Star-Nail    

Business Plan

First round patent purchase and proof of concept machine development ............…$10 Million

Stock/Equity in the corporation to be negotiated

Investor’s Debt Retirement

Jay Rotolo, Barry Seace and the Star Nail inventor, Frank Potucek have developed a professional relationship, to raise ten to thirty  million dollars for the purpose of bringing this promising  new invention successfully to the marketplace.

To accomplish this task, it will be necessary to first construct a commercially viable production model of the Star Nail Machine to make the nails. Then relationships with standard nail distributors and retailers will have to be developed and secured. Finally, full scale Star Nail production, channel marketing and sales will need to be in place to then realize the ultimate goal of bringing this nail to the global marketplace and producing the desired profit for all parties involved.

Our main goal is to produce a technically superior nail product that will use roughly one half of the raw wire material to manufacture this new, patented "Star Nail". By using significantly less wire material in the manufacturing process of the star nail, a factory utilizing numerous production ready Star Nail machines could produce extremely high profit margins compared to the current round nail manufacturing model.

Currently, the key players that remain in the nail manufacturing business such as Keystone Steel & Wire or Titan Steel & Wire are also in the raw wire producing business. They not only produce wire used to manufacture nails, but manufacture all types of fasteners, fencing and other products that use high percentages of this raw steel wire material. Typically, the amount of material used to make nails is between 70-90% of the actual cost of the nail.

The Star Nail will require about half the material to make a nail, ironically resulting in a technically superior nail. Because it takes significantly less material to produce a nail, the profit potential of this new manufacturing model will be significant.

Company Overview:

We are presently exploring two ways to complete this project.

One way would be to find a suitable manufacturing partner that is already in the same or similar field of manufacturing and marketing. At this point, Stanley Tools and Fasteners has our prototype nails, and they are conducting tests before further talks. Working with a manufacturing partner is easier, but the financial rewards are significantly less.

Another way is to raise adequate money through private investors, a venture capital group or a public offering. A new company will be formed whose sole purpose will be to build a machine that will produce nails at the industry standard rate of 1,100 nails per minute.

A small manufacturing plant will be set up and the company will assemble the talent to staff this plant to produce large quantities of the Star Nails. Principals in this business other than investors are listed below.

Jay Rotolo has been involved in electronic design, marketing, sales and distribution of computer aided design and manufacturing systems for 20 years. He will be involved in day to day operations, sales and marketing of the new Star Nail enterprise.  ViewResume

Barry Seace is the sole owner of an 18 year old custom furniture manufacturing shop, a computer graphics designer and an adjunct professor at the Ringling College of Art and Design,. He will be in charge of initial manufacturing and plant production.  View Resume

Frank Potucek, who has over 200 patents in his name and is the Star Nail and Star Nail Machine’s inventor, will be retained as an engineering and production consultant. Any other staff will be hired through professional staffing organizations as needed.

There have been three prototype Star Nail Machines produced between 1989-1993. The initial designing and building process produced the current Star Nails that are used for samples. The first machines were not reliable, but the lessons learned from building them have allowed the inventor to redesign the second generation Star Nail machine. The original machines are no longer in existence.

The newly formed company’s main goal is to perfect the Star Nails manufacturing process and to create awareness and demand for Star Nails.

Product Marketing Strategy:

The first phase of Star Nail marketing will be to replace the standard round nail in all commercial/residential building markets and pallet building markets. The typical sales channel would be the same as the round nail and would include building/contractor distributors such as Senco, Grainger, Allied, etc.

We may sell to these companies using our own factory sale force and resources or use the resources of established manufactures representatives already selling in these markets. Our secondary markets would also be the same as the standard round nail and these would be large retail outlets such as Sears, Home Depot, Wal-Mart, etc.

Selling to these large retailers may require the implementation of EDI or just in time ordering/stock replenishing which is typical when dealing with these large entities.

As a new unknown company and with a visually different but intriguing product it will be necessary to develop an interesting and unique marketing and promotional program. This program may use seminars, trade shows, industry standard press releases, magazine ads and product giveaways to create demand and excitement. We will utilize typical informational press releases and new product press releases and any variation needed to market this product successfully.

According to the U.S.Commerce Department, The nail & fastener business is a five billion dollar industry in the U.S., and twelve billion dollar industry globally. This industry is stable, mature and very established, unlike the volatile high technology industries, which fluctuate wildly.

The Nail/Building industry is growing nationally, and internationally. The key industry players have been consistent and stable for many years.

Even if the Star Nail only captured 20 percent of the domestic market, which could easily be done on price promotion alone, the Star Nails portion of this industry would be over one billion dollars annually. Because the Star Nail is cheaper to manufacture, the profit potential is large.

The above sale figures include Standard Nails, Pallet Nails, Specialty Nails and Collated Nails. The most expensive and profitable of these nails is the collated nail.

The collated nail is the most expensive nail to manufacture because it takes additional human intervention to make the collated cartridge and an additional 10-15% material cost to bundle or strap the nails together to make the cartridge. But the collated nails sell for such high prices, that the increased production costs are acceptable.

The reason the entire collation process is important to the overall Star Nail manufacturing model is because the Star Nail may not require added material costs for its collation process, because the fins of the star nail can fasten together by mechanical forces. This makes additional collation material unnecessary, and ironically no or little human intervention will be needed.

At this time, the patented automated collating process will be put on the back burner until the bulk Star Nail is in full production and sales and marketing channels are developed. In the interim the Star Nail can be collated just like standard round nails. Star Nails will also work in industry standard nail guns.

Sales Forecast:

See the attached spreadsheet for specific comparisons and figures, but for quick information comparisons, the manufacturing bottom line summaries are as follows:

A Star Nail plant with 1- machine at 16hr days (per year - net profits)……….$163,721

A Star Nail plant with 40 - machines at 16hr days (per year-net profits)....…$6,548,850

The profits of an automated collated Star Nail plant would be approximately 2-3 times the above profit numbers. Estimated cost for a new production model (2^nd run) Star Nail Machine, should be about $350,000. A typical factory with 40 new Star Nail Machines would cost approximately $20 million dollars, which could be paid back in 3 to 5 years.

 

Preliminary Financial Plan

An initial phase will be necessary to purchase the star-nail patents and to develop a  "Proof of Concept" machine. The  investment required to purchase the patents and re-design and re-engineer the Star-Nail machine will be approximately $8  million, and an additonal $2million will be necessary for initial one time start up and day to day operating expenses. This phase will require a modest office and minimal overhead. The majority of activity during this period will center around the re-engineering and fabrication of a commercially viable Star-Nail machine. Much of this activity will take place at other locations such as independent machine shops and engineering facilities.

The second phase will span a two to three year period. During this time we will build and operate a fully operational Star-Nail plant with 40 final run machines.  This growth period will begin with the selection of an adequate manufactureing facility. The next step will be to install the first group of machines and hire and train their operators. Sales and marketing efforts will begin immediately upon the production of Star-Nails, and will be accelerated as new machines and staff are added and production increases. This second phase will be completed when all 40 machines are funcitional and the sales and marketing department has developed a successful sales channel for the factories output.  This second phase will require an additional $20 millon.

The nail business hasn’t changed for 50 years and the basic plant and distribution costs are the same; between $.85 to $1.50 per box of nails. We do not intend to change the nail factory operations or distribution systems. What we do intend to do is significantly reduce the raw materials used to produce the superior Star-Nail. Since the Star-Nail's weight is half the standard nail, we will significantly  reduce standard industry shipping and handling costs as well.

A detailed business plan can be provided to those who are interested. Please contact us.

Manufacturing Partner Scenario   >

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