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ByMe Business Plan May 2016

Adriana Zemel

1. General Company and Product Description: ByMe is a brand created by me that mixes garments and photography. Since its creation in 2014, my main goal is to use the photos that I take in final products to consumers. However, since photos are normally sold in frames, I come up with the idea of print them into t-shirts as a different format from what people are normally used. All the products development process is coordinated by the company, from modeling to fabrics, and, of course, the selection of the photos. Since its launched the main focus of ByMe is to sell not only garments, but art. Currently, the brand is in standby, so it is a good moment to develop a fresh business plan for it. Nowadays, the fashion market is composed by many distinct brands that focus only on selling garments. The fact that ByMe is selling art, rather than just a regular T-shirt makes it differentiate itself from part of the brand in this highly competitive environment. During the first years of the brand, it was possible to identify that the public really cares about the idea that is behind the brand, not only for being creative, but also for offering them a unique product, since the idea is to work with limited editions. Based on that, the proposal of Byme will remain and be expanded in this business plan. All photos were taken by me during special moments of my life, rather than being just a standard draws. This concept helps to create a true bond with customers, where the buyers understand what is behind that piece of art. Also, through the photos the brand builds a sense of lifestyle, adding value to the main concept. Another interesting point relates to the consumers’ fascination for small and more “handmade” brands, or in other word, “non-massive” brands. There is an increasingly new profile of customers that goes after and appreciates brands that are truly unique. This new customers are a huge opportunity and the main target of the company. When analyzing this new tendency and the customers that ByMe used to have, it is possible to identify the brand’s target market. First, it is important to define the main market focus: Sao Paulo, Brazil. The group of main consumers is formed mostly by women, although the brand also offers men’s products. These women are mainly from upper class, interested in photography, art, travel and “art craft”. The group age varies between 24-35, so they are no longer in university and have jobs

and a monthly income that makes it possible for them to spend money on items that bring them pleasure. Although the target group is financially successful, one of the main goals of the brand (and another differentiation) is to provide good merchandise for a fair price. Having this is mind, and not forgetting that the company are targeting the Brazilian market, the product’s average price is around R$70,00. We have as our mission statement the following: Responsible in sharing art and creating a lifestyle.

2. Customers: Because the brand was developed by me, initially a large share of customers comes from my social circle. These people are not only people I directly know, but also customers that are connected by someone, even unintentionally. This initial customer base is extremely important to create the initial momentum that allows ByMe to growth and expand its customers. Main target: Age: 24-35 Young and urban woman from upper class Workers Monthly income: R$ 3.000 – R$ 10.000 Connected to fashion and art.

In order to define the brand’s typical customer, it would be easier to visualize if we construct characters. Target Client - Fernanda: a) Where is she from? Fernanda is from Sao Paulo, capital, in Brazil; b) How old is she? She is a young woman of 27 years old; c) What does she do? She works in marketing; d) How much is her salary? Fernanda’s salary is around four thousand reais/month, but she still lives with her parents who help with her expenses. e) What are her hobbies? She really likes to have dinner with her friends and boyfriend. She normally goes out to eat about twice a week. Also, she loves

traveling, mostly to the beach. On the weekends she stays in town, she normally goes out to bars or restaurants and also goes to the movie theater; f) What neighborhoods does she frequent? Fernanda lives in Alto de Pinheiros, a suburb neighborhood in São Paulo, where her school is located and most of her friends live. Also, her boyfriend and grandmothers live in Higienópolis, an upper class neighborhood in the same city. Besides that, some other neighborhoods that she normally goes to restaurants, bars, shopping are Pinheiros, Vila Madalena, and Jardins. g) Does she have the opportunity to travel abroad? Traveling to new and different places is something important in her family. Because of that, since she was little she had the opportunity to visit places outside Brazil. Now, it is possible to say that, once a year, she has the chance to travel abroad. h) Where does she go to shop? Fernanda is a person who enjoys shopping. The easiest place is the shopping mall close to her house; however, she prefers to visit stores located on the street instead of spending the whole day in the mall. Also, she is always looking for new and smaller brands, some of them recommended by her friends, where she tends to buy not only for her but also birthday gifts to her friends. To finish with, every end of year, she goes to some bazaars with “handcrafted” and original products. Based on Fernanda’s profile, and mostly shopping profile, we would have the chance to reach her at the bazaars. Also, by knowing where she normally goes shopping – street stores – we could work with some multi-brands stores located in the neighborhoods she tends to go. According to what was explained in the beginning, customers tend to be connected to ByMe through some common person. Because of that, another way to reach her is through Instagram, Facebook or other type of social media.

3. Market Research and Competition: a) Market According to Fernando Pimentel, director of the Brazilian Association of the Textile Industry and Confection (ABIT), in the year of 2016 the Clothing Retail is expected to decrease 4,8% on total sales with a total of 6.15 billion pieces. However, this numbers should be better than last year, which was extremely affected by the economic crisis that Brazil is facing. Also, Pimentel pointed, “(…) sales are not over. Only sales that commit a bigger part of income should suffer more in this period.”

Also, in the past year Brazil’s economy is facing a negative period. Comparing the first half of the month of April with same period from last year, for example, sales went down by 4,3% according to Sao Paulo’s Commercial Association (ACSP). Additionally, according to the International Monetary Fund (IMF), Brazil should end the year of 2016 with the second worst Gross Domestic Product (GDP) of the World, finishing only in front of Venezuela. It is estimated that Brazilian’s economy shrinks by 3,5% this year. In the other hand, in 2017 Brazil should have a better scenario with a stagnated GDP. For the long term, with the Presidential election in 2018, the country is expected to perform better. b) Competitors Although ByMe sells only T-Shirts, we must considerer as our competitors all the brands that sell garments in general and have a similar proposal or target price as ByMe. Those brands stores are mostly located in the same neighborhoods where our brand’s target customers go to shop. It is possible to divide ByMe competitors in three main groups: the first one is composed by Fast Fashion companies, such as Zara, Forever 21, TopShop, and Riachuello. Even that these brands don’t have the same concept as ByMe, they work with low prices and are much more known so they can affect our sales. The second group is composed by brands that focus on T-Shirts, but most important in handmade garments. Also these brands are not big enough so have this unique and exclusive look and, because some of them are still trying to growth in market share, they participate in similar bazaars as ByMe. Furniture and accessories with an exclusive look form the third group. It is important to consider this group because ByMe’s target clients normally shop for pleasure and not for necessity. Based on that, they might not be that loyal to one store or one type of garment, but to a style – that we can see as vintage, (or) exclusive, and (or) handmade. c) Inspirations Some of the main inspirations to ByMe are: Melon Melon: The brand started selling T-Shirts but has expanded their products. Although the price range is much higher – ranging from R$180,00 to R$300,00 for a T-Shirt - it has a similar concept of being a “cool” brand focused on urban and modern young woman. It’s really impressive how big the company is with more than thirty thousand followers on Instagram and a very nice blog where they

talk about new tendencies from the fashion universe but also décor, trips, and lifestyle. In terms of communication, they certainly do a good job. Cabana Craft: Although this is not a T-Shirt brand, it can be considered a competitor because it has a similar public as ByMe and participates in same bazaars. Also, as the name explains, the process is very unique and handmade. As soon as Cabana Craft entered the market, they hired a good PR agency that was able to promote them a lot, which is an essential item. Now, not only the brand participates in bazaars, but they also expand and rented their own space, exactly the path we are looking for ByMe. Espaço Pie: This is a multi-brand store but has a really nice and cozy concept. They work only with small brands and on the back of the store have a nail salon, which it is a great idea because can generates greater flow on the store. Also, their space is located door to door to a very young and modern restaurant, so it is the perfect location for ByMe.

4. Pricing: ByMe’s t-shirt prices start at R$70,00, where you can find most part of the models, and goes up to R$100,00, with the sweater. Some factors were taken in consideration in order to define the price: (i) the costs to produce a T-shirt; and (ii) a safety margin in case something goes wrong (an unsuccessful bazaar, non-successful collection, etc.). Additionally, the price was determined based on the costs of multi-brands and sale distribution. In sum, the total cost of producing a T-shirt is: a) New pattern creation: R$140,00 – not always necessary and you can do as many T-shirts as you want with one pattern. b) T-Shirt development process (buying fabric, cost to sewn, costs of print): R$16,50 c) Tag and bag: R$ 1,00 Based on that, the total cost of each T-shirt is on average R$17,50. Because developing a brand is a risky process, where a whole production can be missed, it is necessary to have a safety margin. Also, it is important to have in mind that when working with multi-brands retailer, the final price to the company is lower, since those retailers normally pay only 50% of the total price of the product. The margin would also be important because as a brand we have some fixed and variable costs.

Based on that information and analyzing the competitors and not forgetting one of the brand’s differentiation of offering good prices, the final price is between R$70,00-R$100,00. In Brazil, a fast-fashion store like Zara charges approximately R$70,00 for a T-shirt. It is important to notice that Zara does not offers an exclusive product, such as the products from ByMe. Also, small stores charges for a more exclusive product around R$90,00 or more. Because of that, and also the feedback I had from consumers when offering ByMe products with an average price of 85 reais, it is possible to say that this is a good approach to the target.

5. Marketing: In order to market the brand, one of the initiatives that the company already put in practice is the communication regarding package and everything that is directly connected to the product. Based on that, all the t-shirts have tags that contain not only the brand’s logo but also a brief explanation about the brand history. Besides that, ByMe also uses customized bags to each of the t-shirts, making the whole consumer’s experience complete. Additionally, ByMe has an Instagram page that shows several customers wearing our products but also photos that I have taken. The reason we do this is to link the brand with the lifestyle we are committed to. Our Instagram page also feeds the brand’s page on Facebook. Everything that is post on Instagram is shared on Facebook, which attract people to the website, since we also shared our weekly posts on ByMe’s page on Facebook. To bring new customers, we used to work with the platform advertisement system. As part of ByMe marketing strategy there was also an entire website apart from the e-commerce, only with content. The goal of this website was basically to share our lifestyle with our public. In order to do that, the website is feed with weekly posts with general tips about restaurants, trips, new places or stores. Also, there is a page with pictures of all of our customers wearing ByMe, and a page with photos, which was also updated every one or two weeks. The website also had links to both Instagram and e-commerce pages. Nowadays, even trendier than Instagram is Snapchat. According to a marketing research from WGSN – a platform that provides trend forecast - “When luxury brands such as Burberry, Louis Vuitton and Valentino – each used to create high-quality and heavily controlled content – embraced Snapchat, it was a very clear

indication that the platform’s users were of too much future value to ignore”. For that reason, it is vital for ByMe to be part of this universe in the future. Also, the brand has the goal to start working with a Public Relation agency (PR Agency). According to Robert Wynne, “PR agencies, as opposed to advertising agencies, promote companies or individuals via editorial coverage. This is known as “earned” or “free” media — stories appearing on websites, newspapers, magazines and TV programs — as compared to “paid media” or advertisements.” In conclusion, not only they know the best place to indirectly advertise your brand, but they also make sure that the communication is more authentic than only a pure advertisement. The expected expenditures in website and marketing are:

6. Sales and Distribution: Nowadays it is very important to diversify the sales mechanism. Based on that, since its beginning, ByMe was working with four different sales platforms. Initially, the only mechanism was the direct sale. In this case, I used to promote events in a specific venue, such as my house, in order for the public to see all the products. Also, I used to send to people’s house a small bag with some tshirts options for them to try and choose. After one or two days, when the clients were able to choose which products they wanted to buy, I offered a free pick up service. Letting people to get in contact with the clothes in their own place and try everything in their own pace was something that really worked for the brand because the clients would normally buy more than the expected plan and take this opportunity to show the garments to the rest of their family or friends, which normally resulted in more sales. After sometime working exclusively with direct sale, the company started to develop a website in order to facilitate the shopping experience. The website was mainly used for people to know about the news, rather than as a selling mechanism. According to a report elaborated by ATKearney “physical retail is by no means dead.

Physical stores remain the preferred shopping channel and where the most significant value continues to be created, as customers are able to touch and feel products, be immersed in brand experiences, and engage with sales associates.� In a smaller brand it is even more difficult since first buyers don’t know the quality of your product and how it fits on the body. To make sure that clients have direct contact with the products, we also start working with multi-brands stores. In order to sell the products, most of the stores charge around 50% for every sold item. These stores were located in Jardins, Pinheiros and Vila Madalena, in streets with lot of commerce and restaurants, and a large flow of people. Finally, we participated in some seasonal markets, as a great opportunity to bust the sales. In the last six months the brand also started working with a sales force. To recruit the sale agents, we focused on our target market. The idea was that more than sale agents, we would work with people who could represent well the brand’s image. We were working with about eight young women. To select them, the brand focused on actual clients, they should represent our lifestyle, having in mind that it was important to work with a wide range of different sales agents: one of the girls used to work in a law office while the other in an advertisement agency. At the beginning of every month these agents received a bag with ten t-shirts (but they could receive more orders and pick more items with us) to sell on consignment. Bellow you can see the compensated plan: From"21+"








When discussing about our competitors, selling through the website and multi-brand stores cannot be considered an advantage to the brand. However, focusing on direct sale was a big differential because not only it was comfortable to the client and establish a close relation with the brand, but also direct sale is not

something brands really focus, specially using agent force; that was actually a lot more than a simple way of selling, but the best marketing we could have. Because we were still a small brand and distribution was difficult, the market we worked was restricted for Sao Paulo.

7. Operations: The operation’s system that we had until now is not perfect at all. However, because of the brand’s size it was our only option. Even brands bigger than ByMe have to operate this way to cut unnecessary expenses. In order to create the garments, we didn’t count with our own factory and in the near future we won’t be able to change that. Normally in Brazil, a brand has to be really consolidated or produce to other brands in order to have its own factory. With globalization and the entrance of Koreans and Bolivians in the Brazilian “fashion production” market, lot of brands had to close their own factory or start buying from outside because they just couldn’t work with the low margins that these new competition established. Production process starts every first week of the month, with one month in advance. So, for example, to have everything ready to sell in December, I have to start in November. The first step is to decide the designs, draw everything and determine quantities. In case I decided to make any new model, I would have to develop a new pattern. This process, to create a pattern and approve it could take up to two weeks. Once I had everything ready, the next step is to go to a fabric store to search for the fabrics. This is the only raw material I needed to buy because the rest was the dressmaker’s responsibility. Also, it was easy to locate the materials I needed for my product since there is a whole neighborhood in Sao Paulo focused on fashion items. Besides buying the fabric, I would also have to produce the composition tags and buy the bags. With all the fabric and drawings, next step is to take everything to my dressmaker. He would take about three weeks to sew everything. While the garments were in production, I would select the photos and print them in a place specialized in sublimation. They would also stamp the photos on the t-shirts to finish the process.

From now on, ByMe’s plan is to change the actual factory and work with a larger supplier, responsible not only by producing the patterns, but also sewing them and elaborating the tags. In the beginning this plan wasn’t feasible because of the low quantity produced. However, now that the brand is more established and is planning to get even bigger we would have more skills to negotiate favorable terms. Also now I do the quality control, however with this new factory they are much more structured and have people responsible for that sector. By using this new factory, I will have much more time to focus on selling and customer service.

8. Financials: Below is the information regarding initial costs, such as fixed and variable costs, in order to turn the brand a real project.

To analyze the brand’s break-even two analyses were developed. Based on ByMe costs and profits, the first graphic shows that from the moment we start selling sixty t-shirts we will reach the monthly break-even, in other words, the moment we paid for all our initial investment.

However, it is complex to start a company. It normally takes some time to start achieving the initial goals. Based on that, it was developed a second study that shows not the quantity we need to sell – since we already have this number- but how long it will take for us to achieve the break-even. Based on a prevision of how many T-shirts the brand will sell from the start until reaching the sixty units per month, it was identified that it will take around two months for the brand to start ending the month with profit rather than with dept. Yet, by observing the accumulated data, it will take five months until ByMe achieve a positive balance. In#Reais Month Total#Sales#(units) Revenue Fixed#Costs Variable#Costs Profit/(Loss)#=#per#month Profit/(Loss)#=#accumulated

In#Reais Month Total#Sales#(units) Revenue Fixed#Costs Variable#Costs Profit/(Loss)#?#per#month Profit/(Loss)#?#accumulated

0 0,00 R$################= =R$#######3.115,77 R$################= 'R$******3.115,77 'R$******3.115,77

6 120,00 R$###8.400,00 ?R$###3.115,77 ?R$###2.100,00 R$***3.184,23 R$***5.489,61

1 30,00 R$#######2.100,00 =R$#######3.115,77 =R$##########525,00 'R$******1.540,77 'R$******4.656,54

7 120,00 R$###8.400,00 ?R$###3.115,77 ?R$###2.100,00 R$***3.184,23 R$***8.673,84

2 70,00 R$######4.900,00 =R$######3.115,77 =R$######1.225,00 R$**********559,23 'R$******4.097,31

8 120,00 R$###8.400,00 ?R$###3.115,77 ?R$###2.100,00 R$***3.184,23 R$*11.858,07

3 80,00 R$#######5.600,00 =R$#######3.115,77 =R$#######1.400,00 R$*******1.084,23 'R$*******3.013,08

9 120,00 R$###8.400,00 ?R$###3.115,77 ?R$###2.100,00 R$***3.184,23 R$*15.042,30

4 100,00 R$#########7.000,00 =R$#########3.115,77 =R$#########1.750,00 R$*********2.134,23 'R$************878,85

10 120,00 R$###8.400,00 ?R$###3.115,77 ?R$###2.100,00 R$***3.184,23 R$*18.226,53

11 120,00 R$###8.400,00 ?R$###3.115,77 ?R$###2.100,00 R$***3.184,23 R$*21.410,76

5 120,00 R$###8.400,00 =R$###3.115,77 =R$###2.100,00 R$***3.184,23 R$***2.305,38

12 120,00 R$###8.400,00 ?R$###3.115,77 ?R$###2.100,00 R$***3.184,23 R$*24.594,99

9. Project Timeline:

Based on this timeline, the first ByMe’s collection would be ready on middle of February 2017, same period that the brand would be able to start selling it products.

10. Next Steps: The long-term goal is to raise the necessary money to open my own store in five years: a store completely dedicated to the Byme products. In order for this to happen, it will be necessary capital to invest in the store. For the next steps I am considering that the necessary capital will come entirely from Byme’s operation, without other sources of funding. According to the initial projections, within five years the company will be selling ten thousand T-shirts per year versus the one thousand expected for the first year. To achieve these revenues, I consider that new employees will be hired. This plan also involves maintaining the sales agent and e-commerce, but stop selling to multi-brand stores, since it has a much lower margin. The target market will continuous to be Sao Paulo. Additionally, with the ecommerce expansion, it will be possible to target consumers from all over Brazil. The table below shows the projections for the first five years, and the additional employees needed to achieve the goal. Year Total.Sales.(units) Revenue Fixed.Costs Variable.Costs Profit/(Loss) Profit/(Loss).D.accumulated Extra.Fixed.Cost People.(Total.Salary) Total.Number.of.people Assistant Driver Logistic.responsable Marketing Cost.per.people.(month) Assistant Driver Logistic.responsable Marketing

1 .............1.240 R$.86.800,00 DR$.40.505,01 DR$.21.700,00 R$.24.594,99 R$.24.594,99

R$.............D 0

2 .................1.860 R$...130.200,00 DR$.....68.105,01 DR$.....32.550,00 R$.....29.544,99 R$.....54.139,98

3 .................3.720 R$...260.400,00 DR$...116.105,01 DR$.....65.100,00 R$.....79.194,99 R$...133.334,97

4 .................5.580 R$...390.600,00 DR$...146.105,01 DR$.....97.650,00 R$...146.844,99 R$...280.179,96

5 .................10.000 R$.....700.000,00 DR$.....146.105,01 DR$.....175.000,00 R$.....378.894,99 R$.....659.074,95

R$.....27.600,00 1 X

R$.....75.600,00 2 X X

R$...105.600,00 4 X X X X

R$.....105.600,00 4 X X X X

X R$...2.300,00 R$...1.500,00 R$...2.500,00 R$...2.500,00

According to the projection, in the end of year five, the company will have accumulated over six hundred thousand reais. Since the initial investment estimative is about two hundred to three hundred thousand reais, this amount will be enough to open the store and take Byme to another level:

Costs%to%open%a%store %%%%%%%%%%%%Store%(%rent%for%one%year) %%%%%%%%%%%%Improvements %%%%%%%%%%%%Ventilation%system %%%%%%%%%%%%Decoration %%%%%%%%%%%%Equipment %%%%%%%%%%%%Computers %%%%%%%%%%%%Inventory TOTAL

R$%%%%144.000,00 R$%%%%%%%%9.000,00 R$%%%%%%%%3.500,00 R$%%%%%%10.000,00 R$%%%%%%%%4.000,00 R$%%%%%%%%1.500,00 R$%%%%%%82.500,00 R$%%%%254.500,00

This is the first step in order to create a much more well-known and established brand.

Works Cited: Morah, Chizoba “Business Startup Costs: It’s in the Details.” Investopedia. Web. “Global Retail E-commerce Keeps on Clicking.” AT Kearney. Web. Aldenton, Samantha “Marketing in 2016 – Top Trends.” WGSN. Jan 29,2016. Web. Thau, Barbara “Study Finds Shoppers Prefer Brick-and-Mortar Stores to Amazon and EBay.” Jul 25, 2014. Web. Wynne, Robert “What Does a Public Relations Agency Do?” Forbes. April 10, 2013. Web. Gordon “GANT Chart Example.” Lecture Hub. Nov 14, 2013. Web. “Quanto Ganha um Profissional de Marketing” – What is a Professional Marketing Average Salary. Guia da Carreira. Web. “Guia de Profissões e Salários” – Professions and Salary Guide. Catho. Web. “Pesquisa Salarial” – Salary Research. Salário BR. Web l&idadeDe=16&idadeAte=80

Zap. Web. “Como Montar uma Loja de Roupas e Acessórios para Surfistas” – How to Build a Surfer’s Garment and Accessories’ Store. Sebrae. Web.,3ba87a51b9105410VgnVCM1000003b74010aRCRD Naime, Laura and Trevizan, Karina and Laporta, Taís “PIB do Brasil terá Segundo Pior Desempenho do Mundo em 2016” = In 2016 Brazil’s GDP Will Present Second Worst Performance in the World. Globo Economia. Feb 17, 2016 Web “Vendas no Varejo Recuam 4,3% na Primeira Quinzena de Abril” – Retail Presents Decrease of 4,3% in First Half of April. Varejista. April 19, 2016. Web. Freitas, Tatiana “Com Ajuda do Câmbio, Setor Têxtil Deve Crescer 5% em 2016” – With Help From Currency Exchange Textile Sector Should Grow 5% in 2016. Folha de S. Paulo. April 02, 2016. Web.

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