Practical Electronics

1. Practical Electronics At-Home Lab Kit

2. Company Officers • Joshua Durr • Steve Miller • Andrew Bower • Charles Lowe • Matt Dunlap • Michael Sanford

3. Business Description Practical Electronics (PEC) was formed to produce and market electronic testing equipment catered to the average consumer. Most testing equipment is costly and feature functions that the average consumer will never use. Practical Electronics will provide equipment with all of the needed functions at a reasonable cost.

4. Featured Product • The At-Home Lab Kit is a product that combines a function generator with a digital oscilloscope. • Function Generator – A device that creates waveforms using electricity. • Digital Oscilloscope – A device that reads incoming waves and displays them on a LCD.

5. At-Home Lab Kit At-Home Lab Kit Function Generator Digital Oscilloscope

6. Business Environment • Currently there is no comparable product on the market that combines these technologies. • Most function generators cost between $300 and $2000, are over 300 in³, and weigh over 5 lbs. • Most digital oscilloscopes cost between $500 and $10,000, are over 500 in³, and weigh over 10 lbs. • Each of these students and professionals use this equipment on a regular basis.

7. Competitors • Tektronix is the largest distributor of testing equipment. • Tektronix markets high quality equipment at high prices. • Hewlett Packard also has an electrical testing equipment division • These companies’ markets primarily consist of universities and large businesses, not individuals.

8. Competitors ctd. • Tektronix Net Income • First quarter 2002 $13.1 million • Hewlett Packard Net Income • First quarter 2002 $390 million • Less than 3% of net income is a result of testing equipment sales

9. Market • Practical Electronics will market its products to the average consumer. • High priced testing equipment will no longer be an issue. • The target market will be engineering students, electricians, professors, and hobbyists. • Each of these students and professionals use this equipment on a regular basis.

10. Market ctd. • There are over 100 major engineering universities in the US. • These universities on average enroll 150 freshman ECE students a year. • This equipment is essential throughout these students’ educations and careers.

11. Critical Risks • Delays • Management Experience • Public Acceptance • Competition

12. Funding • Initial start up costs will be approximately $100,000. • This money will secure the initial building, machinery, and any other fixed costs until the venture realizes a return. • We intend to obtain this funding through either a venture capitalist or angel funding.

13. Location • Starkville, MS • Labor/Wages • Educated labor pool, inexpensive labor • Building/Zoned land • Appropriate buildings exist, ample amount of appropriately zoned land • Transportation • Proximity to key north-south and east west federal highways, and the Golden Triangle Regional Airport

14. Standard Industry Code #3699 • Electrical Equipment and Supplies • Average Annual Sales for companies • 5-25 Employees $1.9 to $2.1 million • Mississippi $6.6 million • Above the nation average

15. Suppliers and Distributors • Suppliers • Digi-Key and Mouser will be supplying all of the electronic components for PEC. • Distribution • Practical Electronics will handle all of the production and distribution of its products. • Products will be marketed via the internet and catalogs and will be shipped via Fed-Ex and UPS. • Traveling sales representatives will also be employed for the marketing and distribution of products.

16. Financial Plan • Initial funds between $100,000 and $200,000 • Projected sales • Year 1: 800 units yielding $400,000 cash • Year 2: 1400 units yielding $700,000 cash • Projected net income • Year 1: $30,214 • Year 2: $135,375

17. Cost Analysis • Building Cost

18. Cost Analysis: Building Cost • Location: 102 Willow Rd. Starkville, MS 39759 • Size: 1000 square foot commercial building • Price: $49,900 to buy • Annual Taxes: $442.00

19. Cost Analysis • Building Cost = $49,900 fixed cost • Building Tax = $442.00/yr • Utilities = $10,000/yr • Equipment = $10,000 fixed cost with 20 yr useful life • Employee Salaries = $150,000/yr • At-Home Lab Kit Cost per unit

20. Cost Analysis: At-Home Lab Kit Function Generator XR-2206 $4.00 Resistors/Capacitors $3.00 Potentiometers $4.00 Switches $6.00 Digital Oscilloscope PIC 8515 $8.00 Resistors/Capacitors $4.00 A/D Converter $7.00 Switches $8.00 LCD Display $90.00 with Controller • The total parts cost is about $140.00 per unit • PCB $30.00 per unit • Enclosure $5.00 per unit • Labor is estimated to be $30.00 per unit

21. Cost Analysis • Building Cost = $49,900 fixed cost • Building Tax = $442.00/yr • Utilities = $10,000/yr • Equipment = $10,000 fixed cost with 20 yr useful life • Employee Salaries = $150,000/yr • At-Home Lab Kit Cost = $205.00 per unit

22. Break Even Analysis • FC/(1-VC/P) • Fixed Costs = $205,781 • Variable Costs = $205 • Price = $500 • To break even approximately 698 units per year must be sold.

23. Goals • Equip professionals and students with high-quality, low-cost testing equipment • Achieve strong customer loyalty • Begin to turn a profit by the second year of business • Create positive equity for stakeholders • Broaden product line by designing and marketing new products

24. Questions? Company Information can be found at: http://www.ece.msstate.edu/classes/design/ece4522/2003_spring/function_generator/