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BUSINESS PLAN: 3D ADDITIVE MANUFACTURING TECHNOLOGIES, CO. – 3-DAM TM Starting A New Venture – MGMT 6630 Joe Ott 7-18-2012.

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Presentation on theme: "BUSINESS PLAN: 3D ADDITIVE MANUFACTURING TECHNOLOGIES, CO. – 3-DAM TM Starting A New Venture – MGMT 6630 Joe Ott 7-18-2012."— Presentation transcript:

1 BUSINESS PLAN: 3D ADDITIVE MANUFACTURING TECHNOLOGIES, CO. – 3-DAM TM Starting A New Venture – MGMT 6630 Joe Ott

2 BUSINESS CONCEPT 1. INTRODUCTION 1.2. BUSINESS IDEA 1.3. BUSINESS MODEL 1.4. BUSINESS GOALS 1.5. KEYS TO SUCCESS 2. THE COMPANY 2.1. LEGAL STRUCTURE AND OWNERSHIP 3. PRODUCTS / SERVICES 3.1. PRODUCT AND SERVICE SUMMARY 3.2. CUSTOMER 3.3. TECHNOLOGY 3.4. REGULATORY ISSUES 4. THE MARKET 4.1. MARKET ANALYSIS 4.2. TARGET MARKET SEGMENT 4.3. GROWTH POTENTIAL 5. THE INDUSTRY 5.1. COMPETITION 6. SALES 6.1. SALES STRATEGY PRICE STRATEGY 6.3. PROMOTION STRATEGY 6.4. SALES FORECAST 7. THE MARKETING PLAN 8. MANAGEMENT AND EMPLOYEES 9. ACTIVITY PLAN 10. FINANCE AND ECONOMY FIGURES BACK UP SLIDES

3 1.2. BUSINESS IDEA The business idea behind 3-DAM TM is to cross additive manufacturing technology with the Kinkos TM concept. Customers contact store by appearance, , web submission Business would staff trained engineers and technicians to assist customers in selecting the correct technology to manufacture their hardware BUSINESS MODEL Sole Proprietorship during the initial start-up phase Would initially target a small volume of jobs, applying a medium margin. Diversification Growth Strategy - 3-DAM TM would practice Forward Integration by getting in front of the customer 1. INTRODUCTION - With 3-DAM TM comes manufacturing freedom!!

4 From ASTM Designation: F2792 – 10 - Standard Terminology for Additive Manufacturing Technologies 2 Why pursue additive manufacturing? There are many benefits in using additive manufacturing to make hardware over conventional manufacturing 5 : Design flexibility No tooling constraints Allows complex models No hard tooling required No material lead time Automated process Reduced development expenses Faster concept design to functional component Reduced manufacturing costs Near wrought material properties Reduced product life cycle cost Reduced manufacturing time: hours/days/weeks vs. months Minimal secondary machining - near-net shape part Additive manufacturing is an emerging industry. Some of the difficulties with additive manufacturing are: New technology – not everyone is familiar, technology evolving High barriers to entry – initial high start-up costs for equipment Material properties are still being defined Technical and process models are limited 1. INTRODUCTION - With 3-DAM TM comes manufacturing freedom!! Picture courtesy of Rapid Quality Manufacturing 5

5 1.4. BUSINESS GOALS 2 years of operation: Increase market share – establish 4 stores in largest US manufacturing locations (Houston, TX; Milwaukee, WI; Seattle, WA; San Antonio, TX) 4 Increase market penetration over time –grow each stores revenue at least 12.5% yearly Establish new pricing incentives and promotions Build long lasting quality partnerships Advertising Join Committee F42 on Additive Manufacturing Technologies 1 6 years of operation: Increase market share – establish a store in 10 major US cities. Have plan developed to have 50 stores in major US cities by 10 years of operations. Increase market penetration over time – continue to grow revenue at least 12.5% yearly, per store KEYS TO SUCCESS Flexibility – providing solutions for variety of customer and their unique requirements. Adaptability – have technology and capability for variety of needs. Sustained Growth – have capacity where and when a customer needs it. Technical Know-how – have understanding of how to use additive manufacturing technology to provide best results. Speed – providing solutions faster and more efficient than anyone else. Funding – have cash and capital to sustain growth and profit. 1. INTRODUCTION - With 3-DAM TM comes manufacturing freedom!!

6 2.1. LEGAL STRUCTURE AND OWNERSHIP 3-DAM TM will be listed with the Internal Revenue Service as a sole proprietorship The principle owner (and equity shareholder) will be Joe Ott. Minor equity shareholders (<49%) will be silent partners 2. THE COMPANY - With 3-DAM TM comes manufacturing freedom!! Figure 1. – Basic Organizational Structure

7 3.1. PRODUCT AND SERVICE SUMMARY Plastic and metal parts and concepts, produced in a few hours or days, using additive manufacturing technologies Evaluation and modification of designs/CAD and concepts for application to additive mfg. Coordination of post processing. Metrology center – accurate measurement evaluation 3.2. CUSTOMERS The target customers are everyone from local hobbyist and enthusiast to large Fortune 500 companies needing unique part developed and produced. The current market doesnt have local to-go-to places to get all your materials and additive manufacturing methods and post-processing under one roof. All competition is located in a few select areas 3-DAM TM would provide a place for customers to have one-stop-shopping for their manufacturing. Customer(s) can contact the business center by phone, web, or face-to-face. Sales engineers would be available to help customers work through product development and iteration until the final product is ready. Pricing would be evaluated based upon the necessary amount of engineering and development to make hardware, material considerations, and post processing requirements. 3. PRODUCTS / SERVICES - With 3-DAM TM comes manufacturing freedom!!

8 3.3. TECHNOLOGY Powder Bed Technologies - Powder Bed is the distribution of thin layer of powder (metal or thermoplastic) and uses an energy source to sinter/melt the powder into solid form. Powder Bed Technologies offer high resolution, medium volume, small to medium sized part capabilities. Two common methods are: Selective Laser Melting – laser beam power source in an inert atmosphere (nitrogen or argon) Electron Beam Melting – electron beam power source in a heated, vacuum environment Deposition Technologies – Metal is introduced via powder nozzle or wire feed into an energy source directly at the build location, which melts to metal into solid form. Deposition Technologies offer lower resolution, lower volume, larger sized part capabilities. 3 common methods are: Laser Powder Deposition – laser/power nozzle combination Laser Wire Deposition – use of a continuous feed wire and laser energy source Electron Beam Wire Deposition – use of continuous feed wire and EB energy source Specialized Software – (CAD/CAM, 3D model analysis, project/customer management) will be required to seamlessly integrate customer models between additive mfg. platforms and required post processing technologies REGULATORY ISSUES "Green Technology" PPE Inert Gases Intellectual Property 7 Product Liability 7 3. PRODUCTS / SERVICES - With 3-DAM TM comes manufacturing freedom!! Pictures courtesy of EOS (http://www.eos.info/en/home.html), Arcam (http://www.arcam.com/), and Optomec (http://www.optomec.com/)http://www.eos.info/en/home.htmlhttp://www.arcam.com/http://www.optomec.com/

9 Potential CustomerYear 1Year 2Year 3CAGR Sm. Business ,30% Lg. Business ,48% Hobbyists ,29% Total ,30% 4.1. MARKET ANALYSIS Wohlers Associates Inc. - Additive manufacturing had a total of market size of $1.7 billion worldwide in Emerging Industry - Additive manufacturing can be considered an emerging industry in the US TARGET MARKET SEGMENT Small Businesses - 2+ years old (generally wouldn't be start-ups in their first year) Income - Have manufacturing costs >$1000 per part. Need - need fast parts made, short runs Education - need to understand hardware end requirements. Work - manufacturing, research, engineering, automotive, etc. Geographical location - in key starting cities, some internet sales. Large Business - 2+ years old Income - Have manufacturing costs >$1000 per part. Need - need fast parts made, short runs, development iterations Education - need to understand hardware end requirements. Work - manufacturing, research, engineering, automotive, etc. Geographical location - in key starting cities, some internet sales. Hobbyists - Age - 16 years or older Income - able to afford part costs between $100 and $2000. Need - generally have a concept they want to make or need a replacement part for one that broke Gender - male and female Education - majority expected to have some college and / or trade school Work - professionals and trades Geographical location – key US manufacturing centers / cities, some internet sales GROWTH POTENTIAL Additive Manufacturing, aka 3D Printing, will reach $3.1 billion worldwide by 2016 and $5.2 billion by If 3-DAM TM can capture even 1% of this market that would be $31 million dollars in revenue. 5% growth in revenue the next year would result in $32,550,000 of revenue, per store. 4. THE MARKET- With 3-DAM TM comes manufacturing freedom!! CAGR- Compound Annual Growth Rate

10 5.1. COMPETITION - Other companies trying to adopt the Kinkos model are: Mydea Technologies – digital model shop and an additive manufacturing and rapid prototyping provider. Owners: Michael Siemer Annual Sales: $520K Competitors distribution channel: Internet Competitors marketing strategy: Internet Sales Products and Services: Product Development & 3-D CAD Modeling, Rapid Prototyping/Additive Fabrication, Subtractive Rapid Prototyping, Rapid Tooling & Manufacturing Competitors price strategy: mid to high cost. Shapeways – 3D Printing company for designers and Do-It-Yourselfers. Helps people make and sell their items. Owners: Peter Weijmarshausen Annual Sales: $1.90M Competitors distribution channel: Internet Competitors marketing strategy: Internet Sales, Arts and Crafts forums, Web sales of clients products, Do-It-Yourself market. Competitors price strategy: Low to mid cost. Products and Services: Tutorials, Shapeways Lab, Software, Metals and plastic fabrication, Online Sales. The following companies are a selection that specialize in additive technology and would be competition for their prospective sub-fields: Morris Technologies - – Selective Laser Sintering (SLS) metalshttp://www.morristech.com/ C&A Tool - – SLS metals and machine shophttp://www.catool.com/ Paramount Industries – - Stereolithography (SLA) and SLS of plasticshttp://www.paramountind.com/ Materialise - - a Belgian firm that uses additive manufacturing to make a range of products, including medical devices.http://manufacturing.materialise.com/ 5. THE INDUSTRY - With 3-DAM TM comes manufacturing freedom!!

11 SalesYear 1Year 2Year 3 Sales Engineering Powder Metal Powder Plastic Total sales Direct costs, sales Sales Engineering Powder Metal Powder Plastic Total, direct costs, sales SALES STRATEGY It is envisioned that customers would contact a local 3- DAM TM business center to initiate a job PRICE STRATEGY Pricing would factor in the costs of overhead, materials, and per hour cost for machines and personnel. A profit mark-up of 30% will be added to each job PROMOTION STRATEGY Sales will be generated through advertisement and campaigns. The campaign will utilize TV, trade journals, and the internet (web pages, FaceBook, etc.) SALES FORECAST Based 3 major products/services: Sales Engineering, Fabricated Metals, and Fabricated Plastics. Projected the amount of sales revenue generated by the average increase in customers each month times the expected revenue each customer would generate. YR 2 accounts for 4 stores in key cities. YR 3 accounts for 5 stores in key cities. Expect average growth of 12.5% per year for each store. Cost of sales is the overhead for the sales engineers and technicians plus an estimated monthly operating cost for the metal machines of $4000 and plastic machines of $3000. These numbers are based upon a best scenario. 6. SALES - With 3-DAM TM comes manufacturing freedom!! Sales monthly

12 As part of a Diversification Growth Strategy 3-DAM TM would practice Forward Integration. As the customer is the focal point for the business model, 3-DAM TM offices will be targeted close to the customers. Customers will be contacted through advertisement and campaigns. The campaign will utilize TV, trade journals, and the internet (web pages, FaceBook, etc.). Highlights of ads will target design freedom, no or low tooling, and speed. Additionally, small to large manufacturing companies will be approached. A marketing group will be selected to assist in the marketing campaign on a yearly contract. A $100k budget will be set for marketing. The marketing campaign will start in June 2013 and continue through December THE MARKETING PLAN - With 3-DAM TM comes manufacturing freedom!!

13 CEO / CTO - complete oversight and responsibility for the company as well as technical authority. CFO - direct oversight of the following reporting line: Accounting, Patient Accounts, Communications, Purchasing, Printing & Duplicating, Information Management, Management Information Systems. Accounting and Human Resources - Accounting and Human Resources will be outsourced to a 3 rd party company and overseen by the CFO. The company will be responsible for all day to day accounting and human resources activities, including accounts receivable and payable, health and dental care, 401k management, and taxes, etc. The company should have experience with accounting and HR in all US states. It would be preferred if the company has experience with start-up companies. Technology Team – Materials Engineer, Technology Researcher, Training/Quality Responsibility for moderately complex engineering projects, Serves as consultants, providing technical information and engineering recommendations that assist various projects and processes and materials. Coaches and trains less experienced engineers and technicians. Branch Manager(s) – oversee branch offices and perform sales Employees Sales engineers – customer interface, engineers marry up technology to customer needs. There will be 2-3 per store. CAD and Build technicians – modify designs to make technology friendly, operate and run machines. There will be 1 per machine and two CAD operators per store. Post processing technicians - provide any necessary post processing and coordination. There will be one per store. Shipping/Receiving – ship and receive hardware, supplies, etc. There will be one per store. 8. MANAGEMENT AND EMPLOYEES - With 3-DAM TM comes manufacturing freedom!!

14 This section describes some activities that will be needed to implement the whole or parts of the business plan. Order and Install Machines – machines and installation at $1,000,000 a- piece. 1 plastics, 2 metals, 1 metrology and inspection, 1 oven and autoclave = $5,000,000 Store – 15,000 sq. ft. * $ per foot per year = $52,800. Plus $1,000,000 for upgrades and office requirements. Equals $1,052, Hire Accounting / HR - $100,000 Supplies - $100,000 Advertising Campaign - $100, ACTIVITY PLAN - With 3-DAM TM comes manufacturing freedom!! ActivityStart dateStop dateBudgetResponsibleDepartment Order and Install Machines 03/01/201306/01/ CTOTechnology Team Store03/01/201306/01/ CTOCEO Hire Accounting / HR 01/02/201305/31/ CFOCEO Supplies03/01/201306/01/ CEO Advertising Co.04/01/201306/01/ CEOBranch Managers Total

15 10. FINANCE AND ECONOMY FIGURES - With 3-DAM TM comes manufacturing freedom!! Start-up Costs Research Technology Research Store Location Permits and Fees Marketing Study Total Start-up Costs Start-up funding Bank Loans Bank Loans Other Investors Grants Government Loans Total Start-up funding Total Equity The following are Seed Capital funding expenses that will be incurred prior to the business starting: The following describes all the Start-up through Second Stage funding (existing and needed) for the project: Bank Loans – $3,000,000 – Secured against the procured equipment. Equipment, Real-estate, and Long-term loans. Angel Investors – $2,000,000 Other Investors – $2,000,000 – Informal Risk Capital, Venture Capital Grants – $2,000,000 – SBIR - Phase I and Phase II, Fed, State, Local. Government Loans - $1,000,000 – SBA (504, SBA), etc. Total: $10,000,000 Third stage (growth) funding would be necessary for expansion beyond the first store and would be necessary at last quarter 2013.

16 10. FINANCE AND ECONOMY FIGURES - With 3-DAM TM comes manufacturing freedom!! Year 1Year 2Year 3 Sales Sale costs BTO profit BTO profit %17 %64 %67 % Expenses Salaries Additional Salaries costs Marketing and activity costs Depreciation Accounting / HR / Advertising Services Supplies (office and operating) Utilities, Web, IT, Phone Insurance Maintenance Plan Research Technology Research Store Location Permits and Fees Marketing Study Sum direct costs Financial costs-0 Profits before tax Profit before tax % % %-843 % PROFIT & LOSS TABLE Net profit monthly Net profit yearly

17 10. FINANCE AND ECONOMY FIGURES - With 3-DAM TM comes manufacturing freedom!! Balance Sheet Year 1Year 2Year 3 Current assets Liquid assets Sales Total current assets Fixed assets Fixtures and fittings & fixed assets Acc depreciation fixtures & fittings/fixed assets Total fixtures and fittings/fixed assets Total assets Liabilities Share capital & risk capital Accounts payable Accrued taxes Long-term liabilities 000 Balanced profit/loss Total liabilities & equity capital Profit for the year YR1 YR2 YR3 Current Ratio = *indicates low liquidity Debt Ratio = *indicates business while taking on more debt is working out of debt Debt to Equity = 1.32 *High capital industry/business Net Profit Margin = *indicates high initial risk but business becoming more stabile. ROI = *indicates high initial risk but business becoming more stabile.

18 10. FINANCE AND ECONOMY FIGURES - With 3-DAM TM comes manufacturing freedom!! CASH FLOW ANALYSIS Year 1Year 2Year 3 Liquid assets, incoming Liquid assets obtained from activities Sales Other earnings000 Total earnings from activities Other liquid assets obtained VAT and tax refunds Increase in accounts payable000 Increase in short-term liabilities000 Increase in long-term liabilities000 Sale of current assets000 Sale of fixed assets000 New capital increase000 Total liquid assets obtained Liquid assets spent Cash expenditure Total expenditure from activities Other liquid assets spent VAT and tax payments Reduction in short-term liabilities 000 Reduction in long-term liabilities000 Purchase of current assets000 Purchase of fixed assets Total liquid assets spent Net cash flow Liquid assets, outgoing

19 Back Up Slides

20 REFERENCES: 1. "ASTM International Technical Committee F42." ASTM International Technical Committee F42. N.p., n.d. Web. 17 July "Designation: F a - Standard Terminology for Additive Manufacturing Technologies." ASTM F a. ASTM, 17 July Web "Industrial Space Cost Comparison." Greater Houstono Partnership. Cushman & Wakefield, Third Quarter 2011, Web. June Kotkin, Joel. "Heavy Metal Is Back: The Best Cities For Manufacturing." Forbes. Forbes Magazine, 15 Dec Web. 17 July Liechty, Eli. "Commercial Benefits of Metals Additive Manufacturing for Aerospace Production." Midwest SAMPE. Mar Lecture. 6. "Manufacturing.GOV." National Network for Manufacturing Innovation (NNMI). N.p., n.d. Web. 17 July Marcus, Adam. "3D Printing: The Future Is Here." 3D Printing: The Future Is Here. The Technology Liberation Front, 10 June Web. 17 July McCue, TJ. "3D Printing Industry Will Reach $3.1 Billion Worldwide by 2016." Forbes. Forbes Magazine, 27 Mar Web. 17 July McCue, TJ. "Additive Manufacturing Will Change in the Next 5-10 Years." Forbes. Forbes Magazine, 02 May Web. 17 July Smartplan Generator Ver USA. EXECUTIVE OFFICE OF THE PRESIDENT. EXECUTIVE OFFICE OF THE PRESIDENT. A FRAMEWORK FOR REVITALIZING AMERICAN MANUFACTURING. Dec Web. June USA. National Science and Technology Council. Executive Office of the President. A NATIONAL STRATEGIC PLAN FOR ADVANCED MANUFACTURING. Feb Web. June Wohlers, Terry. "Worldwide Trends in Additive Manufacturing." RapidTech 2009: US-TURKEY Workshop on Rapid Technologies. Wohlers Associates, Inc, Web. June

21 One Store (Houston, TX) Ratios YR1YR2YR3 Current Ratio = *indicates low liquidity Debt Ratio = *indicates store is working out of debt Debt to Equity = 1.32 *High capital industry/business Net Profit Margin = *indicates high initial risk but business working toward stabilizing. ROI = *indicates high initial risk but business becoming more stabile.


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