names of suppliers of raw materials in business plan

Raw Materials Supply Business Plan [Sample Template]

By: Author Tony Martins Ajaero

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Are you about starting a raw materials supply company? If YES, here is a complete sample raw materials supply business plan template & feasibility report you can use for FREE .

Okay, so we have considered all the requirements for starting a raw materials supply business. We also took it further by analyzing and drafting a sample raw materials supply marketing plan template backed up by actionable guerrilla marketing ideas for raw materials supply companies. So let’s proceed to the business planning section .

The fact that players in the manufacturing industry would require raw materials for them to be able to produce their products means that there is a good business opportunity for suppliers of raw materials. So, if you are thinking of starting a business where you are assured of huge returns on investment, then one of your best bets is to venture into the raw materials supply business.

Just like all other investment vehicles, there are potential down sides that you need to look out for if you want to start a raw material supply business.

Part of what you need to do to make headway in this line of business is to ensure that you have good business relationship with manufacturers of the raw materials you intend supplying and also business network with end users (manufacturing companies) that make use of the raw materials you intend supplying.

If you are truly convinced that starting a raw material supply business is for you, then you need to write your own business plan. Below is a sample raw materials supply business plan template that will help you successfully write yours with little or no stress.

A Sample Raw Material Supply Business Plan Template

1. industry overview.

Those involved in the raw material supply business engage in the movement and storage of raw materials and unfinished goods from the point where they are generated to the point where they are used to produce a product or transformed into finished goods.

Raw materials could be lumber, sawdust, raw latex, crude oil, cotton, coal, raw biomass, leaves/herbs, roots, iron ore, logs, or even water.

Over the past five years, the industry has struggled to rebuild itself, even as the overall economy strengthened. Rising consumer confidence and household income have helped ignite remodeling activity that was stalled during the recession, providing additional demand for raw materials.

The Raw Material Stores industry is indeed a large industry and pretty much active in most countries of the world. Statistics has it that in the united states of America alone, there are about 45,069 registered and licensed building materials supply stores and other related raw material suppliers scattered all across the United States responsible for employing about 301,881 people and the industry rakes in a whopping sum of $107 billion annually.

The industry is projected to grow at 4.4 percent annual growth within 2012 and 2017. It is important to state that Builders FirstSource has the lion market share in this industry.

The Raw Material Supply industry is highly regulated in the United States of America and anyone who aspires to start a raw materials supply business must apply and obtain a license before they can legally operate in the industry. This is to guard against substandard raw materials which ultimately will lead to the production of substandard finished goods.

The raw materials supply industry is a profitable industry and it is open for any aspiring entrepreneur to come in and establish his or her business; you can choose to start on a small scale supplying raw materials to cottage industries or you can choose to start on a large scale supplying raw materials to players in major industries in key cities through the United States of America and Canada.

2. Executive Summary

Free Flow™ Raw Materials Supplier, Inc. is a registered raw material supply business that will engage in the supply of raw materials to the textile industry. Our office will be located in Little Rock – Arkansas.

We have been able to lease a facility that is big enough (a 15 thousand square foot facility) to fit into the design of the kind of standard raw material supply store that we intend launching and the facility is located in a corner piece building in the biggest textile raw material market in Little Rock – Arkansas.

Free Flow™ Raw Materials Supplier, Inc. will supply a wide range of raw materials like cotton, fleece, fiber, wool and fur et al to players in the textile industry. We are set to service a wide range of clientele in and around Little Rock – Arkansas.

We are aware that there are several large and small raw materials supply store outlets all around Arkansas that supply raw materials to the textile industry, which is why we spent time and resources to conduct a thorough feasibility studies and market survey so as to be well positioned to favorably compete with all our competitors.

Free Flow™ Raw Materials Supplier, Inc. will ensure that all our customers are given first class treatment whenever they order textile related raw materials from us.

We have a CRM software that will enable us manage a one on one relationship with our customers no matter how many they are. We will ensure that we get our customers involved in the selection of the types of raw materials that we will be dealing in.

Free Flow™ Raw Materials Supplier, Inc. will at all times demonstrate her commitment to sustainability, both individually and as a firm, by actively participating in our communities and integrating sustainable business practices wherever possible.

We will ensure that we hold ourselves accountable to the highest standards by meeting our customers’ needs precisely and completely whenever they patronize our products.

Free Flow™ Raw Materials Supplier, Inc. is a family business that is owned by Loew Adolphus and his immediate family members. Loew Adolphus has a B.Sc. in Business Administration, with over 5 years’ experience in the raw materials supply stores industry working for some of the leading brands in the United States.

3. Our Products and Services

Free Flow™ Raw Materials Supplier, Inc. is in the raw materials supply industry to service a wide range of clients and of course to make profits, which is why we will ensure we go all the way to make available a wide range of textile related raw materials from top farmers in the United States and other countries of the world.

We will do all that is permitted by the law of the United States to achieve our aim and ambition of starting the business. Our product offerings are listed below;

• Treated cotton

4. Our Mission and Vision Statement

• Our vision is to become the leading brand in the raw materials supply industry in Arkansas.
• Our mission is to establish a world – class raw materials supply store business that will make available a wide range of textile related raw materials from top farmers at affordable prices to textile companies in Little Rock – Arkansas and other key cities in the United States of America and Canada where we intend opening our supply chain network.

Our Business Structure

Free Flow™ Raw Materials Supplier, Inc. does not intend to start a raw material supply store business on a small scale; our intention of starting a raw material supply store business is to build a standard textile related material supply store in Little Rock – Arkansas.

Although our raw material supply store business might not be as big as Builders FirstSource and co, but will ensure that we put the right structure in place that will support the kind of growth that we have in mind while setting up the business.

We will ensure that we hire people that are qualified, honest, customer centric and are ready to work to help us build a prosperous business that will benefit all our stakeholders. As a matter of fact, profit-sharing arrangement will be made available to all our senior management staff and it will be based on their performance for a period of ten years or more.

In view of that, we have decided to hire qualified and competent hands to occupy the following positions;

• Chief Executive Officer (Owner)
• Store/Warehouse Manager
• Human Resources and Admin Manager
• Merchandise Manager

Sales and Marketing Manager

Information Technologist

• Accountants/Cashiers
• Customer Services Executive

Truck and Van Drivers

5. Job Roles and Responsibilities

Chief Executive Officer – CEO:

• Increases management’s effectiveness by recruiting, selecting, orienting, training, coaching, counseling, and disciplining managers; communicating values, strategies, and objectives; assigning accountabilities; planning, monitoring, and appraising job results; developing incentives; developing a climate for offering information and opinions; providing educational opportunities.
• Creates, communicates, and implements the organization’s vision, mission, and overall direction – i.e. leading the development and implementation of the overall organization’s strategy.
• Responsible for fixing prices and signing business deals
• Responsible for providing direction for the business
• Responsible for signing checks and documents on behalf of the company
• Evaluates the success of the organization

Admin and HR Manager

• Responsible for overseeing the smooth running of HR and administrative tasks for the organization
• Maintains office supplies by checking stocks; placing and expediting orders; evaluating new products
• Ensures operation of equipment by completing preventive maintenance requirements; calling for repairs
• Enhances department and organization reputation by accomplishing new and different requests; exploring opportunities to add value to job accomplishments
• Defines job positions for recruitment, and managing interviewing process
• Carries out induction for new team members
• Responsible for training, evaluation and assessment of employees
• Responsible for arranging travel, meetings and appointments
• Oversees the smooth running of the daily office activities.

Store Manager:

• Responsible for managing the daily activities in the store/warehouse
• Ensures that proper records of textile related raw materials are kept and warehouse does not run out of products
• Ensures that the store facility is in tip top shape and goods are properly arranged and easy to locate
• Interfaces with farmers who sell wool, furs and fibers and also cotton farmers
• Controls textile related raw material distribution and supply inventory
• Supervises the workforce in the textile material sales floor

Merchandize Manager

• Helps to ensure consistent quality of textile raw material are purchased and retailed / supplied in good price that will ensure we make good profit
• Responsible for the purchase of textile raw materials for the organizations
• Responsible for planning sales, monitoring inventory, selecting the merchandise, and writing and pricing orders to vendors
• Manages external research and coordinate all the internal sources of information to retain the organizations’ best customers and attract new ones
• Models demographic information and analyze the volumes of transactional data generated by customer purchases
• Identifies, prioritizes, and reaches out to new partners, and business opportunities et al
• Identifies development opportunities; follows up on development leads and contacts; participates in the structuring and financing of projects; assures the completion of development projects.
• Responsible for supervising implementation, advocate for the customer’s needs, and communicate with clients
• Develops, executes and evaluates new plans for expanding sales
• Documents all customer contact and information
• Represents the company in strategic meetings
• Helps increase sales and growth for the company
• Manages the organization website
• Handles ecommerce aspect of the business
• Responsible for installing and maintenance of computer software and hardware for the organization
• Manages logistics and supply chain software, Web servers, e-commerce software and POS (point of sale) systems
• Manages the organization’s CCTV
• Handles any other technological and IT related duties

Accountant/Cashier:

• Responsible for preparing financial reports, budgets, and financial statements for the organization
• Provides managements with financial analyses, development budgets, and accounting reports; analyzes financial feasibility for the most complex proposed projects; conducts market research to forecast trends and business conditions.
• Responsible for financial forecasting and risks analysis.
• Performs cash management, general ledger accounting, and financial reporting
• Responsible for developing and managing financial systems and policies
• Responsible for administering payrolls
• Ensures compliance with taxation legislation
• Handles all financial transactions for the organization
• Serves as internal auditor for the organization
• Assists in loading and unloading textile raw materials
• Maintains a logbook of their driving activities to ensure compliance with federal regulations governing the rest and work periods for operators.
• Keeps a record of vehicle inspections and make sure the truck is equipped with safety equipment, such as hazardous material placards.
• Assists the transport and logistics manager in planning their route according to a pick – up and delivery schedule.
• Inspects vehicles for mechanical items and safety issues and perform preventative maintenance
• Complies with truck driving rules and regulations (size, weight, route designations, parking, break periods etc.) as well as with company policies and procedures
• Collects and verify delivery instructions
• Reports defects, accidents or violations

Client Service Executive

• Ensures that all contacts with clients (e-mail, walk-In center, SMS or phone) provides the client with a personalized customer service experience of the highest level
• Through interaction with customers on the phone, uses every opportunity to build client’s interest in the company’s products and services
• Manages administrative duties assigned by the human resources and admin manager in an effective and timely manner
• Consistently stays abreast of any new information on the organizations’ products, promotional campaigns etc. to ensure accurate and helpful information is supplied to customers when they make enquiries

6. SWOT Analysis

Our intention of starting our textile raw material supply business in Little Rock – Arkansas is to test run the business for a period of 3 to 5 years to know if we will invest more money, expand the business and then open our supply outlets all over key cities in the United State.

We are aware that there are several textile raw material supply stores all over Little Rock – Arkansas and even in the same location where we intend locating ours, which is why we are following the due process of establishing a business.

We know that if a proper SWOT analysis is conducted for our business, we will be able to position our business to maximize our strength, leverage on the opportunities that will be available to us, mitigate our risks and be welled equipped to confront our threats.

Free Flow™ Raw Materials Supplier, Inc. employed the services of an expert HR and Business Analyst with bias in supply chain business to help us conduct a thorough SWOT analysis and to help us create a Business model that will help us achieve our business goals and objectives. This is the summary of the SWOT analysis that was conducted for Free Flow™ Raw Materials Supplier, Inc.;

Our business is located in a city with loads of textile manufacturing companies and also, we can boast of having good business relationship with top producers in and around Arkansas.

A major weakness that may count against us is the fact that we don’t have our own farm for now, we are a new raw material supply store outlet and we don’t have the financial capacity to compete with multi – million dollars raw materials supply stores when it comes to supplying textile raw materials at a rock bottom prices.

• Opportunities:

The fact that we are going to be operating our textile raw material supply company in one of the busiest raw materials market in Little Rock – Arkansas provides us with unlimited opportunities to supply our goods to a large number of cottage companies and textile manufacturing companies.

We have been able to conduct thorough feasibility studies and market survey and we know what our potential clients will be looking for when they order textile raw materials from us; we are well positioned to take on the opportunities that will come our way.

Just like any other business, one of the major threats that we are likely going to face is economic downturn. It is a fact that economic downturn affects purchasing/spending power especially for a business like textile raw material supply.

Another threat that may likely confront us is the arrival of a new textile raw material supply store outlet in same location where ours is located. So also, unfavorable government policies may also pose a threat for businesses such as ours.

7. MARKET ANALYSIS

• Market Trends

If you are conversant with the Textile Raw Material Supply Stores Industry, you will quite agree that the changes in disposable income, consumer sentiment, ever changing trends and of course the rate of startups textile companies springing up is a major growth driver for this industry.

A massive rise in consumer confidence has also contributed in helping the industry experience remarkable growth, but uneven performance in these drivers has led to slightly constrained revenue growth.

So also, the rising demand for winter clothes, as a result of increasing disposable income and consumer sentiment, will result in revenue growth, but profit margins will stagnate as textile raw material supply stores keep prices low to attract more sales amid growing competition.

A close watch on the industry activities reveals that the retail market for textile raw materials was hit hard by the recent economic downturn and experienced a decline in revenue in recent time. As part of marketing strategies, textile material supply stores partner with key players in the textile industry. They are in the best position to offer you textile raw material supply contract.

8. Our Target Market

We have positioned our textile raw material supply store to service the textile manufacturing companies in and around of Little Rock – Arkansas and every other location where franchise cum outlets of our textile raw material supply stores will be located all over key cities in the United States of America and Canada.

We have conducted our market research and feasibility studies and we have ideas of what our target market would be expecting from us.

Our Competitive Advantage

A close study of the textile raw material stores industry reveals that the market has become much more intensely competitive over the last decade. As a matter of fact, you have to be highly creative, customer centric and proactive if you must survive in this industry.

We are aware of the stiff competition and we are well prepared to compete favorably with other leading textile raw material supply stores in Little Rock – Arkansas and throughout the United States and Canada.

Free Flow™ Raw Materials Supplier, Inc. is launching a standard textile raw material supply store that will indeed become the preferred choice for key players in the textile manufacturing industry in Little Rock – Arkansas and every other location where our outlets will be opened.

Our textile raw material supply store is located in a corner piece property in the largest textile raw material market in Little Rock – Arkansas.

One thing is certain, we will ensure that we have a wide range of textile raw materials available in our store at all times. It will be difficult for customers to visit our store and not see the type of raw material that they are looking for. One of our business goal is to make Free Flow™ Raw Materials Supplier, Inc. a one stop textile raw material shop.

Our excellent customer service culture, online store, various payment options and highly secured facility will serve as a competitive advantage for us.

Lastly, our employees will be well taken care of, and their welfare package will be among the best within our category in the industry meaning that they will be more than willing to build the business with us and help deliver our set goals and achieve all our aims and objectives.

We will also give good working conditions and commissions to freelance sales agents that we will recruit from time to time.

9. SALES AND MARKETING STRATEGY

• Sources of Income

Free Flow™ Raw Materials Supplier, Inc. is in business to retail a wide range of textile raw materials to textile manufacturers of in and around Little Rock – Arkansas. We are in the business to maximize profit and we are going to go all the way out to ensure that we achieve or business goals and objectives. Free Flow™ Raw Materials Supplier, Inc. will generate income by;

10. Sales Forecast

One thing is certain when it comes to textile raw materials supply, if your store is well stocked with various types of textile raw materials and is centrally positioned, you will always attract customers cum sales and that will sure translate to increase in revenue generation for the business.

We are well positioned to take on the available market in Little Rock – Arkansas and we are quite optimistic that we will meet our set target of generating enough income/profits from our first six months of operation and grow the business and our clientele base.

We have been able to critically examine the textile raw material stores industry, we have analyzed our chances in the industry and we have been able to come up with the following sales forecast. The sales projection is based on information gathered on the field and some assumptions that are peculiar to startups in Little Rock – Arkansas.

• First Fiscal Year: $450,000
• Second Fiscal Year: $950,000
• Third Fiscal Year: $1. 9 million

N.B : This projection was done based on what is obtainable in the industry and with the assumption that there won’t be any major economic meltdown and there won’t be any major competitor retailing same raw materials as we do within same location. Please note that the above projection might be lower and at the same time it might be higher.

• Marketing Strategy and Sales Strategy

Before choosing a location for Free Flow™ Raw Materials Supplier, Inc. we conducted thorough market survey and feasibility studies in order for us to penetrate the available market and become the preferred choice for key players in the textile manufacturing industry in and around Little Rock – Arkansas.

We have detailed information and data that we were able to utilize to structure our business to attract the number of customers we want to attract per time.

We hired experts who have good understanding of the textile raw material supply industry to help us develop marketing strategies that will help us achieve our business goal of winning a larger percentage of the available market in Little Rock – Arkansas.

In summary, Free Flow™ Raw Materials Supplier, Inc. will adopt the following sales and marketing approach to win customers over;

• Open our textile raw material supply store in a grand style with a party for all
• Introduce our textile raw material supply store by sending introductory letters alongside our brochure to textile manufacturing companies and other key stakeholders in and around Little Rock – Arkansas
• Ensure that we have a wide range of textile raw materials from different manufacturing brand at all times
• Make use of attractive hand bills to create awareness and also to give direction to our textile raw material supply store
• Position our signage / flexi banners at strategic places around Little Rock – Arkansas
• Position our greeters to welcome and direct potential customers
• Create a loyalty plan that will enable us reward our regular customers
• Engage on roadshows within our neighborhood to create awareness for our textile raw material supply store
• List our business and products on yellow pages ads (local directories)
• Leverage on the internet to promote our business
• Engage in direct marketing and sales
• Encourage the use of Word of mouth marketing (referrals)

11. Publicity and Advertising Strategy

Despite the fact that our textile raw material supply store is well located, we will still go ahead to intensify publicity for the business. We are going to explore all available means to promote our textile raw material supply store.

Free Flow™ Raw Materials Supplier, Inc. has a long – term plan of opening outlets in various locations all around key cities in the United States which is why we will deliberately build our brand to be well accepted in Little Rock – Arkansas before venturing out.

As a matter of fact, our publicity and advertising strategy is not solely for winning customers over but to effectively communicate our brand. Here are the platforms we intend leveraging on to promote and advertise Free Flow™ Raw Materials Supplier, Inc.;

• Place adverts on community based newspapers, radio and TV stations
• Encourage the use of word of mouth publicity from our loyal customers
• Leverage on the internet and social media platforms and other platforms to promote our business.
• Ensure that our we position our banners and billboards in strategic positions all around Little Rock – Arkansas
• Distribute our fliers and handbills in target areas in and around our neighborhood
• Advertise our textile raw material supply store business in our official website and employ strategies that will help us pull traffic to the site
• Brand all our official cars and trucks and ensure that all our staff members and management staff wear our branded shirt or cap at regular intervals

12. Our Pricing Strategy

Our pricing system is going to be based on what is obtainable in the textile raw material supply line of business, we don’t intend to charge more and we don’t intend to charge less than our competitors are offering in and around Little Rock – Arkansas.

Be that as it may, we have put plans in place to offer discount once in a while and also to reward our loyal customers especially when they refer clients to us. The prices of our textile raw materials will be same as what is obtainable in the open market in The United States of America.

• Payment Options

The payment policy adopted by Free Flow™ Raw Materials Supplier, Inc. is all inclusive because we are aware that different customers prefer different payment options as it suits them but at the same time, we will ensure that we abide by the financial rules and regulation of the United States of America. Here are the payment options that Free Flow™ Raw Materials Supplier, Inc. will make available to her clients;

• Payment via bank transfer
• Payment with cash
• Payment via credit cards
• Payment via online bank transfer
• Payment via check
• Payment via mobile money transfer

In view of the above, we have chosen banking platforms that will enable our client make payment for supply of our textile raw materials without any stress on their part. Our bank account numbers will be made available on our website and promotional materials.

13. Startup Expenditure (Budget)

When it comes to starting any business, the amount or cost will depend on the approach and scale you want to undertake.

If you intend to go big by renting / leasing a big facility, then you would need a good amount of capital as you would need to ensure that your employees are well taken care of, and that your facility is conducive enough for workers to be productive.

The materials and equipment that will be used are nearly the same cost everywhere, and any difference in prices would be minimal and can be overlooked. As for the detailed cost analysis for starting a textile raw material supply store business; it might differ in other countries due to the value of their money. These are the key areas where we will spend our startup capital;

• The total fee for registering the Business in the United States of America – $750
• Legal expenses for obtaining licenses and permits as well as the accounting services (software, P.O.S machines and other software) – $3,300
• Marketing promotion expenses for the grand opening of Free Flow™ Raw Materials Supplier, Inc. in the amount of $3,500 and as well as flyer printing (2,000 flyers at $0.04 per copy) for the total amount of $3,580
• The cost for hiring Business Consultant – $2,500
• Insurance (general liability, workers’ compensation and property casualty) coverage at a total premium – $2,400
• The cost for payment of rent for 12 months at $1.76 per square feet in the total amount of $105,600
• The cost for shop remodeling (construction of racks and shelves) – $20,000
• Other start-up expenses including stationery ( $500 ) and phone and utility deposits ( $2,500 ).
• Operational cost for the first 3 months (salaries of employees, payments of bills et al) – $60,000
• The cost for Start-up inventory (stocking with a wide range of textile raw materials) – $250,000
• The cost for counter area equipment – $9,500
• The cost for store equipment (cash register, security, ventilation, signage) – $13,750
• The cost of purchase and installation of CCTVs – $10,000
• The cost for the purchase of office furniture and gadgets (Computers, Printers, Telephone, TVs, Sound System, tables and chairs et al) – $4,000.
• The cost of launching a Website – $600
• The cost for our opening party – $7,000
• Miscellaneous – $10,000

We would need an estimate of $550,000 to successfully set up our textile raw material supply store in Little Rock – Arkansas.

Generating Startup Capital for Free Flow™ Raw Materials Supplier, Inc.

Free Flow™ Raw Materials Supplier, Inc. is a private business that is solely owned and financed by Loew Adolphus and his immediate family members. They do not intend to welcome any external business partners, which is why he has decided to restrict the sourcing of the startup capital to 3 major sources. These are the areas we intend generating our startup capital;

• Generate part of the startup capital from personal savings
• Source for soft loans from family members and friends
• Apply for loan from my Bank

N.B: We have been able to generate about $250,000 ( Personal savings $200,000 and soft loan from family members $50,000 ) and we are at the final stages of obtaining a loan facility of $300,000 from our bank. All the papers and documents have been signed and submitted, the loan has been approved and any moment from now our account will be credited with the amount.

14. Sustainability and Expansion Strategy

The future of a business lies in the number of loyal customers that they have, the capacity and competence of their employees, their investment strategy and the business structure. If all of these factors are missing from a business, then it won’t be too long before the business close shop.

One of our major goals of starting Free Flow™ Raw Materials Supplier, Inc. is to build a business that will survive off its own cash flow without the need for injecting finance from external sources once the business is officially running.

We know that one of the ways of gaining approval and winning customers over is to retail our wide range of quality textile raw materials a little bit cheaper than what is obtainable in the market and we are well prepared to survive on lower profit margin for a while.

Free Flow™ Raw Materials Supplier, Inc. will make sure that the right foundation, structures and processes are put in place to ensure that our staff welfare are well taken of. Our company’s corporate culture is designed to drive our business to greater heights and training and retraining of our workforce is at the top burner.

As a matter of fact, profit-sharing arrangement will be made available to all our management staff and it will be based on their performance for a period of six years or more. We know that if that is put in place, we will be able to successfully hire and retain the best hands we can get in the industry; they will be more committed to help us build the business of our dreams.

Check List/Milestone

• Business Name Availability Check: Completed
• Business Registration: Completed
• Opening of Corporate Bank Accounts: Completed
• Securing Point of Sales Machines: Completed
• Opening Mobile Money Accounts: Completed
• Opening Online Payment Platforms: Completed
• Application and Obtaining Tax Payer’s ID: In Progress
• Application for business license and permit: Completed
• Purchase of Insurance for the Business: Completed
• Leasing of facility and remodeling the shop: In Progress
• Conducting Feasibility Studies: Completed
• Generating capital from family members: Completed
• Applications for Loan from the bank: In Progress
• Writing of Business Plan: Completed
• Drafting of Employee’s Handbook: Completed
• Drafting of Contract Documents and other relevant Legal Documents: In Progress
• Design of The Company’s Logo: Completed
• Graphic Designs and Printing of Promotional Materials: In Progress
• Recruitment of employees: In Progress
• Purchase of the needed furniture, racks, shelves, computers, electronic appliances, office appliances and CCTV: In progress
• Creating Official Website for the Company: In Progress
• Creating Awareness for the business both online and around the community: In Progress
• Health and Safety and Fire Safety Arrangement (License): Secured
• Opening party planning: In Progress
• Compilation of our list of products that will be available in our store: Completed
• Establishing business relationship with vendors – farmers: In Progress

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How to List Personnel and Materials in Your Business Plan Manufacturers must show the labor and resources needed to run their business. Here's what you need to know.

By Eric Butow • Oct 27, 2023

Opinions expressed by Entrepreneur contributors are their own.

This is part 11 / 11 of Write Your Business Plan: Section 5: Organizing Operations and Finances series.

Manufacturers combine labor and materials to produce products. Any problems with these critical inputs spell trouble for your business and its backers. Business plan readers look for solid systems to ensure that personnel and materials are appropriately abundant.

For this reason, your plan should show that you have adequate, reliable sources of supply for the materials you need to build your products. If you are working with suppliers in other parts of the world, show that they are reliable and that you have established a system to make such international production run smoothly. A global marketplace means more opportunities to find the materials or products you need and new markets for sales. This can be impressive to your readers.

Related: The Main Objectives of a Business Plan

However, you need to define and provide the details of how your business will benefit from being a part of the global marketplace. Even if you are not planning to actively pursue global partnerships, buy from vendors around the globe, or market to customers in other countries, you must address the possibility of international sales if you are selling via your website.

Estimate your needs for materials and describe the agreements with suppliers, including the length and terms you have arranged to fulfill those needs. You may also give the backgrounds of your major suppliers and show that you have backup sources available should problems develop.

Related: What Equipment and Facilities to Include in Your Business Plan

You'll first need to estimate the number and type of people you will require to run your plan. Startups can do this by looking at competitors' plants or by relying on the founders' prior experience at other companies. Existing firms can extrapolate what they'll need to expand from current operations.

Next, show that you can reasonably expect to be able to hire what you need. Look at local labor pools, unemployment rates, and wage levels using information from chambers of commerce or similar entities. If you plan to import sizable numbers of workers, check out housing availability and build an expense for moving costs into your budget.

Related: How to Craft a Business Plan That Will Turn Investors' Heads

More in Write Your Business Plan

Section 1: the foundation of a business plan, section 2: putting your business plan to work, section 3: selling your product and team, section 4: marketing your business plan, section 5: organizing operations and finances, section 6: getting your business plan to investors.

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Raw Materials Retail Business Plans

Gravel rock products business plan.

Durango Gravel seeks to expand its existing market niche by becoming a major supplier to the asphalt paving companies in the Four Corners area.

Sometimes the best business is one that supplies other businesses with the materials necessary to succeed. Supplying wood, metal, plastics, grains, and other raw materials with unique sourcing or supplying methods may provide a good startup opportunity, with the right business plan. Check out our library of sample raw materials retail business plans for ideas and inspiration.

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How to write a business plan for a supplier

A business plan is an important and comprehensive document that is useful throughout the business life cycle. 

The document contains both strategic and financial details about the business and can be used for numerous purposes, such as securing investments or providing details to suppliers. 

Creating a business plan for suppliers can be difficult without knowing what information to include in the document which is why we created this practical guide. 

In this guide, we’ll focus on what a business plan for a supplier is and what it’s not. Reading this guide will help you understand why some suppliers require a business plan and help you figure out what tools you can use to create a business plan for a supplier.

So, let’s get started.

In this guide:

• What is a business plan?

Why do suppliers often ask for a business plan?

How does a business plan for a supplier differ from a traditional business plan (i.e., for a bank or investor), what does the financial forecast of a business plan for a supplier look like, what does the written part of a business plan for a supplier look like, what tool should i use to write a business plan for a supplier, what is a business plan .

A business plan is a document that defines a company's objectives and how it plans to achieve them. It can be used to secure funding, find a business partner, or provide business details to suppliers. 

It can be divided into two sections: a financial forecast and a written presentation. 

The financial forecast, which includes a Profit and Loss (P&L) statement, balance sheet, and cash flow statement, contains valuable information used to determine the current and expected profitability and financial position. 

Whereas the written section, which includes an executive summary, strategic details, competitor analysis, and more, conveys the context required to assess the relevance and credibility of the forecast. 

Need a convincing business plan?

The Business Plan Shop makes it easy to create a financial forecast to assess the potential profitability of your projects, and write a business plan that’ll wow investors.

Supplier relations are highly important to the success of a business. Companies evaluate their suppliers based on the quality of materials they provide. Similarly, suppliers also evaluate their potential clients based on different factors.

Counterparty risk is the biggest concern suppliers have. The main risk suppliers face is not getting paid in time, and this is, therefore, where most of the counterparty risk lies, and why some suppliers will ask for a financial forecast to be included in your business plan.

Other important factors such as reputation (are you doing business ethically and sustainably? Is there a risk of being associated with you in terms of image?) also come into play when assessing counterparty risk.

A supplier will also want to assess their revenue potential with your business. This will help them determine whether you will be a small-time client or a major customer, and which terms of business they should offer as a result. 

Assessing these details will help suppliers determine various factors about your business relationship with them, including:

• Price charged for the material.
• Amount of material they are willing to provide. 
• Payment terms. 

Now that we know why suppliers ask for business plans, let’s have a look at the difference between the content of a traditional business plan and one written for a supplier.

The main difference between a traditional business plan, for a bank or investor, and one for a supplier is the level of risk.

You see, financiers take a significant level of risk when they agree to finance your business as it might take them years to get their money back. 

Though suppliers are also interested in the profitability and cash generation of your business because they want to know that you’ll be able to pay them in time, the “ask” is less risky as the time they have to wait to be paid is much shorter.

As a result, a business plan for a supplier doesn’t have to emphasize your funding requirements and will require less convincing and, therefore details in your plan, to get them on board. 

The aim here is to secure a long-term professional relationship. So this document should reflect the fact that your business is stable and is expected to grow so that suppliers can determine how much revenue they can hope to generate with you. 

Though you’re not asking the supplier for funding, the financial forecast remains a key part of a business plan for a supplier.

Suppliers use the information provided in the section to determine whether you can pay them on time and if your business is expected to grow. Both these factors are critical to the supplier as they help determine the potential revenue they can generate from you. 

The financial forecast section of a business plan for a supplier should include the following financial tables. 

The P&L statement  

The P&L statement of the financial forecasts provides the supplier with information about your business’s revenue, expenses, and costs. Your supplier can use this information to determine key financial metrics, which include: 

• Profitability - the expected profits your business can generate. 
• Growth rate - the rate at which your business is expected to grow.
• Cost structure - how expenses are structured within your business.

The balance sheet 

A balance sheet is basically another type of financial statement that contains details of your business’s assets and liabilities. It’s one of the most essential financial statements your supplier may use to measure the solvability of your business. 

When looking at your balance sheet, suppliers will most likely focus on liquidity. Liquidity is the ability of your business to repay its short term debt (such as accounts payable with the supplier). 

It is assessed by comparing the cash position of your business, and other liquid assets (such as money you’re expected to recover from what clients owe you), with the short term liabilities (trade payables, taxes due, financial debt due in the next 12 months, etc.).  

The cash flow forecast

The cash flow forecast shows how money comes in and goes out of the business. It is a critical part of the financial forecast section of a business plan for a supplier. It helps determine how capital is managed and allocated.

This information can help your supplier understand your business's operational and financing activities. Your supplier can use the information available in these statements to figure out when they are likely to be paid. This can help the supplier create:

• Payment terms that are more feasible.
• Delivery milestones that meet your business’s requirements.

Now that you know what the financial forecast section of a business plan for a supplier should include, let’s look at the written part of the document. 

When creating a business plan for a supplier, you shouldn’t overlook the written part of the document. It’s just as important, if not more. This section of the business plan is what will help your supplier understand the context behind your financials. 

It’ll help them learn more about your business, industry, and customers. This will allow the supplier to source and provide you with materials that match industry standards and are suitable for your customers with regard to quality. 

However, it’s important to remember that the business plan for a supplier doesn’t have to be as detailed as the document needed for a bank or an investor. 

The written section of a business plan for a supplier will include the following sections. 

Executive summary

The executive summary of a business plan for a supplier serves as an overview of the entire document. It lets readers know what they can expect. 

When writing this section, you should know that the aim here is to present your business in a clear, comprehensive, and concise manner. This will help capture the supplier’s attention and encourage them to read on. 

Company details

This section will contain details about your business. When writing this section, you should make sure that you provide information about your partners, team members, and how capital is distributed. 

When writing about your management team, it’s also important to mention their skills and qualifications. This will help the supplier better understand your business and its structure. 

Product and service details

This is the most important section of a business plan for a supplier. In this section, you will include details about the products or services you offer. 

It’s important to know that these details may include the features and functionalities. Providing these details will help your supplier source and deliver materials that improve the quality of your products or services. 

Market research

This section will contain the findings of your market research and analysis. It can include details about your competitors, technological innovation in the industry, and overall market attributes. 

The goal here is to show that there is a viable opportunity for your business. This information will help your supplier determine whether you will be a major customer for them. 

Strategic details

In this section, you will include information about three key aspects of your business: pricing, marketing, and risk management. 

Providing this information will help your supplier determine the profitability and positioning of the business. This will help the supplier meet your requirements and will help them determine the revenues they can generate from your business. 

Operational plan

In this section, you should include information about how your daily business operations are conducted. 

This might detail your production or service production and distribution plans. Your supplier can use this information to better understand business practices and tailor their delivery dates accordingly. 

Now that you know what a business plan for a supplier should include, let’s look at some tools you can use to create this document. 

Need inspiration for your business plan?

The Business Plan Shop has dozens of business plan templates that you can use to get a clear idea of what a complete business plan looks like.

The options for tools used to write a business plan for a supplier are limited, and some of them aren’t very effective. Let’s take a look.

Writing your business plan using Word or Excel

Using these tools to write your business plan is a very cheap approach. However, you need to know that it requires manual effort and is an outdated method. 

This approach is also error-prone if you’re not an expert in finance. You might also face difficulties when structuring and formatting your business plan. 

Using online software to create a business plan for a supplier 

This is by far the most effective approach to creating the document. Using online software to write a business plan for a supplier has numerous advantages, such as: 

• Having access to instructions and examples throughout the process. 
• Being able to use downloadable templates to create a business plan for a supplier. 
• Integrating financial forecasts into your business plan with just a few clicks. 
• Identifying errors in your existing financial forecast. 
• Converting your business plan for a supplier to one used for banks and investors.

Don’t wait. Start a free trial now and learn how we help you create a business plan for a supplier . 

Conclusion 

A business plan is an important document that contains strategic and financial details. A business plan for a supplier helps you communicate your current and expected requirements with ease. Suppliers can use this document to determine if you will be able to pay them and whether or not you will be a major customer for them. 

Using online software to create a business plan for a supplier is by far the best approach, as it helps you create the document with ease. 

Also on The Business Plan Shop

• How to do a market analysis for a business plan
• What is a business plan and how to create one?

Know someone who needs to create a business plan for a supplier. Share this guide with them!

Founder & CEO at The Business Plan Shop Ltd

Guillaume Le Brouster is a seasoned entrepreneur and financier.

Guillaume has been an entrepreneur for more than a decade and has first-hand experience of starting, running, and growing a successful business.

Prior to being a business owner, Guillaume worked in investment banking and private equity, where he spent most of his time creating complex financial forecasts, writing business plans, and analysing financial statements to make financing and investment decisions.

Guillaume holds a Master's Degree in Finance from ESCP Business School and a Bachelor of Science in Business & Management from Paris Dauphine University.

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Raw Material Inventory Management: Manufacturer’s Guide

• Oliver Munro
• 6 months ago

• October 17, 2023

Every manufacturer knows the importance of raw materials – without them, there’s no final product. But it’s not easy keeping track of all the essential elements needed to keep the production line productive .

Raw material inventory management oversees the procurement, handling, and storage of raw materials. It ensures you maintain optimal raw materials inventory levels, and therefore plays a crucial role in optimising your manufacturing processes.

This guide explores the ins and outs of managing raw materials in a manufacturing business, with examples and actionable tips for improving your processes. Let’s dive in.

In this guide:

What is raw material inventory management.

Raw material inventory management is the process of managing the material goods used to create a product. It aims to ensure you always have enough raw materials available to meet demand and maintain production levels while avoiding operational lost time.

By accurately controlling the inventory levels of raw materials, manufacturers can achieve two goals at once:

• Bring costs down (by limiting the required storage space for raw materials to a minimum)
• Complete production jobs and fulfil orders faster (by reducing the risk of understocked items)

Raw materials inventory management deals with raw materials stock throughout the entire supply chain. It encompasses the processes involved in purchasing, tracking, consuming, and relocating raw materials.

Without an effective system in placing for managing raw materials inventory , there’s a good chance you will end up overstocked – and pay extra in storage costs – or understocked and unable to produce goods when you need them.

Definition of raw material

Raw material can be defined as any unprocessed materials or ingredients used to create a product. It refers to commodities bought and sold by businesses for the purpose of manufacturing goods to be sold or used in the production of products. For example, the raw materials used to produce a child’s toy may include plastic, wood, paint, and glue.

Examples of raw material inventory

Raw material inventory refers to the materials and ingredients used in manufacturing and production. In other words, raw materials are input goods or inventory which manufacturers use to produce their products .

When it comes to production, there are two ways raw materials can be used – and so two ways of classifying raw material goods.

Let’s break down the two main types of raw material inventory with some examples:

• Direct materials : Direct raw material inventory refers to materials directly used in producing or manufacturing a product. It is a part of the bill of materials for the finished goods. For example, the direct raw materials for LED lights can include LED boards, connection wires, rectifier circuits, soldering flux, LED chips, and packaging.
• Indirect materials: Indirect raw material inventory refers to the supplementary items that are needed in the production process but do not go into the finished product itself. Indirect materials are not part of the product’s bill of materials. The indirect raw materials for a manufacturer of LED lights can include drill bits for machining, disposable gloves, and cleaning supplies such as mops or detergent.

Why inventory management of raw materials and finished goods is important for manufacturers

Inventory management is critical for manufacturers when dealing with raw materials and finished goods because it has a direct impact on workflow efficiency and production costs.

When you know the value, location, and quantities of your stocked items you’re in a better position to make informed decisions around procurement and sales – ultimately resulting in reduced production costs and improved profitability.

On the flip side, if you fail to implement strategic inventory management for your raw materials and finished goods your manufacturing costs will go up . Productivity will also take a hit, as your processes will not be optimally streamlined.

Raw material inventory management challenges

Managing raw material inventory can be a complicated task.

Even firms with smaller production volumes can struggle due to limited resources or inefficient processes.

To mitigate the associated risks, these challenges of raw material inventory management must be met with strategic planning, effective inventory management, and strong supplier relationships .

Let’s look at four of the biggest raw material inventory challenges you’re likely to face.

1. Inventory planning

Planning inventory is a common challenge for manufacturers due to factors such as demand variability, product lead times, and supply chain disruptions.

Poor planning can result in overstocking of goods, which is an inefficient and costly use of your storage capacity. And it can also result in understocking, meaning you’re unable to reliably fulfil customer orders in full and on time.

Effective inventory planning is essential to ensure you have the right inventory quantities to keep your operations running smoothly. Demand forecasting tools , accurate inventory reporting and an optimised warehouse layout can all help improve your inventory planning.

2. Financial constraints

Financial constraints that reduce the opportunity to invest in large quantities of raw materials affect your ability to negotiate price and delivery times with suppliers.

Balancing inventory costs with cash flow constraints can also be a challenge.

While budgetary restrictions can stop you from taking advantage of volume discounts offered through bulk purchasing, holding too much inventory ties up cash flow that could be better used elsewhere in the business.

Your best defence against cash flow challenges is to minimise the amount of capital tied up in stock. This is achieved through accurate demand planning and effective warehouse management.

3. Reliance on a few suppliers

How you procure and manage your suppliers will impact how they perform.

Manufacturers can experience disruptions to production when raw materials suppliers have issues with production, delivery delays, or price fluctuations. This is particularly challenging for producers of perishable products or products with a short shelf life.

It can be helpful to have backup suppliers should your regular vendor have any issues fulfilling an order. Similarly, it’s important to set accurate safety stock levels for all of your regular inventory items.

4. Quality control

Quality control to guarantee the consistent quality of raw materials from suppliers is also a challenge for manufacturing companies.

Maintaining outstanding quality control is imperative for food manufacturers where freshness and food safety are vital. And for manufacturers of medicines, supplements, and nutraceuticals, quality control ensures the purity of active ingredients.

Additionally, the value of your finished product is partially determined by how well you manage the quality control of your raw material inventory.

An optimised raw material inventory management strategy can aid in ensuring high-quality goods are produced every time.

How to manage raw material inventory

Managing raw material inventory can be simplified if you employ an inventory management system in your business. Inventory software solutions will provide you with a real-time view of your inventory – what’s in stock, what’s being delivered, and what is on backorder.

If you’re a small business, you may find a simple spreadsheet system sufficient for getting started. But as you grow in complexity and scale, you’ll probably find that this method requires too much admin or can’t do everything you need it to.

Cloud-based manufacturing software can help you not just manage raw materials inventory but also automate many of your daily production and procurement processes as well.

In addition to raw material inventory systems, here are some techniques you may find useful.

Raw material inventory management techniques

The raw material inventory management techniques listed below are methods for monitoring and optimising stock. Consider your specific business requirements and capabilities before deciding which techniques to implement.

Five effective raw material inventory management techniques:

• Just-in-time (JIT) – JIT is an inventory management technique that helps reduce inventory-related manufacturing costs. This approach aims to improve manufacturing productivity while reducing waste by producing only what is needed when it’s needed.
• Demand forecasting – Demand forecasting involves determining the approximate quantities of stock you’ll need for a future period based on historical performance and other factors. When done accurately, it ensures that you have the right amount of inventory on hand to satisfy customer expectations.
• Economic order quantity (EOQ) – EOQ is an inventory management technique that considers the ordering, holding, and storage costs of inventory. EOQ helps manufacturers establish the ideal order quantity of their raw materials to reduce overall inventory costs while managing to ensure sufficient on-hand inventory to meet consumer demand.
• Six Sigma – Six Sigma is an inventory management technique that centres around reducing inventory defects and variations. Six Sigma takes a data-driven approach and uses statistical analysis to identify and eliminate unnecessary steps, thus improving efficiencies within your inventory management process.
• Materials requirement planning (MRP) – MRP is an inventory management method that is sales-forecast dependent. It’s used to estimate the quantities of raw materials required to maintain your inventory levels sufficiently to meet your production needs.

These are just a few of the ways you can manage your raw materials inventory. We recommend diving deeper into the topic of inventory management techniques to find the right solution for your unique needs.

Best practices for managing raw material inventory

Once you’ve settled on your approach for managing raw material inventory, the next step is to optimise it. Here are some best practices to help you improve your processes:

• Develop a system of stock-keeping units (SKU). This is done by allocating each type of raw inventory item a unique code. SKUs are the basis of efficient inventory management, as they help you to track the movements and current inventory levels of all stocked items.
• Utilise an inventory control system for raw materials. Good inventory control is crucial to tracking and managing your inventory levels, raw material reorder points, and raw material inventory lead times.
• Adopt a data-driven approach to your inventory management. Data-driven strategies improve reporting, providing you with a more accurate picture of your inventory status. They also help you to make better-informed decisions about your inventory needs.
• Avoid understocking and overstocking inventory. Understocking can lead to stockouts and lost production time, while overstocking may result in lost sales and dissatisfied customers. Overstocking can also lead to increased carrying costs that affect your cash flow and profitability. Both are undesirable outcomes, so setting optimal inventory levels early on is vital.
• Improve your inventory data by automating operations. Automation can help you improve the accuracy of your inventory management operations and reduce the risk of human error. Research systems and tools that could help with your production processes.
• Focus on the raw material inventory items that are critical to your business operations. Use inventory ratios and KPIs to help determine which items add the most value or are the most essential to your business. These are the raw materials that you should care about the most.
• Be precise with your cost estimations for raw material inventory. Accurate cost estimations are essential for effective inventory management. Be sure to include all costs associated with acquiring, storing, and managing your raw materials when calculating total manufacturing costs.

In general, prioritise accuracy and efficiency when dealing with raw materials inventory.

These are the two focus areas that will help to bring costs down and lift manufacturing productivity . And that’s how you make more profit and keep customers happy.

Inventory accounting for raw materials

In accounting, raw materials inventory refers to the total cost of all material currently on hand that has not been used in any production processes. The value of direct raw material inventory is recorded as a current asset on your balance sheet.

Accurately accounting for raw materials gives you a better insight into your business’s financial health and helps you to keep track of your inventory investment throughout your production processes.

Let’s look at a few accounting metrics you may find useful when dealing with raw materials inventory management.

Useful metrics for raw material accounting

These raw material  inventory metrics can help you to make more informed business decisions and help to enhance your business operations.

Some useful metrics to help you keep track of your raw material inventory accounting include:

• Inventory turnover ratio : This measures the number of times you sell and replace your raw material stock over a specified timeframe. This metric helps you to determine if you are carrying too much inventory compared to the amount of inventory you’re selling.
• Days on hand: The average number of days it takes to sell your inventory. Days on hand measures the rate at which your inventory turns daily. This metric helps you determine how quickly and efficiently your business is using its raw material inventory.
• Weeks on hand: This metric shows the average amount of time inventory sells each week. A greater number of weeks on hand indicates inefficiencies in your stock movement, while fewer weeks on hand indicates a more efficient turnover of your inventory.

How to calculate your raw materials inventory value

Whatever the size of your manufacturing business, you’ll need to account for your raw materials, business supplies, and finished goods. You can do this by first determining your ending raw materials inventory value at the end of each accounting period.

To determine ending raw materials inventory, add your opening inventory for the period to your net purchases and subtract the total cost of goods sold.

This will tell you the final value of your raw materials inventory for the period.

The formula for valuing ending raw materials inventory is :

Opening Inventory + Net Purchases – COGS = Ending Inventory

• Learn more: A Guide to Inventory & Manufacturing Costing Methods

Raw material inventory management software

Raw material inventory management software refers to digital systems designed to help you streamline your inventory processes and optimise your inventory control processes.

These systems can come in all shapes and sizes. Some will help with the tracking of your raw material goods, while others may also offer production management and procurement functionality.

Key features to look for in raw material inventory software :

• User-friendly, easy to navigate, and has an intuitive interface that allows you to quickly access the information you need.
• Scalable to grow with your business, meet your production needs, and capable of handling large volumes of data.
• Consolidative to easily integrate with other business applications, accounting software, and sales management systems.
• Instantaneous with real-time visibility and tracking of inventory levels, so you can identify any issues quickly and take any necessary corrective action.
• Secure enough to protect your information from unauthorised access.

Can you perform raw material inventory management in Excel?

Yes, Excel offers several ways to perform raw material inventory management. But as we’re about to explain, these tools can be limited and may hinder productivity for large or complex organisations.

Excel can be a great tool for beginners or firms with limited inventory.

Using Excel’s customisable spreadsheets and formulas you can create an inventory management system with interactive functionality that allows you to create raw material inventory reports. Excel offers many ways to sort, explore, and extract this data.

The results can be visually presented in charts and tables. With the Power Pivot add-on, you can also import and analyse large amounts of data from various sources to create more complex reports.

However, one of the key disadvantages of performing raw material inventory management in Excel is its limited scalability. Keeping track of your inventory control spreadsheets as your production and sales increase can become time-consuming.

Another downside is that Excel needs to be manually updated whenever there are changes to your stock levels; it cannot provide you with inventory levels in real time. Manual data entry is prone to human error with data entry errors leading to inaccurate inventory records and potentially resulting in stockouts or overstocking.

Excel also lacks the built-in features for tracking historical data to identify patterns and analyse trends, which help you to make informed, data-driven decisions.

Article by Oliver Munro in collaboration with our team of specialists. Oliver's background is in inventory management and content marketing. He's visited over 50 countries, lived aboard a circus ship, and once completed a Sudoku in under 3 minutes (allegedly).

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