This is a business plan proposal for Timber Ville Wood Products Ltd., a prospective public company intending to get a market share in the Western North American timber market with their wood material. This business plan emphasizes on the main concepts of the product design and development, as well as the fundamental values and organization of Timber Ville Wood Products Ltd. The product will be manufactured from approximately 80 years old trees of above-average strength and aesthetic characteristics. Retrieval of the raw material from Interior Forests like the Alex Fraser Research Forest in Williams Lake, Alberta, is executing an important ecosystem service by reducing wildfire risk, mule deer winter range creation, and release of remaining trees in restored forests. The product becomes an eco-friendly (“About Alex Fraser Research Forest” 2015, p1).
Timber Ville has made ready a financial analysis of the company. The analysis shows profits by year. We will collect financing from public investment, provincial and federal governments and financial institutions loans. By practicing our manufacturing motto of Uncompromised Quality, the company hopes to make a working environment that promotes environmental accountability and a high level of employee participation. Quality control will be imperative in ensuring customer fulfilment. We have developed a marketing strategy that emphasizes on the quality of the product. It targets both the end user and the supply chain. The strategy involves personal selling, e-commerce and joint advertising to maximize product exposure. Timber Ville Wood Products Ltd. Plans to do further market research to polish marketing strategies and improve product development. This business plan encompasses the company’s idea for their unique product.
Timber Ville Wood Products Ltd. intends to produce Wood for selling to both the Western United States and Canada. The market atmosphere for both target markets is promising. With an ecologically conscious product that is appealing, Success probability of Timber Ville Wood Products Ltd is high. The raw material resource is the impetus for the product idea and, thus, the making of this business plan. Cypress and Pine trees are abundant in the inner forests of Alberta. They remain under-exploited as a wood products material. The source of the trees for timber, the Edmonton Research Forest, in Williams Lake, Alberta, has been actively researching the resource (“Albertaparks.ca” 2015, p2).
Due to changes in the use of adjacent land, forest management techniques, particularly fire suppression methods, there is an over-abundance of 20-50 year old Pine and cypress trees, suppressed in very dense forests. Most of the trees in the forest contain tight-grained, relatively knot-free wood that is ideal for structural wood products. A major benefit of this venture is the reduction of fuel loading. The high wood density, combined with fire suppression, has resulted in amassment of combustible material in the forests. By decreasing tree density, the risk of wildfire is reduced.
- 2. Timber Ville Wood Products Ltd. Company Description
Timber Ville Wood Products Ltd. is a public company based in Williams Lake, Alberta. The management is a team of persons with education in wood products manufacturing and forest management. Timber Ville is dedicated to becoming a leading producer of timber products whose unique raw material is Cypress and pine trees. This is embodied in the company’s mission and vision.
Mission Statement: The promotion of forest management, which is sustainable, in our production of high quality structural timber
Vision Statement: Practicing of responsible stewardship of forests and at the same time leading the development and improvement in wood products production
Below is a summary of our values:
Environment: We are our forests’ stewards.
Performance: We focus on quality products, delivered on time.
Customers: The customer can depend on us to put them in a priority position.
Employees: The success of our company depends on the success of our people. Investors: Strong relationships build strong businesses.
The above statements will help direct actions of the management and employee training.
- 3. Industry Analysis
Alberta has held a long-term status as a great producer of wood products. Cypress and pine wood products, particularly, produce quality timber products. Demand of quality wood has always been high for centuries (AFPA 2015, p1).
Environmental Concern for wood products
Recent international pressure on environmental management encourages sustainably managed forests (Kaur 2014, p1). It has resulted in Alberta wood products manufacturers to get their raw material from forests that have certification from relevant certification systems developed by non-profit, third-party bodies. As such, Timber Ville Wood Products will get SFI, ISO 14001, and FSC certification for their forestry operations.
- 4. MARKETS
Timber Ville’s products are to be manufactured and sold in the Western North American furniture industry and timber frame housing market. This market can be separated into two targets: the Alberta, and the Pacific Northwest American States that include Oregon and Washington. The closeness of the market to manufacturing services drops transport costs. Restraining transportation costs can decrease overall costs.
This product will be marketed to the structural timber market and a smaller niche market appealing to consumers who desire advanced strength characteristics in the furniture and building material used in their homes. Consumers will get stronger furniture and structures because the strength of the product makes homes safer. Timber Ville’s wood looks good with no cracks, more clearly wood content, and a unique appearance that appeals to the market.
Lower Mainland Market
Housing statistics are increasing in Alberta. This means that there is need for household items like furniture and fittings made of wood. Alberta government reports a surge in housing permits issued. Highest housing statistics are in the Edmonton Metropolitan Area. The growing housing market in Alberta provides a promising future for Timber Ville’s potential market (“www.cbc.ca” 2015, p1).
Pacific Northwest Market
The housing market in the Pacific Northwest is also growing. The region is also the second largest housing market in the United States.
Future Market Considerations
Major attention will be given to the international markets including the United Kingdom where there is visible growth in the timber frame homes market.
5. Competitive Analysis
The product for Timber Ville is Wood for construction, furniture, and industry. Fifty and above businesses and contractors in Alberta, alone, produce timber based products and are potential buyers of Timber Ville’s products. By promoting the exceptional product features of our wood, with aesthetic-uniqueness, we can get into the supply chain of these establishments, and those that operate in the Pacific Northwest. Our success will be determined by product quality, features, manufacturing quality, and marketing plan.
Timber Ville may face problems getting into the market if costs get too high or if the products price is too high. The advantage that Timber Ville already has over its main competitors Lakewood Enterprises, Canadian Timber, and North West America Lumbers, among other companies is the low stumpage premium paid for the volume of wood harvested. Limiting costs will reduce the price. The company will continuously improve on harvesting operations to cut costs. It will also be looking for a mean of getting government funding for commercial thinning, which is a valuable ecological, service because it improves interior forest’s health and reduces fuel loading. The main challenge of Timber Ville is likely to face from its competitors is that they are already well established and it has to keep up.
Timber Ville will be looking at other prospective consumers in the target markets, for instance factory-built home manufacturers. By marketing our product to the end user, consumer desire can influence suppliers. Competition may grow from businesses starting similarly appealing and lightweight products. Timber Ville will enhance its marketing. For now, the competition is not that robust. Timber Ville hopes to work for significant market share before this takes place.
6. Marketing Plan
The initial design of Timber Ville wood is standard timber beams of varying lengths and widths / girths, for use in furniture development, construction and housing. As production methods progress, more dimensions will be produced. This product can diversify and progress with consumer needs. Other prospects include attractive laminated beams, park benches, and playground equipment.
Customers will get quality products. Our wood is straight, clear with no cracks. These beams also have great strength. This ensures quality products resulting from their use. The skilled labor required for logs processing is available in the working location. Williams Lake is in the core of the wood manufacturing industry and has a wide labor pool skilled in wood products handling. The management will be selected from the region’s main industry. Since our wood will be competing with commodity wood products, the management team will be in possession of prior industry knowledge and will add greatly to the marketing planning of Timber Ville Wood Products. A customer service department will attend to products customization, orders, and delivery confirmation. Customers will get special attention to make sure that their needs are met. Guaranteed will be the warranty for products and their decorative attributes.
The economic feasibility of wood production has been studied and understood. The market acceptability of the Timber Ville product is yet to be fully ascertained. There are factors to consider in the marketing strategy. Visual elements like glue and voids common in the middle of the wood may be unattractive to consumers. Production procedures will have to reduce the appearance of glue, and identify approaches of plugging the hole with other materials might be beneficial to address our customers’ concerns.
The final wood product will be distributed to merchants, such as constructors, homebuilders, and carpenters, within Alberta, British Columbia, and the North Western United States. These transfers will be handled directly by a sales person within Timber Ville, specifically, a member of the Customer Service department. Products will be transported under the supervision of Timber Ville. Road Transport is best for this kind of business. Efficient delivery is achievable with trucks. We will use the Alberta Trucking Association to get the most suitable company to transport the product.
Fixed Costs: They include site overhead, office supplies, and safety equipment. The equipment will be fixed start-up costs. Depreciation will be calculated over time. Variable Costs: Raw material costs, mostly timber and glue, likely to vary as market for these products changes. A budget needed for marketing and promotion will also change as the product improves and diversifies. Transportation costs will depend on the shipment distance.
Taxes: Timber Ville is subject to provincial corporate and small business taxes. Stumpage is also charged on the timber delivered to the mill. When delivering to the United States, border taxes will also have to be included.
Profit Margin: The retail value of timber will be based on the costs associated production. To make revenue for shareholders, a good profit margin has been incorporated in the financial analysis. This is a realistic projection of the profit that can be achieved.
Our marketing and clients
Builders and Retailers
The main customer Wood beams and planks will be building contractors and building supply warehouses. Personal marketing will be the best advertising tool for this circumstance. Trade shows will also be great marketing tools. Introducing our product early to exploit this opportunity will give the product the publicity it needs.
Although the main consumers have been recognized as builders and wholesalers, other important customers can provide market for the wood. Building professionals like engineers, architects and interior designers are high priority customers who may be reached via trade shows and advertisements in trade journals and catalogues. Promotion of our products will be via television adverts and newspapers
- 8. Operating plan
Strategy: Our manufacturing strategy is for the plant to run at half’ its capacity for the first year, then we to push up production in the next year to full capacity. We will reinforce labor force productivity by focusing on the product quality.
Management will be implemented in a liberal style that allowed laborers to float ideas to the management and vice versa. The main goal is to promote efficiency.
Location: Timber Ville Wood Products Ltd. is located in Edmonton, Alberta. This location benefits the company by being close to timber supply, and reducing transport costs to the American market.
Listed below are salaries of the workforce at Timber Ville Wood Products Ltd.
|Research & Development||60,000|
|Cut-off saw operator||45,000|
|Quartering saw operator||45,000|
|Gluing operators (2)||90,000|
|Skrag mill operator||45,000|
Material: Material will be sourced from the nearby Edmonton Provincial Forest under the guidelines provided by the provincial government on the exploitation of Natural resources.
During the first year of, production capacity for the plant will be kept at 50%. We will be operating with one shift, 40-hour workweek until the second year where we switch to full capacity production. Management will routinely oversee everyday operations.
- Management Plan
For better communication flow, Timber Ville Wood Products Ltd will maintain a flat organization structure. Efficiency of the decision making process will be upped.
Empowering employees is a way to improve the company. Employees get a greater responsibility and ability in decision-making. , This improves motivation and job satisfaction among employees. Timber Ville Wood Products Ltd. Employees are encouraged to partake in team workshops, allowing them to interact with each to strengthen the employee-to-employee relationships.
- Financial Plan
The capital requirements of Timber Ville for the first year are below:
|Machinery Working capital||1,150,000|
|12 months’ salary and wages||805,000|
|Inventory Log cost (800 stems/day)||3,000,000|
|Total working capital Miscellaneous||
|Utilities and Office Furniture||30,000|
Loans and grants will be sought from the provincial government and other private sources. Financing will be based on an interest rate of 4.0%. The company will be owned by four partners based on an agreement, part of which, each partner will contribute $100,000 each. Timber Ville welcomes prospective partners.
Return on Investment
By year four of operations, there will be an expected Return on Investment.
|Liabilities and Owners’ Equity|
|Long term liabilities||1,150,000|
|Total Liabilities and owners’ equity||5,027,000|
APPENDIX B: First year of operations at half capacity
|Cost of Goods Sold|
|Equipment depreciation (based on 12yrs)||0||7986.1||7986.1||7986.1||7986.1||7986.1||7986.1||7986.1||7986.1||7986.1||7986.1||7986.1|
|Total cost of goods sold||0||302736.1||302736.1||302736.1||302736.1||302736.1||302736.1||302736.1||302736.1||302736.1||302736.1||302736.1|
|selling, administrative, general expense|
|Earnings before taxes||$0||$27,847||$27,847||$27,847||$27,847||$27,847||$27,847||$27,847||$27,847||$27,847||$27,847||$27,847|
|Results of Operations|
|First 200,000 Earnings *||$4,051.64||$18,181.82||$18,181.82||$18,181.82||$18,181.82||$18,181.82||$18,181.82||$18,181.82||$18,181.82||$18,181.82||$18,181.82||$18,181.82|
|Income Tax (12%)*||$486.20||$2,181.82||$2,181.82||$2,181.82||$2,181.82||$2,181.82||$2,181.82||$2,181.82||$2,181.82||$2,181.82||$2,181.82||$2,181.82|
|Income Tax (28%)||$1,101.37||$4,942.43||$4,942.43||$4,942.43||$4,942.43||$4,942.43||$4,942.43||$4,942.43||$4,942.43||$4,942.43||$4,942.43||$4,942.43|
|Cash after Tax||$6,397.54||$28,709.10||$28,709.10||$28,709.10||$28,709.10||$28,709.10||$28,709.10||$28,709.10||$28,709.10||$28,709.10||$28,709.10||$28,709.10|
|Total cash available||($147,835.79)||($125,524.24)||($125,524.24)||($125,524.24)||($125,524.24)||($125,524.24)||($125,524.24)||($125,524.24)||($125,524.24)||($125,524.24)||($125,524.24)||($125,524.24)|
|Interest Rate||year 1|
|Owing @||Owing @ End|
|Beginning of Year||$4,627,000.00||$6,318,370.85|