Details regarding the business are as follows –
1.2 The market
1.3 The future
The key objectives of the business with regard to finance are as follows –
Rose petal (RP) is the retail store that will deal in kids clothing and the business will be initially established in East Sydney. It will present wide range of the kids clothing that will be manufactured using various fabrics like wool, cotton and silk. The clothing will be designed keeping in mind the latest fashion trends.
2.2 Registration details
The business will be registered with Australian Securities and Investment Commission (ASIC) in the name of Mr John Steward under the brand name of Rose Petal. Further, before starting the business the company need to register with the Australian Taxation Office for complying with taxation requirements.
2.3 Business premises
The business will be located in East Sydney that is just 30 minutes away from centrally located Sydney Business Park.
The business will be owned by Mr John Steward. However, the organizational structure will include the production manager, who will be responsible for everyday decision making associated with manufacturing, HRD manager, who will be responsible for managing all the departments, Accounts manager, who will be responsible for taking all the finance related decisions (Schaper et al. 2014).
2.6 Key personnel
|
Name |
Designation |
Responsibility |
|
John Steward |
CEO |
All marketing and operational activities |
|
Ricky Hudson |
HRD Manager |
Managing all the departments |
|
Sally Armanda |
Account manager |
Making finance decisions |
RP will offer its customers the below mentioned kids clothing and products –
RP will use special cotton fibre for the garments that will be used by the kids during summer. This special fibre has never been used by its competitors and thereby it is expected that it will receive a positive feedback from the customers (Sadgrove 2016).
2.9 Insurance
The company will take insurance policies for its office equipments, warehouse products and various machineries in the manufacturing plant.
2.10 Risk management
|
Risk |
Likelihood |
Impact |
Strategy |
|
Increasing price of the fabric |
Highly Likely |
High |
The company shall find out alternate fabric that will not compromise the comfort of the kids |
|
Increasing maintenance cost |
Likely |
Medium |
The company must depend on the insurance policies and servicing policies, to provide smooth services. |
|
Retention of designers |
Highly Likely |
High |
As the company has high competition in the garment market, the designers are likely to leave for additional benefits. Therefore, the company will hold regular meeting with the designer to know their demand and preference. |
All the legal procedures will be adhered to as per the “Australian Business Licence and Information Service (ABLIS)” (Steingold 2015).
2.12 Operations
RP will sell its products through following 2 methods –
Under the sustainability plan, the company will make the following plans –
Kids wear market in Australia is highly competitive and slowly the market is shifting from growth to maturity. However, the increase in the children’s age group for 15 years and under is supporting the growth in revenue (Massa and Tucci 2013). High rate of immigration also contributed for the growth of the target market. It is expected that the industry revenue will be increased by 3.9% that is $ 3.4 billion over next 3 years.
Main targets for the company will be the children aged between 5 to 15 years. The characteristics for the targeted customers will be as follows –
|
Description |
% |
Sales (amt) |
|
Market total |
100% |
$ 2,000,000.00 |
|
Boys clothing |
40% |
$ 800,000.00 |
|
Girls clothing |
40% |
$ 800,000.00 |
|
Boys and girls accessories |
20% |
$ 400,000.00 |
Increase in the online shopping habits and social media has exposed the consumers to latest fashions and it influenced their desire for new trends and styles. Further, the weak sentiments of the consumers and subdued disposable growth in earnings over last few years influenced the popularity of fashion markets.
Various factors that will made RP as ideal choice of the customer will be as follows –
|
Strength |
Weakness |
|
· Wide range of products with great variance · Customized product can be ordered for the individual customers · Expert designers for following latest fashion trends · Discounts allowed on bulk purchase |
· Comparatively new as against the competitors · In the initial stage the marketing expenses will be large as for establishing the brand lot of advertising campaign will be required. · Huge capital will be required for starting up the business as the company will not be able to avail credit initially (Blackburn, Hart and Wainwright 2013). |
|
Opportunity |
Threats |
|
· There is huge demand for boys wear. Therefore, adding value to this category will be great opportunity · Animated movies character print has increased the demand among the children · The garment sector in Australia is growing fast and opening new opportunities for the (DaSilva and Trkman 2014) |
· Owing to recession the people are now more conscious for the pricing and prefers the brand where discount is high · The high competition in clothing retail sector creating threat for the company. |
|
Competitor |
Established date |
Size |
Market share (%) |
Value to customers |
Strengths |
Weaknesses |
|
Phoenix and the Fox |
Late 2014 |
2400 |
22% |
This brand offers the offbeat clothing at reasonable prices that can be chosen quickly (Fox 2018). |
100% organic cotton are used |
Availability is not there all over Australia |
|
Just Jack |
2012 |
2700 |
17% |
The main competitive advantage if this brand is that it truly cares regarding the feel and fit of the customers. |
Manufactures all type of boys wear like swimwear, sleepwear, casual wear and sportswear. |
Manufactures only for boys (Jack   2018). |
|
Huckleberry Lane |
2008 |
2900 |
7% |
This is the sleepwear brand and it makes comfiest and sweetest sleeping clothes for the people of all age groups (Huckleberrylane.com.au. 2018). |
It is made from soft and quality fabrics that can be fitted easily. |
Manufactures only sleepwear |
|
Feather Drum |
2016 |
1500 |
5% |
Their designs include the pieces that are made by skilled artisans instead of the robots |
Removes nasty chemical from clothes before launching it in the market |
Comparatively new in the industry (Feather Drum 2018). |
|
Little Edge Apparel |
2012 |
1900 |
14% |
Fully Australian made brand (Little Edge Apparel 2018). |
High quality and everything is ethical |
High price |
Various marketing channels like mailing, social media, direct sales, telephonic campaign will be used for marketing and advertising the brand. Further, the customer will be regularly updated on the upcoming clothes and discounts, if any.
To become the distinguished retailer for kids clothing that will be known globally for the quality of the product, setting new lifestyles and trends.
4.2 Mission statement
Mission of the company is to offer high value products to their customer on regular basis. For fulfilling this, they are focussed on the exceptional quality, design, convenience, interactive communication and innovation.
Major goals and objectives of the company are recognized with quality and cost efficiency. Other objectives are –
The key objectives of the business are as follows –
Further, the total requirement for start-up as estimated will be $ 21,09,000 for registration and other business needs and $ 33,50,000 for equipments. Therefore, total requirement will be $ 54,59,000, out of which 40% that is $ 21,83,600 will be raised through long term borrowings and 60% that is $ 32,75,400 will be raised through equity.
The assumptions made are as follows –
|
START-UP COSTS |
Cost ($) |
EQUIPMENT/CAPITAL COSTS |
Cost ($) |
|
Registrations |
Business purchase price |
$120,000 |
|
|
Business name |
$3,000 |
Start-up capital |
$800,000 |
|
Licences |
$2,500 |
Plant & equipment |
|
|
Permits |
$2,000 |
Vehicles |
$1,200,000 |
|
Domain names |
$2,000 |
Computer equipment |
$350,000 |
|
Trademarks /designs/patents |
$10,000 |
Phones |
$65,000 |
|
Vehicle registration |
$15,000 |
Fax machine |
$125,000 |
|
Membership fees |
$12,000 |
Security system |
$210,000 |
|
Accountant fees |
$45,000 |
Office equipment |
|
|
Solicitor fees |
$2,000 |
Furniture |
$300,000 |
|
Rental lease cost (Rent advance/deposit) |
$120,000 |
Shop fit out |
$180,000 |
|
Utility connections & bonds (Electricity, gas, water) |
$50,000 |
||
|
Phone connection |
$3,000 |
||
|
Internet connection |
$7,500 |
||
|
Computer software |
$120,000 |
||
|
Training |
$75,000 |
||
|
Wages |
$100,000 |
||
|
Stock/raw materials |
$90,000 |
||
|
Insurance |
|||
|
Building & contents |
$300,000 |
||
|
Vehicle |
$260,000 |
||
|
Public liability |
$50,000 |
||
|
Professional indemnity |
$40,000 |
||
|
Product liability |
$45,000 |
||
|
Workers compensation |
$100,000 |
||
|
Business assets |
$220,000 |
||
|
Business revenue |
$55,000 |
||
|
Printing |
$55,000 |
||
|
Stationery & office supplies |
$150,000 |
||
|
Marketing & advertising |
$175,000 |
||
|
Total start-up costs |
$2,109,000 |
Total equipment/capital costs |
$3,350,000 |
|
BALANCE SHEET FORECAST |
[Year 1] |
[Year 2] |
[Year 3] |
|
Current assets |
|||
|
Cash |
$4,369,900 |
$4,231,000 |
$3,532,500 |
|
Petty cash |
$25,000 |
$32,000 |
$29,000 |
|
Inventory |
$350,000 |
$250,000 |
$150,000 |
|
Pre-paid expenses |
$36,000 |
$23,000 |
$21,000 |
|
Fixed assets |
|||
|
Leasehold |
$600,000 |
$600,000 |
$700,000 |
|
Property & land |
$400,000 |
$500,000 |
$500,000 |
|
Renovations/improvements |
$20,000 |
$500,000 |
$750,000 |
|
Furniture & fit out |
$792,430 |
$800,000 |
$800,000 |
|
Vehicles |
$126,500 |
$258,700 |
$221,500 |
|
Equipment/tools |
$512,170 |
$460,953 |
$414,858 |
|
Computer equipment |
$450,000 |
$450,000 |
$700,000 |
|
Total assets |
$7,682,000 |
$8,105,653 |
$7,818,858 |
|
Current/short-term liabilities |
|||
|
Credit cards payable |
$320,000 |
$380,000 |
$310,000 |
|
Accounts payable |
$1,800,000 |
$2,020,000 |
$1,910,000 |
|
Interest payable |
$3,000 |
$14,000 |
$16,000 |
|
Accrued wages |
$45,000 |
$52,000 |
$51,000 |
|
Income tax |
$55,000 |
$45,000 |
$390,000 |
|
Long-term liabilities |
|||
|
Loans |
$2,183,600 |
$2,133,600 |
$2,083,600 |
|
Total liabilities |
$4,406,600 |
$4,644,600 |
$4,760,600 |
|
NET ASSETS |
$3,275,400 |
$3,461,053 |
$3,058,258 |
5.5 Profit and loss forecast
|
Particulars |
Year 1 |
Year 2 |
Year 3 |
|
Sales |
$ 5,000,000 |
$ 5,600,000 |
$ 6,384,000 |
|
Cost of goods sold |
$ 3,000,000 |
$ 3,248,000 |
$ 3,702,720 |
|
Gross profit |
$ 2,000,000 |
$ 2,352,000 |
$ 2,681,280 |
|
Gross profit % |
40% |
42% |
42% |
|
Expenses |
|||
|
Accountants fees |
$ 55,000 |
$ 55,000 |
$ 60,500 |
|
Advertising and marketing |
$ 120,000 |
$ 100,000 |
$ 80,000 |
|
Bank fees and charges |
$ 120,000 |
$ 105,000 |
$ 110,000 |
|
Bank interest |
$ 12,000 |
$ 10,500 |
$ 11,000 |
|
Credit card fees |
$ 6,000 |
$ 7,000 |
$ 12,000 |
|
Utilities (electricity, gas, water) |
$ 35,000 |
$ 40,000 |
$ 45,000 |
|
Telephone charges |
$ 3,500 |
$ 4,200 |
$ 4,800 |
|
Loan payments |
$ 50,000 |
$ 50,000 |
$ 50,000 |
|
Rent and rates |
$ 60,000 |
$ 60,000 |
$ 66,000 |
|
Motor vehicle expense |
$ 22,000 |
$ 24,000 |
$ 31,000 |
|
Repairs and Maintenance |
$ 4,500 |
$ 5,200 |
$ 6,700 |
|
Stationary and printing |
$ 8,000 |
$ 14,000 |
$ 16,000 |
|
Salaries |
$ 140,000 |
$ 140,000 |
$ 208,000 |
|
Insurance |
$ 1,070,000 |
$ 909,500 |
$ 773,075 |
|
Superannuation |
$ 42,000 |
$ 42,000 |
$ 62,400 |
|
Total Expenses |
$ 1,748,000 |
$ 1,566,400 |
$ 1,536,475 |
|
Profit before taxes |
$ 252,000 |
$ 785,600 |
$ 1,144,805 |
|
Taxes paid @ 30% |
$ 75,600 |
$ 235,680 |
$ 343,442 |
|
Net Profit after tax |
$ 176,400 |
$ 549,920 |
$ 801,364 |
|
Profit/loss percentage |
3.53% |
9.82% |
12.55% |
Reference and Bibliography
Andries, P., Debackere, K. and Looy, B., 2013. Simultaneous experimentation as a learning strategy: Business model development under uncertainty. Strategic Entrepreneurship Journal, 7(4), pp.288-310.
Blackburn, R.A., Hart, M. and Wainwright, T., 2013. Small business performance: business, strategy and owner-manager characteristics. Journal of small business and enterprise development, 20(1), pp.8-27.
Bocken, N.M., Short, S.W., Rana, P. and Evans, S., 2014. A literature and practice review to develop sustainable business model archetypes. Journal of cleaner production, 65, pp.42-56.
DaSilva, C.M. and Trkman, P., 2014. Business model: What it is and what it is not. Long range planning, 47(6), pp.379-389.
Feather Drum. 2018. Feather Drum – Feather Drum. [online] Available at: https://www.featherdrum.com/ [Accessed 27 Mar. 2018].
Fox, P. 2018. Phoenix and the Fox. [online] Phoenix and the Fox. Available at: https://www.phoenixandthefox.com.au/ [Accessed 27 Mar. 2018].
Huckleberrylane.com.au. 2018. Shop Sleepwear & Pyjamas Online & In Store | Huckleberry Lane. [online] Available at: https://www.huckleberrylane.com.au/ [Accessed 27 Mar. 2018].
Jack , J. 2018. Dymocks – Just Jack by Jane Tanner. [online] Dymocks.com.au. Available at: https://www.dymocks.com.au/book/just-jack-by-jane-tanner-9780143504924/ [Accessed 27 Mar. 2018].
Klang, D., Wallnöfer, M. and Hacklin, F., 2014. The business model paradox: A systematic review and exploration of antecedents. International Journal of Management Reviews, 16(4), pp.454-478.
Little Edge Apparel. (2018). Little Edge Apparel | Australia | Mummy and Kids Designer Clothing. [online] Available at: https://littleedgeapparel.com/ [Accessed 27 Mar. 2018].
Massa, L. and Tucci, C.L., 2013. Business model innovation. The Oxford Handbook of Innovation Management, Oxford University Press, Oxford, pp.420-441.
Sadgrove, K. 2016. The complete guide to business risk management. Routledge.
Schaper, M. T., Volery, T., Weber, P. C., & Gibson, B. 2014. Entrepreneurship and small business.
Simpson, A. 2014. Community. In The Brand Strategist’s Guide to Desire (pp. 19-49). Palgrave Macmillan, London.
Steingold, F. S. 2015. Legal guide for starting & running a small business. Nolo.
Tukker, A., & Tischner, U. (Eds.). 2017. New business for old Europe: product-service development, competitiveness and sustainability. Routledge.
Ward, J. 2016. Keeping the family business healthy: How to plan for continuing growth, profitability, and family leadership. Springer.
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