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Table of Contents
Page 1
1.0 Executive Summary.............................................................................................................................1
Chart: Highlights ......................................................................................................................1
1.1 Objectives ...................................................................................................................................2
1.2 Mission ........................................................................................................................................2
1.3 Keys to Success ........................................................................................................................2
2.0 Company Summary.............................................................................................................................2
2.1 Company Ownership .................................................................................................................2
2.2 Company Locations and Facilities ..........................................................................................3
3.0 Products and Services........................................................................................................................3
3.1 Product and Service Description .............................................................................................3
3.2 Competitive Comparison ..........................................................................................................3
3.3 Sales Literature ..........................................................................................................................4
4.0 Market Analysis Summary ..................................................................................................................4
Chart: Sales Monthly ...............................................................................................................5
4.1 Market Segmentation ................................................................................................................5
Chart: Market Analysis (Pie) ..................................................................................................7
Table: Market Analysis ...........................................................................................................7
4.2 Target Market Segment Strategy .............................................................................................7
4.2.1 Market Trends................................................................................................................8
4.2.2 Market Growth ...............................................................................................................9
Chart: Sales by Year ...................................................................................................10
4.2.3 Market Needs ..............................................................................................................10
4.3 Service Business Analysis .....................................................................................................10
4.3.1 Distributing a Service .................................................................................................11
4.3.2 Competition and Buying Patterns .............................................................................11
4.3.3 Main Competitors .......................................................................................................11
4.3.4 Business Participants.................................................................................................12
5.0 Strategy and Implementation Summary ..........................................................................................14
5.1 SWOT Analysis ........................................................................................................................14
5.2 Strategy Pyramid .....................................................................................................................15
5.3 Value Proposition ....................................................................................................................16
5.4 Competitive Edge....................................................................................................................16
5.5 Marketing Strategy ..................................................................................................................16
5.5.1 Pricing Strategy...........................................................................................................16
5.5.2 Promotion Strategy .....................................................................................................17
5.5.3 Distribution Strategy ...................................................................................................17
5.5.4 Marketing Programs ...................................................................................................17
5.5.5 Positioning Statement ................................................................................................18
5.6 Sales Strategy..........................................................................................................................19
5.6.1 Web Plan Summary ....................................................................................................19
5.6.2 Sales Forecast ............................................................................................................19
Table: Sales Forecast.................................................................................................19
Chart: Gross Margin Yearly ........................................................................................20
5.6.3 Sales Programs ..........................................................................................................20
5.7 Strategic Alliances...................................................................................................................20
5.8 Milestones ................................................................................................................................21
Table: Milestones..................................................................................................................21
Table of Contents
Page 2
6.0 Management Summary ....................................................................................................................21
6.1 Organizational Structure..........................................................................................................21
6.2 Personnel Plan .........................................................................................................................22
Table: Personnel ...................................................................................................................22
7.0 Financial Plan ....................................................................................................................................23
7.1 Break-even Analysis................................................................................................................24
Table: Break-even Analysis .................................................................................................24
Chart: Break-even Analysis .................................................................................................24
7.2 Important Assumptions............................................................................................................24
Table: General Assumptions ...............................................................................................25
7.3 Key Financial Indicators ..........................................................................................................25
Chart: Benchmarks ...............................................................................................................25
7.4 Start-up Summary ....................................................................................................................26
Table: Start-up.......................................................................................................................26
Table: Start-up Funding........................................................................................................27
7.5 Projected Profit and Loss .......................................................................................................27
Table: Profit and Loss ..........................................................................................................28
Chart: Profit Yearly ................................................................................................................28
Chart: Profit Monthly .............................................................................................................29
7.6 Projected Cash Flow ...............................................................................................................30
Chart: Cash ...........................................................................................................................30
Table: Cash Flow ..................................................................................................................31
7.7 Projected Balance Sheet ........................................................................................................32
Table: Balance Sheet ...........................................................................................................32
7.8 Business Ratios .......................................................................................................................33
Table: Ratios .........................................................................................................................34
Table: Sales Forecast ...............................................................................................................................1
Table: General Assumptions ....................................................................................................................2
Table: Profit and Loss ...............................................................................................................................3
Table: Cash Flow .......................................................................................................................................4
Table: Balance Sheet ................................................................................................................................5
Table: Personnel ........................................................................................................................................6
Barton Interiors
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1.0 Executive Summary
Barton Interiors is a proposed venture that will offer comprehensive interior design services for
homes and offices in the Boulder, Colorado area. Barton Interiors also will provide access
to products to complement the design consulting services including furniture, both new and
antique, decorator fabric, and home and office accessories. This venture offers the personalized
services the target market desires and can afford in a way that is unique from concept to
implementation.
Recent market research indicates a specific and growing need in the area for the interior
design consulting services and products Barton Interiors offers the market it will serve. The
market strategy will be based on a cost effective approach to reach this clearly defined target
market. Although the population of Boulder is under 100,000, the market has a significant
quantity of relatively wealthy households that are conscious of the appearance and feel of
their home and offices.
The approach to promote Barton Interiors with be through establishing relationships with key
people in the community and then through referral activities once a significant client base is
established. Barton Interiors will focus on developing solid and loyal client relationships offering
design solutions based on the client's taste, budget, use, and goals for the space. The
additional selection, accessibility of product, design services, and value-based pricing will
differentiate Barton Interiors from the other options in the area.
Total revenues in the first year are projected to exceed $46,000 with a loss. The venture will
show increasing profits in year two and three, with revenues projected to increase to almost
$80,000. This interior design business plan outlines the concept and implementation and details
regarding the first three years of this venture.
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1.1 Objectives
1. Realize an average of $3,870 of sales each business month for the first year, $5,720 for
the second, and $6,600 for the third year.
2. Generate a minimum of 45% of revenues from product sales versus consulting billing.
3. Establish a commercial revenue client base accounting for 10% of total revenues.
1.2 Mission
Barton Interiors is an interior design service for discerning, quality-conscious clients that seek
assistance in their design choices for their primary residences, vacation homes, and
businesses. This experience offers personal attention through the design process and also
provides design resources and products to its clients through special purchases of furniture,
fabric, and accessories. The total experience is provided in a way to inform, inspire, and
assist people through the process of transforming their home or business environment to
become a unique and personalized expression of themselves and add to their enjoyment of that
interior space.
1.3 Keys to Success
The primary keys to success for Barton Interiors will be based on the following factors:
Provide the highest quality interior design consulting experience possible.
Sell specially selected products to these clients to further meet their interior design
needs.
Communicate with our client base through the website and personalized communication
techniques.
Retain clients to generate repeat purchases and initiate referrals.
2.0 Company Summary
Barton Interiors is a start-up business that will offer comprehensive interior design services for
home and office. This business will assist those that want to have guidance and council in
developing a basic design concept of their project, to the person that desires someone to take it
from concept to complete implementation. Barton Interiors will offer the ability for clients to
purchase new and antique furniture, art work, decorator fabric, and home accessories. The
website www.bartoninteriors.com will be used as another way to communicate the
services available and provide a portfolio of the work accomplished. The business will begin as
a home-based business and is expected to remain in this structure through at least the first
three years.
2.1 Company Ownership
Barton Interiors, located in Boulder, Colorado is registered in the State of Colorado as a sole
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proprietorship owned and operated by Jill Barton dba Barton Interiors.
2.2 Company Locations and Facilities
Barton Interiors is operated from a home office located in Boulder, Colorado. A room is dedicated
to support a work area, a client contact work center, and display samples of design concepts,
products, and past work.
3.0 Products and Services
Barton Interiors focuses on providing interior design consulting. This is complemented
by specially purchased furniture, art pieces, decorator fabric, and accessories for the home
and office. The sales process will begin with interior design consulting services, and then
progress on to offer specially selected components to complement the design theme.
Products available through Barton Interiors include:
Furniture available through special purchase arrangements with Thomasville, Drexel
Heritage, and Henredon and local craftsman.
A selection of decorator fabrics from Waverly, P Kaufmann, Fabricut, Ralph Lauren, Regal,
Robert Allen, Latimer Alexander, Covington, and Portfolio.
A line of drapery hardware called "Oval Office Iron" purchased through Dept. of the
Interior Decorator Fabrics in Eugene, Oregon found at www.fabric-online.com.
Accessory and art pieces available through wholesale shows.
Hunter Douglas window treatment products including a variety of hard window coverings.
Interior shutters made of wood and a plastic/resin product called "polywood."
Antiques acquired for specific client needs through an arrangement with a local antique
buyer and through direct purchases through other sources.
3.1 Product and Service Description
Our primary points of differentiation offer these qualities:
A unique client experience from a trained and professional interior designer that is
qualified and capable of meeting the needs of discerning clients with high expectations.
Access to a wide and unique selection of new and antique furniture, accessories, and
special-order decorator fabrics.
Personal assistance from a complementary product offering, including hard-covering
window treatment, hardware, and home accessories that fit the look and objectives of
each project.
3.2 Competitive Comparison
Our competition is primarily from other interior designers. Looking at a broader picture, there is
also competition from the "do-it-yourself" resource providers that have retail stores and websites
that include the following:
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Bed, Bath and Beyond moved into the market in the year 2000 at an excellent location.
Discount stores including Target, Wal-Mart and Home Depot have expanded their fabric,
bedding, pillow, and ready-made drapery selections often representing lines including
Waverly.
Norwalk continues to make purchasing "blank" furniture and making a designer fabric
selection an attractive option to recovering furniture.
Catalog sales continue to be a strong force with a list including Pottery Barn, Calico
Corners, Ballard Design, and Eddie Bauer expanding purchasing selection.
The list of competitors for home accessory competition includes Pier 1 and local
competitors that provide an entire list of other furniture, accessory and gift stores.
Web sales of furniture, fabric and other interior design-oriented products has expanded
dramatically and in many cases is easily available.
3.3 Sales Literature
A simple and professional looking brochure will be available to provide to referral sources, leave
at seminars, and on a select basis, use for direct mail purposes.
4.0 Market Analysis Summary
Barton Interiors has a defined target market client that will be the basis of building this
business. This client is identical for both the residence and office spaces, but the target market
is identical based on her different roles for each of those spaces.
Effective marketing combined with an optimal product offering is critical to the Barton
Interiors' success and future profitability. The owner possesses solid information about
the market and knows a great deal about the common attributes of those that are expected to
be prized and loyal clients. This information will be leveraged to better understand who Barton
Interiors will serve, their specific needs, and how to better communicate with them.
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4.1 Market Segmentation
The profile of the Barton Interior client consists of the following geographic, demographic,
psychographic, and behavior factors:
Geographics
The geographic market is the affluent sector within the Boulder, Colorado area with a
population of 94,673. (Based on the 2000 Census data.)
A 20-mile geographic area is in need of the products and services offered and do not
intend to pursue the Denver market at this time.
The total target market population is estimated at 24,000 based on the following
demographics.
Demographics
Female, married and have attended college.
Have children, but they are not necessarily at home.
A combined household annual income greater than $100,000.
Age range of 35 to 55 years, with a median age of 42.
Owns their home, townhouse and/or condominium valued at over $425,000.
They and/or their spouse work in a professional setting and may have interior design
requirements for their office space as well as their homes.
Belong to one or more business, service, and/or athletic organization including:
Boulder Country Club.
Junior League of Boulder.
American Business Women's Association.
American Auxiliary of University Women.
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Doctor's Wives Auxiliary.
The following is known regarding the profile of the typical resident of Boulder:
67% have lived in the area for seven years or more.
23% are between the ages of 35 and 44.
40% have completed some college.
24% are managers, professionals and/or owners of a business.
53% are married.
65% have no children living at home.
56% own their residence.
Psychographics
The appearance of her home is a priority.
Entertaining and showing her home is important.
She perceives herself as creative, tasteful and able, but seeks validation and support
regarding her decorating ideas and choices.
She reads one or more of the following magazines:
Martha Stewart Living.
Country Living.
Home.
House Beautiful.
Country Home.
Metropolitan Home.
Traditional Homes.
Victoria.
Elle Decor.
If she does seek out television as an information source for home decorating that is
most likely to be "Martha Stewart" and, on a lesser basis, "Interior Motives."
Behaviors
She takes pride in having an active role in decorating their home.
Her home is a form of communicating "who she is" to others.
Comparison positioning and stature within social groups are made on an ongoing basis,
but rarely discussed.
Barton Interiors is providing its clients the opportunity to create a home environment to
express who they are. They seek design assistance and have the resources to accomplish
their goals. They desire their home to be personal, unique, and tasteful as it communicates a
message about what is important to them. Barton Interiors will seek to fulfill the following
benefits that are important to our clients.
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Table: Market Analysis
Market Anal ysi s
Year 1 Year 2 Year 3 Year 4 Year 5
Potenti al Customers Growth CAGR
Country Cl ub Women 12% 34,400 38,528 43,151 48,329 54,128 12.00%
Boomers i n Transi ti on 9% 12,000 13,080 14,257 15,540 16,939 9.00%
Professi onal Youngsters 8% 8,000 8,640 9,331 10,077 10,883 8.00%
Home Bui l ders 5% 8,000 8,400 8,820 9,261 9,724 5.00%
Other 0% 0 0 0 0 0 0.00%
Total 10.09% 62,400 68,648 75,559 83,207 91,674 10.09%
4.2 Target Market Segment Strategy
Our marketing strategy will create awareness, interest, and appeal from our target market for
what Barton Interiors offers its clients. The target markets are separated into four segments;
"Country Club Women," "Boomers in Transition," "Professional Youngsters," and "Home Builders."
The primary marketing opportunity is selling to these well defined and accessible target market
segments that focuses on investing discretionary income in these areas:
Country Club Women - The most dominant segment of the four is comprised of women in the age
range of 35 to 50. They are married, have a household income greater than $100,000, own at
least one home or condominium, and are socially active at and away from home. They are
members of the Boulder Country Club, Junior League of Boulder, AAUW, and/or the Doctor's
Wives Auxiliary. They have discretionary income, and their home and how it looks is a priority.
The appearance of where they live communicates who they are and what is important to
them. This group represents the largest collection of "Martha Stewart Wanna Be's," with their
profile echoing readers of Martha Stewart Living magazine, based on the current demographics
described in the 2001 Martha Stewart Living Media Kit.
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Boomers in Transition - This group, typically ranging in age from 50 to 65, is going through a
positive and planned life transition. They are changing homes (either building or moving) or
remodeling due to empty nest syndrome, retirement plans, general downsizing desires, or to
just get closer to the golf course. Their surprisingly high level of discretionary income is first
spent on travel, with decorating their home a close second. This is what makes this segment so
attractive. The woman of the couple is the decision maker, and often does not always include
the husband in the selection or purchase process.
Professional Youngsters - Couples between the ages of 25 and 35 establishing their first "adult"
household fall into this group. They both work, earn in excess of $80,000 annually, and now
want to invest in their home. They seek to enjoy their home and communicate a "successful"
image and message to their contemporaries. They buy big when they have received a
promotion, a bonus, or an inheritance.
Home Builders - People in the home building process, typically ranging in age from 40 to 55, are
prime candidates for Barton Interiors. This applies to both primary residences and vacations and
secondary homes. Although only expected to occur two to fives times each year for the
business, this event will be the single largest dollar transaction amount.
4.2.1 Market Trends
The home textile market, considered to include sheets, towels, draperies, carpets, blankets,
and upholstery, accounts for 37% of all textile output. The trade publication "Home Textiles
Today" estimates the size of the U.S. home textiles market at the wholesale level, excluding
carpets, to be between $6.5 billion to $7 billion annually. The industry is expected to realize a
steady increase over the next few years.
The industry is driven by the number of "household formations" which is expected to continue
through the first years of the new millennium. This is primarily due to the solid growth in the
number of single-parent and non-family households. This growth also comes from baby
boomers needing bigger houses to accommodate growing and extended families and, as people
get older, they are buying homes rather than renting to realize tax and equity building benefits.
Favorable mortgage rates will also enable others to invest in their existing home.
The "do-it-yourself" (DIY) market continues to grow and closely parallels the professional home-
improvement market. DIY market growth is attributed to an increased presence of products,
the personal satisfaction experienced, and the cost savings clients realize. A portion of the do-
it-yourself market is the "buy-it-yourself" (BIY) market. Consumers are buying the product and
arranging for someone else to do the fabrication and/or installation. This is more expensive
then the do-it-yourself approach, but less costly than buying finished products from other
sources. It also provides similar feelings of creativity, pride, and individuality associated with
direct creative involvement. This sense of "participation" in home decorating is an important
factor for many of these committed clients.
Regardless of this data, the following trends and issues impact the success and challenges of
Barton Interiors.
National economic health: The industry performs better when the country
experiences "good times" regardless of its direct impact on the local economy. Sales
decrease when the stock market falls and when NATO takes military action. An upbeat
State of the Union address by the President correlates with an increase in sales.
New home construction activity: More closely related to what is taking place in our
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local economy, new home construction has a significant impact on sales across all
product lines.
Shifts in design trends: Major changes in design trends increase sales. The Boulder
market lags behind metropolitan design trends by six to 12 months. This offers a buying
advantage for the store, offering a preview of what is coming and how we should
adjust our in-stock inventory.
4.2.2 Market Growth
American Demographics projects the number of U.S. households will grow by 16% to 115
million by the year 2010. Almost half of the households comprised of people from 35 to 44
years old are married couples with children under the age of 18. Based on this research,
households in the 45 to 65 age range will grow to 34 million by the year 2000. These
households will increase another 32 percent to 45 million in 2010 as baby boomers add to this
peak-earning and spending age group. These families will either build new homes or move into
existing dwellings. With approximately 46.2% of the nation's 93.3 million dwellings built before
1960, many of these homeowners are also expected to update.
One important factor is that married couples in the 35 to 65 age range represent a growth
segment and enjoy larger incomes than other family structures. They enjoy the choice to
spend their disposable income on life's amenities. They may demonstrate "cocooning" by making
their home a more comfortable and attractive haven. They choose to spend resources here
rather than on vacations and other discretionary options. This group represents a larger
subsegment of the target market.
These factors contribute to an increased need for home decorator fabrics for window treatment,
upholstery, pillows, bedding, and other fabric accessory needs. This demand is expected to be
complemented by the growth in the Boulder market. The majority of homeowners spend a large
percentage of their disposable income on home goods within two years after buying a new
house. Therefore, positive trends in new housing activity represents growth and opportunity
for home textiles.
Recent slow downs in the local economy have resulted in falling below sales projections and
these factors will affect market growth. Adding additional revenues through the website will
hopefully add a more stable factor in to the revenue stream.
The publication, American Demographics, projects the number of U.S. households will grow by
16% between 1995 and the year 2010, an increase from 98.5 million to 115 million. Of the
households comprised of people from 35 to 44 years old, almost half are married couples with
children under the age of 18. Based on research by American Demographics, households in the
45 to 65 age range should grow to 34 million by the year 2000. These households will increase
another 32 percent to 45 million in 2010 as baby boomers add to this peak-earning and
spending age group. With approximately 46.2% of the nation's 93.3 million dwellings built before
1960, many of these homeowners are also expected to update. These factors contribute to an
increased need for home decorator fabrics for window treatment, upholstering, pillows,
bedding, and other fabric accessory needs. This demand is expected to be complemented by the
growth in the Boulder market. The majority of homeowners spend a large percentage of their
disposable income on home goods within two years after buying a new house. Therefore, positive
trends in new housing activity represents growth and opportunity for home textiles.
One important factor is that married couples in the 35 to 65 age range represent a growth
segment and enjoy larger incomes than other family structures. They enjoy the choice to
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spend their disposable income on life's amenities. They may demonstrate "cocooning" by making
their home a more comfortable and attractive haven. They choose to spend resources here
rather than on vacations and other discretionary options. This group represents a larger sub-
segment of the target market.
4.2.3 Market Needs
Barton Interiors will provide its clients the opportunity to create a home environment to
express who they are. They have the choice to actively participate in the design, look, and
feel of their home. They desire their home to be personal, unique, and tasteful as well as
communicate a message about what is important to them. Barton Interiors seek to fulfill the
following benefits that we know are important to our clients.
4.3 Service Business Analysis
The industry continues to be competitive with a "commodity" concern with "designers" of all
skill and background levels available throughout the market.
Potential Competitors: There are many other interior designers in the Boulder area
and these competitors range from those that provide simple-focused services, such as
draperies only, to a more full-service interior design approach similar to Barton Interiors.
Power of Suppliers: Moderately high in most anyone that has a business licence can
have access to wholesale purchase of furniture, fabrics and accessories.
Power of Buyers: Very low as buyers work within the financial terms and product
availability offered through the suppliers that specify the terms and conditions.
Substitute Products: High as many people refer to themselves as interior designers
regardless of background, training, or certification. Substitute products are also high in
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the area of window treatment as hardcovering solutions have become available and
increasingly affordable. This includes blinds, shutters, and other "manufactured"
treatments. Substitute products are not as prevalent in the area of antiques and art
pieces.
Rivalry: Moderately low with the "territorial" structure that the industry experiences
and moderately low exit barriers. The easy entry is accompanied with an easy exit and
people get out when it is not working.
With the slow, but steady, growth of the past few years, the industry is now experiencing a
"cautious optimism" regarding the future. Growth and expansion activities for most areas of the
interior design industry appear to be carefully considered. Many in the industry continues to
decide what to do and buy as the economy has experienced a slowdown and increased
uncertainty from the more economically confident 1990's.
4.3.1 Distributing a Service
Our primary method of distribution will be on a direct sales basis for each individual client.
4.3.2 Competition and Buying Patterns
Competition in the area is strong, with designers ranging from the home-based, no formal training
individuals to the more formalized store front, American Association of Interior Designers (ASID)
certified designers that have close relationships with prestigious architects. In most
cases, clients make the provider decision on the basis of three criteria in this order with
these percent influences indicated after each:
1. Referrals and relationship with other professionals, particularly architects (55%).
2. Personality and "expected relationship" with the designer (25% ).
3. Past work (15%).
4. ASID certification (5%).
Understanding the influence of these factors on the prospective client will be key in the
marketing strategy.
4.3.3 Main Competitors
Current local competition includes the following:
Interior Designers: There are 37 interior designers listed in the Boulder Yellow Pages (Year
2000-2001 issue) that offer fabric as a part of their services. Interior designers make
profit off mark-up of fabric in addition to their hourly services charges. Their costs per
yard are typically higher since they do not benefit from retail or volume discounts.
Therefore, their costs to their client is often two to four times higher than the price per
yard from Barton Interiors.
House of Fabrics: Nationwide recognition and buying power of numerous types of dated
fabric with strong product availability. This store has experienced financial difficulty in
recent years and has closed several locations throughout the country.
Warehouse Fabrics: Locally owned, offering low-cost products with a wide selection of
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discontinued fabrics and only a limited number of "current" fabrics. This warehouse
concept offers marginal client service with what many "upper end" clients consider to
be an "undesirable" shopping environment.
JoAnn's: Nationwide chain with strong buying power. They have a broad fabric selection
for clothing with a limited number of in-store decorator fabrics available. Their primary
target markets are the clothing seamstress, with an increasing emphasis on craft items.
Low prices are fabric main point of competitive differentiation.
Website Providers: Fabric sales over the Web are limited at this time, and this will be a
source of competition for the future to watch. Currently, there is no measurable impact
on our market through competitive websites.
Catalog Competitors
An increasing level of competition is anticipated from catalog sales. Recent trends, such as
those demonstrated in the well established but evolving Pottery Barn catalog, indicates
increased interest in offering decorator fabric, window designs, and other home decorating
products through this increasingly popular channel of distribution. Catalog sources do not offer
clients the option to see, touch, and have the fabric in their homes. Price is the most
significant competitive factor this product source presents. The most aggressive catalog
competitor is Calico Corners followed by Pottery Barn and other home-accessory-based
providers.
Discounters
Channels of distribution continue to shift in favor of discounters, who account for a significant
portion of the growth in the industry. As consumers experience lower levels of disposable
income, discounters leverage frequent store promotions to entice frugal, value-oriented
consumers. One of the biggest criticism of discounters is their failure to offer a quality service
experience and their failure to present inviting displays to promote sales. These discounters,
along with specialty store chains, present one of the most severe competitive threats for
individually-owned specialty stores. This is partially due to extensive promotional efforts, price
advantages, and established relationships with their vendors. One example of these discounters
is the "home improvement" chains, such as Home Base. This aggressive retailer has adopted a
strategy to include complete decorator departments in their metropolitan stores. Currently
existing in the Los Angeles market, this strategy is anticipated to be introduced into the
Seattle area and other select metropolitan markets within the year. Although the Boulder Home
Base store sells basic curtain rod hardware and other hard cover window treatment, there are no
known plans at this time for the Boulder Home Base store to implement this in the foreseeable
future. This will be an important issue to monitor for competitive purposes.
4.3.4 Business Participants
Industry participants in the area of interior design comes from six general categories; interior
designers, traditional furniture stores, traditional fabric retail stores, catalog and Web-based
sales, click and mortar discounters, and individually owned stores. Most of these players have
some type of an online presence. The following provides an overview of the type of
participants that are most active and most successful in this arena.
Interior Designers
This large group makes up a substantial quantity of higher-end fabric purchases. For example,
there are 37 interior designers listed in the Boulder Yellow Pages (Year 2001-2002 issue) that
offer fabric as a part of their services. Interior designers make profit off mark-up of fabric in
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addition to their hourly services charges. Their costs per yard are typically higher since they
do not benefit from retail or volume discounts. Therefore, their costs to the client is often two
to four times higher than the price per yard from Barton Interiors. It is unusual to find an
independent interior designer that has a website.
Traditional Fabric Retail Stores
The traditional retail stores are corporate stores (not franchises) that have multiple locations
in select metropolitan markets. Example of these stores include:
JoAnn's www.joanns.com - Nationwide chain with strong buying power. They have a
broad fabric selection for clothing with a limited number of in-store decorator fabrics
available. Their primary target markets are the clothing seamstress, with an increasing
emphasis on craft items. JoAnn's purchased the House of Fabric chain and has a link set
up from the previous URL www.houseoffabrics.com.
Calico Corners www.calicocorners.com - This national chain was a franchise through
the 1980s (no longer selling licenses) and has been purchasing those stores throughout
the country. Calico Corners stores number about 90 and are in most larger cities, with a
concentration in the Northeast.
Catalog and Web-based Competitors
Virtually every catalog and major retail store in the industry now has a website. The most
aggressive and direct catalog competitor is Calico Corners at www.calicocorners.com which
complements their 80+ retail store network. An increasing level of competition is anticipated from
these catalog and Web-based sales. Recent trends, such as those demonstrated in the well
established, but evolving, Pottery Barn catalog at www.potterybarn.com and Ballard Design at
www.ballarddesigns.com indicates increased interest in offering decorator fabric for window
design and upholstery through this increasingly popular channel of distribution.
Click and Mortar Discounters
Channels of distribution continue to shift in favor of discounters, who account for a significant
portion of the growth in the industry and who have been extremely active on the Web. As
consumers experience lower levels of disposable income, discounters leverage frequent store
promotions to entice frugal, value-oriented consumers. One of the biggest criticism of
discounters is their failure to offer a quality service experience and their failure to present
inviting displays to promote sales. One example of these discounters is the "home
improvement" chains, such as Home Base at www.homebase.com. This aggressive retailer has
adopted a strategy to include complete decorator departments in their metropolitan stores.
Currently existing in the Los Angeles market, this strategy is anticipated to be introduced into
the Seattle area and other select metropolitan markets within the year. Although the Boulder
Home Base store sells basic curtain rod hardware and other hard cover window treatment,
there are no known plans at this time for the Boulder Home Base store to implement this in the
foreseeable future. Bed, Bath & Beyond at www.bedbathandbeyond.com has an even larger
assortment of hardware with a selection of pre-made solutions for window treatments, bedding
and pillows. Both of these retailers have stores in our market and with selection activity on
the Web, this will be important to monitor for competitive purposes.
Individually Owned Stores
Some form of locally owned stores exist in virtually every market with a population of over
50,000. Typically, the low end begins with those that carry a limited selection of decorator
fabric, often with a focus on clothing fabric and crafts. At a slightly more sophisticated level,
stores may offer low-cost products with a wide selection of discontinued fabrics and only a
limited number of "current" fabrics. "Full service" individually owned stores, like Barton Interiors,
are less prevalent. An increasing number of these stores at all level do have websites, including
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this local competitor example: www.econosales.com.
5.0 Strategy and Implementation Summary
The primary sales and marketing strategy for Barton Interiors includes these factors:
A premier interior design consulting experience that provides impressive client service
throughout.
The sale of other complementary products that adds value for the client's total
experience.
Providing a experience that will result in repeat business for home and/or office needs and
client referrals.
This strategy will be implemented through the tactics and programs described in this section.
5.1 SWOT Analysis
The following SWOT analysis captures the key strengths and weaknesses relating to the
market analysis summary and describes the opportunities and threats facing Barton Interiors.
Strengths
The proven ability to establish excellent personalized client service.
Strong relationships with suppliers that offer flexibility and respond to special product
requirements.
Good referral relationships with architects, complementary vendors, and local realtors.
Client loyalty developed through a solid reputation among repeat, high-dollar purchase
clients.
Weaknesses
The owner is still climbing the "retail experience learning curve."
Not established in a market where a variety of interior design options exist.
Challenges of the seasonality of the business.
Opportunities
A significant portion of our target market is desperately looking for the services Barton
Interiors will offer.
Strategic alliances offering sources for referrals and joint marketing activities to extend
our reach.
Promising activity from new home construction activity.
Changes in design trends can initiate home updating and, therefore, generate sales.
Threats
Continued price pressure due to competition or the weakening market reducing
contribution margins.
Dramatic changes in design, including fabric colors and styles can present challenges to
keep paced with what is desired by what is expected to be a leading-edge client base.
Expansion of products and services offered by other sources including national discount
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stores into the local market including Target, Wal-Mart, and Home Depot.
Catalog resources, including Calico Corners and Pottery Barn, with aggressively priced
trend-setting fabric products including drapery, bedding and slipcovers.
This analysis indicates solid potential success, but the weaknesses and threats must be
recognized throughout the life of the venture.
5.2 Strategy Pyramid
The following three strategies summarize our implementation process for the upcoming year.
They address in-store retail revenue, expansion to non-fabric revenue sources, and Web-
based sales activities.
STRATEGY #1 - Generating Referrals
Tactic #1A - Build a client base through leveraging existing contacts from former clients of the
architecture firm.
Tactic #1B - Build a referral network through professional contacts. Offer special order fabric
that will arrive in reasonable time frame and enable to provide something very unique for each
customer.
Program #1A - Press release in the local paper announcing the business is open.
Program #1B - Offer seminars through organizations to promote the concept of using an
interior designer and using Barton Interiors.
STRATEGY #2 - Product Sales
Tactic #2A - Promotion of products available through Barton Interiors.
Program #2A - Seminars and demonstration promotions.
Program #2B - Cross selling activities with home and office consulting.
Tactic #2B - Promotion of art and antiques.
Program #2C - Demonstrate the unique qualities they offer to promote these higher
dollar transactions.
Program #2D - Display this through the online and notebook portfolio.
STRATEGY #3 - Generate Awareness Through the Website
Tactic #3A - Better facilitate and communicate Barton Interiors services and
product through the website.
Program #3A - Design of www.bartoninteriors.com.
Program #3B - Integration of completed client work.
Tactic #3B - Monthly assessment of performance of email inquiries.
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Program #3C - Establish goals of the program (Refer to Web Strategy Plan done in Web
Strategy Pro).
Program #3D - Evaluate the client work initiated through the site.
5.3 Value Proposition
Barton Interiors offers the highest interior design experience for the home and office
conveniently available for those in the Boulder area. The concept is unique through the
selection of antiques, home accessories, and complementary products along with the interior
design consulting experience.
5.4 Competitive Edge
Barton Interiors will be differentiated from other interior designers by the value it offers
in quality, sought-after products not found through other designers or store choices, and
through the excellent service and support it offers. Client follow-through will be impeccable.
This competitive edge leverages the same proven factors that indicated higher success rates for
interior design services.
5.5 Marketing Strategy
The marketing strategy is based on establishing Barton Interiors as the resource of choice for
people in need of interior design ideas and products. The more involved "do-it-yourself"
and the "buy-it-yourself" clients will find the consulting and guidance helpful. On the other
end of the spectrum, the "just-get-it-done" client will find Barton will successfully
accomplish exactly that. All clients will find Barton Interiors to be a resources to decorate
their homes and offices in a way that is inspiring, inviting, and motivating.
Our marketing strategy is based on superior performance in the following areas:
Unique consulting services.
Product choices specifically chosen for each individual client project.
Overall quality of the experience and the result.
Excellent client service and support regardless.
This marketing strategy will create awareness, interest, and appeal from our target market for
what Barton Interiors offers our clients. This will be executed in a manner that will entice them
to come back for repeat purchases and encourage them to refer friends and professional
contacts.
5.5.1 Pricing Strategy
Product pricing is based on offering high value to our clients compared to others in the market.
Value is determined based on the best design services, providing a "picture" of what the space
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will look like before the work begins, convenience, and timeliness in accomplishing the goal.
5.5.2 Promotion Strategy
The promotion strategy will focus on generating referrals. Other potential sources of promotion
include:
Newspaper Advertisements: Select advertisements in the Boulder Herald.
Television Advertisements: Select "Martha Stewart" and "Interior Motives"
local television shows.
Quarterly Postcard: A direct mail postcard distributed to the client mailing list.
Website: Traffic from www.bartoninteriors.com.
5.5.3 Distribution Strategy
The primary source of distribution is through the tradition retail distribution channel. On a
secondary basis, it will be through the website via email inquiries and phone sales, or directly
from the site itself.
5.5.4 Marketing Programs
The single objective is to position Barton Interiors as the premier source for home decorator
fabrics in the Boulder area, commanding a majority of the market share within three years. The
marketing strategy will seek to first create client awareness regarding the products and
services offered, develop that client base, establish connections with targeted markets and work
toward building client loyalty and referrals.
Barton Interiors' four main marketing strategies are:
1. Increased awareness and image.
2. Leveraging existing client base.
3. Cross selling.
4. New home construction promotion.
The strategies will be implements through the following marketing tactics and programs.
Strategy #1
INCREASED AWARENESS and IMAGE - Informing those not yet aware of what Barton Interiors
offers.
Advertising
Martha Stewart.
Interior Motives.
Referral Generation
Realtor "open house" promotions.
Complementary vendor referrals.
Imperial Floors.
Upholstery resources.
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"Design Time" Interior Design.
27th Street Fabrics.
Organization Relationships
Co-sponsorship of fund raising activities.
Participating in social and service events.
Strategy #2
LEVERAGING EXISTING CLIENT BASE - Our best sales in the future will come from our current
client base.
Client Service and Relationships
Exceptional client service in the store.
Follow up contact.
Personal shopper support.
Additional Experiences
Classes.
Demonstrations.
Strategy #3
CROSS SELLING - Increasing the average dollar amount per transaction.
Internal
Additional sales of furniture, art pieces, and fabric and home accessories.
Look for office/commercial assignments.
Prospecting
Ongoing work including more involvement in the implementation phase.
Future assignments based on additional work initiated by family changes and
transitions.
Strategy #4
NEW HOME CONSTRUCTION PROMOTION - Connecting with people involved in the building
process.
Connecting with "Suppliers"
Realtors gift certificate program.
Builders design support services.
Loan Officers gift certificate program.
Connecting with "Clients"
Subscription and use of "newcomers" report.
Chamber of Commerce new members update.
5.5.5 Positioning Statement
For the person that seeks to create a personalized and unique impression of her home, Barton
Interiors is the source for client-oriented design services. Clients will be impressed with, and
return for, the services they receive and the outcome they have enjoyed. Unlike other interior
designers or stores, such as JoAnn's, Warehouse Fabric, or catalog options, Barton Interiors is a
pleasant and tasteful resource that encourages everyone in the process of decorating their
home. Unlike using the services of other interior decorators, Barton Interiors allows the
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individual to participate in their design choices to the extent they choose, and realize greater
value for the dollars they invest.
5.6 Sales Strategy
The key to our sales strategy is referrals from pleased clients that are proud of the result Barton
Interiors provided them and pleased to tell their friends--people much like them. Keeping in
contact with past clients to acquire repeat business and to remind them of this referral
opportunity will be key. Sales activities will depend on creating awareness about the services
Barton Interiors offers and then build on each and every client as they make the decision to
refer to others.
5.6.1 Web Plan Summary
The website of www.bartoninteriors.com will be used for information only purposes at this
time. Contact information will be presented with a complete portfolio of work accomplished.
Additional information will be provided regarding the product-based resources Barton Interiors
incorporates into the work done for clients.
5.6.2 Sales Forecast
The sales forecast is broken down into three main revenue streams; residential consulting
revenue, commercial consulting revenue, and product sales. The goal is to have these two
revenue streams be equal by the second year, with product sales slower to secure during year
one. The revenue forecast for the upcoming year is based on a modest 12% growth rate.
The economic unpredictability adds to the difficulty of making these projections.
Table: Sales Forecast
Sal es Forecast
Year 1 Year 2 Year 3
Sal es
Resi denti al Consul ti ng $22,700 $31,200 $46,000
Commerci al Consul ti ng $3,960 $6,240 $7,200
Product Sal es $19,800 $31,200 $46,000
Other $0 $0 $0
Total Sal es $46,460 $68,640 $99,200
Di rect Cost of Sal es Year 1 Year 2 Year 3
Resi denti al Consul ti ng $3,405 $4,680 $6,900
Commerci al Consul ti ng $594 $936 $1,080
Product Sal es $10,890 $17,160 $25,300
Other $0 $0 $0
Subtotal Di rect Cost of Sal es $14,889 $22,776 $33,280
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5.6.3 Sales Programs
In brief, our marketing mix is comprised of these approaches to pricing, distribution, advertising
and promotion, and client service.
Pricing - Residential consulting will bill at an average of $90 per hour and commercial
consulting at $100 per hour.
Distribution - All services and products will be distributed directly through the personal contact.
Advertising and Promotion - The most successful advertising is anticipated to be through
the Boulder Herald and through ads on local broadcasts of the "Martha Stewart" and "Interior
Motives" television shows.
Client Service - Excellent, personalized, fun, one-of-a-kind client service is essential. This is
perhaps the only attribute that cannot be duplicated by any competitor.
The first goal is to recognize individualized needs of each client. If they are a repeat client,
they benefit from the knowledge regarding their lifestyle and taste that was gained from the
previous experience.
5.7 Strategic Alliances
Barton Interiors does have some dynamic alliances. Based on initial research and contacts,
several architect firms are willing to refer clients to Barton Interiors, including Jill's existing
employer, Gibson & Sawyer, LLC. Other alliances include a retail store called "Providance"
which focuses on gallery-type pieces for the home and office and is expected to refer clients.
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There is also a positive relationship with "Interior Fabricators" and this business is expected to be
a referral resource. Strategic online alliances do not exist at this time. This will be an area of
concentrated development for the future and is reflected in our milestone chart.
5.8 Milestones
The milestone chart below accompanied by the graphic outlines key activities that will be critical
to Barton Interiors' success in the coming year.
Table: Milestones
Mi l estones
Mi l estone Start Date End Date Budget Manager Department
Year Buyi ng Program 1/2/2002 1/30/2002 $560 Ji l l Products
Membershi p Strategy 2/2/2002 2/15/2002 $225 Ji l l Promoti ons
Semi nar Schedul e & Prep. 3/1/2002 4/1/2002 $45 Ji l l Marketi ng
Semi nars 4/1/2002 5/30/2002 $540 Ji l l Marketi ng
Cl i ent Revi ew/Anal ysi s 6/1/2002 6/15/2002 $250 Ji l l Marketi ng
Furni ture Market (Hi gh Poi nt, N.
C.)
11/10/2002 11/20/2002 $1,800 Ji l l Products
Year End Eval uati on 12/20/2002 12/31/2002 $250 Ji l l & CPA Management
Total s $3,670
6.0 Management Summary
Jill Barton is the founder and owner of Barton Interiors. Jill received a Bachelor of Arts degree
from the University of Oregon in 1990 through the College of Architecture and Interior Design and
is ASID certified. After working for three years at a prestigious interior design firm in Portland,
Oregon, she moved to Boulder in 1993 and began working with Gibson & Sawyer, LLC, a well-
established architecture firm focusing on the commercial sector. Jill worked with the architects
in the interior design needs for their projects. During this time, she has developed
relationships with a number of community, professional, and supplier contacts throughout the
Boulder and Greater Denver area. Jill plans to leave the firm on favorable terms at the end of
the year.
With her new role at Barton Interiors, Jill will oversee all aspects of the design process and all
business operations. Jill's responsibilities include all aspects of establishing the business,
marketing, buying, bookkeeping and financial dealings.
6.1 Organizational Structure
The organization structure is simplistic. Jill manages all employees and professional contacts,
and will be interfacing with more than 12 account executives/vendors. Jill will determine
resources requirements and monitor expenses for all aspects of the firm.
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6.2 Personnel Plan
Jill will act as a sole proprietor without employees at this point. Contract labor may required
for upholstery and fabrication purposes, but that will be included in the cost of good for each
client's project. Jill's salary will begin at a modest $1,200 per month, increase quarterly, and
then is projected at $2,400 per month for year two and $3,000 for year three.
Table: Personnel
Personnel Pl an
Year 1 Year 2 Year 3
Ji l l Barton $19,800 $28,800 $36,000
Other $0 $0 $0
Total Peopl e 0 0 0
Total Payrol l $19,800 $28,800 $36,000
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7.0 Financial Plan
The initial funding of $25,000 will be invested by the owner. The goal is to fund the growth of
the business from its earnings. The financial plan contains these essential factors:
1. A growth rate in sales of 47% for the year 2002 and 15% for 2003.
2. An average sales per month that increases each year, averaging $3,870 in the first
year, $5,720 the second, and $6,600 in the third year.
3. Continue to fund the growth of the business from the revenues it generates.
Financial difficulties and risks
Slow sales resulting in less-than-projected cash flow.
Unexpected and excessive cost increases compared to the planned expenses.
Overly aggressive and debilitating actions by competing designers.
A parallel entry by a new competitor further diminishing revenue generation potential.
Worst case risks might include
Determining the business cannot support itself on an ongoing basis.
Dealing with the financial, business, and personal devastation of the venture's failure.
Survivable but painful.
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7.1 Break-even Analysis
The break-even analysis below is expressed as a per-client unit. This is based on average
hourly billing, product sales, and costs per transaction.
Table: Break-even Analysis
Break-even Anal ysi s
Monthl y Revenue Break-even $4,067
Assumpti ons:
Average Percent Vari abl e Cost 32%
Esti mated Monthl y Fi xed Cost $2,763
7.2 Important Assumptions
The following captured critical assumptions will determine the potential for future success.
A healthy economy that supports a moderate level of growth in the market.
The ability to support a gross margin percentage in excess of 65%.
Keeping operating costs low, particularly in the areas of product purchases ongoing
monthly expenses.
Receiving an initial payment for each project of 50% of estimated time and product
purchases and collecting the balance of these revenues within 45 days of completing
each project.
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Table: General Assumptions
General Assumpti ons
Year 1 Year 2 Year 3
Pl an Month 1 2 3
Current Interest Rate 9.50% 9.50% 9.50%
Long-term Interest Rate 8.50% 8.50% 8.50%
Tax Rate 28.17% 28.00% 28.17%
Other 0 0 0
7.3 Key Financial Indicators
The key financial indicators focus on cash flow. There is virtually no inventory but late
payments for completed jobs will be a concern. Timely billing and collection will be critical. All
expenses are tracked on a monthly basis, recorded in the accounting software, and will be
compared to our business plan budget.
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7.4 Start-up Summary
The following details the initial start-up expenses for Barton Interiors. Most equipment costs are
office related. Sample and display costs include books, samples and resources necessary to
promote furniture, fabric and other home accessory products.
Table: Start-up
Start-up
Requi rements
Start-up Expenses
Legal $500
Stati onery etc. $850
Brochures $420
Consul tants $450
Insurance $150
Sampl es and Reference Books $3,250
Research and devel opment $800
Expensed equi pment $4,250
Other $550
Total Start-up Expenses $11,220
Start-up Assets
Cash Requi red $9,780
Other Current Assets $1,000
Long-term Assets $3,000
Total Assets $13,780
Total Requi rements $25,000
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Table: Start-up Funding
Start-up Fundi ng
Start-up Expenses to Fund $11,220
Start-up Assets to Fund $13,780
Total Fundi ng Requi red $25,000
Assets
Non-cash Assets from Start-up $4,000
Cash Requi rements from Start-up $9,780
Addi ti onal Cash Rai sed $0
Cash Bal ance on Starti ng Date $9,780
Total Assets $13,780
Li abi l i ti es and Capi tal
Li abi l i ti es
Current Borrowi ng $0
Long-term Li abi l i ti es $0
Accounts Payabl e (Outstandi ng Bi l l s) $0
Other Current Li abi l i ti es (i nterest-free) $0
Total Li abi l i ti es $0
Capi tal
Pl anned Investment
Ji l l Barton $25,000
Investor 2 $0
Other $0
Addi ti onal Investment Requi rement $0
Total Pl anned Investment $25,000
Loss at Start-up (Start-up Expenses) ($11,220)
Total Capi tal $13,780
Total Capi tal and Li abi l i ti es $13,780
Total Fundi ng $25,000
7.5 Projected Profit and Loss
The following represents the projected profit and loss for Barton Interiors based on sales and
expense projections for 2002 through 2004.
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Table: Profit and Loss
Pro Forma Profi t and Loss
Year 1 Year 2 Year 3
Sal es $46,460 $68,640 $99,200
Di rect Cost of Sal es $14,889 $22,776 $33,280
Other $0 $0 $0
Total Cost of Sal es $14,889 $22,776 $33,280
Gross Margi n $31,571 $45,864 $65,920
Gross Margi n % 67.95% 66.82% 66.45%
Expenses
Payrol l $19,800 $28,800 $36,000
Sal es and Marketi ng and Other Expenses $11,560 $13,430 $15,100
Depreci ati on $300 $750 $800
Leased Equi pment $0 $0 $0
Uti l i ti es $540 $660 $800
Insurance $960 $1,200 $1,600
Rent $0 $0 $0
Payrol l Taxes $0 $0 $0
Other $0 $0 $0
Total Operati ng Expenses $33,160 $44,840 $54,300
Profi t Before Interest and Taxes ($1,589) $1,024 $11,620
EBITDA ($1,289) $1,774 $12,420
Interest Expense $0 $76 $238
Taxes Incurred $0 $265 $3,206
Net Profi t ($1,589) $683 $8,176
Net Profi t/Sal es -3.42% 0.99% 8.24%
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7.6 Projected Cash Flow
The cash flow projections are outlined below. These cash flow projects are based on our
basic assumptions and expense and revenue projections.
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Table: Cash Flow
Pro Forma Cash Fl ow
Year 1 Year 2 Year 3
Cash Recei ved
Cash from Operati ons
Cash Sal es $32,522 $48,048 $69,440
Cash from Recei vabl es $9,578 $18,511 $26,892
Subtotal Cash from Operati ons $42,100 $66,559 $96,332
Addi ti onal Cash Recei ved
Sal es Tax, VAT, HST/GST Recei ved $0 $0 $0
New Current Borrowi ng $0 $1,600 $1,800
New Other Li abi l i ti es (i nterest-free) $0 $0 $0
New Long-term Li abi l i ti es $0 $0 $0
Sal es of Other Current Assets $210 $0 $0
Sal es of Long-term Assets $0 $0 $0
New Investment Recei ved $0 $0 $0
Subtotal Cash Recei ved $42,310 $68,159 $98,132
Expendi tures Year 1 Year 2 Year 3
Expendi tures from Operati ons
Cash Spendi ng $19,800 $28,800 $36,000
Bi l l Payments $24,693 $38,506 $52,924
Subtotal Spent on Operati ons $44,493 $67,306 $88,924
Addi ti onal Cash Spent
Sal es Tax, VAT, HST/GST Pai d Out $0 $0 $0
Pri nci pal Repayment of Current Borrowi ng $0 $0 $0
Other Li abi l i ti es Pri nci pal Repayment $0 $0 $0
Long-term Li abi l i ti es Pri nci pal Repayment $0 $0 $0
Purchase Other Current Assets $0 $0 $0
Purchase Long-term Assets $0 $0 $0
Di vi dends $0 $0 $0
Subtotal Cash Spent $44,493 $67,306 $88,924
Net Cash Flow ($2,183) $852 $9,209
Cash Bal ance $7,597 $8,449 $17,658
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7.7 Projected Balance Sheet
Barton Interiors' balance sheet is outlined below.
Table: Balance Sheet
Pro Forma Bal ance Sheet
Year 1 Year 2 Year 3
Assets
Current Assets
Cash $7,597 $8,449 $17,658
Accounts Recei vabl e $4,360 $6,441 $9,308
Other Current Assets $790 $790 $790
Total Current Assets $12,747 $15,680 $27,757
Long-term Assets
Long-term Assets $3,000 $3,000 $3,000
Accumul ated Depreci ati on $300 $1,050 $1,850
Total Long-term Assets $2,700 $1,950 $1,150
Total Assets $15,447 $17,630 $28,907
Li abi l i ti es and Capi tal Year 1 Year 2 Year 3
Current Li abi l i ti es
Accounts Payabl e $3,256 $3,157 $4,457
Current Borrowi ng $0 $1,600 $3,400
Other Current Li abi l i ti es $0 $0 $0
Subtotal Current Li abi l i ti es $3,256 $4,757 $7,857
Long-term Li abi l i ti es $0 $0 $0
Total Li abi l i ti es $3,256 $4,757 $7,857
Pai d-i n Capi tal $25,000 $25,000 $25,000
Retai ned Earni ngs ($11,220) ($12,809) ($12,126)
Earni ngs ($1,589) $683 $8,176
Total Capi tal $12,191 $12,874 $21,050
Total Li abi l i ti es and Capi tal $15,447 $17,630 $28,907
Net Worth $12,191 $12,874 $21,050
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7.8 Business Ratios
Business ratios for the years of this plan are shown below. Industry profile ratios based on the
Standard Industrial Classification (SIC) code 7389, Business Services--Interior Design Services,
are shown for comparison. If we fail in any of these areas, we will need to re-evaluate our
business model:
Gross margins at, or above, 65%.
Month-to-month and annual increases to meet the expected growth requirements.
Self-fund growth not dependant on the credit line to meet cash requirements.
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Table: Ratios
Rati o Anal ysi s
Year 1 Year 2 Year 3 Industry Profi l e
Sal es Growth n.a. 47.74% 44.52% 12.40%
Percent of Total Assets
Accounts Recei vabl e 28.22% 36.53% 32.20% 26.10%
Other Current Assets 5.11% 4.48% 2.73% 44.70%
Total Current Assets 82.52% 88.94% 96.02% 74.50%
Long-term Assets 17.48% 11.06% 3.98% 25.50%
Total Assets 100.00% 100.00% 100.00% 100.00%
Current Li abi l i ti es 21.08% 26.98% 27.18% 44.30%
Long-term Li abi l i ti es 0.00% 0.00% 0.00% 16.00%
Total Li abi l i ti es 21.08% 26.98% 27.18% 60.30%
Net Worth 78.92% 73.02% 72.82% 39.70%
Percent of Sal es
Sal es 100.00% 100.00% 100.00% 100.00%
Gross Margi n 67.95% 66.82% 66.45% 0.00%
Sel l i ng, General & Admi ni strati ve Expenses 73.96% 65.72% 38.61% 80.80%
Adverti si ng Expenses 16.36% 12.24% 11.36% 1.30%
Profi t Before Interest and Taxes -3.42% 1.49% 11.71% 2.20%
Mai n Rati os
Current 3.92 3.30 3.53 1.75
Qui ck 3.92 3.30 3.53 1.38
Total Debt to Total Assets 21.08% 26.98% 27.18% 60.30%
Pre-tax Return on Net Worth -13.03% 7.36% 54.07% 3.80%
Pre-tax Return on Assets -10.29% 5.38% 39.38% 9.70%
Addi ti onal Rati os Year 1 Year 2 Year 3
Net Profi t Margi n -3.42% 0.99% 8.24% n.a
Return on Equi ty -13.03% 5.30% 38.84% n.a
Acti vi ty Rati os
Accounts Recei vabl e Turnover 3.20 3.20 3.20 n.a
Col l ecti on Days 55 96 97 n.a
Accounts Payabl e Turnover 8.58 12.17 12.17 n.a
Payment Days 27 30 26 n.a
Total Asset Turnover 3.01 3.89 3.43 n.a
Debt Rati os
Debt to Net Worth 0.27 0.37 0.37 n.a
Current Li ab. to Li ab. 1.00 1.00 1.00 n.a
Li qui di ty Rati os
Net Worki ng Capi tal $9,491 $10,924 $19,900 n.a
Interest Coverage 0.00 13.47 48.93 n.a
Addi ti onal Rati os
Assets to Sal es 0.33 0.26 0.29 n.a
Current Debt/Total Assets 21% 27% 27% n.a
Aci d Test 2.58 1.94 2.35 n.a
Sal es/Net Worth 3.81 5.33 4.71 n.a
Di vi dend Payout 0.00 0.00 0.00 n.a
Appendix
Page 1
Table: Sales Forecast
Sales Forecast
Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12
Sales
Residential Consulting 0% $800 $900 $1,000 $1,200 $1,400 $1,600 $1,800 $2,000 $2,400 $2,800 $3,200 $3,600
Commercial Consulting 0% $0 $0 $0 $240 $280 $320 $360 $400 $440 $560 $640 $720
Product Sales 0% $400 $600 $800 $1,000 $1,200 $1,400 $1,600 $1,800 $2,000 $2,400 $3,000 $3,600
Other 0% $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Total Sales $1,200 $1,500 $1,800 $2,440 $2,880 $3,320 $3,760 $4,200 $4,840 $5,760 $6,840 $7,920
Direct Cost of Sales Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12
Residential Consulting $120 $135 $150 $180 $210 $240 $270 $300 $360 $420 $480 $540
Commercial Consulting $0 $0 $0 $36 $42 $48 $54 $60 $66 $84 $96 $108
Product Sales $220 $330 $440 $550 $660 $770 $880 $990 $1,100 $1,320 $1,650 $1,980
Other $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Subtotal Direct Cost of Sales $340 $465 $590 $766 $912 $1,058 $1,204 $1,350 $1,526 $1,824 $2,226 $2,628
Appendix
Page 2
Table: General Assumptions
General Assumptions
Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12
Plan Month 1 2 3 4 5 6 7 8 9 10 11 12
Current Interest Rate 9.50% 9.50% 9.50% 9.50% 9.50% 9.50% 9.50% 9.50% 9.50% 9.50% 9.50% 9.50%
Long-termInterest Rate 8.50% 8.50% 8.50% 8.50% 8.50% 8.50% 8.50% 8.50% 8.50% 8.50% 8.50% 8.50%
Tax Rate 30.00% 28.00% 28.00% 28.00% 28.00% 28.00% 28.00% 28.00% 28.00% 28.00% 28.00% 28.00%
Other 0 0 0 0 0 0 0 0 0 0 0 0
Appendix
Page 3
Table: Profit and Loss
Pro Forma Profit and Loss
Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12
Sales $1,200 $1,500 $1,800 $2,440 $2,880 $3,320 $3,760 $4,200 $4,840 $5,760 $6,840 $7,920
Direct Cost of Sales $340 $465 $590 $766 $912 $1,058 $1,204 $1,350 $1,526 $1,824 $2,226 $2,628
Other $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Total Cost of Sales $340 $465 $590 $766 $912 $1,058 $1,204 $1,350 $1,526 $1,824 $2,226 $2,628
Gross Margin $860 $1,035 $1,210 $1,674 $1,968 $2,262 $2,556 $2,850 $3,314 $3,936 $4,614 $5,292
Gross Margin % 71.67% 69.00% 67.22% 68.61% 68.33% 68.13% 67.98% 67.86% 68.47% 68.33% 67.46% 66.82%
Expenses
Payroll $1,200 $1,200 $1,200 $1,500 $1,500 $1,500 $1,800 $1,800 $1,800 $2,100 $2,100 $2,100
Sales and Marketing and Other
Expenses
$2,165 $615 $615 $885 $625 $625 $685 $685 $935 $685 $2,425 $615
Depreciation $25 $25 $25 $25 $25 $25 $25 $25 $25 $25 $25 $25
Leased Equipment $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Utilities $45 $45 $45 $45 $45 $45 $45 $45 $45 $45 $45 $45
Insurance $80 $80 $80 $80 $80 $80 $80 $80 $80 $80 $80 $80
Rent $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Payroll Taxes 15% $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Other $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Total Operating Expenses $3,515 $1,965 $1,965 $2,535 $2,275 $2,275 $2,635 $2,635 $2,885 $2,935 $4,675 $2,865
Profit Before Interest and Taxes ($2,655) ($930) ($755) ($861) ($307) ($13) ($79) $215 $429 $1,001 ($61) $2,427
EBITDA ($2,630) ($905) ($730) ($836) ($282) $12 ($54) $240 $454 $1,026 ($36) $2,452
Interest Expense $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Taxes Incurred $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Net Profit ($2,655) ($930) ($755) ($861) ($307) ($13) ($79) $215 $429 $1,001 ($61) $2,427
Net Profit/Sales -221.25% -62.00% -41.94% -35.29% -10.66% -0.39% -2.10% 5.12% 8.86% 17.38% -0.89% 30.64%
Appendix
Page 4
Table: Cash Flow
Pro Forma Cash Flow
Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12
Cash Received
Cash fromOperations
Cash Sales $840 $1,050 $1,260 $1,708 $2,016 $2,324 $2,632 $2,940 $3,388 $4,032 $4,788 $5,544
Cash fromReceivables $0 $12 $363 $453 $546 $736 $868 $1,000 $1,132 $1,266 $1,461 $1,739
Subtotal Cash fromOperations $840 $1,062 $1,623 $2,161 $2,562 $3,060 $3,500 $3,940 $4,520 $5,298 $6,249 $7,283
Additional Cash Received
Sales Tax, VAT, HST/GST Received 0.00% $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
New Current Borrowing $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
New Other Liabilities (interest-free) $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
New Long-termLiabilities $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Sales of Other Current Assets $0 $0 $0 $210 $0 $0 $0 $0 $0 $0 $0 $0
Sales of Long-termAssets $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
New Investment Received $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Subtotal Cash Received $840 $1,062 $1,623 $2,371 $2,562 $3,060 $3,500 $3,940 $4,520 $5,298 $6,249 $7,283
Expenditures Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12
Expenditures fromOperations
Cash Spending $1,200 $1,200 $1,200 $1,500 $1,500 $1,500 $1,800 $1,800 $1,800 $2,100 $2,100 $2,100
Bill Payments $88 $2,583 $1,209 $1,345 $1,772 $1,667 $1,815 $2,019 $2,174 $2,588 $2,705 $4,729
Subtotal Spent on Operations $1,288 $3,783 $2,409 $2,845 $3,272 $3,167 $3,615 $3,819 $3,974 $4,688 $4,805 $6,829
Additional Cash Spent
Sales Tax, VAT, HST/GST Paid Out $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Principal Repayment of Current Borrowing $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Other Liabilities Principal Repayment $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Long-termLiabilities Principal Repayment $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Purchase Other Current Assets $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Purchase Long-termAssets $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Dividends $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Subtotal Cash Spent $1,288 $3,783 $2,409 $2,845 $3,272 $3,167 $3,615 $3,819 $3,974 $4,688 $4,805 $6,829
Net Cash Flow ($448) ($2,721) ($786) ($474) ($710) ($106) ($114) $122 $546 $611 $1,444 $454
Cash Balance $9,332 $6,612 $5,826 $5,352 $4,642 $4,536 $4,421 $4,543 $5,089 $5,700 $7,143 $7,597
Appendix
Page 5
Table: Balance Sheet
Pro Forma Balance Sheet
Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12
Assets Starting Balances
Current Assets
Cash $9,780 $9,332 $6,612 $5,826 $5,352 $4,642 $4,536 $4,421 $4,543 $5,089 $5,700 $7,143 $7,597
Accounts Receivable $0 $360 $798 $975 $1,254 $1,572 $1,831 $2,091 $2,350 $2,670 $3,132 $3,722 $4,360
Other Current Assets $1,000 $1,000 $1,000 $1,000 $790 $790 $790 $790 $790 $790 $790 $790 $790
Total Current Assets $10,780 $10,692 $8,410 $7,801 $7,396 $7,004 $7,157 $7,302 $7,683 $8,549 $9,621 $11,656 $12,747
Long-termAssets
Long-termAssets $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000
Accumulated Depreciation $0 $25 $50 $75 $100 $125 $150 $175 $200 $225 $250 $275 $300
Total Long-termAssets $3,000 $2,975 $2,950 $2,925 $2,900 $2,875 $2,850 $2,825 $2,800 $2,775 $2,750 $2,725 $2,700
Total Assets $13,780 $13,667 $11,360 $10,726 $10,296 $9,879 $10,007 $10,127 $10,483 $11,324 $12,371 $14,381 $15,447
Liabilities and Capital Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12
Current Liabilities
Accounts Payable $0 $2,542 $1,165 $1,286 $1,717 $1,607 $1,748 $1,947 $2,088 $2,500 $2,546 $4,617 $3,256
Current Borrowing $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Other Current Liabilities $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Subtotal Current Liabilities $0 $2,542 $1,165 $1,286 $1,717 $1,607 $1,748 $1,947 $2,088 $2,500 $2,546 $4,617 $3,256
Long-termLiabilities $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Total Liabilities $0 $2,542 $1,165 $1,286 $1,717 $1,607 $1,748 $1,947 $2,088 $2,500 $2,546 $4,617 $3,256
Paid-in Capital $25,000 $25,000 $25,000 $25,000 $25,000 $25,000 $25,000 $25,000 $25,000 $25,000 $25,000 $25,000 $25,000
Retained Earnings ($11,220) ($11,220) ($11,220) ($11,220) ($11,220) ($11,220) ($11,220) ($11,220) ($11,220) ($11,220) ($11,220) ($11,220) ($11,220)
Earnings $0 ($2,655) ($3,585) ($4,340) ($5,201) ($5,508) ($5,521) ($5,600) ($5,385) ($4,956) ($3,955) ($4,016) ($1,589)
Total Capital $13,780 $11,125 $10,195 $9,440 $8,579 $8,272 $8,259 $8,180 $8,395 $8,824 $9,825 $9,764 $12,191
Total Liabilities and Capital $13,780 $13,667 $11,360 $10,726 $10,296 $9,879 $10,007 $10,127 $10,483 $11,324 $12,371 $14,381 $15,447
Net Worth $13,780 $11,125 $10,195 $9,440 $8,579 $8,272 $8,259 $8,180 $8,395 $8,824 $9,825 $9,764 $12,191
Appendix
Page 6
Table: Personnel
Personnel Plan
Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12
Jill Barton 0% $1,200 $1,200 $1,200 $1,500 $1,500 $1,500 $1,800 $1,800 $1,800 $2,100 $2,100 $2,100
Other 0% $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Total People 0 0 0 0 0 0 0 0 0 0 0 0
Total Payroll $1,200 $1,200 $1,200 $1,500 $1,500 $1,500 $1,800 $1,800 $1,800 $2,100 $2,100 $2,100