Business Plan Example

This is the companion post to our introduction to business plans, you can find that post here.

Executive Summary

MotionBud Inc. designs, manufactures, and markets a practical and portable non-pharmaceutical approach to motion sickness that prioritizes style, comfort, and effectiveness. Our mission is to lead the motion sickness relief market in the development of novel solutions that target the inner ear, our brain’s motion sensor, directly. Our FDA approved device is the first of its kind on a market that traditionally favors OTC drugs and acupressure wristbands. As roughly 50% of the world’s population suffers from motion sickness in some form, this is no insignificant advancement. Our unique positioning, as well as our advanced technology, primes us to reach a decent portion of the $670m motion sickness relief market. We currently project to reach profitability within the next 2 years based on strong revenue growth and are orienting our strategy to attain contracts in various technology sectors as well.

Product Description

Our product, the MotionBud, is an in-ear headphone set. Along with traditional headphone functionality, the MotionBud features a transmitter that releases vibrations to overwhelm the motion sensors in the inner ear. This crowds out the brain’s ability to process motion, thus collapsing the physiological conflicts that create motion sickness. MotionBud does this by assessing three main questions – “How fast is this person moving in a given direction?” (traditional velocity), “How much is this person spinning around in a circle?” (centripetal force), “How much in this person being thrown around?” (variability in motion). By understanding these dimensions of a person’s motion, the MotionBud uses proprietary algorithms to disperse vibrations that adequately confuse the brain.

Industry Overview/Market Analysis

The motion sickness relief market was valued at $670m in 2017 and is primed to grow to $900m by 2026. The current industry for motion sickness solutions is primarily centered around canonical drugs such as Dramamine and their generics. Our product exists in a smaller section of the industry that offers a non-pharmaceutical approach. We will analyze our relationship to these other alternative approaches more carefully in the Competitive Analysis section.

Due to the ubiquity of motion sickness, we have a fair amount of latitude in securing a customer base. Our target demographic can roughly be split into two types of consumers. The most common use of motion sickness treatments is for personal use or for a customer’s child. Motion sickness most commonly afflicts children and young adults, and most of the industry is geared towards serving this population. Alternatives like MotionBud have an innovative edge but are less established in an already crowded market. Thus, we seek to serve customers who are already seeking alternatives to the usual medicated approach.

The other market is comprised of integrative opportunities – opportunities to incorporate MotionBud technology into already existing products. For instance, a need for motion sickness treatments exists in a military context. Servicemembers report motion sickness at high rates, considering the significant portion of their time spent on wheels, in boats, or cruising the skies. The government historically hasn’t collaborated with or contracted biotechnology firms to address this issue, but recently has taken interest in non-pharmaceutical options. Virtual reality technology developers have also taken interest. As VR becomes more widespread, developers hope to find a way to quell the motion sickness that deters a subset of users. Military or VR contracts are both more appealing, but demand a product that is convenient, integrable into current technology, and able to outperform competitors.

Marketing and Sales

We currently are able to offer the standard MotionBud package for $150. This includes the headset itself, which can be used just like traditional headphones, along with a MotionBud sticker pack and new pair of AA batteries for the battery pack attached to the transmitter. This price is slightly higher than we would like, and our aim is to market at $100 by June 2019. Pending final negotiations with a new assembly plant, we are on track to hit this target. For the time being, we utilize two promotional strategies to offset the higher consumer cost. We occasionally run 30% sales on everything in the MotionBud store and new customers receive a promotional code for a 33% discount that they can share with a friend. We retail on our own website as well as through a few e-commerce websites (our contract with Amazon begins March 2019). In August 2018, we finalized a contact with CVS Pharmacies and our products are sold in 2000 of their stores as of December 2018.

Operations/Execution Strategy

MotionBud technology is entirely proprietary and all patents are owned by MotionBud, Inc. Assembly and packaging is handled by an outside plant, but we hire employees to perform final checks on all products as well as manage the shipping process. All materials are common electronic equipment that we source from a domestic vendor. Our FDA approval cleared last year (October 2017) and affirmed the efficacy of our technology. We currently don’t require any additional, nonstandard regulatory approvals.

As noted, our current business model centrally relies on retail success. Our aim is to transition with time to a model in which revenue is primarily generated by licensing contracts with headphone manufactures and the military or VR opportunities outlined above. But for 2019, we hope to continue focusing on building a retail base that shows both the strength of our product and its popularity among consumers, fielding contract proposals as we find them.

Competitive Analysis

Our competition comes in two forms – traditional pharmaceutical drugs used for motion-sickness and new, alternative treatments. As it currently stands, we do not have the resources to launch a marketing campaign against pharmaceutical use for motion sickness. Our best strategy isn’t conversion, but dominating the alternative market.

While alternative treatments have become more popular, their diversity and variability in performance helps MotionBud’s image. The most popular form of holistic motion sickness care comes in the form of wristbands that stimulate the P6 (Nei-Kuan) acupressure point either electrically or through pressure. MotionBud consistently outperforms the five most common wristband brands by a wide margin, as indicated by internal research. Furthermore, the two products exist at different price points. MotionBud is a more expensive, but more consistent, higher quality product. The closest direct competitor of MotionBud utilizes similar technology on a headband. They currently market their product at $159 and lack the dual headphone functionality provided by MotionBud. This lack of functionality additionally creates the appearance of a more cumbersome design. MotionBud is the most modern, consistent, and exciting product on the market currently.

Advantages Over Competitors

  • Uniformity of product: MotionBud can ensure consistent performance due to its singular design, whereas alternatives like wristbands vary in efficacy between manufacturers.

  • Performance: In internal consumer studies, we’ve found the MotionBud to work 40-50% more effectively than the top 5 brands of acupressure motion sickness wristbands.

  • Multi-functionality: The MotionBud is marketable as “smart” technology as it performs traditional media functions (headphone use) while using bioinformatics to interact with bodily processes – this also opens the possibility for future integration with the new wave of “smart” devices.

Financial Statement

Projected Expenses – We measure “Cost of Goods” and “Operating Costs” in dollar amounts, whereas “Operations”, “R&D”, “Marketing”, “General/Admin” are measured by employee headcount per division. “Cost of Goods” is measured per unit, whereas “Operating Costs” assesses auxiliary expenses (e.g. rent, company events, etc.)

Expense 2019 2020 2021 2022 2023
Cost of Goods 74 65 60 60 50
Operations 15k 20k 30k 57k 70k
R&D 3 4 5 6 6
Marketing 3 5 7 10 15
General/Admin 2 2 3 4 5

Projected Revenue – We measure “Sales Volume” in units sold and “Pricing” in dollar amounts.

Revenue 2019 2020 2021 2022 2023
Sales Volume 19k 23k 27k 37k 43k
Pricing 100 95 95 95 89

Net Income – We measure “Net Income” in dollar amounts. It should be noted that this only considers net income as generated by retail revenue. We are not currently negotiating any licensing contracts, though we have started preliminary discussions with vendors that should materialize throughout 2019.

Income 2019 2020 2021 2022 2023
Net Income -10,000 -3,000 5,000 14,000 26,000

We have sufficient funds to carry out operations through 2020, Q1. We have raised roughly $500k in investment capital thus far and are currently asking investors for $250k in order to expand our retail base, accelerate our marketing hires, and sustain general operations until we hit profitability.

Exit Strategy

Our primary exit strategy aims for a buyout. We envision acquisition of MotionBud Inc. to occur in one of two ways. With continued retail success and a substantial portfolio of licensing clients, MotionBud Inc. could be approached by a traditional biotechnology company such as GE that is interested in disseminating the technology throughout its wider, internal network. The other scenario involves a company that initially hopes to license MotionBud technology but decides it would be more prudent to buy the company full out. For instance, if Oculus were to acquire MotionBud Inc., it could leverage exclusive rights to MotionBud technology for any VR devices it updates or releases. The same goes for a company like Sony, which could take interest in a high-end line of motion-sickness reducing headphones.

Simultaneously, we do not foreclose the possibility of an IPO offering down the line. With current projections, our company should have the foundation to transition to an IPO in roughly 5-7 years.