Pet Supplies Business Plan
Tonya McClendon has developed a new* elevated pet feeder component, designed several elevated feeder models around the component and built several prototypes. She plans to invest a minimum of $22,000 through a combination of personal savings and loans and is seeking additional funding to protect her feeder component and design ideas and to bring the products to market. She plans to incorporate Tall Drink of Water as a New York-based subchapter S holding corporation to shield her from personal liability and double taxation.
Ms. McClendon intends to establish her product as a brand leader in the $34 billion pet products industry, which is experiencing steady growth, but it is fragmented with no clear brand leaders producing elevated feeders.
Ms. McClendon has managerial, operational and technical experience in business, including financial services, management consulting, food service, architecture and landscape architecture, and Olympic planning. She has a strong customer service and sales foundation and is comfortable working in environments ranging from small family businesses to Fortune 500 corporations. She has a broad range of skills and experience to draw from to launch the company from start-up to stellar.
Based on her research, she is confident that a start-up pet products business that designs and sells innovative, contemporary elevated pet feeders to design professionals, pet care professionals, government agencies and individual consumers will be successful in the United States, where more than half of all American households have at least one pet dog or cat.
Sales forecasts for the first three years are modest based on the performance of competing and complementary products. First year sales are projected to total $143,800 and to increase at a rate of 10% over the following two years, reaching $248,748 by the end of Year 3. Sales are expected to improve dramatically once the brand is established.
To be a leader in the pet feeder product market with a measurable share of the market by the end of the second year of operation, based on the design and development of:
- Innovative, functional and beautiful elevated pet feeders
- Accessories and complementary pet products
- Products that are environmentally and socially responsible
- To increase sales by at least 10% for the first three years of operation.
- To reach sales of $250,000 by the third year of operation.
Tall Drink of Water designs, develops, and markets innovative, functional and beautiful elevated pet feeders and related pet products using methods and materials that are socially and environmentally responsible. It provides a rewarding and respectful work environment with competitive compensation and benefits.
1.3 Keys to Success
Tall Drink of Water, will:
- Design and develop innovative, functional, reliable and beautiful products
- Provide a competitive guarantee for our products
- Provide exceptional customer service
- Participate in design and pet industry communities
- Support pet associations that rescue, train and promote the humane treatment of animals
- Use profits for new product development
- Promote pet safety and health
Tall Drink of Water is a New York-based start-up company that is developing elevated pet feeder technology and designs that are unique in the pet products market in both form and function. Its elevated pet feeder products will be marketed to design professionals, pet care professionals, government agencies and individual consumers.
2.1 Company Ownership
Tall Drink of Water is privately owned by Tonya McClendon and will file for S-Corporation status.
2.2 Start-up Summary
Start-up expenses for the company total $31,200 and will be distributed as follows:
- 52% – Product research and development: design fees, patent fees and prototyping.
- 19% – Corporate brand development: website design, marketing materials and advertising.
- 10% – Administrative costs: legal fees, licensing and other general administrative costs.
- 19% – Home office: interior improvements, office equipment, software and miscellaneous purchases.
We will also need a small amount for start-up inventory ($1,000), and a $40,000 cash reserve on opening to cover operating costs for the first few months.
Start-up costs will be financed using a combination of owner investment and a 2-year Small Business Administration (SBA) loan.
Tall Drink of Water designs, develops and markets innovative, functional, luxury elevated pet feeders to design professionals, pet care professionals, government agencies and individual pet owners.
The products are divided into two categories, basic models and deluxe models. The basic models are off-the-shelf solutions that have the following features:
- Four standard heights: small (3″), medium (9″), large (15″) and extra large (21″).
- Three standard colors: clear, pearl (frosted) and smoke.
- One material: acrylic.
Basic models have one feeding platform that includes a water dish and food dish and a base. The small basic model is intended for small dogs and cats, while the medium through extra large sizes are intended for larger dogs. While these products cannot be customized, they can be personalized with pets’ names, pet’s photos or breed likeness.
Deluxe models can be fully customized – the options are limited only by the buyer’s (and their design professional’s) imagination. Some examples of customized options include sizes tailored for individual pets rather than based on average sizes like the basic model. Owners can add multiple platform heights to one unit or multiple water and food dishes in one unit. If purchased through a design professional, the materials, colors and design choices are limitless.
Over the next five years, the company plans to expand the pet feeder line, introduce incremental improvements to existing products and introduce complementary products, based on customer feedback.
All products will be manufactured by vendors using just-in-time (JIT) methods, unless experience determines that it is more efficient to maintain an inventory of basic models.
Market Analysis Summary
According an April 2004 American Pet Products Manufacturers Association, Inc. (APPMA) news release, pet owners are projected to spend “$2.2 billion for other [pet] services” in 2004. That’s a small portion of the more than $34 billion they will spend on all classes of pet care and product spending in 2004. The same APPMA news release reports that consumer spending on pet products has doubled from $17 billion to a projected $34 billion since 1994 when the APPMA first began tracking pet industry statistics.
One market research company, Mindbranch, states that “inadequate marketing has resulted in annual sales returns well below the level this market should deliver,” which indicates that growth in this market could be much stronger if marketing efforts were more sophisticated than they are in the current fragmented market.
Based on our industry research, we think we have opportunities to attract customers from the following market groups:
- Design professionals
- Pet care professionals
- Government agencies
- Individual consumers
The first three groups were selected because they offer growth outside of the “usual” pet products consumer; their favorable opinion of the product may help establish product reliability, brand credibility and influence individual consumer purchases.
4.1 Market Segmentation
The four target market segments selected for this product are design professionals, pet care professionals, government agencies and individual consumers. Each segment is described below and illustrated in following market analysis pie chart.
Interior designers, architects, and landscape architects, were selected as a target market for this product because the deluxe models are intended to be customized to meet pets’ and owners’ needs. Designers who have clients with pets will have access to a solution that is integral to their designs, not an afterthought. The 2000 U.S. Census Occupations report shows 1,926,689 people in architecture and engineering fields, but for the purposes of this plan, we used the numbers reported by professional organizations rather than Census data, because it is more specific and representative of the populations we would have access to:
- Interior designers (American Society of Interior Designers): 20,000
- Architects (American Institute of Architects): 70,000
- Landscape architects (American Society of Landscape Architects): 14,200
Pet Care Professionals
Veterinarians, breeders, kennels and pet day care centers also need access to a customized solution that works best for their clients. Veterinarians recognize the health benefits of elevated feeders for pet digestive health, as well as for the the joint, muscle and skeletal health of older pets. They also recognize the benefits and pet preference for flowing rather than stagnant water and can offer these products to clients to address those health needs. Breeders, kennels and pet day care centers all may have multiple pet facilities. Some of these facilities cater to high-end clients who want assurance that their existing or future pets are well cared for. Our customized multiple pet units can meet the pet care professionals’ needs for feeding and watering pets and the pet owners’ need to know that their pets are receiving high-quality care.
We used data from the American Veterinary Medical Association and the 2000 U.S. Census for market data for this segment:
- Veterinarians (American Veterinary Medical Association): 69,000
- Pet care except veterinary services (2000 US Census): 28,320.
Police departments and fire departments use dogs as service animals. They may benefit from a customized, multiple-pet solution. Parks and recreation departments that build and maintain dog runs or dog parks may also benefit from a customized solution. In our research, we have found that New York City area dog runs often have one water dish used by hundreds of dogs throughout the day. We can offer another way for parks and recreation departments to address the need to offer hydration for pets in these locations: multiple height, water-dish-only units.
Market data for this segment was obtained from the 2002 US Government Census report that shows parks and recreation and fire protection departments as special district governments totaling 1,314 and 5,743 respectively, while state and local police agencies in 2000 totalled 17,784. Further research may indicate that this market should be further segmented to focus on New York City agencies to start.
The largest number of potential buyers for these products are individual consumers. Industry experts estimate that more than 55% of U.S. households own at least one pet cat or dog; many own multiple pets. The 2000 Census reported a total population of 281,421,960; 55% of that number represents our potential individual consumer market, 154,782,078.
We project that the individual consumer segment will grow at a rate of 10% per year, while the commercial market segment, design professionals, pet care professionals and government agencies, is forecasted to grow at a rate of 5% annually.
4.2 Target Market Segment Strategy
The initial market focus will be on the commercial market segments: design professionals, pet care professionals and government agencies. Design professionals were selected because they can recommend customized product solutions to existing pet owners as an added value to their new or remodeled home. Pet care professionals can inform, assure and influence pet owners regarding the health benefits of the products for their pets. Government agencies can offer the product as value added to attract visitors to dog runs and dog parks by demonstrating an interest in the health and well-being to pets that visit them. Other government agencies, police and fire departments that use service dogs can benefit from improved feeding and watering for the larger breed dogs typically employed for this kind of service. Together, these market segments were selected to establish product reliability, brand credibility and brand recognition.
Once the products are established in the commercial market segments, the company will introduce them to individual consumers who think of their pets as family, and are style and status conscious.
To support this strategy, we will attend industry trade shows and enter design competitions. This strategy will allow us to form partnerships with people and organizations that can help the company establish the highest level of product performance and customer service.
4.3 Industry Analysis
In an April 2003 news release, the American Pet Products Manufacturers Association (APPMA) forecasted that pet owners would spend $31 billion for the care, feeding, spoiling and pampering of their pets. According to their April 2004 news release, actual spending on pet products in 2003 was $32.4 billion, $1.4 billion more than projected. Industry researchers estimate that the industry will grow between 5% and 15% annually through 2008.
Industry experts also report that the pet products industry is competitive and highly fragmented with no clear brand leadership, and under utilized marketing opportunities. There are opportunities for successful entry to it that we intend to use to our advantage.
4.3.1 Competition and Buying Patterns
We have many competitors in the pet products industry. Direct competitors are designers and manufacturers of elevated pet feeders and complementary products such as pet fountains. In our research, we identified one direct competitor that is publicly traded, OurPet’s Company. Other competitors include, but are not limited to, private companies:
- Doskocil Manufacturing Company (LeBistro feeders and waterers)
- Veterinary Ventures, Inc. (Drinkwell fountains)
- A Charmed Life (Elevated feeders)
Indirect competitors for pet-related purchases include, but are not limited to, large public pet products corporations:
- Nestle Purina PetCare
Large bricks and clicks retailers:
Online and catalog retailers:
- Drs. Foster & Smith
- Watson’s Pet Company
Current consumer buying habits for elevated pet feeders are driven primarily by the products’ functionality, elevating pets’ food and water dishes to a level that is healthier for them or providing flowing water, which pets not only prefer, but is also healthier for them, encouraging hydration and reducing microorganism growth that occurs in stagnant water.
Some consumers, dissatisfied by current market offerings for elevated pet feeders are building their own elevated feeders or asking friends or relatives to build them to suit their unique space, aesthetic tastes or pet needs. Others, like me, are starting companies of their own to offer products to address consumers needs for functional products that also suit the owners’ needs for products that fit their lifestyles.