Project description
A furniture factory had to cope with declining sales, after years of growth. Newly opened branches and the increased stock absorbed liquid funds. The company needed fresh money, but the bank did not want to agree to an expansion of bank loans.
In this situation, we developed an action plan to free up liquidity, reduce costs and revive sales. We translated this action plan into a liquidity forecast.
Together with the management, we conducted the talks with the bank and provided them with data and arguments to increase the loans.
What banks look at in a furniture manufacturing business plan
Furniture manufacturers need machinery, space and materials before the first sale. The plan should show the product range, the production process, the capacity of the workshop and the selling prices to retailers or end customers.
Cost calculation per product is key: materials, labour, energy, tooling and overheads. Lenders also look at stock levels of raw materials, payment terms of customers and the risk of price changes for wood and other inputs.
The investment plan for machinery and premises, combined with a monthly liquidity forecast, shows how the loan is used and repaid. Sales channels and customer concentration should be addressed as well.
