Specialist Photographic Limited
Trading as
Ag Photographic + Photolab
Business Plan for Growth
April 2019
Contents
Executive Summary
Executive Summary
Business Details
Key People
Vision
Our concept and business idea
Our Success to date
What do we do
Why are we different
Our idea for growth
How investment will be used
Market Analysis
Customer Profiles
Competitor Profiles
Market risks and how we manage these
How we operate competitively: pricing
Promotion and advertising
Operations
Members of staff and their roles
Premises
Suppliers
Plant and equipment
Operational risks
Finance
Current profit and loss
Forecast profit and loss
Cash flow and working capital
Financial risks: how we manage these
EXECUTIVE SUMMARY
Ag Photographic+Photolab, has a mission:
to provide a 360 degree offer of consumables and services to the Enthusiast, Professional, Fine Artist
and Student photographer, especially those photographers with a demand for high quality photographic
print output and those utilising a hybrid analogue-digital workflow or a fully traditional analogue
workflow. We are their essential partner. Customers can purchase their film, paper, chemistry and can
also utilise our lab services to process, digitise and print their work.
The company was founded by managing director Matthew Wells who also owns the business together
with Elaena Wells. We retain our accountants NJR Accountancy to advise and complete our formal
accounting and payroll services.
Our product and service offer includes:
Sales of: Photographic camera film
Black and white photographic paper
Colour photographic paper
Digital inkjet papers
Darkroom equipment
Services: Processing of all current camera film process (C41, E6 and black & white)
Scanning to digital of all film types
Professional quality photographic printing from film or digital original
Framing and mounting
Competitive Advantage
We have no competitor in the UK who offers the same combination of related products and services.
Furthermore, we have an array of plant and equipment, together with the experience and knowhow that
makes for significant barriers to entry for any competitor looking to match our offer.
The nature of our business, especially the service side of our offer, generates significant barriers to entry
in the form of specialist knowledge, plant and equipment.
Our target forecast
With the right level of investment, we project we can double out turnover and also improve our already
excellent net profit margin, by year end 2021. This business plan explains the route to achieving this
growth.
Matthew Wells, May 2019
Business Details
Specialist Photographic Limited
Trading name: Ag Photographic+Photolab
Unit 6 Phoenix Business Park
Avenue Road
Birmingham
B7 4NU
Telephone: 0121 366 0016
Email: [email protected]
Websites:
www.ag-photographic.co.uk
www.ag-photolab.co.uk
The business’s legal status is as a private limited company registered in England & Wales No. 8182545
The company started trading in February 2015
The business operates as a specialist supplier of photographic products such as photographic camera
film, photographic paper (both silver based black and white and colour papers, and digital inkjet); and
photochemistry.
The company also operates a service business with a photo processing laboratory handling development
of all film types, digital scanning of film and high quality photographic printing from both film or digital
originals.
Key People
Matthew Wells
Position: Managing Director. Founder of business.
Role: Day to day management. Provide and execute vision and ideas for business.
Recognise new markets and win new business.
Formal Qualifications: LL.B hons. (Bachelor of Laws) University of London
Business Experience: Experienced small business operator since 1997. Worked as professional
photographer and extensive experience of specialist photo products and photo
finishing.
Elaena Wells
Position: Director
Role: Non-executive, advisory in team management and strategy.
Formal Qualifications: MA, University of Durham
Previous: University of Aston, Senior managerial (non academic) Head of Administration
James Britton
Position: Accountant
Formal Qualifications: AAT Level 3
Role: Financial management and control. Ensuring management accounts are always
available. Cash flow forecasting.
Nick Howse
Position: Senior photographic technician
Role: Day to day fulfilment of customer orders. Liaising with and advising customers.
Quality control.
Experience: 25 years continuous experience in photofinishing
Previous employment: Quadrant Photolab, Bromsgrove
Peter Gaffney Metro Colour Lab, Birmingham
Dave Shepherd
Position: Senior photographic technician
Role: Day to day fulfilment of customer orders. Liaising with and advising customers.
Quality control.
Formal Qualifications: BA (1st class) Photography
VISION
Our Concept & Business Idea
Ag Photographic+Photolab was established to cater for the growing specialist photographic sector. The
digital revolution changed the face of photography and created millions of new photography enthusiasts.
We are here to serve this group with supply of materials, equipment and services.
As many photographic specialists and services providers faded away during the first 10 years of the
digital revolution, we have tailored our business for the new age of photography and continue to grow
in this market.
Our success to date, and revenue forecast
Since February 2015 we have enjoyed continuous growth.
Trading Profit and forecast EBITDA
Actual Actual Actual Actual Forecast Forecast Forecast
Year to 31 Year to 31 Year to 31 Year to 31 Year to 31 Year to 31 Year to 31
October October October October October October October
2015 2016 2017 2018 2019 2020 2021
Turnover £315,019 £535,450 £598,747 £663,429 £801,040 £1,001,300 £1,301,690
Cost of Sales £198,964 £343,852 £387,848 £304,131 £377,479 £430,559 £533,692
£116,055 £191,598 £210,899 £347,180 £456,592 £570,741 £767,997
Gross Profit
(37%) (36%) (36%) (53%) (57%) (57%) (59%)
Administrative
£92,749 £102,006 £113,417 £220,283 £280,115 £350,455 £442,575
Costs
Trading Profit /
£41,679 £97,842 £97,482 £125,789 £176,228 £220,286 £325,422
EBITDA
EBITDA as
Percentage of 13% 17% 16% 19.3% 22% 22% 25%
Turnover
There was a considerable improvement in gross margin from 2017-2018. This is attributable to the
significant growth in lab services over the course of these years. As services make up an increasing part
of our turnover, this will account for sustained and improvements in gross margin.
We expect growth to continue as per the forecast, provided we gain the requisite investment in plant &
equipment, personnel, technology and marketing, as we increase our market share in existing and new
markets.
What do we do?
Our core business products and services include
Finest quality digital photographic silver halide (no-ink), continuous tone printing up to 50” in
width by 120” length
Film scanning digitisation of all film types and for all applications (small files up to exhibition
quality)
Film processing – development of all 3 current film processes (C41, E6 & black and white)
Print mounting for display and exhibition
Sales of a wide range of film, paper, photochemistry and processing equipment
Why we are different
There is no other business offering the same wide range of products and services, under one roof. This
generates economies of scale for customers who are able to purchase services and goods at the same
time, making savings. We are also able to cross-promote products and services and enable us a
competitive advantage in the market.
There are considerable barriers to entry into the service side of our business, including plant and
equipment cost and technical expertise. We have captured the know-how before it has seeped away
following the digital revolution.
We have engineered some of our plant and equipment to be unique to us, giving us a competitive
advantage in the new age of photography.
Our idea for Growth
There are a number of growth areas immediately available to us, both in terms of gaining
more of our existing markets, but also by winning business in closely related areas that we do not
currently enjoy.
1. Digital photographic print market – for professionals, enthusiasts and fine artists
We already enjoy a loyal following for our finest quality digital photographic printing service.
Photographers continue to outsource printing to commercial photographic labs because they are unable
to generate the type of prints a professional lab can, and this will probably always remain the case. Inkjet
printing (being the type of printing available to photographers DIY’ing prints) quality has not progressed
for 20 years (although speed has improved) and it remains expensive (in terms of consumables), slow
and unable to offer the finite detail of the wet processed continuous tone prints from the professional
lab. The equipment required and necessary throughput for lab quality prints remains out of reach,
financially, for individual photographers or even photographic firms and therefore the professional lab is
the perfect solution: higher quality prints at a lower cost than photographers can print themselves. Files can be
sent via the web and printed same day.
Digital photography has increased the number of photographs taken, and so has the demand for high
quality photographic printing.
We can penetrate this market much more deeply than we already do. Currently our website
does not allow for a slick ordering journey for digital photographic prints. We need to re-build
www.ag-photolab.co.uk entirely and offer a sophisticated shopping cart whereby the customer is able
to upload their image files as part of the ordering process, but also to include value added options, such
as mounting and framing.
We estimate we can increase our sales of digital photographic print by over 400% over 24 months with
right online ordering system.
Digital photographic prints in sizes up to 12”x36” offer a typical gross profit margin of over 80%.
2. Film Processing & Scanning
Today this is a specialist service, but Ag is already one of the most popular destinations for film
processing. This market is growing as millennials and enthusiasts originate more on film and scan into
the digital domain – hybrid photography. Ag provides a cost effective and fast turn-key solution,
processing and scanning customers’ film at a higher quality and much faster than they are able to achieve
themselves.
Furthermore, Ag pioneered a simple to use online ordering system for film processing whereby
customers order what they require and send in a post paid mail bag supplied with the return of their
previous order, or with a freepost label downloadable off our website.
We want to improve the online ordering system for film processing and scanning so as to include a
portal for customers to download digital scans from their film shortly after processing. This will shorten
the time it takes to deliver files to customers by 24-48 hours (postage time when sending on CD). This
will be built as part of our new website.
We estimate this change will increase our sales of film processing and scanning by an additional 100%
during the next 24 months, over and above the natural growth expected in the market.
3. Film Processing: additional options
There are a number of additional value added options we would like to offer customers when
processing film. These include alternative archiving options for film; additional scanning options; and
more specialist services such as processing of large format film.
4. Print Mounting & Framing
There are significant value added services available to print customers. Many customers will be ordering
prints for display purposes. Our new website will include the option to order mounting and framing of
these prints, and customising these options, as part of the order journey and shopping cart.
Ag has already invested in the basic equipment required to mount and frame prints. We want to
enhance this with additional mounting options (eg. cold laminating). The additional member of staff will
be qualified or trained in professional photo framing and mounting.
We estimate that, within 24 months, print mounting and framing will add an additional £200,000
turnover. Gross profit on mounting and framing is between 60-70%.
5. Entry into discerning consumer photographic print market
A new website utilising the same shopping cart as our new ag-photolab.co.uk site (so we only have to
build this code once), but targeted towards the consumer photographic print market. The discerning
consumer looking for a higher quality result than is currently provided by online operators such as
Photobox, Free Prints or Snapfish. Marketing would reflect this. We estimate this business can be
turning over approximately £200,000 per annum by end of second year of operation and we would
expect growth to £500,000 by end of year 3. Launch of this site would be planned within 6 months of
completion of new main site. Overhead increase would be minimal in delivery.
6. Enhancement of our range of products
Whilst we currently offer a wide range of film, paper, photochemistry and equipment, we believe we can
expand this significantly to become an ever more “on-stop-shop”. This will involve investment in stock,
increasing our stock level and range.
How investment will be used
Specialist Photographic Limited has been accepted by the crowdfunding platform Crowdcube to
crowdfund equity investment. We have been granted Advance Assurance from HMRC for Enterprise
Investor Scheme status (EIS).
We intend to seek a base funding target on Crowdcube of £100,000, but we would like to overfund
significantly on this. We have capped our maximum raise at £400,000.
As a minimum we are looking to raise £112,000 so as to cover the commission payable to Crowdcube
and our costs in developing the Crowdcube pitch, leaving a net of £100,000 for investment as detailed
below:
Website Development £21,000
Labour £18,000
Plant & Equipment £61,000
Total: £100,000
Options for overfund spend:
Commission new custom B&W processor £79,000
Build mezzanine floor £29,000
New electrical installation £4,500
Mezzanine fit out £18,000
60” Cold / Hot laminator £16,000
Automatic mounted slide loader for X5 scanner £3,900
Additional framing automation equipment £12,450
Improvement in social media presence and marketing £30,000
Customer work stations £25,000
2nd X5 scanner £15,000
Reduction of any debt in the business £variable
The board may change priorities in investment dependant on their view of the economic climate,
changes in market conditions or technical developments.
MARKET ANALYSIS
Customer profiles
There are four key customer groups in our market:
Enthusiast
Professional / business
Fine Artist
Student
Enthusiast
The digital revolution has brought photography to more people than ever before. Now, almost every
person carries a camera in their pocket at all times. The effect of this has been a huge upsurge in
photography enthusiasts: amateur photographers who do more with photography than shoot mere
“snaps”. They have a deep interest in photographic genres, equipment and styles. As more and more
enthusiasts have emerged since the early 00’s a proportion of these enthusiasts also become interested
in other photographic systems, such as analogue, traditional photography. Many of them have developed
an obsessive interest in hybrid photography – originating on film and then scanning the film to bring it
into the digital domain.
For those enthusiasts who shoot digitally, as the quality of results from digital cameras has become ever
more impressive, so has their demand for the highest quality photographic printing, capable of displaying
the full capabilities of the camera.
Professional
Our professional customers come from a range of backgrounds. Digital professional photographers
shooting a wide variety of commercial subjects, including university and graduation photography,
wedding photography, wedding book binding, editorial, fashion. The majority of professional
photographers shoot digitally and we are producing high quality print output for them. There are some
photographers, notably shooting fashion, who like to originate on film for various assignments and we
are able to supply the film and also process it.
Fine Artist
The fine art photographer is a growing market. Photographic galleries are surging in popularity, and have
become world renowned in a very short space of time – for example, Fotografiska in Stockholm,
opened in 2010 and now ranking as one of the major attractions in Sweden. The photographer’s gallery
in London with its recent move and refurbishment. There is a huge desire to exhibit work and such
photographers look for the best possible quality in print output and processing. Photographic fine artists
don’t have to be world renowned and a photographer with a small exhibition in a local café can rank as
a fine artist.
Student
Photographic courses at colleges and universities are ever popular. Ag enjoys a strong following of
student photographers both buying product from us and also entrusting their processing and printing to
us.
Competitor Profiles
We examine our significant competitors here.
IMPORTANT: For the purpose of our Crowdcube pitch we have to blank
out the names and any other commercially sensitive information.
XX XX XX XX XX XXX
Competition area: Fine quality digital photographic printing; Mounting, display, framing.
Established since with an estimated turnover of around £3m, focuses on digital print,
framing and mounting. They have gained a strong following for this service. They have an excellent
website and at Ag we have decided to use this site as a benchmark for our own site, although we do
believe we can improve on various elements.
Our Research: We have been given a tour of their facility. They produced some prints for us –
they were of substandard quality, but we have assumed this was a one off as they have a strong
reputation for quality.
Threat: they are more established; they have excellent technical expertise; They have a strong
following. Output quality is very high; They are based in a fashionable area of London suited to
their market.
Weakness: Limited range of services; plant and equipment inefficient for smaller prints (below
12”x16”). Very high overheads with central London rent, rates and wages – impact on
profitability.
Best way to target: The easiest way to target customers is by undercutting on price
for the same quality product as we enjoy significantly lower overheads. We are also able to offer
a wider range of services, such as film processing, thereby more of a one stop shop. Whilst we
do not enjoy the same location advantages, Birmingham is only a short distance from London,
set to become even closer with the advent of HS2. It is also the second largest city in the UK
with a vibrant creative scene.
XXX XXX XXX XX X XX
Competition area: Professional quality film processing of all types; Photographic printing.
Established for years, a strong following . However, in recent years the business,
outwardly, looks past it’s best. Despite this, we regard them as a significant competitor in the field
because of their , like ourselves and because of their established status.
Our Research: We have used as an undercover customer. Turnaround time was
reasonable and quality seemed OK. However, ordering system cumbersome. We monitor
social medial and internet forum activity to gauge the preferences of customers. appears
less in recent years on these sites but comments are positive.
Threat: That they improving customer experience and
their efficiency.
Weakness: Their plant is inefficient. the new age of film processing and date from
an era before digital. They use scanners Ag use.
clerical input. We have become aware of some quality control issues via customers.
Best way to target: make our website even better for film processing – as planned. With the
portal for customers to download image files. Use targeted social media and forum activity.
Keep increasing output quality.
XXX XXX XX X XXX
Competition area: Film processing and scanning
Relatively established, we believe operates . But with low overheads, has
gained traction for a limited range of services.
Our Research: Continuous watching of internet activity and feedback on their service.
Undercover communication with them to establish features of the business
Threat: They offer a price. That they start to expand that service to
. That their website....... . That they introduce.... .
Weakness: The business appears small, scaling of the business will mean ,
increasing prices to recover. They have printed
order form, thus creating inefficient . They do not offer the customer
for processing – this puts the customer to considerable inconvenience. Further scaling of the
business would ultimately require overhead.
Best way to target: Use internet forums to target customers with offers. Improve our
website beyond that achievable by . Encourage them to . Although only
a business, we treat such start-ups with seriousness.
XXX XXX XX XX X XXX
Competition area: Film processing, scanning, photographic printing. Film sales.
Well established is the . They have a strong following from students and local
photographers due to their established status.
Our research: for a number of years, prior , a customer of . During
2018 . This has gained us
considerable insight into the current status of the business.
Threat: They are very established and have a strong, following. The largest threat
they pose is . Aside from this, they are a
popular destination for students and a band of loyal customers.
Weakness: Their plant and equipment . Very poor online
presence. Excessive overheads . (premises taken on in different era).
seems to have lost interest. They have a
Best way to target: Target the main customer groups, .
XXX XXX XXX X X X XXX
Competition area: Photographic Printing, some film processing
are a well established photo laboratory that have adapted well to the new age of
photography. They offer a good benchmark for the Ag business in many respects.
Our research: We have been in contact with them when one of their machines failed and they
were looking to outsource to us. We have been an undercover customer.
Threat: They have excellent website. They continue to market themselves
as a film processing laboratory. They have excellent expertise and experience in producing high
quality photographic prints and also they have the facility to mount, frame and laminate. That
they decide to is a threat. Great social media and industry coverage.
Weakness: their plant fashioned unable to
types of process. We believe they have taken on in the last 12-24 months.
Best way to target: Ensure we can offer the range of services they do, but enhanced with some
they don’t. Improvement in our website to compete with theirs. Specific targeting of their
customer base via social media.
XXXX X X XXX X XX XX
Competition area: Sale and supply of film, paper, photochemistry and equipment
have been established . They competitor for specialist
photo products as they offer a full range like ourselves.
Our Research: visited premises undercover and also
their premises premises .
Threat: the main threat is price orientated. That they remain competitive and increase their
stocks. That they continue to run regular sales and discounting. That they improve their .
Weakness: previously very knowledgeable about the products they supply.
are not. There has been a slide in . .
Stock levels . They suffer problems
.
Best way to target: Improve our range and also tweak our product sales website so as to give
even better service ( etc.) Offer discount on film purchased in return
for minimum spend on services on our services website.
XXX XXX XXX XXX XXX
Competition area: Sale of products
Our research: We are subscribed to their email updates and also regularly scrape data from
their website to ascertain their best selling products and stock availability. We cross reference
this with our own data to help determine their success. web
platform the business is using and is based on actual data). .
Threat: Whilst this is currently small , having researched and
watched their handling of they are clearly very . They may have designs
on expanding into other areas away from film. They may also have ideas about offering film
. must still be taken seriously.
Weakness: They seem to lack some understanding of this market and lack technical
understanding of the products. immaturity in business operations with too much
dependence and not enough attention to the disingenuous nature of some
of their offers and promotions.
Best way to target: Increase our range of . Increase our visibility and
activity on .
OPERATIONS
Members of Staff and their Roles
Matthew Wells – Managing Director
Day to day operational management and forging a future vision for the business.
Management of suppliers
Price negotiation with suppliers
New product and service research
Personnel management
Deciding where to target new growth areas
Competitor profiling
Technical assistance for customers
Elaena Wells – Director
Non executive advisory role in personnel management and corporate strategy
James Britton – Accountant
Attends at Ag’s premises for 1 day each week to ensure update of all bookkeeping, including generating
management accounts, cash flow forecasts, filing VAT returns etc. Advise with financial control of the
business.
Nick Howse – Senior technician
Oversees quality control of print and scan quality including colour balancing. Liaising with customers,
customer service. Ensuring timely dispatch of service orders
Dave Shepherd – Senior technician
Oversees quality control of print and scan quality including colour balancing. Liaising with customers,
customer service. Ensuring timely dispatch of service orders
Steve Ford – Sales assistant
Ensures timely dispatch of all goods orders to customers. Liaises with customers, customer service,
stock control. Serves customers for counter sales at the Ag premises. Call handling.
Justin Macintosh – Sales and lab assistant
Flexible contractor handling film processing and serving customers on the counter. Ensuring dispatch of
goods orders. Call handling.
Chris Warren – Lab assistant (part time)
Flexible contractor to cover evening work and when workload is higher. Also covering Sunday shift.
Equipment routine maintenance. Highly experienced in image manipulation and colour balancing.
Peter Gaffney – Consultant (part time)
With 50 years experience in photofinishing, Peter is a superb consultant and also operates our specialist
E6 film processing line ensuring quality control and timely completion of customer slide processing
orders.
Premises
Specialist Photographic has a Lease on Unit 6 Phoenix Business Park. This is set to expire in December
2019, but is a Landlord and Tenant Act protected tenancy and so must be renewed if we require.
Rent payable is £7500 per annum
Business rates payable for 2018-19 financial year are £7680
Within the lease there is an option to buy, any time during the term, at a price of £146,000. We believe
that we may be able to exercise this option some time during 2019 with a commercial mortgage.
Unit 6 is a modern and efficient property with 7 parking spaces, central heating and a mix of office and
workshop space. It has generously high eaves and we would like to gain approximately 1000 square feet
with the installation of a mezzanine floor.
Suppliers
Ag has excellent relations with a number of leading suppliers, including:
Harman Technology Limited (Ilford Photo)
Ilford Way, Mobberley, Knutsford, Cheshire, WA16 7JL.
Manufacturers of ILFORD black & white film, paper and photochemistry.
Fujifilm UK
St Martins Way, Bedford, MK42 0LF.
Manufacturers of photographic film, colour paper, photochemistry and hardware
Tetenal UK
Meridian Business Park, Leicester, LE19 1WX.
European distributor of all Kodak products and their own Tetenal photochemistry made in Germany.
Fotoimpex GmbH
Pieskower Str. 30a DE-15526 Bad Saarow, Germany
Manufacturers of specialist film products and distributors of numerous lines.
Process Supplies Limited
Mount Pleasant, London, WC1X 0AR.
UK distributor for Czech company Foma Bohemia Spol, black and white film, paper and
photochemistry.
Plant & Equipment
The majority of our specialist plant and equipment is required for our service business. We have a range
of specialist equipment which enables us to process and print efficiently and deliver the highest quality
results for the customer, but ensuring the best possible margins.
Noristu 3704HD Photographic printer for high speed genuine photographic printing with no
trade off in quality.
Noritsu 3702HD As per 3704HD
Noritsu HS-1800 (x2) Super efficient high speed film scanner for digitising photographic film in a
variety of formats. Very fast ensuring excellent margins. Results preserve quality
and feel of the analogue image, delivering it into a digital format.
Hasselblad Flextight X5 The fastest incarnation of this famous line of scanners. Delivers the ultimate in
quality available from a virtual drum arrangement, without the laborious
inconvenience of using a traditional drum scanner.
Noritsu V50 Film processor for C41 colour negative processing at high speed, high quality
Copal B&W Unique to Ag, this is a re-engineered machine for black and white processing
with high efficiency and no trade off in quality.
Copal E6 A very specialist machine which enables super high quality processing of colour
reversal film, but with great efficiency.
Lightjet 430 Ultimate wide format photographic printer. An exposure engine with gas filled
red, green and blue lasers. Exposes prints up to 50” wide x 10 feet long / 127cm
x 304cm.
Autopan 130 50” RA4 processor to compliment Lightjet 430
Kaiser Enlargers 8 no. Kaiser photographic enlargers for photographic darkroom experiences and
workshops.
Kreonite 30” Paper processor, 30”, for adaption to black and white so as to enable processing
of digital silver gelatin prints.
Framing A framing workshop with all associated equipment including professional mount
cutters, vacuum press and moulding guillotine.
Operational Risks
Our main operational risks are:
Equipment failure
Equipment obsolescence
Equipment Failure
We manage against equipment failure and the impact of it in a number of ways:
a rigorous maintenance schedule
having a number of independent technicians we are able to call on, at short notice, should there
be an failure.
retaining our own stocks of parts
having duplicate or spare machinery. We have 2 Noritsu printers, for example, which not only
increases capacity, but means with one out of action we can continue production.
These measures ensure that we are able to maintain continuous production.
Equipment Obsolescence
As the photographic market has adapted, so has the availability of certain plant and equipment. Where
we identify that machinery we are using is affected in this way, we take steps to stock pile parts and
duplicate units. We have a significant stock of parts for the Lightjet 430, which is no longer in production
(although there are new alternatives available). We also take steps to invest in new alternative plant.
