business plan for startup

Business Plan of CONTESSA INTERIOR

Executive Summary

„Contessa‟ is a basically furniture showroom. The name is known by some

geographical area people only in Colombo. It was the wood division of „Link Engineering‟

since its incorporation in 1990. After the acquisition by „Blue Ocean Group of Companies‟ in

September 2013, The name „Contessa‟ is registered as the separate entity which is going to

function as a separate SBU under the umbrella “Blue Ocean”.

In future, Contessa will also be diversified into all type of interior work such as steel, glass,

partitioning decorations, curtaining, wooden and laminated flooring and imports and exports

of furniture also. In addition, it is also expecting to expand its wider hands all over the island

through establishing multiple show rooms in selected regions.

Over the years, Contessa has clearly identified a market for its interior solutions. With broad

innovative ideas, customer oriented service or products, and quality of service by the sales

force, Contessa seeks to build a strong market position by establishing its major “Blue Ocean

strategy” in its activities. It also concentrates on targeting high end residential customers,

commercial development projects, and mid range residential customer segment.

Objectives

To be the top interior decorator firm in the market.

Revenue to more than Rs One billion in the year ended 2018 December

Aims to have 60% sales from commercial developments and 40% from individual

customers over the years.

To have fifteen number of sales outlets all over the island within the targeted four

years.

Mission

To be the most innovative interior solution service provider in the market while enhancing

and ensuring the customer satisfaction.


Start up and initiating business

Contessa as you all know was doing the business as s showroom since its incorporation.

Now, through the branding which is going to be done, it will break up the competition in the

market and establish the name as the most innovative interior service provider. As it is being

functioning as the division of „Link Engineering‟, it will not need the start up costs or kind of

imitation cost. In order to take the significant business into the company its requiring funds

spending on advertising and selling at the initial stage.

Strategic Miles Stone

2014 - Opening first showroom

2015 – Developing show rooms and increasing number of sales & Q/S staffs significantly

2016 – Start Exporting Wooden products to multiple countries

2017 – Achieving Rs. 450 millon turnover

2018 – Achieving remarkable Rs.One billon turnover through increased sales & Q/S staff,

Island wide show rooms, exports, winning tenders, capturing corporate clientele through

branded image interior solutions.

2025 – Targeting forty numbers of show rooms all over the Island.

2030 – Listing in Colombo Stock Exchange at DiriSavi Board & Developing international

activities through establishing international branches


Business Model & Plan (1.1)

Product Target customers /

Segment

Product stage in

PLC Pricing strategy Marketing Communication

Pantry cupboards

& Aluminium products

North & East region Introductory Premium pricing

Issuing leaflets, targeting public

gathering events & functions.

News paper advertising

Central Growth Absorption pricing Issuing leaflets & newspaper

advertising

West & south Matured market Loss leadership Newspaper advertising, email

flyers,

Innovative

CLEI Products

(www.clei.it)

Segmented high profile

customers (Eg: Blue

Ocean Customers)

Early Introductory Price Skimming

Hoardings (Eg: Sumsung Curved

TV intro in SL),

Promotional Video TV Ads,

heavy paper ads promtions

Wooden products &

wooden crafting

Middle and high

residential customers

Stage between

Introductory &

Growth

Market oriented pricing Issuing leaflets in public

gathering and newspaper ads

Melamine wardrobes &

computer tables

Retail sellers all over the

Island Growth Predatory pricing

Issuing product profiles to retail

sellers and selling through them

by adding profit margin for them

Office partitions,

furniture, decorative

items & other interior

Contacting corporate

clientele all over the

island which are about

to renovate

- Market oriented pricing

Issuing “Contessa Product

Profiles & Album”, conducting

presentations, sending email

flyers

Registering / Tendering

for Office Interior work

& supplying furniture

Following all tenders

(Through Q/S staff) - Loss leadership

Issuing company profiles with

designed albums and the past

history with all activities.

Vanity Units, home

furniture & Bathroom

accessories

Residential apartments Highly growth Market based pricing

Sending samples to apartment or

property developers and issuing

catalogues.


Production Strategy

1. CLEI imported innovative furniture items

At the initiation stage, we will import small quantity of the products from www.clei.it After

the importing, process reverse engineering will be done to find out the manufacturing process

and to find the solutions how to manufacture using the Srilankan raw materials. Specialized

manufacturing staff will be allocated for the reproduction.

2. All other manufacturing items

All production process will be done through the in house factory and outsourcing will also be

done by looking after the capability of factory and production ability per month. Based on the

sales, some of the production will also be outsourced considering the factory capability

during the production times.

Marketing Analysis

There is enough market for interior designing solution provider in Srilanka because of the

reason, the entire country in a huge developing phase after the end of the war.

Market for Contessa products is huge according to the government‟s development plan as

well as private sector development programmers. But, for implementing strategies and taking

business, Contessa hugely requires advertisement and branding.

Economical and political factor is major benefit for Contessa in the coming growth.

Addressable market

Contessa will strategically concentrate on corporate clients. But, in order to establish its

brand name under the household, it would serve to individual customers as well with

household items.

Segmentation

We have identified our market segment as follows:

Group of customers : It differs according to each and every product contessa offers

(please refer table 1.1)

Geography : Concentrates mainly based on Colombo area for interior works and other

regions for some other products (Please refer table 1.1)

http://www.clei.it/


Prices : Our strategy would be based on the each product that we offer (Please refer

table 1.1)

Distribution channel : Place mix will be done through direct distribution methods.

Industry Analysis

Industry analysis is a vital part of the decision-making process in a business. A

comprehensive industry analysis helps to take an objective view of the underlying forces,

attractiveness, and success factors that determine the structure of the industry. Understanding

the business's operating environment in this way can help to formulate an effective strategy,

position the business for success, and make the most efficient use of the limited resources of

the small business. We are going to discuss the following sections in the industry analysis:

Industry analysis on interior solution providers.

The industry for total interior solution in Srilanka is very attractive as there is no heavy

competition to provide all interior services under one roof. But, there is lot of competitors in

the market to offer the same product Contessa manufacturing. Every competitor will be

producing only some of the products. Not all interior services. This will be major competitive

advantage for Contessa. But, prevailing competitors can‟t copy the CLEI products for some

time if Contessa is successful in manufacturing by using the time and potential Contessa can

make significant profit and huge market share easily.

Competition prevailing in the industry

Product Competitor Strategy to eradicate

competition

Pantry and home furniture Moratuwa wooden

manufacturers, Singer

Homes, Damro

Innovation in furniture such

as fitting lights in Pantry,

Color modifications, Low

pricing


Opportunity over the market

Based on the market and industry analysis, there is a strong demand for interior works all

over the Island. The weakness of the competitors will also be used as an additional feature in

order to capture the market via prevailing opportunities. For example.

Ramada Hotel

http://www.ft.lk/2014/07/16/ramada-colombo-soon-to-unveil-dazzling-new-lobby/

Domino‟s Pizza

http://www.island.lk/index.php?page_cat=article-details&page=article-

details&code_title=107811

Sampath Bank

http://www.sampath.lk/en/news/entry/sampath-bank-rajagiriya-branch-moves-to-a-new-

location

Subway

http://sundaytimes.lk/140727/magazine/subway-ready-to-open-in-colombo-107936.html

Melamine wardrobes,

computer tables

Piyestra, Damro Supply for local retailers

through low pricing and

providing them innovative

catalogues

Aluminium and combined

products

Lanka Aluminium, Alumex

and other local fabricators

Low pricing

Office furniture & partitions All over the Island several

competitiors

Heavy advertising for

creating strong brand name

http://www.ft.lk/2014/07/16/ramada-colombo-soon-to-unveil-dazzling-new-lobby/

http://www.island.lk/index.php?page_cat=article-details&page=article-details&code_title=107811

http://www.island.lk/index.php?page_cat=article-details&page=article-details&code_title=107811

http://www.sampath.lk/en/news/entry/sampath-bank-rajagiriya-branch-moves-to-a-new-location

http://www.sampath.lk/en/news/entry/sampath-bank-rajagiriya-branch-moves-to-a-new-location

http://sundaytimes.lk/140727/magazine/subway-ready-to-open-in-colombo-107936.html


Marketing Plan

Marketing plan for Contessa describes the future marketing plans of Contessa and the

strategies that will be used in the future in order to capture the target market. (Please Refer

table 1.1)

Target Customer strategy

The target customer strategy for Contessa is identified on customer needs in certain segments

and geographical areas. (Please refer 1.1)

Channel strategy

All the products will be directly supplied by the own transportation except the melamine

products which are going to be sold for customers through all over the Island retailers.

Branding strategy

At the initial stage Contessa will be carrying its family Blue Ocean Group under all

promotions in order to establish a strong brand name. After some period, it would start to do

all of its activities under its own name “Contessa Pvt Ltd”

As we are new to the market that we are expecting to capture (all over the Island), our brand

recognition or brand identity is less at the introduction stage of our product life cycle. But, we

believe that we can create brand loyalty within the next few years through the unique feature

of our product, comparing with the existing product in the market.

The values we expect to remain in the minds of our customers are superior quality and

innovation. Through marketing these values we will create identification for our product. The

essential skill required to create the brand strategy is the marketing skill which is a very

positive resource to our business. So the mix of their marketing skill with all the other

available resources will create a very strong pool to build the position of our business.

Pricing strategy

All the products pricing will be done according to the market perception (Please refer 1.1)


Internet Strategy

Our Corporate website (ww.contessa.lk) will be used for all promotional activities and

innovate us from the competition. In addition, time to time there will be a toolbar in mostly

viewed websites to familiarize the name. (Eg: ikman.lk; hitad.lk, srilanka equity forum,

etc…)

Communication strategy

In times, Contessa will be doing guerilla marketing campaigns as well such as promotions

through school students by offering gifts and vouchers and through targeting the public at

unexpected places.

Example :

http://www.creativeguerrillamarketing.com/guerrilla-marketing/15-clever-bench-guerrilla-

marketing-examples/

Sales Strategy

All our products except the melamine cupboards will be sold by our own sales executives

through our show rooms. On the other hand, we will be selling some of our products through

retail stores where as 3-5% commission will be given for the retail sellers on their sales.

http://www.creativeguerrillamarketing.com/guerrilla-marketing/15-clever-bench-guerrilla-marketing-examples/

http://www.creativeguerrillamarketing.com/guerrilla-marketing/15-clever-bench-guerrilla-marketing-examples/


Operation Plan

Production

All the products will be done through our moratuwa factory. But, considering the capability

of factory, some of the production will be also outsourced at times. In addition, based on the

success of business and production ability, Contessa will be expanding its production through

establishing some other factories as well.

Quality, Research & Development

There will be a team which is responsible for ensuring quality, cutting down factory cost and

innovating ideas in the factory production.

Other equipment

Based on the success of future business of Contessa, it will be expanding its machinery and

accessories such as purchasing its own chemical treatment plant, moisture reducing plant and

other machineries.

Development Plan & Strategy

The business is planning to serve with all type of interior works under one roof. At the initial

stage, it is depending on the product brochure, corporate website and the ability & skill of the

sales people majorly. After two years, Contessa will also develop its market for other

countries through exporting home furniture, and establishing some sales outlets in near

regions.

.


Risks Faced by the Business

Although the business seems to be very attractive as every enterprise this also has its own

risks. So it is very important to first identify those risks and then try to implement plans to

mitigate those risks. This will help the firm to understand the reality and focus on those that

may have a critical impact on the success of the firm and not the ordinary operating risks

faced by any business. The natural tendency is to consider what may go wrong, but equally

important is what must go right. The major risks that the firm might face are explained in the

following part.

Competitor’s response, predatory pricing

There is huge domestic rivalry for furniture industry in Srilanka. But, as Contessa is dealing

with not only furniture but also all type of interior works, it is safer for some points. In

addition, contessa will also be giving quality assurance certificates for customers to ensure

the quality. Here the competitive advantage can be achieved through focus differentiation.

Financial

The company is also exposed to financial risk as even though it is supported by Link

Engineering. But, in order to do big promotional campaigns and participate in exhibitions,

Contessa needs to be waiting for capturing business significantly and required fund.

Macroeconomic changes

As Srilanka market is open economy and full freedom after the civil war, some of the foreign

companies also expanding their business to Srilanka which will be indirectly affect the

business activities of Contessa.

Government Law & Regulations

Even though current government‟s plan is supportive for growth of Contessa as it gives lot of

opportunities in the market for the development, in the near future, there will be presidential

election which is going to be held in order to re-elect Srilanka‟s new president for next six

years. Uncertainty on the new government will have negative impact on growth of Contessa.


FY 2015 FY 2016 FY 2017 FY 2018

Revenue / Sales 72,577,827 178,992,313 441,433,003 1,088,667,402

Cost of Sales 61,691,153 152,143,466 375,218,053 925,367,292

Gross Profit 10,886,674 26,848,847 66,214,950 163,300,110

Expenses

Advertising & Selling 3,467,597 7,035,194 14,648,320 29,152,506

Administrative 3,944,801 7,005,373 13,518,631 26,645,148

Operating Profit 3,474,276 12,808,280 38,047,999 107,502,456

Finance Cost 1,518,480 4,681,498 8,434,714 16,307,456

Profit/Loss Before Tax 1,955,796 8,126,782 29,613,285 91,195,000

Revenue Growth rate Nil 247% 247% 247%

Gross Profit 15% 15% 15% 15%

Operating profit 4.79% 7.16% 8.62% 9.87%

Net Earnings 2.69% 4.54% 6.71% 8.38%

Financial Plan


Contessa (Pvt) Ltdfor the quarter ended in 3 months

Budgeted Comprehensive Statement of Income (Rs)

31-Dec-14 31-Mar-15 30-Ju-2015 30-Sep-15 31-Dec-15 31-Mar-16 30-Ju-2016 30-Sep-16 31-Dec-16 31-Mar-17 30-Ju-2017 30-Sep-17 31-Dec-17 31-Mar-18 30-Ju-2018 30-Sep-18 31-Dec-18

Revenue / Sales 10,000,000 12,531,631 15,704,178 19,679,897 24,662,121 30,905,660 38,729,833 48,534,799 60,822,020 76,219,912 95,515,983 119,697,107 150,000,000 187,974,468 235,562,671 295,198,451 369,931,812

Cost of Sales 8,500,000 10,651,887 13,348,551 16,727,912 20,962,803 26,269,811 32,920,358 41,254,579 51,698,717 64,786,925 81,188,586 101,742,541 127,500,000 159,778,298 200,228,270 250,918,684 314,442,040

Gross Profit 1,500,000 1,879,745 2,355,627 2,951,985 3,699,318 4,635,849 5,809,475 7,280,220 9,123,303 11,432,987 14,327,397 17,954,566 22,500,000 28,196,170 35,334,401 44,279,768 55,489,772

Expenses

Advertising & Selling 600,000 672,000 752,640 842,957 1,200,000 1,344,000 1,505,280 1,685,914 2,500,000 2,800,000 3,136,000 3,512,320 5,200,000 5,824,000 6,522,880 7,305,626 9,500,000

Administrative 700,000 798,000 909,720 1,037,081 1,200,000 1,368,000 1,559,520 1,777,853 2,300,000 2,622,000 2,989,080 3,407,551 4,500,000 5,130,000 5,848,200 6,666,948 9,000,000

Operating Profit 200,000 409,745 693,267 1,071,947 1,299,318 1,923,849 2,744,675 3,816,453 4,323,303 6,010,987 8,202,317 11,034,695 12,800,000 17,242,170 22,963,321 30,307,194 36,989,772

Finance Cost - - 450,000 504,000 564,480 632,218 1,200,000 1,344,000 1,505,280 1,685,914 2,000,000 2,240,000 2,508,800 2,809,856 4,000,000 4,480,000 5,017,600

Profit/Loss Before Tax 200,000 409,745 243,267 567,947 734,838 1,291,631 1,544,675 2,472,453 2,818,023 4,325,073 6,202,317 8,794,695 10,291,200 14,432,314 18,963,321 25,827,194 31,972,172

No. of Sales executives 1 2 4 6 8 10 13 16 20 25 31 39 49 61 77 96 120

Avg.Sales per salesman 10,000,000 6,265,816 3,926,045 3,279,983 3,082,765 3,090,566 2,979,218 3,033,425 3,041,101 3,048,796 3,081,161 3,069,157 3,061,224 3,081,549 3,059,255 3,074,984 3,082,765

Factory labourers 25 32 40 44 55 62 78 88 110 127 162 185 232 270 338 400 490

Production per labourer 400,000 400,000 400,000 450,000 450,000 500,000 500,000 550,000 550,000 600,000 600,000 650,000 650,000 700,000 700,000 750,000 750,000

Number of showrooms in Island 1 2 2 4 4 5 6 6 8 8 10 13 13 13 15 15 15

Buying Treatment machinery on lease on 30 June 2015 30-Jul-17

Buying heavy vehicles on lease 30-Jan-16 30-Aug-16 30-Nov-17

Diversifying Electronic items Imports from CLEI Tiles & Granite

Wooden flooring Curtaining Glass work Steel & S/S Fabrication

Laminated flooring


31-Dec-14 31-Mar-15 30-Ju-2015 30-Sep-15 31-Dec-15 31-Mar-16 30-Ju-2016 30-Sep-16 31-Dec-16 31-Mar-17 30-Ju-2017 30-Sep-17 31-Dec-17 31-Mar-18 30-Ju-2018 30-Sep-18 31-Dec-18

Pantry Cupboards 3,000,000 3,000,000 4,004,178 4,079,897 4,062,121 4,505,660 4,913,333 5,600,719 6,021,610 6,322,691 6,639,803 6,971,793 7,320,383 7,686,402 8,070,722 8,474,258 8,897,971

Office Interior 4,500,000 4,500,000 5,000,000 6,000,000 7,700,000 9,200,000 11,224,000 14,000,000 17,080,000 20,837,600 25,421,872 31,014,684 37,837,914 46,162,255 56,317,952 68,707,901 83,823,639

Aluminium products 1,500,000 2,000,000 2,500,000 2,800,000 3,200,000 4,500,000 5,600,000 6,800,000 8,324,000 9,822,320 11,590,338 13,676,598 16,138,386 19,043,296 22,471,089 26,515,885 31,288,744

Other wooden items 1,000,000 1,431,631 1,400,000 1,800,000 2,400,000 2,900,000 3,335,000 4,000,000 4,850,000 5,577,500 6,414,125 7,376,244 8,482,680 9,755,082 11,218,345 12,901,096 14,836,261

Wooden flooring - 1,000,000 1,500,000 1,800,000 2,000,000 2,500,000 3,075,000 3,967,000 4,879,410 6,001,674 7,382,059 9,079,933 11,168,318 13,737,031 16,896,548 20,782,754 25,562,787

Laminated Wooden - - - 700,000 1,000,000 1,300,000 1,625,000 2,100,000 2,850,000 3,562,500 4,453,125 5,566,406 6,958,008 8,697,510 10,871,887 13,589,859 16,987,324

Marbles & Granite - - - - 800,000 950,000 1,064,000 1,400,000 1,850,000 2,072,000 2,320,640 2,599,117 2,911,011 3,260,332 3,651,572 4,089,761 4,580,532

Glass work - - - - 300,000 350,000 395,500 480,000 665,000 751,450 849,139 959,527 1,084,265 1,225,219 1,384,498 1,564,483 1,767,865

CLEI products - - 700,000 1,200,000 1,650,000 2,800,000 4,116,000 6,050,520 8,970,000 14,810,117 22,583,273 32,854,914 46,343,836 63,968,102 86,897,471 116,620,883 155,031,802

Curtaining & Carpets - - - 300,000 350,000 400,000 492,000 605,160 850,000 1,045,500 1,285,965 1,581,737 1,945,536 2,393,010 2,943,402 3,620,385 4,453,073

Steel & S/S Fabrication - - - - - - 1,000,000 1,150,000 1,282,000 1,384,560 1,495,325 1,614,951 1,744,147 1,883,679 2,034,373 2,197,123 2,372,893

Electronic items - 600,000 600,000 1,000,000 1,200,000 1,500,000 1,890,000 2,381,400 3,200,000 4,032,000 5,080,320 6,401,203 8,065,516 10,162,550 12,804,813 16,134,065 20,328,922

Gross Revenue 10,000,000 12,531,631 15,704,178 19,679,897 24,662,121 30,905,660 38,729,833 48,534,799 60,822,020 76,219,912 95,515,983 119,697,107 150,000,000 187,974,468 235,562,671 295,198,451 369,931,812


Gap Analysis

Revenue

Rs.1 Billon Expected Growth

Market Development – North, east & other part of Srilanka

Product Development – CLEI products, Vanity Units

Diversification – Steel fabrication, wooden flooring, wall papers

Rs.36 Million Current Growth


SWOT Analysis

Strengths

Availability of product catalogues

Financially supported by Link Engineering

Strong brand name in Colombo suburbs

Initial distribution is done by the company

Customer service by experienced sales staff

Creative staff dedicated to develop strategic direction

Experienced and high skilled factory labourers

Existence of well experienced 3D interiors

Weakness

Absence of technically brilliant cost accountant

Slow production

Poor access to supply management

Possibility for negative cash flows

Bargaining power of company is relatively low since we are in introductory stage

Inexperience about the interior market for current sales staff

Not sufficient sales & Q/S staff for undertaking customer handling.

Opportunities

There are several development programs all over the Island after the war.

Positive Government regulations

Access to all distribution channels

Wider market in the whole Island which we can target

Threats

Changing taste of customers in terms of Interior market

Technological advances in furniture interior

Substitute products always available in the market


Our Website

business plan for startup

Documents

initiating business

significant business

type of interior work

interior decorator firm

sales force

customer oriented service

number of sales outlets

wooden products