Loading

BUSINESS PLAN KaYAK BUtter, LLC

Executive Summary

Kayak Butter offers premium products designed using customer feedback as the primary factor in determining ingredients, formulas, styles, and overall design and couples that with a network of youtube and Instagram personalities that give the product an entirely new level. It aims to galvanize resources among partners, to win the game of creating an ultra-premium product, value-dense influencer support, and wellness education platform that perfectly nails what people are looking for in their products faster than anyone else.

Company Description

Kayak Butter LLC is currently headquartered in New York City and incorporated in the State of Delaware. The company is founded by Jason Potter, a graduate Food Sciences Research Student at Harvard University with experience both in product development and in achieving actualization of massive fitness goals.

Organization and the Team

The main Board of Directors team will be composed of the CEO/Founder, CFO, the Director of Marketing and Sales, Director of Subject Matter Expertise, a representative engineer and a representative designer.

Mary Earnst, Founder: has over 13 years of experience of travelling to remote parts of the world and understands the need for clean water, power and heat as she was experienced the 2004 Indian Ocean Tsunami, one of the deadliest natural disasters in recorded history (National Geographic, 2005). Mary has a MS in Chemical Engineering with a focus on energy storage and therefore understands the need for save and sustainable batteries. Mary lead other founding teams before Kayak Butter and has a great ability to communicate over multiple platforms and the motivation to drive the mission of Kayak Butter to success.

Kelly Rotundo, CFO/Co-Founder: has a spend many years in law, advising investment for banks and hedge funds. Her passion for travelling granted her a unique perspective to the needs of cultures around the world. Kelly realized that one common need beyond food and shelter, however, is the ever-growing demand for electricity.

Katie Smith, Product Design Engineer: plays a crucial role in providing expert advice on the product design of Kayak Butter. She has a MS in Advanced Manufacturing and Design from MIT. Katie developed many health product designs and successfully helped develop effective manufacturing strategies for consumer products.

Our Mission

Provide reliable, high quality, premium and health and wellness products to customers, to help them to achieve their wellness goals, enjoy their journey doing so, and maintain a healthy and enjoyable physical and mental state.

Industry Analysis

Product development among companies and brands providing chemical consumer products ranging from lotions, to food products, to protein powders, and everything in between is changing drastically. Large companies and conglomerates, that previously were able to push slightly altered versions of their products with only a small amount of ingenuity and creativity incorporated in the product development cycle are no longer able to keep up with that strategy. Consumers are becoming more and more educated in products they put in or on their bodies. As a result, we are seeing massive growth from small and nascent brands specializing in one or very few products, developing what is truly a buyers-first formula, marketing it through highly specialized social media and influencer channels, and then gaining previously unheard of market ownership among their niche.

While there are many large brands and specialty chemical consumer producers, consumers are rapidly swaying their buying behaviors and prefer products which feature less ingredients, ingredients they recognize from social media influencers they follow and trust, and natural ingredients.

It is exceedingly challenging for the larger billion-dollar brands to suddenly pivot and create such products in a genuinely creative and refreshing package that consumers not only trust but are intrigued and compelled to purchase.

Here lies the problem for the consumer: simple products that are creative, genuinely unique, and highly effective, with minimal ingredients that they don’t want or recognize (especially with names that at least sound like a synthetic chemical), are in need.

On any given day, there are quite a large number of Americans looking to positively change their body. Survey data consistently shows that:

  • 40% of people in the US say they are “on a diet”. People in America spend $2 billion on weight loss supplements alone every year. Personal Care Products make up $5 billion annually in sales in the US.
  • Additionally, 60% of people admit, when surveyed, that they are influenced in the products they buy to affect their health and body by Instagram influencers and 39% say that YouTube has become their primary place to educate themselves on health and fitness specific goals and questions. (Mintell Market, 2019)

The market is under developed (BBC, 2018). An even more auspicious element of the opportunity is that interest premium health, wellness, and personal care product-related searched are increasing. From years 2007 to 2018, Google trends reported year over year increases in frequency of search terms “healthy food”. This is a key take home point to consider when reviewing the market size projection in Market Size Analysis.

Google Trend for Keyword "Healthy Food"

Annually, $2 billion dollars is spent on premium health and wellness products in the US. (Mintel Market, 2019). If Kayak Butter Group were able to achieve a market share of 5%, the opportunity equals an annual revenue of $100 million.

Product and Service

Kayak Butter offers premium products designed using customer feedback as the primary factor in determining ingredients, formulas, styles, and overall design and couples that with a network of youtube and Instagram personalities that give the product an entirely new level.

1) A premium formula or design optimized for value in what consumers want from that particular type of product and the wellness related results it aims to deliver

2) Links to talented social media authorities such as youtube and instragram who vouch for the ingredients in the products, connect to, and educate people on how to use them, their benefits, etc… (much like the experience of using a peloton bike and connecting with other people and trainers doing the same routine and who have similar interests)

Entry into the market for the Kayak Butter product is crucial as it is important to enter with the optimized product and with the right messaging at the right time to the right people. For this purpose, it is highly important to understand the Six Forces Model (Byers, Dorf, & Nelson 2015), Common Strategies, Beta Test the product before commercial quantity production and determine the messaging and timing.

  1. Firm Rivalry: Firm rivalry is low as there are some similar products out in the market with similar level of quality, although very few which match the “full package” model for premium products outlined in the value proposition of this business plan.
  2. Threat of entry by new competitors: The threat of entry by new competitors overall is low to moderate, since the barrier to entry for effectively assembling the talent (youtube personalities, plus Instagram personalities, plus product development engineers) is fairly moderate. Such a comprehensive platform requires the ability to quickly reach a critical mass to allow for the greatest “exponential growth” ie desired viral marketing effect among the health and wellness community to materialize. New potential competitors entering to the market usually enter with simpler product offerings, and do not attempt to create what is essentially a marketplace of health and wellness information disseminated by youtube stars (or people Kayak Butter deems capable of being such “stars” after partnering with the brand) coupled into premium products all owned under one conglomerate, so in that regard Kayak Butter is not in the same league and has a moderate potential of threat.
  3. Threat of Substitute Products is moderate to high considering the fact that substitute products are being developed and offered at an increasing rate, particularly on Amazon, Whole Foods, and online premium health, wellness, and personal care stores. Again, the success of combating this depends on the ability of Kayak Butter to reach market eminence and gain enough loyal followers to powerfully self promote related brands and partners owned by Kayak Butter to keep consumers buying and consuming content all owned by Kayak Butter.
  4. Bargaining power of Customer is moderate as the buyers have a medium range of opportunities to buy premium products that also do follow up with educational and motivational content on their brand’s website or on their youtube and Instagram partners’ platforms of selection and depend on the few existing ones, hence companies like Kayak Butter have substantial bargaining power to appeal to its customers.
  5. Bargaining Power of Complementors: Kayak Butter also will sell individual parts and products featured in the bag such as the water purifier in case users want to buy it separately or as replacement. The bargaining power of complementors will be high since Kayak Butter in it’s well executed form, excels in self promoting via it’s network of youtube and Instagram coaches that have a deep report, trust, and loyalty from their followers.
  6. Bargaining Power of Suppliers is high as there are few companies who offer a similar product like Kayak Butter and a lot of consumers who are looking forward to purchasing it. This means Kayak Butter will also have the pricing power. Nonetheless, Kayak Butter is striving to provide a quality product and strong customer service, which can retain customers

Marketing Plan

Target Market

  1. Household online buyers of premium health, wellness, and personal care products, 900.1 million
  2. Specialty Health and Wellness Stores: Whole Foods, Trader Joe’s, Lush, B2B at micro/local level via Amazon, Alibaba, and a Wholesale page on our ecommerce stores. 290 million
  3. Other Special Health and Wellness Facilities including Gyms, 1.04 million (NCES, 2015; Bureau of Labor Statistics, 2017) Total Kayak Butter market share (5% total market): 4.5 million

The opportunity at Kayak Butter Group, in essence, is in identifying talented individuals in the health and wellness industry, who can benefit from a platform that contracts them to produce high quality products and/or genuinely valuable YouTube and Instagram content that connects with people.

Youtube personalities will offer tutorial videos on how to use products, either as recipes or how-to videos focused on results and optimized for SEO keywords that data shows people are actually interested in. This means that is a brand under Kayak Butter develops a line of easy-to-prepare keto-friendly breakfasts, YouTube personalities partnered and tailor picked will perform a video series on keto lifestyle, highlighting how that product can fall into a daily routine. Complimentary, an Instagram personality will add a dimension to the experience of using the product by posting interesting and beautiful value-packed pictures and stories of creative ways they are fitting that product into their healthy lifestyle and enjoying doing so.

All in all, customers receive the full package in every product they buy. Important to this framework for the value proposition and business model is to make sure that people are effectively funneled to the appropriate Kayak Butter social media partners, to optimize promotion and to grow the Kayak Butter community and brands strategically. A qualitative goal that, if achieved, contributes massively to the success of this business model, is if a critical mass of followers and brand loyalty is obtained to graduate the Kayak Butter social media network of personalities into a reputable and sought after platform, with a reputation that attracts more talent. Such a dynamic would contribute to an increasing rate of growth which allows principles ad classical mathematics governing viral and exponential growth seen in highly popular, i.e. famous brands and accounts on YouTube, Instagram, and other platforms.

Legal & Regulatory

Fortunately, most products in the health and wellness industry, particularly those that customers prefer in the premium niche tier, are actually not regulated by the FDA. If a product may fall under regulations by the FDA, it is important to use proper labeling and compliance with information readily available by the us government website for FDA regulations. In these cases, and in general during an initial product development and launch, this is something that must be carefully taken into consideration during the product development cycle of each new products. Costs to have products evaluated and approved by the FDA in cases that this is required in the health and wellness industry typically fall between $5,000 to $25,000 per product. Though in most cases developing such a product can be avoided in favor of using a natural-ingredient approach and clever marketing that caters towards the educated buyer.

Financial Projections

Based on the size of the market and the defined market areas, the sales projections show that the break even point will be reached within year two. The projected profits for year three, four and five are projected to grow exponentially due primarily due to networking effects. Economies of scale play a minor, yet still appreciable role in producing the distinctively parabolic curve as well.

Harvest: Growing profits will be expected in year three and investors can expect profitable repays by then. Kayak Butter will allow for an Initial Public Offering (IOP) by year four, which will result in increased value of company shares.

The Kayak Butter Backpack Company has prepared the following Financial Statements for a three year projected period. These Financial Statements are: Forecasted Income Statement (Cash Flow), Break-even Analysis, and Sensitivity Analysis (Gregory, 2016).

Table 1 Estimated Income Statement between May 2018 and April 2021

Table 2 Forecasted Sales

The company is forecasting sales of 348 units below its break-even point in year one, 40 units below break-even in year two and 167 units above break-even in year three.

Request Fundings

As can be seen from the financial statements, our company requires $111,700 to start the business, which include the cost for first year fixed costs plus purchasing 300 units of Kayak Butter pack from the manufacturer. The Five owners will invest $30,000 at $5,000 each. $50,000 will be a bank loan from a commercial Bank, and the remaining $31,700 from outside investors. Payment on the $50,000 will be made monthly and amount of $900 per month (5-year period).

The Breakeven point in the first year of operation is 498 units. The financial projections anticipate breakeven point will remain overall consistent. Forecasted Income Analysis shows that our company will have a net loss of $43,901 at the end of its first year. And will have a net loss of $3,746 by the end of its second year. The earnings projections for the third year are expected to be $16,378. Last but not least is that the Forecast Sensitivity Analysis shows that the actual number of units sold will have a significant impact on the revenue.

Uncertainties and Risks

There are some uncertainties and risks involved in producing and selling Kayak Butter in the marketplace. Since Kayak Butter is a “health food related product” some consumers will not consider buying it until they are impacted by a health emergency, which creates a high uncertainty. Even if some might decide to buy such a health product this customer might prefer another product in the marketplace due to various preferences. These reasons should be analyzed and market surveys should be implemented in order to at least convert customers to Kayak Butter. Similarly, the sales trends will be intermittent, which is an uncertainty on the production side. If the customers are willing to purchase the product after such diseases, sales cannot be forecasted from before. On the other hand, it is also hard to predict sales for different locations apart. Kayak Butter can start selling the innovative health products in the high-risk area stores. Once the company can attain the breakeven point, then the founders can start working on the expansion strategies. This product is an “essential need” required by the customers. Keeping its price very high will deter customers from buying the product. Another risk is that compared to other products’ features of Kayak Butter mainly aim to fulfill the micro-nutrient needs of the customers. While this is a very important need by the survivors, the reaction of the early adopters is uncertain and also the entry to market with such a purpose is a risk that might result with targeting a very niche need or being unsuccessful.