Do you want to start diamond cutting and polishing business?

Executive Summary

Company Summary

Products

Marketing Analysis of Marketing Agency

Strategy

Personnel plan

Financial Plan

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 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 professionals, 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.

Diamond Cutting and Polishing Business Plan 1

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.

Diamond Cutting and Polishing Business Plan 3

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.

Diamond Cutting and Polishing Business Plan 5

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 CustomersGrowthYear 1Year 2Year 3Year 4Year 5CAGR
Jewelry Stores & Residents48%22 33432 34443 66552 54466 43210,00%
Automotive, Mining & Military Companies32%12 86714 43315 99917 56519 13115,32%
Medical Equipment Manufacturers20%11 43313 34416 55318 74520 54513,43%
Total100%46 63460 12176 21788 854106 1089,54%

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

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6.4 Sales Yearly
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6.5 Sales Forecast

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Sales Forecast
Unit SalesYear 1Year 2Year 3
Diamond Cutting & Shaping1 887 0302 680 3202 588 240
Diamond Repairing & Polishing802 370815 430823 540
Diamond Laser Inscription539 3207702301 002 310
Diamond Buying & Selling265 450322 390393 320
TOTAL UNIT SALES3 494 1704 588 3704 807 410
Unit PricesYear 1Year 2Year 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 CostsYear 1Year 2Year 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 1Year 2Year 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 1Year 2Year 3
Plan Month123
Current Interest Rate10,00%11,00%12,00%
Long-term Interest Rate10,00%10,00%10,00%
Tax Rate26,42%27,76%28,12%
Other000

8.2 Brake-even Analysis

Diamond Cutting and Polishing Business Plan 13

8.3 Projected Profit and Loss

 Brake-Even Analysis
Monthly Units Break-even5530
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 1Year 2Year 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/Sales30,00%39,32%48,64%

8.3.1 Profit Monthly

Diamond Cutting and Polishing Business Plan 15

8.3.2 Profit Yearly

Diamond Cutting and Polishing Business Plan 17

8.3.3 Gross Margin Monthly
Diamond Cutting and Polishing Business Plan 19

8.3.4 Gross Margin Yearly

Diamond Cutting and Polishing Business Plan 21

8.4 Projected Cash Flow

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 Pro Forma Cash Flow
Cash ReceivedYear 1Year 2Year 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
ExpendituresYear 1Year 2Year 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
AssetsYear 1Year 2Year 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 CapitalYear 1Year 2Year 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 1Year 2Year 3INDUSTRY PROFILE
Sales Growth4,35%30,82%63,29%4,00%
Percent of Total Assets
Accounts Receivable5,61%4,71%3,81%9,70%
Inventory1,85%1,82%1,79%9,80%
Other Current Assets1,75%2,02%2,29%27,40%
Total Current Assets138,53%150,99%163,45%54,60%
Long-term Assets-9,47%-21,01%-32,55%58,40%
TOTAL ASSETS100,00%100,00%100,00%100,00%
Current Liabilities4,68%3,04%2,76%27,30%
Long-term Liabilities0,00%0,00%0,00%25,80%
Total Liabilities4,68%3,04%2,76%54,10%
NET WORTH99,32%101,04%102,76%44,90%
Percent of Sales
Sales100,00%100,00%100,00%100,00%
Gross Margin94,18%93,85%93,52%0,00%
Selling, General & Administrative Expenses74,29%71,83%69,37%65,20%
Advertising Expenses2,06%1,11%0,28%1,40%
Profit Before Interest and Taxes26,47%29,30%32,13%2,86%
Main Ratios
Current25,8629,3932,921,63
Quick25,428,8832,360,84
Total Debt to Total Assets2,68%1,04%0,76%67,10%
Pre-tax Return on Net Worth66,83%71,26%75,69%4,40%
Pre-tax Return on Assets64,88%69,75%74,62%9,00%
Additional RatiosYear 1Year 2Year 3
Net Profit Margin19,20%21,16%23,12%N.A.
Return on Equity47,79%50,53%53,27%N.A.
Activity Ratios
Accounts Receivable Turnover4,564,564,56N.A.
Collection Days9299106N.A.
Inventory Turnover19,722,5525,4N.A.
Accounts Payable Turnover14,1714,6715,17N.A.
Payment Days272727N.A.
Total Asset Turnover1,841,551,26N.A.
Debt Ratios
Debt to Net Worth0-0,02-0,04N.A.
Current Liab. to Liab.111N.A.
Liquidity Ratios
Net Working Capital$120 943$140 664$160 385N.A.
Interest Coverage000N.A.
Additional Ratios
Assets to Sales0,450,480,51N.A.
Current Debt/Total Assets4%3%2%N.A.
Acid Test23,6627,0130,36N.A.
Sales/Net Worth1,681,290,9N.A.
Dividend Payout000N.A.