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Security Guard Business Plan Sample

Protect your community by starting a security business using a security guard business plan similar to this one.

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Protect your community by starting a security business using a security guard business plan similar to this one to compile your own.

1Executive Summary

Batten-Hatchez Security is a start-up security company founded by Chindit Batten, an experienced former police sergeant and security company manager. Located in Coastalburg at its launch, the business will provide security guards, security audits, and referrals to equipment providers to commercial buildings, retail businesses, and, eventually special event venues and other clients. The business seeks to acquire capital from an angel investor and will expand to additional cities in our state and beyond if successful.

In the current political climate, with increasing fears of terrorist activity, and the current economic climate, which promises an upswing in general and in outsourced services especially, this business is launching at the right time. The business will target large retail stores and building management companies first in order to establish a strong base of clients in Coastalburg.

Batten-Hatchez will grow its employee base of security guards carefully, based on client contracts, and use both full-time and part-time guards. The business expects respectable sales of in the first year, almost doubling by the end of the third year. Gross margins will be similar to the industry average, based on guard labor costs vs. billings.

After the initial investment and launch, a lean first year, and the establishment of an office and training space in the second year, the business will be poised to expand through its own financing after three years. After the business is proved replicable in additional cities, the business may be sold to provide an exit for the initial investor and founders.

Related: Free Business Plan Template Download

Objectives

Batten-Hatchez Security will base its success on meeting the following objectives:

  • Employ 25 full-time equivalent security guards by the end of the third year of operation
  • Supply security guards to 15 buildings on a full-time basis by the end of the third year of operation
  • Earn $2 million in revenue with net profit over $300,000 in its third year of operation

Mission

Batten-Hatchez Security will remove worries for clients who require security guards for their buildings, facilities, and events by providing excellent customer service for clients and in-depth training for their employees.

Keys to Success

Batten-Hatchez Security believes the keys to success in its industry include:

  • Listening carefully to client concerns and objectives to create customized security guard packages
  • Knowing what the client does not know (bringing deep security expertise as well as knowledge of legal regulations and liability to the table)
  • Training security guards carefully and maintaining their training and certifications (e.g. to carry firearms)
  • Monitoring the quality of security guard service to offer quality assurance

2Company Summary

security-company-summary

Batten-Hatchez Security is a startup security company founded by Chindit Batten, a former police sergeant and security company manager with fifteen years in law enforcement and ten years in security work. The business will provide security guards to commercial buildings, retail businesses, and special events. The business will launch in Coastalburg but will expand to additional cities if successful.

Company Ownership

Chindit Batten is CEO and founder of Batten-Hatchez Security. He currently owns 60% of the business and the remaining 40% of shares are owned by his partner and co-founder, Viipuri Hatchez, COO. The business is incorporated as an S Corporation to enable additional investment for its launch. The founders shares will be diluted as up to 40% of shares will be given to investors.

Start-up Summary

Batten-Hatchez Security will launch as a home-based business out of the home office of Chindit Batten. Initially, this will reduce the cost of rent and equipment. Training for security guards will be provided in temporarily rented office space as needed.

Other start-up costs include the costs of incorporation and permits, such as concealed weapons permits, business license, and police clearances (legal fees), the initial website and brochure design and printing, and the first insurance premium for the business, including liability insurance for the guard’s work and carrying of firearms. Long-term assets include mobile phones and headsets for all guards and employees, as well as two-way radios for guards working as teams.

Related: Conducting a Business Plan Market Analysis


3Services

security-company-camera

Batten-Hatchez Security will provide well trained guards for one or more of the following purposes:

  • To guard entrances and screen guests/employees
  • To monitor clients’ premises with video surveillance equipment
  • To protect clients’ assets, employees and guests
  • To deter crime with visual presence
  • To organize response in the case of fire, evacuation, or other emergency
  • To respond to customer and employee health emergencies and accidents
  • To eject unwanted customers or trespassers
  • To liaison with police and city emergency responders

In addition, the principals of the firm will offer the following:

  1. Security audits and recommendations for security plans
  2. Referrals to providers of security technology (camera systems, etc.)

Batten-Hatchez will be a licensed, insured, and bonded business and will offer both armed and unarmed guards, based on client needs and budgets. All guards will be certified for security work and to carry firearms. Whenever possible, the same guards will be sent consistently to the same clients. However, substitutes will be necessary from time to time and the business will ensure that detailed data about the job is transmitted to substitute guards on those occasions.

Batten-Hatchez Security will build trust with clients as a partner, rather than simply in the specific guard or guards they grow comfortable with. Guards will keep in constant communication with their team via portable two-way radios and with the Batten-Hatchez office, as necessary through mobile phones.

The Batten-Hatchez office will be not be staffed full-time at launch, but the CEO and COO will be within reach by phone wherever they work. Guards who encounter criminal activity will alert the authorities immediately rather than going through a communications centre.

Once the Batten-Hatchez office is established outside of the home of Chindit Batten, it will be staffed full-time with a rotation of three call centre personnel who will cover the dispatches. Guards will either be stationed at desks or patrol on foot at all facilities. Clients must provide vehicles if their jobs require vehicle patrol (i.e., a facility with several buildings), but this will not be a focus of Batten-Hatchez Security.

Related: How to Write a Funding Proposal


4Market Analysis Summary

security-market-analysis-summary

The market for security guard services includes building management companies, retail businesses, event venues, and other businesses. IBISworld.com reports that the security services industry as a whole was $29.7 billion in 2008. While this number includes investigative services and armoured car services, it is estimated that security guards accounted for $22.3 billion. This represents approximately 540,000 employees in the security guard industry.

While market revenue has dropped 2% in 2008 due to the recession, it is expected that the market will rise again due to increasing outsourcing of security services by companies who will delay hiring their own full-time employees as the recession ends. The continuing and growing concerns about security brought on by international terrorism are also expected to contribute to growth in the industry.

Of the potential targets available in Coastalburg Batten-Hatchez Security will focus on building management companies and retail businesses at the outset. These businesses require steady security needs and serving them is simpler than serving special events.

Related: How Do I Start A Security Company?

Market Segmentation

The market analysis table shows the market segmentation for Coastalburg among the major market segments for security guard services. Growth is slow among these markets as new development is not prevalent in Coastalburg currently.

Building management companies generally install surveillance equipment and employ security guards to monitor that equipment, to staff front desks/security checks, and sometimes for general patrol. These companies often work with a number of commercial or residential buildings and look to establish a relationship with one reliable vendor for all of their security guard needs. While some buildings require night-shift guards, others require only day coverage.

Large retail businesses use security guards to deter theft and to provide safety. These include department stores and other retail stores over 4,000 square feet, although some smaller stores may use security guards if they sell high-priced items (designer fashion, jewelry, technology, etc.). Retailers require more guards during the day. Some simply lock the store at night while some larger department stores use night patrols as well.

Event venues use security guards to monitor guest lists and fire capacities and to organize emergency response. Nightclubs and bars may be included in this category. However, most nightclubs and bars employ their own security personnel (or “bouncers”) directly and do not use vendors. Event security has the same risks as other security, but there is limited time for security audits and situations change fast, making this a higher stress business that requires better trained guards. Events tend to happen in the evenings with weekday nights for corporate events and weekend nights for private events.

Educational institutions, such as primary and secondary schools and colleges, generally employ security officers to guard and patrol their buildings and campuses. Often these institutions employ their own in-house security staff, but they will sometimes use outsources security vendors. These institutions require night and day patrols.

Target Market Segment Strategy

Batten-Hatchez Security will target the first two of these target markets initially, building management companies and retail businesses. Both segments require ongoing security vendors and are eager to establish long-term relationships. Once relationships are established, good customer service, quality assurance, and competitive pricing can ensure that the relationships are retained and that the security provider is considered a true partner in the protection of the building or businesses’ assets and people.

Furthermore, the other two target markets listed will be taken on at a later date, if at all. Event venues require more specialised services and may be a slower market to tackle. Educational institutions are often eager to establish their own security staffs, making this a difficult market to establish a strong foothold in as well.

Related: Target Market Worksheet

Service Business Analysis

According to IBISWorld, there were 41,000 security services firms in the U.S. in 2008 running 56,000 establishments. The average size of a firm was $700,000 revenue per year based on these numbers, meaning that the industry includes both small and larger companies. There are few barriers to entry, as long as basic legal requirements are met, as the capital investment in the business is very low. The industry depends on a supply of labor, often using retired police officers as security guards.

As security guard services are sold business-to-business, marketing and advertisement is generally targeted on the markets and industries the security companies seek to serve. Businesses generally search for security guard providers on the Internet or through referrals from other companies they trust.

Competition and Buying Patterns

Top players in the industry include Securitas AB, Allied Security LLC, The Brink’s Company, and G4S plc. Huge players provide services for a huge range of markets, including governments, chemical and petrochemical, colleges and universities, commercial real estate, financial institutions, health care facilities, manufacturing and industrial, residential communities, shopping centers, and temporary security services.

Smaller security companies achieve success based on the expertise and reputation of their founding managers and the growth of a team with a similar track record. The continued success of a company depends on client satisfaction, leading to referrals.

Larger institutions and governments may receive several bids for security contracts, while smaller businesses (such as many that Batten-Hatchez Security will target) often prefer to try out security companies and move on if they do not meet expectations.

The smaller the amount of assets being protected, the more willing a company will be to risk their security on educated hunches about a security company without feeling the need to do due diligence on a number of options.

IBISworld reports the following about the security industry:

  • While the public’s perception of the rising crime rate assists revenue, the most significant factor which increases the demand for this industry’s services is a breach of an existing security system, a break-in or a near break in. The economic crisis has hurt demand over the past two years but things will soon begin to improve.
  • In Coastalburg, security guard service competitors include securityguard.com, Top Guard Security, US Security Guard Services, and Trend Security Corporation.

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Professional Services

Plastics Recycling Sample Business Plan

Using this sample plan will provide you with guidance when drawing up your own plastics recycling business plan.

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Plastics Recycling Business Plan

Executive Summary

The growing utilization of plastics in industrial and consumer applications, combined with increased consumer awareness surrounding solid waste recycling, has led to an increased demand for recycled plastic resins and products. One of the fastest growing types of collected plastic materials for recycling is polyethylene terephthalate (“PET”) from post-consumer beverage and water bottles. Replay Plastics will capitalize on the opportunities in the recycled resin and packaging markets through two main divisions: a Recycling Division and a Packaging Division.

The Company will create a PET cleaning and refining plant located in the western United States (all 16 major North American PET recycling plants are currently located in the eastern United States or Canada). Its initial capacity will be 46 million pounds, and it will utilize post-consumer bottle feed stock presently collected in California, Oregon and Washington States, which collect over 200 million pounds per year. The Company will be vertically integrated, and use almost all of its recycled material in its Packaging Division. Any surplus materials (clean flake) produced will be sold to outside companies. The extruded sheet may then be sold to manufacturers, who will thermoform it into high-visibility packaging or use it in other high value added manufacturing operations. The strapping will be sold to companies who ship large packages or pallets, such as the lumber milling industry. The Company currently has commitments available from customers to purchase all of the product produced.

MANAGEMENT

Ben Braddock, President, has a 30-year history of experience encompassing all aspects of Polymer Raw Material, Plastic Conversion Methods, and Venture Development. He has founded successful ventures in the plastic converting industry, and assisted in the launch of five plastic converting manufacturing plants. Sam McGuire, Executive VP and COO, is a graduate Engineer with over 20 years experience in the post-consumer plastics recycling industry and is the inventor of the primary cleaning & refining technology used in the process for this project. He has received a patent for his technology and has been directly involved in over twenty-five major post consumer plastics recycling projects. Carl R. Smith, CFO, has over 30 years investment and merchant banking and management experience. He has assisted in raising over $500 million and served as board member and/or officer in over 40 public and private companies.

1.1 Objectives

  • Sales passing $15 million in first year, $31 million in year 2, growing to $43 million.
  • Gross margin of 35% or more in first year, 45% in second year then 50% or more.
  • Net profit of 13% in year one, then exceeding 20% annually starting in year two.

1.2 Mission

Replay Plastics is a manufacturing company dedicated to converting waste plastic materials into commercially viable products, utilizing environmentally friendly recycling and manufacturing methods. We intend to make enough profit to generate a significant return for our investors and to finance continued growth and continued development in quality products. We will also maintain a friendly, fair, and creative work environment, which respects diversity, new ideas and hard work.

1.3 Keys to Success

The main keys to the success of the Company are:

  1. Secure Supply- Contract for supply of post-consumer bottles and post-industrial manufacturing waste for PET raw material feed stock.
  2. Marketing –  Contractual arrangements for the sale of virtually all initial production.
  3. Management – Strong senior management with extensive, broad-based, industry-specific experience.

1.4 Potential Risks

Unavailable or scarce raw material feed stock for production

  • Replay is confident that it has secured good availability of low cost post-consumer PET bottles (feed stock) derived from post-consumer beverage bottles from California based recycling collectors, and has back up sources identified.

Technology employed may be unreliable or unprovenReplay will use a proven, patented technology that was developed by one of its principals for the cleaning and recycling phase. The extrusion division will employ commercially proven technology – the industry is employing unique recycled PET technology which is used by prominent eastern U.S. manufacturers of PET extrusions.

  • There may not be a market for the Company’s products

The Industry-wide experience of the Management Team has allowed them to identify markets for the Company’s products. Their expertise and reputations have allowed them to obtain commitments for virtually all of the planned initial production.

  • The location may not be near enough to markets

The markets that have been identified are primarily in the western U.S., which will provide a distinct advantage to the Company because of freight costs and delivery timing.

  • The Company may not be able to attract top management

The Company has assembled a world class management team with proven ability and direct experience in the Company’s market segments.

  • Company may not meet environmental standards

This environmentally-favorable venture provides for the development of technically feasible and economically viable solutions to PET plastic beverage bottle recycling, as well as environmentally aware in-house re-use practices which filter and return nearly all of the process water to the production lines.

  • The Company may not be able to sell all of its production capability

Through the Senior Management’s industry-wide contacts, the Company has identified potential customers and received commitments for all of the production potential of the initial facility.

Company Summary

The Company will capitalize on the opportunities in the recycled resin and packaging markets through two main divisions: a Recycling Division and a Packaging Division.

Recycling Division

Using a patented process, the Company will create a PET cleaning and refining plant located in the western United States; we have chosen this region because all 16 major North American PET recycling plants are currently located in the eastern United States or Canada, despite western states’ favorable recycling attitudes among consumers. Its initial annual capacity will be 46 million pounds and it will utilize bottle feed stock from California, Oregon and Washington States, which collect over 200,000,000 pounds per year. The Company will become totally vertically integrated, and use all or almost all of its recycled material in its Packaging Division.  Any surplus material produced will be sold to outside companies.

Packaging Division

We will create a plant (actual facilities to be shared with the Recycling Division) to manufacture extruded plastic roll stock sheet or high-strength strapping, employing state-of-the-art technology developed to utilize recycled PET resin. The extruded sheet will be primarily sold to thermoformers who will convert it into high visibility packaging, as well as laminators and fabricators. The strapping will be sold to commercial users for use as package or pallet strapping. The Company currently has commitments from customers to purchase all of the initial production capacity.  Excess flake will be sold to outside customers.

2.1 Company Ownership

Replay Plastics is owned by the initial founders, B. Braddock, S. McGuire and C. Smith, who are the proposed three executives of the operating entity. The plan was conceived and developed by these individuals, with the intent to apply their extensive experience and contacts in the industry to building a successful profitable corporation.

2.1.1 Potential Conflict

Our COO, Mr. Sam McGuire, the inventor and patent holder of the recycling process to be used by the Company, is a principal in Company A of Chicago, IL. For many years, Company has designed, manufactured and assembled plastic recycling equipment, and has given us quotes on meeting our needs in this area.

After a thorough investigation, Replay has found that Company A is able to source or supply the required equipment at considerably lower cost than any other company from which a quote was available. Mr. McGuire has disclosed that Company A has included a smaller than normal margin in their quote on goods they will manufacture, to cover overhead, contingency and profit which might result in a small benefit to him. They have agreed to source all of the equipment possible with no added margin.

Replay has concluded that the savings available outweigh any other consideration and that we will purchase the cleaning and refining equipment from Company A.

2.2 Start-up Summary

Our start-up expenses are budgeted at $210,000, which is mostly for on-site contractor services during facility preparation. $50,000 has been set aside for legal and accounting, $25,000 for special consulting that may be required during start up and $50,000 each for local engineering and lab equipment and supplies. $30,000 has been set aside as a contingency for the start up period.

Our largest Start-up Requirement is the building of the recycling and extrusion facility. Its final value at completion is listed below as a long-term asset of $3,620,000 (excluding expensed items like consultants and engineering listed above). Aside from the building itself, we need $25,000 in machinery and fixtures, $500,000 of inventory (plastic bottle feed stock) and cash to cover us through the initial year.

Products

Replay Plastics will utilize two processes in the same facility to produce:

  • Cleaned and recycled plastic PET flake (RPET), recovered from post-consumer beverage bottles and manufacturing waste produced by its sheet customers
  • Extruded roll stock sheet PET.
  • Extruded PET high-strength strapping for securing large packages or pallet loads; each using 100% RPET produced in-house

3.1 Product Description

Roll stock sheet will be sold to custom thermoformers primarily to be used to produce high-visibility packaging. It will also be sold to manufacturers of laminates and fabricated plastic products.

High strength PET packaging strapping is used to secure packages or pallets in such industries as lumber milling and corrugated and other paper production.

Both products will be extruded from post-consumer polyethylene terephthalate (PET) bottles. The recycling programs in California, Washington and Oregon collect in excess of 200,000,000 pounds of PET bottles per annum. Replay’ initial capacity will be 46,000,000 pounds.

Using a patented process, Replay will clean and refine the PET material from the post-consumer bottle stock and post-industrial manufacturing waste. The PET flake resin produced will be extruded into roll stock sheet or high-strength strapping.

Although the Company expects to convert all of its bottle feed stock into extruded products, any surplus flake will be sold to outside manufacturers.

3.2 Competitive Comparison

While quality and delivery are important factors to our potential clients, price is most often the determining factor in a buying decision. Good-quality packaging products manufactured from recycled (less expensive) resins, as close as practical to the end customer’s operations, will be most competitive and achieve a significant market share. These factors have helped to determine the business parameters of Replay Plastics.

3.3 Sourcing

In excess of 200,000,000 pounds of post-consumer PET beverage bottles are collected and available as feed stock for manufacturers who can re-process this material into commercial products. The Company has excellent relations with the firms and associations that collect and distribute these materials and has been assured that its requirements will be available for the foreseeable future.

The Company has entered negotiations with a California based source of post-consumer bottles and is confident that sufficient volumes are available on a contract basis from this source to satisfy its requirements. In addition, the Company intends to purchase production waste from its sheet customers and blend it into its feed stock.

Currently, the majority of the post-consumer PET bottles collected in California, Oregon and Washington are exported to China. The Chinese have absorbed the amounts surplus to the use in North America. Their interest has kept the industry in the position of being able to maintain a steady price range for this bottle stock. A significant percentage of all sales of such bottle stock are managed by Plastics Recycling Corporation of California (PRCC), an industry funded marketing agency which operates similarly to a co-operative. They accept bids from potential buyers on behalf of the firms which act as “consolidators,” which accumulate stocks from the smaller, individual bottle-recycling depots. Some amount of the available stocks are regularly bought by recyclers in eastern North America who focus on the carpet manufacturers who use RPET resin in their process, but the high cost of transport from the western U.S. makes eastern sources more desirable.

Replay has a good relationship with Company B, one of the larger consolidators in California. Company B has indicated a desire to contract to supply Replay with all of its raw material needs. They prefer to deal with a local consumer such as Replay, rather than the uncertainty and extra preparation requirements of the export market.

There are other sources of post-consumer feed stock known to Replay, and we are confident that we will have sufficient materials available for our production needs.

3.4 Technology

Sam McGuire, a key member of our Management team, is one of the original innovators of cleaning and refining technology for post-consumer PET, and we will be utilizing his patented process in our recycling facility. Sam has worked in the establishment and operation of facilities employing similar technologies over the last several years.

On the manufacturing side, Management has been an integral part of the advancement of industry practices over the last twenty years or so, and includes in their knowledge base most, if not all, of the state-of-the-art available equipment and manufacturing techniques.

Market Analysis Summary

Strong demand for recycled plastics is working in the industry’s favor.  Major users of plastic packaging, apparently responding to consumer desires, have begun incorporating at least some recycled plastic content in their products as part of the growing interest in recycling.  Recycled resin demand is on the rise as prices for the two major recycled resins, PET and HDPE, continue to hold value or appreciate against their virgin counterparts.

In volume, PET is currently the number one recycled resin. Supply of recycled PET is in excess of 800 million pounds per year. This figure is expected to grow, reaching over 1 billion pounds during the next few years. The plastics industry has developed new markets and applications for recycled resins from both post-consumer and post-industrial sources.

PET leads the recycled recovered resins as the most visible and valuable, and its use is increasing. Of the total 3.7 billion pounds of PET consumed in 1997, just 16% was from recycled sources. Of the more than 90 billion pounds of plastics produced annually in the United States, less than 5% is from recycled sources. Plastics, after aluminium, represent the second highest value material in the waste stream and have the highest projected growth rate.

Markets and uses for recycled plastics are rapidly expanding. Plastic containers are being collected at the curb for recycling in nearly 500 communities, representing more than 4 million households. U.S. demand for recycled plastic will continue to expand and new markets will develop as technologies permit the efficient segregation and reprocessing of high-purity resins. Improved quality of resins, environmental issues and higher prices for virgin resin will contribute to growth.

Packaging is expected to be the largest market segment for recycled plastics, with sheet and lumber following. Surveys indicate that Americans are increasingly willing to collect and separate discarded packages, foregoing a degree of convenience to make products more disposable, and even paying a premium for a recycled item.

Increasingly, communities are refusing to consider incineration until every effort is made first to recycle; public sentiment is strongly in favor of products that can be recycled or are made of recycled materials.  In recent years, the household recycling rate of PET bottles has more than doubled to 30% of all PET soft drink bottles sold.  In fact, PET’s recycling rate is the fastest growing among all beverage containers. The future of PET recycling is even brighter than it has been in the past. PET intrinsic scrap value is second only to aluminium among container materials. The plastics industry has launched a research and development program aimed at increasing PET recycling. According to the U.S. Environmental Protection Agency (EPA), plastic soft drink bottles account for approximately 2% of the solid waste discarded in America. The EPA has set a national goal to recycle 25% of the municipal solid waste stream and the industry is committed to achieving its share of that important goal.

The recycling industry intends to accelerate the rate of plastic recycling as part of its commitment to develop solutions to the solid waste problem. Industry analysts have projected that 50% of all PET containers will be recycled by the year 2007. More plastics will be recycled annually than any other recyclable material. Replay believes a significant answer to America’s waste problem lies in creating high value, recycled thermoformable sheet and other extruded products for the packaging market.

Although more than 200 million pounds of PET post-consumer materials are collected in the western United States each year, there is presently no local cleaning and refining facility converting the bottles into resins suitable for re-manufacturing. Originally, recycled PET (RPET) was used primarily in the carpet fiber industry, which is located along the eastern seaboard. The early development of the RPET industry was therefore focused in the eastern USA, with eastern states adopting the first bottle deposit laws that resulted in collection of post-consumer bottles that can be recycled. Recently, California, Oregon and Washington have adopted bottle deposit programs, and accumulation of recyclable materials in those states has begun. With all of the cleaning and recycling plants and the majority of consumers traditionally located in the eastern part of the country, development of consumers of recycled flake and down-line products, such as film and sheet, has been slow to develop in the West. A strong demand for post-consumer bottles from Asia has prevented the buildup of inventories and reduced the pressure for the collection industry to find or develop western markets.

There is currently no independent extrusion plant of recycled polyterephthalate (PET) sheet in the western United States or Canada that services the roll stock requirements of major custom and proprietary formers. With the development of the recycling industry for PET starting in the eastern part of the country, and the preponderance of consumers of sheet there as well, development of independent extrusion facilities using RPET has been slow to develop. It appears that in order to attract such companies, local sources of RPET would have to available. While there are customers in the West for the products, contracting a supply and shipping it from the East makes the venture unattractive.

Our founders recognize that an opportunity exists and propose a vertically integrated conversion facility that will employ state-of-the-art technologies to produce extruded sheet and high strength strapping from 100% recycled PET post-consumer bottle stock, cleaned and refined in our own facility.

4.1 Target Market Segment Strategy

The Company has chosen its target markets because recycled PET (RPET) is in high demand as flake resin by converters,  as roll stock sheet used to produce high visibility packaging and as high strength strapping for the lumber industry.  Sales are price-sensitive, so that proximity to markets and feed stock source provide a competitive edge. Replay Plastics identified an opportunity to take advantage of both circumstances in the western United States.

RPET Flake

Total market demand is reported as 1.2 billion pounds per year. Since only 800 million pounds are processed in the USA, consumers are forced to look at wide spec virgin PET (virgin resin that is outside of spec but still usable) which is normally sold at a discount to virgin prices, but still higher than recycled (RPET) pricing. Some manufacturers are also forced to import materials from Mexico, India and South America. Some converters are being forced to use more expensive virgin resin.

The current pricing for virgin resin is $0.65-0.73 per lb. and $0.42-.53 for RPET flake.  The spread between the two has traditionally been maintained at approximately $0.20 per lb.

PET Film & Sheet

The total reported market of extruded film and sheet is 872 million pounds, of which identified industry usage of RPET is 160 million pounds.

The reported market demand (to replace virgin PS, PVC and PET) if RPET was available is estimated at 1 billion pounds.

Current pricing for RPET sheet is $0.70-0.79 per lb.

RPET Strapping

The total reported domestic plastic strapping market is 240 million pounds. Of this market, industry usage of virgin polypropylene is 132 million pounds and of PET is 108 million pounds.

It is generally accepted in the industry that less expensive strapping made from RPET could not only take over the polypropylene strapping market, but convert as much of the much larger and more expensive steel strapping market as RPET strapping was available.

Current pricing for RPET strapping is $0.90 -1.08 per lb.

4.2 Market Segmentation

The primary market can be broken down as follows.

Consumers of PET in:

California: 62
Oregon: 8
Washington: 9

Consumers of HDPE in:
California: 73
Oregon: 10
Washington: 12

4.3 Industry Analysis

Currently there is no direct competition in the western United States for either of the two divisions of the Company. Any production in the trading area remains captive and not available to our target market.

The ability of the Company to obtain a source of post-consumer bottle stock is an integral component of the strategy to vertically integrate operations and manufacture products in demand by western consuming industries. Without the cleaning and refining division, it would be difficult to source sufficient RPET flake resin at costs that would allow the Company to be competitive.

4.3.1 Barriers to Entry

Limited Supply of raw material
Recycled PET (RPET) resins are in high demand, and demand is currently under-supplied. Many manufacturers are delaying expansion because of uncertainty of supply. Entrants would have to consider sourcing post-consumer or post-industrial waste and clean and refine it rather than attempting to purchase flake on the open market. Even at that, there is not an over-abundance of post-consumer or post industrial material in the marketplace.

Equipment costs are high and industry specific, resulting in a high exit cost.
Because of the scarcity of RPET flake, entrants may be forced to establish cleaning and refining facilities for post-consumer bottles. The equipment required is costly and very industry specific. It would not easily be re-sold as a system.
There is a market for used extrusion equipment, which normally sees 60-70% of new value being realized.

Vertical integration is an important consideration and difficult to accomplish successfully.
Because of the scarcity of RPET resin, and to maximize profit potential, entrants must consider a two-stage production facility. Cleaning and refining post-consumer bottles and extruding the resulting flake into commercial products requires a management team such as Replay has, with a broad range of expertise, experience, industry contacts and knowledge in both areas.

Firm contracts for supply and sales.
Replay Management’s industry contacts will allow us to secure contracts for both supply of feed stock and sale of finished goods.

Freight is a major cost of operations; proximity to source of supply and markets is crucial.
Hauling plastic materials is expensive so entrants will have to consider establishing facilities close to materials and markets. Entrants with existing operations would have to consider new separate facilities in many cases, reducing economies of scale and making management more difficult.

4.3.2 Competition and Buying Patterns

There has been a strong demand (sellers’ market) for our products for several years. Traditional buying patterns in this industry are based on quality, price, reputation of manufacturer, freight costs, delivery times and proximity to markets. During such a sellers’ market, buying patterns are often more influenced by availability.

4.3.3 Main Competitors

Currently in the western United States, there is no direct competition for cleaning and refining post-consumer or post-industrial PET. Nor is there any non-captive extrusion of roll stock sheet.

The extruded sheet required by thermoformers is currently supplied by:

  • Advance Extrusion, Becker, MN
  • Kama, Pittsburgh, PA
  • Plasti-Shell Packaging, Gonzales, LA
  • Petco, Montreal, Canada
  • Klockner, VA

In a news release dated September 10, 2004, Itec Environmental Group, Inc. announced their intention to open a PET and High Density Polyethelene (HDPE) recycling operation in Riverbank, CA (east of San Francisco). The news release states that the Company’s new and yet unproven technology lets it work with bottle streams that others have to reject as too dirty. This Company is familiar to our Management, and is not considered a significant factor in any of our markets.

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Self-Storage Sample Business Plan

Before you start your self-storage facility you will require a business plan similar to this one.

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Self-Storage Business Plan

Executive Summary

This storage business plan describes a proposed self-storage facility to be established in Westbury, New York involving the conversion of an existing building. Total project costs are estimated at $1,054,487 including purchase price, conversion costs, and pre-opening expenses (see section on Start-up Summary). Based on current and projected strong demand for self-storage units, rental revenue is projected to grow rapidly as units fill up from the first year’s target of $320,000 to $684,000 by year three.

Objectives

After achieving experience and success in their present self-storage facility in Plainview, New York the principals of this proposed project plan to take advantage of the strong demand in the self-storage industry to achieve a major presence in Westbury. The ownership connection with Stote Moving will assist in gaining full occupancy quickly. Goals have been set to rent 50% of the proposed 300 unit spaces within the first six months of Year 1. An additional 25% will be rented in the second half of Year 1, with the remainder to be filled in Year 2.

Mission

The mission of the principals is to serve the Long Island community’s local residential and commercial storage and moving needs.

Keys to Success

The keys to success in the self-storage business are:

  • To provide dry, secure, and clean facilities with convenient access.
  • To have good connections in the moving industry to direct customers needing temporary storage space.
  • To be able to adapt as storage and market needs change.

Company Summary

Westbury Storage is a start-up project to be located in Westbury. The owners are experienced in the moving and storage field, owning a well-established moving company (Stote Movers) and a successful self-storage facility in nearby Plainview (Plainview Storage). The building to be purchased for this project is a large brick building originally constructed as a bleachers around 1910. This building as well as surrounding buildings, were connected with the now dying leather industry which flourished a few decades ago. A large building of similar size located next door and connected by a walk bridge has already been converted successfully and is operating well. The Westbury Storage building contains three floors of heavy-duty wood and steel beam construction ideally suited to the planned purpose of self-storage units. The building is heated by oil. One of the two elevator shafts will be the home for a new over-sized passenger elevator suitable for transporting storage contents from the ground level to the units on the second and third floors. A large separate parking lot area comes with the building but will not be needed for this project. This lot could be sold or could be the site of additional future storage units to be set up using one of several one-story steel storage systems.

It is estimated that, with purchase of the building taking place in June of this year, the conversion into storage units could be completed and ready for occupancy by the end of the year. Demand for the units is strong, as evidenced by the market survey of existing self-storage facilities. Bank financing for 70% of the project costs is expected with the remainder supplied by shareholder equity.
Company Ownership

The company will be incorporated as an S Corporation, and will be owned by three individuals: Roger Black, Sebastian Stote and Daley Thompson. Each will own 1/3 of the stock. Roger Black and Sebastian Stote are 50-50 owners of Plainview Storage which is a 110 unit self-storage facility converted in 1993 from a former piano factory. All units are fully rented. Sebastian Stote is owner of Stote Movers, which is a family business providing residential and commercial moving since 1917. In addition to being the source of many of the rentals at Plainview Storage, Stote Movers has 52 filled 45-foot trailers located in Roslyn-by-the-Sea. These trailers contain customers’ stored goods pending delivery at a new location.

Company Locations and Facilities

Westbury Storage will be located in Westbury, in a central location about 1/2 mile from the monument in the center of Westbury. The owners’ present self-storage facilities are located at in Plainview with further storage capacity in 52 trailers in Roslyn.

Start-up Summary

Advertising and promotion will rely heavily ads in the Yellow Pages, as well as initial local newspaper ads at the time of opening. We are assuming three directories for Yellow Pages ads with 1/8th page ads costing $165/month each. The ads in the local papers (Springfield News and community newspapers) are estimated to cost $300 monthly for the first year only. They will be reduced in the second year to half this amount and eliminated in the third year.

Property taxes ($11,946) are projected at the actual rate of the last tax year. Significant increases are not expected.

Building maintenance is normally a very substantial item on a building of this size built in 1910. However, the roof has been completely redone fairly recently and the basic structure of the building is very robust. The start-up costs reflect adequate amounts to ready the building for opening in good order. Also, it should be noted that expenditures for building maintenance would need to be larger if the building were being used for offices rather than storage. We assume an annual amount for maintenance equal to 5% of the purchase price which works out to $27,500.

Services

Westbury Storage will provide short- and long-term self-storage services in the North Shore community. The company owners have extensive experience in the storage business as well as the good connections in the moving business. The later will help utilize the storage space at the maximum capacity. Westbury Storage will provide about 45,000 square feet of well maintained self-storage units that will be offered for both residential and small business renters.

Market Analysis Summary

In a similar split experienced by management’s existing storage facilities, Westbury Storage is expecting to rent 70% of its available units to non-commercial renters and the remaining 30% to the commercial sector of the market. A total of 300 self-storage units of various sizes will be created and offered for rent by Westbury Storage in a central location in downtown Westbury. The present supply of these units is insufficient to meet the demand as evidenced by a survey of all self-storage facilities within easy reach of Westbury residents. The price realized by these existing units is more than double the national average.

Market Segmentation

Self-storage units are needed by residential customers for storage of personal items as well as by commercial customers for storage of stock. It is envisaged that 70% of the planned self-storage units will be taken up by the residential segment of the market and the remaining 30% will be directed toward the commercial segment. This split is expected based on the existing customers of management’s present self-storage facilities in Plainview. The commercial segment are small businesses, many of which are run out of people’s homes such as an interior designer who needs space to store hundreds of expensive sample fabric books, or a retail shop with inadequate on premises storage.

The market research shows that the annual market potential for the commercial self-storage service in the Westbury area is about 10,000 customers. As stated above, these are mostly small businesses. The residential segment potential is substantially higher at 150,000 customers per year and is based on the Self Storage Association’s assumption that 40% to 55% of population has used self-storage facilities.  This estimate includes individuals who need storage facilities due to moving arrangements or to store excess household property. Both of the market segments are expected to grow at a 5% annual rate.

Target Market Segment Strategy

Since the demand for local self-storage services substantially exceeds the local supply, Westbury Storage will simultaneously market its services to the two major customer segments–residential customers and small business customers. The company will not pursue large business segment due to the limited service scope it can provide to such customers at the existing facilities.

The market analysis shows that local self-storage rates are substantially higher than the national averages. Westbury Storage will position itself to the both customer segments as a conveniently located and affordable quality self-storage facility. Both customer segments will be effectively reached via the local Yellow Pages ads and through the referrals of Stote Movers owned by one of the Westbury Storage’s co-owners.

Market Needs

Customer needs in the self-storage industry have certain similarity across different market segments. The underlying need is for a reliable, safe, dry and accessible self-storage facility. Due to the overwhelming demand, customers are less price sensitive and consider convenient location as the major buying decision criterion.

Residential customers use self-storage facilities to temporarily store their property while moving to a new location. This need originates in the mobility of the American population and the affordability of rental accommodations. Such customers usually rent 25 to 100 square feet depending on the size of their household and they rent on a weekly or monthly basis. The other cluster of residential customers rents self-storage facilities for longer periods to keep their oversize property like boats or other equipment that either does not fit in their garages or is not used on a constant basis.

Small business customer segment requires self-storage facilities to temporarily store their stock or merchandise. These customers may use the storage facilities more often than residential customers and they benefit from convenient loading areas, extended operating hours and better equiped storage units of bigger size.

Service Business Analysis

According to an article in the November 15th issue of Inside Self-storage the national industry average rental income generated by self-storage units is $6.00 per square foot per year, or $.50/sq. ft. per month. In the market to be served by Westbury Storage the average storage rate (see section on Competitive Comparison) is more than double this amount. Washington Storage in Westbury is a typical example. They charge $50/month for an 8X6 ft unit which works out to $12.50 per sq. ft. per year. A 9X9 unit on the second floor also rents for this same amount only because there is no elevator. All of their units are fully rented! All units within the area were surveyed. The average rate is $1.20/sq. ft. per month ($14.40 per year) and the mean was closer to $1.40/sq. ft. per month ($16.80 per year). The story concerning availability was uniform. Either the facility was full or only had one or two available units to chose from. E-Z Mini Storage in S. Centreport said, “There’s some turn-over at the end of every month. Leave your name and we will call you when one becomes vacant.” Extra Space Storage in Springfield said, “We need one week advanced notice.” North Shore Self-Storage said, “We have nothing available on the ground floor.” U-Haul reported, “We have one small unit available, otherwise we are all full.”

The self-storage industry really only started in the late 1960’s when a few far-sighted people recognized the growing need for residential and commercial storage. The industry has doubled in size each decade. Returns on investment have been very impressive–often twice that of other forms of real estate investment. The reasons for this have been the mobile society, the tendency to live in rental apartments, and the general increase in the accumulation of property, especially leisure articles such as skis, wind-surfers, exercise equipment, etc.

The industry lends itself relatively easily to financial modelling. The magazine article mentioned earlier explains the economics of an average self-storage project which is of similar size to the proposed Westbury Storage project. The total building square footage in the model is 41,000 (Westbury Storage is approximately 45,000 after deducting the office space portion of 9,600 sq. ft.). The model shows total gross income based on $6.00/sq. ft. or $240,000 annually. (Westbury Storage’s gross revenues will be more than double that.) Total project costs for the model come to over $1,150,000 versus $1,054,500 for Westbury Storage. The loan amounts are virtually the same as well as the interest rates used (8.5%). Normal operating costs generally come to about $2.00 per sq. ft. Westbury Storage’s operating costs are projected at nearly twice this amount due to generous provisions for maintenance and payroll. However, the model’s net operating income is slightly less than $4/sq. ft. versus Westbury Storage’s $11.40/sq. ft.

It could be argued that the higher than national average rates enjoyed by local self-storage facilities may not continue indefinitely, but there is no indication of any downward pressure at this time. It should also be pointed out that during an economic down-turn the self-storage industry does not suffer to the extent that other industries suffer.

Should the supply of self-storage units begin to outstrip demand, Westbury Storage should be well positioned to deal with the competition due to its ability to offer heated units (nearly all competing units are unheated) and its ability to supply electric outlets to individual units (for hobby/workshop purposes).

Business Participants

Although there are a few nation-wide players in the self-storage market, the industry is still fairly dispersed in which many small companies take part. (See the section on Competitive Analysis for a complete listing.)

Competition and Buying Patterns

Convenience is probably the single most import factor in the decision of where to rent a self-storage unit. For example, Hicksville and Huntington have no self-storage facilities. Residents choose to rent one in a nearby town probably based on proximity to the route taken by the renter to and from work. If no units are available nearby, then renters will travel further afield. Units on the ground floor are favored, especially if no elevator is available.

Main Competitors

See the section on Competitive Comparison for names of competitors. In the present market situation, competition plays a very weak role.

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Photography Studio Sample Business Plan

Starting up your photography studio will need a proper business plan and this sample will provide the guidelines.

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Photography Studio Business Plan

Executive Summary

Families need photographs to capture the special moments of their lives. Families of professionals are busy, and if too much time goes by between photos, these moments are lost forever. Babies, especially, grow fast and parents need photos of them several times a year.

While nearly everyone has a camera for snapshots, people need professional quality photos when they will be shown to an important audience, and when people want to be seen in the best light. The Internet has expanded the use of photos, making it possible for anyone to send them or to publish them for wide viewing.

Professionals often have business needs for high-quality photos, and through this familiarity, they acquire a taste for them. When these professionals need photos to preserve memories, or to display family photos when they entertain at home, they have the budget and the desire for similarly high-quality photos. Just as they appoint their homes with fine furniture and decorations, the photos on their walls need to exhibit their standards of quality.

Most people use professional photo studios only on rare occasions, such as weddings, yearbook pictures, or baby portraits. Because the client has to initiate the call, many special moments are lost and the studio loses potential business. Photo studios generally charge a large fee for CDs of their clients’ digital images. For these reasons, most photo studios are rarely used by families as a whole.

This photography business plan shows how Phoebe’s Photo Studio will meet the needs of professionals and their families to capture the special moments in their lives and present them in the best light. We will establish a relationship in which we initiate the calls to keep their photos up to date. Digital files of their photos will be available for free by e-mail, or with a nominal fee for CD.  Because of our relationship with the families, when something big like a wedding comes, there’s no place else they would go.

Phoebe’s will grow at an annual rate of over 40 percent by targeting families of professionals with newborn babies for baby pictures and then developing a relationship with the client over the years for ongoing photographs. The funding requested in this plan is projected to result in a comfortable annual net profit by Year 3.

The opening of Phoebe’s Photo Studio will mark a change in the way professional photography is delivered.  Rather than being a rare place to visit, this photo studio will be a fun part of a family’s lives, helping them capture special moments and share them in a digital world.

Mission

Phoebe’s Photo Studio helps clients preserve memories and portray themselves in the best light. We thrive on repeat business by developing relationships with our clients and calling them with timely reminders for new photos. We make professional quality photographs easily available in a digital format. We do this by using a pricing structure that makes our digital photographs a household staple and by making it fun for them to come here or to have us in their homes.

Objectives

In addition to livelihood, we’re in this business for the enjoyment of photography and having fun with people. We want to keep it simple.

Our objectives are:

  • To generate a comfortable net profit by the third year.
  • To develop systems of production for each product category that are easy to replicate with new clients to keep it simple and fun.
  • To have a client relationship system and call plan that will keep us on top of each of our client’s scheduled needs at all times.

Keys to Success

Our keys for success are:

  • Target marketing for the gateway products of baby pictures, high school photos and wedding albums.
  • Developing relationships with our clients through personal customer service, to turn one-time customers into lifetime clients.
  • Our system of tracking clients’ ongoing needs for photos and taking the initiative to call them for appointments.

Company Summary

Phoebe Peters has worked as an industrial photographer and freelance portrait photographer in Southern California for 10 years. She has found that personal customer relationships are the key to repeat business and will open Phoebe’s Photo Studio in downtown Eugene, Oregon on that premise.

Company Ownership

Phoebe’s Photo Studio is a sole proprietorship owned by Phoebe Peters.  It will open in a leased 800 square foot studio in downtown Eugene, Oregon.

Phoebe Peters is a graduate of Brooks Institute of Photography in Santa Barbara, California and is a member of the Professional Photographers of Oregon and the Professional Photographers of America. She has 10 years experience capturing the special moments of people’s lives.

Company Locations and Facilities

We will open in an 800 square-foot studio at 100 Main Street, the heart of the commercial district with ample free parking.  The space will be leased for three years beginning at $800 a month with cost-of-living adjustments made annually.

The studio will have a highly visible electric sign and a 20-foot wide display window visible to passing foot and auto traffic. Customers will enter a public area with a counter, samples of our photographs and albums, and couches for waiting. A separate playroom with props and other toys will accommodate children with sitting areas for parents, while a utility area off the back door will be set up to accommodate pets and their props. Children, pets and props can be brought into the photography studio for their photographs.  An office and working area will be used for assembling the final product.

Products

Phoebe’s Photo Studio will help our clients to look their best, will keep their photos up-to-date, and will capture the special moments of their lives.

Phoebe’s Photo Studio has a comprehensive program to preserve memories on an ongoing basis. We see individual pictures, especially baby pictures, as gateway products for our programs of ongoing photography.

All of our photos are created in a high-resolution digital format, from which our prints are made. Since the Internet and commonly used printers typically use the lower-resolution 300 dpi format, 300 dpi digital files are available to clients for a nominal charge. Higher-quality digital photos and prints carry full pricing. We will retain the high-resolution data and clients can order more prints from us if they wish.

Our photo studio includes quality props for portraits and baby, child and pet photography. The physical environment of the studio is fun and accessible, making families want to come here. We also go regularly to people’s homes and bring cameras and lights that are out of the budget of non-professionals.

Product Description

Our products include:

Baby Pictures
Our specialty is baby pictures. We have a unique combination of props and a passion for babies. Babies are also our prime gateway product for entering families into our programs of ongoing pictures.

High School Senior Yearbook Portraits
Senior pictures are a long-standing tradition that brings high school seniors into photo studios. By making these photos easily accessible in digital form, and by marketing prominently on the Internet, we hope to capture much of this market.

We offer a special package of a family portrait at half price with the senior picture. It is often the parents who are paying for the senior portrait, so we want to establish a relationship with the parents. The parents will want a picture of their senior with the rest of the family. This introduction to the family will allow us to market our other services.

Family and Pet Portraits
Portraits of the entire family are needed for display, to send to relatives and to use in family newsletters and websites. Most families have pets, and we can arrange family portraits that include them. While we don’t specialize in pet portraits, we have props and will take stand-alone photos of pets as well. There’s an additional charge for exotic animals.

Individual Portraits
Individual portraits are commonly needed for individual and business websites, business cards, brochures and annual reports.

Model’s Portfolio and Glamour Shots
Photos suitable for magazine publication.

Wedding Album
Weddings are one of the most special moments of life. Our wedding album includes up to 7 hours of wedding photography, with prints displayed in a custom photo album and digital images on CD.

Annual Portrait Program

We take the initiative to schedule the annual portrait and we replace it in last year’s frame while saving last year’s photo in a portfolio.

Baby Picture Program
We arrange pictures of the baby at 1 month, 3 months, 6 months, 9 months, 1 year, 18 months, 2 years, and 2½ years.

Child Portrait Program
We arrange a portrait of the child at 3 years, 4 years and 5 years, or until the child begins to be photographed annually for school pictures.

Capturing Memories Program
We arrange an annual portrait of the family and individual pictures of each member of the family. Photos can include pets and the house and grounds, if desired.

Competitive Comparison
The competition for portrait photography is divided into several categories:

Award-Winning Photographers
Award-winning photographers are those who routinely deliver magazine-quality photographs. Their work is highly creative and spontaneous instead of routinely posing shots. They are rare and highly expensive.

Quality Photographers

These are professional-quality photographers, like us, who use a lot of posed shots. Most of the competition falls into this category.

Value Photographers

Low-priced, lower quality providers.

Same Day Photographers
Normally priced photo studios that provide lower quality photos on the same day.

Sales Literature

ACE Marketing Communications will develop the logo, electric sign, business cards, brochures, website and display ads.  All will contain branding information around the theme of capturing the special moments of our lives.  This theme is the backdrop of our program to maintain customer relationships and to take the initiative to schedule photo shoots at our studio, in our clients’ homes, or in nature, to preserve their special moments.

Technology

Our innovative approach makes the most of consumers’ fascination with the latest digital imagery. By playing to this market trend, we gain new customers and provide added value, with high-quality, small file-size images our clients can easily share with friends and family members.

Phoebe’s Photo Studio will use several digital cameras, and will require a computer fully loaded with image-manipulating software, such as Adobe Photoshop. We will also need an ongoing maintenance agreement for the computer and software, and nightly backups of image files, in the event of computer failure, theft, or fire.

Market Analysis Summary

Families with children are the biggest market for portraits. For the purpose of this analysis, these families are divided into three socio-economic categories:

  1. College graduates
  2. High school graduates
  3. Non-graduates

Families of college graduates are most likely to be professionals and to have the means and the taste for professional portraits.  There are nearly 20,000 such families in the metropolitan area.

We will target female professionals and wives of professionals, because women make the majority of purchasing decisions in these families.

The competitive environment is divided between luxury magazine-quality photographers, moderate professional photographers who mostly pose their subjects, and same-day photo studios.

The trend among our targeted consumers is toward more digital photography and more sending of digital images on the Internet. As the world becomes more technical, people need more personal support.

Phoebe’s Photo Studio will use a “high-tech, high-touch” approach to reach and retain clients for their ongoing photo needs. We will make it affordable and easy for them to disseminate their photos electronically.

Market Segmentation

People who who pay for professional photo portraits are generally status-conscious professionals who have children, and so we’ve segmented the Eugene-Springfield metropolitan area according to the social status of families. We’ve used education as a measure of social status.

Families of College Graduates

Professionals are, almost by definition, college graduates. They are the ones most likely to have a need for professional photo portraits for career purposes. They are also most likely to have the means and taste to want professional photos for their families, as well.

Families of High School Graduates

People who have not completed college are assumed to be more likely to be employees or be in a trade. While many of them may have the means for professional photos, relatively few will use them. They are more likely to use home-made photographs, except for rare occasions, such as a high school photo or wedding.

Families of Non-High-School Graduates

These are families who are generally without the means to hire professional photographers on a regular basis.

Demographics

The Eugene-Springfield metropolitan area has a total population of 330,527. There are 74,836 families.

Some 25.5 percent of the adult population in the metropolitan area is composed of college graduates, which we will here define as professionals. Some 62 percent of the population is made up of high-school graduates.

The Eugene-Springfield metropolitan area closely conforms to the boundaries of Lane County, Oregon. The office will be located in Eugene, but clients are accessible throughout Lane County through physicians’ offices. Most Lane County residents are accustomed to doing occasional business in Eugene.

Target Market Segment Strategy

Our target market is families of college-educated people who are most likely to be professionals.  This is the population most likely to order professional photos on a regular basis, having both the means and the desire for professional quality photographs.

Since women make most of the purchasing decisions in families, our specific target market is middle-aged professional women in the Eugene-Springfield metropolitan area, roughly 19,554 people.

Market Trends

Photography has gone digital. Digital cameras are replacing conventional cameras faster than DVDs are replacing VHS in video stores. Even cell phones have digital cameras on them. The uses of photography have expanded as well because of Web pages on the Internet and email. Digital images are needed for printing uses as well, for such uses as brochures and business cards.

Photo studios have mostly switched to digital format because it also allows for easy processing and manipulation.  They have been less amenable to making digital files affordably available to clients, and this is a trend on which we intend to capitalize.

Market Growth

The growth rate used in the table is based on the 1.4 percent growth rate experienced by the Eugene-Springfield area over the past year. This growth is reflected in the accompanying chart and graph.

Market Needs

Families have photos taken to preserve memories. Most photos are taken by consumers with their own cameras, which are increasingly digital and are even part of their cell phones. Most of these photos are low quality but no one cares because only the family views them.

Consumers generally engage professional portrait photographers when the photos will be viewed outside the family and when quality matters. Professionals, such as those in our target market, often have business needs for quality photos and have acquired a taste for them. These professionals have families, too. They have the budget and the need to use them for their families because they often entertain at home and their family photos will be on display. Just as they appoint their homes with fine furniture and decorations, the photos on their walls need to exhibit quality.

Specifically, some of their needs include:

  • baby pictures
  • portraits for home or office
  • senior pictures for the high school yearbook
  • family pictures to send to family members
  • family newsletters
  • family, individual or business websites
  • portraits for business cards, such as for real estate agents
  • portraits for brochures and annual reports

The world has become increasingly digital, but many professional photo studios have made it difficult for people to enter the digital age. The traditional practice of retaining negatives to require clients to return for prints has been carried over to charging high fees for releasing digital files of their portraits.

The need to capture memories lasts for people’s entire lives, and business portraits require a regular update. But people generally don’t look forward to seeing a photographer. In fact, they find it a burdensome expense, have not established a relationship with a photographer and don’t think often about going to one. As a result, a lot of memories are lost and ancient portraits of professionals continue to be hung on walls and portrayed in publications. This makes them appear to be trying to preserve their youth instead of embracing their maturity and experience, and doesn’t show them in the best light.

Industry Analysis

The competition is divided between luxury magazine-quality photographers, moderate professional photographers who mostly pose their subjects, and same-day photo studios.

Phoebe’s Photo Studio is not a luxury, magazine-quality studio, but our service and photo quality is high compared to other moderate professional photographers. Our rates are comparable to theirs, but we add value through personal contact and easy dissemination of digital images.

Main Competitors

Competitor X is an award-winning, highly creative photographer with a style that one would expect to find in a national magazine.  His prices are the highest in the area, up to $15,000 for a wedding album.  His strategy appears to be to capture the high-end market, where a magazine look is a luxury that people can afford.

Competitor Y is a more typical photographer with more staged photographs and wedding packages running up to $5,000.  His strategy appears to be to occupy the middle-ground of quality and price where most of the market is likely to be.

Competitor Z offers same-day photos.  This is easier to accomplish with digital processing for a studio organized around speed, but quality is necessarily sacrificed.  The market for same-day photos doesn’t necessarily demand quality.  Prices are average.  The strategy of this studio appears to be to appeal to convenience and speed.
Competition and Buying Patterns

Purchasing decisions generally begin with an urgent need, such as a high-school senior picture or the birth of a baby.  Buyers are most likely to seek a professional by referral from someone who has used their services.  If this is not available, they are most likely to look in the Yellow Pages, but increasingly online, especially if they are young.

Distribution Patterns

Photo studios are generally located in commercial areas with high visibility, but many studios are run out of the owner’s home. This is possible because so much photography occurs on location: in people’s homes or offices and in nature or at social events.

Industry Participants

Photo studios are run by professional photographers with various levels of education and experience. There is considerable variation in quality and taste according to the ability of the individual photographer. This is a highly individualized, creative process that makes it difficult for large corporations to enter the market or to create “chain stores.” The participants are mostly individual photographers.

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