2. TechnoTurf
2
Problem
Whether you are the parent in the stands of your
child’s lacrosse game, or the hard working
athlete yelling to the referee, we’ve all said it;
“Which line is out?” Artificial turf fields, with lines
for 2-3 different sports have become increasingly
common in high schools and universities. While
these fields are used to save money and space,
they also create confusion and annoyance that
detract from the athletic experience. Players end
up stopping at the wrong line, and poor mothers
are left even more perplexed by the rules of the
sport. What consumers need is a field that not
only saves them money and space, but does so without compromising the athletic experience. They
need a new lining system for turf fields.
TechnoTurf’s Solution
Enter fiber optic turf. Fiber optics are plastic filaments that
enable light to be refracted throughout the fibers. Artificial
turf is manufactured synthetic fibers, made to look like
natural grass. The TechnoTurf idea is to infuse these two
substances and create fiber optic turf. We would be
combining the durability of turf with the versatility of fiber
optics. Fiber optic material and sports turf material have
similar properties, so the line marking fiber optic can be
mixed with the turf grass without interfering with the
surface characteristics.
TechnoTurf will use fiber optic turf to create a new lining system for multi-sport fields. We will provide
our turf through a process called retrofitting. This process is currently used to install all colored lines
on traditional turf fields. For these fields, the green turf is installed, all lines are cut out, and then the
colorful lines are manually added. In the same way, TechnoTurf can cut out any part of a field that a
customer wants to replace with fiber optic turf.
Once installed, the field will have a basic setting where all the grass is green. Then, one will be able
to “turn on” lines specific to the sport they want to play at that time, displaying only those lines on the
field. This technology also lends itself to the possibility of more creative and versatile personalization
of the field. One could utilize the colors and effects of fiber optic LED lighting to personalize end
zones, have logos, or even create colorful ads that surround the field, offering a potential for selling of
ad space.
3. TechnoTurf
3
Target Market
Because our fields are designed to solve what we call “the multi-line problem,” we are targeting the
market most plagued by this issue: high schools. High schools typically have one turf field with lines
for multiple sports, as they have neither the space nor the money to build additional fields. We believe
that our product is the solution to this problem. After talking to the turf manufacturers and multiple
potential customers, we have determined that multi-lines are an issue they are looking to solve,
meaning our customers will be
“It comes up in every consultation we have: All
particularly receptive to our product.
schools are concerned with multi-lined fields.”
- Jimmy Weekly, X-Grass
Between private and public high
schools we have an impressive
potential market of around 4,500 qualified customers. With such a large target, we will begin with
Nashville as our first market. We chose Nashville as our primary market because of the high
concentration of competitive schools. Additionally, the proximity of these schools will enhance the
distribution process and will make it very easy to publicize our product to many schools that fall within
our target market. After Nashville we will look to expand to other cities with similar characteristics,
using regional partnerships with turf companies to get a foothold in the industry.
Competitor Analysis
TechnoTurf is competing with ShawSports and Electrafield, two turf manufactures that aim to create
“Turf TV’s” for NFL fields. Building entire turf fields is not our primary objective; rather we aim to
simply adjust and modernize already existing turf, thus establishing ourselves in a niche market. Our
target market and our unique service differentiate us from our competitors.
Although our competition offers a similar product, we do not believe they will be looking to enter our
market. Professional sports and universities offer these companies a large market that they have not
even begun to saturate. Once they exhaust the NFL, these companies will look to expand to other
professional sports played on turf fields. For this reason, we believe that they have no need or
interest in entering the high school market. Because of this, there should be few obstacles in our way
of achieving market dominance as a fiber optic lining and custom service.
Marketing TechnoTurf
One of the marketing strengths of TechnoTurf is that we create a public product. We are selling fields
that are going to be seen by players and fans, but also by competing teams that are going to be
playing on the field weekly. We also have the added bonus of frequent publicity in local and regional
papers and media coverage, as well as a strong online presence. Every time a reporter or blogger
writes about a game played on our field, TechnoTurf will most likely be mentioned. This high visibility
puts our fields in front of a lot of people, and allows us to create a buzz about our product without
spending a great deal of money on advertising.
4. TechnoTurf
4
Additionally, as we have found that most marketing for turf is done through networking and word of
mouth, we will be looking to partner with existing turf companies that already have connections in
regions we wish to target. Our offer would be mutually beneficial in which we would bring them our
customers who needed entire fields, and they would give us the contact information for fields they
have installed in the last 1-3 years. Through this partnership, we will gain the reputation, experience,
and expertise of leaders in the industry, and they will gain additional customers.
Market Opportunity
TechnoTurf’s standard field will cost $40,000 for us to manufacture and install, and will be sold for
$100,000. This price is both profitable for us and reasonable for our customers. Brand new turf fields
can range from $750,000-$900,000 making our alternative solution an affordable way to markedly
improve an already existing turf field. Artificial turf is currently an industry with $648.50 million in
revenues and from 2006-2011 has had an annual growth rate of 5.7%. This is expected to grow to
12.4% from 2011-2016.
Value for Investors
We are requesting a $1,000,000 start up investment for 30% equity of our company. This investment
will cover our start up capital expenditures, research and development of our product, and supplies in
order to launch within 6 months of investment. It guarantees positive cash flow for our operations until
we start selling our first product in mid-year 1. We will begin selling only our mutli-lined fiber optic turf.
Our projected revenues for the first 3 years are $331,843, $3,539,561, and $10,292,287 respectively.
The increases in revenues come from our establishment in the industry with increasing demands and
the launch of our 2nd more expensive custom product in mid-year 2.
The projected year 3 EBITDA is $3,218,961,
and using the 5x company valuation
TechnoTurf will be valued at $16,094,806. A
30% equity gives the initial investment a
$4,828,441, a 4.8 times return on
initial investment. We believe based on our
projected value and return, this would be a
sound investment for any investor.
Taylor Bayles,
CEO TechnoTurf
Revenue
EBITDA
Gross Margin
Year 1
$331,843
-35,818
172,456
Year 2
$3,539,561
495,947
2,313,959
Year 3
$10,292,278 3,218,961 6,807,421
5. TechnoTurf
5
Table of Contents
Section I. Opportunity
Industry ..............................................................................................................6
Company/Product ………………………………………………………………........6-7
Entry/Growth Strategy ……………………………………………………………….7
Customers …………………………………………………………………………….7-8
Market Size/Trends … ………………………………………………………….…...8
Competition…………………….……………………………………………..……....8-9
Competitive Advantage..………………………………………………………….....9
Revenue Streams ……….………………………………………………………..….9
Sales & Market Share ……………………………….……………………………...10
Section II. Marketing
Overall Strategy ................................................................................................10
Pricing ...............................................................................................................10-11
Service and Warranty ........................................................................................11
Advertising and Promotion .................................................................................11-12
Distribution......................................................................................................... 12
Development Task and Costs............................................................................ 12
Product Improvement/New Products..................................................................12-13
Proprietary Issues ..............................................................................................13
Section III. Operations
Operating Cycle ..................................................................................................13-14
Strategy................................................................................................................15
Key Management Personnel ...............................................................................15-16
Compensation/Ownership ...................................................................................16
Advisors/Service ..................................................................................................17
Project Development Schedule ...........................................................................17-18
Section IV. Financials
Critical Risks ........................................................................................................18
Revenue & Profits ................................................................................................19
Break Even Analysis ............................................................................................20
Cash Flow……………………………………………………………………………….20
Balance Sheet Highlights .....................................................................................21
COGS and Expenses…………………………………………………………………..21
Desired Financing ................................................................................................21
Use of Funds ........................................................................................................22
Investor’s Rate Return .........................................................................................22-23
6. TechnoTurf
6
Section I. OPPORTUNITY
1.1 Industry
The last 8 years have seen a significant spike
“One field in my conference had
in the turf industry as more and more schools
football, girl's lax, boys lax, soccer,
and parks are switching to turf fields. Only 10
years ago it was uncommon to see a turf field
and field hockey on the same field. It
anywhere outside of professional sports, but
was horrible because they also didn’t
today a majority of high schools are purchasing
have cones”
artificial turf fields. This “turf boom” can be
attributed to the incredible progress made by the turf industry in making turf safer and more affordable
for customers. Although turf fields have high initial cost compared to grass, they are much more cost
effective in the long run. Grass fields need to be maintained and relined every season, which takes
time and a lot of money. Although there seems to be a major shift towards turf fields, some schools
still have not adopted this trend. All of the schools that TechnoTurf talked to attributed their dislike of
turf to one reason: multiple lines. Schools and professional sports teams alike share the same dislike
of this problem. Many high schools we have talked to express this sole concern as their reason for
not installing a turf field, as they prefer the
“I hate it when they do the lines in
added cost of repainting grass to the
confusion of multi-lined fields. The Titans had
red. About 10% of males are
the same answer. They still maintain a grass
red/green colorblind, which means
field because the women’s soccer team plays
about 10% of players and a slightly
on their field twice a year. Having a turf field
smaller percentage of men's officials
would make it impossible for the field to be
lined for both of these sports without causing
are as well.”
confusion.
1.2 Company and Product
TechnoTurf sees our process of cutting out
already existing lines and providing partial
fields with fiber optic turf as a way to create our
own niche market and dramatically cut costs.
Fiber optic infused turf is obviously more
expensive than traditional turf, so by giving the
school the option of which parts of the field
they specifically want to be lit with fiber optics
we create a variety of potential products that
can be tailored to a schools particular budget.
Diagram 1.2
7. TechnoTurf
7
Diagram 1.2 outlines our soon to be patented process of developing this turf. We will have bundles of
fiber optics (shown in blue) that are connected to an LED light source. LED lights have a life span of
15 years and fiber optics are extremely durable, meaning our product will last double what a
traditional turf field would last. With installation taking only around 3-6 days, our process will be a
quick and impactful improvement for athletic fields. Below is a breakdown of the TechnoTurf product
offerings.
Field Type
Standard:
Price
$100,000
Custom:
$220,000$300,000
Description
Includes lines for football, soccer and
lacrosse.
Customers have the option to customize
their field however they like
- End zones
- Logo/mascot/school seal
- Advertisements
- Sponsorship
1.3 Entry and Growth Strategy
As newcomers to this market we need a strong initial entry strategy. Because we are introducing such
revolutionary technology, we anticipate having a little trouble obtaining our first customer, as they may
be hesitant to be the first to adopt a brand new product. To solve this problem we are offering our first
field to a school at a discount. This initial field will serve as our debut field and will be the model for
our subsequent sales. We will gain recognition from the public and our other target schools through
the launch of this field.
Using Nashville as our first market will allow us to take advantage of the concentration and
competitive nature of the schools in the area. Starting with these schools means we are able to
streamline the installation process and publicize our product to the entire area.
Other geographic regions we have identified as profitable to our product are the greater Boston and
Miami areas. Boston has a very high concentration of high schools, particularly boarding schools.
Boarding schools are ideal customers for TechnoTurf because of their competitive nature and strong
alumni associations. Miami is a profitable area because it has a large number of affluent private
schools in a region that does not support grass fields well. Miami schools use turf more than other
regions because of weather concerns, therefore confirming a large number of qualified customers in
this region.
1.4 Customers
There are 30 private high schools in Nashville, many of which would be considered qualified
customers. This means they either already have turf, or could benefit from switching to turf, and have
8. TechnoTurf
8
a large enough athletic program to demand our product. Appendix 1 shows a breakdown of the
private schools by size, athletics, and type of field in place.
Within public schools we will specifically be looking to athletic booster clubs and sponsors to fund the
fields. We understand that booster clubs play an important role in reaching out to sponsors to fund
something like a TechnoTurf field. We predict that sponsors will be interested in promoting their
businesses by advertising on our field. Through speaking with executives in the Nashville area, we
have learned that it is very common for businesses to sponsor sports teams and athletic facilities,
especially if executives have children in the school they are benefiting. We feel confident that many
individuals will be interested in putting their company name behind such an innovative product.
Private schools have the same need for our product, but with the added desire to stand out amongst
their competitors. This competitive nature is what we believe will drive sales. A TechnoTurf field
would be an excellent selling point for any school, as it shows potential students that the school puts
a strong emphasis on athletics and is devoted to giving their students the best facilities and
experiences. This is a strong advantage in recruiting athletes and students. Alumni bases in private
schools are responsible for funding most school additions. By targeting alumni boards and
organizations, TechnoTurf will be communicating directly with the source of funding. We believe that
alumni who would already be donating a standard turf field would be excited by the prospect of
adding a unique and revolutionary TechnoTurf field to their alma mater.
1.5 Market Size and Trends
There are about 45,000 high schools in the country, 27,000 of which are public and 18,000 of which
are private. Assuming a potential market of 10% of the total High Schools in the United States, that is
4,500 schools.
Through talking to industry experts we have found that the trends in the industry include a continuous
sensitivity to price as well as reliance on continuous improvements in safety and quality. Therefore, it
will be important for TechnoTurf to be able to lower its prices as new products are created and
development processes are streamlined. Also TechnoTurf will have to maintain strong R & D to
ensure we are continuously creating the best possible product.
1.6 Competition
The top competitors in the artificial turf industry are Astro Turf, Sports Turf, Shaw Sports, and
FieldTurf. Astro Turf (+50 years) is the inventor of synthetic turf fields contracting their first turf field in
1966. Their advantages are being an iconic brand with years of work experience. Sports Turf’s
advantage is their established customer base with over 600 installations and renovations that provide
experienced knowledge. FieldTurf sets itself apart by its technology which aims to imitate grass as
close as possible. They worked with athletes for years in trials and tests to develop their final product
Shaw Sports is the leader in turf technology and research and are one of our direct competitors as we
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have previously mentioned, as well as Eletrafield. Below is a breakdown of our competitors.
Company
Product
Target
Price
TechnoTurf
Retrofitted lines and customizable “turf accessories”
High Schools
$100,000 for
standard product
ShawSports “Turf TV” covering entire field. Tracks movement,
displays down-lines, shows replays
NFL
$2.5 - 3 million
ElectraField
“Turf TV” covering entire field. tracks movement,
displays down-lines, shows replays
NFL
$2.5 - 3 million
AstroTurf
Inventor of Synthetic Turf. (50+ years) 3 variations
(GameDay Grass, PureGrass, AstroTurf 12)
NFL/College
$950,000
SportsTurf
1 football turf, also do sports courts, tracks and tennis
(20+ Years)
College/High
School
$800,000
FieldTurf
Synthetic Turf. Alternative to grass that provides
better drainage, less maintenance, and more cost
effective over time.
NFL/College
$750,000
1.7 Competitive Advantage
TechnoTurf’s advantage is that we are operating in a niche market with our product costing a fraction
of our competitors. Additionally TechnoTurf is solving a specific problem that our competitors are not
focusing on. We offer our customers a solution to a relevant problem but allow for customization that
will dramatically enhance the aesthetics of their field and appeal to fans.
We anticipate our customers being excited about our product because of the added incentive of
allowing sponsors to advertise on their fields. Through this service a TechnoTurf field has the
potential to pay for itself, making our product very affordable to schools.
1.8 Source of Revenue
Private high schools are more likely to have monetary support from alumni and therefore will be able
to afford our product. We expect that our traditional three sport retrofitting (soccer, football, lacrosse)
as stated before, will cost us about $40,000 and will be sold at $100,000. When compared to the cost
of an entirely new field, this price seems attractive to potential customers. Additionally, our superior
customer service will allow us to make a name for ourselves as a company worth investing in.
Although we anticipate most of our customers being able to afford our product, TechnoTurf does offer
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payment plans specific to schools’ individual needs. These plans allow more schools to be able to
afford our fields.
1.9 Estimated Sales and Market Share
As mentioned, Turf is currently an industry with $648.50 million in revenues and from 2006-2011 has
had an annual growth rate of 5.7%. We see this rate almost doubling as the price of these fields are
dropping and artificial turf is becoming an affordable option for their fields. This is expected to grow to
12.4% from 2011-2016. Using the expected growth rate through 2011-2016, the turf industry will have
estimated revenues of $888.5 million by 2015. Our projected revenues for year-end 2015 are around
$10 million, which is an estimated market share of around 1.2% in the turf industry.
Section II: MARKETING
2.1 Overall Strategy
Our overall marketing strategy is to work with the relationships we already have to
expand our TechnoTurf name. We have spoken with Jimmy Weekley from XGrass, Ryan Moriarty- Sports Turf Solutions, and Jim Dobmeier from A-Turf.
Through our conversations we have unanimously heard that they industry is all
about who you know. Therefore, these three companies will
be extremely valuable partners for TechnoTurf in the future.
All three companies have clients both in Nashville and
throughout the country so have valuable connections in areas that TechnoTurf
will want to expand. Marketing through these individuals will come in the form of
mutually beneficial partnerships in which we will be referring
customers to them, and they will be promoting our products to
their customers.
With the help of these partnerships, TechnoTurf will look to traditional marketing
methods in order to get in front of athletic directors and schools. These mediums
will include a strong online presence with informational videos and blogs.
2.2 Pricing Strategy
Fiber optic turf is not currently being offered by any other companies, and no other companies are
based solely on retrofitting existing turf fields. By combining two unique services, TechnoTurf created
a completely unique package that we are able to offer at a reasonable rate. A TechnoTurf field offers
prestige and uniqueness to any school, while still remaining practical and solving a real problem. By
installing our field, a school; eliminates their multi-line problem, identifies themselves as athletically
competitive, creates the opportunity for sponsors to advertise on their field, differentiates their school
11. TechnoTurf
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from competitors, shows that they are devoted to their students, and gets positive publicity because
of their revolutionary new feature.
By simplifying a revolutionary technology, TechnoTurf has created an inexpensive alternative to the
products currently offered. If prestige and uniqueness are not enough to entice customers, the
practical value of our field will be. The least expensive turf fields run around $700,000. They can
then get TechnoTurf lines installed for only $100,000, making the total cost of their revolutionary fiber
optic field only $800,000, which is less than many traditional turf fields. If a client does not need an
entirely new field, they can have TechnoTurf lines retrofitted into their existing turf field for $100,000.
Although this product is expensive, it is an incredible value when compared to traditional turf fields
that offer none of the unique benefits of fiber optics.
2.3 Service and Warranty Policies
TechnoTurf is offering clients a 10 year limited warranty on every product. A new turf field lasts about
5-7 years, depending on wear and maintenance. The fiber optic system we are using has a predicted
span of 15 years, while our LED lighting system has a predicted life of 13.7 years. Looking at these
figures, we foresee clients needing to replace our lines not because of our technology, but because of
the limitations with actual turf.
When a client buys a TechnoTurf product they are getting much more than a field. Customers get
around the clock maintenance, should the need arise. They also get the training and advice of our
technology team, who will teach customers how simple it is to use our technology. Our customer
design team will be available for frequent consultations for those wanting a custom field. Since there
are so many potential accessorizing opportunities, TechnoTurf will be able to help their customers
through the entire planning process.
2.4 Advertising and Promotion
One of the marketing strengths of TechnoTurf is that we create a public product. We are selling fields
that are going to be seen by players and fans, but also by competing teams that are going to be
playing on the field weekly. We also have the added bonus of frequent publicity in local and regional
papers and media coverage. Every time a reporter writes about a game played on our field,
TechnoTurf will most likely be mentioned. This high visibility puts our fields in front of a lot of people,
and allows us to create a buzz about our product without having to spend a lot of money on
advertising.
Considering the social proof that indicates we make our decisions based on those made by others,
the drive to imitate others will be an important social construct on which we will focus our marketing.
As consumers we trust what other people are buying. We trust our friends, but are also aware of
competitors. No one in any industry wants to be outshone by competition. Because of this, when one
school gets the next big thing, anyone who is paying attention will quickly follow suit.
12. TechnoTurf
12
Following the instillation of our first field we plan to release a YouTube video debuting our product.
Between our YouTube video and traditional media coverage, a lot of people will hear about
TechnoTurf in a short period of time. We will also take advantage of the trends toward social media
and blogging. There are currently many sports blogs and TechnoTurf aims to become part of the
conversation. We will target athletic directors and communities alike in order to have greater visibility
within the athletic circles.
Throughout this process of media coverage our TechnoTurf website will become increasingly
important. Our website will be both informative and entertaining, as it will describe how our product
works while also displaying videos of it. The website will have pages devoted to the media coverage
of our fields, so that interested clients can easily find out what previous clients have thought of our
product. The site will also have informational pages where fiber optic and turf experts explain how the
technology works, so clients feel comfortable from the beginning that this technology is legitimate.
2.5 Distribution
We will be buying all of our fiber optics and LED lights in bulk from our manufacturing companies in
China. Through bulk orders we will be saving money per unit. This turf will be assembled in our
manufacturing company in China. This outsourcing allows us to save money on turf equipment and
guarantees that the turf produced is of the highest quality made by experts who specialize in turf
manufacturing. The turf will then be shipped to the United States and stored in our warehouse in
Nashville. We will bring the rolls of turf and LED equipment to our clients in our trucks. TechnoTurf
will then install our LED lights, fiber optic turf, and complete control paneling into the existing turf field.
We have calculated the instillation process to take between 3 and 6 days, depending on weather and
the size of the fiber optic field the client selected. We will be contracting installers for this process
through our partner companies in the appropriate region. Our instillation manager and our electrician
will oversee this process.
2.6 Development Status and Tasks
The development of Techno Turf has already begun. Our CTO Andres has designed our first working
prototype. We will take this prototype to engineering professors at Vanderbilt University who have
agreed to be our advisors. These professors have decades of experience with electrical engineering
and are on the forefront of cutting edge technology, such as fiber optics. With them we will work
through any inefficiency there may be in our current design. Professor Kenith Pence will help us work
out any kinks in our design. After this initial design period we will make a test field and sell it for a
high discount to our first customer (who agrees to participate in product testing.) During this 3-month
testing period we will receive feedback to make sure that we are meeting all of our customers needs.
After all final adjustments are made we will purchase a bulk order of supplies and begin
manufacturing our product.
13. TechnoTurf
13
2.7 Product Plans
Because TechnoTurf is a new idea, we do not expect to have a problem keeping it relevant. Right
now TechnoTurf is a futuristic concept, which we hope will soon become the standard in athletic
fields. Although we are not worried about its relevance, we are already thinking ahead about
advances we can make with this technology, as well as related products. These products would not
be launched for a few years, as we want to give our custom and multi line markets a chance to gain a
foothold in the industry.
Another step for TechnoTurf would be to enter the professional market and come out with our own
version of “TurfTV”. This technology is more advanced and complex, but also has very high margins
and would be a way for TechnoTurf to more directly compete with ShawSports and Electrafiield in
their growing market.
We have also discussed developing is materials for playgrounds and play areas for young children.
Playground space is usually quite limited, especially in cities, so TechnoTurf is working on creating a
play space that includes all court sports, including basketball, volleyball, four square, hopscotch, etc.
This idea could also be utilized in gymnasiums with the same space problems, as most school
gymnasiums have lines for every sport, and often serve as auditoriums and cafeterias as well.
While TechnoTurf is initially targeting high schools, we have the potential to break into other larger
markets. Once we have established ourselves in this industry it will be simple and very profitable to
also offer our product to middle schools, youth recreational facilities, and college practice fields.
Offering our products to these additional locations expands our accessible market astronomically.
While a town usually only has one high school, towns may have multiple middle schools and will
absolutely have additional recreational facilities. All universities with athletic programs have at least
one practice field in addition to their main stadiums. TechnoTurf believes that the high school market
will be most profitable for market penetration, but understand that we have the opportunity to reach a
much broader market.
2.8 Proprietary Issues
Our fiber optic technology is a unique idea that only a few other companies are currently working with.
We will not be able to patent the turf itself, rather our way of assembling the product. Our unique
development process is competitive with the few companies who are currently creating similar
products, and we believe we have utilized both turf and fiber optics in the most efficient and effective
way possible. Therefore, we will patent our diagram. Our product is sturdy, long lasting, and
extremely well made and therefore our patent will serve to protect this intellectual property.
14. TechnoTurf
14
SECTION III: OPERATIONS
3.1 Operating Cycle
TechnoTurf’s operating cycle begins by ordering bulk lines of our fiber optic turf from our partner
manufacturer in China. We chose to manufacture in China because it would be much more cost
efficient for a start-up. Then, we will be storing our turf in a warehouse in Nashville. Once our website
is set-up and we’re ready to accept orders, our cycle begins.
We get an order, flowing from the website or through
direct sales. Once we have an order, we will have a
crew go to the field to cut out the turf and do an analysis
of necessary linear footage. After the analysis and
planning, we then deliver and install the TechnoTurf
within the 3-6 day installation schedule. To receive
payments there will be options for payment plans in
order to appeal to a variety of customers with differing
financial capabilities. In order to work on customer
relations and satisfaction, feedback surveys will be
requested from each customer. We will also look to
maintain contact for feedback in the coming years
following installation to ensure customer satisfaction
with our services and to ensure that TechnoTurf will be
their first or only option when it’s time for an upgrade.
Bulk Order
Store as
inventory
Receive Direct
Order
Email Feedback
Survey
Receive Payment
Cut out Turf
Deliver and
Install
15. TechnoTurf
15
3.2 Strategy
Our business strategy is to emphasize the uniqueness of our product as well as the practical solution
it provides. We benefit from the fact that our customers understand the process of how lines are
currently installed. Therefore, they will be able to envision how TechnoTurf could be incorporated into
their own fields. Because of our variety of services that include fiber optic multi lining system (mid-1st
year), fiber optic logos, ads, (mid-2nd year), and fiber optic end zones (mid-2nd year), we are able to
meet the needs and wants for each individual customer. The personalization of their fields with our
product gives it an appeal to the general public that will increase awareness and demand for our
services.
The first milestones for TechnoTurf are the building of our partnerships, development of our prototype
and installation of our first field. After the initial launch of our product, our next milestone will be to
promote our product in the nearby geographical area of our first field to all potential customers in
Nashville. The promotion of our product, along with our list of target schools, will look into the sales
and installation of our next few fields. Thereafter, TechnoTurf will begin expanding throughout
Tennessee and eventually throughout the country with our next target locations.
For our marketing and sales we will be bringing samples of our turf into schools we are targeting. We
will use our personal connections to contact the athletic directors and boosters and present our
product. We will stress that our product solves a well-known problem and has the ability to be tailored
to their individual needs. Our first year production milestone is to make 3 multi-lined fields, then for
the following two years we are aiming to complete 118 contracts for multi-lined fields. TechnoTurf is
projecting a breakeven date of mid-to-late year 2 after the launch of our customizable product.
3. 3 Management Team
TechnoTurf is confident that our current team possesses the experience and drive to get TechnoTurf
up and running. Through this process we have become very close and have learned about each
other’s strengths and weaknesses. We have found that because of our wide array of skills and
experiences, we are able to overcome any weakness one member may encounter. This team is very
passionate about TechnoTurf and truly believes in the product and services we can provide to our
customers. It is this dedication to our product that will motivate this team to not give up and see our
idea to fruition.
Taylor Bayles, a junior Communication Studies major and Corporate Strategy and Leadership and
Organizations minor, is the CEO. She has a lot of leadership experience, as she was group leader in
her marketing class as well as team leader in the Vanderbilt Consulting Club for two semesters. She
is very good at managing and encouraging others and serves as the driving force behind the idea of
TechnoTurf. Furthermore, Taylor is very persuasive, organized and personable and it is her vision of
TechnoTurf that will be driving the company into the future.
16. TechnoTurf
16
Grace Myers, a sophomore majoring in Human and Organizational Development and minoring in
Corporate Strategy, will be serving as COO. As Taylor’s right hand, Grace is able to contribute to a
variety of the technical aspects of TechnoTurf and its operations. She has previous experience in
consulting and is capable to look at the company with a different lens to think of all potential problems
TechnoTurf could encounter and has the ability to come up with ways to mitigate these issues. As a
TA for a managerial studies class, Grace also knows how to create and advise others on effective
business plans and her experience in PR will be a huge asset to our team when trying to stir up press
around our futuristic product.
Matt Robinson, a sophomore majoring in Finance, will be the CFO. Matt has been the CFO in
previous classes and has lead his team to first place on multiple occasions due to his attention to
detail and understand of what it takes to properly finance a business. Matt has held two finance
internships and through his experiences has gained valuable practice in accounting and we feel very
confident regarding his capabilities to manage all financial aspects of the business.
Andres Policastro, a junior Engineering Science major, will be the CTO. Andres has experience with
electrical engineering and web design and plays an integral role in the development of our fiber optic
technology and working for the patent of our product and its installation processes. Andres is also
creating the website that will be optimized by Grace and Taylor to serve as a strong marketing tool for
the TechnoTurf product. Andres also has necessary connections within the engineering department
at Vanderbilt that will be very valuable when looking for consultants for our product.
Charles Meller, a junior Political Science major and Corporate Strategy minor will be the CMO. Given
his past experiences in both the management of retail and catering, we find that his ability to
methodically tackle problems will give him the competitive edge in the position. His experiences in
customer service makes him the ideal candidate for this marketing position because he is able to get
into the minds of the customer and offers a unique perspective to our team.
3.4 Compensation/Ownership
The ownership of TechnoTurf will be evenly
distributed after the 30% equity stake for
the investor(s) is settled. This leaves a 14%
ownership of TechnoTurf to each founding
and management team member, but it will
be contractually agreed upon that any costs
or expenses incurred will be evenly split if
necessary. The ownership of TechnoTurf
will also serve as a great motivating factor
for the management team since they will be
working to grow the value of their share.
% Ownership
Charles
Meller
14%
Andres
Policastro
14%
Matt
Robinson
14%
Grace
Myers
14%
Investor(s)
30%
Taylor
Bayles
14%
17. TechnoTurf
17
3.5 Advisors
Consultant: TechnoTurf will have a consultant from the beginning. We will
be seeking part-time consulting from Professor Kenneth Pence from
Vanderbilt University. Dr. Pence is an associate professor of the practice
of Engineering Management, and General Engineering. Dr. Pence has a
B.S. in Engineering Science, a M.S. in Management of Technology, and a
Ph.D. in Management of Technology. We are confident that he is
extremely qualified to advise us through the product development and
launch of our product.
Dr. Kenneth Pence, Associate
Professor of
Engineering Management and
General Engineering
Research and Development: Although our CTO is capable of working on
the research and development of our product, we will need to hire
someone full-time to work with him to ensure the product development will
be done on-schedule as we aim to build our partnerships. This full-time
hire will be an Electrical Engineer who has the expertise in circuitry and
programming. His expertise will help with the R&D for the product itself
and the manufacturing process.
Intellectual Property Lawyer: Throughout our product development, TechnoTurf will need to secure
our assets through Intellectual Property by filing patents as we develop our product and installation
processes. This is why we need to hire an experienced IP lawyer to guarantee the security of our
assets as well as the setting of barriers to new entrants in our niche market.
3.6 Product Development Schedule
We plan on installing our first TechnoTurf field by the middle of the first year. This means that in the
first six months we will be allocating our funds into the patent filings and our product development and
testing. In the first month of our launch schedule we will be setting up our partnership with our local
turf company followed by the partnership with our manufacturer in China. We will then rent out our
warehouse where we will be storing our turf and equipment and testing our products.
Stage 1: Patent
Week 1:
File for a design patent to protect our unique fiber-optic installation and production process
Stage 2: Partnerships
Week 1 - Week 4
During this time we will also be looking for our partner turf company, fiber optic experts, and
turf experts to be serving as advisors working up to our initial launch
Stage 2: Research and Development
18. TechnoTurf
18
Week 4-Week 20
We will undergo a 4-month extensive research and development process. We will be
developing blueprints for specific sports fields set-ups, develop necessary software for the
control of light arrays, develop method for fiber optic filament integration into artificial turf and
of course purchase necessary equipment
Stage 3: Turf Production
Week 20
·
With all the necessary research completed, we will begin production of the turf with our partner
manufacturer.
Stage 4: Begin Marketing Strategy
Week 20-28
We will be bringing samples of our turf into schools in all of the management team’s
hometowns. We will use our personal connections with schools to contact the athletic
directors and boosters and present our product and also use our partnerships
Stage 5: Implement the Operating cycle as described above
Stage 6: Product Development and Innovation
Begin offering our alternative services, such as fully customizable fields
SECTION IV. FINANCIALS
4.1 Critical Risks
New Entrants: Barriers to entry into this new market are relatively high due to the cost of product
development for fiber optic turf. In order to protect the company in the future from potential
competitors, TechnoTurf will place patents on our proprietary integration of fiber optics and artificial
turf. Competitors entering into this new industry are not unexpected, but having patents in place and
suppliers locked into contracts with TechnoTurf will further raise the barrier of entry for any potential
competitor. Furthermore, if a new entrant could enter the market, we will gain a competitive edge by
building strong customer relationships with clients. Establishing a strong brand name by being first in
this business as well as through execution and strong customer relations will further increase our
competitive edge against any new entrants in this new industry.
Delayed product delivery: With a tight launch schedule of six months from initial funding, any delay
will negatively impact our ability to generate revenues as expected. To ensure we stay on schedule
and to mitigate the risks associated with product delays, we have taken many precautions. This
includes having a working prototype of the product and hiring the best engineers and consultants to
ensure manufactured product performs as designed and is delivered ahead of schedule. We have
contracted with multiple manufactures to ensure a timely delivery of product and reduce risk.
19. TechnoTurf
19
TechnoTurf, not the manufacturers, owns all patents and intellectual property. In addition, our initial
capital requests are sufficient to cover any unforeseen delays in production.
4.2 Revenue & Profits
TehnoTurf will generate revenue through the design, sale and installation of our unique fiber optic turf.
Each mulit-line package will retail for an average price of $100,000, which equates to an average cost
per square foot of fiber optic turf at $7.18. After year 1, we expect to begin selling and installing
custom field logo and end zone packages that retail for an average of $220,000. The cost of product
per square foot is the same as the retrofit package.
We anticipate the sales projections to be accurate based on the lack of any direct competitors and the
size of the potential market. The sales projection for year 1 is low, so TechnoTurf can put all
resources into testing, improving both product and installation methods and demonstrating the
product to other potential customers. A 50% deposit will be required and payment in full will be due at
job completion. Financing options will be available through lending institutions we are partnering with,
but the purchaser will incur the finance cost.
Our projected cost of goods will be approximately 40% of net sales. Therefore our gross margin is
60%. During the first year, TechnoTurf will have a high SG&A due primarily to start up costs, but in
subsequent years, the SG&A will be 49% and 32.6% of net sales. TechnoTurf will experience a net
loss during the first year of operation, but with increasing sales and installations, we are able to post
positive returns in all subsequent years. As TechnoTurf expands, we expect to reduce product cost
due to volume discounts from our manufacturers. In our second year of operation, we anticipate a
34.63% net margin and a 33.86% net margin in year 3.
TechnoTurf will have low general administrative costs since the majority of the expenses are in
product cost and installation. Since the product cost is basically fixed (volume discounting reducing
the cost by 15%), TechnoTurf’s profit margin increases as more units are sold, as administrative
costs remain relatively flat and we expect to become more efficient at installations, maximizing the
bottom line without increasing expenses.
Year
Revenue
Year 1
Year 2
Year 3
$331,843
$3,539,561
$10,292,287
Operating
Expenses
$168,600
$1,734,500
$3,354,000
Operating Profit
$3,856
$579,459
$3,453,421
20. TechnoTurf
20
4.3 Breakeven Analysis
JAN '13
MAR
MAY
JUL
SEP
NOV
JAN '14
MAR
MAY
JUL
SEP
NOV
JAN '15
MAR
MAY
JUL
SEP
NOV
TechnoTurf expects
Cummulative Net Profits
to breakeven by the
third quarter of the
10,000,000
second fiscal year
of operation. The
8,000,000
time to breakeven is
dependent on the
6,000,000
rate of sales and
Cummulative
the amount of sales
4,000,000
Investment
revenue generated.
In year two, we are
2,000,000
dramatically
increasing the
product availability
as well as offering
(2,000,000)
custom installations,
which will retail for over twice the amount of the standard retrofit package. We also anticipate higher
margins for the custom packages, since installation costs will drop due to centralized installations and
less fitting required in end zones and field logos, compared to line retrofitting.
4.4 Cash Flow
TechnoTurf will have sufficient cash reserves to keep the business operating due to conservative pro
forma projections and the request for an adequate initial investment. By securing sufficient capital, we
are able to fund first year operations and still have enough reserve cash on hand to provide a
comfortable safety margin. Based on current projections, the company will experience a low cash
balance of $524,479 in October 2014. At that projected low cash point, there are still adequate cash
reserves available to safely continue operations without the need to seek additional funding.
21. TechnoTurf
21
4.5 Balance Sheet Highlights
TechnoTurf’s assets are largely
comprised of cash and accounts
receivable. Because TechnoTurf
is funded solely by equity there
are no long-term liabilities. The
two largest liabilities will be
comprised of current liabilities
and accounts payable.
2,000,000
Monthly Cash
Balances
1,800,000
1,600,000
1,400,000
1,200,000
Year 1
1,000,000
Year 2
800,000
Year 3
600,000
4.6 Cost of Goods Sold and
other Expenses
400,000
200,000
-
Our total costs of goods sold over
the 3-year span are $159,387,
$1,225,602, $3,484,911 respectively, of our total revenue ($14,163,691), their sum comes out to be a
35% of costs of good sold; providing us with a $9,293,837 gross margin. Having a high gross margin
gives us more room for profitability and appeal to investors. Following gross margin, our total SG&A
expenses are $5,660,635; this figure includes all of the salaries and expenses coming from
operations such as: vehicles, rent, insurance, consulting fees, meals & entertainment, office
expenses (phone, utilities, etc.), and travel expenses. As demand for our product increases, we must
increase our workforce for installations, customer service, and management. The salaries account for
54.89% of SG&A expenses. Taking into account all of these figures, our total EBITDA at the end of
year 3 is $3,218,961.
4.7 Desired Financing
TechnoTurf is initially seeking a $1,000,000 equity investment. Based on projections, this initial
investment will be adequate to fund the first 18 months of operating expenses determined by our
sales estimates. In return for the initial equity requirement, an investor will receive a 30% ownership
stake of the company. In the event we are not able to secure the full amount from one investment
source, we will seek a number of smaller individual investments, with the ownership percentage of the
company being determined on a pro-rata basis using the original capital requirement and ownership
percentage.
22. TechnoTurf
22
4.8 Use of Funds
TechnoTurf will use the initial funding to pay for capital expenditures and development associated
with our product. The majority of funding will be applied towards consulting and product development.
One of the great strengths of our business strategy is that we will be entering the market around the
time of other competitors and will be the drastically cheaper option.
Of the initial investment, $187,508 is being used as our start up expenditure. $138,108 of this start up
expenditure is being used to purchase our opening
2016 Potential Valuation
inventory. $7,250 will go towards security deposits.
This includes rent ($5000), telephone ($750), and
EBITDA
Multiple
Value
a utilities deposit ($1,500). $28,350 will go towards 3,218,961
5X
16,094,806
start- up expenses. This includes accounting fees
3,218,961
6X
19,313,766
($2,000), insurance ($12,000), legal and
3,218,961
7X
22,532,727
consulting fees ($7,500), meals and entertainment
($2,500), office supplies ($2,000), printing brochures ($2,000), and sales tax permit ($350.) We will
also need $13,800 for capital expenditures. This includes, computer equipment ($1,000), furniture
($800) and leasehold improvements ($12,000).
The rest of the investment money is necessary to keep our business cash flow positive as we expect
to incur a loss at the end of year one. After that, sales will start to increase, and will provide us with
enough revenue to become self-funding. According to our projections, we are looking at a breakeven
date around July 2014 (midyear 2).
4.9 Investor Returns
With an initial investment of $1,000,000, an investor should expect to receive an IRR of 120% over
the course of the first three years. Using an EBIDTA exit multiple of 5X, we project TechnoTurf to be
worth $16,094,806 at the end of year 3. An investors 30% share of the company on an initial
investment of $1,000,000 will be worth $4,828,441 upon the sale of the company at the end of year
three. Based on realistic forecasts, TechnoTurf offers an outstanding investment opportunity for
potential investors.
23. TechnoTurf
23
Appendix 1. Break Down of Nashville Private Schools
School
Students
Athletics
Turf
?
School
Students
Athletics
Turf
?
Battle Ground
Academy
975
Football
Y
Father Ryan High
School
870
Football,
Baseball
Y
Harding Academy
474
Football
Soccer
Y
Franklin Road
Academy
817
Football,
Tennis
N
Currey Ingram
Academy
312
Tennis
Football
N
Godspasture
Christian School
336
Baseball,
Football
N
Ensworth
1,041
Football
N
Hendersonville
Christian Academy
266
Football,
Basketball
N
Harpeth Hall
625
Soccer
Y
Lighthouse Christian 412
School
Soccer
N
Montgomery Bell
Academy
713
Cross
Country
Y
Lipscomb Adademy
1521
Football
Y
Nashville Academy
103
Basketball
N
Madison Academy
121
Soccer,
N
Gymnastics
University School of
Nashville
1,022
Soccer
Y
Madison Nazarene
Christian Academy
142
Basketball
N
Brentwood Academy
780
Football
Basketball
N
Nashville Christian
School
650
Football,
Basketball
Y
Christ Presbyterian
Academy
1,062
Football
Y
Pioneer Christian
Adademy
220
Basketball
N
Davidson Academy
771
Football
N
Pope John Paul II
High School
622
Football,
Soccer
Y
Donelson Christian
Academy
755
Football
Basketball
Y
Radnor Baptist
Academy
274
Basketball
N
