Fragrance Store Business Plan

Fragrance Store Business externalizeBusiness Name FRAGRANCESCompany SummaryFragrances is a new natural and herbal tea cosmetics social club proposing to set up a signature herbal cosmetics store in Central London. The store lead take in in herbal cosmetics including perfumes.The come with has been setup by a team of three members who have years of experience in understanding and managing cosmetics business, channel merchandise and high-level sales. The promoters will initially fund the business themselves as they believe strongly in their product idea. Market research among over 1000 women in various historic period groups shows that there is a demand for such products. bargains projections for Fragrances atomic number 18 estimated be over 1 million for the head start year, with a bonnie net profit.The promoters feel that, by creating aware(predicate)ness of their products, many women will prefer to purchase their products for their own handling, as will friends and famil y members.ObjectivesCreate a niche trade in herbal cosmetics industryGenerate retail sales of over 1,000,000 in year one.Maintain a gross margin of over 65%.MissionTo give an un confine opportunity to women of all ages to become beautiful naturallyKeys to SuccessFragrances willOffer a unique line of herbal cosmetics that will take into account the differences in requirements of versatile age groups. Herbal cosmetic products are currently in demand today and are overly available but there are no differences in cosmetics available for different age groups.Satisfy the demand of women who do not want to workout cosmetics containing harmful chemicalsExecute a targeted marketing campaign to generate cognisance of the their productsFragrances will be a UK-based herbal cosmetics company offering its customers a serial publication of unique herbal cosmetics including skincare products, hair care products and perfumes. There will a wide variety in these cosmetics and will take the differ ences in requirements of diverse age groups. The store will have two product experts who will help the customers choose the right products according to their ages and requirements. The company will reach unwrap to customers through their own signature store as well as its website.In the future, the company will also explore the possibility of expanding to the entire UK by setting up a chain of such stores.Company Ownership decoratives industry in the UK is a growth industry dominated by a few key players. Fragrances needs to pool funding to be able to make its bearing felt in the industry. It will be set up as a private limited company as the three promoters will pool in their funds and will form the core instruction team. As a private company it will be able to achieve its initial standing which would not have been possible as a sole proprietorship or partnership firm. commence-up SummaryStart-up costs for Fragrances involve legal costs, computer supplies, new product marketing, website design and regulatory costs for cosmetics1. Start-up assets are mostly dedicated to start-up stock.Start-up ExpensesLegal1,000Computer Supplies1,250Marketing15,000Web design2,500Regulatory4,000General Administration (including rent and salaries)137,000Total Start-up Expenses160,750Start-up AssetsCash10,000Start-up stock60,000 other(a) current assets0Fixed assets (Including fixtures)20000Total assets90,000Total Requirements for Expenses and assets250,750To start with, Fragrances will introduce its herbal range in skincare products perfumes.Skincare productsThese will include day creams, night creams, exfoliating creams, anti-wrinkle or anti-ageing creams. Within these there will be creams for specific age-groups and skin types.PerfumesFragrances will start-off with a limited range of perfumes for the running(a) women. In stage two, more variety will be introduced.Source National Statistics, accessed from http//www.statistics.gov.uk/cci/nugget.asp?id=6Market SegmentationThe three important segments of the market who would steal herbal cosmetics are working executives, college and university students and ageing women. There will also be those who would shop for women, perhaps a husband, friend or a family member. though the store will be in Central London it will cater to the needs of entire UK. Women living outside London will cloud the cosmetics online through the company website. The absence of a store in small towns will not impact the sale as the product will be extremely effective and safe. The confidence will be based on additional expenditure on creating awareness about the products.As per the mid nose count estimates, the total women population in all age groups in UK is 30,730,300 (Source NSO Statistics). In addition, statistics indicate that on an average 93% of total women in all age groups buy cosmetics. The potential market may be set at 28,579,179 (93% of total women). Based on the primary and secondary segments, the projected sales think is conservatively set at less then 1% of the total potential market (285,790), as highlighted in the following table and chart.Potential Customers increment200820092010CAGRWorking women0%142,895142,895142,8950%Young girls0%107,171107,171107,1710%Ageing women0%26,79326,79326,7930%Others0%8,9318,9318,9310%Total0%285,790285,790285,7900% product ElasticityThe product is a necessity and is not highly price elastic. Consumers are ready to pay a higher product if they become aware of the unique benefits from the product.Industry AnalysisThe UK cosmetics industry accounts for 5 billion sales. (Source Euromonitor Consumer Europe 2002/3 18th Edition Pub. Euromonitor International Plc)) 93% of British women use cosmetics in some shape or form making us one of the highest users in Europe. (Source Key commemorate Report Cosmetics Fragrances A Market Sector Overview tenth Edition, Ed. By Eleanor Hughes) Convenience and benefits continue to be a key trend for British cosmetics consumer s. Easy application and usage, as well as effectiveness, are the main requirements. Some of these products have a higher price positioning, but consumers appear willing to pay higher unit prices if products can offer genuine benefits in terms of saving time.Fragrances will be a small segment of the cosmetics industry. The market is dominated by major players. Significant shifts in overall appreciate share in this sector have primarily been achieved through major mergers and acquisitions such as LOrals purchase of The personate Shop.Competition AnalysisNatural and herbal cosmetic products is a growing sector with the presence of a few big players such as LOral, Bodyshop, Boots and Johnson and Johnson. It is becoming stronger in the UK and UK is now competing with other European countries for product launches. There has been a 170 per cent increase on launches from the parallel period in 2006. According to a recent Mintel report, the UK has seen the largest increase in herbal beaut y products of any European country even in the first quarter of 2007. The country accounted for a mere five per cent of the 1600 organic cosmetics launched worldwide in 2006, which has now risen to 19 per cent of the 1053 products that have already been launched globally in 2007.In recent years there has been an explosion of activity as consumers have become more aware of the health benefits of use natural ingredients. Supermarkets have now begun to pick up on this trend, with leading chains such as Asda, Tesco and Waitrose all developing own brands to capitalise on the growing consumer demand for organic and ethical products.Our marketing strategy is to urinate product awareness among women using cosmetics by strategically placing Internet ads, using civilize mailers and generating PR.Competitive EdgeThe present herbal cosmetic retailers carry a mainstream line of cosmetics that are appealing to the masses. Due to their mass distribution model, it would not be prudent for them t o carry small amounts of specialty items for specific age groups. By positioning in the market as a specialty store, Fragrances is confident that countersign of mouth will help to create product awareness across UK.Fragrances unique selling proposition is that its products will be exclusive and customised for women in unity with their age groups, skin types etc. Currently, no major cosmetic retailer and online stores offer such customised herbal cosmetics.The primary weakness of Fragrance will be to generate awareness about the cosmetics and highlight how these are different from the other products available in the market. To generate sales, there is a need to first create awareness about the existence of the product and make it easy for potential customers to locate the speciality store. However, it will not be difficult to establish its presence in the cosmetics industry.Marketing StrategyFragrances marketing strategy is crucial to its success. The company will need to create aw areness of its products throughStrategically-placed ads in womens magazines and women tie in websitesDirect mail and email advertising to working womenNew product PR in publications for womenSales StrategySales are dependent upon creating awareness and generating excitement about the herbal cosmetics. The company will strategically place pop-up and banner ads on web-sites relevant to both women, use direct mail and e-mail lists and seek public relations coverage in relevant media sources.Fragrances will fulfil orders through its speciality store. It will also offer returning customers an option to place their orders on the companys official website, or fax in orders to the company.E-orders Customer can purchase online 24-hours a day, seven days a week.Fax orders Customers can fax in an order 24-hours a day, seven days a week.Sales ForecastThe sales forecast for First social class 2008 takes into account slower sales at the beginning as the company creates awareness of its produc t and website. Initially the company will be selling limited range of skincare products and perfumes. As the company grows, it will explore the demand for other types of customised products.The following table illustrates unit sales of 109,500 units for the first year. This would require the company to sell to less than 1% of its target market.FY 2008FY 2009FY 2010Unit SalesUnits Sold109,500115,000121,000 comely unit price 101010Sales receipts 1,095,0001,150,0001,210,000Direct Unit Costs333Direct Cost of Sales 328500345000363000Initially the company will be managed by its promoters. They will oversee product development, the online store, speciality store and marketing efforts. Outsourcing will be used on some initial tasks, specifically the website design and maintenance.Personnel PlanAs the companys launch date approaches, two product experts will be hired to help with the speciality store sales. As the company grows, more personnel will be added as needed.Personnel PlanFY 2008 ( in )FY 2009 (in )FY 2010 (in )Management team for 3 Members45,00045,00045,0002 Employees20,00021,00022,050Total People555Total Payroll65,00066,00067,050Fragrances project the gross margin to be healthy percent (70%). Sales projections for 2008 are at over 1 million. key out appendix for a projected profit loss account, projected cash-flow statement and projected balance sheet for the period 2008-2010.Start-up FundingThe promoters of the company will use personal funds to finance the start of this business. The primary start-up costs are as followsStart-up ExpensesStart up FundingStart up Expenses to fund160,750Start up Assets to fund90,000Total Funding Required250,750AssetsNon-cash assets from start-up80,000Cash10,000Additional cash Raised0Cash counterweight on Starting look10,000Total Assets90,000Liabilities and capitalLiabilitiesCurrent Borrowing0Fixed liabilities0Accounts payable0Other current liabilities0Total Liabilities0 capital letterPlanned InvestmentShareholders equity 250,750Investor0Additional Investment Requirement0Total Planned Investment250,750Loss at Start-up(160,750)Total Capital90,000Total Liabilities and Capital90,000Break-even AnalysisThe following Break-even Analysis shows what is needed in monthly sales to break even.Break-even Analysis (Year 2008)Monthly units break-even1,914Monthly Revenue Break-even19,140AssumptionsAverage per-unit revenue10Average per-unit variable cost3Estimated monthly fixed cost13396This Confidentiality Agreement (the Agreement) is by and between (hereinafter Disclosing Party) and the undersigned recipient of information. (hereinafter recipient role)Recipient and its Representatives shall not disclose any of the Confidential information in any manner whatsoever, except as provided under Permitted Disclosures. Recipient hereby agrees to indemnify Disclosing Party against any and all losses, damages, claims, expenses and legal fees incurred or suffered by Disclosing Party as a result of breach of this Agreemen t by Recipient or its RepresentativesAppendix A communicate Profit Loss2008 ()2009 ()2010 ()Sales1,095,0001,150,0001,210,000Direct cost of goods328,500345,000363,000Other costsCost of goods sold328,500345,000363,000Gross marge766,500805,000847,000Gross Margin %70%70%70%Total Operating Expenses396,025375,667352,917Profit Before Interest and Taxes370,475429,333494,083EBITDA370,475429,333494,083Interest ExpenseTaxes148,190171,733197,633Net Profit222,285257,600296,450Projected Cash Flow2008 ()2009 ()2010 ()Cash ReceivedCash from OperationsCash sales1,095,0001,150,0001,210,000Subtotal cash from operations1,095,0001,150,0001,210,000Additional cash trustworthyVAT received000New current borrowing000New other liabilities000Sale of other current assets000Sale of fixed assets000New Investment received000Subtotal cash received1,095,0001,150,0001,210,000ExpenditureCash spending58,00086,00095,000Bills payment652,232691,342727,276Total spent on operations710,232777,342822,276VAT paid000Repaymen t of current borrowing000Purchase of other current assets000Purchase of fixed assets000Dividends000Subtotal Cash Spent710,232777,342822,276Net Cash Flow384,768372,658387,724Cash Balance394,768767,4261,155,150Projected Balance Sheet200820092010AssetsCurrent assetsCash394,768767,4261,155,150Stock60,00060,00060,000Other Current Assets000Total Current Assets454,768827,4261,215,150Fixed AssetsFixed assets Accumulated20,00020,00020,000disparagement000Total Assets474,768847,4261,235,150200820092010Liabilities and CapitalCurrent LiabilitiesAccounts payable53,90057,08560,020Current borrowing000Other current liabilities108,583220,456308,795 retentive term liabilities0Total liabilities162,483277,541368,815Capital including profits312,285569,885866,335Total liabilities and Capital474,768847,4261,235,150BibliographyBarrow Colin, Barrow Paul, Brown Robert, The Business Plan Workbook, (2001) Kogan paginate LtdBlackwell Edward, How to Prepare a Business Plan, (2004) Kogan Page LtdBranson, Richard, The Best-Laid Business Plans How to Write Them, How to Pitch Them (Virgin Business Guides), (2005) Virgin Books New Ed editionCovello Joseph, Hazelgren Brian, The Complete Book of Business Plans (Jan 1993), SourcebooksEleanor Hughes, Key Note Report Cosmetics Fragrances A Market Sector Overview 10th EditionEuromonitor Consumer Europe 2002/3 18th Edition Pub. Euromonitor International PlcFinch Brian, How to Write a Business Plan, (2006), Kogan Page LtdMcKeever Mike P., How to Write a Business Plan,(1992) Nolo PressUK Population data accessed from http//www.statistics.gov.uk/glance/populationFootnotes1 The UK cosmetics industry is regulated under the the Department of Trade and Industrys 1996 Cosmetic Products (Safety) Regulations.