Do you want to start diamond cutting and polishing business?
Are you thinking about starting a diamond cutting and polishing business? Well, it is an immensely profitable business that involves shaping the diamond in various forms taking high accuracy in consideration. So, if you are a person with technical skills and if you can afford the money required to buy its expensive equipment, then this is probably the right business for you.
The first step before starting this business is to write a professional business plan. To guide you through the steps of starting this business and making an effective plan, we are providing here a sample diamond cutting and polishing business plan for a startup named, ‘Diamo Cuts’.
Executive Summary
2.1 The Business
Diamo Cuts will be a licensed and insured company based in New York City, mainly focused on obtaining various eye-catching shapes from the rough diamond crystal. This diamond cutting business plan, will be demonstrating the way Diamo Cuts will adopt in order to polish and shape the diamonds.
2.2 Management
If you have decided to start a diamond shaping business, you must
be very wary about the staff you hire and the management plan you follow. This business requires highly skilled business consultants, delicate equipment and expensive machines. So, in your gemstones business plan, you have to add a detailed plan about how you will be able to manage all these. Our feasibility plan is mainly written for rough diamond business plan but it will guide you through the steps of earning huge profits by this luxurious commodity.
2.3 Customers
As we’ll be servicing in cutting diamonds in required shapes so our customers will mainly be the jewelry stores, automotive, mining and military industries, medical equipment manufacturers, and the wealthy community of NYC.
2.4 Business Target
Our target is to be the most visited diamond cutting business in the whole of NYC. Our financial targets are to balance startup costs with the earned profits within a year.
Company Summary
3.1 Company Owner
Samuel Depp will be the owner of the business. Samuel is a graduate in management sciences from the University of California. Before starting a diamond business, Samuel has taken a course of Diamond Cutting and Rough Diamond Grading from the American Institute of Diamond Cutting.
3.2 Why the Business is being started
Samuel knows how to start a diamond jewelry business due to all his paternal relatives in the jewelry manufacturing field. He not only has the knowledge of how to upgrade rough diamonds but the experience of teaching this skill for two years in the same institute from where he learned. Considering the money which he can invest, he has decided to opt for this business.
3.3 How the Business will be started
After making a detailed diamond polishing business plan, Samuel has decided to hire his employees with a certification in Diamond Cutting & Grading. He will buy a facility in New York City and will purchase the required machinery and tools.
Shaping and cutting is the basic thing which gives a diamond its beauty, cutting by specific angles cause the diamond to reflect light brilliantly. So, in order to have accurate cuts, Diamo Cuts will be using Sarin Machine, Laser Diamond Sawing Machine, and other latest equipment.
The detailed startup requirements are given below:
| Start-up Expenses | ||
| Legal | $55 300 | |
| Consultants | $0 | |
| Insurance | $32 750 | |
| Rent | $32 500 | |
| Research and Development | $32 750 | |
| Expensed Equipment | $32 750 | |
| Signs | $1 250 | |
| TOTAL START-UP EXPENSES | $187 300 | |
| Start-up Assets | $220 875 | |
| Cash Required | $332 500 | |
| Start-up Inventory | $32 625 | |
| Other Current Assets | $232 500 | |
| Long-term Assets | $235 000 | |
| TOTAL ASSETS | $121 875 | |
| Total Requirements | $245 000 | |
| START-UP FUNDING | ||
| START-UP FUNDING | $273 125 | |
| Start-up Expenses to Fund | $151 875 | |
| Start-up Assets to Fund | $123 000 | |
| TOTAL FUNDING REQUIRED | $0 | |
| Assets | $23 125 | |
| Non-cash Assets from Start-up | $18 750 | |
| Cash Requirements from Start-up | $0 | |
| Additional Cash Raised | $18 750 | |
| Cash Balance on Starting Date | $21 875 | |
| TOTAL ASSETS | $373 125 | |
| Liabilities and Capital | $0 | |
| Liabilities | $0 | |
| Current Borrowing | $0 | |
| Long-term Liabilities | $0 | |
| Accounts Payable (Outstanding Bills) | $0 | |
| Other Current Liabilities (interest-free) | $0 | |
| TOTAL LIABILITIES | $0 | |
| Capital | $620 125 | |
| Planned Investment | $620 125 | |
| Investor 1 | $0 | |
| Investor 2 | $0 | |
| Other | $0 | |
| Additional Investment Requirement | $0 | |
| TOTAL PLANNED INVESTMENT | $620 125 | |
| Loss at Start-up (Start-up Expenses) | $313 125 | |
| TOTAL CAPITAL | $251 875 | |
| TOTAL CAPITAL AND LIABILITIES | $251 875 | |
| Total Funding | $255 000 | |
Products
After training his staff, Diamo Cuts will provide the following services to its customers. For anyone who wants to know how are diamonds cut and polished, we are providing a sample plan, enlisting services in detail free of cost.
- Diamond Cutting & Shaping from Rough: Our main service will be to convert rough diamond crystal in various shapes such as oval, marquise, cushion, round, emerald or any other required.
- Repairing, Reshaping & Polishing: We’ll repair, recut and reshape every type of gemstone and diamond.
- Laser Inscription: We will etch numbers and letters on diamonds for certification or identification purposes.
- Buying & Selling: We will buy and sell diamonds and gemstones in a small display store of our company.
Marketing Analysis of Diamond Cutting And Polishing Business
Note
The most important and difficult part of starting diamond cutting and polishing industry is its marketing plan. Diamonds are a luxurious property affordable by a few ones. So, if you aim at starting this business, you have to choose a location of well-off and rich people or a location where jewelers and industries can contact you for cutting and shaping diamond for them. You must come up with a well devised diamond cutting marketing plan to strive in this industry.
5.1 Marketing Segmentation
Diamo Cuts has divided its target customers in the group of three to focus on each category separately.
The detailed marketing segmentation of our target audience is as follows:
5.1.1 Jewelry Stores: The biggest group of our target customers will be the stores who design and sell jewelry sets. They will require our services in order to shape the diamonds in different sizes to be used in ornaments.
5.1.2 Automotive, Mining, Military & Other Companies: Our second target group will comprise of the companies who manufacture mechanical or optical equipment, electronic appliances, and heat sinks and the companies who require it for cutting glass or drilling.
5.1.3 Medical Equipment Manufacturers: Our third target group will be the manufacturers of surgical instruments and medical equipment such as diamond knife and diamond blades which are used in delicate surgeries.
5.1.4 Residents: Last group of our target customers will comprise of the rich class of NYC, who can afford precious gemstones and diamonds. They are expected to buy diamonds from us and to reshape and polish their old ones.
The detailed market analysis of our potential customers is given in the following table:
| Market Analysis | |||||||
| Potential Customers | Growth | Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | CAGR |
| Jewelry Stores & Residents | 48% | 22 334 | 32 344 | 43 665 | 52 544 | 66 432 | 10,00% |
| Automotive, Mining & Military Companies | 32% | 12 867 | 14 433 | 15 999 | 17 565 | 19 131 | 15,32% |
| Medical Equipment Manufacturers | 20% | 11 433 | 13 344 | 16 553 | 18 745 | 20 545 | 13,43% |
| Total | 100% | 46 634 | 60 121 | 76 217 | 88 854 | 106 108 | 9,54% |
5.2 Business Target
Our business targets are as follows:
- To balance startup costs with earned profits by the end of the first year
- To achieve the net profit margin of $10k per month by the end of the first year, $15k per month by the end of the second year, and $25k per month by the end of the third year
5.3 Product Pricing
Business Plan for Investors
Diamond cutting is a hard and technical job. Keeping in view the training, experience, and delicacy of our work, we haven’t priced our services low. They are nearly the same as our competitors.
Strategy
After having a detailed market analysis, you now know how to get into the diamond industry. It’s time to think about ways to be distinguished from your competitors and to be able to gain desired customers.
6.1 Competitive Analysis
If you are looking for how to get into the diamond business and run it successfully, you must have some features in you which your competitors lack. The biggest competitive advantage of Diamo Cuts will be its highly experienced and skilled staff. All our staff will be trained for using the latest techniques to perform the task effectively. Secondly, we will be offering Laser Inscription which none of our competitor in the market is offering right now. And lastly, we are initiating our business in a location which is considered an ideal location for a diamond dealing business.
6.2 Sales Strategy
To advertise and sell our services, our experts have come up with the following ideas:
- We’ll send our introductory letters to the first three groups of our target customers with an offering of 5% discount to get introduced to them
- We’ll advertise our services through the local newspaper and magazines
- We’ll emphasize on our search engine marketing efforts to ensure a strong web presence
6.3 Sales Monthly
6.4 Sales Yearly
6.5 Sales Forecast
| Sales Forecast | |||
| Unit Sales | Year 1 | Year 2 | Year 3 |
| Diamond Cutting & Shaping | 1 887 030 | 2 680 320 | 2 588 240 |
| Diamond Repairing & Polishing | 802 370 | 815 430 | 823 540 |
| Diamond Laser Inscription | 539 320 | 770230 | 1 002 310 |
| Diamond Buying & Selling | 265 450 | 322 390 | 393 320 |
| TOTAL UNIT SALES | 3 494 170 | 4 588 370 | 4 807 410 |
| Unit Prices | Year 1 | Year 2 | Year 3 |
| Diamond Cutting & Shaping | $140,00 | $150,00 | $160,00 |
| Diamond Repairing & Polishing | $600,00 | $800,00 | $1 000,00 |
| Diamond Laser Inscription | $700,00 | $800,00 | $900,00 |
| Diamond Buying & Selling | $650,00 | $750,00 | $850,00 |
| Sales | |||
| Diamond Cutting & Shaping | $2 149 800 | $2 784 000 | $3 383 200 |
| Diamond Repairing & Polishing | $120 050 | $194 500 | $268 500 |
| Diamond Laser Inscription | $50 110 | $71 600 | $93 000 |
| Diamond Buying & Selling | $139 350 | $194 600 | $249 850 |
| TOTAL SALES | |||
| Direct Unit Costs | Year 1 | Year 2 | Year 3 |
| Diamond Cutting & Shaping | $0,70 | $0,80 | $0,90 |
| Diamond Repairing & Polishing | $0,40 | $0,45 | $0,50 |
| Diamond Laser Inscription | $0,30 | $0,35 | $0,40 |
| Diamond Buying & Selling | $3,00 | $3,50 | $4,00 |
| Direct Cost of Sales | |||
| Diamond Cutting & Shaping | $989 300 | $1 839 000 | $2 679 700 |
| Diamond Repairing & Polishing | $66 600 | $119 900 | $173 200 |
| Diamond Laser Inscription | $17 900 | $35 000 | $52 100 |
| Diamond Buying & Selling | $19 400 | $67 600 | $115 800 |
| Subtotal Direct Cost of Sales | $1 294 100 | $1 699 400 | $2 104 700 |
Personnel plan
Enlisting the staff with a little job description is an important component of a diamond business plan. Samuel has decided to hire certified staff for diamond upgrading. To ensure the best quality work, he will also be training them a week before the launch of the business.
7.1 Company Staff
Samuel will be the manager himself, the staff he’ll hire is as follows:
- 1 Accountant to maintain financial and other records
- 2 Sales Executives responsible for marketing and discovering new ventures
- 2 Diamond Grading & Inspection Experts
- 8 Diamond Cutting, Resizing, Polishing & Shaping Experts
- 1 Store Manager to operate sales and purchase unit
- 1 Technical Assistant to manage the company’s websites and social media sites
- 3 General Assistants for carrying day-to-day tasks
- 1 Technician to deal with any inconvenience related to machines
- 1 Customer Representative to interact with customers and record their orders
- 8 Security Officers
7.2 Average Salary of Employees
| Personnel Plan | |||
| Year 1 | Year 2 | Year 3 | |
| Accouontant | $85 000 | $95 000 | $105 000 |
| Sales Executives | $50 000 | $55 000 | $60 000 |
| Diamon Inspection Experts | $187 000 | $194 000 | $201 000 |
| Diamond Cutting Experts | $255 000 | $260 000 | $265 000 |
| Store Manager | $85 000 | $95 000 | $105 000 |
| Technical Assistant | $50 000 | $55 000 | $60 000 |
| General Assistant | $245 000 | $252 000 | $259 000 |
| Technician | $85 000 | $95 000 | $105 000 |
| Customer Representatives | $50 000 | $55 000 | $60 000 |
| Security Officers | $187 000 | $194 000 | $201 000 |
| Total Salaries | $635 000 | $662 000 | $689 000 |
Financial Plan
Diamond cutting and polishing is a business which requires a considerable investment to buy equipment, tools, and latest machinery. So, if you have decided to start this business you need to make an accurate financial plan crafting in detail the cost of inventory, payroll, utilities required for the startup and a plan to balance all these costs by the earned profits. Samuel himself is adept in financial planning so instead of getting this work done by somebody else he has prepared his financial plan by himself which is given here as a financial plan for diamond manufacturing process pdf for anyone who wants to benefit.
8.1 Important Assumptions
| General Assumptions | |||
| Year 1 | Year 2 | Year 3 | |
| Plan Month | 1 | 2 | 3 |
| Current Interest Rate | 10,00% | 11,00% | 12,00% |
| Long-term Interest Rate | 10,00% | 10,00% | 10,00% |
| Tax Rate | 26,42% | 27,76% | 28,12% |
| Other | 0 | 0 | 0 |
8.2 Brake-even Analysis
8.3 Projected Profit and Loss
| Brake-Even Analysis | ||
| Monthly Units Break-even | 5530 | |
| Monthly Revenue Break-even | $159 740 | |
| Assumptions: | ||
| Average Per-Unit Revenue | $260,87 | |
| Average Per-Unit Variable Cost | $0,89 | |
| Estimated Monthly Fixed Cost | $196 410 | |
| Pro Forma Profit And Loss | |||
| Year 1 | Year 2 | Year 3 | |
| Sales | $309 069 | $385 934 | $462 799 |
| Direct Cost of Sales | $15 100 | $19 153 | $23 206 |
| Other | $0 | $0 | $0 |
| TOTAL COST OF SALES | $15 100 | $19 153 | $23 206 |
| Gross Margin | $293 969 | $366 781 | $439 593 |
| Gross Margin % | 94,98% | 94,72% | 94,46% |
| Expenses | |||
| Payroll | $138 036 | $162 898 | $187 760 |
| Sales and Marketing and Other Expenses | $1 850 | $2 000 | $2 150 |
| Depreciation | $2 070 | $2 070 | $2 070 |
| Leased Equipment | $0 | $0 | $0 |
| Utilities | $4 000 | $4 250 | $4 500 |
| Insurance | $1 800 | $1 800 | $1 800 |
| Rent | $6 500 | $7 000 | $7 500 |
| Payroll Taxes | $34 510 | $40 726 | $46 942 |
| Other | $0 | $0 | $0 |
| Total Operating Expenses | $188 766 | $220 744 | $252 722 |
| Profit Before Interest and Taxes | $105 205 | $146 040 | $186 875 |
| EBITDA | $107 275 | $148 110 | $188 945 |
| Interest Expense | $0 | $0 | $0 |
| Taxes Incurred | $26 838 | $37 315 | $47 792 |
| Net Profit | $78 367 | $108 725 | $139 083 |
| Net Profit/Sales | 30,00% | 39,32% | 48,64% |
8.3.1 Profit Monthly
8.3.2 Profit Yearly
8.3.3 Gross Margin Monthly
8.3.4 Gross Margin Yearly
8.4 Projected Cash Flow
| Pro Forma Cash Flow | |||
| Cash Received | Year 1 | Year 2 | Year 3 |
| Cash from Operations | |||
| Cash Sales | $40 124 | $45 046 | $50 068 |
| Cash from Receivables | $7 023 | $8 610 | $9 297 |
| SUBTOTAL CASH FROM OPERATIONS | $47 143 | $53 651 | $59 359 |
| Additional Cash Received | |||
| Sales Tax, VAT, HST/GST Received | $0 | $0 | $0 |
| New Current Borrowing | $0 | $0 | $0 |
| New Other Liabilities (interest-free) | $0 | $0 | $0 |
| New Long-term Liabilities | $0 | $0 | $0 |
| Sales of Other Current Assets | $0 | $0 | $0 |
| Sales of Long-term Assets | $0 | $0 | $0 |
| New Investment Received | $0 | $0 | $0 |
| SUBTOTAL CASH RECEIVED | $47 143 | $53 651 | $55 359 |
| Expenditures | Year 1 | Year 2 | Year 3 |
| Expenditures from Operations | |||
| Cash Spending | $21 647 | $24 204 | $26 951 |
| Bill Payments | $13 539 | $15 385 | $170 631 |
| SUBTOTAL SPENT ON OPERATIONS | $35 296 | $39 549 | $43 582 |
| Additional Cash Spent | |||
| Sales Tax, VAT, HST/GST Paid Out | $0 | $0 | $0 |
| Principal Repayment of Current Borrowing | $0 | $0 | $0 |
| Other Liabilities Principal Repayment | $0 | $0 | $0 |
| Long-term Liabilities Principal Repayment | $0 | $0 | $0 |
| Purchase Other Current Assets | $0 | $0 | $0 |
| Purchase Long-term Assets | $0 | $0 | $0 |
| Dividends | $0 | $0 | $0 |
| SUBTOTAL CASH SPENT | $35 296 | $35 489 | $43 882 |
| Net Cash Flow | $11 551 | $13 167 | $15 683 |
| Cash Balance | $21 823 | $22 381 | $28 239 |
8.5 Projected Balance Sheet
| Pro Forma Balance Sheet | |||
| Assets | Year 1 | Year 2 | Year 3 |
| Current Assets | |||
| Cash | $184 666 | $218 525 | $252 384 |
| Accounts Receivable | $12 613 | $14 493 | $16 373 |
| Inventory | $2 980 | $3 450 | $3 920 |
| Other Current Assets | $1 000 | $1 000 | $1 000 |
| TOTAL CURRENT ASSETS | $201 259 | $237 468 | $273 677 |
| Long-term Assets | |||
| Long-term Assets | $10 000 | $10 000 | $10 000 |
| Accumulated Depreciation | $12 420 | $14 490 | $16 560 |
| TOTAL LONG-TERM ASSETS | $980 | $610 | $240 |
| TOTAL ASSETS | $198 839 | $232 978 | $267 117 |
| Liabilities and Capital | Year 1 | Year 2 | Year 3 |
| Current Liabilities | |||
| Accounts Payable | $9 482 | $10 792 | $12 102 |
| Current Borrowing | $0 | $0 | $0 |
| Other Current Liabilities | $0 | $0 | $0 |
| SUBTOTAL CURRENT LIABILITIES | $9 482 | $10 792 | $12 102 |
| Long-term Liabilities | $0 | $0 | $0 |
| TOTAL LIABILITIES | $9 482 | $10 792 | $12 102 |
| Paid-in Capital | $30 000 | $30 000 | $30 000 |
| Retained Earnings | $48 651 | $72 636 | $96 621 |
| Earnings | $100 709 | $119 555 | $138 401 |
| TOTAL CAPITAL | $189 360 | $222 190 | $255 020 |
| TOTAL LIABILITIES AND CAPITAL | $198 839 | $232 978 | $267 117 |
| Net Worth | $182 060 | $226 240 | $270 420 |
8.6 Business Ratios
| Ratio Analysis | ||||
| Year 1 | Year 2 | Year 3 | INDUSTRY PROFILE | |
| Sales Growth | 4,35% | 30,82% | 63,29% | 4,00% |
| Percent of Total Assets | ||||
| Accounts Receivable | 5,61% | 4,71% | 3,81% | 9,70% |
| Inventory | 1,85% | 1,82% | 1,79% | 9,80% |
| Other Current Assets | 1,75% | 2,02% | 2,29% | 27,40% |
| Total Current Assets | 138,53% | 150,99% | 163,45% | 54,60% |
| Long-term Assets | -9,47% | -21,01% | -32,55% | 58,40% |
| TOTAL ASSETS | 100,00% | 100,00% | 100,00% | 100,00% |
| Current Liabilities | 4,68% | 3,04% | 2,76% | 27,30% |
| Long-term Liabilities | 0,00% | 0,00% | 0,00% | 25,80% |
| Total Liabilities | 4,68% | 3,04% | 2,76% | 54,10% |
| NET WORTH | 99,32% | 101,04% | 102,76% | 44,90% |
| Percent of Sales | ||||
| Sales | 100,00% | 100,00% | 100,00% | 100,00% |
| Gross Margin | 94,18% | 93,85% | 93,52% | 0,00% |
| Selling, General & Administrative Expenses | 74,29% | 71,83% | 69,37% | 65,20% |
| Advertising Expenses | 2,06% | 1,11% | 0,28% | 1,40% |
| Profit Before Interest and Taxes | 26,47% | 29,30% | 32,13% | 2,86% |
| Main Ratios | ||||
| Current | 25,86 | 29,39 | 32,92 | 1,63 |
| Quick | 25,4 | 28,88 | 32,36 | 0,84 |
| Total Debt to Total Assets | 2,68% | 1,04% | 0,76% | 67,10% |
| Pre-tax Return on Net Worth | 66,83% | 71,26% | 75,69% | 4,40% |
| Pre-tax Return on Assets | 64,88% | 69,75% | 74,62% | 9,00% |
| Additional Ratios | Year 1 | Year 2 | Year 3 | |
| Net Profit Margin | 19,20% | 21,16% | 23,12% | N.A. |
| Return on Equity | 47,79% | 50,53% | 53,27% | N.A. |
| Activity Ratios | ||||
| Accounts Receivable Turnover | 4,56 | 4,56 | 4,56 | N.A. |
| Collection Days | 92 | 99 | 106 | N.A. |
| Inventory Turnover | 19,7 | 22,55 | 25,4 | N.A. |
| Accounts Payable Turnover | 14,17 | 14,67 | 15,17 | N.A. |
| Payment Days | 27 | 27 | 27 | N.A. |
| Total Asset Turnover | 1,84 | 1,55 | 1,26 | N.A. |
| Debt Ratios | ||||
| Debt to Net Worth | 0 | -0,02 | -0,04 | N.A. |
| Current Liab. to Liab. | 1 | 1 | 1 | N.A. |
| Liquidity Ratios | ||||
| Net Working Capital | $120 943 | $140 664 | $160 385 | N.A. |
| Interest Coverage | 0 | 0 | 0 | N.A. |
| Additional Ratios | ||||
| Assets to Sales | 0,45 | 0,48 | 0,51 | N.A. |
| Current Debt/Total Assets | 4% | 3% | 2% | N.A. |
| Acid Test | 23,66 | 27,01 | 30,36 | N.A. |
| Sales/Net Worth | 1,68 | 1,29 | 0,9 | N.A. |
| Dividend Payout | 0 | 0 | 0 | N.A. |
Download Diamond Cutting and Polishing Business Plan Sample in pdf
Professional writers OGS capital specialized also on theme such as production and supply chain business plan, candle making business plan, manufacturing business plan, electronics semiconductor business plan, coal mine business plan, business plan for a metal casting shop and many other business plans.