Custom Quilt Artist Business Plan

Sew Distinct will begin commissions in January, 2006, with the first quilts to be completed within 3-6 weeks after commission.

8.1 Important Assumptions

I anticipate a steady and increasing interest in quilt commissions, based on the trends I have seen in the last several years. The financial plan is built on the tax and interest rates shown below.

8.2 Key Financial Indicators

I expect a steady but slow rise in sales over the next three years, up to the maximum capacity of 6 quilts per month. As the business and its reputation grows, I will be able to direct clients toward the best quilt for them more efficiently, and streamline the design and production processes.

8.3 Break-even Analysis

The break-even analysis shows the projected break-even point for Sew Distinct, taking into account all variable and fixed costs, including fees paid to the contracted quilters. I will pass the break-even point in the third month, and be profitable thereafter.

8.4 Projected Profit and Loss

The Profit and Loss for Sew Distinct is encouraging. In addition to paying good wages and fees to the owner and the contracted hand quilters, the business will be able to pay for the necessary insurance, taxes, loan interest, and a small marketing budget, and still make a modest profit.

The projected marketing and promotion expenses are low, because the owner already has an established reputation and clientele, from her part-time forays into quilting in the last few years. The marketing budget includes items like advertisements in local papers and magazines, church and synagogue directories (a great source for customers seeking gifts!) and yellow page ads, as well as brochures in likely local venues.

8.5 Projected Cash Flow

The Cash Flow table and chart show my projected cash position. The table also shows the planned repayment of the start-up loan.

8.6 Projected Balance Sheet

The Projected Balance Sheet is quite solid. I do not project any real trouble meeting my debt obligations. As business progresses, I will build up my cash reserves so that I can take a vacation or sick time starting in the third year. I would also like to be able to pay my quilters bonuses for their 20th quilt completed, 30th quilt, and so on, although these numbers are not included in the financials of the plan – actual amount will depend on achieving the sales goals set forth, so I’m leaving myself some flexibility.

The ultimate goal is to create a suitable net worth to see myself into retirement within 20 years, since this is not the sort of business that can be sold to another person. Most of my assets are cash, and I expect this trend to continue in the future, given the nature of the business.

8.7 Business Ratios

The following table outlines some of the more important ratios from the Quilting for Individuals industry. The final column, Industry Profile, details specific ratios based on the industry as it is classified by the Standard Industry Classification (SIC) code, 7299.0801. My ratios differ from the industry standard in several areas; this is largely because this closest industry type more accurately fits what my subcontracted quilters are doing, and does not represent businesses engaged in creating new gifts/works of art from scratch.