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Do you want to start candle making business?
Are you planning to start candle business? What many people do not know is candles still remain popular even today despite the fact they were primarily introduced for illumination purposes. Candles have been there for centuries and used in different civilizations and cultures. Even with the introduction of electricity, the role of candles has been redefined and they still continue to be an important item in any home or business. In the U.S. 7 out of 10 households use candles meaning the market is still excellent. Uniquely branded candles are the most popular home décor items which are on very high demand. Fortunately, candle making is not a capital intensive business and with a good business plan, you can be successful.
Executive Summary
2.1 The Business
The candle-making businesses will be registered under the name Wax Glow Candle and will be situated in Houston, Texas. The business will be owned by Susan Cook who is an experienced chandler. This business plan outlines how to start a candle business step by step to help anyone interested in venturing into candle making.
2.2 Management Team
Prior to starting candle business, Susan Cook worked as a professional Chandler and boasts of 20 years’ experience in the candle-making industry. She is extensively knowledgeable having worked for large and reputable organizations in the course of her career.
2.3 Customer Focus
Susan has worked in the candle and scent industry for long and therefore, has an in-depth understanding of customer patterns and segments. Given her long career in the business, she is aware of the changing customer trends and which market segments are in need of unique candle brands. She’s also aware that customers are primarily looking for uniquely branded homemade candles.
2.4 Business Target
Susan Cook knows where she needs to concentrate her efforts in order to maximize the revenue for her candle making businesses. Her intention is to proactively reach out to all segments in need of unique candle products. Her target is to be the best and most reputable candle making business in Houston as she knows she has knowledge her competitors might not be having.
Company Summary
3.1 Company Owners
Susan Cook is an experienced chandler with extensive skills and experience in candle making. Before thinking of starting a candle company, she worked for big brands across the United States such as Proctor & Gamble as well as SC Johnson & Sons among others. She took a major role in making key decisions for the various departments she worked for quickly rising to top managerial level because of her commitment and professional skills. After working for twenty years, she decided it was time to venture into entrepreneurship.
3.2 Aim of Starting the Business
Even though candles have been there for centuries, they are still relevant to date meaning there is still rising demand from both households as well as businesses. Having been in the business with a clear understanding of how candles continue immensely influence the modern society, Susan Cook began to plan how to start a candle company that would effectively address the needs of today’s society.
3.3 How the Business will be Started
Wax Glow Candle will begin operations after a comprehensive market research has been completed by the relevant experts. In order to be successful, Susan knows her knowledge and experience will be a great asset that will be instrumental in making strategic decisions that will spur business growth. She has also worked closely with a team of financial experts to formulate a detailed financial analysis for the business.
| Start-up Expenses | |
| Legal | $2,000 |
| Consultants | $3,000 |
| Insurance | $5,000 |
| Rent | $6,000 |
| Research and Development | $7,000 |
| Expensed Equipment | $10,000 |
| Signs | $2,000 |
| TOTAL START-UP EXPENSES | $35,000 |
| Start-up Assets | $0 |
| Cash Required | $50,000 |
| Start-up Inventory | $20,000 |
| Other Current Assets | $10,000 |
| Long-term Assets | $3,000 |
| TOTAL ASSETS | $8,000 |
| Total Requirements | $10,000 |
| START-UP FUNDING | $0 |
| START-UP FUNDING | $50,000 |
| Start-up Expenses to Fund | $20,000 |
| Start-up Assets to Fund | $10,000 |
| TOTAL FUNDING REQUIRED | $0 |
| Assets | $7,000 |
| Non-cash Assets from Start-up | $5,000 |
| Cash Requirements from Start-up | $0 |
| Additional Cash Raised | $20,000 |
| Cash Balance on Starting Date | $10,000 |
| TOTAL ASSETS | $0 |
| 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 | $0 |
| Planned Investment | $0 |
| Investor 1 | $12,000 |
| Investor 2 | $16,000 |
| Other | $0 |
| Additional Investment Requirement | $0 |
| TOTAL PLANNED INVESTMENT | $30,000 |
| Loss at Start-up (Start-up Expenses) | $25,000 |
| TOTAL CAPITAL | $30,000 |
| TOTAL CAPITAL AND LIABILITIES | $25,000 |
| Total Funding | $40,000 |
Services for Customers
Wax Glow Candle plans to offer a wide variety of products and service in order to increase its competitiveness and get a larger market share. Susan knows the secret to start a candle business and have it succeed is to embrace creativity and offer clients a unique range of products. Given her experience and studying market trends, Wax Glow Candle is in a perfect position to capitalize on its strengths to achieve its business goals and increase revenue. The following products will be offered by Wax Glow Candle.
- Signature Scented candles with various fragrances such as strawberry, vanilla, cinnamon and mulberry among others
- Candle holders which come in a beautiful and vast array of types and designs
- Luminaries that are available in different sizes and colors
- Various types of Melting oils
Marketing Analysis of Candle Making Business
Despite candles being around for numerous centuries, they still play a vital role in today’s society. Aside from illumination, the era of scented candles and fragrances has ushered in a new perspective and the market it constantly looking for unique and creatively made candles for use in homes, businesses and special occasions. In this business plan for candle making, Wax Glow Candle has done an extensive market analysis and identified untapped opportunities to harness in order to grow business revenue.
5.1 Market Segment
For Wax Glow Candle to realize its dreams, the candle making businesses has identified the appropriate customer markets to advertise its products and services. Any candle making business plan sample should clearly outline who potential customers are and how the business intends to establish connections.
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5.1.1. Households
Houston is a large city with over a million households which is a key market for Wax Glow Candle. The first customers for candles are households and residential establishments who use them for various purposes. Even though candles in the home are rarely used for illumination, many homes still buy candles for various purposes such as decoration. Scented candles have become a leading product for households and Wax Glow Candle has an opportunity to put in place creative marketing strategies to reach a wide population segment. When starting your own candle business, the domestic market is a key segment that cannot be ignored considering most of the products from Wax Glow Candle are tailored for domestic use.
5.1.2 Gift Shops
Nowadays, many people consider unique candles as an awesome gift item which can be presented on various occasions. In most gift shops, you will find various types of unique candles and associated accessories which are sold primarily as gift items. Houston has a large number of gift shops and it’s important for Wax Glow Candle to find ways of forming partnerships with local gift shops with an aim of stocking their products in gift shops. Because they have direct access customers, gift shops can be of great benefit and help the candle making businesses to reach its revenue targets.
Business Plan for Investors
5.1.3 Hotels and Restaurants
The hospitality industry is a key use of candles which are placed in various sections of hotels and restaurants. Exclusive restaurants and hotels love using candles on their dining tables and bathrooms to create a relaxing and elegant environment. Hospitality based businesses are always in need of good quality and unique candles to be utilized for various purposes.
5.1.4 Beauty and Massage Parlors
Candles are a common feature in massage and beauty parlors who invest heavily in various kinds of candles in their establishments. Houston and its surrounding has many massage parlors which are great customer prospects for Wax Glow Candle. With the right strategies put in place, candle making businesses profitable ventures include approaching business that require different types of candle related products.
| Market Analysis | |||||||||
| Potential Customers | Growth | YEAR 1 | YEAR 2 | YEAR 3 | YEAR 4 | YEAR 5 | CAGR | ||
| Households | 30% | 15,000 | 18,000 | 21,000 | 24,000 | 27,000 | 8.00% | ||
| Gift shops | 25% | 23,000 | 26,000 | 29,000 | 32,000 | 35,000 | 7.00% | ||
| Hotel and restaurants | 23% | 10,000 | 13,000 | 16,000 | 19,000 | 22,000 | 10.00% | ||
| Beauty and massage parlors | 22% | 12,000 | 15,000 | 18,000 | 21,000 | 24,000 | 12.00% | ||
| Total | 100% | 80,000 | 95,000 110,000 | 125,000 | 140,000 | 12.00% | |||
5.2 Business Target
Wax Glow Candle plans to establish itself in Houston which is a major American city with plenty of opportunities that can be explored. Wax Glow Candle hopes to realize an annual sales growth of between 25%-30% in the first three years of operation.
5.3 Product Pricing
How to start a candle making business requires an extensive market research in order to find out pricing structures of competitors. This is done with an aim of coming up with a creative pricing strategy that will attract customers.
Strategy
Wax Glow Candle intends to come up with an effective marketing strategy to enable the candle making business reach out to all its intended customer targets. If you want to start a candle making businesses, there must be a good plan in place that will help you reach out to as many prospective clients as possible.
6.1 Competitive Analysis
Wax Glow Candle has carried out an extensive market research in order to identify the most effective marketing strategies that will see the business expand its market share, compete effectively and realize its revenue targets.
6.2 Sales Strategy
For Wax Glow Candle to effectively reach out to the market, this business plan for candle making to implement the strategies below to advertise its range of products.
- Send introductory letters to businesses and stakeholders to create awareness about the candle making businesses
- Organize an opening party and invite guests from target markets to advertise the business. During the opening, offer visitors free samples of products to allow them have a feel of the quality
- Attend exhibitions and trade shows which are awesome platforms for advertising the candle making businesses
- Market the business on social media platforms such as Facebook, Twitter and Instagram. Advertise the business online using Google Ads.
- Advertise Wax Glow Candle on local directory listings
- Create a simple search engine optimized website to boost the online presence of the candle making businesses for purposes of gaining higher online rankings
- Advertise Wax Glow Candle on local broadcast and print channels such as newspapers, TV and radio
6.3 Sales Forecast
How to start a candle business should entail a comprehensive sales forecast that will spell out the roadmap for Wax Glow Candle.
| Sales Forecast | |||
| Unit Sales | Year 1 | Year 2 | Year 3 |
| Signature scented candles | 60,000 | 70,000 | 80,000 |
| Candle holders | 50,000 | 60,000 | 70,000 |
| Luminaries | 40,000 | 50,000 | 60,000 |
| Melting oils | 30,000 | 40,000 | 50,000 |
| TOTAL UNIT SALES | 180,000 | 220,000 | 260,000 |
| Unit Prices | Year 1 | Year 2 | Year 3 |
| Signature scented candles | $50.00 | $52.00 | $60.00 |
| Candle holders | $40.00 | $42.00 | $44.00 |
| Luminaries | $30.00 | $32.00 | $34.00 |
| Melting oils | $20.00 | $22.00 | $24.00 |
| Sales | |||
| Signature scented candles | $50,000 | $52,000 | $54,000 |
| Candle holders | $54,000 | $56,000 | $58,000 |
| Luminaries | $57,000 | $59,000 | $61,000 |
| Melting oils | $59,000 | $61,000 | $63,000 |
| TOTAL SALES | |||
| Direct Unit Costs | Year 1 | Year 2 | Year 3 |
| Signature scented candles | $1.20 | $2.20 | $3.20 |
| Candle holders | $1.00 | $2.00 | $3.00 |
| Luminaries | $0.60 | $1.60 | $2.00 |
| Melting oils | $3.00 | $4.00 | $5.00 |
| Direct Cost of Sales | |||
| Signature scented candles | $100,000 | $120,000 | $140,000 |
| Candle holders | $50,000 | $80,000 | $110,000 |
| Luminaries | $25,000 | $35,000 | $50,000 |
| Melting oils | $40,000 | $50,000 | $65,000 |
| Subtotal Direct Cost of Sales | $100,000 | $120,000 | $140,000 |
Personnel Plan
If you’re planning on starting a candle making businesses, the first thing to think about is to find a team of qualified staff who will assist in running the business. Susan Cook intends to hire a competent team of staff to work in various departments. A personnel plan has been formulated to come up with the best strategy for business of hiring qualified and experienced staff.
7.1 Personnel Plan
To help the candle making business realize business success, the following team of staff will be employed to work in Wax Glow Candle. Susan Cook who is the owner of the candle making businesses will be the Chief Executive Officer in charge of the entire business. She will be assisted by the following team of staff.
- 1 Assistant Manager
- 2 Sales and Marketing Executives
- 1 Customer Service Executive
- 2 Chandlers
- 1 Accountant
Successful applicants will undergo comprehensive training a few weeks before the business officially opens its doors to the public.
7.2 Average Salaries
When planning how to start your own candle business, Wax Glow Candle plans to compensate its members of staff the following salaries within the first three years of operation.
| Personnel Plan | |||
| Year 1 | Year 2 | Year 3 | |
| Assistant Manager | $30,000 | $32,000 | $34,000 |
| 2 Sales and marketing executives | $40,000 | $42,000 | $44,000 |
| 1 customer service | $25,000 | $27,000 | $29,000 |
| 1 Account | $30,000 | $32,000 | $34,000 |
| 2 chandlers | $50,000 | $52,000 | $54,000 |
| Total Salaries | $175,000 | $185,000 | $195,000 |
Financial Plan
Wax Glow Candle has come up with a detailed financial plan which is critical for starting a candle business. To ensure candle making business profit is a reality, it is critical to analyze and document various financial parameters before opening a business. Susan Cook intends to raise money for her business using her personal savings. Additionally, she plans to bring on board 2 investors and a bank loan for business plan to finance the budget deficit. candle making businesses profit margin will be determined depending on how the business will excel.
Below is a comprehensive financial analysis for Wax Glow Candle.
8.1 Important Assumptions
The financial forecast for Wax Glow Candle is based on the assumptions below.
| General Assumptions | |||
| Year 1 | Year 2 | Year 3 | |
| Plan Month | 1 | 2 | 3 |
| Current Interest Rate | 12.00% | 14.00% | 16.00% |
| Long-term Interest Rate | 4.00% | 4.00% | 4.00% |
| Tax Rate | 10.00% | 12.00% | 14.00% |
| Other | 0 | 0 | 0 |
8.2 Brake-even Analysis
Wax Glow Candle brake-even analysis is shown in the graph below.
| Brake-Even Analysis | |
| Monthly Units Break-even | 6000 |
| Monthly Revenue Break-even | $120,000 |
| Assumptions: | |
| Average Per-Unit Revenue | $300.10 |
| Average Per-Unit Variable Cost | $0.60 |
| Estimated Monthly Fixed Cost | $100,000 |
8.3 Projected Profit and Loss
Profit and loss information for Wax Glow Candle as calculated on a monthly and annual basis is indicated below.
| Pro Forma Profit And Loss | |||
| Year 1 | Year 2 | Year 3 | |
| Sales | $120,000 | $130,000 | $140,000 |
| Direct Cost of Sales | $60,000 | $80,000 | $100,000 |
| Other | $0 | $0 | $0 |
| TOTAL COST OF SALES | $60,000 | $80,000 | $100,000 |
| Gross Margin | $30,000 | $34,000 | $36,000 |
| Gross Margin % | 70.00% | 74.00% | 80.00% |
| Expenses | |||
| Payroll | $265,000 | $350,000 | $425,000 |
| Sales and Marketing and Other Expenses | $4,000 | $6,000 | $8,000 |
| Depreciation | $2,000 | $3,000 | $4,000 |
| Leased Equipment | $0 | $0 | $0 |
| Utilities | $5,000 | $7,000 | $9,000 |
| Insurance | $1,200 | $1,400 | $1,600 |
| Rent | $10,000 | $12,000 | $14,000 |
| Payroll Taxes | $30,000 | $35,000 | $42,000 |
| Other | $0 | $0 | $0 |
| Total Operating Expenses | $220,000 | $250,000 | $300,000 |
| Profit Before Interest and Taxes | $50,000 | $90,000 | $100,000 |
| EBITDA | $20,000 | $30,000 | $50,000 |
| Interest Expense | $0 | $0 | $0 |
| Taxes Incurred | $20,000 | $23,000 | $26,000 |
| Net Profit | $100,000 | $115,000 | $130,000 |
| Net Profit/Sales | 30.00% | 40.00% | 50.00% |
8.3.1 Monthly Profit
8.3.2 Yearly Profit
8.3.3 Monthly Gross Margin
8.3.4 Yearly Gross Margin
8.4 Projected Cash Flow
Below is a summary of Wax Glow Candle Pro forma cash flow, subtotal cash received, subtotal cash spent, subtotal cash from operations and subtotal cash spent on operations.
| Pro Forma Cash Flow | |||
| Cash Received | Year 1 | Year 2 | Year 3 |
| Cash from Operations | |||
| Cash Sales | $50,000 | $55,000 | $60,000 |
| Cash from Receivables | $8,000 | $10,000 | $12,000 |
| SUBTOTAL CASH FROM OPERATIONS | $58,000 | $65,000 | $72,000 |
| 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 | $58,000 | $65,000 | $72,000 |
| Expenditures | Year 1 | Year 2 | Year 3 |
| Expenditures from Operations | |||
| Cash Spending | $20,000 | $22,000 | $24,000 |
| Bill Payments | $15,000 | $20,000 | $25,000 |
| SUBTOTAL SPENT ON OPERATIONS | $35,000 | $42,000 | $49,000 |
| 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 | $35,000 | $45,000 | $55,000 |
| Net Cash Flow | $12,000 | $15,000 | $18,000 |
| Cash Balance | $23,000 | $28,000 | $33,000 |
8.5 Projected Balance Sheet
Below is a Projected Balance Sheet for Wax Glow Candle that shows assets, liabilities, capital, long term assets and current liabilities.
| Pro Forma Balance Sheet | |||
| Assets | Year 1 | Year 2 | Year 3 |
| Current Assets | |||
| Cash | $70,000 | $72,000 | $74,000 |
| Accounts Receivable | $10,000 | $12,000 | $15,000 |
| Inventory | $3,000 | $4,500 | $6,000 |
| Other Current Assets | $3,000 | $3,000 | $3,000 |
| TOTAL CURRENT ASSETS | $86,000 | $91,000 | $98,000 |
| Long-term Assets | |||
| Long-term Assets | $10,000 | $12,000 | $14,000 |
| Accumulated Depreciation | $13,000 | $15,000 | $17,000 |
| TOTAL LONG-TERM ASSETS | $2,000 | $1,000 | $500 |
| TOTAL ASSETS | $80,000 | $83,000 | $86,000 |
| Liabilities and Capital | Year 1 | Year 2 | Year 3 |
| Current Liabilities | |||
| Accounts Payable | $15,000 | $18,000 | $21,000 |
| Current Borrowing | $0 | $0 | $0 |
| Other Current Liabilities | $0 | $0 | $0 |
| SUBTOTAL CURRENT LIABILITIES | $15,000 | $18,000 | $21,000 |
| Long-term Liabilities | $0 | $0 | $0 |
| TOTAL LIABILITIES | $12,000 | $14,000 | $17,000 |
| Paid-in Capital | $25,000 | $25,000 | $25,000 |
| Retained Earnings | $25,000 | $50,000 | $75,000 |
| Earnings | $100,000 | $120,000 | $140,000 |
| TOTAL CAPITAL | $200,000 | $230,000 | $260,000 |
| TOTAL LIABILITIES AND CAPITAL | $180,000 | $210,000 | $240,000 |
| Net Worth | $220,000 | $250,000 | $280,000 |
8.6 Business Ratios
The following is the Ratio Analysis, Business Ratios and Business Net Worth for Wax Glow Candle.
| Ratio Analysis | ||||
| Year 1 | Year 2 | Year 3 | INDUSTRY PROFILE | |
| Sales Growth | 6.00% | 30.00% | 50.00% | 4.00% |
| Percent of Total Assets | ||||
| Accounts Receivable | 6.00% | 5.00% | 4.00% | 10.00% |
| Inventory | 3.00% | 2.80. % | 2.60% | 11.00% |
| Other Current Assets | 2.00% | 3.00% | 2.95% | 30.00% |
| Total Current Assets | 110.20% | 130.10% | 140.30% | 54.00% |
| Long-term Assets | -4.00% | -18.00% | -25.00% | 40.50% |
| TOTAL ASSETS | 100.00% | 100.00% | 100.00% | 100.00% |
| Current Liabilities | 5.00% | 4.00% | 3.50% | 24.50% |
| Long-term Liabilities | 0.00% | 0.00% | 0.00% | 22.50% |
| Total Liabilities | 5.10% | 1.00% | 0.50% | 42.10% |
| NET WORTH | 90.20% | 80.00% | 100.00% | 36.00% |
| Percent of Sales | ||||
| Sales | 100.00% | 100.00% | 100.00% | 100.00% |
| Gross Margin | 70.00% | 72.00% | 74.00% | 0.00% |
| Selling, General & Administrative Expenses | 60.00% | 75.00% | 62.00% | 65.00% |
| Advertising Expenses | 3.00% | 2.00% | 0.50% | 2.20% |
| Profit Before Interest and Taxes | 22.00% | 25.00% | 28.40% | 1.50% |
| Main Ratios | ||||
| Current | 10 | 14 | 18 | 0.7 |
| Quick | 25 | 27 | 32.3 | 0,5 |
| Total Debt to Total Assets | 3.05% | 2.00% | 1.65% | 55.00% |
| Pre-tax Return on Net Worth | 80.00% | 90.00% | 92.60% | 2.20% |
| Pre-tax Return on Assets | 64.30% | 58.00% | 66.00% | 7.00% |
| Additional Ratios | Year 1 | Year 2 | Year 3 | |
| Net Profit Margin | 16.00% | 19.20% | 23.00% | N.A. |
| Return on Equity | 50.00% | 54.00% | 58.00% | N.A. |
| Activity Ratios | ||||
| Accounts Receivable Turnover | 4 | 5 | 7 | N.A. |
| Collection Days | 92 | 97 | 110 | N.A. |
| Inventory Turnover | 15 | 18 | 20 | N.A. |
| Accounts Payable Turnover | 11.1 | 14.4 | 17 | N.A. |
| Payment Days | 22 | 22 | 22 | N.A. |
| Total Asset Turnover | 2.6 | 2.4 | 2.2 | N.A. |
| Debt Ratios | ||||
| Debt to Net Worth | 0 | -0.04 | -0.02 | N.A. |
| Current Liab. to Liab. | 0 | 0 | 0 | N.A. |
| Liquidity Ratios | ||||
| Net Working Capital | $200,000 | $220,000 | $240,000 | N.A. |
| Interest Coverage | 0 | 0 | 0 | N.A. |
| Additional Ratios | ||||
| Assets to Sales | 0.45 | 0.48 | 0.32 | N.A. |
| Current Debt/Total Assets | 5% | 3% | 2% | N.A. |
| Acid Test | 24 | 28 | 32 | N.A. |
| Sales/Net Worth | 2.3 | 2 | 0.7 | N.A. |
| Dividend Payout | 0 | 0 | 0 | N.A. |
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