Clara's Hardware Store - Sample Plan
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Table of Contents 1.0
Execu Executiv tive e Summa Summary ry . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 1.1 1.1 Missi Mission on . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 1.2 1.2 Keys Keys to to Succ Succes ess s . .. . .. . .. . .. . .. .. . .. . .. . .. . .. . .. . .. .. . .. . .. . .. . 1
2.0
Compa Company ny Summa Summary ry . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 2.1 2.1 Compa Company ny Own Owner ershi ship p . .. . .. . .. .. . .. . .. . .. . .. . .. . .. . .. . .. . .. . .. . .. 2 2.2 2.2 StartStart-up up Sum Summa mary ry . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
3.0
Products Products . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
4.0
Marke Markett Analy Analysis sis Summ Summary ary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 4.1 4.1 Marke Markett Segm Segmen enta tati tion on . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
5.0
Strat Strategy egy and Implem Implement entati ation on Summ Summary ary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.1 5.1 Compe Competi titi tive ve Edg Edge e . .. . .. . .. . .. . .. .. . .. . .. . .. . .. . .. . .. . .. . .. . .. . . 5.2 5.2 Sale Sales s Stra Strate tegy gy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.2.1 5.2.1 Sales Sales Fore Forecast cast . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
6.0
Manag Manageme ement nt Summ Summary ary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 6.1 6.1 Person Personnel nel Plan Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
7.0
Financial Financial Plan Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.1 7.1 Break Break-e -eve ven n Anal Analysi ysis s . .. . .. .. . .. . .. . .. . .. . .. . .. . .. .. . .. . .. . .. . .. . 7.2 7.2 Proje Project cted ed Prof Profit it and and Los Loss s . .. . .. . .. . .. . .. . .. . .. . .. . .. . .. . .. . .. . .. . . 7.3 7.3 Proje Project cted ed Cash Cash Flo Flow w . .. . .. . .. . .. . .. . .. . .. . .. . .. . .. . .. . .. . .. . .. . . 7.4 7.4 Proje Project cted ed Bala Balance nce Shee Sheett . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.5 7.5 Ratio Ratios s .. . .. . .. . .. . .. . .. . .. . .. . .. . .. . .. . .. . .. . .. . .. . .. . .. . .. .
4
6 6 6 7
9 9 10 11 13 13
Clara's Hardware Store 1.0 Executive Summary The demographics of home ownership has changed radically in the South Gate section of Gilmore. Today, over 40% of the area's homes are owned by women. In addition, 60% of the area's rentals are owned by women. More often than not, it's a woman who will now head to the hardware store for repair parts and advice. Today's hardware store, which more and more are dominated by the mega-store ch ains, are cold, uninviting and usually involve more driving time. Clara's Hardware is uniquely positioned to take a dvantage of this n ew fact of life. Conveniently located to serve the South Gate area, Clara's Hardware offers parts, material, and advice to tackle any home repair, as well as lawn care. The focus is on helping the customer identify what they want as soon as they enter the store. Through the use of a selection of hardware goods, superior personal customer attention, and reasonable prices, Clara's Hardware will capitalize on this incredible opportunity. A location has been secured that offers v ery good foot traffic and easy accessibility. accessibility. The store will efficiently efficiently lay out the store to increase sales and give the customers the upmost in attention. The projected growth rate for Clara's C lara's Hardware is quite steady. The sto re will reach profitability profitability by month six and will have revenue of $100,000 by year three.
1.1 Mission The mission of Clara's Hardware is to offer quality hardware products in a customer-friendly shopping environment. Our customers will get assistance quickly and will leave the store prepared to get the job jo b done right the first time. Clara' s Hardware will also focus on anticipating the seasonal needs of its customers and providing the best products at competitive prices. Most importantly, Clara's Hardware will make the ad ditional 15 minute drive to a mega-hardware store, too far to go and too expensive to entertain.
Clara's Hardware Store
Highlights (Planned)
$1,400,000 $1,200,000 $1,000,000
Sales
$800,000
Gross Margin $600,000
Net Profit
$400,000 $200,000 $0 2003
2004
2005
2.0 Company Summary Clara's Hardware offers the parts, material, and advice to tackle any home repair, as well as lawn care. The store's owner, Clara Johnson, has worked in the hardware industry for over ten years. Most recently, she was the shift manager at Home Depot located in Waterfront Shopping Center. Her area of expertise was home repairs. She conducted four presentations a
Clara's Hardware Store 2.2 Start-up Summary The start-up cost of Clara's Hardware will consist primarily of inventory and display equipment. Clara Johnson will invest $80,000. She will also secure a $150,000 SBA loan.
Table: Start-up
Start-up Requirements Start-up Expenses Legal Stationery etc. Br ochur es Cons ultants Insurance Rent Start-Up Inv entory Display Set-Up Cas h Reserve for Hiring Adv ertis ing Other T otal Start-up Expense
$1,000 $0 $0 $0 $0 $3,000 $50,000 $5,000 $20,000 $0 $0 $79,000
Start-up Assets Needed Cas h Balance on Startin g Date Other Short-term As sets T otal Short-ter m Assets
$121,000 $0 $121,000
Long-term Ass ets T otal As sets T otal Requirements
$30,000 $151,000 $230,000
Funding
Clara's Hardware Store
Start-up
$160,000 $140,000 $120,000 $100,000 $80,000 $60,000 $40,000 $20,000 $0 Expenses
Assets
Investment
Loans
3.0 Products Clara's Hardware offers the parts, material, and advice to tackle any home repair, as well as lawn care. The primary focus will be to satisfy the seasonal needs of the area's customers. •
Fall/Winter: Weatherization projects.
Clara's Hardware Store 4.1 Market Segmentation Clara's Hardware will focus on th ree significant customer groups: •
Women home owners : Many women home owners perform their own home repairs and home improvement projects. Clara knows this first hand since she has helped many of these women in mastering the skills needed to do the work successfully. Clara's Hardware will be uniquely designed to be responsive to the sh opping environment that will attract and retain this important customer group.
•
Customers who need assistance in planning a project/repair project/repair: This customer group can have the most frustrating experience in the hardware mega-stores. If they can't make the sch eduled demos or trainings, they are left to sort thing out with whoever they can flag down in the store help them. Clara's Har dware will be set-up set-up to provide resources and assistance as soon as they walk into the store.
•
Local repair and home improvement professionals professionals: The South Gate area supports a good number of repair and home improvement professionals. Currently, the hardware mega-stores have their business but Clara's Hardware can win a increasing share of this customer group through aggressive marketing. Time is money and if Clara's Hardware can save them a trip outside the area, they will buy there.
Table: Market Analysis
Market Analysis Potential Customers W om en Home Owners New Repai r/Proj ect Cus tomers Repair/Home Improvement Professionals T otal
Growth 10% 20% 5%
2002 15,000 40,000 42
2003 16,500 48,000 44
2004 18,150 57,600 46
2005 19,965 69,120 48
2006 21,962 82,944 50
CAGR 10.00% 20.00% 4.46%
17.51%
55,042
64,544
75,796
89,133
104,956
17.51%
Clara's Hardware Store 5.0 Strategy and Implementation Summary Clara's Hardware will be heavily promoting the store. We will use the local paper, The Gilmore Sun, to advertise. In addition, we will have a drawing for five $1,000 home improvement gift certificates that can be redeemed at selected home improvement professionals. We will have new drawings each week for the first eight weeks of the store's operation. Clara's Hardware will use the drawings to make con nections with the local home improvement professionals. It is our plan to recoup r ecoup some of the gift certificate money in material purchases that will be made by the home improvement professionals the winners select.
5.1 Competitive Edge Clara's Hardware's competitive edge is: •
Location: Clara's Hardware is located in South Gate Plaza. The foot t raffic in the plaza is very strong. The closest hardware store to the South Gate area is a twenty minute drive.
•
Seasonal Products: Each season has it own unique demand on a homeowner. Clara's Hardware will focus on this pattern a nd bring in local customers by marketing these items at competitive prices.
•
Repair/Project Repair/Project Resource Area: The first section c customers ustomers will find when they enter the store is a repair/project resource area that they can use to plan repairs or projects. There will be a repair/project resource person there to answer their questions and direct them to the section of store where the needed products are.
•
In-Store Expertise: Store employees will be kno wledgeable in in home repairs/projects. In addition, the repair/project resource area will be used to conduct short trainings and
Clara's Hardware Store 5.2.1 Sales Forecast Clara's Hardware will hit the ground running in April. Table: Sales Forecast (Planned)
Sales Forecast Sales Har dwar e Other T otal Sales
2003 2004 2005 $964,000 $1,090,000 $1,240,000 $0 $0 $0 $964,000 $1,090,000 $1,240,000
Direc t Cost of Sales Har dwar e Other Subtotal Direc t Cost of Sa Sales
2003 $474,000 $0 $474,000
2004 $500,000 $0 $500,000
2005 $612,000 $0 $612,000
Sales Monthly (Planned) $100,000 $90,000 $80,000 $70,000 $60,000 $50,000
Hardware
$40,000
Other
$30,000 $20,000 $10,000
Clara's Hardware Store 6.0 Management Summary Clara Johnson is a excellent staff supervisor and will do very well in managing the staff of Clara's Hardware.
6.1 Personnel Plan Clara's Hardware will have the following staff members: • • • • • •
Manager. Assi Assist stan antt Mana Manage ger. r. Offic Office e Mana Manage ger/ r/Ac Accou counta ntant. nt. Checke Checkers rs (ful (fulll time time and and part part time). time). Two Two Custo Custome merr Assis Assista tants nts.. Stocker Stockers s (ful (fulll tim time e and and part part time). time).
Table: Personnel (Planned)
Personnel Plan Manager As si stant Manager Office Manager/Book kee per Chec kers Cus tomer Assis tants Stock ers Other T otal Payroll
2003 $36,000 $36,000 $36,000 $32,400 $60,000 $39,600 $0 $240,000
2004 $40,000 $39,000 $39,000 $35,500 $68,000 $44,000 $0 $265,500
2005 $45,000 $43,000 $42,000 $40,000 $74,000 $48,000 $0 $292,000
T otal People Payroll Burden T otal Payroll Expenditures
9 $36,000 $276,000
9 $39,825 $305,325
9 $43,800 $335,800
Clara's Hardware Store 7.0 Financial Plan The following is the financial plan for Clara's Hardware.
7.1 Break-even Analysis The monthly sales break-even point is $50,526.
Table: Break-even Analysis
Break-even Analysis: Monthly Units Break -even Monthly Sa Sales Br Br eak-even
842 $50,526
Assumptions: Av erage Per-Unit Rev enue Aver Averag age e Per Per-Un -Unit Vari Variab ablle Cost Cost Est Estima imated ted Mon Montthly Fixe Fixed d Cos Costt
$60.00 $3.0 $3.00 0 $48 $48,00 ,000
Break-even Analysis $20,000 $10,000 $0 ($10,000) ($20,000) ($30,000) ($40,000)
Clara's Hardware Store 7.2 Projected Profit and Loss The following table and chart highlight the projected profit and loss for three years.
Table: Profit and Loss (Planned)
Pro Forma Profit and Loss Sales Direc t Cost of Sales Other Produc tion Expen ses T otal Cos t of Sal es Gr oss M argin Gr oss M argin % Operating Expenses: Adv ertis ing/Promotion T ravel Mis cellaneous Payroll Expense Payroll Burden Depreciation Leas ed Equipment Utilities Insurance Rent Inventory Contrac t/Consul tants T otal Operati ng Expens es Pr ofit Befor e Interest and T axes Inter est Expense Short-term Inter est Expens e Long-te rm T axes Inc urred Extraordinary Items Net Profit
2003 2004 2005 $964,000 $1,090,000 $1,240,000 $474,000 $500,000 $612,000 $0 $0 $0 - ---------------------- --------- ---$474,000 $500,000 $612,000 $490,000 $590,000 $628,000 50.83% 54.13% 50.65% $75,000 $0 $0 $240,000 $36,000 $4,284 $0 $6,000 $0 $36,000 $0 $0 - -----------$397,284 $92,716 $0 $13,375 $23,802 $0 $55,539
$100,000 $0 $0 $265,500 $39,825 $4,285 $0 $6,000 $0 $36,000 $0 $0 ----------- $451,610 $138,390 $0 $10,500 $38,367 $0 $89,523
$100,000 $0 $0 $292,000 $43,800 $4,285 $0 $6,000 $0 $36,000 $0 $0 --------- ---$482,085 $145,915 $0 $7,500 $41,525 $0 $96,891
Clara's Hardware Store 7.3 Projected Cash Flow The following table and chart highlight the projected cash flow for three years.
Table: Cash Flow (Planned)
Pr o Forma Cash Flow
2003
2004
2005
Cash Received Cash from Operations: Cas h Sales From Receivables Subtotal Cash from Operations
$964,000 $0 $964,000
$1,090,000 $0 $1,090,000
$1,240,000 $0 $1,240,000
Additional Cash Received Extraordinary Items Sales Tax, VAT , HST/GST Receiv ed New Current Borrowing New Other Liabilities (interes t-free) New Long-term Liabilities Sales of other Short-term Ass ets Sales of Long-term Ass ets New Investm ent Receive d Subtotal Cash Received
$0 $0 $0 $0 $0 $0 $0 $0 $964,000
$0 $0 $0 $0 $0 $0 $0 $0 $1,090,000
$0 $0 $0 $0 $0 $0 $0 $0 $1,240,000
2003
2004
2005
$62,818 $276,000 $515,297 $854,115
$69,087 $305,325 $616,784 $991,196
$80,302 $335,800 $713,784 $1,129,886
$0 $0 $0
$0 $0 $0
$0 $0 $0
Expenditur es Expenditures from Operations: Cas h Spent on Costs and Expenses W ages, Salar ies , Payroll Taxes , etc . Payment of Acc ounts Payable Subtotal Spent on Ope rations Additional Cash Spent Sales Tax, VAT , HST/GST Paid Out Pr inc ipal Repayment of Current Borrowing Other Liabi lities Principal Repayment
Clara's Hardware Store
Cash (Planned) $250,000 $200,000 $150,000
Net Cash Flow
$100,000
Cash Balance $50,000 $0 ($50,000) Apr May Jun
Jul Aug Sep Oc t No v Dec Jan Feb Mar
Clara's Hardware Store 7.4 Projected Balance Sheet The following table highlights highlights the projected balance sheet for three years.
Table: Balance Sheet (Planned)
Pro Forma Balance Sheet Assets Short-term Ass ets Cas h Other Short-term Assets T otal Sh Short-ter m As Assets Long-term Assets Long-term Ass ets Ac cumulated Depreciation T otal Long-term Ass ets T otal As sets
2003 $200,885 $0 $200,885
2004 $269,689 $0 $269,689
2005 $349,803 $0 $349,803
$30,000 $4,284 $25,716 $226,601
$30,000 $8,569 $21,431 $291,120
$30,000 $12,854 $17,146 $366,949
2003 $50,062 $0 $0 $50,062
2004 $55,058 $0 $0 $55,058
2005 $63,997 $0 $0 $63,997
Long-term Liabilities T otal Liabilities
$120,000 $170,062
$90,000 $145,058
$60,000 $123,997
Paid-in Capital Retained Ea Earnings Earnings T otal Capital T otal Li Liabilities an and Ca Capital Net W orth
$80,000 ( $79,000) $55,539 $56,539 $226,601 $56,539
$80,000 ($23,461) $89,523 $146,062 $291,120 $146,062
$80,000 $66,062 $96,891 $242,952 $366,949 $242,952
Liabilities and Capital Ac counts Payabl e Cur rent Borrowing Other Short-term Liabilities Subtotal Shor t- term Liabilities
Clara's Hardware Store Table: Ratios (Planned)
Ratio Analysis 2002 0.00%
2003 13.07%
2004 13.76%
Industry Pr ofile 6.00%
0.00% 0.00% 0.00% 88.65% 11.35% 100.00%
0.00% 0.00% 0.00% 92.64% 7.36% 100.00%
0.00% 0.00% 0.00% 95.33% 4.67% 100.00%
11.00% 48.50% 20.20% 79.70% 20.30% 100.00%
0.00% 22.09% 52.96% 75.05% 24.95%
0.00% 18.91% 30.92% 49.83% 50.17%
0.00% 17.44% 16.35% 33.79% 66.21%
37.60% 30.00% 19.70% 49.70% 50.30%
Percent of Sales Sales Gr oss M argin Selli ng, General & Administrativ e Expens es Adv ertis ing Expenses Pr ofit Befor e Interest and T axes
100.00% 50.83% 45.07% 7.78% 9.62%
100.00% 54.13% 45.92% 9.17% 12.70%
100.00% 50.65% 42.83% 8.06% 11.77%
100.00% 33.80% 21.10% 1.90% 1.10%
Main Ratios Cur rent Quick T otal Debt to T otal As sets Pr e-tax Return on Net W orth Pr e-tax Return on Assets
4.01 4.01 75.05% 187.64% 46.82%
4.90 4.90 49.83% 101.94% 51.14%
5.47 5.47 33.79% 63.15% 41.81%
2.24 0.58 57.30% 2.20% 5.30%
2002 $107,111
2003 $121,111
2004 $137,778
Industry $0 0.00%
2002
2003
2004
Sales Growth Percent of Total Assets Ac counts Receivable Inventory Other Short-term As sets T otal Short-ter m Assets Long-term Ass ets T otal As sets Other Short-term Liabilities Subtotal Shor t- term Liabilities Long-term Liabilities T otal Liabilities Net W orth
Bus ines s Vitality Pr ofile Sales per Employee Survi val Rate Additional Ratios
Appendix Appendix Table: S ales Forecast (Planned) (Planned)
Sales Forecast Sales Hardware Other Total Sales
Apr $50,000 $0 $50,000
May $60,000 $0 $60,000
Jun $70,000 $0 $70,000
Jul $75,000 $0 $75,000
Aug $85,000 $0 $85,000
Sep $90,000 $0 $90,000
Oct $1 $ 100,000 $0 $100,000
Nov $85,000 $0 $85,000
Dec $90,000 $0 $90,000
Jan $85,000 $0 $85,000
Feb $79,000 $0 $79,000
Mar $95,000 $0 $95,000
2003 $9 $964,000 $0 $964,000
2004 $1,090,000 $0 $1,090,000
2005 $1,240,000 $0 $1,240, 000
Direct Cost of Sales Hardware Other Subtotal Direct Cost of Sales
Apr $25,000 $0 $25,000
May $30,000 $0 $30,000
Jun $35,000 $0 $35,000
Jul $37,000 $0 $37,000
Aug $42,000 $0 $42,000
Sep $45,000 $0 $45,000
Oct $50,000 $0 $50,000
Nov $42,000 $0 $42,000
Dec $45,000 $0 $45,000
Jan $42,000 $0 $42,000
Feb $39,000 $0 $39,000
Mar $42,000 $0 $42,000
2003 $4 $474,000 $0 $474,000
2004 $5 $ 500,000 $0 $500,000
2005 $6 $612,000 $0 $612,000
Appendix Appendix Table: Personnel (Planned)
Personnel Plan Manager Assistant Manager Office Manager/Bookkeeper Checkers Customer Assistants Stockers Other Total Payroll
Apr $3,000 $3,000 $3,000 $2,700 $5,000 $3,300 $0 $20,000
May $3,000 $3,000 $3,000 $2,700 $5,000 $3,300 $0 $20,000
Jun $3,000 $3,000 $3,000 $2,700 $5,000 $3,300 $0 $20,000
Jul $3,000 $3,000 $3,000 $2,700 $5,000 $3,300 $0 $20,000
Aug $3,000 $3,000 $3,000 $2,700 $5,000 $3,300 $0 $20,000
Sep $3,000 $3,000 $3,000 $2,700 $5,000 $3,300 $0 $20,000
Oct $3,000 $3,000 $3,000 $2,700 $5,000 $3,300 $0 $20,000
Nov $3,000 $3,000 $3,000 $2,700 $5,000 $3,300 $0 $20,000
Dec $3,000 $3,000 $3,000 $2,700 $5,000 $3,300 $0 $20,000
Jan $3,000 $3,000 $3,000 $2,700 $5,000 $3,300 $0 $20,000
Feb $3,000 $3,000 $3,000 $2,700 $5,000 $3,300 $0 $20,000
Mar 2003 2004 2005 $3,000 $36,000 $40,000 $45,000 $3,000 $36,000 $39,000 $43,000 $3,000 $36,000 $39,000 $42,000 $2,700 $32,400 $35,500 $40,000 $5,000 $60,000 $68,000 $74,000 $3,300 $39,600 $44,000 $48,000 $0 $0 $0 $0 $20,000 $240,000 $265,500 $292,000
Total People Payroll Burden Total Payroll Expenditures
9 $3,000 $23,000
9 $3,000 $23,000
9 $3,000 $23,000
9 $3,000 $23,000
9 $3,000 $23,000
9 $3,000 $23,000
9 $3,000 $23,000
9 $3,000 $23,000
9 $3,000 $23,000
9 $3,000 $23,000
9 $3,000 $23,000
9 $3,000 $23,000
9 $36,000 $276,000
9 $39,825 $305,325
9 $43,800 $335,800
