Comgate is a custom millhouse that creates architectural woodwork such as wall paneling, custom cabinets, or other products for the local market. Comgate has created this business plan to clarify its mission statement after several years of losses and low profits in competitive bidding construction projects. Prior years were marked by a rush to bid on as many jobs possible. Because pricing policy was “flexible”, margins were small to avoid insufficient production staff.
However, with the growth of sufficient sales, Comgate has the opportunity to create greater margins, increase efficiency, and improve overall profitability through long-overdue restructuring and focusing on our target market. These changes will assure more accuracy in pricing, billing, and tracking of costs for comparison purposes. Expect to see an increase in profits.
Comgate’s mission is to be a profitable competitor in Connecticut’s high-end residential custom woodwork market. It will focus on custom work of the highest standard and specialize in the most complex needs of newly built and renovated designer homes priced between $3 and $15 million.
Comgate is engaged with custom architectural woodwork. This includes wall paneling in various forms, moldings, moldings, pilasters in radius units, circular stairs in special woods, elaborate dressing areas, and specialty kitchen work. With the recent addition to state-of-the art CAD capability, Comgate will be able to significantly increase sales for higher-end product lines by targeting design professionals who can influence subcontractors when building homes that are trophy’ homes. These homes are more expensive than $3 million. Comgate’s key word is “Custom” The average home wouldn’t use our products. Comgate woodworking is custom-made. No finished goods are available for purchase. This is why there are very few production runs.
The industry has a long history and is well represented. There are many mill shops in the same market area which are focused on specialty areas. One mill shop may concentrate on custom furniture and form special alliances with upholstery shops. Others may be more focused on standard kitchen cabinetry. Comgate targets residential homes at the highest price ($3-$15million). This work is not as price-sensitive and can be maintained even during economic downturns. The company’s most powerful competitive tool is its CAD capacity. The program is designed specifically to be used in the custom woodwork sector and is expected make substantial inroads into residential markets at the highest end. Comgate will be able differentiate itself from its competitors and fully utilize its newly increased production capacity.
Comgate is integrating its CAD capability and the practices design professionals to allow it to outsource parts that are less complex to other mill shops. However, Comgate will continue to build trophy homes. Comgate will be able to provide another mill shop with detailed CAD drawings along with precise dimensions. This will enable them to increase their sales and profits and allow them to focus on more difficult custom woodwork products.
Recent investments of more than $110,000 in new Computer Numerical Control (CNC), combined with the creation of an industry-adapt Computer Aided Drafting capability (CAD) will increase sales to almost $800,000. Year 3 will see $1.2 million. Profits will rise as well. The desire to reduce accounts payable in year 2 in order to take advantage all trade discounts will lead to a short term need for additional bank lines of credit in the range of $30,000.
Comgate’ is a company that aims to be profitable in the Connecticut high-end residential market for custom woodenwork. We will be focused on high-quality custom work, and we specialize in the most difficult needs of newly built and renovated designer homes priced between $3 and $15 million.
1.2 Keys for Success
The key to success for contractors is ’
The mill shop industry is:
- Avoid bidding for projects based solely on price.
You must correctly price the job. This means:
- Accurate takeoffs and listings
- A clear understanding between client and company, regarding terms of payment and quality.
- Correct calculation of material (including waste) and labor needed to complete the project.
- Correctly applying overhead factors, profit margins, and any special considerations.
- An administrative system supported by operating procedures that accurately tracks the job costing and compares the job as bid with the actual costs of completing the job. Constant adjustments to bid formulas.
- Reliable production staff that can communicate with administration in order to produce the job on time, as per bid, using maximum labor, materials and machinery.
Comgate’s main objectives are:
- Increase production. The new machinery and four production workers have been carefully measured to ensure that the full productive capacity is reached. The goal is for the monthly production to be at 80%, 85%, and 90% respectively in the last quarters of Year 1 and Year 2. This 80% capacity allows for 342 feet per month of crown molding, 22 pinsters, 54 doors of different grades, 77 linear feet of cabinets, or some combination thereof. This will translate into monthly sales of $608,816.
- It’s much easier to manage site contract workers (6). At the moment, full employment levels will result in monthly revenue of 34.623 which (after expenses) nets $21,794.
- Continue to increase awareness of the company’s in house CAD capability, especially in Hartford, New Haven Stamford, Stamford, Norwalk and Shelton. These are the areas that have the highest concentration of the $3-15 million residential homes.
- As an industry partner, join the Connecticut Chapter of American Society of Interior Designers. Get listed in their directory.
- Make the necessary administrative changes to ensure that all work has been properly billed.
- Finish the operation manual that was started.