Table of Content

    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.

    1. 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.
    2. Repairing, Reshaping & Polishing: We’ll repair, recut and reshape every type of gemstone and diamond.
    3. Laser Inscription: We will etch numbers and letters on diamonds for certification or identification purposes.
    4. 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

    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

    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.

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