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Painting Contractors Business Plan
Executive Summary
Barnum Painters will provide top-quality interior and exterior residential and commercial painting services. The principal officers of Barnum Painters believe that most companies in this industry suffer two major problems. These are poor scheduling of job projects and poor retention of quality employees. Both lead to lower customer satisfaction, lack of repeat business and a low word-of-mouth referral rate. Barnum Painters believes that by implementing this contractor business plan, it can improve upon and exploit these weaknesses to gain local market share.
The objectives for Barnum Painters over the next three years are:
- To achieve sales revenues of approximately $620,000 by year three.
- To achieve a customer mix of 30% commercial/60% residential building contracts per year.
- To expand operations to include all the Greater Seattle area including Kirkland, Renton and the Kitsap Peninsula.
The company will seek to provide its painting services in the most timely manner and with an ongoing comprehensive quality-control program to provide 100% customer satisfaction. The company’s principal officers see each contract as an agreement not between a business and its customers, but between partners that wish to create a close and mutually-beneficial long-term relationship. This will help to provide greater long-term profits through referrals and repeat business.
Barnum Painters will institute the following key procedures to reach its goals:
- Create a position of inventory coordinator, and have at least one expediter assigned to each project.
- Have a dedicated project manager for each project who can handle quality-control issues.
- Institute a program of profit sharing among all employees.
Barnum Painters is a start-up limited liability company consisting of three principal officers with combined industry experience of 40 years. Barnum Painters will be a partnership between Mr. William Barnum, Mr. Anthony Barnum and Mr. Michael Kruger. The principals will be investing significant amounts of their own capital into the company and will also be seeking a loan of $7,000 to cover start-up costs and future growth. Finally, the company has procured a $10,000 line of credit (not shown on financial statements) that will be used if necessary to cover unforeseen expenses or opportunities.
Barnum Painters will be located in a rented suite in the Rucker Industrial Park on 710 Snoquamie Route, Suite 250 in Edmonds, WA. The facilities will include a reception area, offices for the principals, storage area for inventory, and employee lounge. Barnum Painters offers a wide variety of services primarily focused on interior and exterior residential and commercial painting. The firm also provides such services as drywall plastering, acoustical ceilings, pressure washing, and others. The idea is to provide clients with a broad range of related services that will minimize their need to employ a variety of contractors. Barnum Painters will engage in a low-cost leadership strategy while maintaining a suitable level of quality.
Initially the company will focus on residential and commercial customers in the Everett, Washington area. However, by the end of the three-year projections, the company expects to be serving the entire Puget Sound area. The company has rigorously examined its financial projections and concluded that they are both conservative in profits and generous in expenditures. This was done deliberately to provide for unforeseeable events. The company’s principals believe that cash flow projections are realistic.
Keys to Success
The principal officers of Barnum Painters have had many years of experience in the contracting business. They believe that most companies in this industry, which includes painting contractors, suffer from two major problems that Barnum Painters can improve upon and exploit.
The first problem comes from scheduling of jobs. Many painting contractors find it difficult to maintain established schedules with their customers that lead to a decrease in customer satisfaction and retention. This is caused by poor management, less than reliable employees, and delays in inventory procurement and distribution. The second problem is in retaining reliable and motivated personnel. Many painting companies rely on temporary or transient employees that lead to high turnover rates and decreased service quality.
Barnum Painters will institute the following key procedures:
- Creation of a position of inventory coordinator and have at least one expediter assigned to each project.
- Have a dedicated project manager for each project who can handle quality control issues.
- Institute a program of profit sharing among all employees.
Mission
The mission of Barnum Painters is to provide top-quality interior and exterior residential and commercial painting services. The company will seek to provide these services in the most timely manner and with an ongoing comprehensive quality control program to provide 100% customer satisfaction. The company’s principal officers see each contract as an agreement not between a business and its customers, but between partners that wish to create a close and mutually beneficial long-term relationship. This will help to provide greater long-term profits through referrals and repeat business.
Objectives
The objectives for Barnum Painters over the next three years is to:
- Achieve sales revenues of approximately $450,000 by year three.
- Achieve a customer mix of 30% commercial/60% residential building contracts per year.
- Expand operations to include all the Greater Seattle area including Kirkland, Renton and the Kitsap Peninsula.
Company Summary
Barnum Painters is a start-up limited liability company consisting of three principle officers with combined industry experience of 40 years. The company was formed to take advantage of the perceived weakness and inadequacies of other regional companies in terms of quality and customer satisfaction. Barnum Painters will be a partnership between Mr. William Barnum, Mr. Anthony Barnum and Mr. Michael Kruger. The principles in the company will be investing significant amounts of their own capital into the company and will also be seeking a loan to cover start-up costs and future growth.
Barnum Painters will be located in a rented suite in the Rucker Industrial Park on 710 Snoquamie Route, Suite 250 in Edmonds, WA. The facilities will include a reception area, offices for the principals, storage area for inventory, and employee lounge.
The company plans to use its existing contacts and the combined customer base of Mr.’s Barnum and Kruger to generate short-term residential contracts. Its long-term profitability will rely on focusing on commercial contracts that will be obtained through strategic alliances and a comprehensive marketing program.
Company Ownership
Barnum Painters is a privately owned limited liability partnership with each of the principal officers holding an equal share in the company.
Company Locations and Facilities
Barnum Painters will be located in a rented suite in the Rucker Industrial Park on 710 Snoquamie Route, Suite 250 in Edmonds, WA. The facilities will include a reception area, offices for the principals, storage area for inventory, a painting booth, tool area and employee lounge.
Services
Barnum Painters offers comprehensive interior and exterior painting services for both the residential and commercial markets.
Service Description
Barnum Painters services include:
- Full prep work.
- Dry wall contouring.
- Fine detailing.
- Small carpentry work.
- Specialty wall coatings.
- Refinishings.
- Acoustical ceilings.
- Pressure washing/roof cleaning.
Each project is customized to the wants and needs of the client. Prices are determined by the scope of the project, materials needed, wear and tear on equipment and required profit margin.
Competitive Comparison
The contracting and painting market is very competitive. The barriers to entry and exit in this market are very low making this an industry with a large number of rival firms with high turnover rates. Buyers have a significant amount of power since they have a large number of companies to choose from. Moreover, services are undifferentiated, which means that customer loyalty is usually low. Painting companies must compete on quality and timeliness of service, customer relations, and price.
Barnum Painters believes that it can improve on the quality and timeliness of services in this industry by instituting procedures that will avoid many of the mistakes that other firms make. This includes delayed schedules and high employee turnover which leads to lower service quality. The company will be equally competitive in price and will maintain close ties with its clients throughout the entire project since each project is a customized job. Through these steps, Barnum Painters will be able to build up a reputation of better quality service at competitive prices than its competitors.
Market Analysis Summary
Barnum Painters will focus on two markets within the industry, the residential segment (including apartment buildings) and the commercial segment (including buildings used for professional purposes).
The commercial market requires the shortest amount of time to completion of projects and usually the least amount of customization. Since our projects impinge upon a business’ profitability, it is absolutely crucial for our project foremen to maintain schedule and keep the stakeholders apprised of the project’s progress.
Although the above is also true for the residental owner, time is not as critical, quality and meeting the needs/wants of the client come first in the residential segment. The client is often willing to wait a little longer to have the project done to his/her specifications. The project foremen must be willing to be more flexible and willing to listen to the client.
Over the past decade a number of new trends have been observed in this industry. This includes the tremendous growth of the economy, the high technology boom, and the growth of substitute services such as Home Depot.
Market Segmentation
Barnum Painters will focus on two markets within the industry, the residential segment (including apartment buildings) and the commercial segment which includes buildings used for professional purposes. The company can handle any size building that needs its services. It is the goal of the company to eventually have approximately one-third of all business coming from the commercial segment, since this generates the greatest cash flow. Furthermore, this segment has the lowest percentage of variable costs. The residential segment is considered to be the company’s cash cow. Even during the slow winter months, the company can expect to have a small number of residential contracts.
Initially the company will focus on the two segments in just the Everett, Washington area. However, by the end of the three year projections, the company expects to be serving the entire Puget Sound area.
Target Market Segment Strategy
Each of the two market segments has differing needs and trends. The following sections go into detail about how the company will fact them.
Market Trends
Over the past decade a number of new trends have been observed in this industry. The tremendous growth of the economy has fueled the painting contractors industry as well, as people have progressively spent more and saved less. The high technology boom has created great opportunities in the Pacific Northwest which the industry has also benefited from. However, the growth of firms such as Home Depot, which encourages do-it-yourself painting and construction, has lead to a serious decline in sales for the residential segment. The growth of this trend poses a significant threat to the industry. Barnum Painters plans to increasingly focus on the commercial segment as the company grows in order to promote greater revenue and income.
Service Business Analysis
Most of the industry analysis is contained in the Competitive Comparison section to give the reader the idea of the competitive nature of the industry, its opportunities and threats, and the company’s flexibility in pricing. Barnum Painters exists in a purely competitive market that faces virtually unlimited competition and high demand. The ability of the company to differentiate its services or enter into a niche market is limited. The company will engage in a low-cost leadership strategy while maintaining a suitable level of quality.
In the painting contracting industry, there are a limited number of large firms that compete for the largest projects, and a vast number of smaller companies that fight for all the rest. Within the largest company section, market consolidation is always a threat.
Competition and Buying Patterns
This industry is highly seasonal. The busiest times are during the summer months where it is easy for a company to become so engaged that it must turn down contracts. During the winter months businesses must focus on marketing to get any contracts at all.
Main Competitors
The main competitors for Barnum Painters include Kolby and Wilson, DMB Enterprises, Sun Painting, and Milbrant Commercial Painters.
Each of these competitors is able to achieve a high degree of profitability through marketing, volume or high-end contracts. They pose a significant threat to Barnum Painters because of their deep pockets and their desire to acquire other painting competitors. Barnum Painters will compete with these rivals through the use of greater marketing and better service.