Pixel Commercial Photography Business Plan

EXECUTIVE SUMMARY I-24 Pixel Commercial Photography, located in and serving Nairobians will serve small and medium-sized businesses and nonprofits for all of their studio photography needs by creating beautiful shots that serve the client's needs, offering excellent service and flexibility with a personal touch, and offering value-added services related to photography. Founded and directed by veteran freelance commercial photographer Chengo Wenslauce, I-24 Pixel Commercial Photography intends to raise Ksh. 530,000 by adding limited partners to the business in order to open a studio space, hire staff, and undergo a new marketing campaign. Sales and profits from the business are projected to rise steadily, from Ksh.3,560,000 revenues and Ksh. 500,000 profits in the first year to Ksh. 7,500,000 revenues and Ksh. 990,000 profits in year 5. Gross margins and net profit margins will be relatively steady at 75% and 13% respectively. The keys to success for the business include: Establishing I-24 Pixel Photography as flexible to the needs of small and medium-sized businesses Offering a range of additional services, such as printing, photo editing, and framing of photos in a variety of digital formats Making businesses feel at home at studio & part of creativity. OBJECTIVES I-24 Pixel Commercial Photography seeks to enter the top three commercial photography providers in the Nairobi, Kenya metropolitan area within five years. We seek the following objectives within that five year period: To be in the top three photography studios of market share To exceed Ksh. 900,000 in annual revenue To support five full-time staff MISSION I-24 Pixel Commercial Photography seeks to serve small and medium-sized businesses and non-profits for all of their studio photography needs by creating beautiful shots that serve the client's needs, offering excellent service and flexibility with a personal touch, and offering value-added services related to photography. I-24 Pixel intends to offer personalized service to make it easy for small businesses to outsource their photography needs. KEYS TO SUCCESS Establishing I-24 Pixel Photography as flexible to the needs of small and medium-sized businesses Offering a range of additional services, such as printing, photo editing, framing, and production of photos in a variety of formats Making businesses feel at home in studio & part of creativity. COMPANY SUMMARY I-24 Pixel Commercial Photography will be based in a conveniently-located studio space within the commercial Centre within Nairobi Central Business District. The exact business location will not be disclosed in fear for someone to rush and occupy the space before us. The company was founded by Chengo Wenslauce in 2019 as Mfalme Chengo Agency registered under Wafalme Studios in Bungoma County. For more than three years, Chengo Wenslauce has operated as a freelance photographer specializing in commercial shoots, establishing a reputation among small businesses as a professional and talented photographer. Over this time, I-24 Pixel business has steadily grown, including a variety of returning clients who rely on I-24 Pixel for their product photography for pamphlets, brochures, websites, and other marketing collateral. I-24 Pixel has operated without a devoted studio during this time, traveling to client sites and setting up a studio space wherever possible. COMPANY OWNERSHIP I-24 Pixel Commercial Photography was established as a sole proprietorship in 2019 and is currently being re-established as a limited liability partnership to facilitate the participation of investing partners. Currently, all shares of I-24 Pixel Commercial Photography are owned by Chengo Wenslauce. START-UP SUMMARY Start-up expenses include the legal fees associated with reincorporating the business, permits associated with a studio space, and the build-out of the studio space. Marketing includes a promotional campaign to alert customers and potential customers to the services and capacity I-24 Pixel Commercial Photography is adding. Rent includes two months of studio rent to cover the build-out period and two additional months for a security deposit. Long-term assets include additional photography equipment (cameras, tripods, backdrops, Flashes, lighting) that must be purchased. START-UP REQUIREMENTS Start-up Expenses Legal Stationery e.t.c Insuarance Rent Marketing Studio Build-Out Total Start-up Expenses Ksh. 25,000 Ksh. 10,000 Ksh. 10,000 Ksh. 80,000 Ksh. 100,000 Ksh. 20,000 Ksh. 245,000 Start-up Assets Cash Required Other Current Assets Long-term Assets Total Assets Total Requirements SERVICES Services to be offered include the following: Studio commercial photography On-site commercial photography Set dressing services for photo shoots Photo editing and digital editing work Ksh. 150,000 Ksh. 10,000 Ksh. 300,000 Ksh. 460,000 Ksh. 705,000 Delivery of prints or digital files of photo shoots Framing of photos Web portal to access digital files from shoots and manage editing process with clients Rental of the studio space to subcontractors when time allows In the future, as additional staff is added, there are plans to offer graphic design services for the photos taken, and to expand to a multi-room studio to allow for multiple shoots simultaneously. MARKET ANALYSIS SUMMARY The market for commercial photography includes all businesses and non-profits. For I-24 Pixel Commercial Photography, the target market is small and medium-sized businesses and nonprofits (those with wedding ceremonies, parties and corporate events etc.) based within the city limits of Nairobi. In the past two years, the market for commercial photography in City has contracted due to the recent economic downturn. It is estimated by the Geopoll Survey report 2020/2021 that commercial photography has shrunk from Ksh. 5.7 million to Ksh. 4.5 million annual revenues since two years ago. Small and medium-sized businesses which formerly used large commercial studios can no longer afford their rates. This has created an opportunity for smaller photography studios with lower overhead and prices to serve this market and seize market share in time for a market upswing. MARKET SEGMENTATION Very Small Businesses: These businesses are generally run by their owners. Photography needs tend to be for their basic marketing collateral (signs, menus, pamphlets, brochures, websites, newsletters, etc.). These businesses generally begin by taking these photographs in-house, but, over time, determine that this method produces sub-standard results. They then seek inexpensive freelance photographers who can quickly handle their needs. Small Businesses: These businesses have ongoing and regular needs for photography of their products and services, such as quarterly catalogs. They appreciate establishing relationships with vendors who understand their way of working, allow them access to the creative process, and reduce the stress of creating marketing materials. They prefer to work with one vendor for all photography needs and will be reluctant to change that vendor once it is found. Medium Businesses: These businesses have marketing departments which outsource photography to photo studios. They have a higher volume of photography needs than smaller businesses and pay great attention to the quality of the images as well as the price. Volume discounts may be needed to retain businesses in this category. Market Analysis Potential Growth Year 1 Year 2 Year 3 Year 4 Year 5 CAGR Customers Very Small 10% 1,000 1,100 1,210 1,331 1,464 10.00% Business Small Business 15% Medium Business 20% TOTAL 12.81 500 200 1,700 575 240 1,915 661 288 2,159 760 346 2,437 874 415 2,753 14.98% 20.02% 12.81% % TARGET MARKET SEGMENT STRATEGY Larger businesses in the city are served by large studios who can send photographers to the client site or set up shoots with little notice. These businesses require photography vendors with the capacity to shoot in multiple locations at the same time. Smaller businesses, on the other hand, are comfortable working with smaller photography studios. They are generally unhappy with larger studios, as they find they are not a priority compared with the larger clients of the studio. They want the same level of service, scaled to the needs and budget of their business, and only a smaller studio can provide this. Furthermore, larger businesses often bring a great deal of photo editing work in-house to their marketing departments. Smaller businesses value the ability of a photo studio to handle this work as their marketing or design departments often do not have the capacity to deal with this work when new materials are being developed. Medium and small businesses can provide ongoing work. However, without serving very small businesses, I-24 Pixel will miss out on capturing smaller customers before they grow. Working with very small businesses can also provide a wide base of customers, making the revenue streams of the business less susceptible to the loss of any one customer. SERVICE BUSINESS ANALYSIS The commercial photography industry is characterized by local photo studios which serve cities or small regions. Very few businesses grow beyond this geographic range. Within a local market, there are dozens of photo studios in operation. Businesses seek photography vendors through referrals and google business search. Photography studios generally base their charges on the time of the shoot as well as the number of edited photos provided. Specific competitors for Commercial Photography include: Jacaranta Studios - Established 9 years ago and operating a small studio, this company focuses on product photography only Olunga Studio - Established 6 years ago, this company does not operate a studio, but uses student photographers to offer lower priced on-site photography shoots COMPETITION AND BUYING PATTERNS There are very few barriers to entry into the commercial photography business. At the low-end of the market, freelance photographers with inexpensive digital cameras start work officially and unofficially every day. However, at the high end of the market, quality photographers working with the best equipment and a studio space are protected by the capital required to purchase equipment and to rent and build out a studio. Customers among small and medium-sized businesses seek low prices, but will not sacrifice quality. The best quality is obtained in the controlled environment of a studio, with well-trained photographers and high-quality equipment. Customers choose between photo studios based on their websites and portfolios of work, as well as the personal assurances of the salesperson they work with at the studio that their needs will be taken care of. Word of mouth is extremely important for this business. While the product of the work becomes very visible, it is important that customers feel so strongly about the experience of working with their photo studio that they talk about it to other businesses and contacts. These referrals are extremely helpful in generating business. STRATEGY AND IMPLEMENTATION SUMMARY To build its reputation as a quality choice for commercial photography in the city, I-24 Pixel Commercial Photography will focus on small and medium-sized businesses. These include: Very Small Businesses (under 15 employees) Small Businesses (15 to 60 employees) Medium Businesses (60 to 150 employees) To reach these target markets, I-24 Pixel will use email marketing, business networking, and web marketing to find clients and to ensure that clients find I-24 Pixel studio. The CEO, Chengo Wenslauce, will sell to clients, and both he and an additional team of assistant photographers will be assigned to client photo shoots in the I-24 Pixel studio and, when needed, at client sites. COMPETITIVE EDGE I-24 Pixel Commercial Photography has a competitive edge from the reputation of Chengo Wenslauce in the business community as a high-quality photographer who is easy to work with and attentive to the needs of clients. I-24 Pixel will continue to develop this competitive edge by training additional photographers with his signature style of photography and high attention to customer service. MARKETING STRATEGY The marketing strategy for I-24 Pixel Commercial Photography is based on the belief that using a few marketing tactics extremely well is preferable to using many marketing tactics with moderate success with each. Following are components of initial marketing campaign: Email Marketing: Emailing a new business announcement and then monthly newsletters with details on new packages, the development of the studio, and new hires to past clients and other targets in the business community. Newsletters will include helpful tips on how to use photography and this will be used to gain permission from marketing departments at prospective client businesses to be sent the newsletters. Within these emails/ calls to action to encourage business referrals. Business Networking: Chengo Wenslauce will promote the business through the local Media Max Newspaper People’s Daily, We Are The Law (WATL), and through Damstream Entertainment. Through these meetings, Mr. Chengo will introduce his company's work to other business owners, share leads on business, and receive both exposure and qualified referrals. To encourage members of networking groups to use I-24 Pixel’s services so that they are educated referrers, Mr. Chengo will offer a 25% discount on services to members of the networking group on their first purchase. Web Marketing: I-24 Pixel Photography will purchase search engine advertising with Google around commercial photography keywords for the city market and gear its advertisements towards the needs of small and medium-sized businesses. Furthermore, I-24 Pixel Photography's website will be optimized for higher search engine ranking under these keywords. SALES STRATEGY The company's sales strategy is to utilize the experience of Chengo Wenslauce as salesperson. Mr. Chengo will be able to assure clients of what the company and its photographers can accomplish as all will be personally trained by him. To increase the closing rate of prospects, Mr. Chengo will meet clients at their businesses whenever possible to go beyond phone conversations. He will use a portfolio of images and testimonials. Mr. Chengo will use i24studio.co.ke as a tool to manage the sales process, and to train additional salespeople when the time comes. The scheduling and fulfillment of services will be administered by the office manager, who will use i24studio.co.ke and QuickBooks to manage clients and capture information related to orders. Standard procedures for order fulfillment will be created by Mr. Chengo and checked on an ongoing basis. SALES FORECAST Sales for photo shoots are expected to drive the business and will grow with the growing staff. Additional photographers will be hired to meet the need first as part-time and then as full-time staff. Supplementary revenue streams will be photo editing services and printing and framing of images. Finally, off-hours for the studio will be rented for events of other purposes to create a steady monthly stream of revenue. SALES FORECAST Year 1 Sales Photo Shoots Photo Editing Print & Frame Studio Rental Total Sales Year 2 Year 3 Year 4 Year 5 Ksh. 206,332 Ksh. 256,841 Ksh. 55,345 Ksh. 69,759 Ksh. 23,321 Ksh. 29,524 Ksh. 71,638 Ksh. 36,000 Ksh. 356,636 Ksh. 392,124 Ksh. 300,000 Ksh. 90,000 Ksh. 50,000 Ksh. 36,000 Ksh. 476,000 Ksh. 370,000 Ksh. 120,000 Ksh. 70,000 Ksh. 40,000 Ksh. 600,000 Ksh. 450,000 Ksh. 150,000 Ksh. 100,000 Ksh. 50,000 Ksh. 750,000 Year 1 Year 3 Year 4 Year 5 Year 2 Direct Cost of Sales Print & Frame Ksh. 17,491 Other Cost Sales Ksh. 53,495 Ksh. 21,743 Ksh. 58,819 Ksh. 37,500 Ksh. 71,400 Ksh. 52,500 Ksh. 90,000 Sub-Total Ksh. 80,562 Ksh. 108,900 Ksh. 142,500 Ksh. 70,986 Ksh. 75,000 Ksh. 112,500 Ksh. 187,500 Direct cost of Sales MILESTONES The promotional marketing before the opening of the studio is in a two month period in which an initial Web marketing and email marketing campaign will take place, directed by the CEO, with some help from the part-time administrative assistant, and marketing vendors (a Web marketing specialist). Furthermore, ads will be placed to specifically highlight the studio as a rental option for other uses. Web Marketing specialist will be hired to set-up and maintain Google AdWords campaign and to optimize website for search engines. Constant Contact will be used to maintain email marketing with announcements about the studio opening, new staff, and new services. MILESTONES Milestone Sign Lease on Start Date 15/02/2022 End Date 15/02/2022 Budget Ksh. 0 Department Operations Studio Hire Part-Time 01/03/2022 01/03/2022 Ksh. 0 Operations Staff Train Part-Time 01/03/2022 24/03/2022 Ksh. 0 Operations Staff Open Studio For 02/04/2022 02/04/2022 Ksh. 0 Operations Business Web Marketing 03/04/2022 03/05/2022 Ksh. 8,000 Marketing Campaign Email Marketing 11/05/2022 13/05/2022 Ksh. 1,000 Marketing Campaign Rental Studio 15/05/2022 08/06/2020 Ksh. 1,000 Marketing Marketing Total Ksh. 10,000 MANAGEMENT SUMMARY Chengo Wenslauce will act as CEO of I-24 Pixel Commercial Photography. Mr. Chengo has extensive industry, sales, and operational experience. Immediate hires will include one part-time assistant photographer and one part-time administrative assistant. The CEO will be responsible for sales and marketing, management of all staff, and fulfillment of client services. The first part-time assistant photographer will be Bonface Mokaya, a recent graduate of the School of Visual Arts and an accomplished photographer new in the industry. The assistant photographer will assist on shoots during training and begin to take the lead on photo shoots over time. He will move to full-time within one year if sales projections are met. The administrative assistant will be responsible for bookkeeping (accounts payable and receivable), scheduling of shoots and labor, and fielding calls for rental of the studio and initial sales inquiries. He or she will execute marketing campaigns (update website, print brochures and portfolios, etc). He or she will offer customer service to answer basic questions by phone or email. PERSONNEL PLAN I-24 Pixel Commercial Photography will begin its expansion with one part-time assistant photographer and one part-time administrative assistant, with the understanding that both positions will grow to full-time shortly. Each year an additional assistant photographer will be added. PERSONNEL FINANCIAL PLAN The launch of the business will be financed by the founder's investment and credit and by investments from limited partners. In exchange for Ksh. 530,000 investment in the business at startup, limited partners will receive 49% ownership shares. The initial funding requirements are modest for the business. The growth of the business, beyond the first year, will be financed by the free cash flows generated by the business. This will allow for the expansion of staff to include additional photographers, the ramping up of marketing expenditures, and the resulting increase in sales. Only one photographer will be added per year in order to make sure that there is time for adequate training of new staff. START-UP FUNDING Funding for the business is in part from personal loans, credit cards, and cash investment by the owner, Chengo Wenslauce. The remainder of funding will be from one to three limited partners in the form of equity investment. ANALYSIS The break even for the business is high As the salaries of staff are relatively fixed. Monthly Bills and other Expenses are also to be met. Estimated Monthly Fixed Cost `17,804 PROJECTED PROFIT AND LOSS Gross margins are expected to remain consistent, as most costs of the business are not direct costs of sales. The greatest cost of the service is labor, which is part of salaries and not cost of sales, for example. In year 2, profit is expected to drop as capacity is increased to prepare for growth. This will rectify in future years as sales come in line with the payroll expenses. PROJECTED BALANCE SHEET The business is projected to show growth in retained earnings (which allow for dividends to be paid) as there are not substantial additional capital expenditures needed after the launch. There will be healthy growth in net worth over the first five years of operation, as additional debt is not required to fund the business. PRO FORMA PROFIT AND LOSS Sales Year 1 Year 2 Year 3 Year 4 `356,63 `392,12 `476,00 `600,00 `750,000 `142,50 `187,500 `142,50 `187,500 6 Direct Cost of Sales `70,986 4 0 `80,562 0 `108,90 0 Total Cost of Sales `70,986 `80,562 0 `108,90 0 Year 5 0 Gross Margin `285,65 `311,562 `367,10 0 Gross Margin % `457,50 `562,500 77.12% 76.25% 75.00% `164,92 `201,92 `245,193 0 80.10% 79.46% 0 Expenses Payroll `112,755 `150,28 6 0 1 Marketing/Promotion `36,000 `36,000 `50,000 `60,000 Depreciation `6,000 `6,000 `6,000 `6,000 `70,000 `6,000 Rent `24,000 `25,200 `26,460 `27,783 Utilities `2,400 `3,000 `3,500 `3,800 `4,200 Insurance `2,400 `3,000 `3,500 `4,000 `4,500 Payroll Taxes `18,091 `22,543 `24,738 `30,288 `12,000 `14,400 `17,000 `20,000 `213,64 `260,42 Other Total Operating Exp. 6 `296,118 `353,79 9 `29,172 `36,779 `25,000 `420,845 2 Profit (Int. & Tax) `72,004 `51,134 `70,982 `103,70 `141,655 EBITDA `78,004 `57,134 `76,982 `109,70 `147,655 8 8 Taxes Incurred `21,464 `15,340 `21,295 `31,112 `50,082 `35,793 `49,687 `72,596 `99,159 Net Profit/Sales 14.04% 9.13% 10.44% 12.10% `42,497 Net Profit 13.22% PRO FORMA BALANCE SHEET Assets (C. Assets) Year 1 Year 2 Year 3 Year 4 Year 5 Cash `50,049 `89,582 `121,964 `167,046 `227,760 Acc. Receivable `24,249 `27,598 `33,501 `42,228 Other C. Assets `1,000 `1,000 `1,000 `1,000 Total Current Assets `75,299 `52,785 `1,000 `118,180 `156,466 `210,274 `281,546 Assets (Long-term) L. Term Assets Acc. Depreciation `24,000 `30,000 `6,000 `12,000 `18,000 Total Assets `30,000 `18,000 `12,000 `30,000 `24,000 `30,000 `30,000 `30,000 Total Long-term Assets `6,000 `0 `99,299 `136,180 `168,466 `216,274 `281,546 LIABILITIES AND CAPITAL Current Liabilities `15,717 `16,804 `20,991 `26,259 `32,848 Total Liabilities Accounts Payable `15,717 `16,804 `20,991 `26,259 `32,848 Paid-in Capital `58,000 `58,000 `58,000 `58,000 `58,000 `39,787 `59,420 `91,539 Retained Earnings (`24,500) `25,582 Earnings `50,082 Total Capital `83,582 Total Liabilities& Capital `99,299 `35,793 `49,687 `72,596 `99,159 `119,375 `147,474 `190,015 `248,698 `136,180 `168,466 `216,274 `281,546 Net Worth `83,582 `119,375 `147,474 `190,015 `248,698 LONG-TERM PLAN The profitability of the company will increase in absolute terms with growth. However, the gross margins and net profit margins will not increase dramatically over time as the additional growth in revenues requires additional direct labor. To maintain the reputation of the company, this labor cannot be performed by less skilled, lower-wage photographers. As revenues grow and additional photographers are hired, the CEO will focus a greater percentage of time on sales and prospecting. This will allow for steady growth in revenues while the brand of DUGGAL's Commercial Photography becomes established in the market. A larger studio space with multiple rooms can be leased after a critical mass of utilization has been achieved with the current space. This will allow for continued growth.