Business Plan of Coral Furniture Shop - Case Study Example

of Affiliation CORAL FURNITURE SHOP 0 Executive Summary Coral Furniture shop is a proposed company that will operate in Tripoli city situated in Libya. The business is designed to undertake importation of wide range furniture and resell primarily to unfinished furniture retail shops and designers. The company will maintain two principals, XXX(insert owner 1 name) located XXXX( location shop’s branch 1 )and XXX( insert the name of owner no 2) located in XXXX( location of shop’s branch 2 ). As a measure to ensure its success, Coral Furniture shop will rely on three key elements. First, it will maintain high value relations with its customers and vendors(Abrams, & Kleine,2003, pg 34). Secondly, it will put in place measures geared towards timely delivery of their brands. The last element takes in a well-organized management team that will work to deliver the company goals and objectives. Product or Service Description The proposed business will engage in importation of furniture’s that include: 1) Home furniture, 2) Bedrooms furniture, 3) Office furniture In addition to the brands offered, the proposed business intends to offer services that will include; Consultancy, brokerage, and even delivery services. The Market Coral Furniture shop will aim at three-market sections. The first, which also happens to be the largest, is specialty retailers that make up 80% of the market. This segment promises a growth of about 2% and currently it is comprised of about 15 potential customers. The specialty retailer niche is more competitive, a factor that will demand a reduction of the company dependency on it. Designers form the second segment that also depict an annual growth of about 2% and happens to have 42 potential customers. Last on the list of the targeted niche is the unfinished furniture retailers that also presents a 2% growth rate like other and maintains 50 potential participants. The market follows less of product equity of the manufacturer; instead, it is based on actual brand and the service provider. Here, great importance is laid on the customer ability to feel the product(Westwood, 2000, pg. 13). These realities benefit Coral Furniture shop as they can chose, pick from a wide range of manufacturers, and avoid cases of selling products from particular companies alone. The Sales Strategy The sales strategy will majorly focus on making direct sales calls to all market segments targeted here save for the interior designers. It will be XXX duty to make these calls since he/she happens to posse’s good background information regarding the products and the competitors. However, a full time staff will be employed following Coral Furniture shop expansion, a factor that will see XXX concentrate on his/her major task. Coral Furniture shop will employ its well –aimed marketing strategy to achieve profitability within the first 3 month of operation. Conventional forecasts show that sales will increase to almost double by the time the company gets to year three. Net profits will be commensurate. 2.0Company Description Business identity location and contacts The name of the business will be Coral furniture shop since it will deal with importation of furniture’s that include; Home furniture, Bedrooms furniture and Office furniture. Coral furniture will be located in Libya capital city, Tripoli. This location serves it well since owing to the well-established infrastructure that will serve to support the business activities. This takes in good roads, which will facilitate transportation of to and from the business center and communication networks to help reach the targeted customers. In addition, goods Tripoli is known to have a tight security that supports smooth running of business transactions. Form of ownership Coral furniture shop will be a sole a partnership business, as it will be owned by Mr. XXXX and Mr. XXXX who will be assisted by other people employed at a pay. The two owners have experience in the same business venture having worked with companies offering the same products and services. Consequently, the proposed business is bound to benefit a lot from their experiences, a factor that will help it grow faster to attain an exceptional standard. OBJECTIVES The objectives of Coral furniture shop are: 1. To put establish a strong and goal oriented administrative group, allowing the owners to spend most of their time maintaining major accounts. 2. To concentrate Coral furniture efforts on numerous selected market segments that have been studied and found promising. 3. To establish reliable and timeliness shipments of furniture’s to meet customers varied demands. Mission Coral furniture is to provide particular market niches that are underserved for a number by domestic manufacturers, with assorted types of furniture’s. This business will employ Mr. XXX interior design background, his experience in furniture retail market and his good relations with foreign manufacturers to customize the brands so that they reflect the different needs of the markets identified. 3.0PRODUCT OR SERVICE DESCRIPTION As mention above, Coral furniture will maintain variety of furniture that ranges from home, bedroom to even office furniture as indicated in the following table Category Furniture type Price Chairs Burke Armless Upholstered Slipper Chair Avington -Threshold Nolan Club Chair Burke Armless Upholstered Slipper Chair - Blue Diamonds Avington Armless Slipper Chair - Red Floral $112.49 $127.49 $112.49 $127.49 Beds & headboards Script Nailbutton Headboard – Threshold Nolan Headboard Juliette Tufted Headboard $229.99 $179.99 $173.99 - $173.99 Office furniture’s Traditions Utility Desk with Wood Top - Renovations by Thomasvill Bryant Park... Walnut Secretary Desk Room Essentials® Storage Desk - Espresso $305.24 $251.99 $146.99 $89.99 MANAGEMENT TEAM Key to any business is the management team that sets the business goals, objectives, and further sees to it that they are fully implemented(Berry, 2008, pg 12 – 17). Coral furniture will maintain the following personnel are who will help in the daily running of the shop activities. 1) The manager 2) Assistant manager 3) Sales representative 4) Store attendant 5) Accounts officer The supreme decision making organ of the organization consists of managers, sales representative and accounts officer. The manager’s roles include recruitment of other employees who later trained on their respective duties. Select new staffs. The business will ensure strong employee-employer relations through provision of incentives, promotions and better remuneration. 4.0 MARKETING STRATEGY & PLAN Marketing plan plays an important role in ensuring business success. A good knowledge of the market setting will reveal much regarding the potential market segments and thus help business management plan well( Coen,2009, pg 17) 4.1Environmental Analysis (SWOT/PEST) Strengths: Highly knowledgeable young and dynamic human resources Well Established tradition Worldly-renowned outsourcing center Innovation, Integration Big market & free media Weaknesses: Outdated system and thus inefficient stock Fear of sharing knowledge Lack of effective & execution framework Industry portrays slow innovation & change Lack of quality responsiveness Opportunities: Emerging new market sections in Services  Lower labor overheads in outsourcing Development & research capability More competent production technique Hybrid solutions–blending Very little competition experienced in contemporary furniture design Threats: Unstable stock control following the introduction of new production methods Inter-company cooperation is unknown increasing charge of imported goods Pioneering uncertainties Clashes in Imbalance vs. Diversity 4.2 Competitive Analysis The most common seen competitor selling toCoral furniture’ Design majpr tergeted is Poppi Furnisture design. Coral furniture’ products are outsourced from reknowm countries that have made name for delivering reliability. The chairs(unlike Coral furniture chairs) ensue from one manufucturer. The brands are imported by a company in Tripoli which benefits from a full –color furniture catalog published by Poppi. In addition, the importer carries all the catalog items in stock. The Poppi chairs are however substandard in quality to those offered by Coral furniture with regard to strength, weight and degree of hand-carving specifications. The following table presents a price comparison of the two companies. Poppi Item Raw Finished Premium Finish Coral Furniture Raw Finished Renaissance "A" $197 $235 $270 156A $202 $264 Renaissance "S" $165 $195 $220 155S $177 $234 Splat Side $132 $150 $175 152S $150 $206 Celestial "S" $127 $145 $170 150S $191 $247 Celestial "A" $162 $190 $225 151A $219 $281 Taking the prices detailed above, it is obvious that Coral prices are higher compared to that offered by Poppi. Among the three brands, Renaissance alone shows close comparison. It is important note that price plays an imporntant part in determining brands competitvtness and it is largely affected when retailer’s margin is tacked on(Coburn,2002, pg 3). Here, the price diffrence with regard to Poppi should not present a problem to Coral Furniture on the acount of the latter products quality. Apart from the pricing issue, Poppi happens to have a edge when considering its excellent the excellent catalog it maintains. This is ven strengthened by the fact that all items detailed here are readily available from stock mainatained in Tripoli. With this scenario, some market sections are likely to move toewards Poppi if Coral furniture fails in timely deliovery. 4.3 Products/Services As detailed above Coral furniture shop will deal in supply of both Home furniture, bed rooms furniture and office furniture. The services provided include consultations for those who would wish to buy furniture in large scale and do not know where and how to get. In addition, the business will offer door deliver services. 4.4 Pricing The current pricing structure for Coral furniture shop is to charge the list cost price to the designer section of the market.This segment typically makes purchases which are time-sensitive and are usually in small quantities. The busines will also offer a 12% discount to all retail segmentsi.e unfinished furniture retailers and speciality retailers. In a case where an individuals or company orders goods ammounting to a full container, or even lerger orders , the business will provide 36% reduction off the list cost. 4.5 Promotion To identify potential interior designers the business plans to come up with post cards that will be mailed directly to persons identified(Blackwell, 2008, pg 12-16) . Another strategy will involve a free offer an armchair for every five side chair bought in the first two months of operation. Regarding the incomplete furniture outlets, attaching a photo label of suggested complete products might work to promote sales in the segment. Here, step- by –step directions to reach the complete look presented by the photo by “d0-it- yourself” could be provided(Rogers, H, 2007, pg 16-19. Additionally, naming a readily available finisher who will do the job at an agreed price might offer another option for the "do-it-yourselfer." 4.6 Place The business location is strategic with regard to marketing. Being in a central business district that also happens to be the capital city of the country, Coral furniture centre is bound to make high sales throughout the year. Such is the case that the city environment hosts many institutions ranging from public and private offices, restaurants, hotels, schools and collages and even government offices to mention just a few, all of which will require our products at some point. 4.7 Process The whole process begins with placing orders for the item required. This might takes considerable time depending on the urgency of the goods and the country offering them. Once the order has been made the relevant personnel organise on how the goods will be transited. The next is receiving goods in which case the personnel in charge counterchecks the goods offloaded against the list of item ordered to verify if they are in the right condition as ordered. Once the goods have been received, they are taken to the store and payment made for both transportation and the goods received. By this time, all the purchasing will be done and now calls can be made to various clients who had requested for the goods delivered while others can be taken to the show room 4.8 People The people living within and without the business location depict great variance with regard to their lifestyles. However, the majority population are categorised as either middle class or top class earners who also happen to posse’s high purchasing power. Most of these people are either self-employed or employed by the government. With such a population, Coral furniture expects to make high sales. 4.9 Physical evidence (service only) (artefact –eg. proof of service) Particulars JAN FEB MAR APRIL MAY JUN JUL AUG SEPT OCT NOV DEC TOTAL Cash inflow Bal b/f 239900 328000 421500 341700 402100 467300 503400 571800 754600 826400 921200 5777900 Cash sales 150,000 150,000 120,000 100,000 110,000 125,000 100,000 125,000 130,000 130,000 160,000 100,000 1,500,000 Debtors 5000 45000 33000 24300 20700 1600 11300 117500 9000 2000 4500 273900 Contribution 50,000 50000 Owners equity 100,000 100000 Total cash inflow 300,000 394900 493000 554500 476000 547800 568900 639700 819300 893600 988400 1025700 7,701,800 Cash outflow Purchases 3000 7500 4000 6500 6000 6000 2000 2000 1000 1000 39000 Rent 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 60,000 Salaries 45500 45500 45500 45500 45500 45500 45500 45500 45500 45500 45500 45500 546000 Electricity 4000 4000 4000 4000 4000 4000 4000 4000 4000 4000 4000 44000 Water 300 500 400 500 400 300 400 500 500 200 200 1000 5200 Stationery 400 400 1000 1800 Telephone 300 400 600 500 600 700 600 500 400 500 500 800 6400 Creditors 2000 4000 10000 10000 5000 5000 8000 10000 50000 104000 Discount allowed 400 600 400 300 1000 2700 Repair and maintenance 2000 5000 7000 License 6000 6000 Promotion 6000 6000 6000 10000 28000 Provision of tax 800 800 Hiring 2000 2000 2000 2000 2000 2000 2000 2000 2000 2000 2000 2000 24000 Consultancy 2000 2000 Total cash outflow 60100 66900 71500 212800 73900 80500 65500 67900 64700 67200 67200 117100 1015300 Net cash c/f 239900 328000 421500 341700 402100 467300 503400 571800 754600 826400 921200 908600 6686500 Accumulated cash 239900 567900 989400 1331100 1733200 2200500 2703900 3275700 4030300 4856700 5777900 6686500 5.2Profit and loss forecast     Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb   Sales   $10,062 $10,062 $10,062 $10,062 $10,836 $10,836 $10,836 $12,384 $12,384 $13,932 $13,932 $13,932 Direct Cost of Sales   $4,025 $4,025 $4,025 $4,025 $4,334 $4,334 $4,334 $4,954 $4,954 $5,573 $5,573 $5,573 Other   $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Total Cost of Sales   $4,025 $4,025 $4,025 $4,025 $4,334 $4,334 $4,334 $4,954 $4,954 $5,573 $5,573 $5,573 Gross Margin   $6,037 $6,037 $6,037 $6,037 $6,502 $6,502 $6,502 $7,430 $7,430 $8,359 $8,359 $8,359 Gross Margin %   60.00% 60.00% 60.00% 60.00% 60.00% 60.00% 60.00% 60.00% 60.00% 60.00% 60.00% 60.00% Expenses                           Payroll   $3,666 $3,666 $3,666 $3,666 $3,666 $3,666 $3,666 $3,666 $3,666 $3,666 $3,666 $3,666 Sales and Marketing and Other Expenses   $4,610 $1,610 $610 $1,610 $610 $1,610 $610 $1,610 $610 $1,610 $610 $1,610 Depreciation   $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Leased Equipment   $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Utilities (Telephone)   $500 $500 $500 $500 $500 $500 $500 $500 $500 $500 $500 $500 Insurance (Liability/Fire)   $0 $0 $1,500 $0 $0 $0 $0 $0 $0 $0 $0 $0 Rent (Warehouse)   $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Payroll Taxes 13% $253 $253 $253 $253 $253 $253 $253 $253 $253 $253 $253 $253 Agent Commission 7% $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Other   $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Total Operating Expenses   $9,029 $6,029 $6,529 $6,029 $5,029 $6,029 $5,029 $6,029 $5,029 $6,029 $5,029 $6,029 Profit Before Interest and Taxes   ($2,992) $8 ($492) $8 $1,473 $473 $1,473 $1,401 $2,401 $2,330 $3,330 $2,330 EBITDA   ($2,992) $8 ($492) $8 $1,473 $473 $1,473 $1,401 $2,401 $2,330 $3,330 $2,330 Interest Expense   $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Taxes Incurred   ($898) $2 ($123) $2 $368 $118 $368 $350 $600 $583 $833 $583 Net Profit   ($2,094) $6 ($369) $6 $1,104 $354 $1,104 $1,051 $1,801 $1,748 $2,498 $1,748 Net Profit/Sales   -20.81% 0.06% -3.67% 0.06% 10.19% 3.27% 10.19% 8.49% 14.54% 12.54% 17.93% 12.54 5.3 Risks & Assumptions In our calculation, we assume that tax rates and interest rates will remain the same although. In addition, we assume the economy will remain stable as it is now. Under stable economy, as experienced today, we anticipate to attain our projections and goals with very little difficulty. References Abrams, R, M, &Kleiner, E, 2003, The successful business plan: secrets & strategies (4th ed.; Deluxe binder ed.). Palto Alto, Calif.: Planning Shop.pg 34 Berry, T, 2008, The plan-as-you-go business plan. Irvine, CA: Entrepreneur Press, pg 12-17. Blackwell, E, 2008, How to prepare a business plan, London: Kogan Page 23-24 Coburn, M, M, 2002, Supporting Strategy with Competitive Analysis. Research-Technology Management, 7, p. 3. Coen, W, A, 2009), Marketing plan. S.l.: John Wiley and Sons, pp. 12-14 Crain, M, A, 2010, A Competitive Analysis Business Valuation Services: Five Competitive "Forces" Shape Industry Strategy. 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