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FMAN3002 Financials lecture week 18 copy(1).pdf

FMAN3002 FASHION BUSINESS

BUSINESS PLANNING: FINANCIAL CONSIDERATIONS

WEEK 18

ABBIE SWINFIELD

KEY FINANCIAL TERMS

• Sales or Revenue – Money earned or received from providing a good service

• Profit – is determined by subtracting the expenses of the business from revenues generated

• Expenses – The costs incurred in operating the business and providing the product or service

• Asset – Any item of economic value that is owned by the business

• Liability – An obligation or amount owed to others

• Net income – The remaining income or revenue after all expenses have been paid

• Cash flow statement – A document that shows the difference between the cash a company expects to receive and its expected cash expenditures, on a monthly basis.

• Debts – Money loaned to a company that is expected to be repaid.

In addition, an entrepreneur should be familiar with the following concepts:

• Equity – Money invested into a company that is not intended to be repaid but rather, represents an ownership interest.

• Start-up costs- The one time costs involved in starting a venture. These costs include expenses such as initial marketing efforts or one-time deposits and capital expenditure.

REVENUE – IN SIMPLE TERMS

In month one, you sell 14 pink t-shirts.

Each T-shirt is sold for £24

Q - What is the revenue generated?

Answer is

14 x £24

= £336

Revenue equals

the total number

of products (or

services) sold at

the price charged.

REVENUE – IN SIMPLE TERMS

Revenue =

Number of Units sold

Price per Unit Revenue =

24 x £14

Revenue = £336

PROFIT – IN SIMPLE TERMS

Fabric £4.20

Cut, make, trim £3.80

Labels £0.40

Thread £0.10

Packaging £0.35

TOTAL COST £8.85

T shirt cost £8.85

T Shirt Sell price £24.00

VAT amount % 20%

VAT amount £4.80

Sell price less VAT £19.20

PROFIT £10.35

MARGIN

COST £8.85

SELL £24.00

VAT £4.80

SELL - VAT £19.20

PROFIT £10.35

PLANNED MARGIN & MARKDOWN

• The planned margin is the potential profit we stand to make if we

sell our goods at full price.

• However, in reality it is rare for a retailer to sell all the goods at full

price. There is almost always an element of markdown applied to the

original selling price

• Consider what your markdown strategy will be:

What % of sales will be at full price

What will be the first level of markdown (e.g. 25% off promo day)

What will the subsequent markdown be (e.g. 40% off end of season sale)

Think about what effect will your markdown strategy have on planned

margin?

FINANCIAL OUTCOMES

The financial plan focuses on three primary outcomes, each supported by written assumptions explaining the source and thought process behind the numbers:

Financial Performance:

How well is the business doing or will it do financially in comparison with other businesses in the industry?

Cash flow:

What are the cash needs of the business, and can sufficient sources be obtained to meet those needs?

Profitability:

Will the business operate at a profit?

PROFITABILITY

Although the entrepreneur may have enough funds to open the business, it is profit or profitability that sustains the business over a period of time.

Profits are necessary to:

• Repay debts

• Purchase fabric / trims / manufacture additional products

• Fund the growth of the business (reinvesting back into the business)

• Pay a dividend to shareholders

Profits are determined by subtracting the expenses of the business from revenues generated

FINANCIAL PLAN

• Within your business plan, you should provide the following financial information:

• Sales Forecasts

• Cash requirements

• Start up cash

• Any cash needed for future product development / store opening / pop up shops

• Break-Even analysis

• Projected financial statements

• Monthly Cash Flow statement

• Year-end income statement

In Addition to this, you

need to state how

much funding you will

need and what you will

do with this money.

This will be taught

during your excel

sessions in week 18

FINANCIAL PROJECTIONS

• Good financial planning is crucial to the success of the business

• An investor is interested in the size of returns and how quickly a company can

grow

• Bankers are interested in stability and minimising risk

• Investors and bankers need financial projections to make judgements on:

• Feasibility of the business

• Whether to offer overdraft / credit facilities / loans

• Whether to offer investment

• If your plan is beautifully written but lacks the financial section, investors and

bankers won’t have the information they need to offer financing or funding.

START UP EXPENDITURE

Businesses are seldom cash flow positive when they start up

Why?

Initial capital is needed to start the business.

There are many costs to consider when starting a business:

• Office premises & furniture

• Branding and brand collateral

• Fabric, trims and manufacturing

• Marketing & PR

• Product imagery, photography and post production

• Website and legal

* A budget should be prepared that lists all the anticipated operating expenses and capital purchases that will be needed to get the business up and running.

Start Up Expenditure:

Refers to the total cash

needed to prepare the

business to make its first

sale

START UP EXPENDITURE

• A budget should be prepared that lists all the anticipated

operating expenses and capital purchases that will be

needed to get the business up and running.

• After a start up capital figure is reached, you will need to

provide an explanation of where the money will come

from.

Start Up Expenditure:

Refers to the total

cash needed to

prepare the business

to make its first sale

I plan to

bring an

investor on

board

I will

borrow the

money

You will need to provide a more

detailed and thoughtful account of

how you will find the start up

capital for your initial cash needs

Showing how a new ventures start up costs will be covered and repaid is an important issue

You will be given this start up expenditure template

to work on as a guide.

You should input your anticipated start up costs (one

off costs) in the following areas:

• Office

• Website

• Branding

• Production

• Creation

• Marketing & PR

EXPENSE TYPE COST COMMENTS

OFFICE

OFFICE FURNITURE 500.00£ 2 x desks, 2 x chairs, drawers, shelves

LAPTOPS 2,000.00£ 2 x mac book pro

LAND LINE & PHONES 150.00£

PRINTER / INK / PAPER 200.00£

SUB TOTAL 2,850.00£

WEBSITE

WEBSITE DEVELOPMENT 5,000.00£ using agency

ADD ONS AND PLUG INS 1,000.00£ including woocommerce, mail chimp, DHL plug in

LEGAL COSTS FOR T&Cs 500.00£

DOMAIN NAME & EMAILS 50.00£

SUB TOTAL 6,550.00£

BRANDING

BRAND DEVELOPMENT 250.00£ could be reduced if designed yourself

BRAND STATIONARY 150.00£ including letter heads, compliments slips, envelopes

TRADEMARKING BRAND 200.00£

BOXES 200.00£

TISSUE & STICKERS 100.00£

SUB TOTAL 900.00£

PRODUCTION

PATTERN CUTTING 150.00£

SAMPLING 175.00£

TRIMS 500.00£ 500pcs at £1 per piece

MANUFACTURING 5,000.00£ 500pcs at £10 per piece

TESTING 100.00£ will use SGS labs in Leicester

FABRIC 5,000.00£

SUB TOTAL 10,925.00£

CREATION

PHOTOGRAPHY COSTS 1,000.00£ including worn shot, flat shot and rights to all images

MODEL COSTS 250.00£ potential to use friends / family

STUDIO HIRE 250.00£

POST PRODUCTION 75.00£

SUB TOTAL 1,575.00£

MARKETING

PRESS RELEASE 250.00£ agency employed to do this

PRESS SAMPLES 250.00£

PRESS LAUNCH EVENT 1,000.00£

INFLUENCER GIFTING 100.00£

FACEBOOK ADS 50.00£

MAGAZINE ADVERT 500.00£

INSTAGRAM ADS 50.00£

SUB TOTAL 2,200.00£

FINAL TOTAL 25,000.00£

START UP EXPENDITURE

If you anticipate incurring any other costs, please include these too

SOURCES OF FUNDING

You must make a decision on the sources of funding:

• Bank loan

• Overdraft

• Government grant

• Start up loan

• Crowdfunding

• Equity investment

• Angel Investment

NB -Your preferred method of funding should be highlighted within

the business plan

Have a look at this infographic from Funding Note:

https://www.fundingnote.com/wp-

content/uploads/2016/06/Business-Funding-Options-

Infographic-FundingNote.jpg

It shows various way you can fund a business.

In particular, you should research the following:

• Angel Investors

• Product Pre-sales (how much could you raise from this)

Also, you should research crowd funding and Funding

Circle loans. (Note there are various crowd funding

platforms, if you choose to finance your business via this

route, you will need to state which platform you have

chosen.)

www.fundingcircle.com

https://www.fundingnote.com/wp-content/uploads/2016/06/Business-Funding-Options-Infographic-FundingNote.jpg

http://www.fundingcircle.com/

CROWDFUNDING Examples of various

crowdfunding platforms

https://www.crowdfunding.com/selection/

WHAT FACTORS AFFECT YOUR SALES FORECAST?

It is important that you think about the external factors which may affect your sales growth.

• Sales and marketing activity - your brand may have a key activity planned e.g. private sale event

• Seasonality - if your product is seasonal e.g. waterproof you need to think about which months the sales will

peak

• Retail calendar - Most products will naturally uplift in December and drop in January (remember your

product will be launching in January)

• Planned discount strategy - If you plan to discount

heavily on black Friday for example, you may see a peak in

sales at the end of November

• The product lifecycle – the product will naturally

follow a launch / growth / maturity / decline phasing

structure http://knowledgegrab.com/wp-content/uploads/2014/11/Product-life-cycle.jpg

Q - Why is forecasting important?

It is important to realistically estimate the number of items you think you will sell

over 1,3 and 5 years for the following reasons:

• You will need to negotiate with the supplier on an initial order quantity which will

determine the cost price and lead time.

• If your forecast is too optimistic (high), you will order too much stock. You may

get a better cost price, but you will have an increased initial investment,

spending cash you don’t need to and will ultimately end up with residual (left over)

stock which is a risk to the profitability of the business.

• If your forecast is too pessimistic (low) you won’t order enough stock. You won’t

maximise sales potential and will restrict sales growth.

SALES FORECASTING

MARGIN AND PROFIT

Margin is simply the difference between the cost and the sell price expressed as a percentage of the selling price. It is the margin you plan to make.

Calculating a margin without VAT (childrenswear)

Sell price £69.99

Cost price (Landed) £15.66

Margin 77.62%

Margin is calculated as follows:

selling price - cost price x 100 = margin percentage

selling price

The profit on the garment is calculated by taking the landed cost price away from the sell price excluding VAT e.g. £58.32 - £15.66 = £42.66 profit

COST

PRICE

SELL

PRICE

The difference

expressed as a %

MARGIN AND PROFIT

Calculating a margin with VAT (mens and womenswear)

Sell price £69.99

Sell price excluding VAT £58.32 (sell price including VAT divide by 1.2)

Cost price (Landed) £15.66

Margin 77.62%

Margin is calculated as follows:

selling price ex VAT - cost price x 100 = margin percentage

selling price ex VAT

The profit on the garment is calculated by taking the landed cost price away from the sell price excluding VAT e.g. £58.32 - £15.66 = £42.66 profit

HOW DO I DETERMINE MY SELL PRICE?

The sell price will normally be 3 x your landed cost price.

This will give you a margin of 66.67% which is a standard margin for a high street retailer. This figure is normally rounded up or down to the nearest pound or retailers pricing architecture.

For example, NEXT may sell ladies T -shirts for between £6 and £30

The pricing architecture may look something like this:

• Basic plain £6

• Basic stripe £7

• Basic printed £8

• Basic embellished £10

• Mid embellished £15

• Highly embellished £20

• Fully sequined £30

EXAMPLE OF SETTING A RETAIL SELL PRICE

Garment

description Manufacturer’s

Cost price

Cost Price x

Rounded up / down

to nearest pound

Final retail selling

price and margin

Basic plain T £2.10 £6.30 £6 £6

65%

Basic embellished T £3.28 £9.84 £10 £10

67.2%

Fully sequined T £9.30 £27.90 £28 £30*

69%

* In this example, the price is rounded up from £27.90 to £30 to fit in with the pricing architecture

PRICING STRATEGY

There are 2 methods to determine the price of a product:

• Cost based pricing or Value based pricing:

Cost based pricing:

• Retail price is determined by adding a mark up to the product’s cost

• Actual mark up % (or margin) will be determined by you

• Standard mark up for high street is around 3x or 66% margin (excl VAT)

Value based pricing:

• Retail priced determined by estimating what consumers are willing to pay

• Based on the perceived value of a product

• May have to conduct research to determine customer expectations

• Value based pricing frequently produces a higher gross margin

The price you choose for your product must make sense

PRICING STRATEGY

Cost based pricing:

• Converse Chuck Taylor High Tops in Black £55

Vs.

Value based pricing:

• Converse Comme Des Garcons High Tops in Black £110

Q – Where is the perceived value in the CDG high tops and why can

Converse justify selling these for double the price?

Q – Would the CDG high tops be more or less expensive to

manufacture than the Chuck Taylor High Tops?

Q – What extra cost would the buyer have to factor into the CDG high

tops which they wouldn’t have on the Chuck Taylor ones?

£110

£55

THINGS TO CONSIDER

You may choose to make MORE or LESS than the standard margin: (3 x cost

price or 66%).

You may have a premium garment which may sell for more and achieve a higher

margin,

or a high volume garment which you may wish to sell for a less and achieve a

lower margin.

Either way, you should justify the margin and sell price of your item.

THINGS TO CONSIDER

The margin will ultimately be determined by the following factors:

• Your product strategy - is the product basic or luxurious, high volume

or limited run?

• Your sales strategy and markdown strategy (will your planned margin

be higher to accommodate your markdown strategy)

• Where the product fits within your pricing architecture

• The price the customer will be prepared to pay (this will be

determined through competitor and brand analysis and market research)

Week 15 intro to business planning(3).pdf

FBUY2003 Fashion Business INTRODUCTION TO BUSINESS PLANNING: Purpose and requirements of a Business Plan

Fiona Bailey Week 15

Today’s session:

In this session you will find out:

–What a Business Plan is

–Why plan?

–The importance of business plans

–Steps to take before a business plan is written

• Idea generation

• Initial Screening

• Feasibility analysis

•Formative task for week 17 brief

What is a Business Plan

and why plan?

A business plan is a written document outlining what you plan to do as a business and

how you plan to do it.

What is a business plan?

A business plan is:

• An important tool that helps new businesses

• A written document, carefully explaining every aspect of a new venture

• Beneficial to both internal and external stakeholders

• Helps convey the direction and vision of the business

• Essential for funding / investment

Why plan?

• Establishes a business focus

• To open a bank account

• To secure funding from investors

• Attract executives

• Introduce the business model

• Present the business idea or product idea

• Introduce the team and their experience

• Highlights the risks, benefits and challenges

Why plan?

Internal Reason External Reason

Forces the team to work together to

hammer out the

details of a business

venture

Communicates the

merits of a new venture

to outsiders, such as

investors and bankers.

The benefits of a business plan

• A business plan can help you:

–Determine how to get from point A to Z

– Keeps you focused

– Plan out clear aims and objectives

–Defines short and long term goals • And actionable steps to achieve these

–Gain an insight into the market opportunity

–Determines which resources you need

– Proves the legitimacy of the business to potential stakeholders / suppliers / investors

The benefits of a business plan

– The process of researching an writing a business plan is arguably more important than the final document.

– It will point out the product and the teams weaknesses

– help you anticipate and avoid problems.

– In reality, a business plan is a working document.

– It should be reviewed regularly as your business grows an changes.

– Time should be spent each quarter comparing your plan to your current sales / financial situation.

– This helps you, as an entrepreneur to stay focused and realistic.

Tip – websites such as www.entrepreneur.com offer guidance and resources for writing a business plan

http://www.entrepreneur.com/

Who reads a business plan – Who reads a business plan and what are they looking for?

INTERNAL STAKEHOLDERS • A firm’s employees (both management and rank-and-file employees) • Shareholders • Customers • Agencies (marketing & PR) • Freelance staff (designers) • Helps all employees operate consistently within the direction of the business

– EXTERNAL STAKEHOLDERS • Investors • Potential business partners • Suppliers • Banks • Accountants • Government grant awarding agencies • Potential employees

Idea generation and feasibility analysis

Id e

a 1

Changing Environmental

Trends

Id e

a 2

Unsolved Problems

Id e

a 3

Gaps in the Market place

Figure 2: Three Sources of New Business Ideas

Figure 2 –Adapted from page 16, Chapter 1 of ‘Preparing effective Business Plans; An Entrepreneurial approach’, Barringer, Bruce.M (2009)

To create an effective business plan, the idea must: • Fill a need • Provide unique value to the customer The most successful business ideas stem from one of 3 sources:

Task:

Can you provide an example of a fashion business idea which is a result of:

1. Changing environmental factors 2. An unsolved problem 3. A gap in the market (or niche)?

Don’t jump straight in… According to Bruce R. Barringer in is book ‘Preparing Effective Business Plans; An Entrepreneurial approach’, the work prior to starting to write a business plan is just as important:

‘Although the preparation of a business plan is essential, it is often an insufficient exercise through which to conduct a full and

candid analysis of the merits of a new business idea.

Steps which logically precede the completion of a business plan, which include the preliminary screening of business ideas and

feasibility analysis, are also important.

Many entrepreneurs make the mistake of identifying a business idea and then jumping directly to writing a business plan to

describe and try to gain support for the idea.

This sequence often omits or provides little time for the important steps of critically investigating the merits of the idea before the

business plan is written.’

Things to remember…

The business plan must:

• Be realistic

– An over confident business plan is more likely to be challenged

– Overly optimistic projections undermine the business plan’s credibility

• Clearly demonstrate the viability of the business

– Show potential investors how they will get a R.O.I

• Be written with empathy for the reader

– Clear

– Concise

– Easy to understand the business

• Include the results of a feasibility analysis, including market research and feedback from potential customers (within the appendix).

Feasibility Analysis

Step 1:

Identify a Business Idea

Step 2:

Screen (or test) the idea to determine its preliminary feasibility

Step 3:

Conduct a full feasibility analysis

Step 4:

Prepare a written business plan

Step 5:

Present the business plan to investors and others (pitch deck)

Figure 1 – The Comprehensive Feasibility Analysis / Business Planning Process

Adapted from page 16, Chapter 1 of ‘Preparing effective Business Plans; An Entrepreneurial approach’, Barringer, Bruce.M (2009)

Favourable

results /

proceed

Unfavourable

results / stop

or re-

evaluate idea

Favourable

results /

proceed

Unfavourable

results / stop or

re-evaluate idea

Formative assessment Elevator pitch

Elevator pitch – Task for Week 17

By week 17 you should have some ideas as to your business idea or

product idea.

You need to prepare an elevator pitch

This pitch will last no more than one minute

You should present your ideas to the class

If you have more than one idea, you can present your ideas to the

class for feedback to help you choose one.

Please consider the following in your elevator

pitch:

What – what is your product or business idea

Why – why would someone buy it or use it? What

are the features and benefits

How – are you going to get this product to

market?

Elevator pitch – Task for Week 17

• Everybody will present an idea (ideas) in week 17

• You should prepare a maximum of 2 slides

• PowerPoint of PDF

• You will need to share your screen and talk us through your idea

• You will be required to feedback on other student’s ideas:

• What you like about it / whether you would buy this product or

use this service

• What can be improved

Useful websites

• www.entrepreneur.com offers information on Entrepreneurship including conducting a SWOT analysis

• www.startafashionbusiness.co.uk offers tips and advice for starting and running a fashion business

• www.score.org is a non-profit association whose members individually mentor aspiring entrepreneurs and small-business owners, offering training, workshops and resources.

• www.fashion-enterprise.com is the Centre for Fashion Enterprise, which is London’s pioneering business incubator that supports and nurtures emerging fashion entrepreneurial talent

• www.fashionentrepreneurreport.com for industry trends and reviews

http://www.entrepreneur.com/

http://www.startafashionbusiness.co.uk/

http://www.score.org/

http://www.fashion-enterprise.com/

http://www.fashionentrepreneurreport.com/

week 15 seminar(2).pdf

FBUY2003 Fashion Business Entrepreneurship • Week 15 Seminar

• Fiona Bailey

TODAY’S CONTENT

• What is an entrepreneur

• Qualities of an entrepreneur

• Challenges

• Further Reading

WHAT IS AN ENTREPRENEUR - TASK

What is your definition of an entrepreneur?

What qualities makes a successful entrepreneur?

DEFINITION OF AN ENTREPRENEUR

According to The Fundamentals of Fashion Management (2nd

Edition) by Dillon, 2018, an entrepreneur can be defined as:

“A person who identifies an opportunity or new idea and develops it into a new venture or project”

Therefore a fashion entrepreneur can be defined as:

“Someone who sets up a new fashion venture or starts a new fashion label.”

TRAITS OF A SUCCESSFUL ENTREPRENEUR

• Successful entrepreneurs are good at keeping an eye on the marketplace

• They can identify the needs and gaps both current and future

• They find ways to fulfill the needs and close the gaps

• They are continually researching and re-evaluating their products and services to determine how to improve the product and grow the business

Additionally:

• They use their fame to their advantage by launching their own fashion line

• They capitalise on their social media status

QUESTION – Do you think anyone can be an entrepreneur?

Discuss…

TRAITS OF A SUCCESSFUL ENTREPRENEUR - TASK Working in small groups

What personality traits you think a successful entrepreneur needs…

• Passion / Desire

• Determination / Perseverance

• Willingness to take on responsibility

• Problem Solvers

• Creative and innovative thinkers

• Ability to work independently

• Respect for money

• Ability to manage time wisely

• Dependability

• Flexibility / resilience / optimism

COMMON MISTAKES OF ENTREPRENEURS - TASK

Working in small groups

Write down common mistake entrepreneurs make

• Launching in a crowded market place

• Impatient / giving up too soon

• Reluctance to ask for help

• Lack of interpersonal skills

• No respect for money

• Unwillingness to listen and learn

• Not doing the research / due diligence

• Unaware of customer wants / needs

• Not taken time to evaluate and test their concept

• Not protected their design idea legally

• Lack of organisation

TOP REASONS FOR BUSINESS START UPS FAILING

Some reasons why start up businesses fail…

• Lack of good initial research of the concept

• Lack of sufficient capital

• Lack of solid business planning

• Poor management by the entrepreneur

• Failure to seek and identify a market niche

• Lack of understanding of the competition

• Lack of knowledge of the market

• Poor customer service

FASHION ENTREPRENEURS • Recognise an opportunity • Size up the value of the opportunity • Understand the resources necessary to make that opportunity a success • Are visionaries • Have a vision of how the business will grow • Have a drive to MAKE IT HAPPEN • Are always looking for new markets • Always want to make their products better and more innovative • Are futurists that anticipate and embrace change • See different ways of doing things • Persevere and are not easily defeated • Thrive in a challenging environment • Take calculated risks • Are absolutely passionate about what they do!

ADDITIONAL READING / RESOURCES

• Burke, S. ‘Fashion Entrepreneur: Starting your own Fashion Business’ (2008)

• Fashion Entrepreneurship by Granger & Stirling (my favourite one - it's been updated for 2019) available at 391.00688/GRA

ONLINE RESOURCES:

• Entrepreneurship http://www.entrepreneurship.org (this is a really useful resource for information on entrepreneurship)

• Ewing Marion Kauffman Foundation http://www.kauffman.org The largest foundation in the world with entrepreneurship as its focus. Many resources available here.

• How I built this podcast http://www.npr.org/podcasts/510313/how-i-built-this informative podcast from some legendary entrepreneurs who discuss how they got started in their industries

http://www.entrepreneurship.org

http://www.kauffman.org

http://www.npr.org/podcasts/510313/how-i-built-this

幻灯片 1: FBUY2003 Fashion Business Entrepreneurship
幻灯片 2: TODAY’S CONTENT
幻灯片 3: WHAT IS AN ENTREPRENEUR - TASK
幻灯片 4: DEFINITION OF AN ENTREPRENEUR
幻灯片 5: TRAITS OF A SUCCESSFUL ENTREPRENEUR
幻灯片 6: QUESTION – Do you think anyone can be an entrepreneur? Discuss…
幻灯片 8: TRAITS OF A SUCCESSFUL ENTREPRENEUR - TASK
幻灯片 9: COMMON MISTAKES OF ENTREPRENEURS - TASK
幻灯片 10: TOP REASONS FOR BUSINESS START UPS FAILING
幻灯片 11: FASHION ENTREPRENEURS
幻灯片 12: ADDITIONAL READING / RESOURCES

Week 16 intro to business planning(3).pdf

FMAN3002 Fashion Business INTRODUCTION TO BUSINESS PLANNING: Requirements of a Business Plan

Abbie Swinfield Week 16

Today’s session:

• What elements are required within a business plan

• Purpose of an executive summary

• Writing an executive summary

• What are vision and mission statements?

• Examples from Kingdom of Origin (Fiona's brand)

• Extended vision statements

• Guess the brand task

• Overview of business idea

• SWOT

• Operations plan

What’s included?

1. Executive Summary

2. Mission Statement

3. Company Background

4. Product Description

5. Marketing Plan

6. Competitor Analysis

7. SWOT Analysis

8. Operations Management

9. Financial Planning

10. Summary

11. Appendices: 1. Timeline 2. Summary of Feasibility Analysis 3. Customer Reaction to the Product 4. Supporting Industry Research

Executive Summary Mission

Statement

Company Background

Product Description

Marketing Plan

Competitor Analysis

SWOT Analysis

Operations

Financial Planning

Appendices

Business

Plan

Purpose of an Executive Summary

• Gives the first impression of your business

• Investors see several business plans

• Gives an overview without having to read full business plan

• The executive summary can alone, determine whether an investor will read the rest of the business plan.

• It is arguably the most important part of a business plan

• It must interest and excite the reader…

Writing an Executive Summary

• Always at the beginning of the plan

• You will probably write it last

• Short summary of the entire plan

• Outlines your objectives for the next one to five years

• Should refer to the major points in each section of the plan

• Clearly state any resources needed and how they would be used

• Needs to be as interesting, memorable and engaging as possible

Writing an Executive Summary

• Points to remember:

• The executive summary is not an introduction or a preface to the business plan.

• IT IS A SUMMARY OF THE PLAN ITSELF

• The summary shouldn’t exceed 2 pages.

• The most popular way of laying out the executive summary is to provide an overview on a section by section basis.

• The topics should be presented in the same order as they would be within the business plan.

The Mission / Vision Statement

• The mission statement is different to the vision statement.

• The vision statement answers the questions ‘where do I see the business going?’

• The mission statement answers the question ‘why does my business exist’ also known as your WHY

• Vision statements are future focused.

• Written with the end result in mind

• They are meant to be big and bold

• They inspire and energise and create a clear picture of where you see your business going in the future

The Vision / Mission Statement

Mission

To inspire something different within the global

luxury goods market:

A truly authentic and unique British lifestyle

brand, supporting local artisans and British

manufacturing.

Vision

To be the UK’s leading sustainable luxury girlswear brand

VISION –

WHERE

YOU WANT

TO BE

MISSION –

YOUR

WHY

‘Kingdom of Origin will be the number one

ethically sourced, British made luxury girlswear

brand in the United Kingdom.

By the end of year 2, the brand will be stocked

in the UK’s most prestigious department stores.

By the end of year 3, the brand will be selling

into the European market and will be a key

player within the European girlswear market.

After 5 years the brand will be stocked globally

and considered amongst the world’s finest

ethical children's’ brands.’

EXTENDED VISION

STATEMENT

Guess the Brand

Our vision is to lead the fashion e-commerce

market globally, in a way that delivers for our

customers, people, suppliers and

stakeholders. Our focus is to maintain an

outstanding customer proposition, with the

latest fashion at great prices, combined with

excellent customer service

Guess the Brand

Our vision is to lead the fashion e-commerce

market globally, in a way that delivers for our

customers, people, suppliers and

stakeholders. Our focus is to maintain an

outstanding customer proposition, with the

latest fashion at great prices, combined with

excellent customer service

Guess the Brand

What are they known for?

Fast fashion, latest trends,

cheap product

Innovative, performance

sportswear

Innovative, sustainable

materials and loungewear

product

Variety of on trend

products and huge

choice of brands.

The Company overview

• General explanation of your business and product idea

• Provide background on the industry in general and potential for your product

• Explain the business model

– direct to consumer (D2C)

– wholesale (D2B)

– licensed product

– Concession

• Explain the structure of the business

– Limited company

– Sole trader

– Partnership

• Who are the key people?

Remember this is

an overview only –

the detail will follow

within the rest of

the business plan

The Business idea

• An overview of the business idea including:

• Your WHY

• Background to where the idea was generated from:

–changing environmental trends

–problem solving

–gaps in the market

• Evidence of feasibility (include within appendices)

• State the features and benefits of the product

• Sustainability strategy

The Product idea:

• An overview of the product and

• Background to where the idea was generated from:

–changing environmental trends

–problem solving

–gaps in the market.

• Clearly highlight the products USP, features and benefits

• State the features and benefits of the product

• Include details such as sustainability

• State the WHY – why would a customer choose your product

SWOT analysis

A full SWOT analysis should be provided for your product.

Strengths – be realistic

Weaknesses – describe how each weakness will be overcome

e.g. There is a lack of PR experience within the management team

Solution: ‘An outside PR agency will be employed to manage all PR activities, including product launch, social media strategy and sample requests from magazines. This will be at a cost of £500 per month which is included within the expenditure stated in the financial accounts.’

Opportunities – state how you will capitalize on the opportunities identified

Threats – Include both macro and micro economic factors, competitors, changing trends, changing consumer behaviours, pricing etc.

The Operations Plan

• Covers the resources needed to run the business everyday

• Outline details such as key team members, and their skills and expertise

• Include the following details: – How many colourways / options you will product and when these will be

launched

– production time line for each new product drop

– Details of your supplier strategy

– Details of logistics • How will the product be delivered from supplier to warehouse

• Warehousing details (will this be handled in house or sub-contracted?)

• How the product will be packed and sent to customers (if B2C)

• How the product will be packed and sent to retailers (if B2B)

• Consider any potential issues / risks and advise solutions for these

NB: This section is invaluable to assist you in fully understanding how your product will be made and sent to the retailer / customer.

Financial Planning

• Financial planning aims to show investors the financial feasibility of the business

• Outlines details of income and expenditure and sales forecasts

• Include the following details:

– Product cost price

– Product cost breakdown

– Sell price

– Profit

– Margin

– Initial Buy & repeat quantities

• Initial start up capital

• Sales forecasts over 1 / 2 and 3 years

• Discounting / mark down strategy

• Required investment

NB: Financial Planning will

be covered in depth in

future lectures and also through practical excel

sessions.

Appendices

• Appendices should be used to include documents needed to support the plan.

• Appendices should always be numbered with a list of appendix and included at the back of the business plan.

• An example of what might be included within the appendices are:

1. Timeline – key events (or critical path)

2. Summary of Feasibility Analysis - including questionnaire sample and data analysis using graph or chart and evidence of iterative process if possible

3. Customer Reaction to the Product - including sample of feasibility questionnaire

4. Supporting Industry Research – samples of any Mintel / Keynote findings

5. CV’s of the management team (these can be summarized)

6. Copies of any logos which have been developed

7. Other Primary Research Findings – including online and social media polls

Useful websites

• www.entrepreneur.com offers information on Entrepreneurship including conducting a SWOT analysis

• www.startafashionbusiness.co.uk offers tips and advice for starting and running a fashion business

• www.score.org is a non-profit association whose members individually mentor aspiring entrepreneurs and small-business owners, offering training, workshops and resources.

• www.fashion-enterprise.com is the Centre for Fashion Enterprise, which is London’s pioneering business incubator that supports and nurtures emerging fashion entrepreneurial talent

• www.fashionentrepreneurreport.com for industry trends and reviews

http://www.entrepreneur.com/

http://www.startafashionbusiness.co.uk/

http://www.score.org/

http://www.fashion-enterprise.com/

http://www.fashionentrepreneurreport.com/