amilie clean cosmetics gcc business plan may 4th

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Business Plan

Amilie Clean Cosmetics

Rachel Brockhage & Sharon Seiter

Grove City Entrepreneurship

Business Plan Competition

NON-DISCLOSURE AGREEMENT

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This Non-Disclosure Agreement (the Agreement) is entered into by and between Amilie Clean Cosmetics (ACC) with its principal offices at 332 Rockaway Valley Road, Boonton Twp., NJ 07005 (Disclosing Party) and ____________________ , located at _______________________________________________________________ ,

(Receiving Party) for the purpose of preventing the unauthorized disclosure of Confidential Information. The parties agree to enter into a confidential relationship with respect to the disclosure of certain proprietary and confidential

information (Confidential Information). 1. Definition of Confidential Information. For purposes of this Agreement, Confidential Information shall include all information or material that has or could have commercial value or other utility in the business in which Disclosing Party is engaged. If Confidential Information is in

written form, the Disclosing Party shall label or stamp the materials with the word Confidential or some similar warning. If Confidential Information is transmitted orally, the Disclosing Party shall promptly provide a writing indicating that such oral communication constituted

Confidential Information.

2. Exclusions from Confidential Information. Receiving Partys obligations under this Agreement do not extend to information that is: (a) publicly known at the time of disclosure or subsequently becomes publicly known through no fault of the Receiving Party; (b) discovered or created by the

Receiving Party before disclosure by Disclosing Party; (c) learned by the Receiving Party through legitimate means other than from the Disclosing

Party or Disclosing Partys representatives; or (d) is disclosed by Receiving Party with Disclosing Partys prior written approval.

3. Obligations of Receiving Party. Receiving Party shall hold and maintain the Confidential Information in strictest confidence for the sole and

exclusive benefit of the Disclosing Party. Receiving Party shall carefully restrict access to Confidential Information to employees, contractors and

third parties as is reasonably required and shall require those persons to sign nondisclosure restrictions at least as protective as those in this

Agreement. Receiving Party shall not, without prior written approval of Disclosing Party, use for Receiving Partys own benefit, publish, copy, or otherwise disclose to others, or permit the use by others for their benefit or to the detriment of Disclosing Party, any Confidential Information.

Receiving Party shall return to Disclosing Party any and all records, notes, and other written, printed, or tangible materials in its possession pertaining

to Confidential Information immediately if Disclosing Party requests it in writing.

4. Time Periods. The nondisclosure provisions of this Agreement shall survive the termination of this Agreement and Receiving Partys duty to hold Confidential Information in confidence shall remain in effect until the Confidential Information no longer qualifies as a trade secret or until

Disclosing Party sends Receiving Party written notice releasing Receiving Party from this Agreement, whichever occurs first.

5. Relationships. Nothing contained in this Agreement shall be deemed to constitute either party a partner, party to a joint venture or employee of

the other party for any purpose.

6. Severability. If a court finds any provision of this Agreement invalid or unenforceable, the remainder of this Agreement shall be interpreted so as

best to effect the intent of the parties.

7. Integration. This Agreement expresses the complete understanding of the parties with respect to the subject matter and supersedes all prior

proposals, agreements, representations and understandings. This Agreement may not be amended except in a writing signed by both parties.

8. Waiver. The failure to exercise any right provided in this Agreement shall not be a waiver of prior or subsequent rights.

This Agreement and each partys obligations shall be binding on the representatives, assigns and successors of such party. Each party has signed this Agreement through its authorized representative.

______________________________ ____________ ______________________________ ____________

Signature Date Signature Date

______________________________ ______________________________

Printed Name Printed Name

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The reader acknowledges that the information contained in this business plan is

confidential. Therefore, the reader agrees not to disclose it without the express

written permission of Sharon Seiter and Rachel Brockhage.

Upon request, this document is to be immediately returned to Sharon Seiter or

Rachel Brockhage.

This is a business plan. It does not imply an offering of securities.


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Table of Contents

1. Executive Summary ............................................................................................................................ 7

2. Industry ................................................................................................................................................ 9

2.1 Cosmetics Industry ..................................................................................................................... 9

2.2 Gluten-free Products................................................................................................................... 9

2.3 Gluten-free Cosmetics............................................................................................................... 10

3. Amilie Clean Cosmetics .................................................................................................................... 14

3.1 Background ............................................................................................................................... 14

3.2 Value Proposition ...................................................................................................................... 15

3.3 Barriers to Entry ....................................................................................................................... 15

3.4 Keys to Success .......................................................................................................................... 15

4. Market Analysis ................................................................................................................................ 17

4.1 Customers .................................................................................................................................. 17

4.2 Market Research ....................................................................................................................... 18

4.3 Market Size and Trends ........................................................................................................... 19

4.4 Estimated Market Share .......................................................................................................... 19

4.6 Competitors ............................................................................................................................... 20

4.7 Differentiation ........................................................................................................................... 21

5. Marketing Plan .................................................................................................................................. 22

5.1 Positioning ................................................................................................................................. 22

5.2 Pricing Strategy ......................................................................................................................... 22

5.3 Sales & Distribution .................................................................................................................. 23

5.4 Promotions Mix ......................................................................................................................... 25

6. Operations .......................................................................................................................................... 26

6.1 Operations Model ...................................................................................................................... 26

6.2 Facilities and Equipment .......................................................................................................... 27

6.3 Development Status .................................................................................................................. 28

6.4 Intellectual Property ................................................................................................................. 30


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7. Management Team and Company Structure ................................................................................. 31

7.1 Key Management Personnel .................................................................................................... 31

7.2 Management Compensation and Ownership ......................................................................... 31

7.3 Board of Advisers ...................................................................................................................... 32

7.4 Operations Expansion Plan ...................................................................................................... 32

8. Critical Risks, Problems, and Assumptions .................................................................................... 33

9. Financial Plan .................................................................................................................................... 34

9.1 Startup Cash .............................................................................................................................. 34

9.2 Source of Funds ......................................................................................................................... 34

9.3 Financial Assumptions Sheet ................................................................................................... 35

9.4 Pro-Forma Income Statement .................................................................................................. 36

9.5 Pro-Forma Balance Sheet ......................................................................................................... 40

9.6 Pro-Forma Cash Flow Statement ............................................................................................ 41

9.7 Breakeven Analysis ................................................................................................................... 42

11. Appendix ........................................................................................................................................ 43

11.1 Partnership Agreement ............................................................................................................ 43

11.2 Founder Resumes ...................................................................................................................... 45

11.3 March 7th Beta-Test Presentation ............................................................................................ 47

11.4 Five Month Implementation Schedule .................................................................................... 49

11.5 Sample Web Content ................................................................................................................ 50

11.6 Interviews of Gluten-free Individuals ..................................................................................... 51

11.7 Monthly Balance Sheets............................................................................................................ 53

11.8 Monthly Cash Flow Statements ............................................................................................... 56

11.9 Monthly Operating Schedules.................................................................................................. 59

11.10 Monthly Budgets ................................................................................................................... 64

11.11 Seasonality ............................................................................................................................. 69

11.12 Pricing Assumptions ............................................................................................................. 72


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1. Executive Summary

Amilie Clean Cosmetics solves the growing need for gluten-free cosmetics by manufacturing and

distributing gluten-free, organic makeup and personal care products.

Gluten is a protein in wheat, barley, and rye which causes severe health problems for individuals

with Celiac Disease. Celiac disease is linked to long term problems such as osteoporosis,

infertility and cancer. Individuals who are gluten-intolerant can improve their quality of life by

eliminating all traces of gluten from their diet. Today, over 10% of the American population is

eating gluten free, and the rate of diagnosis for Celiac Disease is rising rapidly.1

In the past three years, demand for gluten-free food has risen 33%.2 However, gluten is also a

hidden threat lurking in the ingredients of name-brand cosmetics products.3 Because the FDA

does not mandate disclosure of ingredients on makeup labels, the presence of gluten can slip by

undetected, with consequences ranging from breakouts to debilitating digestive flare-ups.4

Amilie products offer peace of mind. We give our customers freedom to enjoy the luxuries of

quality makeup worry-free. Unlike competitors, we focus on the gluten-free claim. Our

products are certified gluten-free by a third party and backed with scientific consumer education

which competitors do not offer.

Our primary customers are natural and organic grocery stores and distributors, reached through

trade shows and sales programs. Our end users are women ages 16-60 who suffer from food

allergies, especially gluten-intolerance. We will reach them through web marketing, consumer

events, grocery stores where they shop.

Today, our nourishing Lip Balm is fully prototyped, and receiving positive reviews from family

and friends. Prototypes of our Mineral Foundation and Eye Shadow will be completed in a

matter of weeks.

We believe that Amilie Clean Cosmetics will meet the real and growing need for gluten-free

makeup and personal care products. We will break even in our first year of operations, and grow

in profitability as Amilie becomes a household name in the brand-loyal gluten-free community.

Amilie will require $50,000 of startup capital.

Thank you for taking the time to read this plan. We welcome as much advice as you can give us.

We will launch Amilie after graduation, and want to make it the best it can possibly be.

Sincerely,

Sharon Seiter, CEO

1 Data taken from a webinar entitled The Gluten Free Movement Within Specialty Foods. Full powerpoint

available upon request. 2 http://www.nytimes.com/2011/11/27/magazine/Should-We-All-Go-Gluten-Free.html?pagewanted=all

3 http://news.consumerreports.org/health/2011/11/gluten-in-cosmetics-may-pose-risk-for-celiac-patients.html

4 http://www.sciencedaily.com/releases/2011/10/111031114941.htm


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Rachel Brockhage, COO


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2. Industry

Amilie Clean Cosmetics is part of a young niche industry providing cosmetic products to

individuals who struggle with gluten intolerance and wheat allergies. This niche is currently

underserved and growing, providing serendipitous opportunities for Amilie.

2.1 Cosmetics Industry

Amilie Clean Cosmetics participates in the growing gluten-free cosmetics industry.5 The value of

cosmetics manufactured in the US annually is over $55 Billion.6 According to Forbes.com, the

global cosmetics industry generates over $203 Billion in annual sales.7

The Industry is segmented as follows, with over $19 Billion in Other Cosmetics and Toilet Preparations. This segment includes traditional makeup.

8

The cosmetics industry struggled during the recession, but has rebounded, with healthy 5%

growth in 2011.9 The industry shows especially strong growth in the high-tech and organic

sectors.

2.2 Gluten-free Products

While the cosmetics industry is mature and stable, the gluten-free products industry is relatively

new and volatile. Since 2009, public awareness of gluten-intolerance has grown significantly.

Gluten is a protein found in wheat, barley, and rye which frequently triggers adverse reactions

5 Our NAICS industry code is 325620 - Toilet preparation manufacturing. Our SIC code is 2844 Toilet preparations.

6 http://www.ibisworld.com/industry/default.aspx?indid=499

7 http://www.forbes.com/2006/02/08/best-selling-cosmetics_cx_me_0209feat_ls.html

8 http://www.census.gov/econ/industry/products/p325620.htm

9 http://www.skininc.com/spabusiness/trends/126516783.html

35%

21%

12%

10%

9%

5% 2%

6%

Cosmetics Industry Segments Other cosmetics and toiletpreparations

Creams, lotions and oils,excluding shaving, hair, anddeodorantHair preparations (includingshampoos)

Hair tonics, including hairand scalp conditioners

Perfumes, toilet waters, andcolognes

Dentifrices, mouthwashes,gargles, and rinses


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ranging from headaches and nausea to debilitating fatigue. Gluten exposure

in women with Celiac disease has been linked to long term problems like

osteoporosis, infertility and cancer. Individuals who are gluten-intolerant

can substantially improve their quality of life by eliminating all traces of

gluten from their diet.

Today, 10% of the US population eats gluten-free.10

(Thats more than the entire population of Texas)

In response to burgeoning consumer demand, the natural and specialty food

industry has created an impressive array of gluten-free food products.

SPINs, a market research service for the natural food industry, says that

gluten-free food is a $6.3 Billion industry, up 33% since 2009.11

The NASFT, a specialty food organization, says the gluten-free industry will grow to $8-10

Billion in 2013.12

2.3 Gluten-free Cosmetics

Amid rising demand for gluten-free foods, there is a notable lack of attention to gluten in

cosmetics13

. Gluten intolerant individuals spend hours of time and thousands of dollars ensuring

that their diets are completely gluten-free, yet fail to realize that gluten is hiding in their makeup

bags, causing breakouts or even more serious symptoms.

A popular gluten-free blog lists over 20 common personal care product ingredients which

contain gluten and an additional 10 which may be cross-contaminated.14

One of the most

ubiquitous of these ingredients is Vitamin E oil, which may be derived from wheat, soy, or rice.

If Vitamin E oil is derived from wheat, gluten contamination is inevitable.

Cynthia Kupper of the Gluten Intolerance Group of North America says that gluten-free labeling

on body care products has grown 43% over last year.15

Within the profitable gluten-free products industry, cosmetics are largely ignored. Only four

companies offering full gluten-free certification of their cosmetics and a handful of others make

a gluten-free claim.16

Unlike food and pharmaceuticals, cosmetics do not require pre-approval

from the Food and Drug Administration (FDA) before going on store shelves. The FDA does not

require companies to list ingredients on the product label, and this can cause big problems for

consumers with gluten sensitivity.

10

Data taken from a webinar entitled The Gluten Free Movement Within Specialty Foods. Full powerpoint available upon request. 11

http://www.nytimes.com/2011/11/27/magazine/Should-We-All-Go-Gluten-Free.html?pagewanted=all 12

NASFT webinar. 13

http://news.consumerreports.org/health/2011/11/gluten-in-cosmetics-may-pose-risk-for-celiac-patients.html 14

http://www.naturallydahling.com/ingredients.html 15

http://supermarketnews.com/nonfood/more-nonfoods-labeled-gluten-free 16

According to the makeup list downloaded from the Gluten Free Makeup Gal blog - http://www.glutenfreemakeupgal.com/


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The gluten-free cosmetics industry is disproportionately small relative to the gluten-free food

industry, with potential for rapid growth. 17

Our own estimates lead us to believe that the gluten-

free cosmetics industry had approximately $83 Million in sales in 2011.18

Because the market is

fragmented and untapped, we project 20% annual growth in the next two years.

Gluten is not known to be directly absorbed through the skin. While it is not a major risk in

mineral-based makeup, it is a problem for products that may be ingested, such as lipstick, lip

gloss and lip balm. The presence of gluten in cosmetics is an issue increasingly covered by the

medical community, warning Celiac cosmetic users of the dangers of long term gluten ingestion

directly linked to diarrhea, fatigue and weight loss19

.

During the American College of Gastroenterology's (ACG) 76th Annual Scientific meeting in

2011, Dr. Marie Borum, MD presented a case called "Body Lotion Causing A Celiac

Exacerbation and Dermatitis Herpetiformis: Natural is Not Always Healthy." In the case, a 28

year old woman experienced exacerbation of Celiac symptoms and a recurring skin rash after

applying a body lotion advertised as natural. These symptoms ended after the woman stopped

applying the lotion. Dr. Borum presented the case as an illustration of the huge challenge Celiac

patients face in trying to determine whether cosmetic ingredients contain gluten. 20

Another study unveiled during the meeting examined the products offered by the top ten

cosmetic companies in the United States. The objective was to evaluate the availability of

information about cosmetic ingredients and the accessibility of gluten-free products. The study

found that products used on the lips and face resulted in unexpected exposure to gluten. Only

two of the ten companies in the study offered detailed ingredient information and of the two

companies, neither identified gluten sources, indicating a lack of readily available information on

the presence of gluten in cosmetics. Topical application of cosmetics that contain wheat

ingredients may also trigger an allergic reaction in people with allergies to wheat. The body

mistakenly identifies wheat as a harmful agent and mounts an attack against it, causing a medical

condition known as contact urticaria. The symptoms of contact urticaria commonly appear as

redness, swelling, itching and hives.

17

In 2007, Food Manufacturing was a $590 Billion industry. (http://factfinder2.census.gov/faces/tableservices/jsf/pages/productview.xhtml?src=bkmk) In comparison, Cosmetics Manufacturing was $43 Billion. Assuming the gluten free cosmetics and food industries follow the proportionality of their mainstream counterparts, the gluten free cosmetics industry should be around $460 Million. However, this young industry is underdeveloped and highly fragmented. We estimate that gluten free cosmetics is at most an $80 Million dollar industry today, with potential for rapid growth in the next 3-5 years. 18

We estimated this number in two ways. First, we estimated that the gluten-free cosmetics industry was 1.4% as large as the gluten-free food industry estimated by SPINs (see above). This was based on the relative popularity of Google keyword searches on gluten free (3,350,000), gluten-free food (201,000, and gluten-free makeup (2,900). Second, we reviewed the list of 16 companies claiming to offer gluten free cosmetics (from Gluten Free Makeup Gal). We estimated that the average revenue for that group of companies is $5 Million x 16 = $80 Million. 19

http://celiacdisease.about.com/od/Coping_with_Celiac_Disease/tp/Make-The-Rest-Of-Your-Home-Gluten-Free.htm 20

http://www.sciencedaily.com/releases/2011/10/111031114941.htm


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Cosmetics users who are allergic to wheat can best limit the risk of an adverse reaction by

insuring their products are free of wheat proteins. The topical application of wheat-containing

cosmetics may trigger even more severe reactions like anaphylaxis. Because of these

consequences, people with wheat allergy must take extra precaution to ensure that their food and

personal care products are free of wheat.

Consumers can best avoid the risk of experiencing an allergic reaction by reading the list of

ingredients on all their cosmetic products and keeping track of the products that cause a problem.

The Mayo Clinic recommends that buyers keep it simple when looking for new products. 21

Amilies products are made from simple formulas, allergen-free ingredients and we fully

disclose the ingredients on the package. Our Lip Balm contains only three simple ingredients.

Our products will not cause an allergic reaction because they are free from trace amounts of

wheat and other allergens.

21

http://www.mayoclinic.com/health/wheat-allergy/DS01002/DSECTION=lifestyle-and-home-remedies


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3. Amilie Clean Cosmetics

Amilie Clean Cosmetics (ACC) manufactures and distributes organic, gluten-free, top-8 allergen

free makeup and personal care products. Our high-quality products are distributed online and

through natural and specialty grocery stores carrying gluten-free products.

Awareness of the benefits of organic products has grown dramatically in recent years, and is

more than just a trend. In addition, many individuals are diagnosed with food allergies each

year, and the rate of diagnosis for gluten intolerance is rising. Research in the gluten-free and

food-allergy communities reveals that these individuals are confused and dissatisfied with

current cosmetic offerings.

In addition, our target market is growing. We identify our primary market as females ages 16-60

who suffer from a food allergy, especially gluten-intolerance. These customers have high

purchasing power and are accustomed to spending more than average on allergen-free foods.

Amilie Clean Cosmetics can create barriers to entry through strong branding, proprietary

formulas, and a superior distribution network.

We offer consumers full peace of mind through gluten-free and organic certifications.

3.1 Background

Amilie Clean Cosmetics is a new startup, which we are serious about launching in June 2012.

As the founders of Amilie Clean Cosmetics, we believe that our skills and passions are relevant

to Amilies mission. Sharon, the Chief Executive Officer, has nearly two years of experience working for a snack food company with critical knowledge and contacts in the gluten-free,

natural products industry. Rachel, the Chief Operations Officer, has extensive experience in

biology which will enable her to understand the formulation and scientific basis for our products.

Rachel and Sharon are interested in working together to launch Amilie Clean Cosmetics after

graduation as a side venture to their work and graduate school pursuits.

To date, we have completed this business plan, prototyped products, built a website, and

conducted beta testing and interviews with our target market. 22

22

Please reference Appendices 1 and 2 for complete details and a Five-Month Implementation Schedule.


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3.2 Value Proposition

Amilie products offer consumers Peace of Mind. Amilies value proposition encompasses the following key elements:

1. Peace of Mind assuring consumers that Amilie products are safe

2. Quality creating products that are effective and luxurious

3. Consumer Education providing materials to inform consumers of the harmful

ingredients in mainstream cosmetics

4. Honesty fully disclosing the ingredients in our products

5. Purity sourcing high-quality, organic ingredients for a pure end product

3.3 Barriers to Entry

The gluten-free cosmetics industry is made up of a fragmented group of small companies.

Barriers to entry exist, but can be overcome by smart and determined entrepreneurs.

The greatest barrier to entry for Amilie is developing and retaining strong wholesale accounts in

natural & specialty grocery.

The costs of sourcing raw materials from certified organic and gluten-free suppliers are

substantial, relative to generic ingredients. This forms a second barrier to entry in the gluten-free

cosmetics market.

The costs of equipment and manufacturing space are substantial, but may be lowered by working

with a third-party manufacturer. However, such an arrangement risks contamination from

gluten-containing ingredients.

Consumer brand loyalty is a key barrier to entry. The gluten-free community is highly brand-

loyal, and many consumers have found makeup products which work well for them. Amilie

faces the major challenge of overcoming that loyalty and persuading them to try a new brand.

Finally, Amilies extensive certifications from the GFCO, FDA, and others form barriers against competitors. These certifications are costly and require rigorous tests and periodic renewals.

3.4 Keys to Success

Based on our extensive reading and networking in the gluten-free industry, we believe successful

gluten-free cosmetics companies must:

Educate consumers about the need for gluten-free cosmetics

Provide 100% gluten-free products

Create high quality, enjoyable products

Offer a reasonable price-point

Engage consumers through social media and consumer events

Consumer Education

100% Gluten

Free

Grocery Distribution


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Gain distribution in gluten-free and natural grocery stores

Innovate frequently with new products

While Amilie will work to achieve all seven of these keys to success, we especially emphasize

excellence in these three areas:

100% Gluten-Free Our first focus is on creating a line that is completely free of gluten, to give our consumers full peace of mind.

Consumer Education Amilie will become a thought leader on gluten-free cosmetics.

Grocery Distribution we will pursue distribution in gluten-free and natural grocery stores where consumers shop for gluten-free food products.


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4. Market Analysis 4.1 Customers

We identify our primary market as females ages 16-60 who suffer from a food allergy, especially

gluten-intolerance. These customers have high purchasing power and are accustomed to

spending more than average on allergen-free foods.

There are three key influences that drive these women to purchase cosmetics:

1. Women have an intense need to feel beautiful. In our high-pressure culture of supermodels and TV stars, most women struggle with deep-seated feelings of

inadequacy.

2. Young women lead busy, active lives and seek out personal care products that will contribute to their long-term health and the good of the planet. They have grown up

believing in the benefits of natural products and are attracted to organic foods and goods

free of toxins and contamination.

3. Middle-aged women desire to turn back the effects of time and look young again. They spend billions of dollars each year in this pursuit. The demand for anti-aging

products will continue to grow as the Baby Boomers age.

Like all other women, our customers wear makeup to feel beautiful, young, and healthy.

However, they have an additional need for products that will not exacerbate their severe

gluten intolerance. Gluten often lurks in unlabeled cosmetics. Amilie offers the peace of mind

of certified gluten-free, allergen-free cosmetics.

Our target market is segmented into two subgroups:

Primary Target Market Secondary Target Market

Age 16-30 30-60

Gender23

Female Female

Family Single Married with 2-3 children

Living Situation High School/College/Young Professional Works part time or stays home

Affluence Upper-middle class Upper-middle class

23

Women are diagnosed with Celiac Disease at a much higher rate than men. (http://www.glutenfreepages.com.au/CMS/index.php?page=celiac-age-sex-profile)


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Frequency of

Makeup

Purchase24

3-6 months 3-6 months

Purchase

Behavior

Buy makeup for beauty Buy makeup for anti-aging

Computer Use Heavily involved in social media, use

internet very frequently. Access through

mobile devices.

Use some social media and

internet during free time.

Access through home

computer.

Other Media

Use

_ TV and print

Leisure

Activities

Social events, health-related pursuits. Family-oriented, health

conscious.

4.2 Market Research

On March 7th, we gave a brief presentation on Amilie Clean Cosmetics to a group of faculty and

students. We asked participants to describe Amilie. They responded with words like clean, simple, honest, natural, fresh, and wholesome. One participant said Amilie is a name that immediately captures me. Design-specific words included girlie, bright, pink and green. One evaluator wrote your website was comfortable and agreeable to me. Participants also included terms pertaining to Amilies viability such as start-up, market share, opportunity for sound investment and growth. The idea of healthy, clean cosmetics resonated with many participants, as seen from words like healthy, pure, no allergens, organic, gluten free, all natural, cosmetics for a health conscious generation.

(See Appendix for more detail regarding the March 7th

presentation)

To ascertain the appeal of our products to the target market, we interviewed25

three young

women with gluten intolerance. Emily Topp is a key contact, a junior at GCC with a severe form

24

Based on my personal buying behavior and internet articles, I estimate that most women purchase makeup every 3-6 months. (http://community.sephora.com/t5/Beauty-Confessions/How-often-do-you-replace-YOUR-makeup/td-p/132417)

25 For greater detail, see Appendix.


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of Celiac disease. Emily is forming a new Celiac support group and we plan to attend the

meetings. Elisa Angione is a junior with an undiagnosed case of Celiac disease and provided our

team with scientific research reports on the genetics of gluten intolerance. Abby Pherson is a

junior with Celiac disease and Crohns disease, a condition related to Celiac. These friends were all very curious about and supportive of our idea, and expressed an interest in our products. Our

team also attended the Celiac Awareness Tour event in Monroeville on January 28.

4.3 Market Size and Trends The gluten-free industry is growing. Over 18 million Americans have some form of gluten

sensitivity and a study by the Mayo Clinic found a dramatic increase in the number of Celiac

cases over the last ten years.26

Young people are five times more likely to have Celiac disease

than youth in the 1950s.27

With greater awareness of Celiac disease and related gastrointestinal

disorders, the demand for gluten-free cosmetics has increased. The natural personal care market

accounts for over $6 billion in sales, climbing at an annual rate of 9%.28

Of this market, gluten-

free cosmetics form an $83 Million niche.

Over 96% of gluten-free customers are brand loyal. 29

Once Amilie wins the support of Celiac

cosmetic users, it will enjoy long-lasting support from this core customer base.

Consumer awareness of the need for gluten-free cosmetics is rising rapidly and will lead to

significant growth in this sector during the next 3-5 years.

The gluten-free cosmetics industry is made up of a large number of small companies. Amilie

Clean Cosmetics has an opportunity to dominate this fragmented market with superior cosmetics

and a focused message.

4.4 Estimated Market Share

Amilie Cosmetics will gain share primarily from mainstream products that are crossing over into

the gluten free category. Currently, these products are not labeled or easily identified as gluten-

free, forcing consumers to contact the company directly and engage in dangerous guesswork.

Amilie will also gain market share by utilizing an unusual go-to-market strategy which targets

distribution through grocery and drugstore channels, rather than traditional beauty stores.

Additionally, many existing gluten-free companies cannot offer the peace of mind of a gluten-

free certification. With superior convenience, lower price points, and gluten-free certification,

Amilie Clean Cosmetics will successfully gain market share.

2012 2013 2014

Gluten-Free

Cosmetics $83 Million $99.6 Million $119.52 Million

26

http://www.sciencedaily.com/releases/2003/12/031231084025.htm 27

http://www.nytimes.com/2011/11/27/magazine/Should-We-All-Go-Gluten-Free.html?pagewanted=all 28

http://www.forbes.com/2007/10/31/clorox-burts-bees-markets-equity-cx_af_1031markets15.html 29

http://www.gluten.net/gfrap/list-your-restaurant.aspx


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(20% annual growth) Amilie $91,294 $191,583 $343,500

Market Share 0.1% 0.2% 0.3%

4.5 Competitors

There are several small and medium sized players in this market. Of the 16 companies which

produce gluten-free cosmetics, only 4 are formally tested and certified gluten-free30

. The

remainder of the market is commanded by mainstream products which happen to be gluten-free.

Our key competitors are Arbonne, Gabriel Cosmetics Inc., Himalaya Herbal, and Red Apple Lipstick,

profiled in the graph below. Each of these companies has their products tested for gluten by a

professional lab.

31

30

Information from Gluten Free Makeup Gal product guide: http://www.glutenfreemakeupgal.com/ 31

https://www.arbonne.com/shop_online/showitem.asp?ProductId=7877&menuId=257&withLinks=1 http://www.himalayausa.com/Botanique/skincare/lip-care.htm http://www.gabrielcosmeticsinc.com/index.cfm?fuseaction=product.display&product_ID=8&ParentCat=8 http://www.redapplelipstick.com/red-lipstick/red-lipstick-by-red-apple.html Amilie will pursue a mid-range price point with extremely strong emphasis on the gluten-free status of all our products.

Pri

ce

Prominence of Gluten-free claim


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Arbonne offers a wide range of products which are gluten free. However, the gluten-free claim is not prominently displayed on their website and packaging.

Himalaya Herbal low-cost products with gluten-free label. However, their selection focuses more on personal hygiene items and lacks quality makeup.

Gabriel Cosmetics offer a limited number of gluten-free products. High prices.

Red Apple Lipstick offer high-quality lipstick with a clear gluten free claim. It does not offer any other items.

Based on this competitive analysis, we believe Amilie Clean Cosmetics can command market

share in the gluten free niche by offering high quality makeup products for a medium price point

with a clear gluten free label.

4.6 Differentiation

Amilie is differentiated from competitors on the basis of:

1. Gluten-free certification by the GFCO 2. Full disclosure of ingredients 3. Lower prices than many competitors 4. Scientific consumer education


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5. Marketing Plan 5.1 Positioning

Amilie sells peace of mind to the consumer through gluten free products. Our cosmetics are

positioned based on their high-quality, pure ingredients, and our honesty about what is in them.

Our brand personality is simple, friendly, and relaxed. To explore the look and feel

characteristics of Amilie, visit our website www.amiliecosmetics.com

5.2 Pricing Strategy

Amilie products will command a mid-to-high price point relative to competitors, as shown here:

Product MSRP

Lip Balm $2.99 Foundation $29.99 Eye Shadow $11.99

Lip Balm 0.15 oz.

Cost per Unit $0.51 Gross PM

Wholesale Pricei (case of 36) $1.65 69%

Retail Price $2.99 83%


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This price places us between mainstream and high end lip care products, level with well-known

natural brands, such as Burts Bees.

Mineral Foundation 0.3 oz.


Wholesale Priceii (case of 6) $16.55 73%


Eye Shadow 0.1 oz.


Wholesale Priceiii (case of 12) $6.75 40%


Because prototyping of our Eye Shadow is not yet complete, these numbers are tentative.

(See Appendix for the assumptions underlying our pricing structure.)

We project the follow unit sales for each product line in Years One through Three. The resulting

dollar revenue amounts are calculated on the basis of our wholesale case price.

Product Year One Year Two Year Three

Lip Balm Cases 599 1257 2250

$ 35,580 $74,666 $133,650

Eye Shadow Units 230 483 865

$ 18,630 $39,123 $70,065

Foundation Units 409 858 1535

$ 40,613 $85,200 $152,425

Online & Direct to consumer sales will make up about 8% of the dollar volume of total sales.

These sales will be at the retail price, and command a higher average Net Profit Margin of 80%,

compared to our wholesale average Net Profit Margin of 63%.

Composite Net Profit Margin = 64%

Composite COGS32

= 36% of Sales

5.3 Sales & Distribution

Because Amilie will sell products through two primary distribution channels, we have two

different selling cycles, which are outlined here:

32

Industry leaders, such as Revlon have COGS equal to 35% of Sales


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Sales Cycle Direct to Consumer via

www.amiliecosmetics.com

Stores & Distributors

1. Prospect for

leads

Search Engine Optimization to generate

leads, promotion of products through

giveaways and consumer events.

Gather leads through trade

shows and industry

networks.

2. Make contact Consumer clicks on website, enters contest,

or tries a free sample.

Make contact through trade

shows or introductions

3. Qualify the

lead

Consumer desires gluten-free cosmetic

products.

Buyer understands the

gluten-free market and need

for cosmetics.

4. Presentation Materials on website inform consumer about

the benefits of Amilie.

Formal sales presentation

with powerpoint, or less

formal phone call.

5. Meet

Objections &

Concerns

Customer service will answer emails and

phone calls with questions or concerns.

Take questions following the

presentation/call.

6. Close the Sale Customer purchases a product through the

online store.

Customer agrees to purchase

a quantity of product upon

negotiated terms.

7. Follow Up Email customers to ascertain the quality of

their experience.

Call back regularly to check

on the status of products and

any concerns.

We will receive payment for consumer orders via credit card. Wholesale orders may be paid by

credit card or check, depending on size and consumer preference.

a. Trade Shows

In our first year, we will attend the Natural Products Expo East.33

Expo East provides the

opportunity to reach to the largest buying audience for natural, organic and healthy products on

the East Coast. At the event, we have the potential to reach 25,000 industry members. Because of

the high cost of this event and the age of our company, we will not attend other industry trade

shows in 2012.

b. Distribution

We will also call directly on gluten-free independent grocery stores to promote our products.

Some consumers will discover our products on the shelves of their local store.

After startup, our communication with consumers and customers will remain essentially the

same: internet marketing, consumer events, trade shows, and distribution. The primary difference

33

(http://www.expoeast.com/expoeast2012/public/enter.aspx) Booth costs $3,600, plus fees, travel, plus booth design, free products samples. Total cost approximately $7000.


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will be the quantity of these activities. During the first five years of operations, we will steadily

increase our marketing budget and will attend more consumer events and trade shows to drive

revenue growth.

5.4 Promotions Mix a. Internet Marketing

We will pursue an integrated strategy of internet marketing to drive customers to our website.

These efforts will be segmented by age group:

16-30 Group: These young consumers use social media and search heavily, and are

likely to use a smartphone or other mobile device. 34

We will reach the younger

portion of our target market through a campaign to create internet buzz. This will

include Facebook ads, Google adWords, excellent SEO, and free giveaway contests.

30-50 Group: Middle-aged women are the largest group of social media users.35

This this age group has become remarkably interested in blogging and related

outlets, such as Pinterest. Our social media and SEO efforts will effectively reach

this group. We will also employ tactics involving reviews and giveaways by

influential bloggers.36

b. Consumer Events

The Celiac community is robust and growing, with a network of support groups and events.

Amilie will reach consumers on the grassroots level by participating in and sampling at

consumer events.

Provide Celiac support groups with free samples and product information.37

Distribute information and samples at consumer events:38

Celiac Awareness Tour39

The Great Gluten-free Expo40

Gluten Free for Life Expo41

34

http://pewresearch.org/pubs/1484/social-media-mobile-internet-use-teens-millennials-fewer-blog 35

http://blog.nielsen.com/nielsenwire/online_mobile/for-social-networking-women-use-mobile-more-than-men/ 36

Internet Marketing Costs: Facebook ads $150/month, giveaways $100/month, free samples for bloggers $100/month = $4,200 in the first year. 37

Celiac support groups are present in all areas of the country. This list is outdated, but provides an idea of the prevalence of these communities: (http://www.enabling.org/ia/celiac/groups/groupsus.html) In the first year, we will send $100 worth of product to 12 influential support groups. Our budget for this activity is $1,200 38

The events listed here are a few of many. More complete listing available here: (http://www.celiaccentral.org/community/Upcoming-Events/78/) (http://www.healthandfitnessexpos.com/gluten_free_expos.html) 39

Hosts recurring events in several locations in the northeast. Estimate cost (based on personal experience) $2,000 with samples and travel. (https://www.facebook.com/celiacawarenesstour) 40

(http://www.bhamkidsandfamily.com/home/2011/10/gluten-free-expo/) Approximate cost unavailable. Estimate $2,000. 41

(http://glutenfreeforlifeexpo.blogspot.com/) Approximate cost: $350 for booth, plus travel and samples = $2,000


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6. Operations

Amilie will manufacture, market, and distribute high-quality, gluten-free cosmetic products. Our

operating model and procedures are explained in the following sections.

6.1 Operations Model

Below is a diagram highlighting the workflow of tasks at Amilie. The tasks outlined in purple

will be the primary responsibilities of Rachel. Sharon will be responsible for tasks outlined in

green.

Source Ingredients &

Packaging

Manufacture Products

Direct Sales

Fill Wholesale Orders

Follow Up

Web Marketing

Ship Web Orders

Follow Up

Consumer Events

Answer customer concerns & complaints


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6.2 Facilities and Equipment

Because of the importance of the gluten-free claim to Amilies value proposition, we feel that it is important to keep manufacturing in-house in a dedicated gluten-free facility. This will

eliminate the possibility of cross-contamination and enable us to offer our customers greater

peace of mind.

Our products will be produced and packaged in a dedicated facility by trained part-time

employees. Based on a quick survey of available properties in Cincinnati, Ohio the cost of such

a space should be $2.50 - $5.00 per square foot.

All of Amilies products can be produced manually for test marketing and early sales. Later, quality machinery will be required. Cosmetics machinery can be expensive, but full-scale

machinery is not necessary for niche startups. There are two types of machines which apply to

the manufacturing of our cosmetics products:

1. Lip Balm Filling Machine quoted cost with shipping, $30,000 2. Powder Compacting Machine quoted cost with shipping, $71,500

At startup, Amilie will purchase a Lip Balm Filling Machine. The equipment will be depreciated

over four years.

The lip balm machine is fairly compact and will not take up much space. Thus, the majority of

our facility will be devoted to the storage of ingredients and finished products on large industrial

shelves.

Based on our budget for Year One, we will carry up to $5,000 of raw materials during the first

year.

During the first year, our maximum total inventory on hand will be $4,000 during the first year.

15 square feet will be devoted to storing this inventory, based on the following assumptions:

Product Case Size Cases in

Inventory

$ Value Shelves

Required

Lip Balm 4 x 6 x 3 83 $1344.6 1/3

Eye Shadow 4 x 6 x 3 30 1436.4 1/3

Mineral Foundation 4 x 3 x 3 57 1347.48 1/3

We will use industrial shelving42

to store inventory, estimating that each shelving unit will

require 15 square feet of space. Our raw materials and packaging inventory will require an

additional three industrial shelves, for a total around 50 square feet of storage space. In addition,

the facility will contain 30 square feet of flat work-space containing a sink with hot and cold

42

http://www.homedepot.com/h_d1/N-5yc1v/R-100661857/h_d2/ProductDisplay?catalogId=10053&langId=-1&keyword=industrial+shelves&storeId=10051


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water. Each of the necessary machines has a footprint of approximately 50 square feet. Thus the

total space consumed by shelving, work-surfaces, and machinery is 130 square feet. Based on

this, we estimate that space required during the first year of operations will be 500 square

feet.

For the first three years, we will house manufacturing in extra space in Rachels home in Cincinnati, OH. Space requirements will grow with sales, incurring the following costs:

Year One Two Three Four Five

Space Needed 500 sq feet 500 500 1000 1000

Cost ($4 / sq ft) $ - $ - $ - $4000 $4000

6.3 Development Status

We have selected products for initial development based on three criteria:

a. Lip Balm Our Lip Balm is a soft and nourishing compound of

organic oils, waxes, and flavors. Lip Balm is spread

generously over the lips to alleviate chapping and add

attractive shine.

Status: Prototyping & Testing

Complete

Our Lip Balm is currently formulated in a fresh and

pleasant Orange Cream flavor. It is made from a simple

formula of beeswax, olive oil and orange extract. The

simplicity of its formulation provides a high quality

flavor and texture that soothes chapped lips and leaves a

long-lasting fresh, fragrant flavor. We will develop two

additional fruit-inspired flavors, for a total of three SKUs in our Lip Balm line.

Lip balm is packaged in 0.07oz. slim-line lip balm tubes. These tubes are longer and

thinner than standard lip balm tubes, creating a uniquely upscale look and feel. Each

1. High Profit Margins

2. Simple Manufacturing

3. Widespread Use


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tube is affixed with a colorful label in compliance with FDA cosmetics labeling

guidelines.43

Our Lip Balm tubes will be available individually or by the case of 36. (See Section 5.3

Pricing Strategy for more details) Because our Lip Balm is made from natural ingredients, we recommend that the product is used within 12 months after opening.

b. Mineral Foundation Mineral Foundation is a soft, loose powder

containing a variety of minerals, natural pigments,

and oils. It is available in a variety of skin-tones.

The semi-opaque powder is brushed over the facial

area to give the skin a smooth, even appearance

before the application of additional makeup, much

like primer is applied to walls before painting.

Status: Research & Development

Our Mineral Foundation will be formulated in six shades to match a variety of skin

tones and packaged in 30 gram sifter jars for easy dispensing onto makeup brushes.

Foundation jars will be sold individually, or by cases of 6. Our Mineral Foundation has

a shelf-life of three years.

c. Eye Shadow Eye Shadow is a soft compound of minerals, pigments,

and oils which are pressed firmly into a small container or

palate. Eye Shadow is available in almost every color

imaginable, and is blended on the eyelid with a small

brush or sponge to add color and draw attention to the

eyes.

Status: Research & Development

Our Eye Shadow will be formulated in three popular

shades: Soft Pink, Lavender, and Blue. The Shadows will

be packaged in 10 gram jars for convenient use with small

brushes and sponges. Eye Shadows will be sold

individually and by the case of 12. Our Eye Shadow has a shelf-life of three years.

d. Product Improvement and New Products

Amilie New products will be developed in response to trends and consumer requests

and comments received through surveys, emails, and social media. They may include

expansion of existing product lines or addition of new cosmetic products.

43

http://www.fda.gov/Cosmetics/CosmeticLabelingLabelClaims/default.htm


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Publicly traded industry leaders spend about 2-4% of revenue on Research &

Development.

Therefore, ACCs budgeted R&D costs are as follows:

Year One Year Two Year Three Year Four Year Five

Revenue $91,294 $191,583 $343,500 $551,622 $775,914

R&D (3%) $2,738 $5,747 $10,305 $16,548 $23,277

6.4 Intellectual Property

Our intellectual property will consist of trade secrets surrounding the formulation of our products

and trademarks protecting our brand identity.

Trade secrets will be protected through careful employee training and division of labor within the

manufacturing process.

Our name and logo trademarks will be registered through an attorney at startup.


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7. Management Team and Company Structure 7.1 Key Management Personnel

Sharon Seiter and Rachel Brockhage are founding managers at Amilie.

Sharon has experience in the gluten-free industry through her work with the Mediterranean

Snack Food Company and a broad set of business skills gained through her Entrepreneurship

degree.

Rachel has research experience in clinical chemistry, nanotechnology and a background in

biology. The skill profile of each of the founders is outlined here. See the organizational chart in

section 6.1 Operations Model for a breakdown of primary responsibilities. See the Appendix for detailed resumes of both founders.

Exec

uti

ve

Lea

der

ship

Fin

an

ce

Acc

ou

nti

ng

Man

ufa

ctu

rin

g &

Sh

ipp

ing

Cu

stom

er S

erv

ice

Mark

etin

g &

Sale

s

HR

Web

Man

agem

ent

R&

D

Rachel X X X X

Sharon X X X X X X

7.2 Management Compensation and Ownership

Sharon and Rachel are equal joint owners of Amilie Clean Cosmetics (See Appendix for full

Partnership Agreement).

Their monetary investment in the company is as follows:

Invested Committed Total

Sharon Seiter $130 $4870 $5,000

Rachel Brockhage $75 $4925 $5,000

During Year One and Year Two, founders will each be compensated with 12.5% of total

revenue. In Year Three, they will each receive salaries of $40,000, growing to $50,000 and

$60,000 in Years Four and Five respectively.


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7.3 Board of Advisers

We are currently in the process of selecting a board of knowledgeable individuals to offer advice

and guidance to Amilie Clean Cosmetics. Our board will include:

Mike Ellison, Owner of Ellison Group, company dedicated to manufacturing world-class surface technologies

Professor George Howley business planning expert.

Mike Ellison successful entrepreneur and CEO.

Mary Kate Breese accounting student.

Emily Topp student with Celiac disease and numerous food allergies.

Steve Myers VP of Sales at Mediterranean Snacks with over 25 years of sales experience in natural foods.

7.4 Operations Expansion Plan

During the first six to twelve months of operations, Sharon and Rachel will operate Amilie as a

part-time venture. Once the venture breaks even and begins to grow, they will develop the

venture full time.

As Amilie grows, certain gaps in the founders experience may be filled by mentoring from the Board of Advisers. They will seek out advisers with skills in sales, R&D and operations, and

manufacturing during the early months of launching Amilie. These areas are critical to success,

and Amilie will benefit from the expertise of qualified consultants in the cosmetics industry. While we have a strong management team, maximizing growth will require more personnel with

a diverse range of skills. After the first year of operations, Amilie will pursue the following team

expansions, with an emphasis on acquiring experienced individuals in the natural products

industry.

The cost of hiring employees to assist in the production, packing, and shipping of products is

included in Cost of Goods Sold (See Appendix). As students, we believe in the benefits of internships, and would like summer interns to figure

prominently in the startup of Amilie. We will select interns with strong marketing skills to drive

consumer interest and sales growth.


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8. Critical Risks, Problems, and Assumptions

This business plan contains several key assumptions, which could pose a risk to Amilie if they

are not realized.

We assume that the gluten-free cosmetics industry will experience rapid and sustained growth,

enabling Amilie to grow 110% in Year Two, 80% in Year Three, 60% in Year Four, and 40% in

Year Five. (See Appendix for full Financial Assumptions). Based on industry growth

projections, we believe these growth figures are attainable.

It is assumed that our materials will be available on time and in sufficient quantities. Difficulty

sourcing organic materials and packaging could cause production to grind to a halt. Diversified

supplier relationships will be critical to mitigating this risk, and we will order each ingredient

from a minimum of two different suppliers.

Another assumption is that Amilie will be able to reach a sufficient number of consumers and

stores to meet sales projection. Without these key distributions channels, sales may be

unsustainably low. In light of this risk we have added Steve Myers to our advisory board to

mentor us in the natural food sales process.

Some legal risk is inherent in the production of consumer products, such as makeup. To protect

against legal issues, damage claims, and lawsuits, Amilie will carry general liability insurance.

It is assumed that Amilie will be able to meet the standards required for FDA, GFCO, and other

certifications. Based on the simplicity of our manufacturing process and careful sourcing of

organic ingredients, we will be able to fulfill this assumption.

The greatest risk for Amilie is relatively low barriers to entry for competitors. It is possible that

major cosmetics companies could re-label their products as gluten-free, however this is unlikely

because of the small size of the gluten-free niche relative to the whole market.

Small, entrepreneurial competitors may respond with similar products. Amilies barriers against such future competitors will be strong wholesale account relationships, sourcing relationships,

the expense of manufacturing equipment, strong brand loyalty within the gluten-free community,

and extensive certification processes.

The brand loyalty working in Amilies favor could also be a problem during startup. Because the gluten-free community is strongly brand loyal, many consumers are hesitant to try new

brands. Overcoming this problem will be possible with strong, intentional marketing efforts, as

outlined earlier.

Finally, Amilie Clean Cosmetics will face the cash flow problems common to young businesses.

There is a risk that the venture will be undercapitalized. Therefore, investments at startup must

be sufficient. Startup Capital of $50,000 will help alleviate cash flow difficulties while the

company grows to maturity. In addition, Amilie will carry a $10,000 line of credit for cash flow

emergencies.


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$10,000

$2,000

$10,000

$28,000

Sources of Funds

Founders

Business PlanCompetitionPrizesFamily andFriends

Funds Needed

9. Financial Plan

Pro Forma financials for Amilie are displayed below, with additional detailed financials in the

Appendix. Startup capital of $50,000 will fuel inventory buildup and cash flow, while sales

grow to sustainable levels.

For information on the seasonality of the cosmetics industry, please see the Appendices.

9.1 Startup Cash

Amilie Clean Cosmetics will begin operations with a cash balance of $16,950, $550 in inventory,

and $32,500 in Equipment. Startup capital required is $50,000 and will be used as follows:

Startup Capital Capital Investments Amount

Computer Equipment $2,000

Manufacturing Equipment $30,000

Other Equipment $500

Operating Expenses Amount

Legal Services $3,000

Licenses and permits $1650

Prepaid insurance $500

Starting inventory $550

Cash (working capital) $11,700

Line of Credit Annual Renewal Fee $100

Total Startup Cash Needed = $50,000

9.2 Source of Funds

The chart at right illustrates our

plan for raising necessary startup

cash.

We are currently seeking $28,000

of additional outside funding.


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9.3 Financial Assumptions Sheet

Below is an alphabetized list of the assumptions underlying each item in our financials.

Accounting Costs - Accounting Costs are calculated based on fees of $0.50 per transaction (with an average transaction size of of $72) plus $100 for financials.

Capital Expenditures We will purchase $32,500 of equipment at startup, to be depreciated over four years.

Computers for Rachel and Sharon will cost approximately $5,000 each, as reflected in starting capital expenditures.

Cost of Good Sold = 36% of Revenue, based on our Pricing Assumptions (11.3) and the P&L statements of industry leaders, such as Revlon.

Credit Sales = 80% of wholesale sales

Ending Inventory = 50% of the following months projected COGS.

Insurance we will carry $1,000,000 of general liability insurance.

Legal Costs - Legal Costs are based on fees of $200 - $250 per hour. We estimate requiring 20 hours of legal service in the first year.

Legal Services at startup will cost approximately $3,000. This spend is in addition to the ongoing item listed in our budget.

Licenses the state of NJ requires a Wholesale Food/Cosmetics License. For companies with under $100,000 in sales, the fee is $150. For companies with over $500,000 in sales, the fee is $500. We also

include annual costs of $1,500 for maintaining our gluten free certification with the GFCO.

Line of Credit - According to conversations with our banker, we will be able to secure a $10,000 line of credit with cosigners for an annual fee of $100, and can expect an interest rate of around 6.25%

Marketing - Internet Marketing Costs: Facebook ads $150/month, giveaways $100/month, free samples for bloggers $100/month = $4,200 in the first year. Marketing to Consumer events and support groups = $8,000 (see

marketing plan).

Online Sales = 7.5% of total sales

Purchases 50% of purchases will be paid in the month of purchase.

Research & Development based on the budgets of Revlon, Estee Lauder, and others, we project R&D as 3% of revenue.

Rent See Section 6.2

Salaries Rachel and Sharon each receive a salary equal to 25% of sales. Additional salaries are explained in Section 7.4.

Sales - Revenue numbers are forecast based on our ability to receive about 20 online orders of $5 each and 18 wholesale orders of about $200 each during the first month and grow sustainably thereafter according to industry

trends (see Section 1)

Seasonality Amilies seasonality will include: slow, gradual sales during the summer, sustained growth starting in September and lasting through early January, steady decline during the spring. (see 11.8)

Shipping The shipping costs listed cover shipping of wholesale orders to customers. (Online orders will have shipping covered as an additional charge) The average order Wholesale order will be $72 with

$7 cost of shipping.


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9.4 Pro-Forma Income Statement


Pro Forma Income Statement

Year 1 Year 2 Year 3 Year 4 Year 5

Revenue $91,294 $191,583 $343,500 $551,622 $775,914

Cost of Goods Sold 32,866 68,970 123,660 198,584 279,329

Gross Profit 58,428 122,613 219,840 353,038 496,585

Operating Expenses

Salaries 22,824 47,896 80,000 100,000 120,000

Payroll Taxes 2,739 6,287 10,845 19,189 25,917

Office Supplies 600 1,354 2,429 3,900 5,486

Shipping 8,876 18,626 33,396 53,630 75,436

Rent - 0 0 4,000 4,000

Marketing & Promotions

13,694 28,737 51,525 82,743 116,387

Legal & Accounting Services

7,992 5,000 7,500 10,000 10,000

Licenses & Permits 1650 2000 2000 2000 2000

Line of Credit 100 100 100 100 100

Insurance 2,000 2,000 2,000 2,000 2,000

Research & Development

2,738 5,747 10,305 16,548 23,277

Miscellaneous 1,999 4,196 7,523 12,081 16,993

Total Operating Expenses 65,212 121,942 207,623 306,191 401,596

Net Income: ($6,784) $671 $12,217 $46,847 $94,989

Net Profit Margin -7% 0% 4% 8% 12%


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Pro Forma Income Statement Year One

June July August September October November December January February March April May

Revenue $1,007 $4,168 $5,158 $5,764 $6,578 $7,869 $9,133 $10,316 $11,164 $10,777 $9,873 $9,486

Cost of Goods Sold 363 1,501 1,857 2,075 2,368 2,833 3,288 3,714 4,019 3,880 3,554 3,415

Gross Profit $644 $2,667 $3,301 $3,689 $4,210 $5,036 $5,845 $6,602 $7,145 $6,897 $6,319 $6,071

Operating Expenses

Salaries

252

1,042

1,290

1,441

1,645

1,967

2,283

2,579

2,791

2,694

2,468

2,372

Payroll Taxes 30 125 155 173 197 236 274 309 335 323 296 285

Office Supplies 50 50 50 50 50 50 50 50 50 50 50 50

Shipping 98 405 501 560 640 765 888 1,003 1,085 1,048 960 922

Rent

Marketing & Promotions 151 625 774 865 987 1,180 1,370 1,547 1,675 1,617 1,481 1,423

Legal & Accounting Services 3,416 416 416 416 416 416 416 416 416 416 416 416

Licenses & Permits 1650 - - - - - - - - - - -

Line of Credit 100

Insurance 166 166 166 166 166 166 166 166 166 166 166 166

Research & Development 228 228 228 228 228 228 228 228 228 228 228 228

Miscellaneous 166 166 166 166 166 166 166 166 166 166 166 166

Total Operating Expenses 6,307 3,223 3,746 4,065 4,495 5,174 5,841 6,464 6,912 6,708 6,231 6,028

Net Income: ($5,663) ($556) ($445) ($376) ($285) ($138) $4 $138 $233 $189 $88 $44


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Pro Forma Income Statement - Year Two


Revenue $9,418 $11,720 $11,720 $12,228 $14,181 $16,642 $20,041 $21,994 $22,424 $19,025 $17,072 $15,119

Cost of Goods Sold 3,391 4,219 4,219 4,402 5,105 5,991 7,215 7,918 8,073 6,849 6,146 5,443

Gross Profit $6,027 $7,501 $7,501 $7,826 $9,076 $10,651 $12,826 $14,076 $14,351 $12,176 $10,926 $9,676

Operating Expenses

Salaries 2,355 2,930 2,930 3,057 3,545 4,161 5,010 5,499 5,606 4,756 4,268 3,780

Payroll Taxes 463 532 532 367 425 499 601 660 673 571 512 454

Office Supplies 113 113 113 113 113 113 113 113 113 113 113 113

Shipping 916 1,139 1,139 1,189 1,379 1,618 1,948 2,138 2,180 1,850 1,660 1,470

Rent

Marketing & Promotions 1,413 1,758 1,758 1,834 2,127 2,496 3,006 3,299 3,364 2,854 2,561 2,268

Legal & Accounting Services 416 416 416 416 416 416 416 416 416 416 416 416


Line of Credit 100

Insurance 166 166 166 166 166 166 166 166 166 166 166 166


Miscellaneous 349 349 349 349 349 349 349 349 349 349 349 349


Net Income: ($2,743) ($381) ($381) ($144) $77 $355 $738 $958 $1,005 $622 $402 $181


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Pro Forma Income Statement - Year Three


Revenue $15,603 $21,096 $21,096 $22,010 $25,526 $29,956 $36,074 $39,589 $40,363 $34,245 $30,729 $27,213

Cost of Goods Sold 5,617 7,594 7,594 7,924 9,189 10,784 12,986 14,252 14,531 12,328 11,063 9,797

Gross Profit $9,986 $13,502 $13,502 $14,086 $16,337 $19,172 $23,088 $25,337 $25,832 $21,917 $19,666 $17,416

Operating Expenses

Salaries 6,666 6,666 6,666 6,666 6,666 6,666 6,666 6,666 6,666 6,666 6,666 6,666

Payroll Taxes 648 813 813 660 766 899 1,082 1,188 1,211 1,027 922 816

Office Supplies 202 202 202 202 202 202 202 202 202 202 202 202

Shipping 1,517 2,051 2,051 2,140 2,482 2,912 3,507 3,849 3,924 3,329 2,988 2,646

Rent

Marketing & Promotions 2,340 3,164 3,164 3,301 3,829 4,493 5,411 5,938 6,054 5,137 4,609 4,082

Legal & Accounting Services 625 625 625 625 625 625 625 625 625 625 625 625


Line of Credit 100

Insurance 166 166 166 166 166 166 166 166 166 166 166 166


Miscellaneous 627 627 627 627 627 627 627 627 627 627 627 627


Net Income: ($5,763) ($1,670) ($1,670) ($1,159) $116 $1,724 $3,944 $5,218 $5,499 $3,280 $2,003 $728


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9.5 Pro-Forma Balance Sheet


Balance Sheet

Starting Year 1 Year 2 Year 3 Year 4 Year 5

ASSETS

Current Assets:

Cash & Cash Equivalents 16,950 12,190 16,851 28,943 73,103 156,152

Accounts receivable 6,371 10,118 18,213 29,140 40,796

Inventory 550 2,110 3,797 6,076 8,506 11,908

Total Current Assets 17,500 20,671 30,766 53,232 110,749 208,856

Long-term Investments:

Property, plant, and equipment 32,500 32,500 32,500 32,500 32,500 32,500

Accumulated depreciation 8,125 16,250 24,375 32,500 32,500

Net: 32,500 24,375 16,250 8,125 0 0

Total Long-term Investments: 32,500 24,375 16,250 8,125 0 0

Total Assets: 50,000 45,046 47,016 61,357 110,749 208,856

LIABILITIES & EQUITY

Current Liabilities:

Accounts payable 1,830 3,129 5,253 7,797 10,915

Line of Credit

Total Current Liabilities 0 1830 3129 5253 7797 10915

Long-term Liabilities:

Long-term debt

Total Long-term Liabilities:

Total Liabilities: 0 1830 3129 5253 7797 10915

Equity:

Paid-in Capital 50,000 50,000 50,000 50,000 50,000 50,000

Retained Earnings -6,784 -6,113 6,104 52,952 147,941

Total Equity: 50,000 43,216 43,887 56,104 102,952 197,941

Total liabilities & Equity 50,000 45,046 47,016 61,357 110,749 208,856

Monthly balance sheets for the first three years of operations are included in the Appendix.


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9.6 Pro-Forma Cash Flow Statement


Cash Flow Statement

Year 1 Year 2 Year 3 Year 4 Year 5

Operating Activities

Net Income ($6,784) $671 $12,217 $46,847 $94,989

Add:

Decreases in Non-cash Current Assets

Accounts Receivable -6,371 -3,747 -8,095 -10,927 -11,656

Inventory -1,560 -1,687 -2,279 -2,430 -3,402

Increases in Current Liabilities

Accounts Payable 1,830 1,299 2,124 2,544 3,118

Depreciation 8,125 8,125 8,125 8,125 0

Cash Generated by Operations: ($4,760) $4,661 $12,092 $44,159 $83,049

Investing Activities

Purchase of Long-term investments 0 0 0 0 0

Cash Generated by Investing 0 0 0 0 0

Financing Activities

Line of Credit

Cash Generated by Financing 0 0 0 0 0

Net Increase in Cash ($4,760) $4,661 $12,092 $44,159 $83,049

Cash & Cash Equivalents at Beginning of Year

16,950 12,190 16,851 28,943 73,103

Cash & Cash Equivalents at End of Year $12,190 $16,851 $28,943 $73,103 $156,152

Free Cash Flow ($4,760) $4,661 $12,092 $44,159 $83,049

Monthly cash flow statements provided in the Appendix.


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9.7 Breakeven Analysis

Below is a Breakeven Analysis for Amilie Clean Cosmetics based on our monthly pro-forma

income statements for the first two years of operations. Breakeven will occur in November

2012. During the seasonal lull of Summer 2013, income will become negative again for a short

period of time, before turning strongly positive in Fall 2013.

$(6,000.00)

$(5,000.00)

$(4,000.00)

$(3,000.00)

$(2,000.00)

$(1,000.00)

$-

$1,000.00

$2,000.00

Amilie Cosmetics - Breakeven Analysis


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11. Appendix 11.1 Partnership Agreement

PARTNERSHIP AGREEMENT

Date: March 17, 2012 This partnership agreement is made on this

Commences March 17, 2012 seventeenth day of March, 2012, between

Location: Grove City, PA the individuals listed below:

Sharon Seiter

Rachel Brockhage

The partners listed above hereby agree that they shall be considered partners in business upon

the commencement date of this PARTNERNSHIP AGREEMENT for the following purpose:

The terms and conditions of this partnership are as follows:

1) The NAME of the partnership shall be: Amilie Clean Cosmetics

The PRINICPAL PLACE OF BUSINESS of the partnership shall be: 7726 Laurel Avenue

Madeira, Ohio 45243

2) The CAPITAL CONTRIBUTION of each partner to the partnership shall consist of the

following property, services or cash to which each partner agrees to contribute:

Name of partner

Capital contribution

Agreed-upon cash value

Percent share (%)

Sharon Seiter

50% $55,000 50

Rachel Brockhage

50% $55,000 50

Furthermore, the PROFITS AND LOSSES of the partnership shall be divided by the partners

according to a mutually agreeable schedule and at the end of each calendar year according to the

proportions listed above.

3) Each partner shall have equal rights to MANAGE AND CONTROL the partnership and its

business. Should there be differences between the partners concerning ordinary business

matters, a decision shall be made by unanimous vote. It is understood that the partners may

elect one of the partners to conduct day-to-day business of the partnership; however, no

partner shall be able to bind the partnership by act or contract to any liability exceeding

$1,000 without the prior written consent of each partner.

4) In the event a partner WITHDRAWS from the partnership for any reasons, including

death, the remaining partners may contribute to operate the partnership using the same

name. The withdrawing partners shall be obliged to sell his or her interest in the

partnership. No partner shall TRANSFER interest in the partnership to any another party

without the written consent of each partner.


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5) Should the partnership be TERMINATED by unanimous vote, the assets and cash of the

partnership shall be used to pay all creditors with the remaining amounts to be distributed

to the partners according to their proportionate share.

6) Any DISPUTES arising between the partners as a result of this agreement shall be settled

by voluntary mediation. Should mediation fail to resolve the dispute, it shall be settled by

binding arbitration.

In witness thereof, this PARTNERSHIP AGREEMENT has been signed by the partners on

the day and year listed above.

Partner___________________________________________________________

Partner___________________________________________________________


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11.2 Founder Resumes

Sharon K. Seiter Home: 332 Rockaway Valley Road Boonton, NJ 07005

College: Box #2720 200 Campus Dr. Grove City, PA 16127 Email: [email protected] Cell Phone: 973-461-3802

OBJECTIVE

Locate a challenging position in an organization seeking an optimistic, tenacious, and innovative

individual with strong team-building skills.

EDUCATION

Grove City College Grove City, PA BS in Entrepreneurship May 2012 GPA 3.88/4.00 Deans List

EXPERIENCE

Mediterranean Snacks Intern Marketing Brand Coordinator Boonton, NJ Summer 2010-Present

Supported growth of Facebook fans from 300 to 7,500 in three months.

Gained Content Marketing skills by managing the company website and blog.

Designed and generated highly detailed sales reports in Excel.

Traveled to trade shows to sell products and learn from food industry personnel.

Cared for customers, bloggers, and members of the press.

Built collaboration skills by working with individuals from many functional areas. Sharie Kaye Founder & Owner Boonton, NJ 2009 Present

Designed and sold a line of fitness attire for the unique needs of Irish Step Dancers.

Concept was awarded second place in the 2011 Grove City College Business Plan Competition. Andrew Schlafly Paralegal Far Hills, NJ 2008 2010

Developed professionalism and knowledge of the legal field.

Honed excellent writing and proofreading skills.

Gained knowledge of the LEXIS research system.

ACTIVITIES AND HONORS

Recipient of the Joseph C. Cicero, Jr. Entrepreneurship Scholarship

Recipient of the Grove City College Presidential Merit Scholarship

Entrepreneurship Club President

Business Plan Competition Second-place winner in For-Profit Category in 2011

Elevator Pitch Competition Winner in For-Profit Category in 2009

500 Fives Organized an on-campus fundraiser to benefit gypsies in Chennai, India

Law Society Member

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Rachel M. Brockhage Home: 5207 Minuteman Court Mason, Ohio 45040

College: Box #2508 100 Campus Dr. Grove City, PA 16127 Email: [email protected] Cell Phone: 513-204-9082

OBJECTIVE

PROVEN ACHIEVER with consistent track record in balancing academics and leadership activities. Independent, self-motivated student with extensive experience in working on a team. Committed to long-term career in scientific inquiry and medical research.

EDUCATION

Grove City College Grove City, PA BS in Biology, minor in Communication Studies May 2012 GPA 3.66/4.00 Deans List

EXPERIENCE

Cornell Nanoscale Facility Student Intern Ithaca, NY Summer 2011

Successfully completed Technology and Characterization at the Nanoscale course offered to users of Cornell Nanoscale Facility

Received certification in CNF microscopy methods

Maintained database of National Nanotechnology Infrastructure Network users from pharmaceutical companies, hospitals and biotech startups

Genomic Research Institute Research assistant Cincinnati, Ohio Summer 2010

Investigated size differences in native High Density Lipoprotein Complexes with and without Apolipoprotein A-II

Gained experience in FPLC, high density ultracentrifugation and covalent chromatography

Improved skills in running gel electrophoresis and Lowry assays

Findings published and used for further size heterogeneity studies of ApoA-II and HDL

Presented findings at UCs SURF research symposium and the Sigma Xi Research Showcase

International Medical Missions Student assistant Guatemala 2010

Partnered with Caring Partners International to serve rural and urban communities in Guatemala

Cooperated with patients and certified physicians on the trip in running several full-day clinics

Gained experience in taking blood pressure readings, monitoring blood glucose levels and diagnosing rare diseases

ACTIVITIES AND HONORS

Omicron Delta Kappa national leadership honorary member

B

amilie clean cosmetics gcc business plan may 4th

Documents

disclosing party requests

detriment of disclosing

receiving party b

party c

word confidential

confidential relationship

disclosure agreement

time of disclosure