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Is your idea feasible Before you get started, find out if there is a demand for your products or services. It's also useful to find out who your competitors are and whether the market can sustain your business.

Researching all aspects of your business idea will involve gathering, analysing and evaluating information to help you write your business goals. Some questions to consider are:

  • What product/service will you provide
  • Is your idea viable
  • How will you protect your ideas
  • Is there a market for your product/service
  • What skills do you need
  • Who are your competitors
  • What difference will you bring to the market
  • Do you have the financial capacity to start a business

Are you ready to venture into business? Operating a small business is not just about working for yourself, it's also about having the necessary management skills, industry expertise, technical skills, finance and of course a long-term vision to grow and succeed. 

At the outset it’s important to consider whether you really understand what's involved and whether you're suited to business and self employment. Examine these questions:

  • Why are you starting a business
  • What are your business and personal goals
  • What are your skills
  • What income do you need to generate
  • What are the advantages and disadvantages of starting your own business.
Question:

Details regarding the business are as follows –

  • Business structure – the business will be started as the company and will be registered in the name of Rose Petals. Mr John Steward will be the CEO and managing director of the company. The board will have another 5 executive directors and 3 non-executive directors.
  • ABN – registered Australian business number or ABN number of the company is 11 223 479 606
  • ACN - registered Australian company  number or ABN number of the company is 139 621 085
  • Business location - The business will be located in East Sydney that is just 30 minutes away from centrally located Sydney Business Park.
  • Date established – the business is planning to be started on 1stJuly 2018
  • Business owners - Mr John Steward will be the CEO and managing director of the company.  
  • Owner experience – the CEO is experienced in the retail sector and was the executive director of a well known retail company for more than 12 years.
  • Products – the company will sell various types of garments for the children of age group of 5 to 15 years.

1.2 The market

  • Target market - Main targets for the company will be the children aged between 5 to 15 years
  • Marketing strategy - Offer high quality products at lower possible price, manufacturing the products as per the customer needs and meeting marketing demand and supply the goods demanded as per required time without any hurdle or barrier

1.3 The future

  • Vision - To become the distinguished retailer for kids clothing that will be known globally for the quality of the product, setting new lifestyles and trends
  • Goals - to offer high value products to their customer on regular basis, achieve the financial objectives of the company and set the benchmark in the clothing industry as the cost leader through improving the performance and minimizing the waste

The key objectives of the business with regard to finance are as follows –

  • To increase the sales by 125% till the 3rdyear of business
  • Increasing the number of target customers
  • Minimizing the cost of goods sold by at least 2% from 2ndyear of business.

Rose petal (RP) is the retail store that will deal in kids clothing and the business will be initially established in East Sydney. It will present wide range of the kids clothing that will be manufactured using various fabrics like wool, cotton and silk. The clothing will be designed keeping in mind the latest fashion trends.

2.2 Registration details

The business will be registered with Australian Securities and Investment Commission (ASIC) in the name of Mr John Steward under the brand name of Rose Petal. Further, before starting the business the company need to register with the Australian Taxation Office for complying with taxation requirements.

2.3 Business premises

The business will be located in East Sydney that is just 30 minutes away from centrally located Sydney Business Park.

The business will be owned by Mr John Steward. However, the organizational structure will include the production manager, who will be responsible for everyday decision making associated with manufacturing, HRD manager, who will be responsible for managing all the departments, Accounts manager, who will be responsible for taking all the finance related decisions (Schaper et al. 2014).   

2.6 Key personnel

Name

Designation

Responsibility

John Steward

CEO

All marketing and operational activities

Ricky Hudson

HRD Manager

Managing all the departments

Sally Armanda

Account manager

Making finance decisions

RP will offer its customers the below mentioned kids clothing and products –

  • Sweaters
  • Jackets
  • Shirts
  • Pants
  • Shoes
  • Hats
  • Bags
  • T-shirts

RP will use special cotton fibre for the garments that will be used by the kids during summer. This special fibre has never been used by its competitors and thereby it is expected that it will receive a positive feedback from the customers (Sadgrove 2016).

2.9 Insurance

The company will take insurance policies for its office equipments, warehouse products and various machineries in the manufacturing plant.

2.10 Risk management

Risk

Likelihood

Impact

Strategy

Increasing price of the fabric

Highly Likely

High

The company shall find out alternate fabric that will not compromise the comfort of the kids

Increasing maintenance cost

Likely

Medium

The company must depend on the insurance policies and servicing policies, to provide smooth services.

Retention of designers

Highly Likely

High

As the company has high competition in the garment market, the designers are likely to leave for additional benefits. Therefore, the company will hold regular meeting with the designer to know their demand and preference.

All the legal procedures will be adhered to as per the “Australian Business Licence and Information Service (ABLIS)” (Steingold 2015).

2.12 Operations 

RP will sell its products through following 2 methods –

  • Retail sale – initially the retail stores will be opened in East Sydney location. However, within 2 years period it is planning to open the retail stores in other areas of Australia like Perth, Melbourne and Adelaide (Ward 2016).
  • Online sale – main product of the company will be sold through online in addition from the retail stores. The delivery for online sales will be made within 7-10 business days.

Under the sustainability plan, the company will make the following plans –

  • The company will take appropriate care with regard to environmental issues so that the harmful elements from manufacturing does not impact the community under which it will carry on the business
  • It will prepare the strategies and action plans for the potential risks so that it has least impact on the business

Kids wear market in Australia is highly competitive and slowly the market is shifting from growth to maturity. However, the increase in the children’s age group for 15 years and under is supporting the growth in revenue (Massa and Tucci 2013). High rate of immigration also contributed for the growth of the target market. It is expected that the industry revenue will be increased by 3.9% that is $ 3.4 billion over next 3 years.

Main targets for the company will be the children aged between 5 to 15 years. The characteristics for the targeted customers will be as follows –

Description

%

Sales (amt)

Market total

100%

 $     2,000,000.00

Boys clothing

40%

 $        800,000.00

Girls clothing

40%

 $        800,000.00

Boys and girls accessories

20%

 $        400,000.00

Increase in the online shopping habits and social media has exposed the consumers to latest fashions and it influenced their desire for new trends and styles. Further, the weak sentiments of the consumers and subdued disposable growth in earnings over last few years influenced the popularity of fashion markets.

Various factors that will made RP as ideal choice of the customer will be as follows –

  • Guaranteed quality goods
  • Variety of clothes under same roof
  • Customization facility
  • Easy modes of payment like cash, debit cards and credit cards
  • Delivery within time
  • Ability to accept big order size

Strength

Weakness

· Wide range of products with great variance

· Customized product can be ordered for the individual customers

· Expert designers for following latest fashion trends

· Discounts allowed on bulk purchase

· Comparatively new as against the competitors

· In the initial stage the marketing expenses will be large as for establishing the brand lot of advertising campaign will be required.

· Huge capital will be required for starting up the business as the company will not be able to avail credit initially (Blackburn, Hart and Wainwright 2013).

Opportunity

Threats

· There is huge demand for boys wear. Therefore, adding value to this category will be great opportunity

· Animated movies character print has increased the demand among the children

· The garment sector in Australia is growing fast and opening new opportunities for the (DaSilva and Trkman 2014)

· Owing to recession the people are now more conscious for the pricing and prefers the brand where discount is high

· The high competition in clothing retail sector creating threat for the company.

Competitor

Established date

Size

Market share (%)

Value to customers

Strengths

Weaknesses

Phoenix and the Fox

Late 2014

2400

22%

This brand offers the offbeat clothing at reasonable prices that can be chosen quickly (Fox 2018).

100% organic cotton are used

Availability is not there all over Australia

Just Jack

2012

2700

17%

The main competitive advantage if this brand is that it truly cares regarding the feel and fit of the customers.

Manufactures all type of boys wear like swimwear, sleepwear, casual wear and sportswear.

Manufactures only for boys (Jack &nbsp 2018).

Huckleberry Lane

2008

2900

7%

This is the sleepwear brand and it makes comfiest and sweetest sleeping clothes for the people of all age groups (Huckleberrylane.com.au. 2018).

It is made from soft and quality fabrics that can be fitted easily.

Manufactures only sleepwear

Feather Drum

2016

1500

5%

Their designs include the pieces that are made by skilled artisans instead of the robots

Removes nasty chemical from clothes before launching it in the market

Comparatively new in the industry (Feather Drum 2018).

Little Edge Apparel

2012

1900

14%

Fully Australian made brand (Little Edge Apparel 2018).

High quality and everything is ethical

High price

Answer:

Various marketing channels like mailing, social media, direct sales, telephonic campaign will be used for marketing and advertising the brand. Further, the customer will be regularly updated on the upcoming clothes and discounts, if any.

To become the distinguished retailer for kids clothing that will be known globally for the quality of the product, setting new lifestyles and trends.

4.2 Mission statement

Mission of the company is to offer high value products to their customer on regular basis. For fulfilling this, they are focussed on the exceptional quality, design, convenience, interactive communication and innovation.

Major goals and objectives of the company are recognized with quality and cost efficiency. Other objectives are –

  • to offer high value products to their customer on regular basis
  • to achieve the financial objectives of the company
  • set the benchmark in the clothing industry as the cost leader through improving the performance and minimizing the waste
  • Offer high quality products at lower possible price
  • Manufacturing the products as per the customer needs
  • Meeting marketing demand and supply the goods demanded as per required time without any hurdle or barrier
  • Develop the kid’s friendly decoration and environment in the store that will attract the parents for bringing their children in store.

The key objectives of the business are as follows –

  • To increase the sales by 125% till the 3rdyear of business
  • Increasing the number of target customers
  • Minimizing the cost of goods sold by at least 2% from 2ndyear of business.

Further, the total requirement for start-up as estimated will be $ 21,09,000 for registration and other business needs and $ 33,50,000 for equipments. Therefore, total requirement will be $ 54,59,000, out of which 40% that is $ 21,83,600 will be raised through long term borrowings and 60% that is $ 32,75,400 will be raised through equity.

The assumptions made are as follows –

  • Sales will increase by 12% in the 2ndyear and further 14% in 3rd year
  • Due to winter season the sales during the month of September, October and November will fall significantly. However, during December the sales will be increased due to Christmas
  • Cost of goods sold for the 1styear will be 60% of sales. However, for net 2 years the COGS will be reduced to 58% of sales.
  • Interest and loan repayments will be paid quarterly.

START-UP COSTS

Cost ($)

EQUIPMENT/CAPITAL COSTS

Cost ($)

Registrations

Business purchase price

$120,000

Business name

$3,000

Start-up capital

$800,000

Licences

$2,500

Plant & equipment

Permits

$2,000

Vehicles

$1,200,000

Domain names

$2,000

Computer equipment

$350,000

Trademarks /designs/patents

$10,000

Phones

$65,000

Vehicle registration

$15,000

Fax machine

$125,000

Membership fees

$12,000

Security system

$210,000

Accountant fees

$45,000

Office equipment

Solicitor fees

$2,000

Furniture

$300,000

Rental lease cost (Rent advance/deposit)

$120,000

Shop fit out

$180,000

Utility connections & bonds (Electricity, gas, water)

$50,000

Phone connection

$3,000

Internet connection

$7,500

Computer software

$120,000

Training

$75,000

Wages

$100,000

Stock/raw materials

$90,000

Insurance

Building & contents

$300,000

Vehicle

$260,000

Public liability

$50,000

Professional indemnity

$40,000

Product liability

$45,000

Workers compensation

$100,000

Business assets

$220,000

Business revenue

$55,000

Printing

$55,000

Stationery & office supplies

$150,000

Marketing & advertising

$175,000

Total start-up costs

$2,109,000

Total equipment/capital costs

$3,350,000

BALANCE SHEET FORECAST

[Year 1]

[Year 2]

[Year 3]

Current assets

Cash

$4,369,900

$4,231,000

$3,532,500

Petty cash

$25,000

$32,000

$29,000

Inventory

$350,000

$250,000

$150,000

Pre-paid expenses

$36,000

$23,000

$21,000

Fixed assets

Leasehold

$600,000

$600,000

$700,000

Property & land

$400,000

$500,000

$500,000

Renovations/improvements

$20,000

$500,000

$750,000

Furniture & fit out

$792,430

$800,000

$800,000

Vehicles

$126,500

$258,700

$221,500

Equipment/tools

$512,170

$460,953

$414,858

Computer equipment

$450,000

$450,000

$700,000

Total assets

$7,682,000

$8,105,653

$7,818,858

Current/short-term liabilities

Credit cards payable

$320,000

$380,000

$310,000

Accounts payable

$1,800,000

$2,020,000

$1,910,000

Interest payable

$3,000

$14,000

$16,000

Accrued wages

$45,000

$52,000

$51,000

Income tax

$55,000

$45,000

$390,000

Long-term liabilities

Loans

$2,183,600

$2,133,600

$2,083,600

Total liabilities

$4,406,600

$4,644,600

$4,760,600

NET ASSETS

$3,275,400

$3,461,053

$3,058,258

5.5 Profit and loss forecast

Particulars

Year 1

Year 2

Year 3

Sales

 $   5,000,000

 $   5,600,000

 $   6,384,000

Cost of goods sold

 $   3,000,000

 $   3,248,000

 $   3,702,720

Gross profit

 $   2,000,000

 $   2,352,000

 $   2,681,280

Gross profit %

40%

42%

42%

Expenses

Accountants fees

 $        55,000

 $        55,000

 $        60,500

Advertising and marketing

 $      120,000

 $      100,000

 $        80,000

Bank fees and charges

 $      120,000

 $      105,000

 $      110,000

Bank interest

 $        12,000

 $        10,500

 $        11,000

Credit card fees

 $          6,000

 $          7,000

 $        12,000

Utilities (electricity, gas, water)

 $        35,000

 $        40,000

 $        45,000

Telephone charges

 $          3,500

 $          4,200

 $          4,800

Loan payments

 $        50,000

 $        50,000

 $        50,000

Rent and rates

 $        60,000

 $        60,000

 $        66,000

   Motor vehicle expense

 $        22,000

 $        24,000

 $        31,000

Repairs and Maintenance

 $          4,500

 $          5,200

 $          6,700

Stationary and printing

 $          8,000

 $        14,000

 $        16,000

   Salaries

 $      140,000

 $      140,000

 $      208,000

Insurance

 $   1,070,000

 $      909,500

 $      773,075

Superannuation

 $        42,000

 $        42,000

 $        62,400

Total Expenses

 $   1,748,000

 $   1,566,400

 $   1,536,475

Profit before taxes

 $      252,000

 $      785,600

 $   1,144,805

Taxes paid @ 30%

$        75,600

 $      235,680

 $      343,442

Net Profit after tax

 $      176,400

 $      549,920

 $      801,364

Profit/loss percentage

3.53%

9.82%

12.55%

Reference and Bibliography

Andries, P., Debackere, K. and Looy, B., 2013. Simultaneous experimentation as a learning strategy: Business model development under uncertainty. Strategic Entrepreneurship Journal, 7(4), pp.288-310.

Blackburn, R.A., Hart, M. and Wainwright, T., 2013. Small business performance: business, strategy and owner-manager characteristics. Journal of small business and enterprise development, 20(1), pp.8-27.

Bocken, N.M., Short, S.W., Rana, P. and Evans, S., 2014. A literature and practice review to develop sustainable business model archetypes. Journal of cleaner production, 65, pp.42-56.

DaSilva, C.M. and Trkman, P., 2014. Business model: What it is and what it is not. Long range planning, 47(6), pp.379-389.

Feather Drum. 2018. Feather Drum – Feather Drum. [online] Available at: https://www.featherdrum.com/ [Accessed 27 Mar. 2018].

Fox, P. 2018. Phoenix and the Fox. [online] Phoenix and the Fox. Available at: https://www.phoenixandthefox.com.au/ [Accessed 27 Mar. 2018].

Huckleberrylane.com.au. 2018. Shop Sleepwear & Pyjamas Online & In Store | Huckleberry Lane. [online] Available at: https://www.huckleberrylane.com.au/ [Accessed 27 Mar. 2018].

Jack  , J. 2018. Dymocks - Just Jack by Jane Tanner. [online] Dymocks.com.au. Available at: https://www.dymocks.com.au/book/just-jack-by-jane-tanner-9780143504924/ [Accessed 27 Mar. 2018].

Klang, D., Wallnöfer, M. and Hacklin, F., 2014. The business model paradox: A systematic review and exploration of antecedents. International Journal of Management Reviews, 16(4), pp.454-478.

Little Edge Apparel. (2018). Little Edge Apparel | Australia | Mummy and Kids Designer Clothing. [online] Available at: https://littleedgeapparel.com/ [Accessed 27 Mar. 2018].

Massa, L. and Tucci, C.L., 2013. Business model innovation. The Oxford Handbook of Innovation Management, Oxford University Press, Oxford, pp.420-441.

Sadgrove, K. 2016. The complete guide to business risk management. Routledge.

Schaper, M. T., Volery, T., Weber, P. C., & Gibson, B. 2014. Entrepreneurship and small business.

Simpson, A. 2014. Community. In The Brand Strategist’s Guide to Desire (pp. 19-49). Palgrave Macmillan, London.

Steingold, F. S. 2015. Legal guide for starting & running a small business. Nolo.

Tukker, A., & Tischner, U. (Eds.). 2017. New business for old Europe: product-service development, competitiveness and sustainability. Routledge.

Ward, J. 2016. Keeping the family business healthy: How to plan for continuing growth, profitability, and family leadership. Springer.

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