Scrub-A-Dub Analysis

Entrepreneurship Class

Business Plan Review Critique Assignment

 For Scrub-A-Dub

Background:

Scrub-A-Dub is a start-up company focused on bath products for children primarily within the birth to toddler stages of childhood. The company is particularly focused on producing goods that are innovative, safe, and both environmentally and economically friendly. Their first (and, at the moment, only) product is a tub divider that transforms any kind of adult bathtub into a smaller, water conserving tub for children. This tub divider is portable so that parents can easily transport it with them on their travels. The product is also adjustable in order to custom match most sizes of bathtubs and to adjust to the bathing needs of a growing child as he/she slowly transitions into a full tub.

Purpose:

This critique is for the purpose of ensuring that Scrub-A-Dub’s business plan itself is clear and thorough in introducing all relevant concerns for potential investors. This analysis will also help determine whether or not Scrub-A-Dub has a viable business proposition based on its product offering.

Analysis:

1. Strengths

• The tub dividers proposed by Scrub-A-Dub has no competing product within the US at this time. As such, it would be innovative and rare (as part of the VRIO analysis) to the US baby bath product industry.
• The baby bath product industry has a current annual growth rate that is high. (Per IBISWorld - 14.5% [O’Brien, 2014]).
• The Scrub-A-Dub tub divider allows parents to use a smaller portion of the tub when bathing their child which is safer, because there is less potentially dangerous water levels with which to be concerned.
• Scrub-A-Dub uses environmentally friendly raw materials to make their tub dividers.
• Scrub-A-Dub will be making a positive impact on water conservation as its tub dividers will afford decreased use of water in a child’s bathing.
• The company will sell its tub dividers at a price that will be considered affordable to moderate to high income families.
• Scrub-A-Dub will continue to pursue research into more innovative and environmentally friendly products for children’s bathing needs. This will add to their product line.
• The company will manufacture here in the United States thereby creating jobs to the US.
• There are currently no specific regulations for a product like the tub divider since it is new to the American market. This gives Scrub-A-Dub more freedom and potentially less cost in its production.
• Marketing primarily through social media would be optimal for this product since many current new parents are from Generation Y and are, therefore, very connected through social media. Also the entrepreneurs mention that new parents might rely on social media for information and communication more than usual since they would likely be at home with their young children.

1. Weaknesses

• Although the overall appearance of the business plan is professional, there are multiple grammatical errors throughout its pages. There are so many that they actually detract from the main points of the plan. Since this plan might well be the first formal thing a potential investor will see from Scrub-A-Dub, it is imperative that it be well edited by a professional to ensure that there are no grammatical errors and that there is an easy to follow “flow.”
• Scrub-A-Dub has to overcome the high cost of manufacturing which acts as a high barrier for entry into the baby bath product market. This might be a factor in the company being granted an SBA loan. If the loan is not granted, Scrub-A-Dub would have to rely on private funding from family and friends which may not be enough.
• The company’s breakeven point is after its third year of production which will likely be considered too long a time to wait for a profit to an investor.
• Projected breakeven point and future profits can only be reached if there has been $443,000 in product sales. This would mean that the company would have to reach this strict, high point exactly; any less could potentially cause cash flow problems and, of course, not reaching the breakeven point.
• Although currently, Scrub-A-Dub has no direct competitor in the United States, there is a possibility that a large American-based company can produce a similar product that would compete head-to-head with the Scrub-A-Dub tub divider. It is also possible that overseas companies making tub dividers could expand into the United States through licensing, joint ventures, or wholly owned subsidiaries. Having a patent might protect from some of this, but this takes time to obtain (months to years) – another disadvantage.

Conclusion:

This company has a novel, economically priced product that helps children slowly transition into using an adult tub as they grow. It does this while conserving water. Furthermore, it is made with environmentally friendly materials. It has no current competitors and can be strongly marketed within social media which will provide a large target market of new parents. All of these aspects provide compelling justification for Scrub-A-Dub to start their new business. Additionally, Scrub-A-Dub has produced a thorough and comprehensive business plan that supports this justification. Despite this, Scrub-A-Dub has some disadvantages – the most important being its breakeven point – which will take the sales of many units and a long time to reach. Waiting over three years to make a profit is likely to make potential investors question the company especially one that seems to not be concerned with details as demonstrated with a business plan displaying several grammatical errors. I think Scrub-A-Dub needs to carefully consider several more raw material suppliers and manufacturers to see if there are cheaper materials and manufacturing available that will not decrease the quality of the tub divider. If these are found, start-up costs (and cost of entry) could be lower and the breakeven point could be reached in a shorter amount of time (optimally within two years). I would also make sure that the business plan was well-edited. Finally, I would advise Scrub-A-Dub to go after their patent as aggressively as possible to delay potential direct competitors from entering the market.