Machine Tooling

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Machine Tooling Business Plan

Company Summary

Business Description
Machine Tooling has been operating in Kansas City since May, 1989. We are a Kansas Limited Liability Company (LLC). The company occupies 10,000 square feet of manufacturing area, including offices for administration, engineering, and a quality assurance area.

Overview of Technology and Products
Machine Tooling was formed to provide full-service, close-tolerance contract machining of machine and tooling components, production machining, and automation of production lines. The diverse manufacturing equipment at our facility accommodates versatility and allows the plant to operate self sufficiently.

Managerial expertise and industry experience have helped the company to show profits every year since its inception. During the last three years, the company further entrenched its position in its market niche, which resulted in healthy financials that can be seen in Table 2.1.

2.1 Company History

Machine Tooling was founded in Kansas City in 1989 on the basis of providing quality machine tools for selected industries. The owners had worked in this field for several years and had established multiple business contacts who helped the company pick up major business accounts. By 1999, the company's revenues reached $1.5 million, and the management realized that further company growth would be difficult without securing additional working capital. To be less debt-dependent, the management has decided to go public. However, before the company issues the initial public offering (IPO), Machine Tooling currently seeks $500,000 for expansion purposes. Such expansion will improve the company's sales ability and positively affect its IPO prospects.

Past Performance
1997 1998 1999
Sales $1,000,000 $1,300,000 $1,500,000
Gross Margin $600,000 $800,000 $1,000,000
Gross Margin % 60.00% 61.54% 66.67%
Operating Expenses $400,000 $550,000 $700,000
Collection Period (days) 19 22 34
Inventory Turnover 3.00 3.00 3.00
Balance Sheet
1997 1998 1999
Current Assets
Cash $20,000 $40,000 $60,000
Accounts Receivable $40,000 $80,000 $130,000
Inventory $30,000 $60,000 $90,000
Other Current Assets $5,000 $10,000 $15,000
Total Current Assets $95,000 $190,000 $295,000
Long-term Assets
Long-term Assets $100,000 $100,000 $100,000
Accumulated Depreciation $10,000 $20,000 $30,000
Total Long-term Assets $90,000 $80,000 $70,000
Total Assets $185,000 $270,000 $365,000
Current Liabilities
Accounts Payable $25,000 $50,000 $75,000
Current Borrowing $15,000 $35,000 $50,000
Other Current Liabilities (interest free) $5,000 $5,000 $10,000
Total Current Liabilities $45,000 $90,000 $135,000
Long-term Liabilities $50,000 $50,000 $50,000
Total Liabilities $95,000 $140,000 $185,000
Paid-in Capital $50,000 $50,000 $50,000
Retained Earnings $40,000 $80,000 $130,000
Earnings $0 $0 $0
Total Capital $90,000 $130,000 $180,000
Total Capital and Liabilities $185,000 $270,000 $365,000
Other Inputs
Payment Days 30 30 30
Sales on Credit $750,000 $1,000,000 $1,125,000
Receivables Turnover 18.75 12.50 8.65