Opportunity for industry and the opportunity
California’s Santa Monica area consists of a large number of car industries, which are confronted by the difficulty of finding the right cleaning materials for their use. The demographic population also indicates that families with children form the largest group. As such, it is an opportunity to satisfy community by providing an economical, reliable and safe soap and detergent solution. Smart Cleaning Solutions Company was created to take advantage of the group. It develops, packages and distributes industrial and home cleaning solutions for local and auto companies in Santa Monica. Target Market & Business Model
The target market is majorly the mid-sized auto industries as well as mid-level income earning households. The business model adopted by the firm is production and sale of locally produced soaps and detergents for both home and industry use.
Marketing and Sales Strategy
For its marketing and sales strategy, the company has identified major stores in the region as well as auto garages where the products are expected to be highly consumed. Outdoor advertising such as putting up billboards near such industries, distributing catalogs and product brochures in stores is heavily invested on in order to create awareness. The sales strategy adopted involves offering incentives such as free products in order to boost product sales. Demonstrations are also provided for customers in order to try it out.
A number of soap and detergent producing firms as well exist in the region. However, the company aims to counter their products through innovative packaging using calibrated plastic packs and offering a variety of both industry and home cleaning solutions.
The firm’s startup capital totals $24,815 which is raised through bank loans, investor loans as well as savings from directors. In addition, a three-year start up prediction of $100,000, $300,000 and $500,000 respectively for the first three years is also provided.
Owners / Staff
The company is owned by four partners: John Mark (50%), Rebecca Stanley (30%), Stanis Baratheon (10%), and Judy Sparks (10%). It also employs fifteen employees who ensure that the various business processes are carried out efficiently.
The business is implemented by setting up the manufacturing plant at Santa Monica where production kicks off with the acquisition of all equipment and raw materials
Description of the business
Smart Cleaning Solutions is a small detergent and soap manufacturing company based in California. The company uses locally sourced and certified chemicals as raw material to produce both soaps and detergents for home and industry use. These are then packed and distributed to various stores and supermarkets in the neighborhood. All processes are handled in-house including manufacturing, packaging and storage in order to minimize operational expenses.
Despite there being other soap manufacturing companies in the area, Smart Cleaning Solutions stands out in a number of ways: First, it’s the only soap and detergent manufacturing company that produces cleaning solutions for both home and industry use. Other companies in the area focus on either home or industry cleaning solutions but none focuses on both of these solutions. Second, the soap and detergents are packed in easy to use plastic cases that are calibrated in order to help users’ monitor their usage. Packages as well range from 300ml to 20 liters in order to provide choice and variety for the product users.
Products / Services to be offered
Grease remover (industry)
$100 / liter
Grease remover (home)
$65 / liter
Surface cleaning detergent (home)
$50 / liter
Surface cleaning detergent (industry)
$150 / liter
Special hand wash (home)
$30 / 500ml
Oil cleaning soap (industry)
$50 / 500ml
Target Market / Population
Covello, & Hazelgren, 2006 postulate that it is imperative for a business to identify particular characteristics of its target population. These include: demographic aspects such as size of the population, gender, education level, family size, etc., their habits in spending and buying especially with household goods and as well, the particular influences that coerce them to spend money. In addition, aspects pertaining to business spending habits are also important in selecting the target market in B2B (Business to Business) concerns. Pinson, 2007 as well identifies psychographics – the attitudes and tastes of the the target market as an important aspect to be considered when analyzing the target market.
A number of factors influence the selection of the target market / population for Smart Cleaning Solutions. First, is the level of income earned by most households as well as the level of revenue generated by businesses on a yearly basis. Smart Cleaning Solutions targets mid-level income households ($80,000-$100,000 / per year) and mid-sized businesses ($400,000-$500,000 / per year) for the marketing of its products. This is because, such a population has a high level of disposable income and as such, is willing to spend money on products such as soaps and detergents as an alternative to using other solutions.
Second, the population in the neighboring California region was identified as having a high proportion of industries. This presented a ready market for the industry specific variants of the soaps and detergents. In addition, most families residing in the neighboring region have young children thus implying a need for a cleaning solution that doesn’t portend health effects to its users.
Abrams, 2003, summarizes the essential elements of the operations plan as issues fundamental to the success and nature of the company, issues that enable the company to have a competitive edge as well as those enabling it to overcome problems that are frequent in the business. Smart Cleaning Solutions is located in Santa Monica, California. All operations are housed in one warehouse that is segmented into the production / manufacturing section, the packing and storage section, and the office setup where official operations of the business are conducted.
Main operations that are undertaken in the company include the production of soap and detergent, packaging and storage of products which are then transported to various stores in the neighborhood. Distribution of products occurs on a weekly basis based on the orders that are generated by the stores. The company also runs a website that enables individuals to purchase its products online. These are also delivered to their premises per order. All official functions such as administration, accounting and management are conducted at the office to ensure smooth running of the company.
Ramsey, 2009 identifies three key members in the management team of a business: an individual managing the aspects of the business e.g. administration, taxes, human resource etc., another managing the operations of the business i.e. production of the service or product and finally, employees who perform the work. Smart Cleaning Solutions has 15 workers who comprise one operations manager, one managing director, two drivers, five employees at the production zone, three employees at the packing and distribution zone, one chemical engineer and one accountant. It also has an I.T. manager who handles the web operations of the company.
The chemical engineer is globally certified in the soap production process and has a Master’s degree in Chemical Engineering. He also has five years’ experience in the soap and detergent production process. He is in charge of production at the company. The I.T. manager is a web 2.0 certified technician with a degree in computer science. He is in charge of managing the website sales and maintaining the I.T. infrastructure in the company. Employees including the drivers and others at the production and packaging zones are all diploma holders and are competent in their duties. The managing director is MBA certified and is competent in handling the administrative functions of the company. Finally, the accountant has a degree in finance and is CPA (K) competent in performing the various accounting roles.
The Break even analysis
Average Sales Price for each Unit Sold:
Planned # of Units sold in Year 1:
Variable Cost 1
Variable Cost 2
Direct Labor Cost
Direct Raw Materials
Automobile or Fleet Gas
Salaries (Includes Payroll Taxes)
Repairs & Maintenance
Automobile (or Fleet) Lease
Accounting And Legal
BREAKEVEN IN UNITS SOLD
BREAKEVEN IN SALES ($$)
The following chart and tables summarize some of the startup assumptions.
The Total Fixed Costs (TFC) = $38,029.00
The Total Variable Cost per unit = $2.50
We compute both Break-Even point in Units (X) and sales (S).
Break-Even points in terms of units = Total Fixed Cost /Contribution margin per unit = $38,028.00 / 7.5 = 5,071 units
Break-even in terms of sales = 5,071 * $10 = $50,075.33
Year 1-3 start up predictions
(attached in excel sheet)
Nemethy, 2011 indicates that there are a number of ways to exit a business including: the sale of the business to third parties, bequeathing the business to children or relatives in intergenerational transfer, mergers, management buyout, where ownership is transferred to either one or more management members, etc. Among the methods cited, Smart Cleaning Solutions’ exit strategy involves merging with a similar soap producing company in California in an effort to build a stronger market base for its products. This is because, the company realizes its crucial role among the population of Santa Monica in offering cleaning solutions at are efficient and affordable.
Abrams, R. (2003). The Successful Business Plan: Secrets & Strategies (4th ed.). California: The Planning Shop.
Covello, J., & Hazelgren, B. (2006). Complete Book of Business Plans: Simple Steps to Writing Powerful Business Plans (2nd ed.). Naperville, Illinois: Sourcebooks Inc.
Nemethy, L. (2011). Business Exit Planning: Options, Value Enhancement, and Transaction Managem (1st ed.). John Wiley & Sons.
Pinson, L. (2007). Anatomy of a business plan (1st ed.). Warriewood, N.S.W.: Woodslane Press.
Ramsey, D. (2009). The everything business plan book (1st ed.). Massachusetts: Adams Media.