Drapery Fabricator Business Plan

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 is able to market its workroom production outside of its current client base because it has recently increased its production facilities. The company is committed in providing top quality workmanship, meeting all agreed delivery dates, and executing custom-made work exactly according to the designer’s idea. 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’s headquarters are located in Loudon (New Hampshire). Soft window treatments make up the majority of the company’8217;s production. The company targets $2.7million in soft window market. The disposable income of designers and decorators directly correlates to the market share.

The company was founded in 1991 as a sole proprietorship. It has been in existence for over 25 years. The owner started her business from her home, working as a tailor and seamstress until she reached a certain level of business. She then moved her business into a rented space in Loudon. The expanded space allowed her more time to focus on window treatments and draperies. The office spans 2,200 sq. feet, where seven employees 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 offers sewing services for the creation of high-quality soft window treatments such as draperies, jabots and slip covers.

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. Because the company doesn’t have to provide fabric directly, there are very few sourcing expenses.

Market

The population of the 17 communities within close proximity to Cutting Edge Drapery was 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 have to be created in decorator workshops. The company accounts for 7.5% in this local market.

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. The company will be able to increase its profitability by changing the target market. This is because the designer segment is more price sensitive and has higher margins. Designers work with high-income homeowners who are looking for unique products and exceptional customer service. Cutting Edge Drapery has the ability to best serve these clients by creating a high-contact service environment between the designers.

To be able to penetrate the interior-designer-controlled market for window treatments (“Designer” being the key here, rather than “decorator”). The company’s objective is to market 15 members of the American Society of Interior Designers, located within close proximity of its Loudon facilities, and establish a business relationship at least with three of them. In the second and third years, this number will increase to five and seven. There is a lot of competition for the company from local workrooms. Cutting Edge Drapery plans to increase its image by advertising within prestigious trade publications and joining the ASID network. It will also actively market its chosen target market.

Considerations for Financial Planning

Profits will increase each year due to the robust marketing research and targeted marketing strategy detailed in this businessplan. 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.

At the time of writing, total production was around 98 units. This number will rise to 115 at the end of 2000.

Clients have the policy of providing the fabric for soft window treatments products. The company has a very low cost per unit and therefore a high margin. Due to the business’s custom nature, inventory costs and accounts payable are minimal. The company doesn’t have any long-term capital assets or debt that could impact cash flow. Given the company’s ability to generate cash flow, it can be assumed that the company will use this asset in the near future to expand its markets or production capabilities.

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”). The company’s objective is to market 15 members of the American Society of Interior Designers, located within close proximity of its Loudon facilities, and establish a business relationship at least with three of them. In the second and third years, it will be five and seven.
2. To increase profitability. We will make it easier for price-sensitive jobs in other markets by formalizing pricing. 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 management of the business. 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’s best fit is to serve the interior designer market share. This is because interior designers have the ability to afford high-end 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 will provide the best quality workmanship and meet the agreed delivery dates.

1.3 Keys to Success

A few key aspects can determine success or failure in professional workrooms. Most of these factors stem from interior designers’ importance to reputation:

1. Private clients are not allowed in a professional workroom. The fear of an interior designer finding out that his client will be able to save thousands of dollars by working directly in the room is common among them. It is important to refer private clients to an interior designer who has a close relationship with the company if they contact the company.
2. Interior designers who are able to afford them tend to be more demanding than those who cannot. Designers are often under great pressure. The interior designer must feel that the workroom regards him as the most important person on the planet. 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 has to be faithful to its word. The work must be done exactly as promised and at the agreed cost. Communication between the designer and the workroom is essential.
4. It is crucial to have a competent production supervisor. Production supervisors must ensure that jobs quoted for 15 hours are not extended to 20 hours. Profit goals can not be reached if individual production stitchers do not work efficiently or are left idle.