Drapery Fabricator Business Plan Leave a comment

Introduction

Cutting Edge Drapery is a well established decorators’ workroom. The company produces slip covers, draperies, as well as other textile products, in accordance to interior designers’ designs. Cutting Edge Drapery just expanded its production capacity and is well-positioned for marketing its workroom production to clients beyond its current client base. 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. This business plan focuses on identifying its future clients and describing its marketing strategy. It also aims to improve its internal processes so that it can significantly increase its profitability.

The Company

Cutting Edge Drapery can be found in Loudon, New Hampshire. Soft window treatments make up the majority of the company’8217;s production. The company targets $2.7million in soft window market. The disposable income of designers and decorators directly correlates to the market share.

The company is a sole proprietorship and has been operating for nearly 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 office spans 2,200 sq. feet, where seven employees are employed full-time. Recently an assistant has been hired to take on the administrative burden and to help improve the company’s internal procedures. A new outside accountant has been hired who streamlines the computerized accounting.

Products

Cutting Edge Drapery can provide sewing services to create high quality soft windows treatment products such draperies.

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

277,253 residents are estimated to live in 17 communities close to Cutting Edge Drapery. Roughly, this would mean that this area comprises a total soft window treatment market in excess of $2.7 million annually. All of these treatments need to be manufactured in decorator offices. The company holds approximately 7.5% of this nearby market.

The company is currently moving away from its current target market, interior decorator clients, to the more high-end interior design market. Since the designer market is more cost-sensitive and allows for greater margins, a shift to this market will improve profitability. High-income homeowners are the designer’s clients. They want unique products and high levels 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 increase the share of window treatment sales controlled by interior designers (Designer being the key word rather than decorator). Within the next twelve month, the company will market the 15 targeted interior designer members of American Society of Interior Designers. It also plans to establish business relationships with at least three of them. This number will increase to five within the second year, and seven in the third. The local competition is stiff for the company’s workrooms. Cutting Edge Drapery’s strategy is to enhance its image by advertising in prestigious trade magazines, joining and networking ASID membership and actively marketing its target market.

Considerations for Financial Planning

The marketing research and tailored marketing strategy described in this business plan will result in robust profits, increasing every year. The local soft window treatment market will account for 11% of revenues by 2000, according to estimates.

Monthly break-even is very achievable.

Total production at the time of this writing was approximately 98 units, which will increase to 115 by the end of the year 2000.

The company enjoys a low cost of goods sold account due to the fact that the clients provide the fabric for soft window treatment products. This allows the company to have a high gross margin and a low cost of goods. A custom business model means that inventory costs are low and accounts payable are low. The company doesn’t have any long-term capital assets or debt that could impact 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

1. To be able to penetrate the interior-designer-controlled share of market for window treatments (Designer being 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 targeted designers will rise to five by the end of the first year and seven by the end.
2. To substantially increase profitability. We will encourage price-sensitive jobs to go elsewhere by formalizing the pricing mechanics. This will allow us to concentrate on higher-end custom work that is less expensive for the less price sensitive designer market. The pricing will guarantee a minimum of $65,000 per year in pre-tax profits.
3. To improve the administrative machinery of the operation. This will result in a decrease in the owner&#8217’s involvement with administrative tasks, which will enable her to spend more time on marketing and sales tasks.

1.2 Mission

Cutting Edge Drapery’s best fit is to serve the interior designer market share. This is because interior designers have the ability to afford high-end materials and custom solutions. The company is unable to compete with large workrooms geared to mass production runs, nor can its pricing compete with the many “mom and pop” home workrooms. The company is committed in providing top quality workmanship, meeting the agreed delivery times, and executing custom works exactly according to the designer’s idea.

1.3 Keys to Success

A few key aspects can determine success or failure in professional workrooms. Most of these factors stem from interior designers’ importance to reputation:

1. Private clients must not be allowed to enter a professional workroom. Interior designers are often paranoid that one of his clients will discover he could have saved thousands of dollars by dealing directly with the workroom. Private clients should contact the company to be referred directly to a designer who works closely alongside them.
2. Clients who can afford interior designers tend to be very demanding; designers are under a lot of pressure. An interior designer must feel that his workplace considers him to be the most important person alive. Any action that might indicate that the workroom might be busy with other designers’ work, such as failing to return phone calls promptly, must be avoided.
3. The workroom must live up to its promises. The work must be done exactly as promised and at the agreed cost. Communicating effectively with the designer is crucial.
4. The quality of the production supervisor is key. Production supervisors must ensure that jobs quoted for 15 hours are not extended to 20 hours. If individual production stitchers are not efficient or left idle, profit goals cannot be achieved.