Cloud Mustang Executive Summary

7/24/2019 Cloud Mustang Executive Summary

1/7

Executive Summary

May 2015

CONFIDENTIAL Do NOT Distribute Without Permission Page 1of 7


2/7

Cloud Mustang Executive Summary

Company Overview

Cloud Mustang is an ecommerce enterprise resource planning (ERP) integrated

solution that helps retail operations accelerate selling product across multiple

online retail channels and in new markets. Cloud Mustang was founded by industry

veterans, Adam Shepherd and Grady Johnston in May 2015 and is registered as a S

Corp in Delaware. Cloud Mustang will operate from an office based in Dawsonville

GA.

Cloud Mustangs founders are seeking $10 million to fund operations for the next

five years. Cloud Mustang will be profitable by the end of Year 1 and will experience

a consistent increase in sales in the first several years of operations in-line with

ramping up marketing and sales efforts.

With a hard launch scheduled for June 1st 2015, Cloud Mustang will have three main

focuses:

Cloud Mustang will help manufacturers (large or small) to list and sell their

products on multiple channels and provide management of the entire sales

process including fulfillment, inventory management, and customer service

from a single dashboard and a cloud-based service.

Cloud Mustang will integrate with eBay, Amazon, and other e-tailers to

seamlessly process orders automatically and provide data analysis to help

customers better understand their marketplace and provide suggestions to

customers on how to better position their products.

Cloud Mustang will facilitate international sales through integration with key

ecommerce sites in the US, European Union, China, and Latin America.

Through partnerships with entities such as Alibaba.com or Amazon.uk,

obstacles associated with international ecommerce transactions will be

overcome with Cloud Mustangs ERP solution.



3/7

Keys to Success

Cloud Mustang has identified four keys to success that are instrumental in the

growth and the sustainability of the business. The first is the ability to identify ideal

customers and acquire customers at a steadily decreasing customer acquisition cost.

The second key to success is obtaining $10 million in capital investment in theupcoming 12 months. The third key is to exploit and expand multiple existing

revenue streams. The final key to success is staying ahead of industry needs by

continuing to refine current ERP solutions and developing new turnkey solutions for

retail vendors before they become a mainstream market need.

Industry Analysis

Ecommerce is a growing industry. According to the U.S. Commerce Department, U.S.

online retail sales during 2011 totaled roughly $194 billion. By 2013 this figure hadincreased to $262 billion, an increase of 13.4% over the prior year. In early 2014,

Jeff Jordan of Andreesen Horowitz wrote a widely quoted post that examined the

rapidly changing retail landscape. His takeaway was simple: Were in the midst of

a profound structural shift from physical to digital retail.

The ecommerce market is growing, and its growing fast. In 2013, the growth of

ecommerce significantly outpaced brick-and-mortar both domestically andworldwide. 2014 kept up this pace of growth, and according to recent projectionsfrom eMarketer, this trend is going to continue in the coming years:

Worldwide total retail will continue to grow between 5 6% through 2018.

Worldwide ecommerce will grow at a rate between 13 25%.

U.S. total retail will grow at a rate around 5.5%.

U.S. ecommerce will grow at a rate between 11-16.5%

Competitive Analysis

Cloud Mustang has two main competitors, ChannelAdviser and NetSuite.

ChannelAdvisor is an ecommerce company that provides cloud-based ecommerce

software solutions and publishes ecommerce sales data. While their ecommerce

sales data is popular, ChannelAdviser is an indirect competitor because their focus is

on creating websites and only partial integration into e-retail channels but not

providing a complete ERP solution.

NetSuite provides a group of software services used to manage a businesss

operations and customer relations including a cloud-based ERP solution. Their



4/7

focus is not on providing integrated solutions and their website (a main entry point

for potential customers) lacks user-friendliness and an intuitive presentation of

services.

Competitive Advantage

Cloud Mustangs competitive advantage is two-fold. Through an exclusivepartnership with Amazon and other e-retailers, Cloud Mustang can ship customerproducts in a variety of regions and these partnerships overcome the hurdlesassociated with cross-border selling and order fulfillment.

As there has been explosive growth in ecommerce in the last five years, andsustainable growth in the future, manufacturers are having a difficult time managingmany components of their online distribution including managing pricing andpricing competition between their online channels and in-store retail partners.Major retailers such as Target and Sears have been more aggressive with

manufacturers about pricing they see online.

The industry standard for managing pricing is through Minimum Advertised Price(MAP) where online distributers of a manufacturers products cannot sell below theMAP price. Third-party distributers often dont follow MAP and only comply whenthey get caught by manufacturers and it can be a challenge for manufacturers toconstantly monitor MAP across all third-party distributors globally. Cloud Mustangremoves the need for third-party retailers who had previously gained onlinedistribution locally and globally for manufacturers. Cloud Mustang provides anopportunity for manufacturers to go straight to market and sell directly to theend-users of their product, allowing for greater controls (pricing, inventory, etc.)

and much better margins on ecommerce sales.

Cloud Mustangs other key strengths include:

1) Cloud Mustang can list products on many channels, access more customers,and maximize sales quickly. Everything required to manage all channels isprovided in one simple solution. Partner channels integrated into oursolution include Amazon, eBay, NewEgg, etc.

2) Cloud Mustang aids in achieving a higher ROI through better order accuracy,on time shipping, manageable just-in-time inventory forecasting, anddecreased warehouse labor costs.

3) Cloud Mustang provides advanced analytics including sales, purchasing, andvendor data.



5/7

The Management Team

Those who are involved with the company ensure Cloud Mustangs likelihood of

sustainable success. Adam Shepherd will act as CEO/President of the company and

Grady Johnston will serve as Cloud Mustangs Executive Vice President of Business

Development. Mr. Shepherd has over 10 years of experience within ecommerceretail. As CEO of Sheer Imagination, Mr. Shepherd led the online retailer to more

than $20 million in sales through 7,500 SKUs and is one of the top 10 retailers on

Amazon. As a software architect, Mr. Shepherd designed and led the development of

a web-based ERP system, including purchasing, warehousing, accounts payable and

web analytics in order to effectively scale the company to meet rapid company

growth.

Mr. Shepherd has won several awards including Masters of Innovation from

Featherbone Communiversity and SBDC Small Business Person of the Year.

Throughout the course of his career, Mr. Shepherd has played a pivotal role in thedevelopment of technology to assist with on-going company needs. As a businessowner he understands complex business environments and has created keypartnerships to accelerate operations.

Adam is a graduate of the University of Tampa with a Computer InformationSystems degree.

Mr. Johnston has over 20 years of experience within the technology and securityindustry. As Vice President of Technical Operations and Security for LakePointSports Development Group, Mr. Johnston leads the technology and security teams

through every stage of planning, development, vendor selection, deployment, andcontrol of in-park technology. He also leads operational functions of variousLakePoint services including ecommerce, fiber, security compliance, data centeroperations, broadcast operations, hardware architecture, ERP operationalmanagement, and tenant services.

Throughout his career, Mr. Johnston has played a pivotal role in companies at theforefront of their industries, including Art Technology Group, Tiburon Enterprises,SDG Corporation, and CDW. While developing new companies, Mr. Johnston hasled executive, technical, marketing, and partner alliance groups and teams and has

developed strategic business plans. These companies he has worked witheventually sold for in excess of $1.3 billion.

Mr. Johnston is a graduate of Harvard University and University of Massachusetts.He has served as a non-commissioned officer in the United States Marine Corps,serving in various security and technology-related roles with a career spanningtwo decades and four continents.



6/7

The complementary skill sets of Mr. Shepherd and Mr. Johnston, in addition to theexpertise, leadership and guidance from Cloud Mustangs relationships withindustry leaders, will promote informed decision-making, proactive strategyadjustments and innovative new turnkey solutions for the company.

FinancialsCloud Mustang has conservatively forecasted revenues of $8,295,000 in Year 1,

$19,372,500 in Year 2 and $27,247,500 in Year 3. Cloud Mustang is destined to

succeed due to excellent, in-demand ecommerce ERP solutions, seasoned

leadership, and the insight to recognize how to capitalize on a great upward

trending market opportunity.

The following chart highlights the revenue, gross margin, and net profit for Years 1,

2, and 3.

Figure: Revenue, Gross Margin, and Net Profit Year 1 to 3

The following chart illustrates Cloud Mustangs Profit and Loss statement for Year 1

to 3.



7/7

Figure: Profit/Loss Statement for Year 1 to 3

Year 1 Year 2 Year 3

Revenue $8,295,000 $19,372,500 $27,247,500

Cost of Sales (commission fees) $819,000 $2,905,875 $4,087,125

Gross Margin $7,476,000 $16,466,625 $23,160,375

Gross Margin Percentage 90.13% 85.00% 85.00%

Expenses

Marketing Budget $1,200,000 $1,800,000 $3,000,000

Travel and Entertainment $300,000 $600,000 $900,000

Rent $75,000 $195,000 $600,000

Administrative Costs $75,000 $105,000 $105,000

Server $150,000 $200,000 $200,000

Loan Payback $900,000 $6,000,000 $6,000,000

Personnel Costs $4,740,000 $5,465,000 $7,100,000

Total Operating Expenses $7,440,000 $14,365,000 $17,905,000

Profit Before Interest & Taxes $36,000 $2,101,625 $5,255,375

Taxes (30%) $630,488 $1,576,613

Net Profit or Loss $36,000 $1,471,138 $3,678,763

Net Profit/Sales 0.43% 7.59% 13.50%


Cloud Mustang Executive Summary

Documents

Transcript of Cloud Mustang Executive Summary