JAM Apparel Enterprises Limited Analysis - Business Plan Example

Business Plan: JAM Apparel Enterprises Limited and Executive Summary This business plan has been prepared in order to facilitate the raising of cash from potential investors, well wishers and donators, and enable grants and loans from the banks. The capital required for starting the business is a lot and hence the business needs funding. The business name shall be JAM Apparel Enterprises Limited, and shall be located in Berkeley Street, London. There shall be a managerial structure which shall be led by a CEO, with other major departments under him. The target market for this business encompasses all people and will supply apparel to everyone, all gender, all age. The major competitors are Alexander McQueen, Blackout 11 and John Simons. The promotional strategy shall be through traditional advertising, customer referral and website marketing. Operations shall be uncomplicated and each operation shall be handled under the relevant department. Staffing shall also be procedural, and all the financial plans, financial ratios and turnovers have been summarized in details in the last section of the business plan. Chapter One: Situation analysis Business name: The name of the business shall be JAM Apparel Enterprises Limited. This name has been derived from a combination of the first names of the owners, Jim Brickman, Allan Gidraff and Mellisa Roxane. Business Description JAM Apparel Enterprises Limited shall be a limited company, and therefore in case of becoming insolvent, the private properties of founders or shareholders shall not be taken as payment. It shall deal in purchase and sale of apparel for all people. In addition, being a limited company, it shall not have promoters but there shall be shareholders in it. Upon its first week of opening, the business shall hold an IPO and all the people shall be welcomed to purchase shares in the business, which shall be about 60% of total ownership. The management of the business shall be hierarchical, with several other departments and offices under the topmost level. Management of every business as Finch (2013) plays a great part in determining how successful a business becomes. The CEO shall be the general overseer of this business, and will therefore be tasked with approving the most crucial decisions and ensuring that the business. The CEO shall be a manager, an executor and an overall leader in the business. Just below this shall be four levels, the marketing manager, finance manager, the human resource manager and the office manager. The marketing manager shall be responsible for building, maintaining and/or promoting the image of the business. To do this, he shall be in charge of conducting researches and reports which will help to identify the opportunities, change in tastes and preferences in customer consumption, identifying potential customers among others. The finance manager shall be responsible for all the financial and accounting details of the business. The realization that a company can collapse due to inappropriate and unaccounted for use of funds means that the finance officer will be a highly qualified with a high level of experience. The finance manager shall also be responsible for corroborating all the financial needs, expenditures and records from all departments among a few other roles. The human resource office shall be responsible for addressing employees complains and shall also take care of hiring and firing employees. This business realizes that employees are the greatest asset of the business and hence the need for an effective human resource department shall be considered. The office manager shall be responsible for organizing, supervising and administrating duties all in a bid to ensure smooth and effective running of the business. Communication within the department shall also be taken care of in this department. Under this there shall be the sales and purchases department and the reception/customer care department. The earlier shall be responsible for ordering purchases and monitoring the sales, recording the type and volume of products sold among others. This department shall also be responsible for monitoring the effectiveness of salespeople in the business. The customer care department shall guide customers, address their grievances and also make a record of any special deliveries and requests since this is one way of building customer loyalty (Blackwell, 2011). The major managers shall be people with experience and hence they shall be the main legal and business advisors. Mission and Vision of JAM The mission of the business shall be to provide elegant yet descent clothing to all people at a pocket friendly price. The vision of the business shall be to grow, to expand and to redefine the apparel industry in London and globally. Aims and Objectives of JAM Apparel Enterprises Limited The short term aims and objectives however include opening ten departmental stores in London over a period of one and a half to two years. This shall see the increase of its operations and brand lines, which will include all types of shoes. The long term aims and objective includes expanding its operations to Africa, South America and two more continents in six years from its commencement of operations. This way, it shall expand its exports, its sales, its employee number and its profit margins and thus become a globally recognized company in apparel trade. Products and Services Having seen the need for a store that caters for all peoples clothes needs, JAM Apparel Enterprise Limited shall be a store for all apparel for all people. This means that unlike its immediate competitor who supply apparel wear for a specific gender of people, JAM will sell all types of clothes, for all genders irrespective of ages. This will be a fulfillment of its slogan, Everything for Everyone! SWOT Analysis of the business The SWOT analysis for the business is as represented below. Strengths Modernized clothing Brand with a real identity Timeless brand Stay chic while being at ease All types of clothes, all people, and all ages. Opportunities Lifestyle of casual chic expanding Easy Installation in different countries Creating and developing products tailored to the U.K. market Weaknesses The business will be newly introduced, might not attract many customers at first Price might appear too high, especially for customers uninterested in investing Threats Competitors have already taken the bigger share of the market Copies Made in China Cheaper brands that can overshadow what JAM will offer. Chapter Two: MARKET ANALYSIS Target Market As earlier mentioned, the business is an “Everything for Everyone” store. Everyone in JAM is a target customer irrespective of age, race or gender. Children and adults shall all have a store to shop from. The market segment has been growing gradually, especially with the increased settlement and higher enrollment of young people in the local institutions. The potential market here is made up of people who are well established, and their disposable income is sufficient for JAM Enterprises to thrive. Presently, the share market is about 70% among the major competitors, and the remaining percentage is divided between the small newly introduced apparel businesses. Located on Berkeley Street, the business has huge chances of success if it improves on all the shortcomings of the competitors. Expected revenue The expected revenue in this business has been included in the financial projections which are the last segment of this business plans. Market trends There have been drastic changes in the target market. First, there has been increased settlement around the area and the volume of the target market has gradually increased. Secondly, with the increase of target market, there has been division of potential target customers due to the introduction of small clothing businesses in the area, but a store that will provide all clothes for everyone is likely to succeed. Changes have also been noted in the purchasing power as the target market in the past few years has increased. There is a forecast of a higher growth in target market. To meet this, JAM shall frequently carry updated researches on customer changes and preferences and tastes to ensure that it keeps up with the demand. Product promotion shall also be done to maintain customer loyalty and to keep the customers informed on products. Competitors There are three main competitors for JAM Apparel Enterprises. This include Alexander McQueen which specializes in women’s’ designer wear, Blackout 11 which is known for supplying male wear including ties and scarves and John Simons well know for the fifty’s wear. These three companies are already established and already have a few branches each in London. Alexander Mc Queen commands the largest share of the market segment, followed by John Simons and Blackout II. Alexander Mc Queen has already gone global in two different continents whereas the other two still operate in London. Competitive advantage Pricing will be the greatest competitive advantage. The average pricing in each of the three apparel shops is about $200. However, JAM plans to set its products at a relatively lower price of 420 dollars less. This shall not only be during the introduction of the business but even afterwards since JAM shall purchase its apparel from one of the cheapest exporters. Secondly, there shall be various after sales services and other services including home deliveries for long term customers. Thirdly, the technology applied in the business shall be of high quality, and hence the level of services, including communication and feedback shall be of high quality. Lastly, the business shall improve on the existing customer relations in the other apparel stores, and hence increase the chances of success for the business. Chapter Three: Marketing sales/strategy Marketing strategy is a very important aspect in a business, especially a newly started business as Blackwell (2011) notes. Marketing strategy is important in promoting the image and brand of a business and JAM Apparel Enterprises Limited shall invest much in the strategy. The sales promotion shall be carried out through extensive promotion during the introductory stages and thereafter. The promotion shall also be through customer incentives, customer referral programs and website marketing. This shall be the most effective ways of boosting the sales and cultivating an expanding market. In addition, it will be a step ahead of the competitors who mostly use advertising for the promotional strategies. In addition, Alexander McQueen which has a website does not generate a huge traffic and JAM will be sure to create and maintain a traffic driven website. In addition, JAM shall also have departmental distribution stores and shall also develop online sales and purchasing. Chapter Four: Research and Development Research in every business is very important in ensuring that businesses, especially the new ones, keep an update of changes in marketing trends, customers’ tastes and preferences and technological advances (Pirinson, 2008). With regard to these, JAM Apparel Enterprises Limited shall employ a dedicated team of experts who shall be responsible for carrying out frequent and updated research, and submitting the reports to the relevant departments for action to be taken. Under the leadership of the marketing manager, this team shall carry out frequent analysis of the target market. The research shall analyze any changing trends, even in term so f purchasing power. The team shall also be bestowed with the responsibility of constantly monitoring the changes in application of technology, observing the use of website marketing and its efficiency among other change-oriented activities. The changes in trends and technology shall also be affected when the business goes global, all to ensure maximum efficiency in customer satisfaction. The company shall ensure that with every noted change in market trends, responsive action shall also be taken. The business shall also keep in mind the developments made by the competitors so that they can be a step ahead of the competitors. Chapter Five: Staffing and Operations Staffing Employees are the greatest asset to the business as Blackwell (2011) emphasizes. They, in turn sell the image of the business to the customers. It is therefore very important that the business employs highly qualified employees who are not only disciplined and determined but also focused and share the objectives and aims of the business. In the introductory period, the business shall employ about 100 workers, but as time grows, the number is going to increase. Positions for available chances shall be publicly advertised with all requirements, job specifications and terms and conditions shall be properly laid out. The interested employees shall therefore be recruited after high scrutiny and a very strict interview to ensure that the business gets the best. The terms, conditions and job descriptions shall be made known to them beforehand, and the employees who shall be recruited shall go through a two week training program to ensure that they are aptly prepared to serve the customers to their maximum satisfaction. Operations The operations of JAM will be uncomplicated. The products for sale shall be purchased; both locally and also exported and then resold in the departmental stores. In addition, the business shall also supply the products to other apparel businesses on a wholesale basis, but it shall deal largely directly to the customer. The communication facilities and other equipment needed shall be acquired through tenders. The operations of the business shall be summed up to the relevant departments. Chapter Six: Risk Management and success measurement There are many risks that may be experienced in this business. Examples include natural risks such as fire and floods, physical risks such as robbery and burglary among others. In addition, other risks include the inability to attract a wide customer base and high employee turnover. In case of the occurrence of any emergencies and risk, the business shall prepare a risk management plan, which is defined by Pirinson (2008) as a document that outlines in detail who should take over in times of emergencies, what should be done at the occurrence of any risks and all other relevant details. The importance of the plan is to ensure that when risks occur, time is not lost and the business operations do not stop, and the company resumes its operations as fast as possible. Measurement of success Success in this business shall be directly measured by the volume of profit made. At the end of every trading period, the profit made shall be determined and evaluation made on whether the growth is upwards or otherwise. In addition, the growth and success shall be measured through the customers and employees. Customer and employee satisfaction is an indirect indication of a successful business. Therefore, analysis shall be carried out in every four months by issuing evaluation forms to both the customers and the employees. This will help the business owners and stakeholders to monitor the success of the business. Chapter Seven: Financial plans Company’s Financial Statements Statement of Financial Performance 2014-2017 Currency in £ As of: Dec 31 2014 Dec 31 2015 Dec 31 2016 Dec 31 2017 Revenues 30,990.0 35,119.0 46,542.0 48,017.0 TOTAL REVENUES 30,990.0 35,119.0 46,542.0 48,017.0 Cost of Goods Sold 11,088.0 12,693.0 18,204.0 19,053.0 GROSS PROFIT 19,902.0 22,426.0 28,338.0 28,964.0 Selling General & Admin Expenses, Total 11,358.0 13,120.0 17,422.0 17,738.0 Other Operating Expenses -- 341.0 4.0 10.0 OTHER OPERATING EXPENSES, TOTAL 11,358.0 13,461.0 17,426.0 17,748.0 OPERATING INCOME 8,544.0 8,965.0 10,912.0 11,216.0 Interest Expense -355.0 -733.0 -417.0 -397.0 Interest and Investment Income 267.0 317.0 483.0 515.0 Other Non-Operating Expenses, Total 746.0 1,028.0 631.0 810.0 Other Non-Operating Income (Expenses) -115.0 48.0 14.0 -7.0 Gain (Loss) on Sale of Assets -- 597.0 -- -- Other Unusual Items, Total -40.0 -103.0 -76.0 -210.0 Income Tax Expense 2,040.0 2,370.0 2,812.0 2,723.0 NET INCOME 6,824.0 11,787.0 8,584.0 9,019.0 Balance Sheets for years 2014 to 2017 Currency in £ As of: Dec 31 20I4 Dec 31 2015 Dec 31 2016 Dec 31 2017 Assets         Cash and Equivalents 7,021.0 8,517.0 12,803.0 8,442.0 Short-Term Investments 2,192.0 2,820.0 1,232.0 8,109.0 Trading Asset Securities -- -- -- 7.0 TOTAL CASH AND SHORT TERM INVESTMENTS 9,213.0 11,337.0 14,035.0 16,558.0 Accounts Receivable 3,758.0 4,430.0 4,920.0 4,759.0 TOTAL RECEIVABLES 3,758.0 4,430.0 4,920.0 4,759.0 Inventory 2,354.0 2,650.0 3,092.0 3,264.0 Prepaid Expenses 1,624.0 2,205.0 2,614.0 1,989.0 Deferred Tax Assets, Current 118.0 478.0 227.0 244.0 Other Current Assets 484.0 479.0 609.0 3,514.0 TOTAL CURRENT ASSETS 17,551.0 21,579.0 25,497.0 30,328.0 Gross Property Facilities 16,467.0 21,706.0 23,151.0 23,486.0 Accumulated Depreciation -6,906.0 -6,979.0 -8,212.0 -9,010.0 NET PROPERTY 9,561.0 14,727.0 14,939.0 14,476.0 Goodwill 4,224.0 11,665.0 12,219.0 12,255.0 Long-Term Investments 6,755.0 7,662.0 8,693.0 10,865.0 Deferred Tax Assets, Long Term 96.0 98.0 243.0 403.0 Other Intangibles 8,604.0 15,244.0 15,450.0 15,082.0 Other Long-Term Assets 1,880.0 1,946.0 2,933.0 2,765.0 TOTAL ASSETS 48,671.0 72,921.0 79,974.0 86,174.0         LIABILITIES & EQUITY         Accounts Payable 1,410.0 1,887.0 2,172.0 1,969.0 Accrued Expenses 4,890.0 6,639.0 6,488.0 6,376.0 Short-Term Borrowings 6,749.0 8,100.0 12,871.0 16,297.0 Current Portion of Long-Term Debt/Capital Lease 51.0 1,276.0 2,041.0 1,577.0 Current Income Taxes Payable 264.0 273.0 362.0 471.0 Other Current Liabilities, Total 357.0 333.0 349.0 1,131.0 TOTAL CURRENT LIABILITIES 13,721.0 18,508.0 24,283.0 27,821.0 Long-Term Debt 5,059.0 14,138.0 13,656.0 14,742.0 Minority Interest 547.0 314.0 286.0 378.0 Deferred Tax Liability Non-Current 1,580.0 4,261.0 4,694.0 4,981.0 Other Non-Current Liabilities 2,965.0 4,697.0 5,420.0 5,462.0 TOTAL LIABILITIES 23,325.0 41,604.0 48,053.0 53,006.0 Common Stock 880.0 880.0 1,760.0 1,760.0 Additional Paid in Capital 8,537.0 10,057.0 10,332.0 11,379.0 Retained Earnings 41,537.0 49,278.0 53,621.0 58,045.0 Comprehensive Income and Other -757.0 -1,450.0 -2,774.0 -3,385.0 TOTAL COMMON EQUITY 24,799.0 31,003.0 31,635.0 32,790.0 TOTAL EQUITY 25,346.0 31,317.0 31,921.0 33,168.0 TOTAL LIABILITIES AND EQUITY 48,671.0 72,921.0 79,974.0 86,174.0 Statement of Cash flows from 2014 to 2017 NET INCOME 6,824.0 11,787.0 8,584.0 9,019.0 DEPRECIATION & AMORTIZATION, TOTAL 1,236.0 1,443.0 1,954.0 1,982.0 (Gain) Loss from Sale of Asset -43.0 -5,358.0 -220.0 -98.0 (Income) Loss on Equity Investments -359.0 -671.0 -269.0 -426.0 Stock-Based Compensation 241.0 380.0 354.0 259.0 Other Operating Activities 851.0 1,581.0 964.0 989.0 CASH FROM OPERATIONS 8,186.0 9,532.0 9,474.0 10,645.0 Capital Expenditure -1,993.0 -2,215.0 -2,920.0 -2,780.0 Sale of Property 104.0 134.0 101.0 143.0 Cash Acquisitions -300.0 -2,511.0 -977.0 -1,535.0 Divestitures -- 972.0 -- -- CASH FROM INVESTING -4,149.0 -4,405.0 -2,524.0 -11,404.0 Long-Term Debt Issued 14,689.0 15,251.0 27,495.0 42,791.0 TOTAL DEBT ISSUED 14,689.0 15,251.0 27,495.0 42,791.0 Long Term Debt Repaid -12,326.0 -13,403.0 -22,530.0 -38,573.0 TOTAL DEBT REPAID -12,326.0 -13,403.0 -22,530.0 -38,573.0 Issuance of Common Stock 664.0 1,666.0 1,569.0 1,489.0 Repurchase of Common Stock -1,518.0 -2,961.0 -4,513.0 -4,559.0 Common Dividends Paid -3,800.0 -4,068.0 -4,300.0 -4,595.0 TOTAL DIVIDEND PAID -3,800.0 -4,068.0 -4,300.0 -4,595.0 Other Financing Activities -2.0 50.0 45.0 100.0 CASH FROM FINANCING -2,293.0 -3,465.0 -2,234.0 -3,347.0 Foreign Exchange Rate Adjustments 576.0 -166.0 -430.0 -255.0 NET CHANGE IN CASH 2,320.0 1,496.0 4,286.0 -4,361.0 Financial Projections and ratios 2014-2017 2014-12 2015-12 2016-12 2017-12 Revenue in U.K £ 30,990 35,119 46,542 48,017 Gross Margin % 64.2 63.9 60.9 60.3 Operating Income  8,231 8,449 10,154 10,779 Operating Margin % 26.6 24.1 21.8 22.4 Net Income  6,824 11,809 8,572 9,019 Earnings Per Share  1.47 2.53 1.85 1.97 Dividends  0.82 0.88 0.94 1.02 Payout Ratio % 56.0 34.8 50.9 51.8 Shares  4,658 4,666 4,646 4,584 Book value Per Share  5.38 6.76 6.96 7.34 Operating Cash Flow  8,186 9,532 9,474 10,645 Cap Spending  -1,993 -2,215 -2,920 -2,780 Free Cash Flow  6,193 7,317 6,554 7,865 Free Cash Flow Per Share  1.33 1.57 1.40 1.72 Working Capital  3,830 3,071 1,214 2,507 References Blackwell, E. (2011). How to Prepare a Business Plan; Create Your Strategy; Forecast your Finances; Produce that Persuasive Plan. New York: Kogan Publishers. Finch, B. (2013). How to Write a Business Plan. New York: Kogan Page Publishers. Pirinson, L. (2008). Anatomy of a Business Plan: the Step-by-Step Guide to Building Your Business and Securing Your Company’s Future. Chicago: aka Associates.   Read More