Business Plan

Submitted To: Abdullah Al MasudLecturerDepartment of ManagementUniversity of Barisal

Submitted By: Md. Muktadir Hasan (Group Leader)Roll: 385

Group Name: NEXUSDepartment of MarketingUniversity of Barisal

Md. Raihan Roll: 350S.M. Asif Roll: 348Afroza Khanom Roll: 386Md. Mizanur Rahman Roll: 387Sampa Mondol Roll: 391Krisnendu Das Roll: 340Rejwana Arefin Roll: 349

Date of Submission: 16/03/2012

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Contents

Subject Page

Company Background 03

Executive Summary 03

Company Summary 04

Company Objective 05

Description of Products & Services 07

Market Analysis Summary 07

Strategy & Implementation Summary 09

Management Summary 12

Financial Plan 13

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Business Plan

Company Background:

Vesper furniture was created at Barisal in Bangladesh for the purpose of manufacturing quality handcrafted [Oak, Pine, Cherry, etc.] furniture in this area. We decided to make this company by analyze market and public demand. Barisal is famous for wood but there is no large, organized and qualified furniture manufacturer. So we decided to manufacture furniture from pure wood and market them to change lifestyle of people of Barisal.

01. Executive Summary

Ownership and Management:

The company is owned and managed by a highly experienced and skilled team. There is a chief financial officer with years of accounting and administrative experience. There are also some other member with other skill and expertness. We always maintain ‘chain of Command’ in the organization.

01. Muktadir Hassan [CEO and Financial Officer] 02. S.M.Asif [Marketing Officer] 03. MD.Mizan [Operation Officer]

Product and Service:

The design and style of our product is unique. We offer superior quality and design at competitive prices. Our products are available in a variety of resilient finishes and colors so that customers have the flexibility to customize our furniture to their individual tastes. Our furniture is complemented by superior quality hardware in various popular faux antique finishes.

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All furniture is made from Oak, Pine, Cherry, etc. No component part veneers or particle board are used.

Goals and Objectives:

The company primary goal is to double its retail distributor in the next 2 years. We will continue to expend and add new products as customer’s demands. It is our goal to design and introduce new and standard products per year.

02. Company Summary

Start up summary:

Total start-up expenses, including tools, software, stationery, and related expenses are shown below. Two co-owners, Muktadir Hasan and S.M Asif, 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.

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Competitive Advantages: The company competitive advantage is its unique furniture design and quality, coupled with a competitive pricing strategy, strong market demand and a strategic location close to suppliers, distributors and consumers. The close proximity of our wood suppliers also gives us better control over inventory of raw materials and reduces the risk of supply shortages.

Marketing Strategy:

Household furniture is typically sold to consumers through retail outlets. So we have to increase our retail outlet to sell our product. We also develop a catalogue featuring product lines and samples of our wood finishes. Our priced competitively and take into account production costs, competitive pricing strategies and consumers price sensibility. The company goal is to provide the highest quality furniture for the most reasonable price possible, while still maintaining healthy profit margins. The company requires an estimated 500000 in capital.

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03. Company Objectives

Goals and Objectives:

The goals and objectives of the company are:

To be a top supplier to luxury home in regional market.

Revenues to more than double year 1 by the end of year. Aim to have 70% of sales in high residential customer segment.

20% of sales in mid range residential customer segment. 10% sales in commercial development segment. To have a showroom within 3 month in a prominent retail space.

Mission:

It is company’s mission to continue to develop innovative &unique products and improve our existing products on an ongoing basis in order to maintain our competitive position market value and pricing strategy. We want every taka spent with us to be well spent.

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Factors of success:

01. Uncompromising commitment to the quality of product quality wood , quality design , quality laborers , quality of end the end result:.

02. Keeping cost in line while still enduring that we deliver minimum value to our customers.

Risk Factors:

01. Changes in consumer buying trend 02. Overly aggressive pricing policy by competitors & exporters. 03. Natural disaster affecting the supply of wood products. 04. Availability of skilled labor. 05. Problems generating visibility and product positioning.

04. Description of Products & Services

Products & Services:

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The company manufactures and sells unique, high quality handcrafted furniture including household articles, containers wooden, carving, photography etc.

The design and style of our products is unique. We offer superior quality and design at competitive prices. Our products are available in a variety of resilient finishes and colors so that customers have the flexibility to customize furniture to their individual tastes.

Future Plan:

The company plans to develop several new product lines over the next days and increase distribution by adding distributors to our retail distribution network. In response to customer demand new product lines being developed in the near future.

Production:

Furniture products are manufactured from various valuable woods. No component part, veneers or particle board are used. Products are manufactured on site using wood products purchased from local suppliers. The furniture component are manufactured in small qualities and kept in stock. As orders are received from retailers specifying a customer desired product and finish, parts are sprayed and assembled.

05. Market Analysis Summary

Vesper furniture will be focusing on architects, owners, and contractors in the regional area who are involved in high-end residential, resort, and commercial development segments.

Target Market Segment Strategy:

Vesper furniture will be focusing on contacting contractors and architects that deal with the luxury home market. Making ourselves known to these entities will

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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.

Industry Analysis:

There are two main types of cabinet suppliers in the industry.

1. 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.

2. Custom shops with full, in-house fabrication facilities. They are usually very product orientated and under-perform with customer support.

Vesper furniture can provide high volume work, superior project management, and excellent quality while maintaining a low overhead.

Competition & Buying Patterns:

The high-end furniture 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 such as:

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OTOBI Furniture PARTEX Furniture

HATIL Furniture

TANIN Furniture

Although each of them delivers 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 customer’s investment.

06. Strategy & Implementation Summary

Vesper furniture is 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.

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.

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.

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.

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SWOT Analysis:

SWOT Analysis of Vesper Furniture:

Mission ↓

SWOT Analysis

( To formulate strategy that support the mission )

Internal Analysis External Analysis Strengths Opportunities

↕ ↕ Weakness Threats

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Strengths:

Increasing demand in modern, clean, minimalist designs Highly educated, skilled, young, capable & dynamic human resources Established branding, tradition Big market Enough retail outlets Standard product Enough technological advantage.

Weaknesses:

Inefficient stock control Lack of trust in external organizations Fear of sharing knowledge & taking risks Lack of effective & execution framework Decreasing demand in traditional furniture Lack of quality awareness

Opportunities:

Big potential market in Design sector & emerging new market segment in Services  Lower labor costs in outsourcing Research & Development capability More efficient production method Need modernization of infrastructure Very little competition in modern furniture design

Threats:

Inter-company collaboration is unknown Rising cost of imported goods Pioneering uncertainties Clashes in Diversity Competitors like OTOBI, PARTEX, HATIL.

07. Management Summary

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Muktadir Hasan, CEO & Financial officer, has a lot of years of accounting &Administrative experience, construction management, and having his own furniture business.

S.M. Asif, Marketing officer, has three years of construction experience and spent the last six years in management within the industry.

As the company grows, we will take on an administration/showroom assistant.

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.

Year 01 Year 02 Year 03

Muktadir Hasan 20,000 30,000 40,000

S.M.Asif 20,000 28,000 38,000

Md.Mizan 18,000 25,000 35,000

Carpenters 20,000 40,000 65,000

Administration Assistant

10,000 15,000 20,000

Total People 5 7 10

Total Payment 88,000 1,38,000 1,98,000

08. Financial Plan

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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 Vesper furniture is outlined in the following sections:

Important Assumptions:

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

Year 01 Year 02 Year 03

Plan Month 1 2 3

Current interest rate 10% 10 % 10%

Long-Term interest rate

10% 10% 10%

Tax Rate 15% 15% 15%

Other 0 0 0

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 furniture a month to break even.

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Break-even Analysis

Monthly Revenue Break even 26,000

Assumptions:

Average Percent variable Cost 65%

Estimated Monthly fixed cost 10,000

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Projected Profit Loss:

Projected profit loss is given below:

Year 1 Year 2 Year 3

Sales 4,50,000 10,00,000 1,500,000

(-)Direct Cost of Sales 300,000 5,00,000 8,00,000

Other 0 0 0

Gross Margin 150,000 5,00,000 7,00,000

Expenses

Payroll 88,000 1,38,000 1,98,000

Sales and Marketing and Other Expenses 78,000 157,000 195,000

Depreciation 30,000 35,000 50,000

Utilities 0 0 0

Insurance 3,000 4,000 5,000

Rent 3,000 4,000 5,000

Other 10,000 20,000 29,000

Total Operating Expenses 0 0 0

Total Expenses 2,12,000 3,58,000 4,82,000

Net Profit (62,000) 1,42,000 2,18,000

Projected Balance Sheet:

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Balance sheet of our company is given below:

Pro Forma Balance SheetYear 1 Year 2 Year 3

AssetsCurrent AssetsCash 50,000 45,000 80,000Accounts Receivable 40,000 70,000 1,30,000Other Current Assets 15,000 20,000 25,000 Total Current Assets 1,05,000 1,35,000 2,35,000 Long-term AssetsLong-term Assets 0 0 0 Accumulated Depreciation 0 0 0 Total Long-term Assets 0 0 0 Total Assets 1,05,000 1,35,000 2,35,000Liabilities and Capital Year 1 Year 2 Year 3Current LiabilitiesAccounts Payable 30,000 60,000 90,000 Current Borrowing 0 0 0 Other Current Liabilities 60,000 0 0Long-term Liabilities 50,000 30,000 15,000Total Liabilities 1,40,000 90,000 1,05,000

THE END