Lamp Business Plan for Bank Loan by OGS Capital

Business plan XXXXX XXXXX Strictly private and confidential

XXXXX XXXXX XXXXX XXXXX XXXXX

Disclaimer

Section

Page

Disclaimer

Executive summary

Market research

Business model

Marketing plan

Financial projections

Profile of founder

Use of proceeds

Business plan â&#x20AC;&#x201C; XXXXX

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Disclaimer

Disclaimer •

This presentation has been prepared exclusively for the benefit and internal use of a qualified sophisticated global financier to whom it is directly addressed and delivered. This presentation is for discussion purposes only and is incomplete without reference to, and should be viewed solely in conjunction with, the oral briefing provided by XXXXX. Neither this presentation nor any of its contents may be used for any other purpose without the prior written consent of XXXXX.

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The information in this presentation is based upon forecasted numbers provided in industry literature and our best estimates. These projections and estimations reflect prevailing conditions and our views as of this date, all of which are accordingly subject to change.

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In preparing this presentation, we have relied upon and assumed, without independent verification, the accuracy and completeness of all information available from public and private sources which were provided to us or which were otherwise reviewed by us. In addition, our analyses do not claim to be appraisals of the assets, or the valuation of any entity. XXXXX makes no representations as to the actual benefits which may be received in connection with a transaction nor the legal, tax or accounting effects of consummating a transaction

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A number of statements referenced in this presentation that have been granted, are forward-looking statements, and any statements that express or involve discussions with respect to predictions, expectations, beliefs, plans, projections, objectives, and goals, assumption of future events or performance are not statements of historical fact and may be "forward-looking statements."

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Forward looking statements are based on expectations, estimates and projections at the time the statements are made that involve a number of risks and uncertainties which could cause actual results or events to differ materially from those presently anticipated. Forward-looking statements in this presentation may be identified through the use of words such as "expects," "will," "anticipates," "estimates," "believes," or statements indicating certain actions "may," "could," or "might" occur. Any person or entity seeking to make an investment in the company should not rely on the information set forth in this business plan as complete.

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Any person or entity seeking to make an investment in the company should not rely on the information set forth in this business plan as complete. There exists substantial information with respect to the company, its business and its future prospects which are not set forth in the business plan and there exist a substantial number of risks associated with an investment in the company which are not set forth in this business plan.

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Any person or entity considering making an investment in the company must ensure that they avail themselves of all other information relating to the company, its business, and its financial projections, as well as all other information deemed necessary or desirable by such prospective, prior to any such investor making an investment in the company.

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Any prospective investors shall be required to represent to the company that, prior to making such investment, they have received from the company all information deemed necessary or desirable by them with respect to such investment and that such investor did not rely on any information set forth in this business plan in making any such investment.

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By accepting delivery of this plan, the recipient agrees to return this copy to the corporation at the address listed below if requested.

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Do not copy, fax, reproduce or distribute without written permission from XXXXX.

Business plan – XXXXX

Executive summary

Section

Page

Disclaimer

Executive summary

Market research

Business model

Marketing plan

Financial projections

Profile of founder

Use of proceeds

Business plan â&#x20AC;&#x201C; XXXXX

ÂŠ20XX - Private and Confidential

Executive summary

XXXXX LLC will be engaged in manufacture, import, marketing and distribution of classic table lamps, mirrors and accent tables across North America.

Market analysis

Business idea

Lighting Fixture Demand Trends 25,000

6% 20,000

XXXXX LLC will be engaged in manufacture, import, marketing and distribution of classic table lamps, mirrors and accent tables across North America.

•

The Company will actively outsource key business operations:

15,000

•

Manufacturing – China producer

•

Sales& Distribution – well-known sales agency “XXXXX”

-2%

10,000

-4% -6%

5,000

-8% -

• 8%

1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

Source: Freedonia Inc.

(mil $)

-10%

Annual % Growth

•

An original collection of 33 unique designed table lamps was created by well-known light designer XXXXX located in New Orleans.

•

Location of the business: XXXX

• Target “end customer”: professionals, business owners, business executives and management personnel, with income levels of $75,000 and above.

Goals

Strengths

•

XXXXX is a business producing luxury quality high design table lamps at affordable prices in the United States and abroad

•

To become the leader in production of lighting fixtures products focusing on mid- and high-end

Established connections and huge experience of the Founder will give ability to build profitable business in lighting fixtures industry

•

To conclude long-term relationships with selected partners

Prototypes of the innovative table lamps have already been developed by well-known light designer Julie Neil

•

To add 15 – 20 new designs every 6 months of the market cycle

•

Reputable partners of the Company

•

To play a pro-active role in light fixtures industries attending trade shows and other professional events

•

Outsourcing of production in Asia will help the Company to compete on the market

•

Attractive commission will be available for intermediaries, which will stimulate sales

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To build a loyal customer base

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To maintain the highest quality of the industry manufacturing standards

Human resources and expertise could be directed to the Company from the established lighting business XXXXX

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To research constantly in the lighting industry to determine trends that might have a positive influence on the design of new products

Business plan – XXXXX

Executive summary

The Company is looking for loan from XXXX in amount of $150,000 for financing working capital of the start up business involved in lighting fixtures

Financials

Projected Profit and Loss account $ Year 1 \ Revenue Operating expenses Net profit/(loss)

Year 2

Use of proceeds

Year 3

Year 5

1,356,000

1,532,280

500,000

800,000

(389,472) 77,370

(533,615) 186,470

(728,843) 329,810

(807,376) 384,037

(895,814) 445,526

15%

23%

27%

28%

29%

Net profit margin, %

1,200,000

Year 4

Use of proceeds, $ Item

Source management information

KPIs

Investments in Working Capital (final payment to suppliers in Asia) Staff costs for showroom personnel and travel expenses for Dallas, Las Vegas and Atlanta Markets Investments in Working Capital (prepayment to suppliers in Asia)

Key performance indicators CF(1-5 years), $ NPV(1-5 years)*, $ IRR, % Payback period

1,415,713

Total

855,487

Time schedule

Amount

15,000

Nov-13

10,000

Nov-13

5,000 5,000

Jan-14 Jan-14

25,000

Nov-13

60,000

Jan-14

10,000

Jan-14

20,000

Feb-14

150,000

Source management information

83% less than 1 year

*Discounted rate 10%

So urce: M anagement info rmatio n

Business plan â&#x20AC;&#x201C; XXXXX

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Market research

Section

Page

Disclaimer

Executive summary

Market research

Business model

Marketing plan

Financial projections

Profile of founder

Use of proceeds

Business plan â&#x20AC;&#x201C; XXXXX

ÂŠ20XX - Private and Confidential

Market research

General overview

Lighting fixture demand in the US increased 2.0 percent per year from 2004 to $17.8 billion in 2011 Market Size •

•

Lighting fixture demand in the US increased by 2.0 percent per year from 2004 to $17.8 billion in 2011. The principal end use for lighting fixtures is construction, including both building and non-building. As a result, lighting fixture demand is affected strongly by patterns in the construction market, which are in turn closely related to economic health. Lighting fixture demand trends generally do not move in lockstep with construction expenditure patterns as a result of shifts in the composition of construction spending. However, in eight of the past ten years, growth of construction spending coincided with growth of lighting fixtures sales, and a decline in construction spending coincided with a decline in lighting fixture sales. The first exception occurred in 2001, when construction spending grew but lighting fixture sales fell, due largely to rising construction costs that year. The second exception occurred in 2007, when construction expenditures declined but lighting fixture sales rose. This was because demand for lighting

fixtures was more closely tied to nonresidential construction, which performed strongly in 2007. The drop lighting fixture demand in 2008 and 2009 was a result of the recession that began in late 2007.

Product segmentation • Lighting fixtures, also called luminaires, are lighting system components used to provide physical protection and support for lamps, ballasts and wiring. Fixtures also serve in a variety of other functions, including aiming light in the desired direction and shielding the lamp from view to prevent glare. Lighting fixture products include nonportable and portable fixtures, as well as separately sold parts and accessories such as aftermarket lamp ballasts, fittings, switches, globes and shades. Lighting Fixture Demand by Type

12%

Lighting Fixture Demand Trends

15%

25,000

8% 6%

20,000

4% 73%

2% 15,000

0% -2%

10,000

Nonportable fixtures

-4%

Parts & accessories

-6%

5,000

•

-8% -

Portable fixtures

Source: Freedonia Inc.

1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

Source: Freedonia Inc.

Business plan – XXXXX

(mil $)

-10%

Annual % Growth

Nonportable Fixtures: Demand for nonportable lighting fixtures increased by 1.8 percent per year from 2004 to $12.9 billion in 2011. Nonportable, or hardwired, lighting fixtures are wired permanently in place and consist of outdoor (the largest subsegment in 2011 with 30

Market research

Segmentation

Lighting fixtures are used in a wide range of construction applications and in such manufactured goods applications as vehicular equipment and portable lighting •

•

percent of nonportable fixture demand), vehicular-type, industrialtype and other indoor types. Outdoor lighting fixture products consist of three major categories: area and floodlighting, roadway lighting, and other (e.g., spotlighting and specialty fixtures). Vehicular-type lighting fixtures are used both as original equipment and in aftermarket applications on a wide range of vehicles. Industrial-type lighting fixtures are designed specifically to meet the task requirements of industrial applications such as warehouses, manufacturing plants and processing facilities. Other indoor nonportable fixtures encompass a wide array of fixture types, including recessed, wall, ceiling, plastic wraparound, striplight, track, and indoor sign and emergency. These fixtures can be categorized according to the type of light source each fixture is designed to operate (i.e., fluorescent, incandescent, light emitting diode [LED] or high intensity discharge [HID]).

Market segmentation • Lighting fixtures are used in a wide range of construction applications and in such manufactured goods applications as vehicular equipment and portable lighting. Lighting serves a number of functions in these markets, including providing a comfortable, productive and aesthetically appealing indoor environment, and increasing safety and security for outdoor spaces.

Portable Fixtures: Portable lighting fixture demand reached $2.7 billion in 2011 based on the fastest rate of annual growth, 3.4 percent from 2004. Portable lighting fixtures are plugged into an ordinary wall socket and thus can generally be easily moved. These fixtures include table, floor and desk lamps, as well as a variety of smaller fixtures that primarily target the consumer segment (e.g., flashlights, lanterns and novelty lights). The vast majority of portable lighting fixtures are used in residential applications, although some are used in light commercial settings. The segment is dominated by incandescent fixtures, which accounted for 90 percent of demand in 2011. This preeminence resulted from the widespread availability of these fixtures and consumer familiarity of these traditional products.

Lighting Fixture Demand by Market

34%

Residential 15% Non-residential 69%

66%

Nonbuilding 16%

Parts & Accessories: Demand for lighting fixture parts and accessories expanded 2.7 percent annually between 2004 and 2011 to $2.1 billion. Lighting fixture parts and accessories are

Business plan – XXXXX

defined here as separately sold lighting fixture components, including aftermarket lamp ballasts, fittings, switches, globes and shades. These components are sold primarily as replacements for worn out or broken components, or used to upgrade the look or performance of existing fixtures. Many lighting users, particularly in residential and light commercial operations, opt to install new components as a costeffective alternative to replacing the entire fixture. In 2011, aftermarket lamp ballasts were the leading subsegment, accounting for 30 percent of demand.

Source: Freedonia Inc.

Manufactured Goods

Construction

Market research

Regulatory & Efficiency factors

Lighting fixtures are subject to a wide variety of legislation, regulations and standards imposed by federal and state governments, building code organizations, industry associations and independent standard-setting organizations •

Construction Market: Demand for lighting fixtures in the construction market increased by 2.1 percent per annum from 2004 to $11.5 billion in 2011. This segment is comprised of hardwired fixtures used as a part of new construction and improvement and repair projects, as well as the separately sold parts and accessories used in conjunction with these fixtures. The market can be segmented into residential, nonresidential (office, commercial, industrial, institutional and other buildings) as well as nonbuilding construction applications.

•

Virtually every building requires artificial lighting systems to provide indoor lighting, and many also use outdoor lighting fixtures that are either attached or employed in proximity to the respective structure. The nonbuilding construction category includes lighting fixtures used on roadways and in other outdoor areas such as marinas, parks and quarries. The relative size of the various construction subsegments is highly dependent on levels of construction activity because the majority of lighting fixture demand – 78 percent in 2011 – derives from installation as part of new construction. The largest subsegment of the construction lighting fixture market was nonresidential building construction, which accounted for 69 percent of demand in 2009. This position results from the extensive lighting requirements of most nonresidential buildings, as well as the large number of these types of structures in the US. Nonbuilding applications experienced the fastest rate of growth during the 2004-2011 period, or 7.1 percent per year.

•

Regulatory & Efficiency Factors • Lighting fixtures are subject to a wide variety of legislation, regulations and standards imposed by federal and state governments, building code organizations, industry associations and independent standard-setting organizations. The lighting fixture market is significantly affected by regulations and standards established to promote safety and well-being in specific lighting applications, as well as by environmentally focused legislation aimed at increasing the use of energy-efficient lighting and reducing the impact of lighting use. Regulatory issues have significant influence on lighting fixture demand, as well as on the course of development of lighting fixture products. The majority of lighting regulations are designed to ensure the appropriate type, level and operation of lighting systems in particular settings. For example, commercial and industrial codes established by the US Department of Labor’s Occupational Safety and Health Administration set minimum illumination levels in order to provide sufficient lighting for employee safety. Lighting standards for motor vehicles are established by the

Manufactured Goods Market: Lighting fixture demand in the manufactured goods market fell 1.0 percent annually during the 2004-2011 period to $5.9 billion. Manufactured goods markets for lighting fixtures encompass vehicular equipment (e.g., motor vehicles, industrial vehicles, aerospace equipment and other nonautomotive transportation equipment), portable lighting

Business plan – XXXXX

equipment and various other consumer and non-consumer applications (e.g., fixtures built into furniture). This broad range of applications results in a wide variety of fixture types used in each market segment. For example, lighting fixture use in vehicular applications is dominated by halogen and conventional incandescent lighting fixtures designed specifically for vehicular use, although these fixtures face increasing competition from HID and LED types. While halogen and conventional incandescent fixtures also dominate portable fixture markets, they face limited competition from HID systems, and instead compete with LED and fluorescent lighting systems. In 2011, vehicular lighting fixture was the leading product, accounting for 46 percent of segment demand. Flashlights were the single largest product of the portable and other category, accounting for nearly one-half of subsegment demand in 2011.

Market research

Import/Export

In 2009, the US was a net importer of lighting fixtures with a trade deficit of $4.6 billion •

US Department of Transportation, while lighting requirements for aircraft and airports are governed by the US Federal Aviation Administration.

•

Regulatory & Efficiency Factors. The Energy Independence and Security Act of 2007 encompasses a range of energy efficiency issues in the US and has several important implications for lighting efficiency. Chief among them are the new efficiency standards for general service incandescent light bulbs set to be phased in between 2012 and 2014. These efficiency standards will severely limit the use of conventional incandescent lamps and favor the use of compact fluorescent lamps (CFLs) and halogen lamps. In addition, the Act banned the sale of certain probe-start metal halide lighting ballasts starting in 2009, in favor of more energy efficient pulse-start ballasts. The Act also requires that by 2013, all general purpose lighting in federal buildings must use ENERGY STAR products or products designed under the Federal Energy Management Program.

•

two leading destinations for lighting fixture exports in 2009, due largely to their proximity to the US and low trade barriers. Outdoor and other indoor nonportable lighting fixtures were the most popular types sold in the US in 2009 and were also the most frequently imported products. Parts and accessories, vehicular-type and outdoor lighting fixtures accounted for the majority of US lighting fixture exports in 2009. US Lighting Fixture Trade, $m 10,000

9,000 8,000 7,000 6,000 5,000 4,000 3,000 2,000

Trade •

1,000

In 2009, the US was a net importer of lighting fixtures with a trade deficit of $4.6 billion. Both imports and exports were more significant before the recession of 2007-2009, but depressed demand both domestically and abroad constrained US trade of lighting fixtures in 2009. However, international trade is expected to recover as global demand for lighting fixtures rebounds between 2009 and 2014.

•

Consequently, US imports of lighting fixtures are forecasted to rise 7.4 percent per annum to $8.7 billion in 2014.

•

Most US lighting fixture imports originated in China or Mexico in 2009 due to the lower production costs in these regions. Canada (the third largest trade US partner in international lighting fixture trade in 2009) and Mexico were the

Business plan – XXXXX

Source: Freedonia Inc.

2004

2009 Import

2014

Export

Luxury markets • The world market for luxury furniture and furnishing is worth approximately $51 billion at factory prices (around $133 billion at consumer prices). The market includes around $30.8 billion of furniture (upholstery, bedroom furniture, kitchen furniture, bathroom furniture, dining and living room furniture), approximately $10.5 billion of contract furniture for luxury projects such as five stars hotels, yachts, private villas, executive offices and retail outlets. Another $2.5 billion is made by luxury lighting fixtures and the remaining 11

Market research

Luxury markets

If compared to the wealth distribution in the rest of the world, the US shows a high share of population with wealth above $100,000 •

$7 billion are textiles, appliances and interior decorations, which make the environment become a luxury experience.

Household income in 2011, thousands households 90,000 80,000

FOUR VARIABLES

70,000

•

There are four main proxies to analyze the luxury furniture market size and trends worldwide: the number of world millionaires and their distribution by countries, the international flows of furniture made in Italy, Germany, Japan, USA and other Western European countries, the income per capita generated in each country and where the world’s premier shopping districts are located.

60,000

Taking into account these four variables enable us to evaluate the potential demand for luxury furniture expressed by each country and to show where luxury furniture manufacturers should invest.

•

50,000 40,000 30,000 20,000 10,000

Currently, the highest potentialities are expressed by two big emerging markets, China and India, and by a mature market as well, the United States. If compared to the wealth distribution in the rest of the world, the US shows a high share of population with wealth above $100,000, and by far the greatest number of members of the top 1% global wealth group.

•

Actually, the number of Ultra High Net Worth individuals with wealth exceeding $50 million in the U.S. is eight times higher than that of the second country in the global ranking, China.

•

It is also interesting to note the potentialities expressed by Brazil and Russia.

•

Brazil’s average household wealth tripled between 2000 and 2012, rising from $8,300 per adult to $29,000, whereas total wealth in Russia increased sevenfold between 2000 and 2012, reaching $1.3 trillion in 2012.

More than $190,000

United States, whereas it is quickly growing in China, where Italian and German luxury furniture suppliers are performing very well. Luxury furniture markets are steady increasing in the Middle East and Latin America. While in the Middle East luxury furniture and furnishings European manufacturers are the best performers, in Latin America US players still take the lion’s share. Just moving its early steps, the luxury furniture market in India is expected to see a substantial jump in the number of millionaires in the next five years, as the total number of ultra-rich in the country is likely to touch 242,000 by 2017, registering an increase of 53 per cent in five years.

BEYOND THE CORE BUSINESS •

The overall market for luxury furniture is stable in Europe and the

Business plan – XXXXX

$75,000 to $190,000

Source: US Census Bureau; Income, Pov erty , and Health Insurance Cov erage in the United States: 2011

•

Less than $75,000

Considering the main trends on the luxury furniture market worldwide, luxury lifestyle is becoming a much called-upon catch expression to conceive extensions by luxury brands, outside their core expertise. It is not unusual for luxury goods brands to branch out into sporting equipment (Chanel, Bugatti, Louis Vuitton), branded ©20XX - Private and Confidential

Market research

Luxury markets

hotels (Bulgari, Versace, Armani) and hotel suite design (Jaguar Cars, Bottega Veneta) fixtures rebounds between 2009 and 2014.

•

Consequently, US imports of lighting fixtures are forecasted to rise 7.4 percent per annum to $8.7 billion in 2014.

•

One of the most common trends is the entering of luxury fashion brands into the design and production of luxury home wares. Fashion and home décor share two critical core competencies in textiles and design, and therefore in terms of category extension, for fashion brands, it poses relatively low level of risk.

•

Donna Karan, frequently being featured in design and architecture magazines alongside her properties in New York City, the Hamptons and the British West Indies, launched Donna Karan Home and DKNY, two distinctive bedding and bath collections. More recently, Pure DKNY was launched: an ecofriendly home collection made from 100% organic cotton.

•

The brand has also collaborated with Lenox, a U.S. market leader in quality table top, giftware and collectibles, to produce a collection of home décor and tableware’s.

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Vera Wang opened doors to her first ‘lifestyle’ retail destination back in 2006, for the first time combining her ready-to-wear, accessories, fine jewellery and fragrances, with tableware and textiles.

•

• •

•

Today the brand focuses on bedding, fine papers and table top categories within its home ware products. The strong association of the Vera Wang’s brand with luxury weddings carries Vera Wang to became partner with England’s Wedgewood to produce a collection of sophisticated dinnerware, barware, votives, frames and vases, in both porcelain and Wedgewood’s signature crystal. The brand has also partnered with fine stationary producer William Arthur, to

Business plan – XXXXX

produce a range of invitations, save the date cards, place cards and notepapers. There is also the Vera Wang Flowers extension, a partnership with America-wide florist FTD and premium bedding produced under license by Sferra Bros, in sophisticated shades of white and cream. This “expansion” has been further propelled by the rise of the luxury branded hotel. In 2011, Diane Von Furstenberg launched a collection of bedding and tableware, preceded by the launch of the DVF suite at Claridge’s hotel in London. At the beginning of 2012, there was the launch of the second Armani hotel in Milan (the first is located in Dubai), conceptualised and furnished by Armani Casa’s team of architects and interior designers. Versace’s Home collection led to the brands partnership with the Sunland Group, which saw the launch of first resort bearing the signature of a luxury brand in September 2000. “Palazzo Versace” opened on Australia’s Gold Coast, followed by a property in Dubai. Fendi Casa was enlisted by fellow LVMH brand Princess, to design and furnish the interiors of its super yachts. Bespoke furniture, fabrics, accessories, detailing and floor coverings from the Italian design house have been seamlessly integrated into the super yacht 85’s spacious interior. It is the second Princess to have been created in conjunction with Fendi and further customer orders for similar yachts are already in the pipeline.

Market environment • The principal indicator of demand for lighting fixtures in the US is construction activity, including patterns in expenditures for residential buildings, nonresidential buildings and nonbuilding construction. Across all construction markets, the vast majority of lighting fixture demand is generated from the installation of fixtures as part of new construction projects. Construction activity, and thus lighting fixture demand, is closely related to general demographic and

Market research

Forecasts

Lighting fixture demand in the US is forecasted to increase 4.8 percent per year from 2011 to $21.9 billion in 2014 •

macroeconomic conditions, including the outlook for future economic growth, expected inflation, and the level and trend of interest rates. Demand is also affected by trends in other key industries such as motor vehicles, transportation equipment and other vehicles. Similar to the construction sector, these markets are strongly affected by the outlook for the US economy as a whole, including such indicators as disposable personal income levels and personal consumption expenditures. Chief among a number of external factors that help to shape the industry are regulatory issues related to growing government and consumer concern regarding the environmental impact of lighting energy use.

•

Key Indicators for Lighting Fixtures, $bln Item

2004

Gross Domestic Product 11,868 Resident Population (million) 293 Residential Building Construction Expend 577 Nonresidential Building Construction 289 Nonbuilding Construction Expenditure 164 Vehicular Equipment Shipments 689

2009

2014

14,250 307 285 410 270 496

17,900 322 645 491 324 768

% A nnua l G ro wt h

09/04 3.7 0.9 (13.2) 7.2 10.5 (6.3)

14/09 4.7 1.0 17.7 3.7 3.7 9.1

•

Source: The Freedonia Group, Inc.

Product forecasts •

Lighting fixture demand in the US is forecasted to increase 4.8 percent per year from 2011 to $21.9 billion in 2014. Gains will be aided by recoveries in motor vehicle production and residential housing construction. Advances in lighting fixture demand will also be supported by regulations banning the future sales of less energy-efficient lighting products, including the Energy Independence and Security Act of 2007’s restrictions on the sale of incandescent lamps started in 2012.

•

Nonportable Fixtures: Demand for nonportable lighting fixtures is projected to expand at the fastest rate of annual growth, 5.8

Business plan – XXXXX

•

percent from 2009, to $16.8 billion in 2014. Gains will accelerate considerably relative to the 2004-2009 period, during which residential construction and motor vehicle production declined. Through 2014, growth will be paced by demand for vehicular fixtures (which will account for 28 percent of segment demand) as motor vehicle production recovers from its lowest level in half a century. Gains for vehicular type lighting fixtures will also be supported by a general shift in the product mix towards more expensive fixtures, including HID lighting systems. Outdoor lighting fixture demand growth over the forecast period will decelerate relative to the historical period as nonresidential construction activity slows. Roadway lighting is expected to see the best growth for outdoor lighting through 2014. Other indoor lighting fixtures will also grow faster than average, benefiting from the recovery of housing construction from its low 2009 level. Nonportable lighting fixtures are expected to provide the fastest gains for LED-based products as these fixtures find increasing use in general illumination applications. Portable Fixtures: Portable lighting fixture demand is expected to grow 2.2 percent annually between 2009 and 2014 to $2.9 billion. The expected recovery of residential construction will be the primary driver behind growth through 2014. Gains will also benefit from the decorative nature of the products, as purchasing new portable fixtures remains a relatively inexpensive way to change the décor of a room. The prevalence and popularity of home offices will also support lighting fixture demand, as desk lamps provide task lighting in these applications. Additionally, value gains will benefit from a shift in the product mix toward higher-end decorative fixtures and those using CFL and LED light sources, due in part to the phase out of general use conventional incandescent lamps between 2012 and 2014. Although not all incandescent lamps will be banned (notably excluding halogen, three-way and specialty incandescent lamps), stronger sales of CFLs will spur manufacturers to develop products specifically designed for these light sources. Parts & Accessories: Demand for lighting fixture parts and accessories is anticipated to reach $2.2 billion in 2014 based on 1.9 percent annual ©20XX - Private and Confidential

Market research

Forecasts

Demand for lighting fixtures in residential markets is forecasted to advance 12.7 percent per annum through 2014 •

• •

growth from 2009. Advances will be driven by retrofit projects, in which new ballasts are installed to increase energy efficiency. Additionally, a shift in the product mix from magnetic ballasts to more expensive electronic ballasts will benefit value gains going forward.

•

Lighting Fixture Demand by Type, $m Item Lighting Fixture Demand by Type, $m Nonportable Fixtures Portable Fixtures Parts & Accessories -net imports Lighting Fixture Shipments

2004

2009

2014

16,450 12,500 2,200 1,750 5,490 10,960

17,300 12,700 2,600 2,000 4,640 12,660

21,900 16,800 2,900 2,200 6,900 15,000

% A nnua l G ro wt h

09/04

14/09

1.0 0.3 3.4 2.7 (3.3) 2.9

4.8 5.8 2.2 1.9 8.3 3.5

Source: The Freedonia Group, Inc.

Market Forecasts •

Advances will be boosted by recoveries in single-family housing construction. Gains over the forecasted period will also benefit from additional penetration of LEDs and energy-efficient ballasts, which are typically more expensive than competing products.

•

Construction Market: Demand for lighting fixtures in the construction market is forecasted to increase 3.3 percent per year from 2009 to $13.5 billion in 2014. Growth will improve relative to the historical period as new housing construction recovers from the declines experienced from 2006-2009. Although this acceleration will be more pronounced in new construction applications, lighting fixture demand in improvement and repair applications will also improve.

•

Gains will be aided by retrofit activities aimed at increasing the energy efficiency of lighting systems. Because many of these more advanced energy-efficient fixtures are also more expensive,

Business plan – XXXXX

•

this trend will benefit value gains as well. Furthermore, the ongoing trend toward the use of more aesthetically pleasing, and thus more expensive, lighting fixtures will support demand. Demand for lighting fixtures in residential markets is forecasted to advance 12.7 percent per annum through 2014. Going forward, residential improvement and repair demand will benefit from increased home sales and consumers’ interest in upgrading the appearance and energy efficiency of existing lighting systems. In addition, demand will be supported by the vast stock of lighting fixtures in use that may fail and require replacement. The nonbuilding lighting fixture market is forecasted to grow roughly in line with the market average through 2014, although it will decelerate from the strong growth achieved between 2004 and 2009. Nonresidential lighting fixtures, which accounted for 69 percent of the construction market in 2009, are projected to be the slowest growing, setting an annual pace of 0.9 percent through 2014, and account for 61 percent. Going forward, gains in the nonresidential building lighting fixture market will be constrained by industrial construction activity, which is expected to fall from its peak 2009 level. Manufactured Goods Market: Lighting fixture demand in the manufactured goods market is expected to grow 7.5 percent per annum from 2009 to $8.4 billion in 2014. Advances will be driven by a favorable outlook for the production of motor vehicles and other vehicular equipment. Vehicular lighting demand will continue to benefit from increasing fixture expenditures on motor vehicles, due in part to the growing popularity of advanced lighting systems such as HID, LED and adaptive lighting. Demand for lighting fixtures in the portable and other manufactured goods market will benefit from increases in personal consumption expenditures, as well as a shift in the product mix toward alternative light sources such as dedicated-CFL and LED-based fixtures, and a growing preference for higher-end fixtures. Flashlight gains will be driven by the prevalence of higher-end products with added features, including LED-based flashlights. ©20XX - Private and Confidential

Market research

Competitors

The US lighting fixture industry includes hundreds of companies, a large number of which are small, privately held firms with 100 or fewer employees. •

• •

However, value gains will be restrained by competition from lowcost imports from Asia.

Lighting Fixture Demand by Market, $m Item Lighting Fixture Demand Construction Residential Nonresidential Nonbuilding Manufactured Goods

2004

2009

2014

16,450 10,300 2,650 6,350 1,300 6,150

17,300 11,450 1,670 7,950 1,830 5,850

21,900 13,500 3,030 8,300 2,170 8,400

% A nnua l G ro wt h

09/04 1.0 2.1 (8.8) 4.6 7.1 (1.0)

14/09

•

4.8 3.3 12.7 0.9 3.5 7.5

Source: The Freedonia Group, Inc.

Industry competition •

•

The US lighting fixture industry includes hundreds of companies, a large number of which are small, privately held firms with 100 or fewer employees.

Retail Environment • Retail sales of household furniture totaled approximately $42.3 billion in 2011. Furniture is distributed through a number of outlets, including manufacturer-owned stores, independent dealers, furniture centers, national and local chains, mass market retailers, department stores, and to a lesser extent, home improvement centers, decorator showrooms, wholesale clubs, catalog retailers, and the Internet. As the number and range of distribution options have increased, customers have supported all of these avenues, often shopping for furniture at several different locations. The main factors determining where furniture is purchased are price and quality, followed by selection, brand names, customer service, and special financing. In 2011, furniture stores and chains accounted for the vast majority of retail sales. This segment, along with specialty stores, represented approximately 70% of household furniture retail. Specialty stores encompass retailers such as Crate & Barrel (Euromarket Designs) and Restoration Hardware, which sell furniture

The industry is somewhat fragmented, given the wide range of products and end uses available. However, the level of concentration within the industry does vary somewhat by product segment. The vehicular market exhibits the highest levels of concentration, followed by nonresidential fixtures and then the highly fragmented residential fixture market. Large and small lighting fixture companies play different roles in the industry and typically employ slightly different competitive strategies. The US lighting fixture industry includes a limited number of large companies, which are usually focused on either a broad range of fixtures for construction markets or the vehicular fixture market. Smaller lighting fixture producers typically do not have the resources to compete with large firms over a broad range of lighting products, and thus remain viable by focusing on targeted

Business plan – XXXXX

product types or end users. The lighting fixture industry also encompasses manufacturers of components such as ballasts, production of which in the US is relatively concentrated. Other types of companies that affect the industry include building contractors, building owners, lighting management companies, energy service companies, utilities and market intermediaries. In 2009, the leading suppliers of lighting fixtures to the US – Acuity Brands, Royal Philips (Netherlands) and Cooper Industries – accounted for an 18.2-percent market share. Each of these firms is a broad-line producer of nonportable indoor and outdoor fixtures for the large construction market. In addition to these companies, the US lighting fixture industry encompasses a second tier of leaders – Hubbell, Siemens (Germany), Koito (Japan) and Visteon – that in the aggregate accounted for an additional nine percent of sales in 2009. This group includes large vehicular lighting firms such as Visteon and Koito, as well as more broad-line producers Hubbell and Siemens.

Market research

Retail

Retail sales of household furniture totaled approximately $42.3 billion in 2011 •alongside additional product lines (which, in these cases, are other home furnishings). The ASHLEY FURNITURE HOMESTORE chain of outlets (licensed through Ashley Furniture Industries) led the furniture store retail segment in 2011. Other important retailers include specialty stores Ikea and Williams-Sonoma, single-source outlets Ethan Allen Interiors and LA-Z-BOY FURNITURE GALLERIES from La-Z-Boy, and furniture store chain Rooms To Go.

•

•Also important in household furniture retail is the presence of mass merchandisers, such as Wal-Mart and Target. Mass merchandisers win market share away from other suppliers, offering cheaper alternatives to the premium goods sold at higher price points in furniture stores. Mass merchants benefit from their strong network of stores, well-established proprietary brands and strong buying power, which allows them to maintain low prices. The 2007-2009 recession pushed many consumers in search of lower prices toward mass merchants. Expanded product offerings at such outlets, as well as the rising popularity of casual, outdoor, and RTA furniture, facilitated further gains in mass merchant sales.

Retail Sales of Household Furniture, $bln 60 50 40 30

•An important consideration for furniture retailers is regional location, as trends in one part of the nation are not necessarily the same as those in other regions. As such, many nationwide chains are dealerowned, versus company-owned, giving dealers the ability to cater to regional tastes while still operating under nationally recognized names. Ethan Allen Interiors is an example of a manufacturer that markets its products solely through its ETHAN ALLEN locations. LaZ-Boy also pushes its furniture through branded stores, but its products can also be found in furniture store chains and department stores. Although several national chains feature prominently in the furniture store segment, sales of household furniture are also generated by small, regional operations

Business plan – XXXXX

with only a handful of stores. Nevertheless, the growing presence of vertically integrated furniture retailers, as well as other factors such as a rise in low-cost imports, credit constraints, and changes in consumer shopping behaviors, has led to a decrease in the number of independent furniture stores. The steep decline in housing starts followed by an economic recession worsened the situation for independent stores over the 2006-2011 period, although large chains were also negatively impacted. For instance, in 2011, high-end retailer Robb and Stucky filed for Chapter 11 bankruptcy, and in 2012, online retailer GreatPricedFurniture.com filed for chapter 7.

20 10 0

2006

2007

2008

2009

2010

2011

Source: Freedonia Inc.

Market research

Competitors

The market of luxury lighting fixtures is highly fragmented

Business plan – XXXXX

•

Bradburn Gallery Home is the creation of Fran & Bruce Bradburn who have combined efforts to develop a unique line of lighting and decorative décor focused on finely crafted elements designed by Fran and brought to life by artisans both in the USA and around the globe. Bradburn Gallery Home serves a diverse customer base located around the world and graces the décor of those seeking the element of fine design under the direction of talented interior designers.

•

“The Art of Illumination” establishes Bradburn Gallery Home as a purveyor of designer lighting conceptualized by the Bradburn design team & their Interior Design Licensees. Highly skilled artisans who are experts in their respective mediums are then selected to bring each component to life. All lighting elements are then carefully handcrafted, combined & assembled at the factory in Atlanta, Georgia to UL standards.

•

Founded by Mark Moussa in 1987, Arteriors is a leading provider of luxury residential and commercial lighting, wall décor, decorative accessories and furniture. Launched with a focus on traditional accessories in classic materials, the company collaborates with experienced artisans and manufacturers around the world working in leather, iron, brass, bronze, nickel, wood, glass, ceramic, porcelain and more. Arteriors offers a wide spectrum of styles in luxury materials and finishes scaled specifically for design lovers with up-to-date sensibilities.

•

In 2005, Arteriors expanded into chandeliers inspired by originals as diverse as European antiques and mid-century modern classics. Moussa and his Arteriors design team currently unveil approximately 400 new products annually, with major introductions at the spring and fall High Point home furnishings markets. Arteriors introduced its first-ever designer collaboration in spring 2010, the Laura Kirar Collection, followed by the Lisa Luby Ryan Collection in the fall of 2010. Arteriors debuted its third designer collaboration with designer Barry Dixon in October 2012.

•

Currey & Company is a wholesale manufacturer of distinctive home furnishings products. It is the best known for the lighting products (chandeliers, wall sconces, table and floor lamps) as well as interior furniture, garden furniture and accessories.

•

Headquarters for Currey & Company is in Atlanta, Georgia. This is the shipping point for customer orders also.

•

The multi-cultural company work force in Atlanta creates, assembles, finishes, packs and ships a product. A dedicated management team and an office force tend to details of accounting, order processing and customer service.

•

Currey & Company sales representatives cover the United States and Canada. The corporate office handles international sales. Showrooms open to the trade are located in High Point, NC; Atlanta, GA; and Dallas, TX.

Business Model

Section

Page

Disclaimer

Executive summary

Market research

Business model

Marketing plan

Financial projections

Profile of founder

Use of proceeds

Business plan â&#x20AC;&#x201C; XXXXX

ÂŠ20XX - Private and Confidential

Business Model

Company profile

XXXXX LLC will be engaged in manufacture, import, marketing and distribution of classic table lamps, mirrors and accent tables across North America

Company profile:

XXXXX

Business plan – XXXXX

•

XXXXX LLC will be engaged in manufacture, import, marketing and distribution of classic table lamps, mirrors and accent tables across North America.

•

The Company will actively outsource key business operations: •

Manufacturing – China producer

•

Sales& Distribution – well-known sales agency “ XXXXX”

•

An original collection of 33 unique designed table lamps was created by well-known light designer XXXXX located in New Orleans.

•

The table lamps being created for XXXXX will be made from various materials that include blown glass, laser cut metal, bent metal and clay. The original collection of 33 table lamps do not include anything in clay. The metal and clay lamp bodies will be hand finished with gold leaf, silver leaf and various paints and glazing materials. Shades will be for the most part a “hardback” style and made of white linen/silk fabrics.

•

Location of the business: XXXXXX

•

Date of foundation: June 2013, however, the operations will commence in January 2014.

•

Official website: XXXXX

•

Target “end customer”: professionals, business owners, business executives and management personnel, with income level of $75,000 and above.

•

Geographical focus: USA with further expansion to other countries

•

Founder of the business: XXXXX

Business Model

Products

As of now 33 products are designed and prototypes were made

Business plan â&#x20AC;&#x201C; XXXXX

ÂŠ20XX - Private and Confidential

Business Model

Business Processes

Key operational flows

Description 1. Well-known lighting designer XXXXX will be engaged in continuous design & development of lighting fixtures 2. Manufacturing will be outsourced to two production companies located in China and Taiwan 3. Products/accessories will be delivered from Asia to the USA by the world-known shipping companies (Fedex/ DHL/UPS). Logistics services in the USA will be outsourced to XXXX 4. Representative of XXX will coordinate production and quality control procedures regarding products manufactured in Asia 5. The sales of products in the USA will be performed by well-known sales agency XXXXX 6. The Company will cooperate with different service providers for supporting the operating activity, such as accounting services, warehouse services, marketing services, IT support, etc.

3 Quality control

Delivery services

Manufacturing

XXXXX

XXXXX Design

Business plan â&#x20AC;&#x201C; XXXXX

XXXXX Sales

Other partners

Customers

ÂŠ20XX - Private and Confidential

Business Model

Key partners

Key activities of the Company will be outsourced to reliable and well-known partners

Manufacturing – Two Asian companies

Design of Lamp - XXXXX Designs • General overview • XXXXX is nationally known for her custom chandeliers, pendants and wall sconces that she designs and then has fabricated locally by Louisiana artisans who work with metal or glass. Inspired by the historic city of New Orleans, her award – winning lighting fixtures draw from design principals from generations gone by, but are interpreted by her for modern times. • In terms of her manufacturing process, upon completion of the body of a new fixture by one of her metal fabricators or glass blowers, the piece is returned to the XXXXX Design Studio on Magazine Street in New Orleans, where it undergoes custom hand finishing using ancient techniques such as gilding, paint layering, powdered pigments, gesso, and wax. Over the years, Neill has developed an almost unlimited number of finishes that utilize gold or silver leaf. Once the finishing process is completed, the fixture is wired by hand to meet ETL certification standards. • These hard wired one-of-a-kind lighting fixtures are beautiful, timeless and expensive. Notwithstanding the high costs involved, there is a customer base in the United States who is capable of and in fact do pay many thousands of dollars for a custom made XXXXX designed ceiling fixture.

• • •

Sales & Marketing – XXXXX National Sales Group •

Design & Development of Prototypes • Original prototypes for XXXXX will be built in New Orleans by XXXXX Design Studio and, after being photographed, shipped to XXXXX’s factories for production.

•

Reward: • XXXXX will receive fixed fee for development of prototypes and 5% royalty for each sold item. • Business plan – XXXXX

The manufacturing of the table lamps will be outsourced to the following Asian producers, which are focused on the artistic lighting: • Expert Lighting Manufactory XXXX XXXX XXXX • Burlington Industries, Ltd. XXXX XXXX XXXX The product will arrive in the XXXX The founder’s company XXX has been working with Expert Manufactory since 2008 and XXXsince 2011. Payment terms: 30% deposit

XXXXX Sales Group will be engaged in sales of XXXXX products across the United States. Considered by many in the home furnishings industry as the premier sales group in North America, they represent high design companies like Cyan Designs, Amy Howard Home, Barbara Cosgrove Lamps, Moss Studio and Selamat. With showroom locations in Atlanta, Dallas, High Point and Las Vegas, XXXXX reaches interior designers, home accessory retailers, internet retailers and lighting showroom buyers who attend the eight tradeshow “markets” held each year in the home furnishings industry. In addition to the sales staff at the various market centers, they also have a national sales force of 25 representatives who call on furniture stores, retailers and designers in their territories in between markets. The company also works closely with key accounts such as Neiman Marcus, Horchow’s and Sak’s for both their retail and catalog divisions. Reward: XXXXX will receive 15% sales commission. ©20XX - Private and Confidential

Business Model

Further development

Further ways of development

Further ways of development:

• • •

Organic growth through expanding a range of products services Distribute the products using National sales force, quality showrooms in Dallas, Atlanta, Las Vegas and High Point Market and geographical development by expansion in other countries

Exit strategy in 10-15 years:

• • •

Sell the business to strategic investor – one of the leaders in the lighting fixtures industry Initial public offering, private placement to attract financial institutions Merger or acquisition with other players of the lighting fixtures industry

Business plan – XXXXX

Business Model

Operational cycle

Duration of the operational cycle - 17 weeks Timeframe

Ongoing process Designing

12 weeks XXXXX travels to China every 6 to 8 weeks and works on prototype production with the Expert and XXXXX factories and does quality control on all production before it ships to the USA.

Production in Asia

5 weeks

Once a container arrives in the XXXXX, it can take anywhere from two days to a week to clear customs and to be trucked from XXXXX to the XXXXX warehouse in XXXXX, GA. Once at distribution center, XXXXX can typically ship by Federal Express or Common Carrier within 24 – 48 hours of the customer service department placing an order with them.

Shipping to the USA

2 days Shipping to the clients/partners Business plan – XXXXX

Business Model

Mission, goals

To develop innovative products in lighting fixtures industry

Mission

•

To develop innovative products in lighting fixtures industry

•

XXXXX is a business producing luxury quality high design table lamps at affordable prices in the United States and abroad To become the leader in production of lighting fixtures products focusing on mid- and high-end To conclude long-term relationships with selected partners To add 15 – 20 new designs every 6 months of the market cycle To play a pro-active role in light fixtures industry attending trade shows and other professional events To build a loyal customer base To maintain the highest quality manufacturing standards in the industry To research constantly the lighting industry to determine trends that might have a positive influence on the design of new products To focus on providing environmentally friendly packaging that ensures safe delivery of product to the customers To provide stellar customer service To provide our sales representatives with innovative and stylish catalogs, product samples and sales literature To create and maintain a unique interactive XXXXX website that will be easy to navigate and to purchase from To sign license agreement with Elstead Lighting for sell products of the Company outside of USA To become a member of lighting fixtures associations To build relationships only with well-known service providers To expand the sales to Europe, Russia, Brazil during the next five years To avoid going below 5 of any given SKUs before replacements are received To achieve gross revenue - $1.2m in year 3 To maintain 30-40% of net margin To establish the brand recognition

• • • • • • •

Goals

Business plan – XXXXX

• • • • • • • • • • • •

Business Model

Strategies

Differentiate the Products among others

Management summary strategy/objectives

List of actions

•

Differentiate the products among others

•

To attract the loan for financing the business activity

•

Produce high quality products

•

To sign long-term contracts with partners

•

Build brand awareness

•

Use experience and contacts of management to build relationships with partners

To continue adding to the mix of the existing product line new prototypes of ceramic base table lamps, metal floor lamps, mirrors and accent tables in time for displaying at July 2014 Markets in Dallas, Atlanta and Las Vegas and October 2014 High Point Market.

•

Innovative marketing

•

Achieve synergy effect of sold products

To enter into an agreement with a sales agency that covers New York and New England within the next six months

•

Be cost effective and efficient

•

To maintain an active Public Relations program with industry trade publications

•

Diversification (product/geographical development)

•

Be socially responsible

To maximize the positive influences of social media, including, but not limited to Houzz, Twitter, Facebook and Pintrest

•

To hire and train at least one full time customer service agent to handle orders and any issues encountered by our customers with respect to the overall XXXXX buying experience

•

In order to ensure that January 2014 Market introduction is a grand success, XXXXX Design Studio representative will be sent to China to ensure every SKU meets the high quality standards

•

To maintain an ongoing Monthly “E-blast” program to the 5,000 interior designers, furniture stores and lighting showrooms in the data bank

•

To outsource production to Asia with appropriate quality check by reputable company in the USA

•

To attend Trade Shows (Dallas, Atlanta & High Point)

•

To provide customers with high level of privacy shopping environment

•

To sell the products mainly through XXXXX Group

•

To expand the network of sales agents, retailers and distributors of lighting products

•

To improve businesses processes continuously

•

To expand the business into Europe, Russia, Brazil

•

To initiate offline marketing campaign

•

To outsource non-core activities to avoid unnecessary cost

Description:

Business plan – XXXXX

Marketing plan

Section

Page

Disclaimer

Executive summary

Market research

Business model

Marketing plan

Financial projections

Profile of founder

Use of proceeds

Business plan â&#x20AC;&#x201C; XXXXX

ÂŠ20XX - Private and Confidential

Marketing Plan

Pricing strategy

The Business is implementing premium pricing strategy applying high price for valuable service

Pricing objectives

Pricing strategy

Price options

Business plan – XXXXX

• •

Maximize price Revenue maximization

•

Premium pricing strategy

•

Implementing premium pricing strategy applying high price for valuable service

• •

Wholesale price: $100-$175 per SKU Retail price: $216-$270 per SKU

Marketing plan

Five forces analysis

High barriers exist to enter into lighting fixtures industry in mid- and high-end segment

BARRIERS TO ENTRY •

Key staff with relevant experience is required

•

Reputation/brand is required

•

Innovative products are required

Threat of new entrants

POWER OF PRODUCERS

POWER OF BUYERS •

High brand loyalty

•

Low concentration of buyers

•

Low demand elasticity

•

Buyer has full information

COMPETITORS

Bargaining power of buyers

High differentiation

Bargaining power of producers

•

Low concentration of producers

High competition

Threat of substitutes

Business plan – XXXXX

•

Existence of substitute products

•

Low switching costs for customers

Marketing Plan

SWOT analysis

The lighting fixtures industry with focus on mid- and high-end is a market with high potential for growth

Strengths •

• • • • •

Established connections and huge experience of the Founder will give ability to build profitable business in lighting fixtures industry Prototypes of the innovative table lamps have already been developed by well-known light designer XXXXX Reputable partners (XXXXX and others) of the Company Production outsourcing to Asia will help the Company to compete on the market Attractive commission will be available for intermediaries, stimulating the sales Human resources and expertise could be directed to the Company from established lighting business XXXXX

Weaknesses

• • •

Opportunities

Lack of brand awareness Start up business Lack of investments into the business

Threats

• The lighting fixtures industry with focus on mid- and high-

• Availability of substitute products

end is a market with high potential for growth

• Price pressure will lead to further decrease in profit margins

• Further product/market development is available • No concentration of providers at the market

Business plan – XXXXX

Marketing Plan

Marketing mix

Sales strategy: The Company will distribute the products mainly through intermediaries stores and sales agents. Major sales agent is XXXXX Group. Sales outside of the USA will be conducted through the license contract with XXXXX Intermediaries: The Company plans to cooperate with well-known sales agency XXXXX.

“End users”: Distributors •

Boutique retailers

•

High-end furniture stores

•

Lighting showrooms

•

Internet retailers

Individuals with income more than $75,000

Sales agents

XXXXX

•

Architects and interior designers who specify the type and variety of furnishing required in commercial building and renovation projects

Retail stores

Commercial projects (hotels, casino, offices, etc.)

Online sales Sales outside of the USA will be performed using the license agreement with Elstead Lighting (this licensing fee amounts to 18% of the FOB manufactured cost of product)

Margin allocation between the Company and intemidiaries: 300% mark up to cost of production and landing Business plan – XXXXX

18% commission from retail price

200% mark up to cost of production and landing 32

Marketing Plan

Marketing strategy

The main marketing objective of the Business is to build brand awareness

Marketing objectives

Marketing strategy

• • •

Differentiation • Competitive advantage can be gained through the Business characteristics, which gives the product special features: • Quality • Customized services to client requirements • Fair price (absence of hidden fees) •

Marketing make up

Business plan – XXXXX

To build brand awareness Introduce and increase awareness of XXXXX designed table lamps within the industry Focus on the high-end home furnishing market segments in marketing, distribution and sales of the lamps

• • • •

Product: To build a mark of identification associated with the Business, that reflects a high quality standard, good reputation Price: Fair price Promotion: Due to specific character of the Business, it has to be promoted via pull and push technique. Such promotional types can be implemented by Social Media, Google Adwords, Sales promotion, Industry events and cooperation with distributors, retailers, sales agents Place: USA People: Experienced staff should be recruited

Marketing Plan

Marketing mix

Social media will be used primarily as an attraction tool to create a communication channel with potential clients Online advertising

Google AdWords

Social Networks

•

Purpose: The purpose of Google Adwords campaign is to leverage the allowance of advertising on Google and to acquire direct leads at a competitive CPA for the Company.

•

Strategy: A standard AdWords strategy of identifying potential keywords and then whittling said keywords down to a profitable and manageable list, utilizing tests in ad copy. Landing page design and acquisition offer will be employed.

•

Keys to Success: The keys for a successful Google AdWords launch will include the following:

•

Purpose: Social media will be used primarily as an attraction tool to create a communication channel with potential clients, to highlight the latest news of the Company

•

Strategy: Houzz, Twitter, Facebook and Pintrest fan pages and blogs will be created with maximum daily updates. This will have an added advantage of contributing to the overall SEO effort as well.

•

Keys to Success: The keys for a successful social media launch will include the following:  Successful and aggressive initial friending/following campaign

 Successful acceptance by Google

 Ability to create compelling content on the blog

 Ability to quickly test and respond to ad copy, landing page copy and acquisition offers

 Ability to find time to interact with users via Twitter and Facebook

 Ability to track and determine ROI and CPA of AdWords lead SEO •

Purpose: The purpose of an organic SEO (search engine optimization) effort is to secure top search engine placement in Google, Bing and, to a degree, Yahoo in order to drive site traffic for conversions as well as create greater brand awareness than any pending competitors. The professionally designed website will communicate Company’s brand and quality. SEO maximizes the visibility of the website via search engines to ensure that target consumers can quickly find the Company while surfing the Internet.

•

Strategy: A standard SEO strategy involving onsite optimization, link building and content generation will be employed. Selection of an outsourced SEO firm will be completed to manage this process.

•

Offline marketing Traditional marketing tools (marketing in printing media) • Purpose: Advertising in online and offline lighting fixtures magazines will enable the Company to reach a large audience of readers with a common interest, such as lighting fixtures industry. The Company will place ads in traditional trade magazines (Home Accents Today, Residential Lighting and Enlightenment magazines) that reaches interior designers and retailers who attend the industry trade shows throughout the U.S.

Keys to Success: The keys for a successful SEO launch will include the following:

Strategy: Build marketing campaign based on communication with potential clients.

•

Keys to Success: The keys for a successful traditional marketing campaign will include the following:  Qualified/well trained marketing personnel

 Proactive and creative marketing personnel

 Selection of a budget-appropriate but also upfront and effective SEO firm Business plan – XXXXX

•

 Availability of resources to implement traditional marketing tools 34

Marketing Plan

Initial Marketing initiatives

Initial marketing initiatives

•

Monthly XXXXX to 5,000 interior designers, retailers and lighting showrooms. These XXXXX will contain product photographs and will invite potential customers to see XXXXX at the various markets. As a new company, the discounts will be offered to first time buyers who purchase through the website, which they will be able to go directly to by way of link between the email and XXXXX.

Pre-Market Post Card Mailings

•

Prior to the January Markets in Dallas, Atlanta and Las Vegas and the April Market in High Point, a color post card invitation will be sent to the mailing list of interior designers and retailers inviting each recipient to visit us at whichever market they attend, or, to respond directly via phone, email or website for a new catalog and purchasing information.

Creation of a XXXXX Color Catalog

•

Photography of product has already been completed for use in the new XXXXX catalog. Room scenes with product for use in the catalog were scheduled to be taken in New Orleans on October 2, 2013. It is anticipated that the lay out and printing of this catalog will cost $5,000. These catalogs will be given to customers at the various trade markets and used by the XXXXX sales representatives when calling on interior design and retail customers within their territories.

•

Creation of a business website that allows everyone to see a product but only registered interior designers and retailers can log on, see pricing and order the product. One of the features on the website will be providing customers with the names of retailers that sell XXXXX products across the country.

Monthly XXXXX

Creation of the website

Business plan – XXXXX

Financial projections

Section

Page

Disclaimer

Executive summary

Market research

Business model

Marketing plan

Financial projections

Profile of founder

Use of proceeds

Business plan â&#x20AC;&#x201C; XXXXX

ÂŠ20XX - Private and Confidential

Financial Projections

Assumptions

Assumptions used in the model

Assumptions used in the model Revenue: Year 1 Year 2 Year 3 Share of sales outside of the USA starting from year 2, % Annual revenue growth after year 3, % Operating expenses: Average cost which of production per SKU (FOB China), $ Landed cost will include freight, custom duties, transportation from port to warehouse, etc, % to cost of production Markup of the Company, % to cost of production and landing Royalty on gross sales to Codarus sales agency and other intermediaries, % Payment to Catapult Consulting for quality control per month, $ Costs associated with the development web-portal, $

500,000 800,000 1,200,000 20% 13% 35 20% 300% 15% 1,000 5,000

Royalty for design services provided by Julie Neill

License fees to Elstead, % to cost of production

18%

Annual increase in operating expenses, %

Year 1 Position President Bookeeper Accountant Lawyer Customer service manager Designer for the Winter and Summer Markets IT manager Total

# of staff

Year 2

Annual salary 1 1 1 1 1 1 1 7

35,000 4,800 1,500 600 17,472 3,000 3,000 65,372

# of staff

Annual salary 1 1 1 1 1 1 1

35,000 4,800 1,500 600 24,960 3,000 3,000 72,860

Year 3 Annual # of staff salary 1 35,000 1 4,800 1 1,500 1 600 1 24,960 1 3,000 1 7

3,000 72,860

Source management information

Rent costs: Annual rent costs for administrative offices in Baton Rouge, $

7,800

Annual Rent costs of four showrooms, $

2,000

Annual rent costs of warehouses

4,800

Other expenses, $

Annual staff costs, $

8,000

Source management information

Business plan â&#x20AC;&#x201C; XXXXX

ÂŠ20XX - Private and Confidential

Financial Projections

Marketing budget

40% of marketing budget relates to designing/printing of the brochures

Annual marketing costs Design/printing of the brochures, $ Marketing costs in online media, $ Advertising in printing media, $ Other marketing costs, $

14,000 8,500 10,000 2,000

Total

34,500

Source management information

Structure of marketing budget, for online media %

Structure of the marketing budget 6%

15%

10%

40%

29%

25%

50%

25% Design/pringting of the brochures Marketing costs in social media Advertising in printing media

Google Adwords

Other marketing costs

Source: Management inf ormation

Business plan â&#x20AC;&#x201C; XXXXX

Facebook

SEO and other

Offline marketing

Source: Management information

ÂŠ20XX - Private and Confidential

Financial Projections

Sales

The Company will be mainly focused on the US market

Structure of sales by region, $ 1,200,000 1,000,000

Revenue structure by type of products, %

800,000

100% 90%

600,000

80% 400,000

70% 60%

200,000

50% -

40%

Year 1

30%

Year 3

USA

Outside of the USA

Year 4

Year 5

Year 4

Year 5

Source: Management information

20%

Number of items sold

10% 0%

Year 2

Year 1

Year 2 Table and floor lamps

Year 3

Year 4

12,000

Year 5

Tables and mirrors

10,000

Source: Management information

8,000 6,000 4,000 2,000 -

Year 1

Year 2

Year 3

Source: Management information

Business plan – XXXXX

Financial Projections Profit and Loss account

Projected profit and loss account by quarter in year 1

Projected Profit and Loss account in year 1 $ Quarter 1 Revenue 25,000 Operating expenses Cost of production Landed costs Royalty for design Cost for quality control Marketing cost Staff costs Rent costs Commission to sales agents IT support Other expenses Total expenses EBITDA Income tax (30%) Net profit/(loss) Net profit margin, %

(6,250) (1,250) (1,250) (3,000) (15,000) (16,343) (3,650) (3,750) (4,000) (2,000) (56,493) (31,493) (31,493) -126%

Quarter 2 100,000

Quarter 3 150,000

Quarter 4 225,000

(25,000) (5,000) (5,000) (3,000) (7,000) (16,343) (3,650) (15,000) (250)

(37,500) (7,500) (7,500) (3,000) (7,000) (16,343) (3,650) (22,500) (250)

(56,250) (11,250) (11,250) (3,000) (7,000) (16,343) (3,650) (33,750) (250)

(2,000) (82,243) 17,757 (5,327) 12,430 12%

(2,000) (107,243) 42,757 (12,827) 29,930 20%

(2,000) (144,743) 80,257 (24,077) 56,180 25%

*including custom duties. Source management information

Business plan â&#x20AC;&#x201C; XXXXX

ÂŠ20XX - Private and Confidential

Financial Projections Profit and Loss account

Projected profit and loss account – the Company will become operationally profitable starting from year 1

Projected Profit and Loss account $ Revenue Operating expenses Cost of production Landed costs Royalty for design Cost for quality control Marketing cost Staff costs Rent costs Commission to sales agents Commission related to sales outside of the USA IT support Other expenses Total expenses EBITDA Income tax (30%) Net profit/(loss) Net profit margin, %

Year 1

Year 2

Year 3 1,200,000

Year 4 1,356,000

Year 5

500,000

800,000

1,532,280

(125,000) (25,000) (25,000) (12,000) (34,500) (65,372) (14,600) (75,000) -

(200,000) (40,000) (40,000) (12,600) (36,225) (72,860) (15,330) (96,000) (7,200)

(300,000) (60,000) (60,000) (13,230) (38,036) (72,860) (16,097) (144,000) (10,800)

(339,000) (67,800) (67,800) (13,892) (39,938) (72,860) (16,901) (162,720) (12,204)

(383,070) (76,614) (76,614) (14,586) (41,935) (72,860) (17,746) (183,874) (13,791)

(5,000) (8,000) (389,472) 110,528 (33,158) 77,370 15%

(5,000) (8,400) (533,615) 266,385 (79,916) 186,470 23%

(5,000) (8,820) (728,843) 471,157 (141,347) 329,810 27%

(5,000) (9,261) (807,376) 548,624 (164,587) 384,037 28%

(5,000) (9,724) (895,814) 636,466 (190,940) 445,526 29%

*including custom duties. Source management information

Business plan – XXXXX

Financial Projections

Cash Flow

Payback period of the Business is less than 1 year

Projected 5 years Cash Flows $

Year 2

Year 1

Year 4

Year 3

Year 5

Receipts & Disbursem ents Beginning cash

150,000

225,870

410,839

739,149

1,121,686

Receipts

500,000

800,000

1,200,000

1,356,000

1,532,280

(125,000)

(200,000)

(300,000)

(339,000)

(383,070)

(25,000)

(40,000)

(60,000)

(67,800)

(76,614)

(25,000)

(40,000)

(60,000)

(67,800)

(76,614)

(12,000)

(12,600)

(13,230)

(13,892)

(14,586)

Disbursem ents

Cost of production Landed costs Royalty for design Cost for quality control Marketing costs Staff costs Rent costs Commission to sales agents Commission related to sales outside of the USA IT support Other expenses Interest expenses Income tax (30%) Total Disbursem ents Changes in Cash Ending cash

Key performance indicators CF(1-5 years), $

(34,500)

(36,225)

(38,036)

(39,938)

(41,935)

NPV(1-5 years)*, $

(65,372)

(72,860)

IRR, %

(14,600)

(15,330)

(16,097)

(16,901)

(17,746)

Payback period

(75,000)

(96,000)

(144,000)

(162,720)

(183,874)

(7,200)

(10,800)

(12,204)

(13,791)

(5,000)

(8,000)

(8,400)

(8,820)

(9,261)

(9,724)

(1,500)

(33,158)

(79,916)

(141,347)

(164,587)

(190,940)

(424,130)

(615,031)

(871,690)

(973,463)

(1,088,254)

75,870

184,970

328,310

382,537

444,026

225,870

410,839

739,149

1,121,686

1,565,713

1,415,713 855,487 83% less than 1 year

*Discounted rate 10%

So urce: M anagement info rmatio n

*including custom duties. Source management information

Business plan â&#x20AC;&#x201C; XXXXX

ÂŠ20XX - Private and Confidential

Profile of management team

Section

Page

Disclaimer

Executive summary

Market research

Business model

Marketing plan

Financial projections

Profile of founder

Use of proceeds

Business plan â&#x20AC;&#x201C; XXXXX

ÂŠ20XX - Private and Confidential

Profile of management team

Profile of the Founder/President – a professional with broad experience in lighting fixtures industry XXXXX XXXXX XXXXX XXXXX A creative, hard-working designer who always experiments with the material, yarn and fabrics.

Education: •

•

XXXXX brings years of both legal and business experience to the company. After his first year in college he spent over two years in retail store management. After serving in the U.S. Army, including a tour in Vietnam, he finished his undergraduate studies and then worked for several years as a sales representative for a Fortune 100 company. In 1978, he entered Loyola University School of Law in New Orleans. During law school he served as a President of Student Bar Association and was a member of Loyola Law Review.

Bramble Company In 1993 XXXX co-founded a furniture importing company with his brother that brought in containers Dutch Colonial distressed furniture from Java (Indonesia) into the Mid-west. He subsequently opened a Louisiana branch with his two sons. XXXXX later sold his share in the business to his brother who partnered with the Indonesian supplier to form

Business plan – XXXXX

The Bramble Company, which has become a $10,000,000 a year company.

Dauphine Mirror Company • While traveling through Indonesia in summer of 1994, XXXXX met Christopher Harrison, an Englishman living in Central Java. Mr. Harrison and his partner had moved to this area, which was renowned for the number and quality of wood carvers within its borders and had taught the villagers to carve mirror frames like those crafted in Europe hundreds of years earlier. After researching the mirror industry in the United States, XXXXX became thoroughly convinced that what he had seen in Java presented a unique business opportunity. •

After graduating in 1981 in the top 10% of his class, he became an associate attorney in the maritime litigation section of Louisiana’s largest law firm, Jones Walker. He eventually formed his own law firm in New Orleans wherein he successfully specialized in various areas of personal injury litigation.

Experience: •

•

In 1995 he founded Dauphine Mirror Company. Over the next five years, Dauphine Mirror Company quickly became on the largest wholesalers of hand carved mirrors in the U.S. market and grew the business to $6,000,000 a year in sales. These luxury market mirrors were sold through high-end furniture stores, interior designers and hospitality buyers. Dauphine Mirror Company was eventually absorbed by Harrison & Gil, which in turn now trades under the name “Christopher Guy”, one of the premier luxury furnishing manufacturers in the world today.

XXXXX Lighting • In 2000, XXXXX was shown a lamp made by New Orleans artist XXXXX. XXXXX loved the piece and managed to wrangle a personal introduction to the artist. Impressed with the look of Gruer’s creations, XXXXX entered into a design agreement with the artist to license his creations. XXXXX then founded XXXXX Lighting. This unique lighting company is now in its 13th year in business. XXXXX is the President of XXXXX and is involved in all aspects of the business including product development, manufacturing, sales management, marketing, distribution, administration, accounting. 44

Organizational structure

Organizational structure of the Company with short profiles During the first six months of operation, between January 1, 2014 – July 1, 2014, XXXXX and XXXXX’s existing customer service staff can handle the set up and processing of all orders without need to hire additional employees. However, representatives will be required to represent XXXXX in the XXXXX Showrooms during January 2014 Markets in Atlanta, Dallas and Las Vegas and at April 2014 National Home Furnishings Market in High Point, NC.

XXXXX Customer Service Manager XXXXX has been a manager of XXXXX’s customer service department for over 6 years and brings a wealth of knowledge and experience to the job.

XXXXX Founder – President Duties will include all of the same types of functions noted in work experience with XXXXX

XXXXX Catapult Consulting Mr. Bready has over twenty years experience working with foreign manufacturers to produce high-end functional art which includes the categories of accessories, wall décor and the lighting. He travels to China on almost a monthly basis and will be responsible for costing and ensuring quality production and packaging. He has worked with XXXXX Lighting for the past 11 years.

XXXXX Accountant

XXXXX Bookkeeper

XXXXX Attorney

Business plan – XXXXX

Staff provided by partners of the Company

XXXXX Principal-XXXXX Sales Agency XXXXX will act as XXXXX’s national sales force and will display XXXXX product at their Trade Showrooms in Atlanta, Dallas, Las Vegas & High Point. XXXXX will be responsible for management over the showroom and sales representatives.

XXXXX Product Designer In charge of designing and having prototypes fabricated for use by factories in China.

XXXXX Gammett Services A Georgia attorney, XXXXX is also the owner of the 3rd Party Logistics Company that will receive, store and ship XXXXX products throughout the U.S. XXXXX has been XXXXX’s 3rd Party Logistics Company since 2009.

XXXXX Marketing The former owner of XXXXX with many years experience in the table lamp industry, XXXXX will do graphic design, advertising layout, catalog development and XXXXX for XXXXX. XXXXX has done marketing for XXXXX over the past 3 years.

Use of proceeds

Section

Page

Disclaimer

Executive summary

Market research

Business model

Marketing plan

Financial projections

Profile of founder

Use of proceeds

Business plan â&#x20AC;&#x201C; XXXXX

ÂŠ20XX - Private and Confidential

Use of proceeds

The Company is looking for loan from XXXXX in amount of $150,000 for financing working capital of the start up business involved in lighting fixtures

Expected terms of the loan:

Use of proceeds, $ Item

Building of 33 table lamp prototypes Website development and graphics design of hang tags, Gilded Nola 2014 Catalog Trade Publication Advertising to coincide with the January Markets Printing Gilded Nola 2014 Catalog Investments in Working Capital (prepayment to suppliers in Asia) Investments in Working Capital (final payment to suppliers in Asia) Staff costs for showroom personnel and travel expenses for Dallas, Las Vegas and Atlanta Markets Investments in Working Capital (prepayment to suppliers in Asia)

Total

Amount

Time schedule

15,000

Nov-13

10,000

Nov-13

5,000 5,000

Jan-14 Jan-14

25,000

Nov-13

60,000

Jan-14

10,000

Jan-14

20,000

Feb-14

•

Amount: $150,000k

•

Interest rate: 1%

•

Period: 10 years

150,000

Source management information

Business plan – XXXXX