Are you about starting a leather processing business? If YES, here is a complete sample leather processing business plan template & feasibility report you can use for FREE.
Okay, so we have considered all the requirements for starting a leather processing business. We also took it further by analyzing and drafting a sample leather processing marketing plan template backed up by actionable guerrilla marketing ideas for leather processing companies. So let’s proceed to the business planning section.
Products made from processed leather are used in all parts of the world and of course those that are in the business of processing leather are known to generate huge sales if the business is well-managed.
As a matter of fact, economic downturn hardly affects the usage of products made from processed leather. Leather belts, bags, wallets, wristwatches, shoes, slippers and sandals et al are used on daily basis. It is a known fact that the processing of leather has continued to soar.
If you are however considering starting your own leather processing business, then you must be ready to really learn the ropes.
So, if you have decided to start your own leather processing company, then you should ensure that you carry out thorough feasibility studies and market survey. This will enable you site the business in a good location; a location with the right demographic composition and then hit the ground running.
Business plan is yet another very important business document that you should not take for granted when launching your own leather processing business. Below is a sample leather processing business plan template that can help you to successfully write your own with little or no difficulty.
A Sample Leather Processing Business Plan Template
1. Industry Overview
Leather processing business which is popularly called leather tanning and finishing companies are businesses that are involved in the following activities: tanning, currying and finishing hides and skins; and dyeing and finishing furs. Operators in this industry generally purchase or obtain raw skins from slaughterhouses and treat and dye them to create finished leather.
If you keep a close tab of happenings in the leather tanning and finishing industry, you will agree that in the last five years, the revenue generated from the industry increased slightly. While improved economic conditions have driven downstream demand from the automotive market, the industry has continued to be adversely affected by import competition.
The industry will also face increased competition from substitute products such as faux leather. As the US dollar is expected to improve, high import levels will persist and exports will continue to decline. As a result, industry revenue is anticipated to decline over the five years.
The Leather Tanning and Finishing Industry is a thriving sector of the economy of the united states of America and they generate over billion annually from more than 1,322 registered and licensed leather tanning and finishing companies scattered all around the United States of America.
The industry is responsible for the employment of over 4,365 people. Experts project the industry to grow at a 1.3 percent annual rate from 2012 to 2017. Lear Corporation has the lion market share in the Leather Tanning and Finishing industry in the United States of America.
A recent research conducted by IBISWORLD shows that the Leather Tanning and Finishing industry operates with a low level of capital intensity, as while operators do require machinery for many production processes, the industry’s machinery needs are on a smaller scale than other manufacturing industries, and labor is the primary input of production.
The report also shows that wages account for an estimated 8.2 percent of revenue in 2017, while 0.8 percent of revenue is allocated toward depreciation costs. Therefore, IBISWorld estimates that for every $1.00 spent on employee wages, industry operators will spend $0.10 in capital investment.
One good thing about the leather processing business is that the business can be targeted at national or international markets depending on your financial capacity.
The leather processing business is a profitable industry and it is open for any aspiring entrepreneur to come in and establish his or her business and still compete for the available market and make profits.
2. Executive Summary
Texas Brothers® Leather Processing Company, Inc. is a licensed leather processing company that will be located in an industrial area in Dallas – Texas. We have been able to secure a long – term lease for a facility in a strategic location with an option of a long – term renewal on agreed terms and conditions that are favorable to us.
The facility has government approval for the kind of manufacturing business we want to run and it is easily accessible and we are deliberate about that in order to facilitate easy movement of raw materials and finished products.
We are in the leather tanning and finishing industry to engage in tanning hides and skins, currying hides and skins, finishing hides and skins, dyeing and finishing furs et al. We are also in business to make profits and to give our customers value for their money; we want to give people and businesses who patronize our products the opportunity to be part of our success story.
We are aware that there are several leather tanning and finishing companies scattered all around the United States whose products can be found in nooks and crannies of the state, which is why we spent time and resources to conduct our feasibility studies and market survey so as to enable us locate the business in an area that will support the growth of the business and also for us to be able offer much more than our competitors will be offering.
We ensured that our facility is easy to locate and we have mapped out plans to develop a wide distribution network for wholesalers all around Texas and other cities in the United States of America.
Beyond manufacturing quality and safe leather, our customer care is going to be second to none. We know that our customers are the reason why we are in business which is why we will go the extra mile to get them satisfied when they purchase our products.
Texas Brothers® Leather Processing Company, Inc. will ensure that all our customers are given first class treatment whenever they visit our processing plant and warehouse. We have a CRM software that will enable us manage a one on one relationship with our customers (wholesale distributors) no matter how large they may grow to.
Texas Brothers® Leather Processing Company, Inc. is a family business that will be owned by Andrew Peterson and his brother Terry Peterson. Andrew Peterson who is the Chief Executive Officer of the Company is a graduate of Fine Arts from the University of Texas and he holds a Master’s Degree in Business Management (MBA) from Stanford Business School.
He has over 10 years’ experience working in related industry as a senior production manager prior to Texas Brothers® Leather Processing Company, Inc. He will be working with a team of professionals to build the business.
3. Our Products and Services
Texas Brothers® Leather Processing Company, Inc. is going to run a standard leather processing company whose products will not only be sold in Dallas – Texas but also throughout the United States of America and other countries of the world.
We are in the leather tanning and finishing industry to make profits and also to give our customers value for their money. These are some of the products that we will be offering;
- Upper leather (including patent)
- Wet blues (unfinished)
- Upholstery leather
- Garment leather
- Contract or commission leather
- Calf, sheep and other animal leather
- Sole and accessories leather
- Other leather (including furs)
4. Our Mission and Vision Statement
- Our vision is to establish a standard leather processing Company whose products will not only be sold in Dallas – Texas, but also throughout the United States of America and other countries of the world.
- Our mission is to establish a world class leather processing company that in our own capacity will favorably compete with leaders in the leather tanning and finishing industry. We want to build a business that will be listed amongst the top 10 leather processing brands in the United States of America.
Our Business Structure
Texas Brothers® Leather Processing Company is established with the aim of competing with other leading leather processing companies in the industry. This is why we will ensure that we put proper structures in place that will support the kind of growth that we envisaged while setting up the business.
We will make sure that we only hire people that are qualified, honest, hardworking, customer centric and are ready to work to help us build a prosperous business that will benefit all our stake holders. As a matter of fact, profit-sharing arrangement will be made available to all our senior management staff and it will be based on their performance for a period of ten years or more depending how fast we meet our set target.
In view of that, we have decided to hire qualified and competent hands to occupy the following positions;
- Chief Executive Officer (Owner)
- Plant Manager
- Human Resources and Admin Manager
- Merchandise Manager
- Sales and Marketing Manager
- Machine Operators
- Distribution Truck Drivers
5. Job Roles and Responsibilities
Chief Executive Officer – CEO (Owner):
- Increases management’s effectiveness by recruiting, selecting, orienting, training, coaching, counseling, and disciplining managers; communicating values, strategies, and objectives; assigning accountabilities; planning, monitoring, and appraising job results; developing incentives; developing a climate for offering information and opinions.
- Responsible for fixing prices and signing business deals
- Responsible for providing direction for the business
- Creates, communicates, and implements the organization’s vision, mission, and overall direction – i.e. leading the development and implementation of the overall organization’s strategy.
- Responsible for signing checks and documents on behalf of the company
- Evaluates the success of the organization
- Responsible for overseeing the smooth running of the leather processing plant
- Part of the team that determines the quantity and quality of processed leather products that are to be produced
- Maps out strategies that will lead to efficiency amongst workers in the plant
- Responsible for training, evaluation and assessment of plant workers
- Ensures steady flow of raw materials to the plant and easy flow of finished products through wholesale distributors to the market
- Ensures that the plant meets the expected safety and health standard at all times.
Human Resources and Admin Manager
- Responsible for overseeing the smooth running of HR and administrative tasks for the organization
- Defines job positions for recruitment and managing interviewing process
- Carries out induction of new team members
- Responsible for training, evaluation and assessment of employees
- Oversees the smooth running of the daily office and factory activities
- Manages vendor relations, market visits, and the ongoing education and development of the organizations’ buying teams
- Responsible for the purchase of raw materials (raw skins, hides and furs et al)
- Responsible for planning sales, monitoring inventory, selecting the merchandise, and writing and pricing orders to vendors
- Ensures that the organization operates within stipulated budget.
Sales and Marketing Manager
- Manages external research and coordinate all the internal sources of information to retain the organizations’ best customers and attract new ones
- Identifies, prioritizes, and reaches out to new partners, and business opportunities
- Develops, executes and evaluates new plans for expanding sales
- Documents all customer contact and information
- Helps to increase sales and growth for the company
- Responsible for preparing financial reports, budgets, and financial statements for the organization
- Provides management with financial analyses, development budgets, and accounting reports
- Responsible for financial forecasting and risks analysis.
- Performs cash management, general ledger accounting, and financial reporting
- Responsible for developing and managing financial systems and policies
- Responsible for administering payrolls
- Ensuring compliance with taxation legislation
- Handles all financial transactions for the organization
- Serves as internal auditor for the organization
Client Service Executive
- Welcomes guests and clients by greeting them in person or on the telephone; answering or directing inquiries.
- Ensures that all contacts with clients (e-mail, walk-In center, SMS or phone) provides the client with a personalized customer service experience of the highest level
- Through interaction with clients on the phone, uses every opportunity to build client’s interest in the company’s products and services
- Manages administrative duties assigned by the manager in an effective and timely manner
- Consistently stays abreast of any new information on the company’s products, promotional campaigns etc. to ensure accurate and helpful information is supplied to clients
- Receives parcels/documents for the company
- Distributes mails in the organization
- Handles any other duties as assigned by the line manager
Production Workers/Machine Operators:
- Responsible for handling services that revolve around tanning hides and skins, currying hides and skins, finishing hides and skins, dyeing and finishing furs
- Operates machines used in the processing leather and related products
- Assists in packaging and loading tanned and finished leather products into distribution trucks
Distribution Truck Drivers
- Assists in loading and unloading tanned and finished leather
- Maintains a logbook of their driving activities to ensure compliance with federal regulations governing the rest and work periods for operators.
- Keeps a record of vehicle inspections and make sure the truck is equipped with safety equipment
- Assists the transport and logistics manager in planning their route according to a delivery schedule.
- Local-delivery drivers may be required to sell products or services to stores and businesses on their route, obtain signatures from recipients and collect cash.
- Transport finished goods and raw materials over land to and from manufacturing plants or retail and distribution centers
- Inspects vehicles for mechanical items and safety issues and perform preventative maintenance
- Complies with truck driving rules and regulations (size, weight, route designations, parking, break periods etc.) as well as with company policies and procedures
- Collects and verifies delivery instructions
- Reports defects, accidents or violations
6. SWOT Analysis
From our market research conducted, we got to know that there are several leather tanning and finishing companies in the United States of America which is why we are following the due process of establishing a business so as to compete favorable with them.
We know that if proper SWOT analysis is conducted for our business, we will be able to position our business to maximize our strength, leverage on the opportunities that will be available to us, mitigate our risks and be welled equipped to confront our threats.
Texas Brothers® Leather Processing Company, Inc. hired the services of an expert HR and Business Analyst with bias in startup businesses to help us conduct SWOT analysis and to help us create a Business model that will help us achieve our business goals and objectives.
This is the summary of the SWOT analysis that was conducted for Texas Brothers® Leather Processing Company, Inc.
Our major strength as a leather processing company is the vast experience of our management team, we have people on board who are highly experienced and understand how to grow business from the scratch to becoming a national phenomenon. Access to raw material in pretty large quantities, our large national distribution network and of course our excellent customer service culture will definitely count as a strong strength for the business.
One major weakness that may count against us is the fact that we are a new leather processing company and we don’t have the financial capacity to engage in the kind of publicity that we intend giving the business especially when big names in the leather tanning and finishing line of business are already determining the direction of the market.
The opportunities available to leather processing companies are enormous because almost all Americans make use of products that are made from leather.
As a result of that, we were able to conduct thorough market survey and feasibility studies so as to come up with ‘on – point products’, position our business to take advantage of the existing market for tanned and finished leather products and also to create our own new market. We know that it is going to require hard work, and we are determined to achieve it.
The industry has been adversely affected by import competition, and the fact that domestic footwear and apparel manufacturing industries have continued to decline over the past five years will likely pose a threat to our business.
So also, we are quite aware that one of the major threats that we are likely going to face is economic downturn and unfavorable government policies. Another threat that may likely confront us is the arrival of a new leather processing plant in the same location where ours is located.
7. MARKET ANALYSIS
- Market Trends
Research conducted shows that the Leather Tanning and Finishing industry is undergoing a transition period. After years of offshoring and outsourcing, some industry operators are considering bringing production back to the United States to avoid rising prices in China and high overhead costs associated with manufacturing abroad.
The report also shows that reshoring would also result in shorter turnaround time between production and sales, as well as greater control over manufacturing operations.
However, large players and some players that serve niche markets are replacing other struggling operators that are no longer able to survive profitably in this industry. Consequently, the true impact of reshoring remains uncertain, but IBISWorld expects the effects of reshoring to become more evident over the next five years.
If you take notice of the Leather Tanning and Finishing manufacturing industry, you will notice that the industry has contracted over the past five years. Import competition has been a major factor in the declining performance of this industry, with many players in the industry shifting from manufacturing leather accessories to sourcing them from low-cost Asian countries or third-party contractors.
A good number of leather tanning and finishing manufacturers have departed the industry, unable to sustain operations in the price-pressured environment. The surviving players have altered operations to focus on the design and marketing processes rather than the production of goods.
Lastly, the leather processing industry is adopting eco – friendly approach towards the production and packaging of its products. As a matter of fact, the industry’s adoption of eco-friendly practices will likely persuade environmentally conscious consumers to buy its products, while increasing operators’ efficiency.
8. Our Target Market
When it comes to selling processed leather, there is indeed a wide range of available customers. In view of that, we have conducted our market research and we have ideas of what our target market would be expecting from us. We are in business to retail a wide range of processed leather to the following groups of people;
- Leather belts, shoes, bags, luggage and wallets manufacturers
- Leather car seat manufacturers
- Every other manufacturing companies that make use of tanned and finished leather as raw materials
Our Competitive Advantage
A close study of the industry reveals that the market has become much more intensely competitive over the last decade. As a matter of fact, you have to be highly creative, customer centric and proactive if you must survive in this industry. We are aware of the stiff competition and we are prepared to compete favorably with other companies in Dallas – Texas and throughout the United States.
In view of that, Texas Brothers® Leather Processing Company is launching a standard leather processing brand that will indeed become the preferred choice for manufacturers that make use of processed leather in every city where our product will be retailed.
Production of goods currently favored by the market, our ability to control stock on hand and of course guaranteed supply of key inputs are top on our list as regards competitive advantages.
So also, part of what is going to count as competitive advantage for Texas Brothers® Leather Processing Company, Inc. is the vast experience of our management team, we have people on board who are highly experienced and understand how to grow a business from the scratch to becoming a national phenomenon.
So also, we have access to large quantities of raw leather per time, and our large national distribution network and of course our excellent customer service culture will definitely count as a strong strength for the business.
Lastly, our employees will be well taken care of, and their welfare package will be among the best within our category in the industry; meaning that they will be more than willing to build the business with us and help deliver our set goals and achieve all our aims and objectives.
We will also give good working conditions and commissions to freelance sales agents that we will recruit from time to time.
9. SALES AND MARKETING STRATEGY
- Sources of Income
Texas Brothers® Leather Processing Company, Inc. is established with the objective of maximizing profits in the leather tanning and finishing industry in the United States of America and we are going to go all the way to ensure that we do all it takes to sell our products to a wide range of customers.
Texas Brothers® Leather Processing Company, Inc. will generate income by selling the following products;
- Upper leather (including patent)
- Wet blues (unfinished)
- Upholstery leather
- Garment leather
- Contract or commission leather
- Calf, sheep and other animal leather
- Sole and accessories leather
- Other related products (including furs)
10. Sales Forecast
One thing is certain when it comes to leather processing and manufacturing business, if your products are well – packaged and branded and if your production plant is centrally positioned and easily accessible, you will always attract customers cum sales that will translate to increase in revenue generation for the business.
We are well positioned to take on the available market in Dallas – Texas and every city where our tanned and finished leather products will be sold and we are quite optimistic that we will meet our set target of generating enough profits from our first six months of operation and grow the business and our clientele base.
Below are the sales projection for Texas Brothers® Leather Processing Company, Inc., it is based on the location of our business and other factors as it relates to small and medium scale leather processing company startups in the United States;
- First Fiscal Year: $250,000
- Second Fiscal Year: $650,000
- Third Fiscal Year: $800,000
N.B: This projection was done based on what is obtainable in the industry and with the assumption that there won’t be any major economic meltdown and there won’t be any major competitor offering same products as we do within same location. Please note that the above projection might be lower and at the same time it might be higher.
- Marketing Strategy and Sales Strategy
Prior to choosing a location for Texas Brothers® Leather Processing Company, Inc., we conducted a thorough market survey and feasibility studies in order for us to be able to penetrate the available market in our target market locations.
We have detailed information and data that we were able to utilize to structure our business to attract the number of customers we want to attract per time and also for our products to favorable compete with other leading brands in the United States of America.
We hired experts who have good understanding of the leather tanning and finishing industry to help us develop marketing strategies that will help us achieve our business goal of winning a larger percentage of the available market in the United States of America.
In summary, Texas Brothers® Leather Processing Company, Inc. will adopt the following sales and marketing approach to sell our processed leather products;
- Introduce our leather processing brand by sending introductory letters to manufacturers that make use of leather products, merchants, retailers and other stakeholders in Dallas – Texas and other cities both in the United States of America
- List our business and products on yellow pages’ ads (local directories)
- Leverage on the internet to promote our processed leather product brands
- Engage in direct marketing and sales
- Encourage the use of Word of mouth marketing (referrals)
11. Publicity and Advertising Strategy
In spite of the fact that our leather processing plant is a standard one with the capacity to produce large quantities of processed leathers that can favorably compete with other leading brands, we will still go ahead to intensify publicity for all our products.
Texas Brothers® Leather Processing Company, Inc. has a long – term plan of distributing our tanned and finished leathers in various locations all around the United States of America which is why we will deliberately build our brand to be well accepted in Dallas – Texas before venturing out.
As a matter of fact, our publicity and advertising strategy is not solely for selling our products but to also effectively communicate our brand. Here are the platforms we intend leveraging on to promote and advertise Texas Brothers® Leather Processing Company, Inc.;
- Place adverts on both print (community based newspapers and magazines) and electronic media platforms
- Sponsor relevant community programs
- Leverage on the internet and social media platforms to promote our leather processing company – brand
- Distribute our fliers and handbills in target areas
- Position our Flexi Banners at strategic positions in the location where we intend getting customers to start patronizing our products.
12. Our Pricing Strategy
We are aware of the pricing trend in the leather tanning and finishing industry which is why we have decided to produce various sizes of processed leather and it is based on per square meter.
In view of that, our prices will conform to what is obtainable in the industry but will ensure that within the first 6 to 12 months our products are sold a little bit below the average price of various leather processing brands in the United States of America. We have put in place business strategies that will help us run on low profits for a period of 6 months; it is a way of encouraging people to buy into our brands.
- Payment Options
The payment policy adopted by Texas Brothers® Leather Processing Company, Inc. is all inclusive because we are quite aware that different customers prefer different payment options as it suits them but at the same time, we will ensure that we abide by the financial rules and regulation of the United States of America.
Here are the payment options that Texas Brothers® Leather Processing Company, Inc. will make available to her clients;
- Payment via bank transfer
- Payment with cash
- Payment via credit cards/Point of Sale Machines (POS Machines)
- Payment via online bank transfer
- Payment via check
- Payment via mobile money transfer
- Payment via bank draft
In view of the above, we have chosen banking platforms that will enable our client make payment for the purchase of our processed leather products without any stress on their part. Our bank account numbers will be made available on our website and promotional materials.
13. Startup Expenditure (Budget)
Starting a standard leather processing company is indeed a capital-intensive business because the amount required in setting up a standard leather processing plant is not a piecemeal. The bulk of the startup capital will be spent on leasing or acquiring a facility and also in purchasing leather cutting, polishing and tanning equipment.
Aside from that, you are not expected to spend much except for the purchase and servicing of distribution trucks, raw materials, paying of your employees and utility bills. These are the key areas where we will spend our startup capital;
- The total fee for registering the Business in the United States of America – $750.
- Legal expenses for obtaining licenses and permits as well as the accounting services (software, P.O.S machines and other software) – $1,300.
- Marketing promotion expenses for the grand opening of Texas Brothers® Leather Processing Company, Inc. in the amount of $3,500 and as well as flyer printing (2,000 flyers at $0.04 per copy) for the total amount of – $3,580.
- The cost for hiring Business Consultant – $2,500.
- Insurance (general liability, workers’ compensation and property casualty) coverage at a total premium – $2,400.
- The total cost for payment of rent for 12 months at $1.76 per square feet in the total amount of $120,000.
- The total cost for construction of a standard leather processing plant – $100,000.
- Other start-up expenses including stationery ($500) and phone and utility deposits ($2,500).
- Operational cost for the first 3 months (salaries of employees, payments of bills et al) – $100,000
- The cost for Start-up inventory (supply of raw leather, polishing and tanning chemicals, and dyes et al) – $20,000
- The cost for store equipment (cash register, security, ventilation, signage) – $13,750
- The cost of purchase of distribution vans – $30,000
- The cost for the purchase of furniture and gadgets (Computers, Printers, Telephone, Fax Machines, tables and chairs et al) – $4,000
- The cost of launching a website – $600
- Miscellaneous – $10,000
We would need an estimate of three hundred thousand dollars ($300,000) to successfully set up our leather processing plant in Dallas – Texas.
Generating Startup Capital for Texas Brothers® Leather Processing Company, Inc.
Texas Brothers® Leather Processing Company, Inc. is a family business that is owned and financed by Andrew Peterson and his brother Terry Peterson. They do not intend to welcome any external business partner which is why they decided to restrict the sourcing of startup capital to 3 major sources.
These are the areas we intend generating our startup capital;
- Generate part of the startup capital from personal savings and sell of stocks
- Source for soft loans from family members and friends
- Apply for loan from the bank
N.B: We have been able to generate about $100,000 (Personal savings $60,000 and soft loan from family members $40,000) and we are at the final stages of obtaining a loan facility of $200,000 from our bank. All the papers and documents have been signed and submitted, the loan has been approved and any moment from now our account will be credited with the amount.
14. Sustainability and Expansion Strategy
It is a known fact that the future of a business lies in the number of loyal customers that they have, the capacity and competence of their employees, their investment strategy and business structure. If all these factors are missing from a business, then it won’t be too long before the business closes shop.
One of our most important goals of starting Texas Brothers® Leather Processing Company, Inc. is to build a business that will survive off its own cash flow without the need for injecting finance from external sources once the business is officially running.
We know that one of the ways of gaining approval and winning customers over is to retail our tanned and finished leathers a little bit cheaper than what is obtainable in the market and we are prepared to survive on lower profit margin for a while.
At Texas Brothers® Leather Processing Company, Inc., we will make sure that the right foundation, structures and processes are put in place to ensure that our staff welfare are well taken of. Our company’s corporate culture is designed to drive our business to greater heights and training and re – training of our workforce is at the top burner.
We know that if that is put in place, we will be able to successfully hire and retain the best hands we can get in the industry; they will be more committed to help us build the business of our dreams.
- Business Name Availability Check: Completed
- Business Registration: Completed
- Opening of Corporate Bank Accounts: Completed
- Securing Point of Sales (POS) Machines: Completed
- Opening Mobile Money Accounts: Completed
- Opening Online Payment Platforms: Completed
- Application and Obtaining Tax Payer’s ID: In Progress
- Application for business license and permit: Completed
- Purchase of Insurance for the Business: Completed
- Leasing of facility and construction of standard leather processing plant: In Progress
- Conducting Feasibility Studies: Completed
- Generating capital from family members and friends: Completed
- Applications for Loan from the bank: In Progress
- Writing of Business Plan: Completed
- Drafting of Employee’s Handbook: Completed
- Drafting of Contract Documents and other relevant Legal Documents: In Progress
- Design of The Company’s Logo: Completed
- Printing of Promotional Materials: In Progress
- Recruitment of employees: In Progress
- Purchase of the needed leather tanning, dying, cutting and polishing machines, distribution vans, furniture, racks, shelves, computers, electronic appliances, office appliances and CCTV: In progress
- Creating Official Website for the Company: In Progress
- Creating Awareness for the business both online and around the community: In Progress
- Health and Safety and Fire Safety Arrangement (License): Secured
- Establishing business relationship with vendors – wholesale suppliers / merchants: In Progress.