The company is located in New Haven, Ct. in rented facilities. Total area is 2,500 square feet of which about 100 square feet is taken up with administration. Some expansion in the present facilities is possible by renting another 1,600 square feet of adjoining space. This plan assumes that this additional space will be added in January, 2000 at an increase of $2,000 in monthly rent.
A diagram of the production hall showing the location of the various major pieces of machinery is given in Appendix G.
The products used in this plan were limited to only five items to simplify calculations. “Custom” is the key word. The average home would not use these items. Custom woodworking of the type carried out by Comgate is made to order only. No finished goods are made up for stock. For this reason, there are rarely very long production runs.
Comgate is engaged in custom architectural woodwork in the form of wall paneling, custom cabinets, molding, pilasters, etc. Although by nature of the word “custom” the milled products can be totally unique, the vast majority of products milled to date fall into only these few general categories. However, assuming success with the company’s marketing strategy, Comgate will move more up-market within the high-end residential market (see Chapter 4.0, Market Analysis Summary). Rather than produce ordinary high-quality casework, the company, for example, might produce a custom casework item in soft maple with an antiqued crackle finish designed to hide a stereo system. Radius units, circular staircases in special woods, elaborate dressing rooms and kitchens with a lot of curves would be further examples of challenging work that would be in line with stated strategy goals. More ordinary jobs would be accepted only if the jobs fit into the company’s out-sourcing guidelines. 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.
Performing a competitive comparison with products produced by other mill shops is not a simple task as the products are custom. There are no price lists. Financial comparisons can be made, however, with a group of mill shops (see Architectural Woodwork Institute AWI survey results in Appendix A). There are 12 mill shops in the New Haven area including Comgate. There may be one or two that are not members of AWI and therefore not listed in the membership directory. It is also known that some very large construction companies have their own in-house mill shops (see chapter on Industry Participants). Their present combined sales of all products sold to all home markets are approximately $12-$14 million annually. The market study estimates the total trophy home renovation and new construction market in Greater New Haven to be $127 million of which at least 10% is made up of custom wood millwork. This 10% or $12.7 million would seem to indicate that the demand from this market sector alone is equal to the total supply available to all market sectors. The demand clearly outstrips supply in respect to suppliers in New Haven for the demand in the area. Obviously, part of the demand must be being met by suppliers of high-end woodwork located outside New Haven.
Comgate is targeting the highest end of the residential market ($3-$15 million homes). This work is less price-sensitive and relatively steady, even during economic valleys. The most critical competitive weapon which the company holds at the moment is its CAD capability, which was developed by the person who is on contract to the company. 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.
At the present time no sales literature is available. Brochures of high quality will only be produced after production capacity has been expanded and success has been reached in filling the stated management teams gaps.
All materials used in the company’s production are available from a number of local suppliers (primarily lumber dealers). Sourcing has never been an issue of concern.
Technology does play a part in this industry. Major custom woodworking machinery has incorporated time and labor-saving advantages of the computer age. Precision digital settings and the use of lasers make measurement faster and more exact. Comgate has added over $110,000 in new CNC equipment this year, which will allow the company to substantially increase production despite the limitations imposed by its rather small production hall. Comgate’s CAD department is an attractive addition which is already demonstrating success in image-building with interior designers and architects to the wealthy.
In the past, Comgate has produced custom wood products and has bid competitive jobs. The stated marketing direction of the company (see chapter on Target Market Segment Strategy) will move the product line more up-market by producing more challenging items, such as radius units, staircases, elaborate kitchens and libraries in exotic woods, etc. Some of the more mundane sections of a job will be out-sourced to other mill shops (simple paneling, etc.). Any profits from out-sourcing have not been reflected in the financials of this business plan.
The highest end of the residential market is represented by the new construction and the renovation of “trophy” homes in the $3-$15 million price range. These homes, within the 781/617 area codes, have an annual need for custom woodwork products of approximately $13 million. An estimated further need of $12 million is generated by the same price range of private homes located outside the immediate area but within 60 miles of New Haven.
According to U.S. Census figures, there are 127,080 new single family homes built annually in the Northeast, of which 15,500 were in Connecticut, and of those, 5,670 were in the New Haven area. With average single family home prices at $222,000 in 1999 (all U.S.), and probably closer to $350,000 or more in the Greater New Haven area, this translates into an annual expenditure of over $1.9 billion for new New Haven single family homes.
U.S. Census also reports that almost $14 billion is spent annually on improvements to existing single family homes in the East. Assuming the same percentage share for the New Haven area this means that 4.5%, or $627 million, was spent on major renovation excluding repair and maintenance. The above statistics indicate that for every dollar spent on new homes, $.31 is spent on major renovations to existing homes.
Since the major market for Comgate’s services is custom woodwork to very expensive single family homes in the price range of $3-$15 million, it is useful to know how many new homes are built annually in that price range in the greater New Haven area, and how many existing homes in that price range engage in major renovations. Research indicates over 300 single family homes in the New Haven area (area codes 781 and 617) in this price range actually changed hands in the past two years. Since major renovations generally are undertaken at the time of purchase, this would suggest that at least 150 homes valued at about $4.5 million each elect to have major renovations each year. $200,000 per renovation is not an unreasonable estimate for a renovation of a property in that price range. That amounts to annual renovations of the most expensive homes in the greater New Haven area of approximately $30 million (150 homes x $200,000). If we use the statistic of $.31 spent on existing home renovations for every dollar spent on new homes, that would indicate that $96 million is annually being spent on construction of new trophy homes in this price range in the New Haven area.
Another subsidiary market is the new trophy homes being built outside of New Haven (60 mile radius), as well as the major renovations for homes in the same price range. For example, 44 homes in the same price range ($3-$15 million) changed hands in Stanford alone during the past two years.
The Market Analysis Table shown below has omitted three zeros in all the numbers, for space reasons.
Market Analysis | |||||||
2000 | 2001 | 2002 | 2003 | 2004 | |||
Potential Customers | Growth | CAGR | |||||
New Trophy Homes (New Haven) | 2% | 96,775 | 99,098 | 101,476 | 103,911 | 106,405 | 2.40% |
Renovations (Trophy Homes New Haven) | 2% | 30,000 | 30,720 | 31,457 | 32,212 | 32,985 | 2.40% |
Combined (ex New Haven 60 Miles) | 2% | 120,000 | 122,880 | 125,829 | 128,849 | 131,941 | 2.40% |
Total | 2.40% | 246,775 | 252,698 | 258,762 | 264,972 | 271,331 | 2.40% |
In line with Comgate’s mission statement, the target market is trophy homes, both new construction as well as renovations. The results of our market study indicate that the total high-end trophy home market need for custom woodworking in the New Haven area outstrips the supply from available local custom woodworking suppliers. To compete in this market sector, Comgate has chosen a special service which is proving successful with design professionals. This CAD service is explained more fully in the chapter on Market Needs. All three high-end market sectors are in need of the custom millwork products supplied by Comgate. All of these construction projects, whether new construction or major renovation, will involve design professionals of the highest standards and clients with deep pockets. With properties of this caliber, the work is relatively recession-proof. These clients will have requests for custom woodworking products that are most challenging and thus most suited to Comgate’s expressed mission statement and abilities.
With greater and greater demand for high-end trophy home construction, coupled with the increasing difficulty of attracting and keeping skilled workers, Comgate’s move toward linking its CAD capability with the practices of design professionals will allow the company to out-source certain simpler parts in a project to other mill shops, while keeping the more demanding work for themselves. 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.
Market growth of 2.4% is based on the actual growth rate in building permits in the East experienced in years 1997-99 as tabulated by the U.S. Census.
The new CAD service offered by Comgate evolved as a result of the inefficiencies which the company has observed in the past. One major problem in the past deals with blue-prints. Whichever construction company won the bid would send the blue-prints, let’s say for the kitchen, to custom wood mill shops to bid over. The mill shop will do its “take-offs” from the blue-prints and bid to do the kitchen. Later, the winner of the bid finds that the designed kitchen cabinets will not fit into the room. This results in expensive problem-solving and meetings with architects. The architects themselves do not understand the way in which woodworkers build cabinets, so often the architects’ design concepts are made more difficult (and thus more expensive) to realize. The new CAD service offered by Comgate circumvents all of this. By working together with the architect at the initial stages, the architect only needs to do the inexpensive design concepts. The actual details of how the cabinet is structurally designed, as well as the exact measurements to fit the room, are left to Comgate’s CAD person. The architect can save money on drafting, save again by eliminating the usual problem-solving and re-drafting. The client of the architect also saves by insuring that the woodwork is done in a way that suits the latest woodworking methods without interfering with the design concept — the look of the final product. A further advantage is that Comgate saves the expense of on-site measuring.
4.3.1 distributing a service.
The traditional pattern in this industry is for: an architect to draft the plans according to the specifications, copies given to contractors to bid on, and elements, such as mill work, subcontracted to mill shops who also make competitive bids.
Through Comgate’s marketing strategy, this traditional distribution pattern will be altered to the benefit of everyone concerned. The architect will save on the design drafting (and redrafting), the contractor does not have to worry about change orders to the same degree, because he can feel confident that the desired woodwork will fit the room as built, and Comgate will not have to be as price-sensitive in getting the work. Comgate’s connection to the design professional will assure that the work goes to him rather than being sent to competitive bidding.
The table below lists major competitors in our immediate area. Appendix B is a map marked with red dots indicating the location of mill shops in the Greater New Haven area. None of these mill shops has the same level of CAD capability and few have singled out the trophy home market as their prime focus.
Competing Mill Shops
|
|
|
|
Ace Milling Co. | East Haven | $2-5 million | 20 |
Hamden Woodworks, Inc. | Hamden | $2-5 million | 15 |
Appleton Woodworking | Orange | $.5-2 million | 10 |
Woodstock Corp | Gullford | $.5-2 million | 17 |
Custom Design Woodwork | Bramford | $0-.5 million | 4 |
J. Peterman Woodworking | Woodbridge | $.5-2 million | 7 |
Comgate | New Haven | $0-.5 million | 7 |
Bethany Woodworking | Bethany | $0-.5 million | 7 |
Kaufman Cabinets | Branford | $0-.5 million | 7 |
Sagesmith Woodwork | Hartford | $0-.5 million | 4 |
The Joinery Shop | Woodburn | $0-.5 million | 5 |
Castle Architectural | Springfield | $.5-2 million | 20 |
Inroads into the stated trophy home market in the Hartford area will be made by contacting and selling Comgate’s new CAD features to those architects and interior designers who are best known for residential work in this price range ($3-$15 million), by sticking to the company’s newly formulated costing/pricing method, and following through on the recent administrative control and reporting changes.
After having successfully priced the job to insure an adequate profit margin after all expenses, it is important to close and bring back the sale. The person to do this is the owner himself, Andrew Comins. To free up his time to network with design professionals it is important that he be able to rely on his office manager to administer properly in his absence (see the chapter on Management Team) and he must be able to rely on a production manager for proper flow in the plant (see Chapter on Management Team Gaps).
The most important aspects to be considered in closing the sale are:
The proposal must get there on time and get to the right place. A log should be kept of all bidding efforts. Follow up is necessary.
There are two sources of revenue:
Plant Produced Sales: This revenue comes from manufacturing custom cabinetry, paneling, and other wood products. To project revenue we have chosen several representative items that make up the majority of plant produced sales. The materials for each of these items have been carefully calculated, as has the labor hours going into each item. The material inputs will show up in the direct cost of each item. The labor hours information allow us to determine how many items we can produce with given manpower and machinery. The cost of the labor is calculated in detail in the Personnel Plan Table. As this plan is being written in October, 2000, the actual sales revenue from January through September will be averaged to arrive at a monthly amount for that period. Projected sales will begin as of October, 2000. The representative items chosen are:
The Costing/Pricing Work-up Sheet in Appendix C will break down, in detail, the various materials going into each of these items, as well as the labor hours for each. Labor break-downs for each phase in the production of these items is also included. For example, the Crown Molding (250 linear ft.) requires a total of 4.25 man hours and only one material. The Pilasters however needs two materials in different quantities. Since 4 man hours per pilaster are needed (see labor break-down sheet), 16 pilasters will require a total of 64 man hours. These 64 man hours have been split equally between the two materials (8/4″ Mahogany and the 4/4″ Mahogany). From the totals in Appendix C the total labor input for the above items is 390.4 hours. Since production is limited to 160 manhours per week (8,000 manhours per year), these above-listed items can only be produced 20.5 times in one year. Total yearly full production, assuming only these items are produced, would be:
These items have been projected in the attached table on a monthly basis beginning October, 2000 and on a yearly basis for years 2001 and 2002 assuming 80% of full production October-December, 2000, 85% in 2001, and 90% of full production efficiency in year 2002.
Contract Site Labor: Revenue is also derived from providing carpenters/installers at certain work sites. There are six site workers listed with an “S” next to their name. Below are listed the all-in costs of these workers as well as the rates that they are billed out at.
Worker | All-In Wage Rate | Bill Rate | Hours | Net Revenue |
1. | $34.38 | $39.00 | 1,960 | $9,055.20 |
2. | $30.00 | $36.00 | 1,960 | $11,760.00 |
3. | $22.00 | $31.00 | 1,960 | $17,640.00 |
4. | $30.03 | $36.00 | 1,960 | $11,701.20 |
5. | $25.00 | $34.00 | 1,960 | $17,640.00 |
6. | $24.71 | $36.00 | 1,960 | $22,128.40 |
Totals | 11,760 | $89,924.80 |
Total net revenue from Site Services comes to $89,924.80 annually assuming a full 40 hour week for 49 weeks. For projection purposes we have chosen “hours” as the unit. The average sales price is $35.33. The average cost is $27.69.
Sales Forecast | |||
2000 | 2001 | 2002 | |
Unit Sales | |||
Crown Molding | 4,239 | 4,356 | 4,612 |
Pilasters | 219 | 279 | 295 |
Haunched Passage Doors (Paint Grade) | 234 | 348 | 369 |
Haunched Passage Doors (Stain Grade) | 234 | 348 | 369 |
Cabinets | 591 | 785 | 831 |
Site Work | 7,647 | 11,760 | 11,760 |
Other | 0 | 0 | 0 |
Total Unit Sales | 13,164 | 17,876 | 18,236 |
Unit Prices | 2000 | 2001 | 2002 |
Crown Molding | $4.02 | $4.00 | $4.00 |
Pilasters | $316.96 | $316.96 | $316.96 |
Haunched Passage Doors (Paint Grade) | $592.35 | $592.35 | $592.35 |
Haunched Passage Doors (Stain Grade) | $783.09 | $783.09 | $783.09 |
Cabinets | $194.76 | $194.76 | $194.76 |
Site Work | $35.33 | $35.33 | $35.33 |
Other | $0.00 | $0.00 | $0.00 |
Sales | |||
Crown Molding | $17,027 | $17,424 | $18,448 |
Pilasters | $69,414 | $88,432 | $93,503 |
Haunched Passage Doors (Paint Grade) | $138,610 | $206,138 | $218,577 |
Haunched Passage Doors (Stain Grade) | $183,243 | $272,515 | $288,960 |
Cabinets | $115,103 | $152,887 | $161,846 |
Site Work | $270,169 | $415,481 | $415,481 |
Other | $0 | $0 | $0 |
Total Sales | $793,566 | $1,152,876 | $1,196,815 |
Direct Unit Costs | 2000 | 2001 | 2002 |
Crown Molding | $2.00 | $1.82 | $1.82 |
Pilasters | $48.25 | $44.09 | $44.09 |
Haunched Passage Doors (Paint Grade) | $142.05 | $130.53 | $130.53 |
Haunched Passage Doors (Stain Grade) | $269.76 | $247.88 | $247.88 |
Cabinets | $62.40 | $57.66 | $57.66 |
Site Work | $25.74 | $27.69 | $27.69 |
Other | $0.00 | $0.00 | $0.00 |
Direct Cost of Sales | |||
Crown Molding | $8,486 | $7,928 | $8,394 |
Pilasters | $10,566 | $12,301 | $13,007 |
Haunched Passage Doors (Paint Grade) | $33,240 | $45,424 | $48,166 |
Haunched Passage Doors (Stain Grade) | $63,123 | $86,262 | $91,468 |
Cabinets | $36,878 | $45,263 | $47,915 |
Site Work | $196,871 | $325,634 | $325,634 |
Other | $0 | $0 | $0 |
Subtotal Direct Cost of Sales | $349,165 | $522,813 | $534,584 |
The marketing strategy, as explained in other chapters, is to leverage Comgate’s special CAD capability, as it relates specifically to custom woodworking, with design professionals (interior designers and architects) to increase the type of high-end work taken on, as well as to “jump” the bidding process by creating a situation in which Comgate must be given the bid. A good place to ask for the names of the interior designers with the best reputations is to speak to the designer workrooms. These are the workrooms that carry out the work connected with interior designers’ concepts for window treatments, fabrics, etc.
The best known of these workrooms in and around New Haven are:
A polling of these workshops indicates the following interior designers are often sought by trophy home owners:
** Names have been removed for confidentiality.
Architects are another important group of design professionals that work in concert with interior designers on trophy homes. The latest edition of the Directory of Architectural Firms in Connecticut is available to the members of the CSA. The directory lists 750 architectural firms in Connecticut. Details of each company are given alphabetically, including location and phone numbers as well as the type of work the firm specializes in. The back of the directory gives a listing based on areas of practice. The category of “Residential Work” lists about 300 firms. Although an architectural firm is likely to have work outside of the city where it is located, it would be a good start to find out which of those 300 residential architects are located in those areas of New Haven with the greatest concentration of trophy homes.
Comgate’s CAD capability is an especially strong marketing tool. It allows the mill shop to build the desired items using the most practical methods of construction without interfering with the design concept. It automatically calculates the exact dimensions of each element and produces exact material lists. These features allow simpler elements to be subcontracted to other mill shops, thus allowing the company’s productive capacity to be used to produce the higher end elements.
By pushing this capability with architects who have reputations for designing homes in the $3-$15 million bracket, Comgate will position itself to receive the gravy of this price-insensitive, recession-proof work, while at the same time building an image for the highest quality, most-challenging work.
Simply stated, the goal of the bidding process is to price to get the job while still making an adequate profit. To facilitate this, a dual mark-up system has been developed. One mark-up for materials and another for labor. The reason for the separate mark-ups is that in custom woodwork the mix, or ratio, of material and labor changes with every job. Therefore, a system is needed that accommodates the variations. The system is fairly straightforward and uncomplicated and, once set up, it reduces the bidding process’ complexity. The system requires two separate overhead factors to be computed–an administrative overhead and a factory overhead.
Administrative Overhead The concept is founded on the belief that everything which is sold, whether goods or services, must pay its fair share of the administrative overhead. Whether we use material in manufacturing a product, or merely resell it as is without further processing, it should still make a contribution. So a multiplier factor is calculated and applied to everything sold including direct labor, plant-processed materials, “buy-outs” (out-sourcing to another mill shop), installations, etc.
The administrative overhead mark-up factor is arrived at by dividing the total administrative overhead expenses by the total of materials and direct labor. Appendix B shows the calculations based on expenses in 1999. Total administrative overheads were $123,821. Total direct labor and materials came to $324,495. The resulting .3816 translates into a multiplier factor of 1.3816. By applying this to everything sold it means that the company is setting aside 27.6% of every dollar to cover the cost of bidding, the cost of paperwork to execute the job, the cost of collecting the money, the cost of interest if the money’s late, etc.
Plant Overhead This mark-up is only applied to labor. It’s calculated by dividing plant overhead costs by direct labor. The resulting .837 when added to the .3816 (administrative overhead) builds to a multiplier factor of 2.218 (1.00 + .3816 + .837 = 2.218). The reasoning here is that an item sold that involves plant-processed labor should contribute to defray a portion of those plant overhead expenses (machinery depreciation, insurance, machinery maintenance, etc.) that would not be there if everything were merely sold without any value-added milling by factory millworkers.
With application of the above-described overhead factors, pricing is now reduced to calculating the total materials (including wastage) involved in a job, and projecting the labor input in hours needed to complete the job. Assisting in these calculations is a Job Costing Library which lists the actual materials and the actual labor input involved in similar past jobs. (See a sample section of the Job Costing Library in Appendix C.)
Performing the “take-offs” from blue prints and converting this to materials and labor hours needed to complete the job requires skill, but once this has been done, those figures can be passed on to an administrative assistant who can apply the overhead mark-ups to materials and labor. One can also check the latest prices of the materials as well as the up-dated all-in man-hour rates. (See Appendix D for a schematic of all-in wage rates.)
Up to this point in the pricing process all that we have done is to calculate the actual all-in costs of both materials and labor and added on formulas to cover overhead costs–both administrative and plant. It is a necessary stage in the pricing process to plan in, and insist on, a profit margin. Although industry averages are less since averages include those suffering losses, successful woodworkers do attain a 15% sustainable net profit. Adding 15% to anticipated costs is not going to achieve a net 15% result (15 divided by 115 is only 13%). The best way is to divide total anticipated costs (after application of the two overhead factors) by .85.
To facilitate the costing/pricing, an Excel spreadsheet has been designed to incorporate the process including the two overhead factors as well as the 15% profit mark-up. Appendix E is a sample of the Costing/Pricing Work-up Sheet for a representative job. This spreadsheet also has a database capability. It allows the user to access statistics to facilitate material bulk purchasing, etc.
With the introduction of an in-house CAD capability that is especially designed for the mill shop industry, the best way to spread the word is to directly contact the architects and interior designers. Only one or two trophy homes in the targeted $3-$15 million range can keep a mill shop fully occupied for months. Advertising is not expected to become necessary. However, joining the ASID and the CSA as an “Industry Partner” is an excellent way to network with design professionals. Also it would be helpful to get listed in the Resource Directories of each of these organizations.
It is planned that Comgate will establish strategic alliances with several mill shops who will mutually profit from an association. Exact drawings and cut lists can be given to other mill shops when subcontracting the more mundane items, leaving the more challenging work for Comgate. Even the data on disk to program CNC equipment at the subcontracting mill shop can accompany the exact drawings, allowing a fast and accurate set up. Profits from work performed through these alliances has not been considered in preparing this business plan, but when the plan is updated in 2001, there should be enough historical experience with these alliances to include this aspect in projections.
The table below outlines the strategic milestones for Comgate for the coming years.
Milestones | |||||
Milestone | Start Date | End Date | Budget | Manager | Department |
Complete Administrative Control Changes | 10/1/2000 | 11/30/2000 | $500 | A. Comins | Management |
Complete Procedures Manual | 10/1/2000 | 10/1/2001 | $0 | A. Comins | Management |
Join ASID and CSA | 11/1/2000 | 12/30/2000 | $4,000 | A. Comins | Management |
Get Certification by AWI | 11/1/2000 | 11/1/2001 | $1,000 | A. Comins | Management |
Hire Production Manager | 4/1/2001 | 5/1/2001 | $60,000 | A. Comins | Management |
Totals | $65,500 |
Like other mill shops with less than $1 million in sales, the owner of Comgate has had to wear several hats and shuttle back and forth between production, site visits, the office, and client calls. The company is in the process of making major strides in establishing a more classical managerial structure, as the following chapters will explain.
Ideally, the owner of the mill shop should have three major functions:
A plant manager should be responsible to see that the production staff and the available machinery work together at maximum efficiency. He needs to anticipate questions, answer them, and keep production rolling with a minimum of waste and a minimum of down-time. The CEO is now doing that when he is available.
An office manager should handle all the administration and coordinate well between the plant manager and the CEO. A need for the plant manager is well recognized by management, but a certain financial position needs to be reached to afford him. This position is planned to start in April, 2001, which will help substantially to free up needed time for the CEO to carry out the above listed major duties.
The office manager has, until recently, been performing the bookkeeping. This has taken up too much of his time, plus he is not trained in accounting practices. It has taken until July to get tax filing done, and at a heavy cost in accountant’s charges. This has since been handed over to J&R Associates. Procedures have been set up which will serve as a beginning for a procedures manual. A courier is sent each week from J&R Associates to track all costs associated with a job. This is absolutely essential because without this reliable feedback, one can never be sure how accurate the job cost estimates are when putting together a bid. The handling of inventory is also dealt with in the procedures as well as paperwork flow to insure correctness in billing. A costing/pricing scheme has been devised to assure correct all-in costing and to insure that a fair profit margin is built in to the pricing.
The recent addition of a contract CAD man, has helped to ease the work load on the CEO, as there are fewer questions from production staff as a result of the very accurate drawings and cut lists.
The management team, after the addition of the production manager in April, 2001, should be complete until a higher level of sales has been reached. At a level of approximately $1.5 million in sales, Comgate should add a project manager.
At the present time, a production manager is needed. Without him, the CEO cannot devote enough of his time to CEO issues (see Chapter on Organization Structure). It would have been ideal to promote one of the production staff to that position, but none of the present four workers is suitable for the position. It is hoped that a production manager can be found by April, 2001. His salary and benefits have been provided for in the projections.
Another gap is project manager. The company needs to grow to be able to afford him. The project manager would follow everything from the point of “hand-off” (once the bid has been won) through conclusion. He would confer with architects, handle change orders, examine every facet: warranties, retainage, final payment, punch lists, access to premises, lifts and hoists, check everything. At the moment the CEO is doing this as best he can with the many other matters on his plate. The position of project manager becomes increasingly important when the company has multiple projects.
Milling Costs Personnel: As of the writing of this plan, sales orders are strong and all four production staff are expected to be fully employed on a 40-hour/week basis. For the period of January through September, an average monthly labor amount will be entered based on the totals from the financials as of the end of September. A production manager/project manager has been projected beginning April, 2001, at an annual salary of $60,000 (see Chapter on Management Team Gaps).
Sales and Marketing: Andrew Comins’s salary of $40,000 is entered here although he is general manager/owner. He will continue to wear several hats until a plant manager and a project manager can be found.
General and Administrative Personnel: The office manager, **Stacy Greer, earns $34,320 per year.
** Names have been changed for confidentiality.
Personnel Plan | |||
2000 | 2001 | 2002 | |
Production Personnel | |||
**David Malkinson | $39,066 | $41,604 | $41,604 |
**Simon Lang | $37,335 | $34,680 | $34,680 |
**Brian Mason | $8,670 | $34,680 | $34,680 |
Production/Project Manager | $0 | $45,000 | $60,000 |
**Charles Davidson | $38,355 | $38,760 | $38,760 |
Subtotal | $123,426 | $194,724 | $209,724 |
Sales and Marketing Personnel | |||
Andrew Comins | $39,996 | $40,000 | $40,000 |
Other | $0 | $0 | $0 |
Subtotal | $39,996 | $40,000 | $40,000 |
General and Administrative Personnel | |||
**Stacy Greer | $34,320 | $34,320 | $34,320 |
Other | $0 | $0 | $0 |
Subtotal | $34,320 | $34,320 | $34,320 |
Other Personnel | |||
Name or Title | $0 | $0 | $0 |
Other | $0 | $0 | $0 |
Subtotal | $0 | $0 | $0 |
Total People | 6 | 7 | 7 |
Total Payroll | $197,742 | $269,044 | $284,044 |
Due to initial losses, resulting in a need to resort to shareholder loans, cash flow pressures caused accounts payable to be stretched out to 30 days and more. The financial projections have reduced this to 10 days for the year 2001 and beyond, in hopes of filling this gap with increased bank lines of credit. This would allow the company to take advantage of trade discounts. Failing to do so is expensive, as it becomes the most expensive form of credit (approximately 36% p.a.).
Personnel Burden: The hourly basic wage rates were totalled ($241.73) as were the total after FICA, State Unemployment, FUTA and health benefits ($291.66). The difference came to 21%. The actual burden of 21.95% is from the September, 2000 financials.
Interest Rates: Looking at the various rates in effect (see Cash flow Section), 9% was taken as an average rate.
Payment Days: In order to show the cash flow effect we elected to assume 10 days so as to take advantage of all trade discounts. This change from 30 days to 10 days will take place in 2001. The cost of not taking the discounts is nearly 36% per annum. It is preferred to finance negative cash flow through bank lines of credit.
Collection Days: Collection days, after netting out down-payments with orders, average approximately 30 days.
Tax Rate: The tax rate reflects the present sliding scale:
Profits | Federal | State |
$0 to $50,000 | 15% | 9.5% |
$50,000 to $75,000 | 25% | 9.5% |
$75,000 to $100,000 | 34% | 9.5% |
$100,000 to $335,000 | 39% | 9.5% |
$335,000 and up | 34% | 9.5% |
General Assumptions | |||
2000 | 2001 | 2002 | |
Plan Month | 1 | 2 | 3 |
Current Interest Rate | 10.00% | 10.00% | 10.00% |
Long-term Interest Rate | 9.00% | 9.00% | 9.00% |
Tax Rate | 25.42% | 25.00% | 25.42% |
Other | 0 | 0 | 0 |
The break-even chart is not suitable for multiple custom woodwork items. However, if we use pilasters as an example, the unit price is $316.96 and the unit cost is $44.09 (material cost). If we assume that all plant labor is fixed, whether there is work for the staff or not, it would be necessary to produce and sell 136 pilasters per month. According to best estimates, one pilaster takes four man hours. With 8,000 man hours per year (666 man hours monthly) it is possible to produce 167 pilasters. So, to break even on pilasters alone it would be necessary to work at 81% of capacity.
If, instead, we take cabinets, and use a cost price of $57.66 per Linear Foot LF and a price of $194.76 per LF it would be necessary to produce 270 linear feet of cabinets monthly. At 1.65 man hours per LF, it would be possible to produce 404 linear feet. Break-even on cabinets needs 67% of capacity.
Doors (cope and stick) cost $130.53 per unit and sell for $592.35. Each door takes five hours to produce. It would require 80 doors to break even, out of a maximum capacity of 133 doors. This would be 60% of capacity to break even.
All other things being equal, based on the above analysis, it would be more profitable to produce doors than cabinets, and likewise more profitable to produce cabinets than pilasters.
In the calculations above, it has been assumed that there is no problem in keeping the six site carpenters working full time. The net profit from this activity has been deducted from fixed expenses. If, instead, we assume that the company makes no money on-site services, the monthly expenses would be $89,925 higher. In this case, it would take 96 doors monthly, rather than only 80, to break even.
Break-even Analysis | |
Monthly Units Break-even | 521 |
Monthly Revenue Break-even | $31,432 |
Assumptions: | |
Average Per-Unit Revenue | $60.28 |
Average Per-Unit Variable Cost | $26.52 |
Estimated Monthly Fixed Cost | $17,602 |
As mentioned in the chapter on Company History, a more in-depth analysis of past performance is listed on an Excel spreadsheet in Appendix A. The top two rows summarize 1999 and 1998 financial sheet information in an easy to read format. These categories of information are then used to calculate important ratios to compare Comgate results will industry averages. The ratios have been organized into five main groups: Liquidity, Safety, Profitability, Balance Sheet, and Operations Management. Brief comments are made below concerning these ratio comparisons:
Liquidity: Liquidity decreased from 1.27 in 1998 to 1.19, due entirely to a large project on Orange. The large commercial contractor involved took far longer to pay than was anticipated. The project has since been completed and all outstandings have been settled. Despite the 1.19 current ratio for 1999, it is still superior to the average of 1.01 for all AWI members and fairly close to those members in the Northeast Region (1.24).
Safety: The debt-to-equity ratios have been calculated reflecting certain adjustments. Owner loans have been removed from long-term liabilities and placed into equity. The Debt/Equity ratio for 1999, of 11 to 1, is far higher than the average. It reflects the early start-up losses; however, the leverage improved remarkably from 1998, when it was 25 to 1.
Profitability: The gross margins are substantially higher than the average, which reflects the higher-end nature of the company’s work. Operating profit saw a healthy increase from 6.12% in 1998, to 9.67% in 1999. This is not as good as the operating results of the top 25% of AWI members (22.4%) but still more than double the margin for all AWI members (4.2%).
Balance Sheet: The ratio of Sales to Net Fixed Assets is a good measure of efficiency. Comgate’s ratio of 9.53 is not only a substantial increase over 1998, but is nearly equal to the top 25% of all AWI member results. Obviously the very high operating results to equity ratio merely reflects the narrow equity situation. The same can be said for the fixed assets to equity ratio. The A/R turnover (in days) as well as the A/P days turnover were slowed by the above-mentioned large Orange project. The low inventory days turnover reflects the proportionally lower material content of the high-end business.
Operations Management: The most remarkable ratio in this group of ratios is the very high percentage of non-plant produced sales to total sales. This reflects the revenue from outside on-site subcontracted carpenters and installers.
Other Expenses (CoGS): There are several expenses that are included here:
These CoGS expenses come to to $3,088.55 (January-August) and $5,538.55 per month after August, 2000. Beginning January, 2001 the total grows to $7,538 due to the increased space and rent.
Sales and Marketing Expenses:
General & Administrative:
Pro Forma Profit and Loss | |||
2000 | 2001 | 2002 | |
Sales | $793,566 | $1,152,876 | $1,196,815 |
Direct Cost of Sales | $349,165 | $522,813 | $534,584 |
Production Payroll | $123,426 | $194,724 | $209,724 |
Other | $46,868 | $90,468 | $90,468 |
Total Cost of Sales | $519,459 | $808,005 | $834,776 |
Gross Margin | $274,108 | $344,871 | $362,039 |
Gross Margin % | 34.54% | 29.91% | 30.25% |
Operating Expenses | |||
Sales and Marketing Expenses | |||
Sales and Marketing Payroll | $39,996 | $40,000 | $40,000 |
Advertising/Promotion | $0 | $0 | $0 |
Travel | $750 | $1,200 | $1,200 |
Miscellaneous | $0 | $0 | $0 |
Total Sales and Marketing Expenses | $40,746 | $41,200 | $41,200 |
Sales and Marketing % | 5.13% | 3.57% | 3.44% |
General and Administrative Expenses | |||
General and Administrative Payroll | $34,320 | $34,320 | $34,320 |
Sales and Marketing and Other Expenses | $0 | $0 | $0 |
Depreciation | $26,640 | $26,640 | $26,640 |
Depreciation | $0 | $0 | $0 |
Depreciation | $5,472 | $5,472 | $5,472 |
Depreciation | $324 | $324 | $324 |
Depreciation | $0 | $0 | $0 |
Depreciation | $5,400 | $5,400 | $5,400 |
Fees and Permits | $4,680 | $4,680 | $4,680 |
Office Supplies | $4,152 | $4,152 | $4,152 |
Bank Charges | $480 | $480 | $480 |
Rent | $2,352 | $2,352 | $2,352 |
Payroll Taxes | $43,404 | $59,055 | $62,348 |
Other General and Administrative Expenses | $0 | $0 | $0 |
Total General and Administrative Expenses | $127,224 | $142,875 | $146,168 |
General and Administrative % | 16.03% | 12.39% | 12.21% |
Other Expenses: | |||
Other Payroll | $0 | $0 | $0 |
Consultants | $0 | $0 | $0 |
Contract/Consultants | $36,725 | $27,400 | $27,400 |
CAD Contract Employee | $6,532 | $19,600 | $19,600 |
Total Other Expenses | $43,257 | $47,000 | $47,000 |
Other % | 5.45% | 4.08% | 3.93% |
Total Operating Expenses | $211,227 | $231,075 | $234,368 |
Profit Before Interest and Taxes | $62,880 | $113,796 | $127,672 |
EBITDA | $89,520 | $140,436 | $154,312 |
Interest Expense | $17,461 | $18,536 | $14,255 |
Taxes Incurred | $11,480 | $23,815 | $28,827 |
Net Profit | $33,940 | $71,445 | $84,590 |
Net Profit/Sales | 4.28% | 6.20% | 7.07% |
Fixed Assets:
In the first nine months of 2000, $110,412 was added in new machinery and equipment.
Increase (decrease) Other Liabilities:
At the end of 1999, there was $49,884 outstanding in shareholder loans. After netting out loans due from shareholders amounting to $20,396, loans from shareholders were reduced by $8,126.23. No further changes in years 2001 and 2002.
Change in Other Short-term assets:
At the end of 1999, there were only $1,465 in other short-term assets. This has been increased due to pre-paid insurance, and reflected in April, 2000 of $2,855. No change in 2001 or 2002.
Long-term Borrowing (repayment):
Pro Forma Cash Flow | |||
2000 | 2001 | 2002 | |
Cash Received | |||
Cash from Operations | |||
Cash Sales | $0 | $0 | $0 |
Cash from Receivables | $767,853 | $1,068,195 | $1,186,460 |
Subtotal Cash from Operations | $767,853 | $1,068,195 | $1,186,460 |
Additional Cash Received | |||
Sales Tax, VAT, HST/GST Received | $0 | $0 | $0 |
New Current Borrowing | $0 | $0 | $0 |
New Other Liabilities (interest-free) | $0 | $0 | $0 |
New Long-term Liabilities | $54,072 | $0 | $0 |
Sales of Other Current Assets | $0 | $0 | $0 |
Sales of Long-term Assets | $0 | $0 | $0 |
New Investment Received | $108,000 | $0 | $0 |
Subtotal Cash Received | $929,925 | $1,068,195 | $1,186,460 |
Expenditures | 2000 | 2001 | 2002 |
Expenditures from Operations | |||
Cash Spending | $197,742 | $269,044 | $284,044 |
Bill Payments | $570,888 | $806,874 | $803,670 |
Subtotal Spent on Operations | $768,630 | $1,075,918 | $1,087,714 |
Additional Cash Spent | |||
Sales Tax, VAT, HST/GST Paid Out | $0 | $0 | $0 |
Principal Repayment of Current Borrowing | $1,200 | $1,000 | $20,000 |
Other Liabilities Principal Repayment | $8,126 | $0 | $0 |
Long-term Liabilities Principal Repayment | $19,100 | $7,000 | $64,800 |
Purchase Other Current Assets | $2,855 | $0 | $0 |
Purchase Long-term Assets | $110,412 | $0 | $0 |
Dividends | $5,992 | $0 | $0 |
Subtotal Cash Spent | $916,315 | $1,083,918 | $1,172,514 |
Net Cash Flow | $13,610 | ($15,723) | $13,945 |
Cash Balance | $17,598 | $1,876 | $15,821 |
The following table represents Comgate’s balance sheet.
Pro Forma Balance Sheet | |||
2000 | 2001 | 2002 | |
Assets | |||
Current Assets | |||
Cash | $17,598 | $1,876 | $15,821 |
Accounts Receivable | $187,026 | $271,707 | $282,063 |
Inventory | $47,724 | $71,458 | $73,067 |
Other Current Assets | $2,855 | $2,855 | $2,855 |
Total Current Assets | $255,203 | $347,897 | $373,806 |
Long-term Assets | |||
Long-term Assets | $250,615 | $250,615 | $250,615 |
Accumulated Depreciation | $131,533 | $158,173 | $184,813 |
Total Long-term Assets | $119,082 | $92,442 | $65,802 |
Total Assets | $374,285 | $440,339 | $439,608 |
Liabilities and Capital | 2000 | 2001 | 2002 |
Current Liabilities | |||
Accounts Payable | $63,924 | $66,533 | $66,012 |
Current Borrowing | $68,277 | $67,277 | $47,277 |
Other Current Liabilities | $1,874 | $1,874 | $1,874 |
Subtotal Current Liabilities | $134,075 | $135,684 | $115,163 |
Long-term Liabilities | $134,151 | $127,151 | $62,351 |
Total Liabilities | $268,226 | $262,835 | $177,514 |
Paid-in Capital | $110,000 | $110,000 | $110,000 |
Retained Earnings | ($37,881) | ($3,941) | $67,504 |
Earnings | $33,940 | $71,445 | $84,590 |
Total Capital | $106,059 | $177,504 | $262,094 |
Total Liabilities and Capital | $374,285 | $440,339 | $439,608 |
Net Worth | $106,059 | $177,504 | $262,094 |
The table below shows some of the more important ratios. The table also includes business industry data for Standard Information Code (SIC) 2541, wood partitions and fixtures.
Ratio Analysis | ||||
2000 | 2001 | 2002 | Industry Profile | |
Sales Growth | 43.54% | 45.28% | 3.81% | 4.70% |
Percent of Total Assets | ||||
Accounts Receivable | 49.97% | 61.70% | 64.16% | 27.20% |
Inventory | 12.75% | 16.23% | 16.62% | 28.50% |
Other Current Assets | 0.76% | 0.65% | 0.65% | 18.00% |
Total Current Assets | 68.18% | 79.01% | 85.03% | 73.70% |
Long-term Assets | 31.82% | 20.99% | 14.97% | 26.30% |
Total Assets | 100.00% | 100.00% | 100.00% | 100.00% |
Current Liabilities | 35.82% | 30.81% | 26.20% | 42.00% |
Long-term Liabilities | 35.84% | 28.88% | 14.18% | 14.80% |
Total Liabilities | 71.66% | 59.69% | 40.38% | 56.80% |
Net Worth | 28.34% | 40.31% | 59.62% | 43.20% |
Percent of Sales | ||||
Sales | 100.00% | 100.00% | 100.00% | 100.00% |
Gross Margin | 34.54% | 29.91% | 30.25% | 33.80% |
Selling, General & Administrative Expenses | 30.25% | 23.73% | 23.22% | 19.40% |
Advertising Expenses | 0.00% | 0.00% | 0.00% | 1.50% |
Profit Before Interest and Taxes | 7.92% | 9.87% | 10.67% | 2.00% |
Main Ratios | ||||
Current | 1.90 | 2.56 | 3.25 | 1.92 |
Quick | 1.55 | 2.04 | 2.61 | 1.00 |
Total Debt to Total Assets | 71.66% | 59.69% | 40.38% | 56.80% |
Pre-tax Return on Net Worth | 42.83% | 53.67% | 43.27% | 5.80% |
Pre-tax Return on Assets | 12.14% | 21.63% | 25.80% | 13.50% |
Additional Ratios | 2000 | 2001 | 2002 | |
Net Profit Margin | 4.28% | 6.20% | 7.07% | n.a |
Return on Equity | 32.00% | 40.25% | 32.27% | n.a |
Activity Ratios | ||||
Accounts Receivable Turnover | 4.24 | 4.24 | 4.24 | n.a |
Collection Days | 59 | 73 | 84 | n.a |
Inventory Turnover | 10.91 | 8.77 | 7.40 | n.a |
Accounts Payable Turnover | 9.02 | 12.17 | 12.17 | n.a |
Payment Days | 30 | 29 | 30 | n.a |
Total Asset Turnover | 2.12 | 2.62 | 2.72 | n.a |
Debt Ratios | ||||
Debt to Net Worth | 2.53 | 1.48 | 0.68 | n.a |
Current Liab. to Liab. | 0.50 | 0.52 | 0.65 | n.a |
Liquidity Ratios | ||||
Net Working Capital | $121,128 | $212,213 | $258,643 | n.a |
Interest Coverage | 3.60 | 6.14 | 8.96 | n.a |
Additional Ratios | ||||
Assets to Sales | 0.47 | 0.38 | 0.37 | n.a |
Current Debt/Total Assets | 36% | 31% | 26% | n.a |
Acid Test | 0.15 | 0.03 | 0.16 | n.a |
Sales/Net Worth | 7.48 | 6.49 | 4.57 | n.a |
Dividend Payout | 0.18 | 0.00 | 0.00 | n.a |
Sales Forecast | |||||||||||||
Jan | Feb | Mar | Apr | May | Jun | Jul | Aug | Sep | Oct | Nov | Dec | ||
Unit Sales | |||||||||||||
Crown Molding | 0% | 357 | 357 | 357 | 357 | 357 | 357 | 357 | 357 | 357 | 342 | 342 | 342 |
Pilasters | 0% | 17 | 17 | 17 | 17 | 17 | 17 | 17 | 17 | 17 | 22 | 22 | 22 |
Haunched Passage Doors (Paint Grade) | 0% | 17 | 17 | 17 | 17 | 17 | 17 | 17 | 17 | 17 | 27 | 27 | 27 |
Haunched Passage Doors (Stain Grade) | 0% | 17 | 17 | 17 | 17 | 17 | 17 | 17 | 17 | 17 | 27 | 27 | 27 |
Cabinets | 0% | 40 | 40 | 40 | 40 | 40 | 40 | 40 | 40 | 40 | 77 | 77 | 77 |
Site Work | 0% | 523 | 523 | 523 | 523 | 523 | 523 | 523 | 523 | 523 | 980 | 980 | 980 |
Other | 0% | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
Total Unit Sales | 971 | 971 | 971 | 971 | 971 | 971 | 971 | 971 | 971 | 1,475 | 1,475 | 1,475 | |
Unit Prices | Jan | Feb | Mar | Apr | May | Jun | Jul | Aug | Sep | Oct | Nov | Dec | |
Crown Molding | $4.20 | $4.00 | $4.00 | $4.00 | $4.00 | $4.00 | $4.00 | $4.00 | $4.00 | $4.00 | $4.00 | $4.00 | |
Pilasters | $316.96 | $316.96 | $316.96 | $316.96 | $316.96 | $316.96 | $316.96 | $316.96 | $316.96 | $316.96 | $316.96 | $316.96 | |
Haunched Passage Doors (Paint Grade) | $592.35 | $592.35 | $592.35 | $592.35 | $592.35 | $592.35 | $592.35 | $592.35 | $592.35 | $592.35 | $592.35 | $592.35 | |
Haunched Passage Doors (Stain Grade) | $783.09 | $783.09 | $783.09 | $783.09 | $783.09 | $783.09 | $783.09 | $783.09 | $783.09 | $783.09 | $783.09 | $783.09 | |
Cabinets | $194.76 | $194.76 | $194.76 | $194.76 | $194.76 | $194.76 | $194.76 | $194.76 | $194.76 | $194.76 | $194.76 | $194.76 | |
Site Work | $35.33 | $35.33 | $35.33 | $35.33 | $35.33 | $35.33 | $35.33 | $35.33 | $35.33 | $35.33 | $35.33 | $35.33 | |
Other | $0.00 | $0.00 | $0.00 | $0.00 | $0.00 | $0.00 | $0.00 | $0.00 | $0.00 | $0.00 | $0.00 | $0.00 | |
Sales | |||||||||||||
Crown Molding | $1,499 | $1,428 | $1,428 | $1,428 | $1,428 | $1,428 | $1,428 | $1,428 | $1,428 | $1,368 | $1,368 | $1,368 | |
Pilasters | $5,388 | $5,388 | $5,388 | $5,388 | $5,388 | $5,388 | $5,388 | $5,388 | $5,388 | $6,973 | $6,973 | $6,973 | |
Haunched Passage Doors (Paint Grade) | $10,070 | $10,070 | $10,070 | $10,070 | $10,070 | $10,070 | $10,070 | $10,070 | $10,070 | $15,993 | $15,993 | $15,993 | |
Haunched Passage Doors (Stain Grade) | $13,313 | $13,313 | $13,313 | $13,313 | $13,313 | $13,313 | $13,313 | $13,313 | $13,313 | $21,143 | $21,143 | $21,143 | |
Cabinets | $7,790 | $7,790 | $7,790 | $7,790 | $7,790 | $7,790 | $7,790 | $7,790 | $7,790 | $14,997 | $14,997 | $14,997 | |
Site Work | $18,478 | $18,478 | $18,478 | $18,478 | $18,478 | $18,478 | $18,478 | $18,478 | $18,478 | $34,623 | $34,623 | $34,623 | |
Other | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | |
Total Sales | $56,538 | $56,467 | $56,467 | $56,467 | $56,467 | $56,467 | $56,467 | $56,467 | $56,467 | $95,098 | $95,098 | $95,098 | |
Direct Unit Costs | Jan | Feb | Mar | Apr | May | Jun | Jul | Aug | Sep | Oct | Nov | Dec | |
Crown Molding | 0.00% | $2.06 | $2.06 | $2.06 | $2.06 | $2.06 | $2.06 | $2.06 | $2.06 | $2.06 | $1.82 | $1.82 | $1.82 |
Pilasters | 0.00% | $50.04 | $50.04 | $50.04 | $50.04 | $50.04 | $50.04 | $50.04 | $50.04 | $50.04 | $44.09 | $44.09 | $44.09 |
Haunched Passage Doors (Paint Grade) | 0.00% | $148.15 | $148.15 | $148.15 | $148.15 | $148.15 | $148.15 | $148.15 | $148.15 | $148.15 | $130.53 | $130.53 | $130.53 |
Haunched Passage Doors (Stain Grade) | 0.00% | $281.34 | $281.34 | $281.34 | $281.34 | $281.34 | $281.34 | $281.34 | $281.34 | $281.34 | $247.88 | $247.88 | $247.88 |
Cabinets | 0.00% | $65.44 | $65.44 | $65.44 | $65.44 | $65.44 | $65.44 | $65.44 | $65.44 | $65.44 | $57.66 | $57.66 | $57.66 |
Site Work | 0.00% | $24.53 | $24.53 | $24.53 | $24.53 | $24.53 | $24.53 | $24.53 | $24.53 | $24.53 | $27.69 | $27.69 | $27.69 |
Other | 0.00% | $0.00 | $0.00 | $0.00 | $0.00 | $0.00 | $0.00 | $0.00 | $0.00 | $0.00 | $0.00 | $0.00 | $0.00 |
Direct Cost of Sales | |||||||||||||
Crown Molding | $735 | $735 | $735 | $735 | $735 | $735 | $735 | $735 | $735 | $622 | $622 | $622 | |
Pilasters | $851 | $851 | $851 | $851 | $851 | $851 | $851 | $851 | $851 | $970 | $970 | $970 | |
Haunched Passage Doors (Paint Grade) | $2,519 | $2,519 | $2,519 | $2,519 | $2,519 | $2,519 | $2,519 | $2,519 | $2,519 | $3,524 | $3,524 | $3,524 | |
Haunched Passage Doors (Stain Grade) | $4,783 | $4,783 | $4,783 | $4,783 | $4,783 | $4,783 | $4,783 | $4,783 | $4,783 | $6,693 | $6,693 | $6,693 | |
Cabinets | $2,618 | $2,618 | $2,618 | $2,618 | $2,618 | $2,618 | $2,618 | $2,618 | $2,618 | $4,440 | $4,440 | $4,440 | |
Site Work | $12,829 | $12,829 | $12,829 | $12,829 | $12,829 | $12,829 | $12,829 | $12,829 | $12,829 | $27,136 | $27,136 | $27,136 | |
Other | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | |
Subtotal Direct Cost of Sales | $24,334 | $24,334 | $24,334 | $24,334 | $24,334 | $24,334 | $24,334 | $24,334 | $24,334 | $43,386 | $43,386 | $43,386 |
Personnel Plan | |||||||||||||
Jan | Feb | Mar | Apr | May | Jun | Jul | Aug | Sep | Oct | Nov | Dec | ||
Production Personnel | |||||||||||||
**David Malkinson | $3,185 | $3,185 | $3,185 | $3,185 | $3,185 | $3,185 | $3,185 | $3,185 | $3,185 | $3,467 | $3,467 | $3,467 | |
**Simon Lang | $3,185 | $3,185 | $3,185 | $3,185 | $3,185 | $3,185 | $3,185 | $3,185 | $3,185 | $2,890 | $2,890 | $2,890 | |
**Brian Mason | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $2,890 | $2,890 | $2,890 | |
Production/Project Manager | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | |
**Charles Davidson | $3,185 | $3,185 | $3,185 | $3,185 | $3,185 | $3,185 | $3,185 | $3,185 | $3,185 | $3,230 | $3,230 | $3,230 | |
Subtotal | $9,555 | $9,555 | $9,555 | $9,555 | $9,555 | $9,555 | $9,555 | $9,555 | $9,555 | $12,477 | $12,477 | $12,477 | |
Sales and Marketing Personnel | |||||||||||||
Andrew Comins | $3,333 | $3,333 | $3,333 | $3,333 | $3,333 | $3,333 | $3,333 | $3,333 | $3,333 | $3,333 | $3,333 | $3,333 | |
Other | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | |
Subtotal | $3,333 | $3,333 | $3,333 | $3,333 | $3,333 | $3,333 | $3,333 | $3,333 | $3,333 | $3,333 | $3,333 | $3,333 | |
General and Administrative Personnel | |||||||||||||
**Stacy Greer | $2,860 | $2,860 | $2,860 | $2,860 | $2,860 | $2,860 | $2,860 | $2,860 | $2,860 | $2,860 | $2,860 | $2,860 | |
Other | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | |
Subtotal | $2,860 | $2,860 | $2,860 | $2,860 | $2,860 | $2,860 | $2,860 | $2,860 | $2,860 | $2,860 | $2,860 | $2,860 | |
Other Personnel | |||||||||||||
Name or Title | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | |
Other | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | |
Subtotal | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | |
Total People | 6 | 6 | 6 | 6 | 6 | 6 | 6 | 6 | 6 | 6 | 6 | 6 | |
Total Payroll | $15,748 | $15,748 | $15,748 | $15,748 | $15,748 | $15,748 | $15,748 | $15,748 | $15,748 | $18,670 | $18,670 | $18,670 |
General Assumptions | |||||||||||||
Jan | Feb | Mar | Apr | May | Jun | Jul | Aug | Sep | Oct | Nov | Dec | ||
Plan Month | 1 | 2 | 3 | 4 | 5 | 6 | 7 | 8 | 9 | 10 | 11 | 12 | |
Current Interest Rate | 10.00% | 10.00% | 10.00% | 10.00% | 10.00% | 10.00% | 10.00% | 10.00% | 10.00% | 10.00% | 10.00% | 10.00% | |
Long-term Interest Rate | 9.00% | 9.00% | 9.00% | 9.00% | 9.00% | 9.00% | 9.00% | 9.00% | 9.00% | 9.00% | 9.00% | 9.00% | |
Tax Rate | 30.00% | 25.00% | 25.00% | 25.00% | 25.00% | 25.00% | 25.00% | 25.00% | 25.00% | 25.00% | 25.00% | 25.00% | |
Other | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
Pro Forma Profit and Loss | |||||||||||||
Jan | Feb | Mar | Apr | May | Jun | Jul | Aug | Sep | Oct | Nov | Dec | ||
Sales | $56,538 | $56,467 | $56,467 | $56,467 | $56,467 | $56,467 | $56,467 | $56,467 | $56,467 | $95,098 | $95,098 | $95,098 | |
Direct Cost of Sales | $24,334 | $24,334 | $24,334 | $24,334 | $24,334 | $24,334 | $24,334 | $24,334 | $24,334 | $43,386 | $43,386 | $43,386 | |
Production Payroll | $9,555 | $9,555 | $9,555 | $9,555 | $9,555 | $9,555 | $9,555 | $9,555 | $9,555 | $12,477 | $12,477 | $12,477 | |
Other | $3,089 | $3,089 | $3,089 | $3,089 | $3,089 | $3,089 | $3,089 | $3,089 | $5,539 | $5,539 | $5,539 | $5,539 | |
Total Cost of Sales | $36,978 | $36,978 | $36,978 | $36,978 | $36,978 | $36,978 | $36,978 | $36,978 | $39,428 | $61,402 | $61,402 | $61,402 | |
Gross Margin | $19,560 | $19,489 | $19,489 | $19,489 | $19,489 | $19,489 | $19,489 | $19,489 | $17,039 | $33,696 | $33,696 | $33,696 | |
Gross Margin % | 34.60% | 34.51% | 34.51% | 34.51% | 34.51% | 34.51% | 34.51% | 34.51% | 30.17% | 35.43% | 35.43% | 35.43% | |
Operating Expenses | |||||||||||||
Sales and Marketing Expenses | |||||||||||||
Sales and Marketing Payroll | $3,333 | $3,333 | $3,333 | $3,333 | $3,333 | $3,333 | $3,333 | $3,333 | $3,333 | $3,333 | $3,333 | $3,333 | |
Advertising/Promotion | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | |
Travel | $50 | $50 | $50 | $50 | $50 | $50 | $50 | $50 | $50 | $100 | $100 | $100 | |
Miscellaneous | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | |
Total Sales and Marketing Expenses | $3,383 | $3,383 | $3,383 | $3,383 | $3,383 | $3,383 | $3,383 | $3,383 | $3,383 | $3,433 | $3,433 | $3,433 | |
Sales and Marketing % | 5.98% | 5.99% | 5.99% | 5.99% | 5.99% | 5.99% | 5.99% | 5.99% | 5.99% | 3.61% | 3.61% | 3.61% | |
General and Administrative Expenses | |||||||||||||
General and Administrative Payroll | $2,860 | $2,860 | $2,860 | $2,860 | $2,860 | $2,860 | $2,860 | $2,860 | $2,860 | $2,860 | $2,860 | $2,860 | |
Sales and Marketing and Other Expenses | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | |
Depreciation | $2,220 | $2,220 | $2,220 | $2,220 | $2,220 | $2,220 | $2,220 | $2,220 | $2,220 | $2,220 | $2,220 | $2,220 | |
Depreciation | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | |
Depreciation | $456 | $456 | $456 | $456 | $456 | $456 | $456 | $456 | $456 | $456 | $456 | $456 | |
Depreciation | $27 | $27 | $27 | $27 | $27 | $27 | $27 | $27 | $27 | $27 | $27 | $27 | |
Depreciation | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | |
Depreciation | $450 | $450 | $450 | $450 | $450 | $450 | $450 | $450 | $450 | $450 | $450 | $450 | |
Fees and Permits | $390 | $390 | $390 | $390 | $390 | $390 | $390 | $390 | $390 | $390 | $390 | $390 | |
Office Supplies | $346 | $346 | $346 | $346 | $346 | $346 | $346 | $346 | $346 | $346 | $346 | $346 | |
Bank Charges | $40 | $40 | $40 | $40 | $40 | $40 | $40 | $40 | $40 | $40 | $40 | $40 | |
Rent | $196 | $196 | $196 | $196 | $196 | $196 | $196 | $196 | $196 | $196 | $196 | $196 | |
Payroll Taxes | 22% | $3,457 | $3,457 | $3,457 | $3,457 | $3,457 | $3,457 | $3,457 | $3,457 | $3,457 | $4,098 | $4,098 | $4,098 |
Other General and Administrative Expenses | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | |
Total General and Administrative Expenses | $10,442 | $10,442 | $10,442 | $10,442 | $10,442 | $10,442 | $10,442 | $10,442 | $10,442 | $11,083 | $11,083 | $11,083 | |
General and Administrative % | 18.47% | 18.49% | 18.49% | 18.49% | 18.49% | 18.49% | 18.49% | 18.49% | 18.49% | 11.65% | 11.65% | 11.65% | |
Other Expenses: | |||||||||||||
Other Payroll | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | |
Consultants | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | |
Contract/Consultants | $1,925 | $1,925 | $1,925 | $1,925 | $1,925 | $3,625 | $1,925 | $1,925 | $3,725 | $5,550 | $5,150 | $5,200 | |
CAD Contract Employee | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $1,633 | $1,633 | $1,633 | $1,633 | |
Total Other Expenses | $1,925 | $1,925 | $1,925 | $1,925 | $1,925 | $3,625 | $1,925 | $1,925 | $5,358 | $7,183 | $6,783 | $6,833 | |
Other % | 3.40% | 3.41% | 3.41% | 3.41% | 3.41% | 6.42% | 3.41% | 3.41% | 9.49% | 7.55% | 7.13% | 7.19% | |
Total Operating Expenses | $15,750 | $15,750 | $15,750 | $15,750 | $15,750 | $17,450 | $15,750 | $15,750 | $19,183 | $21,699 | $21,299 | $21,349 | |
Profit Before Interest and Taxes | $3,810 | $3,739 | $3,739 | $3,739 | $3,739 | $2,039 | $3,739 | $3,739 | ($2,144) | $11,997 | $12,397 | $12,347 | |
EBITDA | $6,030 | $5,959 | $5,959 | $5,959 | $5,959 | $4,259 | $5,959 | $5,959 | $76 | $14,217 | $14,617 | $14,567 | |
Interest Expense | $1,313 | $1,303 | $1,293 | $1,283 | $1,274 | $1,264 | $1,669 | $1,650 | $1,631 | $1,612 | $1,594 | $1,575 | |
Taxes Incurred | $749 | $609 | $611 | $614 | $616 | $194 | $518 | $522 | ($944) | $2,596 | $2,701 | $2,693 | |
Net Profit | $1,748 | $1,827 | $1,834 | $1,842 | $1,849 | $581 | $1,553 | $1,567 | ($2,831) | $7,789 | $8,103 | $8,079 | |
Net Profit/Sales | 3.09% | 3.24% | 3.25% | 3.26% | 3.27% | 1.03% | 2.75% | 2.77% | -5.01% | 8.19% | 8.52% | 8.50% |
Pro Forma Cash Flow | |||||||||||||
Jan | Feb | Mar | Apr | May | Jun | Jul | Aug | Sep | Oct | Nov | Dec | ||
Cash Received | |||||||||||||
Cash from Operations | |||||||||||||
Cash Sales | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | |
Cash from Receivables | $80,657 | $82,541 | $56,536 | $56,467 | $56,467 | $56,467 | $56,467 | $56,467 | $56,467 | $56,467 | $57,754 | $95,098 | |
Subtotal Cash from Operations | $80,657 | $82,541 | $56,536 | $56,467 | $56,467 | $56,467 | $56,467 | $56,467 | $56,467 | $56,467 | $57,754 | $95,098 | |
Additional Cash Received | |||||||||||||
Sales Tax, VAT, HST/GST Received | 0.00% | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 |
New Current Borrowing | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | |
New Other Liabilities (interest-free) | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | |
New Long-term Liabilities | $0 | $0 | $0 | $0 | $0 | $0 | $54,072 | $0 | $0 | $0 | $0 | $0 | |
Sales of Other Current Assets | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | |
Sales of Long-term Assets | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | |
New Investment Received | $0 | $0 | $108,000 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | |
Subtotal Cash Received | $80,657 | $82,541 | $164,536 | $56,467 | $56,467 | $56,467 | $110,539 | $56,467 | $56,467 | $56,467 | $57,754 | $95,098 | |
Expenditures | Jan | Feb | Mar | Apr | May | Jun | Jul | Aug | Sep | Oct | Nov | Dec | |
Expenditures from Operations | |||||||||||||
Cash Spending | $15,748 | $15,748 | $15,748 | $15,748 | $15,748 | $15,748 | $15,748 | $15,748 | $15,748 | $18,670 | $18,670 | $18,670 | |
Bill Payments | $60,247 | $56,409 | $36,672 | $36,664 | $36,657 | $36,692 | $37,885 | $36,946 | $37,078 | $42,865 | $86,666 | $66,106 | |
Subtotal Spent on Operations | $75,995 | $72,157 | $52,420 | $52,412 | $52,405 | $52,440 | $53,633 | $52,694 | $52,826 | $61,535 | $105,336 | $84,776 | |
Additional Cash Spent | |||||||||||||
Sales Tax, VAT, HST/GST Paid Out | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | |
Principal Repayment of Current Borrowing | $100 | $100 | $100 | $100 | $100 | $100 | $100 | $100 | $100 | $100 | $100 | $100 | |
Other Liabilities Principal Repayment | $0 | $8,126 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | |
Long-term Liabilities Principal Repayment | $1,200 | $1,200 | $1,200 | $1,200 | $1,200 | $1,200 | $0 | $2,400 | $2,400 | $2,400 | $2,300 | $2,400 | |
Purchase Other Current Assets | $0 | $0 | $0 | $2,855 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | |
Purchase Long-term Assets | $0 | $0 | $50,000 | $0 | $0 | $60,412 | $0 | $0 | $0 | $0 | $0 | $0 | |
Dividends | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $5,992 | $0 | $0 | $0 | $0 | |
Subtotal Cash Spent | $77,295 | $81,583 | $103,720 | $56,567 | $53,705 | $114,152 | $53,733 | $61,186 | $55,326 | $64,035 | $107,736 | $87,276 | |
Net Cash Flow | $3,362 | $958 | $60,816 | ($101) | $2,762 | ($57,685) | $56,806 | ($4,719) | $1,140 | ($7,568) | ($49,982) | $7,822 | |
Cash Balance | $7,350 | $8,307 | $69,124 | $69,023 | $71,785 | $14,099 | $70,905 | $66,186 | $67,327 | $59,759 | $9,777 | $17,598 |
Pro Forma Balance Sheet | |||||||||||||
Jan | Feb | Mar | Apr | May | Jun | Jul | Aug | Sep | Oct | Nov | Dec | ||
Assets | Starting Balances | ||||||||||||
Current Assets | |||||||||||||
Cash | $3,988 | $7,350 | $8,307 | $69,124 | $69,023 | $71,785 | $14,099 | $70,905 | $66,186 | $67,327 | $59,759 | $9,777 | $17,598 |
Accounts Receivable | $161,313 | $137,195 | $111,120 | $111,051 | $111,051 | $111,051 | $111,051 | $111,051 | $111,051 | $111,051 | $149,682 | $187,026 | $187,026 |
Inventory | $6,500 | $26,768 | $26,768 | $26,768 | $26,768 | $26,768 | $26,768 | $26,768 | $26,768 | $26,768 | $47,724 | $47,724 | $47,724 |
Other Current Assets | $0 | $0 | $0 | $0 | $2,855 | $2,855 | $2,855 | $2,855 | $2,855 | $2,855 | $2,855 | $2,855 | $2,855 |
Total Current Assets | $171,801 | $171,312 | $146,196 | $206,943 | $209,697 | $212,459 | $154,773 | $211,579 | $206,860 | $208,001 | $260,020 | $247,382 | $255,203 |
Long-term Assets | |||||||||||||
Long-term Assets | $140,203 | $140,203 | $140,203 | $190,203 | $190,203 | $190,203 | $250,615 | $250,615 | $250,615 | $250,615 | $250,615 | $250,615 | $250,615 |
Accumulated Depreciation | $104,893 | $107,113 | $109,333 | $111,553 | $113,773 | $115,993 | $118,213 | $120,433 | $122,653 | $124,873 | $127,093 | $129,313 | $131,533 |
Total Long-term Assets | $35,310 | $33,090 | $30,870 | $78,650 | $76,430 | $74,210 | $132,402 | $130,182 | $127,962 | $125,742 | $123,522 | $121,302 | $119,082 |
Total Assets | $207,111 | $204,402 | $177,066 | $285,593 | $286,127 | $286,669 | $287,175 | $341,761 | $334,822 | $333,743 | $383,542 | $368,684 | $374,285 |
Liabilities and Capital | Jan | Feb | Mar | Apr | May | Jun | Jul | Aug | Sep | Oct | Nov | Dec | |
Current Liabilities | |||||||||||||
Accounts Payable | $58,344 | $55,187 | $35,450 | $35,442 | $35,435 | $35,428 | $36,654 | $35,714 | $35,701 | $39,952 | $84,463 | $63,902 | $63,924 |
Current Borrowing | $69,477 | $69,377 | $69,277 | $69,177 | $69,077 | $68,977 | $68,877 | $68,777 | $68,677 | $68,577 | $68,477 | $68,377 | $68,277 |
Other Current Liabilities | $10,000 | $10,000 | $1,874 | $1,874 | $1,874 | $1,874 | $1,874 | $1,874 | $1,874 | $1,874 | $1,874 | $1,874 | $1,874 |
Subtotal Current Liabilities | $137,821 | $134,564 | $106,601 | $106,493 | $106,386 | $106,279 | $107,405 | $106,365 | $106,252 | $110,403 | $154,814 | $134,153 | $134,075 |
Long-term Liabilities | $99,179 | $97,979 | $96,779 | $95,579 | $94,379 | $93,179 | $91,979 | $146,051 | $143,651 | $141,251 | $138,851 | $136,551 | $134,151 |
Total Liabilities | $237,000 | $232,543 | $203,380 | $202,072 | $200,765 | $199,458 | $199,384 | $252,416 | $249,903 | $251,654 | $293,665 | $270,704 | $268,226 |
Paid-in Capital | $2,000 | $2,000 | $2,000 | $110,000 | $110,000 | $110,000 | $110,000 | $110,000 | $110,000 | $110,000 | $110,000 | $110,000 | $110,000 |
Retained Earnings | ($65,014) | ($31,889) | ($31,889) | ($31,889) | ($31,889) | ($31,889) | ($31,889) | ($31,889) | ($37,881) | ($37,881) | ($37,881) | ($37,881) | ($37,881) |
Earnings | $33,125 | $1,748 | $3,575 | $5,409 | $7,251 | $9,100 | $9,681 | $11,234 | $12,801 | $9,969 | $17,758 | $25,861 | $33,940 |
Total Capital | ($29,889) | ($28,141) | ($26,314) | $83,520 | $85,362 | $87,211 | $87,792 | $89,345 | $84,920 | $82,088 | $89,877 | $97,980 | $106,059 |
Total Liabilities and Capital | $207,111 | $204,402 | $177,066 | $285,593 | $286,127 | $286,669 | $287,175 | $341,761 | $334,822 | $333,743 | $383,542 | $368,684 | $374,285 |
Net Worth | ($29,889) | ($28,141) | ($26,314) | $83,520 | $85,362 | $87,211 | $87,792 | $89,345 | $84,920 | $82,088 | $89,877 | $97,980 | $106,059 |
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Business overview.
VB Residential Construction Company is a startup construction company located in Milwaukee, Wisconsin. The company is founded by two cousins, Victor Martinez and Ben Schmidt. Together they have over 20 years of experience in constructing homes from design concept, remodeling and renovating homes. They are highly skilled in all aspects of construction and have garnered a positive reputation in the local construction community for their ethical practices and competitive skill set. Now that Victor and Ben have an extensive network of clients and contacts, they have decided to begin their own residential construction company.
The following are the services that VB Residential Construction Company will provide:
VB Residential Construction Company will target those individuals and industry professionals requiring home construction services in Milwaukee, Wisconsin. Those individuals are landowners looking to develop homes on their lots, architects who have clients needing homes built, developers who have the vision but need a company to make it a reality, and households needing home remodeling services.
VB Residential Construction Company will be led by Victor Martinez and Ben Schmidt. Together they have over twenty years of construction experience, primarily in residential builds, remodeling, and renovation. They both started at a young age working and learning from their fathers. When they graduated from high school, their fathers got them jobs at the construction company they were employed at. The four family members worked together for ten years at the construction company. The fathers recently decided they were going to retire from the industry which prompted Victor and Ben to branch out on their own and start their own residential construction company.
VB Residential Construction Company will be able to achieve success by offering the following competitive advantages:
VB Residential Construction Company is seeking $200,000 in debt financing to launch its construction business. The funding will be dedicated towards securing a small office space, purchasing two trucks, and purchasing all the construction equipment and supplies. Funding will also be dedicated towards the advertising agency and three months of overhead costs to include payroll of the staff, rent, working capital, and monthly fees to the accounting and human resources firm. The breakout of the funding is below:
Who is vb residential construction company.
VB Residential Construction Company is a newly established contracting company located in Milwaukee, Wisconsin. Founded by cousins, Victor Martinez and Ben Schmidt, they have over 20 years experience in the construction industry. VB specializes in residential remodeling, kitchen and bath construction, as well as custom home building. VB Residential Construction Company also offers residential design, construction, and project management services. VB prides itself in delivering a level of expert craftsmanship to fulfill the vision for the client while exceeding expectations at exceptional value.
VB comes from the initials of the owners, Victor Martinez and Ben Schmidt, two cousins who have been working in the construction industry most of their lives. Both of their fathers spent decades as contractors and raised their sons working and learning the construction trade. The four have been working for another residential contractor in Milwaukee and have built and remodeled numerous homes for multiple builders and clients. Now that both of their fathers are retiring from the construction industry, Victor and Ben have decided to start their own residential construction company and use their years of experience, expertise, and contacts to be an independent residential contractor.
Since incorporation, VB Residential Construction Company has achieved the following milestones:
The following will be the services VB Residential Construction Company will provide:
Revenue for the Construction industry is expected to continue growing over the five years as demand for new housing expands. Revenues are expected to reach $107 billion.
Relatively low interest rates, coupled with rising per capita disposable income, is expected to support individual investment in new homes, providing an opportunity for industry revenue growth over the next five years.
Per capita disposable income is expected to rise steadily over the next five years, while concurrently, unemployment will drop, proving favorable conditions for industry growth.
Housing starts are expected to rise an annualized 2.9% and this growth is projected to stem partly from forward-looking consumers that choose to purchase homes while interest rates are low. Relatively low housing stock and relatively low interest rates are expected to lead demand for industry services to increase over the next five years.
Demographic profile of target market.
The precise demographics for Milwaukee, Wisconsin are:
Total | Percent | |
---|---|---|
Total population | 590,157 | 100% |
Male | 284,873 | 48.30% |
Female | 305,284 | 51.70% |
Under 5 years | 41,749 | 7.10% |
5 to 9 years | 43,509 | 7.40% |
10 to 14 years | 41,324 | 7.00% |
15 to 19 years | 43,301 | 7.30% |
20 to 24 years | 48,119 | 8.20% |
25 to 34 years | 106,407 | 18.00% |
35 to 44 years | 73,788 | 12.50% |
45 to 54 years | 64,669 | 11.00% |
55 to 59 years | 35,109 | 5.90% |
60 to 64 years | 27,995 | 4.70% |
65 to 74 years | 39,539 | 6.70% |
75 to 84 years | 17,394 | 2.90% |
85 years and over | 7,254 | 1.20% |
Total housing units | 260,024 | 100% |
Households | Families | Married Couples | Nonfamily Households | |
---|---|---|---|---|
Total | 7,510 | 5,081 | 4,210 | 2,429 |
Income Breakdown | ||||
Less than $10,000 | 8.6% | 6.1% | 3.8% | 15.0% |
$10,000 to $14,999 | 6.2% | 1.7% | 1.4% | 14.9% |
$15,000 to $24,999 | 12.6% | 8.5% | 7.6% | 21.9% |
$25,000 to $34,999 | 13.9% | 11.8% | 10.6% | 18.8% |
$35,000 to $49,999 | 14.5% | 15.6% | 15.1% | 12.0% |
$50,000 to $74,999 | 21.2% | 26.1% | 26.8% | 11.1% |
$75,000 to $99,999 | 9.9% | 12.0% | 14.0% | 4.1% |
$100,000 to $149,999 | 8.9% | 12.3% | 13.7% | 1.5% |
$150,000 to $199,999 | 2.6% | 3.9% | 4.4% | 0.0% |
$200,000 or more | 1.6% | 2.1% | 2.5% | 0.7% |
VB Residential Construction Company will primarily target the following customer profiles:
Direct and indirect competitors.
VB Residential Construction Company will face competition from other companies with similar business profiles. A description of each competitor company is below.
JM Remodeling has been in business in Milwaukee, Wisconsin since 1990. They are a full-service design and build company. JM Remodeling specializes in residential and commercial restoration and renovation including custom carpentry, kitchens, bathrooms, roofing, siding, dormers, additions, home gyms, home offices, porches and decks, and mechanical services. JM Remodeling carries a staff of plumbers, electricians, journeymen carpenters, restoration specialists, roofers, siders, sheet metal workers, and expert estimators. JM Remodeling also has an apprenticeship program to train employees within the company. They are licensed, bonded and insured and also part of the National Association of Remodeling Industry (NARI). JM Remodeling also provides warranties on all their services. The work is guaranteed by labor warranties, factory warranties, and extended warranties.
Cream City Construction has more than 50 years experience in home design, remodeling and renovation in the Greater Milwaukee area and Southeastern Wisconsin. The home remodeling services they provide are additions, whole house remodeling, kitchens, bathrooms, lower levels, master suites and historic renovations. Cream City Construction is a design build company that works with the client to create the design plans, generate project costs, and build the project.
Cream City Construction is owned and managed by Todd Badovski and Jim Grote. Together they have decades of experience and have spent years refining the skills required to run a high end, quality driven remodeling company. The majority of their projects come from repeat business or referrals from clients delighted with their previous service. Cream City Construction is also a member of the National Association of Remodeling Industry (NARI) as well as the Historic Milwaukee Incorporated.
Former restaurant owner Don Sazama established Sazama Design Build Remodel, LLC in 1987 after becoming a Master Carpenter. He wanted to merge his passions of business and design and expand his skills in carpentry and architecture. Don’s firm has completed over 700 homes and won 11 awards from the Milwaukee Home and Living magazine. Sazama Design Build Remodel builds homes that are modern and luxurious and have completed many large remodels of bathroom and kitchen renovations. Sazama likes to collaborate with firms such as Ivy Interiors and an award-winning landscape designer, Gingko Leaf Studio. Sazama Design Build Remodel can build and design all aspects of a home – from a home office, outdoor entertaining area, serene spas, and inviting kitchens. The team at Sazama is able to do a historic renovation, build or renovate into something modern and posh, or keep it traditional.
VB Residential Construction Company will be able to offer the following advantages over their competition:
Brand & value proposition.
VB Residential Construction Company will offer the unique value proposition to its clientele:
The promotions strategy for VB Residential Construction Company is as follows:
Victor and Ben have built up an extensive list of contacts over the years providing home construction services for numerous highly satisfied clients. Most of the clients are repeat customers and have also referred them to other associates for home projects. These referrals and repeat customers are very likely to use VB Residential Construction Company instead of the previous construction company Victor and Ben were employed at.
VB Residential Construction Company will become a member of construction and professional associations such as the National Association of Remodeling Industry (NARI) and the Milwaukee Chamber of Commerce. VB will also become a member in associations where other builders, developers, and architects are a part of. They will focus their networking efforts on expanding their client network.
VB Residential Construction Company will invest in professionally designed print ads to display in programs or flyers at industry networking events. They will also invest in two billboards to display in highly trafficked areas of town.
VB Residential Construction Company will utilize the same advertising company that designed their print ads and billboards to also design their website. The website will be well organized, informative, and list all their services that VB is able to provide. The website will also list their contact information and a gallery of pictures that show their previous projects. The advertising company will also manage VB’s website presence with SEO marketing tactics so that anytime someone types in the Google or Bing search engine “Milwaukee residential contractor”, “contractor near me”, or “residential contractor near me”, VB Residential Construction Company will be listed at the top of the search results.
The pricing of VB Residential Construction Company will be moderate and on par with competitors so customers feel they receive value when purchasing their services.
The following will be the operations plan for VB Residential Construction Company.
VB Residential Construction Company will have the following milestones complete in the next six months.
3/1/202X – Finalize contract to lease small office space
3/15/202X – Execute advertising agency contract 4/1/202X – Begin networking and placing bids for construction jobs
5/1/202X – Begin recruiting and hiring team of contractors
5/15/202X – Purchase all necessary construction equipment, supplies, and trucks
6/1/202X – Start on first official job as VB Residential Construction Company
Victor and Ben are highly skilled at project management and residential construction. They are also both certified in plumbing, electrical, and mechanical. In the next few years, they will be certified as Master Carpenters.
Key revenue & costs.
The revenue drivers for VB Residential Construction Company are the upcharge they will charge to the clients for their services. VB will purchase or subcontract a service at cost and will charge a 15% markup in order to obtain the markup fee. 15% is below the normal 25%-30% that other competing residential contractors charge.
The cost drivers will be the overhead costs required in order to maintain a construction company. The expenses will be the costs to purchase and maintain construction equipment and trucks, payroll and overhead costs for the staff, and rent and utilities. Other expenses will be the cost for the advertising agency, accounting firm, human resources firm, and membership association fees.
VB Residential Construction Company is seeking $200,000 in debt financing to launch its construction business. The funding will be dedicated towards securing a small office space, purchasing two trucks, and purchasing all the construction equipment and supplies. Funding will also be dedicated towards the advertising agency and three months of overhead costs to include payroll of the staff, rent, and monthly fees to the accounting and human resources firm. The breakout of the funding is below:
The following outlines the key assumptions required in order to achieve the revenue and cost numbers in the financials and in order to pay off the startup business loan.
Income statement.
FY 1 | FY 2 | FY 3 | FY 4 | FY 5 | ||
---|---|---|---|---|---|---|
Revenues | ||||||
Total Revenues | $360,000 | $793,728 | $875,006 | $964,606 | $1,063,382 | |
Expenses & Costs | ||||||
Cost of goods sold | $64,800 | $142,871 | $157,501 | $173,629 | $191,409 | |
Lease | $50,000 | $51,250 | $52,531 | $53,845 | $55,191 | |
Marketing | $10,000 | $8,000 | $8,000 | $8,000 | $8,000 | |
Salaries | $157,015 | $214,030 | $235,968 | $247,766 | $260,155 | |
Initial expenditure | $10,000 | $0 | $0 | $0 | $0 | |
Total Expenses & Costs | $291,815 | $416,151 | $454,000 | $483,240 | $514,754 | |
EBITDA | $68,185 | $377,577 | $421,005 | $481,366 | $548,628 | |
Depreciation | $27,160 | $27,160 | $27,160 | $27,160 | $27,160 | |
EBIT | $41,025 | $350,417 | $393,845 | $454,206 | $521,468 | |
Interest | $23,462 | $20,529 | $17,596 | $14,664 | $11,731 | |
PRETAX INCOME | $17,563 | $329,888 | $376,249 | $439,543 | $509,737 | |
Net Operating Loss | $0 | $0 | $0 | $0 | $0 | |
Use of Net Operating Loss | $0 | $0 | $0 | $0 | $0 | |
Taxable Income | $17,563 | $329,888 | $376,249 | $439,543 | $509,737 | |
Income Tax Expense | $6,147 | $115,461 | $131,687 | $153,840 | $178,408 | |
NET INCOME | $11,416 | $214,427 | $244,562 | $285,703 | $331,329 |
FY 1 | FY 2 | FY 3 | FY 4 | FY 5 | ||
---|---|---|---|---|---|---|
ASSETS | ||||||
Cash | $154,257 | $348,760 | $573,195 | $838,550 | $1,149,286 | |
Accounts receivable | $0 | $0 | $0 | $0 | $0 | |
Inventory | $30,000 | $33,072 | $36,459 | $40,192 | $44,308 | |
Total Current Assets | $184,257 | $381,832 | $609,654 | $878,742 | $1,193,594 | |
Fixed assets | $180,950 | $180,950 | $180,950 | $180,950 | $180,950 | |
Depreciation | $27,160 | $54,320 | $81,480 | $108,640 | $135,800 | |
Net fixed assets | $153,790 | $126,630 | $99,470 | $72,310 | $45,150 | |
TOTAL ASSETS | $338,047 | $508,462 | $709,124 | $951,052 | $1,238,744 | |
LIABILITIES & EQUITY | ||||||
Debt | $315,831 | $270,713 | $225,594 | $180,475 | $135,356 | |
Accounts payable | $10,800 | $11,906 | $13,125 | $14,469 | $15,951 | |
Total Liability | $326,631 | $282,618 | $238,719 | $194,944 | $151,307 | |
Share Capital | $0 | $0 | $0 | $0 | $0 | |
Retained earnings | $11,416 | $225,843 | $470,405 | $756,108 | $1,087,437 | |
Total Equity | $11,416 | $225,843 | $470,405 | $756,108 | $1,087,437 | |
TOTAL LIABILITIES & EQUITY | $338,047 | $508,462 | $709,124 | $951,052 | $1,238,744 |
FY 1 | FY 2 | FY 3 | FY 4 | FY 5 | ||
---|---|---|---|---|---|---|
CASH FLOW FROM OPERATIONS | ||||||
Net Income (Loss) | $11,416 | $214,427 | $244,562 | $285,703 | $331,329 | |
Change in working capital | ($19,200) | ($1,966) | ($2,167) | ($2,389) | ($2,634) | |
Depreciation | $27,160 | $27,160 | $27,160 | $27,160 | $27,160 | |
Net Cash Flow from Operations | $19,376 | $239,621 | $269,554 | $310,473 | $355,855 | |
CASH FLOW FROM INVESTMENTS | ||||||
Investment | ($180,950) | $0 | $0 | $0 | $0 | |
Net Cash Flow from Investments | ($180,950) | $0 | $0 | $0 | $0 | |
CASH FLOW FROM FINANCING | ||||||
Cash from equity | $0 | $0 | $0 | $0 | $0 | |
Cash from debt | $315,831 | ($45,119) | ($45,119) | ($45,119) | ($45,119) | |
Net Cash Flow from Financing | $315,831 | ($45,119) | ($45,119) | ($45,119) | ($45,119) | |
Net Cash Flow | $154,257 | $194,502 | $224,436 | $265,355 | $310,736 | |
Cash at Beginning of Period | $0 | $154,257 | $348,760 | $573,195 | $838,550 | |
Cash at End of Period | $154,257 | $348,760 | $573,195 | $838,550 | $1,149,286 |
What is a construction business plan.
A construction business plan is a plan to start and/or grow your construction business. Among other things, it outlines your business concept, identifies your target customers, presents your marketing plan and details your financial projections.
You can easily complete your construction business plan using our Construction Business Plan Template here .
Construction companies can be classified according to the type of constructions that they perform. Some are small renovation contractors, others are new home builders and others are commercial construction companies.
Construction companies get their primary source of revenue from individual contracts for new homes, remodeling projects or commercial projects.
The key expenses for construction companies are office space rent, salaries and wages, and equipment costs.
There are many options for financing a construction company like SBA loans, commercial loans, personal loans, or line of credit. There are also equipment funding opportunities that cover expenses associated with necessary tools, machinery and other equipment. Personal savings, credit card financing and angel investors are also popular forms of funding.
Starting a construction business can be an exciting endeavor. Having a clear roadmap of the steps to start a business will help you stay focused on your goals and get started faster.
1. Develop A Construction Business Plan - The first step in starting a business is to create a detailed construction business plan that outlines all aspects of the venture. This should include potential market size and target customers, the services or products you will offer, pricing strategies and a detailed financial forecast.
2. Choose Your Legal Structure - It's important to select an appropriate legal entity for your construction business. This could be a limited liability company (LLC), corporation, partnership, or sole proprietorship. Each type has its own benefits and drawbacks so it’s important to do research and choose wisely so that your construction business is in compliance with local laws.
3. Register Your Construction Business - Once you have chosen a legal structure, the next step is to register your construction business with the government or state where you’re operating from. This includes obtaining licenses and permits as required by federal, state, and local laws.
4. Identify Financing Options - It’s likely that you’ll need some capital to start your construction business, so take some time to identify what financing options are available such as bank loans, investor funding, grants, or crowdfunding platforms.
5. Choose a Location - Whether you plan on operating out of a physical location or not, you should always have an idea of where you’ll be based should it become necessary in the future as well as what kind of space would be suitable for your operations.
6. Hire Employees - There are several ways to find qualified employees including job boards like LinkedIn or Indeed as well as hiring agencies if needed – depending on what type of employees you need it might also be more effective to reach out directly through networking events.
7. Acquire Necessary Construction Equipment & Supplies - In order to start your construction business, you'll need to purchase all of the necessary equipment and supplies to run a successful operation.
8. Market & Promote Your Business - Once you have all the necessary pieces in place, it’s time to start promoting and marketing your construction business. This includes creating a website, utilizing social media platforms like Facebook or Twitter, and having an effective Search Engine Optimization (SEO) strategy. You should also consider traditional marketing techniques such as radio or print advertising.
Learn more about how to start a successful construction business:
You can download our free construction business plan template PDF here . This is a sample construction business plan template you can use in PDF format.
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Published Dec.21, 2020
Updated Apr.24, 2024
By: Noor Muhammad
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Table of Content
Whether it’s about increasing one’s property value or boosting one’s lifestyle, remodeling is the way to go. Remodeling is a type of business that can be started with simple services at the residential level. And can be expanded to performing complicated renovations needed by commercial buildings and businesses.
No matter how large or how small your startup is, you would have to create a remodeling business plan for remodeling. Creating a comprehensive business plan before you open a remodeling business will help you in:
To help you in creating a business plan that covers all the essential aspects, we’re providing a sample business plan of a startup ‘Model-It Solutions’.
2.1 the business.
Model-It Solutions will be a registered, licensed, and insured remodeling business startup based in Buffalo, New York. The business will comprise expert contractors, architects, and engineers to enhance the aesthetic and comfort level of residential as well as commercial structures.
Simply put, we build what you dream!
As a business owner, you can’t rest after setting up a remodeling company. You have to be proactive in organizing and analyzing various business operations. In the case of a remodeling business, you need efficient management to complete given projects in time. To make sure that clients get the work done according to their expectations, you have to properly manage communication, finances, and resources among various channels.
Exploring who are going to be your customers is extremely important. Before you search for how to start a remodeling company, you should identify your customers.
The target customers of Model-It Solutions will be the homeowners, construction firms , contractors, and government agencies. To turn them into our potential customers, we will be taking effective steps.
Our major targets are:
Our financial targets to cover our expenses and investments through the profits earned are summarized in this table.
3.1 company owner.
Anna Huston will be the owner of Model-It Solutions. Anna is an MBA. After completing her education at Stanford University, she started working in Skanska.
But 5 years into the service, she decided to start a remodeling business of her own.
Anna always remained a woman of creative ideas. After serving in a multinational firm, she decided to move to her hometown and serve people with her talent. She realized that the remodeling business has never-ending scope in the years to come as people keep thinking of bringing improvement to their property.
Step1: Plan your business
As the first step, Anna studied various business plan examples for remodeling company to make a business plan for remodeling. From analyzing the market shares to creating a financial plan, Anna put everything on her business plan.
Through this remodeling business plan sample you can study the business’ requirements, balance sheets, personnel plan, and other aspects of Model-It Solutions.
Step2: Define your brand
The second step after creating a remodeling business plan is to get your business registered. You will have to acquire the required licenses and permits. Moreover, this is the time when you have to physically establish your business office.
Step3: Hire the staff
The third step is to conduct interviews and tests to hire the most competent employees.
Step4: Get ready to promote & market
The next step is to promote your services and competitive aspects to reach your target customers. This step also involves the strategy you will adopt to gain and retain your client base.
Step5: Establish a web presence
In this age, people use Google to find the right service provider whenever they need any service. Therefore, it has become essential that you establish a strong social media and web presence.
Anna decided to hire a professional IT expert to create a website for Model-It Solutions. The website will also enable users to make online bookings. Moreover, the website will also keep a record of repeat customers so that Anna could evaluate her business performance time-to-time.
Our startup expenses including costs of all the things we could need for the startup are given below:
Legal | $254,000 |
Consultants | $0 |
Insurance | $35,000 |
Rent | $30,000 |
Research and Development | $28,000 |
Expensed Equipment | $56,000 |
Signs | $4,000 |
Start-up Assets | $319,000 |
Cash Required | $357,800 |
Start-up Inventory | $54,000 |
Other Current Assets | $209,800 |
Long-term Assets | $230,000 |
Start-up Expenses to Fund | $407,000 |
Start-up Assets to Fund | $1,170,600 |
Assets | |
Non-cash Assets from Start-up | $1,543,600 |
Cash Requirements from Start-up | $376,000 |
Additional Cash Raised | $55,000 |
Cash Balance on Starting Date | $34,000 |
Liabilities and Capital | |
Liabilities | $29,000 |
Current Borrowing | $0 |
Long-term Liabilities | $0 |
Accounts Payable (Outstanding Bills) | $47,000 |
Other Current Liabilities (interest-free) | $0 |
Capital | |
Planned Investment | $1,577,600 |
Investor 1 | $0 |
Investor 2 | $0 |
Other | $0 |
Additional Investment Requirement | $0 |
Loss at Start-up (Start-up Expenses) | $355,000 |
Before exploring how to start your own remodeling business, you should decide your services. Deciding your services even before the launch can help you in identifying the ways through which you can facilitate your customers.
To give you a notion of services you can provide as a remodeling firm, we are enlisting the services provided by Model-It Solutions in this remodeling business plan template.
Depending on the clients’ needs we will remodel their kitchen, laundry, bath, deck, and more. We also install sidings, flooring, new windows and doors, cabinets, and whatever else our customers would need.
Marketing analysis is an important part of a remodeling contractor’s business plan as it enables the business owner to keep pace with the demands of their customers. Through efficient marketing analysis, you can recognize remodeling domains that have high demand. Moreover, this part also gives you a clear idea of your customers before you open a remodeling business.
According to a report by IBISWorld, remodeling businesses have seen a growth rate of 1.7% in the past five years. More than 455 thousand remodeling companies are operating throughout the United States. The market size, according to the same outlet, is reported to be $97 billion.
The market stats are quite satisfying and the growth rate also indicates that there is still room for other startups to join the venture. If you want to ensure that you get customers from the very beginning of your startup, you should study the market trends of individual locations. That will help you locate an area where competition is low and people who need remodeling service are greater in number.
Identifying your customers before investigating how to write a business plan for remodeling is necessary. Dividing the wide populations into distinct groups can help you in recognizing their demands. And thus enabling you to plan ways to fulfill their expectations.
The groups that were identified by Model-It Solutions as potential customers are given below:
5.2.1 Real Estate Owners: Our primary customers will be the people who own any sort of building. They can need our services in two cases:
In any of the cases, we’ll go to all extents to make sure they are happy and satisfied with our remodeling services. For them, we’ll provide full property remodeling services as well as individual services like installing new cabinets and remodeling the kitchen, etc.
5.2.2 Contractors & Construction Companies: The second group of our target customers will include contractors and construction companies. They will need our services whenever they get some project or even when they are building some structure from scratch.
5.2.3 Government Agencies : Our third category comprises government agencies who will be needing us to remodel structures of historic, artistic, and cultural importance – in a way that their integrity and historic aspects are maintained.
The detailed market analysis of our potential customers is given in the following table:
Potential Customers | Growth | ||||||
Real Estate Owners | 54% | 53,000 | 56,000 | 59,000 | 65,000 | 68,000 | 10.00% |
Contractors & Construction Companies | 31% | 27,000 | 28,000 | 31,000 | 33,000 | 35,000 | 10.00% |
Government Agencies | 15% | 13,000 | 14,000 | 16,000 | 18,000 | 21,000 | 11.00% |
10% |
Anna set her business financial and other goals before starting a remodeling company. She realized that by doing so, she would be able to provide a direction to her resources and talent.
The business targets of Model-It Solutions are
The prices of our services will be lesser than those of our competitors. It is because we want to capture as many customers as possible in the initial phases of our startup.
A remodeling business plan is incomplete unless you include in it, the ways to capture the attention of your target audience. In this marketing plan for remodeling business we are enlisting the exclusive sales strategy plan of Model-It Solutions.
Anna realized that hundreds of remodeling firms are already operating in Buffalo. Therefore, she decided to come up with distinct features to outperform her business rivals.
The competitive aspects of Model-It Solutions are:
To get introduced to our target customers, we will:
Unit Sales | |||
Full House Remodeling | 44,000 | 46,640 | 49,438 |
Handyman Remodeling | 28,000 | 29,680 | 31,461 |
Historic Home Remodeling | 13,000 | 13,780 | 14,607 |
Individual Structural Re-design | 35,000 | 37,100 | 39,326 |
Unit Prices | Year 1 | Year 2 | Year 3 |
Full House Remodeling | $61.00 | $70.76 | $82.08 |
Handyman Remodeling | $34.00 | $39.44 | $45.75 |
Historic Home Remodeling | $45.00 | $52.20 | $60.55 |
Individual Structural Re-design | $43.00 | $49.88 | $57.86 |
Sales | |||
Direct Unit Costs | Year 1 | Year 2 | Year 3 |
Full House Remodeling | $58.00 | $61.00 | $64.00 |
Handyman Remodeling | $31.00 | $34.00 | $37.00 |
Historic Home Remodeling | $37.00 | $40.00 | $44.00 |
Individual Structural Re-design | $39.00 | $43.00 | $47.00 |
Direct Cost of Sales | |||
While writing a business plan for remodeling, you should also define your employees, their job responsibilities, and requirements. It will enable you to judge the applicants on a definite criterion when you are going through the hiring phase.
Anna will manage the business herself. However, she’ll hire the following staff:
Co-Manager | $16,000 | $17,600 | $19,360 |
Architect | $14,000 | $15,400 | $16,940 |
Contractors | $29,000 | $31,900 | $35,090 |
Field Workers | $50,000 | $55,000 | $60,500 |
Accountant | $9,000 | $9,900 | $10,890 |
Technician | $7,000 | $7,700 | $8,470 |
IT Expert | $9,000 | $9,900 | $10,890 |
Driver | $7,000 | $7,700 | $8,470 |
In the last part of your business plan, you should analyze your estimated cash flows. Before you make a remodeling business plan, you should have a clear idea of how much amount you intend to spend on which aspect of your business. Moreover, you should also have a plan to achieve your business goals by optimizing your profits.
In this business plan sample, you can explore the financial projections, break-even analysis, business ratios, gross margins, and other financial estimations done by Model-It Solutions to gauge its progress and business value.
However, while you go through this financial plan, remember, its projections are based on the assumption that there will be no major recession in the coming 5 years.
Plan Month | 1 | 2 | 3 |
Current Interest Rate | 8.17% | 8.22% | 8.28% |
Long-term Interest Rate | 8.41% | 8.42% | 8.44% |
Tax Rate | 23.64% | 25.06% | 26.10% |
Other | 0 | 0 | 0 |
Monthly Units Break-even | 5342 |
Monthly Revenue Break-even | $134,100 |
Assumptions: | |
Average Per-Unit Revenue | $236.00 |
Average Per-Unit Variable Cost | $0.67 |
Estimated Monthly Fixed Cost | $161,300 |
Other | $0 | $0 | $0 |
TOTAL COST OF SALES | |||
Expenses | |||
Payroll | $0 | $0 | $0 |
Sales and Marketing and Other Expenses | $125,000 | $132,000 | $139,000 |
Depreciation | $2,230 | $2,300 | $2,350 |
Leased Equipment | $0 | $0 | $0 |
Utilities | $3,000 | $3,100 | $3,200 |
Insurance | $1,870 | $1,940 | $2,080 |
Rent | $3,400 | $3,500 | $3,610 |
Payroll Taxes | $38,000 | $40,000 | $42,000 |
Other | $0 | $0 | $0 |
Profit Before Interest and Taxes | $286,500 | $857,190 | $1,645,864 |
EBITDA | $286,500 | $857,190 | $1,645,864 |
Interest Expense | $0 | $0 | $0 |
Taxes Incurred | $57,300 | $171,438 | $329,173 |
Net Profit | $229,200 | $685,752 | $1,316,691 |
Net Profit/Sales | 4.00% | 9.74% | 15.21% |
Cash Received | |||
Cash from Operations | |||
Cash Sales | $57,000 | $61,560 | $66,485 |
Cash from Receivables | $16,000 | $17,280 | $18,662 |
SUBTOTAL CASH FROM OPERATIONS | |||
Additional Cash Received | |||
Sales Tax, VAT, HST/GST Received | $0 | $0 | $0 |
New Current Borrowing | $0 | $0 | $0 |
New Other Liabilities (interest-free) | $0 | $0 | $0 |
New Long-term Liabilities | $0 | $0 | $0 |
Sales of Other Current Assets | $0 | $0 | $0 |
Sales of Long-term Assets | $0 | $0 | $0 |
New Investment Received | $0 | $0 | $0 |
SUBTOTAL CASH RECEIVED | |||
Expenditures | Year 1 | Year 2 | Year 3 |
Expenditures from Operations | |||
Cash Spending | $34,000 | $39,000 | $43,000 |
Bill Payments | $18,000 | $18,000 | $20,000 |
SUBTOTAL SPENT ON OPERATIONS | |||
Additional Cash Spent | |||
Sales Tax, VAT, HST/GST Paid Out | $0 | $0 | $0 |
Principal Repayment of Current Borrowing | $0 | $0 | $0 |
Other Liabilities Principal Repayment | $0 | $0 | $0 |
Long-term Liabilities Principal Repayment | $0 | $0 | $0 |
Purchase Other Current Assets | $0 | $0 | $0 |
Purchase Long-term Assets | $0 | $0 | $0 |
Dividends | $0 | $0 | $0 |
SUBTOTAL CASH SPENT | |||
Net Cash Flow | $13,000 | $14,000 | $15,000 |
Cash Balance | $26,000 | $26,000 | $28,000 |
Assets | |||
Current Assets | |||
Cash | $282,000 | $315,840 | $347,424 |
Accounts Receivable | $25,200 | $28,224 | $31,724 |
Inventory | $4,000 | $4,480 | $4,900 |
Other Current Assets | $1,000 | $1,000 | $1,000 |
TOTAL CURRENT ASSETS | |||
Long-term Assets | |||
Long-term Assets | $10,000 | $10,000 | $10,000 |
Accumulated Depreciation | $18,050 | $20,216 | $22,743 |
TOTAL LONG-TERM ASSETS | |||
TOTAL ASSETS | |||
Liabilities and Capital | Year 4 | Year 5 | Year 6 |
Current Liabilities | |||
Accounts Payable | $19,000 | $21,280 | $23,919 |
Current Borrowing | $0 | $0 | $0 |
Other Current Liabilities | $0 | $0 | $0 |
SUBTOTAL CURRENT LIABILITIES | |||
Long-term Liabilities | $0 | $0 | $0 |
TOTAL LIABILITIES | |||
Paid-in Capital | $30,000 | $30,000 | $30,000 |
Retained Earnings | $57,000 | $62,130 | $68,343 |
Earnings | $198,000 | $215,820 | $237,402 |
TOTAL CAPITAL | |||
TOTAL LIABILITIES AND CAPITAL | |||
Net Worth | $270,000 | $294,300 | $323,730 |
Sales Growth | 7.27% | 8.06% | 8.93% | 3.00% |
Percent of Total Assets | ||||
Accounts Receivable | 9.28% | 10.28% | 11.39% | 9.80% |
Inventory | 5.42% | 6.01% | 6.65% | 9.90% |
Other Current Assets | 2.11% | 2.34% | 2.59% | 2.40% |
Total Current Assets | 150.00% | 152.00% | 152.00% | 158.00% |
Long-term Assets | 11.64% | 11.74% | 12.10% | 12.00% |
TOTAL ASSETS | ||||
Current Liabilities | 4.73% | 4.77% | 4.81% | 4.34% |
Long-term Liabilities | 0.00% | 0.00% | 0.00% | 0.00% |
Total Liabilities | 7.32% | 7.38% | 7.45% | 7.38% |
NET WORTH | ||||
Percent of Sales | ||||
Sales | 100.00% | 100.00% | 100.00% | 100.00% |
Gross Margin | 94.03% | 96.57% | 99.27% | 99.00% |
Selling, General & Administrative Expenses | 93.29% | 95.81% | 98.49% | 97.80% |
Advertising Expenses | 1.58% | 1.62% | 1.67% | 1.40% |
Profit Before Interest and Taxes | 41.40% | 42.52% | 43.71% | 33.90% |
Main Ratios | ||||
Current | 36.8 | 38 | 39.5 | 32 |
Quick | 33.2 | 35 | 35.875 | 33 |
Total Debt to Total Assets | 0.21% | 0.19% | 0.17% | 0.40% |
Pre-tax Return on Net Worth | 75.40% | 76.00% | 77.00% | 75.00% |
Pre-tax Return on Assets | 93.49% | 98.16% | 103.07% | 111.30% |
Additional Ratios | Year 1 | Year 2 | Year 3 | |
Net Profit Margin | 32.29% | 33.29% | 34.32% | N.A. |
Return on Equity | 55.66% | 57.39% | 59.16% | N.A. |
Activity Ratios | ||||
Accounts Receivable Turnover | 7.8 | 7.8 | 7.9 | N.A. |
Collection Days | 100 | 100 | 100 | N.A. |
Inventory Turnover | 31 | 32.55 | 33.7 | N.A. |
Accounts Payable Turnover | 16.1 | 16.4 | 16.76 | N.A. |
Payment Days | 27 | 27 | 27 | N.A. |
Total Asset Turnover | 2.5 | 2.6 | 2.6 | N.A. |
Debt Ratios | ||||
Debt to Net Worth | -0.03 | -0.04 | -0.04 | N.A. |
Current Liab. to Liab. | 1 | 1 | 1 | N.A. |
Liquidity Ratios | ||||
Net Working Capital | $234,000 | $247,104 | $260,942 | N.A. |
Interest Coverage | 0 | 0 | 0 | N.A. |
Additional Ratios | ||||
Assets to Sales | 0.84 | 0.86 | 0.88 | N.A. |
Current Debt/Total Assets | 1% | 1% | 0% | N.A. |
Acid Test | 28.03 | 28.5 | 30.5 | N.A. |
Sales/Net Worth | 2.1 | 2.1 | 2.1 | N.A. |
Dividend Payout | 0 | 0 | 0 | N.A. |
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By: Author Tony Martins Ajaero
Home » Business Plans » Real Estate Sector
Are you about starting a property maintenance & renovation business? If YES, here’s a complete sample property maintenance & renovation business plan template & feasibility report you can use for FREE to raise money. Okay, so we have considered all the requirements for starting a property maintenance & renovation business.
We also took it further by analyzing and drafting a sample property maintenance & renovation marketing plan template backed up by actionable guerrilla marketing ideas for property maintenance & renovation businesses. So let’s proceed to the business planning section.
As a property manager, your core business responsibility is to maintain and renovate building facilities and to liaise with landlords, tenants and in some cases various contractors. For you to effectively conduct your business, you are expected to have a full grasp of the law when it comes to landlord and tenant relationships.
As a property manager, it is your responsibility to create efficient and effective protocols that will make you relate well with your clients (landlords, tenants and contractors).
For example, you are going to be responsible for the full and proper screening or testing of an applicant’s credit, criminal history, rental history and ability to pay his or her rent when due. If you can get that aspect of your job/business right, you will surely enjoy your business.
Interestingly, the minimum educational requirement for anyone that wants to start his or her own property management cum property maintenance and renovation business is a High School Diploma and hands on the job experience.
It is one of the many businesses that an individual can start with from his or her home and basically with just a business card. Since property management business is all about managing property/properties on behalf of your clients, then you may not need a huge financial base to be able to launch the business except you just want to start pretty big.
The truth is that it is one thing to have a fantastic idea cum business plan, it is entirely another thing for the business plan to translate to money (profits) that is why it is important to assemble a team of experts to work with if you want to be successful with your property maintenance and renovation company.
You can hardly run this type of business alone especially if you want to operate a standard property maintenance and renovation business as against running a one man show.
Below is a sample property maintenance and renovation company business plan template that will help you successfully launch your own business;
1. industry overview.
Property maintenance and renovation or better still property management business which is a subset of the real estate industry is perhaps one of the easiest and affordable real estate businesses to start; it is basically about lease contracting or accepting rent using legal documents approved for the area in which the property is located.
In a nutshell, property management companies are responsible for taking care of and managing buildings and other real estate properties for individuals (landlords) or for groups of owners.
In the united states, states such as Texas, New York and Colorado make it mandatory for property management companies to be licensed real estate brokers if they are going to be involved in collecting rent, listing properties for rent or helping negotiate leases and doing inspections as required by their business.
Although a property manager may be a licensed real estate salesperson but generally they must be working under a licensed real estate broker. A few states such as Idaho, Maine and Vermont do not require property managers to have real estate licenses.
Other states such as Montana, Oregon and South Carolina, allow property managers to work under a property management license rather than a broker’s license. Washington State requires property managers to have a State Real Estate License if they do not own the property.
Landlords who manage their own property are not required by the law to have a real estate license in many states; however, they must at least have a business license to rent out their own home. It is only landlords who do not live close to the rental property that may be required by local government to hire the services of a property maintenance and renovation company.
As a property manager, your core business responsibility is to liaise with landlords, tenants and in some cases various contractors; and for you to effectively conduct your business, you are expected to have a full grasp of the law when it comes to landlord and tenant relationship.
Property maintenance and renovation companies are also involved in mitigation and remediation regarding any maintenance issues, generally within a budget, with prior or conveyed consent via a Limited Power of Attorney legally agreed to by the property owner.
In fact, there are numerous aspects of the profession and some of them include helping clients in managing the accounts and finances of the real estate properties and participating in or initiating litigation with tenants, contractors and insurance agencies.
No doubt, if an aspiring entrepreneur who intends starting his or her own property maintenance and renovation business has the right connections, networks, managerial skills, and takes delight in managing real estate for clients, then he or she is going to find the property maintenance and renovation business very rewarding and lucrative.
Crystal Property Maintenance & Renovation Company is a licensed property management company that will be based in Palm Beach – Florida but will operate in all states in the United States of America.
We are in the business of property maintenance and renovation to be able to help our clients meet their needs and achieve their goals with little or no stress on their part because our role is to take the stress off them and deliver to them what they want.
We have been able to build a robust list of landlords and property owners in the whole of the United States and we look forward to helping a larger percentage of them manage their properties in any part of the United States of America.
Crystal Property Maintenance & Renovation Company will ensure that every property that is kept within our care are properly managed in terms of maintenance and renovation because we are in business to deliver excellent services to both landlords and tenants.
We have been able to acquire all the relevant training and certifications in the field of property maintenance and renovation (management) so as to enable us perform excellently.
Crystal Property Maintenance & Renovation Company will strive to minimize the risk of litigation and damage to rental units and also, we have perfected strategies to maximize profit by simply slashing vacancy rates, repair and maintenance costs of all properties under our care.
Much more than renting our properties out to tenants, we intend to build a loyal customer base and part of the plans that we have put in place to achieve this is to offer incentives to law abiding tenants under our care. Part of what we intend doing is to offer lower rent for tenants who agree to enter long term lease agreements with us and also to create a system where points will be awarded to loyal tenants.
As a property maintenance and renovation company, we are going to abide by the Fair Housing Act, which means not singling out one particular demographic group when sourcing for tenants for our properties. We will leverage on all available means to advertise our vacant properties and will not restrict our properties to any group of tenants but to anyone who is qualified and can afford the rent.
Crystal Property Maintenance & Renovation Company will be owned majorly the Mr. Pearson Wilberforce and his immediate family members. Pearson Wilberforce is a property guru that has worked with top Real Estate Companies in the United States of America for many years prior to starting his own business. He has a degree in estate management from University of Florida.
Crystal Property Maintenance & Renovation Company is set to run a standard and profitable property maintenance and renovation business within the scope of the real estate industry in the United States of America. Our intention of starting a property maintenance and renovation business is to make profit from the industry and we will do all that is permitted by the law in the United States of America to achieve our aim and ambition.
Our business offerings are listed below;
Our Business Structure
Our company’s structure is not entirely different from what is obtainable in the real estate industry, as a matter of priority, we have decided to create a structure that will allow for easy growth for all our employees and also, we have created platforms that will enable us attract some of the best hands in the industry.
We will ensure that we hire people that are qualified, honest, customer centric and are ready to work to help us build a prosperous business that will benefit all the stakeholders (the owners, workforce and customers). As a matter of fact, profit-sharing arrangement will be made available to all our senior management staff and it will be based on their performance for a period of ten years or more.
Crystal Property Maintenance & Renovation Company is fully aware of the modus operandi in the real estate industry, hence adequate provision and competitive packages has been prepared for independent sales agents and contractors. Our marketing department will be responsible for managing this aspect of our business structure.
In view of that, we have decided to hire qualified and competent hands to occupy the following positions;
Project Manager
Admin and HR Manager
Chief Executive Officer – CEO (President):
Company’s Lawyer/Secretary/Legal Counsel
Head, Acquisitions and Dispositions
Head of Asset Management
Head of Renovations/Construction
Business Developer
Sales and Marketing Officer
Front Desk/Customer’s Service Officer
The fact that property maintenance and renovation business is a very rewarding business does not mean that there are no challenges in the industry. Starting a property maintenance and renovation business in the United States of America comes with its own challenges, you would have to abide by the law and also compete with loads of other entrepreneurs in the real estate business value chain who also are interested in making a living and building a business in the United States.
In order to compete favorably in the real estate industry as a property maintenance and renovation company, we have been able to hire the services of tested and trusted business and HR consultants to help conduct critical SWOT analysis for us.
We intend maximizing our strengths, explore all opportunities we will come across, properly manage our weakness and confront our threats. Here is a summary from the result of the SWOT analysis that was conducted on behalf of Crystal Property Maintenance & Renovation Company;
Some of our strengths that we will be bringing to the table in the real estate industry is our robust relations with properties investment moguls in the whole of the United States of America. Our access to funding and also, we have a team of experts who have cut their teeth in the industry. Our commission structure and relationship with freelance real estate agents in Palm Beach – Florida and other state in the US will also count in our advantage.
As a newbie in the property maintenance and renovation (property management industry)/real estate industry, we might have some challenges competing with big time property management companies and other property maintenance and renovation companies that have been in the industry for many years; that perhaps is part of our weakness.
The opportunities in the real estate industry especially as a property maintenance and renovation company in the United States of America is massive and we are ready to take advantage of any opportunity that comes our way.
Some of the threats that we are likely to face as a property maintenance and renovation company are unfavorable government policies and global economic downturn; global economic downturn usually affect spending power and the real estate industry is known to encounter decline in sales and profits during this period. There is hardly anything we could do as regards these threats other than to be optimistic that things will continue to work for our good.
The market trends as it involves the property management (maintenance and renovation) business is indeed dynamic and at the same time pretty much easier for a newbie to come in and still make money from the industry. All that is needed for any property management company to do well in the industry is to have good managerial skills and healthy relationship with landlords (property owners).
Some of the factors that count positively in this line of business are trust, honesty and relationship management and any property maintenance and renovation company that has this will indeed do pretty well in the industry. Landlords and property owners ensure that they put their properties under the care of someone they can trust.
One thing is certain for every property maintenance and renovation company; if they are hardworking, creative and proactive, they will always generate enough income to meet all their overhead and operational cost, keep their business going without struggle and make reasonable profits from all business deals that they are involved in.
Our target market as a property maintenance and renovation company cuts across people of different class and people from all walks of life. We are coming into the industry with a business concept that will enable us work with highly-placed people in the country and at the same with lowly placed people who are only interested in putting a roof under their head at an affordable fee that won’t be so much of a stress to raise.
Although finding tenants is relatively easy, but the truth is that finding qualified and law abiding tenants can be somewhat challenging. It is important to note that the target market for those who are into property maintenance and renovation business goes beyond those who make use of the internet (Craigslist to search for properties; some of them only rely on the print media (local daily or weekly newspaper both in English and in Spanish for the Spanish community in the US), some on word of mouth adverts and others on street to street search. The bottom line is that the market trend for property maintenance and renovation business is indeed a dynamic one.
In other words, our target market is the whole of the United States of America, and below is a list of the people and organizations that we have plans to do business with;
Our competitive advantage
Crystal Property Maintenance & Renovation Company might be a new entrant into the real estate industry in the United States of America, but the management staff and board members are considered gurus. They are people who are core professionals and licensed property managers in the United States property market. These are part of what will count as a competitive advantage for us.
Another competitive advantage that we are bringing to the industry is the commission model (our commission structure). We know that freelance (licensed) brokers and contractors would work for the highest bidder which is why we designed a commission structure that will be a win – win for all parties involved in any deal undertaken by us.
Lastly, our employees will be well taken care of and their welfare package will be among the best within our category (startup property maintenance and renovation companies) in the industry meaning that they will be more than willing to build the business with us and help deliver our set goals and achieve all our aims and objectives. We will also give good working conditions and commissions to freelance sales agents that we will recruit from time to time.
Crystal Property Maintenance & Renovation Company is established with the aim of maximizing profits in the real estate industry via managing houses / properties, renovating and maintenance. Although we are a property maintenance and renovation company but part of our workforce are also licensed real estate agents hence we intend generating additional income from diverse means in the real estate agency.
We have successfully built a vibrant real estate network that covers the whole of the United States of America so as to help us build a profitable business. Below are the sources we intend exploring to generate income for Crystal Property Maintenance & Renovation Company;
The fact that the property market is indeed a booming market means that investors are always going to be attracted to the industry. No doubt it is difficult to see multi-millionaires who don’t have interest in investing in properties; real estate investment is one business portfolio that is common to all multi – millionaires in the world.
In essence, the more people acquire properties, the higher the chances that property management companies will secure business deals. Also, as long as tenants are always in search of accommodation, there will always be business for property management companies.
We have perfected our sales and marketing strategies and we are quite optimistic that we will meet or even surpass our set target of generating enough income/profits from the first month of operation and grow the business beyond Palm Beach – Florida to other states in the United States of America within record time.
We have been able to critically examine the real estate market and we have analyzed our chances in the industry and we have been able to come up with the following sales forecast. The sales projections are based on information gathered on the field and some workable assumptions as well;
N.B: Please note that we could not put a specific amount to the projection because the prices and commissions vary for different properties and for different clients. Part of our business strategy is to work within the budget of our clients to deliver quality property/properties hence it will be difficult to project what we are likely going to make from such deals.
But the bottom line is that we are definitely going to make reasonable profit from any business deal that we execute since we work based on commissions. The property management market is structured in such a way that property managers will always make profit from any deal they handle as long as they conduct due diligence before signing the deal.
We are mindful of the fact that there is stiff competition in the real estate market in the United States of America; hence we have been able to hire some of the best business developers to handle our sales and marketing.
Our sales and marketing team will be recruited based on their vast experience in the industry and they will be trained on a regular basis so as to be well equipped to meet their targets and the overall goal of the organization. The training is not restricted to only our full – time employees but also all our freelance brokers that are scattered all over the United States of America.
Our goal is to become one of the top 5 leading property maintenance and renovation company in the United States of America which is why we have mapped out strategies that will help us take advantage of the available market and grow to become a major force to reckon with in the industry.
Crystal Property Maintenance & Renovation Company is set to make use of the following marketing and sales strategies;
We have been able to work with our consultants to help us map out publicity and advertising strategies that will help us work our way into the hearts of our target market. We are set to take the real estate industry by storm which is why we have made provisions for effective publicity and advertisement of our company.
Below are the platforms we intend to leverage on to promote and advertise our property maintenance and renovation business;
Part of our business strategy is to ensure that we work within the budget of our clients to deliver excellent properties to them. The real estate industry is based on commissions and properties are valued by professionals based on the area the facility is located, the type of facility and other factors.
Since we are not directly in control of the pricing system in the real estate industry, we can only abide by what is obtainable when it comes to pricing structure. Part of what we intend doing that will help us cut cost is to reduce to the barest minimum all maintenance cost by renting/leasing any property under our care to responsible tenants who won’t cause damage to our facility.
At Crystal Property Maintenance & Renovation Company our payment policy is all inclusive because we are quite aware that different people prefer different payment options as it suits them, but at the same time we will not accept payment by cash because of the volume of cash that will be involved in most of our transactions. Real estate deals usually involve huge amounts of money.
Here are the payment options that we will make available to our clients;
In view of the above, we have chosen banking platforms that will help us achieve our plans without any itches and we will also pay our freelance sales agents (real estate brokers) with same platforms. Any agent who intends paying with cash will be directed to deposit the money into our corporate account and then present their payment tellers to us.
Starting a property maintenance and renovation business is indeed capital intensive hence an entrepreneur would have to pool cash together or welcome investors to partner with you. Although the capital needed to set up an office structure for such business might not be expensive, but the running capital of the business is always the real deal. You would need huge capital base to be able to maintain and renovate properties.
Here are the areas we intend spending our start – up capital on;
Going by the report from our research and feasibility studies, we will need about $500,000 to set up a standard property maintenance and renovation company in Palm Beach – Florida. Please note that the cost for payment of employees is part of the total budget.
Generating Funds/Startup Capital for Crystal Property Maintenance & Renovation Company
Crystal Property Maintenance & Renovation Company is a private business that is solely owned and financed by Pearson Wilberforce and his immediate family members. They do not intend to welcome any external business partners for the first 3 years which is why he has decided to restrict the sourcing of the startup capital to 3 major sources.
These are the areas we intend generating our startup capital;
N.B: We have been able to generate about $200,000 ( Personal savings $150,000 and soft loan from family members $50,000 ) and we are at the final stages of obtaining a loan facility of $300,000 from our bank. All the papers and document have been signed and submitted, the loan has been approved and any moment from now our account will be credited with the amount.
The future of a business lies in the number of loyal customers that they have, the capacity and competence of the employees, their investment strategy and the business structure. If all of these factors are missing from a business (company), then it won’t be too long before the business close shop.
One of our major goals of starting Crystal Property Maintenance & Renovation Company is to build a business that will survive off its own cash flow without the need for injecting finance from external sources once the business is officially running.
We know that one of the ways of gaining approval and winning customers over is to maintain and renovate properties a little bit cheaper than what is obtainable in the market and we are well prepared to survive on lower profit margin for a while.
Crystal Property Maintenance & Renovation Company will make sure that the right foundation, structures and processes are put in place to ensure that our staff welfare are well taken of. Our company’s corporate culture is designed to drive our business to greater heights and training and re – training of our workforce is at the top burner. As a matter of fact, profit-sharing arrangement will be made available to all our management staff and it will be based on their performance for a period of three years or more.
Check List/Milestone
Doing your own remodeling is, to say it lightly, a big job. There are many things you need to get done, details that need to be finalized, and materials that need to be acquired. The whole process is already a confusing mass of loose ends, and jumping straight into it without first deciding on what to do will only make the task more difficult.You may also check out advertising plan examples.
One of the biggest remodeling mistake homeowners make is skipping the planning phase and rushing straight into the project. Before starting any home remodeling project, you need a plan. While it’s a tedious process, it will help you make the most out of your time and money.You may also like job plan examples.
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Below are four easy steps that will help you ensure that your remodel meets and exceeds even your highest expectations, while successfully avoiding making all those often inescapable annoying little mistakes along the way.
A big part of planning a home project is deciding what look you will try to achieve for your home. Having a clear mental picture of the end product that all the hard work should result in is a great way to make sure that, from the first day to the last, all of the smallest decisions you will make will move you closer to your desired result.You may also like simple business plan examples .
Whether you’re simply converting a bathtub into a walk-in shower or building an in-law suite, having a better understanding of how you want your house to look and feel after all the remodeling will help you decide on budget, design, and materials more easily.
The next step in your home remodeling project is to create a budget. Redesigning a house can be expensive. Deciding on a budget will help you make sure that you don’t spend more than you should, and that you achieve everything you want to get done with enough to spare. You may also see daily plan examples .
Once you’ve decided on the scope of your project and what features and finishes you want, figure out how much money you have available to spend on your remodeling. A little spoiler though, often what you want and how much you can afford aren’t always the same things.
The best thing you can do is to be smart with your spending. After all, there is nothing that a frugal pocket can’t do. Keep in mind that renovations don’t always guarantee returns and that spending more on an upscale renovation isn’t necessarily a better investment than spending less on a mid-range project.You may also see transition plan examples .
You don’t have to cut a big hole from your savings just to make your house prettier. There are several money-saving tips you can follow to make sure you get a lot without having to spend too much.
1. Figure out how much you have to spend. After you’ve decided on what you want, determine whether or not you have enough money to cover the costs to achieve it. Look at your wish list and prioritize needs versus wants. For example, instead of setting aside a budget for garden gnomes, why not spend that money fixing the fence instead? It will make your lawn prettier, the same way that lawn gnomes will, while also ensuring that your house is safely boxed in from unwanted strangers.You may also like simple business plan examples
2. Assess the present condition of your home. As a general rule, the older the home, the more hidden costs you’re likely to find behind your doors and walls. You don’t want to focus on renovating your home office while your attic’s floors are nearly collapsing. Make sure that you don’t have more pressing structural issues to focus on.You may also see territory sales plan examples .
3. Check what permits your city requires. Unfortunately, we are not allowed to randomly break walls for beautification purposes. Which is why, in addition to protecting your home and family, getting the necessary permits will ensure that you won’t have to redo any of the work. The last thing you want is to run out of money in the middle of the project.You may also see weekly plan examples .
To avoid spending more than what your budget allows you to, try adding up a close estimation of all of your expenses before you start. This can help you get a rough guess on how much the remodeling will cost you. Add a little few extra dollars in there for miscellaneous expenses and you’re good to go.You may also see legal strategic plan .
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Planning a home remodeling project involves getting estimates from remodeling companies or general contractors unless you’re doing all this on your own. Chances are you’re not, so before you start researching for available, not to mention affordable, contractors, get recommendations from family and friends about who they hired for their own remodeling project.
You can never go wrong with tried and tested workers. Start compiling a list of several contractors you may want to hire, but don’t let the price be the deciding factor. We are often attracted to the cheapest. It’s one of man’s greatest weakness. However, the cheapest often won’t give you a result you can be happy with.
So instead of focusing on that sole factor, try considering these several others before hiring a contractor:
Honestly, if you are looking for an inexperienced newbie, why don’t you just go ahead and do the job yourself? But you won’t because remodeling your home is important to you, and you want to entrust the job to someone who’s actually capable of doing it. A contractor who has been doing business for a long time makes them a safer bet than one who is fairly new to the business.You may also see project plan examples .
Make sure that your contractor has gone through all of the steps needed to obtain any required certifications specific to their line of work. Why? Would you trust an unlicensed, although just as qualified, doctor to conduct a sensitive operation on you when the medical field is brimming with licensed and qualified doctors? Although a contractor and a doctor are two very different things, the point remains: we only want someone who has been given the right to perform the job. You may also see catering company business plan .
Contractors should have workers’ compensation and liability insurance for the type of work they perform. Yes, you’re just redesigning your house. But these people deal with machines and equipment, and insurance is not an option. It should be a necessity.
It’s important to know when the contractors will start and complete a project, and if there are any circumstances that may affect that schedule. Yes, you want your house to look prettier, but you can’t have strangers banging around your walls and making loud noises with their machines for too long. You need to know exactly when you can enjoy the results of your money and effort.You may also see marketing plan examples .
If knowing when you’ll enjoy your home’s new look will give you some peace of mind, knowing when they will get paid will do the same to your contractors. But, of course, a reputable contractor won’t ask you to pay the full price upfront, and the entire business world advises everyone not to. However, it’s important to discuss payment terms before construction begins. In some cases, it’s even better to spend a little extra to get someone you’re comfortable working with.
Depending on the scope of your project, a home renovation can run anywhere from a few days to a few weeks. As a result, you can expect your day-to-day life to be impacted in some capacity. If you’re remodeling your kitchen, don’t expect your breakfast to be peaceful for a while.
If you’re getting your living room done, move your guests somewhere else. Renovating the master bedroom? You’ll have to make temporary sleeping arrangements. Whether or not you should live in your home during construction depends on what work is being done.You may also see social media marketing plan examples .
If the contractor you hire doesn’t provide their own timeline or project plan for your home renovation, you should make your own and share it with them. It’s best that both parties are in agreement regarding this aspect. Generally, the bigger the project, the longer it will take.You may also see food catering business plan examples .
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Now that we are through discussing the basics of a renovation project, let’s delve deeper into the different factors that you also need to consider before pushing through. Do you need to tap an architect and an interior designer, or your wild mind enough? Do you need a permit before you begin, or are you conducting minor conditions that nobody needs to concern themselves with?
Know the answers to these questions and a couple more helpful tips below.
Always take your budget into consideration. Major renovations are more complicated and may cost more. If you are working with a limited budget, make sure that you use that money to alter a more significant portion of the house.
It’s important to decide which space or spaces need to be prioritized. This will help you stay within your practical working budget. Instead of doing the kitchen and the living room at the same time, choose which one among them must be remodeled first, and go back to the other one next time you become less short on cash.You may also see self-catering business plan examples .
What can I do with my old furniture? This one is a really good question and one that is frequently asked by those who have remodeled their houses. Of course, the renovations would also include purchasing a new set of furniture to go with the new design you are trying to achieve. So what will you do with the old ones?
Once you’ve identified the areas for renovation, inspect the spaces and check pieces that can be reused or repurposed. Reusing the materials will help you keep the cost low. Instead of buying a new table for your office, why not keep that gorgeous old mahogany table for after the remodeling?
Or that sturdy plywood from an old built-in cabinet can be used to make a new center table if it’s still in good condition. If you have pieces of broken ceramic tiles chipped off from the floor, you may use it on kitchen splashboards in place of expensive mosaic tiles by laying it out in a random pattern.You may also see e-commerce project plan examples .
By using your imagination, unleashing your creativity, and focusing on what will help you save money the most, you won’t need to throw away old furniture.
Do I need to enlist the services of an architect or an interior designer?
Commissioning the services of an architect or an interior designer will immensely help you maximize a limited renovation budget as design mistakes and unconfident quality estimates will be kept at a minimum, and specifications will be cost-sensitive. However, you don’t need to enlist the services of any of these professionals if you think you can do a perfectly good job yourself. You may also see hotel marketing plan tips .
Can I work on a renovation project without professional help?
Yes, of course you can. But it is undeniable that you can benefit from having a sketch or a guide of a general layout of the desired final outcome of the renovation. Having a plan will help you define the renovation direction and avoid unexpected changes mid-construction that may have serious cost implications.
1. Diligent supervision during construction is important, especially when trying to keep within a budget without professional design assistance. Yes, your contractors are professionals who will do their best in doing their tasks, but with you there, they’ll try to make an even better one. This will also ensure that all materials are used correctly and that the workers are working to achieve the needed output.You may also see restaurant event proposal examples .
2. Renovations can be complex and costly, but if you’re armed with proper planning and practical prioritization, you can go through the fun and exciting experience without having to break the bank.
3. After the renovations are completed, it is necessary to inspect the correctness of the construction work done and determine if the new space is safe for occupancy. Keep in mind that it would be an expensive inconvenience to spend more on trying to fix unsafe work.You may also see annual marketing plan examples .
Now that you are equipped with the necessary knowledge to do your own remodeling, bear in mind the important tips we’ve discussed. You don’t have to spend a lot to make your home more comfortable and more attractive. You’d be surprised at the amount you can save, while still receiving the same results, if you plan wisely.You may also see business plan profit and loss template examples .
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Sometimes you need a professional to get a task done the way it should be. Doing it yourself should be out of the question, if you want to finish on time. Or even when you just want to avoid risking effort, time and money which can lead to added work, if you want an overhaul for the house. It may even lead to legal problems, if you’re not careful. You may also see project plan templates here.
1. there’s a bigger picture, 2. visit a project site, 3. be a good boss, 4. allow more space and you’ll have a real haven of a retreat, 4 steps to a foolproof home renovation project plan, 1. know what you want, 2. develop a realistic budget, 3. how to budget for a home remodel, free renovation project plan sample template.
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Companies that fail to understand them risk falling behind.
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In 1978, Deng Xiaoping launched his “Reform and Opening” policy to leverage Western technology and know-how for China’s development. It was a politically risky move: Ideological hardliners in the Communist Party resented the implicit assumption of China’s economic backwardness under socialism — and the superiority of the capitalist West. But Deng recognized that China’s modernization required both pragmatism and humility.
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Photo illustration: Sarah Grillo/Axios. Photo: David McNew/Getty Images
Silicon Valley was burning up the socials this week, after learning that Kamala Harris has tacitly endorsed a tax on unrealized capital gains. Lots of what was shared was inaccurate.
Reality check: This only would impact a small subset of America's wealthiest people, and most tech founders and investors would be spared.
What to know: Harris didn't release a new tax plan. Instead, her campaign said it agrees with a series of items in President Biden's last budget proposal , the most relevant of which were nonstarters in Congress and didn't become law.
How we got here: Given that this is really Biden's plan, I spoke with an administration official about it.
The big picture: This would be a major philosophical shift in U.S. tax policy.
Yes, but: The rule could create some perverse incentives, such as discouraging some startup founders from taking their companies public.
State of play: Democrats would need to sweep in November to have any shot of enacting this rule, likely as part of negotiations tied to the expiration of some 2017 tax cuts.
The bottom line: In the unlikely event this becomes law, it's a much smaller deal than the likes and retweets would have you believe.
VP will pitch tenfold increase in federal tax incentives for startup expenses
September 4, 2024 at 4:01 a.m.
by WILL WEISSERT The Associated Press
WASHINGTON -- Vice President Kamala Harris plans to propose on Wednesday a tenfold increase in federal tax incentives for small business startup expenses, from $5,000 to $50,000, hoping to help spur a record 25 million new small business applications over her four-year term should she win the presidency in November.
She's set to unveil the plan during a campaign stop in the Portsmouth area of New Hampshire -- marking a rare deviation from the Midwestern and Sunbelt battlegrounds the Democrat has focused on in her race against her Republican rival, former President Donald Trump.
A Harris campaign official, who spoke on the condition of anonymity to discuss a policy plan that hadn't been released publicly, said Tuesday the change would cover the $40,000 it costs on average to start a business. The proposal would let new businesses wait to claim that deduction until they first turn a profit, to better maximize its impact lowering their taxes.
Such changes would likely require congressional approval. But a series of tax cuts approved during the Trump administration are set to expire at the end of next year, setting up a scenario where lawmakers may be ready to consider new tax policies. The proposal can help Harris show her support for entrepreneurs even as she's called for higher corporate tax rates.
Since President Joe Biden dropped his reelection bid and endorsed Harris in July, the vice president has focused on campaigning in the "blue wall" states of Michigan, Wisconsin and Pennsylvania that have been the centerpiece of Democratic campaigns that have won the White House in recent decades.
She's also frequently visited Arizona, Nevada and Georgia, all of which Biden narrowly won in 2020, and North Carolina, which last voted Democratic in a presidential race in 2008 but which she's still hoping to flip from Trump. Biden won New Hampshire by 7 percentage points in 2020, though Trump came far closer to winning it against Hillary Clinton in 2016.
"The cost of living in New Hampshire is through the roof, their energy bills are some of highest in the country, and their housing market is the most unaffordable in history," Trump posted last week on his social media platform.
Harris' team says securing 25 million new business applications in four years if she wins the White House would exceed the roughly 19 million such applications filed since Biden took office. And those were millions more than the previous four years under Trump. The vice president's goal would be a record for new small business applications -- but records only go back about 20 years.
Applications to start a business don't always translate to small businesses actually being formed. Still, Harris' plan could keep new small businesses that do come to fruition from otherwise incurring more debt which, at a time of high interest rates, might help them better succeed.
In the weeks since Harris took over the top of the Democratic ticket, she has offered relatively few major policy proposals -- attempting to strike a political balance between injecting new energy into the race and continuing to support many of the Biden administration proposals she helped champion as vice president.
Harris' small business plan follows her announcing last month proposed steps to fight inflation by working to lower grocery prices, and to use tax cuts and other incentives to encourage home ownership. The vice president has also proposed ending federal taxes on tips to service industry workers, an idea Trump proposed first.
The plan she's introducing Wednesday further calls for developing a standard deduction for small businesses meant to save their owners time when they're doing their taxes, and making it easier to get occupational licenses -- letting people work across state lines and businesses expand into new states. Harris also wants to offer federal incentives so state and local government will ease their regulations.
In an effort to spur business investment outside urban and suburban hubs, Harris is pledging to launch a small business expansion fund to enable community banks and federal entities to cover interest costs while small businesses are expanding or otherwise creating jobs. Her team says those efforts will focus especially on areas that traditionally receive less investment.
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The vice president supports the tax increases proposed by the Biden White House, according to her campaign.
By Andrew Duehren
Reporting from Washington
In a campaign otherwise light on policy specifics, Vice President Kamala Harris this week quietly rolled out her most detailed, far-ranging proposal yet: nearly $5 trillion in tax increases over a decade.
That’s how much more revenue the federal government would raise if it adopted a number of tax increases that President Biden proposed in the spring . Ms. Harris’s campaign said this week that she supported those tax hikes, which were thoroughly laid out in the most recent federal budget plan prepared by the Biden administration.
No one making less than $400,000 a year would see their taxes go up under the plan. Instead, Ms. Harris is seeking to significantly raise taxes on the wealthiest Americans and large corporations. Congress has previously rejected many of these tax ideas, even when Democrats controlled both chambers.
While tax policy is right now a subplot in a turbulent presidential campaign, it will be a primary policy issue in Washington next year. The next president will have to work with Congress to address the tax cuts Donald J. Trump signed into law in 2017. Many of those tax cuts expire after 2025, meaning millions of Americans will see their taxes go up if lawmakers don’t reach a deal next year.
Here’s an overview of what we now know — and still don’t know — about the Democratic nominee’s views on taxes.
The most recent White House budget includes several proposals that would raise taxes on large corporations . Chief among them is raising the corporate tax rate to 28 percent from 21 percent, a step that the Treasury Department estimated could bring in $1.3 trillion in revenue over the next 10 years.
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Sorry, there are no results matching your search., vice president harris releases partial economic plan that includes tax proposals.
Elements of economic plan include several new tax incentives and preferences
Vice President and Democratic presidential nominee Kamala Harris today released details of elements of her economic plan. Among other items, Harris proposed several new tax incentives and preferences, including the following:
The plan does not include specifics on whether the revenue cost of these items would be offset, though it does state that Harris will ask “the wealthiest Americans and largest corporations to pay their fair share” and that the plan will reduce the deficit.
Harris also calls for Congress to pass the Stop Predatory Investing Act , which would eliminate certain tax benefits for investors who own large numbers of single-family homes.
Notably, with regard to President Biden’s oft-stated pledge not to increase taxes on those making less than $400,000, “Vice President Harris is committed to ensuring no one earning less than $400,000 a year will pay more in new taxes.”
This pledge suggests that, for the $4 trillion of “tax cliff” items scheduled to expire at the end of 2025, Harris appears committed to extending those tax cuts for individuals making $400,000 or less. Though it is worth noting that use of the word “new” raises some uncertainty as to how the pledge will be applied.
Harris does not in today’s release endorse, or otherwise mention, the official tax plan of the Biden-Harris Administration, the so-called Green Book . Her vow to raise taxes on large corporations and the wealthy, however, is consistent with many of the proposals included in the Administration’s plan. Among other things, that plan calls for a 7% increase in the corporate tax rate, a number of new taxes on multinational businesses, and new taxes on high-earning individuals. For more information on the FY2025 Green Book, read KPMG report: Tax proposals in FY 2025 budget .
Absent from today’s release is a proposal to exempt tip income from taxation. Harris has previously indicated that she (along with Republican nominee Donald Trump) supports this idea.
Finally, it should be noted that the sum total cost of all these proposals is several trillion dollars. Pursuing all of these ideas is likely to put significant pressure on finding new tax increases to offset the cost of these items.
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Here is a free business plan sample for a home renovation company. January 29, 2024. Embarking on a home renovation business can be an exciting venture, but knowing where to start can be overwhelming. In the content that follows, we will present you with a comprehensive sample business plan tailored for a home renovation company.
The Plan. Our construction contractor business plan is meticulously structured to include all essential aspects necessary for a robust strategy. It outlines the company's operations, marketing strategy, market environment, competitors, management team, and financial projections. Executive Summary: Presents an overview of your construction ...
5.1 Sales Strategy. 1. Anywhere Remodeling needs to sell the company, not the price. 2. Anywhere has to sell its quality and service. The actual remodeling is like the razor, and the support, service, design and hand holding are the razor blades. We need to serve our customers with what they really need.
File Format. PDF. Size: 358 KB. Download. There is a niche in remodeling business transaction that is more frequent than the others, and that is the remodeling business in interior designing. And that probably will get you to the busy world of remodeling. Imagine how many boutiques are there in a mall.
Vehicle purchase and maintenance: $100,000. Equipment and initial supplies: $150,000. Three months of overhead expenses (payroll, rent, utilities): $100,000. Marketing costs: $30,000. Working capital: $25,000. The following graph below outlines the pro forma financial projections for Eternity Remodeling and Renovations.
Marketing Plan. Traditionally, a marketing plan includes the four P's: Product, Price, Place, and Promotion. For a remodeling company, your marketing plan should include the following: Product: In the product section, you should reiterate the type of remodeling company that you documented in your Company Analysis.
The Plan. Our kitchen and bathroom remodeling business plan is structured to cover all essential aspects needed for a comprehensive strategy. It outlines the company's operations, marketing strategy, market environment, competitors, management team, and financial forecasts. Executive Summary: Provides an overview of the Kitchen & Bathroom ...
Writing a home improvement business plan is a crucial step toward the success of your business. Here are the key steps to consider when writing a business plan: 1. Executive Summary. An executive summary is the first section planned to offer an overview of the entire business plan. However, it is written after the entire business plan is ready ...
Tips for Writing a Remodeling Business Plan. 1. Company Description. Write a detailed description for your remodeling or construction business, including the company name, address and your headquarters' contact information. You also have to explain your company's specialty or the type of remodeling services you usually provide such as ...
Download. Business in a Box templates are used by over 250,000 companies in United States, Canada, United Kingdom, Australia, South Africa and 190 countries worldwide. Download your Renovation Contractor Business Plan Template in MS Word (.docx). Everything you need to plan, manage, finance, and grow your business.
Bring together all your enquiries, estimates, quotes, jobs, staff, invoices, and more — all in one place, across every device. Save time and eliminate stress with Tradify! Try Free for 14 Days! Every renovation business, new or established, needs a solid business plan. Download your free business plan template today!
How to Write a Renovation Business Plan in 7 Steps: 1. Describe the Purpose of Your Renovation Business. The first step to writing your business plan is to describe the purpose of your renovation business. This includes describing why you are starting this type of business, and what problems it will solve for customers.
A Sample Home Remodeling Business Plan Template. 1. Industry Overview. The real estate industry of which home remodeling line of business is sub set of is indeed one of the many industries that are a major contributor to the growth of the economy of many nations of the world; there is hardly any country where the real estate industry is not ...
4.1 Market Segmentation. A market need for custom woodworking is generated by new construction and residential remodeling. For $1,295, a copy of a 350-page market study undertaken by Business Trend Analysts can be purchased. This study examines demand patterns in both new construction and home improvement markets.
Business Overview. VB Residential Construction Company is a startup construction company located in Milwaukee, Wisconsin. The company is founded by two cousins, Victor Martinez and Ben Schmidt. Together they have over 20 years of experience in constructing homes from design concept, remodeling and renovating homes.
She realized that the remodeling business has never-ending scope in the years to come as people keep thinking of bringing improvement to their property. 3.3 How the remodeling business will be started. Step1: Plan your business. As the first step, Anna studied various business plan examples for remodeling company to make a business plan for ...
The Cost of Launching our official Website - $600. Additional Expenditure (Business cards, Signage, Adverts and Promotions et al) - $5,000. Going by the report from our research and feasibility studies, we will need about $500,000 to set up a standard property maintenance and renovation company in Palm Beach - Florida.
Offer your renovation service and convince your clients to do more business with you with this innovative and premier Renovation Business Plan Template. Get access to this amazing template anytime, anywhere using your different devices and in any file formats presented. Strategize your next move through market analysis and customer research.
2. Create a realistic budget. The next step in your home remodeling project is to create a budget. Redesigning a house can be expensive. Deciding on a budget will help you make sure that you don't spend more than you should, and that you achieve everything you want to get done with enough to spare.
2. Develop a Realistic Budget. The next step for your home improvement plan is to create a budget that didn't come out of thin air. Your simple budget should be well-thought and this would only be possible when you decide the scope of your project and what features you want to include.
China's hybrid "state capitalist" system, driven by centralized planning and fierce competition, has led to dominance in critical technological fields and emerging markets. Western ...
**Exclusión de responsabilidad sobre las opiniones Estas opiniones se refieren a varios productos de Kaspersky, todos ellos respaldados por las principales tecnologías de seguridad de Kaspersky. Aunque las opiniones son una representación exacta de las experiencias de nuestros clientes al utilizar nuestros productos, es posible que no se refieran a Kaspersky Standard específicamente.
The city and Tepper Sports view their respective investments as equal, with Tepper Sports chipping in $150 million toward the renovation and promising another $421 million worth of upgrades by 2045.
What to know: Harris didn't release a new tax plan. Instead, her campaign said it agrees with a series of items in President Biden's last budget proposal, the most relevant of which were nonstarters in Congress and didn't become law. This includes the new tax on unrealized capital gains.
Former President Donald Trump and Vice President Kamala Harris have each proposed economic policy that could affect your taxes. Here's what to know.
WASHINGTON -- Vice President Kamala Harris plans to propose on Wednesday a tenfold increase in federal tax incentives for small business startup expenses, from $5,000 to $50,000, hoping to help ...
During a press call hosted by the RNC and the Trump campaign, Kevin Hassett, former chairman to the Council of Economic Advisers in the Trump administration, called Harris's plan for price ...
The tax plan would also try to tax the wealthiest Americans' investment gains before they sell the assets or die. People with more than $100 million in wealth would have to pay at least 25 ...
Her vow to raise taxes on large corporations and the wealthy, however, is consistent with many of the proposals included in the Administration's plan. Among other things, that plan calls for a 7% increase in the corporate tax rate, a number of new taxes on multinational businesses, and new taxes on high-earning individuals.