Business Plan for Itanagar

8/12/2019 Business Plan for Itanagar

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1. Executive Summary

AP Western Wear is a new apparel store that will cater to the various urban

Arunachalee Tribe in and around capital complex area at Itanagar, Arunachal Pradesh. As

name suggests our focus is to provide western wear apparel and accessories, and positionourselves as the top retail store servicing this particular market.

Our intentions will be to obtain 80% market share and become a central hub of

shopping activity for the local urban Arunachalee tribal population as well others who

enjoy wearing western apparel.

AP Western Wear will be located at Main Bazaar, Itanagar. AP Western Wear has

centralized itself directly in position to the educational, residental location and social

activities of our target market. We believe that this is critical to our initial success and long-

term growth.

1.1. Objectives

1.1.1. To create a shopping environment that caters to the apparel needs of the

urban Arunachalee Tribe

1.1.2. To earn 80% market share and become the number one ethnic western wear

apparel store in Itanagar and achieve name recognition in the local urban

Arunachalee Tribeal community.

1.1.3. To receive a 50% profit margin within the first year.

1.1.4. To have a customer base of 1,000 by the end of the first operating year.

1.2. Mission

AP Western Wear's mission is to offer quality, name brand western wear in anassortment of sizes and styles to accommodate all varying body styles and shapes.

1.3. Keys to Success

In order to succeed in the western wear apparel industry AP Western Wear must:

1.3.1. Carry an assortment of sizes to fit the more ample frames of their African-

American target customer base.

1.3.2. Provide customers with top notch personalized customer service in an

atmosphere of southern hospitality.

1.3.3. Advertise and promote in areas that our target customer base will learn about


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our store.

1.3.4. Continuously review our inventory and sales and adjust our inventory levels

accordingly.


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2. Company Summary

AP Western Wear is organized as a sole partnership between Ms. Michi Minu and Ms

Kim.

We will be located at Main Bazaar, Itanagar, being the epi-center of the urban

Arunachalee tribal community at the center of Itanagar.

All merchandise will be purchased according to the company's mission and customer

focus of outfitting all sizes including extra small and plus sizes for woman and man.

2.1. Company Ownership

AP Western Wear is organized as a partnership among the two partners of Ms. Michi

Minu and Ms Kim. Minu will handle all administrative and managerial duties while Kim

acts as a silent partner.

2.2. Start-up Summary

AP Western Wear's incorporation costs are listed below. The company will start

with three months inventory on hand for apparel and accessories as this are the main

revenue generator. The majority of the company's assets will reside in inventory. The

opening days cash on hand balance will be ` 20000.00 .

The purpose of this business plan is to secure a ` 800000.00 loan from State Bank

of India, Ganga Branch. This supplemental financing is required to work on site

preparation, inventory, and operational expenses. The loan amount appears in the

long-term liability row of the start-up summary. Other financing will include an owners

investment of ` 500000.00 and a short term revolving line of credit of ` 200 000.00 for

inventory replenishment during months of high receipts.

Successful operation and building a loyal customer base will allow AP Western Wear

to be self sufficient and profitable in year two.

Start-up Funding

Start-up Expenses to Fund ` 500 000.00

Start-up Assets to Fund ` 1020 000.00

Total Funding Required ` 1520 000.00


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Assets

Non-cash Assets from Start-up ` 1000 000.00

Additional Cash Raised ` 0.00

Cash Balance on Starting Date ` 20 000.00

Total Assets ` 1020 000.00

Liabilities and Capital

Liabilities

Current Borrowing ` 0.00

Long-term Liabilities ` 800000.00

Accounts Payable (Outstanding Bills) ` 0.00Other Current Liabilities (interest-free) ` 200 000.00

Total Liabilities ` 1000 000.00

Capital

Planned Investment

Owners Investment - Cash ` 520 000.00

Other ` 0.00

Additional Investment Requirement ` 0.00

Total Planned Investment ` 520 000.00

Loss at Start-up (Start-up Expenses) (` 500 000.00)

Total Capital ` 20 000.00

Total Capital and Liabilities ` 1020 000.00

Total Funding ` 1520 000.00

Start-up Requirements

Start-up Expenses

Rent ` 50 000.00

Grand Opening Event ` 50 000.00

Telephone & Utilities (3 months) ` 10 000.00

Travel Kolkota Market Buying Trip ` 50 000.00

Business Insurance ` 10 000.00

Advertising & Promotion ` 20 000.00


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Store Fixtures/Decorations ` 200 000.00

Computer/Cash Register ` 40 000.00

Signage (Including Permits) ` 20 000.00

Organizational Dues & Subscriptions ` 10 000.00

Business/Office Supplies ` 10 000.00Other ` 30 000.00

Total Start-up Expenses ` 500 000.00

Start-up Assets

Cash Required ` 20 000.00

Start-up Inventory ` 1000 000.00

Other Current Assets ` 0.00

Long-term Assets ` 0.00

Total Assets ` 1020 000.00

Total Requirements ` 1520 000.00

2.3. Company Locations and Facilities

AP Western Wear will be located at Main Bazaar, Itanagar. This space has

1,020 square feet and has been leased for two years. This location is central to

the geographical location for the urban Arunachalee tribal community in

Itanagar, Arunachal. 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. Thecompany office will also be housed at this location.


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3. Market Analysis Summary

The primary target customer of AP Western Wear will be the urban Arunachalee tribal

community located in the heart of Itanagar, Arunachal. As we are situated in the epi-

center of their residental community we believe they will make up the largest

percentage of our customer base.

The secondary target customers are the non Arunachalee community in the area. As

its population continues to grow rapidly in and around area we expect to receive the

patronage of this community as they are also opening up for using western apparel to

identify and mingle with the locals.

The last target customer of AP is listed as other. As popularity about the store

increases we expect to see an assortment of curiosity seekers, and localresidents from the community as well as seasonal purchasers during festival seasons.

2.4. Market Segmentation

The urban Arunchalee population is concentrated heavily in the centre part of

the city therefore leading to the highest concentration of our customer base.

The non Arunachalee community, which is a growing population in the area

where the store is located, has statistically shown to be opening up to the

adopting to western outfits and brands.

The last area of potential customers is labeled as "other." Because AP Western

Wear offers a variety of western and ethnic 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.

2.5. Target Market Segment Strategy

The goal of AP Western Wear is to serve the local urban Arunchalee population

community that have difficulty finding western clothes that fit their smaller and

shorter frames. We will also serve the non Arunchalee population community

which tends to have a larger frame.

Both of these markets are underserved in the major western retailer outlets.

2.6. Market Needs

There are several important needs in the western wear apparel business that

are being either underserved or not met at all. AP Western Wear plans to meet


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and service those needs.

AP 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 western wear apparel retailers in the

city.

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.

2.7. Industry Analysis

Western wear apparel retailers are made of several kinds of stores:

Small Speciality Stores : The majority of western wear apparel is sold

through small family-run speciality stores that are located in or near

neighborhood communities. 85% of the purchasing statistics for western

apparel is derived from these locations.

Large Multi-owned Western Wear Retailers : These large stores massmarket and sell to hardcore enthusiasts as well as the local tourists .

2.8. Main Competitors

The main competitor of AP Western Wear will be small specialty stores

managed by family. Since multi owned large stores are is just taking rots within

a 20 Km radius of its location.


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4. Strategy and Implementation Summary

AP Western Wear's goal is to provide apparel to the under served market of the urban

Arunachalee community. The major western apparel retailers have left a hole in this

market by not providing a larger assortment of sizes.

Our intention is to gain 80% of this market share by focusing on our niche positioning,

neighborhood location, brand that we sell, southern hospitality and special promotions.

4.1. Competitive Edge

The AP Shopper Card which allows the customer a 15% 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 men.

4.2. 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.

4.3. Pricing Strategy

AP Western Wear will maintain a flexible pricing strategy. We base the product

lines that we carry on their reputation and quality as western wear apparel. Most of

our lines come with a suggested retail price that we will follow.

4.4. Promotion Strategy

AP Western Wear 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 dollars.

A press release kit will be sent to all major media outlets in Itanagar

highlighting the grand opening of the first Arunachalee owned western wearapparel retailer in the city. This kit will include a press release, pictures of


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the interior space, color postcard/flyer, and a business card.

5,000 4x5 color flyers/postcards will be distributed throughout the city at

local festivals.

Spot radio advertisements on two local FM radio stations, radio Ooo la la A direct mail program that will further focus on and target the top 50%

customer base with special in-house sales and promotions.

4.5. Distribution Strategy

Our retail location will be the foundation of building our customer base. We will also

manage a direct mail program that will focus on our top

50% customers spotlighting any in-house sales and promotions.

4.6. Positioning Statement

For the more full-bodied individual seeking western apparel, AP Western Wear will

offer name brand western wear in a larger assortment of styles and sizes that

aren't always readily available in the mass western apparel retailers.

4.7. Sales Strategy

We will utilize the Retail POS software with every sales transaction. Witheach purchase the software will record and maintain in its database the

customer's name, address and purchases. This information will be used with

our direct mailing program to focus on our top 50% of customers.

We will offer a 14 day return/exchange policy to build trust with our

customers and maintain retention and loyalty.


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5. 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 AP we will expect a high degree of customer service skills and

personality as this is essential to our success.

Ms Minu will assess the productivity and perform informal employees evaluations of all

employees every six months. These bi-annual evaluations are conducive to the

continued growth of our small business.

5.1. Organizational Structure

AP Western Wear is a small business and therefore requires a simple

organizational structure. Ms Minu will act a general manager. All decisions aremade in-line with the company objectives. Employee tasks are delegated based

upon their level of expertise, creativity, strengths and weaknesses.

5.2. Management Team

Ms Minu, co-owner and general manager will be responsible for all administrative

functions, purchasing, inventory control, and promotions. She will also act as a

part-time sales representative. She has spent over 2 years in accounting, finance

and operations management. She has extensive background in purchasing,

inventory control, and marketing.

5.3. Personnel Plan

The personnel plan will include one full-time employee and two part-time

employees working 20-30 hours per week. The full-time employee will be paid at a

rate of ` 10000.00 per month and the two part-time employees will be paid at a

rate of ` 7500.00 per month. All employee's will benefit from a one day paid

holiday on their respective birthdays and ` 2500.00 bonus 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.


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6. Products

AP Western Wear will carry nationally recognized national and international

western wear brands. Our selection will range from the basics of Wrangler to the trendy

western style of Western 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,

hats, and gifts.

Management will rely on customer feedback, suggestions, and sales reports

to introduce or eliminate certain brands, styles and sizes.

6.1. Sourcing

We will shop for our merchandise as outlined below:

With manufacturers who have a regional representative and showroom

located at the Kolkota 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 manufacturer and utilize product catalogs and line

sheets.

From apparels shows and exhibitions.The Kolkota Market Center is the largest wholesale merchandise mart having air

road and rail connectivity with Arunachal, this makes it a prime sourcing for AP

Western Wear in servicing its retail needs.

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.

6.2. Technology

Retail apparel establishments have a tendency to have a high number of SKU's

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. AP

Western Wear will utilize Accounting software for all financial and accountingpurposes. For inventory management and point of sale transactions we will utilize


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Retail I.C.E. (Inventory Control Expert) software. This product is a 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 softwares.

6.3. Future Products

As we achieve and exceed our sales and profitability goals, AP Western Wear will

add ethnic dress of minority tribes to the product line and our own personal in-

house label of clothing that will include AP t-shirts for women and shirts for men.

We will expand our line of brands with those that have been repeatedly requested

by our customers. An e-commerce website will also be created to increase ourdistribution channels and expand our customer base to a national level.


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7. Financial Plan

The growth of AP Western Wear 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, checks, and all major credit cards. 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

AP Western Wear does not sell on credit nor do we offer layaways at this time. We

accept cash and checks, Visa, MasterCard, Discover and American Express. All

sales paid via credit cards will be deposited in our business checking account

within 48 hours. Our business checking account will be with SBI, Ganga.7.2. Break-even Analysis

A break-even analysis table has been completed on the basis of average

costs/prices. With fixed costs of ` 124000.00, ` 4300.00 in average sales, and `

2600.00 in an average variable costs, we need ` 313648.00 per month in sales to

break even.

Break-even AnalysisMonthly Units Break-even 72

Monthly Revenue Break-even ` 313648.00

Assumptions:

Average Per-Unit Revenue ` 4300.00

Average Per-Unit Variable Cost ` 2600.00

Estimated Monthly Fixed Cost ` 124000.00


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7.3. Projected Profit and Loss

The following chart and table will indicate projected profit and loss.

Projected Profit and Loss

Year 1 Year

Sales 7033000.00 8439600.00 Direct Cost of Sales 3780000.00 4536000.00

Other Production Expenses 0.00 0.00

Total Cost of Sales 3253000.00 3903600.00

Gross Margin 3253000.00 3903600.00

Gross Margin % 46.25% 46.25%

Expenses

Payroll 450000.00 450000.00Sales and Marketing and OtherExpenses 200000.00 200000.00

Depreciation 0.00 0.0

Telephone / Pagers/ Cell 100000.00 100000.00

Utilities 250000.00 250000.0

Payroll Taxes 15000.00 15000.00

Other 0.00 0.

Total Operating Expenses 1015000.00 1015000.00 Profit Before Interest and Taxes 2238000.00 2888600.00 3

Interest Expense 160000.00 160000.00

Taxes Incurred 1500000.00 1500000.00

Net Profit 578000.00 1228600.00

Net Profit/Sales 8.22% 14.56%


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7.4. Projected Cash Flow

The following table explains projected cash flow.

Projected Cash Flow

Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8

Cash ReceivedCash from Operations

Cash Sales 422000.00 422000.00 422000.00 552000.00 552000.00 632000.00 707000.00 575000.00 700000.00 Subtotal Cash fromOperations 422000.00 422000.00 422000.00 552000.00 552000.00 632000.00 707000.00 575000.00 700000.00Additional CashReceivedSales Tax, VAT,HST/GST Received 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 New CurrentBorrowing 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 New Other Liabilities

(interest-free) 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 New Long-termLiabilities 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 Sales of Other CurrentAssets 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 Sales of Long-termAssets 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 New InvestmentReceived 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 Subtotal CashReceived 422000.00 422000.00 422000.00 552000.00 552000.00 632000.00 707000.00 575000.00 700000.00

Expenditures Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 MExpenditures from

OperationsCash Spending 54166.67 54166.667 54166.667 54166.667 54166.667 54166.667 54166.667 54166.667 54166.667

Bill Payments 30416.67 22083.33 22083.33 22083.33 22083.33 22083.33 22083.33 22083.33 22083.3

Cost of purchasing 254000.00 254000.00 254000.00 332000.00 332000.00 380500.00 425500.00 346000.00 421000.00 Subtotal Spent onOperations 338583.33 330250.00 330250.00 408250.00 408250.00 456750.00 501750.00 422250.00 497250.00


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Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Mon

Additional Cash SpentSales Tax, VAT,HST/GST Paid Out 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 Principal Repayment ofCurrent Borrowing 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00

Long-term LiabilitiesPrincipal Repayment 40000.00 40000.00 40000.00 40000.00 40000.00 40000.00 40000.00 40000.00 40000.00Purchase OtherCurrent Assets 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 Purchase Long-termAssets 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00

Dividends 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00

Subtotal Cash Spent 378583.33 370250.00 370250.00 448250.00 448250.00 496750.00 541750.00 462250.00 537250.00

Net Cash Flow 43416.67 51750.00 51750.00 103750.00 103750.00 135250.00 165250.00 112750.00 162750.00

Cash Balance 63416.67 115166.67 166916.67 270666.67 374416.67 509666.67 674916.67 787666.67 950416.67

7.5. Sales Forecast

The following table explains projected sale forecast.

Sales Forecast

Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8

Unit Sales

Clothing 150 150 150 200 200 220 250 200

Belts & Hats 15 15 15 20 20 30 30 35

Jewelry & Gifts 40 40 40 40 40 65 65 50

Total Unit Sales 205 205 205 260 260 315 345 285


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Unit Prices Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 M

Clothing 2500.00 2500.00 2500.00 2500.00 2500.00 2500.00 2500.00 2500.00 250

Belts & Hats 1000.00 1000.00 1000.00 1000.00 1000.00 1000.00 1000.00 1000.00 1000

Jewelry & Gifts 800.00 800.00 800.00 800.00 800.00 800.00 800.00 800.00 8

Sales

Clothing 375000.00 375000.00 375000.00 500000.00 500000.00 550000.00 625000.00 500000.00 625000.00

Belts & Hats 15000.00 15000.00 15000.00 20000.00 20000.00 30000.00 30000.00 35000.00 35000.0

Jewelry & Gifts 32000.00 32000.00 32000.00 32000.00 32000.00 52000.00 52000.00 40000.00 40000.0

Total Sales 422000.00 422000.00 422000.00 552000.00 552000.00 632000.00 707000.00 575000.00 700000.00

Direct Unit Costs Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 M

Clothing 1500.00 1500.00 1500.00 1500.00 1500.00 1500.00 1500.00 1500.00 150

Belts & Hats 600.00 600.00 600.00 600.00 600.00 600.00 600.00 600.00 6

Jewelry & Gifts 500.00 500.00 500.00 500.00 500.00 500.00 500.00 500.00 5

Direct Cost of Sales

Clothing 225000.00 225000.00 225000.00 300000.00 300000.00 330000.00 375000.00 300000.00 375000.00

Belts & Hats 9000.00 9000.00 9000.00 12000.00 12000.00 18000.00 18000.00 21000.00 21000.

Jewelry & Gifts 20000.00 20000.00 20000.00 20000.00 20000.00 32500.00 32500.00 25000.00 25000.0

Subtotal Direct Cost ofSales 254000.00 254000.00 254000.00 332000.00 332000.00 380500.00 425500.00 346000.00 421000.00

Profit 168000.00 168000.00 168000.00 220000.00 220000.00 251500.00 281500.00 229000.00 279000.0


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7.6. Personnel Plan

The following table explains projected sale forecast.

Personnel Plan

Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Mon

Owner 0% 20000.00 20000.00 20000.00 20000.00 20000.00 20000.00 20000.00 20000.00 20000.00 Full-timepostion 0% 10000.00 10000.00 10000.00 10000.00 10000.00 10000.00 10000.00 10000.00 10000.00 Part-timeposition 0% 7500.00 7500.00 7500.00 7500.00 7500.00 7500.00 7500.00 7500.00 7500.00 TotalPeople 3 3 3 3 3 3 3 3 TotalPayroll 37500.00 37500.00 37500.00 37500.00 37500.00 37500.00 37500.00 37500.00 37500.00


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Business Plan for Itanagar

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