Business Plan for STOPBOX

Inc.
01.06.2017

Lucas Buseck & Anna Caughron

Stopbox Inc.
123 Innovation Ave
London, England
Table of Contents
Table of Contents 1

Executive Summary 2

The Problem: Phantom energy load 2

Our Product 3

Marketing 3

Stakeholders 4

Team 6

Action Plan 6

Costs and Financing 8

Return on Investment 9

Risks & Mitigation 10

Scale Up 11

Executive Summary
Our company produces and sells the Stopbox, a device that plugs into normal outlets, shutting off electric
current to devices when they are in standby mode. Even when devices are not turned on they can be
draining power which is ultimately seen in the cost of the utility bill. This product saves the money and
energy being sucked away by idle electronics automatically with no additional effort from the owner.

The Problem: Phantom energy load

Phantom load occurs when devices are plugged into an outlet in standby mode. Even when these devices
are not being used they are still consuming energy. In the UK phantom load accounts for 9-16% of
electric power use in households, costing up to 86 annually. It is likely substantially higher for office
buildings. This energy inefficiency costs the consumer who must pay for the excess power use, despite it
being wasted. Although data is not available for commercial phantom load in the UK, the US General
Services Administration published a report estimating plug loads as accounting for, on average, 30% of
office electricity demand.

Our Product
Our product is a smart plug device that is able to stop the flow of electricity to devices when the devices
are not being used. We plan on ultimately offering three different types of outlets. We first plan to offer a
device for large computer arrays in offices, and for home appliances, then eventually one for charging
devices that can cut off the power through smart technology once the device is fully charged. Similar
devices are already on the market in the US. However, the Uk market is not nearly as well developed
because of the differences in outlet type and voltage. Our product is unique because once installed, it
requires no change in consumer behavior to operate.

Marketing
Location: London, England
We have chosen to launch our product in the UK because the existing market for phantom load reduction
is not well developed. The UK has also been pushing for increased energy efficiency to meet carbon
reduction targets. The outlet voltage is 230V, almost twice as much as the US. There are also financial
institutions with their headquarters in London.

Target Market: Banking offices

The United Kingdom boasts the largest banking industry in all of Europe. The sector employs 2.2 million
people. Large financial institutions use a great deal of electricity for large computer arrays. We
specifically want to secure contracts with large banks such as HSBC and Barclays in London. Larger
institutions have a huge savings potential, and also the capital to invest in such a technology. Within the
bank we can expose our devices to the employees who are potential customers for residential energy
savings.

Advertising / awareness campaign

Despite the statistics, very few individuals seem to be aware of the energy loss through phantom load. By
attaching our brand to an awareness campaign, we can draw attention to the problem of phantom load
while also suggesting our brand as the solution. We will also take out ads in popular business and banking
publications in order to reach our target market. Near prominent outlets in the office we will place stickers
that educate people on the benefits of the stopbox.

Market Analysis
In their report on phantom load, the Imperial College London offers four solutions for reducing phantom
load that currently exist: smart power strips, energy efficiency appliances, remote controlled sockets, and
smart home systems. None of these devices are marketed specifically to businesses and none of them use
a software system to stop the flow of power to unused devices like ours will. Ours is unique in that it
requires no change in human behavior to reduce electricity consumption.
With electricity prices currently at .1405 on average in the UK, the market for energy efficiency
exists. In addition, some forecasts suggest electricity prices could double over the next twenty years,
which would ensure that the market will continue to exist while we develop new products and expand our
business.

Stakeholders
The primary stakeholders are our customers: banks, businesses, and homeowners.
Other stakeholders include investors and the local utility companies. This product has the potential to
break into the capacity market. The energy efficiency of the stopbox decreases the demand for power
production and distribution throughout the grid. It can aid in estimating the base load power requirements
from energy providers. Our company could benefit from additional revenue from the capacity market
after a few years of data collection.

Another group of stakeholders would be local environmental groups, for example Friends of the Earth
UK, Greenpeace UK, and the World Wildlife Fund UK.
In addition, the government may have a stake in the devices as in 2016 they announced new targets to
reduce carbon emissions by 57% by 2030 compared to 1990 levels.
This device will satisfy the multiple stakeholders. Customers will be satisfied by their costs savings on
utility bills from their energy savings. Environmental groups will be satisfied from a reduction in carbon
emissions that result from lifestyle changes, which they often advocate for. Investors will be satisfied by
the quick return on investment. Utility companies will be satisfied with a better forecast of future
demand, be able to distribute power more efficiently, and turn a higher profit. This device will also
reduce carbon emissions and contribute to the governments target.

Team
 Management - 2
Coordinate line of production and sales.

Production & Labor - 1

Deal with production, shipping and transport. Actual labor outsourced.

Software design & IT -2

Connect the smart tech enabled components. Research and development for future products.

Business Consultants - 1
Work with banks to secure contracts and assist with installation and troubleshooting

Marketing Department - 2
Create persuasive advertising campaigns including TV commercials and utilizing social media
Perform data analysis on energy efficiency and opportunities

Action Plan
The technology has already been developed by our company. The next step is to get onto the market and
develop our business.

I.Immediately - launch awareness and advertising campaign

We will send representatives to large banks initially and put paper advertisements in banking and
business publications.

We will launch a TV ad campaign to reach as large of a market as possible.

II. In 3 Months - secure one major bank contract

Barclays and HSBC are the two largest banks in London, respectively, in terms of total assets.

III. In 6 Months - secure contracts with 10 banks

With one or two of the largest banks setting the example, we hope that smaller banks will see it
beneficial to follow suit.
 IV. In 1 year - begin advertising to residential households directly and
sell our product to wholesale distributors
Those in the United Kingdom susceptible to energy poverty will have the most to gain from this
product.

o One in ten households experience fuel poverty in the United Kingdom. Fuel poverty is
experienced when greater than or equal to ten percent of income is spent on electricity.

Selling to wholesalers will make our products readily accessible to consumers at a more frequent
rate.

Households can use our devices for desktop computers, toasters, microwaves, printers, chargers,
and many more devices.

V. In 2 years - 20,000 devices sold

VI.In 5 years - bid into the capacity market.

Have initial loan paid back to the bank, continue financing primarily through equity.

On a capacity market, energy providers offer bids of how much energy they will be able to supply
in the future (3 years from now, for example) and for what price. This ensures energy security
and lower prices from competition.

Utilities can also pay consumers to promise to reduce their future demand, which gives a better
forecast for future demand and thus helps with grid stability.

Banks will reduce their demand during non operating hours (16:00-8:00), which will coincide
with peak demand hours (17:00-19:00), thus being able to receive the most amount of financial
compensation for doing so.
One priority of the capacity market is to reduce demand during peak demand hours to provide a more
stable base load supply, prevent blackouts, and reduce inefficiencies in distribution.

Costs and Financing

At this point in our project, all of the technology has been designed. We simply need to commence the
production and sale of our product.

500,000 Upfront cost to launch our business

In our first year we will seek debt-financed loans to finance our initial start-up costs from
Triodos Bank, a sustainable bank incorporated in the Netherlands with a branch in the United
Kingdom.
As our business grows we will sell shares to begin equity financing
o We will make our corporation public on the London Stock Exchange
Further research and development to create new products will be financed with grants.
o We will apply for funding from the government fund Innovate UK. This fund is for the
development of innovative products, processes, and services. Our product would fall
under the infrastructure systems category as one that seeks an improved energy system.

Regular Expenses
Production Costs: 10 per outlet * 1,000 = 10,000
Shipping Costs: 1,103 from China for 20ft container
Advertising campaigns: 30,000 per year
Employee salaries: 40,000/ year for employees * 8 employees = 320,000 per year
Total expenses roughly 361,100 in first year
Our business model accounts for paying back the initial loans and financing primarily through equity after
5 years.

Return on Investment
Financial ROI:
PC Monitors consume 15,700 kwh of energy from the plug load per year.
Assuming the device is activated and stops plug load for of the week (112 hours),
15,700 * = 10,465.62 kwh electricity not consumed (saved).
10,465.62 kwh * .1405 = 1,470.42 savings potential per computer annually
10,465.62 kwh saved/year / 365 days/year = 28.67 kwh saved/day
28.67 kwh/day * .1405 /kwh = 4.02 /day saved
100 initial investment / 4.02 /day = 25 days return on investment

Environmental Impact and Sustainability ROI:

In the short term, our product will provide cost savings to users, and reduce energy usage.
In the long term, our product will increase energy efficiency across the board within the UK,
dramatically reducing Carbon emissions.
The United Kingdom, for electricity, uses 30% natural gas and 22% coal.

Of the 10,465.62 kwh saved with our device we can figure how many kwh would come from
natural gas and how many would come from coal from the above percentage

10,465.62 * 0.3 = 3,139.69 kwh from natural gas

10,465.62 * 0.22 = 2,302.44 kwh from coal
The EIA says to calculate the amount of CO2 emitted from burning specific fuel sources,
multiply the fuels heat rate times its CO2 emission factor. Given the most recent data, burning
coal emits .98 lbs CO2/kwh, and burning natural gas emits .42 lbs CO2/kwh.
3,139.69 kwh * .42 lbs/kwh = 1,319 lbs CO2
2,302.44 kwh * .98 lbs/kwh = +2,256 lbs CO2
3,575 lbs CO2 saved yearly/1 computer
For comparison, burning one gallon of gasoline emits 20 lbs of CO2.
3,575lbs/20 lbs/gal = 178.75 gallons of gasoline not burned.

Risks & Mitigation

Top Risk: Electricity prices falling.
 The market for energy efficiency is entirely dependent on high electricity prices. Low electricity
prices remove the financial incentive to be electrically efficient.
However, UK Power, which forecasts electricity prices, suggests prices in the UK will rise due to
heavy reliance on energy imports.
Mitigation: Despite this, advertising the incredibly short financial ROI and attempting to get as
many devices onto the market as soon as possible will help mitigate this risk.
Risk 2: Initial return dependent on one product
Mitigation: Plan to launch additional products within one year of launching the advertising
campaign and have sufficient cash from initial investment to sustain business for at least two
years.
Risk 3: Damage during shipping and handling and from improper use.
Risk 4: Demand exceeding supply if advertising campaign is particularly successful.

Scale Up
The plan for at least the first ten years of our business is to keep sales in the United Kingdom to not have
to produce different devices for the different plug styles found outside of the UK. We do hope to sell
outside of London, however, and as previously stated, we hope to add at least two more product types
onto the market for individuals and households.
If our business model is successful, there is the potential to expand to Europe or the US. This simply
requires a change in outlet hardware.