Académique Documents
Professionnel Documents
Culture Documents
1
Team
3
Fall
2014
Business
Plan
Halo Illuminations,
LLC
Business Idea: LED Backlit Fabricated
Metal Signs
Jo
sh
Par
k
Team
Members:
Curt
Dahmer
Soph
ie
Prince
Natalie
Krewin
Rob
Macey
Paige
Marple
Josh
Narang
1
Signature
Table of Contents
I. Executive Summary
3
II. Elevator Pitch
4
III. Mission Statement
4
IV. Vision Statement
4
V. Business Overview
VI. Product Description
5
VII. Competitive Advantage
5
VIII. Triple Bottom Line
6
c. Competition
7
d. Forecasting
8
e. Breakeven Analysis
8
f. Pricing Strategy
g. Packaging
h. Branding Strategy
9
i. Distribution Strategy
10
j. Promotional Strategy
10
k. Quantitative Review of Marketing
11
X. Employee Recruitment & Training
12
XI. Operations and Processes
a. Operations Strategy
13
b. Outsourcing
14
c. Inventory
14
d. Capacity
15
e. Manufacturing Process
16
XII. Quality Assurance and Recovery Plan
17
XIII. Financial Statements
a. Sensitivity Analysis
17
b. Income Statement
18
c. Retained Earnings
18
d. Financial Ratios
18
e. Balance Sheet
19
f. Statement of Cash Flows
20
XIV. Financial Notes
19
XV. Conclusion
20
XVI. Addendum
21
XVII. References
22
Executive Summary
Halo Illuminations
Josh Narang
1624 South Mojave Road, Las Vegas, NV, 89104
Phone: 703-789-0703
Fax: none
E-mail: narangvj@dukes.jmu.edu
Web Address:
www.haloillumnations.com
Industry: Sign Manufacturing
Number of Employees: 13
Bank: Wells Fargo
Future Auditor: Ernst & Young
Law Firm(s): Randolph Law Firm
Amount of Financing Sought:
$2,220,000
Current Investors:
$500,000 (22.52%) Outside
investors
$1,650,000(74.32%) Borrowed from
Wells Fargo
$70,000(3.15%) Owners: Curt
Dahmer, Josh Park, Natalie Krewin,
Paige Marple, Sophie Prince, Josh
Narang, and Rob Macey. $10,000
each.
Use of Funds: Machinery, Raw
Materials, Marketing/Sales, Office
Equipment, and Other Small Business
Operations
Business Description: Halo
Illuminations is a LLC located in Las
Vegas, Nevada that manufactures
LED-lit stainless steel business signs
Elevator Pitch
Halo Illuminations offers a modern and visually attractive way to draw
attention to house address numbers and business signs. Our company
manufactures LED illuminated stainless steel letters and numbers that are
assembled to the customers design specifications. These signs are made of
T316 stainless steel, which provides the highest level of
quality and corrosion resistance as opposed to the standard
T304 alloy (304 VS 316 Stainless, 2014). These signs will
provide home developers and businesses a stylish advantage
and modern appeal while easing the difficulty of searching for a destination
at night. The predicted amount of new businesses developing in America is
projected to increase at a rate of 4.6% annually for the next five years
(IBISWorld, 2014). Halo Illuminations takes pride in providing top-quality,
energy-efficient, and customizable products for our customers. Help us
illuminate Southwestern America with our signs.
Mission Statement
Halo Illuminations is devoted to creating elegant signs of the highest
quality to give businesses and housing developments a modern edge
through the fabrication a supreme product.
Vision Statement
Our company serves customers in Southwestern America Texas,
Nevada, California, Arizona, Colorado, Utah, and New Mexico with
stainless steel business signs and house numbers of impeccable quality. We
aim for creating an exceptional customer relations experience while earning
a steady profit. In the first five years of operations, Halo Illuminations plans
to focus on increasing market share in the Southwest. Continuous
improvements in individualized customization and quality will broaden our
Our
companys
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is generated through our production process. The metal used to make our
products, stainless steel, is 100% recyclable and has a long-term life (bssa,
2007. Also, using LED light reduces energy costs by using 75% less energy
than incandescent lighting, which minimizes our companys carbon
footprint.
By investing in our product, businesses and growing developments
will increase their profitability by creating a modern and sustainable image.
Additionally, by creating and emphasizing a quality product, the clientele we
attract will enable us to create a profitable margin for our company.
Industry Background
The sign industry has a promising future with growing percentages
throughout the next five years. It is predicted to grow at an average rate of
3.0% annually in revenues (IBISWorld, 2014). The competition level and
barriers to entry are each rated as low, constituting an inviting market for
starting a business in the sign industry (IBISWorld, 2014). Halo
Illuminations has a competitive advantage by using LED technology, which
is predicted to be a leading competitive advantage in the market in the next
five years (IBISWorld, 2014). LED lights are estimated to be 90% more
efficient compared to traditional lighting by using less power (ledluxor,
2013). Although the past five years had a growth rate of only 0.6% due to
the recession, the future is looking bright (IBISWorld, 2014).
Target Markets
Diamond Work Boots: This market includes high-end developers
that build expensive, luxurious, multi-family buildings and single detached
family houses. According to multifamilyexecutive.com, thirteen of the top
twenty-five multi-family developers for 2014 are incorporated in the south
west area we intend on targeting. All twenty-five of these companies have
construction sites in Southwestern United States as well. A potential
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labor.
In addition to the different product sizes and finishes, we also offer a selection
of red, blue, white, and yellow LED lights. Substitutes that could potentially interest
our customers include billboards, digital signs, non-back lit signs, and ordinary
address number signs. Although this is a lengthy list, our products will be chosen
from our selected target market customers not only because of our high quality
inputs, but also because of our unique emphasis on collaboration with the customer
to create the design.
Packaging
We package our stainless steel letters and numbers in average packages
of eight and seven hundred and fifty respectively. We based these numbers off of
our forecasted sales. Our letters and numbers will receive individual care by
being wrapped per unit with bubble wrap then placed into wooden crates to
ensure stability during transit. By shipping these units in larger quantities we
become more efficient with our prices and delivery.
9: Dimensions
of
FigureFigure
9: Dimensions
of Packages
Packages demonstrates the size of our wooden crates that we will need to ship
our business letters and address numbers.
Widt
Lengt
Heig
Business Letters
h
19.0
h
21.0
ht
16.0
Branding
(Packages 8)
Address Numbers
Strategy
30.0
48.0
30.0
(Packages of 750)
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their projects and to use us in the future and tell others about our product. Halo
Illuminations brand promise to our customers is providing them with signs that
illuminate their business name or address number with emphasis on a
prestigious, individual design, and consistent high quality in every order.
Distribution Strategy
Halo Illuminations is a push channel strategy because we have sales
representatives who inform startup businesses and building developers about
our product. Our representatives create a direct connection between customers
and our company by communicating directly with customers through a variety of
selling materials. This direct channel is very beneficial in minimalizing conflict of
customer dissatisfaction or errors. The quality assurance section provides
further detail regarding the benefits of immediate and direct feedback.
Promotional Strategy
Promotional tools that will be utilized are as follows: Advertising
(magazine ads in Small Business Opportunities and Fast Company
Magazine), personal selling (sales representatives), public relations
(Facebook, Twitter, company website), and direct marketing
(catalogs/AdWords).
Our sales representatives will be our main form of promotion.
Through face-to-face meetings, our sales representatives will travel to the
varying businesses and cliental (housing developers and new businesses)
providing professional insight, information, and product promotion to those
businesses who are unaware of Halo Illuminations. We plan on sending two
of our three sales representatives to the triangular, geographic region of
Houston, Dallas, and Austin, Texas because of its high market potential
(high volume of new housing developments being built). Sales
representatives will be equipped with a catalog showing all the available
features and their corresponding prices. Sales representatives will also be
traveling to various trade shows specific to our products industry to
promote Halo Illuminations.
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Figure 11:
Organizati
onal Chart
right around this figure for the same reasoning that are direct model has
the capability to be extremely effective with the small amount of tools
utilized.
Employment Recruitment and Training
According to Figure 11: Organizational Chart, Halo Illuminations will
be employing 13 full time employees at the end of year 2. Our main source
of finding appropriate applicants will be job links such as Monster.com,
LinkedIn, and CareerBuilding.com. Figure 12: Job Description and
Qualifications lists the job obligations we
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Figure 13: Employee Wages and Benefits details the salaries, payroll
deductions, and included benefits package provided to each employee.
Standard benefits include a family-coverage health insurance plan costing
approximately $11,500 towards which employees are expected to contribute
3% of their salary, $250 additional paid life insurance, 3 weeks paid leave
(including 10 days of holidays, vacation, and sick/personal leave), $500
education reimbursement, and a Simple IRA retirement plan (United States
Department of Labor). Employees will also receive a 5% pay increase each
year. We believe these benefits will effectively motivate employees to reach
and develop company goals.
Formal, extensive orientation and training programs will be
mandatory for all new hires and overseen by management executives. Sales
representatives and purchasing agents will be required to learn all phases
of production and distribution of the product in addition to on-the-job
interactive training. Workers directly involved in the manufacturing process
will receive detailed instruction and on-the-job training regarding all
procedures, functions, and programming associated with operating the
equipment. Paid training sessions will be completed in the first two weeks of
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machine.
Figure 14: Equipment Capacities
a timeSheet
into the
machine. Our Accu-bend metal bending machines bend the
Capacities
returns of our steel faces, and operate at a rate of 12 inches of metal per
second. We have four welding tools to
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details the specific steps, procedures, and failure and quality checkpoints
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Financial Notes
1.
Halo Illuminations is a limited liability company, thus the company will be taxed at the owners tax level.
2.
Long-Term Debt: A loan for $1,630,000 for a 16 year loan and 6% interest rate.
3.
Sales Revenues and Cost of Goods Sold: Halo Illuminations offers four different products for consumers.
Sales price per Small Mirror Polish Character is $81. Cost of Goods Sold are the direct labor which is $5.69
per hour worked and direct materials which is $18.84 per unit produced. Sales price per Small Brushed Polish
Character is $79. Cost of Goods Sold are the direct labor, $5.74 per hour worked and direct materials which is
$16.47 per unit produced. The sales price per business mirror polished character is $289. COGS include a
direct labor cost of $7.10 per hour worked and a direct materials cost of $171.03 per unit produced. The sales
price of a business brushed character is $242 and the COGS includes direct labor cost of $7.14 per hour
worked and direct material cost of $137.71 per unit produced. In the first year we expect to sell 19,996 units
with a split of 1,748 mirror polished business characters, 1748 brush polished business characters, 8250
mirror polished house characters and 8250 brush polished house characters (BizMiner, 2014). In the next five
year the letter sign industry will grow at annual industry growth rates of 4.4% from 2015 to 2016, 1.6% from
2016-2017, 1.8% from 2017-2018 and 2.8% from 2018-2019 (IBISWorld, 2014).
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4.
Selling General & Administrative Expenses: Rent for our office portion of the property is $21,757
annually (Loopnet, 2014). Our computers bought in the first year cost $1740 along with the desks which costs
$300, office supplies cost $200 every year and our start up LLC fees are $425.
5.
Salaries Wages & Benefits: See the Employee Wages and Benefits table. In addition to this employee wages
are increasing 5% every year (Bureau of Labor Statistics, 2014).
6.
Depreciation: Straight line depreciation, Depreciation for equipment, Waterjet cutting machines costs
$140,000, salvage value of $28,000 and an average useful life of 10 years, (140,000-28,000)/10= $11,200 per
machine (2 machines) (Williams, 2014). Bending machine costs $39,800, average salvage value of $2,000,
useful life of 12 years, (39,800-2000)/12= $3150 per machine (2 machines) (Computerized Cutters, 2011).
Welders cost $358, salvage value of $50 and useful life of 5, (358-50)/5= $61.60 per year (4 machines) (Villa,
2014). Burnishing machine cost $710, salvage value of $50 and a useful life of 6 years, (710-50)/6= $110 per
machine, (4 machines) (Metabo, 2013). Computers cost, $250, Salvage value $30 and useful life of 5 years,
(250-30)/5= $44 per machine (2 machines) (Dell Customer Service, 2014). Gloves and masks cost $137, with
a salvage value of $10 and useful life of 7 years, (137-10)/7 = $18.1 (4 of each). Air compressors cost $800
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with a salvage value of $75, with a useful life of 8 years, (800-75)/8=$90.6 there are two of these. Office
equipment depreciates at a rate of 835 per year.
7.
8.
Office Supplies Expense: Includes miscellaneous items such as paper, pens, printer ink, etc. It will increase
2% each year because of inflation and growth of company.
9.
Utilities Expense: 2% is an average utilities expense for companies (IBISWorld, 2014). Increase by 2% each
year b/c of expansion/inflation.
10. Interest Expense: The bank loan we have is $1,630,000 with an interest expense of 6% ($1,630,000*0.06) =
$98,700. Pay off $101, 875of the loan each year. Year 2 ($1,528,125*.06) = $91,800. Same for years 3-5.
11. Taxes: See corporate income tax rate schedule and apply the taxes to Earnings Before Taxes (EBT).
12. Dividends: 50% Net income is paid out to shareholders in order to keep our cash levels lower.
13. Accounts Receivable: On average it takes 5 days to collect on account, therefore the revenue from the last 5
days at the end of the year will not be collected until the following year.
14. Inventory: Using the FIFO method to keep record of inventory in stock
15. Production Equipment: Includes 2 Water Jet cutting machines($280,000), 2 air compressors($1,600), 2
bending machines($79,600), 4 burnishing tools($2,840), 4 welders($1,432), 8 tables($3,416), 8 pairs of
gloves($768), 8 masks($328), and 3 manufacturing computers($750).
16. Wages & Salaries Payable: Pay employees every two weeks, with this we have 2 accrued weeks in
December, leaving $32,368 left to owe (2/52)*841,566= $32,368
17. Accounts Payable: Purchase $1,755,522 of materials on account, pay for 11/12 months, have a remaining
balance of $146,294, paid off yearly
18. Taxes Payable: Taxes Owed
19. Current Maturities of Long Term Debt: Principal payment of the loan, $1,600,000 over 16 years =
$100,000 per year.
20. Investors Contribution Stock: $500,000 is contributed by investors
21. Owners Contribution Stock: $70,000 is contributed in total by owners, $10,0000 per owner
22. Insurance Expense: According to BizMiner (2013), the non-health insurance expense was 0.8% of the
revenues, and each year the average inflation rate grows by 2%. Year 1: $9571, (.8%*$1,181,566) = $9571,
Year 2: $19,984, (1.7%*$2,467,110), Year 3: $20,303, (1.7%*$2,506,584) = $20,303, Year 4: $20,669,
(1.7%*$2,551,702) = $20,669, Year 5: $21,248, (1.7%*$2,623,150) = $21,248.
23. Audit Service Expense: According to BizMiner (June 2014) the average audit cost in Las Vegas, Nevada is
0.6% of revenues, Year 1: $7500, (0.6%*$1,181566) = $7500, Year 2: $7,650, (0.6%*$2,467,110) = $7,650,
Year 3: $7,803, (0.7%*$2,506,584) = $7,803, Year 4: $7,959, (0.7%*$2,551,702) = $7,959, Year 5: $8,118,
(0.7%*$2,623,150) = $8,118.
24. Internet & Phone Expense: Got quote from Megalink representative, increasing by 2% each year because
of inflation.
25. General Note: Our net income drops in years 4 and 5 because our expenses our growing faster than our
revenues at that point. This will change in the coming years however, because we will gain more market
share and our revenues will increase at a rate faster than our expenses.
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26. Marketing Expense: Reference table 10. The sales representatives salaries are not included because they
are already included in salaries expense
27. Credit Card Expense: Take 2% of accounts receivable from each year. For year 1, 740,113*.02=14,803.
Same process each year.
Conclusion
Halo Illuminations intends to be a formidable entrant into the sign industry in
the Southwest. Our signs are made of high quality ordering exclusively from
American suppliers including T315 stainless steel.
Regardless of what product customers choose, our products will always exceed
average signs. We follow a premium pricing strategy and utilize recyclable or
environmentally friendly inputs in order to deliver on our commitment to our
triple bottom line. We at Halo Illuminations ask that you help us light up Las
Vegas and the rest of the American Southwest
Figure 2:
with the finest LED signs and letters, and to
Perceptual Maps
always remember to live by our slogan: Radiate
excellence.
Figure 6: Forecasted Sales Revenue
Figure 5: Figure
Five-Year
Forecasted
10: Expenses
of Marketing Actions
Sales Revenue
Figure 5: Five Year Sales
Figure 7:
Breakeven
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