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.

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 candle making business plan, 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 CustomersGrowthYEAR 1YEAR 2YEAR 3YEAR 4YEAR 5CAGR
Households30%15,00018,00021,00024,00027,0008.00%
Gift shops25%23,00026,00029,00032,00035,0007.00%
Hotel and restaurants23%10,00013,00016,00019,00022,00010.00%
Beauty and massage parlors22%12,00015,00018,00021,00024,00012.00%
Total100%80,00095,000              110,000125,000140,00012.00%

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 candle making business plans 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 SalesYear 1Year 2Year 3
Signature scented candles60,00070,00080,000
Candle holders50,00060,00070,000
Luminaries40,00050,00060,000
Melting oils30,00040,00050,000
TOTAL UNIT SALES180,000220,000260,000
Unit PricesYear 1Year 2Year 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 CostsYear 1Year 2Year 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 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 1Year 2Year 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 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 1Year 2Year 3
Plan Month123
Current Interest Rate12.00%14.00%16.00%
Long-term Interest Rate4.00%4.00%4.00%
Tax Rate10.00%12.00%14.00%
Other000

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-even6000
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 1Year 2Year 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/Sales30.00%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 ReceivedYear 1Year 2Year 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
ExpendituresYear 1Year 2Year 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   
AssetsYear 1Year 2Year 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 CapitalYear 1Year 2Year 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 1Year 2Year 3INDUSTRY PROFILE
Sales Growth6.00%30.00%50.00%4.00%
Percent of Total Assets
Accounts Receivable6.00%5.00%4.00%10.00%
Inventory3.00%2.80. %2.60%11.00%
Other Current Assets2.00%3.00%2.95%30.00%
Total Current Assets110.20%130.10%140.30%54.00%
Long-term Assets-4.00%-18.00%-25.00%40.50%
TOTAL ASSETS100.00%100.00%100.00%100.00%
Current Liabilities5.00%4.00%3.50%24.50%
Long-term Liabilities0.00%0.00%0.00%22.50%
Total Liabilities5.10%1.00%0.50%42.10%
NET WORTH90.20%80.00%100.00%36.00%
Percent of Sales
Sales100.00%100.00%100.00%100.00%
Gross Margin70.00%72.00%74.00%0.00%
Selling, General & Administrative Expenses60.00%75.00%62.00%65.00%
Advertising Expenses3.00%2.00%0.50%2.20%
Profit Before Interest and Taxes22.00%25.00%28.40%1.50%
Main Ratios
Current1014180.7
Quick252732.30,5
Total Debt to Total Assets3.05%2.00%1.65%55.00%
Pre-tax Return on Net Worth80.00%90.00%92.60%2.20%
Pre-tax Return on Assets64.30%58.00%66.00%7.00%
Additional RatiosYear 1Year 2Year 3
Net Profit Margin16.00%19.20%23.00%N.A.
Return on Equity50.00%54.00%58.00%N.A.
Activity Ratios
Accounts Receivable Turnover457N.A.
Collection Days9297110N.A.
Inventory Turnover151820N.A.
Accounts Payable Turnover11.114.417N.A.
Payment Days222222N.A.
Total Asset Turnover2.62.42.2N.A.
Debt Ratios
Debt to Net Worth0-0.04-0.02N.A.
Current Liab. to Liab.000N.A.
Liquidity Ratios
Net Working Capital$200,000$220,000$240,000N.A.
Interest Coverage000N.A.
Additional Ratios
Assets to Sales0.450.480.32N.A.
Current Debt/Total Assets5%3%2%N.A.
Acid Test242832N.A.
Sales/Net Worth2.320.7N.A.
Dividend Payout000N.A.