*Changes in red
Opportunity:
· Since the creation of the microwave,
we have become reliant on its ability to warm foods extremely quickly,
essentially removing the need for toasters or ovens in many situations. The
issue that I have noticed is the fact that food from a microwave might be hot,
but it is usually too hot or doesn’t taste like it is supposed to. Anyone who
regularly uses microwaves and is not satisfied with the food that comes out
needs a solution.
· To my knowledge, this opportunity has
existed since people started using microwaves, assuming that they have only
gotten better over the years and not declined in overall quality.
·
This is a very wide market. I do not
think it is an unfair assumption to say that all or most microwaves perform in
a similar manner across the world. Therefore, this market has the potential to
span the entire world and across all demographics, since everyone either has a
microwave or needs another heating solution.
·
People currently just use what is
available to them (ie. microwave) but many people I have talked to are not
satisfied with this solution but do not know of another. I think that many
other people would feel the same way.
·
Depending on initial market demand
after release, this could potentially be an opportunity in which a new solution
is a staple in homes all across the world.
·
This window will remain open until one
of two things happens: either microwaves are innovated to correct this problem,
or another solution is presented and succeeds in the market.
Innovation:
Product
· The product that I am offering is
essentially a fully mobile heating solution. It would act more like a mobile
oven than a microwave as it would heat food up with direct heat rather than
stimulating the water molecules in the food. The product itself is would just
be the heating system, but it would only be useful attached to a container or
mug. For this reason, the other half of my product would be containers and mugs
that this system could be used with.
· The heating system would be the
easiest part of the product to get. There are plenty of
heating elements on the market so it would not be hard to source those from
another company. It would be powered by batteries and have a heating pad
if it were not the ready-to-use, integrated containers or mugs. The integrated
containers would be one piece and very easy to use. The most difficult part of
creating this product would be finding or creating a synthetic plastic that
could withstand high temperatures without warping or melting.
Profitability
· I would sell the integrated
containers and mugs, stand-alone heating systems to be attached to any usable
container, and the containers themselves which could withstand the heat.
· I would target a 30-40% profit margin
on this package of products considering the interest on venture capital raised
so I would initially need to make a gross margin of around 60% before operating
expenses.
· Assumed Costs:
o
Heating
system - $4 per unit
o
Containers
- $2 per unit
· Sale Price:
o
Heating
system - $14
o
Containers
- $5-6
o
Integrated
system - $16-19
Venture Concept:
This product will remove the need to use a microwave when
warming foods that do not otherwise need to be put in the oven. It won’t be
quite as quick at heating food or drinks up but it will not make food soggy and
gross after heating or overheated. It would also be completely mobile so it
could be used at work, on family outings, or other occasions away from the
home.
I don’t think that many customers would buy this product if
it was not mobile. The real attraction to it is the fact that it could be taken
anywhere and keep food warm while transporting it or simply heat it up once you
get to your destination. There aren’t many competitors if any at all right now.
I think I would try to sell this product through online retailers initially and
use their fulfillment centers. This would reduce shipping and handling costs
for me while increasing the value to the customer. This business setup does not
require many employees. After the research and development stage is complete, I
think I would only need about two or three employees to handle customer
service, supply logistics, and accounting.
Three additional
points
I think that my
unfair advantage would be knowledge of raising capital and the connections I
have made working for a mezzanine investment fund. This has taught me a lot
about how startup companies succeed and fail and how they get off the ground in
the first place.
The next thing
that I think would happen would be to expand out of just online retailers and
move into the brick and mortar stores. This would obviously have to coincide
with a larger product mix and possibly a cooling system to complement the heating
system.
If
I were to launch this today, I would want to have a company that generates
around $1 million of EBITDA within the next 5 years. That signals that the
company is stable enough to move into long term growth and I could either sell
it or raise more growth capital for a later sale.
2) The only feedback I received was to look into potentiometers
as a heating source. I then looking into some heating elements because I
realized that there wouldn’t be a reason to produce them myself.
3) I changed the way we would get the heating element. Sourcing
them from another company would lower the price because I wouldn’t have to set
up a whole division for producing those units. I also lowered the prices since
my cost would be lower.
