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Annual Report JA-YE Berlin 2015
Norway
Name: Trashlock Nor Reg of BE: 914 376 939 CEO: Iver Myklebust Website: www.trashlock.no School: Spjelkavik USS Teacher: Frode Røyset Mentor: Øyvind Tørlen, Managing Partner Converto
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Table of contents
1. Executive summary Trashlock Youth Enterprise is located in the county of Møre og Romsdal, a region that gets its fair share of rough weather, and that is known for creativity and entrepreneurial spirit. When we were tasked with coming up with an innovative and user-friendly product, it felt natural to base our business idea on a problem that is particularly evident in our part of the world. Following a period of demanding brainstorming, we came up with the idea we were looking for. Trashlock YE decided to develop a product that prevents waste from falling out of trash bins when the lid blows open, or the whole bin is toppled by strong winds. This is a problem we frequently witness, and it causes a unpleasant clean-up job, especially if birds and cats have been around the waste. The product, which we have called Trashlock, is useful for household all year round. To ensure the best possible usability and functionality, the product is Y-shaped. It is easily operated by both collectors and consumers, and includes an attachment to hold a separate recycling bag for plastic materials. The target market is households with one or more trash bins. The product is easy to install and has an attractive design. Trashlock will be sold for 25 Euros per unit, which represents a contribution margin per product of 10,80 Euros. Our initial production run is 500 units (100+200+200), which will generate a total contribution margin of 5400 Euros. We envisage expanding the market both domestically and internationally in the longer term. In Norway alone there are more than 2.5 million trash bins for paper and household waste, and the market in countries such as Canada, Denmark and Great Britain who has similar weather conditions is significantly larger. This shows a huge market potential. During our time as youth entrepreneurs we have developed an understanding of what business is all about and we feel much better prepared for the future.
“Non scholae sed vitae discimus” “We do not learn for school, but for life”
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Trashlock`s vision is to improve the
environment in courtyards and streets.
Our success factors are functional products
with focus on the environment and usability.
Our business idea underpins this vision by
offering a simple and user-friendly product
for European households, which prevents
trash from falling out from the trash bins.
2. Vision and business idea
Trashlock Youth Enterprise wants to make a positive contribution to waste management and the
environment, primarily in Norway, but also internationally.
The product will improve the lives of individuals who are tired of repeatedly cleaning up bags of waste from bins that have blown over.
3. Product
3.1 Product description Trashlock Youth Enterprise has developed a
product that will prevent waste from littering
front gardens and streets. The product has
several useful functions. Its primary function is
to keep the bin lid closed to stop waste from
falling out whenever the bin falls over. This
will also stop animals from getting to the waste
in the bin.
In addition to the locking function, the product
offers additional value by featuring a wire hook
at the front which is designed to hold bags of
waste that are kept separate, such as
recyclable plastic material.
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3.2 Product development
The product and the idea behind it was developed by the team, through a process led by our product manager Kornelius. He designed and developed the product, and produced initial sketches and working drawings. After converting the idea into a number of drawings, we contacted professional company. Our new partner, the design company Inventas, helped us with further refinement and product development. They also created additional 3D drawings and 3D printing of product parts.
We subsequently identified another key partner and source of inspiration in the company Karlsberg AS. They agreed to manufacture a number of units, but recommended a change of hook material from plastic to spring steel to make it easier to adapt the product to fit different bin designs. This also resulted in better durability and lower production costs. The product is manufactured in Latvia, and Karlsberg’s subcontractors manufacture all the components, including the packaging.
Starting a youth enterprise was a relief after 11 years in school with a lot of theory. During our time as youth entrepreneurs, we have experienced true teamwork. We have seen in a practical setting how different people, with different skills bring valuable contributions to reaching a common goal. This has matured our view on what it means to create a success in business. A well-managed team is so much stronger than highly competent individuals working on their own. We have developed a true understanding of the term “inclusive workplace” as we have seen the strength of this in real life. Our group has got a taste of how it feels when hard work brings strong results. This will clearly be motivation going forward, not only related to Trashlock initiative, but in a relation to all aspects of life. Now we know that if we really want to achieve something, and are willing to put in the effort needed, everything is achievable. We believe the practical understanding of many aspects of business we have developed through JA-YE will be helpful in our understanding of several subjects in current and future learning situations. School has actually become more interesting after this experience, and it will serve as a motivation to for higher education. We have developed a good understanding of every part of the value chain:
4. Learning effect
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We have developed a good understanding of every part of the value chain:
5. History
Product development
The importance of really understanding
costumer’s needs, preferences and behaviour.
The design and construction process where you
need to balance all you want to put into product
against the cost of manufacturing
The extreme importance of quality testing and
how this is getting more complicated as the
distance to the manufacturer increases – a key
learning point in relation to low cost
manufacturing considerations
The value of being solution oriented and willing
to make changes during the development process
The effect of finding good partners that
understands what we want to achieve and are
capable of assisting us in achieving it.
Sales and marketing The importance of understanding the
costumer, and use this understanding in
every part of our business e.g. when
preparing web site, marketing material,
social media activities
The effect of selecting the right channels
for marketing and sales of products. As
we go forward in our effort to grow the
Trashlock business, success will partly
be decided by our ability to get into the
right distribution channels.
Supporting functions We have developed a much better
understanding of how important supporting
functions are when running a business. In
particular this is true for logistics, ICT, cash
Management and accounting.
Production We have truly developed our understanding of
financial principles and concepts and this will
be great value to us in future business
situations.
We have seen the potential in using analysis
tools on our web site to learn what kind of
marketing activities drives traffic to the site.
Going forward digital will be an important part
in our marketing mix.
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6. Organisation and areas of responsibility
Iver is the organiser in the team, with strong opinions on most things. He also possesses a strong competitive instinct, which means that he never stops driving for success. These qualities made him the ideal candidate for the role as General Manager. He always has a plan, and has proved to be a tough but fair manager.
General manager
Iver Myklebust
• Management • Organizer • Adjustment of objectives • Social responsibility
Mentor
Øyvind Tørlen
Financial manager
Vegard Hansen
Marketing manager
Mathias Tørlen Product manager
Kornelius Bjørge Graphic designer
Glenn Flusund
• Accounting • Budget • Financial responsibility • Chairman
• Marketing of business and product • Marketing strategy • Networking
• Design of produkt • Prototype testing • Design of packaging • Brochure
• Website • Logo • Layout
Vegard comes from a family with a strong interest in financial matters, and is always talking about exchange rates, trading games and financial newspapers. Numbers and spreadsheets make up a large part of his bedside reading, and he plays a key role in managing the finances and setting realistic budgets.
Mathias studies marketing and management, and has a very persuasive sales technique. He can sell anything to anyone. He also has a great contact network that benefits the business, and does an excellent job as Marketing Manager.
• Discussion partner
Kornelius comes from a family of carpenters who are known for ingenious improvisations, creative solutions and well-‐thought-‐out details. He continues this tradition, assisted by his impressive artistic talent. Kornelius has been central to a challenging product development process that we are very proud of.
Glenn is the computer nerd in the business. He can reprogram a computer from A to Z. He is responsible for our web site and the layout of all documentation, and Glenn is undoubtedly worth his weight in gold in a business with otherwise only average computer skills.
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8. Innovation and international potential
Who What Function
Inventas Design and innovation
3D-drawings of our product. Contacted a company in Belgium who 3D-printed our first prototype
Årim Environmental company in our region
Årim is an important collaborator. They help mainly with marketing and testing/improvement of our product.
Øyvind Tørlen Managing Partner, Converto
Our mentor has a large contact network with many people who can help our company. In addition to this, he has much knowledge of how to run a business.
Karlsberg Producer Karlsberg produces our product in Latvia. Karlsberg also have an office in Ålesund where they are easy accessible at each delivery. Chosen as supplier due to a welcoming attitude and wide access to materials.
Spjelkavik USS Teachers and advisors
Key supporters in entrepreneurship, finance, marketing and IT, who we can support us when we encounter problems.
I&M and Frislid Advertising and clothing
I&M has made our commercial movie, while Frislid is sponsoring clothing for the European Championships in Berlin
7. Network We have focused on building an
effective and well-functioning partner
network from many different
industries. Since we started in October,
we have worked with a number of
experienced companies and people. We
have found key partners in the areas of
manufacturing, programming and
business development. We have met
with several sanitation companies, and
we are in conversiaton with specific
joint projects that will make it easier to
reach more potential customers.
The innovative aspect is that multifunctional solution to the problem was not available in the market already. Therefore, the number of potential customers is huge, in particular internationally. We have designed our product to the trashcans back in Norway, but you can find similar trashcans all around the world. In Europe we look the floating waste as a big problem. Along the coast in Europe you find lots of places with enough wind to tip many trashcans. Therefore we think that we have a huge market only along the coast, but there are also problems with animals dragging out the waste.
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9. Marketing
When we first started the business, we needed to understand if there was a demand for the product, and therefore we did a market survey. The survey answered a number of questions around the market opportunity for our product and how much customers would be willing to pay for it. The survey was conducted to clarify the potential demand for the product and to set the price. Following our market analysis, where as many as 73% wanted the product, Trashlock received a lot of useful information about what kind of marketing would be effective. Our analysis, combined with the survey, show the importance of reaching consumers early with information about a new product to get it on the radar. Many survey respondents suggested that we made a commercial to show the product in action, as a way of demonstrating that the product works for both consumers and collectors. We made such a commercial, an it proved to work. We based our choice of marketing efforts on a SWOT analysis that was carried out at the start of the school year. As part of this analysis we also mapped out potential weaknesses, threats and competitors. It was important for us to know our starting position to draw up the baseline for our marketing strategy. It is crucial to our marketing strategy to reach out to the target market, which is Norwegian households with one or more trash bins. To achieve this, we among other things want to utilise the domino effect, where the principle is that your neighbour will see that you have something new he has never seen, and think: “I want one of those.” Clear and visible branding on a product is cheap and efficient marketing. Media coverage has also been a key factor in the promotion of our product to consumers. When we launched our product, we contacted local and regional newspapers, and secured editorial coverage with pictures of the product. This meant that consumers got clear and accessible information about the advantages of the product. To reach as many consumers as possible around the country, we have asked key contacts in the Norwegian public service broadcaster NRK to help. This increases interest and boosts publicity around the product. Following our first radio interview with NRK, the web site traffic increased by 300%. We have also marketed the product specifically to certain target markets, through home improvement exhibitions, holiday home exhibitions and waste management conferences. Once we have reached the consumer, it is important to provide useful information, whilst promoting the product's unique properties and explaining the problem it solves. We believe that providing customers with good information promotes the domino effect by customers spreading the word and giving the product good reviews. Most consumers have one trash bin and one bin for paper. Trashlock is suitable for both types of bin, and we are therefore considering a multi-buy discount when buying more than one.
This makes almost whole Europe a big market, because there are animals everywhere, aren’t there? But since we are still in the starting phase we can concentrate our marketing along the coast. If we are going distribute our product around the world it is important for us to find someone we can cooperate with. We need a corporation that has the resources to both marketing and distribute the product to the costumer.
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9.1 Risks
Risk is a large part of the game in youth enterprises. Any real risk can be identified,
and identifying the risk is the first step on the way to preventing the risk from
becoming a real problem. One of the potential threats is that a competitor launches a
similar product that retails for less than ours. We are well financed for a youth
enterprise, and this gives us security against debts in case of loss of manufacturer or
customers. Up till now we have kept small production runs to enable us to pay for
any costs as they are creating. And if our manufacturer walks away, we still have all
the manufacturing drawings and specifications for Trashlock, which we can use to
continue the journey with a new supplier.
If we see good results from the sale of our product, we want to wind up the Youth
Enterprise and start a limited company. One of our aims will be to patent our
solution to protect our product from future competition.
10. Economy 10.1 Capital requirements and financing plan Most of the company's capital has gone into the design and development of the product, in addition to the initial order of 100 units. We have also reserved funds some capital to marketing, website and additional expenses. We have created a financing plan that aims to provide an overview of our capital. Our goal is to cover capital needs by collective voluntary effort, selling shares and getting sponsors, but we will also try to conclude agreements with waste management companies or other companies if the capital requirements increases. First we bought 100 units, and later we bought 2x200 units. Therefore we had to allocate a money reserve to get enough funds for next order. Capital requirements Financing plan Production costs with shipping € 1 423 Collective voluntary effort € 2 000 Marketing incl stand € 340 Sponsors € 784,37 Prototype € 850 Shares € 113,64 Buffer € 285 Total expenditure € 2 898 Total revenues € 2 898
Product cost Sale price € 25 Purchasing value per unit € 7,82 Packaging, duties and VAT € 2,41 Total landed costs € 10,23 Gross profit € 14,77 Indirect costs € 3,97 Profit € 10,8 (43,2%)
10.2 Product cost
The product price is primarily based by the willingness to pay from our market research. With a cost of €10,23 per item, and indirect costs of €3,97 per item, we will be left with a profit per unit of €10,80. Gross profit of €14,77 will be used for marketing and to cover other necessary costs.
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Jan Feb March April May June Sum Payments (IN) Sales 0€ 0€ 0€ 2500€ 5000€ 5000€ 12500€ Sponsors 0€ 284,4€ 0€ 0€ 0€ 0€ 284,4€ Voluntary 500€ 0€ 0€ 0€ 0€ 0€ 500€ Shares 90,9€ 22,7€ 0€ 0€ 0€ 0€ 113,6€ Total 590,9€ 307,1€ 0€ 2500€ 5000€ 5000€ 13398€ Payments(OUT)
Production 0€ 0€ 1423€ 2846€ 2846€ 0€ 7115€ Marketing 0€ 340€ 0€ 0€ 500€ 0€ 840€ Website 0€ 0€ 0€ 0€ 495,4€ 0€ 495,4€ Salary 0€ 0€ 0€ 0€ 0€ 1000€ 1000€ Total 0€ 540€ 1423€ 2846€ 3841,4€ 1000€ 9650,4€ Liquidity at the start of the month
1497,7€ 2088,6€ 2055,7€ 632,7€ 286,7€ 1445€ 1497,7€
Change in liquidity 590,9€ -32,9€ -1423€ -346€ 1158,6€ 4000€ 3947,6€
Liquidity at the end of the month
2088,6€ 2055,7€ 632,7€ 286,7€ 1445,3€ 5445€ 5445,3€
Balance sheet Per 20.06.2015 Current assets Stock € -‐
Debitors € -‐ Cash at Bank € 4 000,00 Cash in Hand € 1 331,70
Total Current Assets € 5 331,70 Current liabilities Bank overdraft € -‐ Loans € -‐ Creditors € -‐ Corporations tax payable € -‐ Vat Due € -‐ Total current liabilities € -‐ Balance € 5 331,70 Represented by: Shares at € 113,6 Profit and loss account € 5 331,70 Shareholders funds € 5 445,30
Profit and loss
Per 20.06.2015 Sales
€ 12 500,00
Purchases w/prod wages
€ 6 500,00 Closing stock € -‐
Cost of sales € 600,00 Gross profit € 5 400,00 Salaries and bonuses € 1 000,00 Stationery
€ 500,00
Rent and hire
€ -‐ Miscellaneous expenditure
€ 545,60
Registration fee € 22,70 Total expenses € 2 068,30 Operating profit € 3 331,70
Miscellaneous income
€ 2 000,00 Net profit € 5 331,70
Corporation tax payable € -‐ Profit after tax € 5 331,70 Balance € 5 331,70
10.3 Cash-flow budget
Trashlock YE has all the way had a strong cash position because of early collective voluntary
effort. We earned about €2000 and later we sold a lot of units that built up our cash reserve. The
operating profit in the end of the school year is €5445,3. The operating profit will be used to buy
more products and to manage the firm.
10.4 Profit and Loss account and Balance sheet
We have sold 500 units and we have a gross profit on about 5 400 Euros. The shareholders fund
is per 20.06.2015 on 5 445,3 Euro.
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The graph illustrates the relationship between number of units sold and net profit. Break-even is reached at 269 units, and at higher volume the company makes profit.
Net profit
Break-‐even volume
Units
12. Prospects Throughout this year we have primarily learnt how to run a business and how to develop an economically viable business model. We have also extended our network and got to know a range of resourceful and knowledgeable people who may be able to help us out in future. We have learnt a lot about each other, and look forward to continue working together in the coming months. We have celebrated the ups and worked through the downs. The most important thing we have learned is that good, honest cooperation lasts the longest, and that hard work is the key to success. Our dream is to become a productive, well-functioning and market-leading limited company. We will have to work hard and be focused on our targets to achieve our long-term objectives, and it may become necessary to make difficult decisions. Our SWOT analysis shows that we have many weaknesses and threats that need to be addressed, but we are also seeing a lot of interest in a sizeable market. The manufacturing of our product is well underway thanks to a solid network and skilful staff. Our marketing efforts, which are designed to translate demand into sales, will determine sales results when the product is launched. We have to convince potential customers that our product solves a common and annoying problem in a good way. If we manage to build a brand with the result that large numbers of people in our region want to buy a Trashlock, we have a bright future ahead of us. In the future we want to expand the market and sell our product nationwide. Selling our product through other companies will largely drive this expansion. We have already mentioned the potential for agreements with waste management companies and the retail chain "Enklere Liv" to increase sales. Enklere Liv is one of the fastest growing retail chains in Northern Europe, and is an ideal partner for our product, even if we are still a long way from making this partnership a reality. If we get a high level of interest from companies who want to distribute the product, we intend to start a limited company and focus all our energies on our business. With a limited company we can hire more people and invest in office space over the next few years. We can develop more useful products, and may one day make a living from functional products with focus on usability and the environment. Whatever happens, we will always stay focused on our success factors: usability, quality, efficiency and creativity.
11. Energy and environment Our product has a clear environmental profile, as the main objective is to prevent waste from falling out of trash bins and being spread in the surroundings. Waste from overturned trash bins can spread harmful pollutants. As our product has such a clear environmental profile, we also wanted to ensure that it is produced in the most energy-saving and environmentally friendly way possible. For this reason we use hardwearing and long-lasting materials that ensure product longevity.
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Trashlock UB c/o Spjelkavik Upper Secondary School Norway, Langhaugen 22, 6011 Ålesund
Phone: +47 916 88 446 E-‐mail: [email protected]
www.trashlock.no
