Office Elegance E-business Plan - Assignment Example

Office Elegance E-business Plan 1 Executive Summary Men looking for distinct and unique office wear and shoes will greatly benefit from OfficeElegance.com online clothing shop. OfficeElegance will remove the need for distributors and middlemen and make it possible for men to access functional, elegant, and beautiful office wear at affordable prices. This will work to reduce additional costs that will accrue as a result of complicated sales chain if middlemen are involved; thus, customers will be able to enjoy great savings given that they will paying for their favorite office wear and shoes at cheaper prices than they are used to, when they shop from normal offline fashion or clothing stores. Year 1 period of OfficeElegance clothing line will be made of great design, high value fabrics, elegant styles that have not been seen in the market before. OfficeElegance elegance will no longer be a one-city business, but will be able to reach young men and women from most cities in America who are in search of elegant and unique office wear and shoes. This is attributed to the huge advancements and developments in internet technology as well as in radio programming and cable television of the last decade. The expectations of customers and their demand for products that represent the rapidly changing fashion industry have been increased as result of these huge advancements telecommunications technology. The owners of and mangers of OfficeElegance have a lot of experience in the fashion industry, particularly in the outdoor apparel industry. In fact, for the past four years, they have been involved in the design of office wear, both men and women clothes, and are thus very apprised of the current fashion trends and consumers preferences and tastes. One thing that sets OfficeElegance and other clothing e-commerce websites that deal in men and women clothing is that it is only deals, specifically in office wear and shoes, for both men and women aged between 18 and 24 years old. Additionally, OfficeElegance will not maintain clothing inventory and thus will work in contract with Ted Clothing Company located in Boston, Massachusetts, which will produce and deliver/ship all the garments for OfficeElegance. Additionally, OfficeElegance will also work in contract with Lambretta Shoes Company, also based in Boston, Massachusetts, which will produce and deliver/ship all the shoes for OfficeElegance. Office Elegance’s design team will closely work with both Lambretta Shoes Company and Ted Clothing Company’s design teams to ensure that the office wears and shoes sold by OfficeElegance are indeed trendy, beautifully, elegant, of great design, and of high value fabrics as envisioned. 1.1 Mission OfficeElegance mission is to offer its customers with office wear, both shoes and clothing that are indeed trendy, beautifully, elegant, of great design, and of high value fabrics; that energizes office activity. Whether it is normal office routine, outdoor office assignments and events, or meetings, OfficeElegance office wear are durable, comfortable, beautiful, trendy, and makes people feel and look wonderful. 1.2 Keys to Success A website that is well designed, easy to use (user friendly), equipped with functionalities that makes its entertaining to use; giving users the experience of being on their favorite local store(Carroll & Broadhead , 2001, p.39). Developing a store image, which customers will consider beingattractive, trendy, and elegant. Developing an excellent relationship with vendors, both Lambretta Shoes Company and Ted Clothing Company’s in order to facilitate and guarantee timely and fast shipments. Establishing an efficient, effective, and successful marketing and advertising strategy which will ensure that the target clientele of 18-24 years office goers are reached. Establishing an excellent customer relationship and interaction by ensuring timely response to customers FAQs and feedbacks, as well as addressing complains and concerns(Belew & Elad, 2009, pp.206-208). Focusing on building customer confidence by ensuring the website’s security is guaranteed, and that in case deliveries are not as per customer’s choice, then there is some sort of money back guarantee(Carroll & Broadhead , 2001, p.44). 2 Company Summary OfficeElegance will deal in office wear, both shoes and clothing that are indeed trendy, beautifully, elegant, of great design, and of high value fabrics; that energizes office activity; for both men and women. These clothing will be ideal for normal office routine, outdoor office assignments and events, or meetings. OfficeElegance office wear will be durable, comfortable, beautiful, trendy, and makes people feel and look wonderful. The owners of OfficeElegance, James O’Connor and Sherry Brandt, who have a lot of experience in the fashion industry, particularly in the outdoor apparel industry, will endeavor to develop a cost-effective operation, which will guarantee reliable and timely shipments and eliminate costs associated with inventory storage and middlemen. This they will achieve by working in contract with third-parties, Ted Clothing Company located in Boston, Massachusetts, which will produce and deliver/ship all the garments and Lambretta Shoes Company, also based in Boston, Massachusetts, which will produce and deliver/ship all the shoes for OfficeElegance. Transactional processing of orders will be done by OfficeElegance online, which will also be responsible for the collection of online payments. The order will then be sent to either Ted Clothing Company or Lambretta Shoes Company both located in Boston, Massachusetts depending on whether it is for shoes or for clothing, where it will be processed and shipped to the buyer. Focus will also be on marketing the office wear shoes and clothes to the targeted clientele especially in big cities such as New York. OfficeElegance will create events and make extensive use of the now popular social networking sites such as Facebook and Twitter to increase its online visibility. Use will also be made of existing local joints, business, and malls, which serve the same targeted clientele, especially with regards to staging marketing events. 2.1 Start-up Summary Most of the start-up costs for OfficeElegance are the costs for design and development of the e-commerce website and the costs associated with advertising and marketing of the E-commerce website, both offline and online campaigns in order to increase visibility. The start-up cost is funded by the investment by the owners which amounts to $320,000 and a long-term business loan amounting to $227,100. Start-up Requirements Start-up Expenses Website Development $20,000 Legal fees $1,500 Rent $3,000 Computer/Equipment and Software $50,000 Lease office furniture $15,000 Stationery $600 Insurance $2,000 Brochures & other marketing materials $700 Consultants $4,000 Other Miscellaneous expenses $300 Total Start-up expenses $97,100 Start-up Assets Capital (Cash) $450,000 Long-term Assets $0 Start-up Inventory $0 Other Current Assets $0 Total Start-up Assets $450,000 Total Requirement $547,100 Table 2‑1: Start-up summary Start-up Funding Cost of Start-up expenses $97,100 Cost for start-up Assets $450,000 Total Funding needed $547,100 Assets Cash Requirements from Start-up $450,000 Non-Cash Assets from Start-up $0 Additional Cash Raised $450,000 Cash Balance at Starting Date $450,000 Liabilities and Capital Liabilities Long –term Liabilities $251,100 Current Borrowing $0 Outstanding Bills (A/C Payable) $0 Other Current Liabilities $0 Total Liabilities $251,100 Capital Planned Investment 1st Investor $180,000 2nd Investor $140,000 Other $0 Additional Required Investment $0 Total Planned Investment $320,000 Start-up Expenses (Loss at Start-up) ($97,100) Total Capital $222,900 Total Liabilities and Capital $450,000 Total Funding $547,100 Table 2‑2: Start-up Funding 2.2 Company Ownership The owners of OfficeElegance are James O’Connor and Sherry Brandt, who have a lot of experience in the fashion industry, particularly in the outdoor apparel industry. 3 Products OfficeElegance will sell office wear, both shoes and clothing online. The office wear that we will offer will be trendy, beautifully, elegant, of great design, and of high value fabrics; that energizes office activity; for both men and women aged between 18 and 24 y. These clothing will be ideal for normal office routine, outdoor office assignments and events, or meetings. OfficeElegance office wear will be durable, comfortable, beautiful, trendy, and makes people feel and look wonderful. The office wear clothing and shoes that will be sold via OfficeElegance.com website will include: Men Shirts Suits Pants Rain gear Jackets Hats Sweaters Bags Belts Shoes Socks Skirts and Dresses Watches All types of ties and scarfs 4 Market Analysis Summary Over the past two decades, the demand for quality, durable, beautiful and elegant office wear for both men and women office-goers has tremendously increased. In fact, office wear for both men and women has grown into a multi-billion dollar niche industry. The huge advancements and developments in internet technologyhas seen a rise in a number of online shops selling clothes and shoes, even office wear; however, no garment manufacturing company is exclusively selling their apparels online. As such, there are still a lot of middlemen involved and costs of distribution to retailers’ stores are still very high thus translating into expensive products for consumers. It will be simplistic to argue that the reason behind companies’ not willing to sell directly online is because the e-commerce concept is untested. Schneider (2008, p.142)argues these companies are worried that selling directly online will take away sales from their already established networks and outlets such as department stores and other retail outlets. It is true that customers can actually buy clothes that they can only see online, especially, if the process of buying gives the experience of buying from a local departmental or retail store and if the products on offer are affordable and are of great design and value. Based on the population statistics from the United States Census Bureau, the population of office goers of the age between 18 and 24 years in 2013 was 10.8 million, 4.2% of the U.S. population. The statistics also suggested that adults aged between 18 and 24 who are working contribute to more than $280 billion dollar in annual spending and have access to close to $120 billion in disposable income. Additionally, this targeted group apparently spends about $20 billion annually and is projected to spend more than $4.6 billion online by end of 2014. On average, working class or office goers aged between 18 and 24 years spend about $120 in a week on fashion, technology, food, and entertainment. This target group are considered as Generation Y; they are the second most growing demographic below the age of 65 and dominate most aspects of the popular culture. The Internet has become very much accessible to most people as a shopping tool, especially to our target clientele; in fact, with the advancement in technology that has seen more portable devices, including smartphones and tablets having the capability of accessing the internet, most of them can use the internet from wherever they are, any time of the day. Today, most people, especially youths aged between 18 and 24, prefer using the internet rather than watching TV; thus most of them are more likely to own devices that can access the internet such as laptops, tablets, and smartphones. Youths aged between 18 and 24 who shop online for electronics, clothes, tickets, etc., are expected to spend close to $475 million, this year (2014) alone. This growth is expected to steadily continue and reach about $1.5 billion in online spending annually by 2017; in fact, it is projected that majority of consumers in the U.S. will prefer to shop online. Some of the things that they are most likely to purchase include clothing, computer software, books, and electronics. It is thus clear that the key to successful marketing to the targeted customers will be embracing on extensive online marketing, especially on social networking sites such as Twitter, Facebook, and LinkedIn, as well as through traditional marketing means such as fashion and professional magazines. The advertisements will be focused on creating awareness of the existence of OfficeElegance.com, its product offering, and on removing middlemen on OfficeElegance’s clothing budget; most importantly, the focus will be on establishing OfficeElegance as a unique, distinct, and elegant style. 4.1 Market Segmentation The dynamic in population dynamic in the U.S., especially with regards to employment has greatly changed since the 2008 economic crisis; the number of people employed have tremendously grown for adults aged between 18 and 24; most of the people in employment, office goers are in this age bracket. Furthermore, they are the most active internet users, second only to young teenagers. This apparently, has created a small multi-billion market niche for business to offer and sell clothing products to these office goers, whether with urban areas or outside urban area. Regional retail stores, malls, as well as departmental stores offer access to outdoor fashion and styles and not office wear that are in demand by young adults. Thus, OfficeElegance will focus on this unique and distinct group of men and women aged between 18 and 24 years who are office goers. They are the main group that will drive the success of OfficeElegance. This is a relatively mature and target group that knows exactly what they want; they use the internet more often and thus will not be difficult to pull to the website. They also have money and fewer responsibilities, and as such will be willing to spend on elegant and unique office wear. One key feature of generation Y that OfficeElegance will endeavor to capitalize on is the fact that these young adults wear attitude to define their identity and to feel unique and elegant; this extends to not only the music and type of hairstyle they wear, but also on the clothing that they wear. The plan and mission of OfficeElegance is to bring elegance and beauty to office wear among the young adults who see office wear as rather boring. OfficeElegance will create an identity that will take advantage of the attitude, nature, and subculture of the targeted clientele. Market Analysis Year 1 Year 2 Year 3 Year 4 Year 5 Potential Customers Growth CAGR Men Ages 18-24 20% 10,000,000 12,000,000 14,400,000 17,280,000 20,736,000 20.00% Women Ages 18-24 25% 12,000,000 15,000,000 18,750,000 23,437,500 29,296,875 25.00% Other 0% 0 0 0 0 0 0.00% Total 22.50% 22,000,000 27,000,000 33,150,000 40,717,500 50,032,875 22.50% Table 4‑3: Analysis: Market Chart 4‑1: Market Analysis 5 Implementation and Strategy Summary OfficeElegance will capture and win a share of the market in the office wear clothing niche industry by aggressive and extensive online campaign in social media and other traditional marketing avenues such as in fashion magazines in order to increase its online visibility and its target customers’ awareness. 5.1 Competitive Advantage OfficeElegance competitive advantage is based more on its processes as well as on its products. OfficeElegance has a lot of confidence on the quality, attractiveness, and competitiveness of its products; however, it still considers that creating an efficient access and awareness of its most website as a very important and crucial task. The website is apparently the endpoint of OfficeElegance entire marketing strategy meant to drive and increase the interest of its customers. The massive experience that the co-owners of OfficeElegance, James O’Connor and Sherry Brandt, have in the fashion industry, particularly in the outdoor apparel industry and the fact that for the past four years, they have been involved in the design of office wear, both men and women clothes, and are thus very apprised of the current fashion trends and consumers preferences and tastes, will ensure that the quality, style, elegance, and beauty of the clothes and shoes that OfficeElegance will sell will meet the expectations, tastes, and preferences of the targeted clientele. Further, James O’Connor have worked for Levi Strauss, a jeans manufacturing company at a time when they launched they own online e-commerce website, where he played a major role in ensuring that their site averaged five hundred thousand hits per month, will be pivotal to the success of OfficeElegance’s own e-commerce website. Most importantly, his experience will go a long way in assuring the satisfaction of customers, particularly with regards to online shopping experience. In fact, OfficeElegance will introduce on the website, a component that will enable customers to measure clothing; it will be fun and interesting to use and will eliminate the confusion that customers have with regards to whether or not the clothing will fit. This will go a long way in improving customer experience on the website, their satisfaction, and will reduce return of goods. Another strong competitive advantage that OfficeElegance has is its contracts with third-parties, Ted Clothing Company and Lambretta Shoes Company, both based in Boston, Massachusetts, which will produce and deliver/ship all the garments and shoes for OfficeElegance, respectively. This will ensure that production costs are low, as well as reduce OfficeElegance’s overhead costs. 5.2 Marketing Strategy The marketing strategy that OfficeElegance will employ is a rather simple one; it entails extensive online marketing on social media sites, Facebook, LinkedIn, and Twitter, and on online fashion blogs and magazines. OfficeElegance will also embark on extensive SEO, search engine optimization with key words targeting its office wear brand so as to improve its ranking on search engines. Additionally, traditional marketing on fashion and professional magazines, using brochures, and events, will also be considered. These will introduce its products and the website to potential clientele. Further, OfficeElegance will offer its customers a 10% discount on all purchases over $70 for the first 3 months. Similar discount offers will be offered on strategic periods throughout the year. For purchases exceeding $500 dollars, OfficeElegance will offer free movie and dinner vouchers. 5.2.1 Pricing Strategy A key feature of OfficeElegance’s pricing strategy is that it will pass on to its customers, most of the store mark-up, by offering reduced and competitive prices for clothing. However, this will not negatively affect OfficeElegance’s sales profits. 5.3 Sales Strategy OfficeElegance will develop and launch a marketing and advertising campaign worth $700 targeted at the core clientele group, office going men and women aged between 18 and 24. The campaign message will focus on introducing and informing consumers of OfficeElegance’s comfortable, beautiful, durable, unique, and elegant office. The message will be, “Comfort and Elegance in Office wear”. The attractive logo and breathtaking, intuitive slogan will be displayed all the ads and marketing campaign materials. It will approximately take 6 months for OfficeElegance to build up its sales to the point of making profits. As had already been mentioned, discounts and promotions will be offered at different times of the year to build initial awareness of the website and maintain customers, through loyalty rewards. 5.3.1 Sales Forecast Sales for both men’s office wear and women’s office wear are expected to steadily increase in the first year. The focus for sales shows that in the initial months, the sales will be low; however, as the discounts and promotions offered at different times of the year to build initial awareness of the website and maintain customers, through loyalty rewards, begin to take effect, which will be approximately after the first six months, the sales will pick up with the increase in customer base. This, as has been projected will be at a time when OfficeElegance will have started reaping some profits. After the first year, OfficeElegance’s sales are expected to increase by about 30% into the second year. The owners are optimistic that they will be able to maintain the steady growth even into the third year. Sales Forecast Year 1 Year 2 Year 3 Sales Men's office wear $4,320,000 $5,616,000 $7,300,800 Women's office wear $4,320,000 $5,616,000 $7,300,800 Other $0 $0 $0 Total Sales $8,640,000 $11,232,000 $14,601,600 Direct Cost of Sales Year 1 Year 2 Year 3 Men's office wear $3,399,000 $4,418,700 $5,744,310 Women's office wear $3,399,000 $4,418,700 $5,744,310 Other $0 $0 $0 Subtotal Direct Cost of Sales $6,798,000 $8,837,400 $11,488,620 Table 5‑4: Sales Forecast Chart 5‑2: Sales by Year 6 Management Summary The design, development, administration, and online marketing of OfficeElegance’s website will be handled and managed byJames O’Connor, who will also be in charge of managing the marketing team. The clothing and shoes design will be managed by Sherry Brandt, who in addition, will also be in charge of monitoring and production of the designs by Lambretta Shoes Company and Ted Clothing Company. 6.1 Personnel Plan Besides the two owners Sherry Brandt and James O’Connor, OfficeElegance will require additional personnel; initially a staff team of twelve members will be required. However, this is expected to grow as the company will continue to grow and solidify its customer base. Two Web administrators One accountant Office manager Four member marketing team Four member design team Personnel Plan           Year 1 Year 2 Year 3 Website/Marketing Director $60,000 $66,000 $72,000 Design Director $60,000 $66,000 $72,000 Website Administrators $96,000 $112,000 $128,000 Accountant $36,000 $40,000 $46,000 Marketing Staff $160,000 $176,000 $192,000 Design Staff $160,000 $176,000 $192,000 Office manager $30,000 $36,000 $42,000 Other $0 $0 $0   Total Payroll   $602,000 $672,000 $744,000 Table 6‑5: Personnel Plan 7 Financial Plan The following subsection illustrated the projected financial plan for OfficeElegance 7.1 Break-even Analysis OfficeElegance’s break-even analysis is not based on fixed costs that otherwise would only be theoretically significant if the business was closing, but, it is based on re-current or running costs, which the business will incur to continue operating. The fixed costs that are not included in the break-even analysis include marketing costs, payroll, utilities, and rent. Break-even Analysis Monthly Revenue Break-even $204,321 Assumptions made: Average Variable Cost Percentage 64% Estimated/Projected Fixed Cost per Month $96,220 Table 7‑6: Break-even Analysis Chart 7‑3: Break-even Analysis 7.2 Projected Profit and Loss The chart and the table below are the projected profit and loss for OfficeElegance for the first three years. Table 7‑7: Pro Forma Profit and Loss Pro Forma Profit and Loss Year 1 Year 2 Year 3 Sales $8,640,000 $11,232,000 $14,601,600 Direct Cost of Sales $6,798,000 $8,837,400 $11,488,620 Other Expenses incurred for Production $0 $0 $0 Total Cost of sales $6,798,000 $8,837,400 $11,488,620 Gross Margin $1,842,000 $2,394,600 $3,112,980 Percentage Gross Margin 21.32% 21.32% 21.32% 320000 Expenses Payroll $602,000 $672,000 $744,000 Marketing, Advertising, Sales, and Other Expenses $320,000 $390,000 $420,000 Depreciation $0 $0 $0 Equipment Leases $15,000 $15,000 $15,000 Insurance $2,000 $2,000 $2,000 Utilities $4,500 $4,500 $4,500 Rent $3,000 $3,000 $3,000 Payroll Related Taxes $150,500 $168,000 $186,000 Other $0 $0 $0 Total Operating Expenses $1,097,000 $1,254,500 $1,374,500 Profit Before Taxes and Interest $745,000 $1,140,100 $1,738,480 EBITDA $745,000 $1,140,100 $1,738,480 Tax incurred $223,500 $342,030 $521,544 Interest Expense $57,600 $47,600 $33,600 Net Profit $463,900 $750,470 $1,183,336 Net Profit/Sales 5.37% 6.68% 8.10% Chart 7‑4: Yearly Gross Margin Chart 7‑5: Yearly Net Profits 7.3 Projected Cash Flow 8 Bibliography Belew, S. & Elad, J., 2009. Starting an Online Business All-in-One Desk Reference For Dummies 2nd ed., Indianapolis, Indiana: John Wiley & Sons, Inc. Carroll, J. & Broadhead, R., 2001. Selling Online: How to Become a Successful E-commerce Merchant, Ontario, Canada: Dearborn Trade. Schneider, G., 2008. Electronic Commerce 8th ed., Boston, MA: Cengage Learning. Read More