Portage Gear Co.

A Feasibility Study by Madison Ellington and Cayla Gleaton

Table of Contents
Table of Contents .......................................................................................................... 2
Chapter One
Description of Our Business ......................................................................................... 3
Market Establishment ................................................................................................... 3
Industry Life Cycle ......................................................................................................... 3
Competitive Niche ......................................................................................................... 3
Legal Entity .................................................................................................................... 5
Chapter Two
Licenses and Permits..................................................................................................... 6
Insurance ....................................................................................................................... 6
Risk Management ......................................................................................................... 6
Chapter Three
Population ..................................................................................................................... 7
Growth ........................................................................................................................... 7
Community Environment .............................................................................................. 7
Chapter Four
Major Areas of Responsibility ....................................................................................... 8
Management Responsibilities ...................................................................................... 8
Staffing .......................................................................................................................... 8
Major Operational Concerns ........................................................................................ 9
Chapter Five
Target Market................................................................................................................ 10
Competition ................................................................................................................... 10
Market Positioning ........................................................................................................ 10
Service Demand ............................................................................................................ 11
Chapter Six
Major Start-Up Costs ..................................................................................................... 13
Financing Our Venture .................................................................................................. 13
Projected Revenues ...................................................................................................... 14
Chapter Seven
Feasibility Recommendation ........................................................................................ 15
ROI Analysis ................................................................................................................... 15
Sources .......................................................................................................................... 16

Chapter One
Description of Our Business
Portage Gear Company is an outdoor gear rental outfitter supplying low prices for all types
of activities year round. We will strive to deliver our customers top of the line gear for
bottom of the line prices. We have a large selection of outdoor and adventure sport gear to
choose from ranging from mountain biking to paddle boarding to cross country skiing. We
will be located in Post Falls, ID, a hub for outdoorsmen and women who have a passion for
exploration of the wild. Our low prices, constant maintenance on gear, personable service,
and experienced staff will help customers find the perfect rentals for their adventures.
Increasingly health-conscious Americans are expected to spend more time participating in
outdoor sports over the next five years. (Alvarez, 2015, p. 8). Rising consumer health
consciousness and rebounding disposable income, coming back from the 2008 recession,
are expected to be at the root of the expansion of participation, which will contribute to an
overall increase in total recreational expenditure for activities (Alvarez, 2015, p.8). Our hope
is to squeeze ourselves into this market and give consumers another option for spending on
gear that will suit their needs.
Market Establishment
The market we are entering, outdoor gear rentals, has already been established in the
United States, and within the region we seek to provide service. In our area, REI, Mountain
Gear, and Tri-State Outfitters all offer gear rental programs. However, the gear rental
programs offered by these companies do not offer a large variety of gear and are limited
during certain seasons.
Industry Life Cycle
The hiking and outdoor retail stores are currently in the mature stage of their life cycle. The
growth of the industry has started to slow but is expected to remain relatively steady for the
next ten years. The number of actual establishments is starting to diminish because of the
ability to take business to an online level, reaching anyone who has an internet connection
(Alvarez, 2015, p.7). Although the number of physical establishments is diminishing, the
industrys contribution to the economy stays relatively the same.
Competitive Niche
Although there are several other companies in our region offering the same service, we will
have lower prices and more variety of rental options. During the summer months, REI and
Mountain Gear are limited to mostly paddle sports. In the winter time, skis and snowboards
are the companies biggest rental item. Below is a chart of the items that each company will
offer during a specific season:

REI
Summer
White Water
Kayaks
Creek Kayaks
Lake Kayaks
Sit-On-Top
Kayaks
Inflatable Paddle
Boards
Personal
Flotation
Devices
Water Helmets
Kayak Paddles
Paddle Board
Paddles
Climbing Shoes
Climbing
Helmets
Crash Pads
Mountain Bikes
Mountain Bike
Helmets
Canoes
Winter
Backcountry Skis
Downhill Skis
Cross Country
Skis
Ski Poles
Snow Boards
Split Boards
Skins for Skis
Skins for Split
Boards
Snowshoes
Ski Helmets
Ski Goggles

Mountain
Gear

Portage
Gear Co

x
x

x
x

x
x

x
x

x
x

x
x

x

x
x

x
x

x
x

x
x
x
x

x
x
x

Year-Round
Tents of Various
Sizes
Day Packs
Expedition Packs

Hiking Boots

Trekking Poles

Sleeping Bags

Sleeping Pads

Cook Sets
Whisper Light
Stoves
2-Burner
Coleman Stove

Sill Tarps

Hammocks

Coolers

Dry Bags

Gaiters
Mountaineering
Gear

Mountain
Gear

Portage
Gear Co

x
x

x
x
x
x
x
x
x

REI

x
x
x
x
x
x

Legal Entity
We chose to be a limited partnership for various reasons. First, there are two owners, so we
knew we needed to go in on some sort or partnership together. Because there are two of
us, we will need to create our articles of co-partnership together to detail financial
commitments, distribution of profits or losses, and any other significant agreements dealing
with our company. Cayla and Madison will act as the general partners of the company,
having the say in the management of the company. Out limited partners will invest money or
property, and will share in legal liability up to the amount of their investment. This way, legal
liability will be shared amongst all parties, yet we will have the opportunity to have other
companies invest in us and help us build our company. All limited partners will also create
articles of partnership with Cayla and Madison in writing that will entail amounts invested
and distribution of profits. Due to being a limited partnership, we will have more potential
for growth and success.

Chapter Two
Licenses and Permits
Employees Identification Numbers through the Internal Revenue Service
This license will allow us to open up a savings account for the business.
Business license through the city of Post Falls
We will need a business license in order to open within Post Falls.
Outfitters and Guides License
Post falls requires Outfitters and guides to sign up for a license. If we ever wanted to
have guides go through our business they would need to get a license connected
with our business (City of Post Falls).
Insurance
To cover business risk management and needs, we will need these four types of insurance:
Liability insurance: We will need to make sure that our company and employees are
covered.
Fire Insurance: There will be propane for stoves kept in the back and having fire
insurance will help cover costs if anything were to happen.
Rent Insurance: We will be renting out a building and with large amounts of gear kept
in the building, we need to make sure everything is ensured in case something
happens.
Group Health Insurance: We want to provide our employees with benefits for
working for us.
Risk Management
To manage the possible risks that could come up, to help protect the company along with
our employees we will:
Have all customers sign a waiver to transfer any injuries that might occur from using
our gear to the customers themselves.
Have a safety training for all staff along with a safety training specifically for our staff
who are working with the gear.
Make sure areas where there will be waxing for skis and what not to have an
adhesive floor material to keep employees from slipping.
Make sure that any chemicals that need to be used by staff will be covered in a
training so all staff know how to properly use that chemical along with what safety
procedures to follow if it injuries were to occur.
Staff should not work for more than five hours at a time without a break.

Chapter Three
Population: 30,123 as of 2014
Growth:
2000-2010: 4.8%
2010- present: 2.2%
Predicted growth: +4% with new families
Community Environment:
Employee Availability
Post Falls is in an area and culture of recreation, which will bring in enthusiasts hoping to be
more involved. Also with the influx of families it will hopefully bring in older high school
students that are looking for a job while going to school.
Competition
There are no established rental outfitters within Post Falls. However, there is one rental
outfitter in Coeur DAlene, along with two well established companies in Spokane: REI and
Mountain Gear. However, our advantage in both is having more gear available throughout
the year. Most of what is offered at these companies are kayaks, canoes, snow shoes, skis
and snowboards, when our outdoor rental company will provide a wider variety of rentals
for a wider variety of activities.
Climate
Post Falls goes through the four different seasons, which allows us to provide equipment for
any and all weather types.
Transportation Availability
Post Falls is the first town in Idaho after leaving Washington. It is between Coeur DAlene
and Spokane Washington, the largest city in the region (city of Post Falls). I-90 connects
both Spokane and Coeur DAlene going East and West, along with I-41 going through Post
Falls North and South. There is an International airport in Spokane and Amtrak stops in
Sandpoint Idaho and Spokane Washington.
Recreation opportunities are either close or within the city itself. The Spokane River flows
through town, Qemelin Park exists within Post Falls with access to open grass, water and
rock climbing. Not far from Post Falls there is the available option of Liberty Lake and Lake
Coeur DAlene. Then there are many mountainous ranges which can be accessible for hiking
during warmer months and winter sports during colder months.

Chapter Four
Major Areas of Responsibility
Front desk staff: take orders for customers for what gear they would like
Tech staff: can make adjustments/ fix gear before going out for customers
Office manager: Looks over daily tasks for Front and Tech staff
Managers: Manages short term and long term goals for the company. The managers
will also be educated for legal matters
Accountant: Keep track of money coming in and out
Management Responsibilities
Front Desk Staff will be responsible for money and keeping track of gear that has
been reserved and sent out.
Tech Staff will be responsible for prepping and taking care of the gear before and
after it leaves along with making sure it is stored correctly.
Office Managers will overlook daily activities along with organizing customer
information and orders.
Managers will take care of ensuring that the company is headed for its short and long
term goals. They will also take care of legal matters that come up in the company
along with supervising money coming in and out of the company.
The Accountant will keep records and prepare statements of the money intake in the
business.
Organization Chart:

Managers

Office
Managers

Front
Desk Staff

Tech Staff

Staffing
Skills/Expertise/Training Required for Staff
Tech staff will either have training on gear or previous experience on a wide variety
of gear.
Front desk staff and Office Managers should be skilled with different programs for
tracking gear that is reserved or out, along with the ability to handle money while
also providing excellent customer service.
Managers should have previous experience in a management experience along with
experience or some sort of education in legal and/or business matters.
Accountants should at least be Certified Public Accountants.

Compensation and Benefits for Staff

Starting salary of $15/hour for Tech staff, Front Desk staff and Office Managers.
Complimentary day of rentals
Pro deals for limited resorts tickets and gear
Orientation and Training programs
Each new employee will go through a general operations orientation along with a
more detailed orientation for their specific job.
Major Operational Considerations
Service Philosophy
We believe that anyone who wants to partake in recreational activities should be able to. We
want to provide everyone of any skill level with recreational gear for a wide variety of
activities year round. We also want to provide our customers with the finest customer
service to keep our customers happy in the back country and in the front country.
Facility Maintenance Schedule
The facility will be cleaned nightly before all employees leave the shop.
Inspections will be done upon every return to make sure they were returned in good
shape.
If the gear is out of season then they should become a part of a monthly
maintenance until they are back in season.
Plan for Informational Technology
We will need to contract out to someone who is technologically savvy to help us put
together a website.
Plan for Legal and Accounting Services
The managers will be educated in legal matters, though if a big case were to happen we
would contract out for a real lawyer.
We will hire an accountant so that they will have a loyalty to the company.

Chapter Five
Target Market
In general, consumer spending on recreational activities moves closely in line with per capita
disposable income (Alvarez 2015). Typically, those who make more money will have more
money spend at their discretion. We are focusing on this for our target market. Our market
is going to consist of those who make $75,000 or more a year. According to SRBnets market
research and demographics on overnight camping, skiing, and most outdoor recreation
sports participation in the United States, the higher the income, the higher the rates of
participation in a given sport (SRBnet, 2015). This report also shows that males and females
from age 18 to 55 are the most likely to participate in outdoor recreation. We will not
provide rental equipment to anyone under the age of 18 without a parent or legal guardian,
however, we will not deny the right to rent our equipment to anyone above 18 based on age
or income. We will market to all experience levels and many different sport cultures.
Competition
The research we have done for this study takes place for the most part in the hiking and
outdoor equipment industry. Because we will not be retailers, we will not be competing with
outdoor retail stores in our area. However, some of the retain stores in our area do have
rental programs that we will be competing with. Our biggest two competitors will be REI
and Mountain Gear, both located in Spokane. Both of these companies have an advantage
over us because they are already widely known. REI already holds about 50 percent of the
industrys market (Alvarez 2015). That aids in their recognition and establishment as a
reputable company. Mountain Gear, a small and locally owned gear outfitter, has a rental
program as well. However, they have a very small selection of gear that is seasonally
offered.
As far as external competition, the outdoor recreation economy continues to grow nation
wide as a leisure pastime. Between 2005 and 2011, the economy grew about five percent
annually while other industries economies were plummeting (More than 2012). As far as
product line competition, outdoor recreation is growing and continuing to take precedent
over other past times.
Market Positioning
Our competitive niche is offering a large variety of gear, year round, for a large variety of
sports. To position ourselves in a market, we are using a quadrant system that is illustrated
below.
High
Price
X

Specialty
Store

Full-Line
Store

Low Price

10

The red X on the diagram above indicates where our store falls into the outdoor equipment
market we are entering. Based on our two competitive niches, offering lower prices for high
quality and offering a full line of different sports equipment, we are using a spectrum that
helps us position ourselves in the market. If our X fell below the x-axis, we would be
considered a discount store, which is not what we are aiming for. We want to offer
comparable prices to the similar stores in the area, however we still have to create revenue
to maintain our business.
Service Demand
According to the Physical Activity Council, inactivity rates in the United States are continuing
to rise year after year. The number of people participating in outdoor sports however, has
not seen much change over the past five years, fluctuating up and down between one
percentage (2015 Participation, 2015). In the past three years, multiple types of outdoor
activities have seen a rise or fall, but the industry itself is rising in numbers. Over the past
three years, we have seen a 5.13% rise in participation in a select group of sports, shown in
the chart below:
2012

2013

Backpacking Overnight

8,771

9,069 10,101

Mountain Biking

7,714

8,542

8,044

6%

Camping

29,982 29,269 28,660

-4.50%

Canoeing

9,839 10,153 10,044

0.90%

Climbing (Sport/Indoor/Bouldering)

4,592

4,754

4,536

3.50%

Climbing (Traditional/Ice/Mountaineering)

2,189

2,319

2,457

6%

Hiking (Day)

34,545 34,378 36,222

1.70%

Kayaking (Recreational)

8,144

8,716

8,855

2.50%

Kayaking (Sea/Touring)

2,446

2,694

2,912

12.90%

Kayaking (White Water)

1,878

2,146

2,351

15.10%

Skiing (Alpine/Downhill)

8,243

8,044

8,649

-4.70%

Skiing (Cross-Country)

3,307

3,377

3,820

2%

Skiing (Freestyle)

5,357

4,007

4,564

4.30%

Snowboarding

7,351

6,418

6,785

-3.30%

Snowshoeing

4,029 42,441 3,501

-3.70%

Stand Up Paddling

1,542

30.50%
5.13%

1,993

Participation Topline Report: Outdoor Participation by Activity

2014

2,751
TOTAL

3-Year Change
12.80%

11

To compile this data, we used results from the Outdoor Foundations Outdoor
Recreation Participation Topline Report published in 2015. We chose to focus only on the
activities that we would be providing gear for through our company.
Due to the increase in participation of outdoor recreation, this company will do well
within its industry. Although US citizens are getting more and more inactive, studies show
that the number of people partaking in outdoor recreation is not declining with the trend of
inactivity. According to the Outdoor Industry Association, around 140 million Americans
make outdoor recreation a priority in their daily lives (The Outdoor). According to the United
States Census Bureau, there were approximately 688,279 people living in the
Spokane/Spokane Valley/Coeur dAlene area in 2014 (Annual Estimates). If 44 percent of
Americans are partaking in outdoor recreation everyday, that means that approximately
412,970 people are partaking in outdoor recreation in the Spokane and Coeur dAlene
regions daily.
Aside from rising participation rates within the outdoor industry, we are also
evaluating the industrys economic impact in our country. Pumping $646 million into our
economy annually, and helping fuel traditional sectors like manufacturing, finance, retail
trade, tourism, and travel, the outdoor industry is often overlooked for being as critical as it
is (The Outdoor). We are projecting that our business, as it is directly aligned with the
outdoor industry, will match the growth and rise of participation and economic impact that
this county is seeing.
In conclusion, if 140 million Americans are participating in outdoor recreation
activities daily, that equals 44 percent of the countrys population. Therefore, if we take the
population of the Spokane and Coeur dAlene areas, approximately 688,279, and calculate
44 percent, 412,970, then we get an idea of how many people take part in outdoor
recreation in this specific area daily. This application of standards provides us with a rough
estimate on the demand for of service we should expect for our company. Of course, we will
not see upwards of 412,970 people at our business daily, however we can use this number to
determine the appeal of recreation in our community.

12

Chapter Six
Major Start-Up Costs
Business Initiation
Legal/Professional Consulting: ........................................................... $500.00
Limited Partnership ($60 Annual Report Fee) ...................................... $180.00
TOTAL................................................................................................... $680.00
Capital Expenses
Building: ......................................................................................... $375,000.00
Rental Equipment: ......................................................................... $100,000.00
Signs: ................................................................................................. $1,000.00
Computers .......................................................................................... $3,600.00
Other Office Supplies: ...................................................................... $6,000.00
TOTAL............................................................................................ $485,000.00
Pre-Opening Operations
Staff Training: .................................................................................... $1,000.00
Advertising: ....................................................................................... $2,000.00
Cash Reserve: .....................................................................................$5,000.00
TOTAL................................................................................................ $8,000.00
Day-to-Day Operating Costs (On Monthly Basis)
Mortgages .......................................................................................... $2,483.21
Utilities .................................................................................................. $300.00
TOTAL................................................................................................. $2,783.21
TOTAL START-UP COST .................................................................. $496,463.21
Financing Our Venture
To finance the building, we will be taking on a fair amount of debt in the form of a mortgage.
This will cover the cost of the property with the building and will be paid monthly with our
revenues, for thirty years. The loan we are calculating our data off of is a fixed rate
mortgage with a down payment of twenty percent. The down payment will be paid in full by
Madison and Cayla with money they have saved up to start this business. The mortgage was
based on the cost of the property, $375,000 and is evaluated at an interest rate of 5.7%.
Below is a chart of what this will look like and how much we will end up paying in the long
term:

13

Home price
Down payment
Total amount
financed
Payment amount
Total payments
Interest rate
Interest
compounding
Total finance
charge

$375,000.00
20.000 %
$300,000.00
$2,483.21
$446,976.51
5.700 %
Monthly
$146,976.51

Event
Loan
Payment
Payment

Amount
$300,000.00
$2,483.21
$2,481.92

Term Period
1
179
Monthly
1

Based on Mortgage Calculator on STCU website.

Being that we are a limited partnership legally, we will be looking to eternal sources of
revenue to kick start other start-up and operating expenses. We plan to partake in equity
financing, finding sources of revenue from our limited partners, angel investors, and small
business investment companies (SBIC). We will be contacting angel investors to pitch our
business idea and collect revenue. To do this, we will need to provide them with accurate
projections of revenue in the future, and make deals on how much return they will receive
on their investments (Crossley, 2012, p. 118).
Projected Revenues
Projected Daily Demand of Outdoor Recreation in our Business Region: 412,970
We are not expecting to have this many people walk through our doors everyday, or even
every month. However, this will be a start for us to determine how many people we will
need to walk through our doors, and how much money they will need to spend, in order to
create revenue. If we look back at our financial analysis, we can expect to be spending
roughly $3,000 per month ($2,783.21 officially calculated). In order to do this, we will need to
create at least this amount of revenue on a monthly basis. The majority of our revenue, aside
from our limited partners, will be generated from the gear rentals we are contracting out. In
addition to these gear rentals, there will be maintenance fees and late fees that we will
charge at necessary times that will also create revenue.
In the Industry we are using to research, Hiking and Outdoor Equipment Stores, there is a 4%
profit rate annually (Alvarez, 2015). If this is the case for us, we can expect to make around
$20,000 dollars per year. To figure out how many people we needed to walk through our
doors, we would need to look further into the pricing for each item and figure out how
much we would need people to spend. To break this down, that would be around $1,654.88
dollars a month, according to industry standards.

14

Chapter Seven
Feasibility Recommendation
According to our ROI analysis, which is provided below, our feasibility recommendation
would be to amend this study and look for funding. Because Post Falls in in the center of an
area that has a wealth of outdoor recreation opportunities, this business could be a big hit
within the community and the surrounding areas. However, because of the timeline of the
information gathering for this study, we would recommend that this study be amended so
that the authors have more time to look into the industry, go out into the community to do
field research about the market, and apply more concepts to this version of the study. If this
study were to be amended, the specific amendments would need to happen in the actual
numbers and the research of the industry. Because our company is unique, we researched
an industry that was slightly different from that which we would wish to enter. The industry
we used however, was close enough to our goal that we were able to use the data and
statistics to project our numbers and conduct necessary research.
ROI Analysis

Enterprise
Portage Gear
Co.

$ Equity
$496,464

Pessimistic
$ Net
Profit
ROI %
-10,000

-2.01

Realistic
$ Net
Profit ROI %

Optimistic
$ Net
Profit
ROI %

10,000

20,000

2.01

4.03

15

Sources
Alvarez, A. (2015, September). Hiking & Outdoor Equipment Stores in the US. IBISWorld
Indistry Report OD4378. Retrieved from IBISWorld Database.
Annual Estimates of the Resident Population: April 1, 2010 to July 1, 2014 - United States -Combined Statistical Area; and for Puerto Rico. (2010). Retrieved from
http://factfinder.census.gov/faces/tableservices/jsf/pages/productview.xhtml?src=bkmk
Crossley, J., Jamieson, L., & Brayley, R. (2012). Introduction to Commercial Recreation
and Tourism: An Entrepreneurial Approach (6th ed.). Sagamore: Urbana, IL.
More than play money: New report finds annual spending on outdoor recreation reaches
$646 billion, employs 6.1 million. (2012, Jun 20). PR Newswire Retrieved from
https://ezproxy.library.ewu.edu/login?url=http://search.proquest.com/docview/1021168626?a
ccountid=7305
Outdoor Recreation Participation Topline Report 2015 (Rep.). (2015). Retrieved
http://www.outdoorfoundation.org/pdf/ResearchParticipation2015Topline.pdf
The Outdoor Recreation Economy (Rep.). (2013). Retrieved
https://outdoorindustry.org/resource/the-outdoor-recreation-economy-2012/
SBRNet. (n.d.). Outdoor sports market/market size, by sport: Snowboarding, Camping, Winter
Sports. [Data]. Retrieved 2015, from SBRnet database.
2015 Participation Report (Rep.). (2015). Retrieved http://physicalactivitycouncil.com

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