Introduction

Comgate is a custom millhouse that creates architectural woodwork such as wall paneling, custom cabinets, or other products for the local market. Comgate has created this business plan to clarify its mission statement after several years of losses and low profits in competitive bidding construction projects. Prior years were characterized by hectic efforts to bid as many jobs as possible. For fear of insufficient production staff, margins were slim because pricing policy was flexible.

Comgate will have the opportunity to grow sufficient sales and increase margins. These changes will result in greater accuracy when pricing, billing and tracking of costs is done for comparison purposes. Expectations are for increased profits.

The Company

Comgate’s mission in Connecticut is to compete profitably on the residential high-end market for custom woodwork. It will focus on custom work of the highest standard and specialize in the most complex needs of newly built and renovated designer homes priced between $3 and $15 million.

Products

Comgate provides custom architectural woodwork, including wall paneling and molding. The addition of CAD capability to the latest version of Comgate’s CAD system will allow for significant sales growth of higher-end products. It targets design professionals that can influence the selection of subcontractors who build homes of —8220;trophyâ€TM value exceeding $3 million. Comgate’s key word is « Custom » The average home wouldn’t use our products. Comgate woodworking is custom-made. No finished goods can be held in stock. It is not common for finished goods to be made up for stock.

The Market

The industry is mature and well-represented. Many mill shops can be found in the same market, but they are all focused on different areas. One mill shop could be a sole supplier of custom furniture or may work with other upholstery shops to create special alliances. Standard kitchen cabinetry may be a specialty of other mill shops. Comgate targets residential homes at the highest price ($3-$15million). This work is less price-sensitive and relatively steady, even during economic valleys. At the moment, the company’s most crucial competitive weapon is its ability to use CAD. This program was specifically designed to fit the custom woodwork market and will likely make significant inroads into the highest-end residential market. Comgate should be able distinguish itself from the competition and be able fully to utilize its newly expanded production capacities.

Comgate sees a growing need for high-end trophy homes, and is looking to integrate its CAD capabilities and the practices of designers. This will allow Comgate the ability to outsource the easier parts of a project, but keep the more challenging work. Comgate will be able present a mill shop with exact CAD drawings and precise material lists. This will help increase sales and profits.

Financial Projections

The recent investment of over $110,000 to upgrade the new Computer Numerical Control (CNC), and the establishment of an industry-adapted Computer Aided Drafting(CAD) capability will drive sales to close to $800,000. These numbers will go up by year 3. Profits will increase as well. A desire to shorten accounts payable in Year 2 to take advantage of all available trade discounts, together with rising receivables, will result in a short-term need for increased bank lines of credit of approximately $30,000.

1.1 Mission

Comgate&#8217’s mission is profitably competing in the high-end residential market of custom woodwork in Connecticut. We will emphasize on custom work of the highest quality, and specialize in the most demanding needs of new and remodeled designer homes in the $3 to $15 million price range.

Success keys 1.2

The keys to success in the contracting industry are key.

The mill shop industry is:

1. Avoid bidding for projects based solely on price.
2. You must correctly price the job. This is why:
   • Accurate take-off and listing.
   • A clear understanding between client and company, regarding terms of payment and quality.
   • Correct calculation (including wastage) of material and labor is essential to complete the project.
   • Correctly applying overhead factors, profit margins, and any special considerations.
3. An administrative system that is supported by operating procedures. This allows you to accurately track the job costing and compare the job as bid with the actual job costs. Continuous adjustments to bid formulas.
4. Reliable production staff, who can communicate with administration well to make sure that the job is completed on time and within budget.

1.3 Objectives

Comgate&#8217’s major goals are:

1. Increase production. The full production capacity of the new machinery has been measured. The goal is to reach, on a monthly basis, 80% of this capacity in the last quarter of Year 1, 85% in Year 2, and 90% in Year 3. This 80% of capacity translates into monthly production of 342 feet of crown molding, 22 pilasters, 54 doors of various grades, and 77 linear feet of cabinets (or some equivalent combination of these items). This will result to monthly sales of $608,816.
2. It is much easier to keep site contractors (six). At present, full employment levels generate monthly revenue of $34,623, which (after expenses), nets the company $21,794.
3. Continue to promote the company’s in-house 3D CAD capabilities to more designers, particularly those in Hartford, New Haven and Stamford. These are the areas where there is the highest concentration of residential homes worth $3 to $15 Million.
4. As an industry partner, you can join the Connecticut Chapter of American Society of Interior Designers. Register in their resource directories.
5. Completion of the required administrative changes is necessary to ensure that all work gets properly billed in a timely manner and that jobs are properly tracked so that later cost comparisons can be made with bid prices.
6. To complete an operation manual that has been initiated,