1.0 Executive Summary
The purpose of this business plan is to raise $100,000 for the development of a sprinkler installation business while showcasing the expected financials and operations over the next three years. The Sprinkler Installation Company , Inc. (“the Company”) is a New York based corporation that will provide for the installation and maintenance of lawn and commercial sprinkler systems to customers in its targeted market. The Company was founded by John Doe.
1.1 Operations
The primary revenue source for the Company will come from the direct installation and sale of sprinkler systems for residences and commercial enterprises. The business will specialize in agricultural, lawn, and produce sprinklers. The secondary streams of revenue for the business will come from ongoing maintenance of sprinkler systems installed by the business. This is an important revenue source for the business as it will provide the Company with highly predictable streams of income that will ensure the continued profitability of the business. The third section of the business plan will further describe the services offered by the Sprinkler Installation Company.
1.2 The Financing
Mr. Doe is seeking to raise $100,000 from as a bank loan. The interest rate and loan agreement are to be further discussed during negotiation. This business plan assumes that the business will receive a 10 year loan with a 9% fixed interest rate.
1.3 Mission Statement
The Sprinkler Installation Company’s mission is to become the recognized leader in its targeted market for installing and maintaining sprinkler systems.
1.4 Management Team
The Company was founded by John Doe. Mr. Doe has more than 10 years of experience in the plumbing and sprinkler industry. Through his expertise, he will be able to bring the operations of the business to profitability within its first year of operations
1.5 Sales Forecasts
Mr. Doe expects a strong rate of growth at the start of operations. Below are the expected financials over the next three years.
1.6 Expansion Plan
The Founder expects that the business will aggressively expand during the first three years of operation. Mr. Doe intends to implement marketing campaigns that will effectively target homeowners, property owners, and commercial enterprises within the target market.
2.0 Company and Financing Summary
2.1 Registered Name and Corporate Structure
Sprinkler Installation Company, Inc. The Company is registered as a corporation in the State of New York.
2.2 Required Funds
At this time, the Sprinkler Installation Company requires $100,000 of debt funds. Below is a breakdown of how these funds will be used:
2.3 Investor Equity
Mr. Doe is not seeking an investment from a third party at this time.
2.4 Management Equity
John Doe owns 100% of the Sprinkler Installation Company, Inc.
2.5 Exit Strategy
If the business is very successful, Mr. Doe may seek to sell the business to a third party for a significant earnings multiple. Most likely, the Company will hire a qualified business broker to sell the business on behalf of the Sprinkler Installation Company. Based on historical numbers, the business could fetch a sales premium of up to 4 times earnings.
3.0 Operations
Below is a description of the sprinkler installation services and products offered by the Sprinkler Installation Company.
3.1 Sprinkler Installations and Sales of Sprinkler Systems
The Sprinkler Installation Company will specialize in engaging residential and commercial sprinkler installations for laws, agricultural operations, and supermarkets. Management has developed an extensive pricing model that will allow the business to profit from all aspects of these jobs. Gross profits will be accrued through the sale of labor and consultation services and form the sale of direct job materials. Management anticipates that it will generate extremely high gross margins from these services. The Company will employ its workforce in-house, and will not outsource these jobs to subcontractors. The business will also generate margins of approximately 50% for the sprinkler system products used in conjunction with the Company’s installations.
3.2 Sprinkler Maintenance and Inspection
The Company will also generate revenue from ongoing maintenance and repair fees from its installations. This revenue will allow the Company to remain profitable regardless of the overall economic climate.
4.0 Strategic and Market Analysis
4.1 Economic Outlook
This section of the analysis will detail the economic climate, the sprinkler installation industry, the customer profile, and the competition that the business will face as it progresses through its business operations.
Currently, the economic climate is moderate. The economy is undergoing a transition period due to changes in global trade policy. At this time, interest rates have remained steady due to appropriate and measured policies by central banks. While there has been volatility, this is expected to subside as the economy adapts to these changes.
As sprinklers are a necessity, the demand for these services will remain strong even in challenging economic climates.
4.2 Industry Analysis
According the U.S. Economic Census, plumbing installation contractors generated gross revenues of $88 billion dollars. The industry employs more than 750,000 people and outputs gross annual payrolls of $25 billion dollars. The market growth in this industry has been resilient, with its five year growth rate nearing 15%. This trend is expected to continue as the demand for housing increases. Of the $88 billion dollars of revenues generated for plumbing installations, 10% or approximately $9 billion dollars was used directly for sprinkler installation and maintenance.
4.3 Customer Profile
Sprinkler Installation Company anticipates that a significant portion of its clients will be residential homeowners, building owners, and property management firms contracting on behalf of building owners. Mr. Doe expects that the rest of the client base will consist of commercial, industrial, and residential clientele. However, Management anticipates that its largest client base will come from the residential arena. As time progresses, the Company may engage more complicated industrial and high-end commercial installations. In this section of the analysis, you should describe the type of customer you are seeking to acquire. These traits include income size, type of business/occupation; how far away from your business is to your customer, and what the customer is looking for. In this section, you can also put demographic information about your target market including population size, income demographics, level of education, etc.
4.4 Competitive Analysis
This is one of the sections of the business plan that you must write completely on your own. The key to writing a strong competitive analysis is that you do your research on the local competition. Find out who your competitors are by searching online directories and searching in your local Yellow Pages. If there are a number of competitors in the same industry (meaning that it is not feasible to describe each one) then showcase the number of businesses that compete with you, and why your business will provide customers with service/products that are of better quality or less expensive than your competition.
5.0 Marketing Plan
Sprinkler Installation Company intends to maintain an extensive marketing campaign that will ensure maximum visibility for the business in its targeted market. Below is an overview of the marketing strategies and objectives of the Sprinkler Installation Company.
5.1 Marketing Objectives
- Establish relationships with general contractors and landscape architects.
- Implement a local campaign with the Company’s targeted market via the use of flyers, local newspaper advertisements, and word of mouth advertising.
- Develop an online presence by developing a website and placing the Company’s name and contact information with online directories.
5.2 Marketing Strategies
Mr. Doe intends on using a number of marketing strategies that will allow the Sprinkler Installation Company the demographic groups discussed in the previous chapter. These strategies include traditional print advertisements and ads placed on search engines on the Internet. Below is a description of how the business intends to market its services to the general public. The Sprinkler Installation Company will also use an internet based strategy. This is very important as many people seeking local services, such as sprinkler installation businesses, now the Internet to conduct their preliminary searches.
Mr. Doe will register the Sprinkler Installation Company with online portals so that potential customers can easily reach the business. The Company will also develop its own online website, which will showcase the services offered by the business, preliminary pricing information, and relevant contact information. Finally, the business will develop ongoing relationships with general contractors and landscape architects that are seeking to outsource their sprinkler installation needs to third party contractors. This is one of the most important aspects to the Company’s marketing plan.
6.0 Organizational Plan and Personnel Summary
6.1 Corporate Organization
6.2 Organizational Budget
7.0 Financial Plan
7.1 Underlying Assumptions
- The Sprinkler Installation Company will have an annual revenue growth rate of 16% per year.
- The Owner will acquire $100,000 of debt funds to develop the business.
- The loan will have a 10 year term with a 9% interest rate.
7.2 Sensitivity Analysis
The Company’s revenues are modestly sensitive to changes in the overall economy. Sprinkler installation businesses are needed regardless of the economic climate. During times of economic instability, the business will be able to generate income from the ongoing maintenance of installed sprinkler systems. Additionally, as this is a contractor business, the Company can scale back its operations at anytime depending on the demand for services.
7.3 Source of Funds
7.4 General Assumptions
7.5 Profit and Loss Statement
7.6 Cash Flow Analysis
7.7 Balance Sheet
7.8 Breakeven Analysis
7.9 Business Ratios
