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twixt

Thefeasibilitystudyofatweenclothingstorein
Leaside,NorthToronto

Submittedby:TaviaMcLachlan
SubmittedTo:GordSorli
APRJ699
WordCount:12000
March27,2010

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TableofContents
Abstract......................................................................................................................................................4
Executive Summary..............................................................................................................................5
Introduction..............................................................................................................................................9
Background...........................................................................................................................................9
Research Problem..............................................................................................................................9
Hypothesis............................................................................................................................................9
Delimiting the Research...................................................................................................................9
Defining the Terms............................................................................................................................9
Stating the Assumptions.................................................................................................................9
Literature Review.................................................................................................................................10
Strategic Planning............................................................................................................................10
Marketing Communications..........................................................................................................11
Marketing Plan...................................................................................................................................12
Financial Implications.....................................................................................................................13
Summary.............................................................................................................................................14
Research Design...................................................................................................................................15
Statement of Results: A Business Plan for twixt....................................................................16
Company Profile................................................................................................................................16
Industry Analysis..............................................................................................................................17
Macro environment......................................................................................................................17
Market Situation...........................................................................................................................18
Map.....................................................................................................................................................22
Distribution Situation..................................................................................................................22
Opportunities and Issues Analysis.........................................................................................23
Objectives........................................................................................................................................23
Marketing Strategy......................................................................................................................24
Merchandising................................................................................................................................39
Operations.......................................................................................................................................40

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Human Resources (HR)..............................................................................................................41


Financial Statements.......................................................................................................................43
Goals.................................................................................................................................................43
Start-up Costs...............................................................................................................................44
Balance sheet.................................................................................................................................46
Financial Ratios and Leverages...............................................................................................48
Income statement........................................................................................................................50
Breakeven analysis......................................................................................................................51
Cash flow.........................................................................................................................................52
Recommendations................................................................................................................................56
Conclusion...............................................................................................................................................56
References..............................................................................................................................................57
Appendix..................................................................................................................................................59
A: Online Potential Customer Survey Results.......................................................................59
B: Naming Survey............................................................................................................................68
C: Interviews.....................................................................................................................................69
D: Inventory Break-down.............................................................................................................77
E: FADS................................................................................................................................................78
F: Commission Schedule...............................................................................................................78
G: Bank Commissions....................................................................................................................79

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Abstract

Thispaperwilloutlineastartupbusinessplanfortheestablishmentofatween(childrenaged712)
clothingstore.Thecompletedbusinessplanwillfocusonutilizingstrategicconceptsofdifferentiationto
putforthafirstclassmarketingcommunicationplanandahighqualityfinancialanalysis.Strengthsand
weaknessesofthestorewillbeoutlinedandevaluated.Thebusinessplanwillincludeamarketingplan
andfinancialstatementsandwillbethedeterminingfactoringoingforwardwiththebusiness.The
conceptoriginatedwhenImovedintotheareaofLeaside,NorthToronto.Itwasrealizedthatalthough
themajorityoffamiliesintheareahadschoolagedchildrentherewasnoclothingstorededicatedto
thatagegroupinthearea.Inordertoassessneedmarketresearchwascarriedout.Qualitativeand
quantitativeresearchwasdonetoassesstoneedintheareaandtogatherfiguresnecessaryforthe
financialstatements.Amarketingplanwasconstructedtocatertotheuniqueneedsidentifiedinthe
marketresearch.Themarketingplanisthoroughandinclusive.Themarketingplanidentifiedtheneed
fordifferentiationthroughuniqueproductsandservices.Thevisionofthebusinessistoprovidea
uniqueandfriendlystorewithindividualcustomerservice,aimedatprovidingtheup&comingyouthof
SouthBayviewwithfashionsasindividualastheyare.Inspiredbythenewesttrends,andcomfortedby
oldfavourites,thereisatreasureineverytrip.Anoverallstrategywasputinplacetoensurea
consistentbrandimagefromstorefronttosalesstafftoproduct.Paramounttothesuccessofthe
ventureisanaccuratepredictionofsales.Salesarepredictedforthefirstthreeyearsandfinancial
statementsarepreparedusingtheseforecasts.Incomestatementsandabreakevenanalysisdnot
demonstrateprofitabilityuntilyearthree.Anapparentissueisthehighcostofrentandinventory.This
negativelyaffectsthebusinessscashflow.Cashflowwillalwaysbeintheforefrontunlessotherterms
ofpaymentorleasenegotiationscanbemade.Inthecurrentstatethebusinessplanforatween
apparelstoreinLeasidewouldnotbeviable.Indicationsarethatthenicheistoosmalltoprovide
enoughrevenueforasuccessfulventure.TheareaofLeasidecansupporttheopeningofatween
clothingstore,underthecurrentfinancialstructure,theanswerisnull.Smallbusinessgrants,asilent
investor,orapartnerisneededtomakethecurrentbusinessplanviable.

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Executive Summary
Theresearchpaperwilloutlineastartupbusinessfortheestablishmentofatweenclothingstoreon
BayviewAvenueinLeaside,NorthToronto.Thisopportunitywasseenasapotentialbusinessbecause
themajorityofthefamilieslivingintheareahavechildrenyetBayviewAvenuelacksachildrens
clothingstore.Inordertobesuccessfulthebusinessmusthaveastrongstrategicandmarketfocuswith
toattentionwhatcustomerswantandarewillingtopayfor.Thepurposeofthepaperistodetermine
thefeasibilityofthebusinessventure.Theresearchwillbecompliedintoabusinessplanincludinga
literaturereviewandfinishingwithrecommendations.TheyhypothesisisthattheareaofLeaside,North
Torontocansupporttheopeningofatweenclothingstore.
Inordertounderstandtheproblemandformulateastrongbusinessplanaliteraturemustbecarried
out.Thefirstsectionoftheliteraturereviewencompassesstrategicplanning.HenryMintzberg(1987b)
maintainsthatstrategyisneededtocreatecohesion.Failuretocompleteastrategicplanwillleadtoan
unsuccessfulbusiness.Inordertocreateasoundbusinessplanthestrategymustcarryfromthe
marketingplanthroughouttherestofthebusinessplan.However,whileformulatingastrategyis
proveneffectiveitisimportanttonotethatthestrategymustbeofsoundintentionandmustnotbe
madeinhaste.Onewaytocombatapoorstrategyistolookatallinternalandexternalfactorsincluding
aPorterFiveForceanalysis.Alsoofimportancetothestrategicreviewisthenotionthatnostrategy
shouldremainstagnant.Thiswillbeafactordowntheroadshouldthebusinessbeviable.
Thesecondsectionoftheliteraturereviewconsidersmarketingcommunications.Marketsegmentation
isasubquestionoftheoverallresearchproblem.WendellSmith(1995)reflectsthatproduct
differentiationandmarketsegmentationaretwoavailablemarketingstrategies.Atweenclothingstore
isasegmentoftheoverallapparelmarketbutsegmentationalonewillnotmaketheventuresuccessful.
Focusingonthetweenmarketwillallowthestoretoconcentrateonanichemarketandformulatea
uniquestrategyforcompetitiveadvantage.Differentiationcompletessegmentationsobydifferentiating
thestoreithasmorelikelihoodofsuccess.Deliveringapositivecustomerexperienceisparamountto
anyretailbusinesssuccess.Marketresearchmustbedoneinordertounderstandwhatthecustomer
wantsandneeds.Marketresearchmustbeanongoingprocessthroughoutthelifespanofthebusiness.
ThetemplateforthemarketingplanhasbeenadaptedfromAthabascaUniversitysMarketing
Management:MKMT504(Sorli,2006).Thistemplateisthoroughandinclusive.
Thefinalportionoftheliteraturereviewcomprisesthefinancialimplicationsofstartinganewbusiness
venture.Theprinciplesoffinancialforecastingmustbeadheredtoandconsiderationneedstobegiven
totheincomestatement,balancesheetandcashflow.Thestrengthoffinancialforecastingliesinthe
accurateforecastofsales.Oncethesalesforecastisdonethebalancestatementandcashflow
statementcanbepredicted.Afinalimportanttopictobeaddressedistheimportanceoffinancialratios,
leveragesandliquidities.Thesefiguresgiveabetterunderstandingofthebusinessfinancialstrength.
Theresearchdesignonthebusinessplanwillincludebothqualitativeandquantitativedatacollection.
Thequalitativecollectionwillconsistof;interviewingchildrensclothingstoreowners,interviewinglocal

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businessowners,performinganonlinesurveytoassessneeds,andcarryingoutanonlinesurveyto
selectastorename.Thequantitativedatacollectionwillinvolve;researchingthecosttoleasespaceon
Bayview,thecostofinventory,startupcostsandanymiscellaneouscosts.Afurtherliteraturereview
willbeneededtoaddressanyongoingconcernsregardingstrategy,marketingandfinanceaswellasto
understandtherequirementsofstartingasmallbusiness.
Thebusinessplanwillcommencewithashortcompanyprofile.Thestorenameistweetandwaschosen
byapaneloftweenchildren.Themacroenvironmentanalysisshallfollowandstudiesthedemographic,
economic,political/legal,environment,socioculturalandtechnologicalaspectsoftheretailindustry.
Leasideisanaffluentareawithaveryhighpopulationoffamilieswithyoungtotweenagedchildren.
TheareahasacommunityfeelandBayviewAvenuefeelslikethemainstreetofasmalltown.
Residentsenjoyshoppinglocalandtendtosupportlocalsmallbusinesses.Theaverageincomeinthis
areaisover$150000implicatingtheavailabilityofdisposableincome.
Whilethecurrenteconomicinstabilityisnotoptimisticforsalesforecasts,researchshowsthatretail
salesareontherise.Thestabilityofthejobmarketcoupledwithrealisticsalesforecastscanensurethe
businesswilloperateefficiently.Afurtherhindrancetotheeconomicclimateistheintroductionofthe
harmonizedsalestax(HST)bytheCanadiangovernment.Thistaxwillbechargedtoallpurchasesata
surchargeof15%.Anothernewbylawputinplaceforcesretailerstochargecustomers$0.05fortheuse
ofaplasticbag.Thisshouldnotbeathreattothebusinessasthefeeisminimalandmanypeoplebring
theirownbagorthestoreisabletoprovideanonplasticbagfreeofcharge.
ThereisastrongcommunityfeelandyearningforsocialacceptanceinLeaside.Thispeerpressurecan
haveasignificanteffectonstorebusiness.Wordofmouthandcustomerreferralsarethemajorformof
advertisingintheareaandneedtoberecognizedasimportant.Onebadexperiencecouldhave
detrimentaleffectsofsales.
Thefinalfactorcontemplatestechnology.Theincreaseduseoftechnologyinsocietyrequiresanynew
businesstohaveanonlinepresence.Awebsiteandsocialnetworkingarebareminimumsrequiredto
reachtheintendedaudience.AdditionalaCRMprogramandPOSprogramareessentialtostayingupto
dateoncustomersandinventory.
TheFiveForceanalysiswillbeusedtoexaminethemarketsituation.Thepowerofbuyersinanurban
settingsuchasTorontoisenormous.Buyershaveanabundanceofchoiceandcanshoparoundforthe
bestprice,selectionandservice.Theimplicationisthatastoremustbeabletodifferentiateitselfto
obtainbusiness.Suppliersalsohavealotofpoweroversmallretailers.Supplierscandictateallthe
termssurroundingtheiragreementwithsmallretailers.Sincesuppliershavenumerousoptionstheyare
bestabletoselectonesfavourabletotheirbusiness.Suppliersandbuyerscreateanunattractive
environmentfornewentrants.Thecostsassociatedwithstaringanewbusinessaswellasthelarge
capitalassociatedwithinventoryandleaseagreementsmakethethreatofnewentrantslow.
Alternatively,thethreatofsubstitutionforchildrensclothingishigh.Therearemanyknockoffbrands
andcompanieslookingtocreatefashionablelooksatcheaperprices.ThefifthPorterforceis

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competition.Fivecompetitorshavebeenidentifiedasathreattoanewtweenstore.Thesebusinesses
areGAPKids,OldNavy,JoeFresh,SportingLifeandonlineretailers.Overallcompetitionisfierceand
offersalotofvarietytocustomersandreliesonquickinventoryturnover.Deeppocketsandcontinuous
pricecuttinghavehelpedestablishedretailersweathertheeconomicstorm.
Theopportunityliesinthefactthatthereisademandintheareaforanichetweenapparelstore.The
mainthreatstothisarebigboxstoresenteringthearea,notbeingthefirststoretomarketandvertical
integrationbysuppliers.Themarketingplanlooksmaximizetheopportunitywhileminimizingthreats.
Theissuestobeaddressedare:
1. Whenandhowshouldthestorebelaunched?
2. Howwillsalesbedriven?
3. Whatareinnovativeandcosteffectivewaystodifferentiatethestorefromcompetitors?
InordertoreachitsfinancialobjectivestweetmustmeetasetofSMARTmarketingobjectivesaswell.
Theforemostgoalistobreakevenbyyearthree.Inordertoreachthesegoalsastrongandcohesive
marketingstrategywillbeputinplace.Theaimistohaveaneffectivestrategythatunifiestheentire
businessplan.Thestrategiesare:
Toattractbuyerstoalocalstorethatoffersuniqueproductsandcustomordering
ToofferuniqueprogramsandservicestoencouragerepeatVIPclientele
Theestablishmentwillbepositionedasauniqueandfriendlystorewithindividualcustomerservice,
aimedatprovidingheup&comingyouthofSouthBayviewwiththefashionsasindividualsastheyare.
Inspiredbythenewesttrends,andcomfortedbyoldfavourites,thereisatreasureineverytrip.Itwill
targetboysandgirlsaged712andtheirmotherswhotypicallyshopforthem.
Marketingcommunicationswillbesegmentedintosevenfocalpoints:salesstaff,storeimage,direct
marketing,salespromotions,publicrelations,networkingandadvertising.Themaindutiesofthesales
staffistogenerateallinternalsalesandprovideexcellentcustomerservice.Therearefourfactorsthat
comeintoplaywhenconsideringthestoreimage:storedesignandname,visualcommunication,store
planningandmerchandising.Allaspectsmustbecongruentwiththeoverallbrandimageofthestore.
DirectmarketingwillcomefromtheinformationobtainedintheCRMdatabase.Thisinformationwillbe
usedtotargetselectgroupsforpromotionsandsales.Therewillbefivetypesofsalespromotions
including;jeanclub,salescommission,registry,themodelcontestandthebirthdayclub.Forthefirst
yeartheconcentrationforthepublicrelations(PR)campaignwillbethroughafreelocalnewspaperand
theGrandOpening.AfteryearonePRwillbecarriedoutthroughwordofmouth,alocalcharityfashion
showandanonlinepresence.Socialandbusinessnetworkingwillfinishoffthepublicpersonaoftwixt.
Finally,advertisingwillbeintheformofreusable,branded,storebags,thecompanywebsiteand
supplierswebsites.Controlsandcontingencieshavebeenputinplacetoensuretwixtistrackingto
meetallitsfinancialandmarketingobjectives.

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Merchandisingwillbedonethroughlocalandinternationalsuppliers.Tradeshowswillbeattended
annuallywherenewbrandlinesandsupplierswillbesoughtout.Inordertoobtainadvantageous
marginsonallproductsanoverallbuyingstrategyhasbeenputinplace.
Businessoperationstakeintoconsiderationallpermitsandfeesassociatedwithopeningasmall,retail
business.Theseincludebutarenotlimitedtotaxes,packaging,inventorycontrol,CRMandquality
control.
TheHRstrategywillbeputinplacetocomplimentthemarketingcommunicationsplan.Inadditionto
theownerparttimesalesassociatesandinternswillbeusedtostaffthestore.
Thefinalportionofthebusinessplanencompassesthefinancialstatements.Theshorttermgoalsof
twixtaretoachievegrosssalesof$98773foryearone.Thelongtermgoalsistoachievebreakevenby
yearthree,reachaveragemonthlysalesof$20000byyearthreeandpaybackborrowedfundsbyyear
five.
Whenconsideringstartupcoststhebiggestcostsareinventoryandlease/leaseimprovements.
Consideringallunsoldinventorycanbereturnedforarefundtheonlysunkcostarethelease/lease
improvementsandbusinesslicencesandpermits.
Thebalancesheetispreparedforthefirstthreeyearsbasedonsalespredictions.Itiscleartoseea
decreaseinassetsandanincreaseinliabilitiesinyearonethroughthree.Thiscanbestudiedinmore
depthbylookingatthefinancialratiosandleverages.Debt/equityratio,currentratioandquickratioall
indicatenegativeoutcomesfortwixtandhighlighttheshortageofcurrentassetsversuscurrent
liabilities.Itcanbenotedthatthebusinessisheavilyleveragedbyyearthreeduetoashortageofcash.
Theincomestatement(andbreakevenanalysis)ispredictedforyearonethroughthreeandshowsthat
thebusinesswillnotbeabletobreakevenuntilyearthree.Theslowgrowthandthevariabilityofsales
donotcoverthehighfixedcostsattachedtooperatingaretailbusinessonLeaside.Ofevenmore
concernisthecashflowprediction.Thecashflowstatementindicatestheexistenceofcreditproblems
andshedslightonthehugeimpactofpurchasinginventoryforagrowingbusiness.Thestoreisnotable
tomeetitscashflowneedsinyeartwoandwouldhavetorelyonashorttermlineofcredittocarryon
withbusiness.Thiswouldfurtherleveragethestoreandputinitfurtherdangerofbankruptcyshould
salesnotcontinuetogrow.
Uponanalysisofalldatathebusinessdoesnotappeartobeprofitableatthecurrentdebtlevel.The
apparentissueiscashflow.Inordertobeviablethestorewouldhavetoincreasesalesorincrease
prices;bothoptionsnotbeingfeasiblesolutions.Whileindicatedasaneedintheareaitappearsas
thoughLeasideistoosmalltosustainanichetweenclothingstore.

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Introduction
Background
Theresearchpaperwilloutlineastartupbusinessplanfortheestablishmentofatweenagedclothing
store.Theideawasformulatedwhenitwasidentifiedthattherewerenochildrensclothingstoreson
BayviewAvenueinLeaside,NorthToronto.Thisisviewedasapotentialopportunitybecausethe
majorityoffamilieslivinginthisareahavechildren:toddlerstoteenagers.Whileitmayseemerroneous
tostartabusinessduringthesechaoticeconomictimes,someentrepreneursbelievethatthisisthe
perfecttimetostartanewbusiness.Inordertobesuccessfulthebusinessmusthaveastrongstrategic
andmarketfocus,withattentionpaidtowhatcustomerswant,need,andarewillingtopayfor.

Research Problem
ThepurposeofthisresearchprojectistodeterminethefeasibilityofatweenclothingstoreonBayview
AvenueinLeaside,NorthToronto.Theresearchwillbecompiledintoabusinessplanoutliningan
overallstrategy,amarketingplanandthefinancialimplicationsofastartupventure.Thebusinessplan
willbethedeterminingfactormovingforwardwiththebusiness.
Subproblems
1. Isanoverallstrategynecessary?Howcanthestoredifferentiateitself?
2. WhatwilltheMarketingCommunicationPlanlooklike?Howwillmarketresearchbecarried
out?
3. Whatfinancialnumbersandreportsareneededtoassessthefeasibilityofthisventure?

Hypothesis
ThehypothesisisthattheareaofLeasidecansupporttheopeningofatweenclothingstore.

Delimiting the Research


ThestudywillnotresearchdifferentOrganizationalstructuresonlythebasicoperationalneedsofthe
company.
ThestudywillnotevaluatetheHumanResourceneedsoftheplanjustageneralstrategicplanfor
budgetingpurposes.

Defining the Terms


Tweenchildrenbetweentheagesof712.

Stating the Assumptions


Thefirstassumptionisthatthenumbersneededforthefeasibilitystudywillbeavailable.
ThesecondassumptionisthatthestorewillbethefirsttomarketonBayviewAvenue.
Thethirdassumptionisthattheeconomicclimateintheareaisstrengthening.

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Theimportanceoftheresearchproposedisimmense.Whenstartingabusinesstherearenumerous
unknowns.Marketresearchwillbeessentialindeterminingtheoptimaldesignandofferingsofthe
business.Inordertodeterminethebestmethodstouseliteraryresearchwillbedoneforstrategic
planning,marketresearch,theoptimaltemplateformarketingcommunications,andrelevantfinancial
dataandreports.

Literature Review
Strategic Planning
Sothequestionmustbeasked,whatisstrategicintentandisitreallynecessary?TheCanadianauthority
onthesubject,HenryMintzberg,describesthecharacteristicsofagoodstrategyas:neededtofocus
effortsandpromotecoordinationofactivity(Mintzberg,1987b).Inessencestrategymustknitpeople
andideastogether.Abusinessmustbestrategicinordertosurvive.Failuretocompleteastrategicand
dynamicbusinessplanwillresultinanullhypothesis.Sincetheaimofthispaperistocreateaviable
businessplanforopeningaretailtweenclothingstoreitisimportantthatthehypothesisbeproven.
Strategicintentneedstoaddresstheresourcesneededfortheventureandhowtooptimizesaid
resources.
ResearchdonebyOttawasLeadEconomicDevelopmentCorporation(OCRI)hasledtoatemplatetobe
putinplaceforWritinganEffectiveBusinessPlan(OCRI,2002).Thisframeworklooksatcompletinga
marketingplan,financialplanandoperationalplanbeforeventuringintobusiness.Thisplanisvery
practicalbutgiveslittlethoughttoanoverallbusinessstrategyandtheimportanceofsettingaroad
mapfortheventure.Itisimportantwhenundertakingthisprojectthattheoverallstrategyofthe
businessbedefinedsothatthebusinessplanandmarketingplanarecohesive.Onewaytoensure
consistencyistoaddstrategicformulationtothebusinessplantoensuremarketinggoalsandbudgetary
goalsfitwiththeoverallgoalsofthebusiness.Afurthersteptoplanningisofkeyimportancenotedby
Mintzberg.Mintzbergstatesthatoncedeveloped,thestrategymustbeshared(Mintzberg,1987a.P.17).
Thisisimportanttothepaperbecauseitexplainshowanoverallstrategywillinfluencethebusiness
planandthoughtmustbegiventohowthestrategyandgoalsofthecompanywillbecommunicatedto
customers,employeesandcreditors.
Whileformulatingastrategyhasbeenproveneffectiveitisimportanttonotethattheassumptionthat
anystrategyisbetterthannoneisjustnottrue(Mintzberg,1987b.P.26).Thisisimportantforthe
purposeofthisresearchpaperbecauseattentionmustbepaidtothebeststrategyforthestoreinorder
tohaveoverallcohesion.AflawisthatMintzbergdoesnotgoontostatehowtoensureoneisnot
formulatingabadstrategy.However,otherresearchintheareaattemptstoaddressthisissue.Robert
GrantattemptstoaddresstheactivityofcreatingasuccessfulstrategyintheBookContemporary
StrategyAnalysis,5thEdition.(Grant,2005).Grantidentifieskeysuccessfactorsforasuccessfulstrategy
whichinclude;adetailedenvironmentalanalysis,industryanalysisandconsumerawareness.Thefactors
laidoutbyGrantareimportanttothisresearchpaperbecausetheydirecttheresearchtoanswerkey

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questionsabouttheproposedbusinessenvironment,competitors,suppliersandconsumers.Inorderto
becompetitive,PortersFiveForces(Grant,2005.P.73)mustbeaddressed.
Howwillstrategyhelpthebusinessattainacompetitiveadvantage?Mintzberghasaddressedthat
corporationsfunctionbestwhentheycantakeonethingforgrantedsothattheycanfocusonother
things(Mintzberg,1987b.P.30).Astrategyisneededtoreduceuncertaintyandprovideconsistency...,
inordertoaidcognition(Mintzberg,1987b.P.29).However,howdoweknowwhenweneedto
reassesswhatwetakeforgrantedsoasnottofallbehindinthemarketplace?Ifastrategyisoutdateda
companywillquicklyloseitscompetitiveadvantage.Whencreatingastrategicplanitisimperativethat
thisissueisaddressed.Mintzbergspeakstothepointofstrategybecomingaliabilitybutdoesnot
addresstheissueshehimselfbringsup.Instead,Mintzbergresearchedtheissueinaseparatepaper
titledReflectingonStrategythathecowrotein1999.Inthispaper,MintzbergandLampel,identified
thattherearecyclesofinnovationinstrategyfollowedbyimitationandconsolidation(Mintzbergand
Lampel,1999.P.28).Theinformationpresentedhereillustrateshowthestrategycreatedforthenew
businessventureproposedinthisresearchpaperwillneedtochangeandadaptovertime.

Marketing Communications
Marketsegmentationisasubquestionoftheoverallresearchproblem.WendellSmithreflectsthat
productdifferentiationandmarketsegmentationaretwoalternativemarketingstrategies(Smith,
1995.P.63).Atweenclothingstoreisasegmentoftheoverallapparelmarketbutsegmentationalone
willnotmaketheventuresuccessful.Differentiationcompletessegmentationsobydifferentiatingthe
storeithasmorelikelihoodofsuccess.Smithstatesthatamarketermaydetermineitisbesttoaccept
divergentdemandandadjustproductlinesandstrategy(Smith,1995.P.64).Whatisnotclearfrom
Smithsresearchishowdoesamarketerrealizethis?Isthereastageinplanningthatbestillustrates
whatsegmentstochooseorproductlinestocarry?Isthisintuition?Moreresearchmustbedoneon
thisissueinordertouseproductsegmentationasanadditionalmarketsegmentandtomaximize
differentiationasastrategyforcompetitiveadvantage.Smithalsosupportsthepremisethatstrategies
ofdifferentiationandsegmentationcallfordifferentmarketingstrategies(Smith,1995.P.64).uniqueBy
focusingonasegmentofthefashionmarketthecompanywillbeabletotargetonegroupofconsumers
withanoverallplan.Itisexpectedthatbyconcentratingonthetweenmarket,thebusinesscangain
competitiveadvantageoverthosestorestryingtomarkettoabroadconsumerbaseanddifferentiation
withuniqueproductofferingsandcustomerservicewillhelpdifferentiateitfromitscompetitorswithin
thetweenclothingmarket.
Deliveringthepositivecustomerexperienceisimportanttotheoverallmarketingmix.Todetermine
whatthecustomerwantsmarketresearchmustbedone.Inordertodeterminewhatinformationis
needed,marketDepthInterviewinghasbeenreviewed.PaulHague,NickHagueandCarolAnnMorgan
studieddifferenttypesofinterviewsandhowtotailorinterviewstogettheinformationneeded(Hague
etal.,2004.P.74).Thisinvestigationwillbehelpfulwhenwritingtheinformationgathering
questionnairesrequiredforthemarketresearch.Hagueetal.statethatwheninsightsandexploration
arerequired(onemust)interviewmorelooselystructuredwithflexibilitytoallowforalotofscope
(Hagueetal.,2004.P.74).Sincetheresearchobtainedfromthesequestionnaireswillbeusedinlieuof

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historicalfigures,itisimperativethattheinformationgatheredisasvalidaspossible.Onedrawbackto
Hagueetal.isthattheydidlittleexplorationofquantitativeresearch.RobinBirnexploredtheneedfor
marketresearchinthebookEffectiveUseofMarketResearch(2004).Marketresearchhasbeenseenas
essentialinordertocomposeandevaluatemarketingobjectives(Birn,2004.P.62).Theterm
evaluateisimportanttohighlightbecauseitsupportsthenotionthatresearchmustbeongoingand
notonlyusedforthepurposeofaccomplishingthebusinessplan.
Writingabusinessplanandlaunchingasuccessfulnewbusinessishighlydependentonthestrengthof
itsmarketingplan.InhisbookWritingandImplementingaMarketingPlan,RichardGersonstatedthat
youcanvirtuallyguaranteethesuccessofyourbusinessifyouknowwhoyouare,whatyourcustomer
wants,whereyouaregoing,howyouwillgetthere,andwhatyouwilldoonceyouarrive.(Gerson,
1991.P.1).Gersonexplainswhyitissoimportanttohaveadetailedmarketingplantocomplementthe
businessplan.However,whatconstitutesasolidmarketingplan?Thisquestionhasbeenaddressed
throughresearchbymanyindividuals;ofnotePhilipKotlerandKevinLaneKellerintheirtextbook
MarketingManagement:12thEdition(KotlerandKeller,2006)andJohnWestwoodinhisbookHowto
WriteaMarketingPlan(Westwood,2006).Westwoodoffersadetailedmaptobeusedwhenwritinga
marketingplan.However,thelimitationsofhisplanlieinstrategicalanalysis.Thereviewgivenby
Westwooddoesnotconsiderhowtoprovidevaluebeyondthatofskimmingorpenetrationpricing
strategies(Westwood,2006.P.55).Incontrast,KotlerandKellerhighlighttheimportanceof
distinguishingbetweenstrategicmarketingandtacticalmarketing(KotlerandKeller,2006.P.36).In
ordertowritethemarketingplanstrategicmarketingmustfirstaddresscustomersegmentation,market
focusandvaluepositioning.Thisisimportanttothisprojectbecauseaclearmarketmustbedetermined
beforedecidingonwhatproductstosellandhowtopromotethem.

Marketing Plan
InordertowritethemarketingplanthetemplatehasbeenadaptedfromAthabascaUniversitys
MarketingManagement(MKMT504)(Sorli,2006).Itisimportantthatthefollowingsectionsbeadhered
to.Thesectionstobeincludedare:
SituationAnalysis
Macroenvironment

Demographics

Economics

PoliticalLegal

Ecological

SocioCultural
Technological

MarketSituation
DistributionSituation

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OpportunitiesandIssuesAnalysis

OpportunitiesandThreats
IssuesAnalysis

Objectives

Financial

Marketing

MarketingStrategy

TargetMarket

Positioning

Product/Service

Pricing

MarketingCommunications

SalesForce

SalesService

DirectMarketing

SalesPromotion

PublicRelations

Advertising

MarketResearch

ActionProgram
FinancialImpact
ControlsandContingency
Thistemplateisthoroughandinclusive.TheresearchdonebyKotlerandKellerandbyGersonsupport
thesectionsandsubsectionsoftheSorliMarketingplan.

Financial Implications
Inordertodeterminethefinancialimplicationsofthebusinessplanfinancialforecastingoftheincome
statement,balancesheetandcashflowwillbedone.Theprinciplesoffinancialforecastingoutlinedin
PrinciplesofCorporateFinance(2008)are:
1. Itisnotanafterthought
2. Itiscarriedoutfrequently
3. Itforecastsrollingaverages1518monthsahead
4. Itbeginswithsales

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5. Itinvolvescompletebusinessperformance
6. Accuracyoftheforecastingmustbemeasurable
7. Outcomesmustbecomparedtotheforecast
(GitmanandHennessey,2008.P.188)

Theprinciplesstatedabovearegoodguidelinesforfinancialforecastingbuttheydolittletoindicate
howforecastingiscarriedoutinstartupventures.Mostoftheresearchonforecastingandfinancial
planninguseshistoricalnumberstoanticipatefutureresults.Moreresearchneedstobedoneon
forecastingfinancialstatementsfornewbusinessventures.Theaimoftheresearchpaperisthatthe
informationattainedthroughquantitativeandqualitativemeasureswillbeabletodetermineifthe
businessshouldbestated.
Thestrengthoffinancialforecastingliesintheaccurateforecastofsales(GitmanandHennessey,
2008.P.177).Oncethesalesforecastisdonethebalancestatementandcashflowstatementcanbe
predicted.Thepercentagesalesapproachlooksatallcostasaconsistentpercentageofsales(Gitman
andHennessey,2008.P.192).Thismethodisunrealisticbecauseofthefixedcostsassociatedwith
runningaretailstore.Whileproductcostswillincreaseasaresultofsalesincreaseitmaynotbe
consistent(duetodiscounts)andotheritemsonthebalancesheetwillnotbetieddirectlytosales.The
judgementapproachwillbeusedtoindividuallyanalyzethefactorsassociatedwithoperatingaretail
store(GitmanandHennessey,2008.P.203).Inaddition,alowhightechniquewillbeusedinforecasting.
Afinalimportantfinancialtopictobeaddressedistheimportanceoflookingatfinancialratios,
leveragesandliquidity.AnthonyAtkinson,RobertKaplan,EllaMaeMatsumuraandS.MarkYoung
introducethebasicratiosneededtobestudiedinManagementAccounting:5thEdition(2007).The
importantequationstothebusinessplanare:breakeven,operatingprofitmargin,netprofitmargin,
financialleverage,debtratio,currentratio,quickratio,freecashflowandinventoryturnover.Atkinson
etal.illustratehowtopreparethereportsandwhatthenumbersmean.Itisimportanttopredictwhat
thesenumbersareforthebusinessandwhatthenumbersrepresent.

Summary
Theresearchstudiedimpliesthatastrongbusinessplanneedsastrongstrategicplanthatiswell
thoughtout,communicatedandimplemented.Thefailuretocompleteastrategicplanwillresultina
nullhypothesisfortheresearchproblem.AgreatdealofattentionhasbeenpaidtoHenryMintzbergs
theoriesandresearchonstrategy.Mintzbergillustrateshowstrategycanbeacompetitiveadvantage.
Overall,inorderforthebusinessplantobeeffectiveandforabusinesstosucceedagoodstrategyisa
necessity.
Awellrecognizedstrategyismarketsegmentation.Inordertomaximizeresultsaplanneedstobe
madetofocusonanichemarket.Whatisnotclearfromtheresearchisifbeyondanichemarketif
moresegmentationneedstobedone.Attentionwillbepaidtothiswhencompletingmoreresearchon

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thebusinessplan.Alotofconsiderationhasgoneintothepropermarketresearchtocarryout.Amixof
qualitativeandquantitativeinterviewsandsurveysmustbeusedinordertogetacompletepictureof
whattheconsumerwants.Fromthemarketresearchadetailedmarketingcommunicationsplanwillbe
completed.
Finallythefinancialforecastswillindicatewhethertheventurewillbefeasibleornot.Forecastingwillbe
preparedtodetermineiftheventurecanbeprofitableandtoanticipatecashflowneeds.Special
attentionwillbepaidtoresearchonpredictingsalesandinventoryturnoverastheyarethemain
limitingfactors.

Research Design
InordertodeterminethefeasibilityofopeningatweenagedclothingstoreinLeasideabusinessplan
mustbeprepared.Theresearchdesignwillincludebothqualitativeandquantitativedatacollection.
Ethicsapprovalwillbesoughtforthequalitativeinterviewscarriedout.Inordertocompletethe
businessplanthefollowingresearchneedstoinvestigate:
1. QUALITATIVEDATACOLLECTION:
Interviewchildrensclothingstoreownersnotinarea.
Interviewclothingstoreownersinarea
Onlineneedsassessmentsurveytomothersoftweenagedchildreninthearea
Onlinestorenamesurvey
2. QUANTITATIVEDATACOLLECTION:
CosttoleaseandimprovespaceonBayview
Costoftaxes,permitsandcommissions
Costofinventory
Costofstaff
Costofstartupfees
Costofinternetsite
3. LITERATUREREVIEW:

Startingasmallbusiness

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CanadianGovernmentrequirements

Strategyresearch

Marketingresearch

Financialresearch

Oncetheinformationhasbeengathereditwillbecompiledforthepurposeofabusinessplanthat
incorporatesthefinancialstatementsaswellasacompletemarketingplan.

Statement of Results: A Business Plan for twixt


Company Profile
NAME:twixt
FORM:Thebusinesswillbeasoleproprietorship.
STARTDATE:August1st,2010
HOURSOFOPERATION:TuesdaytoSaturday:10am6pm,Sunday:11am5pm.
VISION:Auniqueandfriendlystorewithunparalleledcustomerserviceaimedtoprovidetheup&
comingyouthofSouthBayviewwithfashionstodemonstratetheirindividualstyle.Inspiredbythe
newesttrendsandcomfortedbyoldfavourites,thereisatreasureforeverywardrobe.
LOCATION:1531BayviewAvenue,Toronto,Ontario
BUSINESSADVISORS:
Lawyer:TerrencePochmurski
Accountant:VincentTitel
Mentor:HeatherAdams

McLachlan17

Industry Analysis
Macro environment

Demographics
Leaside,theareainwhichthestorewillbelocated,iscomposedofmainlydoubleincome
familieswithanaverageincomeofover$150000(AppendixA).Ofthepeoplesurveyed
(AppendixA),themajorityoffamilieshave2children(72.2%).Mostfamiliesintheareahave
youngchildrenandprefertoshopintheareainwhichtheyreside.Whiletheaveragepriceof
homesinthearea($700000)isabovetheTorontoaverage,mostparentswaitlongerbefore
havingchildrenandareintheirmidfortieswithestablishedcareers.Thismeansthatthereis
disposableincomeavailable.Thedemographicsarefavourableforatweensclothingboutique
openingonBayviewAvenue.

Economics
Thecurrenteconomicrecessionnegativelyaffectssales.However,nationalretailsalesfigures
roseinDecember2009by2.8%(Tong,2010)yearoveryear,showingsignsofincreased
consumerspendingforthefirsttimeinoverayear.Thejobmarketisalsoseeingaresurgence
whichmeansmoredisposableincomewillbeavailabletoliftspending.Tougheconomic
conditionswillforceanewbusinesstooperateefficientlyanddemandapositiverateofreturn
onmarketingdollarsspent.

Political/Legal
CommencingJuly2010theCanadiangovernmenthasimposeda15%harmonizedsalestax
(HST)onallpurchases.Thisreplacestheprovincialsalestax(PST)andgoodsandservicetax
(GST)whichcombinedtogetherwere15%.ThedifferenceisthatHSTwillapplytoallclothing
purchaseswhilesomechildrenspurchaseswereexemptfromPSTpriortoJuly2010.This
increaseintaxmaynegativelyinfluencesales.Additionally,thecityofTorontorequiresthe
paymentofmanypermitfeesandtaxesbyallbusinessesoperatingintheirjurisdiction.These
willbeaddressedinStartupFees.Thesefeesincreasethecostofopeningandrunningastorein
thecityofToronto.

Environmental
TheCityofTorontonowregulatesthatallcustomersmustbecharged$0.05forallplastic
shoppingbags.Inordertoavoidthissurchargeshoppersareencouragedtobringtheirownbag
orthestoremustusematerialsotherthanplastic.Thenewbylawimpactsthematerialusedto
packagethepurchase.Paperorreusablebagsareagreatoptionbecausetheyareoftenreused
bycustomersofferingfreeadvertisingforthestore.

Sociocultural
ThereisastrongcommunityfeelandyearningforsocialacceptanceinLeaside.Manyfamilies
chosewheretheyeat,shopandplaybasedonwhattheirneighboursdo.Thisinformalpeer
pressurecanhaveasignificanteffect,eitherpositiveornegativeonstorebusiness.Wordof

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mouthisaveryimportantformofadvertisingandcancarrymoreweightthandiscountsor
productsoffered(KellerandKotler,2006.P.156).Usingclientsasadvocatescanbeusedas
positiveadvertisingandhelpdrivenewcustomersintothestore.Conversely,anegative
experienceissharedwithtentimesasmanypeopleasapositiveone(Grant,2005.P.450).
Therefore,onebadexperiencecouldhavedetrimentaleffectsonsales.

Technological
Theincreaseduseoftechnologyinsocietymeansthatcustomerswantinstantgratification.
Thereisanincreasedtrendforonlineshoppingorbrowsing.Thepresenceofawebsiteisa
requirement.Thetweenagegroupreliesheavilyontechnologyandsocialnetworkingtostayup
todateonfashions,trendsandgossip.Anonlinepresenceintheformofsocialnetworkingisa
necessity.Anothernecessityisaninventorytrackingsystemwhichenablesthestoretheability
toefficientlyknowwhatisavailableandwhathasbeensold.Usedproperlytechnologycanbe
incorporatedintoamarketingplanasaformofadvertisingandnetworkingtostayincontact
withtheclientbase.

Market Situation
ThePorterFiveForceAnalysiswillbeusedtoexaminethemarketsituation.
PowerofBuyers
InanurbansettingsuchasTorontothepowerofbuyersishighduetoanabundanceofchoice.
Buyersareabletocomparisonshopforthebestpriceandquality.Whilebuyersdonotreceive
bulkdiscountstheyareabletoinfluencetheirbuyingpoweroversmallretailersthrough
frequentbusinessandloyalty.Withholdingtheirbusiness,shoppingelsewhereorwaitinguntila
productgoesonsaleareallwaysbuyerscaninfluenceretailers.Additionally,buyersareableto
influenceotherbuyersbyrevealingtheirshoppingexperience.Theimplicationofthisanalysisis
thatifasimilarproductcanbefoundelsewhereatacheaperpriceorbetterservicethenthere
isahighpotentialthebuyerwillmaketheirpurchaseelsewhere.However,thisopensupthe
potentialforstoredifferentiation.Ifastorecanprovidevalueaddedservicesandunique
productsthebuyerwillhavelessdesiretoshopelsewhere.Returnbuyersdrivesalesbywordof
mouth,productselection,priceandcustomerserviceandthemarketingstrategyshouldreflect
thisfact.
PowerofSuppliers
Suppliershavealargeamountofpoweroversmallretailers.Supplierscandictatetheminimum
volumerequiredtoplaceanorder,thenumberofstoresinanareathatsellaspecificbrand,the
unitprice,andtheaccountspayableterms.Inaddition,recenttrendsshowanincreasein
suppliersverticallyintegratingtoopenbrandedstoresinwhichtheyselltheirownproduct.
Historicallyaccesstosuppliershasbeenlimitedbutonlinepresenceaswellasnumeroustrade
showshasdecreasedthemystiqueofsuppliers.Theimplicationofthisinformationillustrates
thatsuppliershavenumerousoptionstodistributetheirproduct.Reliablebusinesspartners,

McLachlan19

shortpaymenttermsandmutuallybeneficialmarginsallcanpositivelyinfluencesuppliers.
Backwardsintegrationcanneutralizethepowerofsuppliersbyeliminatingthemiddlemanand
increasingmarginsonmerchandise.
ThreatofNewEntrants
ThereisalowthreatofnewentrantstotheretailchildrensclothingindustryonBayview
Avenue.Thecostadvantagefavouredbyestablishedretailersandtheproprietaryexclusive
rightstosellcertainproductslimitstheproximityofvendorsforsomebrands.Furthermore,
attainingvaluablerealestatetorentandthelargecapitalrequirementsdissuadenewstores
fromopening.Thisresearchindicatesthattheareacanonlysupportoneretailtweenclothing
storesothekeyistobefirsttomarket.
ThreatofSubstitution
ThreatofSubstitutionishighfortweenbrandnameclothing.Therearemanyknockoffbrands
thatofferbettermarginsforaretailerwithnoswitchingcostsforacustomer.Intheendthe
customerisfacedwithapriceversusperformancetradeoff.Thesedetailsrevealthatsalesmay
beveryunpredictableandthereisstrongevidencetosupportdecliningretailsaleswithdeclined
economicconditions.

CompetitiveRivalry
Overallcompetitionisfierceandoffersalotofvarietytocustomersandreliesonquick
inventoryturnover.Deeppocketsandcontinuouspricecuttinghavehelpedestablishedretailers
weathertheeconomicstorm.MoredetailiscoveredinCompetition.

Competition

GAPKids
Location2574YongeStreet.(Refertomap)

HoursofOperationMondaytoSaturday:10am6pm,Sunday:11am5pm.

YearsinBusinessFifteenyearsatthislocation.

ProductDescriptionGAPKidscarriesfashionable,casualclothingandwardrobeessentials.

CustomerProfileMiddleclassmothersshoppingfortheirchildren.

PricingTops$15$25,Bottoms$25$40.
StrengthsGAPKidshasastrongmarketingpresencethroughprintandtelevisionadvertising.A
moderateonlinepresenceintheformofawebsiteaddstothemarketingmix.Agreatstrength
ofGAPKidsliesintheirdirectmarketingwithanextensivecustomermailinglist.Thestoreis
visuallyattractiveandprovidestheabilitytoshopforarangeofagesbothmaleandfemaleallin
oneplace.Theclothingiswellmadeandfashionable.GAPKidsoffersacustomerloyalty
programintheformofaJeansClubthatrewardsmultiplepurchaseswithafreepairofjeans.

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WeaknessesGAPKidspresentsgenericclothingthatisthesameineverystoreregardlessof
clientele.Thebusinessmodelallowsforlittlestorecustomizationandanoverallstandardized
feel.Littleleewayisgivenforthosewhowantanindividuallookoruniqueexperience.
Furthermore,GAPclothingismadeinAsia(doesnotappealtobuylocaltrends)andGAPisan
Americancorporation.

OldNavy
Location6LebovicAve.(Refertomap)

HoursofOperationMondaytoSaturday:10am9pm,Sunday:11am6pm.

YearsinBusinessEightyearsatthislocation.
ProductDescriptionOldNavycarriesfashionable,seasonal,clothingandaccessoriesatlow
prices.Eachstoreoffersarangeofclothingfrommenandwomen,tochildrenandinfants,to
pets,allunderoneroof.
CustomerProfileLowtomidIncomeshopperswantingtogetgooddealsonfashionable,
trendyitemsforthemselvesandtheentirefamily.

PricingTops$10$15,Bottoms$15$25.
StrengthsOldNavyoffersfamiliestheabilitytoshopatthesametimeandinonelocation.
Seasonal,trendyclothesareofferedatgoodprices.Thecontinualinventoryupdatesand
bargainpricesencouragemorefrequentpurchases.OldNavystaysintouchwithcustomerswell
throughfrequentsatisfactionsurveyswhichofferadditionaldiscountsonfuturepurchases.
SinceOldNavystoresaretypicalbigboxstorestheyofferampleparking.
WeaknessesThequalityofclothingatOldNavyispoorandhasashortlifespan.AsOldNavyis
abigboxstoreitisnotconvenientlylocatedonornearBayviewAvenue.AswithGAPKids,Old
Navyoffersgenericclothingthatisthesameineverystoreregardlessofclientele.Clothingdoes
notappealtobuylocaltrendsasitismadeinAsiaandOldNavy,aGAPsubsidiary,isan
Americancorporation.

JoeFresh
Location11RedwayRd.(Refertomap).
HoursofOperationMondaytoSaturday:8am10pm,Sunday:8am8pm.

YearsinBusinessSixyears.
ProductDescriptionFashionable,knockoffclothingcombinedwithwardrobeessentialsat
cheapprices.Offeringarangeofclothingfrommenandwomentochildrenandinfants,allin
onelocation.

McLachlan21

CustomerProfileLowtomidincomeworkingmothers,withlittletime,lookingtocombineall
shoppinginoneouting.

PricingTops$5$12,Bottoms$10$12.
StrengthsJoeFreshisabletoreplicatetrendsquicklyandcheaply.Bysellingtheirclothing
linesincorporatelyownedgrocerystorestheycouplecheapoverheadwithexcellentcustomer
access.Cheappricesappealtomotherswithgrowingchildrenand/orchildrenwhoarehardon
theirclothesandgothroughthemquickly.Beingabletocheaplyreplaceessentialsisconsidered
agreatstrength.Customersareofferedconvenientshoppingandthestoreisrewardedwith
impulsepurchases.JoeFreshhasunbeatablepricesattributedtotheirlowcosts.Thismodel
appealstotimecrunched,workingmothers.
WeaknessesThequalityofJoeFreshsclothingispoor.Thelifespanoftheclothingisshort;
meaningitcannotbehandeddowntoothersiblings.JoesFreshhasnocustomertargetlistor
customerappreciationprograms.

SportingLife
Location2665YongeSt.(Refertomap).
HoursofOperationMondaytoFriday:9:30am9pm,Saturday9am6pm,Sunday10am
6pm.

YearsinBusinessThirtyoneyearsinbusinessattheYongeStreetlocation.
ProductDescriptionOriginallyaskiandsportsequipmentstore,SportingLifenow
concentratesonbrandnameapparelandclothing.ProductlinesincludeNorthFace,Patagonia,
RalphLauren,RoxyandTommyHilfiger.
CustomerProfileMidhighIncomefamilieslookingforbrandnameouterwear,clothingand
apparel.Customersarewillingtopayapremiumforbrandnameclothing.
Pricingbrandnameprices.Topsrangingfrom$30$50,Bottomsrangingfrom$50$250.
StrengthsSportingLifeoffershighqualityclothingandaccessories.Thestoreisdividedinto
brandnamecategoriesaswellasbywomen,menandchildren.Familiesareabletoshopatthe
sametimeinonestore.SportingLifeownstheirownpropertywhichmeanstheyincurnocostly
rentexpenseonlypropertytaxes.
WeaknessesSportingLifedoesnothavemuchselectionforsizes(ages)712.Thestoreislarge
withalotofmerchandisemakingithardtofinditemsunlessyouknowexactlywheretolook.
StaffatSportingLifegenerallyonlyworkintheequipmentdepartments,sothereisalackof
customerservice.Nocustomerloyaltyprogramisoffered,noristhereacustomerrelationship

McLachlan22

programordatabase.Anotherdownfallistheminimalparking,whichoverloadsonweekends
andinbusyseasons.

OnlineRetailers(eBay,LandsEnd,LLBean)

HoursofOperationOpenatalltimes.
ProductDescriptionAnentirerange:fromessentialstopremiumbrandnameproducts
ranginginpricefromcheaptopremium.

CustomerProfileTimecrunchedmothersandmotherslookingfordeals.

PricingTops$5$100,Bottoms$5$250.
StrengthsOnlinestoresoffertheabilitytoshopatanytimefromanywhere.Consumersare
abletosearchforbargainsandcomparisonshopallfromthecomfortablelocationoftheir
home.Onlineshoppingmakesiteasierforparentstoshopwiththeirchildrensinceitcanbe
scheduledintoanyfamilyagenda.
WeaknessesOnlinestoresmustshiptheirorderstocustomers.Shippingincursanadditional
feeaswellasatimedelaybetweenpurchaseandacquisition.Additionally,returnsincur
additionalshippingcosts.Finally,onlineshoppingdoesnotpermitcustomerstheabilitytotryan
itemontoensurefitandlikeability.
Map

Distribution Situation
Distributorsarepowerfulintheretailindustry.InCanadathereareusuallyexclusivedistributionrights
whichplacesallthecontrolinthehandsofthedistributor.AsdiscussedinthePowerofSupplierssection

McLachlan23

therearewaystoimprovethissituationbutthebusinessplanmustaddressthisissueanddevelopa
strategyfordealingwithsuppliers.
Opportunities and Issues Analysis
Theopportunityliesintheunsatisfieddemandintheareaforaspecialtytweenapparelstore.
Thethreatsare:

Abigboxcomplexenteringtheareawithlargestoresandampleparking.
Notobtainingfirstmoveradvantage..
Retaliationintheformofpricecuttingbylarger,moreestablishedstores.
Inabilitytokeepupwithfashiontrends.
Verticalintegrationbysuppliers.

Thefollowingissuesmustbeaddressedinthemarketingplan:
1. Whenandhowshouldthestorebelaunched?
2. Howwillsalesbedriven?
3. Whatareinnovativeandcosteffectivewaystodifferentiatethestorefromitscompetitors?

Objectives
Financial

NetSales
Est.Profit

1
$113850
$43432.87

2
$182850
$23373.18

3
$235750
$4359.60

Marketing
InordertolaunchthestoreandgrowsalesthefollowingSMARTgoalsmustbeattained:
1. Increaseawarenessofstoreanditsservicestotargetmarketby100%bySeptember1st2010.
Thiswillbemeasurethroughafollowupinternetsurvey.
2. Growsalesto$6900(exclusiveoftaxes)byendofmonthone,$16100byendofmonth5and
haveGrosssalesof$98773foryearone.Thiswillbemeasuredthroughpointofsale(POS)data.
3. Breakevenbytheendofyearthree.
4. Acquire50clientfilesbymonththree,100clientfilesbymonthfiveand300clientfilesinyear
one.ThiswillbemeasuredbytheCustomerRelationshipMonitoring(CRM)program.

McLachlan24

Marketing Strategy
Ananalysisoftheexternalfactorsandtheoverallcompetitiveenvironmentindicatesastrongbusiness
strategyforthestoreisnecessary.Anoverallstrategywillbethebasisonwhichtheoperationofthe
storewillberun:inclusiveofmarketingplan,buyingeffortsandinstorepromotions.Keysourcesof
differentiationmustbeidentifiedandexploitedinthemarketingplaninordertoreachtheobjectives
setforth.Thesekeysourcesare:

Toofferuniquebrands.
Promotequalityoverquantity.
Offerunparalleledandpersonalcustomerservice.
Provideajeanloyaltyprogramtoencouragerepeatpurchases.
Makecustomorderingavailable.
Differentiatethestorewithrelationshipbuildingprogramsandevents.

Thefollowingmarketingplanwillcoverthefirstthreeyearsofbusinesswithroomformodificationand
continuousimprovementquarterlyforyearoneandannuallythereafter.
ProductsandServices

Products
Theproductsofferedatthestorewillbeclothingandrelatedaccessoriesforgirlsandboysagedfrom
seventotwelveyearsofage.Brandsofferedatthestorewillbefashionable,casualandsemiexclusive
tothestore.ExamplescanbefoundintheOperationssection.
Services
Inordertocreatedifferentiation,uniquecourtesyserviceswillbeofferedbythestore.Theseservices
are:
1. Clientmailingstoinformclientsofnewproductlaunchesandsales.
2. Specialorderingofitems.
3. Aregistryforwishlistitemsthatcanbeselectedbyclientsandkeptonfileatthe
store.Thislistcanbeaccessedbythosebuyingpresentsfortheclientandwillbe
updatedtoreflectpurchases.
4. Clientholdforuptofivedaysfordesireditem(s).

McLachlan25

Inadditiontothesecomplementaryservicesthereisoneservicethatcarriesanominalfee:

HostingFashionShootBirthdaypartieswhereVIPclientscanbringinfriendstotryonclothing
andbephotographedlikeupandcomingfashionistas.Includedinthepriceoftheservicewillbe
food,theuseofthefacility,makeupartists,hairstylistandphotographer.

Theseserviceswilldistinguishthestorefromitscompetitorsandserveasaplatformtobuilda
reputationforuniquecustomerservice.
Positioning
Auniqueandfriendlystorewithindividualcustomerservice,aimedatprovidingtheup&comingyouth
ofSouthBayviewwithfashionsasindividualastheyare.Inspiredbythenewesttrends,andcomforted
byoldfavourites,thereisatreasureineverytrip.
Targetmarket
Fromthemarketresearchcompleted(SeeAppendixA)thefollowingtargetmarkethasbeencreated.
Uniquetoachildrensclothingstoreisthedualtargetgroups:childrenwhowillweartheclothingand
parentswhowillpurchasetheclothing.Bothmustbeaddressed
Agerange
Thetargetagegroupwearingtheclothingis7to12yearoldboysandgirls.
Thetargetpurchasersaremothersintheirlatethirtiesthroughforties.
Incomerange
Combinedfamilyincome$150000to$200000+.
Gender
Themainendusertargetwillbe30%boysand70%girls.
Themainpurchaserswillbewomen.
Locationboundaries
LocalLeasideandDavisvilleVillageresidentsofNorthToronto.
Averagepurchase
$50$100.Theaveragepurchaseisestimatedat$75.
Frequencyofpurchase
Bimonthly.

McLachlan26

Psychographics
ParentsandchildrenintheLeasideareasareverytrendconsciousandintouchwithwhatothersinthe
communityarebuyingandwearing.Tweensareinfluencedbywhattheirfriendsarewearingtoschool,
whileadultsareconsciousofpricebutwanttoappearasthoughtheytoocanaffordtokeepupwiththe
trends.Currenttrendsfortweensare:

JonasBrothers
MileyCyrus
Vampires
LoveandPeacerelatedclothing
Videogames
SocialNetworking
TextMessaging

Theproductmustfillthebasicneedofclothingaswellasoneoftwopsychologicalneed:A)tofitinorB)
toexertindividuality.Theagegrouponwhichthestorecatersexperiencesasignificantpowershiftin
whochoosestheclothingwornbythetween.Theyoungerdemographicarestillhappytohavetheir
parents(mainlymother)chooseandbuytheirclothing.Clothingisboughtwhenneededorasan
impulseonthepartofthemother.Asthechildgetsolderthisbehaviourchangestothechildwanting
moreinputintowhattheywear.Themarketingdifficultyliesinthefactthatthisspecificageisdifferent
foreachindividual.Withmanyopinionsandpeopletoconsider,thepsychographicsofeach
child/parentduoareveryimportanttounderstandandthismustbeutilizedinthemarketing
communicationplan.
Pricing
Clothingwillhaveanoverallaveragemarkupof120%.Thiswilldifferdependingonthebrandanditem.
Topswillbefrom$20$40,pantsfrom$40$60,anddressesfrom$40$60.
Accessorieswillhaveamarkupof200%.
MarketingCommunications
SalesStaff
Thesalesstaffisresponsibleforgeneratingallinternalsales.Thesalesstaffwillbetrainedbytheowner
toensuretheimportanceofcustomerserviceiscomprehended.Responsibilitiesofthesalesstaffare:

Maintaininginventorylevelsandrestockingasneeded.
Keepingrecordofwhatitemshavebeensoldusingpointofsale(POS)programming.
Balancingthecashflowandcreditcardreceiptsdaily.
Keepingthestorecleanandorganized.
Provideinputintothevisualaestheticsofthestore.
Providinginputintohotitemsandreordering.

McLachlan27

Promotingthejeanloyaltyprogram.
Promotingthevalueaddedservicesavailable.
PromotingandbuildingtheCRMdatabasewithrelevant,uptodateinformation.

Storeimage
Therearefourfactorsthatcomeintoplaywhenconsideringstoreimage.

1. Storedesignandstorename
Anameconjuresupanimmediatereactionandemotionalattachment.Thestorenamemustbe
memorableandsupporttheoverallvision.Inordertosupportthevision,thenameneedstobe
short,catchyandfitwiththevocabularyoftheenduser.Inputwastakenfrompotentialcustomers
andmarketresearchwascompletedonthetopeightnames(AppendixB).Thetopthreenames
werepresentedtoasmallfocusgroup(fivetweens)whovotedunanimouslyforthefinalname.The
namechosenwastwixt.
Thestorefrontisthefirstvisualimpressionofthebrandandmustcongruentwiththepositioning
statementinthemindofthecustomer.Signagewillbeconsistentwiththevisualcommunication
insidethestoreandwithbusinesscardsandpromotionalmaterial.Sincethebuildingislongand
narrowthestoresignwillcovertheentirefrontofthebuildingintheformofafluorescentsignsoas
tobeseeninbothdayandnight(ImageA).

ImageA:StorefrontSign

twixt

Theoverallinteriorwillbebrightandwelcomingwithcontemporaryoverheadlightsaswellasspot
lightingondisplaysanddisplayshelves,aswellasineachchangeroom.Thestoremustbekept
cleanandtidyatalltimes.
Trendy,tweenmusicwillbeplayingthroughoverheadspeakersatalowtomidvolumesoasnotto
overpowerconversationbuttoaddtotheoverallambianceofthestore.

McLachlan28

2. VisualCommunication
Inordertoconveyafashionableandtrendymoodeachaspectofthestoremustcomplimentthe
other.Allsignagewillbebrandedandwillbeconsistentwiththestorelogo(ImageB).Productswill
beprominentlydisplayedonshelvesandmannequinswillbestyledtoreflectseasonaltrends.In
additiontothemannequinstherewillbelarge,postersizedphotographsdisplayedonthewalls
(refertoSalesPromotion#4)ofmodelswearingtheseasonalfashionsavailable.Allmerchandisewill
belabelledwithbrandedpricetagsandallcommunicationwillbedoneonstoreletterheadwhich
includesthestorelogo.

ImageB:StoreLogo

twixt

3. Storeplanning
Whenpreparingaplannogramforaretailspacethoughtmustbegiventoamountofspaceallocated
toalldepartments,whattheoveralllayoutshouldlooklikeandthedesiredtrafficflowofthe
customers.Additionally,ithasbeenreportedthatemployeetheftandshoplifting combined
accountforthelargestsourceofpropertycrimecommittedannuallyinNorthAmerica(Retail
Council,2008)).Theeasiestwaytodiscouragetheftinastoreisbytakingawayopportunitiesto
steal.Alittlethoughtintothestore'slayoutanddesigncanpreventtheftbeforealossoccurs.
ImageCprovidesanillustrationoftheplannogram.Directlyinsidethedoortherewillbeanarea
voidofproductdisplay.Thisareawillserveasadecompressionzonewhichwillallowcustomers
toenterthestoreandadjusttotheenvironment.Thedecompressionzonewillwelcomethe
customersintothestoreandallowthemtogetanoverallvisualwhiletheymaketheirfirst
judgement.Sincefirstjudgementsareoftentheonesthatstick,thisareaisveryimportant.
Importanttoallretailclothingstores,isthechangeroomspaceprovidedtocustomers.Therewillbe
threethemedchangeroomsinthestore.ChangeroomonewillhaveMileyCyrus/HannahMontana
theme,ChangeroomtwowillbedecoratedwithSydneyCrosbyparaphernaliaandChangeroom
threewillbeadornedwithJonasBrothersgear.Theywillbelocatedattherearofthestorebehind
theredcarpetareawherecustomerscanshowofftheiroutfitstothoseshoppingwiththem.The
roomswillbebigenoughforachildandaparent.Roomonewillbebigenoughtofitthreepeoplein
ordertoaccommodatemultipleshoppingchildrenoryoungerchildrenaccompanyingoldersiblings
andparentsontheirexcursion.Also,attherearofthestorewillbeasmallplayareaforyoung

McLachlan29

childrenwhomaybeaccompanyingtheirparentsandoldersiblings.Thisareawillhousetoys,video
gamesandatelevision.
Thefinalconsiderationistheoverallfloorplan.Sincethevisionofthestoreisforyouthclothing
withatrendyandfunvibethestorelayoutwillbeafreeflowingone,asopposedtoatraditional
gridlayout.However,sincemostpeoplereactpositivelytobothbalanceandsymmetry,thesemust
becontemplatedaswell.ImageCoutlinesthestoreplannogram.Theadvantageofafreeflowing
storeplanisthatitallowsforbrowsingfreely,itincreasesimpulsebuying,anditaffordsvisual
appeal.

McLachlan30

ImageC:Storeplannogram

RedCarpet

CashRegisterand
display

DisplayWindow

Playarea

McLachlan31

4. Merchandising.
Merchandisingwillbeintheformofshelving,hangingracksandstandfolding.When
consideringmerchandisingpsychologicalpreferencessuchasimage,sightlinesandcolour
blockingmustbeconsidered.Theplannogramillustratestheoverallmerchandisingplan.
Popularitemswillbedisplayedateyelevelwithextrastockorlargersizeshousedhigherup
onshelves.Essentialswillbefoldedontables.Merchandisewillbeseparatedbyboysand
girlsandthenseparatedintobrandclusters.Theonlyareatonotbeseparatedwillbethe
jeanbar,anareaofshelvingaccessedbystaffthathostsallthejeans.Asampleofeach
pairofjeanswillbedisplayedononeoftwoexclusivejeanracksthatallowscustomersto
contrastandcompareallpairsavailablebeforetryingasomeon.Theoverallaimof
merchandisingistoprovideappealingvisualcuesthatdrawsthecustomertotheproduct
anddrivessales.Theflowofthestorewillushercustomerstowardsthechangeroomswith
accesstoessentialsalongtheway.
Directmarketing
DirectMarketingwillbetargetedtopreviousclientsbyusingtheCRMprogram.TheCRMprogramwill
bepositionedasanidentitycardthatkeepsthestoreandpeoplebuyingfortheclientuptodateon
theirwardrobesandsizes.CustomersregisteredtotheprogramwillbecalledVIPclients.Datastored
intheCRMprogramwillinclude:

Name,Birthdate,Gender
Addresses:home,email
Namesofparents,siblings,bestfriends
Sizes:tops,bottoms,dresses,shoes
Favouritecolours
Favouritedesigners
Hobbies.

Thisinformationwillbeusedtosendoutbirthdaycardswith10%offcoupons,sendtargetedemails
whentherearerelevantnewarrivals,andemailtheentiredatabasewhentherearesales.Theaimisto
keepVIPclientsthefirsttoknowofstoreoccurrences.
Salespromotion
Thefocuswillbeonfivetypesofsalespromotions:
1. JeanClub
Thejeanclubisaloyaltyprogramdesignedtoencouragerepeatpurchasesofjeans.Theprogram
willbeavailabletoallVIPclients.Foreveryfivepairsofjeansboughtthecustomergetsonepair(at

McLachlan32

thelowestpricepurchased)free.Clientswillgetabusinesscardstampedforeverypurchaseanda
recordwillbekeptonfileatthestore.
2. Commission
Inadditiontoabasesalarysalesrepresentativeswillbecommissionedonwhattheysell.Therate
willbe5%forallregularpriceditems.Nocommissionwillbegiventosaleitemsortoalready
discounteditems
3. Registry
Customerscanregisterforupcomingspecialeventssuchasbarandbahmitzvahs,birthdays,
graduationandChristmas.ThisprogramwillbeavailabletoallVIPclients.Itemscanbepreselected
andrecordedonfiletomakebuyinggiftsforthesepeopleeasier.Potentialgiftgiversneedonlyto
enterthestoreandaskfortheregistereditemswhenselectinggifts.
4. ModelContest
Thewallartanddisplaywindowimageswillbeintheformofalargeposterdisplayingseasonal
merchandise.ThemodelsforthisprintadvertisementwillbeselectedrandomlyfromtheVIP
databaseandcustomerswillbegiventheopportunitytoposefordisplay.Threetimesayearthe
pictureswillbeupdatedandthewinnerwillreceivetheirposterintheend,aswellas15%offaone
timepurchase.
5. BirthdayClub
AllVIPclientswillbeeligiblefor15%offallitemsontheiractualbirthday.
PublicRelations(PR)
Thefocusinthefirstyearwillbeonfourmeansofpublicrelations.Theseconsistof:
1. SNAPNewspaper
SNAPisalocalmonthlynewspaperaimedatcoveringlocalevents.SNAPcoversallstoreopeningsin
NorthTorontoandincludesanarticleonthenewbusinessinitspublication.Itisprovidedfreeof
chargeandisavailableinthemajorityofretailstoresinNorthToronto.Itsdistributionreaches2000
people.
2. GrandOpening
ThestorewillbelaunchedAugust2010withaGrandOpening.Thegrandopeningwillcorrespond
withbacktoschoolshoppinginordertoattractcustomersatthebeginningofanewschoolyear
whenwardrobesarebeingreplenished.AGrandOpeningpartywillbethrownfortheofficial
openingoftwixt.Suppliers,localbusinesses,mediaandpotentialcustomerswillbeinvitedtothe
event.ThefocuswillbeontheVIPprogram.Tenpercentoffcouponswillbegivenatthisexclusive

McLachlan33

event.Pressreleaseswillbeprovidedtoallmediapersonnel.Brandedbagswithfreegiveaways
fromotherlocalbusinesseswillbedistributedtoallattendees.
3. WordofMouth
ThemajorityofPRwillcomefromwordofmouth.Ensuringunsurpassedcustomerserviceand
tailoringproductstomeettheneedsofpotentialcustomerswillbeparamountinensuringpositive
wordofmouth.
4. CharityFashionShow
ClothingandstylingassistancewillbeprovidedtoRolfRoadSchoolsannualfashioncharityshow.
Thisshowattractstwohundredpeopleallofwhofallinthetargetaudience.Entrancetotheevent
willbeintheformofadonationtoapreexistingcharitytheschoolsupports.
5. OnlineShopping
Afteryeartwothecompanywebsitewillbetransformedintoaneshopmodeliffurthermarket
researchindicates.Thestorewillallowcustomers:

Theabilitytobuyinventoryfromhometobedeliveredtotheirhome.
Theabilitytoreserveinstoreitems(forVIPclients).
Theuseofavirtualchangeroomtoplanoutfitsbeforeshopping.

Networking
Theriseofsocialnetworking,especiallyinyouthandteensnecessitatesthattwixthaveanonline
presence.Inordertokeepcustomersuptodateafacebookgroupandtwitterpagewillbeopenedand
updatedregularly.Inadditiontothesesocialoutlets,theownerwillbecomeamemberofaBusiness
NetworkingInternational(BNI)groupinordertostayuptodateonsmallbusinesstrends.Regular
meetingswithothervendorsonBayviewwillbesetuptodiscussandlearnbestbusinesspractices.
Advertising
Inadditiontothegrandopeningadvertisingwillincorporate:

Storepaperbagsandreusablebags
Awebsitetopromotethestoreslocationvision,hoursandbrandsoffered
Storelistingonsuppliersandproductswebsites.

McLachlan34

MarketResearch
Measurement
OnlineSurvey

Description
Followuptoinitial
survey
Measurementofproduct
needs,customerservice
andoverallsatisfaction
Gageinterestand
feasibilityofeshop.
Monthlyevaluationof
employeesandservicesby
hiredprofessional
Monthlyanalysisofsales
figuresbrokendownbysales
associate,brand,dayand
timeofday

SilentShopper

SalesData

AnnualCost
NoCostAssociated

$360

IncludedinPointofSales
Software

ActionPlan
Who
SalesStaff

Owner

What
Training
Displayandrestock
merchandise
PromoteJeanClub
PromoteVIP
program
Keepstoreclean
andvisually
appealing
Openandclose
store
Sellmerchandise
andkeepPOS
records

BuildCRMdatabase
JoinBNIgroup
Developmarketing
plan
Planmonitoring
Attendtradeshows
Buymerchandise
Trainsalesstaff
PlanGrandOpening
MeetwithSNAP

When
July2010
Ongoing
Ongoing
Ongoing
Ongoing

Ongoing

Ongoing

Ongoing
Annually
Inprogress
Monthly
Inprogress
Ongoing
July2010
July2010
August2010

Cost
$240
Nocost

Nocost
Nocost
Nocost

Approximately5%
ofsales
Nocost

Nocost
$700
Nocost
Nocost
$8000
variable
$240
$500
Nocost

McLachlan35

ProgrammingCoop
Student

Webdeveloper

Photographer

RolfRoadPublicSchool

GraphicDesignStudent

magazine
Hiresilentshoppers
Launchonline
survey
Tracksales
Paycommission
DevelopCRM
software
Developpointof
sale(POS)software
Developandlaunch
website
Developonline
store
Selectmodels

Takemodelphotos

Developposters
Planandhostyouth
clothingfashion
show
Developlogo
Developbranded
material

FinancialImpact
Separatefinanceshavebeenpreparedforeachyear.

September2010
September2010
Monthly
Monthly
May2010August
2010
May2010August
2010
July2010
July2012
July,November,
February
July,November,
February

March2011,2012

Inprogress

$30/month
Nocost
Nocost
Nocost
Nocost
Nocost

$500

Nocost

500

Nocost

$450
Nocost

Nocost
Nocost

McLachlan36

FINANCIALSJULY2010AUGUST2011
Debit

FixedCosts
Sales
freemerchandise
misc.(training,etc.)

Credit

113850

EST.GROSSSALES

1,300
240

1,540
DirectMarketing
birthdayclub
businesscards
CRMquestionnaires

60
50
40

150
MarketResearch
silentshoppers

360

360
PublicRelations
grandopening

500

500
Networking
BNIgroup

700

700
Advertising
website
coupons
internalsignage
merchandisetags
bags
photos

500
200
100
20
200
450

1470
Total

4720

McLachlan37

FINANCIALSAUGUST2011AUGUST2012
Debit

182850

EST.GROSSSALES
FixedCosts
Sales
freemerchandise
misc.(lunches,training,etc.)

Credit

2,500
240

2,740
DirectMarketing
birthdayclub
businesscards
CRMquestionnaires

120
50
40

210
MarketResearch
silentshoppers

120

120
PublicRelations

0
Networking
BNIgroup

700

700
Advertising
website
coupons
internalsignage
merchandisetags
bags
photos

500
500
100
20
200
450

1770
Total

5540

McLachlan38

FINANCIALSAUGUST2012AUGUST2013
Debit

FixedCosts
Sales
freemerchandise
misc.(lunches,training,etc.)

Credit

258750

EST.GROSSSALES

2,500
240

2,740
DirectMarketing
birthdayclub
businesscards
CRMquestionnaires

150
0
20

170
MarketResearch
silentshoppers

120

120
PublicRelations

0
Networking
BNIgroup

700

700
Advertising
website
coupons
internalsignage
merchandisetags
bags
photos

0
1000
100
20
200
450

1770
Total

5500

ControlsandContingencies
1. Ifsalesarenottrackingat$20000forthefirstquarterof2010thenmarketingmoneyallocated
tothejeanclubwillbeusedtorentaboothattheAnnualChildrensTrunkShow.Thisevent
parallelsSpurtstargetmarketandprovidesgreatexposuretomanycustomers.Tenpercentoff
couponswillbegivenoutattheshowtoencouragepatronstovisitthestore.
2. IftheuseoftheRegistryserviceisnotattwentyfivepercentofVIPcustomersbyDecember10th
2010,couponswillbemailedouttoallVIPmembersandtheirfamiliesforuseonRegistryitems.

McLachlan39

3. Ifinventoryturnoverislessthanninetydaysonseasonalwearandonehundredandtwenty
daysonessentials,arrangementswillbemadetoreturnexcesstodistributorsandchangeswill
bemadetoquartertwobuying.
4. Iffeedbackfromsilentshoppersisnegativeadditionaltrainingwillbedonetoimprove
customerserviceandproductlineswillbereassessed.Alleffortswillbemadetoupholdthe
positioningstatementandvisionof twixt.
5. IfCRMdatabasedoesnothave100clientsbytheendofthequarterone2010,theincentivesfor
membershipwillbereassessedandimproved.Qualityofpersonalizedservicedependson
personalinformationandrelationshipbuildingwithcustomersandeveryeffortmustbemade
toobtainqualityfacts.
6. Ifmarketresearchin2010doesnotindicatefurtherprofitsfromthelaunchofanonlinestore
thenthewebsitewillnotbeadaptedtoaneshopformat.
Merchandising
Tradeshows
Feb.
1418:LasVegas
28Mar2:Toronto

Mar.
79:NewYorkCity
2025:Toronto

June
68:Chicago

Aug.
Sept.
2528:Toronto
1618:LasVegas
2022:NewYorkCity
2224:Toronto

Productlines
Selectionsfromthesedesignerswillbecarried:

T2Love
RachelWeissman
Halabaloo
AlphaIndustries
Diesel
EllaMoss
FlowersbyZoe

FuzzyWuzzy
MissMe
Oilily
Saurette
Splendid
Submarine
HavenGirl

Roxy/Quicksilver
Kingsley
CharlieRocket
Munster
StinkyKids
Norton

Suppliers
Inordertoobtainadvantageousmarginsonallproductssoldanoverallbuyingstrategymustbe
followed.Yearonewillrequiresupplierstobeobtainedfromthevarioustradeshowsaswellasfound
throughtheCanadianAssociationofWholesaleSalesrepresentatives(CAWS).Inordertomaintain
marginsthefollowingstrategyhasbeenputinplace:

Negotiatepricesandbulkbuyingtokeepperunitpriceslow.
Negotiateaccountspayableanddonotbuyonlessthan60dayterm.
NegotiateproductexclusivityforNorthToronto.
Negotiatestorenameadvertisingonwholesalerswebsite.

McLachlan40

Ensureproductreturnsareavailableifproductdoesnotsell.
Maintainopencommunicationwithwholesalers.

Operations
BusinessRegistrationandPermits
SeveralpermitsarerequiredandmustbeobtainedfromtheCityofTorontoorGovernmentofOntario
beforethestoreopening.Thecostofeachitemisincludedinbracketsandfiguresintotheopening
costs.Thepermitsare:

Signpermit($209.42)

Siteplan(2329.58)

Buildingpermit($7380)

Vendorpermit($0)

MasterBusinessLicence($60)

ImportPermit($50)

BusinessRegistration($60)

HSTRegistration($0)

Taxes
Thenewharmonizedsalestax(HST)mustbecollectedandsubmittedquarterly.
PackagingandLabelling
Allmerchandisewillbetaggedwithastorelogodisplayingthepriceandsizeoftheitem.Originalbrand
logosandtagswillnotberemovedfromtheitem.Subsequenttoapurchasethemerchandisewillbe
professionallyfoldedandwrappedintissuebythesalesassociate.
InventoryControl
Inventorycontrolwillbedoneonce/week.EveryMondaymorningtheinventoryinthecomputerwillbe
reconciledwiththeinventoryontheshelvesandinstorage.Discrepancieswillbenotedandcountedas
BadDebt.Foundmerchandisewillcreditthebaddebtaccount.
QualityControl
Allmerchandisewillbehandcheckeduponarrivalfordamagedmaterialororderdiscrepancies.Quality
controlwillbedonebytheowneroramanagerandmustbedonewithintwentyfourhoursofthe
arrivalofthemerchandise.

McLachlan41

ClientRelationshipManagement(CRM)System
AsoftwareprogramwillbedevelopedbyaGeorgeBrowninternstudenttobuildadatabaseof
customerinformation.Thissystemwillenabletwixt tostoreinformationonitsVIPclientbase.The
systemwillbesortedaccordingtonamebutallfileswillbeabletobeaccessedbyphonenumberor
birthdateaswell.
PointofSales(POS)System
AsoftwareprogramtotrackallsaleswillbedevelopedbyaGeorgeBrowninternstudent.Inadditionto
actingasaninvoicingsystemthePOSsystemwillautomaticallyupdatetheinventorydatabase.ThePOS
systemwillalsoallowuserstoviewpreviouspurchasesandpullupoldinvoices.
Human Resources (HR)
Strategy
TheHRstrategywillbeputinplacetocomplimenttheMarketingCommunicationsPlan.Inorderto
complimentthebusinessknowledgeofthebusinessownerparttimeemployeesmusthavea
backgroundinfashion.InadditiontothepaidstaffstudentsfromGeorgeBrownCollegewillbehiredon
aninternbasisinordertoattainthefullcomplementofknowledgethebusinesswillneedtosurvive.
Internstudentswillincurnoadditionalexpense.

McLachlan42

RolesandResponsibilities
JoinBNIgroup
Owner
Developmarketingplan
Planmonitoring
Attendtradeshows
Buymerchandise
Trainsalesstaff
PlanGrandOpening
MeetwithSNAPmagazine
Hiresilentshoppers
Launchonlinesurvey
Tracksales
Maintaininginventorylevelsandrestockingasneeded.
ParttimeEmployees
Keepingrecordofwhatitemshavebeensoldusingpointofsale(POS)
programming.
Balancingthecashflowandcreditcardreceiptsdaily.
Keepingthestorecleanandorganized.
Provideinputintothevisualaestheticsofthestore.
Providinginputintohotitemsandreordering.
Promotingthejeanloyaltyprogram.
Promotingthevalueaddedservicesavailable.
PromotingandbuildingtheCRMdatabasewithrelevant,uptodate
information.
Sameasabove
FashionIntern
GraphicDesignIntern
SoftwareDesignIntern

Developlogo
Developbrandedmaterial
DevelopPOSsoftware
DevelopCRMsoftware

McLachlan43

Financial Statements
GeneralFinancialAssumptionsandConsiderations:
1. Financing:Afiveyear$50000loanhasbeensecuredataninterestrateof3%.Paymentswillbe
mademonthlyintheamountof$898.43whichis$833.33principleand$25interest,andare
accountedforintheincomestatementunderRepaymentExpenses.
2. SalesAssumptions:ArebasedonsimilarstoresincomparableareasofToronto(AppendixC
C.1).SalesareinclusiveofHarmonizedSalesTax(HST).
3. COGS:Thecostofgoodssoldisat40%ofsales.Aninventorybreakdowncanbefoundin
AppendixD
4. OfficeExpenses:Includerent,phone,internet,utilities,suppliesandmaintenance.
5. Amortization:Afixedassetdepreciationschedule(FADS)canbefoundinAppendixE.
6. SalariesandCommissions:Minimumwageof$10.25/hourwillbepaidfortotalmanhoursof35
hours/week.Noemployeeswillqualifyforbenefitsorvacation.Inlieuofvacationemployees
willbepaid4%oftheirsalaryannually.A5%salescommissionwillbepaidonsales(exclusiveof
taxes),(SeeAppendixF).Commissionswillnotbepaidforthefirstquarterin2010.
7. BankCommissions:50%oftransactionswillbecompletedbycreditcardatacostof2%.40%of
transactionswillbecompletedbydebitcardatacostof$0.10/transaction.Thisfeewillbe
predictedbasedonanaveragestorepurchasevalueof$75.Aschedulecanbefoundin
AppendixG.
8. TradeShows:Inclusiveinthiscostaretravel,mealsandentrancefees.
9. Businesstaxes:Are15%ofgrosssalesandwillbepaidquarterly.
Goals
Sales
MONTHLYSALES$(inclusiveoftaxes)
JAN FEB MAR APR MAY JUNE JULY AUG SEPT OCT
NOV
DEC
2010
6900
6900 6900 10350
16100
2011 9200 6900 9200 11500 11500 9200
9200 18400 18400 16100 16100
23000
2012 11500 9200 11500 13800 14950 14950 14950 23000 23000 19550 21850
31050
2013 14950 10350 14950 18400 18400 20700 19550

Shortterm
1. Growsalesto$6900(exclusiveoftaxes)byendofmonthone,$16100byendofmonthfiveand
haveGrosssalesof$98773foryearone.

Longterm
1. Basedonsalesforecast:Breakevenbyyearthree.

McLachlan44

2. Surpasssalesforecasttoensurethereisnocashshortageinyearthreeandnoadditional
financingisneeded.
3. Achievemonthlysalesof$20000/month.
4. Paybackborrowedfundsbyyearfive.
Start-up Costs
Thebiggestcostsassociatedwithopeningthestoreareinventoryandleaseimprovementsandthe
lease.Theleaseandleaseimprovementsaresunkcostshowever,unsoldinventorycanbereturnedto
thedistributerforarefund.
AssumptionsandConsiderations:
1. ThecostsforbusinesslicencesandpermitshavebeentakenfromtheCityofToronto(Cityof
Toronto,2010).
2. QuarterOnemarketingexpenseshavebeenincludedinstartupcosts.

McLachlan45

STARTUPBUDGET
BUSINESSLICENSESANDPERMITS
Si gnPermi t
Bui l di ngPermi ta ndDra wi ngs
Bus i nes s Li cens e
El ectri ca l Ins pecti on
ImportPermi t

209.47
7380
60
150
60
7859.47

OFFICESUPPLIES
500
RENT
fi rs t/l a s t

9000

UTILITIES
Tel ephone
Hydro
Wa ter
Ca bl e
RENNOVATIONSANDMATERIALS
ma teri a l s
fi xtures
l a bour

100
50
50
100
300
3000
1500
5500
10000

INVENTORY
7200
INSURANCE
6000
OFFICEEQUIPMENT
Photocopi er/Fa x
Tel ephone
Computer
Shredder
Couch
Cha i rs
Ma nnequi ns

200
100
1000
40
300
300
100
2040

MARKETING
Gra ndOpeni ng
Mercha ndi s eTa gs
Promoti ona l Ma teri a l
TOTAL

500
650
650
1800
44699.47

McLachlan46

Balance sheet
Thebalancesheetispreparedforoneoperatingcycle.Theassetslistedonlyincludetheinventorythatis
ownedbytwixt atthedateoftheBalanceSheetpreparation(August1).Inventoryvaluationisbased
onthepricepaidforthemerchandiseandnottheactualpriceitwillbesoldfor.Theinventoryisbased
onaveragecostassumption.
Thebalancesheetspresentedbelowarestudiedmoreindepthintheformofratiosandleveragesinthe
nextsection.
AUG.2010
ASSETS
CurrentAssets
Cash
AccountsReceivable
Inventories

55300.53
7200

TotalCurrentAssets 62500.53
GrossFixedAssets
LandandBuildings
10000
Equipment
1440
700
FurnitureandFixtures
PrepaidExpenses
26459.47
Other(lease)
270000
TotalGrossFixedAsse 308599.5
Less:Ammortization
3200
NetFixedAssets
TotalAssets

305399.47
367900

LIABILITIES
CurrentLiabilities
AccountsPayable
Accruals
LineofCredit
Longtermdebtdue
within1year
TotalCurrentLiabilities
LongtermDebt
LongtermDebt
Longtermleases
TotalLongtermDebt
ShareholdersEquity
RetainedEarnings
Dividends
TotallShareholders
Equity

7200

10781.16
17981.16
38919.1
261000
299919.1
50000

50000

TotalLiabilitiesandShareholdersEq 367900.3

McLachlan47

AUG.2011
ASSETS
CurrentAssets
Cash
0
AccountsReceivable
5347.5
Inventories
21866.67
TotalCurrentAssets 27214.17
GrossFixedAssets
LandandBuildings
8000
Equipment
240
560
FurnitureandFixture
PrepaidExpenses
3466.67
Other(lease)
216000
TotalGrossFixedAss 228266.7
Less:Ammortization
2200
NetFixedAssets
222600

LIABILITIES
CurrentLiabilities
AccountsPayable
18494.45
Accruals
1617.75
LineofCredit
Longtermdebtdue
within1year
10781.16
TotalCurrentLiabilities 30893.36
LongtermDebt
LongtermDebt
28137.94
Longtermleases
207000
TotalLongtermDebt
235137.9
ShareholdersEquity
RetainedEarnings
Dividends
TotallShareholdersEquity

TotalAssets

TotalLiabilitiesandShareholdersEq 266031.3

266031

AUG.2012
ASSETS
CurrentAssets
Cash
AccountsReceivable
Inventories
TotalCurrentAssets
GrossFixedAssets
LandandBuildings
Equipment
FurnitureandFixtures
PrepaidExpenses
Other(lease)
TotalGrossFixedAsse
Less:Ammortization
NetFixedAssets
TotalAssets

6000
180
420
10400
162000
179000
2200
176800

LIABILITIES
CurrentLiabilities
AccountsPayable
Accruals
LineofCredit
Longtermdebtduewithin
1year
TotalCurrentLiabilities
LongtermDebt
LongtermDebt
Longtermleases
TotalLongtermDebt
ShareholdersEquity
RetainedEarnings
Dividends
TotallShareholdersEquity

217475

TotalLiabilitiesandShareholdersEqui

0
7475
33200
40675

22957.47
9287.64
4091.95
10781.16
47118.22
17356.78
153000
170356.8

0
217475

McLachlan48

Financial Ratios and Leverages


Inordertogetabetterpictureofwhatthefinancialspreadsheetsillustrateratiosandleverageshave
beenstudied;specifically:debt/equityratio,currentratio,quickratio,inventoryturnoverandaverage
ageofinventory.Foreachcalculationallthreeyearsofforecastingwillbeused.
TABLE1
Debt/EquityRatio

Year1

Year2

Year3

(%)

86.4

99

Thedebt/equityratioindicatestherelianceondebtforfinancing.Thehigherthepercentagemeansthe
riskierthebusinessendeavourbecauseofthehighfinancialleverage.Yearoneindicatesthat86.4%of
theassetshavebeenfinancedbydebt.Inthiscasetheremaining14%offinancingcomesfromthe
owner.Thisratiogetsworseinyeartwoandyearthreeasthebusinessreliesheavilyonfinancial
leveragetosupportinvestmentinassetsneededtosustainthebusiness(namelyinventoryandleasing).
Thedebt/equityratioindicatesthatthecompanywouldrelyheavilyondebtfinancingwhichcouldlead
tomajorfinancialproblemsifinventoriescouldnotbesoldoff.Theworstcasescenarioisbankruptcy.
TABLE2
CurrentRatio

Year1

Year2

Year3

(times)

3.48

1.48

1.07

Thecurrentratiomeasurestwixtsabilitytomeetitsshorttermobligations.Thegeneralruleof
thumbis2.Table2displaysthecurrentratioforthefirstthreeyearsoftwixtsbusiness.The
measureof3.48isgoodbutmustnotbemisinterpretedbecausethisaverageistakenatthestartofthe
businessbeforecashflowistakenintoaccount.Poorcashflowcallsforahigherasset/liabilityratio
becauseoftheuncertaintysurroundingmoneycomingintotwixtandhavingapositiveeffectthe
balancesheet.Abetterpredictorcanbetakenfrombothyear2(1.48times)andyear3(1.07times).
Yeartwoandyearthreebothsuggestthatmorecurrentassetsareneededtomeetthedemandsplaced
ontwixtbyitscurrentliabilities.
TABLE3

QuickRatio

YEAR1

YEAR2

YEAR3

(times)

3.08

.74

.20

McLachlan49

Thequickratiorevealsamoreaccuratepictureofhowmanyassetsarereadilyavailabletocovercurrent
liabilities.Bytakinginventoriesoutoftheequation,thequickratiocalculationsdeterminethatbyyear
twocurrentassetsarenotabletoreadilycovercurrentliabilities.Inventoriestaketimetoselland
generallyrequiremorethanthirtydaystobeconvertedintocash.AsevaluatedinTable3,thereisnot
enoughcashandmarketablesecuritiestocoverthecurrentliabilitiesinfull.Analysisofthisratio
suggeststhatmoreinvestedcashisneededforthebusinesstoensureitcanmeetallitsfinancial
obligationsinyearsonethroughthree.
TABLE4
Inventory

YEAR1

YEAR2

YEAR3

Turnover(/year)

5.5times

AverageAge(days)

66

InventoryturnoverispredictedusingtheCOGSforyearonedividedbytheinventoryondayoneof
business.Thismethodisnotveryaccurate.Inventoryturnoverforyeartwoandthreecannotbe
predictedfromthebalancestatementbecausethelineitemInventoryontheBalanceSheetincludes
anticipatedleftoverinventoryfromyearoneaswellasyeartwo:quarteroneinventory.Forabetter
representation,inventoryturnovermustbestudiedandthenpredictedbasedonyearoveryear
analysis.Duetothefluctuatingseasonsofretailandtheinfluxofmerchandiseatthebeginningofeach
seasonitisunrealistictoseeturnovergreaterthanevery60to90days.Buyingisbasedonthisfactand
inventorycontrolssuchasproductreturnsarefactoredintotheseasonaldemands.

McLachlan50

Income statement
Theincomestatementindicatesthatpredictedsalesforyearonewouldnotcoverthecostsassociated
withopeningtwixt.Withfixedcostsof$81141andvariablecostsat35%ofsales,salesof$113850are
toolowtosupportthehighrentandemployeecosts.Theincomestatementalsoindicatesthatthereis
noallowanceforanownersdraw,meaningtheownerwouldnotbepaidfortheirworkinyearone.
PROJECTEDINCOMESTATEMENT:YEARONE
TIMEPEROIOD
1stQuarter 2ndQuarter 3rdQuarter 4thQuarter
SALES
20700
35650
27600
29900
less
COGS
7200
12400
9600
10400
GROSSPROFIT
13500
23250
18000
19500
less
MARKETING
0
1023
874
1023
OFFICE
14810
14810
14810
14810
SALARIESANDCOMMISSIONS
4784
6334
5984
6084
BADDEBT
50
50
50
50
BANKCOMMISSIONS
218.04
375
290.72
314.95
TRADESHOW
2000
2000
2000
2000
OPERATINGPROFT
8362.04
1342
6008.72
4781.95
less
REPAYMENTEXPENSES
2695.29
2695.29
2695.29
2695.29
BUSINESSTAXES
2927
4650
3600
3900
OWNERDRAWINGS
0
0
0
0
NETINCOME
13984.33
8687.29
12304.01 11377.24

ANNUAL
113850
39600
74250
2920
59240
23186
200
1198.71
8000
17574.71
10781.16
15077
0
43432.9

McLachlan51

Breakeven analysis
Theincomestatementsforyeartwoandthreearepredictedbelow.Itisexpectedthatsaleswillnotbe
highenoughtosupport twixt tobreakevenuntilyearthree.However,ofnotefromtheincome
statementisthedetailthattheownerhasstillnotbeenpaidfortheirworkortakenanypaymentfor
theirservicesfromthebusiness.Thispieceofevidencecanberemediedbyreducingparttimesales
staffandusingthatmoneytopaytheowneranhourlywageaswellascommission.Conversely,this
moneywouldbetterservethebusinessifitwasinvestedasretainedearnings.
PROJECTEDINCOMESTATEMENT:YEARTWO
TIMEPEROIOD
SALES
less
COGS
GROSSPROFIT
less
MARKETING
OFFICE
SALARIESANDCOMMISSIONS
BADDEBT
BANKCOMMISSIONS
TRADESHOW
OPERATINGPROFT
less
INTERESTEXPENSES
BUSINESSTAXES
OWNERDRAWINGS
NETINCOME

1stQuarter 2ndQuarter 3rdQuarter 4thQuarter ANNUAL


52900
50600
34500
44850
182850
18400
34500

17600
33000

12000
22500

1385
1385
16310
16310
7084
6984
50
50
557.21
532.99
2000
2000
7113.79
5738.01

1385
16310
6284
50
363.4
2000
3892.4

2695.29
6900
0
2481.50

2695.29
6600
0
3557.28

2695.29
4500
0
11087.69

15600
29250

63600
119250

1385
5540
16310
65240
6734
27086
50
200
472.42 1926.02
2000
8000
2298.58 11257.98
2695.29 10781.16
5850
23850
0
0
6246.71 23373.18

McLachlan52

PROJECTEDINCOMESTATEMENT:YEARTHREE
TIMEPEROIOD
SALES
less
COGS
GROSSPROFIT
less
MARKETING
OFFICE
BADDEBT
SALARIESANDCOMMISSIONS
BANKCOMMISSIONS
TRADESHOW
OPERATINGPROFT
less
INTERESTEXPENSES
BUSINESSTAXES
OWNERDRAWINGS
NETINCOME

1stQuarter 2ndQuarter 3rdQuarter 4thQuarter ANNUAL


65550
67850
43700
58650
235750
22800
42750

23600
44250

15200
28500

20400
38250

82000
153750

1375
1375
1375
1375
0
16310
16310
16310
16310
65240
50
100
50
50
250
7634
7734
6684
7334
29386
690.46
714.69
460.31
617.78
2483.24
1250
1250
1250
1250
5000
15440.54 16,766.31 2,370.69 11,313.22 45,890.76
2695.29
2695.29
2695.29
2695.29
8550
8850
5700
7650
0
0
0
0
4195.25 5,221.02 6,024.60 967.93

10781.16
30750
0
4359.60

Cash flow
Cashflowhasbeenpredictedforthefirstthreeyearsofbusiness.Thestatementofcashflowsdetails
thechangeintwixtscashovereachfiscalyear.Thecashflowisveryimportantinunderstanding
whenthestorewillneedinjectionsofcashandplanningmustbemadeformonthswherecashisgoing
tobetight.Cashisneededtocoverallliabilitiesandwithoutitthestorewillbeforcedintobankruptcy.
Thecashflowstatementindicatestheexistenceofcreditproblemsandshedslightonthehugeimpact
thepurchaseofinventoryhasonthestoresavailablecash.Theindividualitemsinthecashflow
statementseemtobedistributedinaprudentmanorandshowthatthestoreisgrowing.However,
overall,thecashflowstatementgivesanundesirableviewoftheplannedbusiness.Cashflowisa
seriousconcerninyearthree.Ananticipatedgrowthinsalesmeansthatthereismoremoneyowedin
accountspayable.Thestoredoesnothavethecashonhandtopayfortheincreaseininventory.Thisis
ahugeproblemsinceitmeansthestorewouldhavetoleverageitselfevenmorewithashorttermline
ofcredit.WithoutaninjectionofcashinyeartwothestorewillnotbeabletocoverexpensesinJuly.
Carryingthisnegativebalanceforwardwouldonlyfurtherlimitthestoresabilitytocovercostsinyear
three.Qualifyingforashorttermlineofcreditatthebeginningofyearthreewouldensuretwixt has
enoughcashtocoveritsoperations.

McLachlan53

YEARONE
CASHRECEIPTS
cashsales
30day
60day
90day
other
CASHIN

AUG

SEPT

3450
x
x
x

3450
3105
x
x

3450

6555

OCT
3450
3105
172.5
x
50
6677.5

NOV

DEC

5175
3570.8
172.5
172.5

8050
4657.5
172.5
172.5

9090.8

13052.5

EXPENSES
equipmentpurchases
T&A
4200
200
rent
x
4500
4500
4500
maintenencecos
100
80
80
80
labourcosts
1840
1472
1472
1472
commissions
x
x
x
450
marketing
1470
35.45
30
30
inventory
x
x
x
12400
advertising
100
x
x
150
sellingexpenses
37.5
37.5
officeexpenses
350
350
350
350
loanpayments
898.43 898.43 898.43 898.43
taxes
x
x
2927
x
bankfees
x
63.2 63.2
63.2
other
CASHOUT
8995.93 7599.1 10321
20431

JAN

4600
3450
7245
4140
258.75
402.5
172.5 258.75
50
12226 8251.25

4500
4500
100
80
1840
1472
700
400
30
30
x
x
x
x
45
22.5
350
350
898.43
898.43
x
4650
94.8
147.47
8558.23

FEB

12550

1300
4500
80
1472
300
30
x
x
15
350
898.43
x
84.27

MAR

APR
4600
3105
230
402.5

5750
4140
172.5
230
50
8337.5 10242.5

1300
4500
100
1840
400
30
9600
x
350
898.43
x
63.2

4500
80
1472
500
125.45
x
150
15
350
898.43
3600
84.27

9029.7 19081.63 11775.2

MAY
5750
5175
230
172.5

JUNE
4600
5175
287.5
230

11327.5 10292.5

4500
80
1472
500
30
x
x
227.5
350
898.43
x
105.33

1000
4500
100
1840
400
30
x
x
7.5
350
898.43
x
105.33

8163.26 9231.26

JULY
4600
4140
287.5
287.5
50
9265

4500
80
1472
400
30
10400
x
350
898.43
3900
84.27
22114.7

CASHINCASHOU5545.93 1044.08 3643.13 11340.3 4494.27 324.15 778.450010744.13 1532.65 3164.24 1061.24 12849.7
OPENINGBALANC
55300 49754 48710
45067 33726.5
38221 37896.6 37118.15
26374 24841.4 28005.6 29066.85
33726 38220.8
37897 37118.2 26374.02 24841.4 28005.6 29066.9 16217.15
CLOSINGBALANCE 49754.1 48710 45067

McLachlan54

YEARTWO

AUG

SEPT

OCT

NOV

DEC

JAN

FEB

MAR

APR

MAY

JUNE

JULY

CASHRECEIPTS
cashsales

9200

9200

8050

8050

11500

5750

4600

5750

6900

7475

30dayreceiveables

4140

8280

8280

7245

7245

10350

5175

4140

5175

6210

60dayreceiveables

230

230

460

460

402.5

402.5

575

287.5

230

287.5

90dayreceiveables

287.5

230

230

460

460

402.5

402.5

575

287.5

230

other
CASHIN

50
13858

17940

4200

200

16970

50
16215 19607.5

16855

7475

7475

6727.5 6727.5
345 373.75
287.5

345

50
10753

10753

1300

1300

4500

4500

12543

50
14202.5

14835

14871

EXPENSES
equipmentpurchases
T&A
rent
maintenencecosts
labourcosts
commissions

4500

4500

4500

4500

4500

4500

1000
4500

4500

100

80

80

80

100

80

80

100

80

80

100

80

1472

1472

1472

1840

1472

1472

1840

1472

1472

1840

1472

650

650

800

800

700

700

1000

500

400

500

600

650

976.67

81.67

51.67

81.67

51.67

186.67

76.67

81.67

51.67

106.67

inventory

18400

150

208.33

208.33

208.33

officeexpenses

350

350

350

350

350

loanpayments

898.43

898.43

898.43

898.43

94.45

188.91

169.59

bankfees

6900
188.91

150

17600

sellingexpenses

taxes

4500

1840

marketing

advertising

4500

208.33

12000

x
208.33

350

350

350

350

350

350

350

898.43

898.43

898.43

898.43

898.43

898.43

898.43

898.43

6600

4500

5850

169.59

242.27

121.13

96.91

121.13

145.36

157.47

157.47

208.33

15600

208.33

150

208.33

208.33

51.67 551.67

208.33

208.33 208.33

other
CASHOUT

CASHINCASHOUT

14118

27179

15349

8610

26718 15037.7

260.3809239.34 1620.66 7604.98 7110.52 1817.3

9406.6

21875

12932

8410.79

1345.94 11122.8 389.059 5791.71

25356

14718

10520.9 153.35

OPENINGBALANCE

16217

15957

6717.4

8338.1 15943.1 8832.55

10650

11996

872.95

483.89

6275.6

4245

CLOSINGBALANCE

15957

6717.4

8338.1

15943 8832.55 10649.9

11996

872.95

483.89

6275.6

4245.3

4092

McLachlan55

YEARTHREE

AUG

SEPT

OCT

NOV

DEC

JAN

FEB

MAR

APR

MAY

JUNE

JULY

CASHRECEIPTS
cashsales

11500

11500

30dayreceiveables

6727.5

1035

9775

10925

15525

7475

5175

1035 8797.5

9832.5

13973

6727.5

7475

9200

9200

10350

9775

4658 6727.5

8280

8280

9315

60dayreceiveables

373.75 373.75

575

575

488.75 546.25

776.25

373.8 258.75

373.8

460

460

90dayreceiveables

373.75 373.75

373.75

575

575 488.75

546.25

776.3 373.75

258.8

373.75

460

other
CASHIN

50
18975

13283

11709

50
20873

26421

22433

50

50

50

13225

13233

16510

18113

19464

19960

1200

1200

4500

4500

4500

4500

4500

4500

EXPENSES
equipmentpurchases
T&A

2600

rent

4500

maintenencecosts
labourcosts
commissions

4500

4500

4500

100

80

80

80

100

80

80

100

80

80

100

80

1472

1472

1472

1840

1472

1472

1840

1472

1472

1840

1472

1350

650

450

650

800

800

900

850

51.67 186.67

76.67

81.67

51.67

106.7

51.67

551.67

1000

1000

850

950

936.67

81.67

51.67

81.67

inventory

22800

150

sellingexpenses

208.33 208.33

x
x

X
150

208.33 208.33

officeexpenses

350

350

350

350

loanpayments

898.43

898.43

898.43

898.43

taxes
bankfees

4500

1840

marketing

advertising

4500

157.47

8550

242.27 242.27

x
205.93

23600

208.33 208.33
350

350

898.43 898.43
x

8850

230.15 327.06

x
x

15200

150

20400

208.3 208.33

208.3

208.33

350

350

350

350

350

350

898.43

898.4

898.43

898.4

898.43

898.43

5700

7650

157.47

109

157.47

223.3

223.25

218.04

25137

14368

208.33

x
208.33

other
CASHOUT

CASHINCASHOUT

12741

6234.1

31633

4092 2142.2

CLOSINGBALANCE

2142.2 16208

33129

17522

9392.9

18350.25493.95 11976.1 6707.33 4910.01 3832.1

OPENINGBALANCE

17203 8896.4

16208 21702
21702

9726

9726 16433

11523

8639

29472

16778.47

11904.92142.1 9473.82 10007.9 3181.53


7691 19596 17454 7980.1 17988.04

16433 11523 7691.1 19596 17454

7980

17988 14806.51

McLachlan56

Recommendations
Uponanalysisofalldatathebusinessdoesnotappeartobeprofitableatthecurrentdebtlevel.In
additiontolargesalesfluctuationsandhighfixedcosts,cashflowisanobviousissue.Thecurrent
businesswouldnotprovidetheownerwithsoundearningsoninvestment.Inordertoensureamore
viablebusinessoptionthefollowingrecommendationsaremade:
1. Lookintosmallbusinessorentrepreneurialgrantstoraisemorecapitalforthebusiness.
2. Enterintoapartnershiporobtainasilentinvestor.
3. Negotiateamorefavourableleaseorconsiderswitchingstoretoadifferentareawithaless
expensivelease.
4. Eliminatethestaffingandcommissioncostsuntilthestoreisabletobreakeven.
5. Increasemargins.
6. Eliminatetradeshowcostsbycontactinglocaldistributorsandonlyattendinglocalshows.

Conclusion
MarketresearchindicatesastrongneedforatweenclothingstoreinLeaside.Thehypothesiswasthat
astrongstrategicmarketingplancouldsupporttheopeningofatweenclothingstore.Underthe
financialsituationasresearchedabovethisisanullhypothesis.Newretailventurestakeyearstoget
salesuptosustainablelevels.Theonlywaytocoverthehighcurrentliabilitiesisthroughanincreasein
sales.Itappearsasthoughthenicheistoosmalltosustainthebusinessasitisunlikelythatthesales
forecastisoverlypessimistic.ThehighfixedcostofrentonBayviewAvenuedoesnotallowthetime
neededtoreachthesehighsaleslevels.Whilethemarketmaydictateaneed,thepricethestorewould
needtochargeitscustomerswouldmakethestoreunattractivetothecustomer.Cashflowisthe
numberonereasonscompaniesgobankruptandthisisthemaincauseofconcernfortwixt.Zerocash
onhandisunrealisticandunwise.Inventorycanbesentbackandwillcoveritselfovertimebutthecash
neededupfrontwillmakeithardforthestoretomeetitsotherfinancialobligationsontimewithout
usingalineofcreditandleveragingitselffurther.Itisrecommendedthatthestorenotbeopened
unlessthereisa$100000incashthatcanbeusedtostartandsustainthestore.Thismoneywould
decreasemonthlyfixedcostsandallowthestoreroomtogrowatitsownpace.

McLachlan57

References

Atkinson,A.,Kaplan,R.,Matsumura,E.,andMark,S.(2007).ManagementAccounting:5th
Edition.UpperSaddleRiver,NewJersey:Pearson,PrenticeHall.
Birn,R.(2004).EffectiveUseofMarketResearch:4thEdition.Sterling,Virginia:KoganPage
CanadaRevenueAgency(2010).CCAClasses.Retrievedfromhttp://www.cra
arc.gc.ca/tx/bsnss/tpcs/slprtnr/rprtng/cptl/clssseng.htmlonFebruary20,2010.
CityofToronto(2010).BuildingPermitsandApprovals.Retrievedfrom
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Kotler,P.,andKeller,K.(2006).MarketingManagement:12thEdition.UpperSaddleRiver,New
Jersey:Pearson,PrenticeHall.
Gerson,R.(1991).WritingandImplementingaMarketingPlan:AGuideforSmallBusiness
Owners.USA:CourseTechnologyCrisp.
Gitman,L.,andHennessey,S.(2008).PrinciplesofCorporateFinance.Toronto,Ontario:
Pearson,AddisonWesley.
Grant,R.(2005).ContemporaryStrategyAnalysis:5thEdition.Malden,Massachusetts:Blackwell
Publishing.
Hague,P.,Hague,N.,andMorgan,C.(2004).BusinesstoBusinessMarketResearch.Sterling,
Virginia:KoganPage.
Mintzberg,H.(1987a).ThestrategyconceptI:FivePsforstrategy.CaliforniaManagement
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Mintzberg,H.(1987b).ThestrategyconceptII:Anotherlookatwhyorganizationsneed
strategies.CaliforniaManagementReview,30(1),2532.
Mintzberg,H.,&Lampel,J.(1999).Reflectingonthestrategyprocess.SloanManagement
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OttawasLeadEconomicDevelopmentCorporation.(2002).WritingandEffectiveBusinessPlan.
Ottawa:Author.
RetailCouncil.(2008).CombatTheft.Retrievedfromwww.retailcouncil.org/news/media/press
onMarch3,2010.

McLachlan58

Smith,W.(1995).ProductDifferentiationandMarketSegmentationAsAlternativeMarketing
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McLachlan59

Appendix
A: Online Potential Customer Survey Results
Thefollowingsurveywascompletedby42respondentsallofwhomqualifyasthetargetmarket.
Background
1)Whatisyouragebracket?

Percentage Responses

7
13

14.3

30

40

14.3

41

50

66.7

28

51
+

4.8

Totalresponses:

42

2)

Pleaseselectyourgender

Female

Percentage Responses
90.5

38

9.5

Male

Totalresponses:

42

McLachlan60

3) Whatisyourfamilyincomebracket?

$0$100000

Percentage Responses
9.5

0.0

23.8

10

61.9

26

4.8

$100001$150000

$151000$200000

Over$200000

Unsure

Totalresponses:

42

4) ParentsONLY:Howmanychildrendoyouhave?

Percentage Responses
5.6

72.2

26

16.7

5.6

4ormore

Totalresponses:

36

ShoppingBehaviour

Thefollowingquestions(58)relatetochildren'sclothingandapparel.Pleaseanswerthequestionsas
theybestdescribeyourbehaviourONLYasitrelatestochildren'sclothing/apparel.

McLachlan61

5)Howmanytimespermonthdoyoushop?

Percentage Responses

lessthanonce

28.6

12

Once

23.8

10

Twice

28.6

12

Everyotherweek

9.5

Weekly

4.8

Twice/week

0.0

Morethantwice/week

4.8

Totalresponses:

6) Wheredoyoushop?(selecttop3)

42

McLachlan62

Percentage

Responses

TheGAP

23.4

30

LaSenzaGirl

6.3

OldNavy

12.5

16

SportingLife

10.9

14

JoeFreshClothing(Loblaws)

15.6

20

7.8

10

9.4

10

14.1

15

Mall

Online
LandsEnd,LLBean

Other
MexxKids,West49,Abercrombie,
AmericanEagle,Winners.

7) Whodoyouregularlyshopwith?

Percentage Responses

McLachlan63

Alone

52.2

24

0.0

0.0

17.4

30.4

14

OneFriend

Morethanonefriend

Parent

Child(ren)

8) ParentsONLY:
Whodoyoushopfor(checkallthatapply)?

Child(ren)

Percentage Responses
90.0

36

0.0

10.0

Friend'sChild(ren)

Relatives

PurchasingBehaviour
Definition:Purchaseonetransaction.ThismayincludeMOREthanoneitem.
Thefollowingquestions(913)relatetochildren'sclothingandapparel.Pleaseanswerthequestionsas
theybestdescribeyourbehaviourONLYasitrelatestochildren'sclothing/apparel.
9)Whenwasthelasttimeyoumadeapurchase?

Percentage

Responses

McLachlan64

Thisweek

23.8

10

23.8

10

52.4

22

0.0

0.0

0.0

Lastweek

Withinthelastmonth

Withinthelast2months

Over2monthsago

Never

Totalresponses:

42

10) ChildrenONLY:Whopaysforyourclothing?(checkallthatapply)

Mom

Percentage

Responses

47.1

16

29.4

10

0.0

23.5

0.0

Dad

Self

Grandparents

Other

11) ParentsONLY:Howmanypurchasesdoyoumake(onaverage)permonth?

Percentage

Responses

Lessthan1

5.6

33.3

12

McLachlan65

33.3

12

1/week

22.2

2/week

5.6

Morethan2/week

0.0

Totalresponses:

36

12) Howmuchisyouraveragepurchase?

Notapplicable

Percentage

Responses

0.0

4.8

30.9

13

50.0

21

14.3

0.0

$20

$21$50

$51$99

$100$200

Over$200

Totalresponses:

42

13) Whatisthemostyouwouldspendonapairofjeans?

Lessthan$50

Percentage Responses
71.4

30

14.3

$51$70

McLachlan66

$71$100

4.8

9.5

Over$100

Totalresponses:

42

NeedsandWants
14)Pleaserankinorderofimportancetoyou:

Price

Average
Score

2.90/7

Service

5.00/7

Locationofstore

4.05/7

Parking

5.90/7

Qualityofitemsoffered

3.14/7

Styleofitemsoffered

3.24/7

Selectionofitemsoffered

3.76/7

15) Whereyoucurrentlyshop,areyourneedsbeingmet?

Yes

Percentage

Responses

48.0%

20

52.0%

22

No

McLachlan67

Totalresponses:

42

16) Whatwouldyouchangeaboutthestore(s)youcurrentlyshopin?

basic'sneedtobeavailableallthetime
moreconvenientlocation
Atthisstageinourfamily,itisalwayshelpfultohavea"kids'station"wheretheyoungerones
candraw,etc.
closer
Moreclothingforkidsage913(tween)
Dressingroomstailoredtochildren,moreselectionforboys10+
Closertohome!
HavingwellmarkedshelveswithstaffwhoareknowledgeableabouttheirproductsAND
restocking,nothavingpilesofclothingstackedupTOBEputontheshelveslyingaround
Moreselectionforbigger1012yearoldgirls.
Location,closerisbetter!

McLachlan68

betterselectionofbrandnameclothing
moreavailabilityinmychildren'ssizes
Moreselectionoftweensizesandstyles

B: Naming Survey

Thefollowingsurveywascompletedonlineby32respondents.Thetop3names(BeTween,twixtand
Lifepop)werethenproposedtoagroupoffivetweens.Thefinalname(twixt)wasaunanimous
decision.
SURVEY:
Eachrespondentstopfouranswershavebeengraphedandaremeasuredinpercentages.

McLachlan69

C: Interviews
Thefollowinginterviewswererecordedandthentranscribedforreferencesake.Allanswers
arespokeninthefirstpersonandaretheopinionoftheinterviewee.Notallquestionswere
answeredineachinterviewbutallanswersgivenhavebeenincluded.
C.1GwenRamsayofGumbootsClothing
1.IDENTIFICATION:
1.1Name:GwenRamsay
1.2NameofCompany:Gumboots
1.3Address:789MtPleasantBlvd

McLachlan70

1.4Telephone:4164834499
1.5Sector:Retailclothingstore
1.8#ofemployees:
Fulltime2(onefulltimemanager)
parttime3
1.9#ofyearsinbusiness:10

2.BACKGROUND/HISTORY:
2.1EducationandTraining:BachelorofArts
2.2Experience:Retailsalesexperience

3.THEORGANIZATION:
3.1Describetheenterprise:ChildrensClothingstorewithhighendclothingforchildrenages26.
3.2Howmanyhoursaweekdoyouwork?:20
3.3Howdoyoustayontopofdaytodaywhilestillpromotingthebusiness?Wordofmouthbusiness
becauseofnumberofyearsinbusinessanddemographicsofareainwhichstoreislocated.Donotwork
fulltimeinthestoresoabletospendtimepromotingthestoreandenjoyinghobbies.
3.4Whatareyourmargins?:Variable.Generallyaveryhealthymarginonclothingespeciallywhenitis
brandnameordesigner.Weaverage$15$20thousandinsalesamonth.
3.5Howdoyouanticipateinventorylevels?:Havebeeninbusinessalongtimeandcanpredictbuying
patterns.SpringandChristmasareverybusytimesformotherstobeoutlookingfornewoutfits.
3.6Howdoyoudifferentiateyourself?:Bytheclotheswecarry.
3.7Howdoyoumakeupforareasyouareweakerinorhavelittleknowledgein?:Haveanaccountant
andalawyer.
3.8Howdoyouknowwhatyourcompetitorsareupto?Nootherstoresinareacarryingthesame
brands.TherearebrandslikeGAP,Gymboree,andMexxatthemallbuttheyarentasconvenientand
theyoffercheaplymadeclothing.Notcomparable,inmymind.
Trends?:Cuteclothesalwayssell!Butwehavebeenthinkingaboutcarryinggreenlinesandwecarry
manyorganictopsandsweatpants.WhateverseemspopularattradeshowsandItrustmysuppliers
opinions.

4.VISION/STRATEGICMANAGEMENT:

McLachlan71

4.1Whatrulesofthegamehaveyouidentifiedforsuccessinyoursector?:Haveuniqueproducts.
Ensureyoucanhavehealthymargins.
4.2Howdoyougoaboutacquiringmerchandise?

Buyinggroups:
Shows:Usedtogotoalltheshowsbutnowonlylocalshows.
Wholesalers:Goodrelationshipwithdistributersandtrusttheiropinionsandbrands.

4.3Didyouidentifyyourstrategybeforeyoubeganordoesitcomeasyougoalong?:Isawthatthere
wasmoneyintheareaandmorematurepeoplewithmoneywerehavingkidslaterinlifesotheyhad
goodjobs.Wantedtocarryspecialchildrensclothingthatfashionconsciousmomswouldbuyfortheir
kids.Insomecasesitsthesamebrandthemomiswearing.Plusitgivespeopleanoptionwhenbuying
foraspecialoccasion.IbuymostlyEuropeanbecausetheyhavegreatfashionsandareaheadofus.
4.4Doyouhaveamarketingplan?:No.

Yearly?

5.LEARNINGMETHOD:
5.1Howdoyoulearn?:Experienceandlisteningtowholesalersandfriends.
5.2Whathavebeenyourbestlearningresources?Husbandhasgreatbusinesssense.
5.3Howdoyouprepareyourselfforthefuture?MakesurethatIcangetoutwhileIamstillprofitable!

6.SELFASSESSMENT:
6.1Howdoyouseeyourself?
6.2Howdoyougofromturningideasintoanoperation?
6.3Haveyouchangedasapersonsincegoingintobusiness?
6.4Whatplacedoyougivetointuitioninthewayyouoperate?Alot

7.OTHER:
7.1Whathavebeenyourbiggestchallenges?Managingcashinitially.Thenithasbeenmanaging
inventorylevelsandensuringwedonthavetomarkdownitemsveryoften.Therearesomany
uncontrollablethingsthatthrowyouoff.Forinstancelastyearthesidewalkwasunderconstructionfor
mostofthesummersomomswerentoutwalkingby...thatreallyhurtsales.
7.2Whatadvicewouldyougivepeoplewantingtogointobusiness?GoodLuckitstough.Plantowork
allthetimeandalwaysbeputtingoutfires.

McLachlan72

7.3Arethereanypointswehavenotcoveredthatyouwanttoadd?

C.2DarcyMcGrathofDEW
1.IDENTIFICATION:
1.1NameDarcyMcGrath
1.2NameofCompanyDEW
1.3Address1553BayviewAve.
1.4Telephone6474361232
1.5SectorRetail:Clothing
1.6#ofemployeesowner,fulltimemanager,8parttime
1.7Listofdepartmentssalesandmanager
1.8#ofyearsinbusiness3

2.BACKGROUND/HISTORY:
2.1EducationandTrainingBackgroundinfashionandbusiness.GraduatedfromRyersonfashion
program.
2.2Experience
2.3FavouriteActivities

Areyoucompetitive?Iswinningimportanttoyou?
Doyouread?Newspaper?Magazines?magazines:tabloidsandfashion
Hobbies?Shopping

3.THEORGANIZATION:
3.1DescribetheenterpriseAstylishstorethatstockswomensdesignerfashionsandaccessories
3.2Howmanyhoursaweekdoyouwork?2030
3.3Howdoyoustayontopofdaytodaywhilestillpromotingthebusiness?Havefulltimestaffso
donthavetobeinthestoreallthetime.Ihavefriendsinfashion.Ihavegreatfashionsense.Gotoall
bigbuyingshowsandfashionweekinNYCandToronto.
3.4Whatareyourmargins?200%onalotofstuff,especiallyjeansactuallyhigheronjeans.

McLachlan73

3.5Howdoyouanticipateinventorylevels?Tough.Wasatotalguessatfirst.Iaskedmywholesalers
andstockedoneineverysize.Ionlyreallybuyonesizeofanyitem.ThenIhavetoputitemsonsaleif
theydontsell.
3.6Howdoyoudifferentiateyourself?Imtheonlystylishstorearoundhereforwomenmyageand
olderhighschoolgirlsoryoungmoms.Icarryfashionableclothingfromdaytoeveningtoweekend.
3.7Howdoyoumakeupforareasyouareweakerinorhavelittleknowledgein?Myparentshelpas
wellasanaccountant,lawyer,etc.
3.8Howdoyouknowwhatyourcompetitorsareupto?Gointothem.Seewhattheyaresellingandfor
whatprice.Nodirectcompetitorsinthisareasothathelps.
Trends?Fashionmags.,Shows,shopping.

4.VISION/STRATEGICMANAGEMENT:
4.1Whatrulesofthegamehaveyouidentifiedforsuccessinyoursector?Needtobebetteratbuying
andquantities.IofferspecialorderitemsforpeopletopreorderorforpeopletoorderwhenIamsold
out.Iwillcallmydistributerstotryandtrackdownclothing.Givingpeoplewhattheywantisimportant.
4.2Howdoyougoaboutacquiringmerchandise?

Buyinggroups
ShowsFallandSpringshowsinVegasandNYC
WholesalersGreatrelationshipwiththem.Theyarelikefriends.Irelyonthemandthey
helpmeout.Theycometome.

4.3Didyouidentifyyourstrategybeforeyoubeganordoesitcomeasyougoalong?Iidentifiedthe
needwhileIwasinschoolandIwentfromthere.

4.4Doyouhaveamarketingplan?WhenIstarted.

Yearly?

5.LEARNINGMETHOD:
5.1Howdoyoulearn?Bydoing
5.2Whathavebeenyourbestlearningresources?Parents,school,wholesalers.
5.3Howdoyouprepareyourselfforthefuture?Learnfromthepastandrelyonothers.

6.SELFASSESSMENT:

McLachlan74

6.1Howdoyouseeyourself?Confident,outgoing,fashionablebusinesswoman.
6.2Howdoyougofromturningideasintoanoperation?Justdoit!
6.3Haveyouchangedasapersonsincegoingintobusiness?YesInowhavetothinkaboutwhere
moneyiscomingfrom.
6.4Whatplacedoyougivetointuitioninthewayyouoperate?HUGE.Allintuitionwellalot.

7.OTHER:
7.1Whathavebeenyourbiggestchallenges?Allthestepsnecessarytoopenabusinessandalltherules
andpermitsandimportingissuesyouhavetodealwith.
7.2Whatadvicewouldyougivepeoplewantingtogointobusiness?Thinkthereisaneedforatween
clothingstoreonBayview.Offeringfunclothestokidsissomethingthatwouldgooverwellwithmy
clients.
7.3Arethereanypointswehavenotcoveredthatyouwanttoadd?

C.3KarenJuddofMomsToBeandMore
1.IDENTIFICATION:
1.1NameKarenJudd
1.2NameofCompanyMomsToBeandMore
1.3Address1642BayviewAve
1.4Telephone4164889907
1.5SectorRetailClothing,Babyfurnitureandaccessories
1.6#ofemployees
fulltime10+owner
parttime15
1.7ListofdepartmentsSales:furniture,strollers,general.Installations.
1.8#ofyearsinbusiness15

2.BACKGROUND/HISTORY:
2.1EducationandTrainingBCOMM.

McLachlan75

2.2ExperienceAfterIhadkidsIrealizedtheneedandgrowthofthebabymarket,especiallyinthisarea
whereeveryonehaskidsorispregnant.SoIstartedlookingforuniquebabyproductsandopeneda
store.
2.3FavouriteActivities

Areyoucompetitive?Iswinningimportanttoyou?
Doyouread?Newspaper?Magazines?
Hobbies?

3.THEORGANIZATION:
3.1DescribetheenterpriseMomstobeandMoreisTorontosmidtownstoreforallofyourbaby
needs.Withfifteenyearsofexperienceinthebabygearindustryweguaranteeyouwillhaveafunand
informativeshoppingexperience.
3.2Howmanyhoursaweekdoyouwork?TooMany.50+.Notallinthestorebutdealingwithstore
issuesorbuyingorthinkingupnewideasorsourcingnewproducts.
3.3Howdoyoustayontopofdaytodaywhilestillpromotingthebusiness?Amazingstafftotakecare
ofthedaytoday.InthebeginningIreliedalotonwhatIlikedandwhatfriendslikedandfoundout
howIcouldsellit.Thatandtradeshows.
3.4Whatareyourmargins?Variable.Hugemarkuponclothing.Moresothanonfurnitureandstrollers.
3.5Howdoyouanticipateinventorylevels?15yearsofexperience.Goodthingisforlargeitemsisthat
peopleexpecttohavetoorder(cribs,beds,chairs,dressers,strollers).AllotheritemssoldIcanorder
moreandhaveinaweekorso.Distributorsaregenerallyhappytobesellingyoumore.
3.6Howdoyoudifferentiateyourself?Productsoffered,ourregistry,ourknowledgeablesalesstaff,our
website,ourcarseatinstallationservice,storagefacilityandourfriendlyservice.
3.7Howdoyoumakeupforareasyouareweakerinorhavelittleknowledgein?Readaboutit.
Outsource(ie:website)
3.8Howdoyouknowwhatyourcompetitorsareupto?Gointotheirstores.Talktothem.
Trends?Askcustomers.Readparentingmagazines.Gotoshows.Theinternet.

4.VISION/STRATEGICMANAGEMENT:
4.1Whatrulesofthegamehaveyouidentifiedforsuccessinyoursector?Knowyourmargins.Know
yourcustomersandknowyourproductinsideandout(makesureyourstaffdoesaswell).
4.2Howdoyougoaboutacquiringmerchandise?

McLachlan76

Buyinggroups
Showsyes
Wholesalersyes.Majority.FindwhodistributestheproductsIwanttosellandcontact
them.

4.3Didyouidentifyyourstrategybeforeyoubeganordoesitcomeasyougoalong?Uniquestoreidea
wasoriginalstrategy.Nowitevolvestokeepsamevision.AlwayschangingproductscarriedsothatIcan
ensureIamthebestequippedbabystoreinTorontoandpeoplewanttocomeshophere.Iadvertisemy
servicesandproductsinmagazinesandparentingpapers.Ineedtomakesurethatpeoplewanttostart
outbyregisteringhereandneverwanttogoelsewhere.
4.4Doyouhaveamarketingplan?Yes

Yearly?Addressisyearlyandsticktosamestrategybutupdatewhatwillbedoneand
whatisneededtotakethestoretothenextlevel.

5.LEARNINGMETHOD:
5.1Howdoyoulearn?
5.2Whathavebeenyourbestlearningresources?
5.3Howdoyouprepareyourselfforthefuture?

6.SELFASSESSMENT:
6.1Howdoyouseeyourself?
6.2Howdoyougofromturningideasintoanoperation?
6.3Haveyouchangedasapersonsincegoingintobusiness?
6.4Whatplacedoyougivetointuitioninthewayyouoperate?

7.OTHER:
7.1Whathavebeenyourbiggestchallenges?
7.2Whatadvicewouldyougivepeoplewantingtogointobusiness?
IdefinitelythinkthereisaneedforachildrensclothingstoreanditissomethingIhavetoyedwithifI
weretoexpandmyspace.TherentonBayviewisasuperlimitingfactor.Also,youneedtobeableto
reallystayontopoftweentrendsinordertoopenastoretargetingthem.Thatishardkidsaremore
fickle.

McLachlan77

7.3Arethereanypointswehavenotcoveredthatyouwanttoadd?

D: Inventory Break-down
BOYS(30%)

GIRLS(70%)
YEAR1
YEAR1
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
tops
1026
1767
1368
1482 tops
2358.7
4067.4 3144.96 3407.04
pants
1026
1767
1368
1482 pants
1572.5
2711.6 2096.64 2271.36
accessories
108
186
144
156 dresses
604.8
1041
806.4
873.6
accessories
504
868
672
728
total
2160
3720
2880
3120 total
5040
8680
6720
7280
GRANDTOTAL

20700

35650

27600

29900

BOYS(30%)

GIRLS(70%)
YEAR2
YEAR2
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
tops
2622
2580
1710
2223 tops
6027.84 5765.76 7967.23 5110.56
pants
2622
2508
1710
2223 pants
4018.56 3843.84 5311.49 3407.04
accessories
276
264
180
234 dresses
1545.6
1478.4 2042.88
1310.4
accessories
1288
1232
1702.4
1092
total
5520
5280
3600
4680 total
12880
12320
17024
10920
GRANDTOTAL

52900

BOYS(30%)
Q1

Q2

tops
pants
accessories

3249
3249
342

total

6840

GRANDTOTAL

50600

34500

44850

GIRLS(70%)
YEAR3
YEAR3
Q3
Q4
Q1
Q2
Q3
Q4
3363
2166
2907 tops
7469.28 7731.36 4979.52 6683.04
3363
2166
2907 pants
5291.52 5154.24 3319.68 4455.36
354
228
306 dresses
1915.5
1982.4
1276.8
1713.6
accessories
1596
1652
1064
1428
7080
4560
6120 total
15960
16520
10640
14280
65550

67850

43700

58650

McLachlan78

E: FADS
Assetswereamortizedaccordingtothefollowingschedule(CanadaRevenueAgency,2010).
FIXEDASSETDEPRECIATIONSCHEDULE
COST
RATE(%)
COMPUTER
800
100
SOFTWARE
200
100
PHONES
100
20
FAXANDPHOTCOPIER
200
20
FURNITURE
600
20
MANNEQUINS
100
20
LEASEHOLDIMPROVEMENTS
10000
20
TOTAL

2010
800
200
20
40
120
20
2000
3200

2011
0
0
20
40
120
20
2000
2200

2012
0
0
20
40
120
20
2000
2200

F: Commission Schedule
MONTHLYCOMMISSIONS$
JAN FEB MAR APR MAY JUNE JULY AUG SEPT OCT NOV DEC
2010
0
0
0
450
700
2011 400 300 400 500 500 400 400 800 800 700
700 1000
2012 500 400 500 600 650 650 650 1000 1000 850
950 1350

McLachlan79

G: Bank Commissions
YEAR1
credit
debit
TOTAL

Q1
207
11.04
218.04

Q2
356.5
18.5
375

Q3
276
14.72
290.72

Q4
299
15.95
314.95

TOTAL

YEAR2
credit
debit
TOTAL

Q1
529
28.21
557.21

Q2
506
26.99
532.99

Q3
345
18.4
363.4

Q4
448.5
23.92
472.42

TOTAL

YEAR3
credit
debit
TOTAL

Q1
655.5
34.96
690.46

Q2
678.5
36.19
714.69

Q3
437
23.31
460.31

Q4
586.5
31.28
617.78

TOTAL

1198.71

1926.02

2483.24

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