William Vose

Raleigh, NC (USA)
Role(s):
Founder/Owner/Principal

VoStone

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Location: Raleigh
Industry: Manufacturing
Year Founded: 2000
Number Employees: 10-50 people
Description: Executive Summary Located in Raleigh, North Carolina, VoStone is a stone fabrication and installation company specializing in the fabrication and installation of natural and man-made stone materials (primarily in residential kitchens and bathrooms). Founded in 2006 VoStone was formed through a combination of two established companies with years of success and experience in the stone business. The transaction enabled these companies to increase efficiency, purchasing power and sales volume, and combine manpower, experience, contacts and customers, resulting in one of the largest stone fabrication companies in the area. VoStone has developed many processes and systems that give them an advantage over its competitors and that have allowed them to enjoy significant growth, provide competitive pricing and deliver excellent service. VoStone has the capability to efficiently and profitably produce standard, semi–custom and custom products of the highest quality. VoStone has developed several unique manufacturing systems that have allowed them to produce larger than standard shop volumes day after day for much less cost and overhead than competitors. VoStone has years of experience and expertise working with natural stone and was an early adopter of man-made stone products. It has a backlog of customers, low manufacturing costs and high efficiency fabrication, all of which has enabled it to succeed even during slower economic periods. VoStone sells its products directly to production homebuilders and homeowners alike, through building product distribution, through cabinet and kitchen dealerships and through installed sales program. Originally focused in the Raleigh/Durham market, VoStone continues to expand distribution throughout the state, traveling up to 200 miles in every direction. VoStone has ah strong presence in the Fayetteville, North Carolina market, which is a higher margin territory and only an hour away from its fabrication plant. VoStone fabricates a broad portfolio of natural stone as well as man-made products. The Company is best known for its quality and consistent pricing, without gimmicks or hidden costs. Many of its competitors offer low introductory prices only to impose additional costs for installation, edging, faucet holes etc. VoStone’s prices are all-inclusive, and this engenders trust and loyalty with its customers. Rapid Organic Growth VoStone and its predecessors have successfully and profitably managed rapid growth since formation with minimal marketing efforts. This growth accelerated in 2006 as the Company continued to add distributors, large, national big-box installed sales stores (e.g., Stock Building Supply and CTI [a division of The Home Depot]), and large production builders to its client roster. With the addition of more standard pricing, standard stones, standard sinks and in stock material, VoStone expects growth to continue to accelerate in 2008 and beyond. Sales Representation As with any owner operated business James Vose is the primary sales catalyst. Many other sales are generated by customer referrals or by internally growth of VoStone’s existing customers, the Company has recently engaged a small, hand-selected sales force to cover territories that it wants to develop. VoStone’s sales force has years of sales experience and pay is commission based. Strategic Contacts in the Building Products Industry Over the years, James Vose has made many contacts with executives and decision-makers in large building products companies. These contacts have been critical to VoStone’s success in broadening its local relationships within the same organizations. These relationships include upper-level executives at Stock Building Supply, The Home Depot, Lowes Contractor Yard and Kohler. Excess Capacity Notwithstanding the high volume of business VoStone currently enjoys, it does have excess capacity at its facility, which consists of a 10,000 sq ft fabrication shop and on-site granite yard. VoStone currently runs two shifts at the facility. The Company believes that it can increase its volume and profitability through scaling its operations, value engineering and some automation. VoStone also believes it could add as much as 30% to its business with a standard third shift at its existing location without any major capital expenditures. Sale Details - Loan to VoStone Inc for 1.1 million. o Payable at 7.5% for 72 months. (VoStone will pay it ALL back). - While financed Investor retains 51% of control of VoStone. o While financed Investor earns 60% of Net Annual Profit. o If VoStone sells while under financing Investor earns 51% of Net Profit. o While financed Investor retains the option of dissolving the loan an converting it into an equity position within the company, buying back a maximum of 90% of the financed stock. - Once Paid in Full Investor retains ownership of 15% of VoStone. o For 2 years after loan has been paid Investor retains 30% of Net Annual Profit. o If company sells within the this two year time window Investor earns 20% of the net profit from sale. - The money will be spent in the following ways: o $900,000 to Jason Hardi. ? This money will buy his 50%. ? Pay off Loan to Hardi. ? Pay off Loan to Greenspoon (MAG). o 50,000 to Marble Point/Dal Tile o $10,000 Misc Facility Repairs - VoStone Inc. will be left with $140,000 liquid capital. We currently end most weeks with about $75,000. This would put us in a strong cash position. This is a cash-flow business, and this $215,000 in operating capital ensures us a strong position in a week market. Stipulations - I will continue to work diligently and will drive sales. I want a salary of $190,000; continued vehicle payments; a gas card and two to three weeks of vacation. I’ve never taken 3 weeks but like knowing it’s there if needed. While on vacation I’ve always, continued to work via email. - I want my partner to step in and handle the books; i.e. VoStone will hire an AP/AR Clerk but payroll and major accounting will be handled by investor at investors expense. Monthly meetings will track cash-flow, expenses, margins etc. - Investor must be growth minded. For clarification, I want VoStone to do 10 million in sales by the end of 2010. To do this we need to stay aggressive and we need an advertising budget as well as an additional sales professional. I have ideas. Alternative Proposal - Standard Loan and Stock Purchase What This Means…. - VoStone will very minimal debt once Marble Point is paid. - VoStone will have approximately $150,000 in Paid Material Inventory. - VoStone will have approximately $75,000 - $85,000 of liquid capital. - VoStone will have approximately $300,000 of receivables. - Nearly all of VoStone’s equipment will be paid for. Key Points - Business is up over 10% DOWN market. - Monthly Expenses will be reduced by $28,000 immediately. - If Vose, Hardi and Moody had not taken such large salaries and so many personal expenses, VoStone would have profited much more. Our philosophy was to keep the books at as close to a break-even point as possible. o We would show minimum $500,000 in net income or an unadjusted EBITDA of 10%. o Adjusted EBITDA of greater than $1,000,000 Balance Sheet Adjustment Clarifications - Automobile Expenses will be down by $27,000 annually with the removal of Moody and Hardi. - Loan Interest will be down to ZERO with loans paid off. - Payroll will be down by $320,000 with the removal of Moody and Hardi. o VoStone will need a Controller but this can be done for far less. - Accounting will be down by $72,000. ABS does our books and is owned by my partner. o VoStone will need a Bookkeeper but this can be done for far less. For further information contact the undersigned. Respectfully, W. James Vose Jr President | VoStone Inc. Cellular Phone [<a href="(URL removed)">send me a message</a>] Email (URL removed)