Herbal Cosmetics for Skin and Hair Care - Assignment Example

? Entrepreneurship Assignment Introduction In relation to the fiercely growing competition in the global cosmetic industry, it has been observed thatthe customers have become highly inclined towards purchasing the cosmetic products concerning their quality as well as their potential effects which in turn have shifted the customer buying behaviour from price centric to quality centric. Contextually, the growing awareness towards selecting cosmetic products by the global consumers has been apparently observed as an emerging opportunity for the herbal products due to its quality based advantages. Moreover, the consumers of the present business world seek to justify products and their ingredients especially while it is concerned with their skin. According to the recent phenomenon of the cosmetic industry, a growing interest has been witnessed for the herbal skincare products. Majority of global customers seek to prefer herbal skincare products due to its better effectiveness accumulated with insignificant side-effects than the other derivatives and chemicals used in the cosmetic products (Gediya, Mistry, Patel, Blessy & Jain, 2011). Emphasizing upon the various concerning areas and growing interest of the global consumers towards herbal products, the primary purpose of this report is to prepare an effective business plan to attain advantages in terms of growing opportunities in the herbal cosmetic industry. The proposed business plan will further aim to reflect a clear depiction of the business including its manufacturing of products and/or services, selling and marketing strategies, constructing of management groups and their roles as well as predictions of financial forecasts for a few years that the organization will perform. Brief Description of the Venture The proposed business plan is significantly prepared on the basis of sole proprietorship which can enable the entrepreneur to effectively control and manage each function performed within the firm. Notably, the financial benefit is the core factor of sole proprietorship where the owner can enjoy a large amount of monetary benefit from the venture. A sole proprietorship venture can also facilitate the marketer to independently make decisions towards the improvement of the overall processes executed within the organization. In addition, the entrepreneur, as the sole proprietorship can also obtain greater amount of secrecy concerning the organization’s current performance enabling the entrepreneur to possess greater flexibility concerning the operations and other required changes for better effectiveness. Mission Statement of the Venture The mission statement is a long-term and essential attributes which depicts the main purpose of the business. In relation to the proposed business plan, the mission statement of the venture will be focused on revealing the effectiveness of herbal products and its importance to nourish and serve the potential customers. In accordance to this mission statement, the organizational process will further attempt to integrate the quality and effectiveness of its products over the long run. Primary Objectives of the Venture The primary objective of the venture is to obtain recognition as the most preferred and reliable company in terms of offering a wide range of herbal cosmetic products. Moreover, the objective of the venture will further extent to achieve a minimum growth of 10% of its potential customers in each month in the respective market. In addition, attaining the desired sales goals of AUD 100,000 in the first year and augmenting its annual sales around 15% in the 2nd year of the venture have also been considered as its primary objectives. Start-up Summary of the Venture The initial stage of the proposed business plan is focused on procuring raw materials, manufacturing different types of herbal cosmetic products and distributing them in different target markets. The start-up cost of the herbal cosmetics requires a large amount of finance in terms of procuring machinery, raw materials along with various types of botanical equipments. Moreover, the procurement of the raw materials can also cost large amount of financial investment for the production of quality herbal beauty care products. To satisfy this capital requirement, the proposed business plan will be financed by both personal investment and loan from a recognised financial institution. The total amount of financial investment has been predicted to be AUD 100,000 where AUD 50,000 will be availed from the personal account and the remaining AUD 50,000 will be financed from bank. The following financial assumption depicts the amount to be used in the proposed business plan. Products The product line of the herbal cosmetic manufacturing plant will be focused on offering a large number of products in different categories which can provide ultimate care for the customers. In this context, the categories will be followed as skincare, hair care, and herbal bath bags along with other cosmetic products. The manufacturing process of the plant will further be focused on implementing proper unification of 100% herbal ingredients in order to effectively address different skin problems of the customers. The product lines of the venture will mainly be focused on producing beauty-care products for dry skin treatment, anti-aging treatment, skin protection and dandruff prevention treatment. The manufacturing process in the proposed business plan will further incorporate the products which can be used by the customers for eczema treatment and acne treatment purposes (Making Cosmetics Inc., 2004). In relation to producing an effective range of herbal beauty products, the manufacturing process will be focused on examining different raw materials with regard to justify their potential impacts. With this regard, an effective herbal research team will be formed in order to efficiently examine the ingredients as well as the effectiveness of the materials procured from different farms and suppliers for the manufacturing purposes. At the initial phase of the venture, the manufacturing process will be strategically focused on producing skincare and hair-care products. In relation to the skincare beauty products, the company will tend to manufacture lotions and creams to be used for different purposes. In addition, the manufacturing process will also produce hair care nutritional oils and shampoos which can meet the desires and expectations of the customers with greater efficiency. In addition, herbal therapy pack along with 100% herbal bathing soap will also be manufactured which can nourish the skin of the consumers and protect them from various harmful infections thus rendering utmost concern towards the quality prospects. Sales and Market Analysis Marketing and sales strategies can be considered as one of the major decisions for the entrepreneurs in order to obtain a significant growth prospect within the targeted marketplace. Marketing plan is an effective set of practices executed by an organization with the aim of generating value to the customers along with ensuring proper communication and delivery of the products and/or services in a time efficient manner. Moreover, the process also empowers the capability of the entrepreneurs to manage an effective relationship which further enables to achieve significant growth and long-term sustainability within the targeted market (Kotler, 2001). The sales and marketing strategy of the proposed business plan will be focused on identifying and making use of the potentiality possessed by the products as per the needs and demands of the consumers. In relation to the present market scenario, herbal products, especially beauty care items have significantly grown its recognition over the few decades (Kapoor, 2005). With this regard, an effective assessment of marketing mix and segmentation strategy can provide adequate support for the successful launch of a competitive range of beauty care products. Marketing Mix Strategy Product: Product can be regarded as one of the core attributes for an organization which depicts the image of the company and also ensures to predict its future growth. In relation to the proposed business plan, the products will be highly prioritized relating to their quality, ingredients and their effectiveness (Kotler, 2001). The products of the herbal cosmetic company will further be concentrated upon skin and hair care treatment ensuring adequate care to the customers. Place: Place is also an essential facet of the entrepreneurs to effectively perform its successful business plan. In relation to the proposed plan, the products of the company will be distributed through wholesalers, distributors and retailers that are located in different growing markets, comprising of a large proportion of middle-income group. Moreover, an expert sales force of 50 members will also be formed in order to demonstrate and sell the products through door to door or personal selling as well as taking the virtues of word-of-mouth promotion (Learning Seed, 2009). Price: Pricing of products can further be considered as a major factor which can enable the proposed business plan to attain its desired goals in the competitive market. A penetrative pricing strategy will be developed in this regard for the herbal cosmetics which can further facilitate the company to attain its financial goals by increasing the price of its products in accordance with the market demands (Ministry of Small Business and Economic Development, n.d.). Promotion: The promotional strategy of the proposed plan will be implemented in accordance with the flow of products in the market. In relation to attain a greater customer loyalty and build sustainable customer satisfaction, the labelling process will play the major role. The labels of the products will convey information regarding various related products which can further influence the customers to purchase multiple products of the organization owing to the availability of a larger variety. This type of adverting promotion shall further enable the company to simultaneously increase the sales of it different categories of products (Goi, 2009). Market Segmentation Strategy The marketing strategy of this proposed plan will be focused on segmenting the overall target market into two major parts namely demographic and psychographic factors. In relation to the demographic factor, the age, gender along with income level of the customers will be taken into consideration which can facilitate the company to attract a larger customer base for its exceptional herbal cosmetic products. In this context, the females are highly associated with the beauty products. Therefore, the products to be offered by the company will be focused on targeting female customers belonging to different age groups. Moreover, the demographic segmentation strategy for herbal cosmetic products tends to further encompass the middle and higher level income groups of customers (Goi, 2009). For the business proposed, the psychographic segmentation will also be conducted through attracting the customers’ perception towards the effectiveness of the herbal products. In this context, the growing interest towards the effectiveness of the herbal products can influence the company to attain a steady but continuous increase in its sales revenue over the short and the long run period (Kotler, 2001). Competition The increasing demand of the herbal products, especially for nourishing skin, can be identified as a growing opportunity for the entrepreneur to achieve considerable growth. Moreover, the minimum number of competitors in the herbal skincare industry also stipulates significant opportunity to obtain a competitive position in the respective market. Therefore, the proposed business plan for herbal cosmetics can enable to successfully accomplish the determined business objectives more efficiently as compared to the other business industry (Felter, 2004). Operations section - Including Manufacturing & Physical Distribution Manufacturing During the initial stage, the venture will commence its operational processes within the concrete manufacturing facility in the area of North California region due to the greater convenience of procurement owing to the availability of a wide range of herbal products. In the manufacturing process, the herbal ingredients will be used for producing beauty-care products in three major varieties namely for total extracts, selective extracts and single molecule purified. Therefore, the manufacturing process of herbal cosmetic products will be focused on justifying the herb elements in accordance with the types of products to be used by the customers. In this context, a greater emphasis upon the needs and desires of the customers in the production process can empower the organisation to achieve competitive advantages in the herbal beauty-care industry. Moreover, adequate practice of justifying herb elements and applying them to improve its effectiveness can also enable the organisation to accumulate a good relationship with its customers yielding a high degree of customer satisfaction which is quite essential to strengthen its foothold in the initial phase of the business establishment. Quality Control In order to ensure the deliverance of quality-based products, all products of the organisation will be assessed and manufactured in accordance with the regulatory quality certification processes. Appropriate procedures will be developed and followed for obliging a quality review before commencing the production process. A checklist will be created in order to monitor the frequency of mistakes in production functions and thereby registering the wastes created in consequence. Furthermore, the employees will be provided with adequate training on undertaking inspection tasks in an efficient manner. Procurement The procurement activities can be regarded as one of the important factors in terms of manufacturing quality-based herbal beauty-care products. In this regard, the required raw materials will be procured from reliable sources including farms and local suppliers. Moreover, the procurement activities, in lieu of the proposed business, will be focused on working in partnership with multiple numbers of suppliers in accordance with their quality and assurance. In order to manufacture quality and value-based herbal beauty-care products, the procurement strategy of the new venture will focus on selecting different suppliers for different products in accordance with the costs and time conveniences. For instance, the raw materials required for producing dry skin treatment and anti-aging treatment cosmetic products will be procured from different suppliers to that used in procuring hair-care ingredients. Packaging Packing is the final phase of any production procedure. After the finished product is passed through inspection phase, the products will be packed and made ready for its delivery to the customers. The objective of packaging is to protect the product from damages when transporting or distributing to the ultimate customers. Besides, packaging will also help to make the product attractive and identifiable by customers contributing towards its overall brand equity. Physical Distribution Physical distribution is concerned with transportation, warehousing and inventorying activities. The overriding objective of physical distribution is to accomplish competitive level of customer service at a feasible or lowest cost. It is worth mentioning in this context that physical distribution is a complex strategic activity which can impose significant impact on the revenue structure of the business over the long run. The prime objective of physical distribution is to accomplish competitive customer services. Hence, the concept of physical distribution in the marketing process can be referred as an effective set of practices which can enable a company to deliver its finished products to the ultimate consumers. It is basically defined as the practice of distributing finished goods to the ultimate selling locations including retailers, wholesalers, and distributors of the supply end partners in the supply chain of the company (McKinnon, 1989). In relation to herbal cosmetic products, the distribution process will incorporate different distribution channels including wholesalers, distributors, retailers and personal selling processes. Moreover, the physical distribution process of the venture will also focus on recruiting experienced sales staffs to offer its wide range of herbal beauty-care products through direct visit to the customers and word-of-mouth promotion. Financial Projection Demonstrating appropriate and valid financial plan can be considered as one of the major steps for the organisation in order to manage and efficiently operate its overall functions. An effective and authentic financial arrangement significantly involves various attributes including financial goals, sources of finances as well as income statements with the aim of accomplishing a feasible outcome from the business operations (Ministry of Small Business and Economic Development, n.d.). Financial Goals In relation to the anticipated revenue, it is obvious to consider that the company will face certain amount of loss during the start-up phase of the new venture. Additionally, it is common for any new venture to face a considerable loss due to the occurrence of large capital investment at the start-up stage as compared to the sales ratio during its few months of business operations (GRANT Finder Ltd., n.d.). With this regard, the financial goal for herbal cosmetic venture will be focused on setting adequate structure of its investment portfolio. After commencing the business operations, the strategy will be focused on minimising the organisational expenses from the 7th month of the venture which can be identified to recover at least 50% of total loss that is expected to occur during its start-up stage. Source of Finance In relation to the proposed business plan for herbal cosmetic products, the venture will be financed proportionately by personal investment (50% of total start-up cost) and availing the remaining 50% of fund through bank loan. The total investment fund will be included in the process of manufacturing, furnishing facilities, purchasing inventories, raw materials, machineries as well as payrolls during the first twelve months since the establishment of the proposed venture. Income Statement In order to clearly identify the income prospects for the new venture of herbal beauty-care products, a project cash-flow on the basis of the planned business process has been constructed. Cash Flow Statement for the Initial Three Years of Operation As can be observed in the above demonstrated cash flow chart, the venture will require additional working capital in its fourth year of commencement to overcome the chances of losses owing to the declining net cash flow. With this concern, assistance will be taken from another bank loan to make the business operations financially stable over the long run. SWOT Analysis of the Proposed Business Plan Fig: SWOT Analysis of the New Venture (Herbal Cosmetics) Conclusion Herbal beauty care products can be recognised as an effective attribute for the consumers which cause almost no side-effects as witnessed by the regular users of chemical beauty care products. In the current market scenario, the demand of herbal products is rapidly increasing especially for their effectiveness and lack of side effects. Hence, this particular sector has been observed as a potential industry segment to establish a new venture. The innate content as well as natural ingredients within the herbal products further tends to enrich the human body without making any side effect of their usage. Apparently, a growing opportunity can be identified for the modern entrepreneurs to attain competitive benefits in the emerging herbal beauty care industry. However, instigating a venture successfully, in this industry is also subjected to various challenges such as licensing, high concern towards quality, obtainment of required quality assured and highly perishable raw materials, and certainly the requirement of huge capital. The proposed business plan tends to demonstrate effective structure for the entrepreneur in order to successfully establish its position in the cosmetics industry. In accordance with the various important attributes, such as start-up summary, operations and manufacturing processes in the suggested business plan can enable the business to efficiently produce and market the herbal cosmetics products to the potential users. Moreover, the financial projection in the plan also signifies considerable benefits which can further provide adequate benefits to towards attaining the long-term sustainability in the respective industry. References Felter, H. W. (2004). American medical plants. Eclectic Medical Journal, pp.1-16. Gediya, S. K., Mistry, R. B., Patel, U. K., Blessy, M. & Jain, H. N. (2011). Herbal Plants: Used as a cosmetics. J. Nat. Prod. Plant Resour., 1(1), pp. 24-32. Goi, C. L. (2009). A review of marketing mix: 4Ps or more? International Journal of Marketing Studies, 1(1), pp. 2-15. GRANT finder Ltd. (n.d.). Writing a Successful Business Plan. Retrieved from http://www.grantnet.com/HelpfulReports/businessplan.pdf Kapoor, V. P. (2005). Herbal cosmetics for skin and hair care. Natural ProductRadiance, 4(4), pp. 306-314. Kotler, P., 2001. Marketing Management, Millennium Edition. United States: Prentice Hall Inc. Learning Seed (2009). Marketing’s 4 Ps: The consumer angle. Retrieved from http://www.learningseed.com/_guides/1237_marketings_4_ps_guide.pdf MakingCosmetics Inc. (2004). Tested plants used in cosmetics. Retrieved from http://www.makingcosmetics.com/articles/04-herbal-ingredients-in-cosmetics.pdf McKinnon, A. C. (1989). Physical Distribution Systems. Great Britain: Taylor & Francis. Ministry of Small Business and Economic Development, (n.d.). Business Planning and Financial Forecasting a Start-up Guide. 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