A five year pro forma and capitalization worksheet are included in Exhibits 1 and 2 respectively. Details regarding the financial expectations of RLW are as follows: Revenue
Roatán Leather Works’ revenue will be derived from four initial products at varying price points: Bracelets ($15), Belts ($25), Wallets & Clutches ($30) and Bags ($100). These price points were identified based on information taken from surveys and interviews that indicated customer willingness to pay between $25-$100, with current purchasing behavior in line with the lower end of that continuum. Additionally, we benchmarked prices against industry advisor, Parker Clay, and have positioned our products at a more conservative, less expensive price. These products will …show more content…
Our interview process noted that we’d likely be able to hire artisan labor for a daily wage of $10, but that $15 would be a more appropriate number. Because our mission is one of economic empowerment, we’ve elected to go with an even higher $20 per day (rising over time). This assumes a six-hour workday, which we’ve learned is optimal for the types of employees we’d be engaging. To identify the laborers needed, we’ve estimated optimal daily production output based on the experience of Parker Clay and accounted for an efficiency covariant to allow for a slower manufacturing process early in our timeline. This covariant begins at 50% efficiency in year one, increasing to 85% by year five. As such, we’ll anticipate a need for 7.5 laborers in year one, growing to 34.7 in year two. We’ve also accounted for an additional overhead fee paid directly to our vocational partner, which we’ve estimated to be 20% of artisan labor. This number, however, has not yet been negotiated and could change once negotiations have completed. Finally, we acknowledge a limited variable cost tied to our online sales channel. Because this channel is secondary for Roatán Leather Works and we do not anticipate a marketing push in this direction for the time being, we’ve estimated online sales to equal 5% of overall retail revenue. The applicable cost for which we’ve accounted is the standard 3.5% credit …show more content…
They include a $10,000 investment to develop and launch the “Made in Roatán” certification with the Honduran Tourism ministry, as well as an annual certification fee once launched. We’ve also budgeted a significant amount of funds, which will be designated to communication collaboration – both programming and special projects – to fulfill our commitment to the island of Roatán and its inhabitants. This amount will grow over time, as our business becomes more successful and we aim to reinvest in the community we are serving. Finally, because of the geographic location, we anticipate the need for board members to visit and see RLW’s business operations first-hand and our projections account for those travel expenses. Net profit
We anticipate that, despite a small loss in year one, Roatán Leather Works will be profitable in year two. Net profit will grow to more than $610,000 by year five. During that same timeframe, net profit margin is expected to grow from -11.5% to 40.4%. This increase acknowledges greater efficiency of operating expenses over time and reflects the relatively lean structure of RLW. We also benefit from the design of our business model, which keeps production/labor costs
Roatán Leather Works’ revenue will be derived from four initial products at varying price points: Bracelets ($15), Belts ($25), Wallets & Clutches ($30) and Bags ($100). These price points were identified based on information taken from surveys and interviews that indicated customer willingness to pay between $25-$100, with current purchasing behavior in line with the lower end of that continuum. Additionally, we benchmarked prices against industry advisor, Parker Clay, and have positioned our products at a more conservative, less expensive price. These products will …show more content…
Our interview process noted that we’d likely be able to hire artisan labor for a daily wage of $10, but that $15 would be a more appropriate number. Because our mission is one of economic empowerment, we’ve elected to go with an even higher $20 per day (rising over time). This assumes a six-hour workday, which we’ve learned is optimal for the types of employees we’d be engaging. To identify the laborers needed, we’ve estimated optimal daily production output based on the experience of Parker Clay and accounted for an efficiency covariant to allow for a slower manufacturing process early in our timeline. This covariant begins at 50% efficiency in year one, increasing to 85% by year five. As such, we’ll anticipate a need for 7.5 laborers in year one, growing to 34.7 in year two. We’ve also accounted for an additional overhead fee paid directly to our vocational partner, which we’ve estimated to be 20% of artisan labor. This number, however, has not yet been negotiated and could change once negotiations have completed. Finally, we acknowledge a limited variable cost tied to our online sales channel. Because this channel is secondary for Roatán Leather Works and we do not anticipate a marketing push in this direction for the time being, we’ve estimated online sales to equal 5% of overall retail revenue. The applicable cost for which we’ve accounted is the standard 3.5% credit …show more content…
They include a $10,000 investment to develop and launch the “Made in Roatán” certification with the Honduran Tourism ministry, as well as an annual certification fee once launched. We’ve also budgeted a significant amount of funds, which will be designated to communication collaboration – both programming and special projects – to fulfill our commitment to the island of Roatán and its inhabitants. This amount will grow over time, as our business becomes more successful and we aim to reinvest in the community we are serving. Finally, because of the geographic location, we anticipate the need for board members to visit and see RLW’s business operations first-hand and our projections account for those travel expenses. Net profit
We anticipate that, despite a small loss in year one, Roatán Leather Works will be profitable in year two. Net profit will grow to more than $610,000 by year five. During that same timeframe, net profit margin is expected to grow from -11.5% to 40.4%. This increase acknowledges greater efficiency of operating expenses over time and reflects the relatively lean structure of RLW. We also benefit from the design of our business model, which keeps production/labor costs