This week I'm pitching biz plan for a sellable Fastlane biz launch, to reach $1m/yr sales in 1 yr.

[Late Bloomer]

I have very good rapport with two people are subject matter experts (SME, term from my corporate days), dealing with some equipment and practices that can help many consumers enjoy healthier, happier lives. It's a range of products and techniques where it's appropriate to have a disclaimer to ask your doctor before beginning. And for which most doctors would happily tell most patients, "That sounds like a good idea for you, just be sure to keep safe by starting slow and easy." I'm not going to reveal more about the niche while startup is underway.

The SME's have made incomplete, not fully thought out efforts to prepare a book (content is excellent, organization is a mess) and some promotional videos that don't lead to an opportunity to buy anything. They have assumed that even though they bought the top of the line equipment, "nobody" else would be interested "because it's too expensive."

They are willing to consider my business ideas as they have nothing better of their own! They were very enthusiastic to schedule a conversation this week from my overview memo, before even seeing the full business plan.

I did a bottom-up analysis. As I put in the document:

Therefore, rather than starting with 250 million adult Americans and Canadians of whom such a percent might be motivated enough to exercise or who could use physical therapy, and of those so many have disposable income, etc., it is far more pragmatic and realistic to plan bottom-up for how many like-minded, compatible people the company can reach throughout a year, which is analyzed more fully later in this document.

Strategically, this places the fundamental constraint on growth inside the company, rather than in the external marketplace. This is as it should be, for the company cannot influence how many millions of people are interested and able to afford exercise equipment, but it can control how well it reaches the thousands that one particular business can serve with excellence that builds great appreciation and loyalty with those whom it serves so well.

My bottom analysis looks at how much content marketing could be done on a shoestring while the dynamic duo keep their day jobs; and expected conversion to subscribers and then to purchases. I referred to expansion through paid marketing, such as ads, list rental, event sponsorship, trade show attendance; but left details out of the initial launch plan.

I broke purchases down to entry level, mid level, and big ticket items, ranging from $15 for the introductory book to $1,000 for the deluxe equipment package that will last a lifetime, and estimated fulfillment costs and contribution margin per item.

I considered how many items will likely be included per order, distribution of low and high end order quantity, and re-order rates for the most appropriate clientele.

I compared this to the feasible initial marketing push, then subtracted fixed costs of running the business. One of the SME's is a currently non-practicing but well connected attorney in Silicon Valley, so legal and accounting should be inexpensive if he can pull some strings and favors. And still affordable, even if he can't.

Bottom line of the business plan is a customer base of around 5,000 people within a year, with net sales revenue around $1.2 million and EBITDA profit around $400,000. With some proven growth history, I would expect sellable enterprise value in 2 to 5 years of around $1 million before estimated 20% marketing and transaction costs to sell the business, for net around $800,000 at the exit event if the business is sold at that point.

I am going to ask for 20% ownership, 100% of any management headaches they'd rather delegate to me, about $5k coverage by them of the hard costs (legal, accounting, hosting etc.) and about $5k up front one time to me for my time to put this together, after which I'd only get my ongoing profit share, and my equity share if there's a sale or refinancing of the company. I will ask for the one time fee for me to convert to stock if company succeeds enough to reimburse it, otherwise in 3 years it will convert to a personal recourse loan. (This strategy was recommended by the founder of Autodesk, which became a Fortune 1000 company.)

Running this business would be around half time for me, which would be ideal for an $80k/yr management role with vendors but no employees.

Thanks again to MJ for sharing his experiences and ideas on why a scalable and sellable business model that makes CENTS, is a good way to go.

Questions, comments, suggestions are welcome. If I had a spare $10k I'd launch it myself without asking for a penny out of pocket from the others, but a temporarily broke guy gotta top off the mac 'n cheese cabinet if he's gonna be focused enough to coordinate a business launch.

 

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