The Analysis of Fit Stitch Company - Report Example

Table of Contents Stitching Service 2 Business 2 Type of Business 3 Mission of Fit Stitch 3 Vision ment 3 Market Segmentation 3 Target Market 4 Seven Ps of Service 4 Service 4 Price 5 Place 5 Promotion 5 People 6 Physical Evidence 6 Process 6 Assumption 8 Effectiveness of Sales 8 Financing 8 Financial Analysis 9 Three Scenarios 9 Bibliography 9 Appendix 11 Business Accounting Stitching Service The increasing costs of stitching services have insisted the people to go for the readymade garments. After the market analysis, I felt the need to start a stitching business. The stitching service which I will provide will make the lives of people easier by taking order both offline and online. A traditional shop will be opened where people may come and give their clothes to get stitched. Moreover, an online website will be developed, in which the online orders will be taken and the customer may send the unstitched cloth with the printed copy of the filled online slip by parcel. Business Name The name of the company will be ‘Fit Stitch’ as it is a very short name and it shows the nature of business as well. The official website of the company will be published with the URL name www.fitstitch.com. Currently there is no company offering services with this name therefore, Fit Stitch will become a trademark for my business. Source: Domain Name Website Type of Business The nature of the business will be sole proprietorship, which means that I will be the sole trader of this business and I would be liable to bear all profit or loss. Moreover, in this kind of business, only I would have the decision making authority, however, to increase the participation of my workers, I would take their input before making any business decision. Mission of Fit Stitch Fit Stitch aims to offer affordable, outclass, quick and convenient stitching services it to its customers. Our skilled and expert designers offer outstanding stitching services for all kind of dresses. Our ultimate aim is to satisfy our customers while achieving break even profit. Vision Statement We want to become market leaders in stitching services. Market Segmentation I have identified a few market segments in the selected industry and following tables gives a simple idea about different market segments. Customers who go to traditional tailors Customers who prefer ready made garments Women wear 1 2 Men wear 3 4 Kids wear 5 6 Others 7 8 Target Market The company will offer its services in Lisbon, Portugal. There are two basic reasons because of which I am targeting Lisbon market: the first, it is my home city; second, the market need. Fit Stitch will target all these market segments including men, women and kids. Attracting customers who get their clothes stitched from tailors will be easier because most of these people are sick of the prices of tailors and they usually feel very boring when it comes to visit the tailors. Since we will be offering online service and with some extra charges we will also offer the facility to get order from home, therefore, most of the customers will find it very convenient. The customers who prefer readymade garments will also find Fit Stitch services convenient, affordable and creative therefore, they will be also attracted by Fit Stitch. Seven Ps of Service Service The main service that will be offered is ‘stitching’ however; the optional services will be as follows: Different options to place the order Different options to get the order delivery Alteration services free of charge in case of any fault Unique Selling Proportion: The unique selling proposition of this service will be the level of convenience. The only weakness of this product is the geographical limitation. Since, the budget is limited therefore; Fit Stitch cannot offer its services to all localities in the city. As long as expansion of the service is concerned, if my business goes successful, I will expand it to the other cities of Portugal. Price   Outlet Online Ordering from home Normal stitching Additional charges will be taken depending on the design For online orders, customer will pay for courier services Prices are fixed The stitching cost may vary from £6 to £30 based on style £6 £8 £15+ £1/Km     Urgent delivery £5 £5 £5 Place Buying a physical shop will not be possible at this stage; therefore, I will rent out a shop in a commercial area. The city in which Fit Stitch services will be offered is Lisbon, Portugal. Promotion I would allocate very small amount to promote Fit Stitch services because of the limited budget and the following strategies will be used to promote my services. Most of the promotion will be done through Word of Mouth such as by updating the status on Facebook and other social websites An ad in the local newspaper will be also given Fliers and pamphlets will be also circulated especially near colleges and universities, shopping plazas, beauty salons etc. People Expert tailors will be hired to stitch the stuff and in the start total workers for stitching will be about six. Two workers will be hired to collect the orders from home. One attendant or office boy will be also hired for support functions. One person highly skilled in maintaining the website will be hired so that continuous updates could be provided to the customers. Moreover, a receptionist will be also hired to deal with the customers. Physical Evidence The service outlet will be in a commercial area and it will comprise of three sections. In section 1, the workers will carry out stitching and in section 2 the computer system and telephone for taking the orders will be placed. The third section will be the reception desk and the customer will be able to interact with the receptionist only. Process Following is the complete service process. 1) Taking orders Customers will have three options to place their order including visiting outlet, placing order online or ordering from home. All these options will cost different for example,   Outlet Online Ordering from home Normal stitching £6 $8 $15 + £1/Km Visiting Outlet: In this option customer will visit the outlet and he/she will be shown a magazine to select a design. Online Order: In this option, the customer will fill out a form online and he will send his/her clothes through a parcel and a printed copy of the form will be also attached. The customer will pay all the charges of sending or receiving parcel. A sample form is as follows: Order Placed 17-May-10   Order Collected 27-May-10   Order No 123456         Name           Age                     Selected design from website Shirt Details Length Neck Sleeves length   Picture 6             Trouser Details Length Width Style     Ordering from Home: In this option, customer will place an online or telephonic request and the agent of the company will visit his/her place to collect the order details and clothes. 2) Order in Progress The time period to complete an order will be 10 to 15 days. A customer can also ask for an urgent order which will have extra charges. 3) Collecting Order The status of each order number regardless of the option through which it has been placed will be available online. Moreover, customers will be given the option to ask about the status of their order after the least mentioned period through telephone. Once the order will be completed, customer can place a request for parcel delivery or Fit Stitch agent can be also asked to drop off the stitched clothes. 4) Alteration Within three days after receiving the order, the customer can ask for alteration. However, the dress will be altered only if its measurements differ from the given measurements. Assumption Since I am going to start a business therefore, in the beginning I will open online one outlet and the customers who will go for the third option to place the order will ensure that they are within 25 kilometres range. The company will offer its services only within national boundaries and international customers will not be targeted, unless they are willing to pay the shipment cost. The assumed average price of a stitched suit is £15 Effectiveness of Sales Although people get their clothes stitched throughout the year however, still I believe that we may face higher number of customers during December, January and March because of Christmas and Easter. Financing To finance the company the funds will come from two sources. Being the owner of the business, I would contribute £10,000 and I would get a loan of £20,000 from a bank at 7 percent annual interest. Financial Analysis The financial statements of the company show that the company will incur a lot in the first month of its operations (Appendix). However, in the second month the break even point will be achieved and there will be no loss. The company will start generating profit from third months onward. The major cost incurred by the company will be in the first month because the company has to invest in purchasing machineries and equipment. Three Scenarios The projecting costing for the year shows that the company will incur £84200 in the whole year. However, let me take an optimistic view that if I win a lottery of £10000 then what would be my response. In that case, I would reduce the amount of loan by £10000. This will reduce my interest payments. On the other hand, from a pessimistic view, if I incur any loss, then I would incur it on my own and if cash will be required, more loan will be taken from the bank. Bibliography DomainName. (2010) Available Domain Names. [Online] Available from: http://www.domainname.com/index.html/?VT=yni_PFPRdDFyjIi_aQ2WcuxULbvXcbKWsCL7OFPRdDv3u5Pe [Accessed at 20 May 2010] Naptool. (2010) Stitching Machine Prices. [Online] Available from: http://www.naaptol.com/buy-online/WO-shopping-best-deals-W189O/consumer_electronics/home_appliances/sewing_machine.html [Accessed at 20 May 2010] Ezilon. (2010) Portugal Car Market Place. [Online] Available from: http://www.ezilon.com/portugal-autos.html [Accessed at 20 May 2010] Appendix Fixed Costs Fixed costs In £’s Machines and Equipment 7,200 Van 3000 Rent for premises 500 Insurance (premises & Van) 50 Salaries 2000 Electricity 100 Gas 100 Phone Bill 50 Internet Connection 50 Transportation 200 Total 13,250 Items Required in Stitching a Suit Description of items used for stitching Item price Needles 2p Scissors 10p Fabrics 5p Flosses and Fibres 5p Hoops and Frames 10p Collars 5p Threads 5p Ribbons 10p Since it is a service therefore, expected per unit cost is as follows: Per suit cost       Material £0.5 Labour £2 Manufacturing Overhead £0.5 Total £3 Full Cost of the Year   First Quarter £’s Second Quarter Third Quarter Fourth Quarter Total Machines and Equipment 7,200 - - -   Van 3000 - - -   Rent for premises 1,500 1500 1500 1500 6000 Insurance (premises & Van) 150 150 150 150 600 Salaries 6000 6000 6000 6000 24000 Electricity 300 300 300 300 1200 Gas 100 300 300 300 300 Phone Bill 150 150 150 150 600 Internet Connection 150 $150 150 150 600 Transportation 600 600 600 600 2400 Total 19,150 9150 9150 9150 84200 Financial Statements Income Statement Profit and Loss Account             Expected Suits Stitched 200 260 335 470 670 800 Sales 3000 4000 5000 7000 10000 12000 Less: COGS 600 780 1005 1410 2010 2400 Gross profit 2400 3220 3995 5590 7990 9600 Expenses 1280 1280 1280 1280 1280 1280 Depreciation 1940 1940 1940 1940 1940 1940 Net Income -820 0 775 2370 4770 6380 Cash Flow Cash flow forecast Jan Feb Mar Apr May Jun CASH IN             Opening Balance 30000 11800 11300 11600 13900 19750 Cash from sales 3000 4000 5000 7000 10000 12000 TOTAL 33000 15800 16300 18600 23900 31750 CASH OUT             Purchase of Van 5000           Cash Purchases 7200 500 700 700 1000 2000 Other cash expense 6000 4000 4000 4000 4000 4000 TOTAL CASH OUT 18200 4500 4700 4700 4150 6000 Closing Balance 11800 11300 11600 13900 19750 6000 Balance Sheet Balance Sheet Balance sheet on start of business Balance sheet after 1 year Fixed assets 10200 8710 Depreciation 0 1940 Add: Current assets 12200 9730 Cash 7600 16000 Total assets 30000 36380       Loan from Bank 20000 18600 Stock 0   Less: Current Liabilities 0 1400 Owners equity 10000 10000 add: Profit retained 0 6380       Total Liabilities and equity 30000 36380 Read More