Professional Documents
Culture Documents
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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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.
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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.
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
McLachlan18
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
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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
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
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
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
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
9406.6
21875
12932
8410.79
25356
14718
10520.9 153.35
OPENINGBALANCE
16217
15957
6717.4
10650
11996
872.95
483.89
6275.6
4245
CLOSINGBALANCE
15957
6717.4
8338.1
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
OPENINGBALANCE
17203 8896.4
16208 21702
21702
9726
9726 16433
11523
8639
29472
16778.47
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
http://www.toronto.ca/building/building_permits.htmonFebruary25,2010.
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
Review,30(1),1124.
Mintzberg,H.(1987b).ThestrategyconceptII:Anotherlookatwhyorganizationsneed
strategies.CaliforniaManagementReview,30(1),2532.
Mintzberg,H.,&Lampel,J.(1999).Reflectingonthestrategyprocess.SloanManagement
Review,40(3),2130
OttawasLeadEconomicDevelopmentCorporation.(2002).WritingandEffectiveBusinessPlan.
Ottawa:Author.
RetailCouncil.(2008).CombatTheft.Retrievedfromwww.retailcouncil.org/news/media/press
onMarch3,2010.
McLachlan58
Smith,W.(1995).ProductDifferentiationandMarketSegmentationAsAlternativeMarketing
Strategies.MarketingManagement,4(3),6365.
Sorli,G.(2006).MarketingPlanTemplate.MKMT504CourseNotes.Athabasca:Athabasca
University.
Westwood,J.(2006).HowtoWriteandMarketingPlan:3rdEdition.Philadelphia:KoganPage.
Tong,Vinnee(2010).TheReturnofRetailSales.Retrievedfrom
http://money.aol.ca/article/decemberretailsalesshowsignsoflife,onJanuary3,2010.
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:
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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