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BUSINESS PLAN: Pete’s Pottery Shop
EXECUTIVE SUMMARY
The purpose of
this plan is to describe how Pete’s Pottery Shop expects to operate,
expand and market and why it is a viable business for inclusion in
the Jubilee Business Incubator. This plan was prepared by Pete
Johnson with assistance from Steve Hodges, Manager of Jubilee
Business Incubator. Pete has taken a small business course taught
by Steve in the spring of 1996, and Pete repeated about half of the
course during the next series of classes in the fall of 1996.
Although Pete is a member of the Clinch Appalachian Craft
Cooperative, which is itself a business in the Jubilee Business
Incubator, he wishes to complete a business plan in order to
proceed in a more organized and accelerated fashion with their
business as well as gain needed production space by entering the
Incubator.
Pete’s Pottery
Shop will be located at 120 N. Jockey Street in Sneedville and will
offer a variety of of hand-painted ceramics and hand-thrown
pottery. Products will include mugs, floral dishes, vases,
decorative figurines, etc. Pete and June Johnson is the principal
owners and operators, with assistance in operation from their
daughter Cindy and other part-time local help as the business
grows.
An initial
investment of $300 was made in the business on April 20, 1996 by
Jack Treadway, one-time pharmacist at Surgoinsville Drug Store; Pete
has been sending him 4% of his profits since that time. As a
condition of their inclusion in the Jubilee Business Incubator, by
August 1, 1997, Pete will have written documentation of either one
of the following: (1) A receipt signed and dated by Mr. Treadway
documenting Pete 's completed purchase of Mr. Treadway's claim to
the business through repayment of the original investment, if
necessary with interest at a mutually agreed-upon rate OR (2) a
written agreement signed by Mr. Treadway clarifying the percentage
of the business he claims to own.
PRODUCT OR SERVICE
The products
will be of two types: One type is poured liquid stone items
(primarily mugs, floral dishes, vases, decorative figurines) will be
fired, then painted in single or multiple colors and refired, and
some will be fired with a decal. The second type of product
(including mugs, bowls, vases and pitchers) which Pete has recently
been trained to make, is pottery made from clay, thrown on a wheel,
fired, glazed, and fired again.
CUSTOMERS
There are
several types of customers for Pete 's poured liquid stone
ceramics:
1. Individual
customers are
a. local people
seeking home decoration items, as well as
b. tourists, notably
visitors and workcamp participants (Jubilee and Catholic Charities)
coming to Jubilee Project mainly in the summer; many
of these are
i. seeking a souvenir
of their visit which reminds them of Sneedville, or Hancock County,
or Jubilee Project
ii. seeking decorator
items for their home
2. Institutional
customers include
a. florists shops
(currently in Sneedville and Big Stone Gap, VA) for the floral
dishes, small and large vases;
b. civic groups and
church groups for mugs, thimbles, bells and other items customized
with decals;
c. cooperative gift
bundling projects including
i. Clinch Appalachian
Craft Cooperative using customized mugs to sell to United Methodist
Cokesbury stores and to churches via direct mail, and
ii. Clinch Powells
Sustainable Development Initiative which will use plain mugs in
their Mountain Gift Baskets
d. Bible Schools for
bisqueware on religious themes, which is painted by attending
children and returned to Pete for firing
COMPETITORS
Pete 's competition
will vary with each customer:
1.a. Competition
for local customers seeking home decoration items includes primarily
Laura's Country Cottage and Floral Shoppe on Main Street, with a
wider array of home decorator items and collectibles in a large,
visible, centrally located shop. It is hard for our ceramics to
compete with the very visible location, the wider array of
collectibles and types of collectibles; our strategy for this market
is (1) to compete by personal selling, taking our products on
the road in town; the drawback is that this strategy takes time
which could be spent producing products
(2) to compete by appealing to customers seeking a specific
theme in their decorating, e.g. Southwest, Indians, pioneer,
religious
themes, etc
1b. Competition
for tourists: for
(1)
General tourists, competition includes Laura's, and for souvenirs it
includes Hancock Drug Store and Gibson’s Supermarket (cards), and
Credit-N-Carry and Quick Aide Drug Store (T-shirts). In
this case too, it is hard to compete with the more visible location;
with this customer, our best strategy is to cooperate with
the Clinch Appalachian Craft Cooperative and Young Artists
Cooperative in getting signage and referral from tourist
information center(s) to help tourists find Jubilee Center and the
variety of products we have.
(2)
Jubilee Project tourists,
A.
we have an advantage over Laura's, Hancock Drug Store and Gibson’s
Supermarket, and Credit-N-Carry and Quick Aide Drug Store in that
our location in the Jubilee Business Incubator, our connection with
Jubilee, and the active promotion of the Jubilee staff all mean that
Jubilee tourists will not only see our crafts (along with other
Craft Cooperative members) first, but be more inclined to buy them
because of the Jubilee connection. This assumes that we have the
kind of craft they are looking for, so our strategy to be
competitive here is (a) to continually ask Jubilee tourists what
kind of ceramic ware they would most like to buy, and to make those
kinds in preparation for future tourists (b) Assuming souvenirs of
their visit is one motive, make items which by theme (mountains,
etc.) or by decal or painted words ("Sneedville", "Hancock County",
"Jubilee") recall their visit (c) Similarly, assuming that United
Methodist-related themes will appeal to the tourists and perhaps to
others back home to whom they will refer our business, make items
which by theme (circuit rider, country church, etc.) or by decal (UM
cross & flame logo, UMW logo, etc.) or painted words provide them
with a United Methodist-related item. These products can also be
used as part of the competitive strategy for gift basket/bundles
sold to United Methodist stores, church groups, and individuals.
B.
With Jubilee tourists, our bigger competition is the other 22
members of the Clinch Appalachian Craft Cooperative; but the
advantages of combining our craft offerings to attract more
people by providing a greater selection and a very attractive
showroom, probably comes close to counterbalancing our losses
to other craft people.
2.a. Competition
for florist's shops are: no other suppliers for Kanker’s Florist in
Hancock County; I don't know about but will ask about other
suppliers to Barry’s in Norton.
2.b. Competition
for civic groups and church groups are regional and national
customizing companies that because they buy materials and
produce on a large scale can make a wide variety of customized
ceramics (mugs, plates, etc.) of reasonable quality, at lower prices
than we can. Pete and Deanna's can compete mainly on the
grounds that (1) many groups are not aware of these
regional/national companies and so our promotion will be the first
they hear (2) even if they do hear about these companies, some
groups will prefer the dealing with a local company because of
convenience, trust, or philosophical commitment to local business
(3) United Methodist-related groups may prefer dealing with us
even if they know of these companies because of our Jubilee
connection
2.c. Competition
for cooperative gift bundling projects, like gift baskets, are few:
i. Clinch Appalachian
Craft Cooperative plans a gift basket project using customized mugs
for United Methodist stores, church groups, and individual; since
it is a gift basket, a mug for hot drinks is a highly desired item;
since it is a Craft Cooperative project, items by Craft Cooperative
members will receive preference (this is part of the market
pitch/appeal of the basket); and since so far there are no other
customized mug-makers in the Craft Cooperative, our mugs will almost
surely be used.
ii. Clinch Powell
Sustainable Development Initiative plans to continue its Mountain
Gift Basket project which will use plain mugs; my competition is
Walmart, Kmart, dollar stores, and other places which sell mugs
cheaper than I can make them; while Clinch Powell may prefer my mugs
if they are close to the same price, I cannot afford to make them
if I don't make much or any profit. This is probably a product line
I will let go, to concentrate my time on products which give me a
fair and better return on my labor
2d. Bible Schools: I
am not aware of any competitors in the Hancock or regional
Methodist church market to my business in supplying bisqueware to
interested Bible Schools
LOCATION
Pete’s Pottery
Shop will carry out both production (with a kiln and workspace in
each location) and retail from an outbuilding next to our home as
well as from our rented space in the Jubilee Business Incubator in
Sneedville, Tennessee. The Jubilee space is expected to increase
sales by giving us greater access and visibility to visiting tour
and workcamps groups as well as to local community leaders coming to
the building on other businesses.
MARKETING
I. Research: I will
continually do market research by asking each of my customers what
kind of ceramic products they would most like to purchase from me,
and keeping records of their responses. This will enable me to know
how best to use my money purchasing molds and how best to use my
time developing new products.
II. Price: Until now
I have used a competitive pricing strategy: my prices have been
comparable or slightly lower than similar ceramics in the region. I
will do a break-even analysis on each major item, and will not
produce any item which does not allow me to earn at least $5.50 per
hour, after subtracting other variable costs. I will give first
priority to those products which allow me to make the greatest
profit.
III. Promotion:
1. Promotion of
hand-painted home decoration products to local people will continue
to be through a combination of personal selling as I encounter them
in town, and limited selling from the Clinch Appalachian Craft
Cooperative gift store.
2. Promotion to
visitors and workcamp participants (Jubilee and Catholic Charities)
coming to Jubilee Project mainly in the summer, will be through the
arrangement of Jubilee Project staff. As in the past, I will look
for opportunities to demonstrate my craft to potential customers
like these, which is an effective way of increasing customer
interest in purchasing any craft.
3. Involvement with
Red Bird Mission, Cokesbury Bookstore, the Circle of Villages store
in Knoxville, the United Methodist Gift basket project, etc. will be
as a result of participation in the Clinch Appalachian Craft
Cooperative, and with marketing help from Jubilee Project. Thimble
sales to Red Bird are expected to be about 400 per year, based on
experience. As one of my responsibilities in the Cooperative, I
will make an initial trip with a sample United Methodist gift basket
or boxes to Cokesbury Bookstore in Knoxville on June 18, 1997 with
Steve Hodges, to check out their interest in ordering such gift
baskets or boxes.
4. My crafts are
already being promoted in a Clinch-Powell Resource Conservation and
Development Council tourist guide to the region, and will soon be in
other state tourism publications.
5. I have made an
agreement with Clinch Powell Sustainable Development Initiative to
make 250 plain mugs for them now; I will negotiate a price with them
which meets my guidelines of allowing me to make at least $5.50 per
hour. Before making any commitment to supplying further mugs (I
know they want 400 later), I will carefully review the amount of
profit I am making on these mugs compared to my effort, and compare
it with how much I could be making if I spent the same time on other
products. If my time is better spend on other products, I will turn
down the offer to make the next 400.
6. During the month of
June I will also look carefully at the amount of profit I can make
on customized mugs, compared to other products I can sell. If this
turns out to be a comparitively profitable product, then on or just
before August 10, 1997, I will send out a letter to as many civic
groups and churches in the county as I can, advertising the
availability of my customized mugs, dishes, thimbles or bells (or
whatever product is both profitable and likely to sell.)
7. I will continue
marketing my florist supply products to Kanker’s Florist in Hancock
County, Barry’s Florist in Norton, and others near by through
personal contact and selling. Benny has said that he has an almost
unlimited need for 12" (small) and 16' (large) vases. I will
examine carefully my amount of profit compared to the work and
material cost I put into each product (dish, small vase, large
vase), and will stop spending my time on less profitable products so
I can increase sales of more profitable products.
8. Also during the
month of June, I will look at the amount of profit I can make on
selling bisqueware to Bible Schools, factoring in the time it takes
to fire them once they return them. If this turns out to be a
profitable product line, I will immediately send out letters to
churches which are known to have Bible Schools, advertising the
availability of my bisqueware to them. By July I will explore with
the staff of Jubilee Project the possibility of sending a similar
letter or flyer to other churches in the area: e.g. Morristown, or
United Methodist churches in the Morristown District (includes
Grainger, Hawkins, Hamblen, Greene, Cocke, and Jefferson Counties.)
OPERATION & MANAGEMENT
PLAN
Currently the
business has a small building outside the home and a room at Jubilee
Project where both production and retail sales are done in the same
area; in addition, some items are retailed in the Clinch Appalachian
Craft Cooperative Store. At both production locations, there is a
kiln, a worktable, and shelves for storage. As orders increase, my
wife Deanna and daughter Crystal will help with production; if I
need further help, I am interested in hiring one or more high school
aged special education students whom I will pay by the piece, in
order to provide them with some income.
In order to keep
business and personal finances separate, upon entry into the Jubilee
Business Incubator we have agreed that we will open a separate bank
account for the business. All business income without exception
will be put into this account for at least a year, and without
exception only business expenses will be paid from this account,
until after discussion and mutual agreement with Jubilee Business
Incubator staff we decide to change this arrangement. Business
income, expenses, and orders will be reported to and reviewed with
Jubilee Business Incubator staff monthly.
FINANCIAL PLAN
Personal
financial statement of Pete Johnson:
Assets:
Trailer $14,500.00
Kiln $ 1,500.00
Molds $ 3,000.00
Potter's
Wheel $ 250.00
Car $ 800.00
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Total Assets:
$20,050.00
Liabilities
Bank
Loan $ 3,000.00
Personal
Loan $ 250.00
Loan from Jim
Treadway $ 300.00
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$ 3,550.00
Net
Worth $16,500.00
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