Plumbing Shop Business Plan
JAX PLUMBING
5101 Bell Street
Toledo, OH 44027
Jax Plumbing of Northern Ohio is a professional plumbing service franchise. The owners of this franchise attribute their growth and financial success to an established reputation for excellent customer service, state of the art equipment, and a unique networking opportunity. As a member of a worldwide franchise organization, Jax Plumbing receives support, training, marketing, and accounting services from other group franchisees.
- LETTER FROM THE PRESIDENT
- MISSION STATEMENTS
- ORGANIZATION
- PRODUCTS AND SERVICES
- MARKETING STRATEGY
- FINANCIAL DATA
LETTER FROM THE PRESIDENT
Mr. Rooter Plumbing of Northern Ohio is located at 5101 Bell Street, Toledo, Ohio 44027. This location allows us to reach any customer in need of service in 30 minutes or less. The company, a franchise, was started in 1983. The principal owners are Harry Smith and Eric Lane.
Jax Plumbing of Northern Ohio is a professional plumbing company that has no equal in the areas we service. Our company believes the primary focus of the business should be on the customer. We fully realize that the customer is really our employer and that we need them much more than they need us. All field employees are trained how to keep customers for life. They realize the importance of our customers and the value of retaining them.
We are able to offer our customer the latest in technology. This includes high pressure water jetting equipment which enables grease problems to be a thing of the past for restaurants and other light commercial customers. We have line locators and cameras which allow our company to locate and view exactly where and what the problem is and solve the problem faster and less expensively than in the past. We also have the latest in bacteria products that have been approved in areas where most chemical products are now banned. All our products carry a private label, giving us a marketing edge over most of our competitors.
Of our fifteen technicians, seven have a state journeymans license and three others have earned a state masters license. The other five technicians are currently in state approved courses that will allow them to become licensed plumbers as well. This lends to our credibility in the communities we serve. We have always made education apriority, and we have a tuition reimbursement program available for all employees.
Jax Plumbing of Northern Ohio had sales of $2,838,465 with a net profit of 16.48% in 1995. In 1996 we expect to increase sales 19.29%, to $3,386,000 with net profit of about 19%. How this will be accomplished is explained in the marketing strategy and financial data sections of this business plan.
Jax Plumbing is part of the Disson Group, a worldwide franchise organization operating in more than 2,800 locations across 29 countries. In addition to Jax Plumbing, the Disson Group also franchises Sun Carpet Cleaning and Dying, Clean Aire HVAC, Electric Solver, Levitt Accounting, Business Services for Today, Universal Refinishing, Kitchen Giants, and beginning in June 1996, Appliance Solver. The Disson Group is a publically traded company. It appears on the NASDAQ market under the stock symbol, DSSN.
By being a member of the Disson Group we are able to facilitate growth. They support the franchises from the home office and through four national conferences throughout the nation. Larry Samson, our regional director, is located in Columbus, Ohio. We also use other Disson Group franchisees for networking of customer bases and use their Levitt Accounting franchise for our accounting needs.
MISSION STATEMENTS
Mission Statement for the Disson Group
To be a world class company admired for the excellence that customers, franchisees and associates experience with The Disson Group.
Mission Statement for Jax Plumbing Corporation
The mission of Jax Plumbing is to be known as the world leader in the plumbing services industries. We are committed to the selection, development and support of individuals who are dedicated to excellence with their customers, their communities and themselves.
We are committed to provide our organization with superior service and continuous education as we recognize that growth only comes through applied knowledge.
Mission Statement for Jax Plumbing of Northern Ohio
The mission of Jax Plumbing services is to be known as Northern Ohio's leader in the plumbing, sewer and drain cleaning industry. We are committed to provide our customers with the highest quality of workmanship and service possible. We are dedicated to providing our personnel with continuous education, training, and support.
ORGANIZATION
Jax Plumbing of Northern Ohio consists of two (2) partners.
- Eric Lane (75%)
- Harry Smith (25%)
The organizational key employees are:
Eric Lane is president and has 22 years in the industry. He started his career with Plumbing World, a regional, privately owned company, in 1973 as a sewer and drain trainee. While working full time, he also attended Pinehurst College and earned an Associate Degree in Business Management in 1976 and a Bachelor of Business Administration in 1980. In 1983, Mr. Lane purchased the Jax Plumbing franchise for Pinehurst, Creston, and Benning Counties. In the 13 years since Mr. Lane started the franchise, sales have gone from $ 110,000 in 1983 to record sales of $2,83 8,465 with a net profit of 16.48% in 1995. As testimony to the success of the Jax Plumbing franchise, it was named Jax Plumbing Corporation Franchise of the Year both in 1994 and 1995. The franchise has won numeruous awards in the 13 years of its existence.
Harry Smith came to Jax Plumbing in 1981. He holds a Master Plumbers license in 2 states and his knowledge in this area is unsurpassed. In 1985, Mr. Smith bought 25% of the Jax Plumbing ofNorthern Ohio franchise. It was his desire to be a part of the expected growth and management team that Mr. Lane was putting together.
Ellen Lane, Eric's wife, is also a graduate of Pinehurst College with a Bachelor of Business Administration. She has been with the business since its inception. She has experience with two major corporations as an executive assistant and as an office manager.
Jax Plumbing ofNorthern Ohio will conduct daily operations by utilizing a four tier reporting structure. The organizational flow begins with the President, Eric Lane, who will oversee three upper level managers: the Operations Manager, Harry Smith, the Sales Manager, Eric Lane (as acting manager), and the Office Manager, Ellen Lane.
The Operations Manager performs all the duties essential to maintaining the daily operations at the facility. Two managers report directly to the Operations Manager, the Warehouse Manager and the Field Manager.
The Field Manager oversees the work crew, which consists of a Master Plumber and fifteen technicians. The technicians report directly to the Master Plumber.
As Eric Lane is performing the duties of both the President and the (acting) Sales Manager, the chain of command is nonexistent at this time.
The Office Manager coordinates all the office procedures, guidelines, and miscellaneous tasks of the front office with a staff of eight individuals. The Office Manager oversees two clerical personnel, three dispatchers, and three customer service representatives.
PRODUCTS AND SERVICES
Jax Plumbing ofNorthern Ohio does full service plumbing as well as sewer and drain cleaning. The company is able to do any plumbing related job, from clearing an obstruction in a kitchen sink to installing a high efficient water heater to digging and installing a new septic system. We are equipped with state of the art machines, high pressure water jetters, cameras and line locaters.
Jax Plumbing ofNorthern Ohio is unique to the plumbing industry in regard to it's ability to keep their customers. We offer homeowners a service agreement program that is unparalleled in Northern Ohio. The service agreement is sold for one, two or three year periods, or customers can purchase a lifetime guarantee. These agreements allow our customers to benefit from discounted pricing, a complete home inspection twice a year, quarterly specials on products and services, preferred treatment, and peace of mind. To date, we have over 4,500 homeowners that have purchased service agreements representing 9,300 years and 1,100 of these are lifetime guarantees. This is a customer base that will use our services an average of once every 11 months, spending an average of $258 each time. This represents a total service agreement base of $1,161,000 in sales in 1996. We also have preventative maintenance contracts with 138 commercial accounts that are expected to generate $ 118,000 in sales in 1996.
MARKETING STRATEGY
What we are selling the customer is our exceptional service. We give our customers the type of service that no other company is providing for them. Service that will never inconvenience them. We provide service 24 hours a day, 7 days a week, 365 days a year. We never charge extra for evening calls, weekends or holidays.
Currently our market is undergoing significant changes. The population in 1995 rose to an all time high of 418,000. In 1983, the population was 245,000. This growth, according to the Northern Ohio Chamber of Commerce, is expected to continue at 8% annually into the next century.
Our jobs are menu priced, meaning that all jobs have a predetermined price that the customer sees in a book before we start the job. They are aware of the charges before we start. This has resulted in 65% fewer complaints on pricing, since we began menu pricing in 1991. The menu pricing book has a standard price and a value price for all jobs. The value price is for service agreement customers only and is approximately 25% lower than the standard price. In 1995, 58% of our residential customers either had, or purchased, a service agreement. Service agreement customers will have no need to look for another plumbing company, as we offer the most competitive price. An additional benefit this system is that it is possible to actually lower our Yellow Page advertising costs if we chose to do so. It is less expensive to retain customers than it is to gain new customers.
According to latest National Association of Plumbing, Heating, Cooling Contractors, $30 will be spent on plumbing products and services by each person in this country. With 418,000 people in Pinehurst, Creston, and Benning Counties, $12,540,000 will be spent locally. We were able to achieve a22.6% share of the market. In 1996, we expect to reach a25% share of market, with sales of $3,3 86,000. This translates to a profit of 19%. By the year 2000, we expect our market share to reach 33%, with sales of $6,081,042. This will increase our profit to 22%.
This will be our 13th year in business in Northern Ohio and our name recognition is second to none. The Jax Plumbing national TV campaign is currently in the third year of a five year plan that will triple the amount of ads each year. During the 1995/1996 ad campaign, Jax Plumbing ads will air 153 times on all major networks. In addition, we will run 388 ads on local cable channels, including the local weather channel.
Even though we could cut Yellow Page advertising, due to the success of our service agreement sales, we chose to retain this advertising. We will remain in the premiere advertising position with a full page ad in our local directory, and with well-placed 1/2 page ads, in six other community directories.
We will continue direct marketing efforts in a number of different ways. Our technicians will place door hanger advertising materials, offering discounts on our products and services, to neighbors by all jobs they do. We will continue with a program that targets businesses, explaining what we have to offer. We will also continue with coupons mailers. Over the years we have been utilizing coupon services we have continually had a 2 to 3% return on mailings. In 1996, we will mail out 100,000 coupon mailers.
We use a wide variety of promotional literature on the job site, such as disposal, water heater, furnace, stack line stickers, door hangers, valve identification tags and other items that have our name and phone number on them.
We will continue to network our customer base with the five other Disson Group franchises in our area.
We will market to our customer to ensure we do not forget them, but more importantly, they do not forget us.
FINANCIAL DATA
Jax of Northern Ohio
1996 Budget
Amounts to be recorded in whole dollars - A = Actual, B = Budget, F = Forecast
| Job Count Summary-1996 | |||||||||||||
| # of Jobs | 1995A | Jan | Feb | Mar | Apr | May | Jun | Jul | Aug | Sep | Oct | Nov | Dec |
| Sew/Drain | 6388 | 550 | 550 | 550 | 600 | 600 | 575 | 575 | 575 | 575 | 600 | 625 | 625 |
| Jetting | 220 | 15 | 15 | 19 | 28 | 28 | 24 | 24 | 24 | 24 | 24 | 24 | 28 |
| Plumbing | 4288 | 400 | 400 | 425 | 450 | 450 | 425 | 425 | 425 | 425 | 499 | 500 | 500 |
| Pumping | 305 | 27 | 27 | 31 | 31 | 35 | 35 | 35 | 35 | 35 | 35 | 35 | 35 |
| Video Scan | 47 | 5 | 5 | 6 | 7 | 7 | 6 | 6 | 6 | 6 | 6 | 6 | 7 |
| Misc | 61 | 3 | 3 | 4 | 4 | 5 | 5 | 5 | 5 | 5 | 5 | 5 | 5 |
| TOTAL | 11309 | 1000 | 1000 | 1035 | 1120 | 1125 | 1070 | 1070 | 1070 | 1070 | 1169 | 1195 | 1200 |
| Con Prod | 5000 | 500 | 500 | 518 | 660 | 662 | 535 | 535 | 535 | 535 | 584 | 597 | 600 |
| Serv Agr | 2439 | 210 | 210 | 220 | 225 | 225 | 230 | 230 | 230 | 230 | 250 | 255 | 260 |
| %VAR 1996B # of Jobs |
1996B | VS 1995A | 1997F | 1998F | 1999F | 2000F |
| Sew\Drain | 7000 | 9.58% | 7500 | 8100 | 8750 | 9450 |
| Jetting | 277 | 25.91% | 350 | 425 | 525 | 725 |
| Plumbing | 5324 | 24.16% | 6400 | 7500 | 8500 | 10000 |
| Pumping | 396 | 29.84% | 485 | 575 | 665 | 750 |
| Video Scan | 73 | 55.32% | 100 | 125 | 150 | 175 |
| Misc | 54 | −11.48% | 65 | 75 | 85 | 100 |
| TOTAL | 13124 | 16.05% | 14900 | 16800 | 18675 | 21200 |
| Con Prod | 6761 | 35.22% | 7350 | 8400 | 9438 | 10600 |
| Serv Agr | 2775 | 13.78% | 3000 | 3100 | 3200 | 3300 |
| Sales Summary - 1996 | |||||||||||||
| Sales | 1995A | Jan | Feb | Mar | Apr | May | Jun | Jul | Aug | Sep | Oct | Nov | Dec |
| Sew/Drain | 1117900 | 96250 | 96250 | 96250 | 105000 | 105000 | 100625 | 100625 | 100625 | 101200 | 105000 | 109375 | 109375 |
| Jetting | 93720 | 6450 | 6450 | 8170 | 12040 | 12040 | 10320 | 10320 | 10320 | 10320 | 10320 | 10320 | 12040 |
| Plumb Lab | 886830 | 84000 | 84000 | 89250 | 94500 | 94500 | 89250 | 89250 | 89250 | 89250 | 104790 | 105000 | 105000 |
| Plumb Mat | 305234 | 28000 | 28000 | 29750 | 31500 | 31500 | 29750 | 29750 | 29750 | 29750 | 34930 | 35000 | 35000 |
| Pumping | 42890 | 3915 | 3915 | 4495 | 4495 | 5075 | 5075 | 5075 | 5075 | 5075 | 5075 | 5075 | 5075 |
| Con Prod | 195000 | 20000 | 20000 | 20700 | 22400 | 22500 | 21400 | 21400 | 21400 | 21400 | 23380 | 23900 | 24000 |
| Video Scan | 20022 | 2150 | 2150 | 2580 | 3010 | 3010 | 2580 | 2580 | 2580 | 2580 | 2580 | 2580 | 3010 |
| Misc | 8578 | 435 | 435 | 580 | 580 | 725 | 725 | 725 | 725 | 725 | 725 | 725 | 725 |
| Serv Agr | 168291 | 14490 | 14490 | 15180 | 15525 | 15525 | 15870 | 15870 | 15870 | 15870 | 17250 | 17595 | 17940 |
| TOTAL | 2838465 | 255690 | 255690 | 266955 | 289050 | 289875 | 275595 | 275595 | 275595 | 276170 | 304050 | 309570 | 312165 |
| %VAR 1996B Sales |
1996B | VS 1995A | 1997F | 1998F | 1999F | 2000F |
| Sew\Drain | 1225575 | 9.63% | 1380000 | 1498500 | 1645000 | 1795500 |
| Jetting | 119110 | 27.09% | 152250 | 187000 | 236250 | 326250 |
| Plumb Lab | 1118040 | 26.07% | 1344000 | 1664322 | 2000500 | 2347500 |
| Plumb Mat | 372680 | 22.10% | 442206 | 528750 | 631646 | 750967 |
| Pumping | 57420 | 33.88% | 72750 | 86825 | 102410 | 116250 |
| Con Prod | 262480 | 34.61% | 298000 | 336000 | 373500 | 424000 |
| Video Scan | 31390 | 56.78% | 43500 | 54750 | 66000 | 77875 |
| Misc | 7830 | −8.72% | 9490 | 11025 | 12665 | 15000 |
| Serv Agr | 191475 | 13.78% | 207000 | 213900 | 220800 | 22770 |
| TOTAL | 3386000 | 19.29% | 3949196 | 4581072 | 5288771 | 6081042 |
| # of Employees | 1995A | Jan | Feb | Mar | Apr | May | Jun | Jul | Aug | Sep | Oct | Nov |
| Techs | 15 | 15 | 15 | 15 | 15 | 16 | 16 | 16 | 16 | 17 | 17 | 17 |
| Office | 8 | 8 | 8 | 8 | 8 | 9 | 9 | 9 | 9 | 9 | 9 | 9 |
| Mgmt | 6 | 6 | 6 | 6 | 6 | 6 | 6 | 6 | 6 | 6 | 6 | 6 |
| TOTAL | 29 | 29 | 29 | 29 | 29 | 31 | 31 | 31 | 31 | 32 | 32 | 32 |
| 1997F | 1998F | 1999F | 2000F | |
| Techs | 19 | 21 | 23 | 26 |
| Office | 10 | 11 | 12 | 13 |
| Mgmt | 6 | 7 | 7 | 7 |
| TOTAL | 35 | 39 | 42 | 46 |
| Average Price/Job | 1995A | 1996B | 1997F | 1998F | 1999F | 2000F |
| Sew/Drain | 175.00 | 175.08 | 184.00 | 185.00 | 188.00 | 190.00 |
| Jetting | 426.00 | 430.00 | 435.00 | 440.00 | 450.00 | 450.00 |
| Plumbing | 278.00 | 280.00 | 279.09 | 292.41 | 309.66 | 309.85 |
| Pumping | 140.62 | 145.00 | 150.00 | 151.00 | 154.00 | 155.00 |
| Video Scan | 426.00 | 430.00 | 435.00 | 438.00 | 440.00 | 445.00 |
| Con Prod | 17.24 | 20.00 | 20.00 | 20.00 | 20.00 | 20.00 |
| Misc | 140.62 | 145.00 | 146.00 | 147.00 | 149.00 | 150.00 |
| Serv Agr | 14.88 | 14.59 | 13.89 | 12.73 | 11.82 | 10.74 |
| TOTAL | 250.99 | 258.00 | 265.05 | 272.68 | 283.20 | 286.84 |
| Average Per Year | 1995A | 1996A | 1997B | 1998F | 1999F | 2000F |
| Per Tech Jobs | 754 | 772 | 784 | 800 | 812 | 815 |
| Per Tech Sales | 189231 | 199176 | 207852 | 218146 | 229947 | 233886 |
| Per Office Jobs | 1414 | 1458 | 1490 | 1527 | 1556 | 1631 |
| Per Office Sales | 354808 | 376222 | 394920 | 416461 | 440731 | 467772 |
| Per Mgmt Jobs | 1885 | 2187 | 2483 | 2400 | 2668 | 3029 |
| Mgmt Sales | 473078 | 564333 | 658199 | 654439 | 755539 | 868720 |
| Total Jobs | 390 | 410 | 426 | 431 | 445 | 461 |
| Total Sales | 97878 | 105813 | 112834 | 117463 | 125923 | 132197 |
Profit & Loss Statement
| Date Prepared: Jan. 14, 1996 Year End 1995 | ||
| Sales | $ | % |
| Sewer and Drain | 1117900 | 39.38% |
| Jet Work | 93720 | 3.30% |
| Plumbing Labor | 886830 | 31.24% |
| Plumbing Materials | 305234 | 10.75% |
| Gre/Sep Pumping | 42890 | 1.51% |
| Consumer Products | 118560 | 4.18% |
| Video Scan | 20022 | 0.71% |
| Bacteria Systems | 76440 | 2.69% |
| Miscellaneous | 8578 | 0.30% |
| Service Agreements | 168291 | 5.93% |
| Gross Sales | 2838465 | 100% |
| (minus) Cost of Materials | 102300 | 3.60% |
| (minus) Variable Costs | 1045123 | 38.41% |
| (minus) Per/Ren/Subs | 18655 | 0.66% |
| Gross Profit | 1672387 | 57.33% |
| (minus) Fixed Costs | 1159513 | 40.85% |
| Net Profit | 512874 | 16.48% |
Variable Costs and Percentages
| Variable Costs | $ | % |
| Franchise Fees | 85154 | 3.00% |
| Advertising Fees | 56769 | 2.00% |
| Payroll - Technicians | 667607 | 23.52% |
| Taxes - Federal | 85154 | 3.00% |
| Taxes - State | 0 | 0.00% |
| Taxes - Local | 0 | 0.00% |
| Taxes - FICA | 46267 | 1.63% |
| Taxes - Unemploy | 12205 | 0.43% |
| Insurance - Work Comp | 45132 | 1.59% |
| Fuel | 91966 | 3.24% |
| Miscellaneous | 0 | 0.00% |
| Total Variable Costs | 1045123 | 38.41% |
Fixed Costs and Percentages
| Fixed Costs | $ | % |
| Salaries-Owner | 127731 | 4.50% |
| Salaries-Office | 175417 | 6.18% |
| Employee Benefits | 1135 | 0.04% |
| Taxes - Federal | 12773 | 0.45% |
| Taxes - State | 0 | 0.00% |
| Taxes - Local | 0 | 0.00% |
| Taxes - FICA | 16179 | 0.57% |
| Taxes - Unemploy | 3122 | 0.11% |
| Taxes-Property | 0 | 0.00% |
| Utilities | 14476 | 0.51% |
| Rent/Mortgage | 14760 | 0.52% |
| Bad Debt | 1703 | 0.06% |
| Bank Charges | 24978 | 0.88% |
| Loan Interest | 10786 | 0.38% |
| Credit Card Fees | 1419 | 0.05% |
| Legal/Accounting | 38035 | 1.34% |
| Depreciation | 91115 | 3.21% |
| Auto/Truck/Lease | 70962 | 2.50% |
| Repair/Maint-Vehicle | 44280 | 1.56% |
| Repair/Maint-Equip | 26965 | 0.95% |
| Repair/Maint-Property | 2838 | 0.10% |
| Equipment Rental | 29520 | 1.04% |
| Licenses | 16463 | 0.58% |
| Insurance - Health | 11922 | 0.42% |
| Insurance - Liability | 19018 | 0.67% |
| Insurance - Property | 17315 | 0.61% |
| Insurance - Vehicle | 17315 | 0.61% |
| Insurance - Work Comp | 3690 | 0.13% |
| Advert - Yellow Page | 166902 | 5.88% |
| Advert-General | 30939 | 1.09% |
| Office Supplies | 22992 | 0.81% |
| Postage | 6245 | 0.22% |
| Outside Services | 1703 | 0.06% |
| Educational | 5109 | 0.18% |
| Uniforms | 9935 | 0.35% |
| Telephone-Office | 70678 | 2.49% |
| Telephone-Cellular | 5109 | 0.18% |
| Pagers/Radios | 7096 | 025% |
| Travel/Entertainment | 40306 | 1.42% |
| Miscellaneous | 7096 | 025% |
| Refunds | −568 | −0.02% |
| Discounts/Coupons | −7948 | −0.28% |
| Total Fixed Costs | 1159513 | 40.85% |
Balance Sheet
| Date Prepared: Jan. 14, 1996 Year: End 1995 | |
| Assets | |
| Cash on Hand | 200 |
| Cash in Bank | −5914 |
| Accounts Receivable | 58518 |
| Inventory | 38692 |
| Total Current Assets | $91496 |
| Equipment/Furniture | 22752 |
| Accumulated Depreciation | −4993 |
| Vehicles | 152680 |
| Accumulated Depreciation | 49566 |
| Leasehold Improvements | 19877 |
| Accumulated Depreciation | −499 |
| Total Fixed Assets | 140251 |
| Goodwill | 285000 |
| Accumulated Amortization | −28665 |
| Franchise Fee | 141935 |
| Accumulated Amortization | −12465 |
| Organization Expense | 19334 |
| Accumulated Amortization | −2453 |
| Total Long-Term Assets | $402686 |
| Total Assets | $634433 |
| Liabilities | |
| Sales Tax | 495 |
| Federal Withholding - FICA | 163987 |
| Accounts Payable | 188350 |
| Total Current Liabilities | $352832 |
| Note Payable - Bank | 98799 |
| Note Payable - Jim Brown | 21976 |
| Note Payable - John David | 8314 |
| Total Long-Term Liabilities | 129089 |
| Total Liabilities | $481921 |
| Capital | |
| Common Stock | 158000 |
| Returned Earnings Current | −5488 |
| Total Capital | 152512 |
| Total Liabilities & Capital | $634433 |