TS Akuma Handcrafted Jewelry - Essay Example

T.S. Akuma Handcrafted Jewelry Business Plan ASB 3105 Business Plan ID: 500327875 Contents Executive Summary 3 2. T.S. Akuma HandcraftedJewelry Objectives 4 Key to Success 4 3. Company history 5 Start-up summary 5 4. Product/service description 6 5. Service process 6 6. Market analysis 7 6.1 Industry Analysis 9 6.2 Market Growth 9 6.3 Market Positioning 9 7. 4P’s Theory 10 7.1 Product 10 7.2 Price 10 7.3 Place 11 7.4 Promotion 12 8. Strategy and Implementation at T.S. Akuma Handcrafted Jewelry 13 8.1 SWOT 13 9. Management Team 16 10. Financial Plan 18 References 22 1. Executive Summary T.S. Akuma Handcrafted Jewelry is a limited liability company located at near Bangor Business School has been existence for only two months since its establishment in March 2015. T.S. Akuma Handcrafted Jewelry offers a large selection of gemstone jewelry cut in different designs, sizes, and colors allowing them to suffice the differing needs of the customers. To meet the variety needs of the consumers, the business has stocked a large variety of jewelry and offers opportunities for clients to wait or request and later pick customized jewelry. The aim of this business plan is the depiction of the strategy and vision of the business and shall form the guide to the development and growth of the business to achieve global success (Nikolai, 2014, 51). The aims of the company include achieving sustainable profitability and meeting customer needs fully to ensure a high satisfaction rate that can only be ensured through coherence in different company elements including marketing, operations, planning, and sales, among others. The coherence in these business elements is to be achieved through the use of the business plan. T.S. Akuma Handcrafted Jewelry store focuses on youth as the primary target market through sales to older community members and the young one sis also a possibility especially for referrals and customized products. The choice of the target market was necessitated by the high preferences for specialty jewelry and customized ones. Offering different color combinations and choices of varied styles to meet their personality and dressing type will form the main service offered by the company to ensure the clients are satisfied with their purchases and that the jewelry bought fit well with their needs and will be very willing to refer others augmenting word of mouth advertising (Chevalier & Mayzlin, 2006, 347). Industry trends favor the establishment of the business owing to the increased preference for jewelry by both the young and the older members of the community. The jewelry stocked at T.S. Akuma Handcrafted Jewelry is affordable yet trendy and are in a position to be worn with official and non-official attire allowing the customers to wear the jewelry on all occasions. These characteristics ensure the success of the business owing to the complementary industry trends. 2. T.S. Akuma Handcrafted Jewelry Objectives Several objectives are to be achieved with the establishment of T.S. Akuma Handcrafted Jewelry and will be anchored on the successful implementation of the strategies and visions in the business plan. The objectives include: Develop a sustainable business unit selling jewelry to the young people at the university both customized and specialty Jewelry on display at the shop Ensure the shop meets the customers’ expectations and exceeds them through quality jewelry, excellent service, and responsiveness to customer needs and requirements (Cronin et al., 2000, 195) Ensure new designs are introduced every month to allow for changing needs of the consumers to be catered fully Key to Success The jewelry industry has some key requirements for a business to succeed, and T.S. Akuma has these characters to be successful. Having different colors, designs, and sizes of jewelry on display owing to different needs of consumers to be met Excellent customer service to satisfy the different customers effectively (Verhoef, 2009, 34) Offer customers advice on use of different jewelry designs with different outfits and for different occasions resulting in the development of a huge customer base Having satisfied employees who undertake their jobs excellently with the needs of customers in mind since it is mainly serviced based, and the interaction between the consumer and the employee matters a lot in the success of the business. Location in an easily accessible, visible, and high traffic area to ensure the customers have an easy time visiting 3. Company History T.S Akuma is a limited liability company operating handcrafted jewelry near Bangor Business School. The company set up in March of 2015, and we formed this company as a partnership. Those involved in this business are students who were studying at the Bangor Business School, who had an interest in putting their knowledge and skills to good use and getting a source of income from the business. The company aims at achieving global success through the development of a global chain brand focused on handcrafted jewelry manufacturing and distribution to different sales points globally. Our main target customer groups are concentrated around the 20 years old young people who like the special jewelry and are unique and serve to define their personality and identity. The business will be opened from Monday to Saturday 9:00 AM to 8:00 PM but the operation times on Sunday will be limited to between 10:00 AM and 5:00 PM. Start-up Summary The company cost £50,000 in starting that was funded through a partnership between five Bangor Business School students with the main expense being the yearly rent of £20,000. 4. Product/service description The products at T.S. Akuma Handcrafted Jewelry are divided into the following categories: earrings, rings, bracelets, necklaces, brooches, cufflinks and backpack decorations. The provision of customized services for the customers is the other manner in which sales and revenue generation needs of the company are met. Improvement on product sizes, colors, and designs and the introduction of new types of jewelry will mainly depend on the views of the consumers and collection of customer feedback to augment capability of meeting varying needs of the consumers. Inventory management The inventory required for successfully running the jewelry business is $10,000 but since the demand has not picked up owing to the start of the business, the optimal amount will be facilitated by sales and reinvestment in the business. Bins shall be used for the storage of jewelry not displayed at the store and kept in the store with the management of inventory done through spreadsheets but the management will be improved as the business increases with success and growth. 5. Service Process The service process at the T.S. Akuma Handcrafted Jewelry business takes several steps with the employees guided comprehensively by the employees to ensure the customers receive excellent service and are very satisfied. High client satisfaction and the provision of excellent service are the main hallmarks of the success of the business in meeting its profitability and success needs. The service process involves customers choosing the product they prefer or providing information on the product they would like to have from the store. The next phase is for the customer to determine if they would like the product to be customized including engraving messages on the jewelry and other products or writing of name or is they would prefer a standard product. For customized products, the clients will have to wait a little way of between minutes to three days depending on the complexity of their requirements to allow for their needs to be fully met and ensure the highest quality is achieved. The next phase will involve the payment of the products, and different options are available for the consumers including mobile payments, credit card payment, and cash providing them with flexibility and convenience in payment. Payment Completion will be followed by recording of the transaction by the sales persons and the provision of the receipt to the customer as the product is packed and given to the consumer. After-sale-service to the consumers is available in the form of cleaning, repair, and service for the jewelry to ensure that the consumers receive the best value from their purchases at the company. The chart below shows the service process: 2. Market analysis In recent years, jewelry has become an increasingly popular choice for young people, they would like choose it as a gift send to their friends during the holiday and also have it as part of their daily or occasional accessory to define their identity and as a sense of fashion. At the same time, the majority of ladies also love jewelry and other accessories stocked at the store to accentuate their dressing and as a fashion statement allowing for the growth and success of the business through meeting this need. There are 64 million people in the UK; to assume that one in every three of the UK population has a piece of jewelry there will need 20 million pieces, which means a huge market space. However, at the present all kinds of jewelry companies exist but they all have a similar defect, which is the design style that is very similar in each of the brand. In this case, the current state of the market cannot meet the demand of contemporary young people who like to pursue unique things that are in a position to identify with their personality and define their identity. To achieve a foothold in the jewelry industry, the most critical step always is looking for a characteristic project (United States Department of Veteran Affairs, 8). Therefore, there are a large number of market spaces for the handcrafted jewelry and the business has a big opportunity of developing through effectively meeting the needs of this market by providing the young people with unique jewelry designs and offering an opportunity for custom designed jewelry. The other factor in the market is the location of the business near Bangor Business School that provides the business with access to its core market target, the young people. The school has a large number of students who have a high preference for customized and specialty jewelry that are the main product offering by the company. Furthermore, young people have in recent years depicted a preference to access the best jewelry that matches their fashion trends both in official and casual settings. Providing the student population of an easily accessible and affordable avenue of accessing quality jewelry and other accessories as well as for the repair and cleaning for their jewelry is the other factor in the market that favors T.S. Akuma Handcrafted Jewelry. a. Industry Analysis The Jewelry industry consists of 35% market mainly dealing with jewelry for occasions including engagement, anniversary, and bridal rings. The other market percentage is made of fashion jewelry that is the main target of T.S. Akuma Handcrafted Jewelry consisting of bracelets, earrings, rings, and gold chains that fit the needs of the youth especially those in University. The jewelry industry is also comprised of watches, silverware, and diamond that make the highest sales in jewelry shops at 46% followed by gold at 11%. Colored gemstones comprise 9% of sales at jewelry stores while watches make 4% according to the First Industry research report (2010). The other factor evident in the jewelry industry is the seasonality of sales that peaks in the fourth quarter with revenues generated during this period being at least 40% of total revenue and profits of the year. The need to have high inventory and ensure variety to meet differing needs of consumers especially during the high sales season is imperative for success in the jewelry industry. b. Market Growth Jewelry was known to be a feminine commodity in the years but going by the recent trends, the uptake of jewelry wearing is catching up with men especially the youth and the wearing of jewelry by women is at an all-time high. The view that jewelry is trendy, fashionable and serves as a strong personality and fashion statement in recent years have been the main reasons for the augment ted demand for jewelry driving the growth in the market for jewelry at a high pace. c. Market Positioning T.S. Akuma Handcrafted Jewelry will aim at being a destination for quality jewelry that speak volumes in terms of ability to blend well with the fashion in casual and official wear depending on the occasions. Having the latest jewelry trends will allow for the clients to have access to new designs at affordable prices developing a strong client base. Excellent customer service is the other main aspect of the market positioning strategy that T.S. Akuma strives to achieve through ensuring the clients are guided well in their choice of jewelry and the needs for customized jewelry are fully met. 7. 4P’s Theory 7.1 Product Our product is divided into the following categories: earrings, rings, bracelets, necklaces, brooches, cufflinks and backpack decorations. The main characteristics of the products are quality and uniqueness that play a monumental role in ensuring the customers receive value for their money and will be instrumental in the development of a strong customer base (Dogra, 2010, 80). We can also provide customized services to every customer. For example, design a unique ring through using the specified word that provide by customer. At the same time, the customer also can join in the design and production process, and enjoy this special experience. In time, the business will offer advice on the combination and type of jewelry to be worn on different occasions and the provision of fashion advice to the clients. The clients will have a go-to place for guidance on different pieces of jewelry and the combinations that perfectly fit different occasions augmenting the offering of advice to the consumers. 7.2 Price Price penetration pricing strategy will be made use in the business allowing students to try the jewelry and recommend other students allowing for the success of word of mouth advertising at the University and surrounding regions. A price penetration strategy will allow for students to make frequent purchases and allow them to have a low chance of avoiding the business for pricing reasons taking into consideration their low purchasing capacity ass students (David, 2011, 105). The target market will be in a position to access unique and fashionable jewelry at lower prices and served in a business that excellent service is core ensuring a high satisfaction rate from the clientele augmenting the chances of creating a large loyal customer base and recommendations that surpass the benefits of paid-for advertising (Ford, 28). To achieve the aim of having a loyal clientele at the business, membership cards will be offered to new customers to allow them access a further 3% discount off the already low prices. The pricing for different jewelry types currently offered at T.S. Akuma Handcrafted Jewelry are displayed in the table blow with pricing for customized products and servicing provided on individual basis with the prices agreed on by depending on the complexity and uniqueness of the product. Our Price Other Brand’s Price Rings £35 – 200 £50 - 350 Earrings £30 – 285 £40 – 400 Bracelets £20 – 165 £30 – 250 Necklaces £ 30 – 250 £ 40 – 300 7.3 Place T.S. Akuma Handcrafted Jewelry is located at the center of the shopping center near Bangor Business School a site that was selected after visibility determination on the possibility of accessing a high number of youths from the schools as well as visitors visiting students at the school. The visitors could be from other universities or having relatives in the school including lecturers and other workers in the school. A high population of workers, teachers, students, and visitors is a frequent phenomenon near the university making the site an optimal location for T.S. Akuma Handcrafted Jewelry. The other reason for the choice of the location is the heavy pedestrian flow around the university, which is more conducive to the promotion of our brand and reduces the advertising costs (Clifton & Simmons, 2003, 65). Further, the target customer group is focused on 20-year-old young people who like the unique, trendy, and fashionable jewelry and that compared with a prime location near the city center, the rent of the place where is close to University relatively cheap (Sandhusen, 2012). 7.4 Promotion There are different promotion strategies available to T.S. Akuma Handcrafted Jewelry with some of them including word of mouth advertising currently in use. Word of mouth advertising is currently the main advertising strategy for the business that has a strong reliance on the quality of service and products offered. One of the main promotion strategies that have proven effective is the use of fliers and posters in school noticeboards and on boards and walls in the surrounding areas of the university. For improved brand awareness, we will set up a promotion account in the major of social networking sites, such as Facebook and Twitter. Each holiday, we will offer different levels of discount to stimulate the customer’s consumption. Discounts are an important avenue for promoting sales owing to the target market being the youth. If you are a VIP customer of our company, on your birthday you can get a special gift when you pay and showing the valid ID to the assistants. 8. Strategy and Implementation at T.S. Akuma Handcrafted Jewelry Having a focus on a specific market segment has been the main failure for other jewelry stores in the market with their aim being the need to meet the needs of all market requiring high inventory levels and stocking of very many designs and types. The other failure is inability to manage finances and taking too much credit affecting their businesses (Messinger, September 1992, 33). Focusing on the youth as the main target market allows the business to have low inventory levels but ensure the jewelry stocked at T.S. Akuma Handcrafted Jewelry are the highest quality and latest fashion that have a high demand. Having a large variety of small inventory of jewelry with order and demand capabilities allow for the business to meet needs of the consumers well in terms of need for variety and the requirement for latest fashion without having to spend a lot of money in having large inventory levels. Achieving this level of operation requires the business to leverage on the strengths and take on opportunities available in the market as envisaged in the following SWOT analysis. 8.1 SWOT SWOT allows for the analysis of the ability of T.S. Akuma Handcrafted Jewelry to use its strengths and harness available opportunities (Wang, July 2007, 2) in overcoming weaknesses and threats inherent in the internal and external environment respectively (McDonald et al., 2000, 148). A summary of the strengths, weaknesses, opportunities, and threats of T.S. Akuma Handcrafted Jewelry is provided in the table below. Strengths 1. Place Shop location is near to university that is easier to catch the attention of the young people (Kessler, 2013, 3). 2. Handmade Each product is totally handmade; we can guarantee the high quality of the products 3. Low price We can sell our products direct to customers instead of through middlemen. Under this situation, we can reduce the transportation and labor costs to make the price cheaper than other brands. 4. Excellent customer service that has resulted in word of mouth advertising by the students in the two months the business has been operating 5. Well set retail space and large convenient space for the clients to take their time in choosing the jewelry and making inquiries 6. Qualified business-oriented staff also the owners of the business and are able to give their whole in ensuring the business succeeds allowing for excellent client-staff relations and satisfaction of the customers. 7. Conducting business in an ethical manner to ensure high customer satisfaction and achieve profitability (Ferrel et al., 2014, 18) Weakness 1. Limited categories We can only provide limited types of retail goods for our customer at recently. 2. No Experience and limited capital Due to all of the employees in our company are students; we lack business experience. 3. Low brand awareness Our company just established in a very short time; the current popularity is not high enough, and the market share is very low. Opportunity 1. Personalized products Every one of our product is personalized; it can meet a kind of psychology for the contemporary young people that like pursuit the unique things. 2. Social networking sites With the rapid development of online shopping in recent years, a number of social networking and online shopping website also provide us with a good online trading platform 3. Increased ability to purchase The current economic environment recovery results in increased incomes for guardians and parents indirectly resulting in increased purchasing capacity of the youth 4. New product development Developing new products that spell new trends and will set the tempo for more demand and customer loyalty is another opportunity for the business Threat 1. Competitors There are great number of famous brand competitors, such as Pandora, Swarovski, and Tiffany. These large companies were established a long time, with some regular customers. Some of these companies are global chain; they have a very strong economic strength. 2. High Cost In order to enhance the popularity of the company, we need to pay for advertising to promote our brand. Limited capital limit the possibility of augmenting advertising and other promotional activities 3. The threat of shops being broken into and substantial amounts of jewelry stolen 9.0 Management Team The management team at T.S. Akuma Handcrafted Jewelry consists of the CEO deputized by line managers in the different departments including marketing, finance, sales, production, and customer service. The CEO is responsible for overseeing the daily operations of the business and ensuring the reports from the department managers depict optimal running of the business. THE CEO also plays roles including advising the other employees on running of the business and on communication with the clients. The CEO is also responsible for communication with external stakeholders including suppliers. The minimum qualification for the CEO is a degree of bachelor of commerce from an accredited university. Sales Division Manager- responsibilities include ensuring optimal inventory levels at the business through calculating the order amount, forecasting demand, and making projections on the success of the business. A diploma in supplies management is the minimum requirement for a supplies manager. Production Manager- Roles include ensuring efficiency running of operations, sourcing of supplies, and timely completion of Jewelry required or running out of stock (Zairis, 2013, 14). Ensuring the processes at the company are operating optimally and meeting the needs of the employees to ensure optimal operations are the other duties. Having a diploma in production management is the qualification. Having a degree in production management or related field is the minimum qualification for a production manager. Chief Financial Officer (CFO)- the responsibilities include maintenance of accurate historical information on finances, financial reporting, adherence to international and global standards in financial reporting, and other accounting related functions including timely payments. Other duties include the development of credit policy, credit collection, and development of the budget for the financial year. A degree in accounting and a one year experience in a busy accounting firm of the company is the qualifications required of a CFO T.S. Akuma Handcrafted Jewelry. Marketing Manager- the main responsibilities are the determination of promotion strategies and discounts are also the responsibility of the sales division manager at T.S. Akuma Handcrafted Jewelry. Looking for new market and the introduction of new products are the other strategies of the marketing manager. A degree in commerce, finance or economics is the main requirement for the marketing manager. Customer Care Manager- he/she is responsible for ensuring excellent customer service and the running of refresher course for the employees on effective communication and development of interpersonal skills. Ensures the client is effectively served ad communicates with customers on the progress of their orders, delivery, and payment options. The minimum requirement is a diploma in customer service management for the customer service management position at T.S. Akuma Handcrafted Jewelry. The management structure at T.S. Akuma Handcrafted Jewelry is represented in the following diagram. 10. Financial Plan The preparation of financial statements for T.S. Akuma Handcrafted Jewelry made use of several assumptions that allowed for the financial statements to be presented in the manner depicted in the following table. These assumptions are provided before the financial statements. Assumptions FY 2014 FY 2015 FY 2016 Plan 1 2 3 Current Interest Rate 9% 9% 9% Long Term Interest Rate 7% 7% 7% Tax Rate 25% 25% 25% Projected profit and loss account FY 2015 (£) FY 2016 (£) FY 2017 (£) Sales 205,125 298,343 459,027 Direct costs of goods 3,000 5,000 9,000 Gross Profits 202,125 293,343 450,027 Rent 20,000 20,000 20,000 Facilities 4,500 5,000 5,000 Material costs 6,000 8,000 11,000 Salary 174,000 174,000 190,000 Advertising 4,000 4,000 4,000 Total expenses 208,500 211,000 230,000 Profits before interest and Taxes -6375 82,343 220,027 Interest Expense 0 0 19802.43 Taxes 1593.75 20585.75 55,006.75 Net Profit -7968.75 61,757.25 145,217.82 T.S. Akuma Handcrafted Jewelry is expected to break even after a year of operation and the profitability to increase greatly within three years of operation. The need for capital will be met by taking a loan in the third year of operations to allow for increased capability of the company to meet demand and sales requirements resulting in the interest payment. Start-up funding £50,000 Rent £20,000 Facilities £4,500 Material costs £ 6,000 per year Salary CEO Marketing Dept. Finance Dept. *2 Sale Div. *2 Production MGR Customer Service £174,000 £ 2,500 per month £1,500 £2,000 £1,500 £2,000 £1,500 Advertising £ 4,000 per year Profit and Loss Statement for 1st Year Start-up funding £50,000 Sales £155,125 Cost of goods sold £3,000 Gross Profit £202,125 Expenses: Rent £20,000 Facilities £4.500 Material costs £6,000 Salary £174,000 Advertising £4,000 Total Expenses £208,500 Net profit £-6,375 *We assume that there are five customers per day with each customer spending £85 in T.S. Akuma Handcrafted Jewelry. References Chevalier, J. & Mayzlin, D. 2006. The Effect of Word of Mouth on Sales: Online Book Reviews. 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