Business Plan

CHARLESTON, SOUTH CAROLINA

TABLE OF CONTENTS

IntroductionExecutive SummaryBusiness Strategy

OrganizationManagement SummaryFinancial Analysis

Services

Market AnalysisOverviewCompetitionStart-UpMonthly Operating ExpensesPricing StructureIncome PotentialTraining, Qualifications, and AdvancementGrowth StrategyDesign Specialties

INTRODUCTION

Executive Summary

The design industry enjoys strong demand as individuals continue to renovate their existing homes, purchase a new construction, and pursue undeveloped property. NAHB Chairman, Rick Judson, recently released a statement reading, “The stability in the improving markets list this month is encouraging, with three quarters of all metros tracked by our index considered on the upswing as the housing recovery spreads to parts of every state.”

The interior design business has also remained client-oriented; however, as more individuals gain access to digital design consultation, the focus of our organization will be to develop and maintain professional, client-oriented relationships. We will invite new clients to become a part of the “Down Home family.”

The owners of this new design business have been trained and have worked in this sector for a number of years. These skills will play a big role in the success of the business.

With the growth of this sector and local demand for quality designed residential solutions, we are confidant in obtaining a strong market share in the first year.

Business Strategy

The American Society of Interior Designers defines an interior designer as someone “professionally trained to create a functional and quality interior environment. Qualified through education, experience and examination, a professional designer can identify research and creatively resolve issues and lead to a healthy, safe and comfortable physical environment.”

Regulations dictate that only those who have met or exceeded a certain level of accredited education and, in some states, passed the qualifying exam administered by the National Council for Interior Design Qualification. Only these individuals can use the title of Interior Designer. We will hire designers who are accredited or, after a period of mentoring, offer to assist beginning designers by

paying a portion of the examination fees. This will allow us to offer our clients the best in design services.

Designers work in a number of different industries, depending on their design specialty. We will offer our services to these sectors, allowing other companies the freedom of using our services while not having to hire a full time designer.

ORGANIZATION

Management Summary

Both partners will share in both financial obligations and leadership within the organization. Initial hiring of a general manager/lead designer will also be critical to the success of our management plan.

The goal of hiring four to five experienced design associates will also insure profitability over the first year. Plans to include a VP of Marketing/Sales, a VP of Administration, and multiple sales associates after the first year will also grow the success of our business.

President / CEO CIO

Lead Designer/GM

Design Associate

Design Associate

Design Associate

Design Associate

Financial Analysis

Both partners are prepared to finance the business through a combination of personal savings along with local, state, and federal small business loans/lines of credit.

The opportunity for outside investor relations will also be considered during initial set-up.

SERVICES

Services

The design industry is multi–faceted requiring our organization to simultaneously fill multiple roles. We will provide work as a project-based designers or as general design consultants.

The project-based designer is a hands on designer who combines the task of conceptualizing the look of the given space while coordinating with other design professionals.

By establishing a local reputation and references with multiple product dealers; we can focus on offering design consulting services. We will not sell or market any product or brand, but instead offer advice about the design of a particular space. We will be selling our design expertise, and not any single product.

MARKET ANALYSIS

Overview

There are two markets for interior designers: residential and commercial. Residential interior design focuses on the planning and/or specifying of interior materials and products used in private residences. In terms of scope and contract amount, residential jobs are often smaller, but offer a higher profit margin- particularly if you are marketing the products to be used in designing the rooms.

Commercial jobs, on the other hand, are much larger in scope but the bidding that often accompanies the contract can push down the profit margin. Commercial design covers a wide variety projects including facilities management, government/institutional work, health care facilities; retail or store planning, hospitality/restaurant, and office/workplace solutions.

Based on the sheer volume of high-end vacation properties and second homes in the Charleston metro area, our firm’s primary focus will remain on the residential market.

Competition

The Charleston metro area hosts more than 60 independent interior design and decorating firms. However, many of these organizations do not employ licensed interior design professionals.

Our strategy will include employing licensed professionals or those seeking licensure to insure our designs meet up-to-date industry standards. This strategy will also increase the standing reputation of our firms commitment to excellence.

We will also position our studio/storefront on King Street in downtown Charleston. This predominately pedestrian-based access will accommodate walk-in traffic allowing for visitors and potential home buyers immediate access to our studio workplace. By

engaging potential clients in our work, it is the goal to showcase the value of professional designed residences.

Start-Up

Our interior design firm will require basic office supplies and equipment such as computers, telephones, and basic desking solutions. In addition to the standard word processing and spreadsheet software, investing in AutoDesk and Adobe Suite software will allow our firm to present more professionally design solutions to clients with three–dimensional realism.

Manufacturers of wallpapers, paint, carpets, textiles, etc. will also contacted to negotiate obtaining sample books for free. If samples are to be purchased, it will be done with reservation unless for a billable project as digital samples are readily available. Partnerships with local furniture dealerships will also provide for an extensive sample library database.

Monthly Operating Expenses

For the first six months, both partners will not take salary out of the company. After this period, they will each split a 35% share of the net profits each month. Initial expenses are to include:

1. Office Rental - $1,500/mnth 2. Tele/Comm - $150/mnth 3. Advertising - $1,500/mnth 4. Transportation - $500/mnth 5. Miscellaneous - $1,000/mnth 6. Office Equipment - $10,000 7. Software - $3,000 8. Specialty Tools - $2,600

Strategic alliances will be developed with local builders, architecture firms, and realtors. These relationships will provide for several lines of potential revenue into our company.

Pricing Structure

Fee structures vary widely, depending on the designer, complexity of the project, geographical location and a host of other factors. Firms have the option of structuring fees for their services including a fixed/flat fee, hourly fee, percentage fee, cost plus, retail, and per square foot charges.

Our staff designers will require a retainer fee before the start of a design project. A retainer is an amount of money paid by the client to the designer and applied to the balance due at the termination of the project. The incorporation of the pricing structures listed above will be base on the project scope and client contract agreement.

Income Potential

The design industry is one that never sees the exact same project twice. The earnings from a job that requires redecoration of a single room will be very different from a job that requires initial space planning with local developers.

If each on-staff designer earns $1,000 per project, while working at four jobs per month, these designers can expect to earn $40,000 - $50,000 per year.

Based on this estimation our first year’s gross revenue should exceed $600,000 with a gross profit between $300,000 to $400,000 dollars after start-up and monthly expenses. The goal over time will be to increase the number of clients per designer per month through extensive advertising and word-of-mouth leading to increased revenues.

Training, Qualifications, and Advancement

Creativity is crucial in all design occupations. We will recruit design professionals that have a strong sense of the aesthetic—an eye for color and detail, a sense of balance and proportion, and an appreciation for beauty. Educational requirements for entry and senior level positions vary; however a bachelor’s degree from an accredited design program will be considered the minimum. Membership in a professional association and state/national licensure will also be considered in the hiring process.

Beginning designers who receive on-the-job training will be allowed to advance within the organization while those having multiple years of experience will begin in a higher pay grade.

Growth Strategy

Despite projected faster-than-average employment growth, designers in most fields are expected to face keen competition for available positions. We will use this to make sure we hire the most qualified staff.

Rising demand for professionally designed private homes for the rapidly growing elderly population is already beginning spur the local market which will be our primary target. A focus on specialized marketing, client-centered relationships, and the building of a professional and reliable reputation will also aid in the growth of our organization.

Design Specialties

Focusing our firm’s design aesthetic to a nautical, Charleston-centered theme will allow of a concise and cohesive brand for our organization. A commitment to sustainability will also be reinforced within each project through product and material specifications.

Universal or “barrier-free” design will also be employed to provide for ease of use, access, safety and comfort for all users.

CHARLESTON, SOUTH CAROLINA