New Fashion Bug and Retail Store 4 Desktop

Chapter-11. Introduction: 1.1 Executive Summary: New Fashion Bug Clothing is a new apparel store that caters to the Nepali community in Patan, Lalitpur. As our name suggests our focus is to provide Nepali wear and accessories, and position ourselves as the top retail store servicing this particular market. We are the first and only promoters who are launching the kurtas from Pakistan in the city of Patan. Our intentions are to obtain 80% market share and become a central hub of shopping activity for the local Nepali population as well as others who enjoy wearing kurtas. New Fashion Bug Clothing will be located Ghabhal, Patan. Kurtas has centralized itself directly in position to the residential location and social activities of our target market. We believe that this is critical to our initial success and long-term growth. 1.2 Background: In Nepal, there is large number of micro enterprises, which are in operation on cottage basis. It is estimated that small business, legally consisting of cottage and small enterprises contribute to about one-third of industrial value added, account for 95% of the number of industrial units, produce 66% of exports and make up 7.5% gross domestic products. The World Bank estimates that 85% employment opportunities are created by this sector out of the total industrial employment. Under the prevailing socio-economic and geographical situation of the country, small-scale industries and cottage and village industries play a significant role in the industrialization process and economic development of the country. Small-scale industries can be operated with simple technology and run by less trained personnel. It has greater scope than large-scale industries as it does use indigenous resources, provide productive employment, stimulate local Industries, mobilize domestic capital, and increase net national product and income. Nevertheless, their growth depends heavily upon the quality of entrepreneurship. Due to the lack of quality entrepreneurship, small-scale industries are facing the problems regarding capital and labour and at the same time, the products produced by them have to complete with the foreign products. 1 An entrepreneur is a person who mobilizes capital, utilizes natural resources, creates markets and conducts business. The entrepreneur combines talent, ability and drive to transform resources and opportunities into profitable ventures. Entrepreneurs play the important role in economic growth of any country. It is an agreed fact that entrepreneurs are not born but made. The task of developing potential entrepreneurs is not an easy game because they are influenced by tradition, culture, social values, belief and faith. Most people have a certain potential for entrepreneurship that should be identified first. This potential can be further developed through adequate training. Therefore, if Nepal has to accelerate the pace of industrialization, high priority has to be given to small-scale industries because of its suitability of the existing infrastructure. 1.3 Objectives:  To create a shopping environment that caters to the apparel needs of the kurtas to the women, ladies and girls.  To earn 80% market share and become the number one kurta apparel store in middle of the Patan and achieve name and fame in the local community.  To receive a 50% profit margin within the first year.  To have a customer base of 1,500 by the end of the first operating year.  To achieve a net profit of Rs.3,00,000 by year two and Rs.3,52,000 by year three. 1.4 Mission: New Fashion Bug Clothing’s mission is to offer quality branded wears as an assortment of sizes and styles to accommodate all varying body styles and shapes in large quantity. 2 Chapter-2 2. Company Summary: New Fashion Bug Clothing is organized as a family business of Shrestha and Sons’. It will be located at Ghabhal, Patan being the epi-center of the local Nepali community on the south side of Patan. The hours of operation will be Sunday to Friday from 9 a.m. to 8 p.m. and Saturday 9 a.m. to 12p.m. There will be extended special hours designated during the festive seasons. All merchandise will be purchased according to the company's mission and customer focus of outfitting all sizes including women's plus sizes and children’s sizes too. 2.1. Company Ownership: New Fashion Bug Clothing is organized as a family business of Shrestha and Sons’. The Shrestha and Sons’ are responsible for handling all administrative and managerial duties. 2.2 Start-up Summary: New Fashion Bug Clothing’s incorporation costs are listed below. The company will start with three months inventory on hand for apparel and an accessory as this is the main revenue generator. The majority of the company's assets will reside in inventory. Successful operation and building a loyal customer base will allow New Fashion Box Clothing to be self-sufficient and profitable in year two. Start-up: Start-up Expenses: Rent Rs.10,000 Grand Opening Event Rs.5000 Telephone & Utilities (3 months) Rs.3000 Advertising & Promotion Rs.7000 2.3 Company Locations and Facilities: New Fashion Bug Clothing will be located at Ghabhal, Patan. This space has 1,020 square feet and has been leased for two years. This location is central to the geographical location for the local Nepali community in the southern part of Patan, Lalitpur. We feel it is essential to our initial and ongoing success that we locate ourselves in the heartbeat of the community. We also strive to create an atmosphere of acceptance and community, as well as a retail environment where individuals can identify and bond with their culture. All business deliveries and shipments will be handled through the store. 3 Chapter-3 3. Products: New Fashion Bug Clothing will carry nationally recognized Indian wear brands (see list below). Our selection will range from the basics of Wrangler to the trendy Indian style of Ethics. We will be purchasing through sales representatives and manufacturers in a variety of sizes, colors and style to fit our target market base. The greatest percentage of merchandise will be in apparel, followed by accessories, shawls, and gifts. Management will rely on customer feedback, suggestions, and sales reports to introduce or eliminate certain brands, styles and sizes. 3.1 Product Description: New Fashion Bug Clothing will provide a selection of brands that fall within our mission statement. Our goal is to carry a selection of labels from the hardcore Indian wear to the more sophisticated Nepali styles. Some of the labels we will carry are listed below: Raheja Cotton Kaajal Silk Mayuri Chiffons Shawls Pashmina, Chiffon 3.2 Competitive Comparison: New Fashion Bug Clothing has a number of advantages that will allow us to build our brand identity, add value to our merchandise and build a loyal customer base while standing apart from our competitors.  We will be the first Pakistani kurta wear apparel retailer in Patan.  The new customers will entitle to a 20% discount after ten purchases.  We will create a sense of culture and bonding with the community by offering products that combine both the Indian- Nepali and Nepali cultures.  We will offer clothing to fit plus-size women and big and tall women. 4  We will maintain a detailed record on each customer, logging addresses, their purchases, size, and brand for customer follow- up and in-house promotional purposes.  Our location is central to our target customer base. 3.3 Sales Literature: New Fashion Bug Clothing will use a targeted advertising and sales program to generate publicity and build a customer base. Hoarding boards and discount coupons will be spread throughout Lalitpur area. A 200 grand opening invites will be sent to potential new customers two weeks before the grand opening. The invitation will also include a promotional 10% coupon off a customer's first purchase. The customer mailing list has been compiled from contacts the owners have made while in the community. 3.4 Sourcing: We will shop for our merchandise as outlined below:  With manufacturers who have a regional representative and showroom located at the Kathmandu Market Center. We will place our weekly and monthly reorders with them and review new products. For all other brands, we will work directly with the manufacturers and utilize product catalogs and line sheets.  Aswin and Kartik are the main and the most important festive season where the latest collections of all brands are to be made. All orders will be placed for Fall lines not previously viewed and placement orders for Holiday. The Kathmandu Market Center is the largest wholesale merchandise mart and was the first to have a permanent facility to unite regional wholesalers under one roof. The Kathmandu Market Center offers to all registered buyers, special events, fashion shows, product displays and demonstrations, educational programs, seminars, new buyer's kits and registrations, and special buying programs. We will also work to solidify our relationships with sales representatives and vendors so that we may achieve decreased cost of goods. Our competitors, (both direct and indirect) purchase from the same sources and we believe that through marketing programs and strategic alliances we will begin to gain a competitive advantage. 5 3.5 Technology: Retail apparel establishments have a tendency to have a high number of SKU's (Stock Keeping Unit) because of the level of inventory. It is imperative that an advanced inventory and point of sales program be utilized to maintain stock levels and track sales. New Fashion Bug Clothing will utilize Peachtree Accounting software for all financial and accounting purposes. For inventory management and point of sale transactions we will utilize Retail I.C.E. (Inventory Control Expert) software. This product is Windows-based software that allows the small, single store retailer to manage their inventory and point of sale functions all in one. Our business plan will be generated and reviewed on a bi-annual basis using the most updated version of Business Plan Pro from Palo Alto Software and reviewed quarterly to ensure all financial goals and objectives are being reached. Palo Alto's companion software, Marketing Plan Pro will allow us to make the most of our limited marketing budget by focusing our communications on our target markets and enhancing our marketing knowledge. 3.6 Future Products: As we achieve and exceed our sales and profitability goals, New Fashion Bug Clothing will add ladies sandals and shoes to the product line and special clothing that will include T-shirts for women. We will expand our line of brands with those that have been repeatedly requested by our customers. 6 Chapter-4 4. Market Analysis Summary: The primary target customer of New Fashion Bug Clothing will be the Indians and Nepalese located in the whole part of Lalitpur. As we are situated in the epi-center of their residential community we believe they will make up the largest percentage of our customer base. The secondary target customers are the Newari community in the area. As the Newari population continues to grow rapidly in the central area we expect to receive the patronage of Newaris’ as they are very loyal to apparel. The last target customer of New Fashion Box Clothing is listed as other. As popularity about the store increases we expect to see an assortment of curiosity seekers, and local residents from the community as well as seasonal purchasers during rodeo season. 4.1 Market Segmentation: The Nepalese women population is concentrated heavily in the whole part of the city, therefore, it leading to the highest concentration of our customer base. The last area of potential customers is labeled as "other." Because New Fashion Bug Clothing offers a variety of Indian and Pakistani wear apparel, along with accessories and gifts we feel that we will attract many curious shoppers. Our ambience and customer service will make them repeat customers. 4.2 Target Market Segment Strategy: The goal of New Fashion Bug Clothing is to serve the local Nepali ladies community that has difficulty finding Indian and Pakistani clothes that fit their larger frames. We will also serve the Newari community, which tends to have a slimmer yet shorter frame. Both of these markets are underserved in the retailer outlets. 4.2.1 Market Needs: There are several important needs in the apparel business that are being either underserved or not met at all. New Fashion Bug Clothing plans to meet and service those needs. New Fashion Bug Clothing will provide a large assortment of sizes to compliment the various body shapes and sizes of the ethnic community. This is a size segment that is missing throughout the larger apparel retailers. 7 Focus and attention to customer's personal preferences and customer retention will be given high priority. Because of the high rate of employee turnover at major mass retailers, customer service and personal detail has been lost. 4.2.2 Market Trends: Millions of people around the Asia instantly recognize and identify with this apparel. It is synonymous with India and is a true classic. Kurtas has survived many Eras. There will always be a future for this apparel. Within the last few years the kurtas has made a comeback in the fashion industry. With the increase of serials on the television and the apparels worn by the actors more people are becoming aware of Indian kurtas in the Nepali community. 4.2.3 Market Growth: Market growth is in an upward motion, despite some of the latest economic downturns in the Patan metro area. According to a report by the Economy & Trade, Patan can be ranked as the business area after Kathmandu in the valley. Patan has also been designated as the best city in the Lalitpur to start a new business. For these reasons and more, Patan can be considered an economic leader in Nepal. As Nepal has been one of the business areas these days there isn’t any problem for the people to consume goods they want. Lots of facilities are available in the city these days so people are migrating to this place. We can name Patan one of the high class cities for manufacturing of handicrafts and other various garment products, which rank Patan as the top city for the people based on income potential, cost of living, proximity to employers, cost of housing and 21 quality-of-life factors. 4.3 Main Competitors: New Fashion Bug Clothing has lots of competitors within a few kilometers radius of its location. Kumkum, which is located approximately 2 km from our location, is our closest competitor. Kumkum is one of the largest kurta wear apparel stores in the Patan city. They operate 2 stores and sell latest kurta wear apparel and saris to the general mass market. Locating plus size clothing for women, ladies and children can be extremely difficult. They also tend to be a bit behind the market in offering more contemporary Pakistani styles. Vaastra, located approximately 2.5 km from our store. They offer highly embroidered kurtas and saris. As it is located at the main street, it does not need to advertise or promote of their retail outlet. 8 Sunflower is approximately 4 km from New Fashion Bug Clothing and is the farthest of the three competitors. Sunflower is family-owned kurta apparel with two stores in the Patan area. Their customer base tends to be more upscale as they carry more of the boutique labels. They also do the tailoring of clothes, which help them to pull the customers in two ways. They have few plus sizes for women and big and tall for women. Also, sunflower does very little advertising. 9 Chapter-5 5. Strategy and Implementation Summary: New Fashion Bug Clothing’s goal is to provide apparel to the under served market of the Indian-Nepal community. Our intention is to gain 80% of this market share by focusing on our niche positioning, neighborhood location, brand that we sell, hospitality and special promotions. 5.1 Competitive Edge:  New Fashion Bug Clothing discount Card which allows the customer a 20% discount after ten purchases.  Our location in the community will offer closer access to our target customer base.  We will offer plus sizes for women and big and tall sizes for ladies. 5.2 Marketing Strategy: Our marketing strategy will focus heavily on sales promotion, niche positioning in the market, and customer service with loyalty and retention in sales. The marketing budget will not exceed 5% of our gross annual sales. Our promotions will always stay in tune with our company objectives and mission statement. 5.2.1 Positioning Statement: New Fashion Bug Clothing will provide the free size and plus size for women with varieties of designs and styles which are not always readily available in the mass kurta retailers. 5.2.2 Pricing Strategy: New Fashion Bug Clothing will maintain a flexible pricing strategy. We base on the product lines that we carry on their reputation and quality. Most of our lines come with a suggested retail price that we will follow. We will also utilize the standard practice of key-stoning as well. 5.2.3 Promotion Strategy: New Fashion Bug Clothing will follow an aggressive yet creative promotional plan. This will allow us to focus directly on our target customer while still being conservative with our advertising rupees. 10  Advertisement on the established Nepali channels, hoarding boards on the streets.  Free distribution of the prospectus in the busy shopping areas.  Advertising and promoting on the newspaper like “The Himalayan Times”, “Kantipur” and other fashion magazines.  Spot radio advertisements on the local FM stations. 5.3 Sales Forecast: The following table and chart give a highlight on forecasted sales. We expect sales to start off conservatively and increase extensively during the Dashain/Tihar holiday shopping season and during the months of Shrawan and Bhadra, which contains lots of women festivals. New Fashion Bug Clothing has planned for a rate of growth at 15% for the first year as we build name recognition and status in the community. In the second and third year we look to see an increase of revenue of 20% as we gain a larger percentage of the market share and increase our customer base beyond the southwest part of the city. Sales Forecast: Sales Forecast Y 2010 Y 2011 Y 2012 Unit Sales: Kurta Shawls Shoes/sandals 672 336 336 1008 672 672 1680 1008 1008 Unit Prices: Kurta Shawls Shoes/sandals Rs.650 Rs.100 Rs.750 Rs. 650 Rs. 100 Rs. 750 Rs. 650 Rs. 100 Rs. 750 Sales: Kurta Shawls Shoes/sandals Rs.436800 Rs.33600 Rs.252000 Rs.655200 Rs.67200 Rs.504000 Rs.1092000 Rs.100800 Rs.756000 Total Sales Rs.722400 Rs.1226400 Rs.1948800 11 Diagram of Sales Forecast 12 0 200000 400000 600000 800000 1000000 1200000 Y 2010 Y 2011 Y 2012 kurta shawls shoes Chapter-6 6. Management Summary: Employees will be encouraged to work within their creative, physical, and intellectual boundaries. All duties will be divided and delegated according to strengths and weaknesses. At New Fashion Bug Clothing, we will expect a high degree of customer service skills and personality as this is essential to our success. 6.1 Organizational Structure: New Fashion Bug Clothing is a small business and therefore, required a simple organizational structure. All decisions are made in-line with the company objectives. Employee tasks are delegated based upon their level of expertise, creativity, strengths and weaknesses. 6.2 Management Team: Members of Shrestha and Sons’ will be responsible for all administrative functions, purchasing, inventory control, and promotions. They can control over each and every sector of New Fashion Bug Clothing. 6.3 Personnel Plan: The personnel plan is included in the following table below. There will be one full-time employee and one part-time employee working 20 to 30 hours per week. The full-time employee will be paid at a rate of Rs.150 per day and a part-time employee will be paid at a rate of Rs.80 per day. All employees will benefit from a one day paid holiday on their respective birthdays and one week of paid vacation after twelve months of employment. At this time medical benefits will not be offered to employees. As profits increase in the future medical benefits will be offered to all employees. 13 Chapter-7 7. Financial Plan: The growth of New Fashion Bug Clothing will be moderate and the cash balance will always be positive. Being a retail environment we will not be selling on credit. We will accept cash and checks. Marketing and advertising will remain at or below 5% of sales. We will continue to reinvest residual profits into company expansion, and personnel. 7.1 Important Assumptions: New Fashion Bug Clothing does not sell on credit nor do we offer layaways at this time. We accept cash and cheques. 7.2 Projected Profit and Loss: The following chart and table will indicate projected profit and loss. Profit Yearly 14 0 200000 400000 600000 800000 1000000 1200000 1400000 Y 2010 Y 2011 Y 2012 Net profit Profit and Loss: Pro Forma Profit and Loss: FY 2010 FY 2011 FY 2012 Sales Rs.722400 Rs.1226400 Rs.1948800 Direct Costs of Goods Other Production Expenses Rs.505680 Rs.0 Rs.858480 Rs.0 Rs.1364166 Rs.0 ------------- ------------- ------------- Cost of Goods Sold Rs.505680 Rs.858480 Rs.1364166 Gross Margin Gross Margin (%) Rs.505680 70% Rs.858480 70% Rs.1364166 70% Expenses: Sales and Marketing and Other Expenses Depreciation Telephone/Pagers/Cell Rent Rs.7000 Rs.0 Rs.10000 Rs.60000 Rs.7200 Rs.0 Rs.12000 Rs.60000 Rs.7500 Rs.0 Rs.15000 Rs.60000 ------------- ------------- ------------- Total Operating Expenses Rs.77000 Rs.79200 Rs.82500 Net Profit Rs.428680 Rs.779280 Rs.1281666 15 7.3 Projected Balance Sheet: The following table explains the projected balance sheet. Balance Sheet 16 Pro Forma Balance Sheet: Assets Y 2010 Y 2011 Y 2012 Current Assets: Cash Inventory Other Current Assets Rs.100000 Rs.50000 Rs.0 Rs.225000 Rs.100000 Rs.0 Rs.300000 Rs.175000 Rs.0 Total Current Assets Rs.150000 Rs.325000 Rs.475000 Long-term Assets Accumulated Depreciation Rs.0 Rs.0 Rs.0 Rs.0 Rs.0 Rs.0 Total Long-term Assets Rs.0 Rs.0 Rs.0 Total Assets Rs.150000 Rs.325000 Rs.475000 Liabilities and Capital Y 2007 Y 2008 Y 2009 Current Liabilities: Long-term Liabilities Rs.100000 Rs.50000 Rs.25000 Total Liabilities Rs.100000 Rs.50000 Rs.25000 Net Worth Rs.50000 Rs.275000 Rs.450000 Conclusions: As it is clear that small scale industry play a significant role in the industrialization process of Nepal and industrialization, it is the backbone of economic development of any countries. Thus, various government, semi government and non government institutions involved in the enterprise promotion and development should utilize the professional strength and technique for economic development of the country. Since the business that has been mentioned above comes under the small business and our business promotes the latest and stylish wear for the women. The product that we are going to launch is very rarely found in the market specially the Pakistani kurtas, which are very rare in the city. As we have planned to start this new business we are very hopeful that the customers will love our products and increase the sale every year. The women population can consume the very new and latest products. To make the business run smoothly government should make more feasible policies for small investors, only then the economic development of the country and the entrepreneurs are possible. 17 Bibliography  Agrawal, Govind Ram “Entrepreneurship and Small Business Management in Nepal”, M.K. publishers and distributors.  Pant, Prem Raj fieldwork assignment and report writing Veena Academic Enterprises Pvt. Ltd.  Weston, Beasley, Brigham “Essential of Managerial Finance” 11 th edition.  Internet websites on various clothing raw materials.  Guidance from Shringar Fashion Designing and Boutique, Baneshwor. 18