Mainstreet Brick Business Plan — Route to Market and Sales Strategy
Selling into builders' merchants, contractors and direct site delivery, and the pricing and credit terms each channel brings.
Route to Market and Sales Strategy
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- Overview & contents
- i. Important Notice and Basis of Preparation
- 1. Executive Summary
- 2. The Unit Economics of Brick Making
- 3. Market Analysis
- 4. Products and Positioning
- 5. SWOT and Competitive Position
- 6. Site, Plant and Production
- 7. Route to Market and Sales Strategy
- 8. Regulatory, Environmental and Quality Compliance
- 9. Management and Organisation
- 10. Capital Requirement and Funding
- 11. Financial Projections
- 12. Break-Even Analysis
- 13. Debt Service and Working Capital
- 14. Investment Returns
- 15. Sensitivity and Scenario Analysis
- 16. Value Creation Levers
- 17. Risk Management
- 18. Implementation Timeline
- 19. Conditions for Success and Exit Options
- 20. Key Performance Indicators
- 21. Key Assumptions
- 22. Conclusion
- A. Appendix A: Consolidated Financial Summary
- B. Appendix B: Capital and Depreciation Schedules
- C. Appendix C: Funding and Debt Schedules
- D. Appendix D: Risk Register
- E. Appendix E: Glossary
- 7.1 The credit problem, stated directly
- 7.2 Ramp strategy
|
Channel |
Share of volume targeted |
Commercial characteristics |
|---|---|---|
|
Builders’ merchants and hardware groups |
40% |
Volume anchor and credit quality; lower price per unit but reliable offtake and faster payment; requires consistent supply and certification |
|
Residential contractors and developers |
30% |
Better pricing and project-based demand, but concentrated credit exposure; requires disciplined credit vetting |
|
Government, municipal and housing programmes |
20% |
Specification-driven and volume-rich; slow payment cycles and B-BBEE-weighted procurement; strong fit for block products |
|
Direct retail and owner-builders |
10% |
Highest margin per unit, cash on collection, no credit risk; small volumes but valuable during the ramp |
7.1 The credit problem, stated directly
Selling to contractors means extending credit to an industry with chronic insolvency. This plan carries a 1.5 per cent bad debt provision against revenue — R786 750 a year at Year 3 volumes — which is a deliberate charge, not a contingency.
|
Year 1 |
Year 2 |
Year 3 |
Year 4 |
Year 5 |
|
|---|---|---|---|---|---|
|
Revenue, R’000 |
35 343 |
44 631 |
52 450 |
58 479 |
63 685 |
|
Bad debt provision at 1.5%, R’000 |
530 |
669 |
787 |
877 |
955 |
|
Trade debtors at 40 days, R’000 |
3 873 |
4 891 |
5 748 |
6 409 |
6 979 |
|
Debtors as a share of revenue |
11.0% |
11.0% |
11.0% |
11.0% |
11.0% |
- Credit vetting before first delivery, with a trade reference check and a company search on every new account.
- Individual customer limits set against observed offtake rather than against what the buyer requests.
- Stop-supply enforced at agreed arrears, by the system rather than by negotiation. A limit that is discussed is not a limit.
- Credit insurance on the largest accounts, where concentration exceeds what the balance sheet can absorb.
- A deliberate cash-and-merchant weighting during the ramp, when the business can least afford a bad debt.
7.2 Ramp strategy
Because cash break-even sits above 80 per cent of capacity by Year 3 and the plant is below it in Year 1, the sales plan must front-load. The plan targets signed supply agreements covering 40 to 50 per cent of capacity before commissioning, achieved by appointing the sales manager six months ahead of production and pre-selling from the plant specification and a sample batch produced on the supplier’s demonstration machine.
Appointing a sales manager before there is a product to sell feels premature and costs money during a period with no revenue. It is nonetheless the single highest-return expenditure in the implementation timeline, because it converts the ramp from a hope into a contracted schedule. Commissioning a plant and then looking for customers is the most common way brick start-ups fail, and the base case in this plan shows the business cannot afford a slow ramp.