RESPRO INC. BUSINESS PLAN

Your Number One Lifesaver!

Presented by: [Group 12]

Ang Jing Wen (U1221082C)

Chan Yong Rong (U1322665J)

Gautama Wicaksono (U1220104A)

Ho Chin Guan (U1320846H)

Ji Shuang (U1122786A)

Academic Year 2014/2015

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Table of Contents

1. Executive Summary ...................................................................................................................... 1

2. The Company ................................................................................................................................ 2

2.1 Our Vision .............................................................................................................................. 2

2.2 Our Corporate Mission ........................................................................................................... 2

2.3 Keys to Success ...................................................................................................................... 2

2.4 Scientific Advisory Committee .............................................................................................. 2

2.5 Current Corporate Structure ................................................................................................... 3

3. Market Analysis ............................................................................................................................ 4

3.1 Description.............................................................................................................................. 4

3.2 Target Market ......................................................................................................................... 4

3.3 Global Market Development .................................................................................................. 5

3.4 Barrier to Entry ....................................................................................................................... 5

4. The Technology ............................................................................................................................. 6

4.1 Technical Description ............................................................................................................. 6

4.2 Competitive Advantage .......................................................................................................... 6

4.3 Manufacturability ................................................................................................................... 6

5. Implementation & Growth Strategy ........................................................................................... 7

5.1 Product Development ............................................................................................................. 8

5.2 Legal Issues ............................................................................................................................ 8

5.3 Expansion ............................................................................................................................... 8

6. Financial Plan ................................................................................................................................ 9

6.1 Start-up Fund .......................................................................................................................... 9

6.2 Cost & Revenue Analysis ....................................................................................................... 9

6.3 Breakeven Analysis .............................................................................................................. 10

6.4 Investment Highlights ........................................................................................................... 10

References ............................................................................................................................................ 11

Appendix A .......................................................................................................................................... 12

Appendix B .......................................................................................................................................... 13

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1. Executive Summary

Respro Inc. is a Singapore based Start-up Company making lifesaving devices for government bodies

such as police coast guard and marine rescue team, and privately owned companies. Respro Inc. aims

to become the market leader in specializing lifesaving devices.

Respro Inc. has been researching on the devices and techniques to minimize the lifesaving time, and

also reduce the risks of savers themselves when saving drowning victims. The main motive is to

increase the chance to rescue drowning people and reduce fatality rate. Combining different research

processes, design concepts and techniques, Respro Inc. successfully developed its first batch of

lifesaving product, SOZO-01.

SOZO-01, which is named after the Greek word of ‘saving’ and ‘rescue’ and code ‘01’ indicating the

first batch of its product line, is a lifebuoy launcher that can send an ammunition (consists of a

lifebuoy, gas cylinder and capsule components) to a drowning victim, which will then be inflated to a

four-legged buoy once it touches the water. The launcher is designed in such a way that it is user

friendly, accurate, and able to be reloaded easily when an earlier rescue attempt is failed.

In the current market, Respro Inc.’s product is in the introductory stage where it is the first lifesaving

launcher that can send an ammunition, with inflatable ability, to the drowning victims. Our product is

best known for its innovative design and quality of materials used. With a purpose to provide a

durable and long term usage with unique selling proposition, the materials used are carefully chosen.

The current market on marine lifesaving devices mainly focuses on ring buoys. However, such

devices have met limitations during crisis, for instance, unable to reach target from afar and poor

accuracy. Accuracy of such device are easily comprised especially when users are panic. Besides that,

the throwing distance is very limited and such lifebuoy cannot save people that are more than 5m

away. Even for a certified lifeguard, it takes a couple of minutes before reaching the target from more

than 20 metres away. Such duration is critical to the survival of the victim.

SOZO-01 is able to tackle all the limitations above. Consequently, SOZO-01 is an innovative, unique

and competitive product in the current market which serve itself with a unique selling proposition.

With this advantages, Respro Inc. aims to gain a large market share from the market of marine

lifesaving devices, trumping competitor products such as a conventional lifebuoy. Once the target

market is achieved, Respro Inc. will expand to other South East Asian countries.

Respro Inc. is seeking an initial fund of S$500,000 which will enable it to conduct innovation

research and development in the materials and mechanism to be used for the lifesaving buoy launcher.

This will also fund the setup of the manufacturing facilities, research labs, offices and hiring of

workers. A breakeven is forecasted to be achieved within four years after launching in the Singapore

market. Should the target be not fulfilled, Respro Inc. will implement a feasible exit strategy. The

detailed information can be found in the appendix of this business plan.

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2. The Company

Respro Inc. strives to improvise and develop advance lifesaving devices which utilise multiple

cutting-edge technologies, boasting for its user-friendliness and making it affordable for its

consumers. Its advance lifebuoy launcher is made for relevant professionals and its middle-range

products such as the patented buoys will be available for the general public. Core activities will

involve the research and development of effective contact lifebuoys and technologically-assisted life

buoy launchers to improve the efficacy during rescue operation.

Respro Inc. management team comprises the founders who will hold important positions in the

company due to their competencies and experience in the various key areas:

• Chief Executive Officer : Ho Chin Guan

• Chief Technical Officer : Chan Yong Rong

• Chief Financial Officer : Gautama Wicaksono

• Chief Business Director : Ang Jing Wen

• Chief Operations Director : Ji Shuang

Our Vision

Saving Lives through Inimitable Innovation.

Our Corporate Mission

To be the market leader in developing lifesaving devices through cutting edge technology which

improve the efficiency of rescue operation.

Keys to Success

The keys to success are as follows:

• Patented lifesaving technology

• S$250,000 seed funding obtained from SPRING Singapore, $50,000 cash sponsorship from ACE

and $65,000 from Ideas, Inc.

• Early revenue stream from niche technology

• Global collaboration with eminent technology partners

• Global marketing strategies

• Revenue from licensing technology to other industries

• Eminent scientific advisory committee

• Detailed exit strategy

Scientific Advisory Committee

Respro Inc. has bridged with a panel of research experts from Nanyang Technological University

(NTU), each having specific expertise in the company’s research and development activities:

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Board of Directors

Chief Executive Officer

Technical Department

Research and Development

Product Manufacturing

Financial Department

Financing

Accounting and Internal Audit

Business Department

Sales and Marketing

Corporate Relations

Operations Department

Human Resources

Logistics

Scientific Advisory Committee

• Associate Professor Zhao Yang, Nanyang Technological University, Singapore. Expert in

development of mechanical devices, physics and trajectories of projectile.

• Associate Professor Oh Joo Tien, Nanyang Technological University, Singapore. Expert

in electronic packaging and materials fabrication.

• Associate Professor Alfred Tok Iing Yoong, Nanyang Technological University,

Singapore. Expert in defence application, industrial analysis and business development.

Current Corporate Structure

Respro Inc. is operating under a functional organization system assisted by scientific advisors from

NTU. Four main functional departments are under the supervision of the CEO. In turn, the CEO

report to the Board of Directors.

The technical department covers all the technical aspects of the company’s products, i.e. the

manufacturing processes and all research and development projects. The financial department covers

financing matters as well as doing the companywide accounting and internal audit. The business

department covers all the product sales and marketing matters and handling the corporate relations.

The operations department supports the other three departments in terms of human resources and

logistics matters.

Figure 1: Respro Inc. Organization Structure

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Target Market Segmentation

Primary Secondary

30% 70%

3. Market Analysis

Description

Drowning is the 3rd leading cause of unintentional injury death worldwide, accounting for 7% of all

injury related deaths. According to World Health Organization, an estimated number of 359,000

victims worldwide are drowned every year [1]. Thus, Respro Inc. sought to rectify and target such

huge portion of the market related to drowning, in hope if minimising such crisis.

Figure 2: Distribution of global injury mortality by cause [2]

The most common marine lifesaving product currently available in the market is ring buoy, which

accounts for about 50% of marine lifesaving products. The other 50% consists of torpedo buoy,

rescue can, and rescue tube which are bulk in size, such buoys affects the mobility of the rescuer. In

case the victim is too far from the shoreline, the thrown lifebuoy may not reach the victim.

Furthermore, a study has found that the average response time of a lifeguard is one minute and

fourteen seconds, which can be too long when a swimmer is in trouble. Therefore, to rectify such

challenges in the current market, Respro Inc. sought to improve the efficiency and effectiveness of

current life saving device in tackling slow response time, long working distance.

Target Market

Respro Inc. has divided its target market into two segment: primary and secondary market. The

primary market segment consists of the government bodies such as personnel from the police coast

guard and marine rescue team. The secondary market segment includes privately owned companies,

commercial fishermen as well as the general public.

Figure 3: Pie chat of target market segmentation

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The pie chart above shows the volume of target market that Respro Inc. intends to put its emphasis on,

after taking into accounts the potential revenue and market capacity that can be obtained from these

individual market segment. Intend so employ 70% of its market advertising effort on the primary

sector due to its promising returns.

As SOZO-01 is classified as a replica gun, it is advised for our product to cater to the primary market

first for safety and security concerns. Nevertheless, Respro Inc. is looking into possibilities to expand

the market to privately-owned companies which may benefit from our product, such as commercial

fishermen by modifying the product to cater to broader users for minimum safety issue as the business

develops. For promotion strategy, Respro Inc. owns a special marketing representative team which

will engage the respective government bodies and other potential customers.

Global Market Development

Respro Inc. aims to establish a strong presence in the Singapore market within 2 years. Such short

period is possible in view of the considerably small market scale in Singapore. After securing a large

share of market in Singapore, we aim to expand to other South East Asian countries, mainly

Indonesia, Malaysia, Philippines, Thailand, and Vietnam. The abovementioned countries have vast

shorelines and less competitive innovation, which offers an opportunistic market for our product. The

continuation in development after South East Asia will be Australia and other Asian countries which

have primary shorelines for leisure and operation. Future global developments are not limited to local

regions only, it is possible to develop our product to a global recognition.

Barrier to Entry

As a new market entrant, Respro Inc. understands several barriers of entry listed below:

Non-cost related barriers:

o Product/brand recognition

o Consumer perspective

o Manufacturing technology

o Patents and proprietary knowledge

Cost related barriers:

o High capital costs

o High production costs

The cost related barriers will be tackled in section 6, under Financial Plan. The non-cost related

barriers will be tackled separately in section 4 under Technology and section 5; Implementation &

Growth.

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4. The Technology

Technical Description

Respro Inc. product: SOZO-01 aims to rescue victim from up to 70meters away. The capsule

containing a CO2 cylinder and is wrapped with a thin sheet deflated lifesaving buoy. Once the capsule

touches water, the CO2 cylinder will pump the CO2 gas into lifebuoy. The figure below shows the

design of Respro Inc. lifesaving product: SOZO-01.

Figure 4: Digital schematic of lifesaving buoy launcher, SOZO-01

The lifebuoy is designed as a four-legged structure because it has larger coverage and victims can

easily grab onto it, this will compensate the accuracy of normal ring buoy. A rope is contained at the

rear inner part of capsule, and is attached on capsule and launcher for easy retrieving or to pull the

victim back to safety. A target scope is to increase the vision and accuracy of user. A more detailed

design is illustrated in Appendix A.

Competitive Advantage

Current lifesaving products such as ring buoy and torpedo buoy have several notable weaknesses,

which are the bulky size of the buoy itself, the time required to throw the buoy to the victim, and the

effective range the buoy can cover. These weaknesses limit the effectiveness of life rescuing process,

where immediate action is needed. By utilizing our product, such limitations can be eliminated as

explained below:

The buoy in SOZO-01 is compressed and inserted into a capsule, which will dissolve in water

and inflate the buoy after contact with water. This greatly reduces the size of the buoy and

hence increases the mobility of the rescuer.

By using launched capsule, the time needed for the buoy to reach the victim becomes shorter,

compared to throwing a conventional ring buoy. Moreover, this also greatly increases the

accuracy and the effective range that can be covered by the launcher.

Manufacturability

Respro Inc. will be considering outsourcing the launcher to specialized companies such as ST

Kinetics for the first few years in its start-up due to the complexity in the mechanics of the device.

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Rotation molding of buoy

Complete deflation of buoy

Connect and wrap deflated buoy

around a customised CO2

cylinder

Insert top and bottom capsule

respectively to each end of the cylinder

Tightening of the ammunition

Complete product of buoy ammunition

The conceptual design of launcher is quite similar to military launcher; however this product will be

modified to become a lighter and cheaper launcher. The main component is the lifebuoy ammunition

which Respro Inc. will be self-producing. The ammunition will be fabricated by rotational molding,

and followed by stabilizers added into the lifebuoy. Every component will be assembled; and each

components of the ammunition can be produced in batch with very cheap raw materials acquisition

and production cost.

Figure 5: Rotational molding Figure 6: Fabrication process of buoy ammunition

5. Implementation & Growth Strategy

To illustrate Respro Inc. business model, a PEST analysis was adopted. This analysis focus on four

key factors in analysing the external environment for Respro Inc. organization:

Figure 7: PEST analysis of Respro Inc.

Political

Strict government policies on prohibited device.

Tax policy and trade controls.

Environmental and consumer-protection legislation.

Unlikely changes in the political environment for the next 5 years.

Economic

Testing stage of business cycle.

No major concern with unemployment state since targeting government sector.

Moderate labor cost for production line but high for research line.

Socio-cultural

High population growth and age profile may link to safety concerns.

Raising awareness of personal safety issues.

Little impact on social issues and lifestyle due to the purpose of such technology.

Technological

Currently considered to be in the newest breed in its product line.

High competitive advantage with emerging technologies.

Focus on research and development activity.

High impact of technology transfer.

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Out of these four factors, Respro Inc. will be putting its major effort in the government market sector

for the first few years of its development stage due to the political issues that could greatly influence

the selling proposition and market penetration of its product. Thus, it is important to work closely with

the government sector and consistently match its product regulation with the most recent policies

stated and adjust to any changes in the legislation issue.

Product Development

The initial development of Respro Inc.’s product line is initiated with proofing of its conceptualised

design. During this stage, Respro Inc. will conduct a series of field tests to ensure that our product

satisfies the performance objectives. After that, several limited prototypes will be distributed to a

selected group of coast guards and marine officers. This is done to ensure the user-friendliness,

feasibility and functionality of our product under real-time application. Respro Inc. also implements a

feedback mechanism to customers. Respro Inc. will periodically seek feedbacks from our customers,

to keep the improvements of our product. After completing the series of tests mentioned above,

Respro Inc. will patents her technological product SOZO-01, within Singapore and internationally.

This patent will allow Respro Inc. to have monopoly rights for a maximum of 20 years (subject to

renewals) to use this invention and prevent others from using, copying or making the invention

without the company’s consent in the country in which the patent is obtained. Therefore, the

possibility of another company crafting similar product is reduced. Subsequently, Respro Inc. will be

able to gain higher profit margins and recoup the monetary values of the resources spent on

researching and testing out the product.

Legal Issues

Particularly in Singapore, the government has not only banned the possession of many things, many

goods are also prohibited from being imported and exported. Weapons such as knives, explosive item

and any kind of guns including toy guns, which resembled as real guns are prohibited. Any replica

firearms that resemble real firearms that can be used to frighten, intimidate, kill or injure human being

or animals are strictly prohibited. Line launcher is classified as a replica firearms in Singapore, in

which the force of projectile can cause bodily harm, be it intentionally or unintentionally. Since only

those with licenses or permits can hold firearms, the primary users are usually the government bodies.

Respro Inc. will work closely with the Ministry of Home Affairs in regulating the product line of such

device, making sure only suitable safety level of such product will be marketed to the general public

and those with more sophisticated and safety-concerning implications will be accustomed to only the

law-enforcing or safety profession related personnel.

Expansion

After making improvements from local feedbacks on the product and securing a large share of

Singapore market, Respro Inc. is planning to expand to South East Asia. Some countries such as

Indonesia and Philippines have a vast shoreline, which means a large market for Respro Inc. product

line to grow. Respro Inc. plans to send a marketing team to approach the official government bodies

in each respective countries to introduce its product. Respro Inc. will prepare a representative team for

each countries to tackle the possible legal issues (such as prohibition of replica guns). After the legal

issues are settled, Respro Inc. will assemble a regional headquarters to be in-charge for all operational

activities in each respective country.

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6. Financial Plan

Start-up Fund

In order to secure the Technology Enterprise Commercialisation Scheme (TECS) grant offered by

SPRING Singapore to develop a new breed of innovative rescue technology. Respro Inc. will be filing

a Proof-Of-Concept grant proposal. This POC grant was recommended as Respro Inc.’s product is

still at the conceptualisation stage, and the technical or scientic viability still needs to be proven. Upon

successful application for the project grant, Respro Inc. may be offered up to 100% of qualifying costs

for each project supported or subject to a maximum of S$250,000. This grant is important for Respro

Inc. to validate the functionality and feasibility of their conceptualised product through more rigorous

and well-equipped product tests. A procedural process steps for grant application is illustrated in

Appendix C. Respro Inc. will demonstrate entrepreneurial commitment to continue their technology

commercialisation work upon successful completion of the project. Besides getting sponsorship from

SPRING Singapore, Respro Inc. will try it upmost effort to secure grants from other government

sector, mainly; ACE Start-ups Grant and ideas Inc. Business Challenge, manipulating a similar proof-

of-concept grant proposal.

Cost & Revenue Analysis

Appendix A shows the detailed breakdown of the cost and revenue forecast of the business plan. From

year 3 onwards, the sales forecast is expected to increase significantly because we forecasted a

success in the expansion of our market globally. Furthermore, the manufacturing cost will be reduced

from S$100 to S$80 per unit due to the continuous improvement in our manufacturing process.

Table 1: Different sources of funds and amount

Source Amount Percentage

Sponsorship from SPRING S$250,000 50%

Sponsorship from ACE S$50,000 10%

Sponsorship from ideas.inc S$65,000 13%

Term Loans S$135,000 27%

Total S$500,000 100%

The use of funds is elaborated below:

Table 2: Breakdown of the fund usage

Category Amount Percentage

Sales & Marketing S$75,000 15%

Capital Expenditures S$200,000 40%

Research and Development S$100,000 20%

G & A Expenses S$75,000 15%

Others S$50,000 10%

Total S$500,000 100%

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Breakeven Analysis

The breakeven point is the lower limit of profit when determining margins. At this point, there is no

profit made and no losses incurred. For our company to reach the breakeven point, the total sales or

revenue has to be equal to the total expenses. All of the expenses from research and development,

capital expenditures, sales and marketing and other expenses is expected to breakeven in the 4th year

of market launch, after sales of unit 7,500.

Investment Highlights

Our business will breakeven after 4 years of market launch and receive a return on investment of 66%

over a five-year period. Our business plan is of outstanding investment potential due to:

High Return – Due to the unique patented technology, the Gross Margin for the product is as

high as 80%.

Quality Management and Assurance – Respro Inc. is certified with ISO 9001, ISO 14001

and ISO 9004. This ensures that our products are safe, reliable, environmental friendly and of

good quality. These strategic tools have helped us to reduce costs by minimising waste and

errors, and hence increasing our productivity, effectiveness and efficiency. In particular, ISO

9001:2008 helps to ensure that our customers get consistent, good quality products and

services, which in turn brings many mutual business benefits.

Government Support – Secure grants from Spring Singapore, ACE and Ideas.Inc providing

a total amount of S$365,000.

Society Benefit – The vision of this project is to save lives of people who are drown in water

by fast rescue. Investment in our business plan brings both outstanding potential returns and

minimise any coast that could be incurred.

Research and Development – Extensive research and development are carried out to

constantly improve the products.

Clear Exit Strategy – If the sales of our products do not meet our forecasted sales, Respro

Inc. will consider selling its inventories to other companies. The next practical action would

be to sell its patent first to at least be able to cover all the capital expenses. The last resort will

be to merge with other companies. Order of actions performed will depend on the

economic and market situation of that year.

Figure 8: Timeline and exit strategy of Respro Inc.

2014: Initial product

development

• Unsuccessful prototype development

2016: Product launching (SG

market)

• Poor market adoption

• Does not meet forecasted sales

2018: Market expansion (SEA

region)

• Poor market penetration

• Does not meet forecasted sales

Sell inventories to other companies

Sell product patents

Merge with other companies

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References

[1] International Life Saving Federation. (2007, Sep.). World Drowning Report, 2007 Edition.

[Online]. Available: http://www.ilsf.org/sites/ilsf.org/files/filefield/world-drowning-report-

final-sept-27-2007.pdf

[2] World Health Organization. (2014, April.). WHO Factsheet on Drowning. [Online].

Available: http://www.who.int/mediacentre/factsheets/fs347/en/

[3] Team FME. (2013). PEST Analysis Strategy. [Online]. Available: www.free-management-

ebooks.com

[4] Spring Singapore. (2014, Oct). Technology Enterprise Commercialisation Scheme. [Online].

Available: http://www.spring.gov.sg/Entrepreneurship/FS/FS/TECS/Pages/technology-

enterprise-commercialisation-scheme.aspx

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Figure 9: Design of Capsule

Figure 10: Design of Lifebuoy

Figure 11: Design of rope and reel

Figure 12: Overall design and components

Appendix A

Technical Description & Functionality

Respro Inc. also put in many efforts in materials design. SOZO consists of six main components,

namely capsule, lifebuoy, rope, launcher inner part, launcher outer part, and butt pad. The capsule is

designed to be made of PVC, lifebuoy with EVA and rope with nylon. For launcher part, inner part is

made of carbon steel for its high stiffness, toughness and strength, outer part is ABS for its light

weight and resistance to bad weather, while butt pad is made of VLD, a type of foam to reduce recoil.

Material selections are shown in Figure 5 below.

Respro Inc. chooses these materials for a reason, to make it cost effective and light weight for easy

handling. Only carbon steel is chosen for its high strength and stiffness to withstand the pressure build

up in the inner part of launcher. The rest of materials are designed to be in light weight and at low

cost. However, EVA, ABS, PVC and PA are polymer, the base material is not the best choice for any

of the functions of SOZO and these materials are prone to degradation. Therefore, additive must be

added for these materials to function well.

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Appendix B

Financial Projections

Table 3: Detailed breakdown of cost and revenue

Year 0 1 2 3 4 5

Sales Quantity

500 1,000 2,000 3,000 4,200

Total Revenue

250,000 500,000 1,000,000 1,500,000 2,100,000

Cost of Goods Sold

(50,000) (100,000) (160,000) (240,000) 336,000

Gross Margin

200,000 400,000 840,000 1,260,000 1,764,000

Staff Expenses

(75,000) (150,000) (200,000) (250,000) (325,000)

Advertising & Sales

Promotion (75,000) (100,000) (200,000) (300,000) (350,000)

Other Fixed Costs

(50,000) (50,000) (50,000) (50,000) (50,000)

Total Expenses

(200,000) (300,000) (450,000) (600,000) (725,000)

Net Income

0 100,000 390,000 660,000 1,039,000

Income Tax

0 20,000 78,000 132,000 207,800

Cash Flow (500,000) 0 80,000 312,000 528,000 831,200