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Victorian Dolls 100 Victorian Street Doll City, ST. 12345 1-800-VIC-DOLL
CONFIDENTIALITY AGREEMENT
The undersigned acknowledges that the information provided by Jean Smith in this business plan is confidential; therefore, reader agrees not to disclose it without the express written permission of Jean Smith. It is acknowledged that information to be furnished in this business plan is in all respects confidential in nature, other than information which is in the public domain through other means and that any disclosure or use of same by reader, may cause serious harm or damage to Jean Smith Upon execution, this document is to be immediately returned to _______________. ___________________ Signature ___________________ Name (typed or printed) ___________________ Date This is a business plan. It does not imply an offering of securities.
I. LOAN REQUEST
Loan (investment) request ..............................................$ Total start-up requirements ...........................................$ General Use of Funds This is a start-up business. The funds will be used to cover the costs of equipment, inventory, and start-up expenses. Start-up expenses include purchasing inventory, inventory displays, and computer equipment. The balance of the funding beyond this loan request will come from personal savings. Funding Sources Bank loan ..........................................................................$ Business owner .................................................................$ Total funding required.....................................................$ Collateral Package Inventory...........................................................................$ 500 Equipment, furniture, and fixtures (wholesale value). .$ 500 Savings accounts ..............................................................$ 5,000 Stock, bonds and other securities ...................................$ 20,000 Collateral package value .................................................$ 30,000 Guarantors Jean Smith ........................................................................100 percent 0 3,300 3,300 0 3,300
B. Start-up Summary
Start-up Expenses Item Advertising for business opening Building construction/remodeling Beginning cash Computer expenses (Internet, e-mail, DSL, ISP expenses) Initial inventory Insurance (business liability insurance, etc.) Installation Lease or rent Licenses and permits (business licenses) Professional feels (legal, CPA, engineering fees, etc.) Salaries and payroll Other Total Start-up Expenses Start-up Assets Cash required Other current assets Long term assets Computer, furniture & fixtures Total Start-up Assets Total Start-up Funding Requirements Cost $500 $0 $300 $100 $500 $0 $0 $0 $100 $300 $0 $0 $1,800
Advertising. Advertising dollars will be spent for the following items. a) Local community magazine b) Yellow Pages c) Business cards. Computer expenses. Internet and e-mail service through the local ISP, and for website building. Installation. Equipment installation and set up. Insurance. Initial business liability insurance premium. Licenses. Annual business license fee owed to the county.
A. Market Segmentation With Victorian Dolls, the market for dolls is made up of three distinct groups. These groups are: a) consumers at craft fairs and shows (or online), b) gift and craft shop buyers and c) retail agents. Each of these groups has distinct buying patterns. Consumers tend to be impulse purchasers. They will make a decision to purchase at craft fairs or online by feel, instead of using logic to make a purchase. To appeal to this group, there must be a story around all of the dolls, discussing quality of materials and labor. Gift Shop Owners are more concerned with the bottom line. They will carry products based on perceived profitability, and must be sold on the features and benefits of the dolls in relation to why they will sell quickly. Retail Agents represent multiple products to a group of retail outlets on a commissioned sale basis. They have ongoing relationships with the shops they service, and are in a unique position to get crafted products in front of a lot of retail shops.
B. Target Market Segment Strategy Victorian Dolls will focus its efforts on the higher-end of the craft business market. Since the Victorian dolls created are unique and made with the highest quality materials from patterns that are original, all of the Victorian dolls will be viewed as a unique, handcrafted work of art. Marketing will be focused on creating a story around the quality of material and craftsmanship, as well as the certificates of authenticity assigned to each doll. A limited amount of production each year will help promote scarcity. The typical customer has a middle to upper class income, and they are able and willing to part with their money on unique items. C. Quilting Industry Analysis Crafting encompasses a number of different types of handcrafted items. These include (but are not limited to) jewelry, beading, soapmaking, dolls and stuffed animals, quilting, clothing, scrapbooking, embroidery, woodworking, metalworking, glass, pottery, and more. Basically, any kind of item that is made by hand. Over the years, the popularity of handcrafted items has grown as people have come to appreciate the beauty and uniqueness of handmade items over mass produced products. The following craft business statistics are from the Craft Organization Directors Association (CODA) Survey from 2001. One of the first things you should do is visit this web address to view the results of the entire report: www.craftsreport.com/may01/codasurveyresults.html As of 2001, the fine crafts market is a $13.8 billion industry, which is about half the size of the $29.9 billion toy industry and three times the size of the $4 billion organic foods industry. The most popular method of marketing or distributing crafts is through direct retail, accounting for 53 percent of annual craft sales. Wholesaling accounts for 27 percent of annual craft sales. Consignment is 11.2 percent, or the third most common method.
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Direct retail sales take place in a variety of venues. Craft fairs are the largest source of retail sales, at 51.8 percent of total sales. Studio retail sales account for 27 percent, and commission sales for 14.8 percent. Wholesale distribution within the United States provides an average of $73,373 of sales/revenue per year, and retail distribution provides $35,126. The average annual sales/revenue produced per typical craftsperson is $76,025. The median household income for families who derive part of their income from craft is $50,000, which is significantly higher than the median national household income for 1999 ($40,800) reported by the U.S. Census Bureau. The market for a craft business is excellent at this time, and the demand for handcrafted items does not seem to be slowing. And the strategy of starting out with a direct sales model, followed by attacking wholesale sales, seems to be a sound strategy based on the industry statistics.
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D. Competitive Analysis Competitor Analysis. Jane Doe offers handmade dolls similar to the craft products I am going to offer. Jane has operated her doll business for more than 20 years, and may be nearing retirement age. She has an established clientele of longtime customers who are very loyal to her work, and have purchased multiple dolls from Jane. She apparently provides excellent quality and service. However, Ms. Doe can be quite abrupt in her manner, especially to younger customers. She does not advertise, claiming she has plenty of word of mouth advertising. She does provide the occassional dollmaking class, and she is generally well-liked. Her business has matured and is in an apparent holding pattern. Strengths: 1. Established business with established clientele. 2. Well-liked and well known within the community. 3. Offers quality products and service. Weaknesses: 1. Does not advertise or seek new business. 2. Does not offer a lot of dollmaking classes on a regular basis. 3. Offers only a limited number of choices and styles. 4. Has not kept current with recent trends.
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W's Discount Store. This large chain department store has low quality designer dolls that compete with Victorian dolls on a marginal basis. Service quality. This store's service quality is poor. The clerks are not generally knowledgeable about sewing and quilting. Advertising. The store does only a small amount of advertising of its dolls and other craft items Staff. The staff members are part-time sales clerks who also work in other departments. For the most part, they are not knowledgeable about needs of customers for products in this department. Strengths 1. W's offers discount store pricing that is far below what Victorian dolls can offer their dolls for. Weaknesses 1. The store is regarded as a last resort for low quality merchandise.
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B. Sales Strategy and Forecast Sales strategy. The sales strategy of Victorian Dolls is outlined as follows. Craft Fairs and Shows The primary sales venue for Victorian Dolls the first year will be craft fairs and shows. Exhibiting at 40 local and regional craft shows will help drive sales of at least $30,000 in year one. Website The website will be used to make sales, while also serving as an online brochure and communication vehicle for existing customers and prospects. Gift Shops and Other Retail Outlets Victorian Dolls will look to develop wholesale agreements with at least 10 retail outlets the first year. Projected Sales Forecast.
Unit Sales Craft Item 1 Craft Item 2 Craft Item 3 Craft Item 4 Wholesale Craft Items Crafting Classes Other Unit Prices Craft Item 1 Craft Item 2 Craft Item 3 Craft Item 4 Wholesale Craft Items (50% markup) Crafting Classes Other Sales Craft Item 1 Craft Item 2 Craft Item 3 Craft Item 4 Wholesale Craft Items Crafting Classes Machine Quilting Services Total Sales Year 1 72 120 144 20 100 12 0 Year 2 79 132 158 60 110 13 0 Year 3 87 145 174 100 121 15 0
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The right hand section will have a list of doll resources and other links of interest. The website will be promoted via Google Adwords to drive local traffic searching for Victorian dolls or dolls or local crafts. In addition, the website will be promoted on appropriate websites themed around Victorian era crafts or dolls.
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B. Important Assumptions The national economy is projected to continue its course of steady growth. The local economy remains strong with a low level of unemployment and a strong real estate market. The target market consists primarily of people who have established incomes and are in their peak income years. Temporary economic fluctuations will have little effect on their buying patterns. The target market is generally regarded as middle class to upper middle class people, and is sufficiently affluent that they can pursue handcrafted items such as Victorian dolls without considering the costs. C. Projected Profit and Loss
Pro Forma Profit and Loss Sales Gross Margin Gross Margin % Expenses Payroll Loan Payment Advertising/Promotion Depreciation Rent (1500 sq. ft. @ $16 per) Utilities Insurance Payroll Taxes Computer Expenses Classroom Expenses Website Expenses Total Operating Expenses Profit Before Interest and Taxes Interest Expense Sales Taxes* Net Profit Net Profit/Sales Year 1 $33,400 $25,050 75.00% Year 2 $48,774 $36,581 75.00% Year 3 $67,245 $50,433 75.00%
$15,000 $0 $3,340 $0 $0 $50 $0 $1,500 $0 $0 $150 $20,040 $5,010 $0 $2,338 $2,672 8.00%
$16,500 $0 $4,877 $0 $0 $55 $0 $1,650 $75 $0 $165 $23,322 $13,258 $0 $3,414 $9,844 20.18%
$21,150 $0 $6,724 $0 $0 $61 $0 $2,115 $100 $0 $182 $30,331 $20,102 $0 $4,707 $15,395 22.89%
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$33,400 $33,400
$48,774 $48,774
$67,245 $67,245
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$2,783 $2,783
$2,783 $2,783
$2,783 $2,783
$2,783 $2,783
$2,783 $2,783
$2,783 $2,783
$2,783 $2,783
$2,783 $2,783
$2,783 $2,783
$2,783 $2,783
$2,783 $2,783
$2,783 $2,783
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All rights reserved. No part of this publication may be reproduced or duplicated without the express written permission of the publisher.
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