Business Plan

Kansas Robotics Supply Inc

Business Plan

David Pasley, Sr. Robotics Engineer and Founder, Created on August 10, 2024

Executive Summary

• Products - Kansas Robotics Supply Inc (KRS) manufactures high quality, state-of-the art robotics parts for manufacturing machines and other types of robots. The introductory product line is a class of modular robotic actuators which accommodate a high range of motion; which can be constructed durable and cheap; and which include other electronics and software products that make integration of these actuators into an intelligent platform relatively easy to carry out mechanically, electrically, and in software. Other prioritized products include mounting structures, end-effectors for factory manipulators and other fabrication machines, ground-up robotic systems for manufacturing or service. We also offer our products along with wholesale products for sale and resale on our retail website.

• Services - KRS offers short- and long-run manufacturing machines and services to companies. KRS also provides specialized/custom engineering and prototyping services, and an internet store-front for robot parts. KRS will support mechanical parts, electronics, and down the line have plans for ASIC and other chip manufacturing, and other special processes as part of a full-service robotics part manufacturing facility.

• Customers - KRS serves the manufacturing community, the autonomous systems enterprise, and the AI open-source/research community at various levels. The ultimate goal is to produce a product which could be appealing to regular electronics consumers, tapping into the broader market of non-technical individuals who want or need a service robot or robotic assistance in some form.

• Future of the company - KRS has a three-pronged approach using 1) external contracts, 2) in-house products or services, and 3) retail sales of our own and others' products. This gives us a way to start with what works best or catches on first, and use it to develop the other areas of the business to their potential. The current drive is to use machines we've acquired to build more machines to scale our capabilities and services. We will also be focusing on building up a strong marketing and sales presence, and our administrative team. We will be utilizing sub-contracts to fill gaps in our services also, in order to be able to  offer our full capabilities before they have been fully developed.

Company Description

Mission Statements 

•  To foster the growth of domestic manufacturing by providing high quality, affordable robotic parts and precision machines to United States manufacturers; 

• To  meet the racing demand for AI-ready platforms and help establish the United States as the technological leader in that race; and

• To enable broad access to new AI technologies as they mature enough to become practical for service use, by creating a line of robotic products aimed to be simple, functional, affordable, and AI ready.

Principal Members

David J Pasley - Owner/Founder, Robotics Engineer, CTO, Technical Writer

Daniel Q Pasley - Manager, Designer, Marketing and Branding Specialist

Karen Huffman -  Administrative, Tax and accounting

Legal Structure

KRS is an S Corporation, incorporated in Topeka, Kansas.

Market Research

• Industry

KRS is part of the broader robotics industry, with branches in engineering and development, manufacturing, and retail sales. The global market for robotics was valued at $67.9 billion in 2023. The market is expected to grow from $78.4 billion in 2024 to $165.2 billion by the end of 2029, at a compound annual growth rate (CAGR) of 16.1% from 2024 to 2029.  Robotic sales in North America manufacturing grew by 12% in 2022, with the automotive industry responsible for the most new robotic installations, followed by electronics and plastics. The medical robotics market is expected to triple by 2032, the growth of the construction robotics market is still slow but accelerating, and the home robotics market is expected to double by 2028. The broader service robotics industry is growing with a CAGR of 25%. Defense robotics are also seeing slower growth than aforementioned sectors, with a CAGR of 7%. The technical maturity of robotics and AI products are what is behind much of the growth, and new applications for robotics and AI are being found in nearly every industry. The global artificial intelligence market size is projected to expand at a compound annual growth rate (CAGR) of 37.3% from 2023 to 2030. It is projected to reach $1.8 trillion by 2030. Forbes called the robotics industry "the next multi-decade trend to watch."

Chip manufacturing in the U.S. is also receiving a lot of attention and government incentives. As this market analysis was being carried out, Texas Instruments scored a $1.6B federal grant and $3B in federal loans to build three new chip manufacturing plants in the US. The Semiconductor Industry Association projects 203% growth, and the US is expected to grow its share of global chip manufacturing to 28% by 2032, up from 0% in 2022. This push to bring chip manufacturing in the U.S. should result in more abundant chips, thereby driving consumer prices of robotics and other products down significantly.

In Kansas, manufacturing accounts for 15.6% of the total output of the state, and 11.5% of the employment. There were an average of 157,000 manufacturing jobs in Kansas in 2020. Advanced manufacturing such as aircraft, engine and parts manufacturing is the number 2 industry in Kansas, generating $25.3B of the state's $28.6B manufacturing economy. The automotive industry, however, is experiencing a shortage of chips which ultimately affects Kansas manufacturers. As an example, GM laid off 2000 employees in Kansas, September of 2023.  The robotics manufacturing industry and the tech sector overall in Kansas is underdeveloped, likely due to a lack of interest in Kansas as a place to work in tech; but there is a manufacturing workforce which could support growth in this sector, and there are a number of incentives for manufacturers to do business in Kansas. The Kansas Department of Commerce "works tirelessly to educate businesses and key industry leaders on the benefits of starting or moving their operations to Kansas. Companies are attracted to a favorable legislative environment, significant cost and tax advantages, a skilled workforce, and customized incentive proposals."  

• Detailed Description of Customers

The fact the US falls behind the global CAGR is something KRS takes to heart, and will contribute to the market in the US not only by developing robotic parts and platforms, but also by supporting other robotics manufacturing and automated manufacturing companies within the U.S. who need design, prototyping, or manufacturing support. The primary group of customers KRS targets is manufacturing startups, and also existing manufacturing companies who are expanding their volume or advancing their capabilities. 

New and recent developments in the field of artificial intelligence have created a demand for AI-ready platforms, such that NSF grants are available to conduct research in this area, and KRS will be competing for these grants as well. NSF could be considered a customer in this scenario, but the products resulting from the research will have a customer base in AI developers and the open-source AI software community. Meeting a demand for AI-ready platforms for the software development and open source community will eventually lead to products aimed at normal consumers.

• Company Advantages

1. Timing

As covered in the Industry section, the robotics market is growing, and is expected to continue growing for several decades. At the same time, robotics products and the cost of the enabling technologies have still not reached the price point appropriate for consumer markets, or a technological maturity level appropriate for consumer products - but the cost and technical maturity is rapidly approaching ready. KRS is striking at a moment which will put us ahead of the market, ready to meet the demands of consumers and companies who serve these consumers right as the demand fully matures. The robotics market is likely going to get saturated with new companies as well, and KRS will be poised to turn those new companies into our clients. KRS is not a company being founded on top of a popular trend, it is being founded ahead of it, to support it, at a time when this support will make a huge difference in the US's standing in the robotics race. This is all to say that, while many other robotics startups will be affected by an eventual market saturation, KRS will greatly benefit from it. KRS is also establishing itself during a time when there is a push to bring advanced chip manufacturing to the US. For KRS, it not only means that we will have more affordable, short-lead chips available for our products, but it also means that we could seek funding to enable chip manufacturing in our facilities and have a good chance to receive it.

2. Location

The position of KRS in the center of the US gives us an advantage over other domestic companies because we have equal geographical access to most of the country.  Kansas City International Airport is only an hour away, and the Kansas DOT has released plans this year to invest around $11M in the Philip Billard Municipal Airport in Topeka, which will support cargo flights among other types.  Topeka is also located at the intersection between I-70 and US Highway 75, giving us direct access to major truck routes to move our products around the country. 

Topeka is part of a designated federal Opportunity Zone, was designated an EPSCoR jurisdiction for research competition, and was ranked number 7 in opportunity, number 5 in infrastructure, and top 20 in education by U.S. News. Being located in Kansas is advantageous for a manufacturing startup like KRS for a number of reasons, but we consider this the most important: The underdeveloped robotics sector in Kansas, today, is the same as an opportunity for a company like KRS to help develop it in a meaningful way.  

3. Personnel 

One of the primary advantages of KRS is our belief that the remote work infrastructure is developed enough to support almost our entire engineering team and some of the rapid prototyping capabilities we offer. Working with remote engineers opens us up to a much larger pool of talent since they can work from anywhere in the US, and the flexibility of remote work can be very appealing to some of the highest quality individuals. This also extends our geographical coverage as a company, potentially developing local connections and partnerships to better serve numerous locales.

4. Networking

Networks of specialized and general manufacturers and fabricators exist in order to put clients and businesses in the same space for collaboration, and competition for bids. Xometry is such a platform, and KRS will leverage this network plus others like it in order to get in touch with companies who can fill our capability gaps while we are growing, as well as reaching clients and other businesses who need the capabilities we are already set up to provide. The existence of these networks and their associated services puts us in a position to offer nearly our intended full scale services without many limitations. This is an advantage for a company in this industry compared to tech startups which are in more competitive than collaborative spaces, e.g. retail outlets or proprietary software companies.

5. Family Operated

The principal members have the advantage of being tight-knit family who approach problems from different perspectives, and have no problem arriving at quick and efficient solutions or compromises in matters of importance. They have rich experience with overlapping knowledge which encompasses almost all aspects of what is required to make a product or service successful, and as well as what it takes to create such a product, robotic or otherwise. 

They have built a broad and loyal clientele as sole proprietors in creative fields, and have worked for decades providing creative products which meet and exceed expectations. They are naturals at creating long-term trust and relationships with clients and businesses, and as operators of KRS they will continue to apply that philosophy of excellence in service. 

David has inside knowledge of the robotics industry; having worked in government, industry, and academia designing and implementing intelligent robotic systems. He was exposed to numerous trade shows and conferences where the key players network and display their latest and greatest, and also exposed to privy information about the state-of-the-art of robotics and what organizations are funding it. 

Daniel has extensive experience in management, but importantly he has a lifelong career working on company and product branding, gaining insight into what drives consumers to make a purchase or trust a company they have never worked with before. He understands different types of marketing strategies and how to effectively deliver advertisements which drive revenue. Unlike many tech startups which develop a product first for its functionality and figure out how to sell it later, KRS makes an effort to be sure that a product is not only practical, but sell-able before it even goes into CAD. Incorporating art and design into the engineering process is yet another thing which gives the founders an advantage over other tech startups.

• Regulations

Many of the regulations relevant to KRS's operations will apply to only specific products or processes. KRS will ensure that the proper level of research is conducted regarding regulatory requirements of different products and facilities. The following regulations and regulatory agencies are relevant to KRS, but the list cannot be exhaustive as much legislation surrounding the topics of AI and mobile AI platforms are yet to be written.

5. 1. KRS must meet all federal and state regulations that apply to robotics and robotics manufacturing, and may also need to adhere to new regulations concerning the responsible and ethical use of AI, such as Kansas OIT Memorandum 8200.00 regarding generative artificial intelligence, enacted in 2023. Since the technology is fresh, our company will have to adapt to new standards as they are put in place. 

   2. Zoning permits for manufacturing

   3. Environmental permits related to air quality, water discharge, and waste management

   4. KRS may deal with some hazardous chemicals from time to time and will be subject to federal and state regulations related to chemical handling

   5. Electronics for various uses must comply with a variety of federal regulations. Consumer electronics pass UL certification, and electronics for use in automotive or military applications must meet particular standards from ISO, IEEE, MILSPEC, and others.

   6. EN ISO 10218-1 and EN ISO 10218-2 address manufacturers' requirements for the safe design and construction of robots. It ensures that any robot manufactured according to this standard maintains the highest safety level.

   7. Kansas Deparment of Commerce regulates advanced manufacturing in the region.

   8. KDOT and US DOT regulations for the transport of various relevant materials and goods will govern much of our logistics operations, and DOT regulations concerning autonomous vehicles may eventually need to be considered as well.

   9. OSHA, the Kansas Department of Labor, and various other agencies regulating the workplace environment and employment practices

   10. Interstate commerce regulations and regulations regarding Internet sales also come in to play as we roll out the online retail fronts for our product lines.

Service Line

Products include, but are not limited to:

• High-quality metal and plastic replacement parts for manufacturing machines

• Custom actuators and end-effectors for manufacturing machines and other types of machines

• Custom embedded electronics, including but not limited to:

  • Embedded electronics which integrate custom sensor/actuator configurations with a control system

  • The software/firmware which rests on these embedded products

  • Custom displays and indicators

  • Electronics and batteries integrated into functional physical structures

  • Custom wireless and networking technology

• Complete manufacturing machines of different scales, especially for custom applications

• AI-ready robotic platforms and the modular parts used to construct these platforms

• resale robotic parts from leading manufacturers and kept in our warehouse if necessary

• direct sale robotic parts owned by our clients, manufactured in our facility and kept in our warehouse

• custom prototypes, via our engineering services web front

Services include, but are not limited to:

• Manufacturing and Fabrication

  • 3D Printing - extrusion and resin

  • Laser cutting

  • Precision machining and metal work

  • Plastic and polymer manufacturing

  • Custom and experimental processes

  • Chip/ASIC manufacturing is planned, sub-contracts can be utilized in the meantime

• Engineering

  • General CAD design - Printed circuit boards, structures, mechanisms, electro-mechanical devices, ASIC chips

  • Rapid Prototyping - Proof of concept, fitting and temporary fixes

  • Pilot Prototyping - A prototype which should be indistinguishable from a production item in appearance and functionality

  • Engineering for fabrication/manufacture - Either updating the design to work with a process, or updating a process to work with a design. 

Pricing Structure:

• Each manufacturing/engineering contract will require a different pricing, but the following will be used in an itemized contract quote:

  • Fabrication, design and manufacturing contracts will be quoted at a rate based on the labor involved, the process used, and the raw materials used as well as the space occupied, and costs to maintain and operate it. 

  • General labor can range in pay, but the average hourly pay of a laborer is around $18/hr. In order to attract and retain the best talent, we will offer pay that is higher than market rates.

  • Some engineers and technical professionals may charge a higher labor rate than others, depending on their specialization or versatility. For instance, electronics engineers might have a market value between  $55-$75/hr based on their experience or function, but some software specialists who work with machine learning and AI can easily negotiate $100-$200/hr due to the demand. Markups from these numbers need to be included to cover any taxes or other administrative costs involved, plus benefits. Equity is often offered as an incentive as well. Depending on the seniority of an engineer, generally a rate of $200/hr or higher can cover engineer's salary plus the costs associated with employing them, with a small profit margin.

  • Raw materials may be subject to market conditions, but for instance steel prices at this time are around $700 per metric ton, and it is about $1400 per ton of ABS plastic. Estimates for the amount of material used and the amount wasted for a particular part can be pulled from CAD files and other analysis.

  • General operation expenses for the facilities being used for the duration of the project. These numbers would be a function of the percent of the facility's operation that would need to be dedicated to the project in order to meet the contracted schedule. A study of manufacturing facilities across North America showed that total operating costs of a manufacturing facility range from $77 to $120 per square foot annually depending on the location. Kansas is on the lower end of that range, and there are a number of unleased buildings and spaces around Topeka that could be relatively inexpensive to take over. A single multi-process machine might take up 20-100 sqft, a larger product or process involving multiple machines might take up a whole 10,000-50,000 sqft building or larger.

  • If KRS warehouses the product, warehousing costs will be included in contract estimates, based on the volume of the warehouse which the product will occupy, and for how long. Industrial spaces average $6 per square foot to lease in Topeka, lower than a national average of around $10 which is also found near Kansas City. 

  • Logistics outside of the warehouse need to be considered also, but can be simplified for some clients via our web storefront by charging their customers for shipping directly from the manufacturer (KRS), allowing them to select the shipping company of their preference like other retail  sites. Other external and in-house logistics specific to each contract can be handled on a case basis. 

• Each in-house product will be priced based on the calculated total cost per unit plus a fair mark-up, keeping items comfortably within an average consumer's reach as often as possible. Many of our parts are small and require little material, but complicated mechanisms and intelligent engineering as well as detailed technical documentation and patents, marketing materials and ad space. All costs will be considered and broken down in order to deliver the best value and return for the intended application. A consumer-level price point for this application might be $1 to $50 for each part, or around $500 to $700 total  for an intelligence-ready service platform; similar to the average cost of a smart washing machine or lower. Some larger manufacturing machines cannot escape higher costs, and could range from a few thousand dollars to a few hundred thousand or higher. 

• Our engineering and prototyping services are quoted by project. Some projects might be a simple scan to CAD and/or redesign of a discontinued part, these could take an experienced mechanical engineer a day to complete, and a machinist with access to the right equipment a day to fabricate a batch of them when inventory is needed. This might equate to a $3000-$6000 quote, but save someone from having to scrap a legacy machine worth much more. Other engineering contracts involve long term product development and lifecycle management. These contracts could start in the range of $20k and quickly scale up to $100k and seven-figure contracts simply by reinvesting a significant portion of revenues back into the  machines and personnel.

• The costs of sub-contracting will come into play on some projects, and those line items will be based on existing negotiated contract prices as well as new bids. A sub contractor's costs and estimates are likely to be similar to our own and profit margin for these contracts will be low compared to in-house services.

Product Lifecycle

• Engineering and rapid prototyping services have been launched via CustomRobotParts.com, and metalworking equipment has been procured in order to begin fabricating parts, casts, and molds to scale our capabilities and offer our Pilot prototyping abilities. KRS currently owns 6 machines to handle plastic, resin and metal fabrication, as well as equipment needed to melt down soft metal scraps for use.

• A line of modular robot parts and actuators has been developed and initial designs are awaiting casts to finalize for a product launch on a platform such as Kickstarter for additional revenue, as well as on our DIYDroids.com website with limited availability. Some precision manufacturing parts are being offered on customrobotparts.com as well, and advance orders can be taken for our maiden Droid Eye product.

Intellectual Property Rights

KRS's line of products will have relevant and necessary patents in pending status and trademarks in place prior to release. We understand that many of our products will immediately be copied and sold as low price alternatives regardless what protections are in place, but we expect this and will get ahead of it via brand recognition and various anti-tamper designs where it matters.

A service mark for our business within the state of Kansas is not mandatory, nor is it likely to matter in court. Per the Kansas Secretary of State's website:

"Registration of a trademark or service mark with the Secretary of State is strictly optional. Kansas statutes expressly provide that registration does not affect the common law rights of others. Any right you might have to use a mark has been acquired through your use of the mark. If someone has prior use of the mark, registration will not give any rights. Only your legal counsel can advise you about conflicting claims."

Kansas Robotics Supply, at the time the EIN was assigned, was the only business with that name, and the logo was created from scratch by the founders. Three website domains associated with KRS have been purchased: KansasRobots.com; Customrobotparts.com; and DIYDroids com. KansasRoboticsSupply.com may be secured as a forwarding website as well, but KansasRobots.com was secured first as being simple and easy to remember and spell. A logo for DIYDroids.com has not yet been created.

Research and Development

• Manufacturing processes, particularly mixing different materials and methods

• Specialty materials such as UV-hardened gel for additive manufacturing, or electro-active polymers

• Specialty actuators

• Sensor technologies

• AI-ready platform development

• Other robotics research as technology evolves and new features and needs develop.

Marketing & Sales

KRS has created 3 websites in order to reach customers: KansasRobots.com, CustomRobotParts.com, and DIYDroids.com, which each represent a different set of services and/or products. Currently, KRS is solidifying the branding and polishing up the information on our websites prior to starting advertisement. The marketing and advertisement department will be headed up by the founder who has expertise in this area.  

Marketing for the company during its initial stages might require some business-to-business cold calling, but more importantly networking at trade shows and conferences, as well as registering booths at conferences in order to demonstrate our developments. Business to business contracts will likely originate from these types of events, as well as from online ads and networking. 

KRS will also utilize services like Xometry, who can sell the use of our equipment and hook us up with customers, as well as hooking us up with other providers like KRS to help fill each other's volume or capability requirements.

In order to reach the open-source community and R&D teams, various popular online strategies can be deployed to get our products in front of them consistently enough for brand recognition. In the best case, we have to do little more than show videos of our products and processes, and the products will speak for themselves. This isn't a solid strategy to rely on in a consumer market, and so the company will leverage the founder's expertise in order to create appealing marketing materials and campaigns, and eventually grow the marketing and sales team with expert individuals who believe in the vision of the company.

Growth Strategy

KRS has a "start small, think big" philosophy for growth. We are actively seeking funding in order to speed up the timeline, but our success doesn't depend on external funding sources. 

1. KRS is seeking individual investors to help capitalize the S corporation via common stock purchase. KRS issued 8 million of 10 million authorized stocks. The founder will sell a small portion, and also use some of them as incentives to attract talent. Stock prices and voting rights can be negotiated on a per-investor basis.

2. We have built a precision 5-axis CNC to support rapid-prototyping and functional prototyping services. The first focus will be on parts for manufacturing machines, and gaining contracts to put these machines to work. KRS also currently has the ability to provide high-resolution resin printing and additive manufacturing for prototyping; laser cutting and engraving; and a limited amount of machining including small scale lathe work. 

3. The CNC can turn raw materials into tooling, end-effectors, molds, parts that can be used to scale the system larger, and parts to build other systems such as injection molding machines and presses to support basic manufacturing capabilities. Increasing our metalworking and machining capabilities is paramount to the continued scaling of our capabilities and physical assets.

4. KRS will seek out partnerships and project-based contracts with machine shops and other facilities in order to fill in gaps in our capabilities while we are scaling up. We will sub-contract these businesses until we have built up our manufacturing capabilities. As noted in the Pricing section, the profit margins are expected to be lower for sub-contract work than for in-house services,  but the ability to offer these capabilities up front is valuable for our growth.

5. Our manufacturing capabilities will be piloted on an in-house product line which is awaiting these machines. The philosophy is that before we start selling a particular machine or the use of it, we've already vetted it on our own products. Once manufacturing capabilities are fully established and we have a successful run, we can begin supporting some similar manufacturing contracts fully in-house. Sub-contracting is likely to be utilized in every stage of the company's growth. This will always be a way to handle a larger capacity or advanced capabilities as we grow into them, and it also helps bolster these companies who may in turn contract our services as well.

6. Whichever service turns out the strongest revenue between manufacturing, engineering/prototyping services, and retail sales, will support the growth of the others.

7. The remote work force will be developed by seeking out the most qualified and self-driven individuals, offering competitive wages and unique benefits for those who own the tools of the job. We also plan to provide some of our highest performing engineers with desktop versions of some of our in-house machines, essentially expanding a network of engineers with rapid-prototyping and other capabilities across the US. This puts us in a position to be able to serve customers nationwide in an almost-local capacity.

8. With high-performing engineers and scientists on our team, R&D can be ramped up, focusing first on special processes. The products of R&D should enable advanced manufacturing capabilities which separate us from the rest, as well as enabling product lines which cannot be duplicated without knowledge of our processes.

9. With an abundance of resources, KRS plans to sponsor robotics programs at Kansas universities, colleges, and schools - this is a part of positive community outreach and building company familiarity; simultaneously enabling the workforce who can do the things that will make our company continually successful.

10. Once we see the potential to grow beyond 100 investors, KRS will revoke its S corporation tax status with the IRS, converting to a C corporation to open up more opportunities for growth and funding.

Communicate with the Customer

KRS will communicate with different types of customers through various channels:

1. KRS owns three websites to handle different types of clientele and services. Customers are able to reach us directly via email, or fill out forms for quotes and other purposes. 

2. One of our most valuable venues for reaching business-to-business clientele is trade shows. Once we have demos of our products, we can engage potential customers while gaining industry connections and establishing a strong presence in the robotics community. We can also attend these trade shows and conferences as non-presenting vendors to observe, network, and reach potential clients.

3. KRS will frequently run ads targeted at the manufacturing and engineering communities, and later target average consumers with some of our practical products. 

4. KRS will utilize social media, particularly LinkedIn for promoting our professional services. Other social media sites will have general information and a link to our website. 

5. KRS will leverage sites like Xometry which provide a direct route to customers and manufacturing sub-contractors.

6. Vehicle wraps, signs, billboards, stickers, and other appropriate physical media can be used to build brand awareness

7. Direct marketing i.e. approaching target companies and offering services can also be effective where it's appropriate. KRS has a solid strategy for reaching the relevant parties via first building brand recognition with the people around them, and their subordinates. 

How to Sell

Sales and marketing are currently a primary and joint effort between the founders, focused on fully fleshing out company websites and preparing products and capabilities in order to have a polished presentation and solid branding ahead of our advertising launch. Our marketing and sales department will be developed early on in our company's expansion, recognizing that getting a number of talented individuals into these roles is crucial to the success of KRS.