Starting Ones Own Business - Essay Example

? Starting Your Own Business Executive Summary The business plan of providing urban casual wears for men and women with specialization in fashionablegarments is an effective opportunity to attain growth along with sustainability among the leading clothing retailers in the New York market. The store will focus on the local market and will concentrate especially upon the merchandises that are desired by the young population within the New York City. The business will start with a finance of USD 20000 from own capital of the owner along with business loan of USD 25000. The overall starting cost of the business will be USD 45000 and the estimated sales have been forecasted to be around USD 15000 yearly from the starting year. The opportunity can be availed to open a clothing retail store within the New York market due to the uprising flow of the youth desires for urban clothing and apparels along with the fewer existing competitors’ presence. The store will be highly focused on the urban high fashion merchandise and provide the youth with exclusive clothing they generally prefer to purchase from other cities. Proposal Section In the present global context of business scenario, retail merchandising is one of the most efficient and lucrative options for starting a new business initiative. The retail clothing store is considered as one of the highest earning or revenue generating business segments in the US market. The competitive scenario of the US market entails an immense growth opportunity for the apparel sector which is identified to be worth in excess of USD 20000 million according to the present growth ratio in the retail clothing business. Hence, clothing retail business is an attractive option to establish business venture in the competitive US market. From the perspective of present day context, the earning of approximately USD 150 billion has been achieved in a year by 100,000 clothing stores across the country. Therefore, the proposed business will be to open a clothing retail store. The clothing store will entail the products for young population of the US, which will also be providing accessories and leather items for men, women and children in terms of exclusive clothing brands as compared to the other retail clothing stores. The business will be focused on high fashion urban casual wears to attract youth population of the city. The emerging growth of sales in the assortment of clothing of various brands for youth segment provides an efficient growth prospect in the clothing retail industry in the US. Therefore, proposed business venture of opening a retail store which will provide apparels will focus on the local customer desires along with providing clothing and apparels for both adult and youth. The expected start-up cost of the clothing retail store has been reviewed to be around USD 45000 including cost of various apparatus and amenities (Boston Rags Clothing Store, n.d.). Rationale for the Proposal The business plan of starting a retail clothing store in one of the major cities of the US is due to the increasing growth on the retail clothing industry along with the increasing demands of the recent trends among the population in the country. The recently collected earnings by the clothing retail had been more than USD 45000 million for the month of March 2012 which has been mentioned by the United States Census Bureau. Therefore, the clothing retail store can be one of the prosperous segments which can provide an efficient opportunity to generate an intensive growth in a shorter period of time (United States Census Bureau, 2012). At the outset, opening up of any business requires a substantial amount of demand for the products that are to be provided. A constant follow of demand can ensure sustainability for a new business venture in the long run. From the findings, it can be observed that the clothing retail sector is quite prospering and consumers’ demand is generally constant and quite high if a company is providing them with varied assortment at one place. Therefore, the idea of the plan can be substantiated. The various aspects that need to be considered while preparing a business plan in order to start a clothing retail store in the US market entails company summary, key to success, operational process, product and inventory control along with different marketing activities including market analysis, market segmentation as well as various advertising and promotional strategies of the clothing store. The research will also highlight the industry analysis and recent trends along with competition and buying process as well as various strategies such as, sales strategies, risk analysis and for clothing retail in the US market (Boston Rags Clothing Store, n.d.). Company Summary The clothing retail store will be located in the New York City, which is one of the leading fashion capitals in the world. The major objectives of the store are to establish an exclusive clothing retail store in the city of New York which also facilitates in providing job opportunities for the educated youth in different segments of the store. The objective will also include remaining highly consciousness about offering quality products along with affordable price and creative product variance according to the fashionable trends. The objectives of the clothing retail store will also focus to increase the total number of consumers every year as well as to maintain a feasible customer relationship and reduce customer turnover in an uninterrupted process (Boston Rags Clothing Store, n.d.). Key to Success According to the global competitive scenario in the clothing retail sector, the key points to success in the clothing retail store business will be its plan with regard to ensuring sustained increase in cash flow, preserving appropriate business discipline along with ascertaining suitable professional inputs to certify quality of the products and the services to be rendered by the retail store (Community Futures, n.d.). Operational Process The store operation is one of the ultimate processes, which facilitates to maintain the sustainability to continue good relationship with the customers. Moreover, the operational process of the retail store involves store timing, employee wages and benefits, good relationships with the vendors along with various operational policies among others. The operational policy that will be maintained within the store would include various guidelines such as exchange policy of the products, mode of payment both cash and card (credit/debit cards and Visa) acceptance in terms of purchasing goods among others (Boston Rags Clothing Store, n.d.). Product and Inventory Control System The clothing retail store will focus on the young generation by including current fashion trendsetter brands and follow the popular fashion events apparels that are in demand. The store will comprise urban casual merchandises such as, denims, Knits and T-shirts, leather merchandise, sweaters, fashionable skirts and tops along with accessories (Community Futures, n.d.). Inventory control of the merchandise in the store is a major part of the overall efficient management in order to tracking the products of the store. It facilitates to keep the record of sold items along with current stock, product arrival time as well as pre-ordered merchandises. The inventory control system will provide the information with regard to the products which are fast moving merchandise along with slow moving items and their allocation that need to be promoted or declined. The inventory system of the clothing retail store that will be pursued would be the Last In First Out (LIFO) process, which deals with the recently purchased merchandise. The method is useful to reduce tax of the products which can be a beneficial part for the store. The suitable inventory control system identifies the stocking capacities of the products which are needed to be in stock or which are not necessarily required to be stocked in quantity (Boston Rags Clothing Store, n.d.). Market Analysis The market analysis for the clothing retail store is one of the crucial steps to preserve sustainable growth in the retail industry of the US. The present growth in the clothing retail sector in the New York City is highly influenced owing to the increasing rate in the consumer expenditures in the clothing retail sector of the US. The market segmentation for clothing retailers is based upon the demographic condition of that area along with the average household income, which are a few of the basic aspects of segmentation of the retail store (Boston Rags Clothing Store, n.d.). According to the statistical report of clothing retailers in the US market in the year 2010, it has been recognized that the average yearly expenditures of per consumer in the US was USD 48,109 which depicts a higher opportunity for the clothing retailers in the country. It can be considered that there are approximately 38 million youth who are in the age group of 16 to 24 years among the total population of the country (U.S. Bureau of Labor Statistics, 2011). The market analysis of New York signifies a foremost marketplace for the clothing retailers in terms of creating a significant growth in the market. The target place or area for the clothing retail store would be primarily the most developed and the high traffic area where the footfalls of prospective consumer groups are high. The strategy of ensuring customer loyalty will be preferred by the retail store. The strategy of keeping the customers’ loyal towards the offered products will be highly influential and facilitate them to maintain a continual flow in terms of store visit into the clothing retail store (Community Futures, n.d.). Advertising and Promotional Activities The advertising budgets for the clothing store will be approximately three percent of the gross sales of the store. Moreover, the advertising budget will be derived from effective cost methods according to the advertisers’ affordability. Furthermore, the electronic media is one of the largest sources to advertise about the store in the present scenario, which can help to communicate about the various information of the store to the people in different locations (Boston Rags Clothing Store, n.d.). Research/Best Practices Porter’s Five Forces Analysis Porter’s five forces analysis is one of the widely used frameworks to identify the competitive environment which is influenced by the various factors of the industry. The framework incorporates five different factors such as, power of buyer, power of supplier, threat of new entrants, threat of substitute products and competitive rivalry (Chapman, 2005). Power of Buyers Purchasing power of the customer signifies the various aspects of procuring a product by the customer such as, the choice of the customer, size/number of the product, changing cost of the product, importance of the products along with volume and Just-In-Time (JIT) scheduling in terms of purchasing products. In the context of clothing retail business, the organization will provide selected merchandise so that it can easily be identified by its customers along with depicting an image of offering products within an affordable cost (Chapman, 2005). The power of buyers or the bargaining power of the customers in the clothing retail industry in the US market is relatively greater in terms of sold fashion merchandises. As the increasing situation of switching has been observed among the consumers, it has resulted in them to visit or shift their choice of store. Therefore, the plan of starting a business with a large collection of high fashion merchandises with affordable price will significantly attempt to reduce the switching cost of the customers. Power of Suppliers According to the Porter’s five forces model, the power for the suppliers involves the various aspects of organizational activities to sustain the growth level of the company. The various aspects of supplier’s power include organization’s reputation, its geographical coverage, and quality of the product along with relationships with its customers. In the US market, bargaining power of suppliers is quite moderate. It is in this context of clothing retail industry the store will highly focus on these particular factors to maintain cordial relationship with suppliers (Chapman, 2005). Threat of New Entrants In terms of clothing retail store, the entrance option in the US market is a challenging factor for the new organization due to the existence of the experienced clothing retailers in the marketplace (Chapman, 2005). Threat of Substitute Products The threat of substitute products takes into consideration a number of variances such as the pricing variance, changes in distribution procedure along with availability of similar design products from other competitors’ product line. In this context of substitute products the clothing retail store will provide creative and unique products with high quality ingredients to avoid the scenario of competition from substitute products. Furthermore, the clothing retail store would focus on the latest trends and fashionable merchandises; therefore, it is important to identify the global trends and updated fashionable desires of its customers (Chapman, 2005). Competitive Rivalry The competitive rivalry is one of the important factors for the organization which can be identified as a major determinant in the organizational competitiveness. The competitive rivalry has a substantial affect on ensuring sustainability of the organization’s competitive advantages. In this context of competitive rivalry, the clothing retail sector in the US is highly competitive with a number of retail stores all over the US market (Chapman, 2005). SWOT Analysis Strengths The strengths of the proposed new venture would be the collection of merchandise in accordance with the recent trends along with the affordable pricing strategies of the merchandises in the clothing retail store. Store location would be the other crucial strength for the new business plan for starting clothing retail in the US market in terms of influencing target customers of the offered products. The location of the store will be in the heart of the city at a place where the consumers can reach easily. Weaknesses A significant weakness for the clothing retail store can be identified to be the aspect of creating initial customer traffic in the store. The customers need to be convinced of having quality products at affordable prices which can largely help to reduce the initial hurdle. Opportunities Global trends and requirements of contemporary apparel products among the young population is one of the significant opportunities for the clothing retail store. Moreover, the availability of desire among the youth for such items along with the affordable pricing strategy will be among the effective opportunities that can be leveraged in the business portfolio. Threats The presence of leading clothing retailers in the US market such as ‘Bergdorf Goodman Stores’, ‘Bloomingdale’s Departmental Store’, ‘Henri Bendel’ are the major threats for the new clothing retailer. Moreover, the competitive scenario in the overall US clothing retail sector can also be signified to be a challenging part in order to compete with the existing competitors (Bergdorf Goodman Stores, 2012). Research Findings According to the findings from Porter’s five forces model and the SWOT analysis, it can be said that the plan of initiation of a clothing retail store in the New York City is a feasible option. In order to cope-up with the competition that is taking place in the retail sectors in the US. Moreover, the study of Porter’s model influences the business concept of clothing retail store in the New York market due to its recent flow of customer desires along with appropriate pricing strategy for each product that is rendered by the retail store. The major findings that can be identified through the study of Porter’s five forces and SWOT analysis significantly emphasize upon the increasing growth of New York market and also on the aspect of it being a leading fashion capital of the world. These aspects can certainly help in the initial stages to obtain consumer desires. Recommendations The emerging scenario of increasing competition within the clothing retail industry can result in a certain kind of threat of common downfall for the small organizations due to starting business operations with high cash inventories along with overheads. Therefore, the store needs to focus on purchasing expensive amenities and other store ambience building peripherals in the beginning stage. However, it needs to cautiously weigh up the requirements of essential items so that overhead costs do not rise up. Moreover, the organization needs to invest in marketing and advertising sector prior to one month of starting the business with creative advertising campaigns and local media involvement within the local communities. The market analysis is one of the crucial factors in order to start with a new business. The organization needs to identify the market requirements along with the performance of the existing organizations. Furthermore, strict product and inventory control of the store must be taken into consideration in terms of reducing the additional expenses. High focus on these aspects can largely facilitate the retail store to get a place among the leading clothing retailers in New York. References Boston Rags Clothing Store. (n.d.). Retail clothing store. Business Plans Handbook, Vol. 9. pp. 349-373. Bergdorf Goodman Stores. (2012). Designers A-Z. Retrieved from http://www.bergdorfgoodman.com/ Chapman, A. (2005). Porter’s five forces of competitive position. Retrieved from http://www.businessballs.com/portersfiveforcesdiagram.pdf Community Futures. (n.d.). Business plan for clothing line company. Retrieved from http://www.communityfutures.ca/resources/bp/clothingline.pdf IBISWorld. (2010). Dressed for success specialty clothing retailers. Retrieved from http://www.ibisworld.com/Common/MediaCenter/Specialty%20Retailers.pdf United States Census Bureau. (2012). Estimates of monthly retail and food services sales by kind of business: 2012. Retrieved from http://search.census.gov/search?q=retail+clothing+inventory&client=default_frontend&output=xml_no_dtd&proxystylesheet=default_frontend&sort=date%3AD%3AL%3Ad1&entqr=3&oe=UTF-8&ie=UTF-8&ud=1&site=census U.S. Bureau of Labor Statistics. (2011). Consumer Expenditures—2010. Retrieved from http://www.bls.gov/news.release/cesan.nr0.htm Appendix The Specialty Retail Sector Trend in Terms of Growth and Revenue in the US Source: (IBISWorld, 2010). Read More