Garden Crafts Inc. has developed a new product, the Sit N' Caddy, which it intends to produce and market. Garden Crafts has formulated a mission statement and strategy that will use value, quality, and a conscience in the development mix.
Garden Crafts will be incorporated in the state of Georgia as a Chapter S corporation, and will consist of two stockholders: Rob Kane and Keith Jones. The operational facilities will be located separately from the administration offices. Start-up costs have been projected with the bulk being provided by Mr. John Houseman, former owner of Kustom Kabinets. He has agreed to hold the equipment cost as a private note.
The product, the Sit N' Caddy, is a combination stool/tool caddy, constructed out of premium grade hardwood. Market research has uncovered several products similar in nature, but none that were wood based and customizable to the degree of the Sit N' Caddy.
Analysis of several markets points out Home Depot is the largest national retailer in home and garden supplies. This expanding market has experienced constant growth, showing double digit increases over the past three years. With two-thirds of homeowners spending an average of $532 annually on gardening products, this indicates a highly profitable future for Garden Crafts.
Since Home Depot was selected as our initial target for sales, our strategy will revolve around the Merchant that Home Depot uses as their regional buyer. With Home Depot as our sole customer, their merchant pricing system will dictate our sales price. Based on our costs, we have decided that $20 will be the lowest price that we will be willing to accept from Home Depot. With a single product and a standard price, the three-year forecast shows a direct result of the projected 11% growth rate.
Of the $10 cost per unit, it was determined that labor would account for $5 per unit. Rather than pay an hourly rate, it was decided that piece-rate would be the best option for future employees. The corporation will also pay a portion of net profits to the two founders as dividends. The remaining profits will be placed into an aggressive-growth mutual fund as a form of retained earnings.
Gross sales figures show an increase over the three-year period, a natural result of our projection of an 11% growth rate. Operating expenses also show an increase, though not in lock-step with the sales trend. The slight deviation occurs from expenses that are prepaid in the first year, as well as some additional expenses that do not occur after the 15th month. Considering that the total first year production run will be sold to Home Depot, the profits for the first year sales are healthy, followed by modest growth in the second and third year. See the Highlights section of this business plan.
In short, Garden Crafts is positioned to reap healthy returns on a minimal investment. Major factors contributing to this success are the knowledge and skills of the founders, a commitment by Home Depot, uniqueness of design, and a continuous growth in the home and garden market.
Objectives for Garden Crafts:
Garden Crafts will strive for quality in its production and shipping processes. We intend to create a business based on a single product, the Sit N' Caddy, a combination garden caddy/gardening stool. We will ensure safe working conditions for all employees, placing this as a priority above our profits.
We intend to use diverse marketing methods to reach a large segment of the gardening population to offer what we feel is a valuable asset to any gardener's shed. Garden Crafts will also keep an open mind with regards to new methods of production, changes to our product line, and custom orders from interested clients.
We will always keep our profits in mind, but never at the expense of our customers.
Our keys to success will be: