Industrial Wheel Business Plan Mike Mateja Keller Graduate ...mwmateja.weebly.com/uploads/1/8/2/5/18258293/... · Finally, there are no major players dictating the industry. IBISWorld

Running Head: Industrial Wheel Business Plan 1

Industrial Wheel Business Plan

Mike Mateja

Keller Graduate School of Management

Industrial Wheel Business Plan 2

Table of Contents

Executive Summary ....................................................................................................................................... 4

Objectives ................................................................................................................................................. 4

Mission ...................................................................................................................................................... 4

Keys to Success ......................................................................................................................................... 4

Company Summary ....................................................................................................................................... 6

Store Location ........................................................................................................................................... 6

Store Operation ........................................................................................................................................ 6

Store Policies ............................................................................................................................................. 7

Company Ownership ..................................................................................................................................... 7

Company History ........................................................................................................................................... 7

Products and Services ................................................................................................................................... 8

Products .................................................................................................................................................... 8

Services ..................................................................................................................................................... 8

Market Analysis Summary ............................................................................................................................ 9

Industrial Machinery & Equipment Wholesaling information .................................................................. 9

Market Segmentation ............................................................................................................................. 10

Target Market for Industrial Wheel ........................................................................................................ 10

Industrial Wheels Competition ............................................................................................................... 11

Web Plan Summary ..................................................................................................................................... 12

Website Marketing Strategy ................................................................................................................... 12

Development Requirements ................................................................................................................... 12

Strategy and Implementation Summary ..................................................................................................... 14

SWOT analysis ......................................................................................................................................... 14

Strengths ............................................................................................................................................. 14

Weaknesses ........................................................................................................................................ 15

Opportunities ...................................................................................................................................... 15

Threats ................................................................................................................................................ 15

Competitive Edge .................................................................................................................................... 16

Marketing Strategy ................................................................................................................................. 16

Sales Strategy .......................................................................................................................................... 16

Sales Forecast ...................................................................................................................................... 17

Management Summary .............................................................................................................................. 18

Personal Plan ........................................................................................................................................... 18


Financial Plan .............................................................................................................................................. 19

Important Assumptions .......................................................................................................................... 19

Breakeven Analysis ................................................................................................................................. 19

Projected Profit and Loss ........................................................................................................................ 20

Projected Cash Flow ................................................................................................................................ 21

Projected Balance Sheet ......................................................................................................................... 22

Business Ratios ........................................................................................................................................ 23

References .................................................................................................................................................. 24


Executive Summary

Industrial Wheel is an online as well as brick and mortar resource for small material

handling equipment and replacement parts. This family owned S Corp is located in Oak Park IL,

an industrious southwest suburb of Chicago. Specializing in the food preparation and

transportation industries, Industrial Wheel will wholesale custom built material carts and repair

parts. Industrial Wheel will roll over its competition by assuring the customer has the right tool

for the job. We guarantee customer satisfaction, competitive pricing, and a quality product.

Objectives

To create a resource for the food preparation and transportation industries material

handling needs

To achieve average of $9200 in monthly sales in our first year and increase this by 25%

in our second year

To offer our customers quality products, at competitive prices with exemplary onsite

repairs to guaranty customer satisfaction

Mission

Industrial Wheels mission is to simplify the process of moving our customer’s products

to the point of sale, in turn minimizing their losses and maximizing their profits. We venture to

create long-lasting relationships with vendors and supply our customers with superior

knowledge and a premium product.

Keys to Success

Product knowledge - Twenty years of experience in the Industry and Fifteen years of

experience in customer service give us a strong focus on the customer’s needs


Fast Service - In house builds and Onsite repair decrease customers equipment’s

downtime

Customer Loyalty – Built by professional relationships with our customers through

customer satisfaction.

Competitive pricing – Quality products from established Vendors

Success = Sales

Product Knowledge

Fast Service

Customer Loyalty

Competitive Pricing


Company Summary

Store Location

Industrial Wheel is a brick and mortar wholesaler located in the southwest Chicago

commercial suburb of Oak Park IL. This single location houses the offices, storage facility,

receiving dock, and build shop needed to run the entire operation. This allows for raw materials

to be received and product to be shipped from one location.

Store Operation

Industrial Wheels brick and mortar location will operation during normal business hours

of 8am - 5pm, Monday thru Friday. It will be closed on Saturdays, Sundays and all federal

holidays. This schedule matches our competitors as well as our prospective customers. A

company website will be available 24/7 to review product specifications and take orders.

Industrial Wheel will be staffed by the two full time partners, four full time employees. All

employees will be cross trained in order to take and fill phone orders, and assemble our

product offering.

Estimated location of Store


Store Policies

Industrial Wheel accepts cash, check and all major credit cards. Accounts that prove

repeat business can apply for trade credit. Terms for trade credit will be handled on an account

by account basis. Industrial Wheel stresses the use of the right product for the job and

customer satisfaction. Any stock product can be returned no charge if it was incorrectly

recommended by Industrial Wheel for the job. All other returns will incur a 25% restocking fee.

Company Ownership

Industrial Wheel is registered with the State of Illinois as an S Corporation. Each of the

two owners has funded the starting capital needed and retain 50% share of the company. Mike

Mateja handles daily general operations including staffing, accounting, inventory, and the

online presents. John Swift is responsible for our product offering, sales, customer service, and

repairs.

Company History

The concept for Industrial Wheel was formed when two owners, Mike and John,

witnessed a bread delivery man spill his delivery into the street due to broken caster on his

delivery cart. Industrial Wheel was started on the premise that many warehouses do not have

an in-house maintenance man in order to repair merchandise dollies or “trucks”. In researched

this premise, a visit to the delivery man’s employer, Torino Bakery, lead to the discovery of

many unusable delivery carts and a maintenance man up to his ears in repairs. Mike and John

soon began working as an outside contractor purchasing casters in bulk out of their own money

and repairing carts at night in John’s residential garage. Word of mouth brought more jobs and

not long after did they buy a store front across the street from the bakery that started it all.


Products and Services

Products

Industrial Wheel wholesales casters and custom built material carts to commercial and

contractor businesses. One product niche we have discovered is closed bearing wheels and cart

for food preparation and transportation. These carts are custom built to endure freezer

temperature and well as meet the FDA regulations. Raw materials (parts) are purchases in bulk

and shipped from our vendors. Replacement parts can be sold direct to our customers for their

own installation or used by our staff to repair carts in-house or on-site.

Services

Industrial Wheel offers repair services in-house and on-site depending on the size of the

job. In addition to replacements, Industrial Wheel offers their expertise in finding the cart for

the job. We will visit and analyze your work place to suggest the cart that will perform the best.

This will ensure the correct weight requirement and OSHA standards.


Market Analysis Summary

Industrial Machinery & Equipment Wholesaling information

In the beginning of 2012, the Industrial Machinery & equipment Wholesaling industry’s total

revenue was $166.5 billion dollars. Material handling Equipment yields 10.5% or $17.48 billion dollars in

revenue. Service Receipts and Labor Charges yield 5% or $8.325 billion dollars in revenue (McBee, 2012).

Data taken from ISBISWorld report (McBee, 2012)

An estimated 20,000 business contribute to these total revenues. Illinois leads the Great Lakes

Region in the amount of businesses established at 5.3% or about 1016 companies. This places Illinois as

Food Processing Machinery, 3.50%

Service Receipts and Labor Charges, 5%

Metalworking Machinery and Equipment, 8%

Material Handling Equipment, 10.50%

Oil well, Oil refinery and Pipeline

Machinery and Equipment, 17%

Other Industrial Machinery and

Equipment, 27%

General Purpose Machinery and

Equipment, 29%

Industrial Machinery & Equipment Wholesaling Industry’s Revenue Segmentation


the third largest host of Industrial Machinery & Equipment Wholesalers trailing California and Texas.

Most companies are focused around Chicago (McBee, 2012).

This concentration of companies in the Chicago land area provides a few key points. First,

competition is rigorous and the trend is increasing. Second, the barrier to entry in this industry is low.

Finally, there are no major players dictating the industry. IBISWorld lists W.W. Grainger Inc. with the

largest market share of 4%. Applied Industrial Technologies Inc. follows them with less that 1.2% of the

market share (McBee, 2012).

Market Segmentation

This combination of competition, a low barrier to enter and lack of a major player the industry

leaves room for Industrial Wheel to focus on several small niche markets in our area. Industrial Wheels

focus in these niche markets will be based on three key factors of competition; Competitive pricing,

Convenience, and Customer service. These factors support several key success factor identified by

IBISWorld, the most important to Industrial Wheel are loyal customer base and technical product

knowledge (McBee, 2012).

Target Market for Industrial Wheel

Primary target markets are delivery companies which have a single location local to Industrial

Wheel or less than $5 million in sales. The target markets are known for needing constant servicing and

use a large number of hand trucks and cards.

The target markets for Industrial Wheel are:

Beverage distributers

Retail Supermarkets

Food Distributers


Secondary target markets will include retail establishments that use hand truck or carts to

transport their sales freight to the point of sale or contractors in the business of servicing and making

repairs.

Industrial Wheels Competition

Industrial Wheels operate in one of two methods: Online E-commerce or as brick and mortar

locations. E-commerce sites in competition with Industrial Wheel such as Caster City emphasize delivery

time as well as variety of manufactured products (Caster City, 2011). Brick and Mortar locations like

Harbor Freight, offer a small supply casters and hand trucks as one of their many product offerings

(Harbor Freight Tools, 2012).


Web Plan Summary

Industrial Wheels website will be an intricate part of the business. It will need to address two

areas. First, the website will be a one stop shop for return customers. They will be able to review

previous orders, place new orders for products and request repair services. Second the website need to

be a detailed source of product information of our entire offering. In an easy to use Graphical User

Interface, customers and employees will be able to look up prices, product specifications as well as build

custom hand trucks and carts.

Industrial Wheels website will use online credit card processing services to accept all major

credit cards as well as PayPal and Google Wallet. Our website will be interfaced with our inventory

system allowing all orders deliverables to be verified in stock before ordering. Normal company

information such as phone number, address, and hours will also be available.

Website Marketing Strategy

Industrial Wheels Website Marketing Strategy is to create a site where all product data and sales

information can be available. This information will be organized organically, leading the user to addition

product based on their selections for add on sales or upsells. Our goal is to have a site that experienced

computer users feel familiar and new users know there is “real person” available to assist them with

their order.

Industrial Wheels Website will utilize Google Ad Words in order to increase website traffic

(Google, 2012). Other free methods of advertisements using social media websites will be explored.

Development Requirements

General Fees associated with maintaining a website is as follows:

Monthly Website Fee: $6.99 (Go Daddy LLC, 2012)

Annual Domain Registration Fee: $12.99 (Go Daddy LLC, 2012)


Search Engine Optimization: $5.99 (Go Daddy LLC, 2012)

Site Design: Free (done in-house)

Site updates: Free(done in-house)

Google Ad Words: Varies with use (Google,2012)

Credit card processing services: Varies with Credit card use


Strategy and Implementation Summary

SWOT analysis

This SWOT analysis is a breakdown of Industrial Wheels internal Strengths and Weaknesses as

well as exterior opportunities and Threats to our businesses success.

Strengths

Strong Focus on the Customer’s Needs: Industrial Wheel follows the motto “the right

tool for the job”. With over thirty years of combined experience in customer service,

Industrial Wheel knows how to listen. Industrial Wheel focuses on finding a quality

product with the proper specifications to perform to the customer’s expectations.

Solid Professional Relationships with our Customers: Our outside sales representatives

are the face of Industrial Wheel. Every account is contacted monthly; we take time to

get to know you over the phone or in person. We take pride in watching our products

being using in the industry.

Years of Experience: Thirty years of Customer service experience and Twenty years in

the Material handling industry just between the two owners. We hire and train our staff

with the same quality as we sell our products.

Guaranteed Customer Satisfaction: Industrial Wheel stresses supplying the right product

for the job and customer satisfaction. Any stock product can be returned no charge if it

was incorrectly recommended by Industrial Wheel for the job. All other returns will

incur a 25% restocking fee.


Weaknesses

First Time Business Owners: While the owners have experience in sales and the industry,

the added task of running the business, will take time away from maintaining

relationships and making sales.

Limited Warehouse Size: Large build orders will have a long turn-around time due to the

size of Industrial Wheels warehouse. Larger orders will need to be completed in phases,

increasing the lead time for the finished order to reach the customer.

Opportunities

The largest opportunity for Industrial Wheel is the inevitable rising of our economy from

the recession. As the economy regains momentum, the manufacturing of goods will increase.

Those Goods will need to get to the customer. When delivery services and freight warehouse

handle more business, Industrial Wheels hand trucks, casters and services will be needed to

help our customers handle the extra load.

Threats

The largest threat to Industrial Wheel is multiple online competitors. Online applications

have made creating webpages easy. Companies like Amazon and EBay have introduced the

ability to sell products to everyone. This creates an environment where anyone in the world can

market and sell their product. These online sellers have low overhead manufacturing costs

which allow them to undercut the price of most brick and mortar stores.


Competitive Edge

Industrial Wheels has a competitive edge because we guarantee the right product for

the right job. We have the know-how and experience that customers can trust. Our company

combines the personal touch of on-site sales representatives with the speed and technology of

online sales.

Our niche is a mixture of products and services we offer. Industrial Wheel is a one stop

shop for material handling needs of Beverage distributors, Retail Supermarkets and Repair

contractors.

Marketing Strategy

Industrial Wheels Marketing Strategy is focused on:

Our target Audience - Beverage distributors, Retail Supermarkets and Repair contractors

Maintaining strong customer relations

Guaranteeing the right product for the job

Competitive pricing

Sales Strategy

Industrial Wheels Sales Strategy is focused on:

Using Sales representatives to get to know our customers and their material handling

needs

Having a full range of support for our customers; in house, on the road or online

No question returns on stock and ordered products

Stress-free ordering process online, over the phone or in person as well as following

through on order until they reach the customer


Sales Forecast

Annual Sales Forecast (2013)

Three-year sales forecast (2013-2015)

$-

$2,000.00

$4,000.00

$6,000.00

$8,000.00

$10,000.00

$12,000.00

$14,000.00

Annual Sales Forecast (2013)

0

20000

40000

60000

80000

100000

120000

140000

160000

180000

200000

2013 2014 2015

Three Year Sales Forecast


Management Summary

Industrial Wheels consists of the following workforce:

2 full-time partners, Mike Mateja and John Swift

1 full time Sales Representative

1 full time office secretary

1 full time Shipping and Receiving employee

Additional employees will be added as sales increase. Industrial Wheel will anticipate hiring

Sales Representative and Shipping and Receiving employee at similar intervals.

Personal Plan

The five person staff is the minimal needed to conduct normal business operations. Part

of the owner’s agreement states a division of responsibilities for Mike Mateja and John Swift.

Mike will be in charge of daily operations, inventory, accounting, and personal. John is

responsible for driving sales, outside sale support and servicing.

Additional positions are described below:

The Sales Representative position is responsible for acquiring, selling and servicing

accounts.

The Office Secretary’s responsibilities include answering the phone, inputting phone and

website orders, and assisting in daily activities.

The Shipping and Receiving Employee is accountable for receiving and stocking

inventory, shipping out orders filled from inventory, and assembling product for sale.


Financial Plan

Important Assumptions

Sales can occur through Industrial Wheel’s website, via communication with a Sales

Representatives or in person. Industrial Wheel shall collect sales tax for all orders as if they

were purchased in house. The owners of Industrial Wheel will provide a majority of the capital

funding. In the event more capital is needed, a private lender is available. Loans made will be

repaid over 5 years at 5% simple interest.

Breakeven Analysis

Due to the low barrier of entry into its market, Industrial Wheels breakeven point is rather low

consisting mainly of rent, insurance, advertising and web fees.

Industrial Wheel 2013 Break Even Analysis

Monthly Annually

Break-Even Point $ 5,714 $ 68,572

Assumptions:

Average Percent Variable Cost 25%

Estimated monthly Fixed Cost $ 4,286


Projected Profit and Loss

Industrial Wheel projects future growth over the next three years estimated at an optimistic

25% increase. As profits are reinvested in the company, expanding our marketing and offering will fuel

projected growth. We expect to maintain a consistent 46% gross profit margin percentage over the next

three years.

Industrial Wheel 2013-2015

Projected Profit and Loss (Income Statement)

2013 2014 2015

Net Sales

$ 342,857 $ 428,571 $ 535,714

- Cost of goods sold $ 85,714 $ 107,143 $ 133,929

Gross profit margin $ 257,143 $ 321,429 $ 401,786

- Operating Expenses $ 137,143 $ 171,429 $ 214,286

Net Income $ 120,000 $ 150,000 $ 187,500

$-

$50,000

$100,000

$150,000

$200,000

$250,000

$300,000

$350,000

$400,000

$450,000

2013 2014 2015

Industrial Wheel Projected Annual Net Income and Gross Profit Margin for 2013-2015

Net Income Gross Profit Margin


Projected Cash Flow

Industrial Wheel 2013-2015

Projected Cash Flow

2013 2014 2015

Cash received

Cash from Operations

Cash sales

$ 342,857 $ 428,571 $ 535,714 Subtotal cash from operations

$ 342,587 $ 428,234 $ 535,292

Additional Cash received

Sales tax received

$ 30,858 $ 38,571 $ 48,215

New current barrowing

$ - $ - $ -

New other liabilities

$ 30,000 $ 37,500 $ 46,875

New Long term Liabilities

$ 30,000 $ 37,500 $ 46,875

Sales of other current assets

$ - $ - $ -

Sales of long term Assets

$ - $ - $ -

new investment received

$ - $ - $ -

Subtotal cash received

$ 402,587 $ 503,234 $ 629,042

Expenditures

Expenditures from operations

Cash spending

$ - $ - $ -

Bill payments

$ 137,143 $ 171,429 $ 214,286 Subtotal spent on operations

$ 137,143 $ 171,429 $ 214,286

Additional Cash spent

Sales tax paid out

$ - $ - $ - Principal repayment of current borrowing $ - $ - $ - Other liabilities Principal payment $ - $ - $ - Purchase other current assets

$ - $ - $ -

Purchase long term assets

$ - $ - $ -

Dividends

$ - $ - $ -

Subtotal cash spent

$ 137,143 $ 171,429 $ 214,286

Net cash flow

$ 265,444 $ 331,805 $ 414,756

Cash balance

$ 10,450 $ 13,063 $ 16,328


Projected Balance Sheet

Industrial Wheel Balance Sheet

Assets Current Assets

2013 2014 2015

Cash

$ 10,450 $ 13,063 $ 16,328

Inventory

$ 30,000 $ 37,500 $ 46,875

Miscellaneous

$ 1,500 $ 1,875 $ 2,344

Total current Assets

$ 41,950 $ 52,438 $ 65,547

Fixed Assets

Rent

$ 12,000 $ 12,000 $ 12,000

Equipment (computers)

$ 10,000 $ 10,000 $ 10,000

Furniture and Fixtures (desks)

$ 8,500 $ 8,500 $ 8,500

Advertising(signs)

$ 5,000 $ 6,250 $ 7,813

Total fixed Assets

$ 35,500 $ 36,750 $ 55,469

Total Assets

$ 77,450 $ 89,188 $ 121,016

Liabilities Current Liabilities

Accounts Payable

$ 10,000 $ 12,500 $ 15,625

Wages / salaries payable

$ 20,000 $ 25,000 $ 31,250

Total Current Liabilities

$ 30,000 $ 37,500 $ 46,875

Long-Term Liabilities

Mortgage

$ - $ - $ -

Notes Payable

$ - $ - $ -

Total long-term Liabilities

$ - $ - $ -

Owners’ Equity

Mike Mateja- Owner, capital

$ 23,725 $ 29,656 $ 37,070

John Swift -Owner, capital

$ 23,725 $ 29,656 $ 37,070

Total Liabilities and Owners equity $ 77,450 $ 89,188 $ 121,016


Business Ratios

Industrial Wheel Ratio Analysis

2013

Liquidity Ratio

Current Ratio 140%

Quick Ratio 40%

Leverage Ratio

Debt Ratio 39%

Debt to Net Worth Ratio 63%

Operating Ratios

Average Inventory Turnover Ratio 223%

Net Sales to Total Assets 443%

Profitability Ratios

Net Profit on Sales Ratio 35%

Net Profit to Assets 155%

Net Profits to Equity 253%


References

Caster City. (2011). Caster City Home. Retrieved from http://www.castercity.com/

Go Daddy, LLC. (2012). GoDaddy.com Home. Retrieved From http://www.godaddy.com/

Google. (2012). Google AdWords. Retrieved from http://www.google.com/ads/adwords2/

Harbor Freight Tools. (2012). 48 matches for ''casters''. Retrieved from

http://www.harborfreight.com/catalogsearch/result?q=casters

McBee, J. (2012). IBISWorld industry report 42383: Industrial Machinery &

Equipment Wholesaling in the US. Retrieved from

http://clients.ibisworld.com.proxy.devry.edu/industryus/default.aspx?indid=948

Documents

Industrial Wheel Business Plan Mike Mateja Keller Graduate ...mwmateja.weebly.com/uploads/1/8/2/5/18258293/... · Finally, there are no major players dictating the industry. IBISWorld