Brighton Florals Business Description and Strategies - Term Paper Example

Business Plan of Brighton Florals Executive Summary Brighton Florals is a start-up retail business that will mainly sell fresh natural and artificial flowers, gourmet gift baskets and indoor plants to locals and visitors of Denver, Colorado. The business will target mainly men and women from the upper end and middle income levels. The business seeks to achieve sales worth at least $ 500,000 within the first year of trading while also maintaining a growth rate of at least 25% annually. The business which is a sole proprietor will initially be managed by its owner. Three employees will serve customers in addition to acting as designers. According to financial projections, the business will make a net profit of 671,150 within its first year of trade. Business Description Brighton Florals is owned by xxx and is a sole proprietor business. Brighton Florals is a start-up retail business that will mainly sell fresh natural and artificial flowers, gourmet gift baskets and indoor plants to locals and visitors of Denver, Colorado. The business will also serve businesses such as restaurants, churches and offices that require floral decorations. The firm will be located in downtown Denver Colorado in a building that is strategically placed along the third street; where clients can easily find the business. Brighton Florals seeks to offer exclusive and unique products – mainly natural and artificial flowers. The business will target mainly men and women from the upper end and middle income levels. Unlike most floral businesses in Denver that focus on artificial flowers, the business will be a one stop shop for those looking for a variety of high quality flowers. Artificial flowers will consist of those that are 100 percent handmade, and those that are machine made. The shop will also stock floral accessories. Vision The vision of Brighton Florals is to become a global one-stop shop for high quality flowers, indoor plants and related accessories. Mission The mission of Brighton Florals is to be a recognized supplier of quality gift flowers and accessories in the United States of America. Objectives To achieve sales worth at least $ 500,000 within the first year of trading To maintain an annual profit margin and growth rte of at least 25% To expand to other parts of Colorado within a period of three years The business will establish good working relationships with manufacturing companies, wholesalers and its suppliers. The business intends to make profits right from the first month of operations. Within its first year of trading, the business intends to make a profit of at least $500,000. The business considers maintaining a profit margin of between at least 25% each year. The business intends to expand to other parts of the country within a period of two years. Brighton Florals’ main purpose is to encourage the appreciation of flowers while providing clients with unique, beautiful and artistic decorations. Keys to Success In order to succeed, the business will focus on offering high quality products and excellent customer service. The business will also establish good working relationships with in suppliers and distributors. Yet again, the firm will endeavor to control, during its first three years of operation, both it variable and fixed costs. The business ill also engage in aggressive marketing campaigns that will draw customers to make purchases. Unlike most retail shops, the business will offer organically grown flowers for those that are environmentally conscious. Industry and Market analysis Target market Denver is the most populous Colorado’s most populous city. According to the United States Census Bureau, the place has a total population of about 60,000 people. According to the bureau’s 2006 census, the County and city of Denver has over 240, 000 households. The average density of Denver neighborhoods also tend to be high. The place is a metropolitan area with Hispanics, Asians Americans, African Americans, and Latinos among other ethnic communities. Approximately 70% of the city’s population speaks English while most of the rest speak Spanish. Approximately 35% of the population consists of married couples, 11% of households are females without husbands while half of the population are non-families. In terms of age distribution, 10.8% of individuals are between the 18 and 24 years, 22% are below 18 years, 36% of the population from 25 to 44 while 31% are those aged above 45 years. Thirty three is the city’s median age. While the median family income in Denver stands at 48,195 USD, the median income for households is about 41,767. The median income for females is 33,768 USD against 36,232 for males. In the city, 14.4% of the population lives below the poverty line, and the per capita income 24,100 USD. Most people in Denver appreciate flowers and love to decorate their houses, offices, vehicles, and clothes with flowers. Offices and houses are commonly beautified using indoor plants. The market for flowers in Denver is quite huge and in many cases, especially during festive seasons, flowers run out of stock in most shops. From the above statistics, it is noted that there is a huge market for flowers in Denver and its neighborhoods. It is notd that flowers are used during different occasions and are commonly appreciated by people across all ages and ethnic origins. Start-up summary The business needs an initial start-up capital of approximately $10,000. This amount basically consists of rent, marketing costs and product costs. Initial costs of Establishment Requirements Amount in US Dollars Legal, statutory and county fees and Licences 1000 Labour 1,000 Initial promotion and Advertising 800 Renovations and decorations 500 Rent advance 500 Computers, printers and computer software 1,000 Furniture 1,000 Office stationery 500 Insurance 1,000 Electricity and phone costs 400 Opening stock 4,000 Transport costs 1,000 Total initial costs: 19,000 Products and Services Products will be made from a variety of materials including silk, plastic and cotton. The business seeks to establish itself as a reputable and reliable retail gift market. The business will seek to explore the character of flowers in combinations and individually. Yet again the business will focus on providing an aesthetic relationship between setting and flowers. Through the business, the tradition of flowers will be maintained. Brighton Florals’ product will initially include: Roses and tulips Indoor plants Seasonal bouquets Different kinds of flower arrangements. Scarves and hair accessories. The business will offer products that are customized according to unique customer demands. The products and services will be designed to suite specific occasions including weddings, and birthdays among others. The business ill also give standing floral orders for offices and homes. Competitive Analysis According to research conducted by the owner of Brighton Florals, quite a number of competitors exist in Denver. Most of these are small flower shops that operate in little kiosks and are mainly located outside town. While these may seem quite insignificant, Brighton Florals will not take their competitiveness for granted. A number of retail shops also operate within the city. A few of these are already well established flower shops, and are the business’ main competitors. Main competitors include: 1. Plum Valley Flower Co 2. Blume Haus 3. Bella Fiori 4. Cherry Blossoms Florist 5. Bloomin Bee 6. Pink Dahlia Designs Strengths, Weaknesses, Opportunities and Threats Strengths The firm is located at the downtown area of Denver City at a place where there’s a lot of human traffic passing by therefore making it conveniently accessible to the customers who can drop in as they head to their various destinations. The workforce of the firm is highly skilled and experienced when it comes to handling flowers therefore giving high quality service delivery. Its strategic location provides for the customer base to grow gradually. Unique customer service is offered making it a place of unforgettable shopping experience. Weaknesses: The firm, by virtue of being set up in an area that has had the flower business going on for some, will have a weakness in that it may be forced to device ways to attract the customers prefer it to the competition. Opportunities: With the fast growing online services, the firm will use this to grow itself. Repeat business is very likely from customers who are impressed with the exceptional services offered at the firm and keep coming back. The firm will take the flower business to the next level since it will be booming with sales. Threats: The flower shops that may be set up in future encouraged by the firms growth may pose some competition. The already established flower shops may offer a threat for the firm as the competition for the customers heats up. Operational Strategy The company will initially be domiciled in a 550 ft2 retail store which will serve as the test market, outlet and main administration office. Brighton Florals will purchase its natural flowers from a few selected farmers around Denver. The business will also stock artificial brands from reputable flower manufacturers. Of special interest, the business will stock organically grown flowers. These will mainly target customers who are environmentally conscious. The business will be opened on Mondays through to Friday at 8.00am and will close at 6.00 pm. On Saturdays, the business will operate from 9.00a.m to 4.30 pm. The sop shall however be kept open for longer hours routinely if customers are still within the shop. The firm’s products will be priced at affordable levels. Pricing will take into consideration the costs involved, quality, product availability and a reasonable profit margin. Human Resources Requirement Staff and Management The business will be run by two employees initially but with the possibility of others being added in response to business growth. Whenever necessary, part-time employees will be hired especially during occasions such as Valentine’s Day, graduation ceremonies, Christmas day, Easter season, and New Year. All employees of the business will be adequately rewarded for their work. Permanent employees will be awarded monthly salaries that are competitive. Also, like casual workers, permanent workers will be given commissions and incentives based on their performances. Highly qualified and experienced employees will be hired. Apart from having worked in the floral industry, employees will have skills in design, graphic design, interior design, hospitality industry and the hospitality industry. The quality and variety of staff skills and experience ill effectively strengthen the business’ ability to offer customers different approaches; modern and traditional. Customers will therefore have the versatility they need to choose their desired styles to it their varied tastes. The business will be managed initially by its proprietor. This will be done to ensure that business activities are currently run and closely monitored. Once the business has expanded in terms of profitability, a competent and experienced manager will be hired to run the firm. Marketing strategy Brighton Florals will target locals and visitors of Denver, Colorado. The business will also serve businesses such as restaurants, churches and offices that require floral decorations. Brighton Florals’ marketing program will be focused on enlarging its customer base, expanding traditional holiday business and increasing its cash-and-carry as well as special occasion sales. Marketing is a very fundamental aspect when it comes to survival and growth of any business. Brighton Florals appreciates this fact and will use all measures possible to make sure it is well marketed. Even before the firm begins operation it will employ a vigorous marketing strategy so its targeted market gets to know of its anticipated existence. The company’s marketing strategy will comprise the use of e-mail, word of mouth, and advertising on the local print and broadcast media. Marketing will in fact intensify after the business is in operation. Achieving the business’ high goals will not be a simple task. The firm will partner with local organizations such as Denver Small Business Development Centre and Denver Metro Chamber of Commerce to make its marketing dream a reality. An attractive slogan and the firm’s logo will be used to send the message that the enterprise is steadily improving in all dimensions. While this is so, improvements will be made continuously with regard to product quality, profitability and customer service. Vigorous marketing efforts will definitely make Brighton Florals a recognized name around Denver City and beyond the borders of Colorado with time. The marketing costs will be kept at less than eight percent of the gross yearly turnover in line with the firm’s goals. Effective marketing at the beginning of operation will mean not spending much in future when the business grows as the brand name would already be well known. By this time word of mouth between loyal clients and potential clients by recommendation will be the main form of marketing, though advertising by use of the local press will continue. Use of fliers and advertising by use of the local bulletin boards will also run side by side with the other forms of advertising. Brighton Florals will make earn its income by selling stock. Good customer relations and service will be used to ensure repeat sales. This will also go a long way in ensuring that new customers are directed by old ones to the business. One time clients like visitors and tourists will not be targeted by offering occasional special offers and product packages. Financial Projection In order to successfully start the business, at least 19,000 USD will be used. This is excluding running costs for the first month. With a view of assuring success, a total of 25,000 USD will be invested in the business. This means that an extra 6,000 USD will be available for operations. The business will require no loan, but whenever there is need, the proprietor will inject more capital. The following section shows the financial projections for the business. Projected Operating Costs Item Cost in US Dollars Advertising 2,000 Taxes 1,000 Replenish stock 70,000 Transport 10,000 Travel and accommodation 5,000 Postage 500 Accounting fees 500 Legal fees 500 Packaging 10,000 Electricity 500 Insurance premiums 3,000 Salaries, wages and sales commissions 24,000 Rent 3,000 Maintenance and repairs 1,000 Bank charges 300 Total operating costs for the first 12 months: 131,300 Total costs for year1 = Operating costs +Initial costs =$150,300 Break Even Analysis Assuming that each unit of product costs an average of $6 and the business must operate without making a loss or profit, the business must be able to sell a given number of units. No. Of pieces = 150,300 ÷ $6 = 25,050 pieces for the first year. Appendix 1: Projected profit/loss for the first two years year 2010 2011 Turnover 900,000 1,200,000 Cost of sales (100,000) 140,000 Gross profit 800,000 1,060,000 Less Expenses: Administrative expenses (10,000) (10,000) Delivery costs (25,000) (28,000) Marketing, Advertising, (15,000) (15,000) Salaries and wages (24,000) (24,000) Electricity (800) (800) Insurance (1,000) (1,000) Utilities (1,000) (1,000) Equipment depreciation (150) (135) Transport costs (10,000) (13,000) Rent (12,000) (12,000) Miscellaneous costs (10,000) (15,000) Total Expenses 108,950 119,935 Net Profit 671,150 840,075 Appendix 2: Projected cash flow for the first two years Year: 2010 Year:2011 Cash flows from business activities: Cash receipts 900,000 1,200,000 Payments from business activities 108,950 119,935 Net cash in 791,050 1,080,065 Cash flows from business activities: Sale of equipment 0 0 Purchased investment 0 0 Sale of investment 0 0 Net cash used by investment activities 0 0 Net increase/decrease in cash 791,050 1,080,065 Cash at beginning of period 25,000 700,000 Cash at end of period 816,050 1,780,065 Appendix 3: Projected Balance Sheet for Brighton Folrals as at 31/12/2010 Projected Balance Sheet for Brighton Folrals as at 31/12/2010 Amount in $ Amount in $ Assets Fixed Assets: Office equipment and furniture Computers 900 900 1,800 Current Assets Stock Cash 20,000 816,050 836,050 Total Assets 837,850 Liabilities: Short term (current) liabilities: (0) (0) Total Assets less current liabilities 837,850 Shareholders' Funds Share capital Retained Profit 116,050 721,800 Appendix 4: Sample products to be offered by Brighton Florals. 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