Business Plan for Sara Jewelry: it maters Inc - Case Study Example

Business Plan (Sara Jewelry: it maters Inc) Executive Summary Business -Sara Jewelry: it maters Inc. focuseson ethnic classic handmade customize jewelry. Our aim is to provide quality product without using any inferior quality raw material, alteration, and puffery. The company, currently, is producing four varieties of products, necklaces, bracelets / bangles, earrings, rings and nose rings, but their main focus is on product combination and customization. The combination includes the mix and match of different individual items; it is more or less making a bundle deal rather than buying it individually. Customization includes making the new jewelry with desired sizes, color, and design. We would also be able to accommodate the customer selected designs or drawn with mutually agreeable way. Opportunity and Strategy- The following are the available opportunities for the proposed business: the increasing consumer preference toward classic designs; the regional growth in suppliers will benefit the company; the existence of the creation of a new product through customization; the increased number of technology users; and the increased demand in locally-made and reliable products. The company would wish to exploit the above-mentioned opportunities using the following strategies: first, by providing uniquely made jewelry through combinations and customization. Second, by establishing an online portal, for the potential customers, where they can choose, modify, mix and match and upload their preferred designs. The company wants to make sure that those who do not have time during normal trading hours can use this portal which will be of mutual benefit. The target market and projections- We would like to consider factors that influence buyer’s behavior as the basis for selecting the target market rather than segregation criteria based on age or gender. The business would like to concentrate on the buyer’s purchasing decision in order to establish marketing factors such as the customer preference and the range of jewelry they use. Sara’s Jewelry: it maters Inc. wants deliver their product for the middle class (Targets the middle class). The value we want is affordable, durable and long lasting custom-made products. The business aims at satisfying the local demand of unique jewelry through local production. Sara’s Jewelry: it maters Inc. would like to serve their customers by creating a need rather than targeting at any problem. The customer value proposition can be defined as the ‘value’ which will make them feel satisfied and make them loyal customers. The business would be raising funds from various sources. This includes past savings, from various types of lenders one’s own, friends, relative, loans from the bank. The projected cost of starting Sara Jewelry Inc. is $185,000. The entrepreneur would require investors as business grows bigger and more funds would be needed to cope up with the growing demand. Moreover, major lump sum of the funds is required as Capital can be obtained form lending institutions, specifically, through bank loans. Individual savings, Family and Friends are expected to contribute : 50% $105,000 Loans: 50% $100,000 Overall start-up cost with at least 3 months running capital would be $100,000. Now, Foodbuzz business has various costs breakup is as follows: According to the income statement projection, the business performance as measured by the net income shows a negative profit in the first year of operation. However, the second and third year of operation is characterized by positive profit as indicated in appendix 1 below. Industry analysis Competitive analysis Rivalry is present and maintained due to availability of market established companies and brands. The business is likely to face a strong competition from well established companies like Signet Jewelers, Tiffany and co., and fossil. The mentioned companies enjoy a well established customer and brand loyalty. In addition, they also enjoy a great deal of economies of scale. SWOT Analysis The table below summarizes the strengths, weaknesses, opportunities and threats that the business faces. Strengths Weaknesses Customization, Local and Ethnic classic design. Quality. Exclusitivity. Low Fixed Cost. This type of Product Delivery is not present in the market. Can quickly react to the market. Enthusiastic partners and promoter. Financial Conditions Narrow Product Line Narrow geographic coverage Weak Distribution capabilities No Brand Name/Image No previous experience of business Little or no idea about entrepreneurial troubleshooting Opportunities Threats Increasing consumer preference towards classic designs. Reginal growth of suppliers will benefit the company. New product with customization. Increased number of technology users. People want more products that are made from local and reliable. Increased competition from local retailers. Easily available alternatives. Low switching cost. Strict regulations by the government chemical uses. Local suppliers and partners can be a threat in terms of demand Five forces analysis Buyer Power: buyers in the market are benefiting from low-cost switching; however, the brand recognition enjoyed by some larger companies diminishes buyer power to a certain extent. Hence it is good have other brand available in the store. Supplier Power: There are a number of suppliers to the jewelry market and many more options in this ever-changing technological world. Market players often have long-standing relationships with suppliers, with contracts that can result in switching costs being incurred. Suppliers of unique products such as one-carat (or greater) diamonds tend to exert stronger supplier power due uniqueness. Retailers may also purchase finished jewelry from manufacturers. Such suppliers have less power over market players due to the fact that they are numerous and switching costs tend to be fairly minimal. Manufacturers of finished jewelry also face the possibility of market players backwards integrating into their business area. New Entrants: New entrants may enter the market as a new company or by diversifying the operations of an existing company, although they may always find it difficult to compete with larger market players with established brand recognition, economies of scale and stronger bargaining power with suppliers. Hence the uniqueness of the product delivery is a core competence to Sara jewelry: it maters Inc. However, imitation will not let the business enjoy the core competence for a long time. Threats of Substitutes: Substitutes include products that are able to compete for consumers’ discretionary spending, such as replicated and/or counterfeit jewelry, such as costumer jewelry or jewelry made without precious stones or metals. These, however, lack the glamour and status leading to the distortion of quality delivery. Degree of Rivalry: Rivalry is present and maintained due to the availability of well established companies and brands in the industry. Well established companies benefit from the economies of scale and very strong negotiating power, low levels of perceived differentiation of the products. Venture description Mission: the business’s top priority interest is for the masses to enjoy hand-made customized jewelry by keeping the classiness intact with innovative new designs or combinations, which will be produced locally and without compromising on the price. In addition, the business intends to use its buying and selling power to win the local customers’, distributors’, and suppliers’ faith for sustainable performance. The strategy for creating the supplier’s loyalty involve offering reasonable prices for materials and making prompt payments to the suppliers. Customers’ loyalty is to be created through constant provision of high quality, and classic jewelry that reflect current and future fashion trend. The business has higher chances of succeeding owing to the fact that it is focused to providing highly demanded and locally produced jewelry. The second reason for its future success is the production strategy used such as the material combination and customization of the products. Third, the promotion and distribution strategy is cost effective and will ensure that the products are available to the customers when needed. As described above, the business seeks to deliver jewelry to the local middle class. The target customers are likely to buy the product due to its uniqueness and stylishness. The products will not be replacing any but will be among the many in the industry. Lastly, it is possible for the company to legally protect the products to eliminate 100% brand duplication. The product plan In the USA the jewelry and the watches are associated. That is, it appears more beautiful trendy for an individual to have wear a wrist watch and jewelry at the same time. The jewelry makers typically use gold, silver and other precious items such as diamonds, platinum, precious stones (sapphires, emeralds and rubies), pearls (natural and cultured) and semi-precious stones (e.g. Quartz, opal, topaz, amethyst, coral etc.). There has been use of some other metals such rhodium or sterling silver for jewelry plating. While performing this analysis costume jewelry has been excluded. The production of our products will be done using gold palted copper, black and white diamond, coral products, sapphires, emaralds and quartz. These materials will be designed, colored and combined to form unique products according to our designers skills and the customers interest. The production will be done by a four member team under the guidance of our design and inventory manager. The location of the store is in Hoboken, New Jersey but for broader analysis data used is nationwide. Each product is estimated to cost $ 100. The differentiation strategy involves changes in color combinations, mix and match of various sets of materials. The marketing plan Product (Positioning): as described earlier, our new products should reflect the art of innovation. The unique product developed as a result of the combination of different, unique and classic precious stones and metals should be different from the already existing products in the market. Our product development plan has been formulated to capture the market’s attention. We intend to make our products available for the middle class at affordable prices. The company wants to perceive a perception of jewelry customization boutique. Rather than coming up with a completely new product, they would like to deliver it differently. Promotion: distributions of introductory deal will be done via coupons, newspaper, local radio channels and online portals. The promotion strategy has been chosen to reduce costs but increase efficiency and reliability to both the potential customers and the business. Place: Our products would be sold in stores, online and will also be delivered to consumers. On the same note, we have a number of distribution stores at different location which will fasten the product delivery process. If consumers wanted to make their own design (online), the process will be faster enough due to installation of new supply chain management software. Moreover, we want to be physically available in the market of Hoboken, (address as provided) for them who wants to see, feel, and acquire the products. Pricing: the pricing strategy will be competitive. It will be comparable to all other brands available at the same we want to perceive the preposition of our own customized and combined products. Moreover Sara jewelry: it mater Inc. do not want to perceive the product as cheap. Organization plan The type of ownership of the business is a sole proprietorship. The short-term organization structure is as follows: the business is to be solely owned by Miss. Sara, who is to bear the management responsibilities. The bottom management level comprises the finance and accounting manager, markting manager, design and inventory manager. The business plans to employ four persons with qualifications and experience that fit the requirement of the business. Information flow is both ways (top to bottom and vice versa) but, all the critical decisions are made by the top management (Miss Sara) after an extensive consultation with other functional managers. The long-term plan includes hiring an assistant manager and other employees in response to the increased demand in jewelry. Risk assessment Changes in customer preferences and social trend will affect the business’s performance due to a decreased sales level. Changes in technology can also present high manufacturing costs and lead to obsolescence of production methods and inputs. The incapability to adjust to the changes present an adverse effect on the business’s performance. Lastly, the financial risk that is imminent is failure to obtain the required amount of capital from the anticipated sources. Financial plan $ 105,000 is expected to come from individual savings and contributions from family and friends. Another $ 100,000 will be obtained through bank loans. Below is the break-even analysis. To cover all the expenses of the business, we need to determine the sales level in dollars and units. We can see that total expenses are $150,000. Total Expenses = $150,000 Contribution Margin = 100-30 = $70 At Break even, CM * Unit = Fixed cost 70 *units = 150,000 Units for breakeven = 2142.85 = 2143 Hence, venture will have sale 2143 units at $ 100 to be in the business. Assumptions Sales shows seasonal pattern, but it is considered even and spread equally over the years’ time. The overall average tax rate of the states is 15%. As sale increases, the gross margin increases due to economy of scale other cost decrease. Salary of 3 persons is approx. $1666.6 per month. Very basic office setup is developed and office room rent is around $500 plus some other expenses. In year 2, there would be recruitment of 2 more people in sales and marketing. There could be recruitments whenever required. A bank would require a two months’ time to approve the loan, till that point past saving and funs from other sources will be used. The bank would pay money in the beginning (first month) of the business and after six months. Salary to the employees would be paid in the same month (last date of the month) Rent of the space is to be paid on a monthly basis. References Rent information: Retrieved from . Wedges / Salary: Retrieved from http://www.bls.gov/bls/blswage.htm Inventories information: Retrieved from http://www.riogrande.com/Home/MetalPrices Machines information: Retrieved from http://www.jewelrysupply.com/jewelry_making_supply_tools.html Jewelry Making: Retrieved from http://jewelrymakingjournal.com/jewelry-pricing-formula/ Reports: Jewelry Stores Industry. (2012). United States Jewelry Stores Industry Report, 1-243. Market Line Industry Profile Jewelry & Watches in the United States Read More