Individual Assignment Business Economics
  • June 1, 2018
  • David Marks
  • 0

Preparation of Business Plan

Name of the Student:

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Author’s Note:

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1.0 Introduction

Preparation of Business Plan
Preparation of Business Plan

Entering any trade section of a market takes a gigantic amount of effective and efficient efforts from the management of the firm and the new boutique firm is not an exception (Baldwin and Yan 2012). The business plan will analyse all the market entry methods and select the best suited one for the boutique. Moreover, the study will also showcase the entire fiscal position of the firm after in- depth scrutiny of the market and its demands. Estimation will also be provided regarding various sections of finance of the boutique that will include profit and loss statement, projected cash flow, sales estimation and balance sheet.

2.0 Market Entry Strategy

The boutique as planned will carry out its trade operations in city centre of London; hence, there is a possibility of a huge rush in the counters once the boutique offers an eye catching discount on its products as a opening ceremony attraction.  The four market entries method within which the boutique can choose from are stated below:

  • Low cost leadership
  • Differentiation Strategy (Lymbersky 2009)
  • Cost focus
  • Differentiation focus (Marketing Donut 2016)

Figure 1: Market entry strategies

(Source: Byun and Ahn 2009)

The boutique will use an amalgamated strategy of low cost leadership and differentiation strategy which will enable them to attract massive amount of consumers.  Moreover, the boutique will use price penetration strategy as their pricing strategy, where the price will be lowered initially and will increase with rise in demands (Hoernig 2014).

3.0 Market Growth Strategy

According to Chang and Chiu (2009), achieving success and growing smoothly within any business domain is one of the most challenging tasks that the management has to face during the initial set up of the company. The same is also applicable for the boutique and hence, the adopting and implementing the strategic growth of the Ansoff matrix will be executed by the boutique.

Figure 2: Ansoff Matrix

(Source: Businesscasestudies.co.uk 2016)

As already discussed the will adopt the price penetration strategy, which will enable them to achieve the best possible in terms of attracted customers (Chakrabarti, Vidal and Mitchell 2011). Moreover, price penetration is one of the most popular pricing strategies within the clothing and retail industry as there are uncountable numbers of competitors operating within the market.

4.0 Operational Issues

The actual fabrication and development of a firm’s services and products are best highlighted from its operational and logistical divisions (Essling 2011). All the operational sections and its role in the business process of the boutique are stated below:

4.1 Location

The Boutique will be located in the City Centre of London, and being one of the busiest market places of the country, the place will throw in massive business opportunity in the path of the firm.

4.2 Employees

The total numbers of employees in the boutique will 4, which will consist of 3 staff members and 1 supervisor. However, apart from these 4 employees, the boutique will require to either employing or searching manpower to work as freelancers for other requirements of business such as production, designing and IT services.

4.3 Production

The production department of the boutique will disguised play the most pivotal role among the entire business process, as the quality of garments will depend on the skills of the employed workers within this division of the firm (Gunay 2009). Therefore, the boutique will require to employee at least 4 to 5 capable workers to bring out the best and differentiated products within the market and to its customers.

4.4 Inventory

Some nominal and basic inventory will be required within the boutique which will include one computer/ laptop, posters, stock of garments, chairs, and drinking waiter facility.

4.5 Design Unit

This section will employ only 1 employee, who will have the sole responsibility to provide the production department with unique and differentiated designs of garments.

4.6 Finance Unit

1 skilled and experienced financial supervisor will be employed and as it is a small business for the time being, the concerned person will not face any sort of excessive work pressure problems.

5.0 Financial Projections

The reasonable estimation and financial projection of the Boutique has been provided below, which is based on the first year of operation. The start up assets needed for the boutique and the Sources of funding the same has been presented below.

Estimated Budget for opening the retail showroomAmount
Logo and creation of name$1,000
Stationery$1,500
Telephone an utilities $2,000
packaging$2,500
Business Supplies$600
Real Estate Attorney and CPA$2,500
Gran Opening Event$3,000
Signage$1,500
POS System$3,500
Bank Card machine and supplies$400
Build- out$15,000
Business Inventory Insurance$2,500
Travel- market buying trips $2,250
Total Start up expense $38,250
Start – up assets $18,200
Start – up Inventory$80,000
Other current assets $0
Long- term assets $15,000
Total assets$1,13,200
Total Requirements$1,51,450

 

Table 1: Start up assets

(Source: Created by author)

 

Sources of Funds 
Owners’ and other investments$71,000
Bank loans$80,450
Other loans $            –
Total Source of Funds$1,51,450
 
Use of Funds
Buildings/real estate $            –
Leasehold improvements$20,000
Capital equipment$35,000
Location/administration expenses$5,800
Opening inventory$9,000
Advertising/promotional expenses$4,000
Other expenses$1,200
Contingency fund$4,000
Working capital$72,450
Total Use of Funds$1,51,450

Table 1: Sources of Funds

(Source: Created by author)

5.1. Pricing Projection

The pricing of the garments will be underpinned in the tag at its real price but a attracting and mindboggling discount will be provided as the special occasion of the opening ceremony of the boutique. The sales estimation of the boutique is presented below:

DescriptionJanuary FebruaryMarchAprilMay JuneJulyAugustSeptemberOctoberNovemberDecemberTotal
Sales$51,414$56,555$62,211$68,432$75,275$82,803$91,083$1,00,191$1,10,210$1,21,232$1,33,355$1,46,690$10,99,452

Table 2: Sales Estimation

(Source: Created by author)

Graph 1: Sales Estimation

(Source: Created by author)

The above table and graph shows that the boutique will not be able to sell huge amount of garments in the first month despite of providing a huge discount but will successful attract consumers and hence the sale  will go up by 10 % each month (Longbrake 2013). However, another noticeable element is that the boutique due to its price penetration will be able to start from a standard amount of sales from the very beginning month of operation.

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