BM621 Enterprises and New Businesses Assignment

BM621 Enterprises and New Businesses Assignment

BM621 Enterprises and New Businesses Assignment

Executive Summary

In this paper a growth sustainable business plan for developing Vanity Collections, this is a boutique fashion store in Streatham. London will be looked into. The objective of this business development plan will be to operate with high efficiency as well as effectiveness in various aspects of the fashion retailing, appreciate the beauty and style of the customers for the fashion industry. The company will also aim to maintain the brand name and reputation. Additionally, the company will seek to expand itself into other selling channels like internet etc. and create a whole network for itself. A minor restructuring of the company will be done with the intention of streamlining the new objectives which have been selected for the revamped company. Also the newly added technology and dynamics operations will help to extend the promotion of the company (Vanity Collections) through the online methods. 

BM621 Enterprises and New Businesses Assignment, new business, enterprise

Company’s Overview

The company which will be looked into through this task is Vanity Collections, which is a boutique fashion at affordable price store in Streatham (London) selling women clothing and accessories. The store is in the business of offering affordable but quality clothing as well as fashion accessories and its aim will be to serve the need of contemporary fashion of the targeted customers in and around the locality in which it is located (London Borough of Lambeth) . In this paper a growth sustainable business plan for developing the store will be looked into.

Mission of the Company

The mission of the refurbished Vanity Collections will be:

To engage in offering various contemporary fashion clothing as well as fashion accessories for the females through the stand alone shop of the company in addition to the online sales channel. Vanity Collections will strive to maintain highest of the standards for the quality of product, customer service, in addition to the wide range-selection for satisfying the target market’s needs. The company will also aim to treat the esteemed customers with utmost priority which can enable it to serve them better by understanding the needs, experience and lifestyle of the customers.

Vision of the Company

The vision of the refurbished Vanity Collections will be:

To operate with high efficiency as well as effectiveness in various aspects of the fashion retailing, appreciate the beauty and style of the customers for the fashion industry. The company will also aim to establish its reputation and maintain its name within the local community. Additionally, the company seeks to expand itself into other selling channels like internet etc. and create a whole network for itself.

Objectives of the Company

It is necessary that a set of objectives are created for the company with the intention of streamlining the way the future business strategy will be built for the company. Following are the same:

  1. To develop the current fashion retailing operation of the company
  2. To capture the offline as well as online market for the fashion retailing in around the location of the company
  3. To create a strong brand image and reputation as well as a loyal base following the brand amongst the target segment of the company

Unique Selling Proposition of the Company

The unique selling proposition (USP) of Vanity collections will be a well-chosen mix of chic as well as high end clothing at not very high prices with a quicker turn-around time for delivering newest of trends in store. The fashion offering of the store will be according to the latest fashion trends which will be available at the neighbourhood stores of the company as well as the online store.

Also the USP of the company will be to include internet store since there are no similar companies have the same offering. In view of the fact that the local stores usually do not have the internet and online presence the company will be attempting to implement the same for achieving the USP. The highly efficient as well as effective operations in terms of fashion retailing will help in maintaining the USP (Etemad, 2003).

Ownership & Management of the Company

The company will continue to operate under the same ownership as of currently. However the structure as well as the management will be altered slightly to match with the revised mission, vision and objective of the company. There will be an addition of designated team which will be marketing and sales which will be led through a sales and marketing head. There will two teams, one for the sales activities and the other for the marketing related activities. The sales team will primarily include the in store sales representatives. There will be introduction of the information technology and operations team which will be required for opening up the online retailing channel of the company. This team will also include the website team which will be responsible for the development of the e commerce website for the company.

Following is the organizational chart of the company which will be used in the revised scenario:

organizational chart of the company

This restructuring      the offerings of the company to the online methods. 

Products of the Company

The product range of the company will actually stay as the current product range of the store. This will help in managing the complexity regarding the product range of the store. The following are the product offers by the store:

Apparel Lines:

CLOTHING LINES

ACCESSORIES LINES

JEANS

Handbags

DRESSES (EVERYDAY LINES)

BELTS

DRESSES (PARTY LINES)

SCARVES

SHOES

GLOVES

 

HATS

 

EAR RINGS

 

BANGLES

Industry Analysis

Customers of the company

The market and the target segment of Vanity Collections will be a subset of the fashion retailing industry of the UK. The fashion clothing retailing industry of the UK is highly matured industry which had aggregate revenue of 39 billion GBP in the year 2014. However due to the matured state of the industry as well as the huge size of the industry, the average annual growth rate which has been experienced in the industry during year 2011 to 2014 is 1.3%. Hence it can be confirmed that the market of Vanity Collections is a significant one and hence it has a lot of headroom to grow especially through the implementation of various new channels including the internet.

The fashion industry is the world's 2nd largest polluter, second only to oil. It's time for a new business model.…https://t.co/Mz0vBUuNNJ

— AMACATA (@AMACATA) December 6, 2016

The target market of the company will be decided basis the product offering of the same. In view of the fact that the company is in the business of selling fashion garments for especially the young female, the targeting will also be done accordingly. The customer of the industry in which the company is operating is highly influenced towards the gender of women. It has been confirmed by a number of previous researches that the 81% of the shopping decisions are controlled or influenced by the women. Due to the increased financial independence of the women the purchase decisions are being made by the female more spontaneously and the same will be the target base of the company. Following is the demographic details of the female customers for Vanity Collections:

  • Female who have done their education in college
  • Annual household income of more than £50,000
  • Staying in the middle to lower income neighbourhood of Streatham as well as the online shopping
  • Working as well as non-working woman between the age of 20 to 35 years

Market of the Company

The target market of the company will be decided basis the product offering of the same. In view of the fact that the company is in the business of selling fashion garments for especially the young female, the targeting will also be done accordingly. The target market for Vanity collections will be affluent young working female in and around Streatham and Lambeth as a borough who has a willingness of trying contemporary fashion clothing.

Competition of the company

The current competition of the company includes the stores including New Looks and Peacocks. These local competitions are wonderful fashion stores and boutiques which carry various contemporary fashion brands. These stores have been able to successfully market its product range to the target segment of the companies through delivering high-quality customer service. These retailers also have strong relationships with the customers, carry an appropriate mix of merchandises as well as are knowledgeable in fashion.

Strategic Positioning

The strategic positioning of the brand will be to a quick and high efficient fashion retail solution which matches with the style requirements of the customers for the fashion industry. The company will also be strategically positioned as a retail fashion company covering various channels including internet etc (Zahra, 2000).  

Porter (1985) devised a set of generic strategies, arguing that competitive advantage depends on a best selection of templates, including cost leadership, differentiation and focus.

Porter’s generic Strategies

Figure: Porter’s generic Strategies

Amongst the strategies mentioned by Porter, the one which will be implemented by Vanity Collections is differentiation focus strategy which is the constricted option and will be concentrating on the narrow target base that has been described earlier.

To these customers the company will attempt to offer its niche and differentiated products at a relatively cheaper pricing as per the requirements of the segment Through this narrow focusing as well as adapting the marketing mix for the specialized market, the needs of that target market can be met in a more fulfilling way, which also is as per the mission and vision of the company.  

Regulatory & other requirements

The regulatory as well as other requirements will primary includes the import regulations in the clothing sector. In view of the fact that the company under discussion will be selling clothes and accessories which will be imported to the UK, hence the products need to meet labelling requirements as well as relevant safety regulations. Following are the regulations which the company should be taking care of during its business operations:

  • The Footwear (Indication of Composition) Labelling Regulations 1995
  • The Textile Products (Indication of Fibre Content) Regulations 1986
  • Correct use of the textile names set out in EU directives

Also for the radio advertisements which is planned as a part of the marketing mix of the company, the company needs to take the PPL license for airing the advertisements of the company. This license is meant for collection and distribution of the money for the use of recorded music. There are few specialized agencies who work on the obtaining the licence and any of these agencies can be employed for obtaining this specific licence.

Financials

Projected Profit and Loss Statement

Profit & Loss Statement

1st Year

2nd Year

3rd Year

4th Year

5th Year

Sales

5,64,853

6,59,343

6,70,342

6,82,347

6,94,031

Direct Cost of Sales

2,25,302

2,61,272

2,63,886

2,70,502

2,74,560

Other Costs of Goods

-

-

-

-

-

Total Cost of Sales

2,25,302

2,61,272

2,63,886

2,70,502

2,74,560

Gross Margin

3,39,551

3,98,071

4,06,457

4,11,844

4,19,471

% of Gross Margin

60.1%

60.4%

60.6%

60.4%

60.4%

Expenses

     

Salaries for Employees

1,44,200

1,34,100

1,51,200

1,53,400

1,60,500

Advertising

5,280

5,280

5,280

5,280

5,280

Depreciation

5,378

5,378

5,378

5,378

5,378

Amortization - Startup Costs

6,050

6,050

6,050

6,050

6,050

Bank Service Charges

528

528

528

528

528

Dues & Subscriptions

660

660

660

660

660

Training and development activities

1,320

1,650

2,200

2,200

2,200

Workman's Comp Insurance

3,700

3,750

4,000

4,170

4,300

Property & liability Insurance

6,824

6,820

6,930

7,150

7,150

Interest Expense - LT Loan

5,188

5,188

5,188

5,188

5,188

License & Permits

121

-

-

-

-

Office Maintenance

2,640

2,640

2,640

2,640

2,640

PR and marketing activities

10,550

11,100

11,100

11,100

11,100

Miscellaneous

3,960

3,960

3,960

3,960

3,960

Payroll - Charges

877

880

880

880

880

Postage & Delivery

660

660

660

660

660

Printing & reproduction

1,320

1,320

1,320

1,320

1,320

Prof Fees - Accounting

1,650

1,650

1,650

1,650

1,650

Prof Fees - Legal

1,100

550

550

550

550

Rent

39,600

39,600

39,600

44,000

44,000

Repairs

660

660

660

660

660

Security

383

385

385

385

385

Supplies - Office & Store

4,620

4,620

4,620

4,620

4,620

Entertainment and Travel costs

9,250

11,100

11,100

11,100

11,100

Telephone / Internet Access

1,584

1,584

1,584

1,584

1,584

Utilities

2,310

2,310

2,310

2,310

2,310

Payroll Taxes

792

11,567

11,979

12,639

13,217

Employee Benefits

9,900

10,010

10,010

11,110

11,110

Other

2,640

2,640

2,640

2,640

2,640

Total Operating Expenses

2,73,764

2,76,639

2,94,872

3,03,672

3,11,619

Profit Before Interest and Taxes

65,787

1,21,432

1,11,586

1,08,173

1,07,852

EBITDA

71,166

1,26,810

1,16,964

1,13,551

1,13,230

Interest Expense

7,428

6,559

5,652

4,745

3,838

Taxes Incurred

17,508

34,462

31,780

31,029

31,204

Net Profit

40,851

80,411

74,153

72,400

72,810

Net Profit/Sales

7.23%

12.20%

11.06%

10.61%

10.49%

Projected Cash Flow Statement

Pro Forma Cash Flow

Month 1

Month 2

Month 3

Month 4

Month 5

Month 6

Month 7

Month 8

Month 9

Month 10

Month 11

Month 12

Cash Received

            

Cash from Operations

            

Cash Sales

22,594

16,946

28,243

33,891

39,540

39,540

45,188

73,431

79,079

67,782

62,134

56,485

Subtotal Cash from Operations

22,594

16,946

28,243

33,891

39,540

39,540

45,188

73,431

79,079

67,782

62,134

56,485

Additional Cash Received

            

Sales Tax, VAT, HST/GST Received

Nil

Nil

Nil

Nil

Nil

Nil

Nil

Nil

Nil

Nil

Nil

Nil

New Current Borrowing

Nil

Nil

Nil

Nil

Nil

Nil

Nil

Nil

Nil

Nil

Nil

Nil

New Other Liabilities (interest-free)

Nil

Nil

Nil

Nil

Nil

Nil

Nil

Nil

Nil

Nil

Nil

Nil

New Long-term Liabilities

Nil

Nil

Nil

Nil

Nil

Nil

Nil

Nil

Nil

Nil

Nil

Nil

Sales of Other Current Assets

Nil

Nil

Nil

Nil

Nil

Nil

Nil

Nil

Nil

Nil

Nil

Nil

Sales of Long-term Assets

Nil

Nil

Nil

Nil

Nil

Nil

Nil

Nil

Nil

Nil

Nil

Nil

New Investment Received

Nil

Nil

Nil

Nil

Nil

Nil

Nil

Nil

Nil

Nil

Nil

Nil

Subtotal Cash Received

22,594

16,946

28,243

33,891

39,540

39,540

45,188

73,431

79,079

67,782

62,134

56,485

Expenditures

            

Expenditures from Operations

            

Cash Spending

5,764

4,323

7,205

8,646

10,087

10,087

11,528

18,733

20,174

17,292

15,851

14,410

Bill Payments

12,103

9,077

15,129

18,155

21,181

21,181

24,207

39,336

42,362

36,310

33,284

30,258

Subtotal Spent on Operations

17,867

13,400

22,334

26,801

31,268

31,268

35,735

58,069

62,536

53,602

49,135

44,668

Additional Cash Spent

Nil

Nil

Nil

Nil

Nil

Nil

Nil

Nil

Nil

Nil

Nil

Nil

Sales Tax, VAT, HST/GST Paid Out

Nil

Nil

Nil

Nil

Nil

Nil

Nil

Nil

Nil

Nil

Nil

Nil

Principal Repayment of Current Borrowing

Nil

Nil

Nil

Nil

Nil

Nil

Nil

Nil

Nil

Nil

Nil

Nil

Other Liabilities Principal Repayment

Nil

Nil

Nil

Nil

Nil

Nil

Nil

Nil

Nil

Nil

Nil

Nil

Long-term Liabilities Principal Repayment

454

340

567

680

794

794

907

1,474

1,587

1,361

1,247

1,134

Purchase Other Current Assets

Nil

Nil

Nil

Nil

Nil

Nil

Nil

Nil

Nil

Nil

Nil

Nil

Purchase Long-term Assets

Nil

Nil

Nil

Nil

Nil

Nil

Nil

Nil

Nil

Nil

Nil

Nil

Dividends

44

33

55

66

77

77

88

143

154

132

121

110

Subtotal Cash Spent

18,365

13,774

22,956

27,547

32,138

32,138

36,730

59,686

64,277

55,095

50,503

45,912

Net Cash Flow

4,229

3,172

5,287

6,344

7,401

7,401

8,459

13,745

14,802

12,688

11,631

10,573

 

Pro Forma Cash Flow

Month 13

Month 14

Month 15

Month 16

Month 17

Month 18

Month 19

Month 20

Month 21

Month 22

Month 23

Month 24

Cash Received

            

Cash from Operations

            

Cash Sales

26,374

19,780

32,967

39,561

46,154

46,154

52,747

85,715

92,308

79,121

72,528

65,934

Subtotal Cash from Operations

26,374

19,780

32,967

39,561

46,154

46,154

52,747

85,715

92,308

79,121

72,528

65,934

Additional Cash Received

            

Sales Tax, VAT, HST/GST Received

Nil

Nil

Nil

Nil

Nil

Nil

Nil

Nil

Nil

Nil

Nil

Nil

New Current Borrowing

Nil

Nil

Nil

Nil

Nil

Nil

Nil

Nil

Nil

Nil

Nil

Nil

New Other Liabilities (interest-free)

Nil

Nil

Nil

Nil

Nil

Nil

Nil

Nil

Nil

Nil

Nil

Nil

New Long-term Liabilities

Nil

Nil

Nil

Nil

Nil

Nil

Nil

Nil

Nil

Nil

Nil

Nil

Sales of Other Current Assets

Nil

Nil

Nil

Nil

Nil

Nil

Nil

Nil

Nil

Nil

Nil

Nil

Sales of Long-term Assets

Nil

Nil

Nil

Nil

Nil

Nil

Nil

Nil

Nil

Nil

Nil

Nil

New Investment Received

Nil

Nil

Nil

Nil

Nil

Nil

Nil

Nil

Nil

Nil

Nil

Nil

Subtotal Cash Received

26,374

19,780

32,967

39,561

46,154

46,154

52,747

85,715

92,308

79,121

72,528

65,934

Expenditures

            

Expenditures from Operations

            

Cash Spending

5,368

4,026

6,710

8,052

9,394

9,394

10,736

17,446

18,788

16,104

14,762

13,420

Bill Payments

17,776

13,332

22,220

26,664

31,108

31,108

35,553

57,773

62,217

53,329

48,885

44,441

Subtotal Spent on Operations

23,144

17,358

28,930

34,716

40,502

40,502

46,289

75,219

81,005

69,433

63,647

57,861

Additional Cash Spent

Nil

Nil

Nil

Nil

Nil

Nil

Nil

Nil

Nil

Nil

Nil

Nil

Sales Tax, VAT, HST/GST Paid Out

Nil

Nil

Nil

Nil

Nil

Nil

Nil

Nil

Nil

Nil

Nil

Nil

Principal Repayment of Current Borrowing

Nil

Nil

Nil

Nil

Nil

Nil

Nil

Nil

Nil

Nil

Nil

Nil

Other Liabilities Principal Repayment

Nil

Nil

Nil

Nil

Nil

Nil

Nil

Nil

Nil

Nil

Nil

Nil

Long-term Liabilities Principal Repayment

454

340

567

680

794

794

907

1,474

1,587

1,361

1,247

1,134

Purchase Other Current Assets

Nil

Nil

Nil

Nil

Nil

Nil

Nil

Nil

Nil

Nil

Nil

Nil

Purchase Long-term Assets

Nil

Nil

Nil

Nil

Nil

Nil

Nil

Nil

Nil

Nil

Nil

Nil

Dividends

44

33

55

66

77

77

88

143

154

132

121

110

Subtotal Cash Spent

23,642

17,731

29,552

35,463

41,373

41,373

47,284

76,836

82,746

70,925

65,015

59,105

Net Cash Flow

2,484

1,863

3,104

3,725

4,346

4,346

4,967

8,072

8,692

7,451

6,830

6,209

References

  • Bocconi University (20111) ‘Business relations in the EU clothing chain: from industry to retail and distribution.’ Milan: ESSEC Business School/Baker & McKenzie.
  • Etemad, H. and Wright, R. (2003) Globalization and entrepreneurship. In H. Etemad and R. Wright (Eds) ‘Globalization and Entrepreneurship.’ Cheltenham: Edward Elgar. pp.3-14.
  • Mintel (2008) ‘UK Designer Fashion.’ London: Mintel.
  • Storey, D.J. (2000) ‘Small Business: Critical Perspectives on Business and Management.’ London: Routledge.
  • Zahra, S.A., Ireland, D.R. and Hitt, M.A. (2000a) International expansion by new venture firms: International diversity, mode of market entry, technological learning and performance. ‘Academy of Management Journal.’ 43(5): pp.925-950.