced six months apart. Angel investors will be able to purchase preferred stock in Rail Savers, Inc. which will be convertible to common stock at the holder's request. A five-year exit plan will be agreed to, at which point the company will buy back its stock from investors at a price reflecting the net value of the company.

(Income Statement omitted for preview. Available via download)

(Cash flow projection omitted for preview. Available via download)

(Balance Sheet omitted for preview. Available via download)

5f. Start- up costs

In order to incorporate and begin life as a Texas corporation, Rail Savers will have to incur certain start-up costs in order to initiate operations. Among these are insurance policies – both general liability and errors and omission; lawyer fees; filing costs with the State of Texas; any licensing required by states in which Rail Savers, Inc. will operate and tooling fees by factories in China in order to set up for production of goods.

5g. Assumptions

Assumptions regarding the success of Rail Savers, Inc. are based on the experiences of the owner running a sole proprietorship. Among these are continued growth of revenues to allow growth and continued recovery of the US economy creating more revenue in city and company coffers to spend on Rail Savers.

(Schedule omitted for preview. Available via download)

References

Cleaner Times. (2004, March). Skate Deterrents Make Money from the Daily Grind. Cleaner Times, 10. Retrieved from http://www.cleanertimes.com/pdfdocs/2004CTMag/Skate %20Deterrents%20-%20Make%20Money%20from%20the%20Daily%20Grind 202004-03.pdf

Crawford, M. (2013, Spring). Texas Today. Area Development Site and Facility Planning, 48 (2), 61-62,64,66-72,74-75.

Embden, E. (2012, April 25). Skateboarding Results in Real Costs to Red Bank. Retrieved from http://redbank.patch.com/groups/politics-and-elections/p/skateboarding-results-in real-costs-to-red-bank

Nelesen, M.(2008, January 20). Ordinance forbids downtown skateboarding. McClatchy - Tribune Business News, 3a.

Pulley, M. (2005, July 25). Property managers battle damage by skateboarders. Sacramento Business Journal. Retrieved from http://www.bizjournals.com.