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Sample Business Plan: Christine & Denis Landscapes
Christine & Denis Gagnon
123 rue Jacques
Sherbrooke, PQ
J9N 4K4
418-555-1212
418-555-1313
cda@comnet.ca
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Christine & Denis Landscapes Limited has been in the lawn care business in Sherbrooke for the last four years. However, since the nature of the landscaping business is seasonal, we are interested in expanding our company into snow removal and making it a year-round operation. Our goal is to offset the fixed costs our landscaping business incurs in the winter months thereby increasing the overall profitability of our company. With the addition of a snow removal service, we project that our sales will increase by $200,000 for a combined total of $545,000. In order to achieve this goal, we are seeking a term loan of $125,000 to purchase the necessary snow removal equipment.
We will offer our services to our existing residential and commercial
client base. We have already secured commitments from 60 existing
clients as well as a local senior citizens' home, a shopping mall
and a local community college. In addition, the snow removal business
in Sherbrooke, Quebec is on the verge of substantial growth. The
City of Sherbrooke has voted to contract out all snow removal
services which translates into an additional $1.5 million in potential
new business. This brings the total market for private snow removal
services in Sherbrooke to $4 million. In light of this information,
we hope to reach $500,000 in revenue from our snow removal business
within three years.
Our strategy is to sell our services to both the residential
and commercial sectors with two unique offers. We will guarantee
service within 12 hours of a snowfall. We will implement a flat
monthly rate for snow removal based on the size of the property.
Since an overly severe winter would negatively impact business
sales and an overly mild winter would hamper residential sales,
our policy is to keep an even split between residential and business
customers, thereby minimizing undue risk.
Our computerized database of landscaping clients will serve as
a base from which to market our snow removal services. It will
allow us to track services rendered for customers and to send
out direct mail offers to them to solicit further business. In
addition, as part of our launch, we will produce and deliver 10,000
hand bills door-to-door, advertise in the community newspaper
on a weekly basis from November to March and post notices on bulletin
boards in community centres, sports complexes, community colleges
and shopping centres. All services will be provided by ourselves
-- Christine and Denis Gagnon -- three driver/maintenance people
to be hired once financing is secured and three occasional assistants
on an as needed basis. As veteran small business owners, we have
a good grasp of the fundamentals of running a company and have
honed our sales and marketing skills. In addition, we have assembled
a board of advisors to help round out our skills. The advisors
are: Jean-Marie Horvath, founder of J-M Accounting Inc.; Martine
Gallant, president of Elan Communications Limited and corporate
lawyer, Claude Jutra, a partner at Jutra et Leroux.
We are confident that our business idea is a sound one and would
be of use to our existing client base. Complete financial statements
of our existing business are available upon request. These financial
statements illustrate profitability over the past three years
while paying ourselves a salary of $75,000 each.
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Management Team Profiles & Ownership Structure
Christine & Denis Landscapes
Limited was formed in Sherbrooke, Quebec by Christine and Denis
Gagnon. We own 100% of the company's shares.
| Title |
Name |
Job Description |
Qualifications |
| Co-Owner |
Christine Gagnon |
Responsible for the overall running of the company, including the supervision of labour
Responsible for building sales for the company and securing additional contracts from municipal government |
Degree in landscape architecture from Sherbrooke Polytechnic Institute
4 years experience in sales and operations in lawn care business
Excellent management and negotiation skills |
| Co-Owner |
Denis Gagnon |
Responsible for all bookkeeping and marketing tasks for the company
Responsible for all customer service enquiries |
Graduate of 2 year business program at Trois Rivières College
3 years accounting experience for local trucking business |
| 3 Seasonal Drivers and
3 Occasional Assistants |
TBA |
Drive snow removal vehicles |
Minimum of 1 year experience in snow removal
Valid drivers license with a clean driving record |
Compensation
| Position |
Salary |
| Co-Owners |
$75,000 each/annum |
| 3 Seasonal Drivers |
$30,000 each/annum |
| 3 Occasional Assistants |
$15/hour |
We have decided not to
increase our salaries with the addition of the snow removal business.
This will keep money in the business to ensure our success in
the early years
Advisors
We have assembled a board
of advisors who volunteer their time and experience. They include:
- Jean-Marie Horvath.
J-M Accounting Inc., CPA.
Jean-Marie Horvath is
a chartered accountant and founder of J-M Accounting Inc. He
is a fervent supporter of small business and is a council member
of the Sherbrooke Chamber of Commerce.
- Martine Gallant. President,
Elan Communications Limited.
Martine is president
of Elan Communications Limited, a marketing communications company
that focuses on database marketing. Martine is also a contributor
to the Sherbrooke Soleil, a daily Sherbrooke newspaper.
- Claude Jutra. Partner,
Jutra et Leroux.
Claude Jutra is a corporate
lawyer and one of the founding partners in the Montreal law
firm, Jutra et Leroux. Mr. Jutra also lectures on legal issues
for small business and is a regular contributor to Law and Business
Magazine.
Professional Services
We have established good
working relationships with a number of professionals as a result
of operating our landscaping business. We will continue to work
with Scott Riley, a corporate lawyer with Reisse & Carr and
Maureen Bradley, an accountant with Bradley & Associates.
Human
Resources Requirements
The three seasonal positions
for driver / maintenance worker will be made available to persons
with a valid driver's license and a clean driving record. One
year of snow removal experience is required. Landscaping skills
will be considered a great asset since, even though we currently
have seasonal landscape employees, these positions have the potential
to become year round. The driver / maintenance worker will be
paid based on an annual salary of $30,000. The occasional assistants,
who will be under the seasonal driver's supervision, will be used
on an as needed basis and will be paid an hourly wage of $15.00.
Furthermore, we plan to
send our drivers to a one-day winter driving seminar, which instructs
attendees on methods of avoiding winter accidents. All of our
equipment will be insured in case of accident and/or damage.
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Business
Summary & History
Christine & Denis Landscapes
Limited has been in the lawn care business in Sherbrooke for four
years and has a history of profitability. However, since the nature
of the landscaping business is seasonal, we are interested in
expanding our company into snow removal and making it a year-round
operation. We will offer our services to our existing residential
and commercial clients.
Industry
Overview
As a northern country, Canada
has always had a need for snow removal services during the winter.
With the average person working longer hours and juggling more
leisure activities than ever before, the need for professional
snow removal services have increased in the residential sector.
Similarly, as the number of small businesses with limited staffs
continue to increase, more professional snow removal services
are being used by these businesses as an alternative to bringing
maintenance people in house. And, with new policies being implemented
to fine people and businesses who fail to clear their property
of snow hazards in the wintertime, market research indicates that
snow removal services will enjoy a growth rate of approximately
4 per cent per year for the next five years.
On a local level, the city
of Sherbrooke has recently voted to contract out $1.5 million
in snow removal services.
Sectors
Within Industry
- Residential sector:
private residences in the Sherbrooke area; primarily those mid-to-high
income dwellings inhabited by busy professionals who don't have
time to shovel.
- Business sector: primarily
comprised of strip mall tenants and those operating from store
front locations in the greater Sherbrooke area. In addition,
large institutions such as schools, hospitals and seniors' homes
who, due to cutbacks, have decreased the number of maintenance
workers employed, but still need to maintain a high level of
winter safety.
Seasonal
Factors
Snow removal is extremely
sensitive to seasonal factors. A winter with a particularly heavy
snowfall would result in an increase in demand for snow removal
services; conversely, a mild winter would be potentially devastating
to a snow removal company depending on the way its contracts are
structured. However, Sherbrooke weather patterns for the last
ten years have been extremely stable and the average snowfall
from year to year doesn't vary more than 15 per cent.
Consumer
Trends
With the risk of a substantial
fine from the municipal government for failure to remove snow
within 12 hours of a snowfall, residential use of snow removal
services has increased by 16 per cent over the last five years.
Similarly, with lawsuits stemming from property negligence on
the rise, local businesses are 54 per cent more likely to contract
out snow removal services than ten years ago.
Position
in the Industry
Having been in the lawn
care business for four years, we have established a strong reputation
for ourselves in the Sherbrooke community with both business and
residential customers. We are known for offering friendly and
competitively priced service and enjoy a high rate of referral
business. Of our more than 300 customers, the vast majority have
expressed a commitment to using our snow removal services once
they are fully functional.
Competition
There are currently a total
of eight snow removal services in the Sherbrooke area. The two
largest services Au revoir Neige and Gilles
Délétang et fils Ltée currently control
80 per cent of the local market. These companies are well established
and have both been in business for more than ten years. The remaining
20 per cent is currently split between six smaller contractors.
Although other contractors
may try to cash in on the city's decision to contract out snow
removal, Christine & Denis Landscapes Limited is in a particularly
favourable position. We have built up relationships with clients
in both the residential and business sectors as well as the municipal
government over the last four years; therefore, we are in an excellent
position not only to win contracts from the government, but also
from private sectors and residential customers.
Use
of Technology
We plan to make use of
our computerized database, compiled during our four years in the
landscape business, to market our snow removal services to existing
clients. This will be an advantage over a number of our competitors
who do not use a database, since it will allow us to track services
rendered for customers and to send out direct mail offers to them
to solicit further business.
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Target
Markets
The total market for snow
removal services is $4,000,000 which is comprised of the following
markets:
- Residential: comprised
primarily of mid-to-upper income professional families in detached
dwellings who are simply too busy to clear their own snow. The
market is worth approximately $1.5 million.
- Commercial: This market
can be further broken down into three categories:
- Small Business -- consists
largely of strip mall and store front locations in the downtown
core. This sector is worth approximately $500,000 in the Sherbrooke
market.
- Institutions -- consists
of schools, hospitals and other large public organizations,
who have large budgets for maintenance and generally pay invoices
within their 30 day terms. In total, the Sherbrooke market is
worth approximately $500,000.
- Municipal government
contracts -- In addition to the above-mentioned markets, a percentage
of our business will be comprised of contracts from the city,
who has decided to outsource all snow removal in the Sherbrooke
area. The contracts are estimated to be worth about $1.5 million
Services
We will market ourselves
as the year-round maintenance people who show individualized attention
to our clients. Our larger competition is unable to offer this
personalized service and -- since they deal primarily with businesses
and government contracts -- they are more expensive. We will offer
our clients reasonable prices and superior customer service. Through
our handbills and direct marketing letters (see marketing section),
we will position our services as an inexpensive and hassle-free
way to maintain property. By using our services, residential customers
will avoid paying fines for not clearing their property and businesses
can rest assured that lawsuits due to negligence will be minimized.
Pricing
Strategy
Commercial Customers -
based on a monthly flat rate of:
- $125 for a small property
- $220 medium property
- $350 for a large property
Residential Customers:
- We estimate an average
seasonal price range of $200 - $300 depending upon the size
of the property.
Credit Terms
- Residential: 30 day
payment terms, cash or cheque only
- Commercial customers:
net 30 days on approved credit
We have made provisions
for extended payment terms in our cash flow. We expect collections
to be as follows: 25% to be collected in the first 30 days, 50%
within 60 days and the remaining 25% by 90 days.
Special contracts would
be negotiated for the significantly larger snow removal work on
the senior citizens' home, shopping mall and community college.
Sales/Distribution
Plan
Through the operation of
our landscaping business, we have established good working relationships
with our existing client base. Our plan is to offer our snow removal
services to our existing landscaping client base in the residential,
and business sectors. We have already secured commitments from
60 present clients as well as a local senior citizens' home, a
shopping mall and a local community college. We intend to contact
the remainder our existing clients by mail and follow-up phone
calls in order to introduce our new snow removal service. We will
do a limited amount of targeted advertising (see below) in order
to generate sales leads. Sales leads will be closed by a phone
call and an in-person sales call from one of the company's owners.
Advertising
and Promotions Plan
Christine & Denis Landscapes
Limited's new services will be advertised and promoted in a number
of ways:
- Produce and deliver
10,000 hand bills to be delivered door-to-door in November (estimated
cost: $1,500)
- Advertise in the community
newspaper on a weekly basis for November through March (estimated
cost: $600)
- Post notices on bulletin
boards in community centres, sports complexes, community colleges
and shopping centres (estimated cost: $100)
- Send letters to our
existing client base, advertising our services (estimated cost:
$300)
We estimate the costs of
promoting the new service will be $2,500 and will result in an
additional $200,000 in gross annual sales.
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Stage
of Development
We have already sourced
a supplier of four-wheel-drive trucks, snow blowers and plow blades
and have located
a storage area for this equipment. In addition, we have interviewed
our existing landscaping client base and have gauged their level
of interest in snow removal services.
In order to be operational,
the following steps must take place:
- Obtain $125,000 of bank
financing for additional equipment including:
- Three trucks equipped
with plow blades
- Three snow blowers
- Three trailers
- Secure a storage area
for this equipment -- budgeted cost $600 per month
- Advertise our snow removal
services to our existing client base and the population of Sherbrooke
at large
- Negotiate with municipal
government to obtain contracts for snow removal
- Hire and train three
labourers to help with operations
Risks
The following factors could
pose problems to the business:
- Extremely severe winter
conditions would render the commercial contracts uneconomical
and could make guaranteed 12 hour residential service unrealistic
- Extremely mild winter
conditions would result in a decline in the number of residential
jobs undertaken and negatively impact profits
- Damage to equipment
would result in costly repair and replacement fees
Contingency Plan
In the last decade, Sherbrooke's
winter weather patterns have been relatively stable with only
a 15 per cent variation in snowfall from year to year. Therefore,
it is unlikely that conditions will be drastically milder or more
severe than usual. However, since an overly severe winter would
negatively impact business sales and an overly mild winter would
hamper residential sales, our policy is to keep an even split
between residential and business customers, thereby minimizing
undue risk. We will also purchase comprehensive insurance on all
snow removal equipment.
Association Membership
In an effort to network
with other entrepreneurs, we are members of:
- Quebecois Entrepreneurial
Alliance
- Sherbrooke Chamber of
Commerce
Production
Process
Christine & Denis Landscapes
will lease a 1,000 square foot storage space for our equipment
at a rate of $600 per month. We plan on purchasing three trucks
equipped with plow blades, three snow blowers and three trailers.
We will maintain our existing home office facility, which is already
equipped with a fax machine, printer, copier and computer systems
all of which we own outright.
Once our client commitments
have been secured, winter weather is the only factor affecting
the demand on service. In Sherbrooke, we don't anticipate any
drastic changes in weather conditions.
Our truck will do commercial
properties in the early morning while parking lots are empty.
Residential lots will be done late morning or early afternoon
after people have left for work.
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Income
Statement
An income statement showing
incremental results of the snow removal business has been prepared
because the snow removal "division" is intended to be
an add-on service to our existing company. This existing company
already has an administrative infrastructure set up that can accommodate
the snow removal business with negligible additional cost. The
income statement indicates estimated gross sales of $200,000 for
the first year with after-tax profit of approximately $18,000.
Certain items included in the administrative expenses could be
charged to the "division", however, that would not change
the overall income or cash flow as these funds would be disbursed
in the Landscape "division". Ongoing expenses relate
to the operation of the vehicles and the salaries of the drivers
and workers. The equipment must be stored in the off season; insurance
is still required and financing costs continue to be incurred
during that period.
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Cash
Flow Statement
A term loan in the amount
of $125,000 to finance the acquisition of snow removal equipment
is being sought. Since the division of our business is seasonal,
cash generated is limited to the winter months, more specifically,
November to April. The bulk of operating expenses also coincides
with that period. However, certain fixed outflows would continue
for the balance of the year including storage for the equipment,
interest and insurance. The Cash Flow statement indicates that
the division will generate a positive cash inflow of approximately
$65,000.
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Balance
Sheet
The Balance Sheet demonstrates
a strong financial position with $46,000 in cash, $41,000 of collectable
accounts receivable and current liabilities of approximately $22,000.
We will have capital assets in excess of $200,000 which will be
the backbone of our future operation. As our business continues
to grow, future capital additions may be required.
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Risks
Business
Risks
It is our goal to expand
our existing landscaping business to include snow removal services,
making it a year-round operation. In order to achieve this goal,
we are asking for a term loan of $125,000. Once we have secured
this loan, and purchased the necessary equipment, we anticipate
that our sales will increase by $200,000, approximately $18,000
of which we are projecting as net profit.
We have taken into consideration
the fact that part-time drivers could present a risk by quitting
or being laid off, and have agreed to do the driving if this should
ever be the case until a replacement driver is hired. Although
a year with light snow fall would negatively affect our revenue
from residential business, this will be offset by a reduction
in part-time driver costs and will not affect the monthly billing
of our corporate clients.
We are confident that our
existing client base will use our services and we have secured
commitments from a number of local businesses and institutions.
Furthermore, since the City of Sherbrooke has voted to contract
out all snow removal services to private companies, now is the
perfect time for Christine & Denis Landscapes Limited to expand.
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