Business Plan

Insolar Apparel

Company Principal:

Messhia Young

Contact Information:

InsolarApp.com

5732 Sunshine Blvd.

Providence, RI 02912

Executive Summary

Insolar Apparel is a startup photovoltaic apparel company based in

Providence, RI that seeks partnerships with manufacturers and retailers.

Insolar Apparel aims to create high quality, fashionable clothing and

accessories that harness the power of the sun through the use of

photovoltaic technology. All of the items in the Insolar Apparel line are

capable of storing enough power to charge small electronic devices daily.

When consumers use Insolar Apparel to charge their devices, off grid power

is provided. Insolar Apparel also aims to increase awareness of

environmental issues by demonstrating that fashion and environmental

consciousness go hand in hand.

Key Goals:

To be profitable by year 3 To repay investors by year 10 To achieve high brand equity by year 3

Strategic Priorities:

Fashion Quality Convenience Off-Grid Power Awareness

Financial Highlights:

Internal rate of return for first 5 years is 54% Breakeven occurs at year 2.7, with net present value at year 3 equal to

$40,857.72. Net present value at year 5 is $146,624.41.

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Table of Contents

The Business

A. Description of Product or Service ………………………………………………………….….3

B. Market and Marketing Plans……………………………………………………………………….5

C. Competition…………………………………………………………………………………….………….8

D. Management and Personnel …………………………………………………………………....10

E. Manufacturing and Operations………………………………………………….……………...11

F. Location…………………………………………………………………………………………………….12

G. Summary…………………………………………………………………………………...………………13

Financial Data

H. Capital Equipment list for first 12 months………………………………………………13

I. Other Startup Expenses……………………………………………………………………………13

J. Cash Flow Estimate Assumptions…………………………………………………………….14

K. Breakeven Analysis…………………………………………………………………………………..15

L. Funding Information………………………………………………………………………………..15

M. Returns to Investors…………………………………………………………………………………15

N. Exhibits

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I. Exhibit A: Year 1 Cash Flow ………………………………………………………….17

II. II. Exhibit B: Year 2 Cash Flow ……………………………………………………...17

III. Exhibit C: Year 3 Cash Flow ………………………………………………………….18

IV. Exhibit D: Year 4 Cash Flow …………………………………………………………18

V. Exhibit E: Year 5 Cash Flow ………………………………………………………….19

VI. Exhibit F: Production Schedule ……………………………………………………19

VII. Exhibit G: Production Cost and Retail Determination ………………....20

VIII. Exhibit H: Breakeven Analysis ………………………………………………………21

IX. Exhibit I: Examples of Apparel……………………………………………………....22

O. Works Cited ……………………………………………………………………………………………23

The Business

A. Description of Product or Service

Insolar Apparel, LLC is a fashionable, affordable line of solar apparel

and accessories. Insolar Apparel aims to bridge the gap between rugged

sports gear and absurd runway looks in the realm of environmentally

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conscious clothing while raising awareness for environmental issues and

making a profit.

The Strategic Priorities of Insolar Apparel are:

Fashion Quality Convenience Off-Grid Power Awareness

Fashion, Quality, Convenience

Three main strategic priorities of Insolar Apparel are fashion, quality,

and convenience. Insolar Apparel aims to produce fashionable clothing that

is environmentally friendly. These will be items a normal person could wear

there will not be runway looks included in the line. Quality is also extremely

important. To maintain a positive image, and have less impact on the

environment, Insolar Apparel will opt for the highest quality materials and

use the least materials possible for its products. Care will also be taken to

incorporate fair trade practices into sourcing the materials the manufacturer

will use to fabricate the products. Insolar Apparel will focus on materials like

recycled polyester, organic cotton, and linen (14). Leather will not be used in

the designs and plastics will be used only at necessity (15). Convenience is

also a strategic priority. Insolar Apparel Products are convenient in that they

provide off grid power that is portable and easily accessible and can save

both time and money.

Power Grid Burden

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Currently, 147.9 million U.S. individuals own smartphones (2). Using

average data for the iPhone 5 and Samsung Galaxy S III, two of the most

popular smartphones, each year charging a smartphone costs approximately

4.2 kWh of electricity (3). This value is not alarming by itself. However, it

does indicate that in the U.S. around 621.18 GWh per year are used

aggregately for this purpose. This value does not include the impact of

traditional cell phones. In addition using an iPad as an estimate for energy

costs of all tablets, a tablet costs around 12 kWh of electricity per year for

charging (5). At the moment, 34% of the U.S. population owns a tablet

computer (6). This means an estimated 106.73 million out of 313.9 million

people own tablets (9). As a result about 3766.8 GWh per year of electricity

are spent annually for tablet charging. The typical laptop uses nearly 72kWh

per year for charging (10). Since 76% of the U.S. population owns at least

one laptop, this indicates approximately 17,177 GWh, or 17.18 TWh, are

used per year for laptop charging (1,10). If consumers used Insolar Apparel

to charge these products as much as 21565 GWh of electricity burden could

be lifted off of the power grid.

Awareness

Even more than mitigating burden on the power grid, Insolar Apparel

aims to encourage changes in lifestyles that are healthy for both individual

and environment. This will occur because the use of Insolar Apparel product

mandates spending lots of time in sunlight. When people spend more time

outside they are more likely to be physically fit and less likely to operate

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appliances in their homes that make a larger dent on household electricity

consumption such as televisions, air conditioners and lighting fixtures. In

addition, these individuals will develop more of an appreciation for their local

ecosystem through their time spend outdoors (14). According to 2012 U.S.

Energy Information Administration estimate, an average U.S. household

consumes 10,837 kWh per year (12). The possession and use of Insolar

Apparel products will necessarily reduce this value by an amount more than

foregone electricity cost of smartphone or tablet charging.

Moreover, Insolar Apparel aims to raise awareness by reminding

consumers that their daily activities have an impact, no matter how large or

small. While portable device charging makes up less than 5% of yearly

household electricity consumption, the use of Insolar Apparel products will

keep the reality that every kWh of electricity used has a cost. This

consciousness will encourage individuals to more closely watch the varied

ways in which they use electricity and other forms of energy (14).

The Products

Insolar Apparel plans to launch a comprehensive year round line

consisting of a tote, blouse, light jacket, dress, and coat. In addition, a

fashionable dog coat will be produced. Every product will be made with

strategically placed photovoltaic strips and circuitry that allows the energy

stored to be accessed through USB charging extensions. It is estimated that

each Insolar Apparel product can store up to 8 Watts at a time. This will

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require approximately 3 hours in full sunlight. Exhibit I includes detailed

sketches of some Insolar Apparel, LLC products.

B. Market and Marketing Plans

Target Market

The target market for Insolar Apparel is comprised of

environmentally conscious women between the ages of 15 and 35 who

live in areas that get lots of sunlight, or are known for environmental

consciousness. Within this subset, individuals from households with

annual household incomes between $ 80,000 and $ 250,000 will be

targeted (1,7). Individuals in this bracket like to be associated with

high-quality, innovative products but may not want to pay a premium

price for a certain brand (2). This bracket includes high school age

girls, college students, and young educated professionals. In the U.S.,

this market is comprised of approximately 128.7 million people (7).

Clearly, this bracket includes Brown and RISD students.

Marketing Strategy

Given the nature of Insolar Apparel and the fact that it is a

startup, innovative, low cost marketing tactics must and will be

utilized. Sponsorship and participation in competitions and awareness

campaigns will double as marketing opportunities. Giveaways will also

serve as a marketing platform. Insolar Apparel plans to give away

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mostly totes and dog coats, as these products are extremely useful

and have lower production costs than other products in the line.

Advertisement and Public Image

Initially, most advertising will be done via the brand website,

InsolarApp.com, social media, and word of mouth. This will be

supplemented by partnerships with environmental advocacy groups in

Los Angeles, CA, Phoenix, AZ, Austin, TX, as well as Providence, RI to

increase positive visibility of the brand. The image Insolar Apparel

wishes to present is one of positivity and responsibility (14). These two

factors will attract customers and encourage them to purchase our

products.

After fiscal year 7, expansion into existing boutiques in populous

U.S. cities that get a high amount of solar insolation will occur.

Following year 7, Insolar Apparel’s net present value will be

$278,271.34 and revenue from that year will be nearly $98,000.00.

This will indicate to boutiques that Insolar Apparel is profitable and a

brand that will bring customers to their shop. Following 2 years of

steady growth in boutiques, Insolar Apparel will launch its own shops.

Ultimately more focus will go to areas where higher concentrations of

people express interest in Insolar products or could be potential

consumers.

Pricing

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Pricing of Insolar Apparel products is reasonable. After a

standard 60% markup from production costs, certain items undergo

higher markups due to their seasonality or other market factors. For

instance, the coat has a much higher markup because of market

pricing of similar coats (14). In addition, the dog coat has been marked

up higher because market analysis demonstrates that individuals

purchasing clothing of this caliber for their dogs are willing to pay a

significantly more (20). Final retail prices for dog coat, tote, blouse,

jacket, dress, and coat are $15.00, $12.99, $20.99, $27.99, $34.00,

$62.99 respectively. Exhibit G shows more about the method of retail

pricing.

C. Competition

Competitors

While no apparel companies currently fill the niche Insolar Apparel

occupies, there are several in existence that offer photovoltaic apparel or

similar portable devices and would be able to start a similar line. These

include Wearable Solar, Zegna, Soletics, and Solio.

Company Product Price Range

Target Market

Description

Wearable Solar(16)

2014 Oloid Collection

$400-$1500

Ages 18 to 40

Specializes in high end, photovoltaic infused women’s apparel.

Zegna (17)

Echotech Solar

$100-$700 Men ages 16 to 34

Specializes in high end, ecofriendly, trendy

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Jacket menswearSoletics(18)

Smart JacketSmart Gloves

$100-$700 Ages 14 to 50

Offers jacket and gloves that use solar panels and piezoelectrics to convert sunlight and motion into energy.

Solio(19) Bolt Portable Solar Charger

$50-$150 Ages 16 to 55

Specializes in handheld or portable solar technology.

Analysis of Potential Competition

It is important to be aware of competition and make efforts to most

effectively compete against it. Wearable Solar, Zegna, Soletics, and Solio all

pose a threat of competition.

Wearable Solar is a high priced brand that produces runway looks that

are outfitted with photovoltaic cells or strips. A typical item from the 2014

collection is capable of charging a smartphone completely with 2 hours of

sun exposure. It should also be noted that Wearable Solar utilizes leather

and polyvinyl chloride in its designs.

Zegna is a men’s wear producer that has created a jacket outfitted

with photovoltaic strips and capable of charging small electronic devices.

While the concept for this jacket has been renewed, Zegna has not

demonstrated success in bringing any other clothing items with similar

functions to market. Nevertheless, Zegna is well respected for its pioneering

efforts in developing eco-friendly men’s clothing.

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Soletics is a startup that has developed technology that converts

insolation and motion into stored energy with the use of photovoltaic panels

and piezoelectric materials. Currently, Soletics is not fully funded, but the

developers have put a great deal of research into their product thus far.

Solio specializes in handheld portable devices that use solar panels to

collect and store solar energy. While Solio does not produce clothing, they

are a leader in the realm of portable solar products and could easily put

capital into a clothing line.

Situational Analysis

Strengths: Good quality and good for

environment Trendy and Useful Target market is well

understood Network of potential

consumers has already been established

Strategic Response

Enhance strategic strengths by aggressively marketing and maintain a positive public image and high quality production.

Weaknesses: Newcomer to market Limited cash flow Using conventional solar

technology

Strategic Response

Stay cognizant of market trends, cut costs where possible and invest in solar technology research.

Opportunities: Gaps exist in market that

can be filled by Insolar Apparel products

Room to expand in U.S. markets and abroad

Opportunities for low cost marketing

Strategic Response

Demonstrate to consumers that Insolar Apparel is a product they need and stay on top of global trends. In addition, deepen connections with environmental advocacy groups worldwide.

Threats: Competitors are able to put

Strategic Response

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capital into a similar brand Competitors have high

brand equity

Differentiate Insolar Apparel products from the products of competitors, keep prices reasonable emphasize the lifestyle the product implies.

D. Management and Personnel

Messhia Young is one of two members of Insolar Apparell, LLC. She is a

mechanical engineering concentrator at Brown University who wishes to

apply her skills and knowledge to solve environmental issues and be

profitable. At Insolar Apparel, LLC, Ms. Young is both CEO and CFO.

Stephanie Haro is the second member of Insolar Apparel, LLC. She is an

electrical engineering concentrator at Brown University who is passionate

about animal rights and environmental activism. In addition, Ms. Haro enjoys

designing clothing in her spare time. Ms. Haro is the chief designer at Insolar

Apparel, LLC.

Insolar Apparel is incorporated as an LLC in which Messhia Young

possesses 75% ownership. In exchange for her design input, Stephanie Haro,

a fellow colleague at Brown, has been given 25% ownership of Insolar

Apparel.

To keep startup costs low, there will not be any new hires until year 3, at

which net present value will be $90,985.98. At this point the company will be

profitable and able to hire individuals that will move the company forward.

Hiring will focus on college interns from Brown and RISD who are interested

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in environmental issues, electrical engineering, or photovoltaics. College

interns can be paid significantly lower wages than their graduate

counterparts. In addition, interns will bring fresh trains of thought to the

design and marketing approach of Insolar Apparel.

E. Operations and Manufacturing

Initially, all designs and protoypes will be developed as a

collaboration between Ms. Young and Ms. Haro. Both will contribute to

product design, fabrication, and testing to ensure safety. Prince

Laboratory at Brown University will be utilized as a base location for

these operations.

Insolar Apparel will not conduct its own manufacturing. Rather,

rigorous testing on all prototypes will be conducted in order to ensure

the product can be manufactured without setbacks. The designs will be

manufactured by a U.S. manufacturer that is capable of producing

smaller batches. Again, to keep startup costs low, Ms. Young has

arranged for her parents to store merchandise in their home in Dallas,

TX. Ms. Young’s parents will also facilitate shipping to customers,

which will be absorbed into their purchase amount when they order

Insolar Apparel products online.

The forecasted production schedule includes heavy production of

seasonal wear centered around February, August, and October. Non

seasonal items, like the dog coats and totes, will be manufactured

equidistantly throughout each year. The production schedule for year 1

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has been included as Exhibit F. Given the production schedule,

production costs will be more highly concentrated in the second half of

the year. This will be necessary to meet the consumer demand that

comes with holiday shopping in November and December. As an

example :

0 1 2 3 4 5 6 7 8 9 10 11 12 $-

$2.00

$4.00

$6.00

$8.00

$10.00

$12.00

Manufacturing Cost per Month

Month

Man

ufac

turin

g Co

st

F. Location

Locations of current partnerships include Providence, RI, Austin, TX,

Phoenix, AZ, and Los Angeles, CA. Austin, Phoenix, and LA all receive copious

amounts of sunlight and have thriving environmentalist communities.

Providence, RI does not receive quite as much sun, but has a student body

that is very environmentally conscious. In addition, Ms. Young is a Brown

University student and has many connections with student groups on

campus.

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Currently, there is no physical location of the business. However, when

cash flow is sufficient an office space will be purchased in Austin, TX. Out of

the four focus cities, Austin, TX has the lowest cost of living, which will mean

it will be easier to find a good deal on a modest office space for rent. At that

time, Austin will become the new base of operations for Insolar Apparel.

G. Summary

In Summary, Insolar Apparel, LLC is a clothing company that aims to be

profitable, fashionable, high quality, and convenient. In addition Insolar

Apparel clothing provides off grid power and raises awareness for

environmental issues linked to electricity production and consumption. While

there is a great deal of innovation in photovoltaic consumer goods, there are

few brands that offer reasonably priced clothing that a typical person would

wear. Insolar Apparel intends to bridge the gap that exists in this field

between sports gear and high priced runway looks. The market is ripe for

this type of product, as a result, profitability is projected by year 3.

Financial Data

H. Capital Equipment list for first 12 months

Since the Insolar Apparel will not perform its own manufacturing,

capital equipment necessary is mostly for design and prototyping activities.

This includes 10 pairs of scissors, 100 spools of industrial strength thread,

one Juki sewing machine, 500 square yards of linen, organic cotton, and

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recycled polyester, 100 yards of flexible photovoltaic strips or panels, and

assorted circuit elements. In total, this list is valued at an estimated

$2260.00.

I. Other Startup Expenses

Other startup expenses include the cost of incorporating as an

LLC. This cost is estimated at $1500. In Exhibit A, capital equipment

and unforeseen startup expenses have been reflected as lost revenue

in months 1 and 2 of year 1.

J. Cash Flow Estimate Assumptions

In estimating monthly and quarterly cash flow a production schedule

was used to determine revenue and production cost for each period.

Revenue is projected to be higher around October and November, while

lower near January and February as a combination in less demand and less

production at this time of the year. In estimating cash flow it was assumed

that variable costs, the cost of manufacturing, increased 15% per year. Sales

are also projected to increase 15% per year. For year 1, the total

manufacturing cost is $32,400. In addition, fixed costs increased at 3% per

year. Fixed costs included costs for general running of the business:

Website Development: $1400 Research and Testing: $2500 Shipping: $200 Marketing: $750

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Another assumption made in calculating cash flow is that the market

will continue to follow current trends and that consumer’s demand for

ecologically friendly apparel will increase according to projections. Yet

another assumption is that all products produced at the beginning of a

month will be sold by the end of the month. This simplifies the analysis and

alleviates the need for depreciation analysis. Since a low volume of products

are being manufactured, this is a reasonable assumption. Exhibits A through

E demonstrate monthly cash flow for year 1 and quarterly cash flow for years

2 to 5.

Total cash flow for year 1 amounts to $27,184. For year 2, this is estimated

at $44,268.70, while for year 3 this value is $51,878.98.

K. Breakeven Analysis: When the net cash flow will exceed initial investment

Breakeven time was determined by taking the average of the years

leading up to and including the first year of positive cash balance, and

applying the typical breakeven equation to this value. As a result: Breakeven

Time = ((70,000/(AVERAGE(27,184.17+44,268.70+51,878.98)/12))/12)+1 = 2.7

years. The net cash flow will exceed the initial investment of $70,000.00 in

year 2.7. More specifically around mid-August of year 2. At this time, the

company will technically be profitable. Exhibit H demonstrates the method

used to conduct breakeven analysis.

L. Source of Funds Amount of Equity asked for, Percentage of Ownership offered

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The source of funds for Insolar Apparel are family and friends. The

amount of equity asked for is $70,000.00. This amount will be sufficient to

cover all startup costs and also allow for unexpected changes in the market

of production costs. However, it will not offer so much financial cushioning

that Insolar Apparel will not be able to waste these funds. Since these angel

investors are family and friends, no percentage of ownership will be offered.

However, the loan will bear a 5% interest rate.

M. Returns to Investors

Insolar Apparel will break even in 2.7 years. At year 4, the plan is to

begin paying investors back. Interest on the loan has been taken into

account in estimating cash flow. However, actual repayment of the loan has

not been accounted 4. At year 4, cash balance is projected to be $90,895.98.

Starting in year 4, at least 12% of yearly earnings will be set aside for

repayment to the investors until the full $70,000.00 amount plus interest has

been paid back.

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N. Exhibits O. Works Cited1. http://www.pewinternet.org/fact-sheets/mobile-technology-fact-sheet/ 2. https://www.comscore.com/Insights/Press_Releases/2013/11/

comScore_Reports_September_2013_U.S._Smartphone_Subscriber_Market_Share

3. http://lifehacker.com/5948075/how-much-energy-a-smartphone-uses-in-a-year-and-what-it-means-for-your-budget

4. http://www.tech-pundit.com/wp-content/uploads/2013/07/Cloud_Begins_With_Coal.pdf?c761ac

5. http://gigaom.com/2012/06/21/so-how-much-does-it-cost-to-charge-an-ipad-every-year/

6. http://www.forbes.com/sites/benedictevans/2012/10/02/how-many-tablets-are-in-the-usa-and-does-it-matter/

7. http://www.forbes.com/sites/benedictevans/2012/10/02/how-many-tablets-are-in-the-usa-and-does-it-matter/

8. http://www.pewinternet.org/files/old-media/Files/Reports/2013/PIP_Tablet%20ownership%202013.pdf

9. http://www.census.gov/popclock/

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10. http://www.forbes.com/sites/christopherhelman/2013/09/07/how-much-energy-does-your-iphone-and-other-devices-use-and-what-to-do-about-it/

11. http://www.eia.gov/cfapps/ipdbproject/IEDIndex3.cfm?tid=2&pid=2&aid=2

12. http://www.eia.gov/tools/faqs/faq.cfm?id=97&t=3 13. http://www.eia.gov/forecasts/aeo/er/early_consumption.cfm14. Dietz, Thomas, G.T. Gardner, J. Gilligan, P.C. Stern, and M.P.

Vandeburgh. 2009. Household Actions Can Provide a Behavioral Wedge to Rapidly Reduce U.S. Carbon Emissions. PNAS 106:18452-18456

15. http://www.natural-environment.com/blog/2008/04/10/17-eco-friendly-fabrics/

16. http://www.WearableSolar.nl17. http://www.Zegna.com18. http://www.teamSoletics.com19. http://www.Solio.com 20. http://www.doggievogue.com

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