Remodeling Business Plan Leave a comment

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. Comgate created this business plan after suffering losses in the initial phase of several competitively bid construction projects. It aims to make its mission more clear. Prior years were characterized by hectic efforts to bid as many jobs as possible. For fear of insufficient production staff, margins were slim because pricing policy was flexible.

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 assure more accuracy in pricing, billing, and tracking of costs for comparison purposes. Profits will increase.

The Company

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

Products

Comgate provides custom architectural woodwork, including wall paneling and molding. The recent addition of state-of-the-art CAD capability will help substantially to increase sales of higher-end products by targeting design professionals who are in a position to influence choices of subcontractors building “trophy” homes costing over $3 million. Comgate is all about ‘#8220’customer. Our products would be unpopular in the average home. Comgate custom woodworking is done only on request. No finished goods are made up for stock. It is not common for finished goods to be made up for stock.

Market

This industry is well-respected and mature. Many mill shops can be found in the same market, but they are all focused on different areas. One mill shop may be focused on custom furniture and have special relationships with upholstery shops. Others may be more focused on standard kitchen cabinetry. Comgate targets the residential market at the top ($3-15 million homes). This work is less price sensitive and more stable, even during economic recessions. At the moment, the company’s most crucial competitive weapon is its ability to use CAD. The program is especially formulated to suit the custom woodwork market, and is expected to make substantial in-roads into the chosen highest end residential market. Comgate will be able differentiate itself from its competitors and fully utilize its newly increased production capacity.

Comgate sees a growing need for high-end trophy homes, and is looking to integrate its CAD capabilities and the practices of designers. This will allow Comgate the ability to outsource the easier parts of a project, but keep the more challenging work. Being able to present another mill shop with exact detailed CAD drawings, together with precise dimensions and material lists, will allow Comgate to increase sales and profits, and to concentrate on the more challenging custom woodwork products.

Financial Projections

The recent investment of over $110,000 to upgrade the new Computer Numerical Control (CNC), and the establishment of an industry-adapted Computer Aided Drafting(CAD) capability will drive sales to close to $800,000. These numbers will go up by year 3. Profits will rise as well. The desire to reduce accounts payable in year 2 in order to take advantage all trade discounts will lead to a short term need for additional bank lines of credit in the range of $30,000.

1.1 Mission

Comgate&#8217’s mission is profitably competing in the high-end residential market of custom woodwork in Connecticut. We will be focused on high-quality custom work, and we specialize in the most difficult needs of newly built and renovated designer homes priced between $3 and $15 million.

1.2 Keys to Success

The keys to success in the contracting industry are key.

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 listing.
   • Clear communication between the client and company regarding quality and payment terms.
   • Correct calculation (including wastage) of material and labor is essential to complete the project.
   • Correct application of overhead factors and profit margins, plus any special considerations.
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 communicates well with administration to assure that the job is produced on time and as bid, making maximum efficient use of labor, materials, and available machinery.

1.3 Objectives

Comgate&#8217’s major goals are:

1. Increase production. Full production has been measured with the new machinery, four production staff and carefully measured. 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 allows for 342 feet per month of crown molding, 22 pinsters, 54 doors of different grades, 77 linear feet of cabinets, or some combination thereof. This will lead to $60,816 in monthly sales.
2. Maintaining site workers is a much easier task. Six of them are currently employed. Full employment will generate $34,623 per month, which after expenses nets the company $21,794.
3. Continue to make efforts to bring the company&#8217’s in-house computer-aided design capability to the attention more design professionals, especially in Hartford and New Haven, Stamford and Norwalk. These areas are home to the largest concentration of residential properties worth between $3 and $15 million.
4. As an industry partner, join the Connecticut Chapter of American Society of Interior Designers. Register in their resource directories.
5. You must complete all administrative changes necessary to ensure that work is properly invoiced and paid in a timely fashion. Also, you need to ensure that jobs are accurately tracked to allow for cost comparisons with bids.
6. You must complete the operations manual you have begun.