The metal casting industry is concentrated on making molten metal parts that meet end-user specifications. The industry includes die casters and foundries, but most startups are die casting businesses that fill orders for customers who need parts for equipment, autos and trucks, machinery and so on. They also add other services such as machining to ensure long-term success.

Investors reading the metal casting business plan shop need to have a clear understanding of the proposed metal casting business. There is a wide range of casting categories so the business description and operating plan need to ensure it stays focused on the specific services and products the business will offer the market. For example, will the business manage aluminum, brass, zinc, or brass castings? The answer drives everything from the type of equipment needed to defining the ideal marketing plan.

Metal casting business plan for starting your own firm

Do you want to start a steel casting factory? A steel casting business is based on forming different metal shapes and tools by pouring molten metal into crucibles and then cooling it.

A metal casting business has enormous opportunities and never-ending scope as it finds applications in nearly every engineering product. Whether it is a construction site or a railroad, steel pieces of different shapes are required to fit-in the structure.

Due to the immense applications of metal casting, it is evident that you cannot be at a loss if you enter this business. But, still, you need to plan everything about your startup before taking actual measures.

To guide you about how to create a perfect steel sheet manufacturing business plan, we are providing a sample plan for a metal casting startup, ‘Daniel Steelworks’.

Executive Summary

2.1 The Business

Daniel Steelworks will be a registered and licensed steel casting business based in San Diego. The foundry business metal casting work will produce steel products. Our main steel casting products will include steel plates, steel pipes, pump casings, gears, railroad truck frame parts, and more.

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2.2 Management of Metal Casting Business

Metal casting is a delicate job. If you are starting a business for sale metal casting you should ensure that casting is performed under efficient management. And the work is done by people with adequate skill and expertise. It is because casting defects can cost you a lot.

To make sure all aspects of the business are properly managed, Daniel decided to hire a co-manager. Besides, he also made a contract with a steel supplier to ensure that the business operations run smoothly.

2.3 Customers of Metal Casting Business

Steel casting products have applications in various domains. Therefore, the customers of Daniel Steelworks are expected to belong to different areas of life.

Our major customers will be automobile industries, mechanical equipment manufacturing companies, infrastructure, buildings, and pipeline construction companies.

2.4 Business Target

We aim to become one of the most renowned casting businesses in our city. Moreover, we also aim at increasing our production rate in the coming years. Our financial targets to be achieved over the next three years are demonstrated in this table.

Business Plan for a Metal Casting Shop

Company Summary

3.1 Company Owner

Daniel Firth will be the owner of the company. Firth is an MBA. He joined an engineering firm as a junior manager. But after working for three years, he eventually decided to quit the job and start a business.

3.2 Why the Steel Casting Business is being started

Firth has always been associated with the business world through his family. Working in a firm, he realized that he would never be able to generate huge profits. So, he decided to change his career path and start his own business.

Bank/SBA Business Plan
Document for raising debt funding from financial institutions to meet the expectations of the banks, SBA, and government agencies.

3.3 How the Steel Casting Business will be started

Step1: Creating a business plan for steel manufacturing company

Before starting a steel casting company, it is essential to identify your services and make a business plan according to them. Firth wanted to produce various types of steel products so he created a generalized steel casting business plan. If you are looking for a business plan for steel pipes manufacturing company or a steel plate manufacturing business plan, you can have help from here.

Step2: Define the brand

After making the business plan steel wool manufacturing company, the next step is to acquire a physical space for establishing a foundry. Firth decided to rent a large space in San Diego to turn it into a foundry. Meanwhile, he decided to define his services, procure the required equipment, and hire the staff.

Step3: Create an effective web presence

In the present age, it has become a necessity that your business shows up in the top results whenever someone searches for similar services on Google. To develop a strong web and social media presence, Firth decided to hire the services of an expert web developer.

Step4: Reach Your Customers, Promote & Market

Lastly, you have to prepare an influencing advertisement strategy to capture the attention of your target customers.

Firth estimated all the expenses that were required for a successful startup. The startup requirements identified by him are given below:

Business Plan for a Metal Casting Shop

Start-up Expenses  
Legal $251,000
Consultants $0
Insurance $36,000
Rent $33,000
Research and Development $28,500
Expensed Equipment $52,000
Signs $4,000
TOTAL START-UP EXPENSES $404,500
Start-up Assets $318,000
Cash Required $354,000
Start-up Inventory $56,000
Other Current Assets $210,200
Long-term Assets $240,000
TOTAL ASSETS $1,178,200
Total Requirements $1,582,700
START-UP FUNDING
Start-up Expenses to Fund $404,500
Start-up Assets to Fund $1,178,200
TOTAL FUNDING REQUIRED $1,582,700
Assets
Non-cash Assets from Start-up $1,552,200
Cash Requirements from Start-up $360,000
Additional Cash Raised $48,000
Cash Balance on Starting Date $32,000
TOTAL ASSETS $1,992,200
Liabilities and Capital
Liabilities $28,000
Current Borrowing $0
Long-term Liabilities $0
Accounts Payable (Outstanding Bills) $46,000
Other Current Liabilities (interest-free) $0
TOTAL LIABILITIES $74,000
Capital
Planned Investment $1,582,700
Investor 1 $0
Investor 2 $0
Other $0
Additional Investment Requirement $0
TOTAL PLANNED INVESTMENT $1,582,700
Loss at Start-up (Start-up Expenses) $335,500
TOTAL CAPITAL $1,918,200
TOTAL CAPITAL AND LIABILITIES $1,992,200
Total Funding $1,582,700

Products of Metal Casting Shop

Metal casting business offers a wide range of opportunities. Therefore, you must decide your services before setting up a steel casting factory. So that you can acquire the right equipment and the right staff to run your business.

Firth decided to employ sand casting, die casting, and investment casting techniques to perform steel casting. The products Daniel Steelworks will produce are given below:

  • Steel Parts for Bridges & Foundations: We will manufacture steel plates that are used in construction phases to strengthen the foundation. Moreover, we will also manufacture railroad truck frame parts.
  • Mechanical Machines Parts: We will prepare several steel parts that are used in the automobile industry and in making turbines. Our products in this category will include steel pump casings, steel joints, valves, steel fittings, engine cylinder blocks, and hydroelectric turbine wheels.
  • Steel Pipes: We will manufacture plumbing steel pipes. Pipelines made of steel are lightweight and are installed underground to transport water and gas from cities to cities.
  • Steel Wool: We will also manufacture steel wool that is a combination of fine strands of steel. Steel wool has vast applications, the most important of which lies in its ability to finish hard metallic workpieces.

Marketing Analysis of Metal Casting Business

Marketing analysis is one of the most important factors in deciding the success or failure of your business for sale metal casting. In this part, you analyze your target market to learn the ways that can help you thrive amid the competition.

Note

An accurate market analysis informs you about the latest market trends along with some future predictions. Along with it, it also provides you a detailed insight into your competitors’ business strategies – knowing which, you can set your pricing and advertisement approaches accordingly. Simply put, market research is a must before starting any business.

In this business plan, we are listing general market trends of the steel casting business. Moreover, we are also providing market segmentation done by Daniel Steelworks.

5.1 Market Trends

The steel casting business is projected to keep making huge profits due to its growing demand in the automobile industry. According to Reports and Data, the global metal casting industry is expected to reach $193 billion by 2027 due to the growing demand for lightweight vehicles. According to IBISWorld, the market size of ferrous metal foundry products is reported to be $16.7 billion in 2020 in the United States alone.

It can be seen that many industries rely on steel casting companies to make their products. Therefore, you can’t be at a loss if you plan your metal casting business for sale properly.

5.2 Marketing Segmentation

Before starting foundry business metal casting work you should identify your customers. Knowing your customers, their interests, and requirements can help you in coming up to their expectations.

In this business plan for steel manufacturing company we are enlisting the marketing segmentation done by Daniel Steelworks.

The detailed marketing segmentation of our target audience is as follows:

Business Plan for a Metal Casting Shop

5.2.1 Construction Companies & Government Municipalities

Our biggest purchaser will be the construction companies. They will be needing our steel casting products for buildings, bridges, and railroad manufacturing. We expect them to purchase our steel plates, steel joints, and many other products too.

Besides, we also expect to be contacted by the local government for laying pipelines for water and gas.

5.2.2 Automobile Industries & Other Mechanical Setups

Our second group of target customers will comprise automobile manufactures and small/ large mechanical manufacturing factories. They will utilize our services of manufacturing pump casings, engine cylinder blocks, steel wool, steel fittings, joints, and valves, etc.

5.2.3 Hydroelectric Power Plant Manufacturers

The third group of target customers will include hydroelectric power plant manufacturers. They are expected to purchase a variety of steel products from us specifically our hydroelectric turbine wheels.

Market Analysis
Potential Customers Growth Year 1 Year 2 Year 3 Year 4 Year 5 CAGR
Construction Companies & Government 43% 45,000 46,000 48,000 52,000 55,000 9.00%
Automobile Industries/ Mechanical Setups 39% 40,000 42,000 44,000 47,000 50,000 10.00%
Hydroelectric Power Plant Manufacturers 18% 19,000 22,000 25,000 28,000 31,000 10.00%
Total 100% 104,000 110,000 117,000 127,000 136,000 10%

5.3 Business Target

Before launching the catering business, you should clearly define the targets of your startup to be met in a specified time. Setting business targets gives you a specified direction to steer your resources and talent.

Our business targets are:

  • To maintain a customer return rate of 70% throughout our service years
  • To earn a profit margin of $33k per month by the end of the first three years
  • To maintain a CSAT score of above 80%

5.4 Product Pricing

Our prices are almost in the same ranges as that of our competitors. What differs us from them is our customer-oriented attitude and our highest quality service.

However, to get introduced to our target customers, we’ll offer several discounts in our initial phases.

Marketing Strategy of Steel Casting Business

Sales strategy is yet another important component of a business plan for steel manufacturing company. It includes a competitive analysis to know your position in the market. Moreover, an advertisement strategy to reach out the target customers should also be included in the business plan for steel pipes manufacturing company.

6.1 Competitive Analysis

Our biggest competitive advantage lies in the quality and swiftness of our services. We have a large space and a large team to fulfill the manufacturing needs of our customers.

Second, our team is highly skilled in the whole casting process. Due to their experience and talent, our casting products will not be having any minor/ major issues.

Third, we will offer several discounts in our initial phases. This discounting strategy will enable us to reach a wider audience.

6.2 Sales Strategy

  • We will advertise our services and products through our website, social media, Google Local ads, local magazine and newspaper
  • We will offer a 50% discount on our steel plates for the first two months of the launch to get recognized by construction companies
  • We will offer a 35% discount on all of our services for the first three months of the launch

6.3 Sales Monthly

Business Plan for a Metal Casting Shop

6.4 Sales Yearly

Business Plan for a Metal Casting Shop

6.5 Sales Forecast

Business Plan for a Metal Casting Shop

Sales Forecast      
Unit Sales Year 1 Year 2 Year 3
Steel Parts for Bridges/ Foundations 40,000 42,400 44,944
Mechanical Machines Parts 42,000 44,520 47,191
Steel Pipes 21,000 22,260 23,596
Steel Wool 19,000 20,140 21,348
TOTAL UNIT SALES 122,000 129,320 137,079
Unit Prices Year 1 Year 2 Year 3
Steel Parts for Bridges/ Foundations $55.00 $63.80 $74.01
Mechanical Machines Parts $57.00 $66.12 $76.70
Steel Pipes $40.00 $46.40 $53.82
Steel Wool $35.00 $40.60 $47.10
Sales
Steel Parts for Bridges/ Foundations $2,200,000.00 $2,705,120.00 $3,326,215.55
Mechanical Machines Parts $2,394,000.00 $2,943,662.40 $3,619,527.29
Steel Pipes $840,000.00 $1,032,864.00 $1,270,009.57
Steel Wool $665,000.00 $817,684.00 $1,005,424.25
TOTAL SALES $6,099,000.00 $7,499,330.40 $9,221,176.66
Direct Unit Costs Year 1 Year 2 Year 3
Steel Parts for Bridges/ Foundations $53.00 $61.00 $69.00
Mechanical Machines Parts $55.00 $64.00 $71.00
Steel Pipes $37.00 $43.00 $49.00
Steel Wool $33.00 $37.00 $44.00
Direct Cost of Sales
Steel Parts for Bridges/ Foundations $2,120,000.00 $2,586,400.00 $3,101,136.00
Mechanical Machines Parts $2,310,000.00 $2,849,280.00 $3,350,575.20
Steel Pipes $777,000.00 $957,180.00 $1,156,184.40
Steel Wool $627,000.00 $745,180.00 $939,329.60
Subtotal Direct Cost of Sales $5,834,000.00 $7,138,040.00 $8,547,225.20

Personnel plan

The staff hired by Daniel Firth to run his business is listed below in this steel sheet manufacturing business plan. To give you a greater idea of who will be responsible for what, we have also listed the brief job responsibilities of employees.

7.1 Company Staff

Firth will manage the business himself. For his production center he will hire the following people:

  • 1 Co-Manager to help manage the operations
  • 1 Accountant to maintain financial records
  • 1 Front Desk Officer to receive customers and manufacturing orders
  • 8 Foundry Workers to cast and finish metals
  • 2 Technicians to maintain machines
  • 2 General Assistants for routine tasks
  • 3 Sales Executives to deliver products to retailers and discover new ventures
  • 1 Web Developer to manage the company’s website and social sites
  • 2 Drivers to transport raw material and manufactured products

7.2 Average Salary of Employees

 Personnel Plan      
Year 1 Year 2 Year 3
Co-Manager $13,000 $14,300 $15,730
Accountant $9,000 $9,900 $10,890
Front Desk Officer $7,500 $8,250 $9,075
Foundry Workers $50,000 $55,000 $60,500
Technicians $14,000 $15,400 $16,940
General Assistants $13,000 $14,300 $15,730
Sales Executives $19,000 $20,900 $22,990
Web Developer $8,000 $8,800 $9,680
Drivers $13,000 $14,300 $15,730
Total Salaries $146,500 $161,150 $177,265

Financial Plan

Metal casting is a delicate and expensive process. The process requires detailed maintenance of machines from time-to-time. Along with that, it also requires frequent replacements of plaster and rejuvenation of casting sand. In short, the costs of manufacturing are not fixed and you need to carefully create a financial plan to avoid problems in the future.

In this business plan steel wool manufacturing company we are providing the financial plan developed for Daniel Steelworks.

From here you can see the projected profit and loss calculation, brake-even analysis, gross margin, and projected cash flow of Daniel Steelworks. If you are not starting on a very large scale, your finances should also lie within the same range as defined in this financial plan.

8.1 Important Assumptions

 General Assumptions      
Year 1 Year 2 Year 3
Plan Month 1 2 3
Current Interest Rate 8.07% 8.11% 8.18%
Long-term Interest Rate 8.20% 8.26% 8.31%
Tax Rate 24.02% 24.87% 25.60%
Other 0 0 0

8.2 Brake-even Analysis

Business Plan for a Metal Casting Shop

 Brake-Even Analysis  
Monthly Units Break-even 5410
Monthly Revenue Break-even $136,800
Assumptions:
Average Per-Unit Revenue $233.00
Average Per-Unit Variable Cost $0.69
Estimated Monthly Fixed Cost $163,000

8.3 Projected Profit and Loss

 Pro Forma Profit And Loss      
Year 1 Year 2 Year 3
Sales $6,099,000 $7,499,330 $9,221,177
Direct Cost of Sales $5,834,000 $7,138,040 $8,547,225
Other $0 $0 $0
TOTAL COST OF SALES $5,834,000 $7,138,040 $8,547,225
Gross Margin $265,000 $361,290 $673,951
Gross Margin % 4.34% 4.82% 7.31%
Expenses
Payroll $0 $0 $0
Sales and Marketing and Other Expenses $127,300 $131,000 $134,000
Depreciation $2,200 $2,300 $2,390
Leased Equipment $0 $0 $0
Utilities $2,900 $3,100 $3,200
Insurance $2,000 $2,100 $2,200
Rent $3,500 $3,700 $3,900
Payroll Taxes $37,000 $39,000 $41,000
Other $0 $0 $0
Total Operating Expenses $174,900 $181,200 $186,690
Profit Before Interest and Taxes $90,100 $180,090 $487,261
EBITDA $90,100 $180,090 $487,261
Interest Expense $0 $0 $0
Taxes Incurred $18,020 $36,018 $97,452
Net Profit $72,080 $144,072 $389,809
Net Profit/Sales 1.18% 1.92% 4.23%

8.3.1 Profit Monthly

Business Plan for a Metal Casting Shop

8.3.2 Profit Yearly

Business Plan for a Metal Casting Shop

8.3.3 Gross Margin Monthly

Business Plan for a Metal Casting Shop

8.3.4 Gross Margin Yearly

Business Plan for a Metal Casting Shop

8.4 Projected Cash Flow

Business Plan for a Metal Casting Shop

 Pro Forma Cash Flow      
Cash Received Year 1 Year 2 Year 3
Cash from Operations
Cash Sales $55,000 $59,400 $64,152
Cash from Receivables $17,300 $18,684 $20,179
SUBTOTAL CASH FROM OPERATIONS $72,000 $78,480 $84,758
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 $73,000 $78,000 $85,000
Expenditures Year 1 Year 2 Year 3
Expenditures from Operations
Cash Spending $33,000 $37,000 $42,000
Bill Payments $20,000 $21,000 $23,000
SUBTOTAL SPENT ON OPERATIONS $53,000 $58,000 $65,000
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 $55,000 $59,400 $64,152
Net Cash Flow $14,650 $15,000 $16,300
Cash Balance $25,000 $25,700 $27,000

8.5 Projected Balance Sheet

 Pro Forma Balance Sheet      
Assets Year 1 Year 2 Year 3
Current Assets
Cash $281,000 $314,720 $346,192
Accounts Receivable $26,000 $29,120 $32,731
Inventory $5,200 $5,824 $6,546
Other Current Assets $1,000 $1,000 $1,000
TOTAL CURRENT ASSETS $297,400 $333,088 $374,391
Long-term Assets
Long-term Assets $10,000 $10,000 $10,000
Accumulated Depreciation $17,540 $19,645 $22,100
TOTAL LONG-TERM ASSETS $21,000 $23,520 $26,460
TOTAL ASSETS $298,000 $333,760 $375,480
Liabilities and Capital Year 4 Year 5 Year 6
Current Liabilities
Accounts Payable $18,200 $20,384 $22,912
Current Borrowing $0 $0 $0
Other Current Liabilities $0 $0 $0
SUBTOTAL CURRENT LIABILITIES $15,000 $16,800 $18,883
Long-term Liabilities $0 $0 $0
TOTAL LIABILITIES $14,900 $16,688 $18,757
Paid-in Capital $30,000 $30,000 $30,000
Retained Earnings $53,000 $57,770 $63,547
Earnings $201,000 $219,090 $240,999
TOTAL CAPITAL $274,000 $298,660 $328,526
TOTAL LIABILITIES AND CAPITAL $288,900 $333,760 $375,480
Net Worth $274,000 $298,660 $328,526

8.6 Business Ratios

 Ratio Analysis        
Year 1 Year 2 Year 3 INDUSTRY PROFILE
Sales Growth 7.43% 8.23% 9.12% 3.00%
Percent of Total Assets
Accounts Receivable 9.33% 10.34% 11.45% 9.80%
Inventory 5.47% 6.06% 6.72% 9.90%
Other Current Assets 2.18% 2.42% 2.68% 2.40%
Total Current Assets 151.10% 152.00% 152.00% 158.00%
Long-term Assets 11.68% 11.82% 12.02% 12.00%
TOTAL ASSETS 100.00% 100.00% 100.00% 100.00%
Current Liabilities 4.69% 4.73% 4.77% 4.34%
Long-term Liabilities 0.00% 0.00% 0.00% 0.00%
Total Liabilities 7.24% 7.30% 7.37% 7.38%
NET WORTH 100.80% 101.61% 102.54% 110.00%
Percent of Sales
Sales 100.00% 100.00% 100.00% 100.00%
Gross Margin 95.01% 97.58% 100.31% 99.00%
Selling, General & Administrative Expenses 93.73% 96.26% 98.96% 97.80%
Advertising Expenses 1.52% 1.56% 1.60% 1.40%
Profit Before Interest and Taxes 40.60% 41.70% 42.86% 33.90%
Main Ratios
Current 37 38.1 39.4 32
Quick 32 34 34.85 33
Total Debt to Total Assets 0.20% 0.19% 0.18% 0.40%
Pre-tax Return on Net Worth 74.70% 75.00% 76.50% 75.00%
Pre-tax Return on Assets 94.00% 98.70% 103.64% 112.00%
Additional Ratios Year 1 Year 2 Year 3
Net Profit Margin 31.90% 32.89% 33.91% N.A.
Return on Equity 56.00% 57.74% 59.53% N.A.
Activity Ratios
Accounts Receivable Turnover 7.8 7.9 7.9 N.A.
Collection Days 100 100 100 N.A.
Inventory Turnover 32 33.6 36 N.A.
Accounts Payable Turnover 16.5 17.1 17.6 N.A.
Payment Days 27 27 27 N.A.
Total Asset Turnover 2.5 2.5 2.6 N.A.
Debt Ratios
Debt to Net Worth -0.03 -0.04 -0.04 N.A.
Current Liab. to Liab. 1 1 1 N.A.
Liquidity Ratios
Net Working Capital $232,000 $244,992 $258,712 N.A.
Interest Coverage 0 0 0 N.A.
Additional Ratios
Assets to Sales 0.85 0.87 0.88 N.A.
Current Debt/Total Assets 1% 1% 0% N.A.
Acid Test 28.4 29.1 30.06 N.A.
Sales/Net Worth 2.1 2.1 2.2 N.A.
Dividend Payout 0 0 0 N.A.

Developing a business plan for a metal casting company requires the input of experienced professionals familiar with the industry and its unique requirements. OGS Capital business consultants offer the knowledge and expertise needed to develop a business plan that concisely and clearly lay out a path for success.

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