The business plan of the enterprise for the production of frame-modular buildings

* The calculations use the average data for the World

1. SUMMARY OF THE PROJECT

The purpose of the project is the organization of an enterprise for the production of frame-modular buildings in Yaroslavl. Modular buildings can be used as change houses, mobile office buildings, shopping pavilions, country houses, as well as full-fledged residential buildings. The advantages of these buildings are:

  • mobility - the building can be dismantled and transported up to ten times

  • low cost - the use of cost-effective materials in the design allows to reduce the cost compared to wooden or stone (brick, gas-block) buildings; since the modules are manufactured according to standard designs, and the buyer orders the finished goods from the catalog, a minimum of work is carried out directly at the construction site, which also reduces the cost of construction and its time

  • the use of standard modules allows to reduce costs due to mass production, as well as reduce the cost of warehousing of finished products, which allows to increase the profitability of the enterprise

Project performance indicators are given in Table. one.

Table 1. Key performance indicators of the project

Payback period (PP), months

6

Discount payback period (DPP), months

6

Net present value (NPV), rub.

2 772 740

Return on Investment (ARR), %

25.64%

Internal rate of return (IRR), %

24.73%

Profitability Index (PI)

1.35

2. COMPANY DESCRIPTION AND INDUSTRY

Since the project relates to construction infrastructure, it is advisable to consider such interconnected markets as: the construction market, the market for building materials and the market for translucent structures.

According to IndexBox, the construction materials market in the first half of 2016 was subject to the following influences:

  • reduction in residential construction (-16% over the same period last year)

  • some growth in non-residential construction (+ 3% over the same period last year)

  • decrease in production of basic building materials (-8% over the same period last year)

  • growth in production of finishing materials (+ 5% over the same period last year)

  • decrease in investment in construction (-1.6% by 2015)

Since December 2014, there has been a permanent decline in sales in the primary housing market. During this time, sales fell by about 30-35%. The largest decline in housing construction was observed in February 2016, after which there is a gradual increase in this indicator. The decline in sales was primarily caused by a decrease in the number of people who purchased real estate for their own savings. To improve the investment background in the industry, the state has taken a number of measures to stimulate the housing market (subsidy programs).

In non-residential construction, the volume of construction of commercial real estate decreased, the share of agricultural and industrial buildings increased (Fig. 1).

Against the background of a decline in real incomes, there is a shift in demand towards building materials of a low price segment.

Figure 1. The structure of commissioning of non-residential real estate by type in the I quarter of 2015 - I quarter. 2016 (data from Rosstat, IndexBox)

Traditionally, more than 60% of investments in fixed assets in Russia belong to the construction industry. At the same time, there is a growth trend of this indicator in a crisis. In 2015, 5, 945.5 billion rubles were invested in the construction industry. According to the forecasts of the Ministry of Economic Development, a positive value of investment indicators in the industry should be expected in 2017; expected growth rate in 2017-2019 - 2.7% per year.

The driver of growth (decrease in the rate of decline) in sales of construction raw materials and materials was the increase in the volume of repair work against the background of a decrease in construction volumes.

Figure 2. Dynamics of production of basic building and finishing materials in the 1st half of 2015 - the 1st half of 2016 (data from Rosstat, IndexBox)

The share of imported components (primarily PVC profiles) in the plastic window market (according to O.K.N.A.-marketing) has dropped significantly - from 35% in 2006 to 2% in 2015. According to experts, the most likely scenario for the development of the market in 2016 is its fall within 15%.

Competition in the industry today is relatively low due to the small number of players and established spheres of influence.

Figure 3. Dynamics of the plastic window market in Russia in 2006-2015, mln. m

According to experts, the following trends should be expected in the coming years:

  • the most attractive segment for manufacturers of building materials are building materials that can be used for repair - repair work is carried out by the population constantly, regardless of the state of the economy; demand is shifting towards the low price segment;

  • the weakening of the national currency will lead to an increase in the cost of both equipment used in the construction and production of building materials, as well as the raw materials themselves; this means a significant increase in the competitiveness of domestic manufacturers;

  • demand for construction and decoration materials will be supported by the public sector;

  • The most difficult year in the residential real estate market will be 2017, after which the situation is expected to improve.

Thus, given the shift in demand towards budgetary decisions, modular frame construction seems to be a promising area of ​​business.

The production is supposed to be located in Yaroslavl, the sales market is the Central Federal District. The target audience of the project is very wide: trade organizations (small and medium-sized businesses), individuals with summer cottages, individuals with a relatively low income level, who need housing, and so on.

Yaroslavl is a city in the central part of the Russian Federation with a population of 606 thousand people. It is an important transportation hub. The Central Federal District has a population of more than 39 million people, a relatively small territory and a high population density. Thus, the market has a high capacity and a potentially high level of demand.

3. DESCRIPTION OF GOODS AND SERVICES

The company produces frame-modular buildings that have a wide scope:

  • trade pavilions

  • checkpoints

  • change houses at construction sites or for protection of objects

  • country houses

  • residential buildings

From ready-made modules, you can assemble a building of almost any configuration; maximum number of floors - two floors. Any module can be equipped with a heating, water supply and sewage system. There are no restrictions on the scope of the project products.

Modules are made to order in accordance with typical drawings. If necessary, a minor revision of the modules is carried out in accordance with a specific project. Ready-made solutions are placed in a catalog on the company's website. Depending on the configuration and area of ​​the building, the cost of 1 m2 varies; the minimum cost is 7, 500 rubles. per 1 m2. The price includes production, delivery and installation of the building. Finishing work, connection to communications, etc. are not included in the price. The project does not provide for such work.

Table 2. Characteristics of modular homes

Structural element

Characteristic

Frame

Metal channel 100x50x3 mm, pine beam 100x50 mm (racks, logs of the floor and ceiling), bar 50x50 (lathing)

Roof

Gable, metal tile

Floor

Draft - a board of 25x100 mm, 25x150 mm; fair - chipboard 16 mm

Insulation

Foamed penofol (2 layers), mineral wool (50 mm)

Floor waterproofing

Hydroisol

Exterior finish

Painted professional sheet S-8

Interior decoration

Chipboard

Window

PVC 60 mm, single-chamber double-glazed window 24 mm

Entrance door

Metal, lever lock, production Russia

Interior door

DG 21-8, laminate

Table 3. Assortment of turnkey solutions and selling price

No.

Name / Appointment

Area, m2

price, rub. per unit

one

Checkpoint / traffic police post / trade pavilion

16.8

135 118

2

Change house / shopping pavilion

28.8

250 675

3

Trade Pavilion / House

40.3

335, 296

four

Residential building №1

50, 4

435 456

five

Residential building №2

60.0

518, 400

6

Residential building №3

72, 2

587 277

4. SALES AND MARKETING

The target audience of the project can be segmented as follows:

  • state enterprises and structures (Ministry of Emergencies, traffic police, industrial and construction enterprises)

  • construction (non-state) enterprises of various kinds (residential and commercial construction, road construction, energy, etc.)

  • retailers

  • car parks

  • manufacturing enterprises

  • individuals with summer cottages, 35-60 years old

  • individuals with income up to 60 thousand rubles. per month, not provided with own housing

Promotion of enterprise products is carried out in two directions: online and offline. For online promotion, the company’s website is being created, social networks are actively used. Used contextual and targeted advertising.

To promote offline product samples are exhibited in the two largest construction markets of the city. Each exhibit has a detailed description indicating the price and contact details of production.

Work with commercial and government organizations is carried out by sales representatives. They negotiate, enter into supply contracts, oversee the company's participation in tenders and auctions.

Applications are accepted by phone and through the website. If necessary, the customer can visit the production. To clarify the details of the order, drawing up design and estimate documentation, a technical specialist of the enterprise leaves for the customer.

As an additional service, the company provides contacts of contractors performing work on the installation of engineering systems and decoration.

The price level for the company's products is at the average market level. Market analysis shows that the level of competition in this region is low. In the entire Central Federal District there are no more than ten manufacturers of similar products, in Yaroslavl - only one. The competitiveness of the enterprise is ensured by the high speed of work, territorial proximity and reasonable prices.

Demand has a pronounced seasonality, which largely coincides with the construction season, but has a slightly longer duration due to the fact that frame-modular buildings can be produced and mounted at lower temperatures than, for example, stone-mounting works.

Table 4. Planned sales, units / month.

GOODS / SERVICES

AVERAGE PLANNED VOLUME OF SALES, units / month

PRICE FOR UNIT., Rub.

REVENUE, rub.

VARIABLE COSTS, rub.

one

PPC / traffic police post

7

135 118

945 825

762 762

2

Change house / shopping pavilion

12

250 675

3 008 102

2 211 840

3

Trade Pavilion / House

7

335, 296

2, 347, 072

1 805 440

four

Residential building №1

3

435 456

1 306 368

967 680

five

Residential building №2

2

518, 400

1, 036, 800

768, 000

6

Residential building №3

one

587 277

587 277

435 020

Total:

9, 231, 444

6 950 742

5. PRODUCTION PLAN

The production is located on an open area of ​​the production territory on the outskirts of the city. Since there are no special requirements for the organization of the production process, its implementation outdoors is permissible. The area of ​​the production site is 250 m2. Also on site is a rented office space for sales and administrative staff. Office space is 30 m2.

The production process also does not require specialized equipment; various hand tools are acquired. Production is carried out in accordance with the developed standard drawings of the modules and the customer's wishes for the configuration of the building. Production time - 4-8 weeks depending on the configuration and the number of modules.

Finished products until the time of installation are stored in a designated area of ​​the production site. The advantage is the ability to stack modules, which saves space.

Delivery to the installation site is carried out by special vehicles. Delivery within the Yaroslavl region is included in the price of the module. The cost of shipping over a greater distance is calculated individually.

Installation involves fastening the modules together at the construction site. Usually the installation time is no more than 3-4 days.

6. ORGANIZATIONAL PLAN

For the implementation of the project a limited liability company is organized, the founder acts as a director. To do this, he has all the necessary knowledge and skills in the field of entrepreneurship and construction. The initiator of the project has a higher education in construction and work experience in the field of construction infrastructure. Project documentation is developed by the project initiator.

The duration of the preparatory phase is minimal. Considering that the project documentation has already been prepared and approved by the time the project starts, the preparatory phase includes the purchase of a tool, the selection of personnel and the development of a website.

Table 5. Staffing and payroll

Position

Salary, RUB

Number of people

PHOT, RUB

Administrative

one

Accountant

4, 500

one

4, 500

2

Director

45, 000

one

45, 000

Industrial

6

Production foreman

28, 000

one

28, 000

7

Installation Team Leader

28, 000

one

28, 000

eight

Builder

25, 000

3

75, 000

9

Installer

25, 000

2

50, 000

Trade

13

Sales Manager

22, 000

one

22, 000

14

Sales Representative

30, 000

one

30, 000

Auxiliary

18

Storekeeper

23, 000

one

23, 000

nineteen

Loader

15, 000

one

15, 000

Total:

320 500, 00 ₽

Social Security contributions:

96 150, 00 ₽

Total deductions:

416 650, 00 ₽

Figure 4. The organizational structure of the enterprise

7. FINANCIAL PLAN

The project has no time limit. A period of five years is chosen as the horizon of financial planning. The financial plan takes into account all the income and expenses of the project. Revenue refers to revenue from operating activities; income from investing and selling assets is not taken into account.

The amount of investment costs - 2 050 000 rubles. (Table 6), of which the project initiator's own funds are 1.7 million rubles. The lack of funds is planned to be covered by attracting a bank loan at 18% per annum for a period of 24 months. Credit holidays - three months.

Table 6. Investment costs

NAME

AMOUNT, rub.

The property

one

Office equipment

100, 000

Equipment

2

Tool kit

700, 000

Intangible assets

3

Website Design

150, 000

Current assets

four

Current assets

1, 100, 000

Total:

2 050 000 ₽

Own funds:

₽ 1 700 000, 00

Required borrowed funds:

350 000 ₽

Rate:

18.00%

Duration, months:

24

Variable costs include expenses for the acquisition of materials necessary for the construction and installation (Table 7). Fixed costs: rental of a production site, office, advertising, utility bills, depreciation and others (Table 8). The amount of depreciation is calculated using the linear method, the useful life of fixed assets and intangible assets is five years. A detailed financial plan is provided in App. one.

Table 7. Variable costs

GOODS / SERVICES

COSTS UNITS, rub.

TRADING VALUE, %

UNIT COST, rub.

one

PPC / traffic police post

108 966

24%

135 118

2

Change house / shopping pavilion

184 320

36%

250 675

3

Trade Pavilion / House

257 920

thirty%

335, 296

four

Residential building №1

322 560

35%

435 456

five

Residential building №2

384, 000

35%

518, 400

6

Residential building №3

435 020

35%

587 277

Total:

2 262 222 ₽

Table 8. Fixed costs

NAME

AMOUNT PER MONTH., Rub.

one

Rental (site)

10, 000

2

Rent (office)

18, 000

3

Communal payments

9, 000

four

Internet and communication

4, 500

five

Hosting and site support

1, 500

6

Advertising

35, 000

7

Depreciation

15 800

eight

Selling expenses

5, 000

9

Administrative expenses

3, 000

Total:

101 800 ₽

8. EVALUATION OF EFFICIENCY

Assessment of project effectiveness is based on an analysis of the financial plan, cash flows, as well as simple and integrated performance indicators (Table 1). To account for changes in the value of money over time, the cash flow discounting method is used. Accepted discount rate of 12%.

The annual revenue of the enterprise after reaching the planned sales volumes is 63.7 million rubles .; net profit (after tax) - 7.6 million rubles. Simple (PP) and discounted (DPP) payback periods - 6 months.

Net present value (NPV) - 2, 772, 740 rubles, which is a high value and indicates the high efficiency of the project. The internal rate of return (IRR) is 24.73%, the rate of return (PI) is 1.35. These integral indicators also indicate the effectiveness and investment attractiveness of the project.

9. WARRANTIES AND RISKS

When assessing the risks associated with the implementation of the project, external and internal factors are analyzed. Low quality of products due to poor-quality components or assembly technology can be attributed to internal ones, as well as shortfall in profit due to poor-quality work of sales specialists. It is possible to neutralize threats from these factors by constantly monitoring product quality and monitoring the performance of all links by the director.

External risk factors include the following:

  • actions of competitors - price struggle from existing players and the emergence of new ones; it is necessary to strengthen the position of the enterprise and relations with regular corporate clients as soon as possible

  • decrease in demand associated with a decrease in the solvency of the population; perhaps a slight decrease in selling prices due to a decrease in profitability; it is also necessary to provide for the possibility of reducing the cost of production by optimizing production, procurement and other factors.

10. APPLICATIONS

Financial plan

Denis Miroshnichenko

(c) www.clogicsecure.com - a portal to small business business plans and guides

08/18/2019

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