Marketing plan 1

© 2013. Grand Canyon University. All Rights Reserved.
Luis Herrera
March 26, 2015
BUS485
Prof. Arnold
Business Plan for Skyson Industries
Executive Summary
The purpose of this report is to present a business plan for Skyson Industries’ initial
market entry into the marching percussion arena. Recognizing that this is a market with many
unmet needs, we have discovered the opportunity to offer innovative and beautifully designed
products that meet those needs within the market. This initial market entry will begin with a line
of innovative practice pads designed to meet the essential practice needs of consumers that are
not currently being met by other practice pad manufacturers. With our strong sense of vision,
knowledge of the percussive arts arena, and innovative design, we expect to be top contenders in
the percussion equipment industry. Included in this report is a detailed analysis of the
environment, a marketing plan that addresses our organizations strengths, weaknesses,
opportunities, and threats, an organizational plan that discusses the structure of our organization
and the strategies involved with organizational structure, an operational plan that discusses the
logistics involved with our company, a financial plan, an assessment of critical risks, and an
overview of leadership strategy. After reading this business plan, the reader should have a strong
understanding the environmental situation, the opportunities at hand, and the obstacles and risks
the organization anticipates. Readers should also understand the business strategies selected for
initial market entry and how they will affect the organization. They should also have a good idea
of where the company hopes to be in the near future, and how the leadership team intends on
getting it there.
Overview
Context:
The world of marching percussion is a realm full of talent and passion. The individuals
involved with the sport are incredibly artistic and have innovative mindsets that work toward
optimal productivity and efficiency. As the marching percussion activity continues to develop,

we believe that the equipment involved in the sport should also develop, reflecting the goals and
attributes of the artists who use it. Skyson Industries is a percussion hardware company that
believes in challenging the traditional take on marching percussion equipment, introducing a new
line of innovative, convenient equipment to meet the needs of aspiring musicians. We will be
entering the percussion equipment industry competing with other percussion equipment firms,
specifically those who manufacture and distribute practice drum pads.
Mission/Vision:
Being that our target market consists of visionary and goal oriented individuals, we
recognize the importance of effective mission and vision statements that are directed toward the
success of the firm in order to most effectively meet the needs of our consumers.
Mission Statement: To provide passionate musicians with the innovative, high quality tools
necessary for advancement in the percussive arts arena.
Vision Statement: Our vision is to be the number one distributor of percussion equipment in the
United States while keeping our focus on meeting the needs of our consumers.
Competitive Advantage:
Our competitive advantage is our product design. We understand the importance of time
and efficiency to modern percussionists and our beautifully designed products will eliminate the
clutter of heavy traditional equipment that has been used for decades with little modification.
Recognizing that the marching percussion activity involves fees and mainly consists of young
adults between the ages of 15-24, we will also strive to keep our prices competitive with those of
long time percussion equipment distributors.
Business Opportunity:
The marching percussion equipment industry has long been dominated by few firms. As a
result, the marching percussion community has become complacent with the lack of
technological and design advances in the past several years. Despite the facts that the industry is
dominated by few competitors and barriers to entry are relatively high, we see great opportunity
considering our competitive advantage. Recognizing that the activity is growing and developing
rapidly, Skyson industries sees the opportunity to penetrate the U.S. marching percussion market
beginning with a line of innovative, convenient, and high-quality percussion practice pads.

Traditional practice pads are bulky and are created for the single purpose of giving percussionists
a surface to play on. Our design provides percussionists with all of the essentials needed for a
successful practice environment including a built in sheet music clip, a built in metronome, and a
convenient carrying case for travel purposes. Skyson industries intends to take full advantage of
this opportunity to enter the growing marching percussion equipment market.
Environmental Scan
Five Forces:
Seeing as how this is a market with great potential for growth and success, competition
among the industry is projected to be relatively high.
The threat of new entrants for the percussion equipment industry is low considering the
high barriers to entry and the fact that the industry has long been dominated by few firms.
Because predominant firms such as Pearl and Vic Firth have been competing in the industry for
so long they have had the opportunity to maximize production efficiency and develop economies
of scale. Capital requirements are also relatively high because start up costs would include the
acquisition of new plants, manufacturing equipment, and labor costs. Product differentiation,
however, is an area in which the competition lacks, offering extremely similar products that are
easy to manufacture. Distribution channels are not much of a threat because the best opportunity
for product exposure and sales would be merchant booths at percussion events and competitions
which are not costly and easy to attain. The area of greatest concern is customer loyalty as it
applies to switching costs. Customers in the industry have long used the predominant firms’
equipment and have developed some strong relationships. Many of the ensembles in the
marching percussion arena have even gone so far as to attain sponsorships from these firms
which can sometimes provide them with discounted or free merchandise. We expect the
competition to retaliate aggressively with new pricing strategies to retain their loyal customers.
We also anticipate the possibility of the competition imitating our products.
In order to better understand the percussion equipment industry and the industries
involved with it, it is necessary to examine the bargaining power of suppliers and buyers. The
industry of the suppliers of raw material needed for the percussion equipment industry is
competitive but not very concentrated. Most of the raw material needed for production includes
polymers such as plastic, rubber, and some metals. The raw materials needed are substitutable
goods that can be attained from a number of companies. Thus, the bargaining power of suppliers
does not pose a high threat. The bargaining power of buyers, on the other hand, is high because
ensembles tend to buy in bulk from one company. The majority these firms’ revenues come from

ensemble sales in which loyalty plays a large role. However, the switching cost of buyers is low,
which means they could easily decide to buy from another company.
Because percussion equipment is specifically created to fit the instruments, substitutable
goods do not exist outside the industry. Thus, the threat of substitutable goods is very small.
As previously mentioned, competition is expected to increase as we enter the industry.
Competitive rivalry is an area of concern because there are several strong competitors in the
industry that are equally balanced. The low switching costs for buyers also increase rivalry
among competitors because it can force them to use low prices to compete for customers. Overall
rivalry among competitors is relatively high.
Global:
If market penetration is successful in the United States, Skyson industries has every
intention of going international. The mode of entry we would choose to penetrate international
markets would be exporting. While exporting our equipment will involve high costs, it will not
be as expensive as licensing, acquisition, or new subsidiaries. Exporting will mean that we will
not have much control over operations overseas, but considering that we are a product offering
organization, having high control is not completely necessary.
Our first choice for global expansion would be China. Our decision is based upon the fact
that the percussive arts population has been growing rapidly in China over the last several years.
Cultural considerations for expansion to China include the growing percussion culture and strong
sense of discipline that have potential to contribute to the acceptance and success of our
products. While China’s economy is definitely to be taken into consideration, we recognize that
our products are not so expensive as to be threatened by China’s economic state or that of the
consumers. We do recognize that there will be a language barrier to overcome and in order to
address it, special packaging considerations will have to be taken. While this may increase
packaging costs, we do believe it is necessary for success in this market.
Outlook, Forecast, Trends:
Scanning: Early signals of cultural trends include an increase in the Chinese percussive
arts arena, a considerable amount of Chinese percussionists traveling to the U.S. to join
American Ensembles, rapid innovation in Chinese technology, and few domestic Chinese
competitors in the percussion equipment industry.

Monitoring: An increase in the Chinese percussive arts arena means a growing market
with more potential customers. Chinese percussionists traveling to the U.S. means that having
strong brand recognition in the U.S. can aid our performance in China. Innovation in Chinese
technology means that there is a definite possibility of Chinese competitors entering the industry.
Forecasting: We predict a wide market with many potential customers that recognize our
brand and are willing to be on the front end of our innovative products. We anticipate product
imitation, but do not believe any strong competitors will enter the Chinese domestic market.
Assessing: While global expansion does appear to be a great opportunity, we have
concluded that the timing is not right for expansion in the near future. It is more important to
develop a strong brand within the domestic U.S. market that we believe will aid our success in
the Chinese market.
Marketing Plan
Target Market:
In order to be successful in the percussion equipment industry, it is essential to identify
and cater to our target market.
To begin identifying our target market we must first identify the consumer needs that we
are attempting to address. The marching percussion activity is extremely competitive, requiring
individuals to audition for ensembles and compete with each other for an opportunity to then
compete with other ensembles. Such competition requires many hours of effective and efficient
practice. A successful practice session for the average percussionist requires four things: Drum
sticks/mallets, a drum pad/surface to play on, a stand or similar item to place music sheets on,
and a metronome. These items are illustrated below.
Traditionally, such a practice session requires sufficient space for all of these items and as a
result, the ideal practice environment is not easily transportable. Skyson industries’ new line of
innovative practice pads addresses the need of percussionists to easily take their practice

environment on-the-go without dealing with the clutter of the many tools needed for the
traditional practice environment.
Now that we have identified what needs are being addressed, we can take a closer look at
the individuals that have those needs. There are several characteristics of our target market that
can be identified easily. Obviously, the market we are trying to reach consists of musicians, more
specifically percussionists, within the marching percussion arena. While percussive arts have
been gaining popularity in China, for the purpose of our initial market entry we are considering
our target market to be within the United States. Considering that the marching percussion sport
is not typically introduced to percussion students until high school and that the age limit for
competing in marching percussion circuits is 22, we have identified the ideal age range of our
target market to be 16-21. Being that the age range is quite low and that these young individuals
are required to pay fees to participate, we recognize that family income level will require much
consideration within our marketing plan. As of now, we are considering our target market to be
in the middle class in regards to income. While the marching percussion activity has historically
been male dominated, we recognize that over the last several years there has been a large
increase in female participation and as a result we will sustain from marketing to a specific
gender. Overall, our target market can be described as middle class individuals between the ages
of 16 and 21 who live in the United States and are active percussionists within the marching
percussion arena.
Market Size and Market Share Estimate
Identifying market size and share is important so that we know our market potential and
can develop strategies for market entry. While the U.S. marching percussion arena consists of
several circuits, the most popular and well established is Winter Guard International (WGI).
WGI hosts many regional competitions around the U.S. and the Sport of the Arts World
Championships in Dayton, Ohio every year. Most groups who compete in other circuits
eventually end up competing in WGI competitions at some point. According to the WGI web site
there were over 48,000 participants in the 2014 World Championships alone (this does not
include the many groups that did not qualify to compete at the world level). If we were to include
ensembles from other circuits and non-qualifying ensembles, we would arrive at a rough estimate
of 150,000 individuals within our target market. This is a generous amount considering that the
nature of our product is very specific.
While an exact market share cannot be calculated until after market entry, there are a few
factors that we can consider to estimate market share. There are three leading producers and

distributors of drum pads in the percussion equipment industry. These three are Vic Firth,
Offworld Percussion, and Pro-mark. If we were to split them equally among the market along
with another share of “other competitors” each would have a market share of 25%. Competing
with these firms at a market entry level will be difficult, but if everything goes to plan in terms of
promotion and sales we estimate a market share of approximately 15% for the first year. While it
may be optimistic, we believe that the fact that we are addressing customer needs will help us
arrive at this point.
SWOT (use two by two table):
STRENGTHS
 Product differentiation from competitors
 Unique and innovative product design
 Well constructed marketing plan for
market entry
 Knowledgeable workforce with experience
in the marching percussion arena
 Pending patents for product design and
components
WEAKNESSES
 Lack of funds for initial investment
required for market entry
 Potentially high production costs
 No established distribution channels
 Lack of manufacturing plants
 Narrow initial product line
OPPORTUNITIES
 Increasing population in U.S. marching
percussion arena.
 Increasing popularity in percussive arts in
China
 Lack of product innovation within
percussion equipment industry
 Unfulfilled customer needs for mobile
practice setup
 Complacency among domestic competitors
THREATS
 Lack of brand name recognition
 Strong sense of customer loyalty to
established competitors
 High likelihood of product imitation
 High bargaining power of consumers
 Low bargaining power of us from raw
materials manufacturers
Four Ps/Four Is:
Product
As previously mentioned, Skyson industries intends to enter the market with a line of
innovative, high quality practice pads that meet the need of our target market to have a portable
practice environment. Our innovative design eliminates the clutter of a traditional practice
environment and provides our consumers with a versatile, minimalist practice pad. Our design

provides percussionists with all of the essentials needed for a successful practice environment.
The practice pad itself will provide percussionists a surface to practice on. Two industrial
strength clips will be built in toward the head of the pad in order to provide a place for music
sheets. A micro metronome will be conveniently built in along the outer rim with only two
buttons and a headphone jack so as not take up so much space. The bottom of the drum pad will
contain two sleek industrial strength legs that fold out to stabilize the drum pad and give it more
height. Every pad will come with a convenient traveling case made out of polyester material
which includes a carrying strap and a sleeve for drumsticks. The product will come in a
cardboard box with a sleek design on the front consisting of the Skyson logo and a single front
image of the pad. The back of the box will contain images of certain product features and an
attention getting phrase that is yet to be determined. The product will be offered in three different
colors for the shell (White, Black, and Grey) and will all have a hard rubber surface.
Place
In regards to place, there are several factors that we need to consider including physical
location, demographics, and distribution. After close examination of the marching percussive arts
arena we discovered that the most popular and best developed circuit for marching percussion
activity is Winter Guard International. While it is an international circuit, the great majority of its
competitions and its world championships are held in the United States. After some examination
of the circuit and other mentionable percussion circuits (Southern California Percussion Alliance,
Percussive Arts Society, and Drum Corps International) we discovered that the state that seems
to have the most marching percussion activity is California. Therefore it makes sense to focus
most of our distribution (at least for the initial market entry) in California. We will begin our
market entry with direct distribution, selling from our own web site and renting out booths at
competitions and events to sell our drum pads at. We believe this is the best way to reach our
target market. If popularity grows as expected we will consider distributing to retailers such as
music stores and other web sites.
Price
When determining the price of our drum pads we decided to use a cost-plus pricing
strategy. Considering the fact that our target market is young and isn’t expected to have a high
income, we expect price to be a sensitive factor. Therefore, choosing a price that is just slightly
above the break-even point for manufacturing seems to be a good way to appeal to our target
market while still making a profit. Considering that the average MSRP of a practice pad is about
$45, (data collected from http://www.amazon.com/s/ref=nb_sb_noss_1?url=search-
alias%3Daps&field-keywords=snare+drum+practice+pad) the average price of a music stand is
about $20, (http://www.amazon.com/s/ref=nb_sb_noss_2?url=search-alias%3Daps&field-

keywords=music+stand&rh=i%3Aaps%2Ck%3Amusic+stand) and the average price of a basic
metronome is $20, (http://www.amazon.com/s/ref=nb_sb_noss_2?url=search-
alias%3Daps&field-keywords=metronome&rh=i%3Aaps%2Ck%3Ametronome) the overall
value that one would be getting out of our practice pads is roughly $85. If we estimate
production costs to be about $55 per unit (relatively high due to the technology costs required to
input a micro metronome and additional costs of a carrying case) we would arrive at a sales price
and MSRP $80. This price is only $20 higher that of the current leading drum pad in market
“The Invader” by Offworld Percussion which does not include any of the innovative features that
our line does (data collected from http://www.amazon.com/Offworld-Percussion-Invader-
V3RED-Practice/dp/B007BN6IEG/ref=sr_1_2?ie=UTF8&qid=1424240487&sr=8-
2&keywords=invader+pad). At this price, we believe that our target market will feel that they are
getting a good value and that our competitors will find it tough to imitate and compete.
Promotion
As far as promotion goes, we would like to bring as much attention to our drum pads as
possible for the initial product launch and market entry. This means having to sacrifice some
units to increase popularity in sales. One of the most popular ideas for promotion includes
contests on social media in which percussionists may submit videos for review. The contestant
most impressive video as decided by a panel of judges will receive a free unit of choice. This
contest can be held every week for the first few months of market entry. Another promotion
strategy in mind is an e-drawing in which contestants “share” our product and website on social
media in exchange for one entry in the e-drawing to win a unit. The most costly, but perhaps
most rewarding, promotion strategy would be to create a sponsorship contract with one of the
most popular and successful ensembles in the WGI unit and provide each member of the
ensemble with a discounted or free unit with the condition that they use it generously in public
and on social media to create awareness. All of these promotion strategies would greatly benefit
Skyson industries and our entry into the percussion equipment industry.

Organizational Plan
Management Team (include organization chart):
Seeing as how the success of this product launch and ultimately the market entry for the
firm depends on performance in several different areas, it is important to establish a clear
organizational structure. Being that the firm is in its initial growth phase, the organizational
structure as of now is a simple structure consisting of the owner/manager and four staff
members. The owner/manager will be responsible for making important decisions regarding
production, distribution, marketing, and sales. The four staff will consist of three sales people
and an assistant manager. The sales people will be responsible for attending events and
competitions at which they can set up booths and sell our merchandise. A sample of this simple
organizational part is provided below.
As time progresses and the organization grows, eventually we would like to restructure
into a functional structure. This structure would include a CEO, a production manager, a
marketing manager, a sales manager, and a research and development (R&D) manager. The
production manager would ensure that the manufacturing process is as efficient as possible. The
marketing manager would handle all aspects of marketing including promotion and advertising.
The sales manager would be in charge of upholding sales standards and improving sales
performance. The research and development manager would be in charge of ongoing operations
to discover consumer needs and development of technology to meet those needs. These
managers would be responsible for their organizational areas and the employees within them.
Ultimately, these managers would also report to the CEO. An organizational chart for this model
is presented as follows.
Manager
/owner
Assn.
Manager
Sales Rep Sales Rep Sales Rep
CEO

McKinsey 7s Model (describe each):
Shared Values: Skyson Industries believes in constantly challenging the status quo in
order to keep up with the evolving needs of our consumers. We believe that it is the
power of music and the bond of musicianship that guides our passionate organizational
cultre. We are strong advocates of the marching percussion arena and seek to provide
percussionists with the proper tools for advancement; the tools they deserve.
Structure: Ideally, the structure of the organization will be a functional structure
consisting of senior management such as a CEO, a production manager, a marketing
manager, a sales manager, and a distribution manager. These managers are each
responsible for a team of employees and ultimately report to the CEO. Decision making
is centralized, however, certain decisions and responsibilities would be delegated to the
management team. Communication throughout the structure would be encouraged to
promote innovative ideas and a comfortable work place.
Systems: Systems would be strategically designed in order to make sure day to day
operations are running smoothly and time is being used effectively. The CEO will
examine the financial state of the firm daily. Managers would ensure that their team is
operating according to our standards every day and report to the CEO.
Strategy: Skyson Industries’ vision is to be the number one distributor of percussion
equipment in the United States while keeping our focus on meeting the needs of our
consumers. We plan to do this by creating positive brand awareness as a result of
consistently meeting consumer needs through innovative product design, competitive
pricing, and effective promotion. Brand awareness will aid in building strong distribution
channels and relationships with retailers all over the country.
Style: Because it is one of our goals to constantly keep up with the evolving needs of our
consumers, we strive to build a creative and innovative environment in which our
employees and our consumers can communicate their ideas freely and effectively.
Communication between management is open and managers are encouraged to cooperate
rather than compete. We are strong advocates of camaraderie and teamwork.
Sales
Team
Sales
Manager
R&D
Manager
Production
Manager
Marketing
Manager
Marketing
Team
Production
Team
R&D Team

Staff: Our staff consists of passionate individuals who share our appreciation of the
percussive arts. The majority of our employees have firsthand experience in the marching
percussion arena. Our fun and passionate organizational culture along with generous
benefits would be factors for attracting potential staff. All employees undergo
comprehensive training which focuses on teamwork and building strong relationships
with their team members. Team incentives will be provided as rewards for hard work and
loyalty.
Skills: Placing a strong emphasis on meeting consumer needs is very important to us.
Our sales associates will be skillfully trained to interact with our consumers in a friendly
and approachable manner. The fact that the majority of our sales representatives have
experience in the marching percussion arena provides an advantage because consumers
can more easily relate to them. Another skill we would like to emphasize is our research
and development. Bringing design and technical advances to an industry that has long
been complacent with product quality will give us a competitive edge and a positive
brand association in the minds of our consumers.
Business Level Strategy/Corporate Level Strategy:
The business levels strategy of Skyson Industries can be described as a focused
differentiation strategy. We chose this strategy because the nature of our business opportunity is
to provide consumers with products that meet needs that are not being met. This means providing
consumers with products that are superior and different than those of the competition. This is a
focused strategy because the scope of our target market is generally narrow. We hope to provide
value with this strategy by emphasizing high quality standards, rewarding innovation and
productivity, quickly and effectively responding to consumer input, and constantly seeking new
ways to meet consumer needs through effective research and product development. This business
strategy aligns well with our corporate level strategy which is a low diversification high value
creating strategy. We state that our corporate level strategy is low in diversification because the
vision for our organization lies solely within the percussion equipment industry. We do not have
any desire to branch out and create a conglomeration of entities. Doing so would result in a stray
from our mission and vision for the organization. However, our corporate level strategy is
described as high value creating because if we were to slightly diversify within the industry
sometime in the future it would be for value creating reasons such as vertical integration for
increased market power, or creation of economies of scope through shared resources.

Operational Plan
Supply Chain:
The supply chain for our new line of drum pads will involve gathering raw
materials/materials from material suppliers, manufacturing, assembling and packaging, and
distribution to the final consumer. We will collect raw materials needed for manufacturing from
one major supplier of materials such as plastic and hard rubber. The acquiring of finished goods
will involve receiving micro metronomes from an electronics hardware company and receiving
steel clips and legs from a steel manufacturer. Also involved with receiving finished goods from
suppliers will be the boxes that the pads will be packaged in; these will come from another
company that specializes in box design and creation. Manufacturing will take place in house at
our manufacturing plant. Manufacturing would include the shell of the drum pad, which will be
made from the raw plastic and a mold, and the hard rubber playing surface which would be
melted and cooled onto the shell. Assembly includes gathering all the little finished goods
materials acquired from other companies and placing them into our shell. The steel clips would
be attached to the head of the drum pad in order to hold music, and the steel legs would be
attached to the bottom of the drum pad to work as an elevating mechanism. The micro
metronomes would be securely inserted to the side of the shell and the product would then be
ready for packaging. Packaging would involve taking the finished drum pad and placing it into
the boxes that were created by the boxing company. The final product would be distributed to the
final consumers by our own sales team using company owned vehicles.
Our supply chain will create value by establishing strong and positive relationships with
our suppliers and assuring that we receive supplies from them that meet our standards. We will
also monitor our ongoing operations to ensure that our manufacturing plant is operating
effectively and efficiently. In order to create value for the consumer we will employ a highly
skilled and personable sales team that can create positive relationships with our consumers and
effectively receive feedback.
Partners/Suppliers:
Our main partners and suppliers will include those mentioned in the previous section of
the operational plan. In order to assure high quality and top level performance, we will partner
with top rated companies in their respective industries that are also located relatively near our
manufacturing plant in Southern California. This will include Schuff Steel for our metal clips
and legs, California Quality Plastics for the plastic and rubber, Roland for the micro metronome,
and The Yebo Group for our packaging needs. Our goal is to maintain a strong relationship with

a good flow of communication that both parties can benefit from. In the event that one or some
of these partnerships fails, our contingency plan is to keep moving forward with the next best
company in their industry. When our organization begins to expand, we may look at different
potential partners that operate on a larger scale.
Optimize Organizational Effectiveness:
Several activities and practices will be put into place in order to optimize organizational
effectiveness. First off, we will continuously work toward efficient productivity in the
manufacturing plant assuring that all aspects are meeting production standards. Our strong
relationships with suppliers will aid in optimizing efficiency in regards to inbound supplies. The
sales team will be well trained and incentivized to increase sales. The management team will be
responsible for many tasks in regards to their respective teams. Quality control programs will be
created to ensure efficient and effective practices.
Primary and Support Activities:
Primary activities for our organization include: inbound logistics, operations, outbound
logistics, marketing and sales, and service. Inbound logistics deal with getting all the supplies
that we need for production, assembly, and packaging from the suppliers. In order to create value
in regards to inbound logistics we will locate our facilities in a location central to those of our
suppliers. This will hopefully minimize delivery costs and decrease delivery time. The primary
activity of operations deals with the manufacturing and assembly of the drum pads. Quality
control will play a main role in creating value through operations. Marketing in sales includes the
four P’s that were discussed earlier in the marketing plan. Our well trained sales team will aid in
creating value through the primary activity of marketing and sales. Outbound logistics includes
the delivery of our final product to the consumer. By using company owned vehicles to transport
our finished goods, we will ensure on-time delivery and minimize costs. Our sales team and
management team will be responsible for taking care of service both internally and externally.
As the company expands we may choose to establish a human resources department.
Support activities for Skyson Industries include: procurement, technological
development, human resource management, and firm infrastructure. Procurement involves all the
activities included in obtaining the supplies needed to manufacture our product. In order to create
value through procurement we will communicate well with our suppliers and keep our finances
in order to assure we have enough money for the items. Technological development will be a
strong focus in our support activities considering we are using a differentiation strategy in
regards to our products. In order stay on the front end of the competition and use innovation as
our competitive advantage, we will encourage all employees to submit ideas for research and

product development. We will also heavily invest in our research and development department as
we continue to expand. Human resource management and firm infrastructure will be overseen by
management for the time being. As time passes and firm evolves, we will develop a human
resourced department. Value will be created by assuring an accessible flow of communication
and ongoing evaluation of the organization and the industry.
Financial Plan
Pro Forma:
Pro-Forma Income Statement
Skyson Industries
For 2015 through 2017
(all numbers in $000)
REVENUE 2015 2016 2017
Gross sales $1,800 $2,400 $2,760
Less sales returns and allowances 180 240 276
Net Sales $1,620 $2,160 $2,484
COST OF SALES
Beginning inventory $0 $28 $41
Plus goods purchased /
manufactured 1,265 1,663 1,936
Total Goods Available $1,265 $1,691 $1,977
Less ending inventory 28 41 66
Total Cost of Goods Sold $1,238 $1,650 $1,911
Gross Profit (Loss) $383 $511 $573
OPERATING EXPENSES
Selling
Salaries and wages $92 $110 $121
Commissions 14 $17 $18
Advertising 30 $36 $40
Depreciation 6 $7 $8
Other 5 $6 $7

Total Selling Expenses $147 $176 $194
General/Administrative
Salaries and wages $80 $96 $106
Employee benefits 18 $22 $24
Payroll taxes 10 $12 $13
Insurance 16 $19 $21
Rent 40 $48 $53
Utilities 10 $12 $13
Depreciation & amortization 6 $7 $8
Office supplies 7 $8 $9
Travel & entertainment 9 $11 $12
Postage 7 $8 $9
Equipment maintenance & rental 30 $36 $40
Interest 10 $12 $13
Furniture & equipment 16 $19 $21
Total General/Administrative Expenses $259 $311 $342
Total Operating Expenses $406 $487 $536
Net Income Before Taxes ($24) $23 $37
Taxes on income 8 13
Net Income After Taxes ($24) $15 $25
Extraordinary gain or loss $0 $0 $0
Income tax on extraordinary gain 0 0 0
NET INCOME (LOSS) ($24) $15 $25
Calculations:
The above table presents the official pro-forma income statement for Skyson industries
2015-2017. Sales were calculated projections were calculated using the estimated market share
for each of the years provided. The equation is as follows: 150,000 (estimated market size) x .15
(15% of market) x 80 (selling price). Projections for the second and third years were done
substituting the initial market share estimate with estimated market share for the following two
years (2nd year- 20% market, 3rd year 23% market). Sales returns and allowances were estimated

to be around 10% of sales. Goods purchased/manufactured were calculated by multiplying the
units manufactured for the period by the unit variable cost [Goods manufactured in year 1
(23,000) x unit variable cost (55)]. All other information was sampled and gathered from other
companies in the industry and scaled down as a percentage of sales.
The Pro-forma income statement shows a net loss for the first year. This is mostly due to
the high costs involved with starting up. The loss can also be attributed to insufficient sales to
break-even due to a lack of brand awareness. The Pro-forma for the following years takes into
consideration the growth of the organization. Revenues were increased by 5% due to increased
brand awareness. Costs were also increased 20% the second year signalizing tremendous growth
and 10% the second year signalizing conservative practices in an attempt to slow down cost
increase while still growing the company. Years 2 and 3 reveal a net profit for the organization.
Break-Even Point:
BEP= Fixed Costs/ (unit price – variable unit costs). FC:406,000/(80-55)=16,240 units
Break-Even Analysis [Skyson Industries]
[Practice Pad] [4/4/15]
For the Period: Year 1
Selling Price (P): $80
Break-Even Units
(X): 16,240 units
Break-Even Sales
(S):
$
1,299,200.00
[42]
Fixed Costs
Advertising $ 30,000.00
Depreciation $ 12,000.00
Interest
Expense $ 10,000.00
Insurance $ 16,000.00
Manufacturing $ 30,000.00
Payroll $ 214,000.00
Rent $ 40,000.00
Supplies $ 23,000.00
Taxes (real estate, etc.) $ -
Utilities $ 10,000.00
Other
(specify) $ 21,000.00
Total Fixed Costs (TFC) $ 406,000.00

Variable Costs
Variables Costs based on Dollar Amount per Unit
Cost of Goods Sold
$
35.00 per unit
Direct Labor
$
10.00 per unit
Overhead
$
4.00 per unit
Other
(specify) per unit
Sum:
$
49.00
Variables Costs based on Percentage
Commissions 7.50% per unit
Other
(specify) per unit
Sum: 7.50%
Total Variable Cost per Unit (V) $ 55.00
Contribution Margin per unit (CM) = P - V $ 25.00
Contribution Margin Ratio (CMR) = 1 - V / P = CM / P 31.3%
Break-Even Point
Break-Even Units (X) X = TFC / (P - V) 16,240 units
Break-Even Sales (S) S = X * P = TFC / CMR $ 1,299,200.00

*One thing not mentioned in the break-even analysis that contributed to the net loss for
the first year was sales returns and allowances.
Sources of Investment:
Looking at the pro-forma, it is evident that start-up costs for Skyson Industries are going
to be fairly high including costs for a factory and manufacturing equipment. Our first attempt at
acquiring investment capital would be an application for a “Real Estate & Equipment” loan
through the U.S. Small Business Association. Another possible source of investment capital
could be sponsorships from large corporations heavily invested in the music industry (Yamaha,
Boss, etc.) who would be willing to invest in our organization. If needed, we can resort to private
loans/lines of credit through banks.
Financial Information Use:
The financial information calculated here has made excellent contributions to the
formation of our business strategy. By using this information and the financial information of our
competitors we can compare practices and seek to identify and implement the most effective and
Total Cost
Total Revenue
Profit (Loss)
BEP
$(150,000)
$(100,000)
$(50,000)
$-
$50,000
$100,000
$150,000
$200,000
$250,000
0 500 1,000 1,500 2,000 2,500 3,000
Units (X)
Break-Even Point
Total Cost
Total Revenue
Profit (Loss)

efficient business practices. By comparing year end results to our initial projections we can also
identify areas that may need improvement and make adjustments accordingly.
Financial Ratios:
The core financial ratios that we will use in order to evaluate our performance are Gross
Profit Margin, Operating Profit Margin, Return on Total Assets, Net Profit Margin, and Total
Asset Turnover. We will also look at liquidity ratios such as the Current ratio and the Debt to
Asset ratio to measure our ability to pay back the money borrowed as investment capital.
Critical Risks Assessment
Chart/Diagram/Task List
Begin manufacturing and
selling drum pads
Launch company website
Announce partnership with
national music retailers
Expand production and
distribution to Midwestern
United States
Extend product line to
include new drum pad
designs
Expand production and
distribution to Eastern
United States
Begin research and
development for
manufacturing marching
percussion hardware
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar

In January we hope to begin manufacturing drum pads in the one manufacturing facility
that we own. The actual sale of drum pads will be scheduled to being shortly after manufacturing
begins. By April, the company website will be completed and fully operational including access
to an online shop. In July, the organization will finalize and announce a partnership with a
national music retailer to display and sell our products in their stores. Shortly after, we will
acquire a new manufacturing plant and establish distribution channels in the Midwestern United
States. In November we hope to release a new line drum pads with new designs. By the
beginning of the second year of production we hope to have acquired a third manufacturing plant
and expanded production and distribution to the Eastern United States. In March of year two a
new initiative will be launched to more closely discover consumer needs within the marching
percussion market and begin developing the design of marching percussion equipment.
Contingency Plans:
Security Compromise: This contingency plan discusses the procedures to be followed in
case of a security compromise involving important financial information of the organization
and/or customers via the company website. The first step to take in the case of a technical
emergency such as this is to temporarily shut down the company website and have technical
support on staff ready to respond to customer concerns. A public announcement will be
developed and emailed to our online shoppers informing them of the situation and assuring them
that the situation is being dealt with quickly and carefully. Once the website is down it is
essential to identify specifically which information was stolen and how exactly our system was
compromised. A team of technical support staff should simultaneously be working on a solution
to the system error. Once a solution is found it should immediately be implemented and tested
for security flaws. If the solution passes testing the website is to be re-launched and an email will
be sent to consumers informing them that the problem has been resolved and that we are
prepared to assist them with any needs regarding financial security.
Natural Disaster: This contingency plan discusses the procedures to be followed in case
of a natural disaster resulting in damages to a manufacturing plant. Prior to any other action
being taken, the health and safety of our employees must be acknowledged and attended to. A
public announcement will be made informing distributors, retailers, and consumers of the recent
unfortunate events. Insurance agencies should be immediately notified and insurance procedures
followed. The plant should be inspected and all losses including but not limited to inventory,
supplies, and equipment should be accounted for and reported to management. Any equipment
that can be salvaged and repaired will be conserved. Production in other plants will be increased
to compensate for the plant being down. Employees will be put on leave until facilities are once
again operational.

Leadership
Sphere of Influence:
Because this business plan is written for the initial launch of our drum pads during the
early development stages of the organization, the organizational structure (as can be seen earlier
in the report) is fairly simple. As a result, the sphere of influence for my role within the
organization would be company-wide. As the company progresses, the organizational structure
will become more complex so as to include marketing, sales, production, and research and
development departments. These departments will report to the CEO and Board of Directors,
both of which will have influential power within the organization. As CEO, I would play an
important role in decision making for the organization and make an effort to implement and
enforce company-wide policies that are consistent with our values, mission, and vision. I think
this will have a good impact on the business plan, as I will be able to monitor our progress and
lead us toward successful implementation.
Bias:
A personal bias of mine within the organization could be my tendency to take risks. I
personally see risks as challenges and given the opportunity and the right information I will favor
taking educated risks in order to invest in the company’s future. This could impact the
development and progress of our organization in a number of ways. For starters, there is a great
deal of responsibility when it comes to taking risks. High risks may have high returns, but it also
means higher losses if the decision doesn’t work out in your favor. On the other hand, a
favorable outcome of high risk decisions could potentially improve the state of our organization
and speed our progress.
Hurdles:
There are several hurdles that we anticipate during our initial product launch and our
market entry. First off, we anticipate several barriers to entry previously discussed in this report.
These include name recognition, issues with brand loyalty, and large economies of scale within
our competition. Other hurdles include potential issues with desired partnerships, achieving
effective supply chain management, and lack of capital for expansion.

Style/Servant Leadership:
My style of leadership will definitely be more of a servant leadership style. I believe that
true leaders inspire and strive to create an environment in which others can be successful. This
means being able to lead by example and effectively communicate with your team. As a leader in
my organization I will strive to live out the organization’s core values and exemplify what we
expect out of all our employees. I will communicate effectively with our whole team and always
keep an open mind for suggestions from employees at any level. With careful consideration, I
will delegate authority in order to empower others to make important decisions for and bring
value to the organization. After a close evaluation of my leadership skills I discovered that my
weakest area of leadership was emotional intelligence. I will do my best to continually seek
improvement in all areas of leadership for the benefit of my organization and our stakeholders.
Strengths and Weaknesses
I possess several strengths that can greatly benefit our organization. My greatest strength,
as I see it, is my personal experience and wide knowledge of the marching percussion arena. As
a former competitor/participant of the percussive arts, I have a large network within the market
and I know first-hand the needs of our consumers. Other strengths include leadership experience,
communication skills, and marketing experience. Weaknesses of mine that may affect the
organization are my bias toward risk taking, and my tendency to avoid confrontation.
Influencing Others
I believe that the best way to influence others is to live up to your own standards. If I
consistently exemplify the actions of an ideal employee, our employees will be more willing to
uphold our expectations. My goal is to make sure all our employees are comfortable working for
our organization. Surrounding our employees with satisfied, like-minded individuals who love
their jobs will hopefully inspire them to be the best they can. Only then will they be able to
deliver the results we expect.
Conclusion
Skyson Industries has a great opportunity to enter the market with a unique and creative
offering. We have a strong understanding of the industry, the market, and the environment. An
effective marketing plan was developed describing our plan for initial market entry. An
organizational plan that outlines the structure and strategies for the organization has been
developed. Plans for growth have been created, obstacles have been presented, and strengths and

weaknesses have been identified. A detailed plan for how operations and logistics will be carried
out has been included with contingency plans for unanticipated events. The financial outline of
the organization is favorable. Potential risks have been assessed and contingency plans created
for unfavorable outcomes. A leadership model has been established and the organization’s
intentions are very clear. The organization clearly has a good understanding of their current
situation and a strong plan for market entry. Overall, this business plan has adequately prepared
the organization to initiate market entry and initial product launch.

References
Gibson, C. H. (2013). Financial Statement Analysis, 13e. Stanford, CT: Cengage Learning.
Hitt, M. A., Hosskison, R. E., & Ireland, R.D. (2015). Strategic Management: Competitiveness and
Globalization. Stanford, CT: Cengage Learning.
Kerin, R. A., & Perterson, R. A. (2013). Strategic Marketing Problems. Upper Saddle River, CA:
Pearson.
Pricing Information retrieved from Amazon.com.

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