The document provides a business plan for The Fair Trade Store, a student cooperative that would purchase and sell crafts, garments, and food from poor producers in developing countries according to Fair Trade principles. The plan outlines the need to support millions living in poverty globally, as well as the opportunity to provide income to college students through jobs at The Fair Trade Stores on college campuses. The stores would remove middlemen, increase producer incomes, and educate students about Fair Trade while raising funds for community development projects.
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This is the product proposal paper prepared by the students of Capitol University major in Marketing Management and Human Resource Management taking up Introduction to Entrepreneurship Feasibility Study paper.
Basically its a group project done by Shayla Khan Shimu,Badhon Mahadi Islam , Shahanur Alam , Shamrat Banik from American International-University Bangladesh
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This is the product proposal paper prepared by the students of Capitol University major in Marketing Management and Human Resource Management taking up Introduction to Entrepreneurship Feasibility Study paper.
Basically its a group project done by Shayla Khan Shimu,Badhon Mahadi Islam , Shahanur Alam , Shamrat Banik from American International-University Bangladesh
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15. 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.
16. Build Capacity – Fair Trade is a means to development producers’ independence. Members maintain long-term relationships based on 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.
17. 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.
18. 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.
19. 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.
20. 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.
21. 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.
31. Phone and internet servicesA Pricing Estimate<br />Included in Appendix A is a worksheet to determine haw much an ethnic producer will earn based on earning 30% of the retail selling price. This worksheet also assists with the purchasing decision. It shows how much of the retail selling price is available 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 item contribution to sustainability and community development funds.<br />A description of income streams (including donations and fundraising plans, if applicable)<br />Not applicable at this time.<br />A Break-even Analysis<br />Monthly Break Even AnalysisAssumptionsRevenue Per Month%(Avg. Monthly Sales)104,167Cost of Sales30%Producer Income31,25030.030%Student Income31,25030.0Total Cost of Sales62,50060.0Gross Profit41,66640.0Total Expenses40,85839.2Profit Before Tax8090.78%<br />Cash flow Estimates by month for the first Year, by Quarters for years two and three<br />Included in Appendix A<br />Projected Income and Expenses by month for the First Year, by Quarter for Years Two and Three<br />Included in Appendix A<br />Distribution of revenues<br />Notes of Explanation of the Assumptions used for each of the displays<br />Pro forma balance sheet and profit and loss statements<br />Included in Appendix A<br />Projected Mission and Financial Returns for the Venture<br />The Fair Trade Stores target mission return is to spend 30% of the total retail sales dollars directly with 500 ethnic crafters and 500 fair-trade producing farmers. With a financial plan of gross retail sales of $1,250,000 the Fair Trade Stores plan to purchase $375,000 from these crafters and farmers. This represents an increase of $375 annually to each producer.<br />The Fair Trade Store’s secondary target mission return is to pay 30% of total retail sales 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 calculated to be $2,250 per student, which amounts to $250 per month for 9 months.<br />The Fair Trade Stores third target mission return is 5% of total retail sales to Student organizations to donate to charities of their choice. This would amount to $62,500 per year in community development funds.<br />The mission of The Fair Trade Store is to help artisans and food producers from developing countries earn an income, which is above the poverty line, by marketing their goods in Fair Trade Stores on college campuses across the United States.<br />Each Fair Trade Store will purchase ethnic crafts, garments or food from producers in developing countries. An independent auditor will assure the producer is receiving an above price per-piece. Direct purchasing allows for greater communication between producer and consumer. Fair Trade Stores will purchase in small quantities at greater frequencies. The retail stores will have greater inventory turnover and the producers can stay busy year round and adjust to changes in trends and designs. With a franchised set of operating practices the Fair Trade Stores will simplify customs documents, import requirements and in-country regulatory variations<br />A secondary mission of the Fair Trade Store organization is to provide income for college students and their student organizations through the sale of Fair Trade products from low-income producers. In the process the Fair Trade Store will support their community with education on social entrepreneurship, social enterprise and the impact individuals can have on poverty around the world through the use or their consumer dollars.<br />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 commission for any products they sell in the community through direct sales to business, individuals or at farmers markets. The students will actively promote Fair Trade Principles during their sales activity. Word of mouth promotion has been the most effective advertising to grow the fair trade movement. Retained earnings in excess of 10% 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 donated by democratic decisions to charity.<br />Risks, Risk Mitigation, and Exit Strategy<br />There are several risks with the Fair Trade Stores operating on college campuses in the United States. The college administration may have preexisting contracts with retail establishments. On many campuses, Barnes and Nobles has begun managing the bookstore operations. Food service is generally contracted out to third party vendors. The college administrations may not grant The Fair Trade Store space on campus to operate. To mitigate this risk, a retail location adjacent to the college campus will be selected.<br />Several operational risks are apparent in The Fair Trade Store model. These include shipping costs and delays, product designs not adapting to changes in consumer trends, food perishing while in shipment, poor quality, low demand, inventory not selling through, providing money for producers to buy supplies and not receiving repayment. Purchasing from foreign countries will require foreign currency exchange. Contracts issued for future purchases may be subject to exchange rate fluctuations. Locating financial institutions to be partners in small dollar exchanges between the Fair Trade Stores and the individual producers is a risk. Foreign governments in developing countries are subject to instability, which may change the procedures and customs requirements.<br />There are several managerial risks with The Fair Trade Store model. This model is dependent on students. Students have activities, commitments, classes, exams, relationships and other demands on their time. Getting them to devote time to running the store is a potential risk. Theft and security is a risk. Store design and layout will be inconsistent between stores. The risk is cleanliness, safety and maintenance. The student run organization will have limited amounts of money to purchase store displays. The risk is they may try to stack items to high and risk people being injured from items falling. As a student run organization there will be peer oversight, which can lead to insubordination. The students may also have limited experience in cash management. Lack of managerial oversight may tempt students toward borrowing or stealing cash or merchandise. To mitigate this risk cash management safeguards will be put in place and management will be held accountable. <br />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 trade products.<br />Mission drift is likely as students become more involved in the purchasing of products for resale. They may drift into items, which are not made by fair trade artisans or farmers. To keep products flowing through the store to maintain sales and profit margins the buyers may look for items with more current designs or products they can purchase cheaper. To mitigate this risk, all purchases will be required to be in complete compliance with the 9 Fair Trade Principles. <br />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 the organization refocused on the mission. If that is unsuccessful, the organization will seek a buyer or a partner for the business. The buyer or partner will bring in additional resources and experience to resurrect the Fair Trade Stores and bring them into alignment with the original mission. The final exit strategy is to close the business, sell off the assets, pay all producers and vendors and donate any remaining funds to the community development project of the remaining members choice.<br />Replication and Scalability<br />The direct action of the Fair Trade Store is purchasing ethnic crafts, garments and food from poor producers in developing countries at a price high enough for the producer to earn her / his way out of poverty. The systems-changing social impact will come with scaling the organization. As the Fair Trade Stores grow they will be able to purchase and sell more products, in turn increasing the income of more poor producers. For each item sold through a Fair Trade Store the producer benefits with a higher price per-piece and the seller, the college student, earns an income to support her / his college expenses. The third beneficiary is the recipient of the community development funds, which is democratically chosen each year. <br />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 that is a potential of $430 billion dollars. While it is unlikely all college campuses will elect to have a Fair Trade Store on their campus the potential is staggering. Our goal is to have 10 stores in operation by December 2013 and grow at a manageable rate of 20% per year. At the growth rate of adding 20% more college campuses each year we envision having 40 stores in operation in 10 years.<br />Replication and scalability will be achieved through franchising the retail store policies, procedures, product selection, design, forms, computer systems and management structure.<br />Financial returns, from each independently owned and operated Fair Trade Store, will be used to grow the cooperative, support more entrepreneurs, increase the number of students earning an income and to provide financial support to organizations chosen by the democratically controlled Board of Directors.<br />To scale the mission, accumulated capital may be held in reserve, or invested in the purchase of capital assets such as furniture, fixtures and equipment. <br />Monitoring of Social Impact of Organization<br />The Fair Trade Store will engage an external auditor to collect measurement data and produce sustainability reports for the Board of Directors and the members <br />Initial baseline data will be collected prior to the first purchases from the Fair Trade producers. Baseline data will be on the current income of the small-scale crafters and farmers. Measurement of the number of ethnic crafters, and farmers purchased from will be done every 6 months. Included in the measurement will be the total dollars paid out to the producers. In addition, the total number of students employed at The Fair Trade Stores on college campuses and the total payroll paid to the students will be measured monthly. All money allocated to community development funds will be measured based on the democratically selected charity, training or producer financing chosen by the student / members.<br />Business Plan Goals and Objectives with a Time Line<br />Submit Business Plan to Social Venture InvestorsAugust 15, 2010<br />Selection of Management StaffAug 15 – Oct 15, 2010<br />Selection of Initial College CampusNovember 1, 2010<br />Selection of Initial 50 producers, 50 farmersDecember 1, 2010<br />Develop Initial Store DesignDecember 1, 2010<br />Locate and Train StudentsNov 1 – Dec 31, 2010<br />Open First Fair Trade StoreJanuary 1, 2011<br />Identify Next 100 producersJan 1 – Mar 31, 2010<br />Manage, Monitor and Measure First StoreJan 1 – May 31, 2011<br />Evaluate Success and FailuresJune 1 – June 30, 2011<br />Implement ImprovementsJuly 1 – July 30, 2011<br />Select Campus 2 & 3July 15, 2010<br />Locate and Train Students Store 2 & 3Aug 1 – Aug 30, 2011<br />Manage, Monitor and Measure 1 - 3 StoresNov 1 – Nov 30, 2011<br />Evaluate Success and FailuresDec 1 – Dec 31, 2011<br />Goal to Have 10 Stores OpenDec 31, 2013<br /> Serving 500 producers, 500 farmers<br />Appendices Works Cited<br />Alaniz, M. (2010 24-June). Fair Trade Group. Retrieved 2010 2-July from www.linkedin.com: http://www.linkedin.com/groupAnswers?viewQuestionAndAnswers=&discussionID=21889686&gid=137995&trk=EML_anet_qa_ttle-0Qt79xs2RVr6JBpnsJt7dBpSBA<br />Alter Eco Fair Trade . (2008 October). Alter Eco Fair Trade Study, A survey of existing and 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.pdf<br />COOP Group. (2010 31-Mar). COOP Sustainability Report. Retrieved 2010 16-July from COOP Group: http://www.coop.ch/Pb/site/common/node/50543/len/index.html<br />Fair Trade Federation. (n.d.). Fair Trade Principles. (T. F. Federation, Producer) Retrieved 2010 йил 2-July from Fairtradeprinciples.org: http://fairtradeprinciples.org<br />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/1737<br />Krier, J.-M. (2008). Fair Trade 2007: new facts and figures from an ongoing success story. Culemborg: Dutch Association of Worldshops.<br />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.html<br />National Center for Educational Statistics. (2009). Digest of Educational Statistics, 2008. U. S. Department of Education. U. S. Department of Education.<br />National Center for Educational Statistics. (2008). The Condition of Education 2008. U.S. Department of Education. U. S. Department of Education.<br />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/about<br />Wikipedia, the free encyclopedia. (2010 йил 28-June). <br />Consumer_Cooperative. Retrieved 2010 28-June from Wikipedia: http://en.wikipedia.org/wiki/Consumer_cooperative<br />