Furniture Production Business Plan

* The calculations use the average data for the World 1 132 000₽

Minimum starting capital

40%

Profitability

8 months

Payback

519 560 ₽

Net profit

The aim of the project is the creation of furniture production for the sale of wooden furniture in a city with a population of 500-800 thousand people.

To implement the business idea of ​​a furniture manufacturing enterprise, production facilities are rented in the industrial area of ​​the city. The total area of ​​the premises is 350 m2, on which production shops and a sales office are located.

The target audience is middle-income families that renew furniture every 3 years and prefer unique, high-quality furniture made from natural materials. The price segment is medium.

The main advantages of the furniture business:

  • a relatively small amount of investment;

  • promising direction, interest in which will never disappear;

  • manufactured furniture refers to general consumption goods, which provides a wide target audience;

  • the profitability of the furniture business can reach 300%.

The initial investment in furniture production is 1, 132, 000 rubles. Investment costs are directed to the repair of the premises, the purchase of equipment, the arrangement of the office, the initial purchase of raw materials and the formation of working capital. Own funds will be used to implement the project.

Financial calculations cover a three-year period of operation of the furniture production project. It is planned that after this period the institution will need to expand production and the range of products.

The net monthly profit of the furniture project when reaching the planned sales volumes will be 519, 560 rubles. The return on sales in the first year of operation will be 25%. Upon reaching these indicators, the initial investment will pay off for the eighth month of work. Integrated indicators of project performance are presented in table 1.

Table 1. Key performance indicators for a furniture project

Key performance indicators of the projectNumber value

Payback period (PP), months

eight

Discount payback period (DPP), months

eight

Net present value (NPV), rub.

11743

Return on Investment (ARR), %

40.28

Internal rate of return (IRR), %

18.12

Profitability of furniture production

Active growth in housing construction and the number of purchase and sale transactions in the residential real estate market led to an increase in demand for furniture. The acquisition of new housing is always associated with the need to purchase furniture. It is possible to notice these trends by comparing the dynamics of housing commissioning and the volume of the furniture market - the peak is in 2014, after which there was a decrease in both indicators, which is associated with the crisis. By tracking the performance of the construction market, you can predict the situation in the furniture industry.

The active stage of the furniture market development is in 2011-2014 - it was during this period that the volume of the furniture market increased. The sharp drop in volumes in 2015 was due to two trends at once: firstly, a decrease in solvent demand; and secondly, a sharp fluctuation in the exchange rate, which contributed to the displacement of foreign suppliers from the market.

As of 2014, the share of furniture from abroad was about 65% of total sales. Only in 2015, furniture imports decreased by 45.8%. According to marketers of the largest furniture retailers, IKEA and Hoff, that by the beginning of 2018, the share of the domestic manufacturer in the furniture market will reach 70%. This forecast opens the prospect for business development in this segment.

For example, at the end of 2016, the real volume of the furniture production market continues to decline, however, in nominal terms it remains at the same level, which is due to an increase in furniture prices. According to statistics, furniture prices increased by 19.14% - this is the highest growth rate over the past 7 years. Thus, there is a decrease in the qualitative growth of the furniture market.

The crisis also affected the structure of the furniture market. The most significant changes affected the segment of office furniture and bedroom furniture. The first trend is due to the optimization of company expenses in difficult times. The second trend is justified by the fact that bedroom furniture is the least necessary in a home setting. The smallest effect of the crisis is observed in the segment of furniture for the kitchen and living rooms, as well as upholstered furniture. Therefore, the most promising segment of the furniture market is the economy class, which even during the crisis feels more confident.

The furniture market is one of the least consolidated retail segments. The top 10 furniture retailers account for 1/3 of the entire market, and the revenue growth rate of leaders in 2015 exceeded the overall market growth. The constant leader in the Russian furniture market is IKEA, which occupies 22% of the total market. The annual revenue growth rate was 14.7%. Experts predict a further increase in the share of large retailers, which will reach 40%.

At the same time, the Russian furniture market is characterized by a high level of competition. As of 2017, the Furniture of Russia catalog includes more than 14, 000 companies, 5, 000 of which are directly manufacturers.

The highest density of furniture production is noted in the Central and Volga Federal Districts - about ¼ of the total number of manufacturers is concentrated there. In other areas, retail sales far exceed domestic production. At the same time, it is more profitable for furniture manufacturers to sell their products within the region, which reduces transaction costs.

In cities with a population of 800 thousand or more, various large retailers are represented, which is very difficult to compete with. In cities with a population of less than 500 thousand people, there are no network players and delivery in many online stores, which narrows the choice of the buyer and reduces the level of competition.

Another parameter of the furniture market is the trade format. According to surveys conducted at the end of 2016, every fifth resident ordered furniture in an online store. In the first half of 2016, the volume of sales via the Internet grew by almost 47% and reached the level of 974 million rubles, which is 12.5% ​​of total sales in the market. Almost half of the furniture chains have their own sites, but not all of them have the function of online sales. Every year, the popularity of online furniture stores is growing, as it allows sellers to reduce the cost of renting large trading floors and lower the price, and for buyers, online trading is a more convenient purchase option.

By combining the trends of the Russian furniture production market, you can create the image of a successful furniture company: an economy-class furniture manufacturer operating in a city with a population of 500-800 thousand people and selling products through an online store. These parameters will ensure constant demand, almost independent of the economic situation, reduce competition, reduce costs, which will reduce product prices.

Experts predict that the share of small and medium-sized enterprises in the furniture business will continue to grow and in a few years will reach 75-80%. The key task of such manufacturers is to occupy their niche in the market. For example, manufacturers of wicker furniture have almost no competitors in the market, and custom-made furniture is gaining popularity every year.

Recently, there has been a growing demand for the products of furniture manufacturing workshops - exclusivity of supply and variability of production are important parameters when a consumer chooses furniture. This trend is supported not only by the taste preferences of consumers, but also by the development of the market for design services, which, according to the results of 2014, grew almost 2 times. With all the variety of choices presented on the furniture market, the consumer can not always find the right furniture that matches the design project.

The most rational way out of the situation is the production of custom-made furniture, which is performed by small furniture workshops. This market segment is represented mainly in the middle and expensive segment, while the economy class is almost free.

The easiest way to organize furniture production is to open a furniture workshop.

The advantages of this format of furniture production:

  • does not require large investment costs;
  • to accommodate production facilities do not need a large room;
  • savings on equipment;
  • low price of finished products;
  • production flexibility.

The disadvantages of furniture production include:

  • innovation and imagination are the foundation of business success;
  • handmade furniture is time consuming;
  • independent customer search.

This format fits into the image of a modern furniture manufacturer. The implementation of this project involves the opening of a furniture workshop.

Despite the obvious problems in the industry and fluctuations in the demand for furniture products, this segment remains attractive to the investor. The advantages of the furniture business include:

  • a relatively small investment in furniture production;
  • promising direction, interest in which will never disappear;
  • furniture refers to general consumption goods, which provides a wide target audience;
  • business profitability can reach 300%.

The main drawback of the furniture business is fierce competition in the market. However, with the competent construction of production, you can occupy your own niche in which competition will be minimal.

Thus, the prospects for furniture production, forecasts of growth in demand for this type of product and the advantages of furniture production allow us to talk about the investment attractiveness of such a business.

We determine the assortment of furniture production

The furniture company is engaged in the production and sale of wood furniture - dining groups, as well as upholstered furniture - sofas and armchairs. The furniture company being created is positioning itself as a “furniture workshop”, specializing in the manual assembly of products and the production of custom furniture for individual orders. The products of this company are favorably distinguished in the market by the following indicators: low prices, custom-made work, a wide selection of equipment and upholstery, color and material of products, the possibility of online purchase.

Products intended for production are:

  1. Dining table, made of solid pine, painting with imitation of aging, dimensions: 110 * 70cm, tabletop thickness 4 cm;

  2. The chair is made of solid pine, painting with imitation of aging, dimensions: chair height 105 cm, chair back height 60 cm, chair back width 50 cm, seat width 52 cm, seat depth - 45 cm;

  3. Triple sofa, wooden armrests, folding mechanism - book, Jacquard upholstery, dimensions: length - 240 cm, depth - 96 cm, seat height of the sofa - 40 cm, 2 decorative pillows, filler - spring block polyester foam pad, niche for linen. Additional design (carriage screed, upholstery and color options, various models - 3 seater, 2 seater, corner, with and without folding mechanism)

  4. Armchair, frame made of chipboard, plywood, softwood; the seat is made of PPU and a block of flat springs. Dimensions: length - 750 mm, depth - 870 mm, height - 890 mm. Additional design (carriage screed, upholstery and color options).

Table 2 presents the prices of competitors for similar products in the market and the estimated selling price.

Table 2. Comparison of prices for the products of CJSC "Dion" and similar products

Name of product

Planned selling price

Prices for similar products on the market

Table

12000

13000

Chair

3800

4500

Sofa

30000

32000

Armchair

8500

9000

In addition to furniture production, the workshop provides a service for furniture hauling. The cost of the service is 1000 rubles per 1 meter of fabric work.

Marketing and sales of furniture manufacturing enterprises

The target audience of the furniture manufacturing enterprise is middle-income families that renew furniture every 3 years and prefer unique, high-quality furniture made from natural materials. The target audience of the furniture manufacturing enterprise is quite extensive, therefore, to develop an effective marketing strategy, it is necessary to divide the target group into subgroups of consumers:

  1. Successful customers are consumers of furniture in the middle price segment. The main criteria when choosing furniture: the uniqueness of the proposal, quality materials, the manufacture of furniture according to sketches to order, the possibility of delivery and assembly of furniture;

  2. Low-income customers are the largest consumers. The main criteria when choosing furniture: price / quality ratio, custom-made furniture in the budget category, furniture hauling services.

The goal of a furniture company is to satisfy the needs of all customer groups. At the stage of becoming a furniture company, prospective consumers will be active Internet users - an audience attracted to the company's website by various marketing tools.

Since the workshop for the production of furniture focuses specifically on online sales, the main way of advertising is to create your own website, profiles on social networks and their active promotion. The first stage is a professional landing, in which it is necessary to indicate the range of products, production dates, examples of work and current discounts. The development of a full-fledged site with the necessary functionality will be about 50, 000 rubles.

A more budget option is the creation of profiles on social networks and their promotion. In addition to the range of products in the profile, you can post photographs and customer reviews, a list of services that a furniture workshop provides, useful information about various materials, information on furniture care, design decisions that fit your products, information about promotions and bonuses.

Also, for the furniture business, the most effective way of advertising is to place product information on billboards. It is recommended to choose a billboard in the immediate vicinity of construction stores, on the outskirts of the city. The average rental cost of one 3 * 6 m billboard for 1 month is about 23, 000 rubles / month.

Another effective advertising tool will be the placement of booklets with a list of all the services and portfolio of a furniture company in construction stores. The cost of such accommodation depends on the conditions of the construction store and is negotiated individually. You can offer cooperation to a construction store and a joint campaign, which implies the issuance of discount coupons in a furniture workshop with a fixed amount of purchase. It is planned to spend 10, 000 rubles on this method of advertising.

Also, an effective option for promoting a furniture production workshop can be printing ad units in a specialized press. The cost of this type of advertising will be about 10, 000 rubles.

Do not forget about such promotion channels as cooperation with private interior designers, design studios, furniture salons. The search for intermediaries must be carried out independently and offer them a percentage of the order amount in the amount of 10-20%.

Effective ways of attracting consumer attention are participation in various exhibitions and fairs, distribution of promotional materials, the availability of additional services and after-sales services: free delivery, assembly, a one-year warranty for repair or replacement of a product in case of defects, etc.

One of the main objectives of marketing is the formation of public opinion and consumer loyalty to the enterprise. Therefore, it is worth considering options for conducting a survey among customers, the results of which will make it possible to make the necessary adjustments to production, and take into account the requirements of consumers for products.

The use of a particular tool depends on the target audience of the institution and the project budget.

To advertise a furniture production project , it is planned:

  1. Print advertising - placement of booklets in construction stores and 10% discount coupons for buyers of these stores. Costs will amount to 10, 000 rubles.

  2. Creation and active promotion of a profile in social networks VKontakte and Instagram. 10, 000 rubles should be allocated for promoting a profile in social networks;

  3. Creation of a personal website with a portfolio, price, contacts and the function of an order calculator. Costs will amount to 30, 000 rubles;

  4. Participation in furniture exhibitions and fairs.

Thus, expenses of 50, 000 rubles are laid for the promotion of a furniture production workshop.

The most important part of marketing is sales forecasting. Table 2 presents the plan for the sale of furniture workshop products. The average order value may vary depending on the details of the order.

It is planned to receive a corporate order for the manufacture of furniture. Therefore, you should search for customers among the corporate segment - it can be cafes, offices, beauty salons, etc. It is also worth considering the option of cooperation with a furniture salon, which will be ready to purchase some of the products for sale.

Table 3. The planned sales volume of the workshop for the production of furniture by type of product

Name of product

Number of orders per year, pcs

Average order value, rub

Revenue, RUB

Table

161

11000

1 934 400

Chair

426

3800

1, 618, 800

Sofa

403

30000

12, 090, 000

Armchair

403

8500

3 425 500

Total

19 068 700

Thus, the planned revenue for the first year of the workshop will be an average of 19068700 rubles.

Furniture Production Plan

Opening a furniture workshop and organizing production involves the following steps:

1) Selection of premises for production. Since it is planned to open furniture production of a full cycle, the area of ​​the room should accommodate large-sized equipment. To do this, you need a room with a total area of ​​300-350 m2, on which will be placed:

  • production workshop - a place where woodworking machines and other equipment are located

  • assembly shop - a place where furniture is assembled from prefabricated parts;

  • paint shop - a room for paintwork;

  • dryer - a place for storage and preparation of raw materials before production;

  • finished goods warehouse and raw materials warehouse;

  • production staff room;

  • a bathroom with a shower;

  • administrative staff premises, office premises.

In addition to the area for furniture production, the following requirements are imposed on the production premises:

  • non-residential premises for industrial purposes, since the work of the workshop is associated with a high level of noise;

  • ground floor, two entrances. Since the unloading and loading of bulky materials is carried out, it is necessary to place production on the ground floor. Separate entrances are made for the workshop and sales office;

  • three-phase electricity of 380 W, since some equipment requires high power;

  • availability of water supply, ventilation, fire safety systems, convenience of access to the building, availability of a site for unloading raw materials;

  • lack of dampness and high humidity. The materials used in the manufacture of furniture are afraid of moisture and moisture.

Finished products should also not be stored in such conditions, since upholstered furniture has the ability to absorb moisture and odors.

  • a heated room, which is also necessary to maintain the ideal quality of raw materials and finished products.

For the implementation of the project, industrial premises are leased. Total area - 300 m2, cost - 50, 000 rubles / month

2) Purchase of equipment. To ensure the production of a full cycle, it is necessary to purchase a set of equipment:

  • planer - 70, 000 rubles;

  • planer - 120, 000 rubles;

  • milling machine - 70, 000 rubles;

  • drilling and grooving machine - 50, 000 rubles;

  • copy milling lathe - 150, 000 rubles;

  • grinding machine - 80, 000 rubles

  • equipment for painting - 130, 000 rubles;

  • format-cutting machine with manual feed of materials - 140, 000;

  • screwdriver and puncher - 15, 000 rubles;

  • other auxiliary equipment and tools - 50, 000 rubles.

Thus, the total cost of equipment for the production of furniture will be about 825, 000 rubles. With all this equipment, count on the simultaneous monthly production of 400 pieces of furniture.

3) Technology of furniture production and organization of supply. Furniture manufacturing technology includes the following main steps:

  • preparation of the product design;

  • work on cutting material and manufacturing parts;

  • material processing work;

  • assembly of finished furniture.

For enterprises producing full-cycle furniture, edged solid boards are the main raw material. At the first stage of production, they are converted into shields and after that parts for furniture are made. The most popular types of wood are: oak, birch, larch, pine. The most budgetary version of the array is pine. Именно этот материал будет преимущественно использоваться в производстве. Так потребуются плиты ДСП и МДФ.

Для организации производства мебели потребуются поставщики древесины, красок, покрытий, клеев, фурнитуры, тканей и т.д. Основные требования к поставщикам – известная, проверенная компания, наличие всех необходимых сертификатов, возможность доставки. Предпочтительно сотрудничество на долгосрочной основе с компаниями, которые проводят контроль качества, предоставляют оптовые скидки и возможность отсрочки платежа.

4) Recruitment. Производство мебели требует наличия определенных профессиональных знаний и навыков, поэтому перед запуском производства необходимо подобрать квалифицированных сотрудников. Главное требование к персоналу – опыт работы со специализированным оборудованием. В штат необходимо включить: специалисты цеха – 3 человека, мастер производства с материальной ответственностью за сырье и оборудование, менеджер по продажам, дизайнер-технолог, водитель-экспедитор, руководитель, бухгалтер.

5) Форма обслуживания. Работа с клиентом состоит из нескольких этапов:

  • обращение клиента в компанию: клиент связывается с менеджером и оговаривает все условия заказа. Менеджер получает заказ и передает его дизайнеру-технологу, который помогает клиенту определиться с конструкцией изделия, материалами и разрабатывает индивидуальный проект.

  • расчет стоимости, оформление заказа: после согласования проекта с заказчиком дизайнер-технолог рассчитывает стоимость работ. После этого менеджер согласовывает стоимость заказа с клиентом, оформляет соответствующие документы и берет предоплату в размере 30% от суммы заказа. Срок исполнения заказа указывается в договоре и составляет 30 рабочих дней.

  • изготовление и доставка заказа: по факту изготовления мебели формируется график доставки. Для этого менеджер связывается с заказчиком и утверждает время доставки. Оставшаяся сумма заказа выплачивается по факту доставки. Услуга доставки стоит 300 рублей, а при заказе от 20000 рублей предоставляется бесплатно.

Организационный план производства мебельной мастерской

Начальным этапом открытия мебельной мастерской является регистрация бизнеса в государственных органах. Для ведения коммерческой деятельности регистрируется ИП с упрощенной системой налогообложения (15% «доходы минус расходы»). Types of activity according to OKVED-2:

18.08.2019 - Изготовление прочей мебели и отдельных мебельных деталей, не включенных в другие группировки, по индивидуальному заказу населения;

47.59 - Торговля розничная мебелью, осветительными приборами и прочими бытовыми изделиями в специализированных магазинах;

18.08.2019 - Торговля розничная, осуществляемая непосредственно при помощи информационно-коммуникационной сети Интернет;

Также рекомендуется указать:

31.01 - Производство мебели для офисов и предприятий торговли;

31.02 - Производство кухонной мебели.

Лицензии на осуществление этих видов деятельности не требуется, однако рекомендует сертификация всей производимой мебели, чтобы подтвердить качество продукции. Для этого необходимо соблюдение норм и стандартов:

- ГОСТ 16371-93 «Мебель. Общие технические условия»;

- ГОСТ 19917-93 «Мебель для сидения и лежания. Общие технические условия»;

- ГОСТ Р 50051-92 «Мебель. Стулья. Определение устойчивости»;

- ГОСТ 19194-73 «Мебель. Метод определения прочности крепления подсадных ножек мебели»;

- ГОСТ 13715-78 «Плиты столярные. Technical conditions ";

- ГОСТ Р 54208-2010 «Покрытия защитно-декоративные на мебели из древесины и древесных материалов. Классификация и обозначения».

- ГОСТ 30255-95. Мебель, древесные и полимерные материалы.

График работы мебельного цеха – с 8:00 до 17:00 (пн-пт). График работы офиса продаж – с 9:00 до 19:00 (пн-вс). Based on this, the staffing is formed.

Таблица 4. Штатное расписание и фонд оплаты труда

No.

Position

Оклад, руб .

Number of people

PHOT, RUB

Administrative

one

Supervisor

25, 000

one

25, 000

2

Accountant

15, 000

one

15, 000

Industrial

3

Специалист цеха

27000

3

81000

four

Мастер производства

23000

one

23000

five

Designer technologist

20000

one

20000

Trade

6

Manager

20000

one

20000

Auxiliary

7

Водитель-экпедитор

20000

one

20000

eight

Cleaning lady (part-time)

4000

one

4000

Total:

210 000.00 ₽

Social Security contributions:

63 000.00 ₽

Total deductions:

273 000.00 ₽

Специалисты цеха – обслуживают все этапы производства мебельной продукции, совмещают функции сборщика мебели. Образование - среднее техническое, опыт работы в аналогичной должности.

Мастер производства – организует рабочий процесс, осуществляет прием материалов и оформляет соответствующую документацию, является материально-ответственным лицом, контролирует соблюдение техники безопасности на производстве, производит поэтапный контроль изготовления продукции. Образование – высшее, опыт работы в данной сфере – 5 лет.

Менеджер – осуществляет маркетинговую политику предприятия, ведет переговоры с потенциальными клиентами, оформляет заказы и принимает оплату, является материально-ответственным лицом, занимается вопросами рекламы и продвижения продукции, ответственен за наполнение сайта и профилей в социальных сетях. Образование – высшее.

Дизайнер-технолог – разрабатывает модели и конструкции мебели, осуществляет авторский контроль за соответствием произведенной мебели разработанным моделям. Образование – высшее.

Бухгалтер – является материально-ответственным лицом, ведет всю финансовую документацию, осуществляет бухгалтерский учет, контролирует соблюдение законности при расходовании денежных средств и материальных ресурсов. Образование высшее, опыт работы в данной области – 3 года.

Водитель-экспедитор – осуществляет своевременную доставку заказа покупателям. Требования: собственный автомобиль, опыт работы от 1 года, водительские права категории В, С.

Руководитель – является материально-ответственным лицом, представляет интересы предприятия, заключает договора по хозяйственной деятельности, издает приказы и распоряжения, осуществляет прием и увольнение сотрудников, занимается подбором поставщиков и поиском каналов сбыта. Образование – высшее, опыт работы в данной сфере – 3 года.

Уборщица – осуществляет уборку офиса продаж.

Финансовый план по производству мебели

The financial plan takes into account all the income and expenses of the project, the planning horizon is 3 years. It is planned that after this period the institution will need to expand production and the range of products.

To start a project, you need to calculate the amount of investment. Для этого нужно определиться с затратами на ремонт офисного помещения, приобретение оборудования, первоначальную закупку сырья и формирование оборотных средств, за счет которых будут покрываться убытки начальных периодов. Спецификой ведения мебельного бизнеса является необходимость наличия большой суммы оборотных средств.

Таблица 5. Инвестиционные затраты

No.

Name

Amount, rub.

The property

one

Room repair

30, 000

Equipment

2

Set of equipment

825, 000

3

Обустройство офиса

70, 000

Intangible assets

four

Business Registration

7000

five

Starting advertising campaign

50, 000

Current assets

6

Raw material purchase

50, 000

7

Current assets

100, 000

Total:

1 132 000 ₽

Переменные расходы на производство мебели состоят из затрат материалы, которые используются в производстве мебели, а также оплату потребленных в процессе производства мощностей (вода, газ, электричество, канализация). Для упрощения финансовых расчетов переменные расходов рассчитывается, исходя из суммы среднего чека на каждый вид продукции и фиксированной торговой наценки в 300%.

Постоянные расходы на производство мебели состоят из арендной платы, коммунальных платежей, фонда заработной платы, расходов на рекламу, налогов и амортизационных отчислений. The amount of depreciation is determined by the linear method, based on the useful life of fixed assets of 5 years. Fixed costs also include tax deductions, which are not presented in this table, since their amount is not fixed, but depends on the volume of revenue.

Таблица 6. Постоянные затраты на производство мебели

No.

Name

Amount in months, rub.

one

Rent

50, 000

2

Реклама мебельного производства

7000

3

Communal payments

15, 000

four

Depreciation

17000

five

Payroll deductions

273000

Total:

375000

Таким образом, были определены постоянные ежемесячные расходы в размере 375000 рублей.

Оценка эффективности мебельного производства

The project payback period for initial investments of 1, 132, 000 rubles is 8-9 months. The net monthly profit of the project upon reaching the planned sales volumes will be 519560 rubles. The return on sales in the first year of operation will be 25%.

Possible risks of furniture production

To assess the risk component of the project, it is necessary to analyze the external and internal factors. External factors include threats related to the economic situation in the country and markets. To internal - the effectiveness of managing the organization.

The specifics of a furniture manufacturing establishment determines the following external risks:

  • increase in prices for raw materials, failure in the supply of raw materials. In the first case, there is a risk of increased costs and, as a consequence, the selling price, which can negatively affect demand. In the second case, the risk is associated with interruptions in production. It is possible to reduce the likelihood of these threats with the right choice of suppliers and the inclusion in the contract of all necessary conditions that provide for the liability of the supplier if they are violated;

  • high competition in the market. Since the furniture market is quite saturated and the competition is high, the behavior of competitors can have a strong influence on the demand of your products. To reduce this risk, it is necessary to form a systematic approach to business organization and establish processes within the enterprise. This will allow to achieve competitive advantages and form a customer base;

  • lack or decrease in demand. Lack of demand usually occurs when potential customers are not aware of the existence of the company - in this case, an active advertising campaign is necessary. In the second case, the occurrence of risk is associated with the economic situation or the loss of market share. It is possible to reduce this risk when forming your client base, concluding large contracts, and manufacturing flexibility;

  • fire, theft and other force majeure circumstances. The risk of such events involving property damage is rather low. However, when they occur, the damage can be quite large. To minimize this risk, it is necessary to install a fire alarm in the workshop and introduce regular monitoring of compliance with safety regulations. You can also insure risk with an insurance company;

  • refusal to provide rental premises or increase the cost of rent. To reduce this risk, it is necessary to conclude a long-term lease agreement and carefully select the landlord.

Internal risks include:

  • failure to meet planned sales. It is possible to reduce this risk with an effective advertising campaign and competent marketing policy, involving various promotions and bonuses;

  • equipment breakdown and production downtime. Minimize risk will allow regular maintenance of equipment in order to maintain its performance;

  • staff problems, which implies low qualifications, staff turnover, lack of employee motivation. It is easiest to reduce this risk at the stage of personnel selection, hiring employees who meet all the stated requirements. It is recommended to use a bonus tool, for example, to pay employees a fixed percentage of net profit based on annual work results;

  • defective products. With a minor defect, products can be sold at a discount price, and in case of serious violations, sent for processing. The main thing is to identify product defects until the order is transferred to the customer. This risk can be reduced by selecting qualified personnel, purchasing good equipment and high-quality materials;

  • decrease in the reputation of the institution in the circle of the target audience with errors in management or a decrease in product quality. It is possible to mitigate the risk with constant monitoring of product quality, receiving feedback from enterprise customers and taking corrective measures.

Evgenia Yurkina

(c) www.clogicsecure.com - a portal to business plans and guidelines for starting a small business 08/18/2019


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