BUSINESS
PLAN
Section:
Page:
1.
Executive
Summary 3
2.
Corporate
Vision 10
3.
Company
Overview 13
4.
Strategy 16
5.
Market
Analysis 21
6. Marketing Plan 23
7.
Financial
Data 31
8.
Resumes
9.
Website
10.
Graphic
Examples
11.
Supporting
Literature
Property of Inertia Clothing Company
1. EXECUTIVE SUMMARY
“Creating clothing, and accessories for Beach Culture lifestyles and
Action Sports enthusiasts.”
(Action
Sports: surfing, skateboarding, snowboarding, in-line skating, wake-boarding,
and skiing)
Inertia
clothing company’s mission is to be the preferred brand name of clothing, and
accessories, for boys, and men ages 14 to 21, worldwide by the year 2005. Our company will achieve this by creating,
developing and distributing comfortable, durable, innovative clothing, swimwear
and accessories. “By purchasing and wearing Inertia Clothing Company products,
individuals will be associated with our brands’ perpetually positive image,
active lifestyle and innovative fashions.
We will hereby improve the
customers’ persona.”
Our commitment to creating quality innovative clothing and accessories, promoted by our aggressive marketing and advertising will be unique in the Action Sports Apparel Industry, and create a demand for products bearing the Inertia brand name.
Inertia
clothing company will create and maintain a work environment in which
recognition of positive values and the personal growth of our employees will
not be overcome by financial objectives. We will establish a superior work
experience for all employees in order to enhance the quality of their lives,
which leads to superior job performance, increased productivity and superior
customer service.
The
combination of producing and distributing products that improve our customer’s
lives within a business that promotes a “Perpetually Positive” environment, and
improves our lives, can lead to success.
Mr.
Nathan Paul Horner founded Inertia Clothing Company in 1990.
The
company is currently a sole proprietorship based in San Diego, California. When
Incorporated, Nathan Horner and Investors will be main share holders, employees
will also have shares in the company.
California
State Board of Equalization Seller’s
Permit account number: 2/22/1999 SR
FH 97502518
Located
at (home office):
Inertia
clothing company
Phone: (home office) (619)-237-6082
428
C Street, Suite 409 San Diego, CA 92101 Internet: www.inertiaclothing.com:
Mailing Address: P.O. Box 562 La Jolla, CA. 92038-0562
Inertia
clothing company is currently designing, manufacturing and distributing hats,
T-shirts, and stickers to retail sales outlets and customers over the Internet.
Our future product line is currently in development.
The
Company has established a preliminary web site at www.inertiaclothing.com for a
general introduction of our products, present and projected, and information
about Inertia Clothing Company, our history and vision statement.
The
Inertia Clothing Company staff consists of a unique, team-oriented group of
innovative trend setting individuals. We are highly motivated, up to the
challenge of using creativity, and business-leadership skills to plan, develop,
and implement a competitive product line and marketing strategy. Gifted with
‘social’ intelligence, manners, talent, and good looks, we are the youthful
Southern California lifestyle ---
‘Forging the fashions’ of the new millennium.
·
Nathan
Horner, Founder / Creative Director / President
·
Samantha Dill, Promotions Director
·
David
Hopper, Surf Team Manager
·
Chief
Financial Officer
·
Marketing
and Sales Director
·
Team
Managers
·
Web
Master
·
Sales
Representatives
·
Accountant
and Financial Advisor
·
Corporate
Attorney
·
Patent
and Trademark Attorney
·
Shipping
and Customs Consultant
·
Fashion
design Consultant
·
Secretary
Current Products
The
introductory products for Inertia (Brand) clothing are Flowered cotton bucket
hats, Wide brimmed bucket hats, White terry clothe bucket hats, and Black Flex
Fit baseball caps, all hats bearing the embroidered Inertia logo. One T-shirt
with graphic, logo, and web address is also available. We also offer two stickers: (1) the Inertia
logo (2) a display of our motto, “Perpetually Positive,” our web address, and
logo.
Sales of our initial products, and interest in our growth and future products have been overwhelming from retailers and on line buyers.
Inertia
clothing enjoys patent and trademark protection by virtue of propriety rights
afforded by intellectual properties held by the founder of the Company, Nathan
Paul Horner.
Inertia
Clothing Company has achieved a significant preliminary presence in the Action
Sports Market by successfully introducing an intelligent, practical brand
-“Inertia.” Inertia, defined as the Law of Motion or Perpetual Motion, is the
tendency of a body in motion to stay in motion. We will introduce unique, innovative, functional clothing and
accessories into previously non-penetrated market segments via our Internet web
site.
The
concept of our company and its product line were originally conceived for boys and men ages 14 to 21. Specifically,
“Generation X and Y”--- free spirited, surfing, skating and snowboarding
enthusiasts who wear contemporary “Beach Culture” fashions. These fashions
increase the enjoyment of wearing clothes and enhance the style of those who
enjoy an active lifestyle. Inertia clothing products have been widely embraced
in Beach Communities, and with Action Sports enthusiast’s world wide, via the
Internet. All products are strategically priced to establish incentive for
buyers/customers, creating an additional margin opportunity for Inertia
clothing.
Although
designed originally for the Action Sports Enthusiast, many additional market
segments possess equal or greater applicability and volume potential.
The
major market segments (in no particular order) are:
·
Action
Sports and Beach Culture catalogs/magazines
·
Surf
Shops
·
Ski,
Snowboarding and Skateboarding facilities
·
Internet
direct-to-consumer sales
·
Boys
to men ages 14 to 21
·
Boutiques
and Retail stores
·
Mass
merchandisers
·
International
clothing distributors
Reef,
Quicksilver, Tommy Hilfiger, Billabong, Rusty, Volcom, SMP, SRH, Lost, Planet
Earth, FILA
RISK
Patent
and trademark protection, in conjunction with a moderate pricing strategy,
create significant barriers to entry. These barriers should serve to dissuade
and inhibit competitors from pursuing this market niche for three to four
years. However, Inertia clothing company must expect competition --- legal or
illegal --- and must be prepared to prevail in a competitive marketplace.
Current
economic conditions are excellent in the United States of America. If this
positive trend is disrupted there is a risk that it will affect Inertia
Clothing Company.
Fabrics
and labor costs may vary due to the global market. Margins will be sustained/improved through aggressive unit cost management
as more profitable avenues of production are discovered and implemented.
Inertia
Clothing Company’s marketing strategy is to propose, promote and support the
fact that Inertia offers the Action Sports enthusiast clothing and accessories
that will make the consumer feel positive, and full of California energy “STOKED”. We will sponsor athletes,
models, musicians and DJ’s as they are our markets mentors. By advertising and
producing events we will create a unique brand image that will draw in our
target market. We aim to market to not only the core surfing, skateboarding,
snowboarding markets, those who are active participants in the sports, but also
those who support Action Sports and beach-lifestyles and may not be
participants in board-sports but are influenced by the sports and the lifestyle
they represent.
Inertia
Clothing Company’s market research indicates a requirement to promote both the
Company brand recognition and product awareness. We must clearly establish an
image of the company as an innovative and professional supplier of functional,
well constructed and durable products at competitive price points.
Inertia
Clothing Company will conduct a dynamic marketing campaign integrating
multi-media advertising with multi-channel distribution. This will be
accomplished through the following resources:
·
Integrated
direct marketing on the Internet (www.inertiaclothing.com)
·
National ad campaigns in magazines and
internet sites such as --- Surfer,
Surfing, Transworld Surf, Transworld Snowboarding,Blue Torch, Transworld
Skateboarding, Heckler, Warp, In Style, Details, Eastern Surf, Revolt in Style,
The Hut.Com, Etc.
·
National
and regional Action Sports specialty catalog distributors
·
National
and international wholesale distributors
·
Sales
and marketing representatives
·
Independent
manufacturer sales representatives
A
point of sale video will be produced to standardize sales representatives. This
video will be further utilized to introduce and educate international
distributors, media and trade members of the unique features and benefits of
all company products.
A
multi-media campaign will be utilized in the U.S. during peak consumer spending
periods in the spring, summer and winter-holiday seasons. A national
advertising campaign in prominent, nationally distributed newspapers and
consumer magazines will provide additional pull-through for both retail sales
and direct response marketing.
Current
customers include these San Diego, California retailers:
·
Atomic
Trading Company
·
Ocean
Beach Surf Shop
·
Aquarius
Surf-n-Skate Shops
·
Pacific
Drive Surf-n-Skate Shops
·
Swoozy’s
Boutique
·
Chameleon
Hair Lounge/Boutique
Our
advertising and promotional strategy is everything we do. Our brand and brand
image is more than just a logo on the products we sell. The advertising,
promotions, events, hang tags, sponsorships, distribution are all efforts that
build/position our brand name in the mind of our target market. We have planned
a nationwide multi-media campaign to increase product presence and brand
identity recognition among all potential customers.
Inertia
Clothing Company will be spending approximately 15-20% of sales revenue on
promotions and marketing for the remainder of the year (year
of ?). As we continue to grow, we will increase our
spending on advertising to 20-25%.
During
(year of ?),
Inertia Clothing Company will continue to focus on the following business strategies:
·
Obtain
maximum exposure through consumer and trade magazines;
·
Actively
pursue editorial advisement and product review as well as education of Action
Sports Enthusiast as to the advantages of our products;
·
Prepare
and distribute a human-interest article on Inertia Clothing Company’s founder.
·
Secure
positioning as an exhibitor at the ASR trade shows in Orlando, Florida, Long
Beach and San Diego, California, Atlantic City, New Jersey, and Las Vegas,
Nevada.
We
foresee that at least 50% of total sales will be generated by direct promotions
and advertising. An additional 20%
increase will be due to sales through our other channels.
These market segments, of
today’s marketplace and Inertia Clothing Company represent a rare once-in
–a-lifetime opportunity to participate at the “ground floor” level in the
introduction and development of an exciting and significant new player in the
Action Sports apparel and accessory industry.
Capital Requirements
According
to the opportunities and requirements for Inertia Clothing Company described
herein, and based on what we feel as sound business assumptions, initial
capital requirements are $4,000,000.
This amount will provide adequate capital for initial operating costs
for the first 2 years, market testing /analysis, product-line expansion and
execution of a comprehensive marketing and advertising campaign, and
maintenance of a market-penetrating Internet site. Utilization of this initial capital will provide a lucrative
return for the initial investor and will establish Inertia Clothing Company as
a viable, profitable business enterprise.
To
achieve our goals we have developed a comprehensive plan to broaden and
accelerate our current marketing and sales activities, product development,
production, distribution and customer service capabilities.
The
sale of Inertia Clothing Company stock will enable the company to satisfy
capitalization requirements.
Financial
Highlights:
Projections:
Year
1 Year 2 Year 3 Year 4
Year 5
(year of ? )
Total Sales $800,000 $2,400,000 $6,000,000 $15,000,000 $45,000,000
Gross
Profit Margin 40% 45% 48% 48% 48%
Net
Profit Margin 3.9%
10% 16% 17% 17%
Net
Income* $12,480
$108,000 $460,800 $1,224,000 $3,672,000
*Before Taxes
These
financial projections indicate that initial investment is achievable within 5-7
years. Recapture will occur by means of
preferential dividend distribution and execution of provisional redemption
options established upon issuance of Preferred Stock. At the option of the investor(s), Preferred Stock may be
converted into Common Stock, providing for greater investor profit
participation and “roll over” of capital for further growth enhancement and
appreciation of stock value.
Additionally,
an Initial Public Stock Offering (IPO) may be initiated year one on the New
York Stock Exchange (NYSE) and on the Internet (e-trade). This will offer an additional recapture/exit
opportunity and/or increase profit participation based upon exercise of
redemption /conversion options available pursuant to the IPO.
Inertia
Clothing Company is a young, innovative company with an endless pool of
creative ideas. Our management team is
committed, talented, and aggressive.
With a strong economy, and thriving Action Sports Industry, this is a
prime time for Inertia to Get in Motion!
We are ideally positioned for spectacular performance in a rapidly
growing Action Sports Apparel Industry.
We
will continue our advances and growth in the Surf Core and Beach Lifestyle
segment of the Action Sports Apparel Industry by continuing introducing
functional and innovative products that enhance the fashion experience for our
customers.
Based
on assessment of management talent, analysis of market potential, soundness of
marketing strategy and the attached financial projections, we believe that this
venture represents a sound business investment. Inertia is the “Motion for
the Millennium!”
Inertia
Clothing Company was founded in 1990 in San Diego, California by Nathan Paul
Horner to create, market and distribute clothing and accessories for
“Generation X and Y”, free spirited, surfing, skating, and snowboarding
enthusiasts who wear “beach culture”
fashions (casual, comfortable, durable, clothing, swimwear and accessories).
Our Company will distribute on multiple levels including:
·
Beach
community retailers and surf shops
·
Action
Sports specialty magazines and catalogs
·
Integrated
multi-media and direct e-commerce response programs
·
International
clothing and accessories distributors
Full advantage will be made of a strategic alliance with a major full service manufacturer to accomplish production of superior products at competitive price points. Success in achieving global market penetration will be facilitated by numerous factors including:
·
Acquiring
superior market recognition with Registered Trademarks;
·
Designing,
manufacturing and distributing clothing and accessories designed for
enthusiasts of Action Sports and the Beach Culture Lifestyle;
·
Distributing
Inertia products through national and international distributors;
·
Distributing
Inertia products through national and international catalogs;
·
Distributing
Inertia products through sales networks
·
Establishing
a touring team of professional athletes and musicians associated with Inertia
Products through sponsorship.
In summary, Inertia Clothing Company provides innovative clothing and accessories, which contributes to the lifestyle associated with Action Sports. Success will be achieved through clarity of vision, focus on immediate and long term objectives and a bold aggressive growth strategy. This concentrated effort, orchestrated by a team of highly competent and cooperative professionals, will result in an international clothing and accessories empire of global status.
Inertia
Clothing Company’s mission is to become the preferred supplier of quality
Action Sports clothing and accessories worldwide by the year (year of ?). “By purchasing and wearing
Inertia Clothing Company products, individuals will be associated with our
brands’ perpetually positive image, active lifestyle and innovative fashions. We will hereby improve the
customers’ persona.”
Inertia
clothing company will create and maintain a work environment in which
recognition of positive values, personal growth of our employees is not overcome
by financial objectives. We will establish a superior work experience for all
employees in order to enhance the quality of their lives, which leads to
superior job performance, increased productivity and superior customer service.
The
combination of producing and distributing products that improve our customer’s
lives within a business that promotes a “Perpetually Positive” environment,
that improves our lives, can lead to success.
In
order for Inertia Clothing Company to attain its vision in the manner described
in our mission statement, we will achieve the following immediate strategic
goals:
·
Produce
and warehouse sufficient inventory for fulfillment of immediate forecast sales
demands;
·
Acquire
capital to expand the existing product line and customer base;
·
Implement
wide scale direct-to-consumer marketing;
·
Establish
national and international distribution channels.
Inertia
Clothing Company has conceived new products for the Action Sports enthusiast.
Inertia graphic t-shirts were introduced in 1990 and embroidered Inertia hats,
t-shirts and stickers were introduced in 1998.
Market
Since 1998, Inertia Clothing Company has established a preliminary presence on the Internet and has integrated this information with all marketing and advertising programs. The Company’s web site is www.inertiaclothing.com
Inertia Clothing Company has reached several landed new
retail outlet customers and rapidly
grew to establish additional retail accounts by the end of 2000.
Inertia Clothing Company continues comprehensive analysis and testing of regional market segments and various marketing response vehicles.
Inertia Clothing Company will have achieved significant market penetration through the introduction of our advanced clothing line through an integrated multi-media marketing campaign.
By summer (year of ?) Inertia Clothing will introduce “Inertia Clothing Company Catalog.”
By (year of ?) we will broaden to encompass all
board sports by integrating teams and Promotions
By the year (year of ?), Inertia Clothing Company will introduce and sustain an annual Action Sports competition and musical festival.
By the year (year of ?)
we will broaden to all sports and start a women’s line.
Sales
During 1999
Inertia Clothing Company will have achieved sales of $2,400. The products were prominently displayed in 6
retail stores and on our website, with salespeople and consultants being
knowledgeable and supportive of the products and company. Sales will increase in volume in years three
though six.
Ø For (year of ?), total sales will exceed $800,000
Ø For (year of ?), total sales will exceed $2,400,000
Ø For (year of ?), total sales will exceed $6,000,000
Ø For (year of ?), total sales will exceed $15,000,000
Ø For (year of ?), total sales will exceed $45,000,000
We are confident that the above goals can be met and surpassed. The entire Inertia Clothing Management team is prepared and committed to rapid growth and development, coupled with industry patterns; revenues could well exceed the projected gross figures.
Objectives
In order to accomplish the preliminary goals of sustained market penetration expanded acquisition of market share and subsequent establishment of brand presence and identity, Inertia Clothing Company will achieve the following outlined objectives:
1) By April (year of ?) sufficient inventory will be on hand for nationwide market introduction and analysis for Inertia Clothing and accessories;
2) By April (year of ?) substantial market research will be completed through national direct response marketing for additional product;
3) By May (year of ?) preliminary capitalization requirements will be fulfilled;
4) By May (year of ?) an integrated multi-media educational and advertising campaign will commerce for the Holiday, (year of ?) season.
5) By June (year of ?) secondary capitalization requirements for a broad spectrum multi-media advertising and acquisition finance fulfilled;
6) By
July (year of ?) deep market
penetration and sustained retention of majority market share will be achieved.
3. Company Overview
Legal Business
Description
The legal name of the company is Inertia Clothing. The legal form of the business is a San Diego Manufacturer of clothing and accessories for retail sale, business license number SR FH 97502518. The business location is 428 C Street, Suite 409 San Diego, CA 92101 (Home Office) and P.O. Box 562, La Jolla, CA 92038 (Business Mailing Address)
Management Team
The
Inertia Clothing Company staff consists of a unique, team-oriented group of
innovative trend setting individuals. We are highly motivated, up to the
challenge of using creativity, and business-leadership skills to plan, develop,
and implement a competitive product line and marketing strategy. Gifted with
‘social’ intelligence, manners, talent, and good looks. We are the youthful
Southern California lifestyle ---
‘Forging the fashions’ of the new millennium.
·
Nathan
Horner, Founder / Creative Director / President
·
Samantha Dill, Promotions Director
·
David
Hopper, Surf Team Manager
·
Chief
Financial Officer
·
Marketing
and Sales Director
·
Team
Managers
·
Web
Master
·
Sales
Representatives
·
Accountant
and Financial Advisor
·
Corporate
Attorney
·
Patent
and Trademark Attorney
·
Shipping
and Customs Consultant
·
Fashion
design Consultant
·
Secretary
Employee medical and dental benefits and product liability will figure into future expenses outlays.
Upon funding for Inertia Clothing Company, share allocations and percentages of ownership will be determined by negotiations before finalization of deal.
Proposed hierarchy of allocation follows:
#Shares %Ownership
Chief Investor ? ?
Nathan Paul Horner ? ?
Samantha Diane Dill ? ?
Investor (s) ? ?
Other Principals ? ?
Responsibilities
Nathan Paul Horner,
Founder/President/Creative Director
Orchestrate and collaborate the creative direction of the company. Manages, organizes and “makes things happen.” This will ensure that everything is done is promptly and accurately. Responsible for creating images and designing products that represent Inertia Clothing Companies brand image. Oversees the hiring and firing of employees.
Samantha Diane
Dill, Promotions Director
Responsible for developing promotional strategies for Inertia Clothing products. Research and development for products line. Fulfills other managerial duties.
To keep staff requirements minimal, in the
early stages of development, our Management team will fulfill necessary office
duties when needed.
Employee Selection
Selection will be based upon the individuals’ expertise, active participation, reputation and success in their field.
Outside Support
Our outside management advisors provide tremendous support for management decision in the form of guidance and counseling in their particular specialty.
Staffing
Inertia Clothing Company will make maximum use of temporary staffing services and networking opportunities to maintain minimal staff requirements. However, Inertia Clothing Company recognizes that individual staff is required to properly support customer service and fulfillment functions. Subcontracted warehousing and direct response fulfillment services will be in place. Additional staffing requirements will be filled upon funding.
Strategic Alliances
Production/Manufacturing
Inertia
Clothing Company has initiated relationships with American based and offshore
manufactures and wholesale textile companies.
The Inertia Clothing Company offers a unique, team-oriented group of trend setting individuals gifted with “social”
intelligence, talent and good looks. We
are the youthful Southern California Lifestyle---“forging the fashions of the
new millennium.”
4. Product
Strategy
Inertia Clothing Company was founded in 1990, in San
Diego, California, by Nathan Paul Horner, a student at an International art
school, and a graphic artist for H-street skateboarding company. At that time,
he had the vision of a clothing company with the name Inertia, --- meaning, “The tendency of anything in motion to stay in motion”. In the early 90’s, Inertia Clothing Company acquired a
business license and applied for a trademark. T-shirts and stickers were made,
accompanied by advertising in Kema, a southern California surf magazine. There
were sales locally and at some Universities.
Nathan moved to
Virginia to be near his aging grandmother. During this time, his dream remained
alive. A few years went by -- graphics were created and T-shirts were designed.
In 1998, at the age of 31, Nathan adopted a professional approach to Inertia Clothing Company. By developing
a strategy, creating a web site and offering a limited product line of hats,
T-shirts and stickers, Inertia was in motion again.
We are currently
developing our sample product line, geared to boys and men ages 14 to 21.
Specifically, “Generation X and Y”--- free spirited, surfing, skating and
snowboarding enthusiasts who wear “beach culture” fashions --- casual,
comfortable, durable clothing, swimwear and accessories. Ravers, Punk rockers, or Gang Bangers are not our intended market. The first
year, we will produce a variety of shorts, shirts, jackets, sweaters, pants,
jeans, cords, hats, beanies, sports bags, and accessories, --- and possibly,
some hemp products. We will utilize the global textiles market, importing
various fabrics and prints for use in the manufacturing of our products ---
thus giving us a global appeal.
Planned Products
Inertia Clothing Company plans to continually develop new products
and enhance existing products. It is
our philosophy that our product be improved every six months in order to
maintain its competitive position, market value, and price point. We must maintain our ability to innovate as
changes occur in the market environment, in the needs of our customers and in
our own capabilities.
In response to demonstrated needs of our market, new products
being developed in the near future include:
1)Windbreaker jacket
-Exterior-synthetic/nylon (wind proof maaterial)
-Inner
fleece/polyester lining
-Two hand
pockets which close with plastic zippers.
Fleece lined
-Front
zipper, plastic, large gauge, Inertia logo will be on zipper
-cuffs with
custom Inertia button closure
-winged-collar
2)Full-fleece(polyester) pull-over jacket
-Quarter-zipper with Inertia logo,
large gauge, plastic
-"Inertia" embossed on
polyester blend
- Loose elastic cuffs
-hood, fleece with pull-string with
plastic grip-buckle
3)Basic hooded
sweatshirt
-100% thick pre-washed cotton
-embroidered with graphics
-large gauge, full-length plastic
zipper with Inertia logo
4)Hooded quilted jacket low cut (2 versions)
-1) synthetic blend exterior 2) large
cord exterior without hood
-waterfowl
filled quilted synthetic interior
-Hood includes pull-string with
plastic grip buckle
-two large chest pockets with button
down covering flap
-two deep hand pockets lined with a
comfortable blend
-Inertia labels and embroidery
5/6)Pants(cords/jeans)
and similar shorts design
-Baggy cords tapered (thick gauge
cord), Brushed bull denim, brushed twill
-Two pockets in the back
-two deep hand pockets with synthetic
lining
-plus other cargo pockets in design
-custom Inertia button above metal
zipper
7)Boarding shorts
-synthetic blend/nylon
-mesh in bottom of pockets to allow
sand to escape
-draw-string waist
-cargo pockets
8)Windbreaker pants
-wind proof material with mesh/nylon
as accents for design purposes.
-Hand pockets, synthetic lining
-multi-compartmental cargo pockets.
9) Short-sleeve
Hawaiian style shirts
-button down,
custom Inertia buttons
-100% cotton
custom print fabric
-One pocket,
front-left (no button)
-Side label
Inertia tag on pocket
10) Novelty woven
blend shirts (short and long sleeve style)
11) knit sweater
-thick woven blend
-long loose sleeves
12) Flannel shirts
-long sleeve
- 2 buttoned
chest pockets
- button
cuffed sleeves
13) Long and Short Sleeve 100% cotton t-shirts with Inertia graphics
14) Travel bags
-backpacks for global travelers/surf
trips
-multi-compartmental pockets with mesh and
synthetic fabrics
-smaller version for campus/day pack use
At
the 1999 Ocean Beach Street Fair and the 1999 ASR Trade Show in San Diego (the
largest of its kind in the World), Inertia Clothing generated significant
interest through the use of promotional flyers, thus promoting the web site and
sales of t-shirts, hats, and accessories.
The following retailers carried the initial line of Inertia
Clothing products in the Summer of 1999.
Interest and sales were overwhelming.
Although there was insufficient capitol for a large-scale advertising
and promotions of the Inertia Clothing website (www.inertiaclothing.com) in
1998-1999, there was direct response purchasing.
1)
Atomic Trading Company
1036 Garnet Ave.
Pacific Beach, California. 92109
Tel:
619-272-8822 Fax:
619-272-8898
Contacts:
Owner-Anne Labrador Manager - Eric
2)
Ocean Beach Surf Shop
4885 Newport Ave. San Diego, California. 92107
Tel: 619-225-0674 Fax: 619-225-0696
Contact: Joe Ghio
3) Swoozy’s
1857 Bacon St. Ocean Beach,
California.92107
Tel:619-523-5801
Contact:
Owner-Sunny
4)
Aquarius Surf-n-Skate
747 Pacific Beach Drive San
Diego,California.92109
Tel: 619-488-9733
Contact: Jeffrey Strunk
5)
Chameleon Hair Lounge
4760½ Voltaire St. Ocean Beach, California. 92107 Tel: 619-223-7006
Contact: Owner- Evette
Market research and recent sales associates presentations to surf
shops and boutiques demonstrate and ability to close 75% of the outlets exposed
to the Inertia Clothing Presentation.
Research and
Development
Much of the time and effort at Inertia Clothing was spent on
product research and manufacturing process development.
Inertia Clothing Company regularly visits surf-shops, malls, and
boutiques to thoroughly examine hot market items, which will increase the
growth of the company by keeping us in touch with changing trends in
fashion. In order to promote the speed
and innovation of our new product line, Inertia management is committed to the
following:
·
Raise product and customer service quality standards;
·
Conduct comprehensive market research for targeted domestic and
international markets;
·
Establish “factory direct” international distribution for our
products;
·
Introduce products that enhance the lifestyles associated with
Beach Culture and Action Sports Lifestyles.
Barriers to
Entry
Inertia Clothing Company has exclusive patent and trademark
protection provided by beneficial access to intellectual properties held by the
owner and founder of Inertia Clothing, Nathan Paul Horner (Documents dating
back to 1990).
Additionally, Inertia Clothing Company intends to significantly
penetrate all current potential markets with our initial product offering. Our strategy is to bring an appropriate
brand name (Inertia), theme/motto (Perpetually Positive) and a
creative and innovative product line and management team. We will sponsor and promote some of the best
athletes and musicians in the world by direct association with our product,
thus establishing our brand image and targeting our market.
Partnership and
Joint Ventures
Full advantage will be made of a strategic alliance with a major
full-service manufacturer to accomplish production of superior products at
competitive prices.
We will use outside material providers when they have resources
useful to expedite the development of an Inertia Clothing product. They will be selected based upon their
expertise, active participation, reputation, and success in their field, plus
overall quality of their materials.
When beneficial, we seek to blend the ideas and components of
several designers and suppliers to create an optimum hybrid product yielding
the most benefits to our customers.
Production
and Delivery
Production
Inertia Clothing Company is currently in contact and researching
manufacturing and production options in America and overseas. Inertia Clothing Company provides graphic
artwork for clothing, hangtags and custom buttons and zippers.
5. Market Analysis
Market Definition/Industry Analysis, Domestic U.S. Market
Participation in Action Sports spans vast age and income
categories.
Today there are
nearly 22 million teen males in the U.S. influencing $246 billion in household
spending and in 1997, independently this group spent $91.5 billion (TransworldSurf.com).
According to Robert B. McKnight, Jr., chairman of the board and
chief executive officer of Quicksilver Inc., Quicksilver, a leader in the
Action Sports apparel industry, had in increase in their net sales from
78,265,000 to 105,160,000. This is an
increase of 34.4% in one year.
Pacific
Sunwear of California Inc. (Nasdaq:PSUN) reported sales of $34.0 million for
the four-week period ended Nov. 28, 1999, an increase of 40.4% over sales of
$24.2 million for the comparable four week period ended Nov. 29, 1998. Same
store sales increased 10.5% for the period.
Action
Sports Industry Growth Factors
“Industry
shows Strong. Surf companies, shops
upbeat about future. It is a relatively
good summer on both coasts, with enough warmth, sunlight and surf to keep the
retailers positive about the industry.
After the two major surf trade shows in September, the overall mood is
continuing optimism and growth in the surf market” (Transworld Surf Business, October 1999).
Alison Cutler, national sales
manager and director of marketing for an Encinitas based women’s beach wear
clothing company, Watergirl, states that their sales are under a million
dollars but is expected to be at three-million within a year (Transworld Surf
Business, October 1999).
World Market
Textile
& Apparel Trade Balance Report*
Millions
of Dollars
(January-November)
World
15,612
Canada 3,084
Mexico 4,895
China 75
Korea,
South 93
Hong Kong 226
Taiwan 56
Japan 366
UE15 -21.09
ASEAN -124
CBI -3.69
LDDC
exc. Haiti -29.95
* [Source: 1999; U.S. Department
of Commerce Report. Apparel totals only]
6.
Marketing
Plan
Inertia
Clothing Company’s marketing strategy is to propose, promote and support the
fact that Inertia offers the Action Sports enthusiast clothing and accessories
that will make the consumer feel positive, and full of California energy
“STOKED”. We will sponsor athletes, models, musicians and DJ’s as they are our
markets mentors. By advertising and producing events we will create a unique
brand image that will draw in our target market. We aim to market to not only
the core surfing, skateboarding, snowboarding markets, those who are active
participants in the sports, but also those who support Action Sports and
beach-lifestyles and may not be participants in board-sports but are influenced
by the sports and the lifestyle they represent.
The
overall marketing plan for our product is based on the following requirement:
“By purchasing and wearing Inertia Clothing
Company products, individuals will be associated with our brands’ perpetually
positive image, active lifestyle and innovative fashions. We will
hereby improve the customers’ persona.”
Inertia Clothing Company will achieve a broad education and
distribution of its product through a viable, dynamic and continually upgraded
marketing campaign. Initial Inertia
product presentation will include both multi-media advertising and
multi-channel distribution. This will
be accomplished through a complete nationwide instructional sales program using
the following resources:
·
Integrated
direct marketing on the Internet (www.inertiaclothing.com)
·
National ad campaigns in magazines and
internet sites such as --- Surfer,
Surfing, Transworld Surf,Transworld Snowboarding,Blue Torch, Transworld
Skateboarding, Heckler, Warp, details, In Style, The Hut.Com, Eastern Surf,
Revolt in Style, Etc.
·
National
and regional Action Sports specialty catalog distributors
·
National
and international wholesale distributors
·
Sales
and marketing representatives
·
Independent
manufacturer sales representatives
Our
introduction of consumer education and product information will be provided by
a direct response marketing campaign which will target the peak summer months
in the United States. A national
advertising campaign, in prominent nationally distributed consumer magazines
and newspapers, will provide additional pull-through into the market for both
retail outlet sales and direct response marketing.
To
further advance the image of our products and brand name, independent
manufacturers sales representatives and models will show and demonstrate the
features and benefits of our products and accessories. Additionally, a high impact point-of-sale
video derived from our television direct response marketing will be provided to
standardize and enhance the sales presentation. This point of sale video will also be our primary method of
introducing Inertia products to international distributors, trade members, and
media.
Inertia
Clothing Company will introduce its products as the beginning of a line of
products “that are consistent with our
brands’ perpetually positive image, active lifestyle and innovative fashions. We
will hereby improve the customers’ persona.”
The target market segments to focus upon an the means to reach them
are:
Boys and men ages 14-21/ Action Sports Enthusiast
·
Catalog sales
·
Online and Direct Response marketing
Action Sports
Events (X Games, Olympics etc.) and Beach Communities
Domestic
and International
·
Distributors and manufacturer sales representatives
·
Trade magazines
·
Promoters
·
Sponsored Teams
Our sales strategy is presently poised to take full advantage of:
·
the increasing market appetite for lifestyle clothing and
accessories;
·
the natural tendency to want to look and feel good in public
wearing the latest brand name fashions;
·
the tremendous present and future growth of the Action Sports
industry, including the opening of
435,000 square-foot indoor action-sports park in Anaheim, California in
mid to late 2001 (www.glaciersports.com).
Our
marketing position will take advantage of the gaps in the market and the
weaknesses of our competitors. We will
define our own position and plan for a strong tomorrow.
Sales Support
Collateral Materials
Inertia Clothing Company has developed collateral material to support
our sales efforts.
These items include:
·
Inertia Clothing Company product samples
·
Brochures presenting Inertia clothing and accessories
·
Four-color Inertia Clothing display box
·
Inertia Clothing Company stationary
·
Point of purchase posters and banners
·
Inertia Clothing Company logo laundry bags
·
Inertia Clothing Company logo canopy sales tent
·
Published price lists
·
Trade Show booth
·
Published media editorials.
Major Sales
Announcements
Notice of major contract agreements representing significant
relationships or sales, will be released to selected media as soon as practical
after the signing of agreements.
The
prices of our products are determined first and foremost by manufacturing and
delivery costs. Our price points are quite acceptable on the basis of perceived
value, a factor facilitated by association of the product with the established
Action Sports Apparel segment.
Suggested
price points:
Product Retail Wholesale
* Windbreaker jacket $70-$120 $42-$72
* Fleece Pull-over jacket $60-$100 $36-$60
* Hooded
Sweatshirt $30-$50 $18-$30
* Hooded quilted jacket
$150-$200 $90-$120
* Pants-cords $40-$130 $24-$78
*
Pants-denim $40-$130 $24-$78
*
Boarding shorts
$40-$60 $24-$36
* Windbreaker pants $50-$100 $30-$60
* Hawaiian style shirts $65-$90 $39-$54
* Woven blend shirt $40-$90 $24-$54
* Knit sweater $60-$100 $36-$60
* Flannel shirts $40-$70 $24-$42
* T-shirts with graphics $20-$30 $12-$18
* Travel bags $50-$250 $30-$150
Volume
discounts are considered for catalog distributors and mass merchandisers (for
purchases of sufficient volume to effectively reduce Inertia Clothing Company
operating margins).
Retail
The
average retail outlet desires a 30% to 40% gross profit margin on their new
products. Our average wholesale prices provide an attractive pricing
opportunity and a resultant 41% retail GPM. When providing product to company
house accounts (no intermediate involvement); this pricing affords Inertia
Clothing Company an Average 41% GPM for all products. GPM will increase to 46%
(wholesale).
Distributors
Distributors
will purchase/hold inventory and manage accounts receivable. Purchase orders will be accepted subject to
mandatory minimum order quantities and will establish terms requiring
wire-transfer date-of-ship payment. Distributors will receive a 25% discount
from general wholesale.
Manufacturers Representative
Manufacturer
representatives will be paid a maximum of 10% commission on sales to Action
Sports Retailers. Commissions for sales to retail chains and other large
distribution channels will be on a sliding scale ranging from 8% (500-1000
units) to 3% (5001 or more units); unit volume will be determined by total
volume ordered during the first year only, after which the account becomes an
in-house account. The highest commission paid to our manufacturer
representatives will result in a 31% GPM (average) to Inertia Clothing Company.
Direct response and Online
Marketing sales
Direct
response sales result in significant increases in GPM.
Inertia
Clothing Company sells products through multiple channels.
Distribution channels
expressing interest include:
·
Hardcore Enterprise pyt.ltd.
·
Podium Distribution
·
Circus Distribution
·
Syndrome Distirbution.com
The
following are determining factors in choosing our distribution channels:
·
Target
market segment(s) and customer-base demographics profile;
·
Geography
and depth of network;
·
Size
of customer-base;
·
Reputation,
integrity and image.
Inertia
Clothing Company has established an initial customer base of 5 accounts,
including:
·
Atomic
Trading Company
·
Ocean
Beach Surf Shop
·
Swoozy’s Boutique
·
Aquarius Surf-n-Skate
·
Chameleon
Hair Lounge
Numerous
retailers are expressing interest in our future products, direct and through
E-Commerce.
Because
top corporate managers make product acquisition decisions, it is important that
our company CEO, President and senior managers present product to these
customers.
Initially,
the majority of Inertia Clothing Company’s direct sales effort will be handled
by direct customer contact and independent manufacturer representatives.
Product pricing information and our company marketing literature will be
provided to this sales force to respond to anticipated customer interest in Inertia Products.
One
of the key elements designed into Inertia Clothing Company’s marketing plan is
the targeting of national and international distributors. We will select
distribution channels already in existence, which are staffed with
professionals possessing appropriate backgrounds and clientele.
Inertia
Clothing Company products are a perfect fit to any Action Sports distributor’s
business and to the well-being of the fact that these professionals are already
involved with parallel products and services and that they already have a track
record of positive results. Also, it is significantly less difficult for us to
reach their customers and educate them about the benefits available by
purchasing Inertia Clothing Company products.
By
operating within these distribution channels in this manner we can maintain
control of our market. In addition, we can generate growth at a reasonable pace
and obtain excellent sales results.
The global market will have access to Inertia
Clothing products via our web site (the Internet). The initial countries
targeted by Inertia Clothing Company outside the United States of America are
Japan, New Zealand, Bali, Spain, France, the United Kingdom as they are coastal
and are the largest customers of imported Action Sports Apparel and
accessories. Additionally, Australia is targeted as a large potential Pacific
Rim consumer of the Inertia products. Brazil and all Latin America is
considered a 5-10 year growth market, a market that will be fully penetrated by
Inertia Clothing Company.
The
primary means of international distribution will be established international
distributors of Action Sports Apparel and accessories.
Secondary
channels planned are through established international Action Sports Apparel
specialty catalogs. An important role of catalog distribution will be to create
market “pull-through” generated by increased consumer exposure.
Both
of these channels feature low cost and quick start-up.
Returns and Adjustments
Policy
For
direct-to-consumer sales, we will use the following policies:
"If not fully
satisfied with any Inertia Clothing Company product, you may return it for a
full refund within 30 days of receipt of product. Refunds are made on the
product plus applicable taxes, including shipping costs."
"Credit card refunds
will be credited to your account and cash/check payments will be refunded
within 10 days of receipt of returned merchandise in good condition.
Advertising and Promotion
Inertia
Clothing Company recognizes that the key to success at this time requires
extensive promotion to customers. This must be done aggressively on a wide
scale. Advertising will be done independently and cooperatively with
distributors, retailers and companies with whom Inertia Clothing Company has
joint marketing/sales relationships.
Objectives
·
Position
Inertia Clothing Company as the leading supplier of Action Sports Apparel and
accessories to target market segments;
·
Increase
brand identity and brand name recognition among Action Sports enthusiast,
corporate managers, owners and buyers for mass merchandisers, surf shops,
boutiques, and retail outlets, Action Sports events and facilities, specialty
catalogs and other specialty stores;
·
Generate
qualified sales leads and potential new distributors for field sales
organization(s);
·
Develop
significant market research information to generate immediate and long-term
marketing plans;
·
Create
product-advertising programs supporting "by
purchasing and wearing Inertia Clothing Company products, individuals will be
associated with our brands’ perpetually positive image, active lifestyle and
innovative fashions. We will hereby improve the customers’
persona.”
·
Coordinate
sales literature, demonstration materials, and direct response promotions in
order to achieve a new Perpetually
Positive mindset by educating the Action Sports industry and Action Sports
Enthusiast worldwide of the upgrade in self-image, associated with our products
and brand image.
Media Objectives
·
Impart
awareness of Inertia Clothing Company, increase brand identity and brand name
recognition among Action Sports enthusiast, corporate managers, owners and
buyers for mass merchandisers, surf shops, boutiques, and retail outlets,
Action Sports events and facilities, specialty catalogs and other specialty
stores;
·
Establish
the image of Inertia Clothing Company as an organization that is professional,
reliable, and highly positioned in the market;
·
Maximize
efficiency in selection and scheduling of published advertisements to cover
both consumer and trade markets.
Media
Strategy
·
Select
and utilize primary Action Sports publications with high specific market
penetration ( Surfer, Surfing, Transworld
Surf, Transworld Snowboarding,Blue Torch, Transworld Skateboarding, Heckler,
Warp, details, In Style, The Hut.Com, Eastern Surf, Revolt in Style, etc. );
·
Schedule
adequate frequency of ads to achieve market impact with Inertia Clothing
Company logo/image and product messages (
motto: Perpetually Positive);
·
Where
possible, position advertising in or near beach lifestyle, and/or sports
sections of national newspapers;
·
Take
advantage of special high-interest issues of major sporting event publications
when possible.
To
get to the most out of our promotional budget, our initial media strategy will
be to focus on the direct response market audience through the promotion of
events, and sponsorship of athletes, and musicians. These athletes, and
musicians to be used in 30 or 60 second
commercial advertisements on nationwide cable/satellite television
(MTV,VH1,ESPN,BLUETORCH.COM)and direct-to-consumer mail. As provided within our
marketing budget, we will also initiate direct response advertisement in
various appropriate publications such as Surfing, Skateboarding, and
Snowboarding magazines. We will run 1/4 to 1/2 page ads in color, ads expanding
to full page as revenues and operating margins increase.
We
will develop an advertising campaign built around product innovation and
competitive advantages derived from wearing our clothing, and associating
yourself with our brand image. Beginning with "who we are" statement and supporting it with ads that
reinforce Inertia's message/motto "Perpetually
Positive". We support Green
Peace, Surf Rider Foundation and other environmental organizations. Executed
properly and according to plan, we will develop a consistent reach and
frequency throughout the year.
Advertising Campaign
The
best way to reach our potential customers is to develop an intense adverting
campaign promoting our basic premise, "by
purchasing and wearing Inertia Clothing Company products, individuals will be
associated with our brands’ perpetually positive image, active lifestyle and
innovative fashions. We will hereby improve the customers’
persona.”
To
establish our company image, the delivery and tone of our statements will be
high-tech, radically with the times and new trends, presenting an active
Generation-X/Y lifestyle.
Ideally
after becoming familiar with our products, the consumer will log on to our web
site (www.inertiaclothing.com)
and order our products using their credit cards.
Business Location
Inertia
Clothing Company’s’ operation base should be placed in a beach community such
as La Jolla or Pacific Beach. With this
placement, we will be in our element, easily viewed and contacted by our target
consumers. A work/live situation would
be ideal.
7. Financial Plan
Assumptions
Attached
historical data presents actual figures based upon performance of Inertia
clothing Company's introductory products (hats, t-shirts, and stickers).
Cash
flow projections cover the five-year period from (year of ?) to (year of ?), hereafter as "Year 1" through"Year 5".
Projections are based on the assumption that infusion of capital as described
herein will generate accumulated net income between years 5-7 sufficient for
the investor to recoup total investment.
Financial Statements
Inertia
Clothing Company, being a company run on very little capital since 1990, has
only begun to record financials in the last year of commerce 1998-1999
financial statements/documents are provided within.
Summary/Analysis of
Financial Statements
The
following table highlights the primary income-related items:
Year ? ? ? ? ?
Total Sales
$800,00
$2,400,000
$6,000,000 $15,000,000 $45,000,000
% Growth 100% 200% 150% 150% 300%
Gross Profit-Dollars $320,000 $1,080,000 $2,880,000 $7,200,000 $21,600,000
Gross Profit % 40% 45% 48% 48% 48%
Operations–Dollars $307,520 $972,000 $2,419,200 $5,976,000 $17,928,000
Net Income – $12,480 $108,000
$460,800
$1,224,000 $3,672,000
Dollars
Net income % 3.9% 10% 16% 17% 17%
Revenues include
acquisitions and/or strategic alliances.
Capital Requirements
Execution
of this plan is flexible dependent upon amount of capital raised, which will
effectively determine a meaningful time frame for achievement of our
objectives. A reasonably aggressive approach
to market introduction requires equity capital in the amount of $1,000,000.
Availability of funding in this amount will firmly establish brand and product
presence and will set the stage for growth in the future. Upon demonstration of
performance according to sales projections, the company may desire to
accelerate the growth process by acquisitions. This will require additional
capital to enable Inertia Clothing Company to rapidly increase production,
marketing and distribution capabilities as dictated by market response and
sales growth. An IPO is planned as additional procurement of required capital.
The Company may also acquire a debt instrument for planned growth. The
investors will achieve substantial ROI after IPO.
The
sale (via NYSE and e-trade) of up to 20% of the authorized stock in Inertia
Clothing Company will enable the company to satisfy the capitalization
requirements identified within Business Plan.
The
level of safety is high for the funding we are requesting based on management's
educational backgrounds and substantial prior experience in obtaining positive
results. Additionally, market research clearly identifies Inertia Clothing
Company as the right brand name and image to market Action Sports Apparel and
accessories into the next millennium. With products at the right price and a
company that promotes being "Perpetually
Positive" we will establish an image and attitude not yet manifested
by any other company in the world. Our confidence in meeting and surpassing the
attached financial projections is extremely high.
Use of Proceeds
Dollar
Usage
Acquisition Capital $
1,000,000
Advertising $250,000
Marketing $350,000
Facilities $100,000
Operating Capital (Two Years) $500,000
Reserve Capital
$300,000
Total $
2,500,000
________________________________________________________________________
(1)
Fee's
include broker commissions, legal and accounting expenses, and
registration/membership fees (TALA- Textile Association of Los Angeles).
(2)
This
working capital will be used to pay Company's day-day operating expenses,
including the salaries and related expenses for developmental strategies.
Payback / Exit Strategy
The
financial projections indicate that recapture of initial investment will be
achievable within three years through redemption provisions established upon
issuance of Preferred Stock. Execution of convertible stock options at the
discretion of the Investor further provides for additional Investor profit
participation and will also allow capital "roll-over" as fuel for
continued growth.
An
alternate exit strategy exists in the form of an Initial Public Stock Offering
and execution of provisional redemption options will be triggered immediately
following IPO.
Conclusion
Based
on the attached financial projections, we believe that this represents a sound
business investment.
Expense projections
February through December (year
of ?)
Cost
of Goods Sold
400,000.00
Consulting
Fees 50,000.00
Dining
and Entertainment 2,000.00
Insurance
Expense 15,000.00
Legal
and Professional Services 10,000.00
Office
Lease Expense 18,000.00
Office
Supplies and Utilities 6,500.00
Website
and Online Communications 10,000.00
Payroll
Expenses 1,000.00
Payroll
Taxes 10,000.00
Postage,
Shipping Expenses 10,000.00
Printing
Expenses 100.00
Repairs
and Maintenance 1,000.00
Research
and Development 10,000.00
Salaries
and Wages
250,000.00
Advertising
250,000.00
Marketing
and Promotions
350,000.00
Sales
Rep, Fees/Commission 3,000.00
Storage
Expenses 500.00
Transportation/Travel
Expenses 5,000.00
Vehicle
Lease/Auto Expenses 10,000.00