Section 1:
1. What is a business plan?
A business plan is a carefully detailed document that describes the means by which a person starting a business will achieve his or her goals. The guide carries strategies for operations, financial, and marketing perspective.
2. Why is a business plan important?
A business plan is an important aspect of entrepreneurship as it helps the individual to focus on the specific steps that are necessary for the success of their business. Apart from this, it helps in many ways. First, it assists the person in acquiring money for the business. Before a potential lender or investor offer money to a business, they will want to see the written business plan. Secondly, the pan helps in making sound decisions. This is because it makes a person focus only on the written strategies that define the business ideas. In addition, the business plan will help an entrepreneur identify potential weaknesses. Sharing the idea with experts and professionals will make one see the potential pitfalls in the idea. Finally, a business plan is a tool for communication with the stakeholders. Apart from attracting lenders and investors, it will also convince people to work for the enterprise or purchase its products or services.
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3. List 12 components of a business plan
Introduction – This provides basic information about the entity. Includes aspects such as name, address, and contact information about the business; the issuing date for the plan; and a confidentiality statement aimed at keeping private information away from competitors.
Executive summary – This is the overview of the entire plan that can be implemented without the entire document. It includes justification why the business will be successful.
Benefits to the community – This will include information on how the business will affect the human, community, and economic development of the location.
Company and industry – Contain the background of the business, the legal form of business chosen, the type of products or services that it will offer, and determination of potential clients including competition and the future of the entity.
Management plan – Includes the information on the management team in the aspects of skills, talent, and responsibilities and roles. It also includes compensation, training needs, and professional help needed.
Manufacturing and operations plan – Discuss the required facilities, inventory management, capital equipment, purchasing requirement, labor force, and space required.
Labor force – This describes the quality of skills needed, training, motivation, and compensation of the employees.
Marketing plan – Contains the market landscape, service policy, market share, promotion, pricing, and competition.
Financial plan – This is the discussion of the required investment, source of funding, break-even analysis, sales, and cash flow.
Exit strategy – This section shows the plan for succession or decision to go public.
Critical risks and assumptions – This contain the pitfalls of the plan, and how the organization aims at dealing with the problems.
Appendix – This is the section that contains supplementary information crucial to the plan including an organization chart, resumes of owners and principal managers, and any other information.
Section 2:
1. If you had the opportunity to start a business this year, what type of business would you start?
The type of business that I would start is a manufacturing one that makes jeans in an eco-friendly manner. The reason behind this kind of selection is because of the environmental concerns that come with the production of jeans and I want to make a difference to the planet. I also want to make a difference in the lives of people who are at risk of experiencing health impacts of using the conventional material in clothing.
2. What will you name your business? Why did you choose this name?
I would name my business Eco Apparels. This is because I want the customers and everybody out there to get the idea that the company will be set to make environmentally friendly clothing for fashion brands. Everyone nowadays is conscious of going green because of the degradation that human activities cause to the environment.
3. How would you explain your idea to a friend?
The first thing to consider when pitching the business idea to friends is picking the right moment. I would let them know that there is going to be a serious talk. I would then make sure that I have my well-articulated business plan with me entailing the reason why I am starting the business. I would treat friends just the same way banks and venture capitalists would want. This is because I would feel free with them. I would make full disclosures to them including projections, tax returns, financial statements, among others. I would make it official and have an elevator pitch set for any occasion as it is known that humans have an attention span of about eight seconds. I will not depend on a handshake to make the deal as I would be selling unregistered securities. I would start with the friends with a bit of experience and connections.
4. According to expert projections, what is the future outlook for the industry you have selected?
The future outlook of fashion is bright. Expert suggestions point out to an increasing trend towards the consumption of eco-friendly fabric due to the growing awareness on the dangers of the conventional materials. On the general outlook, the jeans industry is promising. Currently, more than 250 million pairs of jeans in the US alone every year ( Stastista, 2017) . Jeans is a global trend that attracts the loyalty of every age group but mostly the trendy youth. The penetration of the western style of casual wear to the world is the driving force. The projection is that by 2021, the global denim jeans market will have grown into $129.8 billion in sales. However, the growth of denim business is under threat from the rise of a sporty culture that regards yoga pants as more effective.
5. How does your idea differ from those behind existing businesses?
My idea is different from the existing ones because of the method of production and the impact on the environment. Conventionally, jeans have been produced by using a lot of synthetic dyes which cause environmental damage ( Gita, Hussan, & Choudhury, 2017 ). My way will utilize the vegetable dyes. The business will also use 100% organic cotton and will not use bleach. The company aims at going entirely eco-friendly. The processes will use techniques like distressing, grinding, whiskering, and scraping. The conventional methods have been using a lot of water. My idea will make sure that to reduce the amount of water wasted in the process, it will use simple enzymes and also the dry processes named above.
6. What purpose will your business serve?
My business will serve the purpose of reducing the environmental footprint of jeans manufacturing. It will also serve at creating an environmentally friendly apparel that meets the health standards of the consumers.
7. What will your mission be? How will your mission statement read?
The mission of the business is to ensure the sustainability of the environment while maintaining the standard of quality.
“ To sustain ethical production of apparel that meets the customer’s quality standards while bringing the effect of the trend to them. We have to balance the goals of corporate success and environmental sustainability, superior products, and services.”
8. Who will be your target market?
The target market will be the US market. This is because of the demographic advantage. The US is a huge market with a culture that supports the casual dressing, which denim jeans stand for.
9. Which market segments will you focus on?
The business will look forward to serving young adults, both young men, and women as a market segment. This is probably the highest consumer segment for denim products. They also are trendy and love fashion. Their consumption rate is also high and this is a good sign for targeting them. They are a group that has fewer obligations and has disposable income. They can thus wish to spend.
10. How will you market the firm’s goods or services?
The marketing of the products will be done mainly through social media platforms. The company will have accounts on Facebook, Instagram, and Twitter to attract the youth who are the target market. It is today more than ever that people are exposed to social media and the internet. The market segment that the business aims to serve as a huge presence in the social media platforms.
11. How will you decide pricing for your goods or services?
The pricing of the goods will be done through considering many elements. First is understanding the market. In this case, the business will take into account what the customers are willing to pay and also what the competition charges. Costing to match or beat the competitors, however, will depend on all the production costs. I will use the cost-plus technique of pricing to add a markup percentage to the costs.
12. How or why will your goods or services be competitive?
The goods will be competitive in terms of being eco-friendly and produced with the least footprint to the environment. This will make them different and able to attract support from consumer groups.
13. How much do you estimate for initial business start-up costs?
The estimated cost of starting the business will be estimated at $350,000. This will include a total fixed cost of $160,000 (fixed costs, salary and benefits – $60,000 and other fixed overheads – $100,000). The variable costs include direct material ($80,000), direct labor ($30,000), variable company overhead ($30,000), shipping ($15,000), sales commissions ($35,000).
14. How will you finance your business?
The business funding will be through crowdfunding. In this case, the company will raise money through the internet through the positioning of being a business that supports ethics and environmentally friendly procedures. We look forward to obtaining interest groups chip in to offer the funding. This means is chosen because it builds traction, validation, and proof of community responsibility of the business. The environmental protection is the selling point.
15. How will you measure your firm’s success or failure and at what time intervals?
The performance will be measured by looking at indicators of sales growth and market share. This will be done after the close of every financial year.
16. What credentials qualify you to run this business?
The basic business management credentials make me suitable to run this business. It makes me able to think, plan, and execute anything related to business. It also enhances that I know what to be done in several circumstances.
17. How will you gain the necessary experience?
I will gain the necessary experience through attending workshops and expos. Furthering into education will also ensure I get the necessary expertise in management.
18. How many employees will you need? What will their roles be?
The company will need 10 employees. The role of six is to sew and process the fabric into finished material. The other two will be engaged in the management of stock and inventory, one for marketing, and one to be responsible for the finances.
19. What location will you select for your business?
The company will be located next to the raw material suppliers. This is to reduce the lead time.
20. Which form of ownership will you select?
The form of business will be a limited liability company (LLC). LLCs are businesses that assume the characteristics of a partnership and corporation but it is not incorporated. On the other hand, it is possible to select whether the entity will pay tax as a partnership, sole proprietorship, or a corporation. The reason behind choosing the type of business is because I would want to enjoy the limited liability enjoyed by the corporations while I am controlling it as a sole-proprietor. I want it to be an existing person on its own in case of future expansions and exit strategy.
21. According to your research, what licenses or permits will be required?
The first license is the Federal Employer ID Number (FEIN) because I will employ people and in addition, will need compensation insurance (Kearns, 2017). The other permit is Garment/Apparel Registration Certificate. As the business deals with taxable goods, it will need a seller’s permit. I would also need to register the business under LLC certificate.
References
Kearns, A. (2017, June 30). Licenses and Permits Needed to Start An Apparel Business. Retrieved December 1, 2018, from https://makersrow.com/blog/2017/06/licenses-and-permits-needed-to-start-an-apparel-business/#
Messmer, R. (2018, October 22). 4 reasons why a business plan is important. Retrieved December 1, 2018, from https://www.iafrikan.com/2016/06/15/4-reasons-why-a-business-plan-is-important/
Stastista. (2017). Retail sales of the global denim jeans market 2012-2021 | Statistic. Retrieved December 1, 2018, from https://www.statista.com/statistics/734419/global-denim-jeans-market-retail-sales-value/
Gita, S., Hussan, A., & Choudhury, T. G. (2017). Impact of Textile Dyes Waste on Aquatic Environments and its Treatment. Environment & Ecology , 35 (3C), 2349-2353.
