1.0 Executive Summary
The purpose of this business plan is to secure $200,000 of debt capital for the development of a 3D printing and fabrication service based in Madison, Wisconsin. The 3D Printing Service LLC (“the Company”) was founded this year with the intention of providing a wide range of exceptional fabrication services using state-of-the-art 3D printers and related equipment. Full scale revenue generating operations will commence in the third quarter of this year.
Operations
The Company will principally generate its revenues from receiving orders throughout the United States among individuals and businesses that are seeking to have specific products fabricated through the use of 3D printing. The Company will generate substantial contribution margins from these services.
The primary focus of the Company’s operations will be to establish ongoing relationships with businesses that have ongoing fabrication needs. This will ultimately produce a substantial amount of highly predictable revenue, which will contribute to the ongoing economic stability of the business. The Company will generate revenue is not only from 3D printing services, but also from the shipment of the products to clients.
The third section of this document will further discuss the operations of the business
The Financing
As noted above, the Company is currently seeking $200,000 a debt capital to establish its operations. This business plan assumes that the Company were receive a 10-year loan carrying an 8% interest rate.
Moving forward, the Company could easily secure additional capital on an as needed basis. As this is a capital-intensive business, there may be the need for a working capital line of credit in order to purchase additional equipment from time to time. This document assumes that the business will use its retained earnings to finance its ongoing growth objectives.
The Future
As The 3D Printing Service will operate on a nationwide basis, the Company will make ongoing investment into the business’ marketing operations that it becomes a preeminent service with the United States. The Company will also continually upgrade its equipment so that the business can provide three printing services using a wide range of materials and inputs.
Market Overview
Revenue Forecasts
2.0 The Financing
2.1 Funds Required
The funding discussed in the executive summary will be allocated as follows:
2.2 Management and Investor Equity
The Founder retains a 100% ownership interest in The 3D Printing Service.
2.3 Exit Strategies
As this business will generate highly predictable stream of revenue from 3D printing operations, the Company could easily be sold to a third-party for a significant profit. It should be noted that this is not expected to occur for a significant amount of time. In this event, the Company will coordinate with a properly qualified business sales specialist that has an understanding of fabrication and manufacturing related businesses.
3.0 Operations
As noted in the executive summary, The 3D Printing Service will be actively involved with providing a wide range of fabrication services from its state-of-the-art facilities in Madison, Wisconsin. At the onset of operations, the Company intends to employed two technicians. They will be required to have an extensive amount of experience operating 3D printing and fabrication equipment.
Generally, most components that are produced by the business will carry a price of $50 to $1,000 depending on the complexity of the print. The business will be able to use multiple different types of inputs while providing precision machining to its clients.
The Company will also provide overnight shipping when requested by a client. The business will have on-site packaging abilities given the fragile nature of certain products that have undergone a 3D printing process.
4.0 Overview of the Organization
4.1 Registered Name
The 3D Printing Service LLC. The Company has registered as a limited liability company in the State of Wisconsin.
4.2 Commencement of Operations
Management intends to commence full scale operations in the third quarter of this year.
4.3 Mission Statement
To become the preeminent printing service within the United States of provides cost-effective fabrication solutions.
4.4 Vision Statement
The business will operate as a highly recognized 3D printing firm with clients in all states.
4.5 Organizational Objectives
• Properly engage a wide-ranging marketing campaign that will create significant interest for The 3D Printing Service.
• Use the latest in 3D printing technologies so that clients receive exceptional work.
• Implement fiscally sound protocols to ensure the longevity in broken business.
• Adhere to all regulatory frameworks regarding the operation of a 3D printing and fabrication business.
• Leverage search engine optimization techniques for the Company’s website.
• Aggressively use targeted social media ads on LinkedIn to establish relationships with companies that have ongoing fabrication needs.
• Provide a stable and secure work environment for the Company staff.
5.0 Market and Industry Analysis
5.1 External Environmental Analysis
Is section of the business plan will focus on the current economic climate, the industry, the customer profile, and the ongoing competition that the business will face as it establishes its operations.
At this time, you can on the climate within the United States is moderate. As a result of changing grade policies, there has been a significant degree of inflation.
It should be noted that as a result of inflation, many people will turn to 3D printing services in order to have their work produced domestically. The business will generate substantial contribution margins from its operations which will fully support the underlying costs in any economic climate.
5.2 Industry Analysis
As of this year, the national level demand for 3D printing services is $20 billion. While this is a relatively new industry that has rapidly expanded over the past 15 years, there is now a significant degree of consolidation occurring as smaller enterprises are being acquired by larger entities. The compounded annual growth rate of the industry is expected to remain between 4% to 5% over the next five years.
5.3 Customer Profile
Any company that has customize fabrication needs is a potential client of The 3D Printing Service. The business will typically target machine, shops, automotive firms, and specialized machinery companies that need to have customized parts created on an on-demand basis. Typically, these businesses will have an annual revenue exceeding $1 million per year. From time to time, the business will work with hobbyists that are seeking customize fabricated parts for their projects.
5.4 Competitive Analysis
As needed above, the industry is currently undergoing a significant period of consolidation. As such, the principal competition will come from much larger entities that provide the same scope of services. The 3D Printing Service will be able to maintain a differentiating factor given that we have low operating costs which will allow the business to operate price competitively.
6.0 Key Strategic Issues
6.1 Sustainable Operations
The 3D Printing Service will be able to maintain successful operations as a result of:
• Highly predictable streams of revenue from the ongoing fabrication of products on a customized basis.
• The Founder has extensive experience in the field of 3D printing.
• The business will have controllable operating cost, which will allow for ongoing reinvestment into expansion.
• The businesses revenue will remain relatively stable or challenging economic climate.
6.2 Basis of Growth
The Company will expand via the following methods:
• Continued expansion of the equipment that is on site to render a greater degree of services.
• Expansion of operation is to include other types of fabrication services.
• Acquisition of additional capital to further the growth objectives in the business.
7.0 Marketing Plan
7.1 Marketing Objectives
• Use multiple forms of online advertising in order to drive traffic to the website.
• Develop high impact pay per click marketing strategies that will drive revenues from the very first days of operation.
• Conduct extensive direct outreach with entities that have ongoing part fabrication needs.
7.2 Revenue Forecasts
7.3 Revenue Assumptions
Year 1
• The business will establish its operations in Madison.
• First year revenues will reach $641,000.
Year 2
• Management will expand the scope of the Company’s marketing operations.
• Revenue will reach $693,000.
Years 3
• Revenue will reach $748,000 by year three.
• The Company will continue to reinvest into SEO and targeted social media.
7.4 Marketing Strategies
Management will use a number of marketing strategies that will create significant brand name awareness for The 3D Printing Service in the coming years. Most importantly, the online platform will showcase all aspects of the Company’s operations, its ability to render 3D printing services, related fabrication services, as well as contact information. The website will have a login portal so that individuals can upload schematics in regards to the product that they need to have 3D printed. This platform will undergo substantial search engine optimization in the coming months and years.
Beyond this type of marketing, the Company will also maintain a significant presence among all major social media pages. A major focus of these operations will be on LinkedIn with direct outreach occurring among individuals at list their professional as a procurement officer for a manufacturing focused Company. The business will also maintain pages on Facebook and Instagram in order to further on increased brand visibility.
As the Company expands, the business will conduct extensive direct outreach initiatives with individuals that own and operate firms at frequently require 3D printing services. In time, the Company will retain sales staff that will receive competitive bonuses for each new ongoing purchase order relationships that they foster.
8.0 Organizational Plan
8.1 Organizational Hierarchy
8.2 Personnel Costs
9.0 Financial Plan
9.1 Underlying Assumptions
• The Company will have a compounded annual rate of 8%.
• The Founder will contribute $50,000 towards the venture.
• The Company will acquire a $200,000 loan carrying an 8% interest rate and a 10-year term.
9.2 Financial Highlights
• 3D printing services will generate contribution marks of 90%.
• Transportation and freight costs will generate contribution margins of 70%.
9.3 Sensitivity Analysis
Only an extremely severe sustained economic recession would impact The 3D Printing Service’s ability to generate revenue. The business is offering cost-effective fabrication solutions from its location in Madison. The significant contribution margin generated on all services rendered one ensure that the business is able to remain profitable while servicing its underlying financial obligations.
9.4 Source of Funds
9.5 Financial Proformas
A) Profit and Loss Statement
B) Common Size Income Statement
C) Cash Flow Analysis
D) Balance Sheet
9.6 Breakeven Analysis
9.7 Business Ratios
Appendix A – SWOT Analysis
Strengths
• Controllable operating overhead cost will contribute to economic stability.
• Through online communications, the business will operate throughout the entirety of the United States.
• The Company will offer cost-effective solutions through its state-of-the-art 3D printing services.
• The operations of the business are highly scalable.
Weaknesses
• Moderately high cost related to marketing.
• This is a highly competitive industry with major agents that are highly established.
Opportunities
• Continued expansion of the operating assets so that greater engagements can be provided.
• Hiring of additional application technicians to boost revenue on a year-on-year basis.
• Expansion of the types of fabrication services offered.
Threats
• Continually in increasing inflation may impact contribution margins.
Appendix B – Risk Analysis
Development Risk – Low
The primary matter that needs to be addressed to securing the funding discussed in this document. Management has already sourced the location as well as the equipment that will be used in conjunction with The 3D Printing Service’s opérations.
Financing Risk – Low/Moderate
The $200,000 of financing will be principle used for tandoor equipment purchases. These risks are abated by the high margin income generated from 3D printing services.
Marketing Risk – Low
The Company will use an expand upon the multiple marketing strategies discussed in chapter seven. Most importantly, the business will leverage search engine optimization techniques for the Company’s website while conducting extensive direct outreach.
Management Risk – Low
The founder is a highly experienced entrepreneur with users of experience and the 3D printing and fabrication industry. He will be able to quickly bring the operations of the business to profitability.
Valuation Risk – Low
The valuation risk is offset by:
Strong demand for 3D printing services among small to large scale corporations.
• The Company will have a significant tangible asset base.
• Substantial contribution margins on all fabrication engagements.
Exit Risk – Low
As noted earlier, there are no long ranging plans to sell this business. If it is prudent to do so then the Company will retain a business broker to assist with the transaction. This is not expected to occur for at least seven years.
Appendix C – Expanded Profit and Loss Statements
Appendix D – Expanded Cash Flow Analysis
How to Start a 3D Printing Service
The first thing you need to do when starting a 3D printing service is to determine how much startup capital you need. For these types of businesses, the amount can vary greatly given that these can be operated as small home based operations or as large printing shops that can provide services to anyone in the world. A frequent question that we receive is how much does it cost to start a 3D printing service? Usually, we answer $50,000 to $100,000. We generally assume that the individual is seeking to develop a full scale and full service company. A substantial portion of these funds are directly used for furniture, fixture, and equipment purchases. You can assume that you are going to spend at least 50% of your startup budget on the equipment needed to run a 3D printing service.
Once you have determined how much capital you will use to start this business, it’s time for the paperwork. Foremost, you should definitely hire both a CPA as well as attorney to determine the type of corporate structure that you will use to operate your 3D printing service. If you are going to be a single owner (or have a limited number of partners/investors), you can expect that these professionals will recommend that you use a limited liability company (“LLC”) in order to carry out operations. However, there are exceptions to this rule so you should definitely have your CPA determine which type of corporate entity is right for your business. Once this step is completed, you and your CPA should determine which type of accounting software your business will use. It is imperative that these systems are put into place early as they will be used throughout the life of the business. It should be noted that once you determine which corporate entity you will be using, your lawyer or accountant should incorporate the business so that you receive your FEIN number. Prior to launching operations, you should have the appropriate workman’s compensation and liability insurance policies in place.
As it relates to marketing, this is going to be one of your biggest upfront expenses related to your 3D printing service. Although this is a relatively new industry, the relatively low startup costs have driven a number of companies into the market. Additionally, many existing specialty prototyping and printing companies have also entered this market in order to add services to their existing offerings. As such, it is imperative for a 3D printing service to have an expansive marketing campaign that targets hobbyists, inventors, and prototyping firms. The upfront marketing costs are significant, but once your business has acquired clients – the ongoing need for a massive marketing campaign is minimal to moderate. Depending on the size and scope of your business, you can expect to spend $1,000 to $3,000 per month on traditional and online advertising.
Related to creating visibility for your 3D printing service, there is a strong need to have a substantial website. This online platform will need to showcase your business, your 3D printing services, hours of operation, and costs. Many large scale companies that provide this service often have online ordering capabilities where to-be-printed files are uploaded to the online platform. For any new business entering the 3D printing space, it is important that your website is able to readily accept large STL files as well as other CAD related inputs. This will help your business differentiate itself from larger competitors. Additionally, some companies have developed proprietary applications that can accept files from popular mobile devices and tablets. This is becoming common place among companies that offer 3D printing services.
In regards competition, one of the ways that 3D printing services are able to remain competitive is by using the latest in printing technology and design software. As this is a constantly changing industry (from a technological and operating perspective), it should be noted that you will most likely need to make continual investments into your 3d printing equipment. This will need to occur on a yearly basis.
If you are raising capital for your 3D printing service then you are certainly going to need a business plan. The primary ways that most entrepreneurs raise capital for these types of businesses is through private investment or a SBA loan. If you are seeking private investors then you are going to need to determine how much of a percentage you are willing to provide to a private funding source in exchange for the capital you need. When approaching the SBA and a bank for a business loan, you are also going to need a well drafted business plan. Central to this document is how you intend to repay the loan even if things do not go as planned with your 3D printing service. Most importantly, you need to showcase what you exactly intend to do with the money they are lending you. Banks do not often lending substantial sums of money for working capital purposes. As such, you need to clearly define the tangible assets that you will be purchasing that can be used as collateral. Your business plan should also focus on industry research that is specific fo a 3D printing service.
Another factor to consider when starting a 3D printing service are the employees that you will need in order to carry out operations. Your attorney should have an employee manual drafted that states, in no uncertain terms, how employees need to act, dress, and work at your facility. This will create a strong legal protection for you in the event that things do not go as planned. For most 3D printing services, employees involved in the business primarily consist of a fabricator, sales person, and bookkeeper. The number of employees you hire depends on the initial scope of the business you are launching. Usually, most 3D printing services start with the owner doing most of the work initially while ramping up support staff. An on-staff 3D printing manager is usually the last person to be hired.
Your 3D printing service will generally not need a large storefront or retail styled location. As discussed earlier, these businesses are usually found online, and you can anticipate that not many customers will come directly to your location in order to have 3D prototyping completed on their behalf. As such, finding an affordable industrial park location may be suitable for your business operations.
For early revenue growth, one of the common ways that 3D printing services get off the ground is by partnering with machining and prototyping companies. These businesses do not often have the capital to invest in large 3D printers. As such, beyond attracting business from individual users, these companies can provide you with highly predictable purchase orders that you can count on a regular basis. These types of accounts are especially important if you are looking to raise capital in the future. Banks and lenders love to see highly predictable streams of revenue generated from these businesses. As such, if you are able to develop ongoing accounts then you will be in a much better position to expand during your first five years of operation.
In closing the steps for how to start a 3D printing service is as follows:
- Determine how much capital you will need
- Complete your 3D printing service business plan
- Incorporate your business
- Source the capital from an investor or SBA lending bank (if not self-financing)
- Develop relationships with companies with ongoing 3D printing and prototyping needs
- Establish a large online presence
- Maintain visibility on social media
- Hire the appropriate staff
- Make sure that you consulting your CPA and attorney for business advice
These are great businesses to start given the low cost operating infrastructure and high gross margins generated. You can anticipate gross margins in the 70% to 85% range with pre-tax profit margins of 20% to 30% depending on your overhead costs. As such, once these businesses are profitable, they can be easily scaled.