Business Plan Report
Entrepreneurship
Submitted to Mr. Asif Tanveer
Summited by Mavra Khan Joiya—27
Anila Siddique—07
Hafiza Rehan Ejaz—16
Amara Shamsi—06
Humaira Mansoor—18
The Islamia University of Bahawalpur
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MOD CON Business Plan Report, Study Guides, Projects, Research of Entrepreneurship
It includes an idea of convertible heals. How this this idea can be converted into business plan
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2014/2015
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Business Plan Report
Entrepreneurship
Submitted to Mr. Asif Tanveer
Summited by Mavra Khan Joiya—
Anila Siddique—
Hafiza Rehan Ejaz—
Amara Shamsi—
Humaira Mansoor—
The Islamia University of Bahawalpur
Table of contents
- Executive Summary..................................................................................................................................
- 1.1 Objectives..........................................................................................................................................
- 1.2 Missions.............................................................................................................................................
- 1.3 Keys to Success..................................................................................................................................
- Company Summary..................................................................................................................................
- 2.1 Company Ownership..........................................................................................................................
- 2.2 Start-up Summary..............................................................................................................................
- 2.3 Company Location and Facilities........................................................................................................
- 3.0 Services..................................................................................................................................................
- 3.1 Competitive Comparison...................................................................................................................
- 3.2 Technology.........................................................................................................................................
- 3.3 Pricing and Payment..........................................................................................................................
- 4.0 Market Analysis Summary.....................................................................................................................
- 4.1 Market Segmentation........................................................................................................................
- 4.2 Target Market Segment Strategy.......................................................................................................
- 4.3 Market Needs....................................................................................................................................
- 5.0 Strategy and Implementation Summary..............................................................................................
- 5.2 Sales Strategy...................................................................................................................................
- 6.0 Management Summary.......................................................................................................................
- 6.1 Personnel Plan.................................................................................................................................
- 7.0 Financial Plan.......................................................................................................................................
- 7.1 pro forma Balance sheet years 1 through 3.....................................................................................
- 7.2 Pro forma Income Statement years 1 through 3..............................................................................
- 7.3 Pro forma Cash flow Statement years 1 through 3..........................................................................
- 7.4 Ratio Analysis years 1 through 3......................................................................................................
but after sometime they feel tired and pain and they wish they could have flat shoes. Mod con fulfill their this wish. The service we provide is to solve a problem and provide multiple benefits a time. Our service can save the lots of time and money women spend on buying their shoes especially when they search for flat shoes and besides high heels. This is something which are competitors like Borjan, Stylo, Metro and many other are not providing giving us a chance to create competitive edge. The market it serves for are women, especially short women who need high heels. The target market also includes the middle class women who cannot afford the high heels and flat shoe at the same time. So our product provides them the opportunity of having both shoes simultaneously with fewer prices. Management structure of the company will include the chairman of the board, who will supervise the overall activities of the company and take report from the managers. Although there will be the five owners of the company but there will be one front man or the chairman of the company. In the financial considerations, Mod con’s initial investment is estimated to be 4.5 million. 0.5 million rupees will be provided by the each partner and the remaining will be borrowed. 1.1 Objectives Mod con is brand that will provide value added featured shoes, currently no one is providing at least in Pakistan. Our objective is to create a competitive edge on our competitors like Style, Borjan, Metro, and choice which are already well developed brands and have large market share,
We can create a competitive edge in terms of value addition and differentiation strategies. We want to build a large market share in women shoes by attracting our customers, and giving them cost effective, convenient, stylish, and comfortable shoes. Women need to buy flat shoes, besides the high heels. Our objective is to direct the attention of women towards us, because we will provide them 2 in 1 shoes, means flat plus high heels in one pair of shoes. Our objective is to minimize the need of rural women to buy 2 shoes at a time, which will decrease their cost of purchasing. There are 1.5 crore rural women who don’t wear high heels just because of the noise it makes, which make them feel ashamed in front of conservative men. We want to create a market for them and increase our customers by providing them these kinds of heels, which they can fold when they pass by the men. In this way giving them solution to their problems, we can provide our shoes to those 1.5 crores women, ultimately giving us the profit of millions rupees. In this way, women will prefer our Mod con brand, which will increase our profits and helps in building our brand name, and market share. 1.2 Missions Shoes are something that adds majestic appeal to your personality. Wearing heels make women look more stylish, confident and tall. Our mission is to provide women shoes that are not only aesthetically beautiful but also comfortable. Our mission is to make women feel comfortable after keeping their feet in high heels for a long time by folding their heels and making them flat. We will provide different varieties of shoes with different colors. These varieties may include; Kitten heels Pumps
2. Company Summary Mod con is a startup shoe brand that will provide the high heels for women that can be folded making them flat. These shoes will not only be aesthetically beautiful but more comfortable. Our value proposition is “stay high with delight”. These days’ high heels are more demanding shoes ever, therefore more expensive. Besides buying the pair of high heels, women also buy the pair of flat shoes which increase their expense. Our objective is to make women get rid of the wasting time and money spends on buying both high heels and flat shoes. Because we will provide them such shoes that are flat and high heel at a same time. Although the product we provide is the value added product so the price could be charged more or premium, but still it will be affordable less expensive. Rich people can obviously afford so many pair of shoes at a time, but these shoes will particularly attract the middle class women. Competitors like Borjan, stylo, and milli, metro are already serving the need of high heels and many other varieties of shoes, but no one providing which we are going to, so this can help us to create a competitive edge on our competitors. We will completely outsource the manufacturing process. Raw material will be purchased from the areas where it will be available at cheap price and best quality. Gujranwala has the best leather of the Pakistan, which Pakistan used to export. Engineers, designers and stylist will make design of the shoe.
2.1 Company Ownership This business will form as a limited liability company. There will be 5 partners. These partners will be Mavra Khan Joiya, Anila Siddique, Hafiza Rehan Ejaz, Amara Shamsi, and Humaira Mansoor with fully ownership. 2.2 Start-up Summary Initial investment require to start this business is Rs.4.5 million. This investment will come from the loan and equity both sources. The equity source will come from the owners of the company. Each owner will provide Rs. 5 lakh. Remaining 1.5 million will be obtained from the outside sources. 2.3 Company Location and Facilities There will be a front store for our brand to sell the shoes. The best location for our brand will be the Bahawalpur Trade Center, Milaad Chowk. It is shopping mall, what can be best place than this. Here families come for shopping, parking area is really good and many other shopping stores are available. 3.0 Services We will provide shoes for female which is problem solving. Our product is stylish and convenient because we will provide two in one variety for girls. The relationship with the customer will be strong because the product which we offer is convenient and value added feature. 3.1 Competitive Comparison The product which we are offering may be available in the big markets. But our product have different feature which is not currently offered in the market. Our product will be unique as compare to its competitor because our product provides different benefits at one time to our customer.
4.0 Market Analysis Summary Market analysis is one of the most important parts of any startup business. The product which we provide has multiple feature and benefits for our customers. But little bit difficult to estimate growth potential of our product/business and future profit due to other competitors. 4.1 Market Segmentation Target market will be divided into different class. But we specially focus on middle class people. Now a days competition is very high People want more benefits in single item. Females which are belongs to middle class not have enough money to purchase different shoes like high heel and flat at a time. So our product solves this problem of females. Because the shoes which we offer, will be comfort, stylish, different due to folding heel. We will reach our customer to available our product on a suitable location. 4.2 Target Market Segment Strategy In the previous section already defined our target customer. In this section we will define how we will reach to our target consumers/customers. We will provide our product by using different distribution channels (Website, Social media marketing, bill boards) in this way we give awareness to our consumer. We will provide high quality products to the customers that will satisfy their need and demands. In the start we also give warranty and guarantee to our customer and create strong relationship. 4.3 Market Needs Market need that our product is satisfying that is time of problem. These days females are working in every field, they want stylish but comfortable shoes so our product will solve this problem. Females can purchase single pair of shoes and enjoyed multiple benefits.
5.0 Strategy and Implementation Summary It is important for a firm or business to well design a strategy in order to tackle the challenges of the future, for the achievement of goals & finally to be successful. Strategy keeps a business on the right track. There should be some clear defined goals and ways in order to implement the whole plan successfully. 5.1 Competitive Edge In order to survive in a tough and competitive market of fashion we have to keep our eye on our competitors. Our company has an advantage over its competitors because we are providing our customers a value added product with differentiation. As we are offering a unique feature in our product that is not so much popular among competitors, even a very few in market has been even aware of the feature. In this way our company clearly has a competitive edge over its competitors. We are giving our customers convenience & a solution to their problem by offering a very first time a two-in-one function shoes. Our competitive commitment is that we deliver what we promise. 5.2 Sales Strategy As we have discussed earlier that our target customers are middle class females. We offer various ways and mediums in order to communicate with our target market, position our brand & to boost our sales. We can communicate and make our customers aware through website, social media and direct marketing. This includes direct outreach by emailing or calling and sending texts to our customers. We will also use TV ads, bill boards & print ads in newspaper as well as fashion magazines. We will do a partnership with already existing high profile brands e.g. Stylo &
Chairman of The Board
Chief
development
officer
Manager
SR ASR
Chief
marketing
officer
Manager
SR ASR
Chief talent
officer
Manager
SR ASR
Chief of
social
resposiilty
Manager
SR ASR
Chief of
corporate
relations
Manager
SR ASR
Chief
financal
officer
CEO COO
6.1 Personnel Plan The following personnel plan details our plans for the ramp-up. We start with the five key founders; by the end of 2015 we should have 14 people, and 16 by the end of 2016. Personnel Plan Production Personnel
People 3 4 4 Average per Person Rs. 221670 Rs. 350000 Rs. 450000 Subtotal Rs. 665010 Rs. 1400000 Rs. 00 Sales and Marketing Personnel People 3 3 3 Average per Person Rs. 260000 Rs. 650000 Rs. 700000 Subtotal Rs. 0 Rs. 00 Rs. 2100000 General and Administrative Personnel People 3 3 3 Average per Person Rs. 370000 Rs. 420000 Rs. 500000
According to Labor Force Statistics (LFS) 2012-2013, of the estimated 180 million people, only 12510000 Pakistani females of various ages are in employment of some type and 610429 females are college/university students in Pakistan. Therefore total market potential in 2015 roughly about 13120429 women. So a MOD CON shoe has great market potential to launch their product. Here is the table which shows the target market and its potential to earn profit. 2015 2016 2017 Target market
(12510000 working women & 610429 college/university female students)
(250200 working women & 12209 college/university )
(257706 working & 12575 college/university ) Market share
Unit sales 1250 (700 working women & 550 college/university)
(715working women & 560 college/university )
working & 575 college/university ) Unit price 1525 1525 1525 Total revenue
working & 838750 college/university)
working & 854000 college/university )
working & 876875 college/university ) Target market growth is based on estimated population growth of women and Market share is calculated by taking the total target market and linking that to unit sales (target market x market share = unit sales).
Pro forma Balance sheets and Income Statements A pro forma financial statement is one based on certain assumptions and projections. These will include balance sheets, income statements, and cash flow statements of years 1 through 3. It will help to determine the operating performance of the company or our business plan.
7.1 pro forma Balance sheet years 1 through 3
MOD CON Shoes, Company Rupees in hundreds Pro forma balance sheet 2015 2016 2017 Cash and cash equivalent 406817 610307 723409 Inventory 56100 57071 57810 Account receivable 149371 73770 80762 Allowance for doubtful accounts -1716 -1729 - Supplies 200 400 600 Prepaid rent 1280 1280 1280 Total current assets 612052 741099 861967 Furniture and fixtures 9600 10303 10303 other equipment 7400 8060 8060 Accumulated depreciation -3400 -7073 - Total long term assets 13600 11290 7618 Non-operating assets Patent 25000 25000 25000 Total assets 650652 777389 894585
Supplies 2400 2743 3086 Employee benefits 128042 134456 134456 Employee taxes 29341 31552 31552 Telecommunication 4200 4200 4200 Website 240 240 240 Travel 4612 4612 4612 Total expenses 1063766 1074872 1120948 Operating income/EBIT 237448 249634 330108 interest income 7644 16801 Interest expenses 1005 813 606 Net income 236443 256464 346302 Statement of retained earning net income 236443 256464 346302 plus: beginning retained earning 179697 287866 less; dividend -56746 -148295 228301 ending retained earnings 179697 287866 405868
7.3 Pro forma Cash flow Statement years 1 through 3
MOD CON Shoes, Company Pro forma Cash flow statement 2015 2016 2017 Operating activities net income 236443 256464 346302 Depreciation 3400 3673 3637 Increase in inventory -56100 -971 - increase in A/R -149371 -75601 - increase in bad debts 1716 13 164 increase in supplies -200 -200 - increase in prepaid rent -1280 0 0 increase in A/P 0 20011 1897 increase in Accrued salaries with holding 16877 1052 0 net cash provided(used)by operating activities 51485 355643 344106 Investing
plant, property and equipment -17000 -1363 0 Patent -25000 0 0 net cash provided (used) by investing activities -42000 -1363 0 Financing Long term debt 13600 0 0 Principle payment on long term debt -2304 -2496 - Proceeds from issuing common stock 442783 0 0 Dividend -56746 -148295 - Net cash provided (used) by financing activities 397332 -150790 - Cash at the beginning of the year 0 406817 610307 Net cash and cash equivalents 406817 203489 113103 Cash at the end of the year 406817 610307 723409
7.4 Ratio Analysis years 1 through 3
Current ratio Description 2015 2016 2017 Current assets 612052 741099 861967 Current liabilities 19372 40643 42764 current ratio 31.59 18.23 20. Gross Profit Margin Gross Profit (^1301214 1324506 ) Net Sales 1906250 1921110 2103195 Gross Profit Margin 68.26% 68.94% 6.90% Operating Profit Margin