As far as the market for toilet seats a recent study revealed that nearly 70% of consumers only buy a new toilet seat every seven years — when it breaks, gets damaged, or during remodeling. Last year alone the over 10 million toilets were sold without a seat (menstuff.org). The market for new toilet seats, priced at about 30 dollars (home depot), would be a 300 million dollar market. This does not include toilet seats that were replaced when broken, damaged, or during remodeling.
Target Customer Profile
After conducting our survey it seems as though our primary customer/target market will be owners of public places with restrooms (26.8% of surveyed) and women who are married with or without children (89.5% said of surveyed said they would buy). Also, 94.3% of women found toilet cleanliness to be very or extremely important. Men seem to only have complaints about toilets in public places being dirty (100% have had to clean urine or feces off of a public toilet) and women seem to have complaints of the men/boys leaving the toilet seat up (expage.com) or urinating on the toilet seat. Majority of the people surveyed who had back problems felt that they didn’t have much problem with lifting toilet seats (men 6.25% and women 10.5%). They more had problems getting up from the toilet or bending down to sit (in which there is already a product for this which is a ‘lifter’ that boosts the person into an upright position). Something like the ‘Mobility Airlift’ (tchomemedical.com), which ‘pushes’ the person up off of the toilet, would be of more use in a nursing home than the ‘Toilet Stepper’. The survey results showed that nursing homes would have had an average feasibility of 21.1%. This information is believed to be somewhat inaccurate due to the fact that many students were influenced by class discussion that nursing homes would be a good place for the ‘Toilet Stepper’. In reality, it would have little or no use because most nursing homes already have a product more suitable for the elderly.
Product/Service Usefulness
A potential customer would be someone like a mother or wife who is fed up with her husband leaving the toilet seat up and having to put it down every time she needs to go to the washroom. Also, in the night time when it is dark and would hurt her eyes to turn on the light she will end up sitting in the toilet bowl if the seat is left up. In addition if the woman has young boys they will tend to ‘forget’ or not care to lift the seat up and urinate on it. This creates extra work/stress that a wife/mother would have to go through if she doesn’t have the ‘Toilet Stepper’. Another example of a potential customer would be a restaurant owner. The last thing an owner wants about their restaurant or business is a bad reputation or bad experience by one of their customers. If an individual goes into a restroom and sees urine all over a toilet seat they obviously won’t be very happy, especially if it is an expensive place. This product would virtually eliminate this problem and the worries of the manager, allowing him/her to focus on more important things.
Magic John ()
If we were to sell 6.7 million units at $21-25 each our sales forecast would come out to be between $140,700,000 and $167,500,000. If we sold 8.7 million units our sales for the initial year would be between $182,700,000 and $217,500,000. (ToTo today Timely News Letter No. 30) or if we sold our toilet seats in Japan we could have up to an estimated 822.51 million dollars in first year sales. ()
Intellectual Property
Unfortunately our product is already protected by intellectual property rights. The basic idea of our product is the same as the patented product with some minor differences in design and features. For example, one product was electronic and another used a hydraulic system to raise and lower the toilet seat, also one almost identical to ours flushed the toilet after the foot was taken off the pedal. Since this toilet seat resembled ours the closest we will consider this the patent owner of “our idea”. (Patent # 6,907,621)
Porter’s Five Forces Analysis: The threats of substitutes are important in the home improvement industry because there are many competitors doing business. There are other products similar to our idea of improving your toilet, such as the Nearest. However, their product uses a control panel installed on the wall. It looks somewhat like a home security panel. Our product would be more basic. The seat moves up or down when a pedal is depressed, and flushes automatically. We are trying to reach out to the consumer who does not want to touch the toilet seat, or for women who wish to avoid the feel of cold porcelain because a male forgot to put down the seat. Getting our product on the market might be hard because there are only a few other companies that deal with toilets and toilet seats, and they are large, established companies. An example of a company that deals with the same idea for the toilet seat is the Nearest, by Toto. The Nearest is ready for competition because no one likes to touch toilet seats in public restrooms. There will be competition, but enough room for a new company in the industry because everyone uses a toilet. The bargaining power of the suppliers would be for us to make the toilet seat that is inexpensive but sturdy. People would not buy a special-feature toilt that breaks easily, but also would not want a toilet seat that is so expensive that it would be cheaper to simply install a whole new toilet. We are focusing on people who want a new feature, but nothing as extravagant as the Nearest toilet by Toto.
To see how attractive the industry might be, you need to know if people are willing to spend money on improving their toilet seats. The industry is attractive because people would spend money on a toilet seat that offers convenience and hygiene. This toilet will make it easier for men to lift the seat and for women to avoid sitting on cold porcelain. The industry is a five because people are willing to make their toilet seats fit their needs. The difficulty with our product is that there are already different patents based on the same idea. One flushes after a person is done with the toilet seat, and the other also lifts the basic toilet seat before it is used.
The life cycle in toilet improvement is growing because of the basic need for the product and the customer’s willingness to enhance its appearance and usefulness. In addition, toilets and toilets seats break, or people want to remodel—often moving up to the most recent innovation. There are three major companies that focus on toilets. A few more companies focus on the toilet seats themselves.
The sales in this industry are growing because there are more and more innovations in toilets. For example, the customer can get a toilet seats with a variety of shapes, textures, and colors—and even seats that are heated. The diversity of products shows that this industry will accept innovations in toilet seats.
We just missed the market because there is already a patented product, so we cannot get into the market with what we are thinking of. There is also a similar, complicated toilet that presents more problems because it requires installing a panel to make the toilet work. People like a product that offers convenience, and this product will. The Nearest is an example of our competition that has the same feature. This toilet has many components, including in-wall installation, but we are offering a toilet that requires minimum installation. This is the time for this product rates about a four because we are not the first company on the market, but our company offers a product that is more basic yet convenient.
The niche we are marketing to is women with families. We want to target the women who are tired of having to put up the seat and want an easy solution. We are going to offer this toilet to contractors who are building new homes, and we will also have a website where individuals can buy our product themselves. The major disadvantage is that a few large companies dominate this industry. They are the power players. The direct competition is a company like Toto that also sells a lift up seat. The indirect competitors are the companies that sell any type of toilet or toilet seat. Future competitors are people who come up with a new idea for a toilet. This is a product that will always be needed and probably will always be improving because people always need toilets.
The management team right now is composed of the people who have the start up idea. We are still in college and are all business majors. Jillian is in Management, Louie is in Business Administration, and Jim is in Marketing. As a team, we have the knowledge to get this job done. The qualifications are: Jim would do the marketing since he has the most education and experience; Louie would be the tech guy because that is what he is passionate about; Jillian would be the people person specializing in interacting with the various publics.
The legal form we need is a founder’s agreement to make sure everyone knows what is going on with each job description. We would need to follow patent laws and file for that. Another legal form would be a nondisclosure agreement between other potential people who might want to invest in our toilet seat.
The additional members we will need are a person that is more of a human resource person to make everything run smoothly. The human resource person can give the heads up and keep everyone on track so that nobody strays from the basic fundamentals of the organization. Another person would handle inventory so that we can keep up with a growing business. We also need to keep improving our industry so we can grow as a company and be a real competitor to the industry.
Financial Feasibility Analysis
The toilet stepper seat idea would not be at a high level of capital intensity because the product would not be costly to make. The main materials used in making the toilet stepper would be an inexpensive metal material, along with plastic casing around the metal frame which would also be an inexpensive material. The main costs would be the research and development of the product, finding the company to manufacture the parts, marketing and advertising, and the initial rollout of the product. The most important immediate capital needs would be the research and development of the product to find out exactly what was needed to make the toilet stepper work. Another immediate capital need would be the advertising the product to the public and getting the consumer aware that our product is out on the market. The important long term capital needs would depend on how successful the first couple of years are for our company. If the company is to succeed and have a high rate of return on the product, then there would be potential for a new office, warehouse, the hiring of personnel, a higher degree of marketing and advertising. If the company is slow in making a profit, then it would take longer period until capital was needed to purchase the above listed items. On a scale of 1-5 on capital intensity, the company would be between a 1-2 at the start-up point bvecause our company is not going to mass produce, but slowly build our way to future expansion.
The flip toilet would also be a product that should interest investors since it is a relatively obscure item on the market. This product, however, has the potential to win over consumers because of the value that it brings: sanitary toilets, ease of use, and eliminating the question of the position the toilet seat is in. This product brings value to a customer and does not have many competitors; therefore, it should attract investors. However, since we are going to be financing the company ourselves, the company will not be looking for any investmentors to help start up the company. If in future years we find that we would not be able to finance expanding the company as we would like, then there would be chance that we would look for outside investors to join in the project.
The company at this point is very reliant on the availability of investment capital. All three of the owners, Jim, Louie, and Jillian, have financial resources in their family that can be fallen back on if necessary. The estimated amount of capital that is in reserve if necessary is approximately $250,000. There was no real effort in bootstrapping the business. Since the company has many financial resources through family members, bootstrapping was not necessary.
Financial Assessment
The owners, Jillian, Jim, and Louie, will be putting in $15,000 dollars of their own money to start up the company, which will total $45,000. The start up money will go primarily to the research and development, advertising, the product parts, and employee wages. The total amount that we figure to spend in the first month of operations is $5,000 on research and development, $2,000 on advertising, $3,456 on product parts, and $1,800 on employees. This will give a total of $12,256 worth of expenses for the first month of business. The company figured these amounts based on the fact that we are assuming that research and development will be roughly only $5,000, possibly being more, but not too much of a variance. Product parts will be roughly $3,456 based on the fact that we are looking to purchase the toilet seat from the company Beneke or Bemis, which both sell a toilet seat for roughly $6, wholesale price, per toilet seat. We then figure that we would have to pay about $3 for the parts, per toilet, for the lever which lifts the toilet seat. We are hoping to have three employees working for us who will mainly assemble and package the products, and maintain the shop. The shop will not be of any cost to the company because that will be given to us from Louie’s father, who has an auto shop that he is retiring within the next year. We will have to pay once we sell the shop and move to a future location or sell the company. The tools will also be supplied from the shop that we take over. The Internet site will also not have a cost for us since the company has a friend willing to start for us, and then Louie will be able to maintain the website. Advertising will cost $2,000 in the first month. The company is expecting to spend about $15,000 for the first year in advertising and breaking the cost of this throughout the year.
We are looking to sell between 5,000 and 6,000 units of the toilet stepper within the first year. We figure that in the first year we will not be expanding the company, waiting to see how well the product is selling after the first year. We are setting a price of $30 for each toilet stepper, which would give us sales of between approximately $105,000 and $126,000. We will have to sell between 96 and 115 units per week. We figure that, with a couple of sales to construction companies, these marks will be within reach. With total costs not being high, mainly because we are being given many resources, the company is looking at total costs being around $52,880 for the year. This is broken down into $9 for parts per toilet, research and development of $5,000, advertising of $15,000, employee wages $28,080, and general wages of $4,800 ($400 a month). This would give us a net income of $52,120. This would be divided among the three owners and, depending on what we were hoping to do in the next year, possibly put back into the company for expansion.
Overall Attractiveness of Investment
The overall attractiveness of this investment is that the cost for producing the toilet stepper is not really high because of all of the capital that was given to us by Louie’s father and how inexpensive it is to produce the product. The break-even point in units is 2,280, which is a low number for the year. This means that we would have to sell about 44 units per week to get the $45,000 dollars that the three owners put into the company at the beginning of the year. The rate of return that we are looking at is about 115% on three owners’ investments. The rate of return is high, but that is also because the net income is high, since our costs are low. The rate of return could change, of course, depending on what the plans for the company are in the future.
Works Cited
Chantanuser, Wichit. “Bowled over: Toto of Japan Elevates Mundane Bathroom
Fixtures” Bangkok Post 27 May 2005
“The Nearest” PerformanceToilets.com 1 Nov 2005
“The Toilet Marketplace” Supple House Times 1 Nov 2005
Stratton, Lee. “Super Toilet Not Only Rises to Occasion But Refreshes.” The Columbus
Dispatch 10 July 2005
Appendix
Pro Forma Statement of Cash Flows
December 31, 2006
Cash flows from operating activities
Net Income (5000 units sold) 52,120
Changes in working capital
Depreciation 1,000
Increase (decreases)
In accounts receivable 8,000
Increase (decrease) in inventory 1,000
Increase (decrease) in accounts
Payable 1,152
Net Cash Provided By
Operating Activities 40,968
Cash flows from investing activities
No Investing activities 0
Net Cash flows provided by
Investing Activities 40,968
Cash flows form financing activities 0
Increase in Cash 0
Cash and Cash equivalents at
Beginning of the year 45,000
Cash and cash equivalents at the
End of the year 85,968
Appendix
Break-Even Analysis: $47,880 = 2,280 units to break even
$21/unit
Return on Investment: $52,120 = 115% return on investment
$45,000