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Part 1.
Executive Summary
This report is based on a business plan preparation related to an online clothing store for women in the US. A startup business requires to undertake and form various strategies for the company’s efficient and effective creation. The report contains strategies that are involved in the business continuation. Essential strategies discussed entail the marketing and sales sector, financial and operational plans required in the startup, and the business’s continuous process.
The business
name is Matlab Clothing Store, which will offer classic and trendy outfits, accessories, and shoes created for women, mostly in the US. Also, the report contains strategies applied to attract women to stylish and fashionable services and products. This will create a platform for future investors wanting to venture into my company.
Introduction
Matlab’s online clothing store will offer classic and trendy accessories, shoes, and clothing created, especially for women residing in the US. Thus, business is meant to attract women searching for the best outfits by eliminating retailers to get perfects outfits online. Fashionable women will receive the best products available and delivered easily at cheap prices than other stores, making the whole process functional and cost-effective.
Business opportunity
Matlab’s online clothing store will provide designer and fashionable clothes, shoes from heels to flats, accessories such as bangles, jewelry, and bracelets, among many others. The online store will target the female inhabitants who belong to the niche section of the US population. It can be affirmed that this online store will create an edge to deliver the best quality commodities in the market. However, the online store will offer many equal opportunities to their clients:
Rentals of clothing: the Matlab online store aims to reuse products that have been used by celebrities just a single time. This means that this stock is made available online only for the public to reach them. Thus, the company can create a hiring section on their site, which will be published to buy or rent celebrities’ clothes at a cheaper cost.
Vintage clothing: the outfits world tends to revolve where old outfits become gold in future times. Various women are attracted to vintage outfits or classic clothing, unique in its quality and characteristics. Therefore, the business plan should include similar clothes, which will attract a huge public segment.
Wedding cloth rentals: Like the strategy of renting celebrity clothes, the online store will have a segment booked for wedding clothes rentals or buying. Not many women are caught up in spending a huge amount of money purchasing new wedding outfits, which serves a single purpose for their entire lives. As a result, the company will make leaps of profits and bounds through this segment on the site.
Recycling of clothes: people develop a tendency of not wearing a similar outfit for a long period, and with the help of this platform, the clothes can be recycled and put for sale on the site only at a cheaper price.
Sales and Marketing strategy
Product Differentiation
Matlab’s online clothing store will provide accessories, shoes, and clothing for the US’s women residents. The policies to be adopted will involve product differentiation, where the online store will render innovative, trendy, and unique services and products. The most significant merchandise attribute will include comfortable, stylish outfits that will meet the target group (Bettis et al., 2015). The store also will provide services that comprise of replacements, product shopping, and specific consumer regulation. The designers will always be present for the online chat menu to provide women with assistance in expanding their styles and personality.
Price
The Matlab online clothing store shall follow a premium strategy on pricing. It will target women with high-income and fashionable women who can pay any required amount to own the best quality clothes. Customers are often eager to spend their cash on excellent and important items (Eden & Ackermann, 2013). the online platform will give them the chance to access what they feel is best for them.
Promotion strategies
Matlab’s online clothing store requires electronic media to create commercials on television, fashion programs, and the internet in the current world. The major platform used by many people today is the social networking sites that will be used in higher promotion of the business, such as Twitter, YouTube, and Facebook. Significantly, the Matlab online store will have a logo captured in all advertising platforms (Hollensen, 2015). Besides, Matlab will provide various concessions in different periods, which will level the seasonality and creation of consciousness in the preliminary website.
Operational Strategy
Competition
The management of Matlab’s online clothing store will follow an investigation line into the competition using opposition. With the simplicity of accessing shopping online, the rivalry will have heightened to the clothing store’s heights. In detail, it will be advantageous to competitors in the present scenario.
Inventory
The store will have an efficient capacity of organization and storage of required levels in stock. These insufficient inventories will result in the inability to reach levels that are required to achieve profitability. The people ordering chosen commodities will dislike selecting clothes only to learn they are out of stock or not available during that period. Therefore, this must cover the requirements and necessities to maintain the inventories.
The owners also will have a reflection of offering discounts at end seasons to shift the leftovers inventories and, as a result, lower profit margin. They require being cautious in pricing their products to create profitability situations for the store (Nielsen, 2015). Since Matlab’s online clothing store will be a new business, the management will, at some time, bargain with wholesalers and set a program where they will purchase back leftover stock from the company.
Marketing
The business plan will comprise a detailed section concerning the market plan for the business and the inclusion of set policies to gain appreciation in the market. Thus, the store will set up a plan of teaming up with other businesses and collaborate to organize fashion shows and other unique events that will benefit the cooperating organizations. Also, social media is a significant platform to market the business when used rightly. However, the use of the internet is the major medium for attending the market. Hence the plan should involve various forms that are used in internet applications.
Technologies
The Matlab online clothing store will research the market to understand while interpreting the current fashion and style necessities to reach the target market. There will be an appointment of a development and research team that will take the responsibility of surveying the commerce, size, and market for the effectiveness of business operations selected by the owner.
Finances
The finance section will comprise of a working plan that will include major company financial statements. This will also have the inclusion of the income statement and a balance sheet based on reality and guesses of figures. This will also be attained using research done in the market involving competition and paying attention to particular companies while preparing financial statements for shareholders and investors (Hollensen, 2015). The financial statement of the company also will be included in the three years statement.
Financial Plan
The financial plan major consideration will involve the following:
- Maintenance of major profit margins that approximate to 15-20% while paying close attention to every day’s expenditures along with goods sold.
- Turning stock to approximately five times with the generation of sales.
- Augmenting alertness of constructing sales by using social media as well as other advertisement modes.
The financial plan will include the following:
The income statement (Profit and loss):
| PROFIT AND LOSS FORECAST | |||||||
| Year | 0 | 1 | 2 | 3 | |||
| Revenue | 0 | 480,000 | 520,000 | 625,000 | |||
| Cost of sales | 0 | 330,000 | 375,000 | 460,000 | |||
| Gross profit | 0 | 150,000 | 145,000 | 165,000 | |||
| Gross Margin | 512,265 | 608,725 | |||||
| Expenses/overheads | |||||||
| Premises (rent, rates) | 18,000 | 18,000 | 18,000 | ||||
| Wages and salaries | 8,000 | 10,000 | 12,000 | ||||
| General expenses | 2,250 | 2,450 | 2,600 | ||||
| Accountant Fees | 20,000 | 20,000 | 20,000 | ||||
| Payroll Tax | 3,800 | 4,100 | 4,400 | ||||
| Utilities | 15,000 | 17,500 | 20,000 | ||||
| Sales and Marketing | 18,000 | 20,000 | 22,000 | ||||
| Postage and Telephone | 1,650 | 1,850 | 2,150 | ||||
| Repairs and Maintenance | 2,500 | 2,750 | 3,000 | ||||
| Website Development Expenses | 35,000 | 35,000 | 35,000 | ||||
| Lease Payments | 14,000 | 16,000 | 19,000 | ||||
| Total expenses/overheads | 140,100 | 133,950 | 141,750 | ||||
| Profit before tax | 9,900 | 11,050 | 23,250 | ||||
| Tax @ 30% | 2,970 | 3,315 | 6,975 | ||||
| Profit after tax | 6,930 | 7,735 | 16,275 | ||||
| Transfer to reserves | 9,900 | 11,050 | 23,250 | ||||
Balance sheet:
| Assets | FY-1 | FY-2 | FY-3 | ||
| Current Assets | |||||
| Cash | $106,050 | $137,050 | $124,650 | ||
| Accounts receivable | $480,000 | $520,000 | $625,000 | ||
| Total current assets | $586,050 | $657,050 | $749,650 | ||
| Fixed (Long-Term) Assets | |||||
| Vehicles | $25,000 | $25,600 | $22,400 | ||
| Equipment | $35,000 | $22,400 | $17,920 | ||
| (Less accumulated depreciation) | $15,200 | $12,800 | $10,880 | ||
| Intangible assets | $50,700 | ||||
| Total fixed assets | $127,500 | $51,200 | $42,240 | ||
| Total Assets | $713,550 | $708,250 | $791,890 | ||
| Liabilities and Owner’s Equity | |||||
| Current Liabilities | |||||
| Accounts payable | $24,000 | $25,000 | $27,000 | ||
| Bank Charges Payable | $3,000 | $3,000 | $3,000 | ||
| Short-term loans | $10,000 | $10,000 | $10,000 | ||
| Accrued salaries and wages | $8,000 | $10,000 | $12,000 | ||
| Current portion of long-term debt | $150,000 | $140,000 | $130,000 | ||
| Total current liabilities | $232,220 | $227,765 | $228,575 | ||
| Long-Term Liabilities | |||||
| Long-term debt | $75,000 | $90,000 | $80,000 | ||
| Less: Loan Repayment | $7,500 | $7,500 | |||
| Total long-term liabilities | $264,500 | $236,700 | $248,790 | ||
| Owner’s Equity | |||||
| Owner’s investment | $200,000 | $225,000 | $275,000 | ||
| Net Profits | $6,930 | $7,735 | $16,275 | ||
| Total owner’s equity | $216,830 | $243,785 | $314,525 | ||
| Total Liabilities and Owner’s Equity | $713,550 | $708,250 | $791,890 | ||
Therefore, the Matlab online clothing store will consider the above scenarios for efficient and effective management of the business and the endeavors daily. Also, the shift in ratios and the trends and other significant data should be controlled and checked effectively.
Part 3.
Online business has become a thriving business and is growing at high rates (Monroe, 2015). Following this trend, the Matlab online clothing businesses wish to grow in such measures. However, starting the business requires the owner to weigh the disadvantages and advantages carefully following good research in the market. Before venturing into this line of business, the Matlab online clothing store should focus on the risks. Weaknesses, advantages, and disadvantages that one will accumulate from the platform (Barney & Hesterly, 2015). In this case, we focus on the weaknesses and risks that might lead the business to be abolished.
Weaknesses
Customer trust; it isn’t easy when establishing a brand name without physical record tracks or face-to-face association between the sales and staff. This will cost setting up an efficient customer service system that the online platform will offer.
Advertising costs; online marketing is an efficient means of attracting the customers to the products being offered, especially when the business will exist in a flooded sector.
Fraud and Security: The online sector’s growth has led to criminal elements that can damage the business’s reputation. This will happen to incase the business does invest in updated latest security systems that protect transactions and website processes.
Infrastructure costs involve dealing with the costs of having a physical space for warehousing of goods, order fulfillment, staffing, and dealing with returns.
Website costs; creating, planning, designing, securing, maintaining, and hosting a professional e-commerce website are expensive, especially when the business is new and requires growing and large sales volumes.
Concepts used
One of the biggest challenges starting the business is not knowing what ideas are good to pursue and placing on the back burner (Nielsen, 2015). It feels that the business will be swimming in opportunities from partnerships and great future innovators. Like other entrepreneurs, my business’s challenge will be deciding what ideas to spend money and time on. To understand this concept, business management should do the following:
Talk to the customers; this will raise the chances of thriving substantially by interviewing potential clients. Understand what they talk about your business as you learn about their problems and learn how to solve them.
Show your potential customers the prototype of your product; This can be achieved by sharing and trying the business solutions by describing your services’ results and the type of deliverables for the business.
Figure out what clients are willing to pay; compare the business competitors’ pricing and decide the means you want to differentiate the business. Compare the value of the business you have with what is already in the market and create your products’ price based on that.
Find clients who think that this business idea sacks; listen to their reasons as to why the business might fail, and let them identify the business’s weak points. From their assumptions, find potential pit-falls that you have not found. This will help in understanding and finding ways of how you deal with business issues.
References
Barney, J. B., and Hesterly, W. (2015). Strategic management and competitive advantage concepts and cases. Pearson
Bettis, R. A., Gambardella, A., Helfat, C., and Mitchell, W. (2015). Qualitative empirical research in strategic management. Strategic Management Journal, 36(5), 637-639.
Eden, C., and Ackermann, F. (2013). Making strategy: The journey of strategic management. Sage.
Hollensen, S. (2015). Marketing management: A relationship approach. Pearson Education
Monroe, K.B., Rikala, V.M., and Somervuori, O., 2015. Examining the application of behavioral price research in business-to-business markets. Industrial Marketing Management, 47, pp.17-25.
Nielsen, L., 2015. Product Positioning and Differentiation Strategy. Hearst Newspapers.