Business Plan

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the BUSINESS PLAN

KATA d e s i g n

f i r m

llc

TAMIA HANNINEN | KAYLEEN SOTO INT 472 - PROFESSIONAL PRACTICE SPRING 2022


cover letter

Contents

Cover Letter pg. 3

Section 1 - Executive Summary Company Introduction pg. 5

Section 2 - company OVERVIEW Meet the Team pg. 7 Company History pg. 7 Legal Entity pg. 7

Section 3 - iNDUSTRY ANALYSIS Market Size pg. 9 Market Characteristics pg. 10

Section 4 - CUSTOMER ANALYSIS Target Customers pg. 12 Customer Needs pg. 12

Section 5 - COMPETITIVE ANALYSIS Direct Competitors pg. 14 Indirect Competitors pg. 14 Competitive Advantages pg. 14 S.W.O.T Analysis pg. 15

Section 6 - MARKETING PLAN Products & Services pg. 17 Pricing Structure pg. 18-20 Promotion Plan pg. 21

Section 7 - MANAGEMENT TEAM Team Members pg. 23 Management Team Gaps pg. 24

Section 8 - FINANCIAL PLAN Revenue Model pg. 26 Pay Structure pg. 26-27

Section 9 - APPENDIX Organizational Chart pg. 29

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KATA DESIGN FIRM


00 COVER LETTER

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Cover Letter KATA Design Firm Kayleen Soto + Tamia Hanninen N John Wayne Pkwy Maricopa, AZ, 85139 22 March 2022 Lending Bank Tempe, AZ, 85287 To Whom It May Concern, We are KATA Design Firm, and we are submitting our business plan to your company in the hope of receiving a start-up loan of $50,000. We are both very passionate about Interior Design and wish to pursue our own business where our goals can be placed into reality and lead the way for future designers. We have both planned to invest a total of $8,000 into our future business. We will be the first residential and commercial Interior Design firm in the city of Maricopa to offer this service, so we hope to be well established before competing companies enter the growing area. As stated in the plan, we will offer Interior Design services and hope to grow our team once becoming financially established. We have contacted several reps and professionals within the area who agree to work with us. We have also found a warehouse available to rent when we go forward with the business. Thank you for your time and consideration in this matter. We hope you will review our business plan and consider our company the best fit. If you have any questions or would like to discuss the plan in further detail, we can be reached at 520-5684962 or at katadesignfirm@gmail.com. We would be delighted to meet you at any time that is convenient for you. Sincerely, Kayleen Soto + Tamia Hanninen KATA Design Firm

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01 Executive summary

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executive summary /ˈkädə/ KATA

to express “how to” perform an action KATA is an LLC design firm that specializes in commercial and residential design located in Maricopa, Arizona founded by Tamia Hanninen and Kayleen Soto. Providing professional interior and architecture design and decorating services. We create innovative and functional designs geared towards the clients' needs. Products and services that we offer are budget planning, concept development, construction documents, color palette consultation, coordination with architects and contractors, etc. Our company sets us apart from other companies in the industry by providing custom work, design for clients -not the design sites-, not being afraid to experiment, and connecting with clients to meet their needs. Visualizing the client’s vision through and through every step of the design process. Forming trust with clients and exceeding their expectations. KATA's core values include client relationships, diversity, community, and creativity. With client relationships comes trust, reliability, and credibility. It is extremely crucial to create a bond with our clients as we have gained their trust and respect. With diversity comes our diverse backgrounds, experience, and accomplishments as we strive for excellence and consistently push ourselves to seek more. With community comes designing spaces where everyone can feel welcomed and truly comfortable in. With creativity comes always pushing the boundaries and coming up with creative solutions to complex problems. We are both very passionate about design and the power that it holds and the ability to change lives. We both knew that we wanted to create a design firm where everyone is truly welcomed, heard, and appreciated. With that comes understanding to a full extent the needs of the users in order to create not only a beautiful space - but an impactful one. With our reasonable and carefully calculated price and fee structure, more clients will feel comfortable with our affordable prices for their needs. KATA understands the needs of the industry and our target clients by consistently staying up to date with events, trends, and market changes. Our diverse and dynamic team will pave the way for future designers and create a new perspective on design.

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02 company overview

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COMPANY OVERVIEW TAMIA HANNINEN |

KAYLEEN SOTO |

Tamia is an NCIDQ certified interior designer and a key member of KATA. She graduated from Arizona State - University with a BSD. She is a Colorado native but now resides in the valley of the sun.

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Kayleen is a designer and creative with a passion to change the world for the better through design. A native of Arizona, Kayleen obtained her degree in Interior Design from Arizona State University.

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ABOUT OUR STORY | It began when they met at Arizona State University in Tempe, AZ. Kayleen and Tamia worked together on numerous projects with each other throughout their four-year undergraduate program at the Herberger Institute. They have formed a long-standing relationship both professionally and personally, which caused them to start their own business that shared the same goals and core values. They knew that they wanted to be the change they wanted to see in the world, and the company blossomed. After graduating from ASU, both designers obtained their NCIDQ certification. They both worked for different firms before deciding to bring their expertise together. Kayleen and Tamia both knew that they wanted to plan accordingly before starting their own business. With a lot of research about funding, licensing and certifications, and growing their network, KATA was formed. Both designers chose to be an LLC company due to the numerous advantages and limited disadvantages. As an LLC, it allows the owners to limit their personal liabilities while enjoying the tax and flexibility benefits of partnership, each member has limited liability- meaning only the business assets are at risk in a potential lawsuit, simple and low-cost to create, increase business credibility and increase tax options and benefits.

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03 INDUSTRY ANALYSIS

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industry analysis MARKET | The interior design industry has been around for over 100 years. Design is booming and there is a constant desire for new spaces, growth, and clients in the market. Commercial spaces are highly competitive and in need of growing communities. More people are spending time at home so the demand for residential design is high. The number of people interested in our offering would depend on the type of project that is being designed, the location, and the population growth of the projected city. If our firm was located in a city that is constantly growing in business, such as Maricopa, the city would be interested in our firm to help with the development of spaces. The income range of the profession ranges from $53,000 - $70,000 annually. Despite limited employment growth, about 7,800 openings for interior designers are projected each year, on average, over the decade. The impact of COVD-19 impacted the employment rate as well as revenue. As a commercial and residential design firm, our clientele has a wide range. Our customers are business owners such as owners of office buildings, schools, restaurants, hotels, etc. As well as consulting work with architects, electrical engineers, contractors, acoustical engineers, landscape architects, and miscellaneous consultants. The city (where our business is located) would also be a potential customer. Property developers and manufacturers. Our customers live in Arizona for the most part, with occasional clients in the western part of the United States. International customers can also be a possibility, depending on project type and size. Our firm will be based in Maricopa, Arizona due to the potential of growth from both a revenue and economic standpoint. There are similar options available to consumers: Interior Design professionals who work under specialties, including Residential, Hospitality, and Specialties design. As well as other commercial interior design firms that specialize in the same areas as our firms do. Potential customers pay for these alternatives by charging a fixed interior design fee. As well as basing our rate on the average numbers of hours normally spent on a project and adding 10%-15% for a buffer in case of surprises. Each design firm may charge as they wish, it is about getting the best price from the customer standpoint, and the best profit from the business owner standpoint.

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industry analysis MARKET CHARACTERISTICS | Market Size Determined by market segmentation: geographical, demographic, psychographic, and behavioral.

Geographical: tailoring marketing by customer location, region, state, city, or zip code Is the area growing or shrinking? Profitable or unprofitable? Demographic: focusing on customer demographics such as age, gender, occupation, income, or ethnicity Is there a specific target group of people or more broad? Psychographic: focusing on client lifestyle, values, hobbies, or interests Can add valuable insight on customers’ motives and preferences Behavioral: includes buying behavior, spending habits, social media interactions, or previous customer feedback Easiest to explore, as businesses can build up a picture of customers’ behavior relatively to studying their actions Determining if the services being offered are accessible, measurable, substantial, and viable. Targeting an area where there is growth, accessibility, and room for improvement.

Market Characteristics Workplace: Design of workspaces ranging from small to large Corporate Co-working Education: Classrooms Elementary Middle High Universities Municipal: Government Libraries Police/Fire Stations

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04 CUSTOMER ANALYSIS

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CUSTOMER analysis CUSTOMERS | Target Customers The intended customer base is whoever resides in the city of Maricopa, Arizona. The demographic data of the city of Maricopa include a median property value of $202,100 and employed population of 48,629, the largest ethnic groups are White (Non-Hispanic) 24.3k ± 1.12k 9.06k ± 1.02k, White (Hispanic), and Black or African American (Non-Hispanic) 5.67k ± 697. Households in Maricopa, AZ have a median annual income of $74,515, which is more than the median annual income of $65,712 across the entire United States. This is in comparison to a median income of $69,572 in 2018, which represents a 7.1% annual growth. The most common job groups, by the number of people living in Maricopa, AZ, are Office & Administrative Support Occupations (3,449 people), Sales & Related Occupations (2,408 people), and Management Occupations (2,404 people)All information was recorded in 2019: https://datausa.io/profile/geo/maricopa-az

Customer Needs Customers need our products and/or services due to the constant need for commercial spaces to encourage employment growth and economic growth for the city. Customers will be able to benefit from our services and potentially draw in more clients to create a booming business. Being located in an area that is growing in business and population is beneficial as well as a profitable yet reasonable price point where both the clients and businesses owners are content. Being affordable is extremely important to our firm as we would like our clients to be able to feel comfortable with our services at a reasonable price. It is important to create a relationship with our customers since they are the main source of revenue. By listening and constantly staying up to date with the needs of our customers we will be able to deliver the best design services to them and the city of Maricopa.

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05 COMPETITIVE ANALYSIS

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Competitive analysis Direct Competitors Any other residential and commercial design firm located within a 100-mile radius of Phoenix, AZ Arcadia Design Group FoRM Design Studio, Ltd. ADM Group, Inc. Firms like Gensler and Architekon are competitors, but since they do not specialize in residential design, it is an advantage.

Indirect Competitors Indirect: when two or more businesses offer different products or services and compete for the same market to satisfy the same customer need Architecture design firms PRO: constantly seeking alternative means and methods to reduce costs while maintaining the highest architectural quality and programmatic function CON: may not offer a selection of furniture and accessories, color palette consultation, and custom furniture and textile design Specialty design firms PRO: offer several products and services that may generate a higher profit thus being able to expand their business even further CON: due to offering various products and services, there isn’t a set target audience which may cause users to turn elsewhere for their needs Hospitality design firms PRO: being able to work on larger scale projects such as clubs, hotels, bars, and restaurants as well as having the ability to experiment in different areas of interest CON: due to dealing with larger projects, it may be more stressful, timeconsuming, and at a larger risk of errors and failed code requirements occurring more frequently

Competitive Advantages Our competitive advantage is that we are both a residential and commercial design firm, indicating that we are able to target two different categories of clients. Another advantage is that we design for the client - not the site - indicating that we work directly alongside the clients through every step of the process. Due to being located in an area where residential and commercial design firms are not common, there will be less competition that we would have to face in the industry.

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STRENGTHS WEAKNESSES

Lack of experience Income instability Lack of guidance Small firm with limited resources Limited salary + benefits New to the market Understaffed Lack of financial resources + abilities Weaknesses of the owners themselves Less experience on larger scale projects Two areas of expertise (residential & commercial) Expanding in other specialties Growth = networking Can attract more target customers Client relationships Supplier/vendor relationships Online engagement with brand = Marketing Learning from each project Location (growth potential) Personal satisfaction & creative freedom

THREATS

Credibility and creating relationships with clients Reasonable pricing and fee structure Experience with software (Revit, AutoCAD, SketchUp, Adobe Creative Cloud, etc.) Valuing client relationships, diversity, community, and creativity Certification in LEED + WELL AP + NCIDQ Creating creative solutions to complex problems Include clients in the design process

OPPORTUNITIES

S.W.O.T analysis

AZ does not require one to be certified to be an Interior Designer (more competition) Large market = Lots of competition Bankruptcy + lawsuits Slow growth because of inability to raise funds Economic threats (pandemics, stock market crash, inflation, etc.) Poor reviews Industry changes Compliance violations

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06 MARKETING PLAN

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Products & Services Interior Design Concept Development Construction Drawings FF&E Procurement

Interior Decorating Material Selections Accessory Selections Furniture Installments

Architectural Details and Drawings Revit/CAD/Sketchup Technical Drawings Rendered Technical Drawings

Selection of Furniture and Accessories Sale Rep Connections Accessory Procurement

Budget Planning Cost Sheet FF&E Scheduling Scope of Work Timeline

Coordination with Architects and Contractors Architecture Firm Connections Contractor Connections

Space Planning and Interior Architecture Blocking Diagrams Circulation Drawings & Means of Egress

Color Palette Consultation Color Rationale Color Scheme

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PRICING STRUCTURE The pricing structure that we’re using is a flat fee structure, one rate for the entire project, typically, this does not include furniture and other items but is the price for the designer’s work and time on the project. The exact scope of the project and what the flat fee includes should be spelled out in the contract. This fee is calculated by any number of factors like experience, square footage, estimated time, and budget. The larger the project, the larger the fee, taking into account the amount of time, resources, and labor required.

EMPLOYER

BILLING RATE PER HOUR

Construction Manager

$50 /HR

Project Manager

$43 /HR

Senior Designer

$30 /HR

Executive Assistant

$30 /HR

I.T. Director

$23 /HR

CAD Drafter

$21 /HR

Junior Designer

$20 /HR

Associate

$18 /HR

Office Administrator

$18 /HR $13 /HR

Intern

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PRICING STRUCTURE Phases of a Design Project Concept Design Schematic Design Design Development Construction Documents Construction Administration

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CONCEPT DESIGN PHASE

HOURS

Design Research

16 HRS

Concept Imagery (2 Concepts)

32 HRS

Conceptual Floor Plan (2 Concepts)

16 HRS

Conceptual Perspective Sketches

40 HRS

Material & Finish Selection

8 HRS

Furniture Selection

8 HRS

Conceptual Presentation

8 HRS

SCHEMATIC DESIGN PHASE

HOURS

Site Analysis

10 HRS

Code Analysis

20 HRS

Programming

16 HRS

Sketching

40 HRS

Floor Plan & Site Plan

20 HRS

Structural, HVAC, M.E.P Plans

30 HRS

Interior & Exterior Finishes

20 HRS

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PRICING STRUCTURE

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DESIGN DEVELOPMENT PHASE

HOURS

Renderings

16 HRS

Finalized Floor Plan, Site Plan, Sections

32 HRS

Finalized Structural, HVAC, M.E.P Plans

32 HRS

Finalized Lighting Selections

8 HRS

Finalized Material & Finish Schedule

8 HRS

Finalized Interior & Exterior Elevations

8 HRS

Final Presentation

8 HRS

CONSTRUCTION DOCUMENTS

HOURS

Foundation Plans

10 HRS

Framing Plans

20 HRS

Cost Estimate

16 HRS

Specification Drawings

40 HRS

Built-in Equipment Working Drawings

20 HRS

Civil Working Drawings/Specifications

30 HRS

Major Detail Conditions Develop.

20 HRS

CONSTRUCTION ADMINISTRATION

HOURS

Architectural Construction Admin.

15 HRS

MEP Construction Administration

20 HRS

Shop Drawing Check & Approval

16 HRS

Material Substitutions

10 HRS

Verify & Approve Periodic Estimates

20 HRS

Final Acceptance Procedure & Reports

30 HRS

Final Inspection

20 HRS

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PROMOTION PLAN Social media (Facebook, Instagram, Twitter, LinkedIn, etc.) The purpose of using social media platforms is to inform, sell, and improve the image of our business. We are looking to reach people looking for services in the residential and commercial sectors. These two sectors provide a wide range of people, including businesses and homeowners to property developers and the city. We believe Facebook, Instagram, Twitter, LinkedIn, and many other social platforms are the most suitable for our company. Most of our competitors use most of these social media platforms and show a success rate. We believe having a presence on each platform will beat their competition.

Contacting local news to broadcast our grand opening The purpose of using the local news is to bring awareness to our design firm. Our target is the general public to whom we hope to achieve a response. We believe the using TV would be suitable to bring awareness to our company. Our competitors use the local news to announce their completed projects which are successful in bringing them business. We can improve their approach and beat them in competition with our deliverables.

Making business cards and handing them out to the public The purpose of using business cards is to inform people about our business. The target is the general public. We are trying to get a response from potential clients. By using this method, we will be able to physically interact with the public.

Creating a website with our digital portfolio and online presence Having a website serves the same purpose as using social media. It will allow us to inform, sell, and improve the image of our business, keeping the same target audience in mind. Creating a website is one of the easiest ways our future clients will be able to view our work, learn more about our company, and contact us.

Show off in a show-house, invite professionals to view our work The purpose of having a show off in a show-house is to improve the image of our business. Having other professionals in the design field, specifically in the residential and commercial sector view our work will allow us to receive feedback useful for the development of our business. Using social media and our website to spread the word about a show-off will be suitable in achieving this. There will be no competition, it is a moment to come together and help improve the image of other businesses.

Spreading the word to close family and friends Word of mouth will help inform and bring business to our firm as word travels fast.

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07 MANAGEMENT TEAM

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MANAGEMENT TEAM TAMIA HANNINEN |

KAYLEEN SOTO | Principal Designer + Co-owner of KATA Design. Graduated from Arizona State University and has a degree in Interior Design.

Principal Designer + Co-owner of KATA Design. Graduated from Arizona State University with a Bachelors of Science in Interior Design. With over 4 years of experience.

PROJECT MANAGER |

CAD DRAFTER |

Has over 10 years of experience and attended Colorado State University-Global Campus and majored in Architecture.

Completed an apprenticeship and graduated from ASU in 2016. Proficent in sketching, computer aided design and drafting.

CONSTRUCTION MANAGER |

INTERN |

Has 5 years of experience and attended NewSchool of Architecture & Design and majored in Construction Management.

Currently a third year design student at ASU and joined the team in hopes of learning more about the industry and gain experience.

JUNIOR DESIGNER |

EXECUTIVE ASSISTANT |

Attended The University of New Mexico and joined the team to gain new knowledge about residential + commercial design.

Attended the University of Southern California and majored in Business Administration with a minor in Sustainability.

ASSOCIATE |

I.T. DIRECTOR |

Attended Weber State University and majored in Interior Design. Has experience in residential + commercial design projects.

Attended University of Advancing Technology and majored in Computer Science and excels in Coding and Programming.

OFFICE ADMINISTRATOR | Attended Central Arizona College and received an Associate's degree in Communications and Sociology Pathway.

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MANAGEMENT TEAM gaps HEAD ENGINEER

CAD TECHNICIAN

manage budgets, negotiate contracts, and make sure work is carried out according to safety regulations, etc.

use specialist software to produce, design, and engineer schematics, technical drawings, plans, etc.

ACCOUNTANT

LIGHTING DESIGNER

handles the bookkeeping and prepares financial documents like profit-and-loss statements, balance sheets, etc.

responsible for the design, installation, and operation of the lighting and fitting individual lighting fixtures to projects.

RECEPTIONIST

JUNIOR DESIGNER

will greet guests, answer questions/calls that come to the office, help guests/users navigate through an office, etc.

participating in various design projects from concept to completion, producing drafts, prototypes, engaging design solutions, etc.

HVAC SPECIALIST

ARCHITECT

installs, repairs, or maintains heating, ventilation, air conditioning, and refrigeration systems that control the temperature and air quality in buildings, etc.

researches, applies knowledge of architectural design, construction detailing, construction procedures, zoning, building codes, and building materials and systems.

LANDSCAPE ARCHITECT

FURNITURE DESIGNER

design attractive and functional public parks, gardens, playgrounds, residential areas, college campuses, and public spaces through the use of greenery.

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design professional who is responsible for planning, testing, and creating furniture and experimenting with materiality, ergonomics + scale.

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08 FINANCIAL PLAN

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Revenue model KATA will generate revenue from the fees charged for our interior design services themselves. By consistently staying up to date on trends and listening to the needs of clients, our firm will continue to generate revenue. Can potentially sell products such as textiles, knick-knacks, pottery, How-To books, guides, etc.

PRIMARY REVENUE: Services (outlined in section 6) Step 1: Determine and define services. Hone in our pricing strategy and figure out effective marketing strategies. Step 2: It will take 8 weeks to determine our goals, do a thorough market analysis, analyze our target audience, profile our competition, and develop a pricing strategy and execution plan. During this time our company will be connecting with local vendors that work within the industry. Step 3: Since our services are a primary revenue builder, a full-time basis approach will be taken. Our services will be offered 5 days a week (Monday-Friday). Consultations (outlined in section 6) Step 1: Determine consultation services and pricing strategy. Step 2: It will take approximately 4 weeks to develop the pricing strategy and execution plan. During this time our company will be developing skills in consulting. Step 3: Since consulting is a primary revenue builder, a full-time basis approach will be taken. It will be offered 5 days a week.

SECONDARY REVENUE: Advertising on the business website and social media platforms Step 1: Create a business website and social media platforms. Put together ad sets to generate brand awareness and reach. Step 2: It will take 2-4 months to create a website. During this time the company will use social media platforms to advertise services. Step 3: Since this is a secondary revenue builder, the company will use a part-time basis approach and content calendar to schedule social media posts three days a week (Monday, Wednesday, Friday).

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pay structure POSITION

PAY STRUCTURE

Construction Manager

Salary

$80K

$59K-100K

$81K

Project Manager

Salary

$176K

$22K-330K

$177K

Senior Designer

Salary

$76K

$54K-98K

$77K

Executive Assistant

Salary

$49.5

$26K-73K

$50K

I.T. Director

Hourly

$88.5/HR

$79-98

$89/HR

CAD Drafter

Salary

$62.5K

$48K-77K

$63K

Junior Designer

Hourly

$22.5/HR

$19-26

$24/HR

Associate

Hourly

$14/HR

$12-16

$15/HR

Office Administrator

Hourly

$21/HR

$19-23

$22/HR

Hourly

$14.5/HR

$11-18

$15/HR

Intern

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SALARY LIMIT INDUSTRY RANGE

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COMPANY OFFER

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09 APPENDIX

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ORGANIZATIONAL CHART KATA DESIGN FIRM LLC

KAYLEEN SOTO

TAMIA HANNINEN

PRINCIPAL OWNER & INTERIOR DESIGNER

PRINCIPAL OWNER & INTERIOR DESIGNER

PROJECT MANAGER

CAD DRAFTER

CONSTRUCTION MANAG.

INTERN

JUNIOR DESIGNER

EXECUTIVE ASSISTANT

ASSOCIATE

I.T. DIRECTOR

AS 1

ID 1

OFFICE ADMINISTRATOR

PM 1

INT 1

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CD 1

JD 1

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CM 1

EA 1

OA 1

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KATA d e s i g n

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TAMIA HANNINEN |

KAYLEEN SOTO |


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