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Furniture manufacturing company

Executive Summary
Trestle Creek Cabinets will be formed as a cabinet company specializing in custom cabinets for the high-end residential, resort, and commercial market. Its founders have extensive experience in the construction and cabinet industry. Trestle Creek Cabinets will operate under the umbrella of Trestle Creek, Inc., a construction company sharing staff, office space, and administration costs. However, for the purpose of business planning, we are treating Trestle Creek Cabinets as a separate company. Over some years of being involved with the construction of luxury homes, the company owners have seen a need for a cabinet line with a broad selection of design choices, high-end finishes, along with top of the line organization, customer service, and quality. Trestle Creek Cabinets will meet those customers needs. Building a strong market position in the high-end residential, resort, and commercial development segments, the company projects revenues to grow substantially between FY1 and FY3. By maintaining an average gross margin of over 25%, the company estimates handsome net profits by FY3. The company owners have provided the capital to cover the start-up expenses. The company currently seeks a 3year commercial loan to cover the operating expenses.

1.1 Objectives
The company objectives are:

To be a top cabinet supplier to luxury homes in the regional market. Revenues to more than double Year1 levels by the end of Year2. Aim to have 70% of sales in high-end residential customer segment. 20% of sales in mid-range residential customer segment. 10% of sales in commercial development segment. To have a showroom within 3 months in a prominent retail space.

1.2 Mission
To deliver a high-quality product, on time and within budget while also providing a fast, error free ordering system.

Company Summary

Trestle Creek Cabinets is a new company that will provide expertise and quality in the cabinet supplier market while meeting the demanding organizational, scheduling, and quality needs of architects, owners, and construction professionals.

2.1 Start-up Summary


Total start-up expenses, including tools, software, stationery, and related expensesare shown below. Two co-owners, Martin Kribs and Brent Palmer, will provide the bulk of the start-up financing. At the same time, the company plans to receive a 3-year commercial loan facility, which will help meet the cash flow requirements.

Start-up Requirements Start-up Expenses Business Cards Drill Press Cabinet Jacks Kitchen Builder Software Lateral File Sign Seat Cushions Phone Transfer First/Last/ Deposit Marketing Level Package Sure Trak Software Estimating Data Base Software Lease Buyout Total Start-up Expenses Start-up Assets Cash Required

$100 $1,916 $713 $2,495 $236 $1,154 $338 $64 $2,400 $4,430 $1,005 $499 $2,200 $7,092 $24,642 $89,299

Other Current Assets Long-term Assets Total Assets Total Requirements Start-up Funding Start-up Expenses to Fund Start-up Assets to Fund Total Funding Required Assets Non-cash Assets from Start-up Cash Requirements from Start-up Additional Cash Raised Cash Balance on Starting Date Total Assets Liabilities and Capital Liabilities Current Borrowing Long-term Liabilities Accounts Payable (Outstanding Bills) Other Current Liabilities (interest-free) Total Liabilities Capital Planned Investment Martin Kribs Brent Palmer Other Additional Investment Requirement Total Planned Investment Loss at Start-up (Start-up Expenses) Total Capital Total Capital and Liabilities Total Funding

$14,478 $0 $103,777 $128,419

$24,642 $103,777 $128,419 $14,478 $89,299 $0 $89,299 $103,777

$0 $40,000 $0 $0 $40,000

$75,265 $13,154 $0 $0 $88,419 ($24,642) $63,777 $103,777 $128,419

Products
Our product is essentially made with two main components. 1. 2. The boxes and shelves will be ordered from two different suppliers (Cab Parts, Scheers), and will be delivered in kitset form. They can be finished with custom veneers. The doors, panels, and drawer fronts will come from four different suppliers: Bergmeyer Manufacturing, Homestead Woods, Decore, and Southwest Door Company. We will have 4-6 custom designs, with unlimited different custom finishes, available from Bergmeyer Manufacturing. The other suppliers will provide their stock products.

Market Analysis Summary


Trestle Creek Cabinets will be focusing on architects, owners, and contractors in the regional area who are involved in high-end residential, resort, and commercial development segments. In 2000, a total of 219 new residential homes worth $168 million were constructed in the Teton County, WY. If we take an average of $40,000 per kitchen, (probably conservative), and multiply that by the 219 homes, that gives us a total of $8,760,000 in kitchens installed for the year. We plan to acquire 4-5% of the market share of this residential segment in our first year. We do not think this is unreachable, especially in a still growing market. Teton County, Idaho has great potential as three new resort developments, Teton Springs Golf & Fishing Club, Grand Targhee Resort Expansion, and Teton Country Club, come on line. The following table outlines to total market potential of the three major customer segments in the Teton County.

4.1 Target Market Segment Strategy


Trestle Creek Cabinets will be focusing on contacting contractors and architects that deal with the luxury home market. Making ourselves known to these entities will generate some strong leads, along with getting personal recommendations to the home owners. There are plans to upgrade office space to a showroom in a high visibility location. This will give us exposure to new home builders that are looking for our product.

Market Analysis
Year 1 Potential Customers High-end residential Mid-range residential Commercial development Total Growth 3% 5% 7% 5.55% 5,260 3,500 10,000 18,760 Year 2 5,418 3,675 10,700 19,793 Year 3 5,581 3,859 11,449 20,889 Year 4 5,748 4,052 12,250 22,050 Year 5 5,920 4,255 13,108 23,283 CAGR 3.00% 5.00% 7.00% 5.55%

4.2 Industry Analysis


There are two main types of cabinet suppliers in the industry. 1. 2. Resellers of complete cabinet sets using stock items where the cabinets turn up completely built. Usually have no shop facilities but do have show rooms. Custom shops with full, in-house fabrication facilities. They are usually very product orientated and underperform with customer support. Trestle Creek Cabinets can provide high volume work, superior project management, and excellent quality while maintaining a low overhead.

4.2.1 Competition and Buying Patterns


The high-end cabinet market understands the concept of service and support, and is more likely to pay for it when the offering is clearly stated. There are many competitors in the local market. Although each of them deliver a quality product, we feel they fail to deliver a full turnkey package. There are four factors that govern the cost of all kitchen projects: Scope, Product, Design, and Services. Most people mistakenly think that the size of the project and the choice of brand name products will make for the best results. But it is the design and a company's services that will have the greatest impact on the quality and value of the customers investment.

Strategy and Implementation Summary


Teton County, Wyoming and Idaho are experiencing steady growth in the high-end residential markets and there is a general consensus of continued growth in the area. Taking part in this growth, while providing attention to the design development, ordering process, project management, and installation will put us on the road to success.

5.1 Competitive Edge


Our competitive edge is our ability to provide high volumes and flexibility in style, while maintaining a quality product backed by excellent service.

5.2 Sales Strategy


Our sales strategy is to make ourselves known through mailings, print advertising, and personal contact to architects and contractors who are primarily involved with the design/construction of commercial development and luxury homes. Having a showroom will be a sales tool in itself. A showroom will give us exposure to the general public, new arrivals to the area, and construction professionals.

5.2.1 Sales Forecast


The following table shows projected cabinet sales. As the company gets established in the market, we anticipate strong sales growth over the next three years.

Sales Forecast
Year 1 Sales Cabinets Other Total Sales Direct Cost of Sales Cabinets Other Subtotal Direct Cost of Sales $442,000 $0 $442,000 Year 1 $301,600 $0 $301,600 Year 2 $1,000,000 $0 $1,000,000 Year 2 $725,000 $0 $725,000 Year 3 $1,500,000 $0 $1,500,000 Year 3 $1,087,500 $0 $1,087,500

5.3 Milestones
The accompanying table lists important program milestones, with dates and managers in charge, and budgets for each. The milestone schedule indicates our emphasis on planning for implementation.

Milestones
Milestone Business Plan Online Research Open Accounts with Suppliers Door Research Design Doors Order Sample Doors Design Sales Literature Print Sales Literature Make Industry Contacts Showroom Feasability Study Totals Start Date 1/15/2001 1/15/2001 1/15/2001 1/15/2001 1/15/2001 1/22/2001 1/22/2001 2/1/2001 1/15/2001 1/25/2001 End Date 1/31/2001 1/19/2001 1/26/2001 1/26/2001 1/26/2001 2/1/2001 1/31/2001 2/7/2001 2/28/2001 1/31/2001 Budget $2,000 $350 $350 $500 $450 $1,000 $1,000 $300 $1,000 $1,000 $7,950 Manager Department Brent & Marketing Marty Brent Marketing Brent Brent & Marty Marty Marty Brent & Marty Brent Marty & Brent Marty & Brent Web Web Department Department Department Department Department Department

Management Summary
Martin Kribs, President, has 20 years of construction experience, from general contracting, construction management, and having his own cabinet business. Brent Palmer, V. President, has three years of construction experience and spent the last six years in management within the hospitality industry. As the company grows, we will take on an administration/showroom assistant.

6.1 Personnel Plan


This table shows salaries for the whole company. Salary increases are kept to a minimum to help the growth of the company. An administrative assistant will be hired later in the year. Monthly details for this year can be found in the appendix.

Personnel Plan
Martin Kribs Brent Palmer Carpenters Administration Assistant Total People Total Payroll Year 1 $24,000 $24,000 $18,000 $12,000 4 $78,000 Year 2 $38,000 $35,000 $60,000 $24,000 6 $157,000 Year 3 $45,000 $40,000 $85,000 $25,000 7 $195,000

Financial Plan
Below are the initial financial goals for the company:

Obtain an operating line of credit from a financial institution. Finance growth through retained earnings. Operate on a 25-30% gross margin.

The financial plan for Trestle Creek Cabinets is outlined in the following sections.

7.1 Important Assumptions


The financial plan depends on important assumptions, most of which are shown in the following table as annual assumptions.

General Assumptions
Plan Month Current Interest Rate Long-term Interest Rate Tax Rate Other Year 1 1 10.00% 10.00% 16.25% 0 Year 2 2 10.00% 10.00% 15.00% 0 Year 3 3 10.00% 10.00% 16.25% 0

7.2 Break-even Analysis


As the business settles in and start-up/showroom costs are met, average monthly operating costs will increase and then stabilize. The average per unit price is for a 24" base unit. This table shows we need to sell 16 units or 32 lineal feet of cabinets a month to break even.

Break-even Analysis
Monthly Revenue Break-even Assumptions: Average Percent Variable Cost Estimated Monthly Fixed Cost $38,806 68% $12,327

7.3 Projected Profit and Loss


Our projected profit and loss is shown in the following table.

Pro Forma Profit and Loss


Sales Direct Cost of Sales Other Total Cost of Sales Gross Margin Gross Margin % Expenses Payroll Sales and Marketing and Other Expenses Depreciation Utilities Insurance Rent Payroll Taxes Other Total Operating Expenses Profit Before Interest and Taxes EBITDA Interest Expense Taxes Incurred Net Profit Net Profit/Sales Year 1 $442,000 $301,600 $0 $301,600 $140,400 31.76% $78,000 $45,680 $0 $3,000 $1,140 $8,400 $11,700 $0 $147,920 ($7,520) ($7,520) $4,000 $0 ($11,520) -2.61% Year 2 $1,000,000 $725,000 $0 $725,000 $275,000 27.50% $157,000 $44,600 $0 $4,000 $1,300 $9,000 $23,550 $0 $239,450 $35,550 $35,550 $3,336 $4,832 $27,382 2.74% Year 3 $1,500,000 $1,087,500 $0 $1,087,500 $412,500 27.50% $195,000 $61,000 $0 $5,000 $1,500 $12,000 $29,250 $0 $303,750 $108,750 $108,750 $1,937 $17,357 $89,456 5.96%

7.4 Projected Cash Flow

We do not expect to have major problems with cash flow as most of our contracts will require a 50% deposit upon signing.

Pro Forma Cash Flow


Year 1 Cash Received Cash from Operations Cash Sales Cash from Receivables Subtotal Cash from Operations Additional Cash Received Sales Tax, VAT, HST/GST Received New Current Borrowing New Other Liabilities (interest-free) New Long-term Liabilities Sales of Other Current Assets Sales of Long-term Assets New Investment Received Subtotal Cash Received Expenditures Expenditures from Operations Cash Spending Bill Payments Subtotal Spent on Operations Additional Cash Spent Sales Tax, VAT, HST/GST Paid Out Principal Repayment of Current Borrowing Other Liabilities Principal Repayment Long-term Liabilities Principal Repayment Purchase Other Current Assets Purchase Long-term Assets Dividends Subtotal Cash Spent Net Cash Flow Cash Balance $110,500 $281,813 $392,313 $0 $0 $0 $0 $0 $0 $0 $392,313 Year 1 $78,000 $349,852 $427,852 $0 $0 $0 $0 $0 $0 $0 $427,852 ($35,539) $53,759 $250,000 $687,272 $937,272 $0 $0 $0 $0 $0 $0 $0 $937,272 Year 2 $157,000 $774,249 $931,249 $0 $0 $0 $13,289 $0 $0 $0 $944,538 ($7,266) $46,494 $375,000 $1,068,792 $1,443,792 $0 $0 $0 $0 $0 $0 $0 $1,443,792 Year 3 $195,000 $1,182,673 $1,377,673 $0 $0 $0 $14,681 $0 $0 $0 $1,392,354 $51,438 $97,932 Year 2 Year 3

7.5 Projected Balance Sheet

The balance sheet shows a healthy growth of net worth and a strong financial position.

Pro Forma Balance Sheet


Year 1 Assets Current Assets Cash Accounts Receivable Other Current Assets Total Current Assets Long-term Assets Long-term Assets Accumulated Depreciation Total Long-term Assets Total Assets Liabilities and Capital Current Liabilities Accounts Payable Current Borrowing Other Current Liabilities Subtotal Current Liabilities Long-term Liabilities Total Liabilities Paid-in Capital Retained Earnings Earnings Total Capital Total Liabilities and Capital Net Worth $53,759 $49,688 $14,478 $117,925 $0 $0 $0 $117,925 Year 1 $25,668 $0 $0 $25,668 $40,000 $65,668 $88,419 ($24,642) ($11,520) $52,257 $117,925 $52,257 $46,494 $112,415 $14,478 $173,387 $0 $0 $0 $173,387 Year 2 $67,037 $0 $0 $67,037 $26,711 $93,748 $88,419 ($36,162) $27,382 $79,639 $173,387 $79,639 $97,932 $168,623 $14,478 $281,033 $0 $0 $0 $281,033 Year 3 $99,908 $0 $0 $99,908 $12,030 $111,938 $88,419 ($8,780) $89,456 $169,095 $281,033 $169,095 Year 2 Year 3

7.6 Business Ratios


The following table contains important ratios for the woodworking industry, as determined by the Standard Industry Classification (SIC) Code, #1751, . Ratio Analysis
Year 1 Sales Growth Percent of Total Assets Accounts Receivable Other Current Assets Total Current Assets Long-term Assets Total Assets Current Liabilities Long-term Liabilities Total Liabilities Net Worth Percent of Sales Sales Gross Margin Selling, General & Administrative Expenses Advertising Expenses Profit Before Interest and Taxes Main Ratios 0.00% 42.13% 12.28% 100.00% 0.00% 100.00% 21.77% 33.92% 55.69% 44.31% 100.00% 31.76% 34.37% 1.27% -1.70% Year 2 126.24% 64.83% 8.35% 100.00% 0.00% 100.00% 38.66% 15.41% 54.07% 45.93% 100.00% 27.50% 24.76% 0.80% 3.56% Year 3 50.00% 60.00% 5.15% 100.00% 0.00% 100.00% 35.55% 4.28% 39.83% 60.17% 100.00% 27.50% 21.45% 1.00% 7.25% Industry Profile 7.90% 35.00% 30.30% 71.50% 28.50% 100.00% 42.70% 14.30% 57.00% 43.00% 100.00% 31.60% 16.70% 0.50% 3.40%

Current Quick Total Debt to Total Assets Pre-tax Return on Net Worth Pre-tax Return on Assets Additional Ratios Net Profit Margin Return on Equity Activity Ratios Accounts Receivable Turnover Collection Days Accounts Payable Turnover Payment Days Total Asset Turnover Debt Ratios Debt to Net Worth Current Liab. to Liab. Liquidity Ratios Net Working Capital Interest Coverage Additional Ratios Assets to Sales Current Debt/Total Assets Acid Test Sales/Net Worth Dividend Payout

4.59 4.59 55.69% -22.04% -9.77% Year 1 -2.61% -22.04% 6.67 58 14.63 27 3.75 1.26 0.39 $92,257 -1.88 0.27 22% 2.66 8.46 0.00

2.59 2.59 54.07% 40.45% 18.58% Year 2 2.74% 34.38% 6.67 39 12.17 21 5.77 1.18 0.72 $106,350 10.66 0.17 39% 0.91 12.56 0.00

2.81 2.81 39.83% 63.17% 38.01% Year 3 5.96% 52.90% 6.67 46 12.17 25 5.34 0.66 0.89 $181,125 56.14 0.19 36% 1.13 8.87 0.00

1.64 1.28 57.00% 7.50% 17.40% n.a n.a n.a n.a n.a n.a n.a n.a n.a n.a n.a n.a n.a n.a n.a n.a