The products used in this plan were limited to only five items to simplify calculations. "Custom" is the key word. The average home would not use these items. 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.
Comgate is engaged in custom architectural woodwork in the form of wall paneling, custom cabinets, molding, pilasters, etc. Although by nature of the word "custom" the milled products can be totally unique, the vast majority of products milled to date fall into only these few general categories. However, assuming success with the company's marketing strategy, Comgate will move more up-market within the high-end residential market (see Chapter 4.0, Market Analysis Summary). Rather than produce ordinary high-quality casework, the company, for example, might produce a custom casework item in soft maple with an antiqued crackle finish designed to hide a stereo system. Radius units, circular staircases in special woods, elaborate dressing rooms and kitchens with a lot of curves would be further examples of challenging work that would be in line with stated strategy goals. More ordinary jobs would be accepted only if the jobs fit into the company's out-sourcing guidelines. 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.
Performing a competitive comparison with products produced by other mill shops is not a simple task as the products are custom. There are no price lists. Financial comparisons can be made, however, with a group of mill shops (see Architectural Woodwork Institute AWI survey results in Appendix A). There are 12 mill shops in the New Haven area including Comgate. There may be one or two that are not members of AWI and therefore not listed in the membership directory. It is also known that some very large construction companies have their own in-house mill shops (see chapter on Industry Participants). Their present combined sales of all products sold to all home markets are approximately $12-$14 million annually. The market study estimates the total trophy home renovation and new construction market in Greater New Haven to be $127 million of which at least 10% is made up of custom wood millwork. This 10% or $12.7 million would seem to indicate that the demand from this market sector alone is equal to the total supply available to all market sectors. The demand clearly outstrips supply in respect to suppliers in New Haven for the demand in the area. Obviously, part of the demand must be being met by suppliers of high-end woodwork located outside New Haven.
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, which was developed by the person who is on contract to the company. 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.
Note: appendices A - K have been omitted from this sample plan presentation.
At the present time no sales literature is available. Brochures of high quality will only be produced after production capacity has been expanded and success has been reached in filling the stated management teams gaps.
All materials used in the company's production are available from a number of local suppliers (primarily lumber dealers). Sourcing has never been an issue of concern.
Technology does play a part in this industry. Major custom woodworking machinery has incorporated time and labor-saving advantages of the computer age. Precision digital settings and the use of lasers make measurement faster and more exact. Comgate has added over $110,000 in new CNC equipment this year, which will allow the company to substantially increase production despite the limitations imposed by its rather small production hall. Comgate's CAD department is an attractive addition which is already demonstrating success in image-building with interior designers and architects to the wealthy.
In the past, Comgate has produced custom wood products and has bid competitive jobs. The stated marketing direction of the company (see chapter on Target Market Segment Strategy) will move the product line more up-market by producing more challenging items, such as radius units, staircases, elaborate kitchens and libraries in exotic woods, etc. Some of the more mundane sections of a job will be out-sourced to other mill shops (simple paneling, etc.). Any profits from out-sourcing have not been reflected in the financials of this business plan.