Human Potential Athletics

Business Plan

Alex Reidy

12/9/2014

I. Introduction:

Human Potential AthleticsWinding Brook WayHolmdel, NJ 07733

www.HumanPotentialAthletics.com

Co Owners:Alex ReidyAnna ReidyNina Kalaschnikow

Description of Business:Human Potential Athletics’ mission is to inspire people to help them reach their full potential. We are an internet based health and wellness company that sells our own clothing line, supplements, and workout equipment. Through our quality products we are trying we are trying to help our customers reach their goals and improve their lives at an affordable price.

Target Market: Human Potential Athletics targets the athletes trying to improve their athleticism for their specific sport and the everyday person just trying to have a healthier lifestyle.

Financing:Initial financing required is $17,439.40, and will be received from the investments from all co-owners. Alex will put up $10,000, while will both Anna and Nina put up $5,000 each from their own personal savings accounts. Alex will hold 70 percent of the company and both Anna and Nina will receive 15 percent of the company. The invested money will cover inventory, website costs, shipping, clothing tags, and utilities.

This report is confidential and is the property of the co-owners listed above. It is intended only for use by the person to whom it is transmitted and any reproduction or divulgence of any of its contents without the prior written consent of the Company is prohibited.

II. Executive SummaryHuman Potential Athletics is an internet based company that sells quality health and wellness

products which include their own clothing, supplements, and workout equipment. Through

their products they are trying to help their customers reach any goals they set out and at the

same time improve their wellbeing. HPA’s mission is to inspire people to help them reach their

full potential. HPA chose to be an internet based company because of the rapid and continuing

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growth of internet shoppers and thought it would be the best way to reach their target market.

In 2013, 191.1 million U.S. citizens were online shoppers and had browsed products, compared

prices or bought merchandise online at least once. These figures are projected to surpass 200

million people in 2015. HPA is trying to target athletes but is mainly focused on combatant

athletes for the first couple years. They are also targeting anyone who is looking to get in shape

or just live a healthier life style.

HPA is selling products that are in three different industries, active wear, supplements, and

work out equipment. Health and wellness is already considered by many as an unavoidable

necessity and top priority so it is no surprise that sales in each of these industries are increasing

every year and don’t show any signs of slowing down. According to The NPD Group, active

wear sales accounted for $33.7 billion, representing 16 percent of the total apparel market, and

have played a significant role in the overall success of the total apparel market for the last two

years. Consumers are wearing active not only to work out in, but also to wear out when going

out with friends. According to Euromonitor International, multivitamin sales reached about

$4.9 billion in 2013. An advantage for selling supplement products is that they are consumable

so if you treat your customers well, they may habitually re-order from you whenever they run

out. . According to Statista.com sales of fitness equipment for home use in the U.S. has grown

from 3.18 billion U.S. dollars since the economic recession in 2008 to an all-time high in 2013 of

3.58 billion U.S. dollars. Nutrition and exercise are already well integrated into our mainstream

culture and is still increasing in popularity. People like the convenience of working out in the

comfort of their own home and need specific workout equipment for their homes.

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HPA plans to make all sales via the internet. The website will allow customers to browse for

their needs, as well as learn about the products they purchase and their proper use. The

products that HPA sells will help customers live a healthier lifestyle. Products that HPA sells

include active wear apparel, supplements, and workout equipment. As of now the active wear

we sell includes cotton T-Shirts, Sport-Tek Competitor shirts, and Sport-Tek Micro-Mesh

reversible shorts. The current supplements we sell is a multivitamin for men and women, and

the supplement brainpower. Kettlebells are the initial workout equipment we sell.

A major social media site that will be vital for promoting HPA’s products will be Twitter because

of the large amount of people that can be reached instantly at any time. HPA has strategic

partnerships with Mixed Martial Artists and Brazilian Jiu-Jitsu legends Renzo Gracie and Rolles

Gracie. Renzo Gracie has 160,000 Twitter followers and Rolles Gracie has almost 26,000

followers. That means that about 186,000 potential customers from the target market can be

reached instantly. Both Renzo and Rolles can tweet about special deals, promotions, or just

letting people know that HPA is in business. In return for these promotions HPA will have

promotional links to their websites and promote any upcoming events and seminars for them.

In order to start up the business financing required is $17,439.40, and will be received from the

investments from all co-owners. Alex will put up $10,000, while will both Anna and Nina put up

$5,000 each from their own personal savings accounts. Alex will hold 70 percent of the

company and both Anna and Nina will receive 15 percent of the company. The invested money

will cover inventory, website costs, shipping, clothing tags, and utilities.

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III. Industry Analysis

Future Outlook and TrendsDevelopment of more stable and reliable online platforms has improved online shopping

significantly. Additionally, online shopping saves money for many customers by leaving out

physical retailing costs and saves them time by allowing the customer to make an order from

their phone or any other capable device wherever they are. According to statista.com, in 2013,

191.1 million U.S. citizens were online shoppers and had browsed products, compared prices or

bought merchandise online at least once. These figures are projected by statista.com to surpass

200 million people in 2015. Human Potential Athletics saw this as a big factor in why they

wanted to be an internet based company.

Health and wellness is already considered by many as an unavoidable necessity and top priority.

What started off as a trend is now becoming an important part of the daily life for many people,

and as they get older, people are buying health and wellness products and working out as an

investment in their future health. An improving U.S. economy will aid growth of the health and

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wellness products over 2013-2018 as higher disposable incomes allow for greater spending on

health and wellness categories. According to blog.euromonitor.com, Health and Wellness can

be a trillion dollar industry by 2017.

Health and wellness gets well-deserved support from medical and scientific studies, and the

media is also doing its part to educate and inform the public. Nutrition and exercise are already

well integrated into our mainstream culture; it is growing rapidly and will continue to do so in

the future. People like the convenience of working out in the comfort of their own home and

need specific workout equipment for their homes. According to Statista.com sales of fitness

equipment for home use in the U.S. has grown from 3.18 billion U.S. dollars since the economic

recession in 2008 to an all-time high in 2013 of 3.58 billion U.S. dollars.

The Health and Wellness Industry has several other advantages. One advantage is that health

products are consumable so if you treat your customers well, they may habitually re-order from

you every month. Another advantage is that an increase in wellness product sales always leads

to an increase in customers and likely distributors. Over 87 percent of U.S. consumers take

some form of dietary supplement. According to Euromonitor International, multivitamin sales

reached about $4.9 billion in 2013.

Growth in active wear buoyed the total U.S. apparel market in the 12 months ending June 2014

(July’13—June’14), helping total apparel sales reach $206.3 billion, a 1 percent increase over

the prior year, according to The NPD Group. Active wear sales accounted for $33.7 billion,

representing 16 percent of the total apparel market, and have played a significant role in the

overall success of the total apparel market for the last two years. Consumers are wearing active

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wear not only to the gym, but also in the gym, from the gym, while they are working out, going

out, and even hanging out. Consumers are drawn to its comfort and versatility, and the fact

that it still makes a fashion statement. Active wear, by nature, also evokes a sense of

athleticism and wellbeing, adding to its appeal.

Analysis of CompetitorsHPA’s direct competitor would be a private company, Onnit Labs LLC. Onnit is an Austin, Texas

based company focused on the sale of health and nutrition related products including

supplements, foods, and fitness equipment. One of the strengths of Onnit is the amount of

exposure they get from sponsoring the Joe Rogan Experience podcast. The podcast reaches

millions of loyal listeners worldwide. They also sponsor professional world class athletes in a

variety of sports such as combat sports, football, and hockey. All this exposure for the past

three years has made them relatively well-known in the health and fitness industry. They may

also have established brand loyal customers.

Market SegmentationThe health and wellness industry can be broken down into three major segments: price, age

and purpose of purchase. We can better focus our marketing efforts if we understand these

market segments.

Price is a main factor in the buying decision for anything. HPA believes in selling quality apparel,

supplements, and workout equipment for the competitive athlete and the average person at a

value price. Our prices will be lower than our competitors without sacrificing quality.

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Age is another factor on how we segment our markets. Age is important because people of

different ages may be looking for different products that they might need at that point in their

lives. A customer over the age of forty could be looking for a daily multivitamin to substitute

what they are not getting in their diet while a twenty-year old may look to put on muscle from

working out with a kettle bell.

The reason for the customer purchase is another factor in how the market can be segmented.

One reason for purchasing is to help improve customers’ athleticism in their chosen sport while

another purchase reason is simply to help customers live a healthier life. These two

subcategories can initially be treated as one category because of our limited product variety,

but as we grow we will add more products to target different purposes. For example, HPA is

currently only selling a multivitamin which can be marketed both to help athletes and also

marketed to someone trying to improve their health. In the future, HPA expects to have a wider

variety of supplements such as a protein powder for athletes to help them recover from a

workout.

Industry and Market ForecastsHPA is selling products that are in three different industries, active wear, supplements, and

work out equipment.

According to The NPD Group for the 12 months ending June 2014, total apparel sales reached

each $206.3 billion. Active wear, representing 16 percent of that total apparel market,

accounted for $33.7 billion. We assume its increasing at 7 percent a year so we project active

wear sales in the U.S. to be at $38.58 billion in 2015.

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Euromonitor International has described the total multivitamin sales for 2013 at about $4.9

billion, and sales are expected to increase another 4 percent through 2013 to 2018. We

estimate a one percent increase in sales each year, so in 2015 we project approximately $5

billion in sales in the U.S.

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According to Statista.com, U.S. consumer fitness equipment wholesale sales for home use

reached $3.54 billion in 2012 and grew to $3.56 billion in 2013. We project $3.6 billion in sales

in 2015 (growing 0.5% annually) and the 2015 online portion of sales to be about

$468,000,000.

IV. Description of VentureHPA is an internet based company founded by the owner Alex Reidy and has two other co-

owners of the company. HPA plans to make all sales via the internet. The website will allow

customers to browse for their needs, as well as learn about the products they purchase and

their proper use. For example, if a customer buys a kettle bell we will provide information on

proper workout techniques via email and will have videos uploaded to the website.

The products that HPA sells will help customers live a healthier lifestyle. The products include

active wear apparel, supplements, and workout equipment. As of now the active wear we sell

includes cotton T-Shirts, Sport-Tek Competitor shirts, and Sport-Tek Micro-Mesh reversible

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shorts. The current supplements we sell is a multivitamin for men and women, and the

supplement brainpower. Kettlebells are the initial workout equipment we sell.

V. Operations PlanWhen a customer visits the HPA website and makes a purchase, the owner, Alex Reidy, will be

on call and ready to get the product shipped out as soon as possible. HPA will use Alex Reidy’s

home and garage for holding inventory. Inventory will be stocked based on how much a

particular product is selling.

HPA will start with 100 units in their active wear inventories, including 20 in size small, 20 in

medium, 20 in large, 20 in x-large, 20 and xx-large. When one of the sizes runs low, HPA will

make another 100 unit order that will consist of the most popular sizes. It will take two weeks

with free shipping from their supplier, CustomInk.

HPA will have starting inventory of 48 bottles of their multivitamin for both men and women

and 48 bottles of Brain Power. When there are 24 bottles left in inventory, HPA will make an

order for more 24 bottles from their supplier, NHS Labs Inc. It will take three to five business

days for the vitamins to be delivered from their U.S.- based supplier and will cost be $6 for

shipping.

HPA will have starting inventory of 20 kettle bells in the 4, 6, 8, and 10 kg. When there are 5

remaining in which ever weight, that weight will be restocked within seven business days. HPA

will use workoutzwholesale.com as their supplier.

VII. Marketing Plan

Pricing

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HPA’s pricing strategy is to provide value pricing for our products, but at the same time still

receiving a quality product. This advantage should not negatively impact our profit and we have

enough margins built in to also allow us to absorb costs of any possible customer discounts and

promotions.

DistributionHPA will distribute its products to its customers using the U.S. Postal Service. They will be using

a one-stage distribution channel, where the product goes from manufacturer to retailer to

consumer. The owner, Alex Reidy, will be the one packaging and shipping its products. Using

the USPS for shipping, a 1lb package will cost $6.51 and 2lb package will cost $8.26 to ship

anywhere in the U.S. Delivery should arrive to the customer in one to three business days.

HPA’s return policy is 20 day full refund guaranteed (customer will pay shipping for returns) and

HPA will also pay for the shipping to deliver to the customer. HPA will monitor shipping costs

and use alternate shipping providers including USPS and FedEx when it is cost effective.

PromotionHPA will start promoting using social media sites. A major social media site that will be vital for

promoting HPA’s products will be Twitter because of the large amount of people that can be

reached instantly at any time. HPA has strategic partnerships with Mixed Martial Artists and

Brazilian Jiu-Jitsu legends Renzo Gracie and Rolles Gracie. The owner, Alex Reidy, is a student

under Rolles Gracie and sees him on a weekly basis. Alex Reidy also trains with Renzo’s son,

Ruran Gracie. Renzo Gracie has 160,000 Twitter followers and Rolles Gracie has almost 26,000

followers. That means that about 186,000 potential customers from the target market can be

reached instantly. Both Renzo and Rolles can tweet about special deals, promotions, or just

letting people know that HPA is in business. Renzo and Rolles Gracie being some of the best Jiu-

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Jitsu fighters in the world have contacts with some of the best Mixed Martial Artists in the

world. This connection can be help HPA sponsor recognizable fighters. In return for these

promotions HPA will have promotional links to their websites and promote any upcoming

events and seminars for them.

Product ForecastOf the $468,000,000 in sales projected for 2015 online purchases for consumer fitness

equipment for home use HPA’s goal is to get a market share of 0.0000024 percent of those

projected sales. This translates to about $1,123.20 in domestic gross sales revenue in the first

year. HPA also expects to double sales revenue each year for its first three years.

Projected 2015 Projected 2016 Projected 2017Total Revenues 1,123.20 2,246.40 4,492.80Cost of Goods Sold 915.65 1,831.30 3,662.60Pre-tax Income (Loss) 207.55 415.10 830.20

Of the $5,000,000,000 in sales projected for 2015 in Multivitamins, HPA’s goal is to get a market

share of 0.00000041 percent of those projected sales. This translates to about $2,050 in

domestic gross sales revenue in the first year. HPA also expects to double sales revenue each

year for its first three years.

Projected 2015 Projected 2016 Projected 2017Total Revenues 2,063.28 4,126.56 8,253.12Cost of Goods Sold 1,444.80 2,889.60 5,779.20Pre-tax Income (Loss) 618.48 1,236.96 2,473.92

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Of the $38,580,000,000 in sales projected for 2015 in active wear apparel, HPA’s goal is to get a

market share of 0.000000105 percent of those projected sales. This translates to about

$4,050.90 in domestic gross sales revenue in the first year. HPA also expects to double sales

revenue each year for its first three years.

Projected 2015 Projected 2016 Projected 2017Total Revenues 4,048.50 8097.00 16,194.00Cost of Goods Sold 3,037.50 6,075 12,150Pre-tax Income (Loss) 1,011 2,022 4,044

VIII. Financial Plan

Human Potential Athletics, Pro Forma Income Statement, First Year by Month

Jan Feb. Mar. Apr. May June July Aug. Sept. Oct. Nov. Dec. Total

Sales 149.17 238.68

358.02

522.11

658.86

745.87

745.87

745.87

602.92 602.92

895.05

969.64

7,234.98

Less: Cost of Goods Sold

111.29 178.08

267.12

388.54

491.57

556.49

556.49

556.49

449.83 449.83

667.79

723.44

5,397.95

Gross profit 37.88 60.60 90.90 133.57

167.29

189.38

189.38

189.38

153.09 153.09

227.26

246.2

1,837.03

Operating expensesUtilities 100 100 100 100 100 100 100 100 100 100 100 100 1,200

Advertising 0 0 0 0 0 0 0 0 0 0 0 0 0

Supplement label fee

225 0 0 0 0 0 0 00 0 0 0 0 225

Woven labels 145 0 0 0 0 0 0 0 0 0 0 0 145

Website cost 6,000 6,000

Site maintenance

250 0 250 0 250 0 250 0 250 0 250 250 1,750

Total operating expenses

6,720 100 350 100 350 100 350 100 350 100 350 350 9,320

Gross profit (6,682. (39.4) (259. 33.5 (182 89.3 (160. 89.3 (196.9 53.09 (122 (103. (7,482.97

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(loss) 12) 10) 7 .71) 8 62) 8 1) .74) 80) )

Human Potential Athletics, Pro Forma Income Statement, Three-Year SummaryPercent 2015 Percent 2016 Percent 2017

Sales 100 7,234.98 100 14,469.96 100 28,939.92 Less: Cost of goods sold

74.6 5,397.95 74.6 10,795.90 74.6 21,591.8

Gross Profit 25.4 1,837.03 25.4 3,674.06 25.4 7,348.12Operating expensesUtilities 16.6 1,200 8.3 1,200 4.1 1,200Advertising 0 0 8.3 1,200 8.3 2,400Supplement label fee

3.1 225 0 0 0 0

Woven Labels

2 145 0 0 0.7 190

Website cost 82.9 6,000 0 0 0 0Site maintenance

24.1 1,750 12.1 1,750 6 1,750

Total operating expense

128.8 9,320 28.7 4,150 19.1 5,540

Gross profit (loss)

(103.4) (7,482.97) 3.3 (475.94) 6.2 1,808.12

Net profit (103.4) (7,482.97) 3.3 (475.94) 6.2 1,808.12

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Human Potential Athletics, Pro Forma Cash Flow, First Year By Month

Jan. Feb. Mar. April May June July Aug. Sept. Oct. Nov. Dec.

Receipts

Sales 111.88 216.30 428.19 481.09 624.67 724.12 745.87 745.87 638.68 602.92 822.01 950.99

Disbursement Cost of goods

89.03 164.72 249.31 364.26 470.96 543.51 556.49 556.49 471.16 449.83 624.20 712.31

Utilities 80 100 100 100 100 100 100 100 100 100 100 100

Advertising

0 0 0 0 0 0 0 0 0 0 0 0

Supplement label fee

180 45 0 0 0 0 0 0 0 0 0 0

Woven label

116 29 0 0 0 0 0 0 0 0 0 0

Website cost

4,800 1,200

Site maintenance

200 50 200 50 200 50 200 50 200 50 200 250

Inventory 503.46 503.46 503.46 503.46 503.46 503.46 503.46 503.46 503.46 503.46 503.46 503.46

Total disbursement

5968.49

2092.18

1052.77

1017.72

1,274.42

1196.97

1359.95

1209.95

1274.62

1103.29

1427.66

1565.77

Cash flow (5856.61)

(1875.88)

(624.58)

(536.63)

(649.75)

(472.85)

(614.08)

(464.08)

(635.94)

(500.37)

(605.65)

(614.78)

Beginning balance

20,000 14,143.39

12,267.51

11,642.93

11,106.30

10,456.55

9,983.70

9,369.62

8,905.54

8,269.60

7,769.23

7,163.58

Ending balance

14,143.39

12,267.51

11,642.93

11,106.30

10,456.55

9,983.70

9,369.62

8,905.54

8,269.60

7,769.23

7,163.58

6,548.80

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Human Potential Athletics, Pro Forma Balance Sheet, End of First YearAssets

Current assets

Cash $6,548.80 Accounts receivable 237.75 Inventory 503.46

Total current assets $7,290.01

Liabilities and Owners’ Equity

Current liabilities

Accounts payable $313.15Total liabilities $313.15

Owners’ equity

Alex Reidy 10,000 Anna Reidy 5,000 N. Kalaschnikow 5,000 Retained earnings (13,023.14)

Total owners’ equity $6,976.86Total liabilities and owners’ equity $7,290.01

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Human Potential Athletics, Pro Forma Sources and Applications of Funds, End of First Year

Source of funds Personal funds of founders $20,000 Net income (loss) from operations (7,482.97)Total funds provided $12,517.03Application of funds Inventory $503.46Total funds expended 503.46Net increase in working capital 12,013.54

$12,517.03

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0 200 400 600 800 1000 1200 14000

5000

10000

15000

20000

25000

30000

35000

40000

45000

Graph of Breakeven

TRTCFC

Dolla

rs

The average selling price of an item from HPA is $29.99The average variable cost of making an item is $23.01The total fixed cost is $9,320In order for HPA to break even they will need to sell about 1,335 units at $29.99 to break even.

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References

HTTP://WWW.STATISTA.COM/STATISTICS/183755/NUMBER-OF-US-INTERNET-SHOPPERS-SINCE-2009/

HTTP://WWW.STATISTA.COM/STATISTICS/236127/US-FITNESS-EQUIPMENT-SALES-FOR-HOME-USE/

HTTPS://WWW.NPD.COM/WPS/PORTAL/NPD/US/NEWS/PRESS-RELEASES/ACTIVEWEAR-GROWTH-SETS-PACE-FOR-OVERALL-APPAREL-MARKET/

HTTP://BLOG.EUROMONITOR.COM/2014/01/CONTROVERSY-AND-CLIMBING-SALES-TWO-CONSTANTS-IN-THE-US-VITAMINS-AND-DIETARY-SUPPLEMENTS-MARKET.HTML

HTTP://WWW.EXECUTIONISTS.COM/BLOG/COST-TO-BUILD-WEBSITES-2014/

HTTP://WWW.STATISTA.COM/STATISTICS/201225/SPORT-EQUIPMENT-SALES-BY-CHANNEL-OF-DISTRIBUTION-IN-THE-US-SINCE-2006/

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