Business Plan Competition December 6-7, Prison Entrepreneurship Program P.O. Box Houston, TX (832)

Transcription

1 Business Plan Competition December 6-7, 2018 Prison Entrepreneurship Program P.O. Box Houston, TX (832)

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3 Adding value to your real estate Business Plan December 2018 Owner & Founder

4 TABLE OF CONTENTS EXECUTIVE SUMMARY...1 PERSONAL FIT...2 OPPORTUNITY...2 SOLUTION...3 CUSTOMERS...3 DIFFERENTIATORS...6 EXTRAS...7 MARKETING...7 FINANCIAL PROJECTIONS... ATTACHED

5 EXECUTIVE SUMMARY Opportunity Purpose Solution We add value back to real estate, one remodel at a time. The depreciation of real estate occurs continually. I remodel homes at a fair price with great quality and craftsmanship. Customers Differentiators Extras My target customers are homeowners who are looking to do upgrades of $5,000 plus. I will be set up to build custom cabinets in my shop. I have friendships with other skilled construction workers and business owners. Marketing Start-up Costs Financials & Extras I reach customers by newspaper ads, networking, social media platforms, signs and logos, business cards, a web page and relationships with suppliers. Owner Inv. - (Cash) $ - Owner Investment (Equipment) $ - Vehicle/equipment Loan $ - Unsecured Debt/Loan $ 5,000 Equity Investment $ 35,000 Total start up costs: $ 40,000 Sales: $ 727, % COGS 484,600 67% Gross profit 242,800 33% Overhead 71,400 10% Pretax income 171,300 24% Tax expense 42,800 6% Owner withdrawals 39,000 5% Net income $ 89,500 12% Personal Fit I have been working for companies that build and remodel homes for 20 years. Some of my personal skills are finish carpentry, framing, roofing, painting, tile and flooring. In addition, I possess knowledge of plumbing, electrical and heating and air conditioning.

6 PERSONAL FIT As owner and founder of, Timothy will be responsible for overseeing and managing all job related activities and construction projects. Timothy brings to Brass Tacks more than 20 years of experience in the residential construction industry. He installed new roofs for Whites Roofing Company in Jacksonville, Texas. Timothy has worked for Pro-Line Construction doing finish carpentry work in luxury, and modular homes. He has completed several remodeling projects for Young and Parks Company. He gained valuable construction skills working for companies such as On the Border, LaQuinta Inn, and Chili s. Timothy has a HVAC-R certificate and an EPA certification. He is proficient in Microsoft Word, Excel, and PowerPoint. Timothy is current working towards graduating for the Prison Entrepreneurship Program in December OPPORTUNITY Explanation: Homes and businesses depreciate and deteriorate from daily wear and tear. Homes and businesses require both repairs and renovations. Can I solve the problem given my skills and personality? Yes, my skills cover a wide range of home and commercial business remodeling needs. Is the customer looking for a more holistic solution than his or her immediate complaint? Yes and I will provide that solution. Do I need to do all of the work myself or can I hire others to help me and still maintain quality? I do not need to try and do every job myself. I can subcontract certain parts of the job out to other craftsmen, such as electrical and plumbing services. Is there growth potential to expand my business, or is this a dying market? As long as life exists, people will be renovating property. How soon can I get my business up and running? The biggest concern is financing. So I think a reasonable answer would be within a year after my release. Is this something that will take a lot of cash to get started or is it more of a question of hustle? It will require both hustle and cash. Is this something I would be proud to share with my family and parole officer? Yes. This is an honorable business that also helps others improve their property, thereby, improving their community Is the opportunity (Activity and Start Date) consistent with potential parole restrictions? There are no parole restrictions associated with this type of business. Would my business start as a part-time venture or need to be full time? This would require my full-time attention. 2

7 SOLUTION Explanation: I will provide a quality service to home and business owners to address their specific areas of need in remolding and repairs. Is what I am offering filling the customer s real need? Absolutely; our focus is on the customer s specific needs at hand, we won t try to sell them something they don t want or need. What are the benefits (not features) that I am providing? The benefit is adding value back to their real estate by improving the look, function, and quality. Why can I do this better than another business (competitor)? I take great pride inn craftsmanship and I am a good people person. I have the gift of gab in this area. How will I deliver this better idea to my customers? I will personally work side by side with my employees and subcontractors ensuring a quality job and timely completion. Is my delivery (retail store, home service, etc.) consistent with how I will produce the service (one-day delivery, hand-made products, etc.)? I will be able to address the calls and concerns of my customers in an efficient and timely manner. Is my solution consistent with my passion for selling? I love to do the work and can envision the finished product at first glance. I may hire designers to aide me in this area also. Is the price of my solution equal to or less than the customer s pain? In biding these jobs materials and permits factor in accordance in the amount of work needed. Labor cost is competitive and fair. Is the approximate cost of my solution lower than the price? I plan to be within a reasonable range of my competitors but I m not prepared to go so low as to not make a dollar or push the others into poverty. Do I need a fixed location (Storefront) or is this a mobile business? Most work is done on site, but I think I need a building for some storage and small builds like cabinets and an office. Do I offer a guaranty or return policy? I offer a five year warranty on my employee s labor and craftsmanship and roofing products usually have their own warranty. We will only use products that do have warranties and good quality ratings CUSTOMERS Explanation: This business will target home owners and real estate agents in the northwest greater Houston area, with household incomes that range between $50,000 and $1 million dollars annually. Also we will target commercial business owners primarily in the restaurant industry. 3

8 Demographics: Will my service have different appeal to men versus women? My service will appeal to men and women who are in need of home improvements equally. What is my ideal customer s age (children, young adult, middle aged, mature)? My ideal customers will range from 25-to-85. Does my customer need to be married, single or does it matter? The marital status of my customers does not matter although married couples do tend to want to make home improves more than singles. Do language or ethnicity differences improve or limit my ability to sell to my ideal customer? My customers will be American citizens and or foreigners from other countries on work visas looking to gain citizenship. They should be already fluent in English so this should not be a barrier. What aspect of my ideal customer am I appealing to (outdoors person, health conscious, nerd, their personal image, environmental concerns, recreation, etc.)? With home improvements the quality and design of work has to appeal to all types of people with a wide range of interests and personalities. Income: Does my customer need a certain income (rich, middle class, poor)? My ideal customer needs to be middleclass and above because home improvements can be expensive. Does my customer need to own specific assets (car, house, boat)? My customers needs to own their own home or at least be legal management over the property. Location: Where will I sell to my customers (their home, their workplace, on the street, online, my store, an event like trades day)? My advertisements will be posted online, but either I or my sales representatives will make the sale in person. Do I go to my customer (home service) or does my customer come to me? I send sales representatives out to the customers or go out on person. What neighborhood will my ideal customer live/work in (River Oaks/Highland park, a suburb, or small rural community) My geographic range is the northwest greater Houston area, Wood lands, Conroe, and Kingwood. How close are my customers geographically located (live close to each other or spread all over the city)? Time is money. These customers will be within a 50 mile radius. How easily can I find this customer (one at a time or they will provide referrals)? With the quality of work we will be doing they will be providing referrals pretty often I believe. 4

9 Other: Can I reach these individuals as a group or do I need to find and sell to them individually? These customers will be a one on one basis as to what improvements take place to their personal property. Once I sell to a customer, what is the likelihood that they will buy from me again? I think with home improvements with home owners they would likely employ service once or twice in a life time but with real-estate agents it will be on-going relationship. Am I selling to a wholesaler, retailer or does it matter? My services will be acquired by mainly restaurant chains, in the commercial side of operations. What industry is my customer in? These customers are in the restaurant business. What size customer do I want to serve (large/small, single/multiple locations)? I will be serving multiple locations around neighboring stores. Will my customer require special insurance (construction bonding, liability insurance)? These customers are already require to carry insurance and certain permits will be required also. Does my customer require 24/7 service? These customers usually need to be serviced at closed hours to prevent inconvenience. Do I have the capacity to meet the customer s demands? Meeting the customer s demand is a matter of employing the right people. Will the size of a customer allow me to develop other clients or will I be hostage to one company? If one customer keeps me busy I will possibly have to employ more sub-contractors and sales representatives to take on the demand of work. 5

10 DIFFERENTIATORS My Competitors Statewide Remodeling Direct or Indirect Direct Promotion marketing, webpages, newspapers Price Above average Their Advantages Large company with many employees Their Disadvantages Slow response time to start date and completion My Differentiators Quick response time to start date and completion Suncrest Building and Remodeling Torres Remodeling and Tile Direct Indirect Webpages, newspapers, community building Newspapers, fliers Average within range of competitors Undercuts competition In business over 10 years, loyalty to previous customers Specialize in tile work, lower labor cost Do not have sales agents with knowledge of interior graphic design No knowledge of cabinetry and trim carpentry Knowledge staff with experience in interior graphic design No need for subcontractors for finish carpentry, and we can build custom cabinets Sexton s Pride Remodeling Services Quality Pro Remodeling Indirect Indirect Webpages, radio, newspapers, suppliers Newspapers, webpages, suppliers Within range of competition Above that of competitors Time efficient work, connection with wholesale supplier Able to buy slate and tile at a low price Do not have custom cabinet shop or do vinyl siding No expertise in roofing Staff who specialize in vinyl siding, and affordability Experience in roofing with a crew who can multi-task. 6

11 EXTRAS External Extras: Do you have a connection with a supplier in your industry? Most of the supplies I need I can purchase from local building supply companies with a line of credit. Do you have access to a favorable location for your business? My office and shop will be located next to my home. Are you going to be the first company of your type in your chosen area operations? There are other companies of this type but the demand is above average in the market at this time. Internal Extras: Do you have a new or cutting edge concept? We will be set up to build custom cabinets at my shop. This will save money and generate interest. Will you be able to offer specialized or flexible scheduling that your competitors cannot match initially? I will be able to employ crews that are willing to work the schedule as needed to perform the task as hand. Are you an especially charming or personable person? I am a person with good social character. I also know that sometimes it helps to hire a sales representative. MARKETING Message: What are three things your company name (with no other information provided) says about your company? It says we provide the fundamentals, we are in construction, and that we are bold and versatile. What is your tagline? Together we renew the community, one build at a time. How does your name and tagline make you different than your competitors? We are involved in the interest of our customers and community. Can your message be effectively conveyed through multiple types of media? Yes. It can be through sports promotions, newspaper ads, webpages and social media. Is your message effective across different demographics? Yes. There are many types of constructions, but people generally associate the word with homes and business development. Is your pricing consistent with the market for similar offerings? Our pricing will be within a reasonable range of the competition. Is your pricing consistent with the degree of personalization? 7

12 Pricing will vary due to the difference in each specific job and material prices, but quality craftsmanship and work will not. Media: What are three types of media you will use to reach your customers? Webpages/social media, logos and business cards. How many potential typical customers (not just total people) can you reach each month using the types listed above? This should reach about 200 people. Once you ve reached your typical customer, how many will actually buy from you? By using a 5% rule of thumb, I will actually gain 10 customers. For each of the three, what do you think the estimated cost will be? $95 monthly- webpages/social media $42 monthly- logos $13 monthly- business cards For each cost estimate, is this a one-time expense up front or a recurring monthly charge? This is a one-time expense for initial annual amount divided over a month s time span. How will you collect customer reviews? I will have a review questionnaire online and also in writing. 8

13 START-UP COST Owner's name Company name Industry Residential Remodeling Start-up Costs Year 1 Assumption 4 - Total Uses Paid or Non-Depreciable Costs contributed in 1 marketing, business cards, fliers 300 cell phone purchase 150 car/truck down payment, if leased 1,100 permits supplies, office & misc. commercial insurance 1,100 Cash needed for start-up expenses 2,650 Depreciable Costs Paid or contributed in 1 Equipment Financing (Additional to amount paid) Depreciable Assets company car, truck or van 11,150 11,150 company trailer 10,000 10,000 computer, printer, fax 1,200 1,200 Carpentry and other tools 5,000 5, building/office deposit N/A N/A beginning cash balance 10,000 N/A N/A Cash needed for start-up assets 37,350-27, assumed life (months) 456 monthly depreciation Total start up cost 40,000 Assumption 5 - Total Sources Cash owner will contribute to the company - 0% Value of owner's assets contributed to company 0% Vehicle loan and other equipment debt (see note 7 for financing) - 0% Unsecured debt, if applicable (for example Kiva loan) 5,000 13% Outside equity investment, if applicable 35,000 88% Total start up cost, total sources 40, %

14 FINANCIALS dba EOU, Financing, and Payroll Assumptions Year 1 Assumption 6 - Revenue Model (Economics of One Unit) Product 1 Product 2 Product 3 Product name Product description Bedroom Remodel Demoiltion and reconstruction of a 300 sq ft bedroom Bathroom Remodel Demoiltion and reconstruction of a 288 sq ft bathroom Kitchen Remodel Demoiltion and reconstruction of a 400 sq ft Kitchen Price per unit 10, % 17, % 30, % Cost of one unit hours rate hours rate hours rate Non-owner payroll exp , % , % , % Non-owner payroll tax 9.0% % % % cost 1 description materials 3, % materials 6, % materials 13, % cost 2 description fuel % fuel % fuel % cost 3 description 0% 0% 0% cost 4 description 0% 0% 0% Total variable costs 5, % 9, % 17, % Income statement gross profit per unit 4, % 8, % 12, % hours rate hours rate hours rate Owner's labor charge , % , % , % Pro forma gross profit 3, % 6, % 9, % Start-up Total Year Bedroom Remodel sold Bathroom Remodel sold Kitchen Remodel sold total revenue $ 57,500 $ 57,500 $ 57,500 $ 85,000 $ 67,500 $ 67,500 $ 67,500 $ 67,500 $ 67,500 $ 57,500 $ 75,000 $ 727,500 total cost of sales $ 32,360 $ 32,360 $ 32,360 $ 47,314 $ 37,860 $ 37,860 $ 37,860 $ 37,860 $ 37,860 $ 32,360 $ 41,814 $ 407,869 total income statement gross profit (excludes owner labor) $ 25,140 $ 25,140 $ 25,140 $ 37,686 $ 29,640 $ 29,640 $ 29,640 $ 29,640 $ 29,640 $ 25,140 $ 33,186 $ 319,631 Owner's labor hours (time spent directly related to sales) 6, , , ,781 Assumption 7 - Financing Total Year Equipment financing, see Start-up Costs sheet amortization schedule Amount borrowed $ - principal, beginning Interest rate 8.0% interest expense Loan term (months) 36 principal payment ly payment - principal, ending Start-up financing, see Start-up Costs sheet Amount borrowed $ 5,000 principal, beginning 5,000 4,871 4,741 4,611 4,481 4,349 4,218 4,085 3,953 3,819 3,685 Interest rate 5.0% interest expense Payback period (months) 36 principal payment (129) (130) (130) (131) (131) (132) (132) (133) (133) (134) (134) (1,449) Grace period (months) - principal, ending 4,871 4,741 4,611 4,481 4,349 4,218 4,085 3,953 3,819 3,685 3,551 ly payment $ 150 Assumption 8 - Payroll, nondirect Total Year # of employees avg hours each employee(s) worked per month, not in EOU above average per hour wage salary expense, exclduing payroll taxes 3,200 3,200 3,200 3,200 3,200 3,200 3,200 3,200 3,200 3,200 3,200 35,200 Assumption 9 - Equipment Purchases, after start-up Description Total Year

15 dba Projected Income and Cash Flow Statements Year 1 Assumptions Start-up First Year % of Total Revenue Revenue 2 Bedroom Remodel 6-10,000 10,000 10,000 20,000 20,000 20,000 20,000 20,000 20,000 10,000 10, ,000 23% Bathroom Remodel 6-17,500 17,500 17,500 35,000 17,500 17,500 17,500 17,500 17,500 17,500 35, ,500 31% Kitchen Remodel 6-30,000 30,000 30,000 30,000 30,000 30,000 30,000 30,000 30,000 30,000 30, ,000 45% Total revenue - 57,500 57,500 57,500 85,000 67,500 67,500 67,500 67,500 67,500 57,500 75, , % Cost of Goods Sold 2 Bedroom Remodel 6-6,700 6,700 6,700 13,400 13,400 13,400 13,400 13,400 13,400 6,700 6, ,903 16% Bathroom Remodel 6-11,254 11,254 11,254 22,508 11,254 11,254 11,254 11,254 11,254 11,254 22, ,299 20% Kitchen Remodel 6-20,406 20,406 20,406 20,406 20,406 20,406 20,406 20,406 20,406 20,406 20, ,466 31% Total COGS - 38,360 38,360 38,360 56,314 45,060 45,060 45,060 45,060 45,060 38,360 49, ,669 67% Gross profit - 19,140 19,140 19,140 28,686 22,440 22,440 22,440 22,440 22,440 19,140 25, ,831 33% Expenses 2 Auto or truck lease - - 0% Depreciation ,014 1% Gasoline & fuels - - 0% Insurance - bonding ,400 1% Insurance - vehicle - - 0% Interest - equip & start up % Marketing ,400 0% Office - rent ,600 1% Office - insurance - - 0% Office - telephone ,100 0% Office - utilities ,400 1% Payroll - not owner and not in 8-3,200 3,200 3,200 3,200 3,200 3,200 3,200 3,200 3,200 3,200 3,200 35,200 5% COGS Payroll taxes (9%) 6 & ,168 0% Permits % Supplies - - 0% Tax service ,200 0% Telephone - cellular % Start-up expenses 1, ,100 0% % ,100 0% ,600 1% - - 0% - - 0% - - 0% - - 0% Total expenses 1,550 6,220 6,619 6,219 6,278 6,228 6,237 6,236 6,636 6,285 6,285 6,684 71,476 10% Taxable profit (loss) 1 (1,550) 12,920 12,521 12,921 22,408 16,212 16,203 16,203 15,804 16,154 12,855 18, ,355 24% Tax (expense) benefit 1 (5,973) (12,885) (12,053) (11,928) (42,839) -6% Owner's withdrawals 1 - (3,000) (3,000) (5,000) (3,000) (3,000) (3,500) (3,000) (5,000) (3,500) (3,500) (3,500) (39,000) -5% Net profit (loss) (1,550) 9,920 3,548 7,921 19, ,703 13,203 (1,249) 12,654 9,355 3,274 89,516 12% Depreciation ,014 Equipment purchases 3 (27,350) (27,350) Principle, equipment loan Repay debt financing 7 5,000 (129) (130) (130) (131) (131) (132) (132) (133) (133) (134) (134) 3,551 Owner contribution Equity investor 3 35, ,000 Net cash flow 11,100 10,247 3,874 8,247 19, ,027 13,527 (926) 12,977 9,677 3, ,731 Cash, period start - 11,100 21,347 25,221 33,469 53,202 53,853 66,880 80,407 79,482 92, ,136 - Cash, period end 11,100 21,347 25,221 33,469 53,202 53,853 66,880 80,407 79,482 92, , , ,731 The accompanying assumptions are an integral part of this financial statement.