Landscaping Service

EXECUTIVE SUMMARY

PRODUCTS & SERVICES

MARKET ANALYSIS

MARKETING & SALES

ADVERTISING

OPERATIONS

FINANCIAL ANALYSIS

CONCLUSION

Helping Hand, Inc.

47 Brookdale Ave.
Madison, Wisconsin 53704

Gerald Rekve

This business plan concentrates on the expansion of an existing landscaping business’s scope. The goal is to make the landscaping business a year–round business, by adding handyman services.

EXECUTIVE SUMMARY

Helping Hand, Inc. has been in the landscaping business in Madison for the last six years. However, since the nature of the landscaping business is seasonal, we are interested in expanding our company into a handyman service and making it a year–round operation. Our goal is to offset the fixed costs our landscaping business incurs in the winter months thereby increasing the overall profitability of our company. With the addition of a handyman service, we project that our sales will increase by $190,000 for a combined total of $445,000. In order to achieve this goal, we are seeking a term loan of $100,000 to purchase the necessary handyman equipment.

We will offer our services to our existing residential and commercial client base. We have already secured commitments from existing clients as well as a local regional development sector which has been allocated for $15 million in renovation grants for low income families. In addition, the handyman business in Madison, Wisconsin is on the verge of substantial growth. The City of Madison has voted to contract out all handyman services which translate into an additional $25 million in potential new business. This brings the total market for private handyman services in Madison to $40 million. In light of this information, we hope to reach $500,000 in revenue from our handyman business within three years.

Business Strategy

Our strategy is to sell our services to both the residential and commercial sectors with two unique offers. We will guarantee service within twelve hours of the property damage. We will implement a flat monthly rate for handyman services based on the size of the property. Since an overly severe winter would negatively impact business sales and an overly mild winter would hamper residential sales, our policy is to keep an even split between residential and business customers, thereby minimizing undue risk.

Management Summary

Helping Hands, Inc. was formed in Madison, Wisconsin by Patrick and Jon O’Reilly. We own 100 percent of the company’s shares.

All services will be provided by us—Patrick and Jon O’Reilly—with four maintenance people to be hired on a sub–contractor basis. As veteran small business owners, we have a good grasp of the fundamentals of running a handyman/landscaping company and have honed our sales and marketing skills.

We are confident that our business idea is a sound one and would be of use to our existing client base. Complete financial statements of our existing business are available upon request.

We have decided not to increase our salaries with the addition of the handyman business. This will keep

Compensation

money in the business to ensure our success in the early years.

Professional Relationships

We have established good working relationships with a number of professionals as a result of operating our landscaping business.

Personnel Requirements

The four seasonal positions for maintenance worker will be made available to persons with a valid driver’s license and a clean driving record. One year of handyman experience is required. Even though we currently have seasonal landscape employees, these positions have the potential to become year–round. Therefore landscaping skills will be considered a great asset. Handyman/maintenance worker will be paid based on an annual salary of $37,000. The occasional assistants, who will be under the seasonal driver’s supervision, will be used on an as–needed basis and will be paid an hourly wage of $12.00.

PRODUCTS & SERVICES

Helping Hand, Inc. has been in the landscaping business in Madison for four years and has a history of profitability. However, since the nature of the landscaping business is seasonal, we are interested in expanding our company into handyman services and making it a year–round operation. We will offer our services to our existing residential and commercial clients.

We will offer a wide variety of handyman services which include the following:

• General repairs
• Home repairs
• Yard and fence repairs
• Deck building and repairs
• Roof repairs
• Carpet repairs
• Electrical repairs
• Small home appliance repairs
• Painting and staining
• Lawn care
• Landscaping
• Tree planting and removal
• Water fountain installation and repair
• Driveway brick landscaping
• Carpentry
• Woodworking
• Window repair
• Drywall and Gyp rock

MARKET ANALYSIS

As a northern state, Wisconsin has always had a need for handyman services during the winter. With the average person working longer hours and juggling more leisure activities than ever before, the need for professional handyman services have increased in the residential sector. Similarly, as the number of small businesses with limited staffs continues to increase, more professional handyman services are being used by these businesses as an alternative to bringing maintenance people in house. And, with new policies being implemented to fine people and businesses that fail to clear their property of public hazards by property or damaged fence hazards in the wintertime, market research indicates that handyman services will enjoy a growth rate of approximately 12 percent per year for the next five years due to Government grants now available.

On a local level, the city of Madison has recently voted to contract out $11.5 million in handyman services.

Industry Sectors

Residential sector: Private residences in the Madison area; primarily those mid–to–high income dwellings inhabited by busy professionals who don’t have time to shovel.

Business sector: Primarily comprised of strip mall tenants and those operating from storefront locations in the greater Madison area. In addition, large institutions such as schools, hospitals and seniors’ homes that, due to cutbacks, have decreased the number of maintenance workers employed, but still need to maintain a high level of winter safety.

Seasonal Factors

Helping Hand, Inc. is extremely sensitive to seasonal factors. A winter with a particularly heavy snowfall would result in an increase in demand for handyman services; conversely, a mild winter would be potentially be better to a handyman company depending on the way its contracts are priced, with more home owners getting outside work done. However, Madison weather patterns for the last ten years have been extremely stable and the average number of property damage from year to year doesn’t vary more than 5 percent.

Growth Strategy

With the risk of a substantial fine from the municipal government for failure to remove public hazards caused by property damage or damaged fence within twelve hours of a incident, residential use of handyman services has increased by 12 percent over the last five years. Similarly, with lawsuits stemming from property negligence on the rise, local businesses are 44 percent more likely to contract out handyman services than ten years ago.

Position in the Industry

Having been in the landscaping business for six years, we have established a strong reputation for ourselves in the Madison community with both business and residential customers. We are known for offering friendly and competitively priced service and enjoy a high rate of referral business. Of our more than 300 customers, the vast majority have expressed a commitment to using our handyman services once they are fully functional.

Competition

There are currently a total of 140 handyman services in the Madison area. The two largest services— Craftsmen Company and Smith Brothers—currently control 20 percent of the local market. These companies are well established and have both been in business for more than 20 years. The remaining 80 percent is currently split between 138 smaller contractors. Although other contractors may try to cash in on the government’s new government grant or the city’s decision to contract landscaping or handyman services, Helping Hand, Inc. is in a practically favorable position. We have built up relationships with clients in both the residential and business sectors as well as the municipal government over the last four years. Therefore, we are in an excellent position not only to win contracts from the government, but also from private sectors and residential customers.

MARKETING & SALES

Use of Technology

We plan to make use of our computerized database, compiled during our four years in the landscape business, to market our handyman services to existing clients. This will be an advantage over a number of our competitors who do not use a database, since it will allow us to track services rendered for customers and to send out direct mail offers to them to solicit further business.

Although other contractors may try to cash in on the government’s new government grants or city’s decision to contract out contractors to remove public hazards caused by property damage, Helping Hand, Inc. is in a particularly favorable position. We have built up relationships with clients in both the residential and business sectors as well as the municipal government over the last four years.

Customers

The total market for handyman services is $4,000,000 which is comprised of the following markets:

Residential:

• comprised primarily of mid–to–upper income professional families in detached dwellings who are simply too busy to clear their own snow.
• The market is worth approximately $1.4 million.

Commercial: This market can be further broken down into three categories:

1. Small Business—consists largely of strip mall and store front locations in the downtown core. This Sector is worth approximately $2,454,000 in the Madison market.
2. Institutions—consists of schools, hospitals and other large public organizations, who have large budgets for maintenance and generally pay invoices within their 30 day terms. In total, the Madison market is worth approximately $3,454,000.
3. Municipal government contracts—In addition to the above–mentioned markets, a percentage of our business will be comprised of contracts from the city, who has decided to outsource all handymen in the Madison area. The contracts are estimated to be worth about $20 million.

Services

We will market ourselves as the year–round maintenance people who show individualized attention to our clients. Our larger competition is unable to offer this personalized service and—since they deal primarily with businesses and government contracts—they are more expensive. We will offer our clients reasonable prices and superior customer service. Through our handbills and direct marketing letters, we will position our services as an inexpensive and hassle–free way to maintain property. By using our services, residential customers will avoid paying fines.

Pricing Strategy

Commercial Customers: We will offer repairs for flat rate hourly fees based on the job that requires to be done.

Residential Customers: We estimate an average seasonal price range of $100–$900 depending upon the size of the job.

Credit Terms

Commercial customers: net 30 days on approved credit

Residential: 50 percent before we start the job and the balance when we are done.

We have made provisions for extended payment terms in our cash flow. We expect collections to be as follows: 75 percent to be collected in the first 30 days, 25 percent within 60 days. Special contracts would be negotiated for the significantly larger handyman work on the senior citizens’ home, shopping mall and community college.

Sales and Distribution Plan

Through the operation of our landscaping business, we have established good working relationships with our existing client base. Our plan is to offer our handyman services to our existing landscaping client base in the residential and business sectors. We have already secured commitments from present clients as well as a local senior citizens’ home, a shopping mall and a local community college. We intend to contact the remainder of our existing clients by mail and follow–up phone calls in order to introduce our new handyman service. We will do a limited amount of targeted advertising (see below) in order to generate sales leads. Sales leads will be closed by a phone call and an in–person sales call from one of the company’s owners.

ADVERTISING

Our computerized database of landscaping clients will serve as a base from which to market our handyman services. It will allow us to track services rendered for customers and to send out direct mail offers to them to solicit further business.

Helping Hand, Inc.’s new services will be advertised and promoted in a number of ways:

• Produce and deliver 50,000 hand bills to be delivered door–to–door in November (estimated cost: $3,454)
• Advertise in the community newspaper on a weekly basis for November through March (estimated cost: $600 monthly)
• Post notices on bulletin boards in community centers, sports complexes, community colleges and shopping centers (estimated cost: $100)
• Send letters to our existing client base, advertising our services (estimated cost: $300)

We estimate the costs of promoting the new service will be $2,454 and will result in an additional $240,000 in gross annual sales.

OPERATIONS

We have already sourced a supplier of four–wheel–drive trucks, hauling trucks to transport any materials or debris found at the site, snow blowers and plow blades, and we have also located a storage area for this equipment. In addition, we have interviewed our existing landscaping client base and have gauged their level of interest in handyman services.

Helping Hand, Inc. will lease a 1,454 square foot storage space for our equipment at a rate of $600 per month. We plan on purchasing three trucks equipped with plow blades, snow blowers and three trailers. We will maintain our existing home office facility, which is already equipped with a fax machine, printer, copier and computer systems all of which we own outright.

Once our client commitments have been secured, winter weather is the only factor affecting the demand on service. In Madison we don’t anticipate any drastic changes in weather conditions.

Our truck will do commercial properties in the early morning while parking lots are empty. Residential lots will be done late morning or early afternoon after people have left for work.

In order to be operational, the following steps must take place.

1. Obtain $159,000 of bank financing for additional equipment including:

   • Three trucks equipped with plow blades

   • Three snow blowers

   • Three trailers

2. Secure a storage area for this equipment—budgeted cost $600 per month
3. Advertise our handyman services to our existing client base and the population of Madison at large
4. Negotiate with municipal government to obtain contracts for handyman and hire and train three laborers to help with operations.

Risk Factors

The following factors could pose problems to the business:

• Extremely severe winter conditions would render the commercial contracts uneconomical and could make guaranteed twelve–hour residential service unrealistic
• Extremely mild winter conditions would result in a decline in the number of residential jobs undertaken and negatively impact profits
• Damage to equipment would result in costly repair and replacement fees

Contingency Plan

In the last decade, Madison’s winter weather patterns have been relatively stable with only a 15 percent variation in the number of the number of property damage from year to year. Therefore, it is unlikely that conditions will be drastically milder or more severe than usual. However, since an overly severe winter would negatively impact business sales and an overly mild winter would hamper residential sales, our policy is to keep an even split between residential and business customers, thereby minimizing undue risk. We will also purchase comprehensive insurance on all handyman equipment.

Alliances and Partnerships

In an effort to network with other entrepreneurs, we are members of the Madison Entrepreneurial Alliance Chamber of Commerce.

FINANCIAL ANALYSIS

Income Statement

An income statement showing incremental results of the handyman business has been prepared because the handyman “division” is intended to be an add–on service to our existing company. This existing company already has an administrative infrastructure set up that can accommodate the handyman business with negligible additional cost. The income statement indicates estimated gross sales of $240,000 for the first year with after–tax profit of approximately $24,000. Certain items included in the administrative expenses could be charged to the “division”, however, that would not change the overall income or cash flow as these funds would be disbursed in the Landscape “division”. Ongoing expenses relate to the operation of the vehicles and the salaries of handymen and workers. The equipment must be stored in the off season; insurance is still required and financing costs continue to be incurred during that period.

Cash Flow Statement

A term loan in the amount of $159,000 to finance the acquisition of handyman equipment is being sought. Since the division of our business is seasonal, cash generated is limited to the winter months, more specifically, November to April. The bulk of operating expenses also coincides with that period. However, certain fixed outflows would continue for the balance of the year including storage for the equipment, interest and insurance. The Cash Flow statement indicates that the division will generate a positive cash inflow of approximately $65,000.

Balance Sheet

The Balance Sheet demonstrates a strong financial position with $36,000 in cash, $37,000 of collectable accounts receivable and current liabilities of approximately $22,000. We will have capital assets in excess of $240,000 which will be the backbone of our future operation. As our business continues to grow, future capital additions may be required.

CONCLUSION

It is our goal to expand our existing landscaping business to include handyman services, making it a year–round operation. In order to achieve this goal, we are asking for a term loan of $159,000. Once we have secured this loan, and purchased the necessary equipment, we anticipate that our sales will increase by $240,000—approximately $24,000 of which we are projecting as net profit.

We have taken into consideration the fact that part–time drivers could present a risk by quitting or being laid off, and have agreed to do the driving if this should ever be the case until a replacement driver is hired. Although a year with light property damage or damaged/fallen fences would negatively affect our revenue from residential business, this will be offset by a reduction in part–time driver costs and will not affect the monthly billing of our corporate clients.

We are confident that our existing client base will use our services and we have secured commitments from a number of local businesses and institutions. Furthermore, since the City of Madison has voted to contract out all handyman services to private companies, now is the perfect time for Helping Hand, Inc. to expand.

Income statement

For the year ending October 31, 2005

Income statement

For the year ending October 31, 2006

CASH FLOW - For the year ending October 31, 2006