Olivia Heo Capstone: The Business Plan May 13th, 2014

Olivia Heo Capstone: The Business Plan May 13th, 2014
H U M A N E HUMANE LIFESTYLE FOR HUMANE PEOPLE Hello everyone. My name is Olivia Heo. I am very happy to present my new brand, Humane, to you today. Last winter, I went to Seoul to visit my parents, and I cleaned and organized my old closet. I found a black hobo bag that I bought 10 years ago but I wore it less than 10 times in the past decade. It ended up with donation, but I wished that it got recycled somehow because I just didn’t like the shape, but the leather was in a perfect condition. My little story became my inspiration, and it was led to Humane’s initial idea, recycling leather for fashion accessories. Olivia Heo Capstone: The Business Plan May 13th, 2014

Olivia Heo | Capstone: The Business Plan | New York University

Why Recycled Leather? “ ” + Over 35 chemicals are used
Less killing animals Reduces landfills Helps protect the environment During traditional manufacturing processes: Every year, the global leather industry slaughters more than a billion animals and tans their skins and hides. -People for the Ethical Treatment of Animals (PETA) ” “ Defoamers Butadiene resins biocides Surfactants Degreasers Lime Sodium sulphide Soda ash Syntans Salt Fungicide Formic acid Resins Dyes Over 35 chemicals are used We recycle paper, cans and plastic, and why we can’t recycle leather? And it’s actually possible. we have three benefits when we recycle leather. We kill less animals, we prevent less leather wastes go to landfillds and we help protect the environment. Global leather waste 1,402,429 tons/year & 83,734 tons/year in North & Central America < Helps protect the environment: the leather industry has commonly been associated with high pollution due to the bad smell, organic wastes and high water consumption caused during traditional manufacturing processes <Ozgunay, H., et al. "Characterization Of Leather Industry Wastes." Polish Journal Of Environmental Studies 16.6 (2007): Environment Complete. Web. 1 Feb > Source: Global leather waste 1,402,429 tons/year 83,734 tons/year in North & Central America + High water consumption Wastes Generated in the Leather Products Industry by united nations industrial development organization Olivia Heo | Capstone: The Business Plan | New York University

Index Brand Industry & Competition Target Consumer Management & Operation Marketing Plan Financial Plan Appendix

Brand I am going to talk about business overview and the brand.

Business Overview Creates bags and small accessories using recycled leather that is collected from contracted suppliers, partnerships with a second-hand store company and customer donations Uses only materials treated in an environmentally friendly way Operates via a website and national vendors Donates percentage of April sales to Goodwill Olivia Heo | Capstone: The Business Plan | New York University

Mission Statement Humane is devoted to making simple and stylish lifestyle accessories using upcycled leather in order to reduce animal slaughter and pollution caused by the leather production process. Ethical business practices across all stakeholders will infuse our values into our products, and a team of experienced leather professionals will ensure each product is of the highest quality. We take the extra step by giving back to society, so our customers can be sure they are ultimately participating in responsible consumption. Olivia Heo | Capstone: The Business Plan | New York University

Mood Board Humane pursues simple and chick look, durable, suits everyday & business use. Leather scrap will be trimmed, died to maintain unified look, and will make a patchwork that looks simple and chick. Patch-work may create simple look, depending on how they are designed and treated. Olivia Heo | Capstone: The Business Plan | New York University

Brand Identity Humane wishes that consumers embrace recycle without feeling disparate Emotional Design Functional Sustainable Simple Everyday Logo: represents simplicity, gold font indicates Warm Urban Durable Responsible Stylish Unique Well-made Olivia Heo | Capstone: The Business Plan | New York University

Humane’s Product Range
Items Average cost Handbags $550 Briefcases $400 Wallets $300 Card cases & coin purses $200 Accessories $150 Tech cases $80 Key chains $50 The target audience, millennial aspirational consumer, has willingness to pay 10-25% premium, and Humane added up the premium at the average bag cost of its competitors. The average handbag price of competitors: $535.52 Humane handbag price: a 5% premium is added Olivia Heo | Capstone: The Business Plan | New York University

NUMBER OF INNER POCKETS
Customization Humane Custom-built Tote HANDLE LENGTH Handheld Over-the shoulder INITIAL ENGRAVING NUMBER OF INNER POCKETS 1 2 3 SIZE Small (10.5”H x 9.5”W x 5”D) Medium (12”H x 13”W x 6”D) Large (14”H x 16”W x 7.5”D) Affection: you use the bag more often, don’t get sick of it, COLOR Black Beige Tan Consumers will have Fun Favorable impression on upcycled leather products Affection towards their custom-built totes Olivia Heo | Capstone: The Business Plan | New York University

Corporate Social Responsibility
Second chance for people in need 10% of sales of April, Earth Month The leather tanning industry is one of the subject industries due to large amount of water to be disposed of together with a high pollution load. 3.4 million people die from a water related disease each year. The cost of building a well varies from $7,000 to $30,000. Minimization of water use and reuse applications within industry has recently gained importance within the context of water conservation efforts. The leather tanning industry is one of the subject industries due to large amount of water to be disposed of together with a high pollution load. The leather tanning industry has a complex structure in terms of materials, processes and manufacturing practices. Therefore a systematic approach is required to assess water use practice. In this study, bovine leather processing was taken as an example. An extensive study was conducted as on-site evaluations and questionnaires in the Istanbul Organized Leather Tanning District to assess water use practices, patterns and minimization trends. Results of the study were discussed and important aspects of water minimization practices have been pointed out. < Stronger partnership Humane will be related to green living and sustainability Stronger partnership with Goodwill can be built Olivia Heo | Capstone: The Business Plan | New York University 12

SWOT Analysis Strengths Competitive advantage – upcycle leather Positive brand image yielded by corporate social responsibility Handmade Design Weaknesses Brand awareness Management – small team Price Small number of vendor Humane Opportunities International opportunity Customers’ changed attitude toward responsible companies Increasing demand on green products Rebounding economy Threats Recession High competition Policies regarding the leather industry Olivia Heo | Capstone: The Business Plan | New York University

Points of Difference Green 1 Limited edition & serial number 2 Go green: recycled leather and eco-friendly packaging Limited edition: due to the nature of recycled leather, some leather produces limited number of products. Custom bag: fun, make recycled leather favorable, more affection Corporate social responsibility Low production cost: Recycled $37.90/yard, conventional leather $169 Conventional leather is 2-3 times expensive than recycled leather Custom built tote 3 Corporate social responsibility 4 Low production cost 5 Olivia Heo | Capstone: The Business Plan | New York University

Industry & Competition

Industry Size Leather good & luggage manufacturing in 2013
Industry Sales $4.1 billion 9.4% In 2013, leather good & luggage manufacturing yield $4.1 billion sales. Handbags and purses were a part of the sale segments at 9.4%.(=$385.4M sales) Source: IBISWorld Industry Report 31691, Leather Good & Luggage Manufacturing in the US, December 2013 Source: IBIS World Industry Report 31691 Leather Good & Luggage Manufacturing in the US December 2013 Olivia Heo | Capstone: The Business Plan | New York University

Industry Performance Current Performance Declined consumer demand during recession High price of leather Moving production to low-cost countries Spending on handbags rather than clothes High international demands: Exports made up 40% of total industry revenue in 2013 Source: Zeeshan Haider, IBISWorld Industry Report Leather Good & Luggage Manufacturing in the US Olivia Heo | Capstone: The Business Plan | New York University

Competitor Landscape Luxury Mass Recycled material Conventional material Kate Spade $300 Tory Burch $538 Coach $495.55 MK $465.75 Ampersand and Apostrophe $650 Looptworks $158.38 Olivia Heo | Capstone: The Business Plan | New York University

Niche Market Players Operated by a husband and a wife in Philadelphia Vintage design Interior items and small furniture for garden and kitchen, jewelry & bags 4881 Facebook page likes Founded in Seattle in 2010 Modern design Female handbags Use recycled leather for design challenge – most products rely on conventional materials 910 Facebook page likes Founded in Switzerland in 1993 Vintage and casual design Uses truck tarps  every bag has different look 87,413 Facebook page likes Founded in Portland Casual design Reuse the world’s pre-consumer excess and transform into apparel, bags and tech cases 5,806 Facebook page likes Olivia Heo | Capstone: The Business Plan | New York University

Competitive Strength Grid
Material type Product type* Price range** Distribution**** Finance Brand awareness*** Only recycled leather Standard Website, 2 national vendors (1st year) Establishing Anything recycled + < Website, 170 domestic vendors, including Anthropology unknown Strongest AMPERSAND AS APOSTROPHE Some recycled = Website, 28 domestic and international vendors N/A Freitag Recycled tarpaulin Website, 3 domestic and 596 international flagship stores and vendors Strong Mid-strong LOOPTWORKS Website, Amazon store Growing H U M A N E HUMANE LIFESTYLE FOR HUMANE PEOPLE *Product type: having Humane’s products offerings as a standard, ‘+’ indicates more items like apparel and interior decoration are available, and ‘=’ indicates similar offerings. **Price range: having Humane’s price range as a standard, ‘<’ indicates lower price range, ‘=’ indicates similar level of price range. ***Brand awareness: Brand awareness is estimated based on Google Trend in the United States between January 2013 and December 2013. **** Distribution: Compared the size of the US distribution Olivia Heo | Capstone: The Business Plan | New York University

Target Consumer

Target Consumer Aspirational consumers Demographics Age: millennials (18-35) Gender: both males and females Income: Mid- and upper-income ($50k-99k) Residence: Urban dwellers Education level: bachelor degree + Source: Mintel report -Those residing in the West are the most green-aware when it comes to major purchases -The most dedicated green shoppers (Super Greens—those who “almost always” buy green products), are the most concerned with others’ perceptions. Some 58% think it’s important to be perceived as “green.” -A positive company review on social networking sites (SNS) can have wide-reaching impact on purchasing. Mintel estimates that about 2.7 million year olds and 4.5 million year olds have switched to a more environmentally friendly product because of a friend’s posting on a SNS. Jennifer Psychographics Actively seek out ways to being green Green to be seen Green WOM on social media Guilt-free status Jason Mintel Report: marketing to the green consumer report March 2013 Olivia Heo | Capstone: The Business Plan | New York University

Target Consumer GUILT-FREE STATUS Tesla Nudie Liberty United Guilt-free status came from the concept that growing number of consumers aware the damage done by their consumptions to the society, planet or themselves. Guilt-free status mean that more people will care about responsibility, sustainability and ethic when it comes to consumption. Guilt-free status mean that more people care about responsibility, sustainability and ethic when it comes to consumption. Olivia Heo | Capstone: The Business Plan | New York University

Target Consumer Target: 900M X 20.5%* =1,845,000
900M aspirational consumers in USA Target: 900M X 20.5%* =1,845,000 Empowered shoppers (78%) Responsible consumers (92%) Nearly eight in ten Aspirational consumers say “shopping for new things excites me” (78%), compared to 48% of all consumers, and believe they “can change how a company behaves based on my purchase decisions” (78%), compared with 66% of all consumers; Nine in ten Aspirational consumers say “I believe we need to consume less to preserve the environment for future generations” (92%), compared to 75% of all consumers, and that they are “willing to pay more for products produced in a socially and environmentally responsible way” (91%) compared to 64% of all consumers; Three-fourths of Aspirational consumers say “I want to stand out by the way I look, my style” (73%), compared to 53% of all consumers; Seek Style and Status (73%) BBMG, GlobeScan and SustainAbility, October 2013 *20.5% was calculated based on the ratio of people aged between 20 and 34 according to 2012 population by age and sex, census.gov More and more consumers notice good companies. They want to be a part of good deeds by consuming those good brands. Humane – aspirational consumers’ brand of choice. Olivia Heo | Capstone: The Business Plan | New York University

Management & Operation

Advisory Board Advisors specialize in startup management, marketing communication, and consumer market research. San Lee Co-founder of SanShoe&Co. Operation advisor Refer for advisory board  Shelly Murphy Marketing Communications Consultant Communication advisor EJ Hur Consumer Market Analyst Marketing research advisor Olivia Heo | Capstone: The Business Plan | New York University

Business Administration
Organization Chart Primary Secondary Marketing Strategy Customized marketing Accounting Financial Human resource Business Administration Product design Material buying & management Photo-shoot & photo editing Design & Art Operation management Quality control Inventory checkup IT Website management Technical support Olivia Heo | Capstone: The Business Plan | New York University

Operating Plan Design Material purchase Product craft
Product packaging Order receive on website Storage Inventory checkup Packaging for shipping Order confirm & cancellation Returns Shipping Vendor management Olivia Heo | Capstone: The Business Plan | New York University

Material Source Supply source proportion: 30% 30% 30% 10%
Recycled leather supplier Leather scraps from leather factory Partnership with second-hand store company Customer donation There are leather manufacturers that create recycled leather. Materials are based on used leathers and reprocessed. NY is the big states Reduce transportation fee Goodwill Industries International Inc. Humane collects unusable yet quality leather goods from second-hand store Restore Customers’ donations to Humane Discount coupons Recycled leather supplier: Olivia Heo | Capstone: The Business Plan | New York University

Leather restoration by professionals
Donated leather goods Humane’s material buying team collect donated leather goods Send to the leather restoration craftsmen Deconstruct, sterilize and restore with natural dye and eco-friendly cleaners Olivia Heo | Capstone: The Business Plan | New York University

Strategic Partnership
Manufacturing partnership Product crafters, material suppliers and restoration craftsmen Sales partnership Established fashion brands and small boutiques ex. Madewell, J.Crew, Anthropology Creatures of Comfort in SoHo, etc. Creatures of Comfort in SoHo, New York Olivia Heo | Capstone: The Business Plan | New York University

Shopify Responsive design Geo-location Social media KPIs & analysis Conversion rate Visit duration Internal search box analysis Cart abandonment analysis Market basket analysis Olivia Heo | Capstone: The Business Plan | New York University

Customer Relationship Management
Good for small companies Specialized in retail/consumer product Features Sales cloud Accounts & contacts Task & event tracking Outlook, Gmail integration Content library Customizable report Target Customer database analysis to identify best customers for future events Olivia Heo | Capstone: The Business Plan | New York University

Marketing Plan

Marketing Plan Two customer acquisition campaigns and one customer retention The first year marketing target: 7 metropolitan areas (Boston, Philadelphia, Washington DC, Chicago, NY, SF and LA) Promote earth month – April Customer acquisition Customer retention Campaign I Humane for humane people Campaign II Second life Social media 6 months 6 months All year round Social media display ad 6 months 6 months Company blog 6 months 6 months All year round SEM 6 months 6 months Referral program 6 months 6 months marketing All year round Public relations 6 months Olivia Heo | Capstone: The Business Plan | New York University

Marketing Plan – Customer Acquisition
Campaign I: Humane for Humane people Communication objective: to increase Humane’s brand awareness Strategies Relate Humane’s brand name to humane activities – sustainability and good deeds Explain what and how Humane upcycles leather Share how humane participates in corporate social responsibility Humane gives a second chance to leather by upcycling it. Second life campaign implies that our customers give the second chance to recycled leather. Campaign duration 6 months Olivia Heo | Capstone: The Business Plan | New York University

Marketing Plan – Customer Acquisition
Campaign II: Second life Communication objective: To increase Humane’s brand awareness Strategies Tell a story how and why Humane creates second life for leather Deliver a message that consumers’ purchase will become a part of Humane’s donation to Goodwill Humane gives a second chance to leather by upcycling it. Second life campaign implies that our customers give the second chance to recycled leather. Campaign duration 6 months Olivia Heo | Capstone: The Business Plan | New York University

Marketing Plan – Customer Retention
Communication objective: To engage with customers for future purchase Strategies Let customers know behind-the-scenes of Humane’s production Share Humane’s corporate social responsibility efforts how and when it is done Provide exclusive sales and pre-sale access codes Share customer reviews and pictures Humane gives a second chance to leather by upcycling it. Second life campaign implies that our customers give the second chance to recycled leather. Campaign duration All year round Olivia Heo | Capstone: The Business Plan | New York University

Marketing Plan – Social Media
for Customer Acquisition & Retention Platform Strategy Measurement To engage with customers through timely updates 1-3 times a day Content: New products Benefits of recycled leather The behind-scenes Design sketch CSR Lucky draw Encourage share & retweet # of share # of likes # of favorites # of retweet Sentiment analysis Bags of words & keyword spotting Olivia Heo | Capstone: The Business Plan | New York University

Marketing Plan – Facebook Mockup
Olivia Heo | Capstone: The Business Plan | New York University

Marketing Plan – Social Media Display Ad
for Customer Acquisition Promoted account Promoted tweet To increase brand awareness by increasing followers To drive traffic to the website by increasing CTR Measurement: # of followers, # of retweets, # of favorites, click-thru-rate (to the website), conversion rate Sponsored page To increase likes of page of Humane To encourage people to visit Humane’s website and purchase Sponsored ad Measurement: # of likes, # of shares, click-thru-rate (to the website), conversion rate Audience location: ny, san francisco & LA metro area Interest: women’s bag, men’s bag, women’s accessories, men’s accessories Total campaign budget: 2,500 Daily budget: 20 Mx bidding: 3 One campaign would last 125 days. Olivia Heo | Capstone: The Business Plan | New York University

Marketing Plan – Company blog
for Customer Acquisition & Retention Owned media: website- embedded blog Expected effects: Increase traffic to its website Increase brand awareness by organic search. Will be leveraged to support public relations effort as it holds extensive information Content: behind scene, CSR program, new product Timing: 2-3 times a week Tracking and measurement: number of unique visitor, visit duration, page view per visit Location: United States: Los Angeles (+25 mi), San Francisco (+25 mi) California; New York (+25 mi) New York Age: Interests: Fitness and wellness or Shopping and fashion Sponsored ad average cost per click: quarter 3 in H U M A N E HUMANE LIFESTYLE FOR HUMANE PEOPLE Olivia Heo | Capstone: The Business Plan | New York University

Marketing Plan – SEM with Display Ad
for Customer Acquisition Estimated reach 158,100,000 Estimated traffic summary Based on max CPC: $1.50 and budget: $50.00/day Total budget: $9,000 per campaign Avg. CPC: $ $0.59 ($0.25*) Clicks/day: Cost/day: $47.51-$58.07 *Q average CPC of shopping category Los Angeles CA, California, United States 30,600,000 San Francisco-Oakland-San Jose CA, California, United States 18,800,000 New York NY, United States ,100,000 Chicago IL, United States ,600,000 Washington DC (Hagerstown MD), United States 17,500,000 Philadelphia PA, United States ,500,000 Boston MA-Manchester NH, United States 14,000,000 All based on Nielsen® DMA® region Conversion rate for shopping: 3.58% Total click x conversion rate= 13 clicks *240 days *3.58%= conversions/ year conversions * $500 = $55,848 ROAS=total revenue/ad spend=55848/6000=930.8% Shopping category average Ad impressions: 232M Click Thru Rate: 5.23% Number of clicks: 12.1M Cost per Click $0.25 Conversion Rate: 3.58% Maximum cost per click: You can influence your ad's position by setting its maximum cost-per-click (CPC) bid. This bid is the highest price you're willing to pay when someone clicks on your ad The following are approximations for the keywords above. For year 5 Based on max CPC: $2.50 and budget: $100.00/day. Avg. CPC: $ $0.97 Clicks/day: Cost/day: $ $110.00 The following are approximations for the keywords above. For year 4 Based on max CPC: $2.50 and budget: $80.00/day. Clicks/day: Cost/day: $ $88.00 Keywords leather bag man's bag man's leather bag men's bag men's leather bag woman's bag woman's leather bag women's bag women's leather bag recycled bag Upcycled bag Eco freindly bags tote bag hobo bag messenger bag Humane Measurement Impression Cost per click Click through rate Conversion rate Keyword performance A/B testing Ad sample – Side Ad Humane bag for humane people Shop an eco-friendly and stylish messenger bag now Olivia Heo | Capstone: The Business Plan | New York University

Marketing Plan – Referral Program
for Customer Acquisition Expected outcomes: Increase sales Increase brand awareness acquire prospective customer database Platform: , Facebook and Twitter Tracking and measurement: click through rate, conversion rate, code redemption rate $25 Location: United States: Los Angeles (+25 mi), San Francisco (+25 mi) California; New York (+25 mi) New York Age: Interests: Fitness and wellness or Shopping and fashion Sponsored ad average cost per click: quarter 3 in Referrer Referee The both will receive $25 codes when a referee purchases Olivia Heo | Capstone: The Business Plan | New York University

Marketing Plan – Referral Program
for Customer Acquisition Stylish and sustainable – it’s so you Humane To: Jon Doe Hello Jon It is so nice to meet you. Your friend Jane Smith thought you would like Humane. Did you know that your green life can wear more sustainability, like us? We strive to create best bags using upcycled leather. SUSTAINABILITY MEETS STYLE Follow us A little bit about us: we are founded in 2015 in NYC. We were inspired by the fact that there are so many leather goes to landfills, and leather tanning process invovles with high chemical usage. Our concern about the environment met our leather craftsmen. Now, we are a stylish and sustainable option for you. Shop now and get $25 off on your first purchase Olivia Heo | Capstone: The Business Plan | New York University

Marketing Plan – Email Marketing
for Customer Retention Strategy To retain profitable customers based on Humane’s in-house database. Use Salesforce Analyze profitable customers Send out New product Humane’s upcycling Product sale SCR A/B testing Measurement: sent/delivered, open rate, click through rate, churn rate Olivia Heo | Capstone: The Business Plan | New York University

Marketing Plan – Publicity
Hire a PR agency to increase brand awareness Will work with FACTORY PR, specializing in fashion and lifestyle public relations Expect to reach to a high number of customers through various outlets like magazines, online press and celebrity dressing Olivia Heo | Capstone: The Business Plan | New York University

Marketing Budget Allocation
Total: $79,550 30.3% of year 1 sales Olivia Heo | Capstone: The Business Plan | New York University

Marketing Schedule Marketing efforts tied to earth month YR 2014
YR 2014 YR 2015 10 11 12 1 2 3 4 5 6 7 8 9 Marketing Acquisition: Campaign I Social Media Social media display ad Company blog SEM Referral program Public relations Marketing Acquisition: Campaign II Marketing Retention marketing Marketing efforts tied to earth month Olivia Heo | Capstone: The Business Plan | New York University

Financial Plan

Financial Plan Year 1 Year 2 Year 3 Year 4 Year 5 Sales 100.0% 262,112 301,429 361,715 452,144 587,787 LESS COGS 50.0% 131,056 150,715 180,858 226,072 293,894 Gross margin LESS Promotion/ad cost 30.3% 79,550 21.4% 64,633 15.7% 56,759 14.6% 65,949 12.8% 75,233 LESS Variable operating cost 5.6% 14,600 5.5% 16,491 5.4% 19,389 5.1% 23,247 5.0% 29,621 LESS CSR donation 0.9% 2,400 0.8% 2,512 3,014 3,768 4,898 Contribution to overhead 13.2% 34,506 22.3% 67,080 28.1% 101,696 29.4% 133,108 31.3% 184,141 LESS Fixed overhead 80.0% 112,094 35.1% 105,816 29.3% 106,094 25.9% 117,132 20.0% 117,410 Earnings before sales tax -66.8% (77,589) -12.9% (38,736) -1.2% (4,399) 3.5% 15,976 11.4% 66,731 Variable breakeven: $223,808.63 Compound annual growth rate (CAGR): 17.53% Growth rates of US apparel & accessories retail ecommerce sales were 16.9% in 2012 and 17.6% in 2013 5th year earnings before sales tax is 11.4% of the sales Olivia Heo | Capstone: The Business Plan | New York University

Milestones Time Department Details June 2014 Look for material suppliers, Supplier confirm, Craftsmen contact and confirm July 2014 Design & art Bus. admin Designer hire process, confirm design direction, product range confirm, Office rental and setup August 2014 1st design decision, 2nd design decision, final design decision, design brief with craftsmen September 2014 Marketing Production start, website building, vendor finding and contract, marketing with social media, company blog and PR October 2014 Bus. Admin Product launching, vendor finding and contract continues, customer acquisition campaign I kick-off *1st week of October: product launching Olivia Heo | Capstone: The Business Plan | New York University

Future Plan Increase customer touch point: set up the flagship stores in NYC and LA Get more leather donations from second-hand stores and customers Contract with 30 national vendors in year 5 Olivia Heo | Capstone: The Business Plan | New York University

Thank you

Appendix

Financial Plan What is included COGS Total cost of purchasing, vendor cost, packaging, inbound freight Promotion/ad cost Facebook display ads, Twitter display ads, Google AdWords, public relations Variable operating cost Direct cost of processing/shipping, outbound freight, packaging material, pick/pack, bank fees, bad debit Fixed overhead Rent, utilities, travel expense, salaries, fridge benefits Olivia Heo | Capstone: The Business Plan | New York University

Financial Plan Sales Year 1 Web 35 12 $550 234,062 Vendor 5 $468 (85%) 28,050 262,112 Ad cost Year 1 Year 2 Year 3 Year 4 Year 5 Twitter campaign $2000 2 mo 2 cam 8,000 1 mo 4,000 Facebook campaign Google adwords $750 6 mo 9,000 18,000 3 cam 27,000 4 cam 36,000 Referral program $50 11 ref 5,050 13 ref 690 15 ref 759 19 ref 9,489 25 ref 1,233 PR agency $5000 9 mo 45,000 30,000 Total 79,550 64,533 56,759 65949 75,233 Cost per customer acquisition Year 1 Year 2 Year 3 Year 4 Year 5 $1,965.9 $1,388.9 $1,016.5 $944.8 $829.1 (Cam is an abbreviate of campaign. Mo is an abbreviate of month. Ref is an abbreviate of reference) Variable breakeven analysis Variable breakeven=promotion cost/(gross margin%-variable overhead%)/(1-returns and cancels%) Suitable for startups Customer acquisition campaign Olivia Heo | Capstone: The Business Plan | New York University

Financial Plan Variable cost Year 1 Year 2 Year 3 Year 4 Year 5 Shopify transaction fee 6798 7818 9382 11239 14610 Shipping $8 600 orders 4800 690 orders 5520 828 orders 6624 1035 orders 8280 1346 orders 10764 Packaging $1.67 1002 1152 1383 1728 2247 Outboud freight 2000 Total 14,600 16,491 19,389 23,247 29,621 Fixed overhead year 1 year 2 year 3 year 4 year 5 Salary 4000 12 mth - 3500 2 ppl 84,000 3000 1 ppl 3 mth 9,000 Rent 1250 15,000 12 mnt 15000 CRM program 125 1,500 Shopify 29 80% 278 278.4 Utilities 250 3,000 30,00 Equipment 6,000 Storage 193 12 2,316 2 4,632 Total 112,094 105,816 106,094 117,132 117,410 Olivia Heo | Capstone: The Business Plan | New York University

Competitor Brand Awareness
Peg and Awl Freitag Looptworks Jan-13 60 45 57 Feb-13 55 37 97 Mar-13 56 39 52 Apr-13 44 53 May-13 30 38 43 Jun-13 36 42 Jul-13 Aug-13 49 Sep-13 34 Oct-13 58 33 Nov-13 61 35 48 Dec-13 90 Average 51.2 39.4 46.6 median 38.5 42.5 Olivia Heo | Capstone: The Business Plan | New York University

Packaging EcoEnclose 100% Recycled Boxes: 100% post-consumer and post-industrial content Choose from our stock sizes or custom options below Fully recyclable and biodegradable Boxes ship flat, stacked, and boxed for protection Absolutely NO virgin fiber content Made in the USA! Humane’s logo Olivia Heo | Capstone: The Business Plan | New York University

Vendor List ALABAMA ETC. CALIFORNIA Bleu Dari E.G. Paige Ivy Blue La Bella Therapy Creatures of Comfort CONNECTICUT Atelier 360 GEORGIA W. Port FLORIDA Hint Miami MASSACHUSETTS French + Italian Gatsby’s Stash NEW YORK 3 x 1 Churchills Katherine Tess Pachute Creatures of Comfort NEVADA The Box OREGON E.G. Paige TENNESSEE H.Audrey Emerson Grace Goal : 30 vendors in year 5 Olivia Heo | Capstone: The Business Plan | New York University

Material and Manufacture Marketing Acquisition: Campaign I
Milestones Milestones June, 2014 July, 2014 August, 2014 September, 2014 October, 2014 W1 W2 W3 W4 Material and Manufacture Look for material suppliers Supplier confirm Craftsmen contact and confirm Design Designer hire process Confirm design direction Product range confirm 1st design decision 2nd design decision Final design decision Design brief with craftsmen Operation Production start Website Product launching Sales Vendor finding and contract Vendor confirm Management Office rental Office set-up (internet, phone, furniture) Marketing Acquisition: Campaign I Social Media Social media display ad Company blog SEM Referral program Public relations Olivia Heo | Capstone: The Business Plan | New York University

Olivia Heo Capstone: The Business Plan May 13th, 2014

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