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For the vintage inspired lifestyle

Strategic Business Plan Startup

Sarah Markgraf December 4, 2012


TABLE OF CONTENTS General Company and Product Description ……………………………………...………………5 General Company and Product Description Continued ………………………….……………….6 Customer ………………………………………………………………………………………….7 Customer Profile ………………………………………………………………………………….8 Market Research and Competition ……………………………………………………………….9 Marketing ………………………………………………………………………………………..10 Pricing, Sales and Distribution ………………………………………………………………….11 Operating and Financials ………………………………………………………………………..12 Balance Sheet and Income Statement …………………………………………………………...13 Project Timeline …………………………………………………………………………………14 Appendices ………………………………………………………………………………………15 Appendices Continued …………………………………………………………………………..16 Appendices Continued ………………………………………………………………………..…17 Appendices Continued …………………………………………………………………………..18 Works Cited ……………………………………………………………………………………..19 Works Cited Continued ………………………………………………………………………….20 Works Cited Continued ………………………………………………………………………….21

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EXECUTIVE SUMMARY Mission Statement  Lucille B’s is a unique online retailer that focuses on selling vintage and vintage inspired fashion and home goods. With our easy-to-manage site, the customer will be able to browse our one-of-a-kind inventory at their convenience. Lucille B’s is dedicated to matching their customers’ needs, ensuring that all products are tasteful, competitively priced, and are superior in quality. Our goal at Lucille B’s is to create an experience for the customer that is convenient, enjoyable and as individualized as they are because at Lucille B’s, we’re all about them. Company Information  Lucille B’s was a budding thought until the founder, Sarah Markgraf, entered into her final year Entrepreneurship class at Columbia College Chicago. Markgraf is the founder and President of the company, taking on all major roles. Her team includes a contracted IT systems support person/group in charge of all things tech and one to two contractors to help gain inventory, along with repurposing those items to turn them into the top selling quality products. Growth Highlights  The internet retail market is a great one to be in and there are no signs of it slowing down. According to research found on mashablebusiness.com, internet sales have been booming. “Last year, 167 million consumers — 53% of the U.S. population — purchased something online. That number is expected to grow to 192 million, or 56% of the population, by 2016. The study also projects that consumers’ average yearly online spending will increase from $1,207 per person in 2011 to $1,738 per person by 2016.” (Indvik, 2012) With the purchasing power being so great and quick inventory turnover, we expect to break even in sales within two years.

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Products and Services  Lucille B’s is an online retailer that focuses on bringing creating the vintage inspired lifestyle that our customer wants. Through our collection of vintage and vintage inspired clothing, accessories and home goods, they will be able to get one-of-a-kind, individualized pieces that cater to their personalities. We also sell product that makes for great gifts and with great gifts comes customized gift packing. Through our quality customer service, competitive pricing and stunningly unique products, we build the foundation of what will make Lucille B’s so successful.

Financial Information  Lucille B’s will start with initial capital of $30,000. This initial funding will cover start-up expenses including marketing, web development, etc. as well as purchasing inventory and operating expenses. This money is brought in by the owner, friends and family and with the help of angel investors. We are currently seeking a $10,000-$15,000 investment from an angel investor. We expect to reach breakeven within two years. Future Plans  Although we are in the startup phase, our company has plans to expand internationally. We will be starting off our sales primarily in the United States by promoting and advertising our company here. However, since we are an online retailer, expanding and marketing globally once we breakeven in sales, would allow us for even more growth and success.

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GENERAL COMPANY AND PRODUCT DESCRIPTION Company biography: Lucille B’s was inspired by founder, Sarah Markgraf’s greatgrandmother, Lucille Button. From a young age, her great-grandmother encouraged her to pursue her dreams of being in the fashion world. Long after her passing, Markgraf continues to hold her great-grandmother’s ambition, confidence and encouragement close to her heart. Markgraf’s professional education at Columbia College Chicago allowed her to pursue Bachelor of Arts degree in fashion business and a minor in art history. Through her time in college she developed a knack for being stylish without sacrificing her wallet. In hopes to give other people the same experience, she developed Lucille B’s, an online retail service that would give her customers access to unique, competitively priced, quality fashion and home goods. Products and services: Lucille B’s will provide vintage and vintage inspired fashion, small furniture pieces and home good accessories via internet. The customer will be able to browse our inventory at their convenience and will be able to purchase online. The product will then get shipped for a small shipping fee to the address requested. We will also provide specialized gift wrapping to make for an individual and customized gift as an option. Opportunities and differentiating Factors: With such easy access to internet today it isn’t hard to find product out there. In fact, there are several vintage and vintage inspired retailers that exist, yet not many of them focus on providing different era lifestyles all in one place. Prominent competitors in the market sell many home accessories, but they are for a different type of market. At Lucille B’s, each product will be handpicked with the customer’s sophisticated, eclectic and individual tastes in mind. Target market: The target clientele for Lucille B’s ranges in ages from their mid-20’s to early 30’s. The market that Lucille B’s would be placed in would be in a niche market. The customer is one who appreciates quality goods that are as unique as them. It is important to them to not necessarily be trendy, but to have pieces in both their homes and wardrobe that matches their sophisticated, creative and one-of-a-kind attitude and lifestyle. Lucille B’s customer appreciates finding these goods at a reasonable price and enjoys gifting these items as much as they enjoy receiving them.

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Price point: Lucille B’s values itself on providing fair and competitively priced goods. Prices can start from $30 and go up to about $400 depending on the product. Average price points will be $200 for clothing and clothing accessories, $200 small furniture items and $50 for home accessories. We find these price points to be quite competitive in the market place. Mission statement expanded: Lucille B’s is a unique online retailer that focuses on selling vintage and vintage inspired fashion and home goods. With our easy-to-manage site, the customer will be able to browse our one-of-a-kind inventory at their convenience. Lucille B’s is dedicated to matching their needs with their customer, ensuring that all products are tasteful, competitively priced, and are superior in quality. Lucille B’s aims to accommodate themselves to the customer’s lifestyle by providing different era pieces in one easy access place. To continue the satisfaction, Lucille B’s provides an individualized gift wrapping service in which the customer can create and send a custom gift to their loved ones. We pride ourselves on customer service and are readily available for our customers when needed. Our goal at Lucille B’s is to create an experience for the customer that is convenient, enjoyable and as individualized as them because at Lucille B’s, we’re all about you.

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CUSTOMER Our typical customer ranges in age from her mid-20’s to early 30’s. She has a creative lifestyle and is specific in what she likes and wants, yet remains broad minded in most aspects of her life. She is sophisticated yet quirky, has a fast paced lifestyle but enjoys her downtime. She appreciates unique and quality products, which can be seen all throughout her home and wardrobe. She often spends her down time relaxing, reading and browsing the web for the next greatest deal on her favorite items that remind her of the good times from the past. How they will be reached: Since we are an online retailer, advertising and social media marketing will really need to be taken advantage of. By having a bulk amount of inventory first, we can create a website right off the bat. From there, creating partnerships and buying advertisement space on social media sites and prominent bloggers, we will be able to get our brand out there in the most efficient way possible. While it is an online retailer, we still can utilize word-of-mouth by spreading the word to people around us, as well as to local businesses. Creating simple, yet efficient physical marketing tools such as flyers, business cards, postcards etc. we can provide something tangible for the customer to see while hangout at the coffee shop or getting their hair done at their favorite salon. Reaching our customer is very important as they are who essentially drives our business. So putting ourselves in their line of vision is crucial to obtaining and maintaining a successful business.

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CUSTOMER PROFILE TARGET MARKET SEGMENT GEOGRAPHIC: Region: Mid-west, yet can reach nationwide City Size: Medium Urban/rural: Urban Climate: Four seasons DEMOGRAPHICS: Age: Mid 20’s to early 30’s Sex: Female Family Life Cycle: Undefined Income: $52, 090 - $90,000 Education: College + Occupation: Creative sector Ex: Public relations specialist Religion: Spiritual Ethnic Background: Undefined PSYCHOGRAPHICS: Social Class: Middle, upper-middle class Personality: Sophisticated yet quirky, unique, broad-minded, nostalgic Life-style: Fast paced yet enjoys their downtime, adventurous, nostalgic CONSUMER BEHAVIOR: Benefits desired: Brand and employee loyalty, individualized Usage rate: Medium

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MARKET RESEARCH AND COMPETITION The target market for this industry is defined under a niche market. Initially the target marketing may seem not very large, but when the use of online retail is taken into account, it allows for a larger projection of consumers. The customers using our products are ones that have most likely shopped at places similar and know what they are looking for. They aren’t necessarily looking for what is trendy, but rather what falls into their eclectic tastes. Traditionally, about 80% of customers that purchase through our store will be returning customers, leaving 20% of non-stationary customers. This 80% will make up most of our sales, allowing for a steady flow of profit. Demographic shifts could slow down the business, however, as the age of our customer is more limited. It will be our responsibility to consistently be matching our inventory with those of our current clientele. Again, since this is a niche market, the customer will likely end up coming back despite changes in age as the thought process of purchasing and individual tastes doesn’t necessarily go away. Since this business is through the internet, local economic events may not affect our business; unless it relates directly to our customer (i.e. a local corporation or business the customer works at shuts down). Broader economic events could drastically change how our company operates, including sales of other countries which could serve as a barrier to trade. However, US retail sales have been and continue to be steady. According to data found in the article, Online Retail in the United States, “The US online retail sector had total revenues of $172.5 billion in 2011, representing a compound annual growth rate (CAGR) of 8% between 2007 and 2011.” (MarketLine, 2012) This isn’t projected to slow down any time soon according to the same article. “The performance of the sector is forecast to follow the similar pattern with an anticipated CAGR of 8.1% for the five-year period 2011 - 2016, which is expected to drive the sector to a value of $254.5 billion by the end of 2016.” (MarketLine, 2012) This data shows that more people will continue to come to the internet for their shopping, which is something that we can take advantage of.

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MARKETING Online and viral marketing will be an essential part of our business as it will be one of the quickest ways for us to get noticed, other than word-of-mouth. According to the article, Consumer Attitudes and Online Retail Dynamics in the US, “The US has the second largest internet user base in the world, having nearly 235.6 million individuals with internet access. This is equal to 74.2% of the total US population, and displays an enormous internet appetite.� (Canadean Ltd 2012) These statistics are something that we will certainly be taking advantage of. We will do much of our marketing through online advertising via blogs and social media sites. We will also create our own company pages on all popular social media sites such as Facebook, Twitter, Pinterest, etc. We will also promote our site using flyers through any local businesses, trade shows, flea markets, etc. that would help generate customers. Coupons will also be generated. We want to present ourselves in the best way possible; therefore we will have a greater marketing budget. Marketing Budget: o Trademark registration and legal services: $500 o Logo design: $120 o Business card design and printing: $85 o Flyer design and printing: $600 o Online advertising: $1,200 o Coupon design, printing, and redemption costs $150 o Miscellaneous: $200 Total: $2,855

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PRICING, SALES AND DISTRIBUTION Several different factors will determine where we set our pricing. First, we will consider the costs. Our initial expenses, including marketing will take out a portion of money, which will serve as a base line for our pricing. If we determine our pricing lower than that amount, we won’t make money. Second, we will look at what our competition is charging and factor in their strengths, weaknesses, average prices, quality of product, location, etc. and price our product around some of those differences. Since we are new to the market, we will plan on debuting high and we will strategize our cost lowering accordingly when further competition comes. Customer knowledge from both ends will also be taken account for as our target customer will know and understand our products, so pricing fairly is important. As established, we will sell our products through our online retail store, lucillebs.com. Our website will have an initial cost of about $6,000 with a monthly hosting fee of $30. We will sell our product from our site and gain attraction using marketing and promotion tactics. Since this is an online business, no full time staff will be needed. However, costs for contracted labor will be taken in account as someone locally is needed to help repurpose any vintage finds and is available for other miscellaneous tasks that come up. They will receive $10 an hour for 40 hours a week equaling $100 per week and $400 a month. See competitive analysis matrix for more details. COMPETITIVE ANALYSIS MATRIX Your Business

Product/Service

Price Ranges Quality

$30-$400+ Good-excellent

Unique Features

Look book, custom styling, wear & tear service

Distribution System

Internet, email, social media

Marketing/Advertising

Word of mouth, local press, blog sites, social media

Geographic Location

lucillebs.com

Strengths

Fair Prices, accommodation to customer lifestyle, products cater to several individual personality types, strong customer loyalty and service

Weaknesses

Company A

Anthropologie: Unique LB's: Vintage/vintage inspired fashion, small furniture lifestyle clothing, pieces and home good accessories accessories, gifts and home décor $15-$8,000+ Good Carry handmade, unique, old & new objects in an array of categories Store, internet, email, mail, social media

Company B Modcloth: Vintage/retro clothing, accessories, gifts and home décor

Company D

One Kings Lane: Vintage Ruche: Trendy clothing and and market finds sold through accessory store weekly launch sales

$10-$500+ Poor-Good

$10-$215+ Poor-Good

Products have a vintage flair, unique, eccentric

Caters to the trendy yet classic, young adult

Internet, email, social media

Internet, email, social media

Internet, email, social media

Internet (ads), social media, monthly magazine, in-store, print media, etc.

Internet (ads), social media, monthly magazine, in-store, print media, television etc.

shopruche.com

onekingslane.com

Internet (ads), social Internet (ads), social media, media, monthly magazine, monthly magazine, in-store, print in-store, print media, etc. media, etc. 175 stores throughout the United States, Canada and United Kingdom anthropologie.com.

Company C

modcloth.com

$20-$1,500+ Good-excellent Weekly sales, vintage and new product, known designers, etc. create sales

Caters to an affluent Caters to price savvy and Caters to a younger/classic woman with discretionary sophisticated individual, Caters to younger/eclectic woman and children, On trend income, carries unique carries unique products, woman, carries unique products yet can still remain classic, products relating to costumized by category and and products with a vintage spin inexpensive, easy to navigate, customer interest, sells designer, location, etc, friendly customer service broad category of products reasonable prices

New business - several factors to take in account: Some product over-priced money, time, low start-up inventory, etc, small clientele based on quality, small due to small advertising budget, doesn't cater to men or customer market children, online only

Online only, caters primarily to Online only, weekly sales, women, vintage items rarely Online only, fair quality items quick product sell-out, must available subscribe in order to purchase

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OPERATIONS Most of our goods will be purchased personally through local travel to flea markets, thrift stores, artisan shops, small clothing companies, etc. Any vintage goods will be looked at by a contracted laborer and repurposed to bring up quality and value. Partnerships will be made with local artisan shops, boutiques, etc. to sell more vintage inspired products. Clothing, accessories, and all home goods will be looked at from each avenue. FINANCIALS This first year budget begins with an assumed initial capital to provide beginning cash on hand. This will allow us to cover startup costs, such as marketing, web development, legal, office expense. This initial cash will also fund the acquisition of the first year supply of inventory.

Also featured on the income expense statement are projected sales which assumed all of the first year inventory will be sold at 100% markup, along with the anticipated recurring monthly costs such as storage, labor, and tech services. For purposes of this projection all of the wholesale and retail price points reflect averaged amounts. Due to the one time startup costs, the first year is expected to result in a modest net loss. However, as the business matures into year two, net monthly profits from sales over expense should bring us to a breakeven point by midyear. However, the acquisition of inventory for year two may push our breakeven point closer to the end of the year.

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Lucille B's Balance Sheet and Income Statement – Year 1 Pro Forma Income / Expense Beginning cash on hand (initial capital) Start up costs Marketing Website development Legal Office supplies Misc.

Balance sheet +

30,000

-

36,160

+

30,000

+

23,840

2,855 6,000 500 500 145 Sub:

10,000

Inventory (first year's supply) Clothing (80 units @ $100 ea-avg) Furniture (50 units @ $100 ea-avg) Accessories (80 units @ $25 ea-avg)

8,000 5,000 2,000 Sub:

15,000

Recurring costs - monthly Storage rental Labor ($10 p/hr x 40 hrs p/mo) Web services Subtotal - monthly: Subtotal - annualized:

500 400 30 930 11,160

Total project annual expenses:

Sales - monthly Clothing ((80 units @ $200 ea/12)-avg) Furniture ((50 units @ $200 ea/12)-avg) Accessories ((80 units @ $50 ea/12)-avg) Subtotal - monthly: Subtotal - annualized:

1,333 833 333 2,500 30,000

Total project annual income:

Ending cash on hand:

Net profit (income - total expense) - Year 1: Net profit (income - rec .mo. expense) - Year 2: Breakeven point: Month 16 (mo.net inc.):

+

-

(6,160)

+

18,840

1,570

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PROJECT TIMELINE Since we don’t have a physical space to set up, this gives us more time to focus in other areas. Beginning in the fall of 2013, we will begin to develop our marketing material more in depth. We will also purchase the standard necessary supplies for our company. We will then create our website and our personal social media sites. A contracted laborer and I will then work on gaining inventory and repurposing vintage products. This will continue for several months. Once we gain a good amount of vintage material, both clothing and home goods, we will then begin to purchase our vintage inspired goods from local vendors and wholesalers, along with distributing our promotion material. We will allow for several months of shipping for our products and will have our storage facility set up just before selling to keep all of our goods in one space. Come August, we will begin to sell and then keep track of those sales in September, along with planning for the next season. DEVELOPMENT CALENDAR SEASON/YEAR:

MONTH STEP 1

STEP 2

STEP 3

STEP 4

STEP 5

STEP 6

STEP 7

STEP 8

STEP 9

STEP 10

STEP 11

STEP 12

OCT Research market, develop marketing material, gather business supplies

NOV

FALL 2013

DEC

JAN

DELIVERY:

FEB

MARCH

APRIL

MAY

JUNE

30-Jun

JULY

AUG

SEP

Create website, social media, etc. Acquire and repurpose inventory Early production, retail orders placed Major production/acquire inventory begins Major production/acquire inventory cont. Major production/acquire nonvintage inventory, develop and distribute promotions, advertisments

Shipping period

Shipping period

Shipping Cont.

Storage setup, compile all info, begin selling Track retail selling, plan for next season

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APPENDICES SWOT ANALYSIS Strengths

Weaknesses

Fair Prices

New business - several factors to take in account: money, time, low start-up inventory, etc.

Accommodation to customer lifestyle Products cater to several individual personality types Strong customer loyalty and service

Small clientele due to small advertising budget

Opportunities

Threats

The vintage style is making a come back

Online retail competitors such as Ruche, One Kings Lane, Modcloth

Online events through social media sites can be utilized to bring people to our website

Physical retail competitors such as Anthropologie, resale shops such as Crossroads Trading Co. and Buffalo Exchange

We can amp up advertising through blogs, etc. since online advertising has become a huge market in itself Local partnerships for advertising

Due to little knowledge of our product, people can turn to the above stores due to existing awareness of product and pricing Doesn’t cater to men or children

Doesn't cater to men or children Online only

External factors such as weather can be beneficial The economy: factors such as shipping, etc. could be to our business as we will be available 24/7 less attractive regardless of outside forces Sites like Etsy, EBay and Craigslist are places where we can sell product

Little marketing budget due to start-up

Chart of Management & Employees

Owner Contracted IT/systems Support Contracted Laborer (s)

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MARKETING MATERIAL Business Cards

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Website

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Flyer

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WORKS CITED General Sources: 

Dahl, Darren. "The Cost of Starting Up a Retail Shop." Inc.com. Inc., 8 Aug. 2011. Web. 26 Nov. 2012. <http://www.inc.com/articles/201108/business-start-up-costs-retailstore.html>.

"Costs of Starting an Online Retail Business." Costs of Starting an Online Retail Business. N.p., n.d. Web. 26 Nov. 2012. <http://www.startupnation.com/businessarticles/1227/1/AT_Costs-Starting-Online-Retail-Business.asp>.

Wong, Martin. "Cost Analysis: Starting A Retail Store Vs. An Online Ecommerce Business." Www.smartt.com. Smartt, 7 July 2010. Web. 26 Nov. 2012. <http://www.smartt.com/cost-analysis-starting-retail-store-vs-online-ecommercebusiness>.

Video: http://www.videojug.com/interview/how-to-determine-what-to-price-yourproduct-or-service-within-your-small-business

Customer Profile: 

“Public Relations Specialist: Job Profile & Salary." Public Relations Specialist Job Overview. U.S.News & World Report, 2012. Web. 26 Nov. 2012. <http://money.usnews.com/careers/best-jobs/public-relations-specialist>.

Executive Summary: 

Info and Chart: Indvik, Lauren. "U.S. Online Retail Sales to Reach $327 Billion by 2016 [STUDY]." Www.mashable.com. Mashable, 27 Feb. 2012. Web. 26 Nov. 2012. <http://mashable.com/2012/02/27/ecommerce-327-billion-2016-study/>.

Market Research and Competition: 

MarketLine. "Online Retail in the United States." Www.marketresearch.com. Market Research, 23 July 2012. Web. 26 Nov. 2012. <http://www.marketresearch.com/MarketLine-v3883/Online-Retail-United-States7077973/>.

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Marketing: 

Canadean Ltd. "Consumer Attitudes and Online Retail Dynamics in the US." Www.marketresearch.com. Market Research, 5 July 2012. Web. 26 Nov. 2012. <http://www.marketresearch.com/Canadean-Ltd-v132/Consumer-Attitudes-OnlineRetail-Dynamics-7047485/>.

Marketing Material: 

Image: http://www.newmediawise.com/

Business card pricing: http://www.eliteflyers.com/cart.php

Business cards: http://www.fedex.com/us/office/designprint/index.html

Flyer: http://www.postermywall.com/index.php/posterbuilder

Website: 

Website generator: www.wix.com

Images: 

Logo: http://www.colourbox.com/vector/beautiful-young-girl-face-silhouette-with-blackumbrella-on-rainy-vector-2215006

Images on Website: o Clothing: http://www.poshgirlvintage.com/1960s-metal-chunky-swirl-bohonecklace-p-3085.html o Clothing: http://www.poshgirlvintage.com/1920s-gold-flapper-era-cloche-p1560.html o Clothing: http://www.poshgirlvintage.com/1960s-green-silk-bullocks-cocktaildress-p-1329.html o Clothing: http://www.poshgirlvintage.com/1940s-barkcloth-wood-handbag-pursep-3223.html o Clothing: http://www.poshgirlvintage.com/1950s-yellow-trapeze-coat-jacket-p25.html

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o Clothing: http://www.poshgirlvintage.com/1960s-fabric-print-box-bag-purse-p1780.html o Clothing: http://www.poshgirlvintage.com/1970s-rare-platform-high-heel-shoes7-p-1670.html o Furniture:http://www.cottagehaveninteriors.com/furnitureFrenchCountryMain.ph p?page=39 o Furniture: http://theestateplantrusts.info/shabby-kitchen-accessories-andstyles/vintage-furniture-from-shabby/ o Prints: http://fineartamerica.com/art/all/vintage/framed+prints ď&#x201A;ˇ

Executive Summary Product Images: o http://www.art.com/products/p3840478546-sa-i4576722/botany-of-the-cottonplant.htm o http://pbaglino.blogspot.com/2009/04/vintage-french-chairs.html o http://pinterest.com/birdsnestonline/birdsnest-spring-summer-2012-collections/

ď&#x201A;ˇ

Flyer Product Images: o http://www.modcloth.com/th/orange-vintage-dress o http://www.polyvore.com/suzanne_kasler_vintage_inspired_mirror/thing?id=214 98247 o http://modernhouseinsight.com/colorful-chic-vintage-chair-2011-12-31

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Lucille B's Business Plan