Willamette Furniture â€” Sample Plan - Business Plan Software and

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Willamette Furniture — Sample Plan

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eConfidentiality Agreement

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e1.0 Executive Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

2.0 Situation Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12.1 Market Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

2.1.1 Market Demographics . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22.1.2 Market Needs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32.1.3 Market Trends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32.1.4 Market Growth . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4

2.2 SWOT Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52.2.1 Strengths . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52.2.2 Weaknesses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62.2.3 Opportunities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62.2.4 Threats . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6

2.3 Competition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62.4 Product Offering . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72.5 Keys to Success . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82.6 Critical Issues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82.7 Historical Results . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 92.8 Macroenvironment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 92.9 Channels . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9

3.0 Marketing Strategy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 103.1 Mission . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 113.2 Marketing Objectives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 113.3 Financial Objectives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 113.4 Target Markets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 123.5 Positioning . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 123.6 Marketing Mix . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13

3.6.1 Product Marketing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 133.6.2 Promotion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 133.6.3 Service . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 133.6.4 Channels of Distribution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14

3.7 Marketing Research . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14

4.0 Financials . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 154.1 Break-even Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 154.2 Sales Forecast . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16

4.2.1 Sales by Manager . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 184.2.2 Sales by Segment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 194.2.3 Sales by Program . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19

4.3 Expense Forecast . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 194.3.1 Expenses by Manager . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 204.3.2 Expenses by Segment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 204.3.3 Expenses by Program . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20

4.4 Linking Expenses to Strategy and Tactics . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 204.5 Contribution Margins . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21

5.0 Controls . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 225.1 Implementation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 225.2 Marketing Organization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 235.3 Contingency Planning . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24

Table of Contents

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e1.0 Executive Summary

Willamette Furniture has been riding a growth spurt, having discovered the high-end direct mail channel that gave us a push to new potential volumes through channels. Bolstered by appearances in specialty catalogs, we were able to develop another additional channel through distributors of office equipment that sell directly to corporations.

We believe that by targeting the high-end market, we can successfully occupy an emerging niche that other channels of distribution have not been able to target. With the implementation of the new marketing focus outlined in this plan, we will position our product line as the high-quality, elegant alternative to mainstream office furniture found in office supply stores. Our ability to integrate emerging technologies in our design, provide complimentary pieces for a complete set, and custom design ergonomic executive-level office furniture will provide strengths and establish a reputation of unmatched quality.

2.0 Situation Analysis

Willamette Furniture's product offerings focus on the executive level customer who has an appreciation for quality craftsmanship and materials, and wishes to integrate technology in to their office environment. Our market segments within the office furniture context include the corporate executive, small business owner, and home office. We will target these markets through a variety of media including the Internet, catalog distribution, and word of mouth advertising. Because Willamette offers products at a high cost level, we do not wish to mass market. Rather our strategy is to make our product information readily available to those seeking quality office furniture with specific technological needs. Therefore, we will add internal catalog publishing to our existing catalog marketing programs (currently through high level channels such as Sharper Image). In addition, because our product assumes the use of computer technology, the development of websites will increase our company profile by promoting our product line in the media most appropriate to our customers.

Willamette Furniture occupies a specific niche within the office furniture market. Therefore, our competition does not provide comparable products, as they lack the combination of technological integration and quality in materials and craftsmanship. Our nearest competition includes Ethan Allen, Acme Computer Furniture, and ABC Manufacturing. These companies distribute their products through channels such as chain office supply stores or their own retail locations. In contrast, Willamette targets its potential customers based on their search for our type of product.

2.1 Market Summary

Our product is positioned very carefully: this is high-quality office furniture combining workmanship and ergonomics for the customer who understands quality, is a user of high technology equipment, and is willing to spend money on the best. Unlike the mainstream products, we do not use laminates or cheap manufacturing technology.

Our marketing strategy is based mainly on making the right information available to the right target customer. We can't afford to sell people on our expensive products, because most don't have the budget. What we really do is make sure that those who have the budget and appreciate the product know that it exists, and know where to find it.

The marketing has to convey the sense of quality in every picture, every promotion, and

Willamette Furniture -- Sample Plan

Copyright © Palo Alto Software, Inc. 2004 All rights reserved. www.paloalto.com Not for reproduction, publication, or distribution. Pg 1

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eevery publication. We can't afford to appear in second-rate catalogs with poor illustrations that make the product look less than it is. We also need to leverage our presence using high-quality catalogs and specialty distributors.

Our target market is a person who wants to have very fine furniture with the latest in technology, combined with an old fashioned sense of fine woods and fine woodworking. This person can be in the corporate towers, small or medium business, or in a home office. The common bond is the appreciation of quality, and the lack of price constraints.

Corporate Executives

Small Business Owners

Home Offices

Other

Target Markets

2.1.1 Market Demographics

We focus our marketing on three types of target consumers:

1. Corporate Executives: The Bureau of Labor Statistics (http://stats.bls.gov) reports there are 14.4 million executive, administrative, and managerial employees in the United States, and that number is growing at 1.6% per year. We estimate the top 1% of that number, 144,000, as our market, and we're suggesting the number is growing at the same 1.6% annually.

2. Small Business Owners and Executives: According to the most recent data available from the Small Business Administration (SBA), there are between 13 and 16 million small businesses (500 employees or fewer) in the United States. That includes about 5.5 million employers and 11 million self-employed people. We take the top 1% of 15 million, to make our potential market of 150,000. We estimate growth at 2.5%, a composite of different sources.

3. Home Offices: According to a story in Home Office Computing magazine, there are 36 million home offices in the United States. That means a home office in 27% of the households in the country. The U.S. census reports that in 1997 there were 16 million households in this country with incomes of more than $100,000 per year. The 27% of those that have home offices are our potential market. That's 4.4 million households (of 132 million total). Our market is the top 10% of those, 440,000, which we estimate is growing at 5% per year.

4. Other: We will also sell to some buyers outside the United States and outside of



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ethese targeted market segments. We estimate 100,000 other potential customers, a number that we estimate will be growing at 5% per year.

Table: Market Analysis

Market AnalysisPotential Customers Growth 2004 2005 2006 2007 2008 CAGRCorporate Executives 2% 144,000 146,304 148,645 151,023 153,440 1.60%Small Business Owners 3% 150,000 153,750 157,594 161,534 165,572 2.50%Home Offices 5% 440,000 462,000 485,100 509,355 534,823 5.00%Other 5% 100,000 105,000 110,250 115,763 121,551 5.00%Total 3.99% 834,000 867,054 901,589 937,674 975,385 3.99%

2.1.2 Market Needs

Willamette gives the discriminating personal computer user, who cares about design, quality furniture, and quality of working environment, a combination of the highest quality furniture and an integration of the latest technology, at a relatively high price. Willamette provides this discriminating customer with more than a piece of furniture. We provide a quality working environment that includes the integration of technological components that generally exist as part of the executive setting. The quality of manufacturing, materials, and ergonomics found in our products serves to enhance the appearance of an executive's office atmosphere, in turn adding to their status and effectiveness as a decision maker, innovator, and leader.

We understand that our target market needs more than just office furniture. This need grew out of the special requirements of personal computing, when combined with office furniture -- keyboards at correct height, monitors at correct height, proper channels for cables, and other amenities. Our target customer wants to have all of that, plus fine furniture. There is a need for quality wood and workmanship throughout. We don't just sell office furniture, we sell design, workmanship, fine materials, and a total-quality office environment.

2.1.3 Market Trends

Our market has finally grown to recognize the disparity between most of the standard office furniture sold through channels and our own products.

The development of the high-end office worker, office owners, and the baby-boomer executive is an important trend for us. We now have people who are using computers and also appreciate the old-fashioned workmanship of good furniture.

Today's high integration of technology in the work place, especially in the multi-task oriented, executive environment, sets the stage for growth in the area of high quality, technologically integrated office environments. Similarly, home offices and small business owners continue to demand more advanced technologies and their integration into the office atmosphere. A sense of craftsmanship and quality of materials, such as oak and cherry, is timeless. The synergy of this desire for the classic cabinet-maker look, and use of technology is inherent in Willamette's offerings.



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100,000

200,000

300,000

400,000

500,000

600,000

2004 2005 2006 2007 2008

Corporate Executives

Small Business Owners

Home Offices

Other

Market Forecast

2.1.4 Market Growth

According to [source omitted], the market for office furniture is growing at XX percent per year, and is projected to increase. The market for PC-related office furniture is growing even faster, at YY percent per year, and is projected to top $XX billion by the year 2005.

Most important is the growth in home offices with personal computer equipment. As the cost of the computer goes down, steadily, the number of home offices goes up. According to [source omitted], this is about 33 million right now, growing at 15 percent per year. Households spent $XX billion last year to equip home offices, and 15 percent of that was spent on furniture.



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0.00%

1.00%

2.00%

3.00%

4.00%

5.00%

Target Market Growth

2.2 SWOT Analysis

We are on the brink of major opportunity. We have the strength of a combined expertise in high-tech ergonomics and furniture manufacturing, and the opportunity of a growing market and new channels of distribution. We have the weakness of a small company without a lot of experience, and the threat of new competition taking aim at our niche.

2.2.1 Strengths

• Strategic market segmentation and implementation strategies.• Combination of skills in ownership. As co-owners, Jim and Susan jointly develop

business strategy and long-term plans. Jim is strong on product know-how and technology, and Susan is strong on management and business know-how.

• Diversified market segments: Corporate executives, small business owners, home offices.

• Increased capital from successful historical growths in sales.



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e2.2.2 Weaknesses

• High-end, high priced product line limits sales volume.• Addition of in-house catalog design and publishing will add an aspect to Willamette's

functions that has not been previously experienced.• Direct marketing through the development of the above catalog creates the need for

further research, data gathering, and analysis.• Establishment on the Internet will produce technological challenges.

2.2.3 Opportunities

• New channels of distribution. • Internet marketing and sales.• Specific niche: High-end appreciation for quality materials (cherry and oak),

ergonomics, and technology (and integration therein).• Employee turnover and corporate restructuring is causing an increased employee

turnover at the highest levels. The new generation of corporate executives, small business owners, and home offices has a far greater appreciation of technology and the needs driven by its implementation, such as office environment quality and integration

2.2.4 Threats

• Growth in the high-end office furniture market invites competition. This competition could emerge from a variety of given sources including:

1. Established mass-market companies' development of new lines. 2. New start up companies generated by healthy economic growth nation-wide. 3. New marketing strategies for established products and companies.

• Existing competition.

2.3 Competition

Within our niche we have three significant competitors, Ethan Allen, Acme Computer Furniture, and ABC Manufacturing. Acme is a bigger company, operating mainly in our same niche, whose marketing is better than its product quality. ABC is a subsidiary of Haines Furniture, a major furniture manufacturer, which has recently targeted our niche. Ethan Allen is a furniture manufacturer which produces some office furniture products and markets to the high level consumer.

In general, however, our competition is not in our niche. We compete against generalized furniture manufacturers, cheaper computer-related furniture, and the mainstream merchandise in the major furniture channels and office supply stores. It is not that people choose our competitors instead of our product, it is that they choose lesser quality, mainstream materials instead of the higher quality furniture we offer.



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0%

10%

20%

-20 0 20 40 60 80 100 120

Acme Computer Furniture

ABC Manufacturing

Ethan Allen

Office Depot

Staples

Office Max

Other

Competitor by Growth and Share

Table: Growth and Share Analysis

Growth and ShareCompetitor Price Growth Rate Market ShareAcme Computer Furniture $800 8% 3%

ABC Manufacturing $1,500 1% 10%Ethan Allen $2,500 3% 15%Office Depot $400 12% 32%Staples $400 4% 10%Office Max $400 15% 30%Other $0 0% 0%

Average $857.14 6.14% 14.29%Total $6,000.00 43.00% 100.00%

2.4 Product Offering

Willamette offers very high quality office furniture designed to effectively incorporate computer machinery into the executive office or home office. The key to the line is an ergonomically effective desk that still looks like an executive desk and looks very good in a high-end office, but is intended to accommodate the personal computer. Each piece is available in either oak or cherry.

1. Our main line is the Willamette computer desk in several versions. This is an elegant piece of office furniture designed to look good in executive office or home office, and at the same time, be ideal for real use of the computer. The two critical elements of ergonomics -- keyboard height and angle, and monitor height and angle -- are completely adjustable. Cable runs and shelving add to the utility of the executive desk, without sacrificing elegance.

2. We also make complementary pieces to fill out the office suite, including file cabinets, printer stands, and bookcases.

3. In addition, we make custom designs to fit exact measurements.



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eFurther supporting our competitive edge is our assembly strategy, which is based on interlocking wood pieces of such high quality that assembly is not only a pleasure for our customers, it is actually a feature that enhances the sense of quality.

In 2001 we will introduce the new custom option to our executive desk line based on the laptop computer, with a docking station to connect to a network. The new furniture has a different configuration to assume easy access to the docking station, and better use of the space that doesn't have to be dedicated the the CPU case.

We are also going to accommodate larger monitors, the 17," 19," and 21" sizes that are becoming much more common, particularly in our high-end market. We will also be watching for technological developments, allowing us to be the first to provide custom furniture for wall-mounted flat screens, liquid crystal displays, and similar technologies.

2.5 Keys to Success

The keys to Willamette's success have historically been effective market segmentation and implementation strategies. Along these lines of proven success, Willamette will implement direct marketing strategies based on our success in distribution through high-end channels such as the Sharper Image. Our catalog marketing will turn to in-house production for more specific, extensive product descriptions.

• Uncompromising commitment to the quality of the product: quality wood, quality workmanship, quality design, quality of end result.

• Successful niche marketing: we need to find the quality-conscious customer in the right channels, and we need to make sure that customer can find us.

• Almost-automatic assembly: we can't afford to ship fully-assembled desks, but assembly must be so easy and automatic that it makes the customer feel better about the quality, not worse.

2.6 Critical Issues

The critical issues emerge from the SWOT analysis and review of the market:

• The underlying paradox: How can we sell our high-end customers a packaged kit that requires assembly. ? Or do we need to find channels to offer delivery of assembled product?

• Channels vs. Internet: Can we do both? Is there a channel conflict? Are we going to be able to manage our channels well enough to make money with them?



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e2.7 Historical Results

The following historical results table is based on research and some simplifying assumptions:

1. We used the Imarket Inc. website at www.imarketinc.com to find an estimate for wood office desks. The total market in the U.S. was estimated at $140 million in 1996.

2. We estimated growth at 2.5% per year, using the average growth of the entire office furniture industry as reported by the U.S. Census in Cendata (http://tier2.census.gov/cgi-win/asm/ASMDATA.EXE).

3. We estimated an average of $500 per desk to calculate unit numbers from market numbers.

4. We simplified our own financial history somewhat, because this makes the analysis more useful for decision making. We rounded some numbers and consolidated, so that our numbers are an accurate reflection.

Looking at the table, we can see that we may soon begin to have measurable market share, as our new channels allow us to contemplate future growth. Our present market share is a function of dividing our numbers, since we don't show up in any industry surveys -- yet.

2.8 Macroenvironment

At a large scale, market research demonstrates that the high-end market that we are catering to is growing and changing to our benefit. Generally, there is a trend toward executive turnover in large companies today. That is, corporate restructuring, increased small business development, and the growth of the home office sector is providing for a younger market in the executive, small business owner, and home office positions. Research indicates that this new generation of executives implements technology to a much higher degree than past trends have indicated. Therefore, with the emergence this new generation of executives, the appreciation of quality craftsmanship and materials in office furniture that provides for an effective office environment, combined with the utilization of emerging technologies for greater efficiency, dictates that our product line will increase in popularity.

2.9 Channels

Our past marketing strategy assumes that we need to go into specialty channels to address our target customer's needs. The tie-in with the high-end quality catalogs like Sharper Image is perfect, because these catalogs cater to our kind of customers. We position our products as the highest quality, highest price offering in any channel mix.

By including our products in these high-end catalogs, we were able to successfully target the specific niche that was our marketing milestone. This has provided the foundation for a move to internal catalog production. With a higher degree of information control internally, these catalogs will target the same audience, but will include more extensive information in terms of quality, examples, testimonials, and information tailored to past sales experiences.



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Outside Catalogs

Internal Catalogs

Websites

Other

Channel Forecast

Table: Channel Forecast

Channel ForecastChannel Growth 2004 2005 2006 2007 2008 CAGROutside Catalogs 20% 120 144 173 208 250 20.14%Internal Catalogs 40% 200 280 392 549 769 40.03%Websites 40% 100 140 196 274 384 39.99%Other 0% 0 0 0 0 0 0.00%

--------- --------- --------- --------- --------- ---------Total 35.19% 420 564 761 1,031 1,403 35.19%

3.0 Marketing Strategy

Willamette furniture is moving toward internal marketing control by establishing programs such as an in-house catalog publishing and distribution department, detailed customer service vehicles that will allow us to track the success of our marketing and sales, and further integration with established quality catalog vendors, such as Shaper Image.

Our target markets present great opportunities for company growth, as our niche is not at all saturated at this point. We will dominate the high-end office furniture market by stressing the quality in workmanship and materials of our product lines, keeping up with and integrating technological advances in the personal computing environment, and by increasing our market research and customer service in order to constantly satisfy our markets' needs.

The home office, small business owner, and corporate executive will greatly benefit from our quality products in terms of , comfort, and appreciation of the office environment. The key to reaching this market is to make them aware that our products are available. We do not need to convince them of anything but the assurance of quality in manufacturing and ergonomic design.



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e3.1 Mission

Willamette helps create pleasant, productive office environments with well-designed furniture that incorporates new technology into the classic office model, in which real people can work happily. We are sensitive to the look and feel of good wood and fine furniture, as well as to high-powered personal computing. We always provide the best possible value to our customers who care about quality office environments, and we want every dollar spent with us to be well spent.

We also create and nurture a healthy, creative, respectful, and fun office and workshop environment, in which our employees are fairly compensated and encouraged to respect the customer and the quality of the product we produce. We seek fair and responsible profit, enough to keep the company financially healthy for the long term and to fairly compensate owners and investors for their money and risk.

3.2 Marketing Objectives

Our marketing strategy assumes that we need to go into specialty channels to address our target customer's needs. The tie-in with high-end quality catalogs like Sharper Image is perfect, because these catalogs cater to our kind of customers. We position as the highest quality, offering status and prestige levels of purchase.

Our presence on the World Wide Web will increase the availability of our products to the specific market segments that we wish to target. Because Willamette's product offerings concentrate on the integration of PC technologies, Web presence is a natural objective in reaching appropriate potential customers.

Finally, our movement into internal catalog publishing will provide Willamette's marketing managers with additional control over the content and recipients of our direct marketing. With experience gained through our inclusion in other high-end catalog merchants, and our managers' publishing experience, our internal catalogs will undoubtedly prove to generate great sales increases for Willamette Furniture.

3.3 Financial Objectives

1. To grow our sales more than three times over during a five-year period, from $450,000 in 2000 to $1.6 million in 2004.

2. To significantly decrease our sales and marketing expenses as a percent of sales: from 34.5% this year to 26% by 2004.

3. To increase contribution margin from 40% to 48% over five years.



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e3.4 Target Markets

Our segment definition is of itself strategic. We are not intending to satisfy all users of office furniture intended for use with personal computers, but, rather, only those who are most demanding. We are definitely out to address the needs of the high-end buyer, who is willing to pay more for quality.

In our particular market, we also seek the buyer who appreciates two attributes: the quality of furniture workmanship and the excellence of design, with an understanding of technology and ergonomics built in.

• Corporate executives: our market research indicates about 2.5 million potential customers who are managers in corporations of more than 100 employees. The target customer is going to be at a high executive level, in most cases, because the purchase price is relatively steep compared to standard office furniture.

• Small business owners: our customer surveys indicate a strong market among the owners of businesses with fewer than 100 employees. There are 11 million such businesses in this country, most of them with concentrated ownership that makes the owners potential customers.

• Home offices: the home office business has proliferated during the 1990s, and we also have home offices for people employed outside the home. This is a big market, some 36 million home offices, growing faster than other markets.

3.5 Positioning

Our competitive edge is our dominance of high-technology ergonomics and traditional high-quality furniture workmanship. Although there are many computer furniture manufacturers, and many computer lovers, few have brought the two crafts together as we have.

We focus on a special kind of customer, the person who wants very high quality office furniture customized to work beautifully with modern technology including personal computers, scanners, Internet connections, and other high-tech items. Our customer might be in larger corporations, small or medium business, or in a home office with or without a home-office business. What is important to the customer is elegance, fine workmanship, ease of use, ergonomics, and practicality.

The product strategy is also based on quality, in this case the intersection of technical understanding with very high quality woodworking and professional materials, and workmanship.

An important competitive edge is our assembly strategy, which is based on interlocking wood pieces of such high quality that assembly is not only a pleasure for our customers, it is actually a feature that enhances the sense of quality.



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e3.6 Marketing Mix

Our marketing mix depends mainly on the product and product marketing, but we are also leveraging a lot more in our presence in channels than on our direct national branding. The channels are the key to our recent growth and our prospects for additional growth.

3.6.1 Product Marketing

Our product marketing has to emphasize the benefits of our unique combination of technological expertise, ergonomics, and fine furniture craftsmanship. We need to sell pride of ownership and workmanship, and prestige. That has to come out in our packaging, finishing, shipping, and collaterals.

Product marketing's most important challenge is the problem of assembly and packaging. We know we have the best product when we deliver it locally. That isn't necessarily so when we send it in boxes to be assembled. We have to make sure that the assembly is truly easy.

3.6.2 Promotion

Our promotion strategy is based mainly on making the right information available to the right target customer. We can't afford to sell people on our expensive products, because most don't have the budget. What we really do is make sure that those who have the budget and appreciate the product know that it exists, and know where to find it.

The marketing has to convey the sense of quality in every picture, every promotion, and every publication. We can't afford to appear in second-rate catalogs with poor illustrations that make the product look less than it is. We also need to leverage our presence using high-quality catalogs and specialty distributors.

3.6.3 Service

The service aspect of Willamette's marketing mix is limited in traditional terms. That is, due to our high degree of quality in manufacturing and assembly, our product lines do not require continued maintenance or service. However, we do consider our customer service to be key to the retention of customers. Willamette manufactures many accessories in addition to our main, executive desk lines. As a result, we offer a fully integrated office environment, including peripherals such as lamps, cabinets, tables, and chairs. Therefore, a Willamette Furniture customer is not considered to be a one time buyer. The establishment of a quality office environment can be an on-going process. Willamette will continue to offer additional pieces to our customers, targeting them based on their previous purchases.



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e3.6.4 Channels of Distribution

The four main manufacturers are selling direct to the office superstores and buying discount clubs. This accounts for the main volume of distribution. The office furniture customer seems to be growing steadily more comfortable with the retail buy in the chain store.

The major corporate purchases are still made directly with manufacturers. Although this is a major channel for some of the more traditional manufacturers, it is essentially closed to new competition. The direct channel is dominated by two manufacturers and two distributors. The distributors will occasionally take on a new line -- happily, this has helped Willamette -- but the main growth is in retail.

Published research indicates that 51% of the total sales volume in the market goes through the retail channel, most of that major national chains. Another 23% goes through the direct sales channel, although in this case direct sales includes sales by distributors who are buying from multiple manufacturers. Most of the remainder, 18%, is sold directly to buyers by catalogs.

In the mainstream business, channels are critical to volume. The manufacturers with impact in the national sales are going to win display space in the store, and most buyers seem content to pick their product off the store floor. Price is critical, because the channels take significant margins. Buyers are willing to settle for laminated quality and serviceable design.

In direct sales to corporations, price and volume is critical. The corporate buyer wants trouble-free buying in volume, at a great price. Reliable delivery is as important as reliable quality.

In the high-end specialty market, particularly in our niche, features are very important. Our target customer is not making selections based on price. The ergonomics, design, accommodation of the computer features within the high-quality feel of good wood, is much more important than mere price. We are also seeing that assembly is critical to shipping and packing, but our customer doesn't accept any assembly problems. We need to make sure that the piece comes together almost like magic, and as it does, it presents a greater feel of quality than if it hadn't required assembly at all.

Table: Channel Analysis

Channel AnalysisChannel Reach Comarketing Payments CostOutside Catalogs 10 8 1 5Internal Catalogs 2 1 8 2Websites 4 7 9 2Other 0 0 0 0

3.7 Marketing Research

Due to the market segmentation that Willamette Furniture has established, we will require constant updates in terms of the potential sizes, distributions, and purchasing patterns of the quality conscious, technology utilizing executive markets. We will use our historical performance to establish a customer database containing this information. This will allow Willamette to target customers more efficiently as a result of actual experience. Furthermore, as our customer service and follow-up are key to establishing retained customers, the marketing database will allow us to divide the potential buying patterns of customers into categories based on future needs.



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e4.0 Financials

The financial picture is quite encouraging. We have been slow to take on debt, but with our increase in sales we do expect to apply for a credit line with the bank, to a limit of $150,000. The credit line is easily supported by assets.

We do expect to be able to take some money out as dividends. The owners don't take overly generous salaries, so some draw is appropriate.

4.1 Break-even Analysis

Our break-even analysis is based on running costs, the "burn-rate" costs we incur to keep the business running, not on theoretical fixed costs that would be relevant only if we were closing. Between payroll, rent, utilities, and basic marketing costs, we think $30,000 is a good estimate of fixed costs.

Our assumptions on average unit sales and average per-unit costs depend on averaging. We don't really need to calculate an exact average, this is close enough to help us understand what a real break-even point might be.

The essential insight here is that our sales level seems to be running comfortably above break-even.

($30,000)

($20,000)

($10,000)

$0

$10,000

$20,000

$30,000

0 8 16 24 32 40

Monthly break-even point

Break-even point = where line intersects with 0

Break-even Analysis



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eTable: Break-even Analysis

Break-even Analysis:Monthly Units Break-even 26Monthly Revenue Break-even $40,435

Assumptions:Average Per-Unit Revenue $1,550.0

0Average Per-Unit Variable Cost $400.00Estimated Monthly Fixed Cost $30,000

4.2 Sales Forecast

Our sales forecast assumes no change in costs or prices, which is a reasonable assumption for the last few years.

We are expecting to increase sales grow from $350 thousand last year to $450 thousand this year. The growth forecast is in line with our last year, and is relatively high for our industry because we are developing new channels. In 2001 and 2002 we expect growth closer to 60% per year, to a projected total of more than $1 million in 2002.

For 2000 we plan to internally develop a company catalog, which will include some other products for the same target customers. The focus will be an executive level office catalog, with furniture, lamps, and other accessories.

Our Oregon location is a distinct advantage for local wood. We can buy higher quality oak and cherry than either of our competitors (one in California, one in New York). Since our sales increased over the last two years, we have been able to buy at better prices, because of higher volumes.

We work with three wood suppliers, all local. Bambridge supplies most of our oak, and a bit of cherry and some other specialty woods. Bambridge has been in business for as long as we have, and has given us good service and good prices. This is a good, stable supplier. Duffin Wood Products is a good second source, particularly for cherry and specialty woods. We've used Merlin supplies as well, frequently, for filling in when either of our main two suppliers were short.

We also work with a number of specialty manufacturers for furniture fittings, drawer accessories, glass, shelving accessories, and related purchases.

Although we aren't a major player compared to the largest furniture manufacturers, we are one of the biggest buyers of the custom materials we need. Most of our suppliers are selling through channels to hobbyists and carpenters, so they treat us as a major account.

We depend on our dominance of the latest in technology of ergonomics, combined with classic design elements of fine furniture. We must remain on top of new technologies in display, input and output, and communications. For example, our latest models are already assuming the desktop digital scanner as a frequent accessory, and audio for use in creating presentations, email attachments, etc.

Our assembly patents are an important competitive edge. No competitor can match the way we turn a drawback -- having to assemble the product -- into a feature. Our customer surveys confirm that customers take the interlocking assembly system as an enhancement to the sense of quality.

In 2000 we will introduce the new line based on the executive laptop computer, with docking



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estation to connect to a network. The new variation on the executive desk line has a different configuration to assume easy access to the docking station, and better use of the space that doesn't have to be dedicated the the CPU case.

$0

$10,000

$20,000

$30,000

$40,000

$50,000

$60,000

Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar

Executive Desk Oak

Executive Desk Cherry

Other Furniture Oak

Other Furniture Cherry

Custom Designed Furniture

Monthly Sales Forecast



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eTable: Sales Forecast

Sales ForecastUnit Sales 2005 2006 2007 2008 2009Executive Desk Oak 209 350 600 700 770Executive Desk Cherry 31 35 40 45 50Other Furniture Oak 45 50 50 55 55Other Furniture Cherry 7 10 10 12 12Custom Designed Furniture 6 10 20 30 50Total Unit Sales 298 455 720 842 937

Unit Prices 2005 2006 2007 2008 2009Executive Desk Oak $1,600.00 $1,600.00 $1,600.00 $1,600.00 $1,600.00Executive Desk Cherry $1,750.00 $1,750.00 $1,750.00 $1,750.00 $1,750.00Other Furniture Oak $900.00 $900.00 $900.00 $900.00 $900.00Other Furniture Cherry $1,000.00 $1,000.00 $1,000.00 $1,000.00 $1,000.00Custom Designed Furniture $2,500.00 $2,500.00 $2,500.00 $2,500.00 $2,500.00

Sales 2005 2006 2007 2008 2009Executive Desk Oak $334,400 $560,000 $960,000 $1,120,000 $1,232,000Executive Desk Cherry $54,250 $61,250 $70,000 $78,750 $87,500Other Furniture Oak $40,500 $45,000 $45,000 $49,500 $49,500Other Furniture Cherry $7,000 $10,000 $10,000 $12,000 $12,000Custom Designed Furniture $15,000 $25,000 $50,000 $75,000 $125,000Total Sales $451,150 $701,250 $1,135,000 $1,335,250 $1,506,000

Direct Unit Costs 2005 2006 2007 2008 2009Executive Desk Oak $400.00 $400.00 $400.00 $400.00 $400.00Executive Desk Cherry $525.00 $525.00 $525.00 $525.00 $525.00Other Furniture Oak $180.00 $180.00 $180.00 $180.00 $180.00Other Furniture Cherry $300.00 $300.00 $300.00 $300.00 $300.00Custom Designed Furniture $625.00 $625.00 $625.00 $625.00 $625.00

Direct Cost of Sales 2005 2006 2007 2008 2009Executive Desk Oak $83,600 $140,000 $240,000 $280,000 $308,000Executive Desk Cherry $16,275 $18,375 $21,000 $23,625 $26,250Other Furniture Oak $8,100 $9,000 $9,000 $9,900 $9,900Other Furniture Cherry $2,100 $3,000 $3,000 $3,600 $3,600Custom Designed Furniture $3,750 $6,250 $12,500 $18,750 $31,250Subtotal Direct Cost of Sales $113,825 $176,625 $285,500 $335,875 $379,000

4.2.1 Sales by Manager

Willamette's sales in terms of our management structure are represented in the following table. Jack and Cassidy are our strongest generators of sales because of their established relationships with past customers and channels. We will bring on two new managers due to our progress on the Internet and through internal catalog publishing. Although the first year sales projections for Sampson and Bertha are not extremely high, their positions and customer interactions will increase exponentially with the completion of our websites and internal catalogs. Willamette has decided to bring them on early because Peggy will be taking a leave of absence during the summer months of 2000. The overlap will also allow Sampson and Bertha to become quite familiar with our product offerings before their respective departments are online.



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e4.2.2 Sales by Segment

Willamette's sales by program forecasts are a direct result of past performance stemming from outside catalog marketing and market research. Our expanding markets are, by default, heavy users of the World Wide Web. With our technological integration that is key to Willamette's product offerings, it can be assumed that our target customers will find our products via the Internet (with a relatively aggressive Internet marketing scheme).

4.2.3 Sales by Program

Our sales by segment show how strategically we have targeted our market segments in the past and project to continue to do so successfully. With historical experience in targeting these market segments, Willamette will only increase in its market share due to expansions in marketing programs tailored to our past success.

4.3 Expense Forecast

Our expenses occur as the result of both historically successful marketing endeavors and projected marketing programs designed to take advantage of expanding markets and improved product lines. We will be moving into the realm of Internet marketing and sales in the year 2000. The initial costs are high relative to the maintenance costs involved after the websites' creation. Similarly, the development of an in-house catalog design and publishing department will incur higher start-up expenses than maintenance costs after the initial publication. We have chosen these two new marketing programs as areas where expenses can initially build up because research indicates that they will cause our market share to increase exponentially over time.

$0

$2,000

$4,000

$6,000

$8,000

$10,000

$12,000

$14,000


Outside Catalogs

Internal Catalogs

Customer Service

Websites

Other

Monthly Expense Budget



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eTable: Marketing Expense Budget

Marketing Expense Budget 2005 2006 2007 2008 2009Outside Catalogs $24,000 $50,000 $100,000 $125,000 $150,000Internal Catalogs $72,000 $104,000 $125,000 $125,000 $125,000Customer Service $30,000 $40,000 $50,000 $55,000 $60,000Websites $30,000 $30,000 $40,000 $50,000 $60,000Other $0 $0 $0 $0 $0

------------ ------------ ------------ ------------ ------------Total Sales and Marketing Expenses $156,000 $224,000 $315,000 $355,000 $395,000Percent of Sales 34.58% 31.94% 27.75% 26.59% 26.23%Contribution Margin $181,325 $300,625 $534,500 $644,375 $732,000Contribution Margin / Sales 40.19% 42.87% 47.09% 48.26% 48.61%

4.3.1 Expenses by Manager

Willamette Furniture's expenses in terms of manager are directly proportionate to the managed program's potential. As our market share increases and capital is generated, we will support further marketing programs and the expansion of current programs, thus increasing our management budgets for these specific departments and projects.

4.3.2 Expenses by Segment

Willamette Furniture's expenses in terms of marketing programs are directly proportionate to the proposed and historical success of these programs. As our market share increases and capital is generated, we will support further marketing programs and the expansion of current programs.

4.3.3 Expenses by Program

Willamette Furniture's expenses in terms of market segment are directly proportionate to the segment's potential. As our market share increases and capital is generated, we will support further marketing programs and the expansion of current programs.

4.4 Linking Expenses to Strategy and Tactics

Willamette's growth in sales revenue will happen as a result of the implementation of new marketing programs in accordance with market growth. The expenses generated by these new marketing strategies will be greater in the initial design and implementation stages than in later maintenance stages. For example, it is proven that an Internet presence will increase our sales anywhere from 3-10%. Therefore, it is worth an initial expenditure of $30,000 for design and staffing in order to maintain the websites. Website expenses increase as website importance increases. We will use our increased capital to make wise infrastructure purchases such as internal catalog publishing capabilities and additional design and manufacturing tools.



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$0

$10,000

$20,000

$30,000

$40,000

$50,000

$60,000


Sales

Expenses

Sales vs. Expenses Monthly

4.5 Contribution Margins

Willamette's sales will increase as a result of market growth, market share increase, and Internet presence. Our gross margin will remain steady at approximately 75%. The contribution margin will steadily increase as a result of the initial expenses involved with starting marketing programs such as internal catalog publication and website development. These second year expense decreases will offset the increases in retained customer expenses, custom product line development, and outside catalog expansion.

$0

$5,000

$10,000

$15,000

$20,000

$25,000

$30,000


Contribution Margin Monthly



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eTable: Contribution Margin

Contribution Margin2005 2006 2007 2008 2009

Sales $451,150 $701,250 $1,135,000 $1,335,250 $1,506,000Direct Costs of Goods $113,825 $176,625 $285,500 $335,875 $379,000Other Variable Costs of Sales $0 $0 $0 $0 $0

------------ ------------ ------------ ------------ ------------Cost of Goods Sold $113,825 $176,625 $285,500 $335,875 $379,000Gross Margin $337,325 $524,625 $849,500 $999,375 $1,127,000Gross Margin % 74.77% 74.81% 74.85% 74.85% 74.83%

Marketing Expense Budget 2005 2006 2007 2008 2009Outside Catalogs $24,000 $50,000 $100,000 $125,000 $150,000Internal Catalogs $72,000 $104,000 $125,000 $125,000 $125,000Customer Service $30,000 $40,000 $50,000 $55,000 $60,000Websites $30,000 $30,000 $40,000 $50,000 $60,000Other $0 $0 $0 $0 $0

------------ ------------ ------------ ------------ ------------Total Sales and Marketing Expenses $156,000 $224,000 $315,000 $355,000 $395,000Percent of Sales 34.58% 31.94% 27.75% 26.59% 26.23%Contribution Margin $181,325 $300,625 $534,500 $644,375 $732,000Contribution Margin / Sales 40.19% 42.87% 47.09% 48.26% 48.61%

5.0 Controls

The executive furniture market is steadily increasing at an average calculated annual growth rate of 7.75 percent. With this in mind, our marketing programs will expand accordingly. The addition of an internally created catalog will allow Willamette to market to this expanding number of potential customers. Sales will increase accordingly, providing working capital for internal product development, marketing department growth, and Internet development. A presence on the Internet will be a key milestone to expanding sales and marketing potentials through the utilization of new channels.

5.1 Implementation

Willamette Furniture will begin the year 2000 by continuing to strengthen our alliances with established partners in distribution. We will prepare our catalog placements internally, submitting them by the middle of January 2000. Simultaneously, the internal catalog plan will be polished and submitted by the end of January 2000. This will be possible with the expertise of Rebecca King and James Black, who have brought their industry knowledge to the marketing department of Willamette Furniture. With the completion of this plan, design stages will occur from February 2000 through to the middle of March 2000. This time frame is accurate because we have experience in the design stage, as we have historically submitted our own designs to outside catalog vendors. As in past years, Spring and Fall Trade Shows will occur at their normal times. These shows will provide test cases for our internal catalog design. , our last milestone category to be implemented will be the expansion of our product distribution through the addition of three new distributors to our current line-up. These distributors will increase our customer base nationwide.



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Jan Feb Mar Apr May Jun Jul Aug Sep

Third Catalog PlacementSecond Catalog

First CatalogNew Distributor

In-House Catalog PlanIn-House Catalog DesignIn-House Catalog Mailing

Laptop Product TestLaptop Product Release

Spring Trade Show - preparationSpring Trade Show

Fall Trade Show - preparationFall Trade Show

Web sitesOther

Milestones

Table: Milestones

MilestonesMilestone Start Date End Date Budget Manager DepartmentThird Catalog Placement 1/15/00 2/5/00 $30,000 Jack AdsSecond Catalog 1/10/00 1/31/00 $40,000 Jack AdsFirst Catalog 1/1/00 1/11/00 $50,000 Jack AdsNew Distributor 3/15/00 3/25/00 $5,000 Cassidy TravelIn-House Catalog Plan 1/5/00 2/19/00 $3,000 Cassidy SalesIn-House Catalog Design 2/21/00 3/22/00 $0 Bertha OtherIn-House Catalog Mailing 3/25/00 3/30/00 $2,000 Bertha OtherLaptop Product Test 2/1/00 4/1/00 $5,000 Terry OtherLaptop Product Release 4/1/00 4/16/00 $1,000 Sampson OtherSpring Trade Show - preparation 1/5/00 3/5/00 $5,000 Terry PRSpring Trade Show 3/10/00 3/15/00 $15,000 Terry PRFall Trade Show - preparation 7/1/00 8/30/00 $5,000 Terry PRFall Trade Show 9/1/00 9/11/00 $15,000 Terry TravelWeb sites 2/1/00 5/31/00 $20,000 Jack ITOther 2/1/00 2/11/00 $0 Jack ITTotals $196,000

5.2 Marketing Organization

Susan Graham, President, is responsible for overall business management. Our managers of finance, marketing, and sales report directly to Susan. Susan had a successful career in retail before becoming half owner of Willamette. She was an area manager of Ross Stores, a buyer for Macy's, and merchandising assistant for Sears and Roebuck. She has a degree in Literature from the University of Notre Dame.

Jim Graham, designer, is responsible for product design and development, assembly, and manufacturing. Our workshop manager reports directly to him. Jim designed furniture for Haines Manufacturing before becoming half owner of Willamette. He was responsible for one of the first executive desks designed to include customized fittings for personal computers, and was one of the first to design the monitor inside the desk under glass. He has an B.S. and M.S. in industrial design, from Stanford University and the University of Oregon,



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erespectively.

As co-owners, Jim and Susan jointly develop business strategy and long-term plans. Jim is strong on product know-how and technology, and Susan is strong on management and business know-how.

Terry Hatcher, 34, is marketing manager. Terry joined Willamette from the marketing department of the Thomasville Furniture chain, having been in charge of national catalog production and catalog advertising. Terry also managed direct sales at one of the furniture distributors that has since died to industry consolidation. Terry has a B.A. degree in literature from the University of Washington.

Our sales and marketing managers are in the process of revolutionizing the way in which Willamette Furniture reaches its customers. Both of these departments have been integrated with our Information Technology area in order to sell and market Willamette's product through our own, internal website. In addition, we have started the publication of our own catalog. Due to the success in marketing with high-end retailers and catalog merchants, such as Sharper Image, we have decided to implement this new, internal strategy for future growth and increased market share. If the executive level employees nationwide are aware of our product offerings, Willamette furniture will soon become a part of every quality office environment.

5.3 Contingency Planning

Willamette Furniture is unique in its discovery and utilization of the high quality, executive level computer integrated office furniture niche. Therefore, it is possible that with our success and superior design, other, well-established furniture manufacturers may release a competitive product line. However, Willamette focuses specifically on the high-end, technologically integrated aspect of office furniture. With this exclusive concentration, Willamette can continue to focus its resources on producing the best executive level office furniture available. Another possible challenge would be the emergence of a new company in our niche. This however, would not be quite as threatening, as their initial market share would be minuscule, allowing for us to strategize further for continued success. Finally, an established furniture company my choose to begin marketing to our target market. This would not be overly threatening because our products are inherently the best available due to the true craftsmanship involved in their design and manufacture.



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Appendix Table: Sales Forecast

Sales ForecastUnit Sales Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb MarExecutive Desk Oak 14 16 16 16 15 12 12 15 15 26 27 25Executive Desk Cherry 2 3 3 3 2 2 2 2 3 4 3 2Other Furniture Oak 3 4 4 4 3 3 3 4 4 4 5 4Other Furniture Cherry 0 1 0 0 0 1 0 1 1 1 1 1Custom Designed Furniture 1 0 0 1 1 0 1 0 0 1 1 0Total Unit Sales 20 24 23 24 21 18 18 22 23 36 37 32

Unit Prices Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb MarExecutive Desk Oak $1,600.00 $1,600.00 $1,600.00 $1,600.00 $1,600.00 $1,600.00 $1,600.00 $1,600.00 $1,600.00 $1,600.00 $1,600.00 $1,600.00Executive Desk Cherry $1,750.00 $1,750.00 $1,750.00 $1,750.00 $1,750.00 $1,750.00 $1,750.00 $1,750.00 $1,750.00 $1,750.00 $1,750.00 $1,750.00Other Furniture Oak $900.00 $900.00 $900.00 $900.00 $900.00 $900.00 $900.00 $900.00 $900.00 $900.00 $900.00 $900.00Other Furniture Cherry $1,000.00 $1,000.00 $1,000.00 $1,000.00 $1,000.00 $1,000.00 $1,000.00 $1,000.00 $1,000.00 $1,000.00 $1,000.00 $1,000.00Custom Designed Furniture $2,500.00 $2,500.00 $2,500.00 $2,500.00 $2,500.00 $2,500.00 $2,500.00 $2,500.00 $2,500.00 $2,500.00 $2,500.00 $2,500.00

Sales Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb MarExecutive Desk Oak $22,400 $25,600 $25,600 $25,600 $24,000 $19,200 $19,200 $24,000 $24,000 $41,600 $43,200 $40,000Executive Desk Cherry $3,500 $5,250 $5,250 $5,250 $3,500 $3,500 $3,500 $3,500 $5,250 $7,000 $5,250 $3,500Other Furniture Oak $2,700 $3,600 $3,600 $3,600 $2,700 $2,700 $2,700 $3,600 $3,600 $3,600 $4,500 $3,600Other Furniture Cherry $0 $1,000 $0 $0 $0 $1,000 $0 $1,000 $1,000 $1,000 $1,000 $1,000Custom Designed Furniture $2,500 $0 $0 $2,500 $2,500 $0 $2,500 $0 $0 $2,500 $2,500 $0Total Sales $31,100 $35,450 $34,450 $36,950 $32,700 $26,400 $27,900 $32,100 $33,850 $55,700 $56,450 $48,100

Direct Unit Costs Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb MarExecutive Desk Oak $400.00 $400.00 $400.00 $400.00 $400.00 $400.00 $400.00 $400.00 $400.00 $400.00 $400.00 $400.00Executive Desk Cherry $525.00 $525.00 $525.00 $525.00 $525.00 $525.00 $525.00 $525.00 $525.00 $525.00 $525.00 $525.00Other Furniture Oak $180.00 $180.00 $180.00 $180.00 $180.00 $180.00 $180.00 $180.00 $180.00 $180.00 $180.00 $180.00Other Furniture Cherry $300.00 $300.00 $300.00 $300.00 $300.00 $300.00 $300.00 $300.00 $300.00 $300.00 $300.00 $300.00Custom Designed Furniture $625.00 $625.00 $625.00 $625.00 $625.00 $625.00 $625.00 $625.00 $625.00 $625.00 $625.00 $625.00

Direct Cost of Sales Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb MarExecutive Desk Oak $5,600 $6,400 $6,400 $6,400 $6,000 $4,800 $4,800 $6,000 $6,000 $10,400 $10,800 $10,000Executive Desk Cherry $1,050 $1,575 $1,575 $1,575 $1,050 $1,050 $1,050 $1,050 $1,575 $2,100 $1,575 $1,050Other Furniture Oak $540 $720 $720 $720 $540 $540 $540 $720 $720 $720 $900 $720Other Furniture Cherry $0 $300 $0 $0 $0 $300 $0 $300 $300 $300 $300 $300Custom Designed Furniture $625 $0 $0 $625 $625 $0 $625 $0 $0 $625 $625 $0Subtotal Direct Cost of Sales $7,815 $8,995 $8,695 $9,320 $8,215 $6,690 $7,015 $8,070 $8,595 $14,145 $14,200 $12,070

Willamette Furniture -- Sample Plan Appendix


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Appendix Table: Marketing Expense Budget

Marketing Expense Budget Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb MarOutside Catalogs $2,000 $2,000 $2,000 $2,000 $2,000 $2,000 $2,000 $2,000 $2,000 $2,000 $2,000 $2,000Internal Catalogs $6,000 $6,000 $6,000 $6,000 $6,000 $6,000 $6,000 $6,000 $6,000 $6,000 $6,000 $6,000Customer Service $2,500 $2,500 $2,500 $2,500 $2,500 $2,500 $2,500 $2,500 $2,500 $2,500 $2,500 $2,500Websites $2,500 $2,500 $2,500 $2,500 $2,500 $2,500 $2,500 $2,500 $2,500 $2,500 $2,500 $2,500Other $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------Total Sales and Marketing Expenses $13,000 $13,000 $13,000 $13,000 $13,000 $13,000 $13,000 $13,000 $13,000 $13,000 $13,000 $13,000Percent of Sales 41.80% 36.67% 37.74% 35.18% 39.76% 49.24% 46.59% 40.50% 38.40% 23.34% 23.03% 27.03%Contribution Margin $10,285 $13,455 $12,755 $14,630 $11,485 $6,710 $7,885 $11,030 $12,255 $28,555 $29,250 $23,030Contribution Margin / Sales 33.07% 37.95% 37.02% 39.59% 35.12% 25.42% 28.26% 34.36% 36.20% 51.27% 51.82% 47.88%



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Appendix Table: Contribution Margin

Contribution MarginApr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar

Sales $31,100 $35,450 $34,450 $36,950 $32,700 $26,400 $27,900 $32,100 $33,850 $55,700 $56,450 $48,100Direct Costs of Goods $7,815 $8,995 $8,695 $9,320 $8,215 $6,690 $7,015 $8,070 $8,595 $14,145 $14,200 $12,070Other Variable Costs of Sales $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------Cost of Goods Sold $7,815 $8,995 $8,695 $9,320 $8,215 $6,690 $7,015 $8,070 $8,595 $14,145 $14,200 $12,070Gross Margin $23,285 $26,455 $25,755 $27,630 $24,485 $19,710 $20,885 $24,030 $25,255 $41,555 $42,250 $36,030Gross Margin % 74.87% 74.63% 74.76% 74.78% 74.88% 74.66% 74.86% 74.86% 74.61% 74.61% 74.84% 74.91%

Marketing Expense Budget Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb MarOutside Catalogs $2,000 $2,000 $2,000 $2,000 $2,000 $2,000 $2,000 $2,000 $2,000 $2,000 $2,000 $2,000Internal Catalogs $6,000 $6,000 $6,000 $6,000 $6,000 $6,000 $6,000 $6,000 $6,000 $6,000 $6,000 $6,000Customer Service $2,500 $2,500 $2,500 $2,500 $2,500 $2,500 $2,500 $2,500 $2,500 $2,500 $2,500 $2,500Websites $2,500 $2,500 $2,500 $2,500 $2,500 $2,500 $2,500 $2,500 $2,500 $2,500 $2,500 $2,500Other $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------Total Sales and Marketing Expenses $13,000 $13,000 $13,000 $13,000 $13,000 $13,000 $13,000 $13,000 $13,000 $13,000 $13,000 $13,000Percent of Sales 41.80% 36.67% 37.74% 35.18% 39.76% 49.24% 46.59% 40.50% 38.40% 23.34% 23.03% 27.03%Contribution Margin $10,285 $13,455 $12,755 $14,630 $11,485 $6,710 $7,885 $11,030 $12,255 $28,555 $29,250 $23,030Contribution Margin / Sales 33.07% 37.95% 37.02% 39.59% 35.12% 25.42% 28.26% 34.36% 36.20% 51.27% 51.82% 47.88%



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