Lizza Computer Graphics Business Plan Summary & Excerpt EXECUTIVE SUMMARY MISSION STATEMENT Take advantage of the creativity, design skills and talent of the business owner and leverage the existing client base, business efficiencies and capital investments to grow the base business of Lizza Computer Graphics while simultaneously expanding it by adding related products and services. STATEMENT OF PURPOSE Lizza Computer Graphics, Inc., established in 1993 and incorporated in 1999 as an S Corporation, is a design and production studio that provides computer graphic design, large-format color printing and digital photographic services to corporations and small to mid-sized businesses in Northeastern Pennsylvania. The company is seeking growth capital of $550,000 for the design and construction of a facility that will allow the company to expand its current customer base and add several new and complementary lines of business: 1. Fine Art Giclees 2. A Professional Art Gallery 3. Museum Archives & Architectural Renderings 4. Large Format Outdoor Signage and Point of Purchase (POP) Advertising 5. Fleet & Truckside Advertising Three of the new lines of business, fine art giclees, large format outdoor signage and POP advertising have already been tested with current customers and have received a very positive response. Funding is required by January of 2003. Repayment of the loan and interest can begin within 30 days of the receipt. This loan can be secured by company assets. BUSINESS OVERVIEW Products & Services The base business for current services (computer graphics and design, drum scans, large format color printing, display and event graphics and digital photography) has grown exponentially every year for the last 7 years. The services being added– fine art giclees, museum archives, architectural renderings, outdoor signage and fleet and truckside advertising -- are a natural extension of his current business model. Opportunity The price of printing equipment continues to float down as manufacturers cut their margins. Loan interest rates are at an all time low. Digital technology is exploding and growth in this market is just beginning. As an early adopter of digital technology, Lizza is uniquely positioned to cash in on projected digital printing sales of $11.3 billion by the year 2005. All of his equipment is already digital and product lines can be rolled out immediately. Add the fact that 400,000 artists (24% of all artists in the United States) live in the tri-state region and are “underserved in rural locations…” and it is clear that Lizza Computer Graphics is positioned for success in fine art giclees, as well. 1 © Write on Target All Rights Reserved 10/2003 Lizza Computer Graphics Business Plan Summary & Excerpt Competitive Analysis Based on a competitive analysis, several companies in the Northeast and mid-Atlantic regions offer some of the same services that Lizza Computer Graphics currently offers or proposes to offer. However, none of them is offering the same range of services Bob Lizza is proposing to offer and none of them offer the high-tech equipment Lizza Computer Graphics has or is proposing to buy. Additionally, no other company that is trading in this business space boasts the core competencies of the owner, Bob Lizza. Lizza holds a degree in Marketing with a minor in Studio arts, has more than 16 years of experience in the arts and graphic design fields, is a commissioned oil painter, and brings a decade of successful small business ownership and management to his business. Marketing During the first year of operation, the marketing strategy for Lizza Computer Graphics will use a combination of proven marketing tools and will focus on local and regional businesses opportunities. The market will be segmented and the marketing targeted to two different audiences – corporations and businesses and the art community. Among the tools Lizza will employ immediately are advertisements in key regional and local publications and on local radio stations. Other methods will be used to reach both audiences including web sites and online marketing. Financial Projections Based on pro forma statements included in the body of the business plan, Lizza Computer Graphics, Inc. projects the following: DATA REMOVED – PROPRIETARY INFORMATION 2003 2004 2005 2006 Sales EBIT Gross Profit Profit Based on these projections, Lizza Computer Graphics, Inc. will reach break even by the end of the fourth quarter of 2003 and will reach profitability during 2004, its first full year of operation. Financing In order to expand its base business and add new products and services, Lizza Computer Graphics plans to construct a 12,000 square foot facility in or around Tunkhannock, Pennsylvania. This facility will house all production services as well as an artist’s studio and a professional art gallery. The company will require a loan in the amount of $750,000.00. Loan and interest repayments will begin within 30 days of receipt of the capital. Note: References for statistics and industry projections are cited in the body of this work. 2 © Write on Target All Rights Reserved 10/2003 Lizza Computer Graphics Business Plan Summary & Excerpt COMPANY PLAN COMPANY DESCRIPTION Lizza Computer Graphics, Inc., established in 1993 and incorporated in 1999 in Pennsylvania as an S Corporation, is a full-service design and production studio that currently provides the following services to corporations and small to mid-sized businesses in Northeastern Pennsylvania: 1. 2. 3. 4. 5. 6. 7. Computer Graphics & Design Drum Scanning Large Format Color Printing & Finishing Display & Event Graphics and Reproduction Professional Photography Photo Reprinting Photo Restoration Of the services currently offered by Lizza Computer Graphics, professional photography and photo reprinting and restoration are the most recent product offerings. The company began offering full-scale photo shoots in 2000 on 35 mm. But by 2001, digital equipment had advanced to the point where Lizza felt digital images rivaled and, in some cases, excelled 35 mm and transparencies. So the company invested in the hardware and software needed to capture and reproduce high-quality digital images. Lizza now offers ultra-resolution product photography with the same quality of image that is found in publications like Architectural Digest and National Geographic. Working with digital images allows Lizza Computer Graphics to eliminate the cost of producing a photographic image, all together. Local and regional agencies have turned to Lizza Computer Graphics in increasing numbers, to get the highest quality digital images at reduced costs. When Lizza invested in a digital scan back, studio lights and a 4 x 5, camera he entered a world inhabited by very few graphic design or print shops. Lizza Computer Graphics was able to control and handle every aspect of creating a finished product – from image capture to design, reproduction and finishing. He also opened the door to adding several new services including: 1. 2. 3. 4. 5. 6. 7. 3 Lizza Fine Art & Giclees Lizza Fine Art Gallery (Sales & Commissions) Museum Archives & Architectural Renderings Digital Image Capture Large Format, Full Color Outside Signage Point of Purchase (POP) Design & Printing Fleet & Truckside Advertising © Write on Target All Rights Reserved 10/2003 Lizza Computer Graphics Business Plan Summary & Excerpt PRODUCTS & SERVICES With the purchase of photographic and image capture equipment and the proposed investment in the Cruse Digital Equipment CS285 ST Scanner and the Sol Jet pro II Outdoor Graphics Printer, Lizza Computer Graphics is poised and ready to expand into four other specialty printing areas which build on existing resources and expertise while deepening the product line and increasing profitability. Those four related services are: 1. Fine Art Giclees (The addition of fine art giclees opens another revenue center for Lizza Computer Graphics – a professional art gallery.) 2. Museum Archives & Architectural Renderings 3. Large Format, Full Color Outdoor Signage 4. Fleet & Truckside Advertising Fine Art Giclees Giclee is French slang for spraying or squirting ink and was coined in the 1990’s to describe fine art prints reproduced with large format inkjet printers. Giclee prints have become increasingly popular as the technology and materials improve. Today, giclée is the world’s best technique for reproducing original works of art. It has a higher resolution than lithography and a wider color range than a serigraph. In fact, the quality of giclees is so high that reproductions have been exhibited at some of the world’s foremost museums including the Metropolitan Museum of New York, the Philadelphia Museum of Art, the Los Angeles Museum of Contemporary Art and the British Art Museum. Although Lizza Computer Graphics already owns and knows how to use the high-end photographic equipment and high-tech, large scale, inkjet printers required to produce giclees, owner Bob Lizza is positioning the company to take the next step in the digital revolution with the purchase of the Cruse CS285 ST Scanner. The Cruse CS285 ST is the most technologically advanced, large format, high resolution scanner in the world. It accommodates originals up to 60” by 90” and produces images up to 10,048 x 15,500 pixels with a file size of more than 800 megabytes. The Cruse achieves a level of clarity and depth of detail never seen before in a digitized print. The Cruse scanner offers significant advantages over current, digital scanners: 1. Focus – Unlike digital camera backs where the focus can only be set visually through the camera’s ground glass, the Cruse scanner uses a complex software algorithm to focus. This eliminates human error and maximizes sharpness on all scans. 2. Lighting – Cruse scanners use the Synchron™ lighting system. The Synchron lighting system uses a patented moving lamp design which provides even illumination and reduces overall light exposure on originals. It provides even illumination across the entire surface of the original and eliminates the need for retouching. 4 © Write on Target All Rights Reserved 10/2003 Lizza Computer Graphics Business Plan Summary & Excerpt 3. Lens Resolution – Pixels on most digital camera backs are 8 microns apart but most standard lenses can’t resolve images that small. The lenses used in Cruse scanners are ultra high resolution and are modified to meet technical requirements. 4. Squareness to Camera – Traditionally, images are captured using a tripod setup which makes it impossible to square a wall-mounted image. The scanning head on the Cruse scanner is perfectly square with the Cruse holders. Because Lizza will be using a Cruse CS 285 ST, he will no longer have to square the original by hand. He also won’t have to manually focus using a loop. Set up time will be reduced by more than 60 minutes. That means that production will increase by at least 3 fold. Lizza currently does 7 to 10 reproductions a day. Using the Cruse, he will be able to do up to 30 images a day. Also, by purchasing the Cruse CS285 ST, Lizza Computer Graphics will be in a class by itself – at this time, no other company in the United States owns the Cruse CS285 ST. Only one installation is scheduled for the first quarter of 2003. The quality of the scanned image is critical to creating giclees but it is just the first step in the process. Lizza Computer Graphics follows through on quality by using only saturated, waterbased archival inks capable of producing a combination of 12 chromatic changes and more than 3 million colors. The next step is image reproduction, itself. Here, too, Lizza Computer Graphics has a competitive advantage over every other giclee studio in the region; the owner is a commissioned oil painter. Because Lizza is an artist himself, he knows that every brush stroke, every detail is important to the artistic integrity of a painting. He complements this innate understanding of detail and his desire to preserve the integrity of the artwork with a practiced eye and 15 years of experience as a commercial designer and photographer. To ensure a color match, Lizza also uses a spectrophotometer and specialty software to address the difference between what the camera sees and what the human eye can see. The final step is finishing or laminating the canvas. Although currently done by hand, Lizza Computer Graphics plans on investing in a liquid laminator, as well. This piece of equipment floods the top of the canvas more evenly. It also dries or cures the canvas as it processes, speeding the finishing process. Lizza Fine Art giclees are of such high quality that the artists themselves find it difficult to distinguish their originals from the reproductions. In fact, the only way to tell the difference is to use 15X loop. As a result, without advertising of promotion of any kind, the company is already producing giclees for more than fifty (50) artists and galleries. The Professional Art Gallery Opening a professional art gallery is a natural extension of Lizza’s skill and expertise as an artist. His work and his reputation have already earned him the respect of the regional art community, opened doors and built connections with local galleries and gallery owners (who double as agents for local and regional artists). 5 © Write on Target All Rights Reserved 10/2003 Lizza Computer Graphics Business Plan Summary & Excerpt Owning and operating a professional art gallery and studio opens up several opportunities for the company to earn income including: The sale of Lizza’s own artwork Fees generated by reproducing other artists’ original works Commissions on sales made at the gallery Charges for staging and holding openings and exhibitions. Most galleries would have to work with originals only, or would have to find a reputable studio to do giclees for them and pay for the work. Under this model, Lizza will be able to create the giclees, display them in his art gallery and mount shows and openings for artists at or below cost. The market is there and the demand is growing. Lizza Computer Graphics is ready to meet the need. Lizza’s own works and of those of selected clients are available and ready to display and sell. All that the company requires is the facility in which to build the gallery and studio. Museum Archives & Architectural Renderings Archiving museum artifacts and capturing architectural renderings are an extension of fine art giclees and would leverage the Cruse scanner. Older models of the Cruse scanner are already being used by the Vatican Secret Archives, Lucent Technologies, NASA Johnson Space Center and the Beethoven Museum to capture and preserve priceless artifacts and images. By purchasing a Cruse scanner, Lizza Computer Graphics will be able to offer both profitable services. Museums and historical societies in the region that want to archive fine art and historical documents will be able to get high quality image scanning, image files and reproductions through Lizza Computer Graphics. The Cruse CS285 ST Scanner can also handle threedimensional originals with no loss of detail or sharpness and no fall off at the edges. Using this technology, Lizza can help museums preserve exhibits and works of art that are vulnerable to deterioration. Architectural and design firms will be able to capture and preserve architectural renderings including conceptual designs, preliminary sketches and final presentations through Lizza Computer Graphics. Large Format Outdoor Signage Large format outdoor signage is a natural fit for Lizza Computer Graphics. The company is already equipped to design, create and produce 4’ X 8’ panels required for outdoor signage. With the addition of a single printer that uses solvent-based, waterproof inks, Bob Lizza will be able to offer full, four-color, photographic images for outdoor signage -- a competitive advantage over traditional outdoor signage companies that only offer colored lettering in vinyl. 6 © Write on Target All Rights Reserved 10/2003 Lizza Computer Graphics Business Plan Summary & Excerpt The printer Lizza wants to add is the SOLJET Pro II SC-540. It offers top-quality printing and rapid production speeds (up to 300 square feet per hour) and outputs a wide range of durable outdoor graphics. The heavy-duty solvent printer has a unique print mode developed specifically for the production of signs, banners, POP displays and vehicle wraps and prints photorealistic images up to 1440 x 1440 dpi. Six precision heads use variable droplet technology designed for the best dot control in the industry The SOLJET Pro also uses a unique, low volatility solvent that does not require special ventilation or environmental equipment. It automatically contours or die cuts graphics as it prints without reloading or repositioning. That means that Lizza can create the images his client wants and print and die cut them simultaneously. This speeds up the production process and allows the customer to layer on top of existing graphics -- adding or changing what they already have and leveraging any investment they may have made. The same process and printer will be used to create and print Point of Purchase (POP) advertising including back lit displays like those found in major department stores. By changing the medium, Lizza will also be able to produce poster ads that cling to windows but don’t adhere permanently (like those used in fast food restaurants). He will be able to create any size ad from as small as a postage stamp to just about any length the customer needs. Again, outdoor signage and POP (backlit displays and cling advertisements) are all related to the printing he currently does for indoor trade show booths. All formats use the same printing process so there is no learning curve. Lizza will be able to provide these new services as soon as the necessary printer is acquired. 7 © Write on Target All Rights Reserved 10/2003