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The purpose of this report was to create a business and to analyze each component of creating a business through primary and secondary by each of the management team members. Hydra Backpack (HB) will be operating as a manufacturer and wholesaler of backpacks that have built in water pouches. We will seek to differentiate ourselves by developing a product that is stylish and adds a functional option for staying hydrated on the go. We will be pricing ourselves lower than our competitors in order to capture as much market share as possible and then changing our pricing strategy when brand recognition is strong. We will also be looking to brand ourselves as a high quality stylish option for our consumers. Our target market will be students aged 10 to 25. Based off our market research this demographic has the largest potential demand for our products. We believe that the company we have designed will be able to generate a realistic profit in the second year of operations. We will hit a 37 percent gross profit margin in our second year and a 38 gross profit margin. Our numbers are a bit skewed in that we will not be paying ourselves within the first couple years to reinvest profits back into the company.

Hydra Backpack (HB) will operate as a wholesaler that manufactures backpacks in Canada with a water pouch built into the design of the backpack. Our backpacks will be designed with functionality and style. We will be seeking to sell most of our products to retailers within Canada, with planned exports to America in the future

We will be operating as a partnership with five equal partners. Decisions will be based on a voting system where each partner can vote in changes to the businesses strategy. A list of the key persons follows:

• Korbin Mountford – Chief Executive Officer

• Mengrui Yue – Accounts Manager

• Xin Jin – Operations Manager

• Almutairi Mudhhi – Productions Manager

• Basim Aljohani – Sales Manager

Our headquarters will be set up in Richmond, British Columbia. This location will provide us with the strategic advantage of being close to transportation routes for our raw materials to reach us while allowing proximity to potential buyers of our finished products. Richmond also offers many other warehouses when we will need to expand our facilities.

Mission Statement:

“To provide a solution to staying hydrated”

Introduction

In this section we will be covering the products we will be looking to develop, the problems that the current consumer has, and how our product can solve those issues. Additionally, we will be covering strategies to get our raw materials to finished goods and to our retailers (sourcing and fulfilment). We will end with a summary of the key points of the section.

We will be developing a backpack with the added feature of a water pouch build in. This backpack will help customers stay hydrated on the go while combining functionality with style. The durable backpack will have a high grade water pouch to ensure that water will not leak into the storage area. We will also have a waterproof lining around the water pouch for added protection. The fabric we will be using is of industrial grade strength to ensure our customers can expect a long-lasting product. We expect the useful life of our backpack to be three to five years depending on its use. The storage of the backpack will be broken into different compartments that are built into a design integrating the concept of a daily routine. There will be a sleeve to fit a laptop, an external card holder for tap-and-go cards, and additional external compartments for increased capacity. We will be seeking to develop the backpack in three to five standard colours without the use of patterns or designs. The base colours we will be using cover the basic tastes of the current market. Overall the style of our product will combine sleekness and modernity with aspects of durability and quality.

Figure 1. Shows a concept of our design

The backpack will be developed in the following sizes:

Large

· 2 liters of Water capacity and 25 liters for storage

Medium

· 2 liters of Water capacity and 20 liters for storage

Small

· 1 Liter of Water capacity and 15 liters for storage

We have chosen three standard sizes to allow us to capture a larger demographic of students and sizes of people. This will allow us to market from elementary to post-secondary students.

Instead of branding our backpacks with our company’s name, Hydra Backpack, we will be using a sleek initialism instead. We have decided on this type of branding to match with the tastes of students. A detailed breakdown of the product’s blueprint has been provided in the appendices.

Our product looks to solve essentially two problems that the market currently faces: Firstly, the issue of staying hydrated in our busy lives; and secondly, the issue of waste generated from purchasing single use water bottles. Our lives are consistently becoming more fast-paced and because of this staying healthy and hydrated becomes difficult. Purchasing bottles of water is a potential solution for on-the-go students; however consistently buying single use water bottles adds up--this has negative financial consequences for students; but this also leads to the second problem of large of amounts of plastic waste building up in our environment (Council of Canadians, 2014).

As mentioned above our product will seek to solve hydration issues and help students reduce the impact on the environment. The reusable water container can hold up to two litres depending on the size of the backpack. The two litre mark helps reach the daily recommended intake of daily intake of water (Dietitians of Canada, 2014). For a person that regularly purchases water bottles the cost of purchasing the backpack pays for itself. Additionally, our product contributes to solving the issue of environmental waste generated from purchasing single use products. This environmental solution offers the end user peace of mind that they are not contributing to needless waste.

2.4.1 Sourcing

Our supply chain strategy will be based around using a few suppliers to secure our components. We aim to achieve our advantage by forming long-term relationships with our suppliers. This will improve our ability to source products on time with ease. These relationships built with suppliers will make them more likely to understand our goals and objectives for setting up a streamlined supply chain (Heizer, Render , & Griffin , 2014). Ultimately this strategy will help us operate as a wholesaler to keep our costs low.

Table 1: Highlights where we will be sourcing our raw materials from.

As per above Table 1 outlines which suppliers we will be using as our primary suppliers and secondary suppliers. Suppliers not labelled supply only small components (such as threads or needles) that can be bought at many places. Secondary suppliers will function as backups as we recognize the need to have potential backup suppliers to keep our supply chain running.

Primary Suppliers:

• Albarrie Canada Limited is a large supplier of industrial grade fabrics all across North America. They will be able to supply us with the fabrics we will need to use to provide durable shells for our backpacks. They are well integrated into the current fabric market and will be able to meet our future demand for fabrics. If we need to change which fabrics, we will be using Albarrie since they also offer many different types of durable fabric allowing us some flexibility in ordering. (Albarrie Limited Canada, 2016)

• Tiger Arms is a local supplier of high grade products typically used for outdoor or combat sports. We will be planning on purchasing from them because of the low price they offer the water pouches at and the relatively close proximity to our location via shipping routes (Arms, 2016).

We will be planning to develop close relationships with our retailers with the goal of developing strategic alliances with them. As we initially will be selling to local retailers within the lower mainland we will have the aim of getting into larger retailers across the country. Eventually we will be aiming to develop quality relationships that will permit us access to our retailers pull data to allow us to better fulfill their needs for our product. More on strategic alliances will be discusses in section five.

Developing new product lines will be part of our long term strategy while we focus on growing our company and brand. We still plan to have our backpacks containing a built in water pouch in the future and will be only looking to keep up with current design trends. Additionally, we will be looking to design more backpacks with different style aspects at their core. For example, having backpacks designed specifically to business casual post-secondary students or for elementary students.

In this section we covered that our company would be designing and manufacturing high quality backpacks. Our backpacks will have functionally fused with a stylish exterior providing a source of hydration wherever our customers go. We will be seeking to develop close relationships with our suppliers and retailers as to build a strong supply chain to provide us with a competitive advantage.

Introduction

In this section we will be covering the principle characteristics of the industry, the major brands, industry trends, and direct and indirect competitors. We will be providing an analysis of each of these areas to provide a clear picture of where we find our product will have strengths and weaknesses. At the end of this section we will provide a brief summary of key points.

 In Canada, the value of backpack market increased by 3% in 2015, whereas luggage businesses posted a 4% rise in growth (Bruce Horovitz ). Although the performance was similar for both luggage and bags, growth drivers were different in each category since varied elements in fashion as well as tourism and travel sectors influenced sales. The level of demand for backpacks is anticipated to increase in the future as the number of individuals who seek outbound and domestic tourism and travel increases. In particular, young consumer groups are likely to be a huge market for many organizations because most teens are interested in adventure. Backpacks are forecasted to grow in value at an average rate of 3% in 2016 and subsequent years. In addition to tourism and travel, technological developments and style are set to become key drivers for underpinning business growth in the industry. Consumers of backpacks in our target market can be quite fickle when it comes to the cool factor of the design (Tim Kiladze, 2013).

Sales volume for backpacks has slowly been growing over the years. According to Horovitz, backpacks that began as an accessory for high school learners in the early 1980s have become a $2 billion dollar business in Canada. Nearly 60% of individuals in the nation own backpacks, with 61% of the products purchased on impulse. In February 2016, luggage and jewelry stores in Canada realized a total of $264 million in sales (Bruce Horovitz )The level of revenues implies that the industry is still lucrative despite the stiff competition. 

Although there are many backpack manufacturers in North America, we have selected the current competitors that we will be sharing the same target market with. These competitors have all been operating for many years and are well integrated into their markets. Their backpacks are similar enough in design that we believe they are the potential substitute products for potential buyers of backpacks to choose. We have broken down our main competition into direct competitors and indirect competitors. Our direct competitor Camelbak manufactures water backpacks for sports enthusiasts. Although it does not manufacture backpacks with style that would appeal to fashionable student changing its overall design would not be impossible for this large brand. Our indirect competitors Herschel Supply, North Face and Jansport all manufacture backpacks that are designed with style in mind. They have the resources behind them to potentially design a backpack with a water pouch built in. Although none of these competitors currently manufacture a backpack like ours we recognize that they are either potential substitute product choices for our target market of students or potential threats to enter into our manufacturing niche.

Provided below is a SWOT analysis of where we believe our backpack will fit with in backpack industry.

Table 2: HB Water backpack SWOT analysis

Highlighted in the SWOT analysis it’s important to note that we have found that one of the biggest threats we will encounter will be other brands trying to enter into our market. They will have the advantage of economies of scale and already built relationships with their retailers and supply chains. We plan to defend against this potential threat by developing strong brand recognition with our customers.

Camelbak is currently the most well recognized brand when it comes to water backpacks. They sell their products across North America. Their products are typically used in sporting activities but can be used in daily activities. Because they can be used in daily activities as well we have found that they are the biggest potential competitor for market share. While we do excel by appealing to a younger demographic and market, they could still add new product lines to come into direct competition with us. Prices range from $45 to $70 plus (Camelbak, n.d.)

• Herschel Supply

Herschel Supply Company is one of the firms that specializes in the design of backpacks in Canada. It was founded in 2009 by two brothers, Lyndon and Jamie Cormack, who adopted the name of the place where several family generations grew up. Located in Vancouver, Herschel Supply Co. mainly produces quality backpacks that appeal to many people in the industry. They currently have exploding sales across all of North America. We find they will be one of our indirect competitors in the they currently are dominating the market in terms of market share and sales (Iain Marlow, 2015). Students can be seen carrying these bags at every single campus in the lower mainland. Their prices range from $50 to $100 plus for its backpacks.

• The North Face

The North Face is a large retailer of sport and outdoor gear. It is known for developing high quality products. The North Face currently sells high quality backpacks as one of its product lines. This company produces different types backpacks. It produces school and/ or work backpacks, hiking backpacks, and other designs in-between. They are a potentially another large competitor because many of their backpacks have an element of style to them and functionality. Additionally, they are well known all across North America. They are integrated already into many large retailers across Canada. The target market of this company is all ages kids and adults, their prices range from $35 to $250 (The North Face, 2016).

• Jansport

Jansport operates all across North America and is also a well-known brand in the market. Jansport designs backpacks that are stylish for students of all ages. Currently they have a decent share of the backpack market. They combine bright colored designs and patterns for a very fashionable look. Like The North Face they are also well integrated into many retailers in Canada. Similar to Hershel stylish design plays into part of their appeal. They are a large enough company to be looking at different ways to expand their product lines and could pose a potential threat. Their prices range from $45 to $75 plus (Jansport, 2016)

In this section we have covered that the backpack or luggage industry is continuing to grow at a steady pace. We have also performed a SWOT analysis highlight the opportunities of this new market we are aiming to enter. The largest threat we have outlined comes from our direct and indirect competitors who have the potential to change their designs of their current products to enter the new market. Considering that they are all well established brands its foreseeable that they have the resources and branding to enter and operate successfully.

Introduction

In this section we will be covering our target market. We will be covering primary and secondary data we have collected over the past five weeks. We will also be providing insight into our target markets buying behavior and detailed demographics. We will end this section summarizing key points.

We have selected students as our main target market as there is a steady demand for backpacks among them. Considering that students struggle with living expenses and tuition fees, their limited resources affect their ability to purchase new backpacks. That being said, students will find our backpacks attractive as it would save them substantial money in the long term. Drinking tap water that will be attached to our backpack will substitute buying bottled water which ranges anywhere from about eight cents per 500 ml bottle of spring water bought in bulk at a gas station to $2.50 for a high-end brand like Fiji or Evian (Stastna K, 2014)Another encouraging reason to buy our backpack is the fact that they will be saving the environment by using tap water instead of bottled water. Also, bottled water is harmful and increases the risk of the individual’s health and safety. According to David Suzuki, who is a Canadian academic and environmental activist, “the stuff in plastic water bottles may be more harmful than anything in our tap water, and that Bisphenol, which is a chemical in many plastic bottles, has been linked to breast and ovarian cancers and childhood developmental problems” (Suzuki D & Moola F, 2008).  

In our market analysis, we have chosen our target segment to be students because of their flexibility for adopting a healthy lifestyle. We have estimated the market size at 1,996,200 post-secondary students and 5,032,183 public elementary and secondary students within Canada (Statistic Canada, 2011). We estimate that only a portion of public elementary and secondary students will be part of our target market because they will not fit our selected ages to market to. The points below summarize our market segmentation. We have defined our target market into four sections including geographic, demographic, psychographic, and behavioral patterns.

Geographic

• Location: Canada (population: 35.8 Million) (Statistics Canada, n.d.)

• Specific location: Lower Mainland (Starting location)

Demographic

• Gender: Men and Women

• Age: Between 10 and 25

• Students in Elementary to Post Secondary

• Millennial Generation

Psychographic

• Quality Aware; they will check product reviews before a purchase

• Trend seekers; personally identify with brands

• Health Conscious

• Active Individuals

Behavioral Segmentation

• Used When: During the day for school, camping, shopping, etc.

• Used Where: mainly at school

• Frequency: Daily

• Prefer to shop local; our Made in Canada will provide a strength here

Secondary research taken from: (Dan Schawbel, 2015) , (Goldmansachs, n.d.), (Inland Group, 2015)

Overall this research suggests that we will have to develop a strong brand that our target market can related to. We will need to refine our image to stress the idea that we are a local company with roots in Canada.

On June 3rd, 2016, a survey was conducted among 20 undergraduate students at the campuses of both Kwantlen Polytechnic University and Simon Fraser University. The purpose of the survey was to conduct a reliable primary market research to evaluate the market reaction for our new water backpack. The results of the survey will be attached to our appendices for further reading.

The survey was conducted by giving a brief overview of our new water backpack followed by a questionnaire given to the students to complete.

The first question on the questionnaire dealt with the type of changes and features, which are desirable in a regular backpack. The second and third Questions were concerned with the willingness to buy and recommendation of our new water backpack. The fourth Question dealt with reasons of not wanting to buy our new product. The last two questions are related to the price of the new water backpack.

From the table of data in the appendices, the most significant items are as follows. In the first Question 80% of the students seek high quality in their backpack, while 63% look for lightweight and adequate Space in their backpack. On other hand, 40% and 35% of the students look for durability and attractive styles relatively in their backpacks.

In the second and third questions, 45% of the surveyed students state that the price will determine their decision on whether to buy our water backpack or not, while 35% will consider features, and 20% look at the style and design. 70% among these students said they will be moderately likely to recommend our water backpack to others.

In the fourth question, four students out of 20 said they are satisfied with competing products currently available in the market, while only 3 students said they don’t a need a product like this and that they are not willing to pay for it.

In the last two questions, the majority of the surveyed students (45%) suggest the $35 - $55 as a price range, which they are willing to pay in order to buy our water backpack, while 30% suggest the price range of $55 - $75. On the other hand, 20% of the students said they are willing to pay between $20 - $35, and only one student said he is willing to pay between $75 - $ 95 for the backpack.

If any conclusions may be drawn from the data, they are, perhaps, the majority of the students prefer a high quality backpack over a stylish one, while the price should be in the range of $35 - $55. That being said, the results are optimistic showing that our potential customers are willing to consider buying and trying our new water backpack once it is available in the market.

Data sourced from (Alojhani, 2016)

In this section we covered our target market. We flushed out the type of consumer we will be looking to target. This consumer is aged between 10 and 25 and mostly likely follows the buying behavior of the millennial generation. Strong branding will be one of our keys to success in reaching this target market. We also found from our primary research that will eventually will be able to charge a higher price if the products quality is viewed of premium quality.

Introduction

In this section we will be covering our marketing plan designed to reach our target market. Our marketing and advertising is designed around our target markets buying behavior. We also we be covering what retailers we will be aiming to get our products in their stores. At the end of this section we will be summarizing key points.

As a startup company, and since we have a limited budget to spend on advertisements and promotion, we have to make sure that every penny spent on advertising is cost effective. That being said, there are two advertising strategies that we can use. First, is the Google AdWords, which is an advertising tool that powered by Google that targets our potential customers. The advantages of this service are that we can set the budget to suit our needs and resources, as a will as set the characters of our targeted market. For example, we can set the characters for those who can see our ad online to be male and female who are between the age of 14 to 26 and live in the Lower Mainland. The cost for this service is between 5 to 10 cents per click, and once our potential customers clicks on the ad, he or she will be taken to our website, which has all the information about our backpack as well as a tutorial video.

Another strategy that we intend to use is the word of mouth. This unpaid advertising carries a positive word about our backpacks by our satisfied customers, and in order to achieve customer satisfaction, we have go above and beyond serving our customers. This additionally will be accomplished by not sacrificing in the quality of materials used and the overall finished product. One way that we can measure our customer’s satisfaction is by surveying them after they purchase our product by providing an online survey code, that will be placed inside the backpack, where our customers can go online to our website to enter the survey code and start the survey.

We will also be looking to develop strategic alliances with local retailers. We will be aiming to get into larger retailers to continue to support our aggressive growth strategy.

Our corporate strategy will utilize a penetration pricing strategy. We will initially set our backpack's price relatively low to attract customers and gain market share, after our brand is recognizable, we will raise the price to increase profit. Our backpack will be sold in three different sizes: small (15 liters), medium (20 liters) and large (25 liters). Our top priority for distribution is the Lower Mainland, where there are over 266,000 post-secondary students. Our backpack will be manufactured in Richmond, BC, and we will use ground freight to deliver it to retailers where it can finally be purchased by the consumer.

Our backpacks will be distributed to retailers that students usually attend, such as book stores like Chapters, and Champions. We will be starting off locally in the lower mainland. Once our sales grow, we will start distributing our backpack across Canada and the United States.

In this section we have covered how we will be marketing to our target market. The three main ways we will be using to reach our target market will be using Google Adwords, Word of mouth strategies, and developing relationships with retailers and taking advantage of their retail spaces. Our pricing strategy will be design to come in at a lower price point that other direct and indirect competitors to maximize penetration into the market.

Introduction

In this section we will be covering our productions plan. We will be covering our location and explain its competitive advantage. We will also be covering our facility and equipment layouts, our labor requirements, purchasing policy, quality and inventory controls and finally a production cost. We will finish this section with a brief summary of key points.

Our company will start with leasing a 2250 square feet Industrial building at 11851 Hammersmith way in Richmond. It is located inside of The Riverside Industrial Park.

Figure 2: Facility Location

Highlighted in Figure 2 is the close proximity to Highway 99

Cost of Location

The monthly payment of our facility leasing is $2323 per month. This cost is one of the lower renting costs within the lower mainland. Industrial leasing in the Greater Vancouver area starts at the highest price $2.20 per square feet in Downtown. Both Vancouver and Burnaby have around $1.3 per square feet. Richmond, New Westminster and Coquitlam have lower price at $1 per square feet.

Advantages of our Location

The location of our facility provides us with an excellent ability to have our products arrive quickly and have our finished goods shipped out. The riverside industrial Park is conveniently situated west of Highway 99 and south of Steveston Highway. It will provide efficient access to Delta, New Westminster, Vancouver, the U.S. border and YVR airport while we are looking to get in with local retailers first. Overall we will be able to gain the benefits lowering our transportation costs and providing us a competitive advantage.

Equipment

According to our market research, there are over 1.5 million students in Canada. Our goal is to capture 1 to 2 percent of this market within the first year by producing 15000 backpacks. To reach this goal we will be purchasing equipment that is small and specialized to producing our backpacks. The cost of purchasing equipment needed to produce apparel goods has come down in recent years granting us a significant lower equipment cost.

Table 3: Our list of required equipment

Equipment above will be purchased for a total of $32489. One Round knife cloth cutting machine is able to cut fabric at a rate of 200 units within one labor hour. Computerized sewing and quilling machine has a productivity at 3 units per labor hour which is estimated at 1590 units per month and 19080 units per year at maximum. If we produce on schedule we should have an extra 4080 units by the end of year one. We will keep these units as safe stock in case we cannot keep up with demand.

Facility

Figure 3: 3D facility layout

Our leasing facility will have 2250 square feet in total and will be divided into three parts: Sales front, Workshop and Storage. Each part will have over 700 square feet space. The sales front will function both as an office and retail area. The sales front will have a comfortable café area in which there will be space to meet with clients. The Workshop contains all the machinery for manufacturing activities. The storage area can hold up to 2000 finished goods as well as the raw components for another 2000 backpacks. The storage area will function as our shipping and receiving area.

Production Process

1. Printing design layout onto fabrics.

A printed blueprint can be used to cut up to 100 units of materials. We will be able to print four of these blueprints a week.

1. Cutting fabric

By using our specialized cutting machine, we are able to cut 200 units of material fabric in per hour

We plan to do all the cutting on the Monday for the goods needed to be completed for the production schedule that week.

1. Quilling and Sewing

Our equipment has the ability to quilt and sew our fabrics at the same time. The machine itself is computerized allowing us to cut down on time which increases productivity. At this stage the water pouches will be sewed into the backpacks and the water tube fed through the fabric. At our current manufacturing size, we will still have a majority of the work done by hand.

1. Finishing and Packaging

To finish up production we will cut all the loose threads off from the sewing. We will be packaging our finished goods into larger boxes depending on how many a retailer wishes to order.

Cost Breakdown

Table 4: Variable Cost Breakdown

According to our product design blueprint, each backpack will contain 1 square meter of non-woven fabric, 0.8 square meter lining fabric, 1 water bag and other supplies at $5 including string and zips. Productivity is 3 units per machine per labor per hour. Thus, labor cost will be $5 per unit at $15 per hour.

Table 5: Fix Cost Breakdown

Hydro and TELUS bills are estimated based on similar manufacturing businesses in the Richmond area. We used the straight-line method to calculate the depreciation expense on our equipment. Insurance-Business includes Content insurance and Business interruption insurance. Property insurance has not been added considering this cost is typically paid by the owner of the property.

Our goal is trying to keep our ending inventory for each period at 500 units. Demand will increase seasonally at the start of each school semester and thus we will adapt our production schedule accordingly. We expect demand to drop during each semester and will increase production for the beginning of the term. Christmas will be another peak of sales during the year.

For quality control, we have projected that a 2% allowance of our products to be sent back for poor quality or other defects. Finished products will be tested within their batch for comfort proper function.

We will be operating the facility with us as the main labor force. We have decided not to pay ourselves to start off and have our wages reinvested into the business. To follow the forecasted demand for each month we plan to increase our labor and subsequently hold back on production when necessary.

According to Manufacturer License Canada, we will first apply for the manufacturing license and display it in a prominent spot. All records of our production, sales and purchases will be kept for at least three years for auditing and inspections on request.

In this section we covered why our location and equipment will provide us with reduced transportation costs and increased productivity for our scale of business. We have also briefly covered how our backpack will be made. Finally, we discussed how we will not be paying ourselves for the foreseeable future into order to reinvest funds back into the business.

Introduction

In this section we will be covering the management and ownership structure. We will be providing a brief set of management bios and qualification each one of our members holds.

Korbin Mountford - CEO

Korbin has been working in the service industry for over 8 years now and has developed into a prominent leader in his workplace. Currently he is a Service Quality Leader, leading and managing daily activities of Chop Steakhouse. He holds a diploma in Business Management. He will be working as our CEO.

Mengrui (Cindy) Yue – Financial Manager

Cindy has been working in the retail clothing for five years. She has a wealth of knowledge when it comes to designing fashionable apparel. She will be handling our books and accounts. She is working towards her accounting diploma.

Xin Jin – Operations Manager

Xin will be our operations manager taking care of ordering supplies and raw materials. Xin has experience running the operations of businesses from previous work experience. He holds a degree in operations management.

Basim Aljohani – Marketing Manager

Basim will be working as our marketing manager. Basim has years of experience in sales from previous experience. He will be handling our promotions and pricing strategies. He will also be coordinating with retailers to develop strategic alliances with in order to grow our brand. He currently holds a marketing degree.

Almutairi Mudhhi – Production Manager

Mudhhi will be working as our productions manger. He will be in charge of getting production schedules completed on time. He will be working closely with Xin to ensure the whole operation runs smoothly. Mudhhi has a background working in the manufacturing industry for over five years.

Decisions that affect the company’s strategic goals will come down to a voting structure. Each partner will get one vote. Ownership is divided equally among the five partners. Small issues that affect the company will be handled by the following chain of command below.

Figure 4: HB’s Organizational Chart

Introduction

In this section we will be covering our milestones and metrics. We have set up goals and sales targets for the next three years. Our goals are centered on establishing ourselves within the market with brand recognition and market share. Sales targets are based around number of units sold. We will also be covering potential risks that could come up when operating our business.

We will start off by listing our goals for the next three years.

• Reach 3 percent of backpack market share in Canada

• Get our operation to break even and have a positive cash flow

• Get into at least 10 retailers across Canada

• Increase production to match our increase in forecasted demand

• Reach a point where we can start putting ourselves on the payroll

• Expand sales into the United States of America

Our Sales Targets go as follows

• First year hit 15000 in number of units sold.

• Second year hit 16000 in number of units sold.

• Third year hit 17000 in number of units sold.

Attached in our appendices will be a Gnatt chart highlight the timeline for these goals and targets.

As previously stated in section three we find the biggest risks to the company will come from other large designers of backpacks entering our market and creating products that are similar to ours. We plan to combat this potential risk by focusing on building our brand by marketing HydraBackpack as a unique, high-quality product made here in Canada.

Another potential risk could be that our suppliers discontinuing certain products we use in manufacturing our products. A disruption in our supply chain could mean a huge lost in sales and prevent us from hitting our goals and targets. To manage this potential risk, we have already lined up back up suppliers. The list of these backup suppliers and be found in section two.

Another potential risk to the company could be one of the managing partners wishing to leave the company. We have outlined that in our partnership agreement that members wishing to leave the company must give at least a year’s notice as to not withdraw essential capital in the company. There is a clause within in this agreement stating that if a member wishes to leave earlier they must find a replacement partner with the necessary skills and capital requirements.

In this section we have covered our goals and targets we wish to accomplish within the first three years of business. The primary goals of the company are to establish a brand and develop strategic relationships with retailers across Canada. The sales targets for the company start at 15000 units for the first year and increase to 17000 units for the third year. The risk of operating a small retailer such as our is the ability of already established brands coming in and taking valuable market share and sales from us. We plan to defend against this threat by developing a strong brand for style and quality.

Introduction

In this section we will be covering our initial funding requirements and financial projections for the first three years. We will also be including our opening balance sheet and closing balance sheet for three years. Our income statements will be included monthly for the first year and yearly after that. Our cash flow will also be done monthly for the first year and yearly after that. We will summarize with a few key points to conclude this section.

In the first year, company name will not able to breakeven. The company will suffer losses at the first year. We will be spending 15% of the total revenues into market development. The company will able to cover all the expenses in the second year. In the third year, we estimate that the company will able to sell 17,000 units of products.

In this section we covered our financials in relation to required initial funding and our financial projections for three years. We will be planning to spend a large amount of our startup funds to purchase equipment and raw materials. We will not be generating a net profit at the end of year one but plan to breakeven in our second year of operations. We have provided additional financial data in our appendices section to provide a more in depth breakdown of costs.

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Bruce Horovitz . (n.d.). Backpacks: A new "Badge" of cool.

Camelbak. (n.d.). Products. Retrieved from Camelbak: http://www.camelbak.com/en/Canada/Sports-Recreation/Packs.aspx

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Dan Schawbel. (2015, January 20). 10 New Findings about the Millennial Consumer. Retrieved from http://www.forbes.com/sites/danschawbel/2015/01/20/10-new-findings-about-the-millennial-consumer/#62b621af28a8

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Heizer, J., Render , B., & Griffin , P. (2014). Supply-Chain Management. In J. Heizer, B. Render, & P. Griffin, Operations Management. Toronto: Pearson Canada Inc.

Iain Marlow. (2015, September 25). How Vancouver’s Herschel sells millions of bags worldwide. Retrieved from http://www.theglobeandmail.com/report-on-business/rob-magazine/how-vancouvers-herschel-sells-millions-of-bags-worldwide/article26423150/

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Tim Kiladze. (2013, May 29). Can Herschel backpacks go mainstream and keep their cool? Retrieved from Globe and Mail: http://www.theglobeandmail.com/report-on-business/small-business/sb-marketing/can-herschel-backpacks-go-mainstream-and-keep-their-cool/article12201755/

Gnatt Chart for Implementation

Product Blueprint

Material and Labor Requirements

Equipment Machine and Furniture Management

Inventory Management

Sales Management

Tax Calculations

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