Businnes Plan

Remodeling Business Plan


Remodeling Business Plan


Introduction

Comgate is a custom-mill house that specializes in architectural woodwork, such as wall panels, custom cabinets and other products, for the local residential market. After initial losses and several thin profit years of competitive bidding construction projects, Comgate is creating this business plan in order to bring its mission statement into clearer focus. Prior years were marked with intense efforts to bid as many jobs and high-stakes negotiations. Margins were thin as pricing policy was “flexible” for fear that there would be insufficient work for production staff.

Comgate can increase its margins and efficiency with sufficient sales growth. This will allow Comgate to improve its overall profitability and long-overdue restructuring. We are focusing our efforts on the target market. These changes will ensure greater accuracy in pricing, billing and tracking costs for comparison purposes. Expectations are for increased profits.

The Company

Comgate’s mission is to be a profitable competitor in Connecticut’s high-end residential custom woodwork market. It will be a leader in custom work and specialize in the most difficult needs of designer homes, new or remodeled, in the price range of $3 to $15 millions.

Products

Comgate is engaged with custom architectural woodwork. This includes wall paneling in various forms, moldings, moldings, pilasters in radius units, circular stairs in special woods, elaborate dressing areas, and specialty kitchen work. With the recent addition to state-of-the art CAD capability, Comgate will be able to significantly increase sales for higher-end product lines by targeting design professionals who can influence subcontractors when building homes that are trophy’ homes. These homes are more expensive than $3 million. Comgate is all about ‘#8220’customer. The average home wouldn’t use our products. Custom woodworking of the type carried out by Comgate is made to order only. No finished goods can be held in stock. It is not common for finished goods to be made up for stock.

Market

The industry has a long history and is well represented. Many mill shops can be found in the same market, but they are all focused on different areas. One mill shop may concentrate on custom furniture and form special alliances with upholstery shops. Other mill shops may focus on standard kitchen cabinetry. Comgate targets the residential market at the top ($3-15 million homes). This work is not as price-sensitive and can be maintained even during economic downturns. The company’s most important competitive weapon is its CAD capabilities. This program is specifically tailored to the custom woodwork market. It is expected to have a significant impact on the residential market at the highest end. Comgate will be able stand out from the rest and fully exploit its newly expanded production capacity.

Comgate is integrating its CAD capability and the practices design professionals to allow it to outsource parts that are less complex to other mill shops. However, Comgate will continue to build trophy homes. Comgate will be able present a mill shop with exact CAD drawings and precise material lists. This will help increase sales and profits.

Financial Projections

The recent addition of over $110,000 in advanced new Computer Numerical Control (CNC) machinery, coupled with the building of an in-house industry-adapted Computer Aided Drafting (CAD) capability, will propel sales to nearly $800,000 by the end of Year 1, and $1.2 million by the end of Year 3. Profits will grow as well. In order to maximize trade discounts and increase receivables, it is possible to reduce accounts payable in Year 2. This will create a short-term need to borrow more bank lines of credit.

1.1 Mission

Comgate&#8217 is a company that aims to be profitable in the Connecticut high-end residential market for custom woodenwork. We will place a high value on quality custom work and be able to meet the most stringent requirements of designer homes that are being built or renovated in the price range of $3 to $15 millions.

1.2 Keys to Success

Success in the contractor industry is dependent on these key factors

Industries that are involved in mill shop manufacturing include:

  1. Avoid bidding for projects based solely on price.
  2. Price the job correctly. This will require:

    • Accurate takeoffs and listings
    • A clear understanding between the company and the client, in reference to quality and terms of payment.
    • Calculate accurately the material required for completion of the project (including wastage).
    • Properly applying overhead factors and profit margins as well as any other considerations is key.
  3. A system that supports the operation of operating procedures and keeps track of job costs. It compares job bids with actual job costs. Continuous adjustments to bid formulas.
  4. Reliable production staff that can communicate with administration in order to produce the job on time, as per bid, using maximum labor, materials and machinery.

1.3 Objectives

Comgate&#8217’s major goals are:

  1. Increase production. The new machinery and four production workers have been carefully measured to ensure that the full productive capacity is reached. The goal is to reach, on a monthly basis, 80% of this capacity in the last quarter of Year 1, 85% in Year 2, and 90% in Year 3. This 80% capacity means that 342 feet worth of crown molding, 22 pilasters and 54 doors in various grades are produced each month. There is also a need for 77 feet cabinets or an equivalent combination. This will result in monthly sales of $60,816.
  2. It is much easier to keep site contractors (six). At present, full employment levels generate monthly revenue of $34,623, which (after expenses), nets the company $21,794.
  3. Continue to increase awareness of the company’s in house CAD capability, especially in Hartford, New Haven Stamford, Stamford, Norwalk and Shelton. These are the areas that have the highest concentration of the $3-15 million residential homes.
  4. Join the Connecticut Chapter of American Society of Interior Designers as an industry partner and the Connecticut Society of Architects as a CSA member. Get listed in their resource directories.
  5. Make the necessary administrative changes to ensure that all work has been properly billed.
  6. Work to complete an operations manual that has been started.