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                 Essence Carpet & Floor Care




     “We are committed to tackling the toughest jobs of carpets and floors.”




                                 Business Plan
                                December 2009




                                  Eferems
                               Owner & Founder
T ABLE    OF   C ONTENTS
E XECUTIVE S UMMARY .................................................................................. 1  

L EADERSHIP ................................................................................................ 3  

S ERVICE O FFERING ...................................................................................... 3  

M ARKET ..................................................................................................... 4  

C OMPETITION .............................................................................................. 4  

D IFFERENTIATION ........................................................................................ 4  

M ARKETING S TRATEGY ................................................................................. 4  

V ISION   AND   O BJECTIVES ............................................................................... 5  

F INANCIAL S UMMARY ................................................................................... 6  

F INANCING S TRATEGY .........................................ERROR! BOOKMARK NOT DEFINED. 

F INANCIAL P ROJECTIONS ................................................................ A TTACHED
E XECUTIVE S UMMARY
                                                                                                   Overview: Essence
 Management:                           Eferems                                                     Carpet Mastery is
 Company Name:                        Essence                                                      committed to
                                        Carpet                                                     tackling the toughest
                                       Mastery                                                     stains in carpets and
 Industry:                              Carpet                                                     upholsteries using
                                      Cleaning                                                     only the most
 Owner investment - cash             $ 10,000                                                      modern equipment
 Owner investment -                                                                                and environmentally
 equipment                              5,000                                                      friendly chemicals
 Start up financing                     4,000                                                      available. We are a
 Total start up costs:               $ 19,000                                                      family-oriented
 Plan Purpose:                        Business                                                     business that
                                      advisors                                                     provides prompt and
                                                                                                   skillful services to
                                           the Brazos Valley area.
                                           Service Offering: Essence Carpet Mastery will provide the services
                                           of carpet and upholstery cleaning, floor stripping, waxing, and
                                           emergency water extraction. Our goal is to recondition carpets and
                                           floors to appear as new. We will offer three services: cleaning carpet
                                           and upholstery, which will make up 60% of our revenue; stripping
                                           floors and waxing, accounting for 30% and water extraction for the
                                           remaining 10% of revenue.
Market: The carpet industry generates $3.3 billion of revenue annually in the United States. The Texas
market is estimated to be at $250 million annually. The market is not growing or shrinking; the market has
been stable for the past few years.
Competition: Our three main competitors in the Washington County area are Chem-Dry, Sears, and
Suvorik Carpet Cleaning. Other indirect competitors are businesses that rent out carpet cleaning machines.
Differentiation: Our business will offer prices that are comparable to our competition. We will guarantee
all work and ensure satisfaction. Customers will think of us when they want dependable service.
Marketing Strategy: Essence Carpet Mastery will mail and deliver fliers with coupons to home owners,
carpet stores, apartment managers, and offer contracts with discounts. There will also be a 25% discount
for all first time customers. We will team with carpet stores as we refer customers to them and they refer
customers to us. We will also offer free walk-through estimates with every job.
Revenue Model and Financial Projections:
                                       Carpet Clean                Floor Maintenance               Water Extraction
 Per Unit Dollars
     Sales price             $      250.00     100%       $         200.00      100%       $       300.00          100%
     Other variable
     costs                          (27.00)                         (37.00)                       (120.00)
     Fin. stmt. gross
     profit                         223.00      89%                 163.00      82%                180.00          60%
     Owner labor
     value                          (40.00)                         (40.00)                       (160.00)
     Pro forma gross
     profit                  $      183.00      73%       $         123.00      62%        $           20.00        7%
 Year 1 total units sold               184                               94                               24
Pretax income           statement: 46%
Year one summary income 33,300
Tax expense             8,300       12%
Sales:               $ 72,000      100%                 $30,000
Owner withdrawals       16,500      23%
COGS                    11,300      16%
Net income           $ 60,600
                         8,500      12%                 $20,000
Gross profit                        84%
Overhead                27,200      38%                 $10,000

                                                              $-
                                                                        Mon 1    Mon 2&3       Qtr 2       Qtr 3          Qtr 4 1
                                                       $(10,000)
2
L EADERSHIP

As founder and owner of Essence Carpet Mastery, Eferems will be accountable for
marketing, staffing, bookkeeping, appointments, and leading the manual labor efforts.
Eferems brings over two years of experience to Essence Carpet Mastery in the floor
and carpet cleaning industry. In particular, he worked for Crown Services for two years
as a utility assistant. While at Crown Services, Eferems performed carpet and
upholstery cleaning and stripped and waxed floors. Eferems assisted in emergency
water extraction and gained valuable skills in the janitorial field. Additionally, Eferems
has eight years experience in the restaurant and food service industry. He performed
duties such as wait staff, bussing tables, general cleaning and simple maintenance.
After earning a position in management, Eferems gained valuable skills in customer
service, staffing, bookkeeping; displaying pride and dedication in his work.

While in prison Eferems participated in the Prison Entrepreneurship Program leading to
a successful change and catalyst to becoming a productive citizen in society. Eferems
helped with events at his local Boys and Girls clubs. He also assisted with activities in
his family church.

Eferems earned his high school diploma from Brenham High School in 1996.


S ERVICE O FFERING

Essence Carpet Mastery will provide the services of carpet and upholstery cleaning,
floor stripping, waxing, and emergency water extraction. Our goal is to recondition
carpets and floors to appear as new. We will offer three services: cleaning carpet and
upholstery, which will make up 60% of our revenue; stripping floors and waxing,
accounting for 30% and water extraction for the remaining 10% of revenue. Our
projected start date is July 2010.

Our primary service will be carpet and upholstery cleaning. We will steam clean,
shampoo, deodorize, and Scotch Guard carpets using all hypo-allergenic chemicals.
We will also dry clean and deodorize all natural fibers of upholsteries. We will do this all
at competitive prices.

Our secondary service will be floor maintenance. We will strip, scrub, and recoat floors.
We will treat all surfaces including tile, laminate, and hardwood with savings to our
customers.
M ARKET

The carpet industry generates $3.3 billion of revenue annually in the United States. The
Texas market is estimated to be at $250 million annually. The market is not growing or
shrinking, the market has been stable for the past few years.

With about 60% of homes, business and other facilities having carpet there is always
demand for carpet cleaning businesses. Certain holidays and end of summer are the
peak times.


C OMPETITION

Our three main competitors in the Washington County area are Chem-Dry, Sears, and
Suvorik Carpet Cleaning. Other indirect competitors are businesses that rent out carpet
cleaning machines.

Our competition competes mostly on value or price. The barriers to entry are low in this
industry.


D IFFERENTIATION

Our business will offer prices that are comparable to our competition. We will guarantee
all work and ensure satisfaction. Customers will think of us when they want dependable
service.

We will explain how to maintain carpet after the cleaning and give our clients pamphlets
to educate them on the upkeep of their carpet. Having a personal relationship with our
customers will set us apart from others.

In addition to this, we will use eco-friendly chemicals and offer a 24-hour water
extraction service.


M ARKETING S TRATEGY

Price
Essence Carpet Mastery will offer three different services. Carpet Cleaning will average
$250, Floor Maintenance will be $200 and Water Extraction will be $300. We will give
free estimates for each service and accept personal checks, cash and credit cards.
Place
Essence Carpet mastery will be located in Brenham, making us highly accessible to our
target market. Brenham has a variety of potential clients because of its college,
apartment complexes and new residential developments.

Promotion
Essence Carpet Mastery will mail and deliver fliers with coupons to home owners,
carpet stores, apartment managers, and offer contracts with discounts. There will also
be a 25% discount for all first time customers. We will team with carpet stores as we
refer customers to them and they refer customers to us. We will also offer free walk-
through estimates with every job. We will put ads in the newspaper and the Yellow
Pages and have a website to show examples of our services and to make
appointments. Our final method of promotion will be to contact local plumbers to
promote our Water Extraction Service.


V ISION   AND   O BJECTIVES

Two Months Before Starting
• Finish business plan
• Research start up cost
• Ensure compliance with city requirements and restrictions
• Make marketing strategy
• Produce marketing materials (website, fliers, brochures, business cards)
• Register with the Chamber of Commerce
• Develop service contract
• Acquire appropriate insurance


First Two Months After Starting
• Obtain 25 clients through marketing strategy
• Send coupons and thank you cards to all customers
• Research customer opinion of service through questionnaires and surveys


First Year
• Revisit sale goals, measure (customers, dollars)
• Hire three employees
• Renew contracts

Second Year
• Offer water extraction service available 24 hours a day
• Purchase two additional vans
• Emphasize and grow floor service business more

Fifth Year
• Buy storefront
•   Hire sales person

Tenth Year
• Storefront in Houston and Brazos Valley
• Hire more employees

Philanthropy
We will donate to the local Boys and Girls Club. We will also buy a dinner for a special
unfortunate family each Thanksgiving and Christmas every year. We will sponsor a PEP
participant each class.

Community Impact
We will be a “GREEN” carpet and floor cleaning company in the Washington county
area. We plan to do everything in our means to keep our environment safe and not
contribute to any damage to the environment. We will offer a service using only
environmental friendly and biodegradable chemicals. We will dispose of all waste the
proper way. All paper used will be recycled paper. We are a part of the community also
so putting any one at risk will be unacceptable.


F INANCIAL S UMMARY

Eferems’s revenue model1 is based on selling the following three services:

•   Carpet Clean at an average price of $250. This service has a material cost of $27
    and owner’s labor charge of $40 producing a gross profit of $183 for each Carpet
    Clean sold. Materials include chemicals and gas. We project selling 184 of these in
    the first year for revenues of $46,000.
•   Floor Maintenance at an average price of $200. This service has a material cost of
    $37 and owner’s labor charge of $40 producing a gross profit of $123 for each Floor
    Maintenance sold. Materials include chemicals and gas. We project selling 94 of
    these in the first year for revenues of $19,000.
•   Water Extraction at an average price of $300. This service has a material cost of
    $120 and owner’s labor charge of $160 producing a gross profit of $20 for each
    Water Extraction sold. Materials include chemicals, gas and carpet pads. We project
    selling 24 of these in the first year for revenues of $7,000.

This will generate more than $72,000 in first year revenues with a net profit of more than
$8,500. This is a 12% net margin after deducting $25,000 in total owner compensation
($16,500 cash withdrawals and $8,300 income taxes).

1
 The revenue model in the Executive Summary includes money paid for non-owner labor plus the
economic value of the owner’s labor (not necessarily cash paid). Initially, the business will be
unincorporated and, as such, receives no tax deduction for money paid to the owner. A deduction for
owner’s labor is included in the Executive Summary so the reader can assess the pro forma gross profit
of the products and/or services. Estimating this pro forma gross profit requires the PEP participant to
value his time in calculating a realistic sales price for his company’s services. The attached financial
projections differ in that non-owner labor is included in cost of goods sold, and money withdrawn by the
owner is shown as owner withdrawals after calculating the business’s tax expense but before net income.
F INANCING S TRATEGY

Essence Carpet Mastery will start in 2011. Total start-up funding is $19,000. This
amount will cover all equipment, chemicals and other start-up costs.

Eferems will save $5,000 in 12 months of employment in the Customer Service
business. Eferems has 5,000 dollars of his own revenue saved to invest in this venture.
He also currently owns $5,000 of equipment which he will use to start the business. The
combined $15, 000 will be Eferems’ initial capital contribution.

The company will have an additional $4,000 in debt financing that will be repaid in 36
months at three times the original investment beginning in the seventh month of
operations.

				
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