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This sample marketing plan was created with Marketing Plan Pro software.

  • Sales are expected to grow from $193,000 the first year to $262,000 by year three.
  • Expenses will increase with the rate of inflation (3%) minus diminishing cost of goods (1%).

Break-even Analysis

For our break-even analysis, we have chosen $3 to represent our average revenue per unit. Although revenue from ropes and other gear amount to significantly more revenue per unit, such items skew the revenue curve toward less units sold. We want to engage in a practical analysis of precisely what it will take to turn the company profitable by using the P&L statement. In light of this, the Break-even analysis merely becomes a gauge by which we can measure our monthly revenue streams to predict long-term profitability.

According to the analysis, we will break-even at 1,333 units.

Break-even Analysis

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Break-even Analysis
  
Monthly Units Break-even1,333
Monthly Revenue Break-even$4,000
  
Assumptions: 
Average Per-Unit Revenue$3.00
Average Per-Unit Variable Cost$0.75
Estimated Monthly Fixed Cost$3,000

Sales Forecast

We will promote to the weekend warriors by hosting fun events like the "Llama Run". Our part-time sales clerks, also trained in the ways of promotional tactics, will call businesses within the Bend area and establish additional sponsors for these events.

For in-store sales, our strategy will be to maintain as much on-site POP (point-of-purchase) literature as possible. Our part-time staff will be responsible for informing customers of the products and creating the best fit between customer and product. Our employees do not work on commission.

Sales Forecast

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Sales Forecast
 FY 2002FY 2003FY 2004FY 2005FY 2006
Unit Sales     
Carabiners3,5774,0074,4885,0265,629
Ropes331370415465520
Books and Magazines181203227254285
Cookies and Cones17,35819,44121,77324,38627,313
Espresso Regulars23,86726,73129,93833,53137,555
Espresso Shakes2,3872,6732,9943,3533,755
Gear Rentals362405454508569
All Other Gear2,1722,4332,7253,0523,418
Other00000
Total Unit Sales50,23456,26263,01370,57579,044
      
Unit PricesFY 2002FY 2003FY 2004FY 2005FY 2006
Carabiners$9.13$9.50$9.88$10.27$10.68
Ropes$141.95$147.63$153.54$159.68$166.07
Books and Magazines$12.15$12.64$13.14$13.67$14.21
Cookies and Cones$1.01$1.05$1.10$1.14$1.18
Espresso Regulars$1.77$1.84$1.92$1.99$2.07
Espresso Shakes$2.68$2.79$2.90$3.02$3.14
Gear Rentals$4.05$4.21$4.38$4.56$4.74
All Other Gear$20.30$21.11$21.95$22.83$23.74
Other$0.00$0.00$0.00$0.00$0.00
      
Sales     
Carabiners$32,669$38,052$44,323$51,628$60,136
Ropes$46,946$54,682$63,694$74,191$86,417
Books and Magazines$2,197$2,559$2,980$3,472$4,044
Cookies and Cones$17,574$20,470$23,843$27,773$32,350
Espresso Regulars$42,287$49,256$57,373$66,828$77,841
Espresso Shakes$6,403$7,459$8,688$10,120$11,787
Gear Rentals$1,464$1,706$1,987$2,314$2,696
All Other Gear$44,084$51,349$59,811$69,668$81,149
Other$0$0$0$0$0
Total Sales$193,623$225,532$262,700$305,993$356,421
      
Direct Unit CostsFY 2002FY 2003FY 2004FY 2005FY 2006
Carabiners$3.54$3.64$3.75$3.87$3.98
Ropes$55.57$57.24$58.96$60.73$62.55
Books and Magazines$0.76$0.78$0.80$0.83$0.85
Cookies and Cones$0.10$0.10$0.11$0.11$0.11
Espresso Regulars$0.25$0.26$0.27$0.28$0.28
Espresso Shakes$0.40$0.42$0.43$0.44$0.45
Gear Rentals$0.25$0.26$0.27$0.28$0.28
All Other Gear$12.13$12.50$12.87$13.26$13.66
Other$0.00$0.00$0.00$0.00$0.00
      
Direct Cost of Sales     
Carabiners$12,658$14,603$16,845$19,433$22,418
Ropes$18,379$21,202$24,459$28,215$32,549
Books and Magazines$137$158$182$210$242
Cookies and Cones$1,752$2,021$2,331$2,690$3,103
Espresso Regulars$6,022$6,947$8,014$9,245$10,665
Espresso Shakes$964$1,112$1,282$1,479$1,706
Gear Rentals$91$105$121$140$162
All Other Gear$26,353$30,401$35,071$40,457$46,672
Other$0$0$0$0$0
Subtotal Direct Cost of Sales$66,356$76,549$88,306$101,870$117,518

Sales by Mail and Web Direct Sales

Our direct sales are seasonal in nature, yet, unlike retail sales, we can maintain small margins throughout the Northern Hemisphere's Fall/Winter months. We will maintain these sales by temporarily discontinuing our direct mail sales in favor of Web sales. Website management costs are between $25-50 a month. Banner advertising on sites such as outside.com, rockandice.com, and others will cost under $1,500 and will help us maintain market exposure during the off season.

We will create direct mail catalogs again in April.

Sales by Retail Store Sales

Retail store sales will end in November and begin again in April. Retail sales figures rely heavily on espresso and carabiner purchases.

The average climber loses one carabiner every trip, and The Boulder Stop will be there to provide them with the best selection of 'biners in the Redmond area. We will price the 'biners competitively, but not too competitively. At an average price of $9 per 'biner, we priced higher than REI, but lower than any of our local competition.

In-store espresso sales are driven by our marketing promotion machine. As people learn that we are a community-involved, neighborhood organization, we'll gain the trust of locals who will choose to drive five miles to the The Boulder Stop, at scenic Smith Rock, rather than visit the local 'strip malled' ice-cream parlor for a cone. This goes back to our main objective: To become a place where locals and expert climbers can mingle to enjoy good gear, coffee, ice cream, cookies, etc.

Expense Forecast

Our expense forecast relies on a conservative inflation forecast of 4% per year minus a 1% diminishing cost allowance.

Marketing Expense Budget

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Marketing Expense Budget
 FY 2002FY 2003FY 2004FY 2005FY 2006
Advertising/Promotion$3,000$3,000$3,000$3,000$3,000
Sponsored Activities$11,250$9,000$9,000$8,000$7,000
Other$49,500$42,000$42,000$42,000$42,000
 ------------------------------------------------------------
Total Sales and Marketing Expenses$63,750$54,000$54,000$53,000$52,000
Percent of Sales32.92%23.94%20.56%17.32%14.59%

Contribution Margins

May and August will provide us with the lowest contribution margins. May, because we are opening our doors in May, requiring plenty of promotional material, and the supplies necessary for our big Grand Opening celebration. August, because we've scheduled the Perry Claw Rock Festival during August. This event will bring some of the finest local musicians and nationally recognized climbers to Smith Rock for a three-day climbing celebration/contest.

The rest of the seasonal year, our contribution margins will average 40% for the first three years. Not great for the industry, but then we are marketing more aggressively than our industry. With our current financial backing and direct sales, we can maintain these 40-50% contribution margins for at least three years, or long enough to gain local recognition and at least 70% market share.

Contribution Margin

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Contribution Margin
 FY 2002FY 2003FY 2004FY 2005FY 2006
Sales$193,623$225,532$262,700$305,993$356,421
Direct Costs of Goods$66,356$76,549$88,306$101,870$117,518
Other Variable Costs of Sales$0$0$0$0$0
 ------------------------------------------------------------
Cost of Goods Sold$66,356$76,549$88,306$101,870$117,518
      
Gross Margin$127,267$148,984$174,394$204,123$238,903
Gross Margin %65.73%66.06%66.39%66.71%67.03%
      
Marketing Expense BudgetFY 2002FY 2003FY 2004FY 2005FY 2006
Advertising/Promotion$3,000$3,000$3,000$3,000$3,000
Sponsored Activities$11,250$9,000$9,000$8,000$7,000
Other$49,500$42,000$42,000$42,000$42,000
 ------------------------------------------------------------
Total Sales and Marketing Expenses$63,750$54,000$54,000$53,000$52,000
Percent of Sales32.92%23.94%20.56%17.32%14.59%
      
Contribution Margin$63,517$94,984$120,394$151,123$186,903
Contribution Margin / Sales32.80%42.12%45.83%49.39%52.44%

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