FoamFloats Operations Summary:

All FoamFloats are hot wire cut foam, with some ply, graphite, and wire parts cut to suit. To date about half of the product has been built to order. Shipping charges were paid directly by the customer and are not included in the dollar sales on the spread sheet.

Manufacturing for the business is centered around a Austrian made StepFour CNC hot wire foam cutting machine. StepFour is still in business and basically offering the same machines today. (Parts, software (DOS?) and product support are available). Support by Step-Four has been nothing less than stellar. They respond to emails immediately, and ship products in very short order. They are clearly a professional outfit doing well with their products. Maintenance costs are nominal for the machine. The machine (depreciated $1000) represents 35% of the fixed assets ($8,859), and therefore would cost around $4200 to purchase new today.

Software to control the machine is also sold by StepFour. The new owner must learn the CNC Machine's software and be able to operate the machine. CAD experience is not necessary as the template drawings could come from another source such as Acrobat. The cutter software is provided with the machine, and updates for the DOS version would likely be free from Step-Four. The software is quite simple, comprising of just basic drawing functions and functions related to the movement of the cutting bow. As simple as the software is, it offers incredible flexibility in operation including adjusting the cutting bow power and speed at any point in the cutting process. I have been using the same software since I first bought the machine. It came with two types of software a wing cutting system, and a multi-cut system. I have found the multi-cut to be more useful and it can ultimately do everything the wing cutting software can. I will teach the buyer both the operation of the machine, and operation of the software. I will offer myself to answer questions after the purchase has been made... I want the buyer to succeed in this endeavor.

Float set cutting templates are in computer data files read by the CNC machines software. Designs were done in an "animation software" package not included in the sale. To create new shapes you could use other software, however you can use the software the comes with the machine to create new templates as well. Other software might just be easier -- or in the case of a 3D or CAD software suite might allow you to export the shapes from already existing 3D meshes. However, ultimately all the shapes could be created in the Step-Four software -- and 90% of my templates were.

The other large asset is the website (valued at about 25%).

The CNC machine and website, combined, are about 60% of the defined assets.

The website and .url are valued at $2200 together, and between them and the cutter are the business' most valuable assets. I built and maintain the website myself. I have redone the website once since launching it, and maintaining it requires nothing if your not going to have an "active" content element. I had an active element in the "how-to" section of the website for awhile. I offered free floats to customers who would send back a write up on the mounting and flying of the plane. It was an extremely popular offer, and I received more info and how-tos than I managed to get around to posting. People still send in pictures that I don't post anymore, however it would be smart to do so. Putting up pictures or how-tos are about the extent of maintenance needed on the site (if desired). That type of work is dead simple, and I could provide assistance on that for a very small fee

The operation of the CNC machine will be taught to the owner by myself. It is allot of fun and a very efficient way of producing products, and nearly limitless in its scope -- again this cutter is "magic". I have no doubt with your background that you can learn the operation of the cutter, and be able to produce new products using the software. I feel the only way to not attract viable competition against FoamFloats is to get very serious about marketing this product. This is not a business to pick up and simply maintain my current strategy or method of sales. This business needs a serious buyer who is willing to reach out every single week to new hobby shops, distribution networks and direct buyers. The manufacture and streamlining of the product has been achieved, and therefore the burden of the buyer will be on selecting the right combination of marketing and correct strategy for getting these float sets into customers hands. I have outlined some future strategies that I believe might be most profitable, and the buyer would be suggested to consider my advice. I am not a business savvy individual, but I have spent over 4 years selling this product on all fronts, and therefore do have some idea of the direction that might be most profitable. Part of me wishes I was in a position to pursue this direction myself, but alas, I have other interests tugging me away. This will take one person committing very seriously to the marketing and production of this product to realize its full potential. As far as "breaking even" in 3 years for your ROI I think just operating in the current "cut to order" direct market, refreshing the Horizon distribution contract to increase sales, and a small but steady magazine advertising campaign will do the trick. However, just relying on that strategy and not developing the marketing further would be risky. The best defense against competition is a good offence. This product is well branded: "Foam Floats" is a valuable name and .url. I suggest further branding that name by getting greater market exposure. A large part of the production costs is the foam, and getting to a point in the business where you can afford to buy it (and other hardware) in bulk will increase your profit from the "bread and butter" direct market, and make the volume market feasible. The timing on this move might be after a year of exploring market strategies, but should always be considered.

The buyer will likely have to setup in California or an adjoining state. The cost of shipping the boxes and cutter to other states will be a significant expense. Likely about $500 freight. The new buyer will also have to make a trip out for training, it would be best to do it all at once so two trips would not be required.