Business Plan -Manufacturing, Importing and Distribution of Office Furniture

Office Furniture CC

Prepared by

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OFFICE FURNITURE CC BUSINESS PLAN

Contents 1. Executive Summary...............................................................................4 2. Business Description and Company Information............................................. 1.1 !ission.................................................................................... 1.1 !ission....................................................................................... 1.2 "#$ectives................................................................................ 1.2 "#$ectives.................................................................................... 1.% &eys to Success..........................................................................' 1.% &eys to Success.............................................................................' %. !ana(ement.......................................................................................' 1.4 "r(anisational Structure...............................................................) 1.4 "r(anisational Structure..................................................................) ..................................................................................................) ......................................................................................................) 1. *+e mana(ement team.................................................................) 1. *+e mana(ement team.....................................................................) 1.' !ana(ement *eam ,aps..................................................................12 1.' !ana(ement *eam ,aps......................................................................12 1.) -roduction -ersonnel re.uirements ..........................................12 1.) -roduction -ersonnel re.uirements ..............................................12 4. Industry Analysis.................................................................................1% 1./ 0alue C+ain..............................................................................1% 1./ 0alue C+ain..................................................................................1% 1.1 ,lo#al "vervie2 of 3urniture Industry.............................................1% 1.1 ,lo#al "vervie2 of 3urniture Industry................................................1% 1.10 Domestic 3urniture Industry........................................................1 1.10 Domestic 3urniture Industry............................................................1 . !ar4et Analysis5,auten(.......................................................................1 '.1 !ar4et Se(mentation..................................................................1 '.1 !ar4et Se(mentation......................................................................1 '.2 !ar4et Attractiveness Assessment.................................................1' '.2 !ar4et Attractiveness Assessment.....................................................1' '.% !ar4et *rends...............................................................................1' '.% !ar4et *rends..................................................................................1' '. -remises6 E.uipment and !ac+inery.........................................................1' 1.11 7ocation and premises ..............................................................1' 1.11 7ocation and premises .................................................................1' 1.12 *+e mac+inery6 e.uipment6 motor ve+icles and ot+er fixed assets.........1) 1.12 *+e mac+inery6 e.uipment6 motor ve+icles and ot+er fixed assets.............1) ). -roduction -lan..................................................................................1) 1.1% -rocess 3lo2...............................................................................1) 1.1% -rocess 3lo2...................................................................................1) /. Competition Analysis............................................................................1) 1. *+e !ar4etin( Strate(y.........................................................................1/ '.4 *ar(et !ar4et Strate(y....................................................................1/ '.4 *ar(et !ar4et Strate(y.......................................................................1/ '. Strate(y -yramid...........................................................................11 '. Strate(y -yramid...............................................................................11 '.' 0alue -roposition...........................................................................11

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OFFICE FURNITURE CC BUSINESS PLAN

'.' 0alue -roposition..............................................................................11 '.) Competitive Ed(e...........................................................................11 '.) Competitive Ed(e..............................................................................11 './ -ricin( Strate(y.............................................................................11 './ -ricin( Strate(y................................................................................11 10. -romotional -lan...............................................................................11 1.14 Advertisin(.............................................................................11 1.14 Advertisin(................................................................................11 1.1 Sales promotion......................................................................11 1.1 Sales promotion..........................................................................11 1.1' Direct !ailin(.......................................................................11 1.1' Direct !ailin(...........................................................................11 1.1) Brandin( and #rand development.................................................20 1.1) Brandin( and #rand development.....................................................20 1.1/ 8elations+ip mar4etin(............................................................20 1.1/ 8elations+ip mar4etin(...............................................................20 11. 8is4 Analysis and 8is4 !iti(ation............................................................20 1.11 3inancial 8is4s.............................................................................20 1.11 3inancial 8is4s................................................................................20 1.20 !ar4et 8is4s................................................................................21 1.20 !ar4et 8is4s...................................................................................21 1.21 "perational 8is4s.........................................................................21 1.21 "perational 8is4s.............................................................................21 1.22 9uman 8esources 8is4s..................................................................21 1.22 9uman 8esources 8is4s......................................................................21 1.2% Economic 8is4s............................................................................21 1.2% Economic 8is4s................................................................................21 1.24 *ec+nolo(ical 8is4s.......................................................................22 1.24 *ec+nolo(ical 8is4s...........................................................................22 1.2 "t+er 8is4s.................................................................................22 1.2 "t+er 8is4s....................................................................................22 12. S:"* Analysis..................................................................................22 1%. 3inancial -lan...................................................................................2% 1.2' &ey Assumptions..........................................................................2% 1.2' &ey Assumptions..............................................................................2% 1%.1 -ro$ected Income Statement...............................................................2% 1%.2 -ro$ected Cas+53lo2 Statement...........................................................2% 1%.% -ro$ected Balance S+eet....................................................................2% 14. Summary and Conclusion.....................................................................2% 1 . Appendices......................................................................................2%

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OFFICE FURNITURE CC BUSINESS PLAN

1. Executive Summary *2o Is "ffice 3urniture CC is a company t+at 2as re(istered in 200/ and o2ned and operated #y Andre2 -+ilip and ;o+n Simon. *2o Is "ffice 3urniture 2as created to specialise on manufacturin(6 importin( and distri#utin( of office and sc+ool furniture and also to supply stationery and supply of cartrid(es 2it+in ,auten( province. *2o Is "ffice 3urniture<s current operations are limited to partial assem#ly of furniture and #uyin( and sellin( complete units from t+e #i( manufacturers and on sellin( to clients and t+is limits t+e mar(ins t+at *2o Is can ma4e. *2o is currently operatin( from a +ome office measurin( a#out 40 s.uare metres in Silverton -retoria 2+ic+ +as limited space for production6 stora(e and office space. *o ena#le *2o Is to ac+ieve its o#$ectives of developin( a fully fled(ed manufacturin( operation6 plans are to relocate to #uy industrial land6 #uild a factory and purc+ase and install manufacturin( e.uipment 2+ere t+ere is more industrial office space and manufacturin( space. In t+is re(ard6 *2o Is +as identified some industrial land t+at is for sale in.... -retoria 2+ic+ it plans to purc+ase6 #uild factory and office. *2o Is< mar4et is made up of mainly -u#lic sector departments and t+e private sector to a lesser extent. :e compete a(ainst (eneralised lar(e furniture manufacturers6 c+eap imported furniture distri#utors6 and t+e mainstream merc+andise in t+e ma$or furniture c+annels and office supply stores. *+e mar4et is lar(e and favours procurement from BEE companies 2+ic+ *2o Is fits t+is matc+. :e also ma4e complementary pieces to fill out t+e office suite6 includin( file ca#inets6 printer stands6 and #oo4cases. :e also ma4e custom desi(ns to fit exact measurements. "ur -retoria location 2ill #e a distinct advanta(e for manufacturin(. :e are also developin( relations+ips 2it+ a +i(+ .uality lum#er yard to supply t+e +i(+ .uality 2ood 2e use to manufacture *2o Is 3urniture. As 2e increase our sales6 2e s+all #e a#le to #uy at #etter prices6 #ecause of +i(+er volumes.

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*+ere are also ot+er reputa#le 2ood suppliers 2+o can supply us 2it+ ra2 materials for our production. :e 2ill also 2or4 2it+ a num#er of specialty manufacturers for furniture fittin(s6 dra2er accessories6 (lass6 s+elvin( accessories6 and related purc+ases. *+e source of repayment 2ill #e from normal trade receipts. *+e pro$ected financial +i(+li(+ts for t+e first years are s+o2n #elo2.

2. Business Description and Company Information "2ners+ip 8e(istration >o Contact -erson E5mail :e#site Contact >um#er Banking Details Account >ame >ame of Ban4 Branc+ *ype of Account 1.1 = = = = = = =

= = = = Mission

*2o Is 3urniture !fr. +elps create pleasant6 productive office environments 2it+ 2ell5 desi(ned furniture t+at incorporates ne2 tec+nolo(y into t+e classic office mode6 in 2+ic+ real people can 2or4 +appily. :e are sensitive to t+e loo4 and feel of (ood 2ood and fine furniture as 2ell as to +i(+5po2ered personal computin(. :e al2ays provide t+e #est possi#le value to our customers 2+o care a#out .uality office environments6 and 2e 2ant every dollar spent 2it+ us to #e 2ell spent. :e also create and nurture a +ealt+y6 creative6 respectful6 and fun office and 2or4s+op environment6 in 2+ic+ our employees are fairly compensated and encoura(ed to respect t+e customer and t+e .uality of t+e product 2e produce. :e see4 fair and responsi#le profit6 enou(+ to 4eep t+e company financially +ealt+y for t+e lon( term and to fairly compensate o2ners and investors for t+eir money and ris4.
1.2 !"ectives

2.1.1 S#ort $erm !"ectives%&it#in 12 mont#s Secure fundin( for purc+ase of land6 construction of t+e factory #uildin(6 e.uipment and 2or4in( capital Complete commission t+e manufacturin( plant 8e(ister onto t+e data #ase of all (overnment and pu#lic sector entities

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2.1.2 Medium $erm -ay off t+e 2or4in( capital

!"ectives%!et'een 12 mont#s and () mont#s

2.1.( *ong $erm !"ectives%!eyond () mont#s 8epay all t+e loan commitments
1.( +eys to Success

"ur 4eys to success 2ill #e as follo2s ?ncompromisin( commitment to t+e .uality of t+e end product= ?se of .uality 2ood in all our products6 @uality 2or4mans+ip6 @uality desi(n6 @uality of end result. Successful nic+e mar4etin(= 2e need to find t+e .uality5conscious customer in t+e ri(+t c+annels6 and 2e need to ma4e sure t+at customers can find us. *+e 4eys to our success are represented in a ta#le #elo2=
Market drivers *o' cost structure .uality S#ort *ead times /lexi!ility ,demandsInventory use Ara2 materials6 2or4 in pro(ress6 finis+ed (oodsB Customer return rate6 internal defect and scrap rate *ime from customer order to delivery6 delivery fre.uency of suppliers Delivery fre.uency to customers6 mac+ine c+an(eover times6 #atc+ siCes6 lot siCes6 inventory levels6 t+rou(+put time t+rou(+ factory6 distance travelled on factory floor Su((estion sc+emes6 la#our turnover and a#senteeism Aproxy for employee commitmentB6 employee development Development of ne2 products Manufacturing performance measures Manufacturing practices Sin(le 3lo2 unit Statistical process control6 .uality circles and team 2or4 Business process en(ineerin(6 cellular structures in order6 processin( and dispatc+6 supply c+ain mana(ement 0alue c+ain relations+ips6 ;I*6 sin(le minute exc+an(e of dies6 multi5tas4in( and multi5s4illin(6 cellular production in manufacturin( Continuous improvement6 2or4er development and commitment

Capacity to c#ange

$ime to market

Concurrent en(ineerin(6 8esearc+ and Development

(. Management

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OFFICE FURNITURE CC BUSINESS PLAN

rganisational Structure
!ana(in( !em#er

Accountant

-roduction !an(er

"perations !ana(er

Admin !ana(er

!ar4etin( !ana(er

1.1

$#e management team

2osition 4eneral Manager Marketing and Sales Manager 5ccountant 2roduction Manager perations Manager 5dmin Manager $otal

3ear 1 1

3ear 2 1

3ear ( 1

3ear 0 1

3ear 1 1

(.1.1 Managing Mem!er6 7oles and 7esponsi!ility

1 Business Development Developin( mar4ets in ne2 territories >e2 products D researc+in( and testin( Ac.uisitions D identifyin( and investi(atin(

2- Management Strate(ic plan in coordination 2it+ staff and senior mana(ers Business plan for eac+ unit (- 2ersonnel Ensure t+e development and maintenance of e.uita#le personnel polices 2+ic+ are consistent 2it+ corporate policies and industry and mar4ets in 2+ic+ t+e company operates reco(nisin( t+at Ea#ility to payF 2ill al2ays influence t+e level of remuneration. -rotect t+e interest and 2elfare of employees and esta#lis+ suita#le communication lines 2it+ t+em or t+eir representatives.

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Determine limitations of aut+ority for direct reports coverin( expenditure6 contracts6 personnel actions and t+e li4e Direct and determine promotions6 demotions6 dismissals and ot+er actions needed. 8ecommend remuneration c+an(es for all supervisory personnel. Control t+e use of consultants and services provided #y ot+ers6 and at t+e same time as developin( t+ese s4ills in employees 2+ere possi#le.

0- Compliance Compliance 2it+ le(islation and re(ulatory #odies is monitored. *imely accurate reportin( to t+e mem#ers committee 1 ) External Stake#olders *imely and re(ular reportin( to t+e mem#ers. /inance -reparation of #ud(et for approval #y t+e mem#ers. 8eportin( a(ainst #ud(et mont+ly to t+e mem#ers6 explainin( any variations and definin( actions to #e ta4en if #ud(ets not met. 8evie2 increases in costs of any ma$or items of ra2 materials6 component or la#our service c+ar(es. Ensure t+e ade.uacy and soundness of t+e company<s financial structure revie2in( all capital expenditure re.uests and arran(ements for additional finance5funds

8ig#est .ualifications 5ge Expertise and Competencies Experience External support C#aracter

Business S4ills *rainin( and !entors+ip ,ood

(.1.2 5dmin Manager6 7oles and 7esponsi!ility

-rovides supplies #y identifyin( needs for reception6 s2itc+#oard6 mailroom6 and 4itc+enG esta#lis+in( policies6 procedures6 and 2or4 sc+edules. -rovides communication systems #y identifyin( needsG evaluatin( optionsG maintainin( e.uipmentG approvin( invoices. !aintains administrative staff #y recruitin(6 selectin(6 orientin(6 and trainin( employeesG maintainin( a safe and secure 2or4 environmentG developin( personal (ro2t+ opportunities. Accomplis+es staff results #y communicatin( $o# expectationsG plannin(6 monitorin(6 and appraisin( $o#

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resultsG coac+in(6 counselin(6 and disciplinin( employeesG initiatin(6 coordinatin(6 and enforcin( systems6 policies6 and procedures. -urc+ases printed materials and forms #y o#tainin( re.uirementsG ne(otiatin( price6 .uality6 and deliveryG approvin( invoices. Completes special pro$ects #y or(aniCin( and coordinatin( information and re.uirementsG plannin(6 arran(in(6 and meetin( sc+edulesG monitorin( results. -rovides +istorical reference #y developin( and utiliCin( filin( and retrieval systems. !aintains continuity amon( corporate6 division6 and local 2or4 teams #y documentin( and communicatin( actions6 irre(ularities6 and continuin( needs. !aintains professional and tec+nical 4no2led(e #y attendin( educational 2or4s+opsG #enc+mar4in( professional standardsG revie2in( professional pu#licationsG esta#lis+in( personal net2or4s. Contri#utes to team effort #y accomplis+in( related results as needed. Improves pro(ram and service .uality #y devisin( ne2 applicationsG updatin( proceduresG evaluatin( system results 2it+ users. Ac+ieves financial o#$ectives #y anticipatin( re.uirementsG su#mittin( information for #ud(et preparationG sc+edulin( expendituresG monitorin( costsG analyCin( variances.

8ig#est .ualifications 5ge Expertise and Competencies Experience External support C#aracter

Business S4ills *rainin( and !entors+ip ,ood

(.1.( 2roduction Manager6 2osition 9acant 7oles and 7esponsi!ility

H !ana(e I direct production operations to manufacture 2ooden furniture items as per sales orders received. H Direct all operations li4e t+e use of e.uipment6 facilities and personnel to o#tain maximum efficiency and meet performance o#$ectives. H Implementin( sc+edulin( properly6 as all t+e steps of production and delivery dates depends on accurate sc+edulin( procedures done t+rou(+ sc+edulin(. H *o ensure 2or4s are carried out to t+e re.uired .uality6 2it+in t+e re.uired time frame and as per desi(ns and specifications H *o carry out 2or4s 2it+in t+e re.uired #ud(et H *o ensure materials are ordered in a timely fas+ion H *o ensure safety standards are maintained H *o assess la#or re.uirements and ma4e recommendations on

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mannin( levels related to t+e $o#s in +ands H *o recommend improvements to t+e infrastructure 2it+ a vie2 of improvin( efficiency and savin( costs H *o recommend material c+an(es to plant and mac+inery H *o record accurately all la#or6 material and plant costs utiliCe on pro$ects for effective and accurate cost control and +istorical cost data Diploma in -roduction !ana(ement

Desired .ualifications Expertise and Competencies 7elevant experience External support C#aracter (.1.0 7oles and 7esponsi!ility

years Business S4ills *rainin( and !entors+ip ,ood perations Manager6 2osition 9acant

Improve t+e operational systems6 processes and policies in support of or(aniCations mission 55 specifically6 support #etter mana(ement reportin(6 information flo2 and mana(ement6 #usiness process and or(aniCational plannin(. !ana(e and increase t+e effectiveness and efficiency of Support Services A986 I* and 3inanceB6 t+rou(+ improvements to eac+ function as 2ell as coordination and communication #et2een support and #usiness functions. -lay a si(nificant role in lon(5term plannin(6 includin( an initiative (eared to2ard operational excellence. "versee overall financial mana(ement6 plannin(6 systems and controls. !ana(ement of #ud(et in coordination 2it+ t+e senior mana(ement. Development of individual pro(ram #ud(ets

Desired .ualifications Expertise and Competencies 7elevant experience External support C#aracter

8e(ular meetin(s 2it+ Executive Director around fiscal plannin(. B. Comm 7o(istics

% years relevant experience Business S4ills *rainin( and !entors+ip ,ood

(.1.1 Marketing Manager6 2osition 9acant 7oles and 7esponsi!ility

mana(e and coordinate all mar4etin(6 advertisin( and promotional staff and activities conduct mar4et researc+ to determine mar4et re.uirements for existin( and future products analysis of customer researc+6 current mar4et conditions and competitor information develop and implement mar4etin( plans and pro$ects for ne2 and existin( products mana(e t+e productivity of t+e mar4etin( plans and

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pro$ects monitor6 revie2 and report on all mar4etin( activity and results determine and mana(e t+e mar4etin( #ud(et deliver mar4etin( activity 2it+in a(reed #ud(et develop pricin( strate(y

Desired .ualifications Expertise and Competencies 7elevant experience External support C#aracter 7oles and 7esponsi!ility

liaison 2it+ media and advertisin( B. Comm !ar4etin(

% years relevant experience Business S4ills *rainin( and !entors+ip ,ood

(.1.) 5ccountant6 2osition 9acant

"#tain and maintain a t+orou(+ understandin( of t+e financial reportin( and (eneral led(er structure. Ensure an accurate and timely mont+ly6 .uarterly and year end close. Ensure t+e timely reportin( of all mont+ly financial information. Ensure daily #an4in( re.uirements are met. Ensure t+e accurate and timely processin( of positive pay transactions. Ensure t+e mont+ly and .uarterly Ban4 Compliance activities are performed in a timely and accurate manner. Supports #ud(et and forecastin( activities. Colla#orate 2it+ t+e ot+er finance department mana(ers to support overall department (oals and o#$ectives. !onitors and analyCes department 2or4 to develop more efficient procedures and use of resources 2+ile maintainin( a +i(+ level of accuracy. Advises staff re(ardin( t+e +andlin( of non5routine reportin( transactions. Ensure a clean and timely yearend audit. Supervise t+e (eneral led(er (roup to ensure all financial reportin( deadlines are met. Assist in development and implementation of ne2 procedures and features to en+ance t+e 2or4flo2 of t+e department. -rovide trainin( to ne2 and existin( staff as needed. 9andle personnel issues relatin( to staff conflicts6 a#senteeism6 performance issues6 etc. :or4 2it+ eac+ direct report to esta#lis+ (oals and o#$ectives for eac+ year and monitor and advise on t+e pro(ress to en+ance t+e professional development of staff. Develop special pro$ects and 2or4flo2 process improvements.

7elevant :ualifications B. Comm Accountin(

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Expertise and Competencies 7elevant experience External support C#aracter

Articles plus 1 year experience Business S4ills *rainin( and !entors+ip ,ood

1.) Management $eam 4aps :e depend on our professionals6 our accountant and our solicitor6 for some 4ey mana(ement +elp. :e donJt +ave a stron( #ac4(round in finance or #usiness mana(ement. As 2e (ro2 2e 2ill need to develop more manufacturin( tec+ni.ue6 more mass production. ;ames (re2 up 2it+ t+e +and5made and custom furniture #usiness6 4no2s fine 2ood2or4in( 2ell6 #ut admits a 2ea4ness in esta#lis+in( standardised assem#ly.
1.; 2roduction 2ersonnel re:uirements

Salaries are (enerally in line 2it+ mar4et pay for t+e ;o+annes#ur( area in our industry6 +o2ever ;o+annes#ur( is on avera(e a +i(+er 2a(e location t+an all ot+er province. As 2e (ro26 2e expect to see steady increases in our personnel to matc+ t+e increases in sales (.1.; &ood mac#inist
*+e :ood mac+inists 2ill #e responsi#le for t+e processin( of tim#er and #oard products into furniture components6 usin( a 2ide ran(e of mac+inery. *+eir main function is to set up6 ad$ust6 operate and maintain a 2+ole ran(e of mac+ines from t+e simplest #and5sa2 to t+e most complex computer controlled spindle moulder. *+e :ood mac+inists 2ill #e a#le to affix details on t+e 2ood accordin( to desi(n specifications.

(.1.< Ca!inet%maker
*+e Ca#inet5ma4ers receive t+e components from t+e 2ood mac+inist and assem#le t+e piece of furniture. *+ey add t+e finis+in( touc+es suc+ as doors6 dra2ers and loc4s. *+e ca#inet ma4ers< s4ill 2ill involve +and2or4 and in addition to t+is6 modern tec+nolo(y suc+ as #asic 2ood mac+ines and electric and pneumatic tools re.uires additional s4ills to operate t+ese mac+ines. *+is is #ecause ca#inets are not only made from 2ood6 #ut also from ot+er modern materials6 suc+ as melamine.

(.1.= /rame%maker
*+e frame ma4er s4ills 2ill #e very similar in most respects to t+at of t+e ca#inet5ma4er6 2it+ a (reater emp+asis on t+e en(ineerin( of sturdy frames6 rat+er t+an +in(es6 doors and so fort+.

(.1.1>

/urniture%polis#er

*+e main tas4 of t+is tradesman is to apply t+e final finis+ to t+e furniture 2+ic+ #ot+ protects and en+ances t+e #eauty of it. -olis+ers 2ill use a 2ide ran(e of +i5tec+ spray applications. *+ey 2ill +ave a sound 4no2led(e of all t+e various coatin(s6 special finis+es6 application tec+ni.ues6 Surin( and dryin( systems6 as 2ell as fault rectification and touc+ up.

(.1.11

Carver

Carvin( is a +i(+ly specialised trade t+at com#ines artistic flair 2it+ t+e more traditional furniture5ma4in( s4ills. *+e s+apin( and decorative 2or4 applied to furniture is eit+er done #y

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usin( carvin( mac+ines and presses6 or done entirely #y +and. Carvers use a 2+ole ran(e of styles6 tec+ni.ues and met+ods. *+e carver 2ill #e re.uired to +ave t+is s4ills set.

(.1.12

?p#olsterer

?p+olsterer 2ill #e responsi#le for applyin( all t+e soft finis+es to t+e various pieces of furniture. *+e main materials t+ey use are fa#rics6 foams and various types of 2e##in(. *+e ?p+olsterer 2ill +ave a sound 4no2led(e of t+e er(onomics of desi(n and types of finis+ t+at appeal to people. 0. Industry 5nalysis 1.< 9alue C#ain

In order to (ro2 tim#er6 inputs suc+ as seeds6 c+emicals6 e.uipment and 2ater are needed. :+en t+e tim#er +as reac+ed a mature a(e Afrom 12 to 2 years dependin( on t+e type of tim#erB it sent to sa2mills6 2+ere mac+inery and ot+er inputs are used for production. *+e sa2n tim#er is t+en delivered to t+e furniture manufacturers. *+e manufacturers in turn o#tain inputs from ot+er industries suc+ as plastic6 metal6 textiles mac+inery and paint. In addition to t+is t+e furniture manufacturers also source inputs suc+ as mac+inery as 2ell as inputs from t+e service sector in t+e form of desi(n and #randin( expertise. *+e finis+ed product leaves t+e manufacturers6 (enerally t+rou(+ a #uyer6 into eit+er t+e domestic or forei(n 2+olesale or retail sector6 #efore it reac+es t+e consumer. *+e c+an(in( nature of t+e industry6 often represented #y lar(e5scale retailers +as led to an increasin(ly common practice of retailers #uyin( strai(+t from manufacturers in a cost savin(5initiative. *+e last step of t+e value c+ain is t+en t+e consumer 2+o 2ill6 in time6 eit+er recycle or dispose of t+e furniture.

Forestry Timber Outputs

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Fibre Sector

Sawmilling Sector

Pole Sector

Charcoal Sector

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Pulp

Wood Chips

Fibre Board

Sawn Lumber

Mining Timber

Treated Poles

Charcoal

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Paper & Paper Products

Wood Products

Wood Furniture

1.=

4lo!al

vervie' of /urniture Industry

:orld2ide6 +i(+5volume furniture manufacturin( strate(y +as #een pursued #y most developed and developin( countries. *+e #rea4t+rou(+ in ready5to5assem#le desi(ned furniture +as encoura(ed innovation and ne2 desi(ns for exportin( manufacturers. Bet2een 2000 and 200/

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OFFICE FURNITURE CC BUSINESS PLAN

2orld2ide trade in furniture (re2 #y %'K and it 2as #y 200/ t+e lar(est lo25tec+ sector. Developed countries6 led #y Italy6 ,ermany and Canada +ave traditionally #een t+e main producers6 and exporters of furniture6 only in t+e last fifteen years +ave t+ey faced fierce competition from developin( countries especially C+ina Aand to a lesser de(ree !alaysia6 0ietnam and IndonesiaB. In 2010 t+e value of (lo#al furniture exports in t+e sector amounted to over ?SL11% #illion. *+e trend seems set to continue at current (ro2t+ rate6 C+ina is t+e leadin( exporter of almost %0K of (lo#al furniture exports6 2ort+ ?SL / #illion. *+e C+inese furniture industry +as (one t+rou(+ a period of tremendous (ro2t+. In 1110 it did not feature in t+e top ten exporters6 2+ile in 2000 2as t+e 2orld<s 1t+ lar(est exporter and 1st from 200' to date. *+e ta#le #elo2 s+o2s ot+er leadin( furniture exporters. *a#le 1= *op 10 furniture exporters

*+e European ?nion AE?B is t+e leadin( importer of furniture6 importin( more t+an 0K of total (lo#al furniture exports. *+e ma$ority of t+e imports are +o2ever intra5E?6 #ut statistics are su((estin( t+at imports from developin( countries are increasin( and li4ely to continue to do so. In 20016 imports from developin( countries constituted 1'K of total E? imports6 2+ic+ (re2 to 2/K in 200 and .....K in 2010. C+ina is #y far t+e #i((est exporter of furniture to t+e E? follo2ed #y Indonesia6 !alaysia and more recently *+ailand. At num#er 4%6 Sout+ Africa is do2n from #ein( ran4ed %4 in 200 . Evidently Sout+ Africa +as not 4ept up 2it+ (lo#al (ro2t+ trends and is conse.uently losin( mar4et s+are. An important feature of E? furniture consumption and production is evidence of polarisation #et2een lo2 .ualityMprice and +i(+ .ualityMprice6 particularly in t+e old E? At+e E?1 1B. *raditional solid 2ood6 +i(+ly specialised6 furniture products +ave retained important nic+e mar4et se(ments particularly for +i(+5end6 expensive6 desi(n5led products. 8eady5to5assem#le products t+at can #e manufactured and s+ipped in lar(e .uantities occupy t+e ot+er end of t+e spectrum. *+ese mass produced products +ave dominated t+e (lo#al mar4ets and +ave #ecome a ma$or source of exports for developin( countries6 2+ere one sees t+at once a(ain6 C+ina is leadin( ot+er Asian countries.

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*+e ?S demand for furniture is increasin(G in particular6 imports from C+ina +ave #een on t+e increase. In 200'6 4)K of all ?S furniture imports 2ere from C+ina and in 2010 t+is fi(ure rose to....K. *+e impact of t+is +as #een devastatin( for t+e ?S furniture industry6 2+ere a lar(e num#er of especially small manufacturers 2ere forced to close do2n. Su#5Sa+aran Africa<s s+are of (lo#al exports of furniture is less t+an 1K6 Sout+ Africa #ein( accounta#le for as muc+ as 1) K of t+is. 3orestland cover in t+e re(ion is a#out 1/% million +ectares6 constitutin( 4.'K of (lo#al forest cover Aover % #illion +ectaresB. *+e a#undant forest in t+e re(ion is an opportunity for Sout+ Africa to source #ot+ ra25materials and develop forestry industries in t+e re(ion in cooperation 2it+ re(ional or(anisations. 1.1> Domestic /urniture Industry

1. Market 5nalysis%4auteng SiCe ,ro2t+ -otential 8is4s *rends Seasonality

Is t+ere a mar4et for your product or service offerin(N :+o are t+e customers and 2+at are t+eir needs and preferencesN Do you +ave any orders on +andN :+at a#out si(ned contracts to deliverN :+at mar4et s+are are you (oin( to strive to (etN Oou s+ould also ta4e t+e follo2in( into consideration=

*+e identification of mar4et se(ments *+e needs and preferences of eac+ mar4et se(ment !ar4et se(ment attractiveness At+e process of tar(etin(B *+e selection of a suita#le tar(et mar4et

).1

Market Segmentation

4 pJs Aproduct6 promotion6 price and placeB *+e primary mar4et se(mentation #ases include t+e follo2in(= 4overnment and 2u!lic Sector6

*arge Corporate companies6

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"ur mar4et researc+ indicates a#out .....potential customers in t+is se(ment in ,auten(. Small !usiness o'ners6 "ur customer surveys indicate a stron( mar4et amon( t+e o2ners of #usinesses 2it+ fe2er t+an 100 employees. *+ere are ...... suc+ #usinesses in t+is province6 most of t+em 2it+ concentrated o2ners+ip t+at ma4es t+e o2ners potential customers. 8ome offices= *+e +ome office #usiness +as proliferated durin( t+e 2000s6 and 2e also +ave +ome offices for people employed outside t+e +ome. *+is is a #i( mar4et6 some ... +ome offices6 (ro2in( faster t+an ot+er mar4ets. A +ome office does not necessarily imply a +ome #usiness5$ust t+at a +omeo2ner +as desi(nated a room in t+eir +ome as an office. *+is se(ment is made up of mostly professional individuals of #et2een %0 to 4 years 2+o attended +i(+er education.
).2 Market 5ttractiveness 5ssessment

"ur tar(et mar4et is a person 2+o 2ants to +ave furniture 2it+ t+e latest in tec+nolo(y6 com#ined 2it+ an old fas+ioned sense of fine 2oods and fine 2ood2or4in(. *+is person can #e in t+e corporate to2ers6 small or medium #usiness6 or in a +ome office. *+e common #ond is t+e appreciation of .uality6 and t+e lac4 of price constraints ).( Market $rends "ur mar4et continues to (ro2 and to attract ne2 players. Imports especially from Asia are increasin(ly findin( t+eir 2ay into t+is mar4et. Imports are competin( on price 2it+ local produced products #ut +ave t+e exc+an(e ris4 attac+ed to t+em. *+eir pricin( is depended on t+e exc+an(e rate and ot+er factors relatin( to s+ippin( t+e (oods from t+eir point of manufacture to delivery. *+ere is also a (ro2in( trend #y end users to opt for furniture units t+at come completely #ro4en do2n and t+e #uyer assem#les t+e units accordin( to a manual t+at comes 2it+ t+e 4noc4ed do2n components. It is easy to disassem#le t+ese units to smaller pieces t+at are easy to transport 2+en t+ere is a need to relocate.
). 2remises@ E:uipment and Mac#inery 1.11 *ocation and premises

In t+is section of your operational plan6 you may provide t+e follo2in( information=

*+e location of your #usiness in terms of p+ysical address

Accessi#ility= In terms of accessi#ility6 does t+e location +ave (ood access roads and communication net2or4sN Discuss t+e proximity to 4ey sta4e+olders suc+ as your employees and customers Expansion possi#ilities

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$#e mac#inery@ e:uipment@ motor ve#icles and ot#er fixed assets

1.12

In t+is section of your operational plan6 provide details of t+e follo2in(= *+e 4ey fixed assets in terms of mac+inery6 ve+icles6 fixtures and fittin(s6 e.uipment and ot+er aspects t+at are essential to your #usiness operations

Include details a#out o2ners+ip and t+e condition of t+e assets :+at is t+e cost of t+e mac+inery and ot+er essential fixed assets used for #usiness operations Details a#out capacity in line 2it+ eac+ asset Details a#out tec+nical maintenance support Details a#out +o2 t+e assets are depreciated or 2ill #e depreciated. Is it t+e strai(+t line6 reducin( #alance or ot+er met+odN :+at is t+e useful life of eac+ fixed assetN *+e +uman resource or staffin( plan is covera(e of aspects relatin( to personnel or t+e +uman resource asset of your entity. It encompasses t+e num#er of employees6 type of la#or As4illed6 uns4illed and professionalB6 recruitment and selection procedures6 s4ills development6 pay structure and ot+er remuneration considerations6 roles and responsi#ilities6 $o# descriptions amon(st ot+er +uman resource related aspects. *+e 4ey aspects of t+e +uman resource plan are summariCed #elo2=

;. 2roduction 2lan

1.1(

2rocess /lo'

<. Competition 5nalysis :+o are your competitorsN

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:+at #usinesses are offerin( a similar product or service offerin( to your #usiness and serve t+e same mar4et t+at you intend to serve or are already servin( Ain t+e case of an existin( #usinessBN :+at are t+e stron( points and 2ea4 points 2it+ re(ard to your competitorsN :+ere are your competitors locatedN Oour competition analysis s+ould ideally ta4e t+e follo2in( into consideration=

Direct competition Indirect competition *+reat from ne2 entrants or future competitors *+reat from customers *+reat from suppliers *+reat from su#stitutes Intensity of rivalry =. $#e Marketing Strategy

).0 $arget Market Strategy "ur se(ment definition is of itself strate(ic. :e are intendin( to satisfy all users of office furniture. In our particular mar4et6 2e also see4 t+e #uyer 2+o appreciates t2o attri#utes= t+e .uality of furniture 2or4mans+ip and t+e excellence of desi(n6 2it+ an understandin( of tec+nolo(y and er(onomics #uilt in. :e focus on a special 4ind of customer6 t+e person 2+o 2ants +i(+ .uality office furniture customised to 2or4 #eautifully 2it+ modern tec+nolo(y includin( personal computers6 scanners6 internet connections6 and ot+er +i(+5tec+ items. "ur customer mi(+t #e in (overnment departments6 pu#lic #odies6 lar(er companies6 small or medium #usiness6 or in a +ome office 2it+ or 2it+out a +ome5office #usiness. :+at is important to t+e customer is fine 2or4mans+ip6 ease of use6 er(onomics6 and practicality. "ur mar4etin( strate(y assumes t+at 2e need to (o into specialty c+annels to address our tar(et customerJs needs. *+e tie5in 2it+ t+e catalo(ues li4e PPP is perfect6 #ecause t+ese catalo(ues cater to our 4ind of customers. :e position as t+e +i(+ .uality and value for money. *+e mar4etin( +as to convey t+e sense of .uality in every picture6 every promotion6 and every pu#lication. :e canJt afford to appear in second5rate catalo(ues 2it+ poor illustrations t+at ma4e t+e product loo4 less t+an it is. :e also need to levera(e our presence usin( +i(+5.uality catalo(ues and specialty distri#utors. *+e product strate(y is also #ased on .uality and price6 in t+is case t+e intersection of tec+nical understandin( 2it+ +i(+ .uality 2ood2or4in( and professional materials6 and 2or4mans+ip.

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"ur most important competitive ed(e 2ill #e our assem#ly strate(y6 2+ic+ is #ased on inter loc4in( 2ood pieces of suc+ +i(+ .uality t+at assem#ly is not only a pleasure for our customers6 it is actually a feature t+at en+ances t+e sense of .uality. ).1 Strategy 2yramid "ur main strate(y at *2o Is 3urniture !fr. is to position ourselves at t+e top of t+e .uality scale6 featurin( our com#ination of super# tec+nolo(y and fine 2ood2or4in(6 for t+e #uyer 2+o 2ants t+e (ood .uality at afforda#le price. *actics underneat+ t+at strate(y include researc+ and development related to ne2 desi(ns and ne2 tec+nolo(y6 c+oosin( t+e ri(+t c+annels of distri#ution6 and communicatin( our .uality position to t+e mar4et. -ro(rammes are mainly t+ose listed in t+e milestones ta#le6 includin( ne2 desi(n pro(rammes6 ne2 e.uipment to 4eep up 2it+ desi(n6 c+annel development6 c+annel mar4etin( pro(rammes6 our direct sales and our continued presence in catalo(ue c+annels and ne2 presence in t+e 2e#. ).) 9alue 2roposition *2o Is 3urniture !fr. (ives t+e discriminatin( office user 2+o cares a#out desi(n and .uality furniture and .uality of 2or4in( environment6 a com#ination of +i(+ .uality furniture and latest tec+nolo(y6 at a relatively afforda#le price. ).; Competitive Edge "ur competitive ed(e 2ill #e .uality6 turnaround time and competitive price. ).< 2ricing Strategy :e 2ill maintain our pricin( position as t+e middle of t+e mar4et provider. :e provide (ood products. :e intend to maintain our separation from t+e price competition at t+e +i(+er end of t+e #usiness. "ur plan calls for pricin( of cost plus 2 K mar(in . 1>.
2romotional 2lan 1.10 5dvertising

"ur advertisin( 2ill #e tar(eted at a specific mar4et t+rou(+ some media c+annel suc+ as radio6 ne2spapers6 #ill#oards6 on5line or internet advertisin(. :+ile advertisin( 2ill #e expensive6 it 2ill #e an effective and +elpful means in creatin( a positive pu#lic ima(e. :e 2ill #e a#le to reac+ a 2ider audience and provide a (reat opportunity for leads and eventually sales and ultimately profits. 1.11 Sales promotion Sales promotion 2ill #e used in store and on trade s+o2s on s+orter term #asis to encoura(e t+e sale of product offerin(s #y stimulatin( consumer purc+ases. 1.1) Direct Mailing *2o Is 2ill use a 2idespread distri#ution of promotional #roc+ures and ot+er mar4etin( literature via mail systems. *+e distri#ution 2ill #e done via electronic mail.

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1.1; Branding and !rand development Brandin( and #rand development for *2o Is is particularly a si(nificant activity and factor t+at 2ill +elp communicate t+e values of t+is #usiness. It 2ill distin(uis+ *2o Is from t+e ot+er competitors. *2o Is<s #randin( 2ill encompass t+e follo2in(= *ogo design *2o Is 2ill develop in con$unction 2it+ reco(nised (rap+ic desi(ners a lo(o t+at is reflective of its identity. Business cards 2ill form an essential component of t+e #randin( for *2o Is to #e used as a Q+and5to5+and< mar4etin( ve+icle. *+e cards 2ill contain all t+e information #elon(in( to t+e company. *2o Is 2ill also develop a professionally desi(ned letter+ead is used for formal 2ritten communication 2it+ t+e sta4e+olders of t+e #usiness. *2o Is 2ill develop an interactive 2e#site. *+is 2ill form an instrumental part of t+e #randin( of t+e #usiness and 2ill #e an important and an economical 2ay for *2o Is to prove its validity to customers. *+e 2e#site 2ill offer clients t+e opportunity to learn more a#out t+e #rand and deepen t+e relations+ip #et2een t+e *2o Is and its clients as 2ell as ot+er #usiness sta4e+olders. 3or more exposure6 *2o Is 2ill list t+e #usiness in t+e yello2 pa(es6 t+e national telep+one directory6 and specialist online #usiness listin( 2e#sites suc+ as= #ra#ys D 222.#ra#ys.comG SA Oello2 D222.sayello2.co.CaG Easy Info D 222.easyinfo.co.CaG 3irstier D 222.firstier.co.CaG and many more t+at 2ill form part of t+e #randin( strate(y. Business #roc+ures and presentations 2ill play a vital role in communicatin( to prospects a#out t+e products to potential customers.

Business cards

*etter#ead design Business 'e!site

Business listings

Business !roc#ures and presentations 1.1<

7elations#ip marketing

*+is 2ill involve *2o Is see4in( to develop lon( term value laden relations+ips 2it+ customers. *+is 2ill #e particularly +elpful in see4in( to esta#lis+ or retain customer loyalty6 increase sales and ultimately profits. 11. 7isk 5nalysis and 7isk Mitigation 1.1= /inancial 7isks Mitigation Strategy :ill endeavor to reduce pay off de#ts #efore t+ey are due and retain ma$ority of profits 2it+in t+e #usiness :ill mana(e t+e costin(s and sellin( prices strictly :ill focus on mana(ement of cas+ flo2 a((ressively :ill screen de#tors #efore advancin( any credit

7isk -oor or +i(+ (earin( ratio -oor -rofita#ility 7oan non repayment De#tors

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:ill ensure t+at t+ere is +ead2ay for excess cas+flo2 re.uirements

7i.uidity -ro#lems

1.2>

Market 7isks Mitigation Strategy :ill continuously monitor t+e effect of su#stitute products so as to develop a strate(y to counter any t+reats :ill #roaden t+e num#er of suppliers :ill ensure t+at t+ere no customer accounts to more t+an 20K of t+e #usiness :ill monitor competitors strate(y and develop counter strate(ies to ensure t+at t+e company remains competitive :ill ensure t+at *2o Is develops t+at products demanded #y t+e mar4et and if need s2itc+ to produce ne2 products :ill pro$ect and produce to meet seasonal c+an(es in demand and supply

7isk *+reat from su#stitute commodities *+reat from suppliers *+reat from customers *+reat from ne2 entrants *+e direct competition *+e indirect competition Seasonal fluctuations

perational 7isks 7isk Mitigation Strategy "ccupational +ealt+ and safety :ill produce accordin( to ,!- standards and 2or4 to2ards attainin( IS" accredited manufacturin( process ris4 *ime :ill 2or4 on daily production tar(ets @uality :ill develop a .uality assurance system and 2ill focus on .uality output 8elia#ility Environmental 1.22 8uman 7esources 7isks 7isk Mitigation Strategy 8ecruitin( and retainin( .uality employees Incidence of fraud Incidence of stri4e action 7oss of 4ey personnel !ana(ement vulnera#ility 7a#our 8elations -ro#lems Economic 7isks 7isk Mitigation Strategy ,lo#al economic conditions 8e(ional economic scenario Interest rates Exc+an(e rates Inflation rate 3uel -rices 1.2(

1.21

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$ec#nological 7isks Mitigation Strategy

1.20

7isk Cost of tec+nolo(y Availa#le of tec+nical support Security ris4 9o2 dynamic is t+e tec+nolo(y 7oss of information Compati#ility

1.21 7isk Barriers to entry Business plannin( Business Insta#ility

t#er 7isks Mitigation Strategy

12.S& $ 5nalysis S& $ analysis Strengt#s

*+e s+ared values of t+e team ,ood competitive advanta(es ,ood location of t+e #usiness Credit2ort+iness of t+e o2ners of t+e #usiness S4illed6 competent and experienced personnel Accreditations 2it+ si(nificant #odies 7ac4 of .uality control systems 7ac4 of advanced financial mana(ement s4ills 7ac4 of a formal structure Sli(+t (ap in capa#ilities 7ac4 of ade.uate mar4et intelli(ence (at+er systems Availa#ility of advanced tec+nolo(y ,reat !ar4et demand ,ro2in( export mar4et ,ro2in( industry 3avora#le ,overnment policies -ositive seasonal influences Increased consumer spendin( Direct competitors Indirect competitors

&eaknesses

pportunities

$#reats

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*+reat from consumers *+reat from su#stitute products or services *+reat from suppliers 8ivalry 8ise in interest rates over t+e term of t+e loan

1(./inancial 2lan

1.2) 1(.1 1(.2 1(.(

+ey 5ssumptions 2ro"ected Income Statement 2ro"ected Cas#%/lo' Statement 2ro"ected Balance S#eet

10.Summary and Conclusion

11.5ppendices 8esumes of 4ey mana(ement % 3oundin( statement 5 C&1 in t+e case of a Close Corporation -rovide copy of C&2 2+ere applica#le S+are+olderJs a(reement 1 *+e past financial statements in t+e case of an existin( #usiness. *+e past % years +istorical financial statements 2ould #e ideal 0alid .uotations from suppliers and ot+er related parties -ro$ected financial statements Aat least % to *ax clearance certificate 7etters of intent Certified copies of operatin( licenses and permits yearsB

10 11 1 1' 1)

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Ban4 statements for t+e last mont+ of t+e financial year A(ency or distri#ution a(reements Sales Contracts 3ranc+ise a(reement

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