CosMix Forecasted Income Statement - Example

CosMix Business Plan Student’s Name Course Instructor Date CosMix Business Plan 22nd November, 2012 Lennox Road, 435P.N. Lewisburg, Pennsylvania www.cosmixent@gmail.com www.cosmixent.com Table of Contents Table of Contents 2 Executive Summary 4 Business Description, Vision and Mission 4 Business Description 4 Vision Statement 5 Mission Statement 5 SWOT ANALYSIS 5 Strengths 5 Weaknesses 5 Opportunities 6 Threats 6 Business Objectives and Goals 6 Attracting and Retaining Customers 6 Customer Service 7 Definition of the Market 8 Description of Products and Services 9 Organization and Management 10 Marketing and Sales Strategy 11 Pricing Strategy 12 Promotion Strategy 12 Products 12 Place 12 Financial Management 12 Estimation of Start-up Costs 12 CosMix Forecasted Balance Sheet as at the end of the first financial year 14 CosMix Forecasted Income Statement 14 References 16 Executive Summary This is a business plan for CosMix enterprise. In preparing this business plan, brevity and precision have been the backbone to necessitate the ease of understanding. The enterprise deals in merchandising of clothes. This is a new business whose focus is market penetration. The details provided in this plan are a blueprint of what the business is going to achieve and how to achieve it. Considering this is a new business, most of the financial information given is basically estimates and forecasts. The outline provided in this business plan is meant to be of help to the management and financial institution. The main product of the business is clothes. Most of these clothes will be imported from foreign countries. This business plan provides comprehensive information of how various aspects of the business will be dealt with. The information provided here includes the marketing strategy of this business. The location of the business has already been identified. Furthermore, the building has also been identified and a six year lease has been agreed. The sales revenue for the first financial year has been projected to be 620000. Similarly, the cost of goods sold is forecasted to be 65% of the total sales revenue. Business Description, Vision and Mission Business Description CosMix is a medium size sole proprietor enterprise that will be dealing in merchandising. The products which the business will be involved in are majorly clothing products. The business will be operating as retailers as at the beginning. Other options available will be enlarging the business to a level of whole selling. The business will start with one branch situated at Lewisburg, but is very likely to open other outlets elsewhere. The business will acquire the merchandising shops by use of a mortgage. The business will be importing a large percentage of its products from other countries. Vision Statement We are a market leader of the highest quality clothing products. Our enduring passion for the development and application of latest fashion allows us to create complete solutions that make our customers more beautiful every day. We will distinguish ourselves through an unwavering commitment to our employees and a relentless drive to maximize our customer value. We look forward to exceeding your expectations. Mission Statement To develop lasting healthy relationships with our customers by providing them with a blend of the best and latest clothing products to our fashion-conscious consumers at a fair price all through. SWOT ANALYSIS Strengths The business is very strategic in relation to where it is located The business will have a competitive edge on the basis that it will be importing quality products The loan that has been secured will greatly boost the financial position of the business. Previous experience Weaknesses This being a new business, there is the issue of stiff competition There is a possibility that planned events may not go as planned Ordinary employees have not undergone training which is likely to affect the quality of the products The business must endure high costs of operations with lower profits Opportunities Current fashion trends are very suitable to our business The business will capitalize on weaknesses of competitors who offer poor quality products Our customer niche consist of mostly economically stable persons Threats Political instability can be a big challenge There is possible loss of staff members if not well compensated Unfair taxation policies Business Objectives and Goals The business is focused on ensuring is able to break even after a period of less than one year The business is focused on establishing itself as the fashion idol To see an increase of at least 15% in sales revenue To minimize cost as much as possible during the next two years To expand and open more outlets within two years To change into a limited company after a certain period of time (approx. 6) To ensure high diversification Seek international market after three years Attracting and Retaining Customers We are focusing on attracting as many customers as we can and when this becomes a reality, we use all means possible to retain them. The appropriateness of these strategies will depend on the features of every segment of our customers. For us to break through faster, our pricing policy shall be friendly to our customers. We shall be pricing three quarters of our products at 80% of the normal price. We are doing this to make sure we attract enough customers during the first phase of operation. When the business catches up, we shall be reviewing this price slowly so that our customers do not feel the effect of the increase. With time, we look forward to putting in place promotions in form of discounts to our most loyal customers. This shall be designed according to the needs of our customers. This is focused on widening customer loyalty base. This is expected to work well with our long term goals and aspirations. Due to this, we shall be monitoring the trend of our loyal customers through our database. This is to help in respect to many things. First it will be of great significance when it comes to awarding discounts and other specialized offers. At the same time, it is meant to assist in our communication with our customers. Customer Service Our top most priority is to offer the best package to our customers. They are the most important stakeholders to our business and therefore their satisfaction is our pride. We regard our customers as our assets irrespective of how small their purchases are. Due to this, we will put a customer care unit that will specialize in dealing with all the issues related to customers. There will be a suggestion box outside our shops to allow customers to drop complains. Besides the suggestion box, there will also be an email where a customers will be channelling complains and their needs. There will be an individual who will be in charge of those complains and comments. He will go through those issues and forward them to managers for the appropriate action to be taken. As the business continues solving the issues raised by the customers, it will be in a position to achieve incredible results. Definition of the Market The marketing strategy adopted has been aligned with the features defining this industry to ensure the business is competitive enough to be profitable. The most common marketing strategy used in this industry is the pricing strategy. It is a tool that many business use both to attract and retain customers in this industry (Malhotra & Birks 2005, p261). The business will be looking forward to exploit a specific niche. The unique features of various consumer segments will be used to determine suitable products for every market segment. Most of my target customers are very fascinated by fashion. To ensure that the business benefits from this particular line of clients, there is a need to ensure fashionable products are available as soon as they emerge. With this, the business will afford to reap the highest returns from this category of clients. This is because this line of customers is concerned with fashion more than they are concerned withthe price. As long as the business is able to meet the needs of this line of customers, profitability will be guaranteed. CosMix is focused on providing solution to a variety of clothing needs in the society. This ranges significantly from school going teenagers to old consumers. Nevertheless, the specific target is to meet the needs of the adolescents. Most of them are completing High School while others are in sophomores. It also accommodates the needs of youths especially those who have just completed their colleges. The business is committed in ensuring that the needs of this particular line of consumers are well catered for. The place where the business is located is strategic to this line of customers. The business has laid down long-term and short-term marketing objectives to be met. In the short-run, the business is targeting to penetrate the market in the next six months of operation. To achieve this, necessary marketing and promotional programs have been lined up. These will include cash sales discount and other kinds of special offers. At the same time, strategies have also been put in place to ensure CosMix is a market leader in the clothing industry. The expansion programs have been forecasted to be realized at the end of every financial period. Description of Products and Services This merchandising shop is expected to sale a variety of clothing products. These are the kind of products that will cater for all clothing needs during various seasons, winter and summer. In addition, there will be special occasion attire like wedding gowns. These kinds of attires will mostly be sold according to placed orders. This kind of selling approach will characterize all clothing for special occasions. The remaining clothing products will be sold through shopping malls and other outlets at a retail price. CosMix is looking forward to building a brand that will remain exceptional in selling of all clothing products. The business will be importing most of the products from countries that manufacture quality clothes that matches with the fashion trends. Our strength shall be in the quality that our consumers can trust. We therefore look forward to meeting the needs of all customers whose clothing needs are determined by quality. The business will establish itself as best importer of the clothing needs of a variety of our consumers. Our differentiation strategy will therefore be built around the quality concept (Malhotra & Birks 2005, p259). We look forward to market unique products even as we establish ourselves as market leaders. The focus of CosMix is to provide satisfaction to all the unmet needs in the clothing industry. It is basically to exploit the gaps that current market players have failed to fill. Therefore, our customer satisfaction is our high calling. We believe that in meeting the needs of our customers, we will be able to bring the flavour that has been lacking in the clothing sector. Organization and Management CosMix is a sole proprietorship. The management of the company, for a start will be in the hands of the proprietor, Ronald Clemons. He will operate in the capacity of a manager until the company achieves most of its expansionary goals. That is when the roles in terms of managing this business will be adjusted accordingly. The business will employ key staff to help carry out the daily transactions. This will include the sales representatives, accounts clerk, the administrator and the proprietor as the overall manager. These are just some of the staff that the business will be starting up with. As the business grows, necessary adjustments will be made to ensure the business is not understaffed at any given point. The qualification of the manager is what the business is banking on to ensure it meets its strategic goals. The manager holds an undergraduate degree in business management. He is a Certified Public Accountant (CPA). He has also undertaken other post-graduate certificates. He brings to the business a 10 year working experience in various positions. As a manager, he worked in the sugar distribution agency for three years. He has held many other positions that make him fit to take his current position. Marketing and Sales Strategy At CosMix, our main target consumers are mainly young consumers. Most of our products have been designed to meet the needs of these young consumers. They form the largest component of consumers of clothing products. Most of them are outgoing and they are not only choosy, but also trendy. These categories of consumers do not have families and therefore fewer burdens. This is the reason they have more disposable income to spend on luxuries. At the same time, their purchasing trend is mostly influenced by their peers. They are also influenced easily by all kinds of adverts. Therefore, this particular category stands out as the most attractive because of their lifestyle. We are particularly looking forward to building our core products around the needs of this group of consumers. If the group can afford to have 75% of brand loyal coming from this category, it will be easier to attain the market leadership goal. There are many opportunities in terms of channels of distributions that this business will exploit as it moves into the future. Meanwhile, this business will be selling most of its main products through various outlets to consumers. The business will be importing and buying locally its products and then repackage where necessary before reselling. Of the products we will be dealing with, the business will seek other distribution channel options. This will come to fruition when the business has expanded to a certain measurable levels. This is when the business will diversify from retailing alone to whole selling and other distribution channels. The suitability of marketing strategy will be based on the business environment. That will be a reliable tool to be used for marketing the products. Pricing Strategy This is one of the most used marketing strategies. It is most effective in the kind of market that is characterized by monopoly. This is because in a monopoly, use of pricing as exploitation strategy is very common. By this strategy, the business will adjust prices lower than normal at the start in order to attract more customers. When the sales pick-up, the business will adjust prices back to normal. Promotion Strategy We look forward to using this strategy throughout our operation. This is a perfect strategy used in attracting and even locking in consumers. Promotions will be part of the business from the time of inception. Nevertheless, the busiest seasons like end month, festive season and other vacations will experience more of these promotions. Products As a business, we have already put down means of ensuring that our products maintain the highest quality standards as possible. We will ensure we import the finest quality of clothes suiting our customers. Place The products of our business will be sold directly to our customers from our outlets by the sales agents. Financial Management Estimation of Start-up Costs Rent deposit expenses………………65000 Marketing & Promotion…………….82500 Stock ………………………………..220000 Salaries and wages…………………..56500 General expenses…………………….48000 Permits & licences…………………….2400 474400 CosMix Forecasted Balance Sheet as at the end of the first financial year Non-Current Assets land and building S78,245.00 Equipment S45,300.00 furniture & fittings S39,115.00 S162,660.00 Current Assets Stock S28,550.00 Cash S40,000.00 Prepayments S11,220.00 Securities S9,250.00 S89,020.00 Current Liabilities Creditor S41,250.00 Accrual S25,450.00 S66,700.00 S22,320.00 S184,980.00 Equity and Liabilities retained earnings S74,550.00 long term liability S110,430.00 S184,980.00 CosMix Forecasted Income Statement Sales revenue S607,290.00 cost of goods sold S404,860.00 gross profit S202,430.00 less: operating expenses Salaries S56,500.00 general expenses S48,000.00 licensing S2,400.00 Depreciation S5,480.00 Taxes S6,700.00 water and electricity S8,800.00 S127,880.00 net profit S74,550.00 References Abrams, R & Doerr, J 2010, Successful Business Plan: Secretes & Strategies, Planning Shop, California, p71. Covello, J & Hazelgren, B 1995, The Complete Book of Business Plans (Small Business Sourcebooks), Sourcebooks, Illinois, p119. Graham, B., Meredith, S.B., & Price, M.F 1998,The Interpretation of Financial Statements. Harper Business, New York, p43. Ittelson, R.T. 2009,Financial Statements: A Step-by-step Guide to Understanding and Creating Financial Reports, Career Press, New York, p63. Malhotra, N.K, & Birks, D.K 2005, Marketing Research: An Applied Approach- European, Prentice Hall, Edinburgh, 255-287. Pinson, L &Jinnett, J 1999, Anatomy of a Business Plan: A Step-By-Step Guide to Starting Smart, Building the Business, and Securing Your Company’s Future, Dearborn Trade Pub, New York, p.114-165. Russell, R., Atchison, M. & Brooks, R.(2008). Business Plan Competition in Tertiary Institutions: encouraging entrepreneurship education. Journal of Higher Education Policy & Management, 30(2), p123-138. Shin, S 2009,Ready or Not, Here Comes IFRS. BizEd, 8(4), p44-50. Wassinger, K. & Baxter, D 2011,Business Plan in Physiotherapy: a practical way of writing a business plan for the non-specialist. Physiotherapy Reviews, 16(3), p210-227. Read More