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Fair Trade Store Business Plan

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  • 1. Business PlanThe Fair Trade StoreStudent Cooperative Suppor ting Fair Trade Practices Worldwide Submitted to: Martin Burt, Professor Global Center for Social Entrepreneurship University of the Pacific Stockton, California Written by: Fred Sconberg July, 2010
  • 2. TABLE OF CONTENTSExecutive Summary 3Fair Trade Principles 4Need and Opportunity Definitions 6Social Impact Model 12 a. Mission 12 b. Vision of Success 13 c. Value Proposition 13 d. Value Creation 13 e. Description of the Innovation 14 f. Customers and Beneficiaries 14 g. Target Mission and Financial Returns 14Implementation Strategy 15 a. Strategy to serve the market 15 b. Idea Generation Process 16 c. Sustainable Advantage 18 d. Team and Governance 19 e. Operations Plan 19 f. Installed Organizational Capacity 20 g. Current Financial Condition 20 h. Financial Plan 21Projected Mission and Financial Returns 23Risks, Risk Mitigation, and Exit Strategy 24Replication and Scalability 25Monitoring of Social Impact of Organization 26Business Plan Goals and Objectives with a Time Line 26Appendices 28 2
  • 3. Executive SummaryThe concept of The Fair Trade Stores was originally conceived by Kelly Walker,President of the Council for Social Entrepreneurship at the University of the Pacificin Stockton, California and Fred Sconberg, Entrepreneur from Sacramento,California. At issue was how could students in the United States support millions ofsmall-scale producers of ethnic crafts, garments and food products in developingcountries who do not generate enough income to provide a dignified life for theirfamilies.There are a significant number of people in the world living below the poverty level.Of the world’s 2005 population of 6.46 billion people, 5.15 billion or 79.7% earnedless then $10.00 per day. (World Bank Development Indicators, 2008). This samereport features the number of people earning below $1.25 per day, was 1.4 billionpeople. These people are primarily living in developing countries. Developingcountries are not defined on poverty levels alone. They are those countries, whichare improving or need to improve, household, community, societal and various otheraspects of life.The direct action of the Fair Trade Store is purchasing ethnic crafts, garments andfood from poor producers in developing countries at a price high enough for theproducer to earn her / his way out of poverty. The systems-changing social impactwill come with scaling the organization. As the Fair Trade Stores grow they will beable to purchase and sell more products, in turn increasing the income of more poorproducers. For each item sold through a Fair Trade Store the producer benefits witha higher price per-piece and the seller, the college student, earns an income tosupport her / his college expenses. The third beneficiary is the recipient of thecommunity development funds, which is democratically chosen each year.The Fair Trade Store’s principal innovation is the use of a college student ownedconsumer cooperative to purchase and sell ethnic crafts, garments and food producedin developing countries by people living below the poverty level. The direct purchaseremoves the importer and wholesaler, which increase the income to the producer.The college campus location takes advantage of the college student’s need foradditional income. College students have been the leaders in the Fair Trademovement. Educating the students on Fair Trade principles, having them promoteFair Trade on campus and in their communities and learning entrepreneurial skillsall are part of the innovation. The Fair Trade Stores will purchase and sell productsfrom small-scale producers of ethnic crafts and food products in developingcountries, according to 9 Fair Trade Principles established by the Fair TradeFederation.College students are leaders of the Fair Trade movement in the United States. Onestudent organization has already been formed. The Fair Trade Stores believes intheir objectives. The United Students for Fair Trade, (USTF) has over 150 activestudent Fair Trade organizations, they list as their core objective to support an 3
  • 4. economic system, which empowers producers so that they may work towardseconomic, social, and environmentally sustainability. They do this by raisingawareness of and expanding demand for Fair Trade alternatives, both on campusand in communities. Through the process, they refine relationships betweenproducers and consumers, and engage in the ongoing struggle to build people’spower. Their second core objective is to expand student empowerment by workingtogether as students to cultivate the consciousness, capacity and creativity that willproactively shape a global economy based on equity, justice and integrity. (UnitedStudents for Fair Trade, 2009)Student organizations have been targeted to be owner / members of The Fair TradeStores due to the raising cost of college education and the decreased availability offinancial aid in the United States. For the 2008 – 2009 academic year, annual pricesfor undergraduate tuition, room, and board were estimated to be $12,283 at publicinstitutions and $31,233 at private institutions (National Center for EducationalStatistics, 2009)(table 334). Financial aid was provided for 66% of all undergraduatesin 2007 – 08. For those students who received financial aid, the average amountreceived was $ 9,100. Fifty-two percent received grants averaging $4,900, 38% tookout an average of $7,100 in student loans and 7% received aid through work-studyjobs averaging $2,400 in wages. (National Center for Educational Statistics, 2008)The net impact of these statistics is college students need jobs. The Fair Trade Storeswill create jobs on college campuses for college students.The Fair Trade Stores will support millions of small-scale producers of ethnic crafts,garments and food products in developing countries who do not generate enoughincome to provide a dignified life for their families, through purchasing theirproducts and selling them to consumers in the United States. In the process, collegestudents will earn an income; promote the Principles of Fair Trade and learn sociallyand environmentally responsible entrepreneurship.Fair Trade Principles 1. Create Opportunities for Economically and Socially Marginalized Producers – Fair Trade is a strategy for poverty alleviation and sustainable development. Members create social and economic opportunities through trading partnerships with marginalized producers. Members place the interests of producers and their communities as the primary concern of the enterprise. 2. Development Transparent and Accountable Relationships – Fair Trade involves relationships that are open, fair, consistent and respectful. Members show consideration for both customers and producers by sharing information about the entire trading chain through honest and proactive communication. They create mechanisms to help customers and producers feel actively involved in the trading chain. If problems arise, members work cooperatively with fair trade partners and other organizations to implement solutions. 3. Build Capacity – Fair Trade is a means to development producers’ independence. Members maintain long-term relationships based on 4
  • 5. solidarity, trust and mutual respect, so that producers can improve their skills and their access to markets. Members help producers to build capacity through proactive communications, financial and technical assistance, market information and dialogue. They seek to share lessons learned, to spread best practices, and to strengthen the connections between communities, including producer groups.4. Promote Fair Trade – Fair Trade encourages an understanding by all participants of their role in world trade. Members actively raise awareness about Fair Trade and the possibility of greater justice in the global economic system. Members demonstrate that trade can be a positive force for improving living standards, health, education, the distribution of power, and the environment in the communities with which they work.5. Pay Promptly and Fairly – Fair Trade empowers producers to set prices within the framework of the true costs of labor time, materials, sustainable growth, and related factors. Members take steps to ensure that producers have capacity to manage the process. Members comply with or exceed international, national, local and Fair Trade minimum standards for their employees and producers. Members seek to ensure that income is distributed equally at all times, particularly equal pay for equal work by women and men. Members ensure prompt payment to all of their partners. Producers are offered access to interest-free pre-harvest or pre-production advance payment.6. Support Safe and Empowering Working Conditions – Fair Trade means a safe and healthy working environment free of forced labor. Throughout the trading chain, members cultivate workplaces that empower people to participate in the decisions that affect them. Members seek to eliminate discrimination based on race, caste, national origin, religion, disability, gender, sexual orientation, union membership, political affiliation, age, marital status or health status. Members support workplaces free from physical, sexual, psychological or verbal harassment or abuse.7. Ensure the Rights of Children – Fair Trade means that all children have the right to security, education and play. Throughout the trading chain, members respect and support the UN Convention on the Rights of the Child, as well as local laws and social norms. Members disclose the involvement of children in production and do not support child trafficking and exploitative child labor.8. Cultivate Environmental Stewardship – Fair Trade seeks to offer current generations the ability to meet their needs without comprising the ability of future generation to meet their own needs. Members actively consider implications of their decisions on the environment and promote the responsible stewardship of resources. Members reduce, reuse, reclaim and recycle materials whenever possible. They encourage environmentally sustainable practices throughout the entire trading chain.9. Respect Cultural Identity – Fair Trade celebrates the cultural diversity of communities, while seeking to create positive and equitable change. Members respect the development of products, practices, and organizational models based on indigenous traditions and techniques to sustain cultures and 5
  • 6. revitalize traditions. Members balance market needs with producers’ cultural heritage.(Fair Trade Federation)Need and Opportunity DefinitionsMarket NeedMillions of small-scale producers of ethnic crafts, garments and food products indeveloping countries do not generate enough income to provide a dignified life fortheir families. There are a significant number of people in the world living below thepoverty level. Of the world’s 2005 population of 6.46 billion people, 5.15 billion or79.7% earned less then $10.00 per day. (World Bank Development Indicators, 2008).This same report features the number of people earning below $1.25 per day, was 1.4billion people. These people are primarily living in developing countries. They arethose countries, which are improving or need to improve, household, community,societal and various other aspects of life.To serve millions of people the Fair Trade Stores are going to have to enlistthousands of people to buy and sell the products from these marginalized producers.One such large group of people is college students. College students need jobs toearn income to pay for the rising cost of college tuition and related college expenses.In addition, student organizations on college campuses do not earn enough funds tomake charitable donations, and student financial aid is underfunded.Current TrendsThe social, political, legal and economic trends affecting poverty in developingcountries vary by country. People are not in poverty because they are lazy, or lackindustriousness, or because they don’t save, or because of political corruption or alack of democracy. People are in poverty because they don’t have enough money tobuy food, housing, healthcare and education. People in poverty cannot purchaseprivate property and cannot accumulate wealth. They remain poor because they lackthe means of production. They cannot buy land, machines, supplies and technologywithout money.Poor farmers are allowed to farm half-fertile land without access to water, electricityand proper tools. Their quality is low, production is low and the cost to farm is high.This is complicated when developed industrialized countries offer free or subsidizedfood below market prices. In an effort to support hunger in developing countries aredonating food to the undernourished. While these donations aid many it is actuallyundercutting the local farmers, who cannot compete with the free or subsidizedproduct donations and are driven out of work and into poverty.In developing countries traditional small artisans, weavers, and tailors are competingwith large international corporations. The economies of scale within largecorporations includes automation and access to natural resources, which allow the 6
  • 7. large corporations to sell products at prices well below the hand crafters, no materhow cheaply they are prepared to work. These local artisans lack access to efficientmeans of production and struggle to compete. Most lack an education and are livingon the outskirts of society. They also have little representation or voice in public andpolitical debates, making it harder to escape poverty.Anther complicating factor is the developing countries governments desire and needto attract foreign investments. These governments are competing for foreigncorporations to place new factories in their countries. They are competing at such alevel that they are providing lower standards, reduced wages and cheaper resources.The effects are damaging to their economies.For those crafters and farmers currently producing products they are findingdifficulties selling their products for a fair price. The Fair Trade Principles haveevolved over the past ten years to provide a structure for organizations to followworldwide. Even with these principles in place the crafters, garment workers andfood processors have struggles. “Mom and pop importers have a lot of expenses andthe big fair trade companies take profit margins beyond the norm in the ordinarylocal commercial industry.”(Alaniz, 2010) Maria Alaniz wrote these words inresponse to a request from a Ugandan Woman, Alexander McDonnell: How do yousell your ethnic crafts?The discussion followed Maria’s experience selling rural women’s jewelry to U.S.markets through various buyers. She mentioned the difficulties of communication inforeign languages, USA Customs, Mexico Customs, export paperwork requirements,shipping charges and getting paid. Her experience had been in working with fairtrade importers and wholesalers and local consolidators. The local consolidatormakes 20% – 30%, and the fair trade companies are selling the product at 400%. Theconsolidator and customer are determining what the producer will receive. She alsomentioned the volume business, to put lots of product in the market at low prices,generated by the big fair trade wholesalers did not keep producers working 52 weeksper year. To fill these larger orders the jewelry makers worked hard for a short time,earned low pay for hard work and then had no work.Root CausesThere are various reasons why small ethnic crafters, garment workers and farmers indeveloping countries are not able to earn a decent income. For example, a verysmall percentage of the money a consumer spends on an item actually gets to theproducer. Most people living in developing countries do not have enough money.For survival they need to work hard and earn their money, anyway they can. Manyhave turned to entrepreneurship and are making crafts or growing food. Others havebecome merchants, wholesalers and exporters. All share in the available incomefrom the sale of the crafts and food items. The Principles of Fair Trade are intendedto be sure each person the product cycle, from production to sale to the consumer, istreated with respect and earns a fair amount of money for their work. 7
  • 8. Small producers have limited choices in which to sell their products. They generallylack the ability to communicate. There are language barriers. Phone and Internetservice is poor or non-existent. There are transportation barriers. They do not havecars, trucks, rail cars or airplanes to move their products to market. Their choice tosell their wares is limited to those who visit their villages and buy from them in theircommunities. Most of these buyers are also poor and cannot pay much for theproducts.Selling to the American consumer offers the poor producers access to consumerswith more cash, who are accustomed to paying more for handcrafted items. Inselling to the American consumer the producers have faced unique problems. Momand pop importers have a lot of expenses so they cannot pay ethnic crafters andfarmers a fair price. Large fair trade companies take profit margins beyond the normcompared to the local commercial industry. This is a result to their buying patterns.The large companies, even Fair Trade Companies, want to buy in large quantities.First to negotiate a lower price per piece, second to fill a container to reduce the perpiece shipping charges and third USA customs, the developing country’s customs,export paperwork requirements, shipping charges, foreign currency and collectingpayment all cost money. Handling items in bulk reduces the per-piece cost andincreases the profit margin for the importer.The impact on the small producer is they often work very hard for a lower price per-piece and then have no buyer for a long period of time. The producer desires to havea higher per-piece price and a more frequent buyer, so they can have an income 52weeks a year.In many cases the importer is determining what the producer will receive. Theypush for the lowest price they can get. This puts the producer is in a desperateposition. They need money and most often accept what the buyer offers. Mostproducers act independently and are not organized into cooperatives or producerunions so they are acting alone, desperate for money.The public awareness of Fair Trade products in the Unites States is extremely low.U.S. per capita consumption of fair trade products in 2007 was $2.98. Compare thisto the European leading $25.87 in Switzerland and $14.21 in the UK. (Krier, 2008)Increasing public awareness of Fair Trade products through The Fair Trade Storeson college campuses will certainly impact U.S. consumer awareness.Environmental LandscapeThere are a variety of factors, which affect the amount of payment, which eventuallyreaches the hands of the small artisan, garment worker and farmer. While the FairTrade Principles are in place and many organizations have adopted them, the FairTrade movement is still young. According to the Fair Trade Labeling OrganisationsInternational (FIO) and the International Fair Trade Organisation (IFAT) as of 8
  • 9. August 2008 there was no association bringing together specialized retailers.(Krier,2008) Without a common voice it has been difficult to get the Fair Trade messageout to the United States consumer.Of those who have opened a number of fair trade specialized shops, many of themare directly linked to larger importers. Many of these are importers who run one ortwo retail stores see themselves as importers plus Fair Trade shops where inEuropean countries have retailers have dissociated from the importing business andconcentrated on retailing.(Krier, 2008) This trend is important to note as the U.S.per capita consumption of fair trade products in 2007 was $2.98. Compare this to theEuropean leading $25.87 in Switzerland and $14.21 in the UK.(Krier, 2008) Anincrease in availability of fair trade products at market prices will undoubtedly have adramatic increase in the U.S. consumption of fair trade products. It is with thislarger U.S. consumption that The Fair Trade Stores will have a positive impact onthe millions of small-scale producers of ethnic crafts, garments and food.Examples of the current Fair Trade market in the United States are fair tradeproducts, primarily coffee, are being sold through supermarkets, organic food shops,whole food shops, cafes, restaurants, on-line, on airlines, in Starbucks, McDonaldsand most major retailers. Each of these organizations chooses to sell a limitedquantity of products. Even though they are selling a limited quantity of productsthey are making an impact. Together in 2007 the United Kingdom and the UnitedStates generated over $1.75 billion in net retail sales of fair trade labeledproducts.(Krier, 2008)Fair Trade retailing and wholesaling in the United States has three major players, alllocated on the Eastern part of the country. Ten Thousand Villages began it all in1946. In 2007 they had 20 shops of their own and sold their products through 160more shops, 57 of which are operated under a franchise agreement. Ten ThousandVillages sells handicraft products from over 100 producers in more then 30 countries.SERRV International recently changed its name to A Greater gift. Started in 1949,A Greater Gift now wholesales to more then 200 fair trade or gift shops nation-wideand mailed out over 975,000 catalogs in 2007. The third major player is EqualExchange, which was founded in 1986. They concentrate on a food onlyassortment. Equal Exchange is a worker cooperative, owned and democraticallycontrolled by its employees.(Krier, 2008) These organization are having an impact,however combined they operate less then 400 Fair Trade shops. By placing a FairTrade Store on 4300 college campuses The Fair Trade Store can grow retail FairTrade shops tenfold.Additional players in the United States marketing of fair trade products are: World ofGood, Inc in cooperation with eBay. They have established a significant on-lineconnection between the producers and the consumers. TransFair USA has licensedover 760 partners, as of 2007, to sell Fair Trade Certified labeled products. GlobalExchange runs three Fair Trade shops to support their international human rightsorganization. Other highly specialized fair trade business include, A differentApproach, Baskets of Africa, Bridge for Africa, Economic Development Imports, 9
  • 10. Global Goods Partners, Handmade Expressions, Peacecraft and WorldCrafts.(Krier,2008)While analyzing the above problems which artisans, garment workers and poorfarmers in developing countries face, as well as conditions surrounding the marketingof the goods they produce, the team preparing this business plan has pinpointedseveral opportunities to solve the problem of meager incomes.OpportunityThe opportunity for the Fair Trade Stores is to increase per capita consumption of$2.98 in the United States to the 2007 level of $14.21 in the United Kingdom.College students’ word of mouth advertising and the opening of Fair Trade Stores oncollege campuses will accomplish this. The current leaders in the United States forretail sales of Fair Trade products, Ten Thousand Villages and A Greater Gift haveonly 400 shops combined. The U.S. consumer does not have access to fair tradeproducts. The over 4000 college campuses will open up the U.S. availability of fairtrade products. Additionally, the largest importer, Ten Thousand Villages onlyworks with 100 producers from 30 countries. The Fair Trade Store’s mission is topurchase directly from 1000 producers to allow them to earn their way out ofpoverty. Working together to spread the message of Fair Trade, these organizationslisted in this section and The Fair Trade Stores, will create a higher U.S. awarenessand generate a U.S. market for the millions of small-scale producers of ethnic crafts,garments and food products from developing countries.The Fair Trade Stores will provide a market for small-scale artisans and farmers indeveloping countries to sell their products directly to U.S. consumers. The FairTrade Store will raise the standard of living for poor producers from developingcountries through small and frequent purchases and sale of their crafts and foodproducts. By purchasing frequently, the producer has a steady income and can buysupplies and materials in smaller quantities. This will allow them to change designsas rapidly as trends change. Smaller orders also tie up less cash. Storage andwarehousing costs are reduced with smaller orders. Each of these small orderbenefits is unique to The Fair Trade Store model. Plus the income generated by theproducers can be used to purchase basic needs such as: water, food, shelter, clothing,health care and education for themselves, their families and their community.The Fair Trade Store would be owned and operated by students. A Fair Trade Storeoperating on a College campuses in the United States will provide students anincome to assist with their college expenses, and in the process educate a generationof future leaders on the value of entrepreneurship and the power of the consumerdollar in eradicating poverty and sustaining our environment.The location on the college campus also allows for a built in market. Spending bycollege students in the United States exceeds $60 billion annually. This amounts toan average of $13,000 for each student. Of this amount 19% is on discretionary 10
  • 11. spending. College students spend most of their discretionary spending on food,which exceeds $11 billion on snacks and beverages alone. Hundreds of dollars perstudent per semester is spent on coffee. It is estimated over $5 billion is spent onclothes and shoes. For the college student quality products, a positive message and aclear value drive their spending. All of these are characteristics of the products,which abide by the Fair Trade Principles. Additionally, College students are foundto be loyal purchasers and active word-of-mouth advertisers.(Martindale, 2008)Word of mouth has been found to be an important introduction to fair tradeproducts. (Alter Eco Fair Trade , 2008) Placing Fair Trade Stores on or near Collegecampuses will increase exposure of Fair Trade products. These talkative studentswill promote to the millions of college students and the communities in which theseschools are located the principles of Fair Trade.Lower competitive prices will be accomplished by removing the importer and themiddleman from the supply chain. Purchasing direct from the producer will allowlocal artisans and farmers in developing countries to earn more for their work andthe consumer to pay less for the items. Locating Fair Trade Stores on collegecampuses and being operated, as a consumer cooperative will reduce overhead.Store design and layout will be inexpensive and comprised of recycled and reusedfurniture and store fixtures.The enrollment in United States degree-granting institutions in 2007 was 18.2 millionstudents(National Center for Educational Statistics, 2009, p. Chapter 3). Thisenrollment is projected to grow to 20.1 million students by 2017. (National Centerfor Educational Statistics, 2009, p. table 188) These statistics demonstrate thegrowing enrollment on college campus, the increased potential purchasing potential,the increased word-of-mouth marketing plus the need for more student jobs due tothe increased costs and limited financial aid.Placing Fair Trade Stores on or near college campuses would provide jobs forstudents, while educating students on Fair Trade principles. The Fair Trade Storewould become the sales agent for the crafts and foods produced by the poor craftersand farmers in developing countries. Students would learn ethical, social andenvironmental sustainable skills while financially supporting people earning theirway out of poverty. These social business skills will position them well for thefuture.Fair Trade Stores on college campuses would provide market opportunities, lesscomplicated import-export mechanisms, and less expensive market access forproducers of ethnic crafts and fair trade food products.BarriersThere are many challenges that organizations face when trying to solve the problemof low income for small-scale artisans; garment workers and farmers such as, 11
  • 12. interpretations of fair trade vary widely with many misinformed consumers. It is aninvolved set of principles, which comprise Fair Trade standards. The problem isU.S. consumers have so many product options many do not take time to learn all thestandards required for a product to be labeled fair trade. The consumers tend to lookat quality, design, function and price when making their buying decision. For TheFair Trade Stores to be successful they need to educate the consumer that humansare valued at every level of the supply chain. At the same time the Fair Trade Storeswill work with the producers to educate them on design trends and choice ofmaterials so appropriate retail prices can be maintained.Another barrier is the lack of knowledge about Fair Trade. Awareness of fair trade isfairly widespread with two-thirds of respondents familiar with the term. Theirinterpretations of fair trade, however, vary widely, and indicate that manyconsumers are misinformed or uninformed about the concept. (Alter Eco Fair Trade, 2008) A consistent message from all the Fair Trade advocates, importers, retailersand The Fair Trade Store will have a positive impact on U.S. consumers awarenessof Fair Trade products and the Fair Trade Principles. This lack of knowledge affectsthe small-scale artisan and farmer as it keeps the market in the United States low.Growing the market will increase the number of marginalized people who can earntheir way out of poverty.After consumer awareness, price and availability are the biggest barriers to fair tradeconsumption. It is believed consumers will generally not pay a premium for fairtrade items, however they will pay a premium for brands they trust. Currently thereis no dominant Fair Trade brand in the minds of consumers. The Fair Trade Storesaim to change this by providing product consistency and branding. At present themajority of people have not seen Fair Trade products where they normally shop.(Alter Eco Fair Trade Study, October 2008) While the availability of fair trade itemsis still limited, the opening of The Fair Trade Store on colleges will increase FairTrade product availability ten fold.Social Impact ModelMissionThe mission of The Fair Trade Store is to help artisans and food producers fromdeveloping countries earn an income, which is above the poverty line, by marketingtheir goods in Fair Trade Stores on college campuses across the United States.A secondary mission of the Fair Trade Store organization is to provide income forcollege students and their student organizations through the sale of Fair Tradeproducts from low-income producers.An extra benefit of The Fair Trade Store is the education on social entrepreneurship;social enterprise and the impact individuals can have on poverty around the worldthrough the use or their consumer dollars. 12
  • 13. Vision of SuccessWe envision a day when – by selling through The Fair Trade Stores on collegecampuses across the United States, artisans and producers of fair trade food productsin developing countries will be able to earn an income which allows their families tolive in dignity.Value PropositionThe Fair Trade Store’s greatest value is to those small-scale ethnic crafters, garmentworkers and farmers in developing countries. These people, who have struggled toearn an income through their hard work, will now have a market of U.S. consumersto buy their products. This earned income will provide them with money to buyfood, water, clothing, healthcare and education for their children and themselves.With these enhancements to their lives they can live a life of dignity.To the students at America’s colleges, they will earn an income selling products fromsmall-scale ethnic crafters, garment workers and farmers in developing countries.This income will be useful to them to help with the increasing cost of their collegeexpenses. The college costs are continuing to increase while financial aid and work-study programs are decreasing. College students need jobs, which The Fair TradeStores will provide.To the recipients of the democratically selected community development funds, TheFair Trade Stores will provide 5% of annual gross sales to support their programs.These community development funds will support those producers in the developingcountries with training and the advance purchase of supplies.An additional value of The Fair Trade Stores is the education of a generation ofcollege students on the Principles of Fair Trade. With this education, when thesestudents mature into their careers, they will be able to influence large populations onthe ethical and dignified treatment of people and the land.Value CreationThe value created is the dignified life the artisans and farmers live due to theircapacity to buy water, food, clothing, sanitation, healthcare, and education. Thestudents will leave college with less debt as they begin their careers. The recipients ofthe community development funds will have a steady source of income to serve thebeneficiaries of their programs. The future of treating people and the land withdignity and respect will be well served by a generation of educated, compassionateleaders. 13
  • 14. Description of the InnovationThe Fair Trade Store’s principal innovation is the use of college students’ ownedconsumer cooperative to purchase and sell ethnic crafts, garments and food producedin developing countries by people living below the poverty level. The direct purchaseremoves the importer and wholesaler, which increase the income to the poorproducer. The college campus location takes advantage of the college student’s needfor additional income. College students have been the leaders in the fair trademovement. Educating the students on fair trade principles, having them promotefair trade on campus and in their communities and learning entrepreneurial skills allare part of the innovation.Customers and BeneficiariesThe beneficiaries of the direct action of the Fair Trade Store’s purchasing ethniccrafts, garments and food are the poor producers in developing countries who arepaid a price high enough to earn her / his way out of poverty. The systems-changingsocial impact will come with scaling the organization. As the Fair Trade Stores growthey will be able to purchase and sell more products, in turn increasing the income ofmore poor producers. For each item sold through a Fair Trade Store the producerbenefits with a higher price per-piece and the seller, our second beneficiary is thecollege student who earns an income to support her / his college expenses. The thirdbeneficiary is the recipient of the community development funds, which isdemocratically chosen each year.The initial customers of The Fair Trade Store will be college students. Spending bycollege students in the United States exceeds $60 billion annually. This amounts toan average of $13,000 for each student. Of this amount 19% is on discretionaryspending. College students spend most of their discretionary spending on food,which exceeds $11 billion on snacks and beverages alone. Hundreds of dollars perstudent per semester is spent on coffee. It is estimated over $5 billion is spent onclothes and shoes. Quality products, a positive message and a clear value drivecollege student spending. (Martindale, 2008)As The Fair Trade Stores grow additional customers will be local business, otherretailers wishing to stock an assortment of fair trade products, individuals and theUniversity. The student sellers of the Fair Trade products will conduct direct sales intheir community as well as selling at local farmers markets.Target Mission and Financial ReturnsThe Fair Trade Stores target mission return is to pay 30% of the total retail salesdollars directly to 500 ethnic crafters and 500 fair-trade producing farmers indeveloping countries. With a financial plan of gross retail sales of $1,250,000 in thethird year of operations the Fair Trade Stores plan to purchase $375,000 in goods 14
  • 15. from these crafters and farmers in 2013 and increasing thereafter. This represents anincrease of $375 annually to each producer.The Fair Trade Store’s secondary target mission return is to pay 30% of total retailsales to United States College students in the form of wages, salaries andcommissions. With total retail sales projected to be $1,250,000 in 2013 this willprovide $375,000 of income to 165 students in the third year of operations. This iscalculated to be $2,250 per student, which amounts to $250 per month for 9 months.The Fair Trade Stores third target mission return is 5% of total retail sales to Studentorganizations to donate to charities of their choice. The charities may be in theircollege communities or in a developing country. This would amount to $62,500 in2013 and growing each year thereafter.The target annual retail sales volume per Fair Trade Store is $100,000 per campus.To achieve $1,250,000 in annual sales there will be 12 college campuses operatingFair Trade Stores by December 2013.Implementation StrategyStrategy to Serve the MarketProvide a market for entrepreneurs in developing countries to sell their productsdirectly to U.S. consumers. The Fair Trade Store will raise the standard of living forpoor entrepreneurs from developing countries through the purchase and sale of theircrafts and food products. The income generated by these individuals can be used topurchase basic needs such as: water, food, shelter, clothing, health care andeducation for themselves, their families and their community.A Fair Trade Store operating on all College and University campuses in the UnitedStates. The Fair Trade Store would be owned and operated by students. The ethniccrafts and food purchased by Fair Trade Stores will provide an income toentrepreneurs in the developing world. This income will help the producers earntheir way out of poverty. For the U. S. based students it will provide an income toassist with their college expenses, and in the process educate a generation of futureleaders on the value of entrepreneurship and the power of the consumer dollar ineradicating poverty and sustaining our environment.Spending by college students in the United States exceeds $60 billion annually. Thisamounts to an average of $13,000 for each student. Of this amount 19% is ondiscretionary spending. College students spend most of their discretionary spendingon food, which exceeds $11 billion on snacks and beverages alone. Hundreds ofdollars per student per semester is spent on coffee. It is estimated over $5 billion isspent on clothes and shoes. Quality products, a positive message and a clear valuedrive college student spending. They are also found to be loyal purchasers and activeword-of-mouth advertisers. (Martindale, 2008) 15
  • 16. Word of mouth is an important introduction to fair trade products. (Alter Eco FairTrade , 2008) Placing Fair Trade Stores on or near College campuses will increaseexposure of Fair Trade products and the Fair Trade principles to the millions ofcollege students and the communities in which these schools are located.The availability and price was a significant barrier to fair trade consumption, withavailability factoring as the larger issue for existing fair trade purchasers, and pricebeing more of a concern for non-fair trade buyers. (Alter Eco Fair Trade , 2008)Increasing the accessibility of fair trade products to the 4352 degree-grantinginstitutions. (National Center for Educational Statistics, 2008, p. table 5) willdramatically increase availability of fair trade products. The price of fair tradeproducts purchased through The Fair Trade Stores on or near college campuses willbe competitive.Lower competitive prices will be accomplished by removing the importer and themiddleman from the supply chain. Purchasing direct from the producer will allowthem to earn more for their work and the consumer to pay less for the items.Locating on college campuses and being operated, as a consumer cooperative willreduce overhead. Store design and layout will be inexpensive and comprised ofrecycled and reused furniture and store fixtures.Fair Trade Stores on college campuses would provide market opportunities, lesscomplicated import-export mechanisms, and less expensive market access forproducers of ethnic crafts and fair trade food products.The enrollment in United States degree-granting institutions in 2007 was 18.2 millionstudents (National Center for Educational Statistics, 2009, p. Chapter 3). Thisenrollment is projected to grow to 20.1 million students by 2017. (National Centerfor Educational Statistics, 2009, p. table 188)These statistics demonstrate the growing enrollment on college campus, theincreased costs and limited financial aid. Placing Fair Trade Stores on or nearcollege campuses would provide jobs for students, while educating them on FairTrade business principles. The Fair Trade Store would become the sales agent forthe crafts and foods produced by the poor crafters and farmers in developingcountries. Students would learn ethical, social and environmental sustainable skillswhile financially supporting people earning their way out of poverty. These socialbusiness skills will position them well for the future. The national average of highschool gradates in 2006 was: male $30,000 and female $24,000. For those studentswith a Bachelor’s degree or higher the annual income rose to male $50,000 andfemale $41,000 (table 21-1) (National Center for Educational Statistics, 2008)The direct action of the Fair Trade Store is purchasing ethnic crafts, garments andfood from poor producers in developing countries at a price high enough for theproducer to earn her / his way out of poverty. The systems-changing social impact 16
  • 17. will come with scaling the organization. As the Fair Trade Stores grow they will beable to purchase and sell more products, in turn increasing the income of more poorproducers. For each item sold through a Fair Trade Store the producer benefits witha higher price per-piece and the seller, the college student, earns an income tosupport her / his college expenses. The third beneficiary is the recipient of thecommunity development funds, which is democratically chosen each year.Idea Generation Process and Selection of Proposed VentureThe initial idea came after Kelly Walker; President of the Council for SocialEntrepreneurship at the University of the Pacific in Stockton, CA asked his advisor ifthe Council could donate money to the Afghanistan Dental Relief Project. Theadvisor replied, “No! The money to run your organization is the University’s andcannot be donated.” The Kelly Walker and Fred Sconberg were sitting at the tableand started discussing small businesses, which the student organization could operateto earn income to then donate to causes of their choice. The first thought was a copycenter / print shop. This was dropped when the student did not show muchenthusiasm. The student then stated he and other members of the Council haddiscussed a Fair Trade Store on campus. Paul Rice of TransFair USA is an advisorto the Council and had spoken to them many times. The Council’s studentsrespected the Fair Trade Principles and liked the idea of a Fair Trade Store. It wasthis discussion, which lead to brainstorming what a Fair Trade Store on collegecampuses might look like.It began with an exploration of the level of poverty in the world and the efforts ofethnic crafters and food producers in developing countries to earn their way out ofpoverty. The difficulties these people have getting a fair price for their products andthe problems getting their products to United States markets became immediatelyapparent.Buying fair trade products from United States importers and wholesalers of FairTrade products was studied. Most due not have a good reputation. They are notpaying fair prices to the producers and add large markups before selling to UnitedStates consumers. This channel was rejected due to high costs of products and lowpay rates to the producers.Working with producers from a single country or selling a single product wasinvestigated. This was rejected due to lack of market appeal in the United States.The U.S. consumer wants a quality product, a positive message and a clear value.They also want selection. This concept was rejected, as it did not provide enoughchoices for the U.S. consumer.The business structure of sole-proprietorships, corporations and traditional nonprofitwas researched in-depth. The consumer cooperative was chosen for its democraticmanagement, shared ownership and defined purpose to sell goods at the lowest 17
  • 18. possible price while distributing accumulated capital to social objectives andgenerating higher returns for the producer members.Sustainable advantageThe direct action of the Fair Trade Store is purchasing ethnic crafts, garments andfood from poor producers in developing countries at a price high enough for theproducer to earn her / his way out of poverty. The systems-changing social impactwill come with scaling the organization. As the Fair Trade Stores grow they will beable to purchase and sell more products, in turn increasing the income of more poorproducers. For each item sold through a Fair Trade Store the producer benefits witha higher price per-piece and the seller, the college student, earns an income tosupport her / his college expenses. The third beneficiary is the recipient of thecommunity development funds, which is democratically chosen each year.Team and GovernanceThe organization will require an Executive Director to oversee all facets of the FairTrade Store. The Executive Director will be supported by a Chief Financial Officer,who will oversee all financial and human capital, a Cultural Relations Manager, whowill conduct the purchasing and monitor fair trading practices and a Retail StoreOperations Manager, who will oversee all retail stores. The Fair Trade Store willengage an external auditor to collect measurement data and produce sustainabilityreports for the Board of Directors and the members of the cooperative. 18
  • 19. Operations PlanThe Fair Trade Stores will help ethnic craft and farmers from developing countriesreach consumers in the United States. The products will be purchased in thedeveloping country and imported to the United States. The Cultural RelationsManager will arrange purchases directly in the developing country. The individualproducts and first developing country to begin from has not been established. Thesematters will be determined when the management team and initial members gettogether for their first democratic decision. The products will be those with largesales potential to college students and residents of college communities. Thesepurchases will provide economic opportunities for the producers. The products willbe sold to United States consumers. The sales of these products will provideoperating income for the Fair Trade Stores, which in turn will provide income forcollege students and student organizations. The Fair Trade Stores will have acommunity development component. Five percent of all retail sales will be allocatedto community development. Students / members will democratically choose whichprojects to support. Emphasis will be on to providing training and financing for theproducers. Purchasing the ethnic crafts and garments will ensure preservation ofcultural heritage will be preserved in modern society. This style of business is called asocial business venture or a social enterprise. The model will be that of a marketintermediary.The Fair Trade Store business model is a consumer cooperative corporation. Theconsumer cooperative operates under the principal of Democratic control, or onemember, one vote. The members (owners) would be students and their customers.Each campus store would be an individual cooperative with its own student Board of 19
  • 20. Directors. The board would be responsible for hiring, management and ensuring thecooperative meets its goals, both financial and mission.A consumer cooperative is a cooperative business owned by its customers for theirmutual benefit. It is a form of free enterprise oriented toward service rather thenfinancial profit. Most consumer cooperatives are retail outlets owned and operatedby their customers. The primary difference from a for-profit business is the financialgain (profit) in the cooperative is retained as accumulated capital in commonownership, or distributed to meet the social objective, or refunded to theowner/consumer as an over-payment.There are many consumer cooperatives in the world. The University Co-operativeBookshop Ltd. is Australia’s largest consumer cooperative. It was established bystudents in 1958 and has grown to be the largest provider of educational, professionaland lifelong learning resources in Australia. The Co-op Bookshop has over 1.3million lifetime members. The COOP Group is the second largest retail group inSwitzerland. The COOP operates over 1800 stores and employees close to 55,000people to serve the 2,518,056 members as of December 31,2010. The COOP’s visionis: “Working together, we use sustainable protection of the environment as anentrepreneurial opportunity.” By sustainability, we mean achieving a better balancebetween environmental protection, social responsibility and regard for economicconsiderations and thus creating a basis for business success.(COOP Group, 2010)The largest consumer cooperative in the United States is the outdoor sportingequipment cooperative, Recreational Equipment Incorporated. (REI)The cooperative structure has been selected, as it is oriented toward service ratherthen financial profits. The consumer cooperative structure will allow the students toprovide quality goods and services at the lowest possible cost, while selling thesegoods and services at a competitive market rate. The cooperative structure will allowretention of accumulated capital in common ownership, distribute the accumulatedcapital to meets its social objective or refund it to the member / owners as an over-payment.Installed Capacity required to successfully implement the venture and/ororganizational capacity building requiredAs of the writing of this business plan Fred Sconberg; Concept Designer is the onlymember of The Fair Trade Stores. All financial and human capital necessary tosuccessfully implement the venture and build organization capacity needs to beacquired.Current Financial ConditionThe Fair Trade Stores is a start-up. At this time there is no cash on hand and nofunding commitments. 20
  • 21. Financial Plan for VentureThe financial projections for the first three years of operations of the Fair TradeStores are included in Appendix A. They show a combined organization of the retailstore operations and the management of the consumer cooperative. Sales revenue isprojected to grow from an initial monthly goal of $2214 in January 2011 to$1,277,857 for the year ending December 31, 2013. The breakeven analysisdemonstrates the monthly sales necessary to cover: producer and student incomes,operational expenses and contributions to the sustainability and communitydevelopment funds is $104,167. The Fair Trade Stores believe they will first hit themonthly breakeven sales revenue in May 2013.Working capital to support the cash needs of the start-up and operations for the first30 months is projected to be $200,000. This amounts to $144,843 to support theinitial business loss until breakeven sales revenues are achieved. The remaining$56,000 is for start-up expenses including: initial inventory purchases, store design,store fixtures, security deposits, insurance, professional services, marketing materials,web site, phone and internet services.Funding for The Fair Trade Store will come from Cooperative Membership fees.Each member / owner will purchase a membership fee for $25.00. This is a lifetimemembership. It is anticipated that membership fee will amount to $25,000 per FairTrade Store per year. The membership fees will be used for capital expenditures andstore maintenance.The initial $200,000 is being sought from social investors. The projected payback,with 2% interest will begin in May 2013. Full payback of all invested capital isanticipated to be on or before Dec 31, 2014. Payments on the original investmentwill begin as soon as monthly breakeven is achieved for 3 consecutive months.During the start-up phase all payments to the producers will be made in advance ofpurchase. This is to support them with purchasing the necessary supplies, training,arranging shipping and customs. Students will earn their income when the productsare sold to United States consumers. The Fair Trade Stores project the producerswill earn $121,000 by the end of the first 12 months of operations. This is the sameamount being paid to college students for their efforts running the Fair Trade Storeand selling the Fair Trade products. Each month there will be a contribution to thesustainability fund and the community development fund. The projections are tofund each of these accounts with $20,000 in the first year. By year-end 2013, TheFair Trade Stores will have purchased in excess of $750,000 from poor ethnic craftersand farmers in developing countries. In addition, college students will earn $750,000in the first three years of store operations. The community development fund andthe sustainability fund should receive contributions in excess of $130,000. Thismoney will be availably for the members to democratically choose how much theywill contribute to individual charities. 21
  • 22. Sources and Applications of Cash and Capital (including donations, if applicable)An Equipment ListA List of Start-up CostsStart-up expenses of $56,000 include: • Initial inventory purchases • Store design • Store fixtures • Store signs / logo / store front identification • Security deposits • Insurance • Professional services • Marketing materials • Web site • Phone and internet servicesA Pricing EstimateIncluded in Appendix A is a worksheet to determine haw much an ethnic producerwill earn based on earning 30% of the retail selling price. This worksheet also assistswith the purchasing decision. It shows how much of the retail selling price isavailable for operations expense. It is necessary to determine if shipping, packaging,customs, and other handling expense can be met, when looked at on a per item basis.It will show how much is available for the students to earn and the per itemcontribution to sustainability and community development funds.A description of income streams (including donations and fundraising plans, ifapplicable)Not applicable at this time.A Break-even Analysis Monthly Break Even Analysis Assumptions Revenue Per Month % (Avg. Monthly Sales) 104,167 Cost of Sales 30% Producer Income 31,250 30.0 30% Student Income 31,250 30.0 Total Cost of Sales 62,500 60.0 Gross Profit 41,666 40.0 22
  • 23. Total Expenses 40,858 39.2 Profit Before Tax 809 0.78%Cash flow Estimates by month for the first Year, by Quarters for years two and threeIncluded in Appendix AProjected Income and Expenses by month for the First Year, by Quarter for YearsTwo and ThreeIncluded in Appendix ADistribution of revenuesNotes of Explanation of the Assumptions used for each of the displaysPro forma balance sheet and profit and loss statementsIncluded in Appendix AProjected Mission and Financial Returns for the VentureThe Fair Trade Stores target mission return is to spend 30% of the total retail salesdollars directly with 500 ethnic crafters and 500 fair-trade producing farmers. With afinancial plan of gross retail sales of $1,250,000 the Fair Trade Stores plan topurchase $375,000 from these crafters and farmers. This represents an increase of$375 annually to each producer.The Fair Trade Store’s secondary target mission return is to pay 30% of total retailsales to United States College students. With total retail sales projected to be$1,250,000 this will provide $375,000 of income to 165 students. This is calculatedto be $2,250 per student, which amounts to $250 per month for 9 months.The Fair Trade Stores third target mission return is 5% of total retail sales to Studentorganizations to donate to charities of their choice. This would amount to $62,500per year in community development funds.The mission of The Fair Trade Store is to help artisans and food producers fromdeveloping countries earn an income, which is above the poverty line, by marketingtheir goods in Fair Trade Stores on college campuses across the United States.Each Fair Trade Store will purchase ethnic crafts, garments or food from producersin developing countries. An independent auditor will assure the producer isreceiving an above price per-piece. Direct purchasing allows for greatercommunication between producer and consumer. Fair Trade Stores will purchase in 23
  • 24. small quantities at greater frequencies. The retail stores will have greater inventoryturnover and the producers can stay busy year round and adjust to changes in trendsand designs. With a franchised set of operating practices the Fair Trade Stores willsimplify customs documents, import requirements and in-country regulatoryvariationsA secondary mission of the Fair Trade Store organization is to provide income forcollege students and their student organizations through the sale of Fair Tradeproducts from low-income producers. In the process the Fair Trade Store willsupport their community with education on social entrepreneurship, social enterpriseand the impact individuals can have on poverty around the world through the use ortheir consumer dollars.Students will earn income through the sale of the ethnic crafts and food to U.S.consumers on and around college campuses. Student sellers can earn a commissionfor any products they sell in the community through direct sales to business,individuals or at farmers markets. The students will actively promote Fair TradePrinciples during their sales activity. Word of mouth promotion has been the mosteffective advertising to grow the fair trade movement. Retained earnings in excess of10% of the Fair Trade Store will be distributed to producers and members annually.Of the 10%, half will be retained to grow the organization and half will be donatedby democratic decisions to charity.Risks, Risk Mitigation, and Exit StrategyThere are several risks with the Fair Trade Stores operating on college campuses inthe United States. The college administration may have preexisting contracts withretail establishments. On many campuses, Barnes and Nobles has begun managingthe bookstore operations. Food service is generally contracted out to third partyvendors. The college administrations may not grant The Fair Trade Store space oncampus to operate. To mitigate this risk, a retail location adjacent to the collegecampus will be selected.Several operational risks are apparent in The Fair Trade Store model. These includeshipping costs and delays, product designs not adapting to changes in consumertrends, food perishing while in shipment, poor quality, low demand, inventory notselling through, providing money for producers to buy supplies and not receivingrepayment. Purchasing from foreign countries will require foreign currencyexchange. Contracts issued for future purchases may be subject to exchange ratefluctuations. Locating financial institutions to be partners in small dollar exchangesbetween the Fair Trade Stores and the individual producers is a risk. Foreigngovernments in developing countries are subject to instability, which may change theprocedures and customs requirements.There are several managerial risks with The Fair Trade Store model. This model isdependent on students. Students have activities, commitments, classes, exams, 24
  • 25. relationships and other demands on their time. Getting them to devote time torunning the store is a potential risk. Theft and security is a risk. Store design andlayout will be inconsistent between stores. The risk is cleanliness, safety andmaintenance. The student run organization will have limited amounts of money topurchase store displays. The risk is they may try to stack items to high and riskpeople being injured from items falling. As a student run organization there will bepeer oversight, which can lead to insubordination. The students may also havelimited experience in cash management. Lack of managerial oversight may temptstudents toward borrowing or stealing cash or merchandise. To mitigate this riskcash management safeguards will be put in place and management will be heldaccountable.There is a risk of slow or no acceptance of fair trade principles. It is highly unlikely,but possible the United States consumer will not gain a desire to buy fair tradeproducts.Mission drift is likely as students become more involved in the purchasing ofproducts for resale. They may drift into items, which are not made by fair tradeartisans or farmers. To keep products flowing through the store to maintain salesand profit margins the buyers may look for items with more current designs orproducts they can purchase cheaper. To mitigate this risk, all purchases will berequired to be in complete compliance with the 9 Fair Trade Principles.In the event The Fair Trade Stores are not successful, the exit strategy is three fold.Initially, the management will reorganize the human capital necessary to get theorganization refocused on the mission. If that is unsuccessful, the organization willseek a buyer or a partner for the business. The buyer or partner will bring inadditional resources and experience to resurrect the Fair Trade Stores and bring theminto alignment with the original mission. The final exit strategy is to close thebusiness, sell off the assets, pay all producers and vendors and donate any remainingfunds to the community development project of the remaining members choice.Replication and ScalabilityThe direct action of the Fair Trade Store is purchasing ethnic crafts, garments andfood from poor producers in developing countries at a price high enough for theproducer to earn her / his way out of poverty. The systems-changing social impactwill come with scaling the organization. As the Fair Trade Stores grow they will beable to purchase and sell more products, in turn increasing the income of more poorproducers. For each item sold through a Fair Trade Store the producer benefits witha higher price per-piece and the seller, the college student, earns an income tosupport her / his college expenses. The third beneficiary is the recipient of thecommunity development funds, which is democratically chosen each year.It is projected that each Fair Trade Store, on each college campus will generate$100,000 in retail sales per year. With 4300 college campuses in the United States 25
  • 26. that is a potential of $430 billion dollars. While it is unlikely all college campuseswill elect to have a Fair Trade Store on their campus the potential is staggering. Ourgoal is to have 10 stores in operation by December 2013 and grow at a manageablerate of 20% per year. At the growth rate of adding 20% more college campuses eachyear we envision having 40 stores in operation in 10 years.Replication and scalability will be achieved through franchising the retail storepolicies, procedures, product selection, design, forms, computer systems andmanagement structure.Financial returns, from each independently owned and operated Fair Trade Store,will be used to grow the cooperative, support more entrepreneurs, increase thenumber of students earning an income and to provide financial support toorganizations chosen by the democratically controlled Board of Directors.To scale the mission, accumulated capital may be held in reserve, or invested in thepurchase of capital assets such as furniture, fixtures and equipment.Monitoring of Social Impact of OrganizationThe Fair Trade Store will engage an external auditor to collect measurement dataand produce sustainability reports for the Board of Directors and the membersInitial baseline data will be collected prior to the first purchases from the Fair Tradeproducers. Baseline data will be on the current income of the small-scale crafters andfarmers. Measurement of the number of ethnic crafters, and farmers purchased fromwill be done every 6 months. Included in the measurement will be the total dollarspaid out to the producers. In addition, the total number of students employed at TheFair Trade Stores on college campuses and the total payroll paid to the students willbe measured monthly. All money allocated to community development funds willbe measured based on the democratically selected charity, training or producerfinancing chosen by the student / members.Business Plan Goals and Objectives with a Time LineSubmit Business Plan to Social Venture Investors August 15, 2010Selection of Management Staff Aug 15 – Oct 15, 2010Selection of Initial College Campus November 1, 2010Selection of Initial 50 producers, 50 farmers December 1, 2010Develop Initial Store Design December 1, 2010Locate and Train Students Nov 1 – Dec 31, 2010Open First Fair Trade Store January 1, 2011Identify Next 100 producers Jan 1 – Mar 31, 2010Manage, Monitor and Measure First Store Jan 1 – May 31, 2011Evaluate Success and Failures June 1 – June 30, 2011Implement Improvements July 1 – July 30, 2011 26
  • 27. Select Campus 2 & 3 July 15, 2010Locate and Train Students Store 2 & 3 Aug 1 – Aug 30, 2011Manage, Monitor and Measure 1 - 3 Stores Nov 1 – Nov 30, 2011Evaluate Success and Failures Dec 1 – Dec 31, 2011Goal to Have 10 Stores Open Dec 31, 2013 Serving 500 producers, 500 farmers 27
  • 28. Appendices Gross Profit Analysis (Should I buy the product?) Revenue (Sales) Retail Sales Price 18.00 Customer Mix Analysis Assumptions Cost of Sales Avg. Gross Profit Mix % 30% Producers Earnings $ 5.40 $ 12.60 Spread Crafters 35% 60% 30% Operations Expense $ 5.40 30.0% Garments 25% 20% 30% Sales Commission $ 5.40 30.0% Food 45% 20% 0.0% Other $ - - 35% 100% 0.0% Other $ - - 5% Sustainability Fund $ 0.90 5.0% Note: Hover mouse over cell to read instructions where you see the red corner in 5% Community Development Fund $ 0.90 5.0% the cell. Total Use of Sales $ 18.00 100.0% 10 # of products purchased per month Producer Earnings / month $ 54.00 300.0% $ 648.00 Producer Income per year 28
  • 29. Monthly Break Even Analysis % Revenue (Avg. Monthly Sales) 104,167 Cost of Sales Producer Income 31,250.10 30.0 Student Income 31,250.10 30.0 Total Cost of Sales 62,500.20 60.0 Gross Profit 41,666.80 40.0 Expenses Executive Director 3,750 3.6 Chief Financial Officer 3,333 3.2 Cultural Relations Manager 3,333 3.2 Retail Store Manager 3,333 3.2 Staff Payroll Tax 2,475 2.4 Health Benefits 780 0.7 Prof. and Gen Liab Insur. 200 0.2 Shipping / Customs 8,333 8.0 Staff Mileage 0 - Occupancy/Lease 1,000 1.0 Utilities 0 - Telephone/internet 99 0.1 Cell Phone 45 0.0 Supplies, Postage 125 0.1 Travel 1,000 1.0 Dues Memberships 50 0.0 Accounting 0 - Legal 0 - Auto Expense 0 - Meals and Entertain 50 0.0 Workers Comp Ins. 300 0.3 Advertising 500 0.5 Measurement/Survey Fees 350 0.3 Marketing Costs 400 0.4 Web Sites 230 0.2 Payroll Processing 35 0.0 Credit Card Processing 719 0.7 Community Dev. Fee 5,208 5.0 Sustainability Fund 5,208 5.0 Total Expenses 40,858 39.2 Profit Before Tax 809 0.78% Monthly 9,708 YearlyWorks CitedAlaniz, M. (2010 24-June). Fair Trade Group. Retrieved 2010 2-July fromwww.linkedin.com:http://www.linkedin.com/groupAnswers?viewQuestionAndAnswers=&discussionID=21889686&gid=137995&trk=EML_anet_qa_ttle-0Qt79xs2RVr6JBpnsJt7dBpSBAAlter Eco Fair Trade . (2008 October). Alter Eco Fair Trade Study, A survey of existingand potential fair trade consumers. (C.-F. A. Edouard Rollet, Editor) Retrieved 2010 24-June from altereco-usa.com: http://www.altereco-usa.com/media/images/altereco-fairtrade-study2008usa.pdfCOOP Group. (2010 31-Mar). COOP Sustainability Report. Retrieved 2010 16-Julyfrom COOP Group:http://www.coop.ch/Pb/site/common/node/50543/len/index.htmlFair Trade Federation. (n.d.). Fair Trade Principles. (T. F. Federation, Producer)Retrieved 2010 йил 2-July from Fairtradeprinciples.org:http://fairtradeprinciples.org 29
  • 30. Fair Trade Federation. (n.d.). Welcome to the Fair Trade Federation. Retrieved 2010 24-June from FAQs:http://www.fairtradefederation.org/ht/display/Faqs/faqcat_id/1737Krier, J.-M. (2008). Fair Trade 2007: new facts and figures from an ongoing success story.Culemborg: Dutch Association of Worldshops.Martindale, G. (2008 13-November). A Look at the Spending Habits of College Students.Retrieved 2010 18-July from StateUniversity.com:http://www.stateuniversity.com/blog/permalink/The-Spending-Habits-of-College-Students.htmlNational Center for Educational Statistics. (2009). Digest of Educational Statistics, 2008.U. S. Department of Education. U. S. Department of Education.National Center for Educational Statistics. (2008). The Condition of Education 2008.U.S. Department of Education. U. S. Department of Education.United Students for Fair Trade. (2009). United Students for Fair Trade. (U. S. Trade,Producer) Retrieved 2010 29-Jun3 from ustft.org: http://www.usft.org/aboutWikipedia, the free encyclopedia. (2010 йил 28-June).Consumer_Cooperative. Retrieved 2010 28-June from Wikipedia:http://en.wikipedia.org/wiki/Consumer_cooperative 30