1.0 Executive Summary
The purpose of this business plan is to secure $150,000 for the development of a carpentry contracting business based in Kossuth County, Iowa. Carpentry Contractor LLC (“the Company”) was founded with the intention of providing a wide range of carpentry services throughout the target market area directly for the general public and on a subcontracted basis. Full scale revenue generating operations will commence in the fourth quarter of this year.
Operations
The primary revenue center for the business will come from large scale engagements in tandem with general contractors that are seeking comprehensive carpentry contracting services as a relates to the development of new properties as well as renovations. The Company will directly employ it staff of carpenters in order to render the services.
The secondary revenues will come from providing services directly to the general public as a relates carpentry installations and repairs. The Company will be able to render a wide spectrum of finishing carpentry services.
The third section of this carpentry contractor business plan will further document the operations of the business.
The Financing
As noted above, the Company is currently seeking $150,000 to establish its operations. This business plan assumes that the Company will receive a 10-year credit facility carrying an 8% interest rate. These funds will be primarily used for carpentry equipment, tools, as well as furniture, fixtures, and equipment.
As the Company expands, the business may acquire additional capital via a revolving credit facility to further the growth objectives of this carpentry contracting business.
The Future
Management intends to continue to hire additional staff carpenters so that the business can increase its revenues on a yearly basis. The Company may also established additional locations in Iowa and once the business reaches maximum capacity for the initial target market area.
Market Overview
Revenue Forecasts
2.0 The Financing
2.1 Funds Required
The funds discussed the executive summary will be allocated as follows:
2.2 Management and Investor Equity
The Founder is the 100% owner of Carpentry Contractor LLC.
2.3 Exit Strategies
There would be a significant demand for this type of contracting business given the highly predictable frames of revenue produced from installations, finishing carpentry, and large subcontracting engagements. Historically, carpentry contractors typically have a sales premium of two to four times EBTIDA. The sale of this business is not expected to occur for significant period of time.
3.0 Operations
As noted in the executive summary, the Company will be actively involved in providing a wide range of carpentry services throughout the Kossuth County area. Most importantly, the Company intends to foster ongoing relationships with real estate developers in this market in order to provide carpentry services when new homes and buildings are being created. The Company will generate revenues of $10,000 to $100,000 through these engagements.
The Company will also produce highly predictable streams of revenue from providing finish carpentry services as well as related repairs to homeowners throughout the Kossuth County area. This is an important revenue center for the business as it will produce highly predictable streams of revenue that will support the underlying operations of the Company.
4.0 Overview of the Organization
4.1 Registered Name
Carpentry Contractor LLC. The Company is registered as a limited liability company in the State of Iowa.
4.2 Commencement of Operations
The Company will commence operations in the fourth quarter of this year.
4.3 Mission Statement
To provide exceptional carpentry services on a cost-effective basis for real estate developers and homeowners.
4.4 Vision Statement
Typical widely recognized and respected carpentry contracting business in the target market area.
4.5 Organizational Objectives
• Properly onboard staff carpenters so the business can take on large scale projects from the onset of operations.
• Conduct extensive direct outreach with real estate developers in the target market area.
• Use best practices relates to all matter matters pertaining to safety at job sites.
• Use multiple forms of marketing in order to establish relationships with homeowners in target market area.
• Provide gainful employment opportunities to staff, carpenters and support staff.
• Continue to expand the scope of the Company’s operations on a yearly basis.
5.0 Market and Industry Analysis
5.1 External Environmental Analysis
This section of the carpentry contractor business plan will focus on the current economic climate, the industry, the customer profile, and the ongoing competition for business will face.
At this time, the economic climate within the United States is moderate. As a result of changing trade policies as well as changing fiscal policy, there has been a significant degree of inflation integrated into the market. It should be noted that geopolitical tensions have added to the economic uncertainty that the country is currently facing. The Federal Reserve is making capital available in order to ensure that the economy continues to grow.
The Company, in regards to rising lumber prices, will automatically mark up the underlying costs for each project. The Company will be able to remain profitable given that the Company can scale or contract operations as needed based on economic climates.
5.2 Industry Analysis
As of this year, carpentry contractors generate $64 billion of revenue. This industry is a mature industry, and its future growth will be similar to that of the growth of the economy as a whole as well as natural increases in population.
5.3 Customer Profile
The primary target market for the Company services will consist of real estate developers. Management has already begun to foster these relationships so that large scale engagements can be acquired at the onset of operations. The Company will also work with homeowners in regards to their finishing carpentry needs. These individuals will typically have a household income of $75,000 to $150,000. They will spend $2,000 to $5,000 per engagement with the business.
5.4 Competitive Analysis
The Company will face ongoing competition from more established carpentry contractors in the target market area. However, the Company will maintain a differentiating factor by being able to provide subcontracted services to real estate developers, while offering a wide range of finishing carpentry services to the general public.
6.0 Key Strategic Issues
6.1 Sustainable Operations
Carpentry Contractor will have sustainable operations as a result of the following:
• The Company will be able to scale operations at the entirety of Kossuth County.
• Significant demand among real estate developers have access to premium carpentry contractors.
• Limited competition among carpentry contractors at operate in the same scale and scope as a business.
• The business will generate income on a B2B and B2C basis.
6.2 Basis of Growth
The Company will expand via the following methods:
• Continued hiring staff carpenters increase revenue.
• Development of additional locations in Iowa.
• Continued acquisition of additional operating assets.
7.0 Marketing Plan
7.1 Marketing Objectives
• Established ongoing relationships with developers throughout the target market area.
• Use multiple forms of online marketing to attract attention at general public.
• Enroll of numerous trade organizations to further increase in visibility.
7.2 Revenue Forecasts
7.3 Revenue Assumptions
Year 1
• First year revenue will reach $634,000.
• Gross profits will reach $524,000.
Year 2
• Revenue will reach $761,000.
• The business will expand its relationships with real estate developers and general contractors.
Years 3-5
• By the fifth year of operation, total revenue will reach $1.1 million.
• Gross profits will reach $956,000.
7.4 Marketing Strategies
The Company will use a number of marketing strategy used to drive significant interest in the carpentry contracting services offered. Most importantly, the Company will establish ongoing relationships with real estate developers in the area so that the business can be called upon for large-scale subcontracted work. Management will leverage his existing contacts within a real estate development industry in order to foster these relationships.
In regards to marketing the Company services the general public, this will be principally accomplished through online marketing channels. The Company’s website will showcase prior projects completed by the carpentry contractor, but also showcasing the wide range of repair services that will be offered. This website will undergo regional search engine optimization specific for Kossuth County in order to ensure that it can be quickly found when searches for carpenters are conducted.
The Company will also enroll among numerous trade organizations and small business groups in order to increase visibility not only among real estate developers but other entities that require carpentry services from time to time.
The Company will also maintain extensive profiles among all major social media platforms. This will not only contribute to the performance of the Company’s search engine, optimization campaigns, but it will also further drive brand visibility in the Kossuth County area.
8.0 Organizational Plan
8.1 Organizational Hierarchy
8.2 Personnel Costs
9.0 Financial Plan
9.1 Underlying Assumptions
• The business will have a compounded annual growth rate of 16%.
• Management will contribute by $50,000 towards the venture.
• The Company will acquire $150,000 business loan to establish operations.
9.2 Financial Highlights
• The Company will generate contribution margins of 40% to 50% on subcontracted services.
• The Company will generate contribution margin of 65% on all product sales.
9.3 Sensitivity Analysis
The Company’s revenues are modestly, sensitive to negative changes in the economy. During severe economic recession the demand for new construction as well as improvements to existing structures may decline. However, carpentry contractors have the ability to scale down its operations as needed. This, coupled with the control operating costs of the business, will ensure that the business is able to remain profitable at all times.
9.4 Source of Funds
9.5 Financial Proformas
A) Profit and Loss Statement
B) Common Size Income Statement
C) Cash Flow Analysis
D) Balance Sheet
9.6 Breakeven Analysis
9.7 Business Ratios
Appendix A – SWOT Analysis
Strengths
• Significant and ongoing demand for carpentry services within the target market area.
• The Company’s Founder is a highly experienced carpenter.
• The business has access to a number of lumberyards which will ensure cost-effective pricing.
Weaknesses
• Potential safety issues as this is a contracting business.
• Ongoing competition from established carpentry contractors in the market.
Opportunities
• Hiring of staff carpenters to render a wider degree of services.
• Expansion of Company’s finishing carpentry operations.
• Expansion into other markets of Iowa.
Threats
• Severe inflation or severe economic recession could impact contribution origins.
Appendix B – Risk Analysis
Development Risk – Low
The founder has already developed the operating plan that will guide the day-to-day operations of this carpentry contracting business. The primary matter that needs to be addressed to securing the funding discussed in this document.
Financing Risk – Low/Moderate
The $150,000 of capital will be principally used for operating assets. The risks related to this financing or offset by the substantial contribution margins generated from subcontracted carpentry work as well as engagements with a general public.
Marketing Risk – Low
Direct outreach will continue remain as the primary method in which the business drives its revenue. This will be complimented by the extensive use of online marketing strategies to showcase the carpentry work completed by the business.
Management Risk – Low
The Founder is a highly experienced carpenter that will be able to properly develop and expand the operations of this business over the next five years.
Valuation Risk – Low
The valuation risk is offset by:
• The Company can scale upward or downward as needed based on economic conditions.
• A significant component of the Company’s capital use will be for operating assets.
Exit Risk – Low
There would be a significant demand for this type of enterprise given its multifaceted nature and substantial profitability. This event is not expected to occur for significant period of time.