Import Export Company
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Executive Summary
This business plan details the launch of a start-up company known as the Import Export Company (IEC). The company functions as a middleman in purchasing housewares from manufacturers in China and reselling the products to retail buyers in the US and Canada. The Import Export Company is primarily an independent import/export business. The products we import from China are resold to retail buyers in the US; in addition, we export the products from China directly to retail buyers in Canada. Without maintaining inventory, the company ships the product directly from China to the US and Canada.
Our product catalog focuses on housewares products that appeal to trend-minded US and Canadian consumers. Product pricing is geared toward budget-conscious consumers seeking a current look for their homes, without paying upscale prices.
In 2003, China was the third largest country trading with the US, importing and exporting a combined $127 billion in goods (US Census Bureau, 2003). As of November 2003, China exported $25.1 billion in goods to the US, up 25.8% over 2002 (US Department of Commerce).
The IEC has developed initial relationships with manufacturers and retailers. Our marketing plan targets a market of 160 retailers in the US that specialize in Home Furnishings and Housewares. The company has targeted fifty Canadian retailers that also meet our target market requirements.
The owners are contributing $15,000 ($7,500 each) in start-up capital from personal savings, in addition to a loan of $30,000 from friends and family. The loan will be repaid at 6% interest when the company becomes stable in the second year of operations. After initial start-up expenses, the company has a starting Cash Balance of $29,880.
The company is forecasting $350,500 in first year sales revenue, with a Cost of Goods projected to be 60%. Cost of Goods directly reflects our targeted 40% profit margin. We anticipate doubling our sales revenue for the first three years of operations as we develop our manufacturing and retail buyer relationships. Sales revenue increases in our second year to $701,000 and $1,402,000 in our third year.
The company projects a Net Profit of $40,665 in our first year of operations, increasing to $139,944 in the second year and $317,688 in the third year. Our Cash Flow objective in the first year is to not allow our Cash Balance to fall below $15,000 in any given month. We anticipate a Net Cash Flow of $17,103 in our first year of operations, increasing to $28,382 in our second year and $114,564 in our third year. Our projections show a Cash Balance of $46,983 in our first year, increasing to $75,365 in our second year and $189,928 in our third year.
Objectives
The objectives of the Import Export Company are to:
Generate first year sales of $350,500, doubling annually for the following two years.
Establish additional strategic relationships with manufacturers and retail buyers representing retail stores in the Home Furnishings and Housewares sector.
Maintain net margins of 40%.
Mission
The IEC imports home furnishing and housewares products from Chinese manufacturers at the lowest possible price for resale to home furnishings and housewares retail stores in the United States and Canada at competitive prices to generate volume unit sales.
Company Summary
The IEC is primarily an independent import/export business. We will import (buy) products from manufacturers in China and resell these products to retail buyers in the US, in addition to exporting the products for resale to retail buyers in Canada.
As a start-up company, our primary business will be locating and sourcing unique housewares products that appeal to trend-minded US and Canadian consumers. Our sourcing will focus on housewares product manufacturers in China, from whom we will identify products for inclusion in our product catalog. We will market our product catalog to direct buyers for home furnishing and housewares retailers in the US and Canada, to whom we will sell the products. When product orders are obtained from retail buyers, an order will be issued to the manufacturer, who then produces and ships the product directly to the retail buyer.
Company Ownership
The company is co-owned by two individuals who will each maintain 50% ownership of the company. The owners have extensive experience in importing goods from Asia and selling to retail buyers in the US and Canada. The company will be formed as a Limited Liability Corporation. The company will obtain local and state business licenses. Additionally, the company will apply for an Employer Identification Number from the federal government.
The company will be located in California, housed in a leased, 200 square foot furnished office space and will carry adequate business insurance. The company will not warehouse or store products, as the company will function as a middleman.
Products
The IEC will focus primarily on importing home furnishings, housewares, and giftware products. The products will be selected for their appeal to trend-minded consumers in the US and Canada, primarily purchasers that are between 25-45 years old and concerned with current decorating trends. Products with a high value/low price position will be identified for inclusion in our product catalog. The products offered in the Import Export Companys brochure will include:
Candles and candlestick holders
Picture frames
Clocks
Throw pillows
Decorative tabletop items
Although products are primarily non-branded in that they do not bear any manufacturers brand name, we will provide private label orders of all products, allowing the buyers to place their companys identifying marks on the products. Private labels are generally thought to be good values by the consumers.
Sourcing