A for Flower Shop in Dubai - Business Plan Example

BUSINESS PLAN Flower Shop in Dubai (Flourish Flowers). Name Institution Date Executive Summary Flourish Flowers offers enthralling flowers, providing a solution to people who lack ideas on what to offer for gifts. This is because in addition to selling of flowers, consultancy services are provided on the types of flower gifts to give. Since there is a wide variety of flowers, they have been made available in accordance to the season of the year; flowers are available for spring, summer, autumn and winter. Besides this, the management of Flourish Flowers comprises highly trained florists. They offer the best of designs in flowers and delivery of flowers upon request is on-time delivery. Customers seeking advice on flowers to purchase or even plant in their gardens will find the right place at Flora. Flourish Flowers targets the large customer base of tourists in Dubai and those visiting the Global Village for various interests in recreation and shopping. Dubai land has been known to be a large tourist attraction place, attracting about 6.5 million tourists to Dubai in the year 2010. Flowers are available to this large base regardless of their age and status and since the number of tourists is projected to rise, the shop expects to expand its operations so as to meet the expected high demand of flowers by customers. From the analysis and projections made, Flourish Flowers is expected to flourish in the business of flower sales. The sales and profits are expected to increase tremendously after the first year as seen in the sales objectives. Further, the company is expected to break even after 13,174 units in a year and this indicates good returns from the company. The structure of the plan indicates that the company is able to compete favorably in the market with other companies in the same business. The provision for new ideas gives further room for expansion of the company and incorporation of new techniques that can be used to propel the company further forward. Although the company is structured to mainly trap tourists and other visitors, it has been structured to also serve other clientele who are working in other areas and this service is availed to them via the delivery requests made by customers. With the emergence of more competition, the company should look towards incorporating further design works like artworks and the sale of other households that are meant for aesthetics. Table of Contents Executive Summary 2 Company Description 6 Motivations and Business Opportunity 6 Company History 6 Business Concept 6 Vision Statement 7 Mission Statement 7 Business Goals and Objectives 7 Key Success Drivers 8 Product and Service Plan 9 Key Product 9 Meeting Customers Needs 9 Feature Benefit Analysis 9 Value Proposition 10 Product Production Plan 10 Marketing Plan 11 Positioning Strategy 11 Pricing Strategy 11 Survey and Results 11 Promotional Message 12 Industry Sector Analysis 12 Economic Factors 12 Social Factors 13 External Threats 13 Potential Opportunities 13 Industry Barriers to Entry 14 Media Plan 14 Promotion and Advertising Plan 15 Target Market Behavior, Demographics and Psychographics 15 Strategies Appealing to Target Market 16 Competitor Strengths and Weaknesses 18 Company’s Competitive Advantage 19 Operational Plan 20 Manufacturing Process and Purchase and Acquisition 20 Purchases and Acquisition 20 Business Location 20 Criteria for Location Selection 21 Equipment List 21 Product Storage and Distribution Process 22 Organizational Plan 23 Human Capital Needs 23 Employment Strategies 23 Description of Legal Ownership 23 Compliance with Laws 24 Business Organizational Chart 24 Financial Plan 25 Starting Capital 25 Budget Cash Flow for Purchases 26 Breakeven Analysis 27 Projected Income and Profit 30 Overall Financial Concerns 31 References 32 Company Description Motivations and Business Opportunity There has been a significant increase in the economic development specific to the region of UAE. This change in the economy is reflected in the socio economic status and the lifestyle changes of the people residing in the region. With increased incomes their standard of living has increased giving way to more disposable income for luxury items. In this regard florist businesses are seeing an increase in their sales due to the increase in demand for decoration and gift giving flower items. This is a business opportunity that can be utilized by Flourish Flowers to target the local population as well as the foreign tourists who visit the region with unique product and service proposition. Aside from this, alliances with the hospitality industry can help the business build a network of business clients as well as customers that can provide long term sustainability for the business. Company History The company Flourish Flowers is a new establishment which is to be launched in the Dubai region of the Global Village. Business Concept Flourish Flowers is a medium-sized flower shop that is located opposite the Global Village in Dubai land. It is a one-stop shop for flowers and offers a variety of flowers from lavender, pink primrose, daisy, Christmas bells, mountain laurel, greater celandine, foxglove, jasmine and many other varieties of flowers. Other than selling the flowers, the shop designs gifts based on the flowers and custom designs of gifts are done on order. Additionally, the flowers are delivered to customers upon requests and prior arrangements have to be made with the shop. Vision Statement To become one of the most sought after florists in the region known for quality of product and service delivery. Mission Statement Flourish Flowers intends to be the catch place for all customers seeking to purchase flowers. The shop will use various marketing techniques especially the sophisticated ones in order to reach out to a very large base of clientele and give tourist-customers one other reason to choose to be Dubai tourists. With the intention of getting fair profit, the company seeks to offer high quality products and services to customers. Customers will be free to make contact at any time and make their requests known and since the company is open to expansion, it will welcome any new ideas from customers as it seeks to be in motion with the ever-changing environment. Business Goals and Objectives 1. To generate a revenue to enable sustainability and growth of the company and the sector in general 2. To continually increase sales by 40 % in year two and a further 20 % in year three. 3. To use the assumption of a 10 % profit in developing pricing programs. 4. To give the best flowers to our esteemed customers. Key Success Drivers Flourish Flowers will be driven to success by the following factors: 1. Provision of unique flowers that customers can choose depending on their tastes. Flowers that go with the season will also be available. 2. Effective communication with customers at all times to ensure that their orders are captured at all times. 3. The offer of additional consultancy services such as guidance on choice of gifts. 4. Acquisition of the best of florists and train them to incorporate their design skills and a customer-friendly attitude that will ensure the future of the company is sustained. 5. Attracting of more customers through customer-friendly pricing of flowers and giving offers depending on the turn-up of customers. Product and Service Plan Key Product The main product that will be provided by Flourish Flowers to its customers would be gift giving ideas in the form of flower arrangement and bouquets. These will be provided in either cut arrangements or as live horticulture products that can be planted by the customers in their homes. Meeting Customers Needs With the changing socioeconomic dynamics in the region, there is significant increase in gift giving which is at the heart of hospitality of the people in UAE. The increase in the disposable income in the region has given rise to demand for flowers and similar gift giving items. The company seeks to meet the needs of the customer by offering enthralling flowers, providing a solution to people who lack ideas on what to offer for gifts. . Flourish flowers will be providing them with the best of designs in flowers and delivery of flowers upon request and with on-time delivery. Customers seeking advice on flowers to purchase or even plant in their gardens will find the right place to shop for products meeting their needs at Flourish Flowers. Feature Benefit Analysis The features of the product provided to the customer would be as follows: Unique creations customized for the customers Colorful arrangements using myriad of flowers Seasonal as well as unique flowers included in the arrangements Door to door product delivery The following benefits can be available by the customers through the proposed products and services by \Flourish flowers: Arrangements made by professional florists Customized consultation Products fitting any price range On time delivery of products and services Value Proposition The value proposition that is provided by the company for the customers includes a selection of flowers both seasonal as well as unique imported items that can be bought for decoration arrangements or for planting purposes by the customers. In additional the team of professional florists in the company will provide consultation services to the customer on the types of flowers to choose, and the respective suitable arrangements as per the needs of the customers. In addition creative gift giving ideas can be provided by the florists to the customers supported by on time delivery of products and services. Product Production Plan As the company will not be producing any products, instead providing customized arrangements of flowers and bouquets for decoration and gift giving; therefore no production plan is proposed. Marketing Plan Positioning Strategy In order to position the company relative to others in the industry Flourish Flowers intends to use its wide variety of kind customer service that includes flower gift hampers based on the season and based on the customer’s request, together with consultation services on the best gifts to be presented at certain times. Customers will enjoy on-the-door deliveries There is stiff competition but the company expects to use the customer retention scheme of providing membership to ensure that customers come back for the quality products and services they receive. Pricing Strategy A combination pricing strategy will be employed. The main strategy would be to use penetration pricing offering the customers with the products and services at the best prices possible in the market. However for unique and highly customized creations using imported rare flowers, the skimming premium pricing strategy would be employed. This is to cover the costs of importing and acquiring rare flowers as well as cover the high costs of unique creations by florists . Survey and Results A brief survey using a quantitative questionnaire consisting of 10 basic questions was conducted to identify the need for the business in the market. The survey was conducted near, in and around the Dubai Global Village. This was to ascertain the market and the feasibility of the business at the actual proposed location of the venture. The market survey highlighted that there are businesses that cater to customers needs for gift giving, including flower arrangements, however the door to door service and the customization of arrangements is limited in availability. Prospective market that is targeted by the business highlighted that there is a need for florist businesses that provide creative yet affordable solutions for the customers through direct as well as online means of transaction exchange. Promotional Message The main promotional message that would be the main selling point of the company would be: “Flourish Flowers…Providing Creative Gifts for Every Occasion to Your Doorstep” The message will directly target the market highlighting that Flourish Flowers is a retailer that provides flowers and gift ideas to customers that can satisfy and cater to any occasion. The creative inventions by the highly trained florists at Flourish Flowers are also emphasized through the message along with the door to door delivery service which is a feature of the business. Industry Sector Analysis Economic Factors UAE is a fast developing hotspot as both a business as well as a tourist destination. The increasingly flow of people into and from the area, specifically in Dubai provides a large market to exist for the flower industry. Growth in the region has also been reflected in the growth of the local floral market industry, with the socio-cultural changes in the region affecting the demand for flowers. Despite the recent fluctuations in the economy due to the recent financial crisis, the flower industry in Dubai has remained largely unaffected (‘UAE flower industry endures effects of crises’, 2009). Social Factors The modern living style of the people in the region has encouraged the use of flowers as a way of greeting. In addition with the increase in migrant workers in the region, Dubai is becoming host to people from different cultural backgrounds. They have their own respective customs and festivals, and with the increasing diversity in the region, the demand for flowers has significantly increased with the increasing celebrations and festivals being celebrated in Dubai. The hospitality industry has also seen significant growth in the region. This has affected the market for flowers as well, as with the increase of the strengthening hospitality industry the demand for flowers and related products has also increased. External Threats The recession is one of the biggest threats that the business faces. In light of the recent recession UAE has sustained growth and the flower industry has not lost its growth. However with US heading towards a fiscal cliff, the effects of the ensuing recession are bound to influence business in UAE, along with the socioeconomic status of the residents. This can effect for demand for the products for Flourish Flowers in the market. Other threats that can be faced by the company pertain to fluctuation in supply and demand in the international market for imported flowers. Holland is one of the main exporters of Tulips and Roses. The price in the international market for flowers can be influenced by supply and demand effecting the acquisition purchase price or rare and imported flowers for the company in the long run. Potential Opportunities The strategic position of Dubai has a free port in hosting easy access to Europe, Asia, and Africa, the region is a hub of cultural activity and has easy access to the international flower markets as well (‘Dubai to become international hub for flower and plant trade’, 2006). This provides avenues for growth and diversification in the local flower industry. In additional a significant trend towards web based florists has been observed who provide online servicing for their customer. The ease of use and the dynamicity of the method have made online shopping for flowers an increasing trend amongst the consumers in the market. Industry Barriers to Entry There are limited barriers to entry for new businesses in the flower retail and gift retail industry. This is because the fixed assets and investment required for the business is significantly smaller than those for other businesses. Moreover the market trends depict a demand for such products which is not completely met by the supply from retailers existing in the market. In this regard there is an opportunity for businesses to venture into the market which is highly competitive. This depicts low barriers to entry, especially in the presence of substitute products like artificial decorative flowers and other non flower based gift items. Media Plan The marketing and promotions by the Flourish Flowers will be conducted using multiple media. The main medium that would be employed would be the internet will some adverts put in lifestyle magazine publications and newspapers. In addition supporting ground level BTL promotions will be conducted. The following depicts the proposed media plan for the business Adverts on Internet through Social Media – Continuous for the entire year Adverts in News Papers – For two months, with one month being prior to the business launch and the second month being the month in which the business is open to public. Adverts in Lifestyle Magazine Publications – For the month prior to launch, with customer reviews posted within three months after the launch BTL Promotions for Launch BTL Promotions Ongoing Direct Marketing to Member Customers Promotion and Advertising Plan The overall strategy of Flourish Flowers is to provide quality flowers to customers at their convenience. The specific marketing objective is to ensure that Flourish Flowers customers always come back for flowers at Flora. In addition, Flourish Flowers will use the same customers to reach out to other customers. Word of mouth will be used outside the company to lure new customers and in addition, the internet shall be used extensively in advertising the company and its products. The target market will include tourists along with workers who are interested in flower gifts. Frequent mails shall be forwarded to customers to remind them of available products and at the time when the company feels they might need the products. Special offers are made known to them via the same means. In addition advertisements will be placed in the popular newspapers and lifestyle magazine publications, with below the line promotional marketing performed on the ground level at the location of the shop. Target Market Behavior, Demographics and Psychographics Flowers targets the large customer base of tourists in Dubai and those visiting the Global Village for various interests in recreation and shopping. Dubai land has been known to be a large tourist attraction place, attracting about 6.5 million tourists to Dubai in the year 2010 (Haryopratomo et al, 2011) The targeted market segments are as follows: Age: Young couples who are dating, together with newly married couples. These include people who are outgoing and tend to visit having a need for gift ideas and exchange of flowers as gifts Family Unit: all families that recognize the importance of anniversaries and special occasions. These would be requiring gifts and flowers for family ceremonies and occasions, especially on anniversaries and festivals Gender: all sexes, but the male gender is most targeted. Income: services are friendly to the low, medium and the high earning, but most favorable to the middle income earners. Such people would be those who are looking for affordable yet unique and creative gift giving ideas as flower arrangements The following graph depicts the target market segment strategy Strategies Appealing to Target Market In order to appeal to the target market, it has already been depicted that the company would be providing creative gift giving solutions using flowers with an option for door to door delivery. The company will be providing customized products for the customers specially created by the trained florists at Flourish Flowers. This would be one of the main unique selling points (USP) for the business. Simultaneously the company will also be providing door to door service with free delivery of the flowers and gifts as a value added service to its customers. The member customers in addition will receive special promotions and discounts based on their purchase behavior and history with Flourish Flowers. Competitor Strengths and Weaknesses The two main competitors that have been identified for Flourish Flowers in the region are the DFC and Ready Flowers. DFC or the Dubai Flower centre is the hub of flower trading in Dubai. The company is the main importer and exporter of flowers in the region with significant presence in the Emirates market. The company has increased capacity for operations through trade between multiple countries and has the best cooled presentation system for flowers in place (UAE Free Zones). The company is highly cost effective and efficient and therefore one of the strongest competitors for Flourish Flowers in the market. The second main competitor that exists in the market for Flourish Flowers is Ready Flowers. Ready Flowers is a company that has a competent centralized management system in place for its operations to support delivery and servicing of its flowers across the UAE. The company also hosts a customer care centre where hired floral experts resolve any queries and problems that customers may have regarding preservation, and treatment of flowers. The company has its own network of delivery with which it distributes the products throughout UAE. The shops operated by the company are categorized on the basis of occasion, color and types of plants. There is also expected competition from Floverme Company in Diamond Tower 4 (UAE), Sentiments Flowers (Zayed road), Dubai Exotic Gifts (UAE) among others. Aside from the above highlighted florist establishments, other online florists like FlowerDubai.com, Flowersdubai.co.uk and Emiratesflorist.com are also possible competitors for the company. They operate on the web based platform and therefore can threaten Flourish Flowers with their increased efficiency of operations and resultant lower prices offered to customers. Company’s Competitive Advantage The company seeks to attain competitive advantage by providing a variety of fresh flowers that will be available in stock. Direct sales will be made to customers that come straight to the shop to purchase the flowers. In addition, the arrangements made between the company and its customers through its customer-membership program will facilitate delivery of the flowers and other gifts. Indirect sales shall be made to customers by partnering other florists. This will be an arrangement with organizations that offer special event services and a referral service will be used in this partnership. Payment is expected to be made on monthly basis from each referral sale. Operational Plan Manufacturing Process and Purchase and Acquisition There is no manufacturing process; however the florists at Flourishing Flowers would be arranging the flowers in preset arrangements as well as in unique creations as per consultation results with customers that would be sold to the target market. Purchases and Acquisition The raw material for the product would include decorating material as well as flowers. The main purchases that would need to be acquisitioned would be the flowers that would be acquired through local wholesale vendors as well as through international traders in importer flora. The lists of material that will need to be acquired through these parties include the following: Red Roses Pink roses Daisies Leather leaves Carnations (assorted colors) Lilies Gerbera daisies Business Location Flourish Flowers is about 1500 square feet and gives provision for packing of vehicles for customers. Outside the shop is a beautiful flower garden that allows gives an impression of the flowers available. The flowers are grown in a design that replicates the company’s logo. This is meant to act as an eye-catcher for passers-by. Criteria for Location Selection The location of the company was chosen outside the Global Village since the place attracts a lot of people and this can serve as ready market for the tourists and other people visiting the Global Village-Dubai land. Furthermore, there is no stiff competition for flower services around the place. Its relatively expansive size is meant to accommodate the large base of people who will be visiting the place and who can be regarded as potential customers. Equipment List The main equipment that would be required for starting the business includes the following: Floral Cooler (10’d *10’w*8’h) Computer (PC) Point of Sale system and supporting software Phone system Backup device Software for Accounting/ Credit card Aside from this tools for decoration and flower arrangements would be required as well for business operations. Product Storage and Distribution Process The products that would be stored in floral coolers or refrigerators to provide sustainable long life for the plants and enable them t stay fresh for a longer period of time. Flourish Flowers offers a wholesale florist service to customers. A variety of fresh-cut flowers together with potted plants are available. Delivery services are also available upon request. In addition, customer membership is provided so that the customers will have their details with the company and in the event of an approaching occasion, the customer can liaise with the company and make prior arrangements for any services required. This will provide a sustainable customer relationship and work towards insuring the future of the company. For customers who require custom-designs of flowers, an advance pay of AED 350 shall be charged via credit card and this will not be deducted until delivery is accomplished. In addition to flowers, special design gift cards are also available at Flora. Organizational Plan Human Capital Needs In order to start and operate the business, a staff of five people would be required. Two of them would be florists who will cater to the customers and provide customized designs and packages to the customers. Two of them would be delivery personnel responsible for bringing in acquired raw material and delivering the finished products to the customers that require door to door delivery operation. The remaining one personnel would be the manager of the establishment who would be supervising the shop. In addition a marketing and administration personnel would be hired as well Employment Strategies The employment strategy that would be adopted by Flourish Flowers would be to hire self motivated and created florists from design schools who seek to work on their own autonomy in creativity. In addition the company would be hiring the management and the delivery personnel by placing adverts in the classified sections. The manager will be trained on the job with probation of three months. Description of Legal Ownership The shop is a sole proprietor and is owned by the founders Compliance with Laws The company will be complying with the local laws of business establishment and development present in the UAE. This will include laws specific to the commencement of the business, its operations and its corporate social responsibility for operating in the region. Business Organizational Chart The following depicts the organizational chart for Flourish Flowers: Financial Plan Starting Capital Start-up capital will be required to cover operational costs of the company up to at least the second month in addition to facilitating the acquisition of long term assets like the refrigeration unit. Other start-up expenses will be required to be given in the following details. The company requires a total of AED 365,010 to start up the business. From this, a total of AED 250,000 is available from a loan and the company is seeking to raise the remaining AED 165,000 through unsecured loan and other available means. The following are the proposed assets required for the business: Asset Description Quantity Cost (AED) Floral Cooler (10’d *10’w*8’h) 1 14,700 Computer (PC) 2 3000 Point of Sale system +software 1 18,500 Phone system 1 1290 Backup device 1 550 Software for Accounting/ Credit card 1 1470 Total Assets 39,510 The following table depicts the financing that would be required for funding the commencement and establishment of the Flourish Flowers business venture Flourish Flowers Start Up Financing Investment in Assets AED 39,510 Lot-Yield Analysis Expense AED 60,000 Start Up Expense AED 36,000 Payment Deposits AED 4,000 Inventory AED 5,500 Working Capital Required AED 220,000 Total Funds required AED 365,010 The table below shows the sources available for financing of the business venture. These sources would be used to acquire the fund establishment of Flourish Flowers. An interest rate of 10% will be applicable on the secured loan, with 12.5% for the unsecured loan. Sources for Funding Secured Loan AED 250,000 Unsecured Loan AED 116,000 Total AED 366,000 Budget Cash Flow for Purchases The business would be requisitioning the raw material including the flowers on the basis of demand and market trends according to the seasons. Therefore the orders placed for raw material can fluctuate on a monthly basis. The following table however depicts a proposed Budget Cash Flow for purchases for the year. Type Units Per Week   Cost Per Unit Weekly Cost (AED) Red Roses 120 5.74 688.80 Pink roses 120 4.55 545.40 Daisies 48 4.59 220.38 Leather leaves 120 1.47 176.28 Carnations (assorted colors) 120 1.47 176.28 Lilies 60 4.96 297.60 Gerbera daisies 60 18.23 1,093.50 Baby’s breath 150 2.42 363.60 Weekly Total 3,561.84 Yearly Total (@ 48 weeks) 170,968.32 Breakeven Analysis The following are the sales forecast assumptions for first year of operation Sale Type Frequency Annual sales (48 weeks) AED Holidays/ Events Valentines/ Mothers/ Christmas 600,000 Retail AED 550 (per week) 26,400 Customer Deliveries AED 1000 (per week) 48,000 Total 674,400 The expected sales increment for the second and third years are to increase by 40 % in the second year and by a further 20 % in the third year. This means that the second year expects sales of AED 944,160 while the third year expects to have sales of AED 1,132,992. The annual variable costs in AED are as follows: Cost of goods sold 265,000 Utility bills 30,000 Marketing costs 9,000 Miscellaneous expenses 22,000 Total 326,000 The annual fixed costs in AED are as follows: Rent 50,000 Personnel 40,000 Depreciation 20,000 Trade License Renewal 10,000 Total 120,000 The average daily purchases (ordered daily and depends on daily orders): Type Cost Ordered Qty (batch) Total (AED) Red Roses 114.8 per 20 1 114.8 Pink roses 90.9 per 20 1 90.9 Daisies 36.73 per 8 1 36.73 Leather leaves 29.38per 20 1 29.38 Carnations (assorted colors) 29.38 per 20 1 29.38 Lilies 49.6 per 10 1 49.6 Gerbera daisies 182.25 per 10 1 182.25 Baby’s breath 60.6 per 25 1 60.6 Total 593.64 Daily number of units = 133 units Annual Number of units = 133*288 = 38,220 units (48 weeks)  Fixed Cost (F.C) = AED 120,000 = $ 32,670.84 Selling Price (S.P)/ unit = AED 17.65 = $ 4.8 Variable Cost (V.C)/unit = AED 8.53 = $ 2.32 B.E.P =  = 13,174 units Assumptions: Estimation of Running costs and costs on goods sold and other expenses so as to determine the Variable costs. Projected Income and Profit Year 1 Year 2 Year 3 Sales in AED 674,400 944,160 1,132,992 Gross Profit in AED 228,400 498,160 686,992 Net Profit in AED 36,600 233,160 421,992 Overall Financial Concerns The financials of the business provide that the business will be able to break even at 13,174 units. When the business is selling 38,220 units annually, this breakeven point will be achieved in the first year of operations only within the first 5 months of operations. The forecasted financials for Flourish Flowers depict a small profit for the first year, but the increase in sales on an annual basis along, the resultant increase in profits for the business is going to be incremental. The company however will need to forecast for changes and seasonality of demand with the changing economic environment which is susceptible to fluctuation significantly. 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