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final business plan
- 1. Table of contents Tableof Contents......................................................1 Executive Summary.....................................2 Store Information........................................................3 Marketing Plan..............................................................4 Product Plan................................................................5 Location and Physical Structure....................................6 Operations and Control Systems.......................................7 Financial Plan.........................................................8 Required Financial Forms..............................9 Analysis..............................10 References............................................................10 Appendices............................................................11
- 2. 2. Executive Summary Scarpetta’smission is to offer comfortable and affordable shoes to the business professional women; our owner and manager Jennifer Lawrence will be running the store along with our assistant manager and two employees. We will be selling business professional Pumps, flats, and seasonal merchandise; boots in the fall, wedges in the spring, that can be transitioned from the office to social settings. Jennifer will open the store with a $60,000 investment that she has been saving over the last five years. This will cover startup expenses with a little left over to cover and miscellaneous opening expense. We have projected gross margin of 52% and a total net operating income of $184,867. If a store sees success over the next five years we will look into expanding our business to a new market either in Dallas or Austin 3. Store/Business INFORMATION 3.1. NAICS code: 316210 3.2. Women’s shoe store called Scarpetta 3.3. Vision Statement: at Scarpetta we fulfill women’s dreams of obtaining comfortable, affordable and transitional footwear all at one place. Our commitment to our customers’ needs will be shown through quality customer service, building relationships through integrity and superior quality; we will become a leader in women’s footwear. 3.4. Mission Statement: Scarpetta offers comfortable and reasonably priced footwear to professional woman, our styles are as versatile and our sales assistants will help our customer find styles that can meet her busy schedule demands. 3.5. Ownership Type: Sole proprietorship 3.6. Management Team Owner/manager: payroll, vendor relations, hiring, collecting sales tax Assistant manager: employees, customers, scheduling, training, maintaining inventory 3.7. Management Philosophy Communication is key to insure proper implementation strategy, all communication between Scarpetta team members will be based on trust and respect. All members of the management team will adhere to respectable practices for employee to learn and find support in. 3.8. Organizational Chart 4. MARKETING PLAN 4.1. Industry profile (Concentration-number and size of firms- and annual sales Business) Shoe industry brings in around 48 billion dollars a year (statisticbrain.com, 2014) 4.2. Growth Potential of the Industry There is much room for growth in the shoe industry. Women’s shoes are a constant necessity especially for the business professional woman and in order for us to stand out and keep up with competition in the industry we have chosen to provide comfortable shoes suitable for day and night. 4.3. Geographic location of industry/customers Our store will be located in Houston, Texas 4.4. Industry Trends Most shoe companies like to show their customers that they are aware of worldly situations such as TOMS. These types of trends show the ethics of the company to the customer and the world;
- 3. making it clearon how important it is to give back in any way possible. Another trend that is big in the footwear industry is for the shoe to do more for the customer, Nike+ system and sketchers shape-ups that help tone certain areas of the body are to examples. Also, some high fashion designers have paired with target to give customers designer shoes at low prices. (Adelson, 2014) 4.5. Target Market Women from ages of 18 -45 who have a need for all kinds of shoes; especially comfortable business professional shoes. Amy is a 23-year-old college graduate who works in downtown Houston. Her job requires her to wear business professional heels and she really enjoys the comfort of her Scarpetta heels. Her shoes can take her from work to happy hour on Thursdays with her friends and even dancing on Friday nights with her boyfriend. The functional and stylish appeal of our shoes will keep her coming back every time for almost any event. Mary is a mother of two who works as a lawyer in Houston. With her full time schedule as a workingwoman and a mother, her love of fashion doesn’t have to completely vanish thanks to Scarpetta. Her love of heels can still be displayed at her work in our lower heeled business professional shoes and can also be worn on the weekend when her husband and her take their kids to the museum for a family fun filled Saturday. 4.6. Promotions Social media will be our company’s main way to advertise our sales and new shoes we get in store. 5. PRODUCT/SERVICES PLAN 5.1. Purpose: Scarpetta fills the need for shoes that business women could wear to work but also to have a girl’s night out. Women will benefit from our comfortable shoes that can be worn all day. 5.2. Legal and regulatory: leasing agreement, Texas Sales Tax ID, employer ID number, vendor’s license, liability insurance, Fire Marshal permits and possibly inventory tax 5.3. We’re limiting it to women’s shoes, primarily shoes that are appropriate for work and social outings; focusing on depth more than breadth of products. 5.4. Proposed lines: essentials: all the shoes essential to complete a women’s wardrobe, meeting in the middle: shoes that can be used on the go between business meetings and daily travel, night time heights: shoes for going out to cocktails after work. 5.5. Assortment of stock: pumps, flats, seasonal shoes, and shoe accessories 5.6. Suppliers: we don’t have a name for a (n) supplier right now but we’re looking at going to markets to buy from vendors and wholesalers 5.7. N/a 5.8. Price range: $45-90 5.9. Merchandise type: leather, satin, canvas, metal fasteners 5.10. We will probably carry very few; if any, national or private 5.11. Mainly we’re going to have a big push of promotional merchandise when we first open to help get customers in the door. After that we will cut back on it to a small amount around large sales months. 5.12. If the shoe sell well we were thinking of slowly adding in shoes that are in a limited quantity, and are high quality for a slightly elevated price point 6. LOCATION AND PHYSCIAL STUCTURE
- 4. 6.1. Regional locationand % Target Market in community (Nielsen’s Zip Code Analysis) Southeast Region of Houston Texas, 66% of the community is our target market with an average of making $80,000 per household. 6.2. Competition and SWOT (include conclusions) S- Unique personal consulting services W-Weak brand image versus key competitors O-We have an unfulfilled customer need as far as consulting services and professional shoe attire. T- Our high profile competitors. 6.3. Description of site (size, location type) and why selected 1,300 square feet, Midtown Houston (fits our target market) 6.4. Finances and location (contracts, rent, and other obligations) Renting for $3,000 a month 6.5. Facilities (A/C, lighting, etc. store windows, floor) Electric bill= $250 a month 6.6. Layout Grid Layout 7. OPERATING AND CONTROL SYSTEMS PLAN 7.1 Ordering and receiving merchandise We will be buying our shoes through wholesalers at trade shows and purchasing at low unit cost or contracting manufactures to produce our shoe line in a variety of sizes, colors and styles to fit our customer base, which can include paying labor cost and shipping fees. 7.2 Paying suppliers If we decide to buy our products from wholesalers we will be buying at retail price, but if we contract a manufacturing facility will be paying labor costs as well as shipping fees to ship to our store. But most likely we will start buying from wholesalers because there is more room for price negotiation. Most suppliers operate on a trade credit basis when dealing with other businesses. This basically means that when you're billed for a product or service, you have a certain grace period before the payment is due (typically 30 days). During this time, the supplier will not charge interest. We will carefully consider all costs, discounts and allowances before deciding whether to buy an item. Occasionally, suppliers grant customer’s discounts for buying in quantity, usually as a freight allowance for a specific amount of merchandise purchased. Some suppliers pay an increasing percentage of the freight bill as the retailer's purchase orders increases; others simply cover the entire freight cost for purchases over a minimum amount. These are things will consider before purchasing our products from manufacturers. 7.3. Staff development Since we are a small shoe company we will employ only 2 sales personnel and have 2 managers on duty every day to oversee business operations and deliver customer service. The hours of operation will be Monday - Friday 10 a.m. - 6 p.m., Saturday 10 a.m. - 6 p.m., and closed on Sundays. There will be extended special hours designated during Christmas holiday shopping season. 7.4 Inventory control To control our inventory we will keep track of sales, prevent shrinkage, avoid stock outs, and account for all products bought from wholesalers or manufacturers. By using Quick response system we will be aware of how much inventory we have at hand and replenish when needed.
- 5. Only employees areallowed to be in the stockroom and managers are responsible of filling out inventory sheets. 7.5 Return Policies and charge backs We deliver excellent customer service. We will be happy to return/exchange unworn or defective merchandise within 30 days of delivery date. Returns/exchanges will not be accepted after 30 days. All merchandise must be returned in the original packaging with tickets attached. Merchandise marked "as is" or "final sale" cannot be returned/exchanged. As far as promotions will offer a sales promotion on a monthly basis, such as: • buy one, get one half priced • buy one, get one free • Half off on shoes from the previous season 7.6 Company budgets (Documentation for transactions) We will accept cash, credit, and store coupons as a form of payment. We to ensure customer privacy we will handled every transaction in a responsible manner by accurately balancing the cash drawer and keeping track of all receipts. 7.7 Security systems To ensure safety inside our store and protect company records each employee will have a login number to have access to the register. We will also have surveillance cameras, alarms, fire extinguishers set up around the store for security purposes. 8. Financial Assumptions 8.3. Sales Estimate (ABC Analysis)
- 6. Attached to appendices 8.4Cash on hand Jennifer will be coming into the business with a $60,000 investment. 8.5 Loans None 8.6 Revolving line of credit As of now we do not have a line of credit, once we become more established we will look into getting one with Bank of America 8.7 Financial obligations Financial obligations include our expenses and payroll expanse which totals to $182,543 8.8 Rent The rent is going to be $3,000 a month; which will total to $36,000 annually. 8.9 Travel Travel will primarily be treated as a variable factor; however, there will be a few set costs such as traveling to market in the fall and spring. For budgeting purposes each month will be given a $150 allowance, the remainder of which will be added to the next month. 8.10 Advertising Scarpetta will be using social media as it’s driving source of advertising but $100 has be budgeted for any miscellaneous expense. % Annual Sales Annual Sales Monthly Sales Forecast Aug 7.8% 679,320.00$ = 52,987$ Sept 6.9% 679,320.00$ = 46,873$ Oct 8.2% 679,320.00$ = 55,704$ Nov 14.2% 679,320.00$ = 96,463$ Dec 19.2% 679,320.00$ = 130,429$ Jan 3.0% 679,320.00$ = 20,380$ Feb 5.5% 679,320.00$ = 37,363$ Mar 7.2% 679,320.00$ = 48,911$ Apr 5.0% 679,320.00$ = 33,966$ May 8.5% 679,320.00$ = 57,742$ Jun 7.2% 679,320.00$ = 48,911$ Jul 7.3% 679,320.00$ = 49,590$ Category A Sales Catgory B Sales Monthly Sales Forecast % Sales Category A Sales $ Monthly Sales Forecast % Sales Category B Sales $ Aug 52,986.96$ 70% = 37,091$ Aug 52,986.96$ 15% = 7,948$ Sept 46,873.08$ 70% = 32,811$ Sept 46,873.08$ 15% = 7,031$ Oct 55,704.24$ 70% = 38,993$ Oct 55,704.24$ 15% = 8,356$ Nov 96,463.44$ 70% = 67,524$ Nov 96,463.44$ 15% = 14,470$ Dec 130,429.44$ 70% = 91,301$ Dec 130,429.44$ 15% = 19,564$ Jan 20,379.60$ 70% = 14,266$ Jan 20,379.60$ 15% = 3,057$ Feb 37,362.60$ 70% = 26,154$ Feb 37,362.60$ 15% = 5,604$ Mar 48,911.04$ 70% = 34,238$ Mar 48,911.04$ 15% = 7,337$ Apr 33,966.00$ 70% = 23,776$ Apr 33,966.00$ 15% = 5,095$ May 57,742.20$ 70% = 40,420$ May 57,742.20$ 15% = 8,661$ Jun 48,911.04$ 70% = 34,238$ Jun 48,911.04$ 15% = 7,337$ Jul 49,590.36$ 70% = 34,713$ Jul 49,590.36$ 15% = 7,439$ Category C Sales Monthly Sales Forecast % Sales Category C Sales $ Aug 52,986.96$ 5% = 2,649$ Sept 46,873.08$ 5% = 2,344$ Oct 55,704.24$ 5% = 2,785$ Nov 96,463.44$ 5% = 4,823$ Dec 130,429.44$ 5% = 6,521$ Jan 20,379.60$ 5% = 1,019$ Feb 37,362.60$ 5% = 1,868$ Mar 48,911.04$ 5% = 2,446$ Apr 33,966.00$ 5% = 1,698$ May 57,742.20$ 5% = 2,887$ Jun 48,911.04$ 5% = 2,446$ Jul 49,590.36$ 5% = 2,480$
- 7. 8.11 Accounting andLegal The combination of accounting and legal will total $30,500 for the year. 8.12 Leasehold Improvements Leasehold improvements will be budgeted at $19,500 which will include fixing any of the exciting structure and new displays and furniture. 8.13 Direct Labor Scarpetta will be paying our single sales associate $7.25/hr.; our assistant manager will be paid $11.50/ hr. Payroll will total $18,512. 8.14 Insurance Insurance for the year will be $600. 8.15 Bank Charges The bank charges $192 if there is less than $250 in the bank account. 8.16 Taxes/license Taxes for the year will be $28,158; this included payroll and unemployment tax as well as sales tax. 8.17 Owners Draw Owners draw will be a salary of $40,000 a year. 8.18 Inventory Our inventory will total to $31,250. 8.19 Utilities Utilities are estimates at $150 a month, and will total to $1,800 a year. 9. REQUIRED FIANCIAL FORMS 9.3 Pro Forma Cash Flow Each year will see a projected increase of 10% on profit and CoGs based on the numbers from last year, payroll will also see a 3% increase. 9.4 Profit and Loss Statement Scarpetta’s one year profit and loss projection has total revenue of sales at $515,401. The purchase of inventory totals at $31,250 for the year and the total cost of sales for the year are totaled at $244,556. Our expenses will be: leasehold improvements, travel, monthly supplies, rent and related costs, Telephone/internet, utility deposits, legal and accounting fees, insurance, etc. The total for expenses is $177,043; and we will have a net operating income of $189,791. See appendices below for the profit and lost statement 9.5. Balance Sheet Scarpetta’s assets are$2050 cash in the bank, inventory for which is $31,250, and prepaid expenses which is $9000. The fixed assets include machinery and equipment ($150), furniture and fixtures ($1,050), and leasehold improvements ($19,500). Total assets are totaled at $36,106. We don’t have a lot of liabilities only accounts payable ($6,455) and taxes payable ($1,107). See appendices below for the balance sheets 9.6 Breakeven Analysis The variable costs for Scarpetta included Costs of Goods Sold ($244,556), inventory ($31,250), and direct labor ($19,012), which came out to 48.22%. The fixed costs included salaries, supplies, repairs and maintenance, advertising, travel, accounting and legal, rent, telephone, utilities, insurance, taxes and owners draw. The total fixed costs came out to $167,955.00 at 20.93%. Our break -even cost was $324,368.57 with a Gross Margin of 52%. See appendices below for the break-even analysis
- 8. 10. ANALYSIS 10.3 Webelieve that this is indeed a viable business; within our first year we keep our cash in more than our cash out and make a 50% profit. We also have a projected increase of profit set 10% for each year; this is high enough to combat inflation as well as our 3% increase in payroll. 10.4 Identify four strengths and weaknesses of the business plan 10. REFERENCES Adelson, J. (2014). 4 trends to watch in footwear. Retrieved 22 October 2014, from http://www.askingsmarterquestions.com/4-trends-to-watch-in-footwear/ Csgnetwork.com. (2014). Electrical energy cost calculator. Retrieved 22 October 2014, from http://www.csgnetwork.com/elecenergycalcs.html Snaid, L. (2014). San Deigo immigration lawyer - intracompany transferee visa, L-1 visa, California immigration attoneys.snaid.com. Retrieved 22 October 2014, from http://www.snaid.com/Intracompany-transferee-L-1-Visa.html Statisticbrain.com. (2014). Footwear industry statistics. Retrieved 22 October 2014, from http://www.statisticbrain.com/footwear-industry-statistics/ Sullivan, P. (2014). Calculating annual sales. Presentation, Texas State University- San Marcos Sullivan, P. (2014). Planning inventory. Presentation, Texas State University- San Marcos 11. APPENDIXES 11.1 Profit and loss
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- 10. 11.2 Cash Flow 11.3Balance Sheets Cash In: Sales 611,390$ 100.00% 672,529$ 100.00% 739,781.90$ 100.00% Cost of Goods Sold 244,556$ 40.00% 269,011.60$ 40.00% 295,913$ 40.00% Total 366,834$ 60.00% 403,517$ 60.00% 443,869$ 60.00% Cash Out: Payroll 18,512$ 3.03% 19,067$ 2.84% 19,639$ 2.65% Supplies 6,192$ 1.01% 6,378$ 0.95% 6,569$ 0.89% Repair & Maintenace 1,200$ 0.20% 1,236$ 0.31% 1,273$ 0.17% Advertising 1,200$ 0.20% 1,236$ 0.18% 1,273$ 0.17% Travel 4,250$ 0.70% 4,378$ 0.65% 4,509$ 0.61% Accounting & Legal 36,000$ 5.89% 37,080$ 5.51% 38,192$ 5.16% Rent 36,000$ 5.89% 37,080$ 5.51% 38,192$ 5.16% Telephone/internet 1,068$ 0.17% 1,100$ 0.16% 1,133$ 0.15% Utilities 1,800$ 0.29% 1,854$ 0.28% 1,910$ 0.26% Insurance 600$ 0.10% 618$ 0.09% 637$ 0.09% Taxes 28,158$ 4.61% 54,036$ 8.03% 59,439$ 8.03% Bank services -$ 0.00% -$ 0.00% -$ 0.00% Security 1,440$ 0.24% 1,483$ 0.22% 1,528$ 0.21% Outside Services 5,547$ 0.91% 5,713$ 0.85% 5,885$ 0.80% Owner's Draw 40,000$ 6.54% 41,200$ 6.13% 42,436$ 5.74% Total expense 181,967$ 29.76% 212,459$ 31.59% 222,615$ 30.09% Net Operating Income 184,867$ 30.24% 191,058$ 28.41% 221,254.46$ 29.91%
- 11. Opening Assets Current Assets Cash inBank 2,050$ Inventory 31,250 Prepaid Expenses 9,000 Other - Total Current Assets 42,300$ Fixed Assets Machinery & Equipment 150$ Furniture & Fixtures 1,050 Leasehold Improvements 19,500 Real Estate / Buildings Other - Total Fixed Assets 20,700$ Other Assets Specify -$ Specify - Total Other Assets -$ Total Assets 63,000$ Liabilities & Net Worth Current Liabilities Accounts Payable 6,289$ Taxes Payable 1,107 Notes Payable (due within 12 months) - Current Portion Long-term Debt - Other current liabilities (specify) - Total Current Liabilities 7,396$ Long-term Liabilities Bank Loans Payable (greater than 12 months) -$ Less: Short-term Portion - Notes Payable to Stockholders - Other long-term debt (specify) - Total Long-term Liabilities -$ Total Liabilities 7,396$ Owners' Equity (Net Worth) 55,604$ Total Liabilities & Net Worth 63,000$
- 12. Closing Balance Sheet (Projected) Scarpetta BeginningProjected as of 01/06/2014 as of 01/05/2015 Assets Current Assets Cash in bank $ 2,050 $ 184,867 Accounts receivable - - Inventory 31,250 31,250 Prepaid expenses 9,000 9,000 Other current assets - - Total Current Assets $ 42,300 $ 225,117 Fixed Assets Machinery & equipment $ 150 $ 150 Furniture & fixtures 1,050 1,050 Leasehold improvements 19,500 19,500 Land & buildings - Other fixed assets - - (LESS accumulated depreciation on all - - Total Fixed Assets (net of $ 20,700 $ 20,700 Other Assets Intangibles $ - $ - Deposits - - Goodwill - - Other - - Total Other Assets $ - $ - TOTAL Assets $ 63,000 $ 245,817 Liabilities and Equity Current Liabilities Accounts payable 6,455$ $ 72,015 Interest payable - - Taxes payable 1,107 28,158 Notes, short-term (due within 12 - - Current part, long-term debt - - Other current liabilities - - Total Current Liabilities $ 7,562 $ 100,173 Long-term Debt Bank loans payable $ - $ - Notes payable to stockholders - - LESS: Short-term portion - - Other long term debt - - Total Long-term Debt $ - $ - Total Liabilities $ 7,562 $ 100,173 Owners' Equity Invested capital $ - $ - Retained earnings - beginning - - Retained earnings - current - - Total Owners' Equity $ - $ - Total Liabilities & Equity $ 7,562 $ 100,173
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- 14. Break-Even Point 1.Fill inthe annual sales, fixed and variable cost information needed below. Annual Sales 611,390 Variable Costs ($) Variable Costs (%) Cost Description Variable Costs Cost of Goods Sold 244,556.00$ 40.00% Inventory 31,250.00$ 5.11% Raw Materials 0.00% Direct Labor (Includes Payroll Taxes) 19,012.00$ 3.11% Total Variable Costs 294,818.00$ 48.22% Fixed Costs Salaries (includes payroll taxes) -$ 0.00% Supplies 6,192.00$ 1.01% Repairs & maintenance 1,200.00$ 0.20% Advertising 1,200.00$ 0.20% Car, delivery and travel 4,250.00$ 0.70% Accounting and legal $ 30,500.00 4.99% Rent $ 36,000.00 5.89% 1300 sq ft Telephone $ 1,068.00 0.17% Utilities $ 18,000.00 2.94% Insurance $ 7,200.00 1.18% Taxes (Real estate, etc.) $ 22,345.00 3.65% Interest 0.00% Depreciation 0.00% Other (specify) 0.00% Other (specify) 0.00% Miscellaneous expenses 0.00% Principal portion of debt payment 0.00% Owner's draw 40,000.00$ 6.54% Total Fixed Costs 167,955.00$ 20.93% Break-Even Sales = Fixed costs/Gross Margin Percentage 2. Calculate Gross Margin $ =Net Sales - Net Sales 611,390.00$ TCOMS 294,818.00$ GM 316,572.00$ 3. Calculate Gross Margin %= Gross Margin/Divided by Net Sales GM% = GM / Net Sales 0.517790608 = $316,572 / 611,390.00$ 4. Calculate Break-Even ($)= Total Fixed Cost/Gross Margin % BE $ Total Fixed Cost / Gross Margin % 324,368.57$ 167,955.00$ 0.5177906 Total Cost of Merchandise Sold (COGS + Variable Costs)