Sports Medical Equipment Business Plan

Professional Athletic Equipment, Inc. is in the business of providing protection against both serious and minor injury among youthful sports participants. Such injuries may include painful bruises, broken ribs, spleen and kidney injuries, and more. The primary function of the “Body Armor” is to improve performance and confidence. The product may also serve to protect its wearer from the more severe outcomes resulting from commotio cordis. Death caused by a ball hitting the chest is a serious problem in youth baseball and softball. The U.S. Consumer Product Safety Commission has documented 38 such deaths since 1973. In all but two cases, the autopsies revealed no pre-existing heart defects of any kind. Of further concern is the fact that response to resuscitation efforts is poor. CPR is of little use when heart stoppage occurs. The injury produced by blunt external trauma is a functional rather than a structural injury. The trauma of impact produces a variety of cardiac electrical abnormalities, including repeatable arrhythmias and traumatic apnea.

The danger to young athletic participants is particularly high since almost all the energy of impact is transferred to the chest because ball rebound after impact is minimal. In a child the layer of soft tissue in the chest wall is thinner than in an adult and yields more readily than does a baseball.

Two areas of possible prevention have been researched extensively in the past:

1. Using balls with softer cores.
2. Various means of padded chest protection.

Changing the compression or size of the ball seems less pragmatic since chest impact from other sports projectiles such as softballs and lacrosse balls also can cause sudden death. In addition, a study of baseballs with softer cores suggests they have little protective effect and may, in some cases, actually increase the impact to the chest.

However, the limited protective padding worn by hockey players seems to offer some protection. Although hockey players routinely receive chest blows, and the hockey puck travels at high speed and is harder than a baseball, relatively few players have suffered commotio cordis.

Chest protection has not met with acceptance to date. The key issues are the high cost of outfitting teams with a protective product and whether or not the wearing of such a product will hinder athletic performance and/or mobility.

Dr. Smith has designed a product that can be produced at low cost, that is lightweight, that has performed in independent university tests as well as anything commercially available in energy absorption capability, and has been worn in competition for more than a year by his own son and other players competing in youth baseball in Anytown, Georgia. The players themselves report that their performance is not hindered in any way. They contend that performance is actually improved due to the mental confidence they experience from wearing the “Body Armor.” The fear of painful injury is reduced and hence the boys perform with fundamentally sound baseball mechanics and with more confidence.

The management of Professional Athletic Equipment, Inc. feels that the “Body Armor” can be successfully marketed.

3.1 Sourcing

Product production costs have been estimated with the help of ABC Plastics of Anytown, Georgia.

Fixed, depreciable costs are for molds for each size and other equipment. Lead time for molds is 18 weeks. Lead time for equipment to affix and shape the foam on the molded plastic part is 10 weeks.

• small mold– $15,000
• medium mold–$17,000
• large mold– $20,000
• foam equip– $ 9,500
• glue equip– $2,000
• rivet gun, misc–$1,500

Total Capital Equipment= $65,000

5 yr. straight line depreciation= $13,000 per year or $1,083 per month

Variable costs are as follows:

Molded part:

• small–$1.35
• med– $1.45
• large–$1.55

Foam back (cut to size with holes):

• small–$3.75
• med– $4.00
• large– $4.25

Glue–.02 per part

Labor cost per assembly–$1.07

Rivets, velcro and loops (est.):

• small–$1.48
• med– $1.48
• large– $1.48

Thus, over all unit variable production cost is:

• small–$7.67
• med– $8.02
• large– $8.37

At 50% small sales, 25% medium sales, and 25% large sales ave. weighted unit cost is $7.94.

Production rate for assembly is 75 units/hour.