You are on page 1of 21

BUSINESS PLAN:

3D ADDITIVE MANUFACTURING
TECHNOLOGIES, CO. 3-DAMTM
Starting A New Venture MGMT 6630
Joe Ott
7-18-2012

BUSINESS CONCEPT
1. INTRODUCTION
1.2. BUSINESS IDEA
1.3. BUSINESS MODEL
1.4. BUSINESS GOALS
1.5. KEYS TO SUCCESS
2. THE COMPANY
2.1. LEGAL STRUCTURE AND OWNERSHIP
3. PRODUCTS / SERVICES
3.1. PRODUCT AND SERVICE SUMMARY
3.2. CUSTOMER
3.3. TECHNOLOGY
3.4. REGULATORY ISSUES
4. THE MARKET
4.1. MARKET ANALYSIS
4.2. TARGET MARKET SEGMENT
4.3. GROWTH POTENTIAL

5. THE INDUSTRY
5.1. COMPETITION

6. SALES
6.1. SALES STRATEGY.
6.2. PRICE STRATEGY
6.3. PROMOTION STRATEGY
6.4. SALES FORECAST
7. THE MARKETING PLAN
8. MANAGEMENT AND EMPLOYEES
9. ACTIVITY PLAN
10. FINANCE AND ECONOMY FIGURES
BACK UP SLIDES

1. INTRODUCTION - With 3-DAMTM comes manufacturing freedom!!

1.2. BUSINESS IDEA


The business idea behind 3-DAMTM is to cross additive
manufacturing technology with the KinkosTM concept.
Customers contact store by appearance, email, web submission
Business would staff trained engineers and technicians to assist
customers in selecting the correct technology to manufacture their
hardware.
1.3. BUSINESS MODEL
Sole Proprietorship during the initial start-up phase
Would initially target a small volume of jobs, applying a medium

margin.
Diversification Growth Strategy - 3-DAMTM would practice Forward
Integration by getting in front of the customer

1. INTRODUCTION - With 3-DAMTM comes manufacturing freedom!!


From ASTM Designation: F2792 10 - Standard Terminology for Additive Manufacturing

Technologies2
Why pursue additive manufacturing? There are many benefits in using additive manufacturing to

make hardware over conventional manufacturing 5:

Design flexibility
No tooling constraints
Allows complex models
No hard tooling required
No material lead time
Automated process
Reduced development expenses
Faster concept design to functional component
Reduced manufacturing costs
Near wrought material properties
Reduced product life cycle cost
Reduced manufacturing time: hours/days/weeks vs. months
Minimal secondary machining - near-net shape part
Additive manufacturing is an emerging industry.

Some of the difficulties with additive manufacturing are:


New technology not everyone is familiar, technology evolving
High barriers to entry initial high start-up costs for equipment
Material properties are still being defined
Technical and process models are limited

Picture courtesy of Rapid Quality Manufacturing5

1. INTRODUCTION - With 3-DAMTM comes manufacturing freedom!!


1.4. BUSINESS GOALS
2 years of operation:
Increase market share establish 4 stores in largest US manufacturing locations (Houston, TX; Milwaukee,

WI; Seattle, WA; San Antonio, TX)4


Increase market penetration over time grow each stores revenue at least 12.5% yearly
Establish new pricing incentives and promotions
Build long lasting quality partnerships
Advertising
Join Committee F42 on Additive Manufacturing Technologies 1

6 years of operation:
Increase market share establish a store in 10 major US cities. Have plan developed to have 50 stores in
major US cities by 10 years of operations.
Increase market penetration over time continue to grow revenue at least 12.5% yearly, per store.

1.5. KEYS TO SUCCESS


Flexibility providing solutions for variety of customer and their unique requirements.
Adaptability have technology and capability for variety of needs.
Sustained Growth have capacity where and when a customer needs it.
Technical Know-how have understanding of how to use additive manufacturing technology to
provide best results.
Speed providing solutions faster and more efficient than anyone else.
Funding have cash and capital to sustain growth and profit.

2. THE COMPANY - With 3-DAMTM comes manufacturing freedom!!

2.1. LEGAL STRUCTURE AND OWNERSHIP


3-DAMTM will be listed with the Internal Revenue Service as a sole
proprietorship
The principle owner (and equity shareholder) will be Joe Ott.
Minor equity shareholders (<49%) will be silent partners

Figure 1. Basic Organizational Structure

3. PRODUCTS / SERVICES - With 3-DAMTM comes manufacturing freedom!!


3.1. PRODUCT AND SERVICE SUMMARY
Plastic and metal parts and concepts, produced in a few hours or days, using additive
manufacturing technologies
Evaluation and modification of designs/CAD and concepts for application to additive mfg.
Coordination of post processing.
Metrology center accurate measurement evaluation
3.2. CUSTOMERS
The target customers are everyone from local hobbyist and enthusiast to large Fortune
500 companies needing unique part developed and produced.
The current market doesnt have local to-go-to places to get all your materials and
additive manufacturing methods and post-processing under one roof.
All competition is located in a few select areas
3-DAMTM would provide a place for customers to have one-stop-shopping for their

manufacturing. Customer(s) can contact the business center by phone, web, or face-toface. Sales engineers would be available to help customers work through product
development and iteration until the final product is ready. Pricing would be evaluated
based upon the necessary amount of engineering and development to make hardware,
material considerations, and post processing requirements.

3. PRODUCTS / SERVICES - With 3-DAMTM comes manufacturing freedom!!


3.3. TECHNOLOGY

Powder Bed Technologies - Powder Bed is the distribution of thin layer of powder (metal or thermoplastic) and uses an
energy source to sinter/melt the powder into solid form. Powder Bed Technologies offer high resolution, medium volume,
small to medium sized part capabilities. Two common methods are:
Selective Laser Melting laser beam power source in an inert atmosphere (nitrogen or argon)
Electron Beam Melting electron beam power source in a heated, vacuum environment
Deposition Technologies Metal is introduced via powder nozzle or wire feed into an energy source directly at the build
location, which melts to metal into solid form. Deposition Technologies offer lower resolution, lower volume, larger sized
part capabilities. 3 common methods are:
Laser Powder Deposition laser/power nozzle combination
Laser Wire Deposition use of a continuous feed wire and laser energy source
Electron Beam Wire Deposition use of continuous feed wire and EB energy source
Specialized Software (CAD/CAM, 3D model analysis, project/customer management) will be required to seamlessly
integrate customer models between additive mfg. platforms and required post processing technologies.

3.4. REGULATORY ISSUES

"Green Technology"
PPE
Inert Gases
Intellectual Property7
Product Liability7

Pictures courtesy of EOS (http://www.eos.info/en/home.html), Arcam (http://www.arcam.com/),


and Optomec (http://www.optomec.com/)

4. THE MARKET- With 3-DAMTM comes manufacturing freedom!!

4.1. MARKET ANALYSIS


Wohlers Associates Inc. - Additive manufacturing had a total of market size of $1.7 billion worldwide in 2011.
Emerging Industry - Additive manufacturing can be considered an emerging industry in the US 12

4.2. TARGET MARKET SEGMENT


Small Businesses -

CAGR- Compound Annual Growth Rate

Year 2

Year 3

CAGR

Sm. Business

100

513

677

61,30%

Lg. Business

10

52

68

61,48%

Hobbyists

310

1 590

2 098

61,29%

Total

420

2 155

2 843

61,30%

Income - Have manufacturing costs >$1000 per part.


Need - need fast parts made, short runs, development iterations
Education - need to understand hardware end requirements.
Work - manufacturing, research, engineering, automotive, etc.
Geographical location - in key starting cities, some internet sales.

Hobbyists

Year 1

Large Business 2+ years old

2+ years old (generally wouldn't be start-ups in their first year)


Income - Have manufacturing costs >$1000 per part.
Need - need fast parts made, short runs
Education - need to understand hardware end requirements.
Work - manufacturing, research, engineering, automotive, etc.
Geographical location - in key starting cities, some internet sales.

Potential Customer

Age - 16 years or older


Income - able to afford part costs between $100 and $2000.
Need - generally have a concept they want to make or need a replacement part for one that broke
Gender - male and female
Education - majority expected to have some college and / or trade school
Work - professionals and trades
Geographical location key US manufacturing centers / cities, some internet sales.

4.3. GROWTH POTENTIAL


Additive Manufacturing, aka 3D Printing, will reach $3.1 billion worldwide by 2016 and $5.2 billion by 20208.
If 3-DAMTM can capture even 1% of this market that would be $31 million dollars in revenue. 5% growth in revenue the next year would
result in $32,550,000 of revenue, per store.

5. THE INDUSTRY - With 3-DAMTM comes manufacturing freedom!!


5.1. COMPETITION - Other companies trying to adopt the Kinkos model are:
Mydea Technologies digital model shop and an additive manufacturing and rapid prototyping

provider. http://www.mydeatechnologies.com/

Owners: Michael Siemer


Annual Sales: $520K
Competitors distribution channel: Internet
Competitors marketing strategy: Internet Sales
Products and Services: Product Development & 3-D CAD Modeling, Rapid Prototyping/Additive Fabrication, Subtractive Rapid
Prototyping, Rapid Tooling & Manufacturing
Competitors price strategy: mid to high cost.

Shapeways 3D Printing company for designers and Do-It-Yourselfers. Helps people make and

sell their items. http://www.shapeways.com/

Owners: Peter Weijmarshausen


Annual Sales: $1.90M
Competitors distribution channel: Internet
Competitors marketing strategy: Internet Sales, Arts and Crafts forums, Web sales of clients products, Do-It-Yourself market.
Competitors price strategy: Low to mid cost.
Products and Services: Tutorials, Shapeways Lab, Software, Metals and plastic fabrication, Online Sales.

The following companies are a selection that specialize in additive technology and would be

competition for their prospective sub-fields:

Morris Technologies - http://www.morristech.com/ Selective Laser Sintering (SLS) metals


C&A Tool - http://www.catool.com/ SLS metals and machine shop
Paramount Industries http://www.paramountind.com/ - Stereolithography (SLA) and SLS of plastics
Materialise - http://manufacturing.materialise.com/ - a Belgian firm that uses additive manufacturing to make a range of products,
including medical devices.

6. SALES - With 3-DAMTM comes manufacturing freedom!!


6.1. SALES STRATEGY
It is envisioned that customers would contact a local 3DAMTM business center to initiate a job.
6.2. PRICE STRATEGY
Pricing would factor in the costs of overhead, materials, and
per hour cost for machines and personnel.
A profit mark-up of 30% will be added to each job.

Sales

Year 1

Year 2

Year 3

Sales
Engineering

98 000

503 000

664 000

Powder Metal

144 000

740 000

975 000

Powder Plastic

104 000

533 000

704 000

Total sales

346 000

1 776 000

2 343 000

240 000

525 000

620 625

Powder Metal

24 000

70 000

82 750

Powder Plastic

24 000

52 500

62 062

288 000

647 500

765 437

Direct costs,
sales
Sales
Engineering

6.3. PROMOTION STRATEGY


Sales will be generated through advertisement and
campaigns. The campaign will utilize TV, trade journals, and
the internet (web pages, FaceBook, etc.).
6.4. SALES FORECAST
Based 3 major products/services: Sales Engineering,
Fabricated Metals, and Fabricated Plastics.
Projected the amount of sales revenue generated by the
average increase in customers each month times the
expected revenue each customer would generate. YR 2
accounts for 4 stores in key cities. YR 3 accounts for 5
stores in key cities. Expect average growth of 12.5% per
year for each store.
Cost of sales is the overhead for the sales engineers and
technicians plus an estimated monthly operating cost for the
metal machines of $4000 and plastic machines of $3000.
These numbers are based upon a best scenario.

Total, direct
costs, sales

Sales monthly

7. THE MARKETING PLAN - With 3-DAMTM comes manufacturing freedom!!

As part of a Diversification Growth Strategy 3-DAM TM

would practice Forward Integration.


As the customer is the focal point for the business model, 3-DAMTM offices

will be targeted close to the customers.

Customers will be contacted through advertisement and

campaigns.
The campaign will utilize TV, trade journals, and the internet (web pages,

FaceBook, etc.).
Highlights of ads will target design freedom, no or low tooling, and speed.
Additionally, small to large manufacturing companies will be approached.

A marketing group will be selected to assist in the

marketing campaign on a yearly contract.


A $100k budget will be set for marketing. The marketing campaign will

start in June 2013 and continue through December 2013.

8. MANAGEMENT AND EMPLOYEES - With 3-DAMTM comes manufacturing


freedom!!

CEO / CTO - complete oversight and responsibility for the company as well as technical

authority.
CFO - direct oversight of the following reporting line: Accounting, Patient Accounts,
Communications, Purchasing, Printing & Duplicating, Information Management,
Management Information Systems.
Accounting and Human Resources - Accounting and Human Resources will be
outsourced to a 3rd party company and overseen by the CFO.

The company will be responsible for all day to day accounting and human resources activities, including
accounts receivable and payable, health and dental care, 401k management, and taxes, etc. The company
should have experience with accounting and HR in all US states. It would be preferred if the company has
experience with start-up companies.

Technology Team Materials Engineer, Technology Researcher, Training/Quality


Responsibility for moderately complex engineering projects,
Serves as consultants, providing technical information and engineering recommendations that assist various
projects and processes and materials.
Coaches and trains less experienced engineers and technicians.

Branch Manager(s) oversee branch offices and perform sales


Employees
Sales engineers customer interface, engineers marry up technology to customer needs. There will be 2-3 per
store.
CAD and Build technicians modify designs to make technology friendly, operate and run machines. There will
be 1 per machine and two CAD operators per store.
Post processing technicians - provide any necessary post processing and coordination. There will be one per
store.
Shipping/Receiving ship and receive hardware, supplies, etc. There will be one per store.

9. ACTIVITY PLAN - With 3-DAMTM comes manufacturing freedom!!


This section describes some activities that will be needed to implement the

whole or parts of the business plan.


Order and Install Machines machines and installation at $1,000,000 apiece. 1 plastics, 2 metals, 1 metrology and inspection, 1 oven and autoclave
= $5,000,000
Store 15,000 sq. ft. * $3.523 per foot per year = $52,800. Plus $1,000,000
for upgrades and office requirements. Equals $1,052,800.00
Hire Accounting / HR - $100,000
Supplies - $100,000
Advertising Campaign - $100,000

Activity

Start date

Stop date

Order and Install


Machines

03/01/2013

06/01/2013

Store

03/01/2013

Hire Accounting /
HR

Responsible

Department

5 000 000

CTO

Technology Team

06/01/2013

1 052 800

CTO

CEO

01/02/2013

05/31/2013

100 000

CFO

CEO

Supplies

03/01/2013

06/01/2013

100 000

CEO

CEO

Advertising Co.

04/01/2013

06/01/2013

100 000

CEO

Branch Managers

Total

Budget

6 352 800

10. FINANCE AND ECONOMY FIGURES - With 3-DAMTM comes


manufacturing freedom!!
The following are Seed Capital funding expenses that will be incurred
prior to the business starting:

Start-up Costs
Research
Technology

100 000

Research
Store
Location

200 000

Permits and
Fees

100 000

Marketing
Study

100 000

Total Start-up
Costs

500 000

Start-up
funding
Bank Loans

3 000 000

Bank Loans

2 000 000

Other
Investors

2 000 000

Grants

2 000 000

Government
Loans

1 000 000

Total Start-up
funding

10 000 000

Total Equity

9 500 000

The following describes all the Start-up through Second Stage funding
(existing and needed) for the project:
Bank Loans $3,000,000 Secured against the procured equipment.
Equipment, Real-estate, and Long-term loans.
Angel Investors $2,000,000
Other Investors $2,000,000 Informal Risk Capital, Venture Capital
Grants $2,000,000 SBIR - Phase I and Phase II, Fed, State, Local.
Government Loans - $1,000,000 SBA (504, SBA), etc.
Total: $10,000,000
Third stage (growth) funding would be necessary for expansion beyond
the first store and would be necessary at last quarter 2013.

10. FINANCE AND ECONOMY FIGURES - With 3-DAMTM comes


manufacturing freedom!!
Net profit monthly

PROFIT & LOSS TABLE


Year 1

Year 2

Year 3

Sales

346 000

1 776 000

2 343 000

Sale costs

288 000

647 500

765 437

--------------BTO profit

---------------

---------------

58 000

1 128 500

1 577 563

17 %

64 %

67 %

Salaries

830 004

1 040 000

2 190 000

Additional Salaries
costs

273 901

343 200

722 700

6 352 800

1 210 560

6 052 800

12 105 600

Accounting / HR /
Advertising Services

99 996

200 000

200 000

Supplies (office and


operating)

99 996

400 000

500 000

Utilities, Web, IT,


Phone

20 000

96 000

120 000

Insurance

999 996

4 000 000

5 000 000

Maintenance Plan

100 000

400 000

500 000

Research Technology

100 000

Research Store
Location

200 000

Permits and Fees

100 000

Marketing Study

100 000

BTO profit %
Expenses

Marketing and
activity costs
Depreciation

--------------Sum direct costs


Financial costs
Profits before tax
Profit before tax %

---------------

---------------

4 134 453

18 884 800

21 338 300

-0

-0

-0

-4 076 453

-17 756 300

-19 760 737

-1 178 %

-1 000 %

-843 %

Net profit yearly

10. FINANCE AND ECONOMY FIGURES - With 3-DAMTM comes


manufacturing freedom!!
Balance Sheet
Year 1

Year 2

Year 3

1 297 208

-9 265 893

-22 254 593

346 000

1 776 000

2 343 000

1 643 208

-7 489 893

-19 911 593

Current assets
Liquid assets
Sales
Total current
assets
Fixed assets

YR1
YR2
Current Ratio = 0.16
*indicates low liquidity

YR3
-1.08

-1.33

Fixtures and
fittings & fixed
assets

6 052 800

29 264 000

54 528 000

Debt Ratio =
6.43
-0.92
-0.75
*indicates business while taking on more debt
is working out of debt

Acc depreciation
fixtures &
fittings/fixed assets

1 210 560

7 263 360

19 368 960

Debt to Equity = 1.32


*High capital industry/business

Total fixtures and


fittings/fixed assets

4 842 240

22 000 640

35 159 040

Total assets

6 485 448

14 510 747

15 247 447

Liabilities
Share capital & risk
capital

10 000 000

10 000 000

10 000 000

Accounts payable

288 000

647 500

765 437

Accrued taxes

273 901

343 200

722 700

Long-term
liabilities

Balanced
profit/loss

-4 076 453

3 520 047

Total liabilities &


equity capital

10 561 901

6 914 247

15 008 184

Profit for the year

-4 076 453

7 596 500

239 263

Net Profit Margin = -11.78


4.28
*indicates high initial risk but business
becoming more stabile.
ROI = -0.63
0.52
0.02
*indicates high initial risk but business
becoming more stabile.

0.10

10. FINANCE AND ECONOMY FIGURES - With 3-DAMTM comes


manufacturing freedom!!
CASH FLOW ANALYSIS
Year 1

Year 2

Year 3

10 000 000

6 644 130

-6 790 066

346 000

1 776 000

2 343 000

346 000

1 776 000

2 343 000

612 082

2 859 146

2 479 729

Increase in accounts payable

Increase in short-term liabilities

Increase in long-term liabilities

Sale of current assets

Sale of fixed assets

Liquid assets, incoming


Liquid assets obtained from
activities
Sales
Other earnings
Total earnings from activities
Other liquid assets obtained
VAT and tax refunds

New capital increase

958 082

4 635 146

4 822 729

Cash expenditure

2 937 992

13 136 300

9 275 437

Total expenditure from activities

2 937 992

13 136 300

9 275 437

Total liquid assets obtained


Liquid assets spent

Other liquid assets spent


VAT and tax payments

323 160

721 842

1 253 200

Reduction in short-term liabilities

Reduction in long-term liabilities

Purchase of current assets

1 052 800

4 211 200

5 264 000

Purchase of fixed assets


Total liquid assets spent
Net cash flow
Liquid assets, outgoing

4 313 952

18 069 342

15 792 637

-3 355 870

-13 434 196

-10 969 908

6 644 130

-6 790 066

-17 759 975

Back Up Slides

REFERENCES:
1.
2.
3.
4.
5.
6.
7.
8.

9.

10.
11.

12.

13.

"ASTM International Technical Committee F42." ASTM International Technical Committee F42. N.p., n.d. Web. 17 July
2012. <http://www.astm.org/COMMITTEE/F42.htm>.
"Designation: F2792 12a - Standard Terminology for Additive Manufacturing Technologies." ASTM F2792 - 12a. ASTM,
17 July 2012. Web. 2012. <http://enterprise.astm.org/filtrexx40.cgi?+REDLINE_PAGES/F2792.htm>.
"Industrial Space Cost Comparison." Greater Houstono Partnership. Cushman & Wakefield, Third Quarter 2011, 2011.
Web. June 2012. <http://www.houston.org/pdf/research/17CW005.pdf>.
Kotkin, Joel. "Heavy Metal Is Back: The Best Cities For Manufacturing." Forbes. Forbes Magazine, 15 Dec. 2011. Web. 17
July 2012. <http://www.forbes.com/sites/joelkotkin/2011/12/15/heavy-metal-is-back-the-best-cities-for-manufacturing/>.
Liechty, Eli. "Commercial Benefits of Metals Additive Manufacturing for Aerospace Production." Midwest SAMPE. Mar.
2011. Lecture. www.midwestsampe.org/content/files/events/.../Metals%20Liechty.pdf
"Manufacturing.GOV." National Network for Manufacturing Innovation (NNMI). N.p., n.d. Web. 17 July 2012.
<http://www.manufacturing.gov/amp/pilot-institute.html>.
Marcus, Adam. "3D Printing: The Future Is Here." 3D Printing: The Future Is Here. The Technology Liberation Front, 10
June 2011. Web. 17 July 2012. <http://techliberation.com/2011/06/10/3d-printing-the-future-is-here/>.
McCue, TJ. "3D Printing Industry Will Reach $3.1 Billion Worldwide by 2016." Forbes. Forbes Magazine, 27 Mar. 2012.
Web. 17 July 2012. <http://www.forbes.com/sites/tjmccue/2012/03/27/3d-printing-industry-will-reach-3-1-billion-worldwideby-2016/>
McCue, TJ. "Additive Manufacturing Will Change in the Next 5-10 Years." Forbes. Forbes Magazine, 02 May 2012. Web.
17 July 2012. <http://www.forbes.com/sites/tjmccue/2012/05/02/additive-manufacturing-will-change-in-the-next-5-10years/>.
Smartplan Generator Ver. 1.5- http://download.cnet.com/Smartplan-Generator/3000-2076_4-10708683.html
USA. EXECUTIVE OFFICE OF THE PRESIDENT. EXECUTIVE OFFICE OF THE PRESIDENT. A FRAMEWORK FOR
REVITALIZING AMERICAN MANUFACTURING. Http://www.whitehouse.gov/, Dec. 2009. Web. June 2012.
<http://www.whitehouse.gov/sites/default/files/microsites/20091216-maunfacturing-framework.pdf>.
USA. National Science and Technology Council. Executive Office of the President. A NATIONAL STRATEGIC PLAN FOR
ADVANCED MANUFACTURING. Http://www.whitehouse.gov/, Feb. 2012. Web. June 2012.
<http://www.whitehouse.gov/sites/default/files/microsites/ostp/iam_advancedmanufacturing_strategicplan_2012.pdf>.
Wohlers, Terry. "Worldwide Trends in Additive Manufacturing." RapidTech 2009: US-TURKEY Workshop on Rapid
Technologies. Wohlers Associates, Inc, 2009. Web. June 2012. <http://iweb.tntech.edu/rrpl/rapidtech2009/wohlers.pdf>.

One Store (Houston, TX) Ratios


YR1YR2YR3
Current Ratio =
0.16-0.10
*indicates low liquidity

-1.5

Debt Ratio =
1.623.340.76
*indicates store is working out of debt
Debt to Equity =
1.32
*High capital industry/business
Net Profit Margin =
-11.78 -11.74 -10.42
*indicates high initial risk but business working toward stabilizing.
ROI =
-0.63
-2.34
1.78
*indicates high initial risk but business becoming more stabile.