One Hit Wonderful

Executive Summary

The following report outlines the business operations performed by the One Hit Wonderfuls, a group of five entrepreneurship students in the Wisconsin School of Business, over the course of the 2014 spring semester. The group undertook the task of creating a viable business from start-up funds in the amount of $50. For this venture, the five members chose to create a homemade jerky business. Making the jerky from venison and beef, the group sold to friends and family, primarily those on or near campus. Through the numerous hiccups that most start-ups face, the One Hit Wonderfuls were able to settle into a profitable business model. At the conclusion of the Entrepreneurial Challenge, the One Hit Wonderfuls earned revenues of nearly $100 to give them a total return on investment of 80.91%. Once the kinks were worked out of the original blueprints, the jerky business turned out to be a potentially sustainable venture for the young entrepreneurs. The invaluable experiences endured and lessons learned during this Entrepreneurial Challenge are communicated throughout this report.

Evolution of the Business Model

Our business model endured quite the transformation over the duration of this Entrepreneurial Challenge. The first meetings we held were essentially brainstorm sessions where each member suggested several ideas for our business. A lot of these ideas were good in theory, but with limited time and resources, very few were considered viable. Our most feasible business ideas were as follows:

· Breathalyzer: One of our initial ideas generally well received by our peers was the idea of buying a breathalyzer and charging college students to use it on a Friday or Saturday night. The initial plan was to travel from bar to bar on campus and ask those waiting in line if they were curious about their Blood Alcohol Content. Team members would take turns spending a weekend night canvassing the bar scene for consumers. The cost of the service would be approximately one dollar to cover the initial investment in the breathalyzer as well as mouthpieces to ensure sanitary practices.

o Pros: This business plan requires a rather large investment upfront for the breathalyzer, but very little marginal costs to provide the mouthpieces. Judging by the response we received in class and from others we surveyed, our initial investment could have potentially been recouped in a single night. The reading given could serve as a reminder for students on campus to be responsible.

o Cons: A member of our team wasn’t entirely comfortable with this business plan. It was a grey area in terms of his moral principles, and for that reason we did not pursue this endeavor. Furthermore, while the service was intended to be a tool of guidance for students to drink responsibly, it could be misconstrued as a competition between friends to be the most intoxicated. Lastly, the legality of this plan was in question. While we would not have advertised it as such, consumers paying for a BAC reading could potentially gauge their sobriety solely off this unofficial measurement and operate a vehicle while under the influence. If someone were to be pulled over for driving under the influence and mention our service, it could have severe repercussions.

· Winter Hat Sales: This particular idea could have contributed substantially to our bottom line as a supplementary form of income. Hamza has had experience buying authentic Pakistani winter hats and selling them for profit here in the States to friends on campus. His father was overseas for several weeks in the beginning of the semester and would return sometime during period 2 of our business operations. Our plan was to have his father travel the few hours from where he was staying to the city in which these hats were sold. Upon his return, he would have brought three or four hats back to Madison, where we would sell them to students on campus. The plan eventually fell through when Hamza received word that his father would not be making a trip to the city where they were sold before he returned to Madison.

o Pros: Hamza had experience selling these hats before, and already knew of a few students who would be willing to buy them for more than three times their cost upon their arrival. The hats cost very little to acquire and could be sold at a high margin.

o Cons: The business was not sustainable. The lag time between shipments under the proposed method of acquisition would have only allowed us one round of sales during the Entrepreneurial Challenge.

· Homemade Jerky: Venison jerky is a healthy, lean snack that is hard to come by if you don’t make it yourself. The idea of venison jerky was conceived when other teams were discussing their plans for puppy chow and snack production businesses. Talon had some experience in making homemade venison jerky and already owned a dehydrator. Owning such an expensive piece of equipment meant that initial costs for production would be low. Our plan was to provide flavorful venison jerky to college students at a fair price.

o Pros: Talon’s access to a dehydrator meant we wouldn’t have to sink our initial capital on an expensive piece of equipment (breathalyzer) and dig ourselves a financial hole for the rest of the challenge. His experience making venison jerky before ensured we were not going into this business blind.

o Cons: Venison meat is not sold in stores, so acquisition could have been (and was) an issue. Production runs for jerky are much longer than the other snack businesses proposed by other team members.

It wasn’t until the middle of the second period of operations that we completely ruled out both the breathalyzer and winter hat ideas. Once we were focused on the task of creating venison jerky for sale, we began searching for raw materials (venison steaks). Our initial thoughts were that, living in Wisconsin, it wouldn’t be hard to find venison to create our jerky. However, venison proved to be as scarce a resource as any business could encounter.

We made the mistake of pursuing this business plan without knowing exactly how much venison we could get our hands on. Talon was able to supply the bulk of the venison steaks via a generous donation from his roommate, while Brad was able to supply about one additional pound of venison for dehydration. After the going through the ordeal of two failed deliveries, Talon bought the cure and seasoning that is required to create a dehydrated product that won’t go rancid. It was after the first batch of production that our team realized that we would not be able to sustain our venison jerky business.

At this time, we were looking for alternatives to venison that would fit within our general business model. Enter: beef jerky! We were forced to evolve into a more dynamic business, and offer a product whose raw materials weren’t so scarce. The first batch of beef jerky did not turn out as planned. The difference in moisture contents required an adjustment in the time we took to dehydrate the beef, and while venison was naturally flavorful, beef tasted blander after dehydration. We adjusted the recipe to account for both the moisture and flavor issues, and it yielded a much higher quality product the second time around.

After modifying the production process to fit our new offering, we faced another inconsistency in our business model. We were spoiled with the luxury of virtually no marginal costs as our venison came by way of donation. By changing our product to beef jerky, we now had to purchase lean steaks with our startup funds. Our initial business model did not anticipate such an expensive marginal cost, and our original price of three dollars per three-ounce bag would no longer turn a profit. It was at this time that we recalculated the price for our beef jerky to five dollars per three ounces. This ensured that we would be able to afford the cost of our lean beef steaks and still profit in the long run.

Final Business Model

The trials and tribulations we endured over the first three periods of operations led us to our final business model. While not far off of our original business plan, we were forced to make some modifications to what the One Hit Wonderfuls offered consumers. At the conclusion of our business operations, we were strictly selling homemade beef jerky to friends and acquaintances. Most of our customers in the last period of sales were repeat customers, having already bought at least one bag of jerky from us. The repeat customers’ insensitivity to our price increase showed us that we really dialed in on a great recipe for a great product that everyone wanted.

· Production Process: Each round of production begins with buying lean beef steaks from the local grocery store. Eye of round steaks tended to give us the leanest, most consistent, raw product. Excess fat was removed from the steaks and they were divided into strips of meat approximately one inch in width and ¼ inch in thickness. Next, the strips were sprinkled with the prescribed amount of cure and seasoning. This was the bottleneck of our process as it takes a full 24 hours to properly cure the meat to ensure it won’t spoil at room temperature once dehydrated. Finally, the cured meat goes into the dehydrator for eight hours to complete the transformation into our final product. Bags of jerky were weighed to three ounces and ready for sales.

· Distribution: Our primary clientele were friends and family. During the final stages of our business operations, the majority of jerky sales were repeat customers. In the last two batches, almost half of the bags were already presold to customers before even being made.

· Pricing: $5 for 3 oz. of homemade beef jerky

· Advertising: Word of mouth.

Viability of Business Going Forward

If our business operations were to proceed indefinitely, we are confident that the One Hit Wonderfuls would continue to be profitable. The main hurdle we faced in executing our original plan was our inability to acquire enough venison. After we switched to beef and adjusted our prices to include room for profitability, the business ended up doing very well. However, if operations were to continue, there are a few minor changes we could make to maximize efficiency. Sourcing the meat was a bit difficult because Madison Fresh and Walmart did not always have the type of steaks we wanted in stock. It would behoove us to find a grocery store or meat market that could meet our demand at any given time. Another issue going forward would be the timing of production. It is a lengthy process, and with the schedule that comes with being a full-time college student, it was difficult to find time to prepare the meat for curing and seasoning. Though we had great success with the particular brand of cure and seasoning we used for the jerky, it would be worthwhile to investigate other means of curing meat that maybe don’t take a full 24 hours. Finally, if demand grew large enough we could invest in another dehydrator to be able to create twice the product in the same amount of time.

Conclusion & Reflections

Reflecting back on the entire project this semester, with all the ideas, pivots, catches, and finally, success, it must be said that this was a great learning process on how to be adaptable and flexible with a business model, if nothing else. We learned many lessons about how to take unexpected twists and turns and channel them into a successful business model. In short, many of our original ideas didn’t go as planned, and we had to adapt to them. Learning how to change your own course from the original plan is probably the single most important lesson we learned from this project. Though just about anything that could go wrong, did; there were several keys issues in particular that really made us have to think (and work) creatively to get our project profits in the black. Though we’ll analyze each of these problems we faced in depth, and what lessons in particular we learned as a group of entrepreneurs from them, the list is:

· Delayed ROI: As can be seen from our financials, it took a long time to finally start making a profit. Though it all worked out in the end and we made our goal, there were some hard times where we really had to re-evaluate our current model to see if it would take us where we needed to go, financially, in the short amount of time that we had. This point was essentially a culmination of the rest listed below.

· Difficulty ordering supplies: This was a serious issue for us, as delays in shipping and a delivery problem with our seasoning really put us behind the eight-ball in starting our production process. It wasn’t until period 3 that we were able to finally start producing jerky.

· A lot of good initial ideas, but we had to pick just a few: This isn’t as serious of an issue as the others, and probably not one commonly run into, but it was a strain at the beginning. Deciding what few ideas we were going to put our group’s time and effort into was difficult. This was especially tricky with handling the group’s working relationship, because everyone had good ideas and wanted to work on theirs.

· One of our initial and best ideas fell through: Our plan to sell quality, foreign winter hats, which we could acquire very cheaply, ended up not gaining any traction. Initially, we thought this could supplement our jerky revenues, but we had to abandon the idea and adjust our plan to just the jerky production.

· Myriad issues with finally getting the jerky to market: We ran into almost every problem under the sun in finally finishing the deer/beef jerky packets. Problems with dehydration, getting the venison in, and properly seasoning the product all caused numerous delays and issues that we had to work together as a team to get around.

· Unsustainable initial pricing strategy: What was initially a very profitable pricing strategy considering the generous donations of venison to our business ended up being unsustainable in the long run. Running out of venison meant we needed to find other meats to dehydrate. The high cost of beef steaks caused us to restructure our pricing strategy.

Now that we’ve given a little background information on each of the biggest issues our group faced, here’s some more detail on how we resolved them using the unique skills of each team member, and what entrepreneurial lessons we learned as a group in how to start and run a business:

· Slow Financial Return: This problem was a pretty obvious one; we saw quickly after we had purchased the seasoning (which was over a whole month before we actually finished the first batch of jerky) that there was a lag between that and profits. On a normal business project, over a month between initial investment and the first returns isn’t an issue, but when it’s a three month project, that is a LOT of time. Talon took care of this problem; he simply buckled down and got the seasoning and made the jerky as soon as he could, despite other problems, to get us returns quicker and get our financials under control. Despite the fact that we were only operating with our initial capital and no outside investors, we felt the pressure to perform. This experience serves as a reminder to stay calm and resolve the issue if in a future endeavor, we have investors pressuring us for quicker returns on investment.

· Inventory Issues: Again, this was something Talon handled, and very well. We ordered some high-quality jerky seasoning, but the order took a very long time to get in. USPS attempted to deliver the seasoning and cure during spring break, but the package required a signature. After two failed delivery attempts, the package was returned to sender. This was a huge unforeseen delay, and set our operations back an extra week. Instead of sourcing the cure and seasoning online and relying on delivery again, Talon bought seasoning from a brick-and-mortar store, and got started on the dehydration process that night. This whole ordeal taught us how to handle sluggish suppliers, and to have preparations ready if you’re going for Just-In-Time inventory.

· Best Ideas: This is a fairly typical issue, but there were a lot of good ideas that we had to decide as a team to weed out before settling on the jerky and winter hat ideas. This was a good lesson in how to keep yourself open to your partners in a business venture and evaluate their ideas with an unbiased temperament.

· Winter Hat Idea Fell Through: Again, this was a pretty cut-and-dry problem and solution, but it wasn’t until our second round of financial projections that acknowledged the fact that we weren’t going to be able to get these hats in time to sell them, and that we could no longer factor that business component into our financial projections. This was a big pivot point for us, and really drove home the fact that sometimes your business model has to make a big change to succeed, so you must be flexible.

· Issues Getting Jerky to Market: This was a BIG one. The venison jerky plan followed Murphy’s Law, in that everything that could go wrong did. There was the cure and seasoning fiasco, our shortage of venison, and the trial and error of finding the right mix of seasoning and dehydration time for our jerky. Talon was instrumental in dealing with these issues and took the time to explore the feasibility of making a beef jerky and modify the recipe to create a quality homemade jerky. This was a great lesson in how to handle unexpected supply disruptions, optimizing the manufacturing process and modifying our plans to meet the consumer product we needed.

· Pricing Strategy: With the initial donations of venison steaks from both Brad’s parents and Talon’s roommate, the only contributing factor to the COGS in the venison jerky was the seasoning and cure. When our team ran out of venison to dehydrate, we were forced to explore other options. Lean beef steaks were our best option going forward, but given our initial price of three dollars per three-ounce bag of jerky, we would have taken a tremendous loss on producing the beef jerky. We were ultimately forced to increase the price of our product to five dollars in order to maintain profitable business operations. The panic we felt upon the realization that our modified product was incurring a loss is one we won’t soon forget, and it helped us realize the importance of a sensible pricing strategy.

Our team, the One Hit Wonderfuls, is comprised of Ibrahim Raheem, Brad Navin, Talon Zarling, John Prezzia, and Hamza Faisal. We each had specific talents and special skills we identified at our first team meeting, and this was the rough breakdown we established:

· Talon Zarling: Product development specialist. He had the idea in the first place of selling venison jerky, and took most of the work in producing and bringing this to market.

· Brad Navin: Advertising leader. He also worked with the jerky and helped to get the word out about the jerky.

· John Prezzia: Project manager. He helped coordinate project meetings and write up the team charter.

· Ibrahim Raheem: Business model expert. He designed the actual business model and made some modifications when we had to.

· Hamza Faisal: Sales representative. He helped sell our final product to consumers across campus.

We also had to figure out how to develop our project and business model in a way that helped bring out each member’s unique talents. We decided at our first meeting, that in addition to the project duties we were assigned, you would help out other members if they had an issue with their tasks. This was a great way to build the team and helped the project in several ways. For example, Brad helped Talon with sourcing and curing the meat, and Ibrahim helped John with the team charter. These examples of working across responsibilities helped our jerky idea succeed in the end and we will remember them when working with real business groups in the future.

Throughout the semester we have learned that team formation is a critical component in the success of an entrepreneurial business. For us, this task was rather difficult considering none of us had worked together in a business or even any other project before. Though Professor Navis encouraged us to network a few sessions before our team formation, we didn’t quite understand the gravity of the task at the time. An ideal team would have featured members with expertise in different the facets of our business model, but without knowing what our business would be, it was hard to follow this plan. We all did a good job of taking on responsibilities in different areas as denoted above, but looking back, there were a few things that our team was missing. Expertise in web design and just general blogging experience would have been helpful to have. None of our team members had extensive experience with Blogger prior to the challenge. Furthermore, a member with a solid foundation in finance would have been advantageous, especially considering our pricing problem. Overall, our team did well in pooling our talents and working toward the common goal of profitability.

Finally, it is important to analyze how we would have done the project differently if we had to do it all over again. First off, we would have setup our initial business canvas with a lot more flexibility then we actually did. We didn’t really plan or anticipate any major changes to it, and having to drop the hat idea and modify our product ingredients (venison to beef) posed some formidable threats to our success. Those were both major evolutions in the business canvas, and it would’ve gone smoother if we had planned in more flexibility then we did. Also, we would probably split up the work with a little more involvement from everyone in most of the parts right from the start, instead of thinking everyone will have their own individual piece. In all, however, most of our problems were unforeseeable and taught us a lot of great lessons about starting and running a business that hopefully will serve us well in our own entrepreneurial careers.

One Hit Wonderful

Wednesday, April 30, 2014

Business Model Canvas

Entrepreneurial Challenge Final Write-Up

Monday, April 21, 2014

Farewell

Thursday, April 10, 2014

Update 4/10

Saturday, April 5, 2014

At Long Last!

Monday, March 24, 2014

Tuesday, March 4, 2014

Progress Report, March 4th