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
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