BackdropDepot.com - School of Business Administration School of

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BackdropDepot.com
POINT. CLICK. BUY.
A Business Plan
Authored by: Robert L. Reum
Contact:
Backdropdepot.com
Robert L. Reum
701 Whitthorne Street A
Shelbyville, TN 37160
sales@backdropdepot.com
3/17/2011
Plan copy no. ______ of 10. The components of this business plan have been submitted in confidence.
By accepting delivery of this business plan the recipient agrees to maintain confidentiality and return the
plan upon request. Reproduction or distribution of the business plan and/or concept without permission
is prohibited.
BackdropDepot.com
TABLE OF CONTENTS
1. Executive Summary…………………………………………………………………………….………….....
vi
2. The Company: Backdropdepot.com..……………………………………………………………..…..
1
2.1 Business Description
2.2 Products and Services
2.3 Management Team
3. Industry Analysis…………………………………………………………………………………………………
4
3.1 US Retail Industry
3.2 Specialty Retail Industry
3.3 Non-store Retail Industry
3.4 E-Commerce Industry
3.4 Textile Manufacturing Industry: Curtains and Drapery Mills
4. Market Analysis ……………………………………………………..….…………………………….…………
7
4.1 Competitors
4.2 Product/Service Positioning and Differentiation
4.3 Target Market/Customer Profile
5. Marketing Plan………………………………………………………………………………………..…..………
10
5.1 Target Market Strategy
5.2 Product and Service Strategy
5.3 Pricing Strategy
5.4 Distribution Strategy
5.5 Advertising and Promotion
5.6 Sales Strategy
5.7 Sales Forecasts
6. Operating Plan………………………………..…………………………………………………………….......
18
6.1 Retail Operations
6.2 Manufacturing Operations
7. Development Plan………………………………….…………………………………………………………..
18
8. Financial Plan…….……………………………………………………………………………………...……….
19
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Appendix A: Financial Exhibits..…………………………………………………………………..………………….…
21
Exhibit 1: Financial Assumptions
Exhibit 2: Pro Forma Income Statement Year 1
Exhibit 3: Pro Forma Cash Flow Statement Year 2
Exhibit 4: Pro Forma Income Statement Years 2 to 5
Exhibit 5: Pro Forma Cash Flow Statement Years 2 to 5
Exhibit 6: Pro Forma Balance Sheet Five Years
Exhibit 7: Sensitivity Analysis
Appendix B: Exhibits…………………………………………………………………………………………………….……
30
Exhibit 11: Development Timeline
Exhibit 12: Backdrop Photos
Exhibit 13: Backdrop Pricing Tiers
Exhibit 14: Facility Photos
Exhibit 15: Facility Development Stages One and Two
Exhibit 16: Team Resumes
iv
BackdropDepot.com
“Great curtains…will be buying more!”
eBay user: topperhrly
“Great Product, Fast Shipping, Smooth transaction.”
eBay user: deanofsteam
“Great Company with wonderful customer service!”
eBay user: reabold
“Love it!!!”
eBay user: koolart
“A great seller to work with, on time delivery.”
eBay user: jdlap813
“Great to work with.”
eBay user: jedwardmorris1950
“Very good quality, thank you.”
eBay user: barelatreasures
“Fast shipping was needed and she came through. Thank you. Good
product.”
eBay user: pintojr
“Great service and great products. Thanks.”
eBay user: topperhrly
“A+++++++ FAST SHIP THANKS!!”
eBay user: hummerchik
“Great seller. Easy to work with!!!”
eBay user: jdlap813
“Great item! Great price! Thanks so much! A++++++++”
eBay user: ktnjd
“Thank you! Curtain and qasw567 are MAGNIFICENT!”
eBay user: moejam13
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BackdropDepot.com
1. EXECUTIVE SUMMARY
Financing. Backdrop Depot will not seek outside financing at startup. The company will be
funded by owners’ contributions and revenues generated from the sale of stage curtains,
backdrops, and accessories.
The Opportunity. There are currently no companies in the stage equipment industry
specializing in stage curtains, backdrops, and accessories. Those large equipment suppliers that
do sell these items typically cater their products to Hollywood and other large stage-based
venues. The smaller markets; schools, churches, small entertainment venues, and independent
entertainers are a relatively large, yet overlooked market, as represented by the $121,364 and
32% growth achieved in recent market tests.
The Company. Backdrop Depot will become the preeminent online retailer of backdrops, stage
curtains, and accessories for value-minded small businesses and consumers. Utilizing efficient
private label manufacturing and a completely web-based retail operation, we will simplify the
decision making and purchasing processes for our customers, offer low cost, high quality fabricbased stage equipment, and provide superior customer service.
Backdrop Depot will be established as a Subchapter S corporation and do business as
Backdropdepot.com. The business will be a closely-held company registered in the State of
Nevada. The operation will be a family owned and operated business with physical facilities
located in Shelbyville, TN.
The Team. Backdrop Depot will be lead by a management team with over 40 years of combined
experience, training, and education in entertainment, business management, and marketing.
Products. Our initial product offerings will be limited to our private label backdrops and stage
curtains and miscellaneous attachment accessories. Backdrop Depot’s private label backdrops
and stage curtains represent simple yet proven designs that are made with close attention to
quality. We will offer eight tiered backdrop packages with options based upon the best selling
sizes and features. In addition, Backdrop Depot will offer customer ordered backdrops and
stage curtains based on our hand-cut and straight stitched platform with selections base upon
fabric, color, size, and optional features such as top attachment finishes, hemmed side finishes,
and bottom attachment or hemmed finishes.
Financial Performance. Backdrop Depot’s private label manufacturing and web-based retail
operations will allow the company to achieve a broad reach while keeping operating costs low.
With the owners’ contributions and sales as the sole source of funding and growth, Backdrop
Depot will extend operations to include Backdropdepot.com, the company’s eBay store, and
selling products on Amazon.com. These new retail channels will spur Backdrop Depot to
increase sales from 947 units, $307,394, in the first year of the new operation to 3,359 units for
just over $1 million by the end of year five. With fantastic gross profit and operating margins of
77% and 36%, respectively, Backdrop Depot represents a tremendous revenue generating
growth opportunity for the company’s investors.
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BackdropDepot.com
2. THE COMPANY: BACKDROPDEPOT.COM
2.1 The Opportunity
In late 2006 lifetime stage professional Rhea Yancy identified a fantastic opportunity. Preparing
for an upcoming outdoor concert, Rhea began looking for a source for stage curtains, or
backdrops, to act as a background for the stage. Her search turned up four sources; local
upholsterers and fabric-based equipment manufacturers that made everything from canvas
awnings to leather seat covers, numerous individual online retailers (primarily selling on eBay)
of muslin and printed photography backdrops, large stage equipment suppliers offering a wide
array of equipment, and two high-end stage curtain suppliers that focused on serving the needs
of Hollywood and other large entertainment venues. Nobody specialized in simple and
affordable backdrops. None of the product options met Rhea’s needs and all were quite
expensive, so she decided to make her own. She ended up with a low cost, high quality
backdrop that was perfect for what she needed. This was the first time Rhea thought she might
have uncovered an opportunity.
A year later, with bookings becoming increasingly irregular, Rhea sought additional income and
decided to test the opportunity she uncovered earlier. Rhea decided to test the opportunity
and listed her backdrop for sale on eBay. To her amazement the backdrop received many bids,
finally selling for just under $500 by the end of the eBay auction. This was nearly 900% more
than the item cost to make. Both shocked and excited by the sale, Rhea decided to try for
repeat success and created a listing for another backdrop. Although she didn’t have another
stage curtain to sell at the time, Rhea extended the listing’s delivery schedule to allow enough
time for her to produce another curtain if her listing was a success. To her delight the first
experience was repeated, she quickly sold another backdrop for nearly $500. This was the start
of what Rhea jokingly calls her “full-time hobby.”1
Despite no official organizational structure, operational strategy, and zero marketing, this “fulltime hobby” has done quite well for the Rhea. In their first year of making and selling backdrops
Rhea netted $91,715.96, and, since then, her sales have grown 32.3% to $121,364 in 2010, an
average annual growth rate of 10.6%.2 In an equally impressive fashion she has maintained an
average gross margin of nearly 71%, and an average operating margin of 44% over the same
period.2 In addition, Rhea has successfully maintained a remarkable 100% eBay seller rating3,
still the only place she currently sell her backdrops.1
Continued success and increasing demand prompted Rhea to ask if this might be a larger
opportunity that she originally thought. By mid-2010, increasing demand from churches,
schools, small entertainment venues, and individual entertainers pushed Rhea to the limits of
what they could produce. What had began as a simple hobby had quickly turned into something
quite different, something that had serious potential. Unsure of which steps to take first, she
partnered with her son, Robert Reum, to explore the possibility of significantly expanding her
little project and launching a new venture.
1
Yancy, Rhea. Telephone Interview, December 12, 2010.
Yancy, Rhea, Financial Records, Compiled January 5, 2011.
3
Qasw567 User Profile, eBay, January 6, 2011.
2
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BackdropDepot.com
2.2 Business Description
“Stage Equipment Made Simple”
Backdrop Depot will become the preeminent online retailer of backdrops, stage curtains, and
accessories for value-minded small businesses and consumers. Utilizing efficient private label
manufacturing and a completely web-based retail operation, we will simplify the decision
making and purchasing processes for our customers, offer low cost, high quality fabric-based
stage equipment, and provide superior customer service.
Backdrop Depot will be established as a Subchapter S corporation and do business as
Backdropdepot.com. The business will be a closely-held company registered in the State of
Nevada. The operation will be a family owned and operated business with physical facilities
located in Shelbyville, TN.
2.3 Products and Services
2.3.1 Products
Our initial product offerings will be limited to our private label backdrops and stage curtains
and miscellaneous attachment accessories.
Backdrops and Stage Curtains
Backdrop Depot’s private label backdrops and stage curtains represent simple yet proven
designs that are made with close attention to quality. We will offer eight tiered backdrop
packages with options based upon the best selling sizes and features. In addition, Backdrop
Depot will offer customer ordered backdrops and stage curtains based on our hand-cut and
straight stitched platform with selections base upon fabric, color, size, and optional features
such as top attachment finishes, hemmed side finishes, and bottom attachment or hemmed
finishes.
TIERED PACKAGES
Value
PRODUCT DESCRIPTION
Black 9 oz. Non-Fire Retardant Cotton Twill Standard Backdrop with Webbing and Grommets
Quality
Black 12 oz. Fire Retardant Commando Standard Backdrop with Webbing and Grommets
Select
Black 16 oz. Fire Retardant Commando Standard Backdrop with Webbing and Grommets
Premium
Make it a PLUS
Black 16 oz. Fire Retardant Princess Velour Standard Backdrop with Webbing and Grommets
Upgrade Any Backdrop Package from Standard to Pleated
Additional fabrics, colors, sizes, and features available with custom orders.
Accessories
Backdrop Depot will offer customers a wide array of accessories, including; portable frames,
weighting systems, and multiple attachment systems such as grommet and tie lines, hidden tie
lines, snap hooks, and hidden snap hooks.
(Refer to Appendix B, Exhibits 17 and 18 for Backdrop Photos and Pricing Tiers)
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BackdropDepot.com
2.3.2 Services
Our initial service offerings will be centered on providing customer service and support, eliciting
customer feedback, and simplifying the purchasing process.
Customer Service and Support
Backdrop Depot will provide 24/7 customer service and support through a combination of
internal and hosted customer service tools, including; website tools (i.e., product information,
FAQ, and hosted chat), email-based customer service, and a hosted customer service telephone
hotline.
Customer Feedback
Backdrop Depot will make a concerted effort to elicit useful feedback from our customers.
Customer feedback is an integral component of continuous improvement and excellent
customer service and satisfaction. Backdrop Depot will gather feedback via interacting with
customers and utilizing a number of automated tools, including; a feedback tab on the
company website, website and purchasing analytics, post-purchase questionnaires, and regular
newsletters.
Purchase Assistance
Backdrop Depot will offer multiple purchase assistance tools to add value and simplify the
decision making and purchasing processes. In addition to developing an easy to use and
intuitive website and shopping cart, Backdrop Depot will further simplify purchasing by utilizing
a host of tools such as; product bundling, tiered product categories with discounted pricing, and
product recommendations based upon the past purchasing histories. Finally, all orders will
include shipment tracking. Our goal is to provide our customers with enough tools to make
their purchases as seamless, efficient, and rewarding as possible.
2.4 Management Team
Backdrop Depot will be a family owned and operated business. Our founding management
team represents a diverse combination of talent, education, training, and experience in our
target market and related fields. (Refer to Appendix B: Exhibit 13 for Team Resumes)
President and CEO: Rhea Yancy has spent over 30 years in the entertainment industry, earning
numerous awards as a performer and experiencing every aspect of the business. In addition,
Rhea has spent the past three years working closely with Backdrop Depot’s target market,
establishing a dialogue and building intimate knowledge of the market and their needs. Rhea
will serve as President and CEO of Backdrop Depot.
Vice-President and Director of Sales and Business Development: Robert Reum has ten years of
experience in management. He has excelled in both sales and business development, earning
numerous awards in both fields. Robert is completing two Bachelor of Science (B.S.) degrees,
Management and International Business, from The University of Montana School of Business
Administration. Robert will serve as the Vice-President and Director of Sales and Business
Development for Backdrop Depot.
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BackdropDepot.com
Director of Marketing and Office Manager: Gretchen Reum has over eight years in
management, a majority of that time in sales and marketing positions. In addition, Gretchen
has spent that past three years in property management, heading the customer service office
of a multi-million dollar residential property management company. She is currently pursuing
Bachelor of Science (B.S.) degrees in both Management and Marketing from The University of
Phoenix. Gretchen will serve as Director of Marketing and Office Manager for Backdrop Depot.
3. INDUSTRY ANALYSIS
3.1 US Retail Industry
The US retail industry represents a $3 trillion market4 and is growing at a rate of 7%.5 The retail
industry is divided between two product types, durable and non-durable goods, accounting for
$1 trillion and $2.2 trillion of sales, respectively.6 Wal-Mart leads all retailers with
approximately $304.9 billion in sales.6 The industry’s largest companies, primarily general
merchandisers and discount stores, represent a large proportion of sales; however, specialty
retailers account for the majority of overall sales.6
3.2 Specialty Retail Industry
Specialty retailers are responsible for the majority of the overall US retail industry, accounting
for 85% of $1.88 trillion US retail sales through the first six months of 2010 alone.7 The industry
is highly fragmented, consisting of relatively few giant superstores and thousands of small and
mid-sized businesses.7 Motor vehicle and parts dealers make up the largest segment in specialty
retail with $372.6 billion in sales (20% of total retail sales), followed by supermarkets, gas
stations, and non-store retailers.7
3.3 Non-store Retail Industry
Non-store retailers account for approximately 45% of specialty retailing, generating an
estimated $168.1 billion in sales.7 In addition, the non-store retailing industry has outperformed
nearly all other retail sectors with a ten-year growth rate of 7.7%.77 Of the 59,375 organizations
operating in the industry4, many have turned to the online retailing as a key to remaining
competitive. Standard & Poor’s Industry Survey suggests this trend is due to the internet’s
ability to help “new businesses to gain a broad reach without opening a single store.”7
3.4 E-Commerce Industry
E-Commerce represents the greatest share of non-store retailing and is the best performing
sector in not only specialty retailing, but the retail industry overall. The e-commerce industry
reported sales of $141.2 billion and $143.4 billion in 2008 and 2009, respectively.7 The latest
figures indicate 2010 sales at $165.5 billion, just over 4% of total retail sales. 5 Financial experts
suggest e-commerce, 14,185 retailers4, will soon represent 10-15% of total retail sales.7
4
U.S. Census Bureau, 2007 Census, July 24, 2009, http://factfinder.census.gov, Retrieved January 3, 2011.
U.S. Census Bureau, E-Stats, May 27, 2010, http://www.census.gov/estats, Retrieved January 4, 2011.
6
Aseda, Jason, Standard & Poor’s Industry Surveys, Retailing: General, November 25, 2010,
http://www.netadvantage.standardandpoors.com.weblib.lib.umt.edu:8080, Retrieved January 3, 2011.
7
Somers, Michael, Standard & Poor’s Industry Surveys, Retailing: Specialty, September 9, 2010,
http://www.netadvantage.standardandpoors.com.weblib.lib.umt.edu:8080, Retrieved January 3, 2011.
5
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E-Commerce is a relatively young segment
within the retail industry, only gaining
significant prominence as late as 19978, but,
according to Standard & Poor’s, “online sales
are increasing faster than traditional retail
sales, and we believe that significant growth
still lies ahead.”7 A recent Forrester Research
study indicates 11% growth in online retail in
2009. 7 From 2009 to 2010 online retail sales
increased 14.8%, outperforming the overall
retail industry by more than 50%.5
Additionally, recent projections indicate a
compound annual growth rate of 10% will
propel online retail sales to $248.7 billion by
2014.7
The online retail industry is highly fragmented
with relatively few large retailers, but thousands of small and mid-sized retailers. Amazon.com
is the dominant player in the industry with $24.5 billion in sales in 2009 and 28% growth from
2008 to 2009.7 Standard & Poor’s reports, “We believe the pace of online sales growth is similar
across the specialty retailing landscape, with online continuing to capture market share.”7
Trends affecting the retail industry are due largely in part to the economy and the maturity of
the industry. The retail industry is highly sensitive to the economy, with success largely
determined by consumer spending. Although the recovery has proven to be relatively slow,
Consumer Confidence and Consumer Spending are both on the rise. As of March 2011,
Consumer Confidence has risen 5.6 points to 70.4.9 Consumer expenditures grew to over $10.6
trillion in February 2011. Consumption on nondurable goods has grown steadily, increasing by
7.5% to $2.3 trillion in 2009 and another 6.1% to $2.5 trillion in 2011. For retailers, this 14%
growth in two years is promising, bringing personal consumption on goods back to prerecession levels.10 According to Standard & Poor’s 2011 marks “an increase in consumer
spending and higher sales for specialty retailers.” 7
Although improvements are evident, consumers’ recent economic challenges are changing the
demographics of the industry and the mindset of retail consumers. Value is quickly becoming
the key determinant in consumers’ purchasing decisions. Standard & Poor’s reports,
“Consumers have inexorably moved to favor shopping at retailers offering the best price/value
propositions.”6
In addition to these considerations, the retail industry is facing a number of other trends that
affect companies’ competitiveness:
8
nd
Reference for Business, Encyclopedia of Business, 2 ed.,
http://www.referenceforbusiness.com/industries/Retail-Trade/, Retrieved January 7, 2011.
9
Conference Board, Consumer Confidence, http://www.conference-board.org, Retrieved March 29, 2011.
10
Bureau of Economic Analysis, Personal Consumption Expenditures by Major Type of Product, Monthly, March 28,
2011, http://bea.gov, Retrieved March 29, 2011.
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
Industry Consolidation. The fragmented specialty retail industry has been experiencing a
high degree of consolidation in recent years, increasing the need for differentiation.
Standard & Poor’s reports “the rapid expansion of specialty chains, combined with
heightened competition from mass merchandisers and department stores, has led to price
wars and homogenization in several sub-segments. Specialty retailers must therefore
constantly try to find ways to distinguish themselves.”7

Price Competition. The current consolidation and increased competition from mass
merchandisers has led to increased price competition within the retail industry. As a result,
companies are taking a second look at the way business is done and are adapting their
strategies and goals accordingly. According to Standard & Poor’s the most successful
strategies have been:





Taking an “everyday low price” strategy versus utilizing price promotions, etc. to
attract customers6
Improving customer service6
Increasing revenues via multi-channel shopping outlets, additional services, and new
strategic partnerships6
Achieving wider margins by cutting costs, streamlining operations, and utilizing
private labeling6
Creatively marketing to attract new segments , build stronger brands, and build
customer loyalty6

International Expansion. In addition to consolidation as a method of expansion, many
retailers are looking to international markets for growth. While China and India are prime
candidates for expansion, offering very large and growing markets, many retailers are
finding success in other non-US Western and emerging markets such as Canada, Western
Europe, Central Europe, Eastern Europe, Central America, and South America.6

Technology. In addition to the promise of growth offered by online sales, retailers are
turning to other technologies to improve operations, namely; inventory management
systems, mobile technologies, social marketing, and even augmented reality611
3.5 Textile Manufacturing Industry: Curtains and Drapery Mills
Although Backdropdepot.com conducts business primarily as a web-based specialty retailer, initially a
majority of products sold by the company will be private label items. As such, additional considerations
must be given to the current landscape of the manufacturing industry, with particular focus on the
textiles segment and, more specifically, curtain and drapery mills.
Textile manufacturing represented a combined value of shipments estimated at $448 billion as
of February 2011, up 9.9% from 2010. New orders were reported at $446 billion while unfilled
11
Farfan, Barbara. Retail Industry Information: Overview of Facts, Research, Data & Trivia 2011, About.com.
http://retailindustry.about.com/od/statisticsresearch/p/retailindustry.htm, Retrieved March 14, 2011.
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orders were pegged at $565 billion as of January 2011.12 There are approximately 5,930, 132
manufacturing firms employing nearly 121 million people.12
The manufacture of non-durable goods represents the largest proportion of US manufacturing
and offers the most promise. The manufacture of non-durable goods constitutes approximately
$245 billion, 54% of all shipments. In addition, this section outperformed overall manufacturing
by 3%, with 12.9% YTD growth from 2010 to 2011. With approximately 14.8% growth in new
orders from 2010 to 2011, this sub-section of overall manufacturing looks to be relatively
promising.12
Textile mills are a relatively well performing segment of non-durable goods manufacturing. The
industry reports shipment values of $2.5 billion and YTD growth from 2010 to 2011 of 9.1 12
Curtain and drapery mills compose a significant proportion of textile mills operating in the US;
however, the overall number of mills has declined by 15%13 in recent years. There are 1,515
companies manufacturing curtains and draperies in the US, employing 13, 948 people. At $1.1
billion, these companies accounted for nearly 50% of the combined shipment value of all textile
mills.13
These figures represent most firms that are involved in the actual finishing of various fabrics
and the manufacture of curtains and draperies; however, manufacturers involved in only the
manufacturing of individual product categories have experienced significant increases in
shipment values and growth. This group of manufacturers is represented by the “All other
miscellaneous textile product mills” classification, and these curtain and drapery mills have
actually grown 18% in recent years.12
Despite claims that US manufacturing is rapidly shrinking, often overshadowed by the
manufacturing growth of China and others, the US is still the world’s largest manufacturer.
According to International Monetary Fund (IMF) and Bureau of Economic Analysis (BEA)
statistics, the US produces 21% of the world’s products worth an estimated $1.6 trillion per
year.14 Financial firm Deloitte suggests companies can compete in the current competitive
environment with a “focus on right-sizing, managing costs and working capital, and taking
additional steps.”15
4. MARKET ANALYSIS
4.1 Competitor Analysis
Backdrop Depot will operate within two industries, the e-commerce industry and the curtain
and drapery manufacturing industry. The US e-commerce industry is highly fragmented with
12
Savage, Chris & Stoica, Adraina, Full Report on Manufacturers’ Shipments, Inventories and Orders February 2011,
U.S. Census Bureau News, March 31, 2011, http://www.census.gov/manufacturing/m3/prel/pdf/s-i-o.pdf,
Retrieved March 31, 2011.
13
U.S. Census Bureau, 2007 Economic Census, Sector 31: EC07311: Manufacturing, October 31, 2009,
http://factfinder.census.gov, Retrieved January 8, 2011.
14
National Association of Manufacturers, Facts about Manufacturing, http://nam.org/Resource-Center/FactsAbout-Manufacturing/Landing.aspx, Retrieved April 2, 2011.
15
Deloitte, Manufacturing Issues,
http://www.deloitte.com/view/en_GX/global/industries/manufacturing/manufacturing-issues/, Retrieved April 2,
2011.
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14,185 online retailers16 represented by relatively few large companies, but with thousands of
small and mid-sized businesses accounting for the bulk of the market.7 There are 1,515 curtain
and drapery mills in the US, with no single firm representing a major share of the industry.13
Competition in the e-commerce industry (general merchandisers are the exception) is focused
on smaller segments and based largely upon the nature of the product/s that each company
sells. Despite a small degree of product specialization, competition among curtain and drapery
mills is based primarily on geographic location.
Backdrop Depot’s competitive nature more closely resembles that of the e-commerce industry,
centered primarily on the products we offer and less around geography. While Backdrop Depot
can be classified as curtain and drapery mill, the highly specialized nature of our stage curtains,
our internet based retail operations, and the identity and brand of our company are more
representative of other e-commerce specialty retailers than a textile manufacturer. Backdrop
Depot’s competition is best understood by examining four categories of competitors:
1. Large General Stage Equipment Suppliers. Large stage equipment suppliers typically
operate in a similar fashion as general merchandisers, insofar as they do not specialize in
any one product or product category. These retailers carry a broad range of stage trappings
and equipment while offering a relatively shallow offering. Most of these operations are
distributors for multiple manufacturers, operate on relatively narrow margins, and utilize
brick and mortar, catalogue, and online retail strategies. Companies that do not utilize
online strategies are more geographically limited, while those using online retail strategies
are not. While there are many of these suppliers, and they offer a small selection of
competing products, they are more representative of future distribution opportunities for
Backdrop Depot rather than heavy competition. Projection, Lights, and Staging News is a
prime example of this type of supplier.
2. Large Specialty Stage Equipment Suppliers. Large specialty stores typically focus on a
slightly narrower range of products with a slightly deeper selection within their respective
product categories. While most of these operations are also distributors for multiple
manufacturers, private label manufacturing within their respective product category is
common. These companies often focus on a more targeted audience and operate on
slightly larger margins than general suppliers; however, they also typically utilize a
combination of brick and mortar, catalogue, and online retail strategies. Large suppliers of
specialty equipment (non-competing products) represent future distribution channels for
Backdrop Depot. Despite the relatively small number of these suppliers within Backdrop
Depot’s market, this category currently represents the most competition. Rose Brand Inc. is
a prime example of this type of operation.
3. Upholstery Shops/Individuals. Upholstery shops typically offer a modest selection of
products based around a particular material such as canvas, leather, and other fabrics, and
sometimes include backdrops. While some of their offerings originate from other
manufacturers, most of their products are hand-crafted and produced in small shops. These
16
U.S. Census Bureau, 2007 Economic Census, Sector 44: Retail Trade, July 24, 2009. http://factfinder.census.gov,
Retrieved January 4, 2011.
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shops are typically operated as small businesses with a relatively local geographic focus;
however, selling items on a company website or e-commerce website such as eBay are not
uncommon. While most of these competitors do not have the capacity to compete on a
large scale, there are thousands of these operations within the US. In addition, with
advances in the e-commerce and logistics capabilities of small businesses, they will continue
to grow as a competitive threat.
Although stage products and equipment represent a straight re-buy decision for those involved
in stage-based activities, not representing a risky or complicated decision making process17, and
the industry is relatively mature, there are significant opportunities for a company with the
right value proposition, target market, and positioning strategy.
4.2 Value Proposition
Backdrop Depot will deliver the “Resonating Focus” value proposition.18 The following tenets
are the basis for this approach:



Learn from your customers
Address your customers most important needs
Document the value of your superiority
Backdrop Depot will deliver on our “Resonating Focus” value proposition by following two
strategy archetypes18:
1. Customer Intimate. Backdrop Depot will focus on a relatively narrow niche and highly
targeted market using a keen understanding of customers and their needs, quality products,
and top notch service to attract and retain customers, build customer lifetime value, and
achieve high margins.
2. Operationally Excellent. Backdrop Depot will focus on serving a more price-sensitive target
market, delivering the perfect combination of quality, price, and ease of purchase to
customers.
4.3 Target Market/Customer Profile
Backdrop Depot’s initial target market is represented by four customer groups representing
both business (B2B) and consumers (B2C). Our B2B customers include churches, schools, and
small entertainment venues, totaling 570,936 establishments.4 19 20 21 Our B2C customers are
entertainers and those that typically work in one of the industries represented by our B2B
customers and total approximately 77,890 people.21 The total size of our initial target market is
648,826.
17
Solomon, Marshall, & Stuart, Marketing, 2009, Pearson Custom Publishing, Prentice Hall, Upper Saddle River, NJ.
rd
Mohr, Sengupta, & Slater, Marketing of High-Technology Products and Innovations, 3 ed., 2010, Pearson
Publishing, Prentice Hall, Upper Saddle River, NJ.
19
Hartford Institute for Religion Research, The Hartford Surveys,
http://hirr.hartsem.edu/research/fastfacts/fast_facts.html, Retrieved February 7, 2011.
20
First Research, Industry Profiles, 2011, http://firstresearch.com/industry-research/, Retrieved February 7, 2011.
21
U.S. Census Bureau, Detailed Occupation and Median Earnings reports, 2008,
http://www..census.gov/hhes/www/ioindex/whatsnew.html, Retrieved February 9, 2011.
18
9
BackdropDepot.com
While there are many segments that are involved in stage-based activities and require similar
products to those offered by Backdrop Depot, our target market represents industries that
have an even more pronounced sensitivity to economic, sociological, and other factors
influencing business operations. The key drivers to success for these organizations are low-costs,
efficiency, and a focus on value, making them an ideal target market for Backdrop Depot.
In addition, while many of these customers currently purchase stage products from either
general or retail stage equipment suppliers, they represent a tertiary market to these suppliers.
With the larger suppliers either selling a wide variety of products or focusing on more
commercial markets such as movie theatres and large entertainment venues, the needs of
Backdrop Depot’s target market are overlooked. Based upon these considerations, this makes
our target market an ideal fit for our products, services, and “Resonating Focus” value
proposition.
4.3 Product/Service Positioning and Differentiation
Backdrop Depot’s goal is to become the focused cost-leader within the stage equipment
industry, utilizing efficient private label manufacturing and a completely web-based retail
operation to offer quality low-price products to a small market segment within the overall
industry. Backdrop Depot will achieve this goal by adopting a three part positioning strategy
that includes:

Variety-based positioning. While typical competitors offer a broad range of stage products
and equipment, Backdrop Depot will focus on producing a narrower subset of equipment
that fits well with the company’s skills, abilities, and resources.

Needs-based positioning. Serving a broad market is not always the best approach to
achieving customer satisfaction, particularly when different groups of customers all have
different needs. Backdrop Depot will focus on a specific group of customers, tailoring all
activities to best serve their needs.

Access-based positioning. While access-based positioning typically involves segmenting
customers based upon access to those customers, usually geography, and the activities
required to reach them, Backdrop Depot will utilize a completely internet based operation
to achieve the same effect. Backdrop Depot’s access to the local Nashville, TN, one of the
world’s largest entertainment centers, also represents this strategy.
5. MARKETING PLAN
5.1 Target Market Strategy
Backdrop Depot will initially employ a concentrated target market strategy. Backdrop Depot’s
target market represents a relatively large horizontal market encompassing multiple customer
groups that perform the same function throughout numerous industries and share similar
needs and characteristics. We will utilize coordinated marketing strategies to address this
segment. We will be successful in our efforts based upon the following considerations:


Backdrop Depot can offer superior value to the customers within this segment
Serving this segment fits with Backdrop Depot’s resources, capabilities, and objectives
10
BackdropDepot.com

Backdrop Depot’s image and brand represent a good fit with this customer base
5.2 Product and Service Strategy
Backdrop Depot’s product and service strategy will be centered on offering a relatively narrow
yet deep assortment of stage equipment to our value-minded customers and simplifying the
decision making and purchasing processes through value-added services.
NARROW
SHALLOW
DEPTH
DEEP
BREADTH
Airport Bookstore
A few Lord of the Rings books
www.legendaryheroes.com
Internet retailer selling only merchandise for
Lord of the Rings, The Highlander, Zena:
Warrior Princess, and Hercules.
BROAD
Sam’s Club
Lord of the Rings books, t-shirts, and toys.
www.Amazon.com
Millions of listings from many product lines;
electronics, apparel, jewelry, etc.
Backdrop Depot’s product mix will be limited to fabric-based stage equipment. We will focus on
product line extensions, adding new items such as table skirts (stretching) and adding additional
backdrop styles (filling) to our existing product line to achieve our desired level of growth. 17
Our overall product strategy is built upon three tenets:
1. Provide Quality. Backdrop Depot will focus on providing quality products and services by
focusing on these key factors: quality inputs, best methods, reliability, durability, precision,
versatility, ease of use, product safety, and, most of all, customer satisfaction.
2. Provide Consistency. Backdrop Depot will ensure that our customers receive the same
quality products and services each time, every time.
3. Satisfy Customers’ Needs. Backdrop Depot will meet and exceed our customers’ needs and
expectations by focusing on customer feedback, purchasing behaviors, and top notch
customer service and support.
Backdrop Depot will combine our core products with value-added services to offer our
customers the “whole” product17, most efficiently meeting their needs and building customer
loyalty.
5.3 Pricing Strategy
Backdrop Depot will utilize a hybrid pricing
strategy. Our strategy is designed to achieve five
primary objectives over the next five years:
1. Increase sales and market share. Utilize
pricing strategies that help the company
meet or exceed the industry’s 10% annual
growth rate.
2. Maximize profits. Utilize pricing strategies,
and efficient private label manufacturing to
maintain a 60% minimum gross profit margin.
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BackdropDepot.com
3. Create and defend our competitive position. Maintain pricing strategies that enhance the
company’s competitive position and discourages new competitors from entering the market.
4. Create and maintain customer satisfaction. Utilize pricing strategies that help simplify the
decision-making process and exceed customer expectations.
5. Enhance our brand and image. Utilize pricing strategies that maintain the company’s
focused, efficient, and value-oriented image and brand.
Our pricing strategy will include elements of customer-oriented pricing, value pricing, and costplus pricing. In addition, Backdrop Depot will utilize multiple pricing tactics to support our
objectives and pricing strategies.
Customer-oriented Pricing
Backdrop Depot will always focus on satisfying our customers’ needs. We will maintain a
customer-centric focus by incorporating customer-oriented principles in our pricing strategies:



Understanding how our customers use our products
Focusing on the benefits our customers receive from using our products
Considering the costs our customers incur to purchase and use our products
By understanding these key elements, Backdrop Depot will be able to more effectively gauge
the value our pricing will represent to our customers. Our customers’ perception of value is the
“true arbiter of price.”22
Value Pricing
Backdrop Depot will utilize value pricing, or “everyday low pricing”, to provide the ultimate
value to our customers. Maintaining value pricing eliminates our reliance on special sales
promotions to generate interest and represents the most effective strategy to best serve our
customers and meet all of our pricing and strategy objectives.
Cost-plus Pricing
Backdrop Depot will utilize elements of cost-plus pricing to maintain the company’s profit and
strategy objectives. Utilizing the minimum markup element of this pricing strategy, in
conjunction with price ceilings based upon our competitors pricing (typically 20% lower than
Rose Brand’s products) and other industry benchmarks, we will effectively maintain sufficient
margins to support all of our objectives.
Other Pricing Tactics
Backdrop Depot will utilize multiple pricing tactics to support the company’s objectives and
pricing strategies:

22
Bundling. Backdrop Depot will offer small discounts, typically 10%, on bundled products
such as a backdrop with an attachment system.
Harvard Business Essentials, Marketer’s Toolkit, 2006, Harvard Business School Press, Boston, MA.
12
BackdropDepot.com

Tiered Pricing. Backdrop Depot will utilize a combination of standardized product packages
and tiered pricing to simplify the decision-making and purchasing processes and stimulate
sales. (Refer to Appendix B, Exhibit 12 for Backdrop Pricing Tiers)

Upgrades. Backdrop Depot will stimulate incremental revenues by offering individual
product feature upgrades at an extra charge.

Sales Promotions. Backdrop Depot will use sales promotions sparingly, typically offering
seasonal discounts in a form that supports increased spending (i.e., 10% off when
customers spend $300) rather than discounts on individual items.

Special Offers. Backdrop Depot will utilize special offers, typically 20% or more discounts
highlighted on the home page of the website, to liquidate returns, overstocks, etc.

Trade and Quantity Discounts. Backdrop Depot’s future distributors (other than eBay and
Amazon) will receive additional discounts based upon each partner’s function and the
quantity of products ordered.
Delivery Pricing
Backdrop Depot will utilize F.O.B. origin pricing, making the exact cost of delivering products
from the company’s factory to the customer the purchaser’s responsibility. To make the
shopping experience as seamless and helpful as possible, our website’s shopping cart will
instantly calculate shipping charges based upon the product size, weight, and destination, and
include these charges in the purchase price. There will be no additional markup added to
shipping costs.
5.4 Distribution Strategy
Backdrop Depot will employ a selective distribution strategy. Our primary focus will be on
distributing directly to customers; however, future strategies may include dual or multiple
distribution systems, with the company distributing products through additional wholesalers
and retailers. The key elements of our distribution strategy are cost, control, and efficiency.
Initially, we will distribute our products via the following channels:

Backdropdepot.com. Our overall goal is to drive customers to our website to make
purchases. Sales through our website, manufactured, stored, and shipped from our own
facility, represent the most cost effective and profitable distribution strategy. In addition,
this strategy allows Backdrop Depot to maintain control of distribution and the effects of
distribution on the company’s image and brand. Key elements to the company website will
be a simple yet effective user experience, useful content, and seamless functionality.

Amazon.com. Backdrop Depot will list products for sale on Amazon.com. Although
customers may purchase certain products directly from Amazon.com, product offerings will
be relatively limited in an effort to drive customers to Backdropdepot.com. Initially, the
company will not utilize Amazon’s logistics services.
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BackdropDepot.com

eBay.com. Backdrop Depot will list products for sale on eBay.com and the company’s initial
distribution channel. Although customers may purchase certain products directly from
eBay.com, product offerings will be designed to drive customers to Backdropdepot.com.

Future Distribution Channels. Backdrop Depot will seek additional low-cost and efficient
distribution channels beginning in the third year of operation. Likely candidates will be
additional web-based distributors, stage equipment distributors, and hospitality product
distributors. A pull strategy would be the ideal in these situations in order to maintain
control of marketing and branding activities.
Logistics
Backdrop Depot will utilize a multifaceted approach to logistics. We will utilize different
strategies and service providers for each logistics activity.

Purchasing, Manufacturing, and Storage. Purchasing, manufacturing, and storage will be
managed internally from Backdrop Depot’s facility.

Order Processing. Backdrop Depot will utilize an enterprise resource planning system to
automate the ordering processes, including the integration of ordering, financing,
manufacturing, and shipping.

Shipping. Backdrop Depot will utilize multiple service providers for all shipping activities
based upon a number of considerations, namely; dependability, cost, speed, accessibility,
capability, and traceability. The company will initially utilize UPS for domestic orders and
USPS for international orders. As additional distributors are added and volumes increase,
Backdrop Depot will investigate additional shipping options.
5.5 Advertising and Promotion
Advertising and promotion (A&P) will play a significant role in helping Backdrop Depot meet
sales, growth, and profit objectives and develop the company brand. While many online and
other non-store retailers are commonly viewed as “…essentially marketing companies”8 due to
the typical role as middlemen and a myopic focus on sales, Backdrop Depot will take a more
strategic approach.
Advertising Budget
Backdrop Depot will utilize a carefully managed advertising budget in determining annual
spending on A&P. To avoid sales and marketing myopia and haphazard spending, careful
financial management and consideration of the overall goals of the company will be utilized in
developing an advertising budget for Backdrop Depot. One of the more efficient approaches is
to set the advertising budget as a percentage of net sales. In the case of retail, the percentage is
typically 4% to 6%, with companies entering new markets or introducing new products
spending more.23 Following these guidelines, Backdrop Depot will initially set the annual
23
Business Owner’s Toolkit, Setting a Marketing Budget,
http://toolkit.com/small_business_guide/sbg.aspx?nid+p03_7006, Retrieved March 8, 2011.
14
BackdropDepot.com
advertising budget at 6% of the previous year’s net sales and will closely monitor, analyze, and
adjust this rate in accordance with the measured success of the company’s marketing activities.
BACKDROP DEPOT’S FORECASTED MARKETING BUDGET
YEAR 1
YEAR 2
YEAR 3
YEAR 4
YEAR 5
$7281.81
$18,443.72
$37,846.56
$45,415.89
$54,499.05
Integrated Marketing Communications
Backdrop Depot will utilize integrated marketing communications to reach the company’s
target audience. Backdrop Depot will first focus on broad reaching and low cost A&P tools to
initially introduce the company’s products and build brand awareness, only turning to more
expensive and focused tools when the objective transforms to maintaining interest in the
company’s products and brand.18
Taking this approach coincides with Backdrop Depot’s growth strategy and allows the company
to use strict marketing metrics to measure the efficiency and effectiveness of the lower level
tools before utilizing the more expensive tools that are available.
COST PER CONTACT
1. Media Advertising. Backdrop Depot’s primary media focus through the first two years of
operation will be on online tools such as the company’s website, search engine optimization
(SEO) and organic search advertising on Google, Bing, Yahoo, and other search engines,
social media marketing on Facebook, LinkedIn,
HIGH
and other sites, and limited banner/display
Personal Selling
advertising on various market-related websites
and directories. Based upon the company’s
Telemarketing
goal of driving traffic to Backdropdepot.com,
Catalogues, Literature, and Manuals
this form of advertising will encompass a
Trade Shows, Seminars, and Training
significant proportion of the company’s A&P
Direct Marketing
budget. Additional media advertising, primarily
in trade journals such as Projection, Lights, and
PR and Publicity
Staging News and local advertising in the
Media Advertising and New Media
Nashville market, will commence during years
three, four, and five.
REACH
BROAD
2. PR and Publicity. Backdrop Depot will utilize a
professional service like PRNewswire to distribute company and product announcements to
target audiences. The company will also actively pursue product placements and cosponsorship opportunities with related products and companies, particularly in the local
Nashville market (i.e., Pearl drums, Gibson guitars, and music groups). In addition, Backdrop
Depot will maintain strong ties to the community and constantly seek aligning events and
causes to support.
3. Direct Mail. As a relatively low cost yet highly targetable form of advertising, direct mail will
represent a significant proportion of the company’s A&P budget. Backdrop Depot will first
15
BackdropDepot.com
utilize e-mail and SMS text marketing due to their lower costs; however, beginning in year
three, the company will begin to utilize direct mail via postal delivery.
4. Tradeshows, Seminars, and Training. Backdrop Depot has already developed a trade show
booth and other materials; however, the company will reserve trade show, seminars, and
training activities to local events only during the first two years of operation. Additional,
more distant activities will begin in year three with the Backdrop Depot’s entry into the
hospitality products market.
5. Catalogs, Literature, and Manuals. Other than relatively standard printed items such as
business cards and stationary, very limited material will be printed for the company initially.
Maintaining a cost-conscious focus on efficiency, Backdrop Depot will make most
information and technical specifications of the company’s products available online, and
will produce only enough material for internal and local trade show uses. Additional
materials will be produced when the company expands marketing activities beginning in
year three.
6. Telemarketing. Backdrop Depot’s sales staff will utilize outbound sales calls when following
up on customer inquiries that did not result in an immediate sales; however, outbound
telemarketing on a large scale, while offering significant potential for future operations,
would be too cost prohibitive to pursue during the first few years of operation. Initially, all
inbound telemarketing will be managed internally by the company’s staff. Once
Backdropdepot.com is launched most customer service inquiries will be managed by a
hosted service.
7. Personal Selling. While every employee will be responsible for selling the company and
brand, and most other A & P tools require a certain degree of personal selling, personal
selling will not be initially utilized as a primary advertising tool. Once Backdrop Depot has
fully utilized the lower level A&P tools to establish product and brand awareness, and a
more focused advertising strategy is needed at the distribution level, the company will then
consider higher cost-per-contact A&P tools such as personal selling.
5.6 Sales Strategy
Backdrop Depot will utilize the company’s sales strategy to achieve the company’s sales
objectives. We will leverage our skills, abilities, and resources, particularly information
resources, to conduct sales activities designed to support the Customer Intimate and
Operationally Excellent strategy archetypes. All
sales activities will be aimed towards achieving
the following three objectives:
1. Build Customer Loyalty. Backdrop Depot will
build customer loyalty by leveraging the
company’s customer service and support
activities, multiple communication lines, and
customer feedback to understand customers’
needs and deliver on the company’s promise.
16
BackdropDepot.com
2. Improve Closing Ratios. Backdrop Depot will improve closing ratios, leading customers from
brand awareness to a purchase decision, by utilizing market research, customer relationship
management, experience, and other information gathering activities to better understand
customers’ hot buttons and purchasing behaviors.
3. Outsell Competitors. Backdrop Depot will outsell competitors by providing our customers
with the best purchasing experience, best product solutions, and focusing on their needs
rather than the sale itself.
While Backdrop Depot’s sales operations are relatively automated, the company will instill a
sense of individual responsibility for the company’s sales and marketing in each and every
employee. Initially, all employees, led by both a sales and a marketing manager, will be
included in all sales and marketing activities. Backdrop Depot will hire additional sales and
marketing employees in the third year of operation with the introduction of additional products,
distribution channels, and marketing activities.
5.7 Sales Projections
First Year
Backdrop Depot’s first year sales will be derived by selling products via three distribution
channels; the company’s eBay store, Amazon.com, and Backdropdepot.com.
TOTAL FIRST YEAR UNIT SALES: 947
TOTAL FIRST YEAR DOLLAR SALES: $307,394
1. Sales on eBay . Sales generated from eBay are forecasted based upon the Yancy’s 2010
sales levels, a 10.6% average annual growth rate, and an average unit price of $324.50.2
2. Sales on Amazon.com. Amazon’s first quarter sales volume was reported at $4.76 to $4.96
billion, 142 to 150% of eBay’s sales, and has an estimated 30% growth advantage over
eBay.24 25 Sales forecasts for this distribution channel are based on the assumption that
Backdrop Depot can expect similar performance in comparison to our eBay sales.
3. Sales on Backdropdepot.com. Backdropdepot.com will receive approximately 90,500
website visits each month, or 1,086,000 per year, based upon Backdrop Depot’s use of
keywords and SEO.26 Sales from these visits are estimated using the internet advertising
industry’s average response rate of .3% 18 an estimated closing ratio of 33%.1 2
Years Two to Five
Backdrop Depot’s second year sales will be derived from the year-round operation of the first
year’s revenue generating activities and are projected to grow by the e-commerce industry’s
forecasted annual growth rate of 10%.6
24
Wingo, Scot, E-Commerce Battle: Amazon and eBay on Deck, Seeking Alpha, April 22, 2009.
http://seekingalpha.com, Retrieved April 26, 2011.
25
Wingo, Scot, Amazon Q1: Analysis and Comparison to eBay, Seeking Alpha, April 25, 2010.
http://seekingalpha.com, Retrieved April 26, 2011.
26
Google, Google Adwords Traffic Estimator, Keywords: Backdrops, Stage Curtains, http://www.google.com,
Retrieved March 23, 2011.
17
BackdropDepot.com
Backdrop Depot will begin additional initiatives to increase efficiency and expand the
company’s product offerings, markets, distribution outlets, and marketing activities, and
expects to generate additional sales from these activities starting in the third year of operation.
Based upon these considerations, Backdrop Depot estimates sales for year three through five
will increase by an additional 10%.
TOTAL UNIT SALES:
TOTAL $ SALES:
YEAR 2
YEAR 3
YEAR 4
YEAR 5
1944 Units
2333 Units
2799 Units
3359 Units
$630,776.08
$756,931.3
$908,317.56
$1,089,981.07
(Refer to Appendix A, Financial Exhibits 1 and 7 for Sales Forecasts and Sensitivity Analysis)
6. OPERATING PLAN
6.1 Operating Strategy
Backdrop Depot’s will employ a focused-cost leader operating strategy. To achieve this end all
operating activities will be designed towards delivering on our “Resonating Focus” value
proposition, maintaining our positioning strategy, and consistently focusing on five
fundamental characteristics:





Price
Quality
Convenience of Buying
Service
Efficient Value Chain Management
6.2 Scope of Operations
Backdrop Depot’s will utilize efficient private label manufacturing and a completely web-based
retail operation to execute the company’s operating strategy. We will manage all operational
activities from Backdrop Depot headquarters, including; general management, sales, marketing,
ordering, materials storage, manufacturing, quality assurance, and shipping activities.
7. DEVELOPMENT PLAN
7.1 Manufacturing Operations
Backdrop Depot’s manufacturing operations will follow a two-tiered development plan based
on production capacity:
1. Contract Manufacturing. Backdrop Depot will initially employ contract manufacturing for all
backdrop production. We will utilize contract seamstresses for a number of reasons,
including: allowing our management team to focus on sales and marketing to achieve salesled growth, the relative simplicity in product design and stitching requirements, the over
abundance of qualified craftspeople in our local market, and significant labor cost savings
for early production levels. Seamstresses will undergo a brief training program and will be
compensated on a piece basis ($5-10 per panel) depending upon experience, quality, and
18
BackdropDepot.com
proximity to Backdrop Depot headquarters. Materials will be delivered each week, orders
called in daily, and quality assurance will be performed by members of our management
team. Once production levels near 2,400 units (five contractors producing an average of ten
units per week) in the third year of operations, Backdrop Depot will hire an additional five
contractors to increase capacity to 4,800 units. We plan to begin internal manufacturing
operations for our more standard products after our fifth year of operation. Contract
manufacturing will continue to be used for custom orders.
2. Internal Manufacturing. Backdrop Depot will begin internal manufacturing operations
sometime after the fifth year of operation. Utilizing our existing structure, we will develop a
manufacturing center that will facilitate the storage, cutting, stitching, cleaning, pressing,
packaging, and distribution of all standard backdrop offerings. The facility will feature
multiple storage areas, two efficiently designed full-process stations, an open loading bay,
and will be conveniently attached to Backdrop Depot’s retail/corporate operations. Based
upon a 50% increase in efficiency using standardization, the latest production equipment,
and employing eight to ten employees, maximum production capacity for this facility is
approximately 10,000 units per year. When combined with the custom order capacity
produced by our contract manufacturers, Backdrop Depot’s maximum production capacity
utilizing current operating plans will be approximately 14,800 units per year ($4.8 million in
orders at our assumed average per unit price).
(Refer to Appendix B, Exhibits 11 and 12 for Facility Photos and Development Stages 1 and 2)
7.2 Retail Operations
Backdrop Depot’s retail operation will be a “pure play” operation, dealing directly with
customers via Backdropdepot.com and other e-commerce channels to sell backdrops and
accessories. Additional products and distribution channels will be considered in year three. Our
website design, hosting, and other customer service features will be handled by a combination
of outside service providers and hosted services. We will initially use a content management
system to control the information on Backdropdepot.com, transitioning to a newly designed
website and in-house web master when web operations are expanded in year three.
(Refer to Appendix B, Exhibit 18 for Development Timeline)
8. FINANCIAL PLAN
Backdrop Depot’s financial plan is based on a capacity of 2,400 units in years one and two, and
4,800 units in years three through five. All revenue generated will be from the sale of private
label stage curtains, backdrops, and accessories via web-based retail channels, namely:
Backdropdepot.com, eBay.com, and Amazon.com. Backdrop Depot expects the break-even
point of 402 units, or $130,369.88, to be attained during the first year of expanded operations.
Backdrop Depot’s primary goal during years one through three is to generate significant
customer awareness in our target market; schools, churches, small entertainment venues, and
entertainers. We will transition to additional growth strategies beginning in year three. Sales
generated in years one and two are estimated at approximately $307,395 and $630,776.08,
with 10% annual growth.
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BackdropDepot.com
Backdrop Depot’s growth strategies beginning in year three include increased capacity,
increased marketing activities, additional products and markets, and an upgraded website.
Based on these activities we expect a 10% increase in annual growth rates, bringing sales for
years two through five to $756,931.30, $908,317.56, and $1,089,981.07, respectively.
Backdrop Depot’s private label manufacturing and web-based retail operations will allow the
maintenance of relatively low operating costs and high margins. As part of our “lean and mean”
operations, we will carry little to no inventory, with products being made as they are ordered.
Although Backdrop Depot is expected to generate sufficient revenue to maintain daily
operations, the owners of the company will invest a combined total of $96,500 in property,
work vehicles, and operating capital to fund website development and other growth related
activities throughout the first year of operation. While Backdrop Depot’s cash flow statement
and balance sheet suggest an excess of cash reserves held by the company, cash reserves in
excess of the amount required for the company’s growth initiatives and contingency reserves
will be invested in a long-term investment vehicle. No dividends are expected to be paid until
after the facility development and growth initiatives expected to occur sometime after year five.
(Refer to Appendix A, Financial Exhibits 1 through 7 for all financial information)
20
BackdropDepot.com
APPENDIX A: FINANCIAL EXHIBITS
Exhibit 1: Financial Assumptions
EMPLOYEE AND OPERATING EXPENSES
OPERATING EXPENSES
EXPENSES:
$ PER YEAR
Insurance
$
2,500.00
Maintenance & Repairs
$
720.00
Office Supplies & Equip.
$
1,143.12
Web Hosting
$
2,400.00
Misc. Taxes, Titles, Etc.
$
96.00
Gas
$
1,500.00
Electric
$
2,640.00
Cell Phones
$
6,240.00
Charter (internet & phone)
$
2,400.00
Tax Preparation
$
195.00
TOTAL
$
19,834.12
CAPITAL ASSETS AND DEPRECIATION
21
BackdropDepot.com
Exhibit 1: Financial Assumptions (Contd.)
MARGIN AND BREAKEVEN ANALYSIS
22
BackdropDepot.com
Exhibit 1: Financial Assumptions (Contd.)
23
BackdropDepot.com
Exhibit 2: Pro Forma Income Statement (Year 1)
24
BackdropDepot.com
Exhibit 3: Pro Forma Cash Flow Statement (Year 1)
25
BackdropDepot.com
Exhibit 4: Pro Forma Income Statement (Years 2 to 5)
26
BackdropDepot.com
Exhibit 5: Pro Forma Cash Flow Statement (Years 2 to 5)
27
BackdropDepot.com
Exhibit 6: Pro Forma Balance Sheet (5 Years)
28
BackdropDepot.com
Exhibit 7: Sensitivity Analysis (5 Years)
29
BackdropDepot.com
APPENDIX B: EXHIBITS
Exhibit 8: Development Timeline
Year 1
Years 2 to 5
2012
Tasks
Q1
Q2
Q3
2013
Q4
Q1
Q2
Q3
2014
Q4
Q1
Q2
Q3
2015
Q4
Q1
Q2
Q3
Q4
Additional Distribution Outlets
New Product Development
Facility Development Stage 2
Products/Markets Expanded
Website Upgrade/Webmaster Hired
Increase Sales & Marketing Activities
Hire/Train Manufacturing Staff
Efficiency Improvement/Management
Implementation
Implementation/Continuous
Milestone
30
BackdropDepot.com
Exhibit 9: Backdrop Photos
Exhibit 10: Backdrop Pricing Tiers
31
BackdropDepot.com
Exhibit 11: Facility Photos
Exhibit 12: Facility Development Stages One and Two
32
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Exhibit 13: Team Resumes
Rhea Leanne Yancy
701 Whitthorne Street B
Shelbyville, TN
(931) 619-0467
Performance Awards and Achievements





Recorded and released multiple full –length country music albums.
Produced and starred in country music video aired on Great American Country (GAC)
Produced and starred in multiple country music performance videos.
Received Independent Country Music Artist of the Year award in 2000.
Contributing artist on numerous recording projects.
Professional Training and Licenses
Auto/Home/Life Insurance Training
1997
Education
Kenai Community College, Kenai, Alaska
 Associate of Arts in Business Management
1996
G.P.A.: 3.8/4.0
Professional Experience
Manufacturing/Sales, Self-employed
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Directly responsible for the operation of a home- based stage curtain and backdrop manufacturing and sales
operation.
Sole manager of all eBay sales, service, and customer satisfaction activities.
Direct all design, manufacturing, and delivery of stage curtains and backdrops.
Independent Musician
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1976- 2008
Vocalist, pianist, guitarist, drummer, and song writer.
Performed in small and large venues with local, national, and international exposure.
Directly involved in all stage processes; design, assembly, performance, and disassembly.
Independently and jointly produced and recorded in studio settings.
Sales Manager, Quality Outdoor Products
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2008-Present
2006-2008
Directly responsible for daily operation of outdoor building and products company.
Managed all operational functions; staff supervision, scheduling, accounts payable, accounts receivable,
marketing, and inventory control.
Solely managed the sales department; setting goals, training staff, sales, and goal tracking.
Entertainer, Caribbean Cruise Lines
2000-2006
 Personally managed all bookings, fees, and benefits.
 Performed multiple showcases each day on the cruise ship.
 Directly responsible for all band routines and functions, including, managing equipment, stage set-up, rehearsal
scheduling, and performances.
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Robert L. Reum
(406) 552-3809
www.linkedin.com/in/robertlreum
robert.reum@umontana.edu
www.facebook.com/RobertReum
EDUCATION
The University of Montana, School of Business Administration, Missoula, MT
B.S. in Management - May 2010
Graduated with High Honors (Summa Cum Laude)
B.S. in International Business, Minor: Chinese – Expected May 2011
G.P.A.: 3.92/4.0
Recognition for Academic Excellence:
 2011 Mortar Board Outstanding Senior in International Business
 Member of Phi Kappa Phi and Beta Gamma Sigma National Honor Societies
 Recipient of multiple highly competitive academic scholarships totaling $23,400.00.
 Scored in 95th percentile or top 5% in the nation on business major field test.
 Earned UM School of Business Administration Students Taking an Active Role in Success (STARS) award for
academic and community leadership.
Additional Skills:
Intermediate Chinese Language Skills – Proficient 700+ Characters – Cross-cultural Management
Business Plan & Strategy Development – International Trade & Development – Sales & Marketing
Social Media Marketing – Public Speaking – Public Relations – Primary & Secondary Market Research
WORK EXPERIENCE (While attending school)
Auditor, Wingate by Wyndham of Missoula
September 2008-Present
 Directly responsible for the evening operation of a popular, 100 unit, nationally branded, high volume
hospitality franchise.
 Collect, record, and process customer and financial data for use in development of sales and marketing
strategies for $2 million unit of regional hospitality operation.
Project Manager (Volunteer), Montana World Affairs Council
October 2008-February 2011
 Lead student interns in the execution of state-wide, community-based youth outreach and education programs
such as the Montana Academic WorldQuest competition.
 Assist the MWAC Executive Director in the formulation and application of strategies to increase public
awareness and membership for non-profit international affairs organization.
Market Research Assistant, Montana World Trade Center
August 2009-December 2010
 Conduct market research in conjunction with industry experts and government agencies such as the Dept. of
Commerce, Dept. of Transportation, and other economic development agencies.
 Work directly with clients, such as a $5 million furniture manufacturing operation, in identifying new global
markets and developing competitive market penetration strategies.
RELEVANT PROFESSIONAL EXPERIENCE
Sales Manager, Nickel Auto Group
May 2005-June 2006
 Achieved 20 times increase in individual sales to earn 13 “Salesman of the Month” awards.
 Performed all training and operations functions for $1 million unit of regional operation.
General Manager, R Place Bar, Grill, & Casino
April 2002-March 2004
 Reduced expenses 40% by modernizing inventory management and ordering systems.
 Capitalized on State gaming regulations to expand casino operations by 87.5%.
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Robert L. Reum – Page 2
PRACTICAL EXPERIENCE
Social Media Marketing & Strategy Development Research
Fall 2010
 Independently launched research project examining practical use of social networking in marketing campaigns
and strategies. Various strategies will be applied and measured in four case studies serving both for-profit and
non-profit organizations from different industries; Montana Academy of Distinguished Entrepreneurs,
Montana World Affairs Council, Wingate by Wyndham, and Riverstone Residential. The results of the study will
be released in a written report and presentation, and will be used in the development of social marketing
strategies for each business.
Strategic Management Consulting Project: B/E Aerospace
Spring 2010
 Conducted team-based competitive analysis of aerospace and defense industries and identified competitive
position of company. Identified company’s competitive strategies and formulated strategic recommendations
supported by the data compiled during the analysis. Delivered a written and public presentation of findings
and recommendations.
Non-Profit/Philanthropy Project: The Sunshine Lady Foundation
Spring 2009
 Collaborated in a team-based project on behalf of Doris Buffet’s Sunshine Lady Foundation by developing the
organization’s Request For Proposals, evaluating the applications submitted, and, serving on the Executive
Committee, awarding the $10,000 grant in various amounts to the selected local non-profit organizations.
RECOGNITION AND AWARDS
John Ruffato Business Plan Competition, Best Undergraduate Business Plan
 Won First Place in undergraduate division and Fourth Place overall competing with 26 graduate and
undergraduate teams in a business plan competition judged by representatives from the top academic,
business, technology, and investment firms within the region.
2010
American Indian Business Leaders Business (AIBL) Plan Competition, First Place
2008
 Led a multi-cultural team of students to a First Place showing in Las Vegas, NV at the national AIBL Business
Plan Competition evaluated by representatives from Harvard University, Arizona State University, and Gonzaga
University.
American Indian Higher Education Consortium (AIHEC), National Champion (4)
2008
 Garnered National Championship for Salish Kootenai College competing in the national AIHEC Business Bowl
competition by leading winning Business Plan team and winning individual National Championship titles in the
Economics and Business Management competitions.
ADDITIONAL COMMUNITY AND ACADEMIC LEADERSHIP
The University of Montana, Academic Advisor, Professor Aide, & Tutor
2009-2010 Academic Year
American Indian Business Leaders (AIBL), Secretary, President
2006-2008 Academic Years
 First non-Native executive officer for student group specializing in business education and business
development in tribal communities.
Salish Kootenai College, Tutor & Peer Mentor
2006-2008 Academic Years
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Gretchen L. Reum
gretchen.reum@yahoo.com
(406) 552-3808
EDUCATION
The University of Phoenix, School of Business
 B.S. in Management & Marketing – Expected May 2012
2010-Present
G.P.A.: 3.8/4.0
Salish Kootenai College, School of Business Administration, Pablo, MT
 Major: Business Management
2007
G.P.A.: 3.5/4.0
Connole-Morton Real Estate School, Missoula, MT
 Certificate of Completion
2007
Additional Skills:
Fluent English –Proficient in office productivity tools, including; Microsoft PowerPoint and Excel
Proficient in AMSI, Craigslist, Tracker, and POS Systems –Dispute Resolution – Public Relations
Sales - Marketing Strategy Development – Social Marketing – Interpersonal Communication
PROFESSIONAL TRAINING AND LICENSES
Property Management Training
Riverstone Residential training programs, Fair Housing Education, Tax Credit Certified
2009-Present
Real Estate Professional Training
Code of Ethics, RESPA, Create 21, NMAR Realtor Association
2007
Montana State Licensed Realtor
2007
WORK EXPERIENCE
Assistant Property Manager, Riverstone Residential
June 2009-Present
 Directly responsible for the operation of a 96 unit tax credit property, including; leasing, rent collection,
resident services, accounts payable, certification compliance, and vendor relationship management.
 Manage to overall operation of the office, leasing staff, and maintenance staff.
 Coordinate, design, and apply marketing strategies; Craigslist, newspaper ads, flyers, B2B cross-marketing
initiatives, resident retention projects, special events, and resident referral incentives.
Sales Manager, Aaron’s Sales & Lease
December 2008-June 2009
 Successfully managed the sales office and sales associates.
 Independently conducted all sales management functions for high volume furniture store, including; sales
strategy, sales training, created presentations, tracking sales reports, inventory management, reporting, and
customer relationship management.
 Assisted in the development of multiple marketing strategies, including; flyers, B2B cross-marketing initiatives,
special promotional events, marketing metrics, and reporting, trained staff, conducted monthly safety meetings.
Customer Service Representative, LC Staffing
August 2008- December 2008
 Temporary customer service specialist and office manager for nationally branded insurance company
specializing in home, auto, and life insurance.
 Worked directly with customers to identify insurance needs, formulate new policy solutions, customer
relationship management, and dispute resolution.
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Gretchen L. Reum – PAGE 2
WORK EXPERIENCE
Realtor Sales Associate, Century 21 Big Sky
December 2007-August 2008
 Licensed Realtor Sales Associate in the state of Montana for a nationally branded real estate company
specializing in bare land and residential property sales.
 Developed an independent marketing campaign, including; power point presentations, open house events,
extensive network marketing , and developing strong professional relationships.
 Tracked market fluctuation and areas of growth and created report spreadsheets.
Ocean Blue Distributor, Ocean Blue of Boise
July 2006-August 2008
 Award-winning independent distributor of home cleaning systems , responsible for all direct sales initiatives,
training of all new regional distributors, and regional sales management.
 Formulated all marketing strategies, including; development of a marketing plan, newspaper ads, Craigslist,
classified ads, network marketing, demonstrations, trade shows, and direct sales.
 Developed a training manual for new hires, including; power point presentations, webinars, capturing a large
audience while delivering an informative and exciting training course.
Collection Manager & Assistant Finance Manager, Montana Auto Finance (MAF)
May 2001-June 2006
 Managed the entire collection department and coordinated with the Finance Department on key functions,
such as; loan approval process, account management, and human resources.
 Created multiple marketing solutions including, newspaper ads, radio spots, magazine ads, classifieds,
commercial, and special events and promotions.
 Wrote training manual for new hires, trained and overshadowed probation periods, conducted training
sessions on all aspects of finance company.
Business Development Officer, E-Z Rent-to-Own (A MAF Company)
June 2005-June 2006
 Responsible for overseeing the launch of new retail sales division, including; initial vendor relationships,
inventory management, recruiting and training staff, and developing sales and marketing strategies.
 Collaboratively developed and deployed initial sales and marketing strategies to effectively reach the unique
target market of a rent-to-own furniture and electronics retail company.
SPECIAL INTERESTS AND PROJECTS
New Media Marketing Project
October 2010 - Present
 Cooperatively launched research project with local marketing firm examining the practical use of
social networking in marketing strategies at the local level. Various strategies will be identified, applied, and
measured to determine the practicability of this marketing medium in the local residential management
market. The results of the study will be released in a written report and will be used in the development of
commercial marketing guides, software applications, and a social media marketing solution for Wildflower and
Creekside Apartments, both Riverstone Residential companies.
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