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Feasibility Study!

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Stephen Fishler - Chief Executive Officer: 484-661-6235 sqf5141@psu.edu !

Brittany Schraeder - Chief Commercial Officer: 402-332-8197 bqs5208@psu.edu !

Derek Sommers - Chief Financial Officer: 610-883-2675 dws5660@psu.edu !

Kelsey Sullivan - Chief Operating Officer: 267-825-0136 krs5592@psu.edu !

Rachel Wagner - Chief Marketing Officer: 610-613-0085 rmw5331@psu.edu!

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TABLE OF CONTENTS

Executive Summary .......................................................................................................................2 Business Concept ............................................................................................................................3 Product/Service Description ........................................................................................................4

What is Trash Smash? ................................................................................................................................ 4 The Competition ........................................................................................................................................ 4 Benefits to the Customer ............................................................................................................................ 5 The Design ................................................................................................................................................. 5

Industry Analysis ..........................................................................................................................6 Market ........................................................................................................................................................ 6 Market Growth and Potential ..................................................................................................................... 8 SWOT Analysis ......................................................................................................................................... 9 Questions Moving Forward ..................................................................................................................... 10

Market/Customer Analysis ........................................................................................................11 Target Audience ...................................................................................................................................... 11 Strengths and Weaknesses ....................................................................................................................... 12 Competitors .............................................................................................................................................. 12 Market ...................................................................................................................................................... 13 Product Improvement ............................................................................................................................... 15 Founding Team ............................................................................................................................16 Who we are ............................................................................................................................................. 16 Strategy and Objective ........................................................................................................................... 16 Sales Strategy ..............................................................................................................................17 Product and Price .................................................................................................................................... 17 Advertising and Promotions ................................................................................................................... 17 Sample Advertisement ............................................................................................................................ 20 Cost Associated ....................................................................................................................................... 21 Industry Benchmarks and Competitor Comparisons .............................................................................. 22 Financial Plan ...............................................................................................................................25 Income Statement .................................................................................................................................. 25 Cash Flow ............................................................................................................................................... 27 Starting the business ............................................................................................................................... 28 Scenarios ................................................................................................................................................ 29 Feasibility Decision ......................................................................................................................30 Timeline to Launch ......................................................................................................................31 Bibliography .................................................................................................................................33 Appendices ...................................................................................................................................35 ! !

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EXECUTIVE SUMMARY !

Trash Smash is a hand-held trash compactor that anyone can use. Many people find that

their trash is filling up too quickly before it has to be taken out. However, there is still room in

the bag for more trash, so Trash Smash can solve this problem by compacting trash in the bag to

allow for more room. You will not have to touch trash, and it will allow more trash to fit in each

garbage bag. Our product is environmentally friendly, has the option of a built in air freshener,

and can be easily stored. Essentially anyone with a garbage can could purchase this product, but

we believe the largest number of consumers will come from people who own houses or

apartments, especially the eco-friendly homeowners. Another target consumer would be students

who live in apartments or dorms because they will be trying to save money and our product will

allow them to not use as many garbage bags to cut down on costs. With our product, you will

never have an overflowing trash can again.!

Our product is unique because there is no other hand-held trash compactor currently

marketed. However, several patents have been put in for, but nothing has come out of them.

There are also built-in, automatic trash compactors that are being sold, but they are more

expensive because they use electricity and have to be installed. Additionally, people can compact

the trash without our product by using their hands or feet, but this method is unsanitary. Our

competitive advantage is that Trash Smash is cheaper and more logical to use because you only

have to use your own strength to push down and compact the garbage. We have had experience

with this industry because everybody has trash in some form or another and has had the problem

of an overflowing trash can.!

In order to start the venture of creating Trash Smash, $15,000 to $20,000 will be

necessary for manufacturing and advertising costs. Our main source of funding will be personal

capital. The founding team of Trash Smash includes Derek Sommers, Rachel Wagner, Brittany

Schraeder, Kelsey Sullivan and Stephen Fishler. Derek is strong in financial analysis as well as

presenting and answering questions pertaining to our business. Rachel does well with business

planning and marketing and also has a background in mathematics and statistics. Brittany’s

strengths include public speaking and engineering design, while Kelsey’s talents are technology

and organization. Stephen is strong in operating management and communication strategies.

Together we believe that Trash Smash can be a successful venture.!

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Trash Smash would fit into the home goods industry, and more specifically in the trash

compactor niche industry. The production of trash will only grow as fast as the population

grows, however the current population is growing and will increase by 5% in the next five years.

The major competitors of the home goods industry are KitchenAid, Broan, Maytag, Whirlpool,

and Kenmore. However, these companies all make electric trash compactors that are over $500.

Trash Smash provides a simple and affordable alternative to the competition. Our sales plan

includes promotions through local trash companies and advertising at college move-in days.

Additionally, we plan to attend trade shows where we will promote our product and create brand

identity and eventually sell Trash Smash in large home goods stores.!

We believe that Trash Smash is a feasible business venture and have found that it would

be able to sell in the current industry market. Our timeline to launch begins with completing the

business plan and is followed by building the prototype, obtaining a patent, hiring a

manufacturer, attending trade shows, hiring sales professionals and accountants, and finally

launching our product and hiring the board of directors.

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BUSINESS CONCEPT !

Trash Smash is a hand-held trash compactor that will allow anyone who generates trash

to manually compact garbage in a trash bag to create more room for additional garbage while

preventing you from coming into contact with the waste. Trash Smash focuses on simplicity and

is made of heavy-duty ABS plastic to ensure reusability and folds nicely for easy storage. ! !

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PRODUCT/SERVICE DESCRIPTION!

What is Trash Smash? !

Our product is a simple, handheld trash compacting device that can be used with a variety

of trash cans to compact trash in such a way that the consumer does not have to come in contact

with the trash. It is not a trash can in itself nor electric in any way, making it different from

typical trash compactors currently on the market.!

Trash Smash is unique because of its simplicity. It is small and easy to use and store and

does not require any electricity or installation. It features a simple design with a few variations to

fit different sized trash cans. Our product’s most basic package consists of the Trash Smash

compactor and three heavy duty trash bags that will reduce the likelihood of broken bags when

using Trash Smash. The consumer will have the option of purchasing a more advanced model

that includes the added feature of an air freshener to mask odor. This model will also include

three heavy duty trash bags. Additionally, we will sell separate packages of heavy duty trash

bags for the consumer to purchase for continued use with Trash Smash. !

The basic benefits of trash smash include: reasonable pricing, never requiring the

consumer to touch their trash, option of air freshener, and heavy duty trash bags included as well

as available for purchase separately.!

The Competition!

Our product is superior to the competition because it does not require the consumer to

replace their existing trash can, spend a lot of money, or use any electricity to operate it. Typical

trash compactors on the market are as expensive as $100-$1000, require installation and

electricity, and are full replacements of existing trash cans. Our compactor will simply be an

accessory to the trash can that consumers already own and will be simpler and cheaper than the

competition. Trash Smash will be able to be used with many different trash cans, including small

bedroom, bathroom, or office sized cans. Typical trash compactors on the market are usually

large and take up a lot of space and are mostly used only in kitchen settings.!

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Benefits to the Customer!

The overall social benefit that Trash Smash provides is that it is a cost efficient solution

to trash compacting that is readily available to the everyday consumer. The consumer does not

need to come in contact with the trash and will save space in each trash bag thus requiring them

to less frequently empty their trash and make trips to their street trash cans or dumpsters.

Throughout our research we have found that using Trash Smash can reduce the space trash

consumes in a single trash can by up to 40 percent1.!

The Design!

The idea for Trash Smash came about as an idea for a solution to a problem that each of

our team members encounters regularly, too much trash. Our product design focuses on

simplicity and will need to be patented and the Trash Smash brand will need to be trademarked.

Trash Smash will be made of heavy-duty plastic and essentially consist of a base platform,

available in different shapes to fit different trash cans, and a handle for the user to grip and use to

push down the trash from a distance. Because of the simplicity of the design, our product’s

weakness is that it may be easy to break. Additionally, competitors may be able to create a

similar design quickly once the product reaches the market. We believe our product is well

defined and at this point in time we do not need any additional information to define it.!

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!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!1 (2014). Amazon.com: Manual Trash Compactor: Home Improvement. Retrieved April 8, 2015, from http://www.amazon.com/BigFoot-1-Manual-Trash-Compactor/dp/B00IAZ8YJG.

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INDUSTRY ANALYSIS !

Market!

This is a very specific item that has a small market and thus a small industry to address

this market. The larger portion of this industry would home goods. In terms of public investing,

the Industrial sector of the S&P 500 encompasses our business the best. The industrials sector

encompasses many different businesses from aerospace defense companies to for-profit schools

to waste management companies. Another perspective on Industry would be categorizing Trash

Smash under the waste management industry, which includes companies like Waste

Management itself and Republic Services, which collects our trash here in State College. !

Per capita disposable income, consumer confidence index, homeownership rate, and

housing stats2 all are important trends to watch out for when going into the home goods industry.

Watching out for and paying close attention to these trends is an important aspect in succeeding

in this industry. An important trend in the waste management industry is companies being able to

accommodate to “green” and “recyclable” initiatives. Many communities are taking the initiative

to recycle more and more (as shown below)3, and companies disposing of that waste should at

the very least be able to respond to said initiatives. If a township rules that all citizens must

recycle, our company and many others should be able to accommodate to those needs. We

anticipate that being ahead of the curve would help with the brand equity of our company and be

able to reach an additional market of people. !

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!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!2 IBISWorld. Retrieved April 23, 2015, from http://www.ibisworld.com/. 3 (2013). Reducing, Reusing, Recycling - Delhaize Group ... Retrieved April 23, 2015, from http://www.delhaizegroup.com/SustainabilityReport/2012/Performance/Zero-waste/reducing-reusing-recycling.html.!

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In the waste management sector the majority of the money is spent on the collection of

trash.4 By using Trash Smash the amount of trash that will be required to be collected will

decrease due to the compaction of the trash. !

With such a simple product it is very easy for substitutes to appear on the market.

However, we believe that with our patent we will not have to worry about other companies

making similar products and stealing some of our customers from us. As far as buyer power

goes, sense the buyers are fragmented no one buyer or group of buyers has any significant say in

our product allowing us to have more control over it. Our supplier on the other hand has much

more power than the customers. The supplier can decide to increase the prices of the

manufacturing and we then must decide to agree with that move or change manufacturing. If

there are other suppliers that it would not cost a lot to switch to, the supplier power is reduced

but either way the supplier will end up having at least some power in our company. With the low

start up cost, there are not very many barriers of entry into this industry. However, with our

patent we will restrict other companies of producing similar products thus, providing them with a

barrier to entry. We hope to increase the barrier of entry of other companies by getting into larger

stores and create brand awareness of our product so that people are most familiar with Trash

Smash and pick us over other potential competitors. !

!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!4 (2014). The Unknown $75 Billion Industry — Grid Waste. Retrieved April 23, 2015, from http://www.gridwaste.com/news/2014/8/20/10l92d52vzaw1zdsf0znubdqpttq7k.

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Market Growth and Potential

Recently the home goods industry has shown no signs of slowing down5, IBM's Big

Data-based retail forecast attributed part of this rise to a recovering housing market. More people

are buying houses and that is driving home good sales, particularly in the appliances category,

and people are needing to furnish their new houses. Given the tougher economic times,

consumers will seek out little luxuries that have a lower cost to make them feel good6. !!! ! !

The waste management companies, like Waste Management or Republic Services, do not

segment the market since they are responsible for everyone’s trash in the United States. Based on

the research of companies who provide a similar product to our own, there is not much of a

market segmentation besides economic statues. Most products that do what we do, sell their

product for $500 and upwards so their demographic obviously skews to the more affluent side of

the market. Some of the companies that would be our competition moving forward and that sell

the pricier options include; Kenmore, KitchenAid, Broan, Whirlpool, and Maytag.

!Industry revenue was $26 billion for home goods and U.S. retail sales for furniture and

home furnishings stores increased 2.9% in the first six months of 2014 compared to the same

period in 2013, so there is growth potential, it is just minimal.7 The trash industry will only grow

as fast as the population grows. The graph below from the EPA shows municipal solid waste

generation rates through 2012.8!!!

!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!5 (2012). Growth of the Home Decor Market Shows No Signs ... - Forbes. Retrieved April 8, 2015, from http://www.forbes.com/sites/moneywisewomen/2012/10/24/growth-of-the-home-decor-market-shows-no-signs-of-slowing-down/. 6 (2013). Retailers Eye Home Goods As Housing Sales Improve. Retrieved April 8, 2015, from http://www.cnbc.com/id/100717120. 7 (2012). Industry Insights| Commercial & Industrial Inventory: Home ... Retrieved April 8, 2015, from http://www.gordonbrothers.com/Expertise/Industry-Insights/C/Commercial-and-Industrial-Home-Goods-and-Housewares.aspx. 8 (2014). Municipal Solid Waste Generation, Recycling. Retrieved April 14, 2015, from http://www.epa.gov/wastes/nonhaz/municipal/pubs/2012_msw_fs.pdf.!

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At the moment, the general population is consuming more and more, resulting in more

trash, but there is a movement to consume less, which would diminish the growth rate of our

industry. In the next five years, the growth rate will be below 5%. !

SWOT Analysis!

Strengths: A variety of qualifications and backgrounds among the founding team allowing for

growth of the company to be relatively easy. We have a clear concept of our business model and

plan and we all see eye to eye on where this business is heading. Because of our varying

backgrounds we have the access to all of the resources that are needed to get this company off of

the ground. !

Weaknesses: The possibility of running out of our own financials and therefore we would not be

able to keep our company afloat. Having a larger group for a founding team does allow for

conflicts of opinion and varying directions of where we want the company to go. !

Opportunities: Low start-up costs, simple design, market growth, and no need for outside

employees until we are ready to sell. We also expect fast growth once our product hits the market

because of our competitive price. Some of our founding team members have a research and

product development background so once we want to expand our business, it will be simple and

low cost to do so. The industry is growing steadily and will continue to grow for the coming

years. Our product will fit well into this industry because we fit into multiple niche markets and

are able to compete with competitors because of our price and simplicity. Another strength is our

verification of the product through professionals. We have discussed our product and business

plan with some of the chefs and managers at the West Dining Hall food district. They mentioned

how useful this product would be since they have to deal with a lot of trash and have to take it to

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the basement to dispose of it. Having the trash being compacted would allow for less frequent

trips downstairs. !

Threats: The simplicity and ease of use of the product makes it easy for other companies to

make a similar product to ours. While there are other competitors out there with electronic

options our main competitor is people’s foot. People could easily stomp on their trash in order to

compact it and we must convince them that our product is a much better option than that. With

low start up costs, there is a low barrier to entry making it easy for competitors to get into the

market. Price erosion is a possibility once other business join in on the market, and our

dependence on our supplier. If our supplier starts to demand more money it will be hard to

switch suppliers mid-way through. !

Questions Moving Forward !

In order to move forward, we need to ensure that there are not any lower budget trash

compactors being sold at the large company stores. Currently the ones that we found being sold

there were hundreds of dollars. Unfortunately, many of our direct competitors are private

companies so there is not much financial information released to the public about their

operations. Something to consider would be partnering with the waste management companies to

subsidize our product, therefore putting it in every home and ultimately reducing the quantity of

work that their workers do and therefore increasing margins for themselves.! !

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MARKET/CUSTOMER ANALYSIS!

Target Audience !

Our target audience is people living in urban areas, although our product could also be

used in more of a suburban setting, and college students. The graph below shows the percent of

the population living in urban areas versus suburban areas according to the U.S. Census Bureau.9!

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We are solving the problem of our customers’ over-flowing trash cans. In urban areas it is

a lot harder to take trash to the curb so reducing the frequency of having to do that chore would

be convenient. Our customers’ profiles would be busy, hard-working people, that live in the city,

and live in areas that do not pick up the trash as often as necessary. Their motivations would be

to reduce the amount of trips to take the trash out. Trash Smash is a cost efficient solution since

more trash can fit into a single bag. !

!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!9 (2013). Rural Character in America's Metropolitan Areas ... Retrieved April 23, 2015, from http://www.newgeography.com/content/004088-rural-character-america-s-metropolitan-areas.

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According to the chart above, the weekly amount of garbage from the average family has

grown exponentially since 1950. 10 Our product will be able to compact that amount of garbage

any help to bring garbage levels back down. This chart also shows that our target market is

growing and will continue to grow for the foreseeable future.!

Strengths and Weaknesses !

The strengths of Trash Smash would be that it can be used with a variety trash cans and

with the user’s existing trash can. Our product does not require electricity or installation, making

it accessible to everyone. We also have a price advantage since our product is so simple

compared to other trash compactors currently on the market. Our product does not require the

customer to touch the trash. The weaknesses of Trash Smash would be that it could break easily

since it is made from plastic (we selected a high-grade plastic, but even those can break after

time). Also, competitors could make similar designs because of its simplicity. !

Competitors !

Specifically in the hand-held trash compactor industry there currently not any large

competitors present. However, there are competitors when it comes to the electric trash

compactor industry. These companies would be KitchenAid, Kenmore, Broan, and MayTag. We

would have to attract business away from these companies by selling them on the price point.

!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!10 (2014). Garbage Infographics Set | Print Templates. Retrieved April 23, 2015, from http://www.forestgfx.com/graphic/garbage-infographics-set/.

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Any home improvement store or large retailer could potentially be seen as competition once our

product grows. There are not any non-profits that are trying to solve a similar problem.!

An additional competitor we considered was the customer’s hand and/or foot. Essentially

someone could just push down their trash further into their trash can by simply pushing it with

their hands or by stepping on it. However, we believe that trash smash is a better solution to

compacting trash because it is not necessary for the customer to touch the trash directly, does not

get trash or lingering smells on their hands or feet, and will not leave any trash or dirt on the

sleeves of their clothing that could potentially lead to clothing stains. !

Market!

One of the great things about our product is that the market is so large. Everyone disposes

of trash daily. In 2012, Americans generated about 251 million tons of trash.11 That equates to

almost 1600 pounds of trash per person per year. The graph below depicts the distribution of the

types of trash discarded in 2012.12!

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!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!11 (2008). Municipal Solid Waste | Wastes | US EPA. Retrieved April 7, 2015, from http://www.epa.gov/epawaste/nonhaz/municipal/. 12 (2014). Municipal Solid Waste Generation, Recycling. Retrieved April 14, 2015, from http://www.epa.gov/wastes/nonhaz/municipal/pubs/2012_msw_fs.pdf.!

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Niche markets include urban areas, people that live in apartments, and college students.

Customers will be motivated to buy Trash Smash by its ease of use, price and simplicity.

Customers will not have to purchase a new trash can to use Trash Smash, they can simply use it

with their existing trash cans.!

To introduce our product in the market we will attend trade shows. One specific trade

show that we will be attending is the ISSA/ INTERCLEAN that takes place every October in Las

Vegas.13 After receiving initial orders and interest in our product we will pair with Proforma14,

our distributor of choice, to help get our product into stores nationwide. Through this and

advertising we will penetrate this large market. !

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Since the number of landfills is significantly lower in the Northeast than other areas of

the United States, we will utilize this for our advantage. Understanding the amount of landfills in

different areas across the will help us to better target our sales strategies to penetrate further into

specific markets. This analysis of the landfill industry is very beneficial to Trash Smash because

it allows us to see where our product can be the useful and have the most market potential. !

The chart to the right shows the amount of trash per million people in different areas

across the United States. The chart shows that the northeast generates a significantly higher

amount of trash per million persons than any other area of the country. In corresponding this

!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!13 ISSA › The Worldwide Cleaning Industry Association. Retrieved April 7, 2015, from http://www.issa.com/. 14 Proforma. Retrieved April 7, 2015, from http://www.proforma.com/. 15 (2014). Municipal Solid Waste Generation, Recycling, and Disposal ... Retrieved April 23, 2015, from http://www.epa.gov/solidwaste/nonhaz/municipal/pubs/2012_msw_dat_tbls.pdf.!

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number with the number of landfills in the northeast (as shown in the chart to the left) we see

that there is a major market and need for our product in this area. Not only does it show us that

our target area for sales and industry will be in the northeast, but it also shows that the secondary

area of focus will be in the midwest. The midwest has the second highest amount of trash per

million persons and the second lowest number of landfills. !

Product Improvement !

We need to find a way to hear customer feedback about our product so we can make

necessary changes before going to the tradeshows. However, we cannot use surveys to conduct

this research and will have to look towards alternative options to retrieve this data. Another

option is to conduct field trials where we will give this product to a select group of people to test

the product for a certain period of time and provide feedback of their experience. Once we have

this feedback, we will have the necessary information about our customers and market in order to

move forward. Even once the product is introduced to the market, market research will be

essential to ensure that we are hitting our market demographics and continually improving our

product and penetration into the market. !

! !

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FOUNDING TEAM!

Who We Are!

The founding team of Trash Smash is Stephen Fishler, Brittany Schraeder, Derek

Sommers, Kelsey Sullivan, and Rachel Wagner. Each member of our founding team has his or

her own unique experiences and strengths. Stephen has expertise in operations management and

communications. Stephen will serve as the Chief Executive Officer for Trash Smash. Brittany

has strengths in public speaking and engineering design and will be Chief Commercial Officer.

Derek is well versed in financial analysis and presentation and will therefore be Chief Financial

Officer. Kelsey is skilled with technology and organization and will be Chief Operating Officer

for Trash Smash. Rachel has talents in business/marketing and statistics and will be Chief

Marketing Officer. Trash Smash is a partnership. Each member brings their own skills to the

table in this company to make it successful and customer focused.!

Strategy & Objectives!

Trash Smash does not currently exist, but is expected to form in the near future after

further planning and analysis. Our team plans to use each other’s unique knowledge and

experiences to form our company with a solid business plan. Currently, our objectives include

beginning by completing a business plan and creating a prototype. With the prototype we will

also need to go through the process of applying for a patent. From there we will hire a

manufacturer as well as an accountant and sales manager and then participate in trade shows to

expose our brand to the industry and hopefully gain some industry partners. We believe that this

will jumpstart our sales in the months following the trade show. Finally, once established, we

will hire a board of directors. Beyond that, our exit strategy consists of being sold to a larger

company to ultimately have our brand sold in large national home goods retailers. See Timeline

To Launch (Page 31) for a graphical representation of this timeline.!

!

! !

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SALES STRATEGY!

Trash Smash will be distributed through smaller novelty and local stores first with the

eventual goal of selling in larger store chains such as Walmart, Target, and Bed, Bath & Beyond.

In order to get into the smaller stores, we will have to participate in various tradeshows across

the country. Sales will be done mainly through these sources and through our manufacturer

Proforma. Proforma is a custom thermoforming and plastic fabrication manufacturer located in

Cleveland, Ohio. Online sales will be completed through the stores selling our product.!

Product & Price!

Trash Smash will be sold as one package that includes the Trash Smash hand-held trash

compactor product and 3 expandable trash bags that will not break when the trash is compacted.

We will also sell models with a built-in air freshener to mask the odor and the expandable trash

bags. The selling of the product to the wholesalers will come from our Trash Smash staff and the

selling of the product to the consumer will be through the wholesalers and vendors the product is

distributed to. Trash Smash will be sold at the low price of $9.99. This pricing is based on

estimated demand for the product and internal manufacturing and distribution costs. Since there

is currently no competition in our market that is selling a similar product at a competitive price,

we can assume that the demand curve for Trash Smash will remain steady for the foreseeable

future.!

Advertising & Promotions!

We will communicate with our customers through print and television advertising. We

are going to have commercials on television that show our product in action and how it can be

useful to consumers. This will help us to get our product onto the shelves in larger stores. Our

advertising budget is expected to be $1,000 through the first year and grow proportionately from

there. !

Customers will learn we exist through the tradeshows that we partake in to get our

product into stores. That is step one. Once we have a solid base and some vendors, it is our goal

to begin advertising on television. Through those television advertisements and through product

placement in stores, customers will learn what Trash Smash is and how it can be useful in their

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daily lives. We will convince customers to use our product through the ease of use that will be

shown in our advertisements are trade shows.!

Three promotions that Trash Smash will engage in to strengthen our brand image and

product placement will be promoting our product through local trash companies, handing out the

Trash Smash product to freshmen at college move-ins, and providing product demonstrations at

in-store locations. The first promotion will involve us partnering with local trash companies. Our

hope is that after these companies see the simplicity and usefulness of Trash Smash that they will

then recommend it for use in the homes of the residents they tend to. This partnership can also be

done with larger trash companies such as Waste Management. Partnering with Waste

Management would be especially beneficial to Trash Smash because of its sustainability

principles.16 Waste Management is a very green company - a standard that directly aligns with

one of the purposes for Trash Smash. They also partner with food and retail companies that work

to reduce waste and maximize efficiency. Our product will definitely maximize efficiency in the

household while also adding sustainability through its ability to save the amount of trash bags

needed. !

The second promotion that we at Trash Smash hope to engage in upon product launch is

selling our product at freshmen move-ins at colleges just like Penn State. Taking out the trash is

one of the last things new college students have on their mind so giving them this product will

not only give them convenience, but it will also give us good product placement and increase the

likelihood of additional sales. Other students will see this product in their friends’ dormitory

rooms and be able to test it out before purchasing it. Once they see the simplicity, convenience

and ease of use of Trash Smash, they will be more likely to buy the product. The main

advertising tactic we are focusing on through this promotion is advertising through word of

mouth.!

A third promotion, not previously mentioned, that Trash Smash will engage in is in-store

product testing. Through this process, we will provide demonstrations of our product’s

capabilities to actual consumers in a store setting. We could start out at local grocery stores like

McLanahan’s and McLanahan’s Downtown Market, and expand based upon the success of these

!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!16 (2012). Industry Solutions - Waste Management. Retrieved April 14, 2015, from https://www.wm.com/enterprise/.

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demonstrations. We see this as a way to continue with our trend of word of mouth advertising

and push short-term demand for Trash Smash by having the product readily available to the

consumer after seeing the viability of the product.!

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Sample Advertisement

!!

! !

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Costs Associated!

The costs associated with this sales strategy are the cost of getting into the stores and the

cost of advertising and maintenance once it is in stores. The first main cost will include going to

trade shows to get the product name and brand out there. There are various trade shows across

the country that we will attend each year to help market Trash Smash.17 Costs included with the

trade shows are the cost of the trade show booth and the cost of travel and lodging at the site.

The trade show booth costs are fixed and the cost of travel and lodging are variable and may be

paid out of pocket in the beginning as we try to conserve money. The next phase of the sales

strategy includes getting into smaller stores. The costs associated with this are manufacturing and

shipping costs and the amount of money per sale the store keeps for profit. All of these costs are

variable because they can and will change at any time. Once we move into larger stores, the costs

to manufacture and ship Trash Smash will begin to level out because of the high quantities that

we will be producing, but these costs will still remain variable.!

Additional information that we need to create an effective sales strategy is to conduct

market research to see where we should be putting most of our money to reach a certain

demographic. Some of this information will come from trade shows and talking with other

people in the industry, but since our product is not like anything else currently on the market

there will have to be market research conducted to better create an effective sales strategy. !

!

! !

!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!17 (2014). Services - 3waytradeshows. Retrieved April 7, 2015, from http://www.3waytradeshows.com/index.php/services.

22

! Variable Costs! Fixed Costs!

Tradeshows! -Travel & Lodging costs -Cost of attendance to trade show

Partnership Promotion! -Price for flyers and promotional items!

N/A!

College Promotion! -Price for flyers and promotional items!

N/A!

In-store Product Testing! -Travel costs! -Table and equipment/products!

Advertising Budget! -Google/Facebook advertising! -TV commercial!!

Industry Benchmarks and Competitor Comparisons!

According to the American Customer Satisfaction Index, our product will fall under the

household appliances industry. Our major competitors, including Kenmore and Maytag, are also

in this industry. The ACSI uses information based on customer expectations, perceived quality,

perceived value, customer complaints, and customer loyalty to give an average weighted

benchmark score reported on a 0 to 100 scale.18 The table below shows the ACSI benchmarks for

the household appliances industry. According to the chart, the baseline for success in the industry

is an average score of 85. The industry has remained steady for the past two years at an average

benchmark of 80.19 We believe that this benchmark is attainable because of the perceived value

and expected customer satisfaction of Trash Smash users, which will allow us to compete with

these other companies. Our benchmark goal is to achieve the industry baseline of 85. This table

also shows our competitor comparisons and what benchmarks we need to achieve to be

!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!18 (2013). The American Customer Satisfaction Index Science and ... Retrieved April 14, 2015, from http://www.theacsi.org/about-acsi/the-science-of-customer-satisfaction. 19 (2014). Household Appliances - American Customer Satisfaction Index. Retrieved April 14, 2015, from http://www.theacsi.org/index.php?option=com_content&view=article&id=147&catid=&Itemid=212&i=Household+Appliances.!

23

competitive in the household appliances industry.

!

The industry benchmark table below shows the baseline for health and personal care

stores - which would be our main points of selling.20 In order to get into these stores we will need

to have an average benchmark of 85 points on the ACSI scale. Our expected benchmark is

substantially higher than the average benchmark for these stores, which will help us get our

product into these stores. Stores interested in raising their industry benchmark will be interested

in selling Trash Smash because of our high product value, as stated by the ACSI.!

!

As stated previously, our main competitors for Trash Smash are KitchenAid, Kenmore,

Broan, and MayTag. These companies already sell trash compactors, but they are automated and

sold at high prices. Trash Smash will be able to compete with these competitors not only through

!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!20 (2014). Health and Personal Care Stores - American Customer Satisfaction Index. Retrieved April 14, 2015, from http://www.theacsi.org/index.php?option=com_content&view=article&id=147&catid=&Itemid=212&i=Health+and+Personal+Care+Stores

24

our expected ACSI industry benchmark standard of 85, which is higher than the 2014 average of

all these companies, but also through our simplicity of product and low price of $9.99.!

FINANCIAL PLAN!

The Trash Smash financial model is based off of saving money through contract

manufacturing of our product, then selling a product that is at a competitive price compared to

similar products on the market. The customer will be charged $9.99 for each individual Trash

Smash product. Our financial plan is based on the following assumptions. We expect to sell two-

hundred units the first year and one thousand units the second year. Once we establish a

relationship with a chain store we expect our sales to jump to 5,000 and expect to sell an

additional 1,000 items each year. The individual product will cost between $2-3 to produce. The

price to produce will decrease with an increase in sales because of the price savings from mass

production. !

Income Statement!

The chart below (Table one) shows the income statement for the first three years of our

business model. For the business, our sole variable cost will be the price to contract manufacture

the product.21 The fixed costs will include salaries, advertising, insurance, patents/licensing,22

lawyer fees, and trade show expenses. Without taking salaries until year three, we will break

even between years three and four. The income statement also shows that after just five years,

with taxes and salaries included, our business will be profiting $65,358.69.!

!

! !

!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!21 (2013). Outsourcing Calculator - Venture Outsource. Retrieved April 7, 2015, from https://www.ventureoutsource.com/contract-manufacturing/information-center/outsourcing-calculator. 22 The Cost of Obtaining a Patent in the US - IPWatchdog.com. Retrieved April 14, 2015, from http://www.ipwatchdog.com/2015/04/04/the-cost-of-obtaining-a-patent-in-the-us/id=56485/.!

25

Table One:!

! Year 1! Year 2! Year 3! Year 4! Year 5!

Net Sales! $1,998! $9,999! $49,950! $59,940! $69,930!

Contract Manufacturing Cost! $8,800! $8,800! $8,600! $8,400! $8,200!

Trade Show Expenses! $3,600! $3,600! -! -! -!

Advertising! $1,000! $2,000! $3,000! $4,000! $5,000!

Insurance! Covered in

contract!

Covered in

contract!

Covered in

contract!

Covered in

contract!

Covered in

contract!

Lawyer Fees23 ($300/month)! $3,600! $3,600! $3,600! $3,600! $3,600!

Patent Fees! $1,500! 0! 0! 0! 0!

Salaries (15% of sales after fees) ! 0! 0! $5,212.50! $6,591! $7,969.50!

Net Expenses! $18,500! $18,000! $20,412.50! $22,591! $24,769.50!

EBIT (earnings before interest

and taxes)!

$-16,502! $-8,001! $29,537.5! $37,349! $45,160.50!

Income after taxes (19.8%)! 0! $0! $23,689.07! $39,953.89! $36,218.72!

Income from Continuing

Operations (previous years)!

-! $-16,502! $-24,503! $-813.92! $29,139.97!

!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!23!(2013).!How!Much!Should!I!Pay!for!a!Lawyer?!|!NFIB.!Retrieved!April!14,!2015,!from!http://www.nfib.com/article/howNmuchNshouldNiNpayNforNaNlawyerN60726/.!

26

Net Income! $-16,502! $-24,503! $-813.92! $29,139.97! $65,358.69!

!

.!

!

Cash Flow!!

Detailed in the next chart (Table two, in the appendices), you will see our cash flow for

the first year, including the month leading up to beginning our business, which is seen as Month

0. For numbers of products sold within the first year, we expect to start with 5 sales the first

month, then fluctuate with sales up until a trade show in October. Once this trade show happens,

our sales will increase and then slow down a bit more to finish out the year.!

!

27

For up-front costs, outsource manufacturing is estimated at about $8,800 for one year.

This would absolutely need to be an up-front cost. We would also need approximately $3,600 for

trade show fees throughout the year. However, we have shown that we can defer this and spread

that fee out to $300 per month. Insurance costs will be included in our manufacturing contract

with our manufactured/distributor Proforma. Advertising costs are expected to $1,000 for the

first year as we will be doing most of the hard sales and advertising on our own in addition to

using free and low-cost outlets such as social media. In addition to these costs, we will also need

to pay for a design patent before we start manufacturing our product. Since our design is

relatively simple, we estimated our patent to be priced at $1,500. !!

To save money, we plan on using a model based on contract manufacturing. This will

include the prices of materials, labor, equipment, packaging, and handling. To lessen this

expense even more we will be using ABS plastic which can be found for about $0.33/pound.24

Using ABS plastic will give us the advantage of being able to 3D print our product, eliminating

any prices associated with getting manufacturing molds casted. We have also considered

developing a model in the future where the part in contact with the trash has a rubber coating for

easy cleaning, which would be priced at $0.81/pound.25 !

!

Starting the Business!

!

We will need approximately $15,000-$20,000 to begin this business. Investments from

personal savings will be our first source for up-front costs . We will also be looking into short-

term loans and investors. Crowd-funding will also be taken into consideration. We will break

even during the third year of business. During our third year, we will be an established company

with a spot in a retail store. The third year will also be when we first take a salary for ourselves

since it is the first year that we will be profitable. !

!

!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!24 (2007). Raw Materials & Prices - Plasticker. Retrieved April 27, 2015, from http://plasticker.de/preise/pms_en.php?show=ok&make=ok&aog=A&kat=Mahlgut. 25 (2004). Rubber Prices - Rubber Board. Retrieved April 27, 2015, from http://rubberboard.org.in/rubberprice.asp?url=earlyrubberprice.asp.!

28

Scenarios

!

The worst possible scenario is that this business fails in the pilot or early stages, causing

the founding team to lose the money that they invested into the company. This could be sparked

by a competitor getting into the industry before we launch, little interest shown at the trade

shows, and inability to get our product into stores where it can be sold in mass quantities. !

The best case scenario is that after the trade shows a lot of interest is shown, causing for

exponential growth of Trash Smash. Having this interest would allow us to partner with many

different stores across the country, thus reaching a larger target audience and making more sales.

This would result in us profiting sooner than expected and allow the Trash Smash company to be

more sustainable, resulting in us expanding our business sooner. !

!

Overall, the business will be able to sustain itself because net sales will cover all of the

upfront costs and we will be profiting within the first several years. However, even after our

salaries and profit, this project will not make enough to be the sole source of income for a group

of five people. !

!

! !

29

FEASIBILITY DECISION!

After going through the feasibility study process, we at Trash Smash have decided that

our product is feasible in the current market. We believe that there is not currently an affordable

solution to compacting trash, like Trash Smash, on the market right now, but there is a customer

base interested in this type of product. Even though this project would be feasible, this project

will not make enough to be the sole source of income for a group of five people. Trash Smash is

a strong competitor in the market because, as compared to other common trash compactors, it

does not require electricity or installation, also making it more affordable than the competition. !

!

Other strengths of Trash Smash include that it comes in different shapes so that it can fit

a variety of trash cans and that it does not require the customer to come in contact with any trash.

A weakness of Trash Smash would be that after reasonable product wear it may break easily

because it is made of plastic. In the future we may consider different designs and materials to use

to ameliorate this weakness. Additionally, Trash Smash’s simple design may enable competitors

to easily make similar products quickly. We hope that patents will help deter competitors from

making similar designs.!!

We believe that to improve our probability of success we need to establish strong

industry partners and make a strong presence at trade shows. Additionally, we will begin in the

industry with a strong marketing and sales strategy. Overall, it is important for us to be organized

and follow our business plan and always keep our stakeholders and customers in mind when

trying to increase our probability of success.!

!

! !

30

TIMELINE TO LAUNCH !

We need to find people that are experts in things that we are not, more importantly

network to find those people. Once we find the people that are experts they could help us with

the financial plan to get more accurate numbers. One price that needs to be adjusted is the

manufacturing cost, we simply estimated the costs but once we know the size of the initial order

we will be able to better decide the manufacturing cost. We have the potential to complete the

business plan within the next six months, basically as soon as we gain some initial interest and

are able to put in that first order. !

Trash Smash founding roles are as follows. Stephen Fishler will be the Chief Executive

Officer, Brittany Schraeder will be the Chief Commercial Officer, Derek Sommers will be our

Chief Financial Officer, Kelsey Sullivan will be our Chief Operating Officer and Rachel Wagner

will be our Chief Marketing Officer.!

We will need approximately $15,000-$20,000 to begin this business, as shown in our

financial plan. Investments from personal savings will be our first source for up-front costs . We

will also be looking into short-term loans and investors. Crowd-funding from sources such as

GoFundMe26, for example, will also be taken into consideration. Derek Sommers, our chief

financial officer will oversee securing funding.!

Some potential partners would be other companies selling similar items, some of these

include places like Wal-Mart, Target, or Bed Bath and Beyond. Another potential market outlet

would be selling through Amazon so we have an online presence. Requirements for these

strategic partners are that they have a strong enough brand name to enhance our product image

and have been in the business long enough to understand the nuances of product launch and

maintenance.!

In the short-term we will need to hire a salesperson and a financial consultant/accountant.

These two people will be key in helping get out product off the ground and making sure that we

!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!26 (2010). GoFundMe: #1 for Crowdfunding & Fundraising Websites. Retrieved April 28, 2015, from http://www.gofundme.com/.

31

are stable financially. We will also need to hire a patent attorney to protect the Trash Smash

patent and to also protect us from future possible liabilities.!

In order to secure our product we will be applying for a patent so people do not have the

opportunity to steal our idea and market a similar product. To apply for a patent we would have

to get in contact with a patent attorney who would then work with the United States Patent and

Trademark Office. It is crucial to apply for a patent because then we have protection until our

patent is finally approved. We will have to apply for a design patent to patent the simplistic

design of Trash Smash as well as a trademark to protect the Trash Smash name and brand.!

This business is feasible and we do have the means to launch the business in the coming

months, but due to academic responsibilities and other obligations we will delay business launch

for the foreseeable future. ! !

32

BIBLIOGRAPHY

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http://www.amazon.com/BigFoot-1-Manual-Trash-Compactor/dp/B00IAZ8YJG.

(2013). The American Customer Satisfaction Index Science and ... Retrieved April 14, 2015, from

http://www.theacsi.org/about-acsi/the-science-of-customer-satisfaction.

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http://www.ipwatchdog.com/2015/04/04/the-cost-of-obtaining-a-patent-in-the-us/id=56485/.

(2014). Garbage Infographics Set | Print Templates. Retrieved April 23, 2015, from

http://www.forestgfx.com/graphic/garbage-infographics-set/.

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http://www.gofundme.com/.

(2012). Growth of the Home Decor Market Shows No Signs ... - Forbes. Retrieved April 8, 2015, from

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slowing-down/.

(2014). Health and Personal Care Stores - American Customer Satisfaction Index. Retrieved April 14, 2015, from

http://www.theacsi.org/index.php?option=com_content&view=article&id=147&catid=&Itemid=212&i=Health+and

+Personal+Care+Stores.

(2014). Household Appliances - American Customer Satisfaction Index. Retrieved April 14, 2015, from

http://www.theacsi.org/index.php?option=com_content&view=article&id=147&catid=&Itemid=212&i=Household

+Appliances.

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http://www.nfib.com/article/how-much-should-i-pay-for-a-lawyer-60726/.

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Housewares.aspx.

(2012). Industry Solutions - Waste Management. Retrieved April 14, 2015, from https://www.wm.com/enterprise/.

ISSA › The Worldwide Cleaning Industry Association. Retrieved April 7, 2015, from http://www.issa.com/.

33

(2008). Municipal Solid Waste | Wastes | US EPA. Retrieved April 7, 2015, from

http://www.epa.gov/epawaste/nonhaz/municipal/.

(2014). Municipal Solid Waste Generation, Recycling. Retrieved April 14, 2015, from

http://www.epa.gov/wastes/nonhaz/municipal/pubs/2012_msw_fs.pdf.

(2014). Municipal Solid Waste Generation, Recycling, and Disposal ... Retrieved April 23, 2015, from

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(2013). Outsourcing Calculator - Venture Outsource. Retrieved April 7, 2015, from

https://www.ventureoutsource.com/contract-manufacturing/information-center/outsourcing-calculator.

Proforma. Retrieved April 7, 2015, from http://www.proforma.com/.

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recycling.html.

(2013). Retailers Eye Home Goods As Housing Sales Improve. Retrieved April 8, 2015, from

http://www.cnbc.com/id/100717120.

(2004). Rubber Prices - Rubber Board. Retrieved April 27, 2015, from

http://rubberboard.org.in/rubberprice.asp?url=earlyrubberprice.asp.

(2013). Rural Character in America's Metropolitan Areas ... Retrieved April 23, 2015, from

http://www.newgeography.com/content/004088-rural-character-america-s-metropolitan-areas.

(2014). Services - 3waytradeshows. Retrieved April 7, 2015, from

http://www.3waytradeshows.com/index.php/services.

(2014). The Unknown $75 Billion Industry — Grid Waste. Retrieved April 23, 2015, from

http://www.gridwaste.com/news/2014/8/20/10l92d52vzaw1zdsf0znubdqpttq7k.

! !

34

APPENDICES!

Table Two: !

!

!

!