Comgate is a custom mill house specializing in creating architectural woodwork in the form of wall paneling, custom cabinets, and other products for the local residential market. After initial losses and several thin profit years of competitive bidding construction projects, Comgate is creating this business plan in order to bring its mission statement into clearer focus. Prior years were characterized by hectic efforts to bid as many jobs as possible. Margins were thin as pricing policy was "flexible" for fear that there would be insufficient work for production staff.
However, with the growth of sufficient sales, Comgate has the opportunity to create greater margins, increase efficiency, and improve overall profitability through long-overdue restructuring and focusing on our target market. These changes will assure more accuracy in pricing, billing, and tracking of costs for comparison purposes. Profits are expected to increase.
Comgate's mission is to compete profitably in the high-end residential market for custom woodwork within the state of Connecticut. It will emphasize custom work of the highest quality, and specialize in the most demanding needs of new and remodeled designer homes in the $3 to $15 million price range.
Comgate is engaged in custom architectural woodwork in the form of wall paneling, custom cabinets, molding, pilasters, radius units, circular staircases in special woods, elaborate dressing rooms, specialty kitchen work, etc. 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. "Custom" is the key word at Comgate. The average home would not use our products. 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.
The industry is mature and well-represented. There are many mill shops in the same market area which are focused on specialty areas. One mill shop may concentrate on custom furniture and form special alliances with upholstery shops. Other mill shops may specialize in standard kitchen cabinetry. 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. The program is especially formulated to suit the custom woodwork market, and is expected to make substantial in-roads into the chosen highest end residential market. Comgate should be able to set itself apart from the competition, and be able to fully utilize its recently expanded production capacity.
With greater and greater demand for high-end trophy home construction, coupled with the increasing difficulty of attracting and keeping skilled workers, Comgate is moving toward linking its CAD capability with the practices of design professionals that will allow the company to out-source certain simpler parts in a project to other mill shops, while keeping the more demanding work for itself. 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.
The recent addition of over $110,000 in advanced new Computer Numerical Control (CNC) machinery, coupled with the building of an in-house industry-adapted Computer Aided Drafting (CAD) capability, will propel sales to nearly $800,000 by the end of Year 1, and $1.2 million by the end of Year 3. Profits will grow as well. A desire to shorten accounts payable in Year 2 to take advantage of all available trade discounts, together with rising receivables, will result in a short-term need for increased bank lines of credit of approximately $30,000.
Comgate's mission is to compete profitably in the high-end residential market for custom woodwork within the state of Connecticut. We will emphasize on custom work of the highest quality, and specialize in the most demanding needs of new and remodeled designer homes in the $3 to $15 million price range.
The most important keys to success in the contractors' mill shop industry are:
Comgate's major objectives are: