| Many people have great ideas for
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| | Founder (one year) $50,000.00Health
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| inventions. These thinkers amongst us may
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| | Care
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| have a new innovation, better mousetrap,
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| | Costs....................................
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| or a totally new concept. Perhaps you
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| | .. 6,000.00Casual Labor
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| have an idea you would like to see come
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| | 6,500.00Sub Total
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| to life and receive the royalties for it
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| | $62,500.00Total
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| and live happily ever after.
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| | Anticipated Start Up Costs:Total From
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| Unfortunately many folks who have such
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| | Marketing and Salary...............
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| ideas spend their life savings going
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| | .$155,600.00Total From Prototype and
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| after a dream of their own invention.
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| | Legal......... ......
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| They fall in love with their idea and
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| | $184,075.00Perfect World Grand Total
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| want to see it come to fruition and mass
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| | Start Up Costs... $339,675.0030% Fudge
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| marketed to the world.It is wonderful to
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| | Factor and Murphy'ism.........
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| see so many garage inventors coming up
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| | ...$101,902.50Real World Start Up
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| with so many nifty gadgets. But it is
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| | Costs.........................
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| also important before you risk you hard
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| | $441,577.50- - - - - - - - - - - - - - -
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| earned dollars to be very careful with
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| | - - - -Indeed what seemed like a really
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| what you wish for. Bringing even the
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| | easy to make product turned into a
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| simplest product to market is not cheap
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| | complete nightmare for Mr. Bob Smith the
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| and very few actually succeed. In this
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| | founder who needs a $5,000 per month
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| case study we will analyze the reality of
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| | income to survive or even be able to quit
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| a seed to weed concept and look into the
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| | his job. Already now we have the first
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| formation of a small business to make,
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| | one year expenses at over $440,000.00,
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| market, and sell this product. The
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| | which is not chump change for the guy who
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| fictitious product or widget as they call
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| | just invested a very useful and needed
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| them in MBA school is called a
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| | product for walkers and joggers to stay
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| JoggingLight. It is a relatively simple
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| | in shape with.For first year startups
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| invention, a light, which is powered by
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| | considering only the prototypes being
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| the human motion while jogging rather
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| | sold and no actual unit sales, which is
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| than a battery, so people can work out
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| | possible, but unlikely we see that what
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| after dark and have light while they do
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| | seems like a great product is hardly
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| so. Now then, first we start out with
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| | cheap to make and bring to market. Let's
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| some real world costs below;The
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| | say for instance that at 50% gross profit
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| JoggingLight
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| | margin per widget sold or $15.00 of the
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| Financial RequirementsPrototypes:Parts
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| | $29.95 target price, that means year one
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| $
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| | to break even would be 24,439 units would
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| 8,600.00Modification Costs
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| | need to be sold. That seems plausible. So
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| 2,000.00Tools
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| | on a "Go or No Go" choice it appears to
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| 1,250.00Work Shop Set Up
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| | be a viable business, even with some
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| 1,500.00Misc. Equipment*
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| | mistakes along the way as you roll with
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| 2,000.00Installation
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| | the punches and fouls. You could also
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| 250.00Back Up Generator (Honda)
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| | make a few dollars on the handling labor
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| 1,200.00Vacuum
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| | costs and thus add $5.00 per unit profit
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| 200.00Injection Molding Engineering
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| | there if you did in-house fulfillment and
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| 12,250.00Plastic Cover Prototypes
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| | charged $10.00 thus cutting down the
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| 25,200.00Human Testing
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| | number of units need to be sold by
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| 800.00Ergonomic Testing (Cal TECH)
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| | approximately 25% to 18,110 units for a
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| 10,000.00Research Paper (Interns)
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| | year one ROI kill date.If you were able
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| 10,200.00Digital Photos and 3D Renderings
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| | to stay out of our fudge factor, unless
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| 8,800.00Sales of Original
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| | needed for real R and D next generation
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| Prototypes...............Sub Total
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| | stuff, you might be able to also cut 20%
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| $ 82,250.00Business Set
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| | off that $339,675.00 figure or
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| Up:Incorporation
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| | $271,740.00 and made your $15.00 per unit
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| $ 1,500.00Parasite Lawyer Retainers
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| | profit plus $5.00 for in-house
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| 8,000.00Federal Registration of
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| | fulfillment or $20.00 per unit then you
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| Trademarks 1,875.00Concept Patent
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| | could be home free at 13,587 units sold
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| Filings, Modifications
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| | prior to end of year one, from the day
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| 35,000.00Procurement Business
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| | you cash the investors or Venture Capital
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| Registration 4,800.00Miscellaneous
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| | check. That seems very doable indeed.Not
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| Legal Docs 675.00CA Trade
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| | the easiest business in the world, but if
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| Marks
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| | Bob will walk before he runs run here,
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| 1,500.00Patent Defense and Negotiation
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| | you can see he might find it possible to
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| Fund..............35,000.00Manual
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| | shatter these goals prior to end of
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| Creation for Consumer Product
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| | fiscal year one. Should we throw this
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| 1,000.00Manual Creation for Industrial
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| | case study in the trashcan? Is this a
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| Product 3,000.00Business Licenses
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| | feasible endeavor for Bob, father and
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| F.N.S. Etc. 500.00Travel
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| | husband in a family of five? Should we
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| Expenses for Business Set Up
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| | further look at a better case scenario
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| 2,000.00BBB and Chamber Memberships
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| | than the one listed which many could
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| 1,500.00Finish Products Liability
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| | consider next to worse case scenario
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| Insurance (DP) 3,675.00Business
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| | above? Do we sharpen our pencils for Bob
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| Insurance Down Payments 1,800.00Sub
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| | and continue, keep assumptions or quit?
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| Total.......................$101,825.00St
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| | We need to be honest with Bob too,
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| art Up Costs Before
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| | because "falling in love" with a business
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| Marketing....................$184,075.00-
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| | or product can make you dead or broke.
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| - - - - - - - - - - - - - - - - - -The
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| | This should only be about winning and
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| JoggingLightFinancial Requirements
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| | making money, as Bob Smith the founder of
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| Post Business Formation and
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| | the JoggingLight has built up a nest egg
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| PrototypeMarketing Costs:Repayment of
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| | for his family, should he risk it all on
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| Loan for Website Creation $
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| | this new widget; The JoggingLight?What
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| 2,900.00Television Infomercial
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| | are your thoughts on this Case Study; in
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| 54,400.00Art Work for Logo
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| | analyzing a prototype project and it's
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| 1,400.00Stationary, Business
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| | costs for a Start-up Company? Would you
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| Cards, Etc 500.00Additional
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| | go with Bob's project or reject it? Do
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| Website Ongoing Work
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| | you as a business student think it is
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| 8,000.00Air Time for Product over basic
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| | feasible? What is the basis for your
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| package 20,400.00Travel Sales
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| | answer? Are there real life places you
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| Costs....................................
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| | could shave costs? Remember it would be
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| . 5,000.00Promotional,
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| | better to be wrong on the downside than
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| Sponsorships...........................
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| | out of business with an unforeseen
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| 5,000.00Sub Total
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| | blindsided problems that could wipe Bob's
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| $93,100.00Salary Costs:Bob Smith
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| | hard earned nest egg out. Think on this.
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