Introduction
Cutting Edge Drapery has been a trusted workroom for decorators. The company manufactures draperies and slip covers in line with interior designers’ ideas. Cutting Edge Drapery is able to market its workroom production outside of its current client base because it has recently increased its production facilities. The company will provide high-quality workmanship and meet agreed delivery dates. It will also execute custom work according to the designer’s design. The focus of this business plan is to identify its future target clients, explain its marketing strategy, and to improve its internal procedures so it can substantially increase profitability.
The Company
Cutting Edge Drapery, Loudon, New Hampshire. Soft window treatments make up the majority of the company’8217;s production. The company targets a market of $2.7 million for soft window treatment in these communities. The disposable income of designers and decorators directly correlates to the market share.
It is a sole proprietorship that has been in operation for almost 25 years. The owner worked out of her home as a seamstress and tailor until her business volume caused her to move her operation into rented space in Loudon. Her ability to focus more on draperies was possible because she now had more space. The 2,200 square foot office houses seven full-time employees. Recently an assistant has been hired to take on the administrative burden and to help improve the company’s internal procedures. An outside accountant was hired to streamline the computerized accounts.
The products
Cutting Edge Drapery is a provider of sewing services that create high quality soft window treatments products like draperies, swags jabots, slip cover, and others.
Although the company could be considered a company making products, because clients furnish the fabric for each custom crafted unit, it actually only provides the sewing and installation services to its customers. The company does not need to supply fabric directly. This is the most costly input in the production process.
The Market
The population of the 17 communities within close proximity to Cutting Edge Drapery was 277.253. This would indicate that the area has a soft window treatment market worth more than $2.7 million annually. All of these treatments need to be manufactured in decorator offices. The company’s share of this nearby market is approximately 7.5%.
The company is moving from the current market of interior decorator customers to the higher end market for interior designers. The company will be able to increase its profitability by changing the target market. This is because the designer segment is more price sensitive and has higher margins. The designer’s clients include the high income homeowners that demand unique products and a high degree of customer service. This, in turn, requires a high contact service environment between the designers and workrooms that can best ne served by a company such as Cutting Edge Drapery.
To be able to penetrate the interior-designer-controlled market for window treatments (“Designer” being the key here, rather than “decorator”). The company’s objective is to market 15 members of the American Society of Interior Designers, located within close proximity of its Loudon facilities, and establish a business relationship at least with three of them. The number of designers will rise to five by the end of the first year, and seven by the end. The local competition is stiff for the company’s workrooms. Cutting Edge Drapery’s strategy is to lift its image, through advertising in prestigious trade publications, joining and net-working ASID membership, and actively marketing its selected target market.
Considerations for Financial Planning
This business plan will show you how to increase your profits each year by using the targeted marketing strategy and marketing research. On average, revenues will represent 11% of the market for soft window treatments in 2000.
Monthly breakeven is possible.
The total production was about 98 units at the time this article was written. It will increase to approximately 115 units by 2000.
Clients have the policy of providing the fabric for soft window treatments products. The company has a very low cost per unit and therefore a high margin. The business is custom-made, which means there are very few inventory costs and no accounts payable. The company also does not have long term capital assets nor debt that could adversely affect its cash flow. It is likely that this asset will be used by the company to expand its markets, production capacity, and capital assets in the future.
1.1 Objectives
- To enter the interior designer-controlled market share in window treatment. It is the company’s goal to market the 15 targeted members of American Society of Interior Designers within the next 12 months and to establish a business partnership with at least three of these designers. This number will increase to five in the second, and seven in the third.
- To significantly increase profitability. By formalizing pricing mechanisms, we will encourage prices-sensitive jobs to move elsewhere. This will allow attention to more expensive custom work to be performed in the lower-priced designer market. This pricing will insure a minimum of $65,000 in pre-tax profits during the first year.
- To improve the administrative machinery of the operation. This will result in a decrease in the owner’’s involvement with administrative tasks, which will enable her to spend more time on marketing and sales tasks.
1.2 Mission
Cutting Edge Drapery has the best chance of serving the interior design market. Clients of interior designers are able to afford custom materials and high quality solutions. The company can’t compete with large manufacturing facilities and the high prices offered by home workrooms. The company is dedicated to providing the highest quality workmanship, meeting the agreed delivery dates, and executing the custom work exactly in accordance with the designer’s concept.
Success keys 1.3
A few key aspects can determine success or failure in professional workrooms. Most of these factors stem from interior designers’ importance to reputation:
- Private clients must not be allowed to enter a professional workroom. The fear of an interior designer finding out that his client will be able to save thousands of dollars by working directly in the room is common among them. It is important to refer private clients to an interior designer who has a close relationship with the company if they contact the company.
- Clients who can afford interior designers tend to be very demanding; designers are under a lot of pressure. The interior designer must feel that the workroom regards him as the most important person on the planet. Avoid any actions that could indicate that other designers are taking over the workroom, such as not returning phone calls promptly.
- The workroom should keep its word. The work must be performed exactly according to plan. It must also be delivered on time and at the agreed rate. The ability of the workroom to communicate effectively with the designer is key.
- The quality of the production supervisor is key. Production supervisors must ensure that jobs quoted for 15 hours are not extended to 20 hours. Profit goals cannot be met if production stitchers don’t work efficiently or remain idle.