Executive Summary
Home energy-efficiency is an increasing concern for many homeowners. As homes age, the standard to which they were built gets increasingly out-of-date. Although current building codes require that houses are built to reasonably energy-efficient standards, older codes did not. Owners of homes built in the 1970s and 80s (and earlier) can see drastically reduced utilities costs by replacing and upgrading the low-efficiency portions of their home. Furthermore, many consumers are concerned with the environmental impact of the products they use, including home renovation products.
Business Overview
EcoShop Renovations is able to address both these concerns. As a provider of high-efficiency, sustainable building products and renovation materials, EcoShop Renovations intends to assist customers in achieving their renovation goals while lowering their energy consumption and environmental impact. To meet this goal, EcoShop Renovations will be a “one-stop shop” for environmentally-conscious homeowners. Not only will they be able to purchase the products and materials to upgrade their homes, but they will also be able to benefit from our professional installation service and our renovation consultants. The advice our renovation consultants provide will help consumers make great renovation choices while saving time and money.
Operations
In order to better meet the needs of Saskatoon homeowners, we are planning to design and build our own store in the north end of Saskatoon, off of Wanuskewin Road. This location is great for several reasons. Many of the neighbourhoods in that area of Saskatoon are reaching the thirty-year-old mark, meaning the houses are ready for energy-efficiency upgrades. As well, our location is easily-accessed from Highway 11, which opens us to the communities north of Saskatoon like Warman and Martensville. Finally, having our location purpose-built will ensure that it is tailored to our business and to our desired customer flow, which will contribute to improving the experience of customers within the store.
We have contacted all of our suppliers, and they are interested in working with us to provide their products to Saskatoon and area. Currently we only feature one or two suppliers in most departments; as the business grows, we will research more suppliers to fill out departments. Many of our products will be ordered at the customer’s request, which helps offset the need for a significant inventory. Furthermore, we plan to form lasting relationships with our suppliers (many of whom are smaller companies themselves); this will help mitigate the risk of being undercut by our larger competitors.
Human Resources
EcoShop Renovations will employ highly-motivated, environmentally-conscious sales and support staff. By emphasizing quality service, offering staff incentives, and through our employee ownership program, we intend to have the industry standard in customer service and satisfaction. As the business develops, we plan on implementing a “management-in-training” program to interested employees; this will help maintain continuity in our management and to reinforce our core competencies throughout our business.
Marketing
Our opening product line features many energy-efficient and environmentally-friendly options, which will be emphasized in our advertising efforts. Two products we are especially proud to offer are Therma-Tru Doors and YOLO Colorhouse Paints. Therma-Tru offers fibreglass doors in a variety of colours and styles, and their doors are currently only sold in Lowe’s stores in Ontario and in the United States. YOLO Colorhouse sells interior and exterior paint in various colours and finishes; no one else in Canada is currently selling their paint.
Our marketing plan focuses on informing our target market about our store and what we offer, including our exceptional customer service. Advertising will also inform potential customers about how upgrading their home’s energy efficiency can save them money and increase the value of their home.
Financials
The capital investment EcoShop Renovations requires to start is $3,739,966, which we expect to be 50% equity. At a required rate of return of 15%, this results inan internal rate of return of 27%, and an external rate of return of 21%.
Conclusion
Ultimately, EcoShop Renovations wants to meet the needs of homeowners who want to go green, but don’t know where to start. By providing a variety of ecologically-friendly products, outstanding customer service, a renovation consultation service, and professional installation service, we intend to be our customers’ first choice in home renovation. Although the business is high-risk and requires significant capital investment, there is potential for significant future growth and respectable return on investment.
Table of Contents
Executive Summary
Table of Figures
1 Business Overview
1.1 Introduction
1.2 Mission Statement
1.3 EcoShop Renovations Overview
1.4 Goals of EcoShop Renovations
1.5 Going Green and the Home Renovation Industry
2 Operations Plan
2.1 Location
2.2 Site Plan
2.3 Building Floor Plan
2.4 Quality Control Program
2.5 Organizational Tasks
2.5.1 Daily Tasks
2.5.2 Weekly Tasks
2.5.3 Monthly Tasks
2.5.4 Yearly Tasks
2.6 Supply Analysis
2.6.1 Appliances
2.6.2 Flooring
2.6.3 Windows and Doors
2.6.4 Plumbing
2.6.5 Lighting and Electrical
2.6.6 Paint
2.6.7 Seasonal Items
2.7 Service Providers
2.8 Capital Budget
2.9 Cost of Sales
2.10 Operating Expense
2.11 Working Capital
2.11.1 Cash
2.11.2 Inventory
2.11.3 Accounts Receivable
2.11.4 Accounts Payable
3 Human Resources Plan
3.1 Organizational Structure
3.2 Job Descriptions and Qualifications
3.2.1 General Manager – Management Staff
3.2.2 Operations Manager – Management Staff
3.2.3 Sales Manager – Management Staff
3.2.4 Yard Supervisor – Management Staff
3.2.5 Installer/Handyman – Service Assistant Staff
3.2.6 Lumber Yard Attendant – Service Assistant Staff
3.2.7 Renovation Consultant – Customer Service Staff
3.2.8 Cashier – Customer Service Staff
3.2.9 Paint Desk Attendant – Customer Service Staff
3.2.10 Returns Desk Attendant – Customer Service Staff
3.3 Human Resource Costs
3.4 Human Resources Strategy
3.5 Shareholders’ Agreement
4 Marketing Plan
4.1 Target Market
4.1.1 First-time Homeowner
4.1.2 Long-term Homeowner
4.1.3 Soon-to-retire Homeowner
4.1.4 Market Categories Summary
4.2 Purchasing Patterns of Customers
4.3 Marketing Mix
4.3.1 Products
4.3.2 Pricing
4.3.3 Promotion
4.3.4 Place
4.4 Competitive Analysis
4.5 Marketing Expenses
5 Financial Plan
5.1 Capital Requirements
5.2 Summary of Projected Income Statement
5.3 Summary of Projected Balance Sheet
5.4 Risk Analysis
5.4.1 Critical Variables
5.4.2 Contingency Plan
5.5 Dividend Policy
5.6 Economic Forecast
5.7 Ratio Analysis
5.8 Break-Even Analysis
5.9 Net Present Value
5.10 Internal Rate of Return
5.11 External Rate of Return
6 Summary
Appendix A: Products
Appendix B: Human Resources Requirements
Appendix C: Financial Projections
Bibliography
Table of Figures
Figure 1: Site Location
Figure 2: Site Plan
Figure 3: Customer and Delivery Flow
Figure 4: Building Floor Plan
Table 1: Operating Expenses
Figure 5: Organizational Structure
Table 2: Wage Costs
Figure 5: Whirlpool Refrigerators
Figure 6: Whirlpool Washers
Figure 7: Whirlpool Dryers
Figure 8: Whirlpool Dishwashers
Figure 9: Teragren Flooring Styles
Table 3: Competitor Analysis
Table 4: Marketing Expenses
Table 5: Capital Investment
Table 6: Projected Income Statement Summary
Table 7: Projected Balance Sheet Summary
Table 8: Ratio Analysis
Table 9: Break-even Analysis
Table 10: Whirlpool
Table 11: Teragren Bamboo Flooring
Table 12: Therma-Tru Fibreglass Exterior Doors
Table 13: Therma-Tru Hinged French Style Patio Doors
Table 14: YOLO Colorhouse Paint
Table 15: American Standard Plumbing Fixtures
Table 16: Good Earth Lighting Fixtures
Table 17: Weekly Cashier Schedule
Table 18: Weekly Renovation Consultant Schedule
Table 19: Weekly Return Desk Attendant Schedule
Table 20: Weekly Paint Desk Attendant Schedule
Table 21: Weekly Lot Attendant Schedule
Table 22: Weekly Handyman/Installer Schedule
Table 23: Weekly Sales Manager Schedule
Table 24: Weekly Yard Supervisor Schedule
Table 25: Weekly Operations Manager Schedule
Table 26: Weekly General Manager Schedule
Table 27: Projected Income Statement
Table 28: Projected Balance Sheet
Table 29: Projected Retained Earnings Account
Table 30: Projected Statement of Cash Flows
Schedule 1: Economic Variables
Schedule 2: Revenues
Schedule 3: Cost of Goods Sold
Schedule 4: Operating Expenses
Schedule 5: Capital Budget
Schedule 6: Financing Budget
Schedule 7: Debt Amortization
1 Business Overview
1.1 Introduction
EcoShop Renovations is your one stop shop for all your green home renovation needs. First and foremost we are a retail store. However, we want to be known not just for our products, but for our amazing customer service. We will be offering a number of green products to our customers but we also want to give them the best experience and the best advice. We will be offering some products that will be exclusive to EcoShop Renovationsand currently are not sold anywhere else in Canada. We understand that going green and being energy efficient is important to our customers; therefore, we at EcoShop Renovations are here to provide you the products, but also the knowledge and service to help you achieve whatever your home renovation projects may be.
1.2 Mission Statement
We are committed to outstanding customer service, knowledge, and assistance, by providing ecologically-friendly building materials and products to our customers, for all renovation project sizes.
1.3 EcoShop Renovations Overview
EcoShop Renovations has three operational goals:
- To provide Saskatoon community with a variety of ecologically-friendly products all in one store
- To provide high quality customer service when assisting customers
- To act as a point-of-contact between customers and other green renovation product providers
1.4 Goals of EcoShop Renovations
Year 1
- Establish store and customer base within Saskatoon
- Have $4,620,000 in sales in the first year
- Low employee turnover
- High customer satisfaction
- Build a strong brand and loyal customer base
Year 5
- Begin the process of franchising EcoShop Renovations
- Based on sales, open a second store in Regina
- Established brand
- Begin planning for expansion into other provinces through Franchisee
- Begin planning for offering an EcoShop Renovationsin-store credit card program
- When feasible, start offering the credit program by year 7
- Research the feasibility of an employee-ownership program
1.5 Going Green and the Home Renovation Industry
With the rise of the environmental movement, and growing concern over potential climate changes, many consumers are seeking products that are environmentally-friendly. Not only can products be built using less wasteful or less harmful techniques, but they can be shipped more efficiently, can have reduced emissions or by-products, or can operate more efficiently, leading to a reduction in resource consumption.
Consumers may be motivated by a desire to help save the planet, or can be motivated by simple economics. More efficient products will save utility costs, eventually paying for the original purchase in savings. As well, there are many government incentives to purchase efficient products, or upgrade existing appliances with high-efficiency models. In short, purchasing energy-efficient, environmentally-friendly products not only helps protect the environment, it helps consumers save money.
According to the Canadian Mortgage and Housing Corporation, 50% of over 4.3 million households in 10 metropolitan areas throughout Canada undertook renovations in 2009. Of those, 73% of households made improvements or alterations, with an overall average cost of $12,099 (Canadian Mortgage and Housing Corporation, 2010). These statistics hint at a larger picture: that many Canadian households are making renovations, and that the bulk of those renovations are in improving aging homes. As ecologically-friendly options become more commonplace, more Canadian homeowners will begin incorporating them in their home-renovation plans.
2 Operations Plan
2.1 Location
EcoShop Renovations will be located in the north end of Saskatoon near the Silver Wood Golf Course. The proposed site is at the corner of Wheeler Place and Wheeler Street. Located just off of Wanuskewin Road, EcoShop Renovations will be built in a newly expanding part of the city. This area is just beginning to be developed, and therefore will make a great site since it is close to the highway for inventory deliveries, as well with many other businesses being developed on the same site will draw a lot of traffic. Figure 1shows the proposed location of EcoShop Renovations.
Figure 1: Site Location
The amount of land to be purchased is 275’ x 250’, for a total of 1.58 acres, or 6,387 m2. The total capital cost of the land is $52,083, or $8.15 per square metre.
2.2 Site Plan
Once the land has been purchased, we will put the site development up for tender. Figure 2 below shows the proposed site plan which includes a lumber yard, parking lot and the building.
As shown in Figure 2, the parking lot is 75’ x 275’ while the lumber yard is175’ x 100’. This leaves a space of 175’ x 175’ for the store itself, which would be internally divided into the retail space, and the inventory storage and office space.
The store should face east, to allow optimal customer and delivery access. Figure 3 shows the site plan with customer and delivery flow.
Figure 2: Site Plan
Figure 3: Customer and Delivery Flow
2.3 Building Floor Plan
EcoShop Renovations will have the following sections within the store: Appliances, Flooring, Paint, Windows and Doors, Plumbing, Lighting and Electrical, and Seasonal Items. Figure 4 shows the location of all departments as well as placement of store tills, returns desk, staff room, and offices.
Figure 4: Building Floor Plan
2.4 Quality Control Program
EcoShop Renovations will not need ISO or HACPP, since many, if not all of our products will have to meet supplier or manufacturer requirements before they are sent to us. However, EcoShop Renovationstakes pride in its products and service. Therefore, inventory will be inspected upon delivery to the store.
2.5 Organizational Tasks
2.5.1 Daily Tasks
The operating hours for EcoShop Renovations are Monday to Saturday, 10 am – 9pm. These hours may be adjusted for peak production times of the year.
The management staff will be the first to arrive and open the store. They are responsible for organizing their respective departments to ready the store for the day. Tasks may include cleaning areas within the store or stocking departments. Managers are responsible for ensuring proper cash floats before a till is signed out for the day.
Before the store opens there will be a quick 20 to 30 minute meeting that the managers are responsible for leading. Each morning meeting will outline the tasks and duties for the day, any new promotions, or new products. It may also include contest or incentive announcements for all staff members. The main focus of the meeting is to let employees know of the sales goals for the day as well as give recognition to staff who are performing well or above average.
Once the meeting is adjourned, all staff will continue on with the regular duties and responsibilities based on their job descriptions. From the time the store opens to closing all employees will be focused on helping customers and meeting customer needs.
After the store closes, all employees will carry out their closing responsibilities, which include such tasks as closing tills, counting out floats, and returning any misplaced items back to their proper positions. These responsibilities will be outlined in the employee manual.
Management staff will complete a returns audit, which includes all items that customers have returned that day. The manager must ensure all items have been returned properly and that they go to their designated location. Depending on the item, this may be back on the floor for sale, or into inventory storage. Items moved to inventory are to be returned to the manufacturer due to defects or for repairs.
Management will also recount employee tills to ensure they calculate the same amount as the employee who submitted it. They are also responsible to lock up the store once all employees have left for the evening.
2.5.2 Weekly Tasks
Weekly responsibilities are only applicable for the General Manager and the Operations Manager. Both the General Manager and the Operations Manager will look at sales figures, inventory levels, and inventory shipments for the week. These figures will be used to produce the weekly sales report, which ensures that the store is operating efficiently and meeting its sales goals. The weekly sales report will be used to track sales progress throughout the year, as well as maintaining optimal inventory levels and identifying departments with above or below average performance.
2.5.3 Monthly Tasks
Every employee will receive a monthly evaluation from his or her direct supervisor, which will help ensure that every employee within the store is providing the best customer service possible.
Starting on the first of the month, management staff will receive their evaluations. Each manager will meet with both the General Manager and the Operations Manager to be evaluated on their performance for the past month. This evaluation will include accomplishments and new qualifications attained, as well as areas for development. The evaluation will conclude with the setting of goals for the coming month.
Customer Service and Service Assistant staff will receive their evaluations starting in the middle of the month. Customer Service staff will meet with the Sales Manager, while Service Assistants will meet with the Yard Supervisor. As with management evaluations, these will include accomplishments and areas for development. Each individual will also set goals for the coming month.
Regular performance evaluations are important in any business. Outstanding employees will be recognized for their efforts, and goal-setting and review will assist employees in meeting their potential within EcoShop Renovations.
2.5.4 Yearly Tasks
At the end of the fiscal year, all management staff will meet to discuss and evaluate the past year. This will be a chance to reflect on the things that have gone well and things that require improvement. It will be a chance to set new goals for the next year as well to make adjustments as required. For example, this may mean changing advertising and promotion strategies. They will be able to suggest new ideas, incentives, or products within the store. This meeting is a chance to brainstorm ideas based on the past year of activities.