60-Second Business Plan
The pitch: Big Agnes cofounder Brad Johnson likes wandering the trails all day, but once he closes that tent flap, he'd really rather stay put. Which is tough to do with a slippery sleeping pad.
He'd bed down in his sleeping bag, perfectly positioned atop his self-inflating pad, only to wake in the middle of the night with the pad practically in another town. "Sleeping outside just got to be a pain," complains Johnson. "I wanted to be comfortable at night."
Johnson reckoned that the $145-million sleeping-bag market was ready for a breakthrough -- hence Big Agnes, a new sleeping bag with a built-in sleeve for a pad that makes life on the ground easier to bear.
Johnson, a former product manager for Lands' End who founded his own outdoor-education center, began building the prototype bag two years ago with help from pal Bill Gamber, owner of a small outdoor-clothing manufacturing company in Steamboat Springs, Colo., called BAP.
From there the two men pooled $80,000 in savings, borrowed $120,000 from family and friends, and launched the operation out of BAP's offices so they could share employees and warehouse space and keep overhead down. They borrowed the company name from Big Agnes Mountain, a local Colorado peak.
Johnson and Gamber boast that not only does their sleeping system solve the slippage problem, but the built-in pad eliminates the need for insulation on the bag's underside. That makes a Big Agnes bag at least 25% lighter than those of name-brand manufacturers like Sierra Designs, North Face, and Marmot. Plus, all six of Big Agnes's bags (with retail prices ranging from $129 to $339) are designed to accommodate the market's top sleeping pad, made by Cascade Designs. "We didn't want people to have to buy our pad," says Gamber.
After an enthusiastic response at a trade show in Salt Lake City two years ago, Johnson and Gamber lined up two Chinese manufacturers to produce the bags and pads -- as well as sales reps to peddle them to specialty retailers. The outdoor-goods stores are critical for building consumer buzz for new outdoor products. Big Agnes's strategy is to drive brand awareness through those retailers and then use the name recognition to sell the bags on-line.
The company is making inroads. As of mid-March, Big Agnes had signed up 120 retailers (most of them west of the Mississippi), including outdoor-gear giant REI, which is carrying the bags at 10 of its stores and on-line. Now Johnson and Gamber are making a strong push to expand distribution eastward.
The media have warmed up to Big Agnes, too. Last May, Outside magazine declared the product a "killer value." And a Washington Post reporter who sacked out in a Big Agnes bag on his way up Mount Kilimanjaro proclaimed that he was "cozy, warm, and slip-free every night."
A genuine happy camper.
The Quick Once-Over
Formal Projections: $490,000 in revenues, breakeven in 2002; $750,000 in revenues, $171,000 net profit in 2003; $1.3 million in revenues, $175,000 net profit in 2004; $1.6 million in revenues, $250,000 net profit in 2005
Total Capital Raised: $200,000 from personal savings and loans from friends and family and a $200,000 line of credit from a local bank. The founders are currently seeking $500,000 from an outside investor.
First-Year Operating Costs: $234,784
Biggest First-Year Expense: Advertising and public relations, totaling $30,000
The Weigh-in: Our Panel Rates the Plan
Sweet Dream or Nightmare?
Who: David Secunda, entrepreneur in residence at Mobius Venture Capital and Sequel Partners in Boulder, Colo., and former executive director of the Outdoor Recreation Coalition of America
Rating: 5 (on a scale of 1 to 10, with 10 being the highest)
"On the positive side, this is a nice idea -- a good product niche -- and it looks like retailers like it. But this industry is very competitive. It's filled with people willing to price their products fairly low because it's a lifestyle business. Big Agnes is dealing with razor-thin margins. What will make or break the business is if it's able to break even and be profitable with the level of sales the founders indicate. How realistic is their break-even analysis? I'm skeptical because it's hard to break even on low volume and small margins. The market segment they're in isn't all that big. And there are huge, entrenched players in that space already. If Big Agnes is even marginally successful, what's to stop the big companies from taking that design forward?"
Who: Annie Getchell, coauthor of The Essential Outdoor Gear Manual (McGraw-Hill, 2000), who lives in Camden, Maine
"They've positioned themselves clearly and seem to know the industry. The product sells at an attractive price point, and for anyone who spends a lot of nights on the ground, it's a great idea. They also have the most hip, hustling public-relations company. Backbone Media carries the premium lines, so if you're being marketed by the premium marketer, you're doing really well. On the other hand, I've talked to retailers who have seen and handled the product but aren't carrying it because they thought it would require a lot of effort by their sales staff to show customers how the bag works. You can't just hang it alongside other sleeping bags."
Who: Michael Hodgson, copublisher of Specialty News, an on-line industry newsletter based in Grass Valley, Calif.
"Sleeping-bag sales last year were in the toilet, and camping and backpacking have been flat. So Big Agnes is trying to sell into a category that's in the doldrums. And I'm not sure they've got an in-store marketing plan that will make their bags stand out. I don't see them doing anything special at point of purchase, so in stores it will look just like any other sleeping bag. They're in some good retailers, but they're still missing some key ones. And if they move too aggressively or too fast with direct on-line sales, they could risk alienating the stores. Sure, you can say you won't discount your goods on-line, but what happens when you have to worry about excess inventory? If you're trying to break into the retail market, you either support it or you don't play in it. They're taking a big risk if they try to play both sides of the fence."
Who: Sam Leslie, camping buyer at Galyans, a chain of 26 sporting-goods stores based in Plainfield, Ind.
"The outdoor industry has very little innovation. You have big companies with big budgets for trying things, and they're just sitting on their hands. So any time anyone comes along with an innovative idea, it's worth pursuing. The product has a high degree of quality and it's innovative, so it will get placement based on that merit alone. And any good backpacking shop will display the Big Agnes products well. Whether the bags sell through to consumers is another thing. Big Agnes's break-even point of $490,000 in sales seems reasonable to me -- it shows that they're going about it in a conservative fashion, and that bodes well. As soon as I think they're a stable company, we'll support them -- I'll put the product in a couple of stores."
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