ACR301 Business Plan Assignment UK CBC College

1. Executive summary

London rags fashion store is new apparel store which provides unique products services to their customers. The focus of the firm is to target a large number of customers especially women’s. In order to grab the attention of customers company will focus on advertising products and services. All the legal laws and regulation will be followed which are compiled by the government. One of the core business strategies is to combine exceptional and knowledgeable customer service with quality stylish merchandise. In current trends Urban wear has enhanced in popularity, therefore the cited firm will provide a unique product of which are mostly attract the women’s. Further large marketing budget is known as the key to establishing a well-known fashion brand. London rags fashion company is start-up company and there are many competitors in the market who sell similar products. The company can focus on various marketing strategies in order to enhance sales and profits.

2 Business details

Name of the business will be “London rags fashion store. This name is selected to identify the store with the city of London, England where most of the store ‘inventory will be purchased. It is the upscale women clothing boutique which intends to provide fashionable products to customers. The business operates within the retail industry with the aim of accomplishing success. The store will be open near the mall the and it will contain two dressing room. Along with this parking facility will be available in front of the store with additional spaces (Swamidass, 2016).

One of the primary goals of the firm is to deliver the quality product so that the come back to make the purchase again and again. It is known as sole proprietor firm which is formally organised in London. All the legal laws and regulation will be followed which are compiled by the government. The firm is established as a sole proprietorship which makes easier the formation and simplicity of the tax record keeping and its structure.

The organisation will market women’s clothing which includes semi-casual, professional outfits, casual. Along with this firm will also sales scarves, belt, and hats as because this all will complement each other to make a complete outfit. The aim of London rags fashion store is to develop fashionable, trendy clothing, and accessories with useful younger age people (Burns, Mulle and Bryant, 2016).

3 Key personnel

London rags fashion store is a new company so in management team there will be 4 to 6 members. When the first store will be established then more shops will be open in town. Main responsibility will be of manager to track sales and profit of the firm. The firm understands the impact of recruiting and managing staff member will have on the firm success (Zimmerer, Scarborough and Wilson, 2005). Due to this reason, proper time will be taken to overseeing the store and those who are working directly in the store. Employees which will be hired are as follows:

The sales clerk who will be prevention manager.

The customer service/ inventory control

The customer service/ inventory control manager will be

The store will open seven days a week. It will open in morning 10 A.M to evening 9 PM. On Sunday shop will be open for half day between 10 A.M to 2 P.M. The company will hire two full-time employees.

4 The business idea

One of the core business strategies is to combine exceptional and knowledgeable customer service with quality stylish merchandise. Based on the experience of working in retail company help in developing understanding related to the women’s shopping behavior. London rags fashion store conducted research employed the following marketing strategies.

  • To develop a strong relationship with customers through using style assessment and offering services to assist each woman to determine the clothes according to her requirements.
  • To provide educational materials and program for the customer so that they can make effective decisions.
  • To build awareness among customers related to the new products which are offered by London rags fashion store.
  • To utilise personal referrals and stylish for building traffic.

Products which will be offered to women’s will be of high quality so that it can easily grab their attention and encourages them for repeated purchase. There are different sales strategies which can be adopted by the firm. With the intent of establishing a new business, it is important to create a unique image of themselves (Carrier, Raymond and Eltaief, 2004).. It includes different style prints and colors. In order to enhance sales and for promoting the firm special events will help which can help people. Some of the specific events which can be held by the firm are anniversaries, celebrations, contests, fashion shows, festivals, trade shows etc. These all special events help in boosting the sales and image of the firm. Advertising plays a significant role with respect to increase the profit of the firm. There are various mediums available for this, but most of them are include social networking sites, Television, magazine. To have a celebrity in front of campaign help in enhance sale of London rags fashion company (Finch, 2016).

5 Business goals

There are some specific goals of the firms which are as follows

  • To create brand image in customer’s mind.
  • To enhance sales and profit within a year
  • To retain customers through providing unique products.

While establishing a business there are some set of goals which are required to accomplish at the time. In the first year of the business, the goal is to settle a business with earning a profit. London rags fashion can sell its product at lower price. When the company will be well established that it can focus expanding its business in next two years. Along with this firm can focus on selling a wide range of product including men’s wear also (Maxwell, Foley and Marty, 2015). Hence in next two years firm can easily focus on expanding its business and accomplish success. The peak time of retail business is a month of August till December in this time sales is high. However, in the month of January, July and June sales remain lower. On the other side in rest of the month's sales remain lower. Therefore, London rags fashion store can focus on a saturation of special events and sales. Along with this firm also organise holidays special events for grabbing attention of customers.

BREAK EVEN ANALYSIS

Amount (£)

Averagse selling Price

20

Variable Cost

8.09

Contribution

11.91

   
   

Total Fixed cost

45000

   

BEP (in units): Fixed cost / contribution

3778

6 What makes the business different

The product and services which will be provided by London rags fashion store will be different from its competitors. In current trends Urban wear has enhanced in popularity, therefore the cited firm will provide a unique product of which are mostly attract the women’s. Further, the product of London Rags will be more than 32 pieces which will include, leather, denim, linen bottoms and silk shirts etc. However, fashion trends change constantly and every season there are many fashions shows present various designer idea. From there also new fashionable clothes idea can be considered for growth and success of the London rags fashion store. The firm will focus on selling those products mostly which are in current trends. Along with this, frim can focus on using special events that are fashion shows, festivals to grab the attention of customers and make aware them about new product development. It helps in making aware of communities policies and goals and purposes (Skoog and Trosdahl, 2017). The top 10 apparel line on which firm can focus are Hocken, Catherine the great, Tosca. James Jeans, Goat, Herr Frau PF lines, Twelfth street, Philosophy di Alberta Ferretti, Philosophy di Alberta Ferretti, Philosophy di Alberta Ferretti. Hence selling products with unique concepts play a significant role with respect to enhance sales and profit. There are many competitors in the market who operates their business in the retail industry for many years. Along with this they also have capture market shares due to which it is not easy for London rags fashion company to carry out business and earn a profit. Hence, introducing unique concept will help in making a good position in the market. Some of the labels which will be carried out by London rags fashion store are as follows:

Wrangler

Lawman Jeans

Circle Y of Yoakum

Silver Strike Buckles

Sunbody Hats

Cowboy Hardware

Hat 'N' Hand

20X by Wrangler

Rouchrider of Circle T

Urgent Gear

Western Ethics,

Panhandle Slim

Rocky Mountains

Cinch

7 Market research

Fashion retail sector is selected for the establishing a new business. This industry is selected because people mostly focus on their way of living and outfit which they wear, regularly and occasionally. There are some current trends in the fashion industry which are identified from previous job experience and through conducting research. There are some top trends which help in setting the agenda for the global fashion industry that is as follows:

Getting personal: Personalisation and curation lead to becoming more essential for the customers. It is because customer values combine around legitimacy and uniqueness, companies will value data even more to modify recommendation (Zukin, Rath and Hagemans, 2015).

Platform first: At present customer mostly focuses on online platforms which is the first point of search. It leads to attract their convenience, relevance and breadth of offering. The platform is growing and reach compelling fashion brands for identifying the way of engaging more with these effective channels.

Mobile obsessed: A customers with fascination with mobile grows and all the transaction to with mobile. Mobile payment solution is already available in the market. Further, London rags fashion store is also thinking to cater for enhancing suitable mobile transactions.

Hence through market research this all are the current trends which are analysed by London rags fashion store (Halkias, 2017).

8 Profiling customers

The company is selling product in fashion retail sector. The main customer group will be firm women’s who are working hard for the firm. Women’s are more conscious for their way of dressing as compare to man. Therefore, demographic market segmentation will be focused by London rags fashion store (McKeever, 2016). Further customer research was conducted which help in analysing the requirements of customers. At present most of the customer focus on purchasing product which are latest in trends and are of good quality (Kolb, 2015). There are some factors on the basis of which customers make decision where to shop that are as follows

  • Treating customers with respect
  • Handles merchandise returns fairly
  • Makes it quick and easy to shop
  • Can find according to their requirement
  • Convenient store hours
 

Per year

Per week

Women's Apparel

$1100

$29.38

Accessories

$636

$13.24

Girls' Apparel

$265

$4.08

Babies

$219

$5.20

9 Profiling competitors (For example SWOT)

Competitor

Strength

Weakness

Marks and spencer

  • Marks and spencer is considered as one of the top retail brand which have top of the mind recall.
  • It perceives value of money because of quality of its product.

Poor financial performance is one of the weakness of the firm.

 

Due to frequent recalls leads to loss in customer confidence.

Zara

One of the biggest strength of Zara is lies in its design abilities. The firm has plethora of designers on board who understand who understand brand of Zara.

One of the weakness is that it do not advertise its products and services.

Next Plc

Next Plc focus on creating products which are different from its competitors. Along with this it use effective pricing strategies to sale products.

One of the weakness lack of skilled employees due to which Next plc face problem

After analysing the competitor’s strength and weakness, London rags fashion company can focus on selling products and services with some unique concept. It can understand factors due to which company profit is getting affected. Such as hiring skilled employees can help in improving quality of products and increase sales. Due to which it become easy for the firm can easily in

10 Managing market risks

Starting a new cloth store come-up with the benefits of exposing customers. There are some risks which can be faced by London rags fashion store that are as follows:

Competitive risk: In clothing business branding is everything. Further large marketing budget is known as the key to establishing a well-known fashion brand. London rags fashion company is start-up company and there are many competitors in the market who sale similar products. Therefore, most of the people prefer to visit those retail store which highly advertise their products and services. For the cited firm not only, the brand awareness can be issues but also large chains have the power to provide deep discounts. It is essential for the company to advertise products and services in the market so that more and more people came to know about it. To make a personal connection with customers through loyalty program help to mitigate the risk.

Inventory management: To operate fashion retail store it is important for the owner to keep a regular supply of clothing on hand. If company fail to purchase enough inventory results in loss of customers and sales. On the other side, if the firm purchase too much inventory then it incurs losses through selling excess clothes at discount price.

11 Pricing

Pricing strategy play significant role in respect to carry sales products and services. In order to sales products prices need to be set for each products that are as follows:

Products

Price

Leather jacket

£ 1000

Jeans

£ 1500

Long gown

£ 2000

12 Staff

Roles and responsibility of staff members London rags fashion store can hire skilled employees in order to carry out its business successfully.

Staff

roles

Sales clerk

Handle cashier work and loss prevention

Inventory control manager

Handle customer services and inventory control

Salesman

To advertise products and services

All employees who are hired lead to perform the following roles and responsibility which are mentioned above.

13 Premises

 

Cost £

Premises required to start-up

£1,000

Premises required in the future (if different): £

£1500

The size of the business required to make sure effectiveness. The minimum cost for the security system which includes shutters, burglar alarm, locks etc. which is approximately 1,000. Along with this company need to purchase video surveillance that cost is £1,000. Hence both the security system will be considered under the capital investment and included in the fixed assets which is reflected in balance sheet. For holding its awareness, it is required to be kept in appropriate working condition

14 Profit and loss forecast

Break even analysis

BREAK EVEN ANALYSIS

Amount (£)

Averagse selling Price

20

Variable Cost

8.09

Contribution

11.91

   
   

Total Fixed cost

45000

   

BEP (in units): Fixed cost / contribution

3778

Profit and loss statement

Particulars

Year 1

Year 2

Year 3

Year 4

Year 5

           

sales Revenue

         

Sales from Products and services

146000

157680

173448

189058

208909

Less: COGS (30%)

43800

47304

52034.4

56717.5

62672.8

Gross Profit

102200

110376

121414

132341

146237

           

Operating Expenses

         

Utilities (Electricity/water/telephone)

26280

28382.4

31220.6

34030.5

37603.7

Promotion and advertisement

7000

7350

7717.5

8103

8509

Maintenance

12000

12600

13230

13891.5

14586.1

Insurance

800

800

800

800

800

salaries of personnel

25000

27500

30250

33275

36603

Miscellaneous and other Expenses

14600

15768

17344.8

18905.8

20890.9

Depreciation

800

800

800

800

800

Less: total operating expenses

86480

93200.4

101363

109806

119792

Operating Profit

15720

17175.6

20051

22535

26445

Less: Interest

1400

1120

840

560

280

PBT

14320

16055.6

19211

21975

26165

Less: Taxation

2864

3211

3842

4395

5233

Net earnings

11456

12844

15368.5

17580

20932

Budget statement

 

Year 1

Year 2

Year 3

Year 4

Year 5

           
           

cash

107256

153404

206807

267105

336709

           

Total current assets

107256

153404

206807

267105

336709

fixed assets

50000

49200

48400

47600

46800

less: Depreciation

800

800

800

800

800

Total fixed assets

49200

48400

47600

46800

46000

total assets

156456

201804

254407

313905

382709

Liabilities

         

Current liabilities

         

creditors

18900

51452.8

87317

108394

121264

oustanding and other current liabilities

8100

22051.2

37422

72262

121264

Total current liabilities

27000

73504

124738

180656

242529

Long term debt

68000

54000

40000

26000

12000

           

capital

50000

61456

74300

89669

107249

add: NP

11456

12844

15369

17580

20932

Total capital

61456

74300

89669

107249

128181

           

Total liabilities and capital

156456

201804

254407

313905

382709

Cash flow statement

PARTICULARS

Pre-Operating year (£)

Year 1 (£)

Year 2 (£)

Year 3 (£)

Year 4 (£)

Year 5 (£)

Opening Balance

 

66000

107256

153404

206807

267105

Cash Sales

 

146000

157680

173448

189058

208909

Owner's capital

55000

         

Bank Loan

65000

         

working capital

15000

         

Total Cash Inflow

135000

212000

264936

326852.48

395866

476014

             

Cash Outflow

           

Fixed Assets

50000

         

Market Research

6000

         

Utilities (Electricity/water/telephone)

 

26280

28382.4

31221

34030

37604

Legal help and permits

4000

         

Promotion and advertisement

9000

7000

7350

7717.5

8103.375

8508.54375

Maintenance

 

12000

12600

13230

13892

14586

Insurance

 

800

800

800

800

800

Miscellaneous and other Expenses

 

14600

15768

17344.8

18906

20891

Depreciation

 

800

800

800

800

800

Interest

 

1400

1120

840

560

280

Tax

 

2864

3211

3842

4395

5233

salaries of personnel

 

25000

27500

30250

33275

36602.5

Loan Repayment

 

14000

14000

14000

14000

14000

Total Cash Outflow

69000

104744

111532

120045

128761

139305

Closing Balance

66000

107256

153404

206807

267105

336709

15 Sourcing finance

There are various sources from where fund can be collected that can be long term or short term

Retained profit: London rags fashion store can use its retain profit for starting a new business. It can be stated that retained profit is the investment amount that do not cost anything. The use of retained earning lead to avoid the possibility of change in control. Along with this avoid any type of interest. Therefore, it can be state that to start-up business retained profit is one of the best sources of finance.

Medium-term credits are propels for a period of from three to ten years. The rate of premium charged on medium-term bank advancing to enormous associations will be a set edge, with the measure of the edge dependent upon the credit standing and risk of the borrower. A progress may have a settled rate of interest or a variable financing cost, so the rate of interest charged will be adjusted every three, six, nine or a year as per late improvements in the Base Lending Rate.

Advancing to more diminutive associations will be at an edge over the bank's base rate and at either a variable or settled rate of premium. Advancing on overdraft is constantly at a variable rate. A credit at a variable rate of interest is all over implied as a floating rate progress. Longer-term bank advances will a portion of the time be open, as a rule for the purchase of property, where the acknowledge shows up as a home credit. Exactly when a financial specialist is drawn nearer by a business customer for a progress or overdraft office, he will consider a couple of components, known ordinarily by the psychological assistant.

Leasing

A lease is an assentation between two get-togethers, the "lessor" and the "inhabitant". The lessor has a capital asset, however empowers the occupant to use it. The tenant makes portions under the terms of the lease to the lessor, for a foreordained time span.

Leasing is, thusly, a kind of rental. Leased assets have generally been plant and contraption, automobiles and business vehicles, however may moreover be PCs and office equipment. There are two fundamental kinds of lease: "working leases" and "store leases".

Venture capital

Financing is money put into an undertaking which may all be lost if the endeavor crashes and burns. An authority starting up another business will contribute speculation of his own, notwithstanding he will in all probability require extra financing from a source other than his own specific pocket. Regardless, the term 'financing' is more especially associated with putting money, regularly as a final product of an esteem stake, into another business, an organization buys out or a significant augmentation scheme.

The establishment that puts in the money sees the wager trademark in the financing. There is honest to goodness peril of losing the entire wander, and it might take a long time before any advantages and returns show up. Nevertheless, there is furthermore the likelihood of high advantages and a liberal benefit for the wander. A financial specialist will require a high expected rate of benefit for wanders, to compensate for the high risk.

Reference

  • Burns, L.D., Mullet, K.K. and Bryant, N.O., 2016.The business of fashion: Designing, manufacturing, and marketing. Bloomsbury Publishing USA.
  • Carrier, C., Raymond, L. and Eltaief, A., 2004. Cyberentrepreneurship: a multiple case study.International Journal of Entrepreneurial Behavior & Research,10(5), pp.349-363.
  • Finch, B., 2016.How to write a business plan. Kogan Page Publishers.
  • Halkias, D., 2017. Characteristics and Business Profiles of ImmigrantOwned Small Firms: The Case of Albanian Immigrant Entrepreneurs in Greece.
  • Kolb, B.M., 2015.Entrepreneurship for the creative and cultural industries. Routledge.
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