Table of Content

    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 business 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.

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    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 business. 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.

    Candle Making Business Plan - 3 Years Profit Forecast

    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.

    Candle Making Business Plan - Startup Cost

    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 business 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.

    Candle Making Business Plan - Market Segmentation

    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 business to reach its revenue targets.

    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 business 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 business, 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 business
    • 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 business
    • 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 business 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.

    Candle Making Business Plan - Unit Sales

    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 business, 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 business 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 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.

    Candle Making Business Plan - Brake-even Analysis

     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

    Candle Making Business Plan - Profit Monthly

    8.3.2 Yearly Profit

    Candle Making Business Plan - Profit Yearly

    8.3.3 Monthly Gross Margin

    Candle Making Business Plan - Gross Margin Monthly

    8.3.4 Yearly Gross Margin

    Candle Making Business Plan - Gross Margin Yearly

    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.

    Candle Making Business Plan - Projected Cash Flow

     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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