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Specialty Foods Business Opportunities |
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| VC or Angel Investor wanted |
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Executive Summary
Strategic Automation Solutions, Inc. (SASI) is a Minnesota based corporation specializing in the design, development, implementation, and support of integrated automation and process control systems.
The company and its strategies were conceived over a multi year period beginning in 1997, becoming reality when incorporated and launched in 2002. Operations were officially started in the fall of 2002. In 2003, the first full year of operations, SASI achieved $400,000 in sales with a 17% gross profit margin.
By commencing its software development initiatives, adding a Vice-President of Business Development with a proven track record, leveraging strategic alliances, and implementing its marketing plan, SASI conservatively projects that it will grow annual sales to over $3 million by the end of 2006, and exceed $6 million by the end of 2008.
SASI asserts that the projected income is not only conservative and reasonable, but the likelihood of dramatically exceeding projections is extremely favorable since any one of the marketing strategies could realistically achieve company revenue goals. Implementing its multiple strategies across diverse markets should have an overwhelmingly positive impact on earnings.
Control system integration is a $20 billion industry, growing at 10% annually. Currently, there are estimated to be 2,200 dedicated system integration firms worldwide. Careful analysis of the System Integration marketplace suggests current average industry income to exceed $7 million.
At the current rate of growth, the marketplace will equal $32.2 billion in 2008. Assuming that the number of System Integrators remains flat for 2004 due to economic issues, and then grows at an annual rate equal to that of the industry through 2010, the average service provider income will equal $10 million. Several service providers have already left the marketplace due to the economic issues of the last three years. Those that remain will gain increasingly greater market share, and those offering unconventional ideas, products, and services will dominate the market in their chosen geographical areas of conducting business, emerging rather quickly as industry leaders.
With the exponential growth expected in the pacific-rim countries, including The Peoples Republic of China, coupled with the rebuilding of both Iraq and Afghanistan, the growth of investment in the African continent, India, and in the Americas, the System Integration marketplace over the next five years will expand much faster than the 10% historic average. SASI believes the 2010 marketplace will be closer to $60 billion, versus the $40 billion historically projected. The company intends to leverage its business contacts in the Pacific-rim and to aggressively pursue that market once its Midwest base is established. (Approximately 6 to 18 months).
Notwithstanding the anticipation of a greater realized marketplace, SASI conservatively projects that in 5 years it will reach a level of income approximately equal to that of today’s industry average. As part of its strategic vision and corporate goal, SASI is targeting annual revenues of twice the industry average, within five years.
System Integrators based in the United States make up the vast majority of the service providers in the global market. With the decline of the skilled labor pool due to the aging Baby Boomer generation, coupled with the increase in need for services, considerable pressures will be exerted upon the marketplace over the next decade, in terms of labor costs and the effect on automation service prices.
SASI has developed a multifaceted marketing plan and strategy; designed to increase total project sales, develop under-utilized markets, and open non-traditional revenue streams. In 2005, SASI will begin to roll out a series of innovative software products designed to dramatically increase profit margins, open up new consulting and support markets, and generate perpetual revenue streams. These products will provide manufacturing firms with an “out of the box” solution that can be readily adapted to meet their specific applications.
SASI has software in development that will significantly reduce the amount of labor required to perform services, provide end-users the ability to reduce support and life cycle costs considerably, and standardize entire enterprise automation implementation – making data consumption and management simpler and more beneficial than ever before.
Several components specifically for the Food & Beverage industry, are already developed, other components and overall packaging is being developed to take advantage of recent advances in technology and tools available today. SASI’s goal for this software is that out of the box each component is applicable for over eighty percent of similar applications. SASI’s goal is to continue development for additional industries while it is expanding its market presence in the industries already developed.
SASI projects its Adaptive Control Software package will sell for around $5,000 each, and earn another $20,000 or more in System Integration services, training, and documentation. In addition, support costs for each installation will contribute to its revenue stream on a perpetual annual basis. SASI uses a $10,000 package total in its projections. (Support revenues are not included in the projections).
SASI is the only system integrator with software in development that will specifically target the Original Equipment Manufacturers, (OEMs), converting a somewhat competitor industry into a consumer of SASI products and services, widening market penetration considerably beyond traditional systems integration boundaries.
OEMs manufacture the equipment and systems utilized by manufacturing and production facilities to produce goods. SASI will provide OEMs with software and services designed to streamline engineering processes, increasing throughput, quality, and margins. These solutions also ensure the systems provided by these OEMs are compatible with the enterprise solutions SASI markets directly to the facilities, thus further reducing costs.
SASI asserts that once completed, its products will provide an overwhelming competitive edge, in that every facility it integrates will standardize the software installed on all equipment purchases going forward. In essence, helping to create the OEM marketplace, which in turn will benefit the facilities, the OEMs, and SASI.
SASI projects that its Engineering Refinement Package will begin around $100,000 each, and earn a similar amount in System Integration services, training, and documentation. In addition, support costs for each OEM will contribute approximately $5,000 to $20,000 in revenue on a perpetual annual basis. SASI uses a $100,000 package total in its projections. (Support revenues are not included in the projections).
SASI will also directly benefit from its own utilization of the Engineering Refinement Package, reducing labor costs by over 50% as compared to traditional methods and practices on eighty percent of the projects it undertakes. This savings will result in SASI’s ability to offer significant savings over competitive firms, while still yielding unprecedented profit margins. Following software development, SASI uses a labor savings of 25% in its projections, and still achieves final year gross profit margins in excess of 30%.
SASI, already a registered service provider to the government and working on getting placed on numerous GSA schedules, will acquire a Vice President of Business Development that in addition to expanding market share in all areas, has a strong government background. This individual’s efforts were responsible for $26.7 million in awarded contracts in 2003, and another $28.4 million in awards programmed in 2004.
Although SASI could realistically project a similar one-time result over the next five years from this individual alone, management conservatively places the value of government contract awards at a cumulative total of $3.75 million over the duration of its plan, or 12% of the individual’s achievements in each of the last two years.
SASI management has intentionally remained conservative with revenue projections, believing that setting easily attainable projections will lead to happier investors and the foundation of a fiscally sound, and well-managed company. SASI management’s position that the projections are 30% of earnings potential is justified by the facts and assumptions illustrated in this summary.
Because SASI perceives the optimum opportunity for positioning itself and its products for market domination (local, regional, national, and global) to be approaching rapidly, (within the next 18 to 36 months), the original intention of bootstrapping the company until maturity will simply take too long, inevitably delay crucial software development, and diminish long term relationship opportunities with significant clients. Accordingly, SASI is seeking financing in the amount of $1.5 million, in quarterly $250,000 increments, to support operational enhancements and software development expenses for a five-year period of newsworthy growth.
SASI’s business plan projects a 1600% growth in revenue over the five-year period. These projections allow for a 36-month payback schedule, with 20% interest payments beginning immediately on investment balances.
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