Business Administration - Kitchenware Products - Research Paper Example

Plan Outline page 0 Executive Summary 2 2.0 Company Summary 5 3.0 Products 7 4.0 Market analysis summary 9 5.0 Marketing and sales strategy 10 6.0 Management Summary 11 7.0 Financial Plan 12 8.0 References 17 1.0 EXECUTIVE SUMMARY 1.1 introductions The market for certain non-electrical kitchenware is very high necessitated by the increased population In U.S.A. One stone kitchenware has been established to supply these non-electrical kitchenware to retailers who in turn market these products to the end user. 1.2 The products One stone kitchenware has identified five unique types of non-electrical kitchenware whose demand is very high. These are clay pots, knives, jars, cups, bottle openers and ceramic and glass teapots. These products will be imported from India and China and will be imprinted in our warehouses with our company logo before they are distributed to the various outlets in the U.S.A so as to differentiate our product from those of our competitors. Onestone needs to create awareness to the retailer and the consumer through advertisements in newspapers made and network of salaries and common based sales representatives. 1.3 The market Kitchenware products as an industry are a very mature industry that is a crowded with many suppliers and distributors. However many of these suppliers and distributors concentrate on electrical products hence we sell that by concentrating on efforts on non-electrical kitchen products we will acquire a sufficient market share over the next five years. The five importers and distributors of related products had a combined & 10,000,000 in sales last year implying a 10% growth in revenue from the previous year. 1.4 Financial consideration Our initial start up cost will amount to &120,000 of which &80,000 will be used to rent operating premises purchase equipment install IT facilities, pay insurance for our shop and for the premises and for other health and safety registration. The balance will be used to create awareness to our deemed customers. 1.5 Mission statement It is onestone kitchenware's mission is to become the leading importer and distributor of non-electrical kitchenware products in the United States. The company endeavors to achieve this success. Guaranteeing customers 100 percent customer satisfaction. Contracting value oriented distributors so as to insure a value friendly service to our deemed customers. Constantly training our distributors to ensure that they are equipped with the necessary knowledge. Provide high quality products branded with our company logo so as to differentiate them from those of our competitors. Highlights 1.6 Objectives To open and operate a successful distribution shop in the New-York city which will employ more full time employees after the first year of operation. Achieve first year sales of $100,000 Maintain an average gross margin of 20 per cent Produce a net profit of at least 20,000 by the end of the second year of operation 1.7 Keys to success Innovative quality products Access to various manufacturers in India and China The principal owner being students will have an upper hand in distributing the products across the institutions of higher learning in the United States Fully integrated programs to help customers increase sales through creative promotions, advertising and cost marketing materials. 2.0 COMPANY SUMMARY Ones tone kitchenware is a new company located in New York and will be established on the basis of the following plan. 2.1 Company ownership One stone kitchenware is a privately owned company in total by the founders Davis Jones and Kelly Mark 2.2 Start up summary The start up expenses total $15,000 and include expenses such as advertising, equipment, IT facilities, legal health and safety regulations. Start up asset include $10,000 cash requirements $17,000 and $50,000 office furniture and starting inventory respectively. These starts up costs will be financed through a loan from our bank and little savings from the owners The details of the start-up costs summary are as follows Start up costs $ Legal 500 Advertisement 2350 IT facilities 2,000 Utilities (first year) 1,000 Insurance (first year) 500 Research and Development 750 Marketing 5,500 Salaries 400 Telephone Bills 1,800 Miscellaneous 200 TOTAL START UP EXPENSES 15,000 START UP CURRENT ASSETS Cash 17,750 Start up inventory 50,000 Other current assets _ 67,750 START UP FIXED ASSETS Premises 18,000 Equipment 20,000 Office furniture 50,000 88,000 TOTAL ASSETS 155,750 TOTAL REQUIREMENTS 170,750 START UP FUNDING Start up expenses to fund 15,000 Start up assets to fund 155,750 TOTAL FUNDING REQUIRED 170,750 ASSETS Non-cash assets for start up 155,000 Cash requirements 17,750 TOTAL ASSETS 155,750 LIABILITIES AND CAPITAL LIABILITIES Creditors 14,750 Other current liabilities - Working capital Davis Jones 25,000 Kerry Mark 25,000 Bank Loan 106,000 Start up expenses 15,000 TOTAL CAPITAL 141,000 TOTAL CAPITAL AND LIABILITIES 155,000 TOTAL FUNDING 170,750 3.0 PRODUCT AND SERVICES 3.1Product and service description One stone has identified five unique types of non-electrical kitchenware whose demand is very high in the United States and more especially among students in the institutions of higher learning. The se are clay pots known jars, cups, bottles openers and ceramic and glass teapots. Our service will include publication of monthly trade newsletters training and product demonstration as well as information an the latest market trend in the kitchenware products industry. Our choice of the product is to bring high quality product competitive prices and product satisfaction to our deemed customers. As a guarantee of quality and satisfaction we have personally sampled each of the products. These products will be imported directly from India and China and will be imprinted in our warehouses with our company logo before they are distributed to the various outlets in U.S.A so as to differentiate our products from those of our competitors. In addition to our products service delivery is also a very important component of our business. The following are some of our important service elements that we will offer to our customers. Ideas to help our customers increase their sales through promotions and advertisements. Adverts will be placed in our local leading newspapers as well as through the media. Constantly training our staff and our customers. Distribute a monthly newsletter with the latest development in the non-electrical kitchenware industry. Print and distribute beautiful t-shirts with our company logo to our customers to always put on when they are at work 3.2 Competitive edge Key competitive strengths Since the owners area students, we will have an upper hand in selling to students who area one of biggest customers of these products in USA, to be our retailers. In addition to variety of products we are currently offering one stone kitchenware in contemplations to importing and distribute peelers and mugs whose availability is scarce in the market and the demand is quite high after the initial two years of operation. Key competitive weaknesses Our primary weakness is that we are a new business competing largely with established importers and also find new ones. Another weakness is that the owners are still students and only one who will be a full time basis. This goes with the saying that, "two hands make-work lighter". 3.3 Sales literature Sales literature to be distributed to our customers will include brochures, newsletters as well as other print media such as print advertisements. Davis Jones is highly skilled in graphics and desktop publishing hence will publish professional price at a low cost 3.4 Technology Onestone kitchenware plans to use the latest in the information technology. Latest applications will reduce field expenses decrease day's sales outstanding and increase worker efficiency. Other feature of this technology would be adjusting item price, calculating profit or margin, streamling orders, tracking stock of each product hence reducing shortage or avoiding surplus and proving sales history reports. All these information will be viewed by management in the office. 4.0 MARKET ANALYSIS Non-electrical kitchenware market is a fast growing market necessitated by the increasing population. This growth in population offers excellent opportunities for new companies to enter this market and we are going to achieve after entering this market, which we are going to achieve after entering this market, which we are segment strategy 4.1 Target market segment strategy While the market is already sizeable, this industry continues to grow. The sales potential in this market is unlimited. Onestone kitchen initially plans to target institutions of higher learning in the United States. It is this segment that is most in need of our products and services. Most of the students do their shopping for these products outside their campuses and colleges hence the need to have our distribution claims within the premises of these institutions with the permission of the relevant authorities, which we have already obtained from various institutions After the first six months we intend to expand our customer base to households by having distribution claims to cater for these very important category. 4.2 industry analysis Kitchenware is general as an industry is congested with many manufactures suppliers brokers and retailers. However most of these concentrate highly on electrical products. Onestone therefore is in a position to capitalize on the customers' need for quality product exceptional service and an effective partner to success this will give us a competitive edge over the rest. 5.0 MARKETING AND SALES STRATEGY We believe in every business success, marketing is a very key compound. This creates a need to work with our customer on a one to one basis to ensure that their needs are met and develop unique marketing plans for each of them. This is in line with of our customer priority. Providing them with what they need, when and how they need it is the key for them to do business with us. We will migrate all of our marketing and sales efforts to project a consistent image of our company and more so our products. This image will be built on our name "onestone non-electrical kitchenware inc" with great emphasis on our high quality products. Since we cannot be masters on our own, we will attend many area convention and trade shows as possible to ensure that we are offering the most up to date market trend information. 5.1 promotion strategy Relationships are the key to success in the distribution business. Onestone will send news release to local media and press as well as trade magazines to try to get product and company feature coverage in front of the eyes of our customers as wee as the customer In addition, monthly newsletter for current potential customers. These newsletters will highlight new and current trends in the industry, upcoming conventions and trade shows, offer promotions and special deals as well as other information that can be used in their business. 5.2 distribution strategy Onestone during the first years of operation will operate three trucks for delivering to our main warehouse in New-York from the port and a special delivery van to do deliveries between scheduled delivery days. 5.3 sales strategy Onestone sales strategy is based on high quality relationship with our customers. Because we are a new business, we understand that we have to prove our worth in our businesses so as to earn respect and business from them. Product orders can be made in a number of ways to help facilitate the process. Telephone orders- customers can easily call our offices and place their orders during normal working hours prior to their schedules delivery day Fax orders-customers can fax in a completed product order sheet with the same deadline as phoned order. However, we do understand the tight schedules of a small business, so if a customer fails to call or fax their weekly orders, they will receive a courtesy call from our office to verify that an order is not needed. 6.0 MANAGEMENT SUMMARY Onestone will be owned and operated by its founders. Kerry Mark will be working on a part-time basis while Davis Jones will be a full a time employee. Initially one part-time employee will be employed to assist the founders. 6.1 organizational structures Kerry Mark will be responsible for the routing distribution management and delivery systems. Davis Jones will be responsible for customer service, accounting, shipping and the general administration of the business. Both will be responsible for product selection and sales and marketing Because Kerry will be a part-time employee, Davis will be spending a majority of his time in the trade. However, even when Kerry is out of the office he will be in constant contact through computer or phone. Both the founder have got good knowledge of business and information technology 7.0 FINANCIAL PLAN 7.1 Cost analysis Onestone inc. protects the gross margin to be at approximately 20-25%. Sales are projected to be $100,000 in the first year and $127,000 in the second year fixed cost include computers (part of IT) utilities insurance, salaries and an estimination of other running cost. The details of the start-up summary are as follow up cost $ Legal 500 Advertisement 2,350 IT facilities 2,000 Utilities (first year) 1,000 Insurance (first year) 500 Research and development 750 Marketing 5,500 Salaries 400 Telephone bills 1,800 Miscellaneous 200 ______ Total start up expenses 15,000 ______ Start-up current assets Cash 17,750 Startup inventory 50,000 Other current assets - _________ 67,750 ________ Startups fixed assets Premises 18,000 Equipment 20,000 Office furniture 50,000 88,000 _______ Total assets 155,750 Total requirements 170,750 Start up funding Start up expenses to fund 15,000 Start up assets to fund 155,750 Total funding required 170,750 Non-cash assets from start up 138,000 Cash requirements 17,750 ________ Total assets 155,750 ________ Liabilities and capital Liabilities Creditors - Other current liabilities 14,750 Total liabilities Capital; Davis 25,000 Jones 25,000 Bank loan 106,000 Start-up expenses (15,000) Total capital 141,000 Total capital and liabilities 155,750 Total funding 170,750 $ Computer 1,500 Utilities 1,000 Research and development 750 Insurance 500 Salaries 400 Other running costs 200 ______ 4,350 ______ Sales (First year) 100,000 Less Variable Advertising 2,350 Marketing 5,500 Telephone bills 1,800 ______ 9,650 ______ Semi variable IT facilities 500 Legal 500 1000 10,650 Contribution margin 98,350 Fixed costs 4,350 _________ 85,000 Net profit _________ Opportunity cost is the next best alternative forfone 1- 89,354 /100000*100 89.35% 1- 89.35% = 10.65% Breakeven analysis Break even point = fixed costs /contribution margin Contribution = 89,350/100,000 = 89.35% 7.2 Budgeted profit and loss account for the first year Gross profit 89,350 Gross profit % 89.35% Expenses Legal 500 Advertisement 2,350 Utilities 1,000 IT facilities 2,000 Insurance 500 Research and development 750 Marketing 5,500 Salaries 400 Telephone bills 1,800 Miscellaneous 200 Fuel 20,000 Interest 21,200 Promotional, costs 3,000 Depreciation 1,800 Net profit before tax 28,350 General assumption Current interest rate 20% Depreciation 10% Tax rate 30% All the figures are in pounds Fixed cost = 4350 4350/89.35% =4868.50 = 4869 units in order to break- even 7.3 Project ed cash budget for the first six months Assumptions 1) Sales grow at an even rate ,that is 20% 2) Variable costs also grow at the same rate of 20% per month 10650/12 3) 96% of the sales are in cash 4) Accounts are prepared on a yearly basis hence opening cash balance will not affect calculation on monthly basis Cash sales 8,000 9,600 11,520 13,842 16,589 19,907 Expenditures Cash spending 17,750 Bill payments 888 65 1,279 1,535 1,842 2,210 Interest repayment 1,766 1,766 1,766 1,766 1,766 1,766 Total expenditure 20,494 2,832 3,045 3,301 3,608 3,976 Net cash flow 12,404 6,768 8,475 10,523 12,981 15,931 General assumptions 1. Interest is calculated on a straight-line basis 2. Financial year runs from January to December References; Eric S. Siegel, Brian R. Ford, Jay M. Bornstein (1993)," Ernest & Young Business Plan Guide" New York (John Wiley and Sons) United States Small Business Administration outline for small business start-up Read More