We manufacture high performance cases for professional grade knives. Our company focuses on creating the sheaths to be paired with high end knives, usually those costing more than two hundred US dollars. The products are a welcomed upgrade from the standard plastic versions which are notorious throughout the industry for being noisy, cracking easily, and melting in hot weather. We seek your counsel in helping us to determine a realistic course of action. For the purposes of this business plan, we have devised a strategy that will accelerate the company assuming a business loan of $100K.

EXECUTIVE SUMMARY

From its beginning in a one hundred square foot college dorm room, Safari Leatherworks has grown into an internationally recognized business that specializes in manufacturing high performance cases for professional grade knives. The cases (more commonly called sheaths), are constructed from the finest leather available and designed to provide unequaled function, durability, and aesthetic appeal. Our company focuses on creating the sheaths to be paired with high end knives, usually those costing more than two hundred US dollars. The products are a welcomed upgrade from the standard plastic versions that are notorious throughout the industry for being noisy, cracking easily, and melting in hot weather.

The niche market for these leather sheaths draws a variety of outdoor enthusiasts, collectors, hunters, campers, and active duty soldiers. Sales are direct retail and sold to the end user via the internet, where they can purchase our products using a credit card. Internet marketing has proven to be a successful strategy and will continue to be the most emphasized method as Safari Leatherworks grows to the next level.

As the business expands, Safari Leatherworks has taken steps to protect intellectual property, thereby maintaining a competitive advantage in the market place, and differentiating our goods. Currently we have a patent pending for a highly unique and functional apparatus that can be used on nearly all knife sheath closure straps. Future inventions of equal or similar potential will also be protected through the registration of patents.

At this time, business operations are focusing heavily on building production capacity through the investment in state of the art tools and machinery. The handcrafted element of the products makes it challenging to mass produce, yet this characteristic allows us to achieve maximum quality. This translates into a high average retail price, usually above one hundred dollars. This high price point also succeeds in making the Safari Leatherworks brand illusive and desirable.

Our long term goal is to maintain a business–to–consumer model and grow into a company that offers hundreds of different products for purchase on our internet store: www.safarileatherworks.com We recognize that our core strength is the ability to inspire a feeling of adventure in our customers and build strong brand loyalty. This will effectively create our own tribe of brand loyal customers. We intend to achieve by using several unique marketing strategies that will be elaborated later in this document. We believe that a slow-medium paced growth strategy will be the most healthy and effective way to prepare this company for long run success. Additionally, this will allow us to hone our business skills and industry expertise in a way that will make the company a more stable entity when it reaches a mature stage.

Immediate operational objectives are focused heavily on transferring production of the goods to a domestic manufacturing facility. The major hurdle for this business is to boost production as quickly and efficiently as possible while maintaining the “USA Handmade” image that our customers have come to respect and appreciate. We believe that production outsourced to facilities on the Pacific Rim, or any low cost country would cause a deterioration of the Safari Leatherworks brand image, and we are therefore committed to producing these goods within the United States. It is worth mentioning that as managers of the business, we are not entirely opposed to such a scenario, but are certain that it would require a separate brand that would appeal to a different market. Maintaining a separate brand for lower priced items would also prevent dilution of the Safari Leatherworks image. Finally, we are passionate about serving our patriotic customers that tend to be heavily concentrated within this niche industry. Maintaining production in the United States also allows us to advertise this admirable quality while feeling positive about the jobs we will create.

GROWTH STRATEGY

Given the fact that Safari Leatherworks started as a student business, and has grown entirely organically, we are now facing a crossroads whereby we must decide to continue expanding the business with company earnings, or seek investment capital to accelerate it more rapidly. We feel compelled to mention our reluctance to rush the process too quickly as our success to this point has been the result of developing and applying business skills as they are learned. Premature expansion of the company could result in an unnecessary failure. At the same time, there is a risk of thinking too small and passing up a critical opportunity for growth. We seek your counsel in helping us to determine a realistic course of action. For the purposes of this business plan, we have devised a strategy that will accelerate the company assuming a business loan of $100K.

BUSINESS STRATEGY

Mission

We awaken people to the adventures of the outdoors by supplying them with professional grade leather sheaths. On the surface we are a manufacturing company, but the products are actually a method to unlock the adventurous personality of their owners. Our business and customers are best described as “Safari Bwanas”. Members are loyal to the brand and share our values. As leaders, it is our responsibility to grow the tribe through clarity of purpose, discipline of methods, and consistency of products.

Company Values

Adventure: It’s not for everyone. Some people prefer activities that are safe, secure, and away from the peril of the wilderness. We live for the excitement of the unknown, especially if it involves being outside. Safari Leatherworks products are a physical tool that enables people to pursue their own adventures in the outdoors.
Communication: By committing to an open dialogue, we prevent problematic situations. This ideal extends beyond personal relationships within the business; we also hold ourselves accountable for maintaining communication with our customers. We respond quickly to emails and inquiries, while kindly handling all customer interactions. At the same time, we are clear about the nature of our products and policies thereby minimizing the potential for confusion.
Generosity: The health of the tribe depends on each member contributing to the vision while knowing that the success of group determines the success of the individual. As we progress toward our many goals, we keep the well being of customers and employees at the forefront of our actions. Those who identify with our vision are able to grow within the company and develop as a person. By giving them the opportunity to grow, they happily devote themselves to the cause.

MANAGEMENT SUMMARY

Matthew McNamara: Currently a student at University of Montana, Matthew is graduating in May of 2008 with a Bachelor’s degree in entrepreneurship. He has been the sole owner of Safari Leatherworks LLC since August of 2006, when he started the business in his college dorm room. Over the course of nearly two years, Matthew has built the business into a sustainable entity. He has learned the value of thinking creatively and developing strong relationships both personally and professionally. Upon graduation, he intends to run the company full time while continuing to grow as an entrepreneur and strengthen his business skills.
Jane Schmidt: Jane is a University of Montana student majoring in entrepreneurship with an additional concentration in economics. Her entrepreneurial interests lie in fundraising and venture capitalism, as well as community non–profits. Jane’s broad range of professional interests have been strengthened through several diverse internships, including an accounting internship with a local marketing firm.
Patrick Keberg: Currently a University of Montana student, majoring in Business Administration with a double concentration in Marketing and Management. Patrick’s business skills have been developed over the course of several internships including a position in 2006 with Block Advertising Agency. Within this company he worked on a special project with the company’s Smith Flavored Tea account that involved event marketing and sponsorship. His primary job tasks included marketing research and Spanish–English translation for the company’s customers and clients. 2004 was highlighted by his internship with the Spanish Soaps and Detergents, LLC marketing department in Madrid. This internship required his involvement with accounts control, specializing in budgets and database marketing. Patrick’s extracurricular activities included having active membership in student organizations like the International Student Federation and The Spanish Student Association.

From the beginning of the business to present day, the company has been run almost exclusively by Matthew McNamara, while utilizing the resources of outside contractors on a limited basis. Future plans will consist of two primary strategies that will be simultaneously implemented. The existing workshop where all of the current production takes place will become the prototyping facility. At the same time, production for the line items will be outsourced to a domestic manufacturing plant. The prototyping facility will be used for the development of new products and as a back up for supply shortages and small production runs.

The daily operations of the company will be handled by a qualified business manager that will be hired at the beginning of 2008. The core responsibilities of this position are processing web site orders, ordering inventory, and handling customer inquiries. In 2009, a fulltime position will be created that will be dedicated specifically to customer relationship management.

COMPANY HISTORY

Unlike most businesses, Safari Leatherworks did not begin with the intention to create a profitable brand, but rather it grew from Matthew McNamara’s existing passion for being a craftsman and his constant desire to spend time outside. Matthew first came up with the business concept while attending a week long wilderness survival class. During this class, the necessity to use a knife was present in nearly every skill taught. Almost everyone in the class had a professional grade wilderness survival knife that cost several hundred dollars, and not one of them had a leather case that matched the quality of the knife. Most of the sheaths were constructed of a material called kydex which is a type of thermoformed plastic. A kydex sheath, like many plastics, is prone to a variety of problems. It is loud, cracks easily, and will even melt like a tape cassette if left in a hot car. After having owned several of these plastic sheaths, Matthew was as dissatisfied as the other students until he set out to make his own leather version. After seeking the tutelage of a master leathersmith, he began selling products on the internet and gradually applied the skills learned in school, effectively building the business piece by piece.

Matthew recently won second place in the 2006 Student Business Leadership Awards, an international business competition for full time undergraduates that run a successful company when not in class. For 2006 there were over three hundred competitors from different ten regions around the globe. After regional eliminations, the final ten competitors flew in from around the world to compete in Chicago. Upon wining the second place position, Matthew was featured in several publications including Montana Journal, Butte Times, Entrepreneur Magazine, and Business Times. Additionally, the business has been recognized on a variety of entrepreneurial websites.

The focus of the business for the last several months has been to invest in equipment that will maximize production efficiency before hiring the first employee. Currently, the manufacturing is done almost exclusively by Matthew, with some limited assistance from outside contractors.

MARKET ANALYSIS

Tactical and Survival Knife Industry

Safari Leatherworks is best classified as a company that serves the outdoor and tactical knife industry. In this context, the word tactical knife implies a capability of being used for military applications. Tactical knives are characterized by being larger than normal: usually between four and nine inches in blade length, and are engineered to be ergonomic for the user. Additionally they are often dark in color so as to minimize their visibility in a combat environment. After 9/11, the growing interest in personal security has been a boost for this segment of the knife industry, particularly amongst active duty soldiers in Iraq and Afghanistan (The Shooting Industry, VOL 51 155.6). However, the market for US manufacturers of knives is shrinking due to the increasing quality of imports from the orient. Specifying an exact market size is difficult because almost all of the companies in this industry are privately owned and do not openly share sales information. Having said that, we believe there is room in the industry for a profitable business because of our track record of success and fact that there are virtually no direct competitors at this time.

Leather Industry

Safari Leatherworks is classified under SIC code 3199: Leather Goods Not Elsewhere Classified. The industry is characterized by equestrian goods such as crops, saddles, stirrups and other industrial products like machinery aprons and welding gear. According to statistics from 2000 there were roughly four hundred small leather businesses of this type, most of them employing less than twenty people at an average wage of $8.46 per hour. These companies are geographically concentrated in Texas, California, and Ohio (www.allbusiness.com).

Trade Shows

The leading industry trade show for our sector is called the “SHOT Show” which stands for Shooting, Hunting, and Outdoor Trade. This trade show is held annually in differing locations across the United States. It gathers manufacturers, retailers, and supporting businesses of all types from the industry. We believe that attending the SHOT show will be a critical step forward for learning more detailed information about our industry and finding potential opportunities. As of yet, we have been unable to attend due to schedule conflicts with classes.

CUSTOMERS

People that buy Safari Leatherworks products fall into several broad categories: outdoor enthusiasts, collectors, and active duty soldiers (usually deployed in Iraq or Afghanistan). Customers tend to be patriotic and place high value on the US handmade characteristic of the products. They are avid outdoorsmen and tend to use tools like knives and sheaths on a daily basis as determined by their lifestyle: either in combat or recreation. Other types of buyers are usually collectors who buy the products out of admiration for the quality and craftsmanship. In many cases, a high price point creates a large degree of value from the consumer’s perspective and entices them to buy. We maintain focus on the segment of customers that have high–end tastes. This allows us to achieve necessary profit margins and keeps our revenue streams coming from individuals that have expendable income. In many cases, if it’s not expensive they won’t buy it.

PRODUCTS & SERVICES

Quality

Safari Leatherworks is a company that focuses on developing and manufacturing high performance leather cases for professional grade knives. Knife cases, commonly referred to as sheaths, are attached to a person’s belt and allow the user to carry the blade in a way that is easy to access while simultaneously protecting it and its user from harm. Sheaths are accessories to knives but are equally important considering the extreme environments where these tools are used: mostly remote wilderness areas and combat operations.

We compete to have the best leather sheath on the market by delivering a product that is functional, reliable, and artistic. More importantly, the selling process conveys our personal commitment to this ideal throughout the customer experience. We are not a low cost competitor; we compete to have the most expensive product of its kind on the market.

USA Hand Made

Every stitch, fold, and rivet is carefully constructed and monitored by Montana area craftsmen. The human attention necessary to create our products allows us to deliver passion and artistic creativity along with the functionality that characterizes our leather sheaths. Future mass production operations will be conducted domestically in a facility that is capable of meeting our quality standards.

Finest Materials

All leather is heavy grade vegetable tanned cowhide, weighing ten ounces per square foot. Materials are purchased from the Kentsey Leather Company of Butte, one of the most reputable suppliers of its kind in the world. Kentsey hides are known for consistency, suppleness, and strength. From the consumer’s perspective, plastic sheaths are anything but desirable and are an ongoing annoyance for serious outdoorsmen and military operatives. The benefits of kydex are almost exclusively advantageous to the companies selling the sheaths, because they are inexpensive and easy to manufacture in large quantities. Consequently, there has been a gap in quality that the knife industry has been unable to bridge. Some of the more quality oriented knife manufacturers do not include sheaths with their knives for the reason that they do not want a substandard sheath associated with their high quality knives. As a result, buyers are left to find their own sheath maker of which there are dozens in operation on a small scale, few of them larger than a two person business. Needless to say, there are limited options available when knife owners seek to purchase a quality sheath, and wait times are often weeks or months because of the limited production capacity of the small shops that can make them.

Safari Leatherworks solves these problems by offering a product that is unparalleled in quality and is immediately available to the customer. We focus on creating sheaths that are designed for specific popular knives on the market, and are constantly improving our products based on the needs of our customers. We pride ourselves on quality control, durability, and having outstanding customer relations. Safari sheaths are sold mostly within the U.S., but have also been shipped to numerous countries abroad, primarily active duty soldiers in Iraq and Afghanistan. One soldier even reported that he was able to rescue an injured comrade from a damaged humvee using the knife he was carrying in a Safari sheath.

GROWTH STRATEGY

As the company continues to grow, it will rely heavily on product line expansion and internet marketing to drive sales. We have proven a successful sales model in the making of sheaths for existing knife companies within the industry. Essentially our accessory products piggyback on the existing credibility of some of the high end manufacturers within the industry. Customers tend to find us accidentally while they are in search of a knife, and then decide to purchase the sheath that goes with it. There are many areas of growth to be explored, especially considering that Safari has offered little more than three products during its entire life as a business. With literally hundreds of popular knives on the market, there are many directions for expansion.

With hundreds of popular high–end knives on the market, there are many different types of sheaths that could be manufactured while maintaining direct retail over the website. The first stage of expansion would aim to increase the product line from the three sheaths we currently offer, to ten or more. This alone could increase revenue by a factor of ten. There are a variety of knife designs that would warrant a sheath in our price range: between one hundred and three hundred dollars. Some of these designs are made by companies like AdamArsenal, who do not even provide a basic sheath for their knives. The notable brands include:

Rodney Rodder: One of the leading suppliers of quality tactical knives, Rodney Rodder is known for their unique designs that use high performance steel available in 154 CM and S30V.
Sandstorm: Well known for their partnerships with high profile wilderness professionals, combat operatives, and martial artists. Sandstorm has a broad range of knife designs that appeal to unique niche markets within the industry, and are well known to be a preferred choice among active duty soldiers.
Adam Knives: Specializing in unique semi–production grade knives with multiple custom options available to the user. Employs the use of cutting edge manufacturing technology, and uses proprietary steel called “silversteel”.

Universal Sheath Line

Often customers request sheaths to be made for knife models that are rare, unusual, or require a considerable degree of time to build a custom sheath. The universal sheath line will be a common design that comes in a multitude of different sizes, such that we will be able to sell an appropriate sheath to someone regardless of the knife’s dimensions. Shoppers will even be able to print a PDF file off of the website that has a line drawing of the exact size and shape of the sheath. This way they can simply hold their knife up to the paper to see if it will fit inside the sheath. A printing set up like this will reduce the number of returns and engage the customer with an interactive process. From a production standpoint, this arrangement will be vastly more efficient than creating a new sheath pattern every time a customer would like a special order.

Customization

One of the most alluring qualities of a leather product is the ability to personalize it through custom colors, accessories, and especially engraving. This is particularly desirable for the military units where a small group of soldiers will often use the same equipment, and take pride in displaying their unit crest. Safari Leatherworks can easily outsource this step to a laser engraving company that can quickly imprint logos, names, phrases, and even photographic pictures onto the leather.

OPERATIONS

Product Design & Development

Essential Elements

The process for constructing any Safari Leatherworks sheath must include four core elements: high quality materials, handcraftsmanship, durability, and aesthetic appeal. These are the essential ingredients that make the finished product desirable to our customers, differentiate us from substitute goods, and allow us to achieve a high price point: usually above one hundred dollars. Our customers have come to especially appreciate the domestic hand crafted nature of these products, and it seems that they are a welcomed respite in a world where most production goods are outsourced to overseas manufacturers on the Pacific Rim.

Materials

The raw leather material is vegetable tanned cowhide, which is purchased from Kentsey Leather Company, one of the most reputable tanneries in the world. Each hide goes through a stringent process of quality control that assesses key factors like thickness, scarring, and pliability. Hardware components such as rivets, studs, and snaps are sourced from a variety of vendors, and are usually purchased in quantity to achieve wholesale discounts.

Processes

The Safari production facility itself is currently home based, but employs some of the best equipment in the industry for sheath production. Highlights include the Barney Stamper, which can stamp out any leather pattern in less than ten seconds, as well as the Ultima Pro sewing machine that is renowned for its ability to sew elegantly without leaving presser foot marks on the leather. Some sheath designs are even press molded to fit the exact dimensions of its counterpart knife. In these situations, 1:1 scale model plastic castings are used in lieu of the actual metal knife. This allows for rapid manufacturing without sacrificing expensive knives to the production process. Before completion, every sheath is embossed with the Safari Leatherworks logo. It is also worth mentioning that every exposed leather surface receives a coating of waterproofing finish for extended durability in wet weather.

Production

These types of leather products are unique in that they cannot be produced in an automated assembly line. As one can understand from the mentioned processes, equipment and logistical planning can speed manufacturing greatly, however there will always be the necessity for human involvement in each of the steps required to make a sheath. Initially, this could appear as a sever limitation to growth, however it is remarkably easy to break down each step and systemize it so as to train production workers. Given the relatively low cost of materials coupled with the high price point, making and selling these sheaths is economically feasible. Take for example the current best seller, which is priced at $109.00. This sheath uses roughly eight dollars in materials and can be constructed from start to finish with an average time of just thirty–five minutes. The manufacturing of most sheaths requires the following processes:

Cut out patterns from raw materials
Dye leather to desired color
Glue into perform assembly
Press mold the leather around knife casting
Sand and buff edges
Sew
Apply waterproofing agent
Attach straps
Final sanding and buffing
Attach closure mechanism

OSHA Compliance

While most of the production is outsourced, the prototyping facility will still require adherence to government regulations regarding the use potentially dangerous chemicals and machines. Safety requirements will be implemented by the company so that our processes are OSHA compliant. Some of these precautions will require that the worker(s):

Wear respirators when handling chemicals and dyes, as well as for activities that generate dust such as sanding and grinding
Use gloves when handling certain chemicals and dyes, or when using specific hand tools like shears or cutting blades
Wear ear protection for loud activities like the operating of the leather cutter which uses an air compressor.
Wear eye protection when necessary for things like drilling, grinding, and buffing.
Wear steel toed boots in the workshop

Obtaining OSHA certification will not be a difficult process because the Safari Leatherworks workshop will not have any lethal hazards to employees. Additionally, OSHA offers a free consulting service to help businesses become compliant with their standards.

Equipment

Safari Leatherworks uses industrial machinery and hand tools for the most efficient construction of sheaths. Some of the current and future equipment includes:

Ultima Pro Sewing Machine: The leather industry’s leading heavy duty sewing machine that will sew multiple layers of leather up to one inch thick. The introduction of the sewing machine has decreased production time by thirteen minutes per unit on average, as compared with sewing by hand.
Barney Stamper: Generates thirty thousand pounds of pressure onto cutting dyes that will stamp out any necessary pattern of leather in less than ten seconds. Using this tool is five to ten times faster than cutting out leather with a pair of scissors.
Embossing Press: Used to imprint the Safari Logo or any type of artwork onto a leather sheath. This machine employs the use of magnesium stamps that can be produced from any black and white image.
Spindle Sander: Puts an exact ninety degree angle on the edge of a leather sheath, which makes the product symmetrical and keeps stitches in consistent orientation.
Buffing wheel: Used to add finishing touches to the edges of a sheath when used in conjunction with a special compound.
Molding Blanks: Duplicate plastic castings of the exact knife which for which sheaths are made. The molding blanks are for a process called wet forming which allows the leather to be conformed around the knife for a perfect fit.
Snap Setter: Allows for the rapid installation of durable snaps, eyelets, and rivets.

Quality Assurance

Specific and measurable standards of quality will be assessed for every sheath before it is packaged and sent to the warehouse. The criteria for each model will differ slightly, but will be designed to determine the grade of leather, quality of finished edges, stitch length, and symmetry. Acceptable products will fall within a certain range that will be scored on a point basis. Products that do not meet the minimum standards will be discarded, saved for training purposes, or sold as cosmetic seconds. Maintaining consistent quality will be one of the major challenges of outsourcing production. Before moving forward with this strategy, we intend to create a contractual obligation that will hold the manufacturer responsible for consistent production.

Multiple Suppliers

As a measure to defend against potentially crippling supply shortages we intend to divide production for different sheath lines between two manufactures. This will allow us to maintain a source of production in the even of a catastrophic event such as a fire. Similarly, it gives us alternative options if production at one facility is delayed.

Logistics

After products leave the manufacturing facility, they are sent to a warehousing company in Illinois. When customers order from the website, packages are shipped to them directly from Illinois, thereby eliminating the need for additional labor to maintain our next business day shipping policy. In addition to reducing costs, the warehousing company will be able to handle any amount of daily orders that Safari Leatherworks could generate. This system also allows us to offer a full range of shipping services including UPS, USPS, FedEx, and DHL. International and military orders require no additional attention from the Safari staff because the warehousing service will also complete any necessary formalities with customs.

Returns are processed at the manufacturing facility in order to check for damaged products, and to repackage the goods for sale to the next customer. All internet customers are notified immediately by email, and are then notified again with tracking number upon the shipment of their goods.

MARKETING & SALES

Internet Marketing

Safari Leatherworks has driven sales almost exclusively through internet marketing. Internet sales have proven successful largely because of the nature of the products: they are accessories for existing knives on the market. Therefore, in order to market the leather sheaths we focus on attracting internet shoppers that are in search of specific knives. When they find our site, they are not initially intending to purchase a leather sheath but end up doing so because it is a unique product that no one else offers, and it differentiates our website from the hundreds of others that sell knives.

Internet marketing in itself can be broken down into two broad categories: “Pay–per–click” (PPC), and “search engine optimization” (SEO). PPC is an immediately effective strategy in which advertisers bid for key words that potential customers may be using in the search engines. When the potential customer types in those words, they will see the normal search results, but will also be shown a variety of ads from the marketer. In this scenario, we are only charged if an internet searcher clicks on one of those ads. Safari Leatherworks currently uses PPC to drive 50 percent of all visitors to the website.

The other method, SEO is a slower but ultimately more powerful method of internet marketing. SEO relies on designing and structuring a website to be “search engine friendly” such that it achieves high rankings for specific key words. There are hundreds of different variables that can affect the rank of a website in the search engine, so much so that it has become a completely new science of its own. We use a software program called web–position that scans the code of the website and returns instructions for more efficient optimization of key words. By employing this program alone, Safari Leatherworks has climbed rapidly through the search engines, having our most important keywords on the first page of Google with some of them shifting in out of the second and third ranking. In time they will likely elevate to first place. As an example try a Google search of different brands of quality knives. You will notice our ads as well as a relatively high position ranking in the center content area.

Future Marketing

The Safari Bwanas

Future marketing operations will be geared toward inspiring our values throughout the customer’s experience. Our intention is to create an adventurous feeling through the branding of our products, leaving the owner with a sense of belonging to “The Safari Bwanas”. We intend to accomplish this through a highly interactive website, contests, promotional DVDs, endorsements, email newsletters, and product packaging.

Interactive website: Visitors will be able to vote on their preference for upcoming products, discuss their experiences in an online forum, and submit their own pictures of Safari products being used in the field. Additionally, the website will have a variety of articles and streaming videos relating to wilderness survival and the practical application of our products. Similarly, there will be an archive of stories and testimonials that are submitted by product owners.
Contests: To inspire people to use our products we will regularly hold prize contests for the best pictures of our sheaths in action. This creates a fun reason for people to get some experience with our goods, and will increase the overall buzz of the Safari Leatherworks brand.
Promotional DVDs: These will be promotional tools available to anyone for free upon request. The content of the DVD will give an overview of the design, development, production, and use of Safari Leatherworks products.
Product packaging: Sheaths will come with a certificate of authenticity, letter from the sheath maker, an instructional DVD and packaged in an environmentally sustainable, yet clever manner. The signed letter from the sheath maker accentuates the quality people most appreciate about Safari Leatherworks products: the handcraftsmanship. The outermost packaging will resemble a cigar box, with a hinged lid and snap closure. The wooden box would be unfinished except for the Safari logo on the top. The sheath would be nested in shredded plant polymers, available from most packaging suppliers in bulk. This material is similar to the potato polymer bags used in grocery stores, which is biodegradable and environmentally friendly. The certificate of authenticity, signed letter from the sheath maker and DVD would all rest on top of the sheath. The letter and certificate of authenticity all reinforce the handmade and exclusive aspect of Safari products.
Endorsements: We intend to seek the recommendation and endorsement from well known and respected people within the industry such as wilderness survival instructors.
Email newsletters: Every week we will send out an email newsletter that will encourage customers to visit the website. The contents of this email will include featured customer stories, how–to articles, upcoming products, and interviews (customers, Safari staff, or survival instructors).
Magazines: Although the primary marketing focus will concentrate on the internet, we eventually plan to advertise in several specialty magazines that relate to knives, knife making, hunting, shooting, and other outdoor sports. Magazine advertising may be an effective way to increase sales, but only when we believe the internet marketing opportunities have been maximized. It is more difficult and expensive to gain recognition through the magazine ads, while it is cheap and immediately effective to pursue internet marketing. Additionally it is an area that is largely untapped for competing search engine rankings.
Word of Mouth: Safari Leatherworks continually focuses on delivering a quality product and outstanding service to every customer; we simply do not give them a reason to complain. This simple ideal has been the driving force of our positive reputation and is extremely important given the “start up” status of the company. Regardless of what strategies we employ to reach new customers, there will always be a heavy focus on maintaining communication with our existing buyers, and ensuring they are happy with their purchases. We give them the best products available, deliver them quickly, and resolve any conflicts immediately. In our opinion this personalized service is a marketing strategy itself. It keeps people spreading good remarks, and creates evangelists who go out of their way to tell others about Safari Leatherworks.

Sales

As production capacity increases, we have identified several areas in which to generate further sales beyond our current focus. As it stands, Safari Leatherworks has generated sales almost exclusively from the sale of the three different knives and the accompanying leather sheaths.

Public Relations

The winning of the SBLA competition helped establish Safari Leatherworks as a reputable entity from a business standpoint, but further action will need to be taken on a consistent basis to maintain the company image in the eyes of our consumers. Several potential PR strategies include:

Press Releases: Knife publications are continually looking for unique stories and innovative products to write about. Safari Leatherworks can make a standard practice of issuing press releases every time a new product is introduced or a significant advance is made, such as with a new partnership or contract.
Customer Database: Collecting and maintaining expansive details about our customers will help us to better accommodate their needs and to plan for future business decisions. Data can be collected during the checkout process on the website, or by interviewing customers over the phone. An example of pertinent information will include: the reason for their purchase, other types of products collected, and the means by which they found our company. This will also help us to determine the purchasing history of any given customer and to isolate key factors for their demographic.
Testimonials: An expansive list of positive testimonials has already been compiled, and continues to grow every week. Most comments focus on the good service or outstanding products. One letter from a soldier detailed the use of his sheath while rescuing a fallen soldier from a humvee in Iraq. These types of statements make a profound impact on new buyers, while serving as a good measure to let us know we are achieving our goals. We can produce copies of these letters upon request.

COMPETITION

Now and throughout history, leather crafting has been a skill of the artisans. It requires attention to detail, a sense of creativity, and the desire to work using the hands. For this reason, it has largely remained a trade that is most often confined by the production abilities of a single person or a small group. In many ways, the word “leather worker” is synonymous with the word “artist”. The artistic nature of the work is quite evident when looking at the existing competition for Safari Leatherworks. The vast majority of competitors are single person operations or small husband–and–wife businesses. These competitors are heavily motivated by working within their trade and involving themselves on a personal level with the production of their wears. They are not engaged in a growth mindset, and are not focused on accelerating their businesses beyond the restraints of their own elbow grease.

Small Competitors

There are many smalltime leatherworkers who are direct competition to Safari; however we speculate that they will prove to be the least significant threats in the long run because of the weakness of their business structures. A mere handful of these businesses are:

Tough Leatherworks
Robert’s Leathercraft
Pine Forest Custom Knives
Leather by Brett

Potential Major Competitors

There are several significant long term threats to Hedgehog that could come from external competition. Perhaps the most likely source would be an existing holster company such as Wayne Holsters, Harley’s Leather Accessories, or Wilderness Equipment. All of these companies have a strong reputable businesses and outstanding products within the firearms industry. It would not be a far leap for them to cross over into the knife sheath sector using their existing equipment and facilities. The most we can do from a defensive standpoint is to continually differentiate our products and develop Safari into an extremely reputable brand. This will set us up to compete on the same level if one of these companies should decide to expand into the sheath business.

Another source of competition could stem from an existing knife company that decides to assemble a leather sheath division within their current operations. This could diminish Safari’s sheath sales because some customers would certainly be compelled to purchase a sheath that is the same brand as the knife. On the other hand, this situation represents more of an opportunity by partnering with one of these knife companies on a contract basis.

The threat of competition from imported goods, from Asia for example, is a rather insignificant threat because the U.S. made nature of these products is a heavy definer of the target market. Almost all the knives that Safari makes sheaths for are manufactured in the U.S., and it is mostly the lower end market that produces knives in Asian countries. Safari Leatherworks is a price competitor, but not in the traditional sense. Rather than compete to have the lowest prices, our goal is to have the most expensive sheath on the market. We would be far more concerned with the entry of a similar company that values a high price point and seeks to capture part of the exclusive market.

Intellectual Property

Safari Leatherworks designed and developed a unique invention that can be used on the closure strap of nearly any knife. Normally, when leather is in a fixed position for an extended period of time, its molecular structure changes such that it maintains that shape. This is the usual situation when the closure strap of a sheath has been fastened around the handle of a knife. When the user goes to release the strap, it tends to stay in the same place and interfere with the extraction of the blade from the sheath. This can result in accidental cutting of the strap or the knife becoming entangled. In an emergency situation, a small hang up like this could be very dangerous by delaying or preventing the knife from being used at that time. Matthew McNamara invented a very simple application of an elastic cord that when attached to a closure strap will eliminate this problem. As soon as the user unfastens the strap, the cord will pull it away and out of the cutting path of the knife, thereby eliminating the possibility of damaging the strap.

RISK FACTORS

Internal Risks

Inability to meet demand: occurs if Safari Leatherworks does not effectively use its resources to supply existing markets with the products they desire. This is perhaps the most serious risk because the handcrafted nature of the products requires a trained and reliable staff to keep the company running.
Inventory surplus
Unused capacity
Fire, flood, theft, or other property damage
Product defect causes lawsuit or recall of a large number of goods

External Risks

Bans or restrictions on the sale, ownership, or ability to use and carry knives.
Price increases for raw materials including leather and steel
Changes or restrictions to national parks, hunting grounds and other locations where tactical knives are used
Status of international conflicts and wars
Entry of new competitors
Failure of partnered businesses such as knife companies or discontinuation of similar contractual relationships

FINANCIAL ANALYSIS

Financial Timeline

Quarter Two of 2007

Sales: $30,000
Income: $(3,673)
Units sold: 75
Enhance website
Production outsourced entirely

Quarter Three of 2007

Sales: $51,000
Income: $21,787
Units sold: 227

Quarter Four of 2007

Sales: $102,000
Income: $47,878
Units sold: 453

Quarter One of 2008

Sales: $156,000
Income: $52,705
Units sold: 693
Hire first employee
Increase marketing operations: launch professional endorsements and instructional DVD.

Quarter Two of 2008

Sales: $214,000
Income: $76,577
Units sold: 951

Quarter Three of 2008

Sales: $246,000
Income: $89,749
Units sold: 1,093

Quarter Four of 2008

Sales: $255,000
Income: $93,653
Units sold: 1,133

Quarter One of 2009

Sales: $264,000
Income: $81,497
Units sold: 1,174
Hire second employee
Begin magazine marketing campaign

Quarter Two of 2009

Sales: $273,000
Income: $85,614
Units sold: 1,213

Quarter Three of 2009

Sales: $282,000
Income: $88,906
Units sold: 1,253

Quarter Four of 2009

Sales: $291,000
Income: $92,611
Units sold: 1,294

Financial Assumptions

Employees paid hourly at $15 with a 5 percent increase per calendar year
1st employee hired in Jan 2008
2nd employee hired in Jan 2009
Unit sold per month is based on average selling price of $225 per unit
COGS is 40 percent of sales revenue and is based on average unit cost of $90
10 percent of COGS is for materials and 90 percent is for assembly
Merchandise sales are 94 percent of revenue
Shipping sales are 6 percent of revenue
Shipping expense is 69 percent of shipping revenue
Credit card processing is 2.7 percent of sales revenue
Shipping and credit card processing are expensed before calculating gross margin
PPC marketing is 2 percent of sales
“Other Marketing” is 10 percent of sales
Magazine marketing is fixed at $2700 per month based on 1/3 page ads in 3 magazines
E–Commerce expense (web hosting and related fees) is fixed at $125 per month
Product liability insurance assumes $1,000,000 coverage at $1000 per month