B. Trading area analysis
1. General data: geographic, demographic, and economic
Geographic: We plan to base our business in King County, WA, more specifically in the city of Sammamish. In this area is a renowned bike park named Duthie Hill Park. Serious bikers come from all over the northwest in order to ride here and many want to show their friends this amazing park, which is where we can benefit. Also, many of the regulars of the park have attempted to make edits in the park and almost all of them are bad, quite frankly, and without a hint of professionalism. In addition, the high schools are extremely competitive and have a large amount of athletes with ambitions of competing at prestigious universities. There are four high schools within an eight mile radius of where we are based in Sammamish, giving us easy access to the schools. We also are going to market our product specifically for Snoqualmie Pass, 45 minutes east of Sammamish. Snoqualmie pass is the premier mountain in Washington, and there are large amounts of high schoolers from Sammamish and nearby Issaquah that go up and ski and snowboard. We also plan to market our business at Crystal Mountain and Stevens Pass, two large ski resorts within three hours of Seattle. It should be noted that our business will not heavily pursue clients outside of King County, we can still service them because of the ease of transporting our equipment.
Demographic: We will target those ages 14-28 because people of this are generally those partaking in competitive sports. Our clients will generally be males because males dominate the action sport landscape, but there are females that are likely to be interested in our recruitment videos. With sports being as competitive as ever, athletes are willing to spend big bucks to ensure a college scholarship or position on a team.
Economic: The city of Sammamish is advantageous because there are many wealthy families that are willing to spend large amounts of money on sports. Many high schoolers also have jobs to fund their hobbies and things like our business. The people we are targeting will mostly be wealthy because it takes a considerable amount of money to finance action sports especially, so clients not being able to afford our services will not be a problem.
2. Competitive data: present competitors (listed and briefly described), competitive advantages and disadvantages of the proposed business
Competitive Advantage:
At EDGE, our number one competitor is going to be our own consumer. In this day and age of the portable camera boom, many consumers purchase inexpensive HD cameras with the intent of creating high level videos. However, for most people, the footage they get on the camera and the footage they see on the advertisement are highly different, because they lack the video production skills, and software required to produce a video that looks comparable with that of the advertisement for the camera they saw on T.V. At EDGE we will set ourselves apart from the competition by having all of the resources necessary to make the cameras produce footage that is near as good if not better than that you might see in the commercial. We also have our expert insight on camera angles, and experience with shooting that sets our video production apart from the competition as it creates a final product that is cinematically professional, as opposed to the typical one or two views you get in most edits.
Also, our camera rentals are designed to go after the spike in portable camera sales. We plan to work with GoPro, the biggest “helmet camera” company, towards a partnership that would entail them providing cameras that we would promote through ski resorts in efforts to market the cameras to consumers in hopes of them becoming future customers of these cameras. This partnership benefits GoPro in that they mustn’t supply any workers towards the marketing, and at the small price of a few cameras, they can have massive amounts of publicity through offering rentals through EDGE and eventually through the ski resorts facilities specifically. Our company is sprouting up in a relatively undeveloped industry where we see immense potential for clientele, so we have the potential of becoming a household name among ski bums and high school athletes alike if we can get startup business and use word of mouth and social media to spread our business across Western Washington and the Pacific Northwest.
C. Market Segment analysis
EDGE’s target market is high school athletes and mostly male action sport athletes between the ages 14 and 28. This is where the demand for our services will be and where people are willing to pay for our professionalism. Also, working out of Sammamish gives us the opportunity to be near the hub of high school sports, put us within minutes of the one of the best bike parks in the northwest, and put us within range of Washington’s Mountains.
Segmentation: We have segmented my market by sport. Football, Basketball, Baseball, volleyball, and soccer will be the major sports we are focusing on; however, special requests can be permitted if there is interest in other sports. For action sports, we are focusing on biking and snowboarding/skiing.
Targeting: In these sports, highlight films can be used to show how good a player is rather than simply looking at the numbers that the athletes put up. This will allow the best results for the customers and the most customer satisfaction.
Positioning: We will use positioning to create a place in the customers mind for EDGE: Athletic Film Production. In order to do this I will use the four P’s, or marketing mix, to define EDGE.
Product: Professional filming and editing will create demand within the community for athletes to get the advantage in recruiting for their sport and renting out cameras will allow action sport enthusiasts to watch themselves and show off to friends.
Place: EDGE: Athletic Film Production will be near several high schools as well as a well known bike park for maximum accessibility. Prime skiing/snowboarding spots in the Snoqualmie Pass is also only 45 minutes away.
Price:
- Package deals will be sold where we will personally film the client for a set amount of time with our best gear and create an edit with the footage. This will be $40 per hour of filming. One mount will come free and other mounts will range from 3-5 dollars a day
- GoPros will be rented out for $35 a day.
- We can create an edit or recruitment tape from the existing footage that you have. This will be $60 for the first 5 minutes and another $20 for every extra minute.
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We will resell outdated gear on a secondary market. We will use value pricing to sell these. Value pricing is when the customer is aware that they are receiving an item that has depreciated in value for the lowest price.
Promotion: We will use a variety of promotions to get our name out. We plan to advertise in high school newspapers and put up signs in Duthie Hill Park. We also plan to do product trial days in Duthie Hill Park where you can try a camera for an hour with any attachment and choose whether or not to buy the footage after for a discounted price. In addition, we will give extra discounts to repeat customers as well as customers who do our editing package and choose to film with our cameras.
D. Analysis of potential locations
EDGE will be based in Sammamish, WA, where there will not be a need for a physical building, but rather a website will be where the transactions and advertisements are going to be. We plan to do our film editing inside our personal homes and do our communication with clients online. Sammamish, WA is a great spot for an athletic film production company because we have four large high schools all within eight miles of us, and all of those schools dominate sports and have many college bound athletes. Also, the areas adjacent to our business are extremely wealthy (see below diagram) so they have money to spend on things such as video productions, and they want the best for their children to succeed, so they will pay for a leg up on the competition. Therefore, our locality to these schools can be the starting point in spreading the message of our business, and through word of mouth and further advertisement enrichment, we can extend our business further out into other parts of Western Washington. For action sports, we are located 40 minutes away from Snoqualmie Pass Ski Resort, which has the largest terrain park in the state of Washington, and 100 minutes away from Steven’s Pass, known for its terrain as one of the most popular resorts in Washington State, and finally Crystal Mountain, only a two hour drive away, as the largest resort in Washington State. We also base our business a half mile away from Duthie Hill Mountain Bike Park, a wildly popular mountain biking park which draws riders from all across the country and world, and has grown immensely in the past few years from a small expanse of land, to an intricate series of free ride and cross country trails, tailored to families and professionals alike. Our close location to so many clients who have sufficient finances for something like film production, and our advantageous setting near many teenagers and action sports hotspots make Sammamish, Washington, a prime setting for a budding Athletic Film Production company like EDGE.
(This graph represents the number of families that fall under different income brackets in Sammamish, WA)
IV. PLANNED OPERATION OF THE PROPOSED BUSINESS/ PRODUCT/ SERVICE
A. Proposed organization
We plan to operate as a Limited Liability Company. This will allow us to gain capital from others outside the business and shield our personal assets from bankruptcy. The assets of my business will be completely separate from my personal assets. Shares will be given privately, but will not be sold to the public. We will be the majority shareholders, allowing us to control the business. Disadvantages of an LLC are that members of an LLC are generally subject to self-employment tax. Also, there is much more paperwork because more licensing is required to become a corporation rather than a business. This is how we plan to start our LLC:
- Consult a lawyer
- Apply for a business license and obtain a certificate of formation
- File an Initial Annual Report with the Secretary of State
- Open up a bank account for the company
- Purchase fixed assets
- Hire workers
- Set up company website
Job Description: As owners of EDGE, we will not only be in charge of the finances of our business, but will be the chief filmers and editors. All marketing decisions and ideas that run through our website/marketing advisor will have to be approved by us, and we will make decisions when it comes down to possibilities involving the potential expansion of our business. We will work to personally deal with customer wants and needs, and will personally market our ideas around our area, through the activities we are involved in, and through our friends who can help to spread our business throughout the community.
Our website and marketing advisor will be in charge of running our company’s website. Through the website, he will work with promotions and will take advantage of social media such as Facebook, and twitter, to fully market our business to our targeted younger generation. In addition, they will answer online FAQ’s and will help to make our mission clear to our clients.
We will be hiring film production interns as well to help with both filming and editing, and they will be our assistants in the production process. We will get them to come from local colleges and universities such as Bellevue College, and the University of Washington. We will offer a great field experience for these budding video production entrepreneurs and provide a good background for them when they are to find a job at a new video production company.
Salary Table:
Payroll Taxes and Benefits Table:
If our first year sales are not adequate, we can either cut our own salaries or cut the hours of our employees. If we have inadequate sales, it will be due to a lack of projects which will probably require cutting hours for employees.
B. Proposed product/service
Rentals: We will rent out GoPro Hero 3 Black Edition cameras through the Summit at Snoqualmie, Crystal Mountain’s, and Steven’s Pass’ rental services. We will be the middle man in the process, GoPro will supply us with the cameras in exchange for a 15% share of the profit, and they will also, in addition, receive great publicity as it will allow people to try the cameras which may convince them to go and buy them on their own. The mountain resorts will put GoPro cameras into stock, and have them available for rental, alongside the skis, boots, helmets, and poles that are already available for rental. In exchange for this, we will give them a 35% cut of the profits that they generate at their resorts, and they will allow us to set up advertising posters along the walls of the rental rooms in their main lodges. In addition to the cameras, we will also include various mounting accessories so that people can try out the different angles of the camera, and get the full use out of the camera. In order to give the people access to the footage that they had filmed on the day, we will require them to set up profiles on our website. From there, we will take the footage, and post it in the profiles of our customers, allowing them download access to their footage, and an opportunity to file all of their clips from the day, or series of days, in one simple area.
Video Editing: We will take your own filmed raw footage and convert it to an appealing video that makes use of expensive and professional software, such as Sony Vegas 10 and Twixtor. The prices for this service will depend on how long you want your compiled video to be, and we will give a survey along with the service that will help us to edit your video to your own preferences.
Full Film + Edit Packages: We will film using our film production crew that contains both of us owners, and our filming assistants, the interns from the local universities. We will film using our main camera, the Panasonic AF100 along with a combination of Canon EF cinema zoom lenses for different types of shots. In addition, we will use the GoPro Hero 3 Black Edition to supply some first person footage and some alternate angles, and will use together a combination of footage to create a diverse and expert video. Our company sets ourselves apart from other video production agencies because it specializes specifically in athletic video production, and is incredibly proficient in the types of lenses, angles, and editing that are associated with high level sports videos.
C. Proposed marketing strategies
Proposed Pricing Policy: At EDGE, we are going to set our prices using cost-plus pricing. That means we have taken into consideration the costs of paying our interns, our marketing manager, and the purchases of the equipment. Our prices essentially just cover the salaries of our employees along with a small section of the price that contributes to the purchase of the product, and a small income form
We set the prices relatively low when compared to other video production companies in an attempt to make a reasonably low profit for ourselves, in exchange for getting our business off the ground. We believe that taking a small personal financial cut on the basis of income will help our business to expand, and eventually, over time, make us more money.
EDGE will use cumulative quantity discounts in order to try and promote larger purchases. Examples of how this will be applied exist in our editing pricing, where it is $20/min then $10/min for every minute over 5 minutes. Another example is in our full package film + editing section, where full day prices provide discounts up to 30% off per hour.
Another pricing policy EDGE will make use of is a seasonal discount, applied more specifically towards the days of the week. Since we anticipate many of our clients will wish to film and rent cameras on weekends, we are setting lower prices during the week in order to attempt to create more business during what we anticipate to be our less busy time.
Proposed promotional activities: Our promotional campaign will be centered around trying to get as much public attention towards our business as fast as possible and then allowing word of mouth and social media to carry most of our advertising from then on. To advertise, we will put up flyers in Duthie Hill Park’s central area and banners at Snoqualmie Pass. These are very cheap and effective ways to advertise our business because a large our market will be in these areas often and will see the signs. If the whole Sammamish biking community knows about our business then we can more easily acquire customers. Also, we will advertise in the school newspapers of all schools that are close to Sammamish. As mentioned before, there are four that are very close, and also other schools we could target if our initial business goes well. The price for a quarter of a page for 6 issues at Skyline is $294 and we also plan to purchase newspaper ads at Issaquah High School, Eastlake High School, and Eastside Catholic High School. This comes out to about 1,200 dollars of newspaper ads directly at our target market. It will let most of the school know about our business and create buzz about our business. We will develop a strong online presence by creating a cohesive webpage where everything the client could possibly need will be found. We will also create pages on social media pages, such as Facebook and Twitter, to market our product. Through these social media pages we will do giveaways of clothing/gear to encourage users to follow and like us. An average giveaway item might be values at $35. If we gave out an item every month and one large item values at $300 that would cost $720 for the year in giveaways. This will allow us to successful relay our promotions and deals to our customers. Finally, we will help build on the trails and jumps in Duthie Hill Park in order to help our standing among the biking community. This only requires manual labor and will help the customer think of us more positively. Also, as a bonus, we could get a jump named after our company which would have benefits.
V. PLANNED FINANCING
A. Projected income and expenses
We made the following financial statements in order to demonstrate our projected financials for a three year period. We plan to use these projections as a comparison towards what actually happened with our financials, and will use these to help to improve our business. We projected our sales through our anticipated number of clients per week in the different months of the year. We took into account the different sport seasons, and school vacation breaks and holidays as well in an effort to project higher numbers in times of year with higher traffic. The next page shows our sales forecast split up by product/service and shows a monthly view of our sales projections, along with a revenue cost model. Note that cost of goods sold model and gross profit models are not included because our company is a service so we do not have any cost of goods sold.
Sales Forecast/Revenue Model:
1. Projected income statement by month for the first three years
2. Projected cash flow for the first three years
A brief narrative description of the planned growth of the proposed business, including financial resources and needs
To account for growth we are taking into consideration the fact that our company will become more of a common name in the industry, and thus we will have more interested people as our company develops. As interest accumulates there also increases an opportunity for expansion which we will look to pursue should interest in our product be high enough to justify the move. As our company grows and develops more clients this will help to increase our revenue and our profit margins because our company provides a service which needs nearly no cost of goods sold, rather simply the fixed assets being used towards the service.
B. Proposed plan to meet capital needs
1. Personal and internal/external sources of financing
As co-owners, we will invest $25,000 of our personal funds into EDGE: Athletic Film Production. In order to create working capital and keep positive cash flow and cover expenses in our first year of operation, we are requesting a $75,000 loan. This loan will help to finance our start-up expenses and will allow us to have positive cash flow in our first year of operation.
2. Plan to repay borrowed funds
We are requesting a $75,000 loan for a term of five years with an eight percent interest rate. The following is an amortization schedule for this loan, which helps to explicate the loan principle and interest payment plan over the course of our five year term.
Amortization Schedule for EDGE: Athletic Film Production
VI. CONCLUSION
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VII. BIBLIOGRAPHY
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VIII. APPENDIX
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by
brendanlong9269 (student)
