Custom Pottery Business Plan

Kaolin Calefactors (KC) is an Oregon company that designs and manufactures custom dishware. Sue Glazer specializes in modern and popular art. The typical customer is someone looking for a unique handmade gift or unusual everyday dishware.

Kaolin Calefactors is a unique business that allows Sue Glazer to combine her love for ceramics and turn it into a profitable venture.

Kaolin Calefactors will gain market share in the custom dishware niche by offering a customer-centric business model. Profitability is expected by month nine, with projected revenues of $78,000 by year three.

1.1 Objectives

The objectives for the first three years of operation:

• To create a company that exceeds customer’s expectations.
• To increase the number of custom clients by 20% annually.
• To develop a sustainable start-up business that leverages a hobby.

1.2 Mission

Kaolin Calefactors’ mission is to design and construct the finest dishware pottery, attracting and maintaining customers. Our services exceed customer expectations.

1.3 Keys to Success

The key to success is innovative design and a customer-centric approach.

Company Summary

Kaolin Calefactors is an Eugene, OR based start-up company that handcrafts production and custom ceramic dishware. KC sells their products in local crafts stores, craft fairs, and their website.

2.1 Company Ownership

Kaolin Calefactors is a sole proprietorship founded and owned by Sue Glazer.

2.2 Start-up Summary

Kaolin Calefactors will incur the following start-up costs:

• Computer system with a CD-RW, printer, Microsoft Office, and QuickBooks Pro.
• Commercial kiln.
• Electric potters wheel.
• Storage containers for clay and glazes.
• Assorted tools for trimming, edging, and glazing.
• Shelves and large tables for storage and workspaces.
• Website development.

Note that assets used for more than a year will be labeled long-term assets and depreciated using G.A.A.P. approved straight-line depreciation method.

Products

Kaolin Calefactors makes production and custom dishware. KC manufactures 12 production styles of dishware as well as offers custom designs based on past creations or customer’s own ideas.

Please note that the term production refers to items made for inventory regardless of whether there is an order for them. Production, in this case, does not imply "mass production."

The offered dishware includes serving platters, dinner plates, bowls, coffee cups, saucers, and additional requested pieces. They come in different shapes and glazing options. Kaolin Calefactors products are high-quality, handmade pieces that can be customized to the customer’s preferences. The price/positioning strategy targets the high-end market.

Market Analysis Summary

The market can be divided into two groups: gift purchasers and end consumers. 80% of the consumer market for pottery comprises of adult females.

4.1 Market Segmentation

The market can be segmented into two groups:

• People purchasing pottery as gifts, looking for unique and standout designs. They often choose from the production line.
• People buying pottery for themselves, often opting for custom designs to match their specific style. Custom work is more expensive and unique, appealing to those buying for personal use.

4.2 Target Market Segment Strategy

Targeting these two groups involves increasing visibility for Kaolin Calefactors in areas where individuals interested in fine, handmade dishware are likely to be found. This includes participating in local craft fairs, which gather various craftspeople to showcase their creations, attracting those seeking unique handmade designs.

Kaolin Calefactors will also have a comprehensive website displaying production designs and Sue’s portfolio of past and present designs, serving as inspiration for custom designs.

In addition, each product includes an information card promoting Kaolin Calefactors, Sue, and the website, particularly useful for retail sales in craft stores. The flyer encourages visits to the website to explore the infinite number of custom designs available.

4.3 Industry Analysis

The craft industry comprises of woodworkers, ceramic artists, doll painters, and jewelers. Most craftspeople attend weekend craft shows while maintaining other jobs. Combining a hobby with a minor money-making venture is common in this industry.

A minority of craftsmen, like Sue, transition their hobby into a full-time job.

While most craftspeople work at home, potters typically require dedicated space due to their equipment and different phases of pottery production, such as drying, kilning, and glazing.

4.3.1 Competition and Buying Patterns

Competition comes from various sources:

• Commercial dishware manufacturers targeting those seeking general dishware based on function rather than aesthetics.
• Assorted craftspeople catering to those purchasing ceramics as gifts.
• Other potters, who are direct competitors but often not involved in producing competing dishware, focusing on cups and vases.

Strategy and Implementation Summary

The strategy for building customers revolves around Kaolin Calefactors’ customer-centric approach, involving customers in the design and production process of their dishware.

5.1 Competitive Edge

Kaolin Calefactors’ competitive edge lies in their customer-centric approach, visible in the collaboration between Sue and the customer to create the perfect design. This approach is both intuitive and effective, as it prioritizes customer satisfaction and loyalty.

5.2 Sales Strategy

The sales strategy focuses on emphasizing the pride and appreciation that comes with owning production or custom dishware. Dishware is used daily and influences the food presentation, making it a long-term investment. Customers are engaged in the creation process, enhancing the overall experience.

5.2.1 Sales Forecast

The first month will be dedicated to setting up the work studio, establishing retail sales outlets, scheduling craft fairs, and designing the website. Business will gradually increase from month two to month five.

5.3 Milestones

Kaolin Calefactors milestones:

• Business plan completion: roadmap for the organization to improve performance.
• Office/work space set up.
• Establishment of retail sales outlets.

Management Summary

Sue Glazer has a Bachelor of Arts from Washington and Jefferson. After taking various classes, including ceramics, she pursued her Masters in Art at Carnegie Mellon University.

After completing her academic program, she taught ceramics at W&J for four years before moving to the Pacific Northwest.

6.1 Personnel Plan

Kaolin Calefactors is a sole proprietorship with Sue as the only employee. She will be responsible for strategic relationships, administrative details, and creating the art.

Financial Plan

The following sections outline important financial information.

Please note that there is a discrepancy in the Ratios table under gross margin and selling/general and administrative expense categories. This is due to the categorization of costs relative to the industry average.

7.1 Important Assumptions

The table below details important financial assumptions.

7.2 Break-even Analysis

The Break-even Analysis indicates that approximately $4,400 in monthly revenue is needed to reach the break-even point.

Break-even Analysis

Monthly Revenue Break-even: $4,449

Assumptions:

Average Percent Variable Cost: 17%

Estimated Monthly Fixed Cost: $3,693

Projected Profit and Loss

Pro Forma Profit and Loss

Year 1 Year 2 Year 3

Sales $40,728 $80,668 $94,723

Direct Cost of Sales $6,924 $13,714 $16,103

Other Production Expenses $0 $0 $0

Total Cost of Sales $6,924 $13,714 $16,103

Gross Margin $33,805 $66,955 $78,620

Gross Margin % 83.00% 83.00% 83.00%

Expenses

Payroll $30,000 $35,000 $40,000

Sales and Marketing and Other Expenses $2,100 $1,900 $1,700

Depreciation $1,116 $1,116 $1,116

Leased Equipment $0 $0 $0

Utilities/ DSL/ web hosting $1,800 $1,800 $1,800

Insurance $600 $600 $600

Rent $4,200 $4,200 $4,200

Payroll Taxes $4,500 $5,250 $6,000

Other $0 $0 $0

Total Operating Expenses $44,316 $49,866 $55,416

Profit Before Interest and Taxes ($10,511) $17,089 $23,204

EBITDA ($9,395) $18,205 $24,320

Interest Expense $0 $0 $0

Taxes Incurred $0 $5,127 $6,961

Net Profit ($10,511) $11,962 $16,243

Net Profit/Sales -25.81% 14.83% 17.15%

Projected Cash Flow

The following chart and table will indicate projected cash flow.

7.5 Projected Balance Sheet

The following table indicates the projected balance sheet.

7.6 Business Ratios

The following Ratios table compares standard ratios based on the Standard Industry Code #3269, Pottery Products, to the planned numbers for Kaolin Calefactors.

General Assumptions:

The provided table displays the general assumptions for the given plan months. It includes information such as the current interest rate, long-term interest rate, tax rate, and other expenses.

Pro Forma Profit and Loss:

The following table represents the pro forma profit and loss statement. It includes details about sales, direct cost of sales, other production expenses, total cost of sales, gross margin, and gross margin percentage.

Expenses:

Under the Expenses category, the table lists various expenditures involved in the business. This includes payroll, sales and marketing expenses, depreciation, leased equipment, utilities/DSL/web hosting, insurance, rent, and payroll taxes.

Total Operating Expenses:

This section showcases the total operating expenses incurred during each month of the plan.

Profit Before Interest and Taxes:

The profit before interest and taxes for each month is displayed, indicating the financial status of the business.

EBITDA:

EBITDA refers to earnings before interest, taxes, depreciation, and amortization. It reflects the business’s operating performance and profitability.

Interest Expense:

The interest expense section shows the amount paid in interest throughout the year.

Taxes Incurred:

This section indicates the total taxes incurred during each month.

Net Profit:

The net profit is calculated by subtracting all expenses, interest, and taxes from the total revenue. It provides an overview of the business’s profitability.

Net Profit/Sales:

Net profit/sales represents the percentage of net profit in comparison to the total sales. It indicates the business’s profit margin.

Pro Forma Cash Flow:

The pro forma cash flow table displays the cash received and spent during each month.

Cash Received:

The cash received section includes details about cash from operations.

Cash, Sales Tax, VAT, HST/GST Received:

This section shows additional cash received through sales tax, VAT, and HST/GST payments.

Expenditures:

The Expenditures section displays the cash spent on different aspects of the business.

Additional Cash Spent:

This section represents additional cash spent on sales tax, VAT, HST/GST payments, current borrowing, other liabilities principal repayment, long-term liabilities principal repayment, purchase of other current assets, sales of long-term assets, and new investments received.

Net Cash Flow:

The net cash flow represents the difference between cash received and cash spent. It shows the overall financial health of the business.

Cash Balance:

The cash balance indicates the remaining cash on hand after all cash inflows and outflows. It provides an overview of the company’s financial position.

Overall, these tables provide crucial information regarding the financial outlook of the business. They assist in evaluating profitability, cash flow, and financial stability.

Pro Forma Balance Sheet

Business Plan Outline

• Executive Summary
• Company Summary
• Products
• Market Analysis Summary
• Strategy and Implementation Summary
• Management Summary
• Financial Plan
• Appendix

Andrew Brooks

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