Business Plan for a Furniture Retail Company

EXECUTIVE SUMMARY

Wow Décor is a one-stop finishing and furnishing showroom to be located in Lagos, Nigeria. The showroom will feature the finest of furniture selections in top quality delivered to customers with a top notch customer service experience.

Our vision is to become the major furniture source for homes and offices; with a guaranteed delivery of quality and enduring furniture works for our wide ranging customers across Nigeria.

Wow Décor intends to leverage on an experienced management team, globally aligned facility setup, well-trained and skilled workforce and a stellar customer service experience to grow the business venture into a household name in luxury furniture in Nigeria.

A capital injection of about N58 million is required to fund the capital expenditure and working capital requirement for this venture. A gross revenue of about N381 million and an After Tax Profit of about N111 million is expected within the first 12 months of business (Conservatively)

The required capital is needed to secure land space for lease, setup the world-class showroom and warehouse facility, import furniture products from our exclusive Chinese vendors, manage a highly skilled and talented workforce and put the required systems in place to deliver unprecedented value to our most esteemed customers.


1. COMPANY AND BUSINESS ENVIRONMENT
1.1 Company Summary

Wow Décor, a subsidiary of the parent company, Wow Media Concept, is a one-stop finishing and furnishing showroom in Lagos, Nigeria. Wow Décor is in the process of signing a long-term contract (tenure: 5 years) with a furniture vendor in China which will allow an exclusivity arrangement to provide only Wow Décor, luxury furniture products in Nigeria and throughout West Africa.

Our vision is to become the major furniture source for homes and offices; with a guaranteed delivery of quality and enduring furniture works for our wide ranging customers

Wow Décor is led by a team of competent persons who have achieved a feat of milestone accomplishments in their previous endeavours and have decided to fill yet another gap in the Nigeria market.
‍

1.2 Current Status
‍

1.3 Business Objectives and Key Performance Indicators
‍
Fresh Capital Injection
Raise initial capital of 57,268,499 naira to finance the CAPEX and working capital needs either through equity or debt funding or a combination of both.

Strong Customer Base
Build a loyal and recurrent customer base by delivering quality product and high satisfactory services, timely delivery and obsessive customer relationship management.

Business Profitability
Profitable growth – live up to the financial goals expectations and enhance the investments of our stakeholders by achieving a steady growing cash flow and profitability

Strong Human Capital and Infrastructure setup
Build a qualified and highly skilled cross-functional team to cover importation procedures, quality control, marketing and sales and administrative roles.

Brand Awareness
We intend to invest in developing and driving marketing campaign designed to create significant awareness level for our products and grow the awareness into positive customer action amongst the target market.

Consistent Growth
Grow market share consistently every year and be the market leader in terms of market share, customer satisfaction, innovative products and service delivery excellence within three (3) years


2. NIGERIAN BUSINESS ENVIRONMENT

Nigeria is the most-populous country in sub-Saharan Africa. At a population figure of about 180 million, Nigeria accounts for approximately one-sixth of the sub-continent’s population. The country, reputed to be the Giant of Africa, is the 13th largest producer of crude oil in the world. It also has the 9th largest proven reserve of Liquefied Natural Gas (LNG) in the world at about 5.1 trillion cubic meters (2014). Additionally, it boasts of rich mineral resources and large expanse of arable land (over 84 million hectares out of which only 40% has been put to use) for agriculture.

2.1 Political Trends

• There was a recent political transition of power from the ever ruling party since the beginning of democracy in 1999 to the strongest opposition party in the country.
• Government’s stance on recovery of stolen funds from political jobbers who have helped themselves with state funds is ongoing, with support from ordinary Nigerians who have in recent times staged solidarity protests in support of the current regime’s anti-corruption war.
• The regime has also focused on securing the country from the twin of insurgency in the North-East and militancy in the Niger Delta.
• Overall, there is general political stability as the security situation has improved.

Gradually gaining political stability, Nigeria is headed on a path of democratic consolidation. Good governance is expected to emancipate from this, leading to economic recovery


2.2 Economic Trends

• Fitch currently gives Nigeria a credit rating of BB- (Negative), though this contradicts S&P and Moody’s ratings of B+ (Stable) and Ba3 (Stable), respectively. This provides a picture neither here nor there for Nigeria’s economy. The implication is that some foreign investors will not have the confidence while others will, depending on which rating they chose to believe.
• According to Mckinsey Global Institute (MGI), Nigeria’s consumer market is worth more than $400 billion, with a potential growth prospect of $1.4 trillion by 2030. This market is currently dominated by foreign goods, but it presents the potential for local investors who can produce locally.
• Nigeria is currently diversifying its economy from its mono-commodity export orientation to include Mining and Agriculture. It is also embracing the import-substitution strategy to enable it focus on local production of commodities in which the country has the capacity to do so. The Nigerian Association of Chambers of Commerce, Industry, Mines and Agriculture (NACCIMA), has said that this policy could help Nigeria save over $50 billion annually if sustained. A testimony to this is the 450,000 tonnes tomato paste processing plant constructed at a cost of N4 billion ($150 million) commissioned by Erisco Foods Limited at Oregun, Lagos, in February 2016.
• According to Thisday newspaper, Dangote Oil Refinery will come on stream in December 2017. The $9 billion, 650,000 barrels per day (bpd) refinery will produce gasoline, diesel, aviation fuel/ household kerosene, slurry as raw material for carbon black, as well as 750,000 mtpa of polypropylene.

The general economic trend shows investors need to be optimistic about the future. However, they need to take calculated risks and negotiate favourable terms instead of avoiding the Nigerian market.

2.3 Social Cultural Trends

• Social tension persists in Nigeria as there are generally dissenting voices between government and the people and among groups. This cuts across ethnic, religious and other sentiments. However, there have been attempts to calm fray nerves and make the polity more inclusive by deliberate collaborations between government, civil societies and traditional institutions to address the challenges. Corruption has been fingered as a big factor in this and the current administration is trying to reverse the trend.According to Mckinsey Global Institute (MGI), Nigeria’s consumer market is worth more than $400 billion, with a potential growth prospect of $1.4 trillion by 2030. This market is currently dominated by foreign goods, but it presents the potential for local investors who can produce locally.
• The level of social awareness is higher in the cities as city dwellers tend to be more culturally diversified and are more tolerant towards one another.
• Educated young Nigerians between the age of 20 and 40 years are also more technologically savvy, upwardly mobile and they tend to dictate the pace of social engagements.
• Women are becoming more independent in nature as they get more expressive about their rights through educational, legislative and international support. However, the flipside is that the rights coupled with dwindling economic fortunes in households have resulted in higher divorce rate and this tends to have negative effect on the upbringing of children.
• The education sector is bedevilled with issues of corrupt parents, corrupt students, corrupt teachers and lecturers and corrupt civil servants. There is need to properly fix this sector to enable the country set a direction for Nigeria’s education future.

The engine room of the economy, that is, the middle class, is having challenges surviving the current economic hardship as micro indices are no longer favourable to them. Welfare efforts at every tier of government are also encumbered by corruption and government is battling to normalise the situation.
‍
2.4 Technological Trends

• Most of the technologies used for production of goods and services in Nigeria are imported. This ranges from agricultural technologies to Information and Communication Technologies (ICT)The level of social awareness is higher in the cities as city dwellers tend to be more culturally diversified and are more tolerant towards one another.
• Technology education has suffered serious setback as Technical schools and Polytechnic graduates are regarded as inferior to University graduates. The irony of the case is that University graduates of Engineering are trained with bad curriculum and by less-innovative lecturers who are practically disconnected from industrial sector needs. The implication is that rather than being at the frontier of research and actual technology development, Nigeria has been a consumer of finished technology products. The government is aware of this and there are efforts to set things right.
• Nigeria’s National Broadband Strategy and Roadmap has articulated government’s resolve to increase broadband penetration from 6% to 30% by 2018 with potential to increase wireless broadband coverage to 80% of the population and fixed broadband to 10% of the population. There is an optimistic projection by the immediate past Minister for Communication, Omobola Johnson, that ICT will be largest contributor to Nigeria GDP by 2020.

The foundation for technological development cannot be laid without addressing the power generation problem in Nigeria. Unfortunately, the power sector itself currently suffers from obsolescence in respect of the technology used for power generation and as such could barely boast of 5,000 Megawatts of electricity generated. This is a good improvement if past performance is considered but yet a far cry from what the country would need to drive its industrial revolution plan. The good thing is that the sector is currently receiving massive support from the government to enable it attract the investment it needs.

3. INDUSTRY AND MARKET ANALYSIS
3.1 Background

The global furniture market size is estimated at about $350bn. Globally, furniture trading has been driven principally by real estate progressive activities. The global furniture market was forecasted to grow with a CAGR of 3.53% over the years 2012 to 2016, a reality of which has been evident thus far. The global furniture space has also witnessed a transformation and alignment with global eco-friendly objectives by producing eco-friendly furniture to align with the UN’s Sustainable Development Goals (SDGs 2025).

Some of the key players in the global furniture space include Ashley Furniture Industries Ltd, IKEA International Group, Sears Holding Corp., Steelcase Inc. among others. Other vendors captured in a report from Reuters include Haworth Inc., Herman Miller Inc., HNI Corp., Kimball International, Knoll Inc., Kokuyo Furniture Co Ltd., and Masco Corp.

Lagos, the fastest growing state-economy in Africa is pointing in the direction of capacity expansion across multiple sectors. These implicated sectors are tied to the growth of the furniture industry in Nigeria. A research from a leading global group showed that one of the key factors contributing to the growth is the boom in global real estate. Real estate activities in Lagos in the recent times has been magnificent. With the latest artificial island project (Eko Atlantic) in the pipeline, the furniture industry outlook is even more promising and positive.

. . .