Professional Documents
Culture Documents
COB 300
Section 2 Team 4
Spring
2021
BUSINESS PLAN
BRIGHT Kitchen
Team Members Color-Changing Cookware Emails
Executive Summary
BRIGHT Kitchen
Section 2, Team 4
303-305 E Ayre St. Newport, Delaware 19804
Phone: 1-800-COOKING
E-mail: KitchenBright@gmail.com
Distribution Channels: We are selling the product directly to consumers exclusively through our website.
Competition: Our direct competitors, like All-Clad and Cuisinart, offer a large range of cookware but lack
special safety features. Through our color changing technology, we can stand out in the competitive cookware
industry. BRIGHT Kitchen can satisfy consumers who value safer, attractive cookware to enhance their
kitchen experience.
Elevator Pitch
Many consumers are concerned parents who value products that are child-friendly and
ensure safety. Based on a Statista report published in 2013, parents are shown to be the most
concerned with their children’s health and safety (GFK, 2013). With concerns of safety in mind, did
you know that the 5th most common cause of non-fatal childhood injuries worldwide are burns?
Children under the age of 15 have an average of 9.25% chance of sustaining a burn-related injury in
the US alone (Cookware US, 2019). BRIGHT Kitchen believes that no one should have to sacrifice
style for safety in the kitchen when you use our color-changing pots and pans.
Product/Service Design
Our products are pots and pans that are made from aluminum and coated in our custom
pigmented, thermochromic paint. The pan has a 10-inch diameter and holds 2.5 quarts, and the pan
Competitive Advantage
We offer a differential competitive advantage in the way our product’s exterior can shift
colors when exposed to heat. The ability to identify the temperature of the cookware from across
the room just by the color of the pot or pan is a feature that cannot be found anywhere else on the
market. Parents can use our product’s color-changing ability to teach their children the importance
Value Proposition
We have a high profit margin allowing us to make our product for only $30 and sell it for
233% profit at $100. BRIGHT Kitchen reduces production costs by outsourcing our raw materials
from China and producing the final custom thermochromic paint ourselves. We stand out from
uncommon for pots and pans. The thermochromic paint changes from blue to red when heated to
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88 degrees Fahrenheit to visually warn against hot temperatures for safety and beauty in the kitchen.
These days, customers are growing to value uniqueness and beauty in their cookware (Mintel, 2019).
Business Strategy
our market, it allows the customer to identify the temperature of the cookware solely based on its
color-changing exterior.
Business Location
We chose Newport, Delaware for our headquarters and will use air and highways for the
transportation of our outsourced materials. This location is convenient for our company due to its
proximity to the airport as well as other travel options. Delaware has no state/local sales tax for all
businesses which helps to keep costs low despite shipments from China (Division of Revenue,
2018).
Outsourced Functions
We are outsourcing most of our raw materials and manufacturing equipment. Our raw
materials will be shipped from companies within the US and China. Outsourcing is our best option
because most of the materials needed for production will be too expensive to manufacture in-house.
However, we will be making our paint in-house because it is more cost efficient.
Financial Performance
BRIGHT Kitchen will be profitable within the operation’s first five years. During Year 1, we
expect a result of a $741,442 loss due to extra startup costs and expanding our brand name. For
Year 2, we predict our brand will have a larger market due to our heavy focus on advertising. This
will result in us becoming profitable and achieving a 20% revenue growth by the end of Year 2. The
next three years, we hope to maintain a steady growth following the industry average of
Chart Structure:
Our organization is small, so a Managing Director is sufficient act as head. Bright Kitchen has 3
main branches reporting to the Managing Director. The Operations and Sales Branches have
managers who supervise over other employees. 1 Accountant is suitable for a company of our size
and structure. Since we are shipping all over the country, we needed a Shipping & Packaging
Coordinator to make sure our customers receive quality delivery while managing packages. Other
employees are employed to produce the product, quality check, or fix any arising work environment
issues.
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Target Group Description Reason for Target Group Market Size Market Growth
(# of
households)
Upper-Middle Families in the We are making high quality 43,801,450 4.5% annually*
class families with U.S.A who make pots and pans that are priced
children (age 4-10) $100,000 or more. high and will be purchased by
These families families with a higher income
have one or more that worry that their young
children who are children will be curious or not
aged 4-11 years know a pot is hot and burn
old. themselves accidentally and
are willing to pay more in
order to avoid that risk.
Notes:
*The change in median household income was projected to increase by 4.5% in the most recent year
surveyed according to the US Census Bureau.
**The prevalence of children with autism spectrum disorder increased from 2014-2016, the most recent
years observed, by 1.77% annually (Source: CDC.gov)
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We calculated this by adding our target markets together. Our first market is comprised of 43,801,450 upper
middle-class families with children age 4-10. Our second market is comprised of 8,760,290 families with a special need
member. Together our total market potential for year one is 52,561,740. Following years include market growth for
We calculated this by multiplying our total market potential (customers) by 0.8 because people tend to not
purchase pots and pans every year. Then we multiplied this number by our unit price of $100. (52,561,740 x 0.8 x
$100= $4,204,939,200)
Market share is calculated by dividing our projected annual revenue by our total market potential ($) then
multiplying by 100.
Positioning Statement:
Our product is designed to make the lives of our customers safer by providing a multi-use, reliable
and aesthetically pleasing product at a competitive price. We are versatile against our competitors in this
market because we provide a high-quality product that is otherwise nonexistent. This product allows users,
with all needs, to easily maximize kitchen safety while cooking. As a business, we can ensure that our
product is made with high quality materials, tested before leaving the facility, and each pot and pan is
worked on by hand. Despite being a small new company, we are certain our distinctive product will make an
impact in the well-established market of hand tools and cutlery. We plan to take advantage of the increasing
popularity of cooking at home and the high revenue growth that is projected for 2020-2025. Compared to
our expensive competitors, we focus more on safety than just design appeal. We stand out from our
competition by being visually appealing as well as being a safer alternative in the kitchen.
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Strategies
Promotions: We will use ads on platforms such as YouTube, Facebook, Instagram to expand our exposure. We
will also utilize search engine optimization on platforms like Google, so we are a top result. According to a study
done respondents said, “31% called social media and search extremely effective, with 27% saying mobile is
extremely effective.” (Lafayette, 2018). This makes us confident in our digital marketing as a growing number of
individuals are becoming more receptive to digital marketing/advertising.
Distribution: Our product will be sold throughout the US exclusively online. Our online store will ease the
process of reaching more of our target market in a way that is more convenient. Our product will be
manufactured in our factory and we will use FedEx and UPS to distribute our product to our consumers from our
factory and warehouse located in Newport, DE. This will allow our consumers to buy our product and receive it
without ever having to step foot outside of their homes.
Sales Information
From the raw materials to machine expenses, the process of making the pots and pans cost $30 per unit. We sell
them for $100 each, resulting in $70 revenue per unit. With the growth of online shopping (Digital Commerce
360, 2021), more people are utilizing online retail stores. By selling exclusively from our website, we also eliminate
the need to rely on retail stores for sales and the decrease in our profits by not paying the wholesale price. People
are becoming more accustomed digital marketing/advertising; thus, our advertising budget reflects this trend by
focusing on attracting attention in the first year as a new brand. By Year 2, we increase the budget to $600,000 to
increase our sales and by Year 3, we decrease the budget as a more stable brand that gradually increases the budget
depending on our sales.
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Quality What is measured? How often? How will you ensure quality?
Step
Q1 Quality and amount of Constantly checking as An employee will check it visually
raw materials new bins come in
Q2 Size and quality of each Constantly watching An employee will check it visually
stamped blank throughout the
workday
Q3 Accuracy of Constantly watching An employee will check it visually
thermochromic paint throughout the day
applied
Q4 Location of handle and Every single time one An employee will use a laser to ensure
security of the handle is attached the handle is aligned in the correct
location
Failure Brief description How will you How will you recover if this failure
Point prevent this failure? occurs?
F1 Machine malfunction Routine maintenance We will recover by making the
at the blank punching checks appropriate repairs on the machine
station
F2 Handle is not properly Make repairs on We will recover by making the
attached due to machine that locks appropriate repairs and making sure a
machine failure that handle into place skilled employee supervises this activity
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Exhibit 8- Quality
Indicate the Dimensions Why is this dimension important, Identify the Quality Step(s) on the Process
of Quality on which you given your industry & target Flowchart / Service Blueprint to which this
will focus. market? corresponds.
Reliability Before we start production, we must Step 1, Q1: Inspect/process raw materials
ensure that our raw materials are
capable of being processed.
Consistency It is crucial that our pots and pans are Step 3, Q2: Shaping pots/pans
shaped correctly and in a consistent
manner so that our customers may cook
with ease in the kitchen.
Special Features The thermochromic paint is what sets Step 6, Q3: Paint coating process
us apart from the rest of our
competitors. Our pots and pans ensure
kitchen safety by changing color when it
becomes too hot to touch. This makes
our product most appealing to upper-
middle class families with young
children and children with disabilities
since it serves as a visual warning.
Assurance The handle allows users to get a better Step 9, Q4: Punch holes and attach handle
grip of the pot and decrease chances of
spills. It is important that we attach the
handle correctly so it can support the
pots and pans while it is being held.
Use the space below to describe any additional Proactive Quality Assurance Plans that are not connected
to a specific activity on your Process Flowchart / Service Blueprint.
To ensure that our product is being created correctly and consistently, we must have trained employees that can
assure the quality of our product. Employees will go through annual training to keep up with production standards.
Describe any reactive quality assurance plans. Include a recovery plan should a customer receive poor
quality goods and/or services.
Customers unsatisfied with the shape of the pot or the intensity of the color-changing paint will have the options of
a refund or a replacement pot/pan with excellent quality.
RAW MATERIAL INVENTORY & SUPPLIER SELECTION If your organization does not have raw material inventory, please check this box: ☐NA
Item(s) Supplier Name & Reason for selecting Supplie Frequency of System of Mode(s) of
Location (City, this supplier r lead replenishme Management Transportation
State, Country) time (in nt (in days)
days)
Anodized Shanghai Maya Low- Four times a Two Bin ☒ Highway
Aluminum Corporation cost supplier, quality product 14 year ☐ Rail
Limited (Qingdao, ☐ Waterway
China) ☒ Air
Thermochromic Qingdao Topwell C Low-cost supplier, quality 14 Twice a year Two Bin ☒ Highway
Pigment hemical Materials product, company guarantees ☐ Rail
Co. (Hebei, China) 100% on-time delivery rate. ☐ Waterway
☒ Air
Paint for Ricciardi Brothers Quality product, close to 4 Four times a Two Bin ☒ Highway
Thermochromic (Newport, DE) manufacturing base year ☐ Rail
Pigment ☐ Waterway
☐ Air
Packaging CustomUSB (Buffa Customizable high- 1 Two Bin ☒ Highway
lo Grove, IL) quality packaging trusted by Twice a year ☐ Rail
big companies such as Nike. ☐ Waterway
☐ Air
Stainless Steel China Royal Group Low-cost supplier, quality 14 Four times a Two Bin ☐ Highway
Ltd. (Tianjin, product year ☐ Rail
China) ☐ Waterway
☐ Air
FINISHED GOODS INVENTORY If your organization does not have finished goods inventory, please check this box: ☐NA
Finished goods Frequency of Average level of Finished goods Amount of safety stock on
produced shipping finished inventory on site site
(per hour) goods
At the end of Year 1 22 5 days a week 77 50
At the end of Year 2 27 5 days a week 94.5 50
At the end of Year 3 29 5 days a week 101.5 75
At the end of Year 4 30 5 days a week 105 75
At the end of Year 5 31 5 days a week 112 75
What is the lifespan of your finished goods ☒NA Our finished goods have a lifespan of 5 years.
inventory?
How will you manage perishability of ☒NA Our finished goods are not perishable.
Finished Goods Inventory?
DISTRIBUTION If your organization does not require distribution, please check this box: ☐NA
Name of transportation Reason(s) for selecting this provider/carrier Frequency of Pick Up/ Drop Off
provider/carrier
FedEx FedEx ships nationwide, provides overnight 5 days a week
deliveries, and has flexible payment options. FedEx
is also more cost effective than other transportation
services when shipping products that weigh more
than two pounds.
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Demand Capacity Utilization Hours of Bottleneck How will you manage/ adjust the
(per hour) (per hour) (%) Operation name and bottleneck to ensure you can
description appropriately serve or supply your
customers?
At the end of 22 27 81.48% 1,820 Punch holes in During the first year we met our required
Year 1 pots and demand by working 5 days a week for 7
pan/rivet hours a day.
handles to attach
them.
At the end of 27 35 77.14% 1,820 Punch holes in In Year 2 our demand increased too much.
Year 2 pots and We met our new demand by
pan/rivet adding 1 more hydraulic press to alleviate
handles to attach the bottleneck impact which increased our
them. capacity to 35 pots/pans per hour. Hours
of operations remained constant.
At the end of 29 35 82.86% 1,820 Punch holes in Hour of operations remained constant.
Year 3 pots and
pan/rivet
handles to attach
them.
At the end of 30 35 85.71% 1,820 Punch holes in Hours of operations remained constant.
Year 4 pots and
pan/rivet
handles to attach
them.
At the end of 31 35 88.57% 1,820 Punch holes in Hours of operations remained constant.
Year 5 pots and
pan/rivet
handles to attach
them.
Show your calculations for the following parameters at the end of Year 1.
Hours of Demand/ month Demand/ hour Capacity/ month Capacity/ hour Utilization
operation/ month
1,820/12=151.67 40,040/12= 3,336.67 40,040/1,820= 22 49,140/12=4,095 49,140/1,820=27 22/27= .8148
Additional resources (beyond your bottleneck) must be allocated appropriately to support operations. Identify
which resources have a significant impact on capacity at start up and describe why these are appropriate
amounts of resources at start up.
We added one more hydraulic press in year two to alleviate our bottleneck and meet our new demand.
Describe adjustments you will make as resource requirements vary with time. Be specific regarding which
key resources (beyond your bottleneck) will be adjusted, when and how. If you will make multiple
adjustments, explain each.
Remaining inventory will be applied to the following years of production so our process will remain effective and efficient.
How will you manage seasonality? If your organization does not have seasonal demand, please check this box: ☒NA.
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Income Statement
Sales Revenue: Based on a $100 per unit price and our online unit sales for five years.
COGS: Based on a $30 per unit cost for five years.
Salaries and Wages: We determined to have 30 FTE working 8-hour days, 5 days a week. Yearly increase
represents employee raises and adjustments for inflation.
Payroll Tax Expenses: Current FICA, FUTA, and SUTA rates were applied yearly. Yearly increase
represents adjustments for inflation.
Employee Benefits and Retirement: Employee benefits include Health, Life, Long/Short Term disability,
401(k)/IRA/SIRA Match, and paid profit sharing. Paid vacation and sick leave are also applied.
Commissions Expense: Was determined by capping commissions at $40,000 for each sales representative
yearly.
General Insurance Expense: Includes general insurance for factory equipment and liabilities.
Depreciation Expense: Using a Gale report, we determined the necessary equipment to manufacture
pots. We used various reports to determine the cost, salvage value, and useful life for each
machine required. Using straight-line depreciation, we subtracted salvage value from the original cost,
then divided by useful life for each asset and added the total to arrive at $3383 depreciation expense per
year.
Building Expense: Cost of purchasing a 7,300 Square Foot industrial building in Newport, Delaware.
Website Expense: $15,500 Start-Up costs, $18,000 annual costs.
Includes licensing, hosting, design, custom development, setup, training, and maintenance costs.
Advertising and Promotion Expense: We began by using 10% of sales revenue for advertising. In year
3, we lowered the percentage to 5% because our name was already out there, so the expense grew as sales
revenue grew at those rates.
Taxes and Licenses: Based on a $75 expense for a license to operate as a business in Delaware. Following
taxes are based on the gross sales receipt tax of 0.1886% added on to the estimated purchases made in
Delaware.
Office Expense: Was determined by the appropriate amount of office space required for our company and
the price to maintain it. First year office expense includes utilities, computer purchases, and installation of
Microsoft Office. Years 2-5 include utilities, Microsoft Office Suite annual renewals, and general increasing
cost of maintenance with increased production.
Equipment Expense: Was determined by the cost of machinery to produce the cookware.
Patent Expense: Cost of thermochromic cookware patent.
Balance Sheet
Cash and Cash Equivalents: At inception, balance was 1,981,680 generated by owner's contribution and
bank loan.
A/R: Was calculated by dividing sales revenue by 30.
Inventory: Based on the amount of inventory left after each year multiplied by the cost to produce it.
A/P: Was calculated by dividing cost of goods sold by 12.
Accrued Salaries and Wages: Employees are paid bi-weekly, so we calculated it based on two weeks out
of their total annual salary.
Accrued Payroll Taxes and Benefits: Since Wages are paid bi-weekly, taxes and benefits are calculated
based on two weeks of the employee's total annual salary.
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Current ratio:
Our current ratio shows that we have enough current assets to finance our current liabilities. The
industry we’re in has a 4.1 average and our ratio at the end of year 5 is 4.7, being slightly above industry
average.
Inventory Turnover:
Our inventory turnover ratios show that we can sell our inventory at a very fast rate. Our industry has an
average of 2.6, we sell our inventory many more times a year than the
average competitor does with our highest being at 4.93. This shows that there is a demand for our product
and that we are marketing it and selling it effectively to our customers.
Return on Assets:
Our return on assets shows how profitable we are relative to our total assets. Our industry average is
20% and in year 3 on our return on assets was above the industry average. We exceeded the industry average
by more than 10% in year 3-5 meaning that we were 10% or more efficient in turning our assets into net
capital than the industry average.
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24
My name is Breyden Blakley. I’m from Mount Airy, Maryland. I’m a junior
studying finance at James Madison University. In my free time I enjoy staying
active often by weightlifting and hiking with friends.
My name is Brian Ziltz and I am from Park Ridge, New Jersey. I am a Junior
Management major at James Madison University. I enjoy playing sports,
investing, and hanging out with friends and family.