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’.
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.
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.
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.
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:
|Research and Development||$28,500|
|TOTAL START-UP EXPENSES||$404,500|
|Other Current Assets||$210,200|
|Start-up Expenses to Fund||$404,500|
|Start-up Assets to Fund||$1,178,200|
|TOTAL FUNDING REQUIRED||$1,582,700|
|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|
|Liabilities and Capital|
|Accounts Payable (Outstanding Bills)||$46,000|
|Other Current Liabilities (interest-free)||$0|
|Additional Investment Requirement||$0|
|TOTAL PLANNED INVESTMENT||$1,582,700|
|Loss at Start-up (Start-up Expenses)||$335,500|
|TOTAL CAPITAL AND LIABILITIES||$1,992,200|
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.
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:
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.
|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%|
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
6.4 Sales Yearly
6.5 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|
|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 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|
|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|
|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|
|Subtotal Direct Cost of Sales||$5,834,000.00||$7,138,040.00||$8,547,225.20|
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
|Year 1||Year 2||Year 3|
|Front Desk Officer||$7,500||$8,250||$9,075|
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
|Year 1||Year 2||Year 3|
|Current Interest Rate||8.07%||8.11%||8.18%|
|Long-term Interest Rate||8.20%||8.26%||8.31%|
8.2 Brake-even Analysis
|Monthly Units Break-even||5410|
|Monthly Revenue Break-even||$136,800|
|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|
|Direct Cost of Sales||$5,834,000||$7,138,040||$8,547,225|
|TOTAL COST OF SALES||$5,834,000||$7,138,040||$8,547,225|
|Gross Margin %||4.34%||4.82%||7.31%|
|Sales and Marketing and Other Expenses||$127,300||$131,000||$134,000|
|Total Operating Expenses||$174,900||$181,200||$186,690|
|Profit Before Interest and Taxes||$90,100||$180,090||$487,261|
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 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|
|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|
|SUBTOTAL CASH SPENT||$55,000||$59,400||$64,152|
|Net Cash Flow||$14,650||$15,000||$16,300|
8.5 Projected Balance Sheet
|Pro Forma Balance Sheet|
|Assets||Year 1||Year 2||Year 3|
|Other Current Assets||$1,000||$1,000||$1,000|
|TOTAL CURRENT ASSETS||$297,400||$333,088||$374,391|
|TOTAL LONG-TERM ASSETS||$21,000||$23,520||$26,460|
|Liabilities and Capital||Year 4||Year 5||Year 6|
|Other Current Liabilities||$0||$0||$0|
|SUBTOTAL CURRENT LIABILITIES||$15,000||$16,800||$18,883|
|TOTAL LIABILITIES AND CAPITAL||$288,900||$333,760||$375,480|
8.6 Business Ratios
|Year 1||Year 2||Year 3||INDUSTRY PROFILE|
|Percent of Total Assets|
|Other Current Assets||2.18%||2.42%||2.68%||2.40%|
|Total Current Assets||151.10%||152.00%||152.00%||158.00%|
|Percent of Sales|
|Selling, General & Administrative Expenses||93.73%||96.26%||98.96%||97.80%|
|Profit Before Interest and Taxes||40.60%||41.70%||42.86%||33.90%|
|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.|
|Accounts Receivable Turnover||7.8||7.9||7.9||N.A.|
|Accounts Payable Turnover||16.5||17.1||17.6||N.A.|
|Total Asset Turnover||2.5||2.5||2.6||N.A.|
|Debt to Net Worth||-0.03||-0.04||-0.04||N.A.|
|Current Liab. to Liab.||1||1||1||N.A.|
|Net Working Capital||$232,000||$244,992||$258,712||N.A.|
|Assets to Sales||0.85||0.87||0.88||N.A.|
|Current Debt/Total Assets||1%||1%||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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