Drapery Fabricator Business Plan

Executive Summary

Introduction

Cutting Edge Drapery is a well established decorators' workroom. The company is engaged in the production of draperies, slip covers, and other textile products in accordance with the designs and concepts of interior designers. Cutting Edge Drapery has recently expanded its production facilities and is well-positioned to market its workroom production beyond its present client base. The company is dedicated to providing the highest quality workmanship, meeting the agreed delivery dates, and executing the custom work exactly in accordance with the designer's concept. The focus of this business plan is to identify its future target clients, explain its marketing strategy, and to improve its internal procedures so it can substantially increase profitability.

The Company

Cutting Edge Drapery is located in Loudon, New Hampshire. Soft window treatments represent the major share of the company's production. The total market for soft window treatments in the communities which the company targets is approximately $2.7 million. The share of this market channeled through designers and decorators is directly proportional to disposable income and real estate valuations.

The company is a sole proprietorship and has been operating for nearly 25 years. The owner worked out of her home as a seamstress and tailor until her business volume caused her to move her operation into rented space in Loudon. This expanded space allowed her to concentrate more on draperies and window treatments. The office is comprised of 2,200 square feet where seven people are employed full-time. Recently an assistant has been hired to take on the administrative burden and to help improve the company's internal procedures. A new outside accountant has been engaged who is streamlining the computerized accounts.

The Products

Cutting Edge Drapery provides sewing services in the creation of high quality soft window treatment products such as; draperies, swags, jabots, slip covers, etc.

Although the company could be considered a company making products, because clients furnish the fabric for each custom crafted unit, it actually only provides the sewing and installation services to its customers. There are relatively few sourcing costs because the company does not have to directly provide for fabric, which is the most expensive input in the production process.

The Market

The population of the 17 communities in close proximity to Cutting Edge Drapery is estimated at 277,253. Roughly, this would mean that this area comprises a total soft window treatment market in excess of $2.7 million annually. All of these treatments must be produced in decorator workrooms. The company's share of this nearby market is approximately 7.5%.

The company is in the process of shifting from its current target market of interior decorator clients to the more higher end interior designer market. A change to this target market will improve profitability levels since the designer segment is much less price sensitive and provides greater margins. The designer's clients include the high income homeowners that demand unique products and a high degree of customer service. This, in turn, requires a high contact service environment between the designers and workrooms that can best ne served by a company such as Cutting Edge Drapery.

To penetrate the interior designer-controlled share of the window treatment market ("Designer" being the key word here rather than "decorator"). Within the next twelve months it is the objective of the company to market the 15 targeted designer members of the American Society of Interior Designers (ASID) who are located in close proximity to its Loudon facilities, and to establish a business relationship with at least three of them. This will grow to five in the second year and seven in the third year. The company faces significant competition from existing workrooms within the local area. Cutting Edge Drapery's strategy is to lift its image, through advertising in prestigious trade publications, joining and net-working ASID membership, and actively marketing its selected target market.

Financial Considerations

The marketing research and tailored marketing strategy described in this business plan will result in robust profits, increasing every year. It is estimated that by year 2000, revenues will reflect an 11% market share of the local soft window treatment market.

Monthly break-even is very achievable. Total production at the time of this writing was approximately 98 units, which will increase to 115 by the end of the year 2000.

Because it is the policy of the company's clients to provide the fabric for the soft window treatment products, the company has a very low cost of goods sold account and therefore a high gross margin. Furthermore, the custom nature of the business means that there is minimal inventory cost and accounts payable. Finally, the company does not posess any debt or long term capital assets that would affect the cash flow. With the ability to generate so much cash flow, it is assumed that the company will seek to use this asset to expand its markets and production capacity in the near future.

1.1 Objectives

1. To penetrate the interior designer-controlled share of the window treatment market ("Designer" being the key word here rather than "decorator"). Within the next twelve months it is the objective of the company to market the 15 targeted designer members of the American Society of Interior Designers (ASID) who are located in close proximity to its Loudon facilities, and to establish a business relationship with at least three of them. This will grow to five in the second year and seven in the third year.


2. To substantially increase profitability. We will encourage price-sensitive jobs to go elsewhere by formalizing the pricing mechanics. This will allow for attention to a more high-end custom work to be performed for the less price-sensitive designer market sector. This pricing will insure a minimum of $65,000 in pre-tax profits during the first year.


3. To improve the administrative machinery of the operation. This will allow a reduction in the owner's involvement in simple administrative tasks from 50% of her time to 20%, thereby allowing her more time for sales and marketing tasks.

1.2 Mission

Cutting Edge Drapery is best suited to serving the interior designer share of the textile treatment market because clients of interior designers can afford expensive materials and custom solutions. The company is unable to compete with large workrooms geared to mass production runs, nor can its pricing compete with the many "mom and pop" home workrooms. The company is dedicated to providing the highest quality workmanship, meeting the agreed delivery dates, and executing the custom work exactly in accordance with the designer's concept.

1.3 Keys to Success

There are a few key factors that spell success or failure for professional workrooms--most of which stem from the importance of reputation to an interior designer:

1. The professional workroom must not have private clients. Interior designers are often paranoid that one of his clients will discover he could have saved thousands of dollars by dealing directly with the workroom. If private clients contact the company, they should be referred to a designer who works closely with the company.


2. Clients who can afford interior designers tend to be very demanding; designers are under a lot of pressure. The interior designer needs to feel that his workroom considers that designer the most important person in the world. Any action that might indicate that the workroom might be busy with other designers' work, such as failing to return phone calls promptly, must be avoided.


3. The workroom must be true to its word. The work must be executed exactly according to plan, when it was promised, and at the agreed price. The ability of the workroom to communicate effectively with the designer is key.


4. The quality of the production supervisor is key. The production supervisor must insure that jobs quoted at 15 hours do not take 20 or more. Profit goals can not be reached if individual production stitchers do not work efficiently or are left idle.