Business Plan for Import Export Company

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Business Plan for Import Export Company

This business plan details the launch of a start-up company known as the Import Export Company (IEC). The company functions as a ‘middleman’ in purchasing housewares from manufacturers in China and reselling the products to retail buyers in the US and Canada. The Import Export Company is primarily an independent import/export business. The products we import from China are resold to retail buyers in the US; in addition, we export the products from China directly to retail buyers in Canada. Without maintaining inventory, the company ships the product directly from China to the US and Canada.

Our product catalog focuses on housewares products that appeal to trend-minded US and Canadian consumers. Product pricing is geared toward budget-conscious consumers seeking a current look for their homes, without paying upscale prices.

In 2003, China was the third largest country trading with the US, importing and exporting a combined $127 billion in goods (US Census Bureau, 2003). As of November 2003, China exported $25.1 billion in goods to the US, up 25.8% over 2002 (US Department of Commerce).

The IEC has developed initial relationships with manufacturers and retailers. Our marketing plan targets a market of 160 retailers in the US that specialize in Home Furnishings and Housewares. The company has targeted fifty Canadian retailers that also meet our target market requirements.

The owners are contributing $15,000 ($7,500 each) in start-up capital from personal savings, in addition to a loan of $30,000 from friends and family. The loan will be repaid at 6% interest when the company becomes stable in the second year of operations. After initial start-up expenses, the company has a starting Cash Balance of $29,880.

The company is forecasting $350,500 in first year sales revenue, with a Cost of Goods projected to be 60%. Cost of Goods directly reflects our targeted 40% profit margin. We anticipate doubling our sales revenue for the first three years of operations as we develop our manufacturing and retail buyer relationships. Sales revenue increases in our second year to $701,000 and $1,402,000 in our third year.

The company projects a Net Profit of $40,665 in our first year of operations, increasing to $139,944 in the second year and $317,688 in the third year. Our Cash Flow objective in the first year is ...

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...c tax rate. For the purpose of estimating, we have set our tax rate at 20%. We do not forecast collecting sales tax, as our purchases are for resale and not subject to sales or use taxes.

We will work closely with our bank, which was selected because of its import and export programs. Initially, we will pursue secured financing options, with the bank advancing funds by using the goods we import as collateral. If we default on our secure financing obligations, the bank takes title of our shipped goods. As we are a start-up company, we will not qualify for unsecured financing until we have established a positive credit record with our bank.

We may pursue a revolving line of credit through the Small Business Administration's Special Purpose loan programs for exporters, which would allow us to receive pre-export financing through the U.S. Export Import Bank. We may also pursue factoring options. As a start-up, we are primarily focused on maintaining a positive cash flow position. For this reason, a factor that buys receivables with a cash advance in exchange for a 5% fee may be a viable option. We feel that our target profit margin of 40% provides leeway to work with factors.

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