XYZ Company Business Plan September 2003 Contact Information Steven Smith
XYZ Company
957 Pine Street
Springfield, Kentucky 46708
Phone: (999) 555-5555 Business Location
635 Street
Springfield, Kentucky 46767
Phone: (999) 555-1234 Table of Contents:Executive Summary The Business The Management The Market Financial Projections
Executive Summary XYZ Company is a new graphic design business, which specializes in logo design. XYZ Company will produce numerous products for this market including: advertisements, brochures, and mailings. The company is located in Springfield, Kentucky, and will focus on the Cedar Valley for sales of its products and services. XYZ Company is an S Corporation and Steven Smith is the owner. There is a community in the Cedar Valley that has not been exposed to professional logo design, because many similar businesses are located in larger cities. XYZ Company is aware the Cedar Valley is an untapped resource, and would like to make logo design available to businesses for use in promotional and informational materials. Logo graphics are a unique feature of this business. XYZ Company will customize specific designs to fit each company’s preferences. Designs created for one customer will not be sold to another customer; therefore, XYZ Company creates a more personalized and individual atmosphere. The owner has invested $4500 in equipment purchases and $6000 in cash to start this business. Additional start-up costs for this venture will be $35,000. This capital will be secured from two major sources: State Bank loan for $25,000 and Targeted Small Business Grant for $10,000. Mr. Smith has already purchased some necessary pieces of equipment and will use the loan and grant money to acquire additional equipment and inventory, and for other start-up expenses.
The Business Purpose XYZ Company is a local small business which will provide quality graphic communications products and services to everyone from individuals to businesses. XYZ Company will help individuals and businesses in a way that will compliment their products and services. XYZ Company will design and sell its own products. This business will provide its customers with quality promotional materials and help small businesses establish their own identity in the marketplace. Products/Services Mr. Smith will be creating and designing numerous products including: advertisements, brochures, direct marketing materials, and other promotional items. XYZ Company will provide customers with professional-looking logos right here in the Cedar Valley so they won’t have to travel to a larger city. In the future, XYZ Company may expand its services to web design. Regulations Mr. Smith will obtain approval to use logos or names from copyrighted and trademarked client companies. Competition The strengths of XYZ Company’s products and services lie in the experience and dedication by the owner. A challenge for the company will be to establish a customer base. Businesses that already employ a graphic design company may be hesitant to change. XYZ Company must seek out businesses that do not retain a specific design company, and give those that do a reason to switch. Location The business is located in Springfield, Kentucky. Being located in an industrial park will allow XYZ Company to work closely with potential clients in the area. This will give the business a good edge for sales and exposure to other businesses and individuals who trade there. Facility XYZ Company has anticipated that the site chosen will meet its needs for five to ten years, at which point it will be necessary to expand if growth estimates are correct. At that point, the business will seek a larger facility in the same area in order to maintain customer relations. Operational Needs Phase I Equipment & Inventory (Already Purchased by Owner) 400MHZ PowerPC G3 $ 3000.00 Adobe InDesign $ 700.00 Adobe Illustrator 8.0 $ 350.00 Apple Design Keyboard $ 90.00 Quicktime $ 400.00 TOTAL $ 4540.00 Phase II Equipment & Inventory (Needed Immediately) 21” Apple Monitor $ 1500.00 Adobe Type Manager 4.0 $ 70.00 Easy Street Design Station $ 15,000.00 Powerlook Scanner $ 1,200.00
TOTAL $ 17,770.00 Phase II Equipment & Inventory (Needed Within 3-6 Months) Laserjet Printer/Copier $10,000.00 Color Printer Supplies $ 250.00 TOTAL $10,250.00 Barriers Two barriers are possible for XYZ Company. 1) Lack of funding to obtain the necessary equipment in order to implement all of the company’s various capabilities. 2) As a new business, it will take time to establish a customer base. XYZ Company must put itself on the map by contacting and advertising to potential customers.
The Management About the Owner XYZ Company is the final achievement of a life long love of art and design, and a desire to continue this work as a career for Mr. Smith. He is ready to begin his own business as an S Corporation. Mr. Smith has over 20 years of experience in graphic design. As the primary designer at XYZ Company, he will bring expertise to the Cedar Valley. Management Setup The owner, Steven Smith, will be the sole person involved in the startup of the business. He will operate the business individually until his customer base and production levels expand to a point where additional help is necessary. Mr. Smith will keep up with the ever-changing design industry by attending training workshops, seminars, etc. He plans to continue his education and monitor trends in these ways. Mr. Smith graduated with an Associate Degree in Graphic Communications from Mountain Community College in Riverton, Kentucky. He has twenty years of experience as a graphic designer with a company in Cedar Rapids, Kentucky. Mr. Smith has created an extensive portfolio of his past work which is available for viewing. Consultants While trying to grow his business, Steven Smith will depend on the consultants at the Regional Business Center in Waterloo, Kentucky to give him advice. He will also be contacting Jane Hill for legal advice and services. The Market Product Mr. Smith’s products and services are unique because of his modern creations, personalized service, and competitive prices. His target market will be satisfied with his custom graphics. XYZ Company strives to be viewed as being imaginative and as providing high-quality work. Mr. Smith’s designs will also be completed in a timelier manner than his competitors’ and delivered to his customers more quickly, due to the personalized nature of his business. Target Market XYZ Company will serve businesses in the Cedar Valley area. Most of these will either be small businesses, without their own graphic designers, or businesses that just don’t have time to create all of their own promotional materials. Research has shown that there are more small businesses now than ever before. Also, more and more companies are outsourcing their promotional-type activities. These trends are expected to continue in the foreseeable future. XYZ Company’s goal is to capture 10-15% of the market in its two years of operation. Market Need XYZ Company satisfies the market need for a local design business that will work on a more personal basis with the community. Mr. Smith will be supplying logos, brochures, print advertisements, direct mail pieces, and other promotional materials. XYZ Company will be a supplier of unique designs with competitive prices, as well as originality and convenience to the local market. Mr. Smith’s services will be available to any person or business that has a graphic design need. For example, small businesses that cannot afford a big design firm or individuals who want to create their own special images will be included in his target market. Currently, the market need is being filled by high-priced design agencies and mass-produced designs rather than individual preferences. Competitors XYZ Graphics - Priced at $60-$65 per hour. The production quality is good and this business can handle big or small jobs. Marketing techniques include newspapers, Internet, and the yellow pages. XYZ has a good central location but their products are quite costly. This competitor caters to big businesses. Their overall market share is 20%, but they possess only 5% of Mr. Smith’s market share. Pete’s Designs - Priced according to the project. Quality is excellent but products are mass-produced. Pete’s Designs has a nationwide market and their distribution system is via mail catalogues and the Internet. Marketing strategies consist of magazine advertisements and TV exposure. Pete’s is located in California, so it does not pose an extreme threat to Mr. Smith’s local market. Overall, Pete’s possesses 30% of the national graphics market and 7% of the local graphics market. Competitive Edge An advantage that XYZ Company has over its competitors is that it is a small business; therefore, it is able to give more personal attention to each customer’s needs. Customers will be dealing directly with the owner and not just a company employee or representative. His equipment will be the newest available on the market in order to manufacture these designs and serve his customers in the most successful manner. On the contrary, XYZ Company’s competitors have not recently upgraded their equipment and; therefore, will not be able to provide the same high-quality designs. Mr. Smith will stay on top of progress in the graphics field by reading trade journals, monitoring competitors, attending seminars, and upgrading to top-of-the-line equipment in order to produce the newest products available. Location The location of the facility is important because it will be near potential customers. We hope that this will help XYZ Company to gain an additional advantage over the competition and provide greater customer satisfaction. Industry Trends New technology is introduced constantly to the graphic design industry. Mr. Smith plans to attend trade shows, read industry publications, and observe competitors in order to follow trends in the industry. At this time, the industry is very successful and 10-15% annual growth is planned to continue through the next five years. Methods of Distribution Once manufactured, the designs and promotional materials may be picked up by the customer or mailed to their home or place of business. If in need of immediate delivery, XYZ Company may deliver products locally. Advertising and Promotion Mr. Smith will advertise through newspapers, local business publications, and by the word-of-mouth satisfaction of customers. Promotional items will emphasize the timesaving and professional capabilities of XYZ Company. Pricing and Expected Sales Mr. Smith will have a fee schedule for the assorted products and services that XYZ Company offers. The prices will be competitive within the local area. The average hourly rate for design services will be $40. XYZ Company is able to charge less than his competitors and still make a profit due to his low overhead and lower personnel costs. Expected sales for Year 1 are $25,000, for Year 2 are $36,000, and for Year 3 are $48,000.
Financial Projections
This section presents an economic model that realistically puts forth the basic financial assumptions of XYZ Company. The model is based upon conservative assumptions and demonstrates XYZ Company can be profitable in its first year of operation. The economic model shows a need for an additional $35,000 to launch the company. XYZ Company’s capital needs are largely for inventory, equipment, working capital, and marketing. Sources of Funds Owner’s Equity (Equipment Already Purchased and cash) $10,500 TSB Grant $10,000 State Bank Loan $25,000 TOTAL $45,500 The following pages present cash flows, profit and loss statements and other financial information projections for three years. (Not included in this sample business plan.) Back to Business Financing and Planning | 