Mach 00 Maen Taig wn. gh eed i ii iil ia til ai er iam pee ak tse mp ‘NilaveL™ Lng Potash ar wasn peaien of he ur ie aie Usverty ofClo Deve Cm Bx nh Bat HM eer Code SRG Paes BORES SNAP. SOC January 1996 Custom Furniture Manufacturing and Retailing 123 A Street Valleytown, USA 01234 (123) 456-7890 1. M. Owner Proprietor ‘Sample Start-up Business Plan—Page 1Table of Contents Section Page ‘Section |. Executive Summary 4 ‘Section I Background Information 6 ‘A. Personal Information Personal Profile of Skills and Experience Personal Financial Capability Statement B. Business Concept Statement of Purpose (1 Business Goals and Objectives General Description ofthe Business asin Statement) Ill, Description of Pr 7 Features of Proposed ProauctsServices Benefits fo Customers Proprietary Aspects of Products/Servioes ‘Stage of DevelopmenyProduction Plan Filure Products Servioes ;ction_1V. Management nd_Organia: 9 ‘Legal Form and Ownership Management and Personnel (Organizational Chart, Outside Services/Advisors ‘A, Industry Descri Background of the Industry (Current and Fuure trends Business Fit in the Industry B. The Market Customer ProilerTarget Market ‘Trade Area Description Market Size and Trends Market Potentish, ‘Sample Start-up Business Plan—Page 2Section (continued) Page ©. Competition Direct and Indirect Competition Evaluation of Competition and Competitive Advantage D. Marketing Strategies Market Botiioning Business Location Marketing Taccies Packaging Pring bution Systems Public Relations/Networking Adsertsing Customer Service Section_V1. The Financial Plan 18 ‘A. Investment Required for Start-up Starvup CassNeeds| Investment Required —BankiSelf B. Cash Flow Projections. Sales and Expease Estimates Worksheets & Assumptions ‘Monthly Cash Flow Projection —Years One, Two and Three C. Summary of Finsncial Needs Section _Vil_Conclusion a7 Feasibility Statement Aton P ¢ion_VIU, ina_Docum 28 . Monthly Expenses Worksheet |. Personal Financial Statement ‘Administrative Policies, Procedures and Controls Documents and Paper Flow moo p> - Risk Analysis and Alternative Plans of Action ‘Sample Start-up Business Plan—Page 3Section |. Executive Summary (Custom Furniture Manufacturing & Retailing (CFM) isin the start-up stage. The concept of custom fariture manufecturing and retailing has been explored and is presented berin. There isa lack of custom retail manufacturers and CFM willbe entering a market of limited ‘competion. Only three custom retailers currenily exist inthe valle. These retailers ae seen 188 expensive and impractical tothe average consumer. CFM wil reduce pri that will be affordable while being designed to the customer preference, CFM will not only produce custom goods, but will algo develop standard ines tha are stocked fon the show floor. Additionally, CFM will sell goods from other companies that make lines of fumiture that CEM will not be producing but ae compatible with CFM quality and pricing 1M. Owner's expesience in the retail furniture industry has given insight ito the imitations ‘of some furniture products, and thereby allowing improvement upon thove designs. Mf ‘Owner as spent ten years learning the retail fornitre business from the bottom up. This Includes everything ftom deliveries, finishing refinishing, repairs, custom building, sales and ordering CFM will stat 2s a sole propeetorship and develop into an S-Corporation after one year of ‘operation. After tn years a C-Corporation will be formed and the possibility of taking the company publie willbe explored, ‘With the direction of the board of advisors and the knowledge that Mr. Owner has obtained Uhroughou the years, CFM will create a very successfol operation tht focuses on quality and ‘customer satisfaction, to things that seem fo be scarce in the furniture industry. Sample Start-up Business Plan—Page 4Section Il, Background Information A. Personal Information Personal Profile of Skills and Experience |. M, Owner has over ten years in the retail funiture business, This experince ialudes the full range of labor and management including material ondering, furniture design, construction and repair, custom finishing, delivery, warehouse management, and sales. Because his experience contains the fll scope of farsiture manufacture and realing as well sr oferations and employee management, Mr, Owner is uniquely qualified to wat thie new ventare ‘While Mr. Owner has many strengths that suggest his success in CFM, he is limited inthe time snd atention to detail he can give to each management function, Also, Mr. Owner does not have a strong Financial background, which is ercial to tracking the health of any busines. ‘Mr. Owner has addressed his weaknesses by selecting a parc-time store manager to asist him, ‘who is experienced in sles, inventory management and store operations. Mr. Owner has also selected an experienced ouside bookkeeping service and CPA. The CPA will provide the initial setup of the compeny's overall record-keeping and provide an effective accounting system. The bookkeeping service will provide day to day bookkeeping at an affordable price. Finally, Mr. Owner's advisory board includes individuals experienced in financial management Personal Financial Capability Statement Mr. Owner's monthly expenses worksheet and personal financial statement can be found in Section VII. Supporting Documents, Mr. Owner has been developing the skills, experience and financial resources to start his own business for a numberof years. AS his monthly expense worksheet indicates he will nally tke a monthly draw of $2,500 from the business (also indicated in his buscess projections), which allows fora continuation of his living style and the ability to meet ll financial obligations. Mr. Owner's Personal Financial Statement shows substantial cash avallabe o invest in the business, B. Business Concept Statement of Purpose (Mission Statement) ‘The purpose of CFM is to provide its customers with the product that they Want ata price they can afford while maintaining both guaity and service Sample Start-up Business Plan—Page 5Business Goals and Objectives Goals: 1, Develop an etfesiveflsime mangge to handle ily operations. 2. Tocease units manufactured by 100% st he end of year3 5. Ineease lie even by 160% she end of yea3 Objectives (within one year): 1. etal writen employee handbook eating personel policies, ob description, te. 2. Provide unig for pastime tore manager by asigning specific onthe jb raining ines cover daily operations and cern ouside taining couses such as customer tons. Goals 2&3 1 Esaish an appropriate accounting sytem (iacuiig cost based manufactuing component) ‘cable of tracking per unit evene, cos and profitably as well as, tdtaa salesman, cstomer and store profil. Provide sales and marking taining for prtsime sore manager nd subseqes esonel, Taret per unit proiability and maintain those targets in CFM's sales satey old weekly company mesings to discus Inventory, prising, odesing and tes General Description of the Business (CFM is currently inthe star-up mode of development. Fumiture designs are being developed and trade accounts are being set-up with different suppliers. Actual production and set-up cannot occur until the location is leased and the proper equipment insaled. ‘CFM will be a welcome addition tothe Furiture buyers inthe valley. ‘This type of ‘manufacturing and retail store has been attempted in many different ways, but they have all ‘been high priced or unrealistic for many people who consider buying custom furniture. CFM will offer standard ines at competitive prices while keeping custom order pices stan affordable evel Other custom furniture manufacturers are either too expensive forthe average sonsumer or they do noe offer all the services that real store offer quality podut at reasonable price with service that CEM’s success will come from a ‘commensurate with CFM quality (CFM ot star up will be operated by I. M. Ownee es sele propriclr. A parttime potion of store manager wil grow toa full-time postion as projected sales are achieved. (CFM will secure a midterm lease (35 years) with the ultimate desire to purchase and renovate 2 building from which to combine the manufacturing and retailing processes. The building ‘would contain the “showease” aspects of popular brew/pubs that allow customers to “view” the manufacturing process. ‘Sample Start-up Business Plan—Paye 6Section Ill. Description of Products/Services Features of Proposed Products/Services Product: Custom Furniture Customers gt he design ey want and ot ats aval 2 Aordable ‘Customers wil be able o ators custom _ esigned turiture, ®. Resists emetrame forpreauevan ana | Many custom design shops have unreaisio Calvary producton tine folowed by countess delays in dlvery othe customer. CFM wil provio a witen quarantoe of product livery da, CEM will be unique: + Real sore withits ova production fasity + Willbeable to poducea stanton compte ln of Foire wile producing custom goods for special ore. Contacts with amber mil for reduced ate of lumber + Ability to match oles, ses and Fnshes on special orders + High quality design of produc, Proprietary Aspects of Products/Services “There are no proprietary aspects in the manufacture and design of this furniture, other than trademarks, which wil be secured, Stage of Development/Production Plan Fifty percent of goods canied by CFM willbe manufactured within its own production facilities. The other 50% willbe bought from other furniture manufacturers to cover the areas in which CFM is not set-up for production. Given a $40,000 month $20,000 would be sales from other manufacturers and $20,000 would be sales from CFM manufacturing. With a standard markup of 2.5 times the cost of other companies goods and 4 times the cos of ur ‘own goods, a gross profit ster cost of goods sold would be approximately $27,000, $12,000 from the sale of other companies’ goods and $15,000 from the sale of CFM goods. By using other manufacturers for 50% of sales, a warehouse willbe needed to stock ‘additonal inventory. Optimal operation would require only 15% of inventory form other ‘Companies to ensure a backup for production as need develops ‘Sample Start-up Business Plan—Page 7Purchasing contracts will be made with several diferent lumber supplies across the US. Each will supply required materials and CFM will buy at negoited quantities. Having more ‘than one supplier will allow for competitive buying adit wil give assurance tht CFM will always have materials at competitive price. ‘Manufacturing wil equire a large failiy with ample power torun diferent machinery needed for production. Future expansion will be necessary as demand requires. A site with room for both production and sales will be sought. ‘oxic materials used in finishing the furniture will have toe disposed of propery. Special ‘bins wil be used to ensure that this material is handled properly. Saw dust will be recycled for other uses and noise willbe controlled trough insulation inthe builng that will abate se nose Certain govemment approvals wll be necessary in the production facilites of CFM. Because ofthe equipment that willbe used in production, health and sey willbe very eft issues ‘Before opening OSHA wil inspec the facility and ensure that all codes for safety are being ‘As the production facilities ae established and busines stars, a careful watch over produetion will be needed to ensure CPM's success. Additonal research wil be needed in production ficiency. The more efficent that prodvetion becomes the beter profit margin can be tained. Product Limitations and Concems Finished product limitations would include both quality and supply of raw materials. AS ‘quality of materials varies, the quality of the finished produets wil vary. Production quality hha a high dependence on the quality of materials that go into production. A steady supply of raw materials is necessary to Keep a steady production level To reduce the risks of quality and supply of raw materials for production, CFM will have ‘more than one supplier of raw materials. ‘Tis wil ensure prem raw materials atthe best ‘market pice. Supply will also be more constant, because if one supplier is shor, another ‘supplier can be called upon to cover the shortage, Future Products/Services CFM will look towards developing the following future product'services + Antique restoration an fut refniehing, + Faritur delivery, set-up en instalation + Famiture design ad style matching. + Changing needs: CPM wit easly be abet atapt preducticn to mest the ehangng sys and castomer preference, + CEM will encourage new esigns and poe improvementthrough employe bows and Incentive ropa. ‘Sample Start-up Business Plan—Page &Section IV. Legal Form and Ownership CCAM is a sole proprietorship, 100% owned by 1. M. Owner |. M. Owner as spent over seven years inthe real furniture business doing such things as + Fumie detivery + Custom fishing + Fate resi + Custom motions + Fumie balding 1+ Warehouse management Fumi sles + Employee management + Ontecng He has leamed the business from the ground up and has substantial customer experience. From ths experience, he understands what customers are looking for in hom furnishings Management and Personnel Position Salary/Wage Benefits Owner/Operator $30,000 100% Ownership Medical, Dent, Vision Store Manager {$14,000 (inet bonuses) _Sales goal bonuses (parttime position: Vacation pay Furniture Maker ‘$24,000 (incl bonuses) _ Incentive bontses based on production ‘Vacation pay Sales Staff ‘minimum wage or ‘A great place © work! (as needed) experienced based Employee Incentives All employees will receive special incentives based on the amount of time they spend withthe company. Incentives will includes sles and production bonuses, and special discount pricing on custom furniture Sample Start-up Business Plan—Page 9Organizational Chart re Manager (2) Production (Sales) Manager CPA (a) Bookkeeping Service (4) Sales People (3) Furniture Maker LM Over 1@) Paevane soe manager 16), Added sales volume warans ©) Oubideservices ‘Sample Start-up Business Plan—Page 10Outside Services/Advisors ile Salace PA (eng time friend) [No fee for business advice. (imal fe for seting up accounting system) Preside, Fumiture World No fee, Branch Manager, Security Bank No fe. Bookkeeping Service $28/month Risk Management Life Inserance 09 Sole Proprietor (1. M, Owner) Company: Valley Insurance Company ‘Type: ‘Term Life Insurance cost {$50 per month Beneficiary: Will also receive ownership of business in case of death of 1. M. Owner Product and General Liability Insuranes willbe necessary to cover the business and the store of goods in the warehouse, the production facilites andthe storefront. A. general business policy wil be set upto cover $2,000,000, ire, water and business interapion. ‘Company; Valley Insurance Company Type General Business Policy ‘Cost ‘51600 per year ‘Sample Start-up Business Plan—Page 11Factory ditet, discount warehouses, and catalogue sales are also becoming more poplar among certain individuals Current and Future Trends ‘The furniture industry is tendy in some areas yet stable in others. Many styles have Some land gone and then retumed again. Some have stayed popular overtime. Current trends have been focusing on antique reproductions and furiture that combines a painted look with a natural wood look. The traditional, country and modem styles have continued to be srong leaders inthe customers preferences. The furniture industry as a whole is a fairy stable industry, with future trends indicating limited growth inthe real area. Custom furniture manufacturers are stil relatively few ‘There isa lot of room for industry growth in the tea of custom real stores. Fature ends show a demand for this typeof manufactuingistail operation, Business Fit in the Industry ‘The manufecturingrtal concep is not new in the industry and at present represents & small ‘but rapidly growing segment ofthe market, B, The Market Customer Profile/Target Market Customer Profile CFM will appeal to customers across a fast broad spectrum. The majority of customs witl be homeowners between the ages of 35 to 50+, The focus will be on couples, since many people only buy furniture when both husband and wife agree. Approximstely 25% wil be ‘ingle mother, fathers and people without spouses or children. Incomes will range from Tower middle incomes to upper mile incomes. Target Market Profile Target market willbe middle income families that are both starting their carers and families 1nd those that have been established and are looking to change out older furniture for new items, Established, older couples wil also be our target for refinishing and the majonity of our custom work. Market Size and Trends ‘CFM's market consists of about 1/8 to 1/4 of the valley population which would be beween 15,000 to 40,000 people. CFM would need approximately 8,000 customers to come trough ‘he store each year. Many of these 8,000 visits Would be repeat visits and not all woud be visits that purchased each time. An average monthly volume would be $35,000 to $40,000 a ‘month giving an average sale of about $700 to $800 per customer Sainple Start-up Business Plan—Page 13Market Potential CCEM's potion ofthe v percent ley market can be increased two ways. One is to capture a greater ofthe overall market. That is, more customers inthe 15,000 to 40,000 individuals that make up the market. The second way isto maximize market potential by raising the average stle per cusomer. CFM will market potent sale. ‘Puture Markets pct its marketing strategies toward maximizing the by bath expanding its customer base and raising the per customer average Future markets for CFM a in the wholesale distribution of CFM brand mame prvucts. Tn ‘order to achieve this goal large expansion wil need to be made to the production facilities ‘oF new facilis found, and, addtional capital will have tobe raised to buy additonal equipment. A larger staff wil be necessary to increase manufecturing output Production/@uality C. Competition Direct and Indirect Competition Direct Competition Competitive Matrix Chart Prices are set 0 show qualty yeltey wil be srategialy the prices of compomor ‘Qually is the priory while Speed of pendicon wil bo the focus of improvement High prices are set to show (qualty and take advantage of _ Ba postionin the custom Goat he naj Bam Speed of preduaton and _quanily fe not important Unique Features: ‘Standard designs tha allow for serosa est esis wth wo SLUTS | Serle Seni secre oan STainon Siow Tor sre Fa Ras Tet’ ap ie eine | Crane Seat, | eineayaeencee | Geographic Location ‘Strengths Weaknesses to the mall area. ~~ | - Larger variety ofsiyies and products iis Pectin M | best rests ml bo seid alview and Milwaukee, do needed before Orchard and Fainiew, fartar from te mal “Well established + Trained production staf. | Store is hidden — off steet Regarded as expensive, ‘Sample Start-up Business Plan—Page 14Indlrect Competition ‘The valley has a full complement of real furniture stores and department sores that retail home fumishings, including furniture. CFM is targeting those customers that wish a custom Piece of furitur, and hopes to in time attract some cross-over customers from these indirect ‘competitors as they realize that custom furniture is avallable tan affordable price, Evaluation of Competition & Competitive Advantage Basis of Industry Competition Furniture retailers compete primarily on price. Since more thn one store caries the same items the better price usually wins the sale (Quality is another area of competition. Some items ae clearly of higher quality than others and some consumers are willing to pay more for beter quality Promotion and service are areas that differ according to the store. Some stores offer good promations but they provide litle or no service. Other stores have outstanding service and no. promations. Depending on buying habits and preferences ofthe target customer, retailers Will have a different combination of promotions and service Competitive Advantage CFM will focus on the customer. CFM's competitive advantage will ince superior Products ata competitive price, combined with excellent service throughout the customer relationship. Customer loyalty willbe an important factor in ceeping CFM on top in the ‘custom retail market. All focus at CFM wil be on making sue the eusomer is served well and is happy withthe produet and service received, D. Marketing Strategies Market Positioning CEM wil be positioned asa high quality, moderately priced retailer that also offers unique customizing capabilites. Because we can offer specialized sevice, our custom goods willbe Positioned as high quality and lean toward higher-end peice, tut wil sll be affordable. ‘We will accomplish our market positioning goals through the following: In the CFM Retail Store: + Outstanding salespeople who undentand easton: ned ‘+ avon! sales to hight oo ability to customize and quality + Dentin W cepa our manulsring eapabliesand unguenss Sample Start-up Business Plan—Page 15Promotion Distribution System CFM will act a its own ret stor. This will reduce the transportation cost associated with ‘ost fumiture sealers that purchase from wholesalers, Public RelationsiNetworking ‘Trade Shows Local trade shows willbe attended twice a year. One inthe spring and one inthe fll in conjunction with CFM’s advertising promotions. The national trade show for custom furniture manufacturers will be atended annually, Aside from the sales potential trade shows coffer the ability to se the compettion. New trends and ideas surface a these trade shows first and are then integrated into “umiture design. ‘The tradeshow isan excellent mechanism ‘o stay curren withthe market and network with both potential customers and other industry representatives Advertising ‘An advertising budget of $3,000 vill be established each year, The first year an additonal ‘$500 willbe used to promote the opening ofthe store, Advertising wil then be divided into ‘the parts: $1,000 for promotion at the beginning ofthe fll season to gain recognition and ‘promote a good image, $1,000 in the early spring to strech out the buying cycle to the extent Possible, and $1,000 to be used ttroughout the year on small promotions and customer appreciation Customer Service Service and Warranties Service wll be provided for all prducts purchased atthe CFM store free of charge for a period of one year. Thereafter a small charge wil be applied to all service and repairs to cover cost of labor and materials, A five year waranty willbe sold with all CFM brand items to cover defects in construction ‘and I year to cover materials wed, Additional service contracts are a possibility that willbe sold if a customer desires longer warranty period on any furniture items, ‘Sample Start-up Business Plan—Page 17Ay Section VI. The Financial Plan A. Investment Required for Start-up Start-up Cost Star-up costs needed are beginning inventory, rent deposi sore design costs for remodeling. city licensing and permits, equipment for production, delivery van and legal fes for yearly ‘ax preparation Cost Purchase fixed assets (land, equip., building, vehicles) _ 25,000 10,000 Remodeling costs (fixtures, signs, paint, cleaning) 1 2. 3.__| installation fees (equip.. phones, hookup charges) 4 | Deposits (ullities, lease, phone, leased equip. 5._ Fees and licenses 6. Legal fees 7.__Avoounting and other professional fees (tax prep) ____z00] |_8._| insurance 9. _ Pre-opening labor expense 10. _ Pre-opening training costs 11._| Beginning inventory of merchandise or mater 60,000 12._| Supplies (leterhead, forms, pric lays) 13._| Promotion (grand opening, prizes, give-aways) 14. | Advertsing (initial media, direct mail, coupons) 16a._| Other expenses: Delivery Van: Vehicle 20,000 166. Insurance 4,000, 166. _ PaintName 600 454 LB Total Startup Expenses| 96,300 c. (AB) Beginning Cash Balance ‘or Additional Cash Required ()| (74,300) Sample Start-up Business Plan—Page 18Investment Required—Bank Loan/Self [As the cashflow projections for 1996, 1997 and 1998 indicate, tke maximum cash deficit is {$166,182. As refleced inthe Start-up Expenses Worksheet, Me. Owner is prepared to put {$25,000 cash ino stating tis business. Approximately $200,008 will be needed to run the busines over the first 3 years. Mr. Owner is requesting « $100,000 loan to start the business and service the del during the first year. He will then seek a $50,000 loan in Year 2 (or pethays a line of credit in that amount to fund expanding operatons, and anether $50,000 in Year3. As equipment aod toot expansions wil be complete in Year 3, ts antcipted that years 4 through 6 will allow Mr. Owner to significantly reduce the debt if business holds at the actcipated steady growth rae In summary, an investment of spproximately $225,000 is needed between the owner and ‘outside Financing sources o start this business and carry it for its inital three years. |.M, Owner's Personal Financial Statement shows cash available of $25,000 and net worth of {$86,300 as potential collateral against a bank loan. Additional calaterl from the business is available inthe form of its assets including van, manufacturing equipment, accounts receivable and inventory Sainple Start-up Business Plan—Page 19‘Cash Flow Projection - 1996. [Ending Gash Butence (A +0) | 17083} ‘Sample Start-up Business Plan—Page 20Cash Disbursements - 1996 tl an Phan vaca ‘ sen| so] owe ves] toma] weer] | [soba a Ps aa] aa 00 [pot tr 20] aso] eo] nol seo] exo] ecg] ro] rol ol — eso} “om tne gsr tat | sso || io | sem wiso| ane sao] — nn] toro | se ss tess — sexo] tse] toc] ro er 20) seam [ume sel sol sol sol a sol sol nl jnacame ee a ax] rool — ews] “ee ie ie se rete {sce exes lace c lone seas : |r “Toa seep ima] semana] aon] ama a ea] mem | ae) ae] aa] a Sample Startup Business Plan—Page 24Cash Flow Projection - [esig ah Baan A= 1 eS Sample Startup Business Plan—Page 22‘Sample Start-up Business Plan—Page 28Cash Flow Projection - 1998 aa f : = aimceaaae ee — se] — so | enol seme a pao | sian | soon] seo | aoe] ns [Gash Pwrcnasas _ 71687 | s2000| 13667] 1657 iss0] 51000] jig00] 1933] rveer| —rzomo[ vas] mise [ator ee “ec0| __ses0| _vaaso| sas a720| romeo} 70680 servo] saeio| —gaso| vaono| sesso] 140070 | [owner wicks | ae ee {het Gash How (6-6) 002 wair|__niore] ene] essa] or ‘yes | ces7]| ze] 0 [sees | one a (O) Adjusted Hei Cash Pow] 8200 si 1070 | ‘sort| 70s0| cos | oza4| oaso| rosr| reas om00) cerza]_rsv6n] teem] — tome) 1p Business Plan—Page 24le ine ke] 282 ele] G88 ahnbak| bebe| ape le tes 2 weEl ebb! ab i b L L ! h b Sample Startup Business Plan—Page 25Cash Flow Assumptions Beginning Cash Balance Sales Inventory Accounts Payable ‘Accounts Receivable Capital Expenditures Depreciation ‘Year One: Taken from the start-up Expenses Workshee’ and includes {$25 000 Cash from Owner Sales are based on average sales of stores currently operating inthe same market and are shown net of Sales Tax, Fumitue sales tend to ‘operate on seven year cycle throughout the valley. Tis being the down side ofthe cycle in 1995, its now a good time tenter the ‘market to take advantage of the up sing inthe cycle tit is forthcoming. {$60,000 of real inventory (inventory from other manufcturers) will, be purchased to start the store. After two months, inventory cots will, bbe evaluated and it willbe determined at that time if adtional retail inventory will be needed as stock and how many things can be purchased on ajust-in-ime schedule, $60,000 retail inventory [purchases are also scheduled for years and 3. The purchase is scheduled to coincide withthe beginning of the Furniue buying ‘season and will replenish the previous years depleted stock ‘Accounts payable willbe in accordance with the paymest rms negotiated with supplies All accounts receivables wil be paid in ful ator before ime of 4elivery. This willbe done using cash, check, credit can oF through a cooperating bank andlor finance company, ‘Other equipment may be needed as sales increase and wl be purchased as required, as shown on the Cash Flow Projetions for ‘Years 2 and 3. All equipment purchased at star-up will be considered capital expenditures, Equipment wil be depreciated on a straight line basis over ten years of useful life Sample Start-up Business PlanSection VII. Conclusion Feasibility Statement CCEM's strategy ofa furniture manufacturing and retailing business can be successful inthe valley area. By targeting those customers who wish custom furniture at an affordable price, (CFM can gain a niche inthe area market Action Plan 1. M. Owner will seek ditional financing to allow the star-up of CFM. Sources wil include fiends and family, banks, SBA Joan sourees and community revolving loan funds. Mr. ‘Owner will leo review the Cach Flow Projections to determine if lazing equipment rather than purchasing would rece the iil loan needs, and will review the supplies and other significant expense items before making a presentation to potenti lenders ‘Sample Start-up Business Plan—Page 27Section Vill. Supporting Documents ‘A. Monthly Expenses Worksheet r Subse 2 Subtotal 3] Subtotal su (6) Total Monthy Outs Incom Available (non- Busines} tattoo, {UB} Minimum Income red fom Busi ‘Sample Start-up Business Plan—Page 28B. Personal Financial Statement Worksheet [Prepared as of: 1/1796 (A) Total Assets: Sanple Startup Business Plan—Page 29u. C. Administrative Policies, Procedures and Controls Sales and orders will be documented on 2 standard form that will slow the person taking the order to note specific deals of the customer's order. Custom orders will have a design sheet that wil be filed out by the design specialist vo make sure tht all specifications are correct [A the time ofthe order 256 of the purchase price will be required as a down payment. ‘The customer will then pay the remainder ofthe price upon delivery ofthe item. CFM ill sive for delivery on custom orders within 30 days of down payment. {All incoming bills will be contolled by 1. M. Owner. Due dats willbe orgnized and the bookkeeper will pay bill in accordance with managements desires. Specil tention to terms and discounts be beneficial to the organization wil be taken. Employees will meet once a week with the owner to coordinate any conflicts or ongoing problems. Employee problems will be documented All new employers willbe given a two week raining in their department followed by a fone month probation period allowing an evaluation period, til be CFM’s poly to promote from within whenever possible ‘Bonuses will be based on percentages above sales goals i the sales department and according t0 production and quality in the production department, Inventory contro will be computerized. Liss willbe available inthe sales office andthe production area that will allow employees to mark inventory as its used in production ‘and sold from the sales floor. ‘This data will then be entered into the computer atthe end of each day. ‘Warranties and returns willbe handled through the owner. All warranties must have proper iemification and retumns will only be accepted 30 days after the purchase ‘After 30 days up to 6 months an instore credit may be issued, and after six months standard warranties wll apply A company creditcard will be issued for van service and office supplies. Other use of the card must be pre-approved by owner and initialed by responsible party. All receipts will be kept and cleared each month, Uses will be mentored and tracked to make ‘sure of no abnormalities, Customer lists willbe kee in the computer data base and protected by passwords fe authorized users only. ‘Sample Start-up Business Plan—Page 30D. Documents and Paper Flow Information will hve a designated path throughout the system to reduce any errors that may ‘coeur. All orders and sles will te written on a standardized form that allows forthe order umber of the piace, a dceription of the piece, the original price and the sale price, anes and totals wil be tallied at the bosom right of the form. blank section will be left atthe bottom to allow for comment and smal instrctons. Larger lists of instructions willbe drawn out on a separate form and that form willbe copied and atached to the invoice, ‘The invoice will then await further processing, The invoices foreach day will be processed at the end of each day. All sles from inventory will be accounted forall orders will be writen ddown in an order book and custom orders will be organized and prioritized for production to schedule ‘The next day the production manager will look atthe custom order, schedule them and begin work. (Onders willbe placed by the sales manager on a weekly basis, He will categorize orders by the company and write w purchase order foreach onder placed da week, Estimated shipping dates and lead times for productien will be noted onthe purchase order shee An ample supply of numbered invoices willbe stocked as well s charge slips and financing documents. Invoices will preferably be computerized to facilitate inventory control, but ‘manvat writen invoices wil azo te available, Sample Startup Business Plan—Page 31E. Risk Analysis and Alternative Plans of Action Sales projections prove wrong—CFM will bea very flexible operation. Production can ‘be modified to meet markt trends and needs. If sles are slow i the retail sales of custom furniture CFM wil sell ro other retailers in neighboring cites. Cestom building of cabinets and ether work for remolding and new home building would also be an area ‘o bolster sales and profits ‘Manufacturing costs become too highIn this case CFM would discontinue its own Production lines and produce only custom work. Other manufacturers lites would be ‘increased to compensate for our reduced lines. ‘Competition destroys your marketplace position —CFM would do allt ould to Combat the competition. Advertising and promotions would be reevaluated as would the teasons for CFM lost market share and dectining sales [Needed labor is unavailable Wages would be increased to 8 more competitive level and management would step into help ease the stress from the shortage, ‘Supply deficiencies develop—Other sources of materials would be developed if all of (CFM's suppliers were deficient. It is unlikely that ll suppliers would be deficient, however, ew materials could be used in production that were more abundant [Needed capital is unavailable—Other means of financing would be looked at such as Investors, family and friends, equity financing and other means of obtaining funds. Product liability occurs claims. insurance wil be set upto take care of any pret lability Problems with management or personnel arise—Weekly meetings willbe held to aciltate work between management and personnel. If large problems arse they will be instructed of their duties and mediation will be eld to take care ofthe problem. IF thie proves ineffective then new employees willbe brought in to take the place ofthe ones that do not wish to work be production workers Product development takes longer than anticipated —A buffer wil be bait in the initial timeline to allow another month for development ofthe produc. Salvaging Assets—All equipment sed in production, office furniture, delivery truck, ‘aw materials and finished goods could be sod in the eat that this venture was unsuccessful Sample Startup Business Plan—Page 32