Man`Chali
Introduction to Business
Man`` Man Chali
ACKNOWLEDGEMENT We wish to acknowledge our regards and indebtedness to our guide and benevolent Prof: MR. Ghulam Ahmad Rana teaching Introduction to Business in University Of Management and Technology (UMT) Lahore. Whose Whose kind kind and preci preciou ous s sugges suggestio tions ns enric enriche hed d our our thoug thought hts s and and helped us to accomplish this Business plan. We also want to thank our families who supported us. Thanks to Almighty ALLAH for giving us such will and power to complete this business plan on time
University of Management and Technology
2
Man`Chali
Introduction to Business
PREFACE We have chosen this Boutique to make our project on it. We had a good time while doing the survey and gathering the information about the topics, and then developing a fictitious company into a project. The project is basically about the Business plan of the day care centre. We also used the source of internet for gathering information. We think that we have done our job in making the business plan we hope that
University of Management and Technology
3
Man`Chali
Introduction to Business
we have given all the complete information required by our teacher, and hope that our hard work pays off.
Course name Introduction to Business Project Name Business plan for boutique Submitted to MR. Ghulam Ahmad Rana
University of Management and Technology
4
Man`Chali
Introduction to Business
Group Section
1 D
Submitted by Shurahbil Bin Nasim Hafiz Mohammad Haris Qadri Zeeshan Arshad Shahbaz Ahmad Jahazeib Haider
INTRODUCTION
Name of the business We open ladies boutique in DHA and we are dealing ladies casual wear, formal wear and semi formal wear.
Boutique Name University of Management and Technology
5
Man`Chali
Introduction to Business
Man`chali Man `chali Our Slogan
The fashion world MISSION “Satisfying our costumers by providing them best qualitative stuff and unique designs keeping in view their comforts and excellence” .
Our Objectives NON-FINANCIAL OBJECTIVE: . • •
To be among the top ten favorite brands. To add new design in every season.
FINANCIAL OBJECTIVE: •
• •
To maintain an inflation growth in earning per year at a rate of 12%. To obtain a return on equity of at least 30%. Providing Providing stitching facilities to other boutiques in 2010 which are lacking this facility. facility.
Boutique business Clothing is a beautiful visual demonstration demonstration of the social and emotional needs of people wearing it. It also portrays in a clearly understood visua visuall mann manner er,, what what peopl people e of differ differen entt cultu culture res s and and styles styles want want social socially ly.. Fashion ashion,, throu through gh times, times, has has gone gone thro throug ugh h so many many rapid rapid changes and bizarre extremes that it has examples of nearly every kind of clothing function. However, in a boutique business, the specifications and descriptions of the designs and clothes are so general that they can fit more than one
University of Management and Technology
6
Man`Chali
Introduction to Business
costume, which actually are quite different in nature from each other and this is solely dependent on the taste of the people. The range of Pakistani dresses is remarkably wide, according to the vast vast cult cultur ures es,, geog geogra raph phic ical al diff differ eren ence ces, s, pur purchas chasin ing g capa capaci citi ties es,, influence influence of the western western culture, culture, and bewilder bewildering ing diversiti diversities es of the ethnic groups. One has, therefore, to sift and isolate, and then relate and bring together, the ideas for creating various designs, which can fit in the context of the fashion in vogue and the culture in practice. In reference to Pakistan, the Boutique business is quite in vogue but has has yet yet to be for formali malize zed. d. The The mark market et of this this ente enterp rpri rise se is quit quite e scattered and unorganized. There are a few major players in Boutique business and these entrepreneurs have also taken an initiative based on their caprice and experience in the field of fashion design. However, there is a massive potential in this field, if one has the ability to design and marke markett his/her his/her product products s throug through h introdu introducing cing innovat innovative ive designs designs both in stitching as well as the fabric sector. Furthermore, there is massive export potential in this sector, as the demand of Pakistani Pakistani dresses, especially in countries countries like UAE, USA, and UK, is massive due to a high number of Pakistani Pakistani expatriates who have settled in these countries.
Proposed Capacity The Boutique business capacity is greatly dependent on the market siz size and the the number of potent ential ial cli clientele tele one can attr ttract. ct. Furthe urtherm rmor ore, e, the women women fashi fashion on wear wear garm garment ents s will will be desig designe ned d throu through gh a contra contracte cted d desig designer ner and and then then stitch stitched ed throu through gh in-ho in-house use stitching unit. On average, a designer can supply forty designs per month month from from which which nearl nearly y thirt thirty y desig designs ns are are select selected ed on avera average ge.. Appro Approxim ximate ately, ly, total total capac capacity ity of the the defin defined ed unit unit with with 5 stitch stitchin ing g machines (basis on 8-10 hours shift) will be about 750 dresses. The breakup of the total number of dresses will be as follows: Total designs selected by designer Number of dresses in each design Number of dresses in each size Total Number of dresses
20 50 50 1000
This production and sales capacity is estimated to be economically viable viable and and justi justifie fies s the capital capital as well well as opera operatio tiona nall costs costs of the project.
Total Project Cost The Boutique shop needs a total investment of about Rs. 1.83 million. This This inclu includes des a capi capital tal inves investm tment ent of Rs.1, Rs.1, 299,43 299,430 0 and and a sum of Rs.530, 680 as working capital.
University of Management and Technology
7
Man`Chali
Introduction to Business
CURRENT STRUCTURE OF THE INDUSTRY INDUSTRY Curre Currentl ntly, y, the bouti boutiqu que e indust industry ry is relat relative ively ly unor unorga gani nized zed and and is scattered in and around the posh areas of the metropolitan cities of Pakistan i.e. Lahore, Islamabad, Karachi, Peshawar, and Quetta. The boutiques in Peshawar and Quetta, mostly sell the traditional dresses havi having ng indi indige geno nous us/l /loc ocal al desi design gns, s, wher wherea eas s the the ones ones in Laho Lahorre, Islamabad, and Karachi deal in fashion wear greatly influenced by the west and the local trends in vogue. As such, there is no exact detail availa availabl ble e of the numb number er of bouti boutiqu ques, es, especi especiall ally y in women women wear, wear, because there is no association or link between these enterprises. The reason being the business rivalries and the competitive structure of this this indust industry ry.. Howeve However, r, one one can can name name a few major major play players ers in the business such as Indifference, Generation, Parahan, Nee Punhal, Bossini, Kapre Waghera, Maria B, Nina’s, • • • • • • •
Some individual designer players like Beegee’s, Nilofar Shahid, Nadia Mistri, Amir Adnan, Shayan Malik, and Sahar Saigol. • • • • • •
MARKETING PLAN The marketing of boutique follows the conventional marketing pattern which which is depen depende dent nt on select selection ion of venu venue e of the outle outlet/s t/s and and the product mix (designs and sizes), as well as the promotional strategy. Furthermore, the boutique owner has to marketing techniques like: Usage of print media i.e. printing of posters and pamphlets as well as displaying it and distributing it at proper places Advertisement in prin printt medi media a i.e. i.e. news newspa pape pers rs and and fash fashio ion n magazines, etc. •
•
University of Management and Technology
8
Man`Chali
•
• •
•
•
•
• • • •
•
•
•
•
•
•
Introduction to Business
Usage of electronic media i.e. projection of the boutique in fashion programs, advertisement on television, and provision of dresses to various television plays and films. Event arrangement like fashion shows and photo-shoots. Usage of e-commerce i.e. launching of website and advertising on web. Word-of-Mouth: Let your friends and family do the raving for you you and and the the wor word will will get get out out and and you you will will star startt gain gainin ing g a business reputation reputation for offering this that or the other thing. Cost: FREE Radio: Call the advertising department for an appointment. They show you what they offer. You get to hear your business name advertised on the radio or. You can make a choice or not. Costs: Yes Direct Mail : Send out a post card about your business to mailing list, friends and family and maybe former co-workers. Costs: Yes Membership cards Telemarketing Exhibitions in universities Fliers & Brochures These can be easily done on your computer. If necessary you can download free software programs online. Costs: Yes Yes Business Cards Business Business cards identify identify your business. Hand one out every time you meet somebody new or speaking with somebody who has a similar business. It is a simple marketing strategy, strategy, Costs: Some Promote Promote for Seasons & Holidays Holidays Set up sales days for seasons, holidays, Elvis's birthday, birthday, Queen's birthday birthda y. Be sensitive to faith and ethnic related holidays. Special Special Sales Hold special sales on specific items during specific hours (down time hours) of your business. This will draw customers in search of these items. Diet Sale Offer a discount percentage equal to pounds lost for your customers. Advertise to health stores, fitness centers, diet groups. Cross Promote with Other Stores Exchange store items and label with each others store name and hours. This will help generate traffic and recognition for customers for both stores Store Draw Offer a Draw to customers at the store. Select a popular item and get customers to leave their name in a ballot box. The more they frequent the store the more submissions are made therefore higher chance of winning. We promote a month in advance.
Moreover, in order to keep abreast with the emerging trends and client tastes, surveys regarding customer satisfaction/needs should be a regular feature of this project. As this proje project ct of Boutiq Boutique ue deals deals in design designer er women women wear wear, theref therefore ore the product product mix will will comprise of different styles of the female dresses in different sizes. Whereas, the styles will be Shalwar Kameez, Q-lots, Pajama Kameez, Frocks, Kurta, Peeshwaz,
University of Management and Technology
9
Man`Chali
Introduction to Business
Party dresses, Casual Dresses and other prevalent dresses based on the market Trends.
Note: This production also includes additional suits that will be prepared on orders/outs orders/outsourci ourcing/CM ng/CMT T (Cutting, (Cutting, Manufactur Manufacturing] ing] and Trimming) rimming) per month in order to utilize the maximum capacity of the stitching unit.
RAW MATERIAL Raw Material The The rawraw-ma mate teri rial al requi equirred for for such such sort sort of proj projec ects ts,, woul would d be as follows: •
•
•
Fabric: The fabric, which is the basic raw material requirement for for a bout boutiq ique ue and and a majo majorr comp compon onen entt of the the cost cost,, can can be obtained from wholesale markets or from markets specializing in designer cloth at Faisalabad, Karachi, and Lahore. Accessories: Acce Accesso ssorie ries s such such as butto buttons, ns, laces, laces, zipper zippers, s, elastics, threads, needles, embroidery threads, glasses, etc. will be procured from the local market at competitive rates. Labels, tags and packaging: Labe Labels ls and and tags tags can can be obtained on order, as these serve as an identity for the boutique and are useful for promotion.
PRODUCTION PROCESS FLOW Production Process Flow The process for converting fabric in designer wear garments follows the below mentioned sequence: •
•
Design: The initial process starts from the designing phase. Various patterns of clothing and the fashions in vogue, which also relate to the tastes of the concerned concerned clientele, are designed. This is done by the contracted designer as he/she will provide the basi basic c desi design gns s of whic which h the the fabr fabric ic will will be conv conver erte ted d into into the the designer wear garment. On average, a designer is supposed to provide provide 40 designs per month or 100-120 designs per season i.e. three three months. months. From rom these these designs, designs, approx approximat imately ely 50% of the designs are selected for further development of clothes. Pattern Making/Cutting: Based on the designs selected, patterns for cutting are developed and based on these patterns, University of Management and Technology
10
Man`Chali
•
•
•
Introduction to Business
fab fabric is cut, embr mbroide ided, block lock prin rinted, ed, and processe essed d accordingly. Stitching: The cutting is then followed by stitching, which can either be done by the in-house stitching unit or by outsourcing it. Labels are also attached to the apparels in this process. Finishing: The final phase is that of finishing, in which the garment will be checked for quality control and will cleaned (if required) for final presentation at the outlet. The garments will also also be tagge tagged d for ident identifi ificat cation ion of sizes, sizes, price prices, s, addr address esses, es, handling instructions, etc. Presentation/Market: Once the designer wear garment is ready ready after after going going throug through h the above-m above-menti entioned oned process, process, it is presented at the outlet/shop for sale to the clientele.
Note: In case of over-lock stitching, it will be done in-house. The stitching of buttonholes as well as elastic embedding will be outsourced. This will cost approximately @Rs.5 per dress.
PRODUCTS Product Mix Prod Produc ucts ts will will be priced priced at the high end end to reflect eflect the quali quality ty and and exclusiveness associated with the brand. High-end materials such as Crinkle Chiffon, Georjot Chiffon, Chinese Raw Silk, Medium Silk, Leafy Print Jamawar, Chamose Silk etc will be used. This boutique will offer following product categories of men wears: Casual Wear Semi Formal Wear Formal Wear • • •
Each product category will include the following product lines:
Ethnic Wear Formal Wear – Party dresses and special occasion dresses.
Contemporary Wear Fusion Wear – Combination of eastern and western wear, suitable for the international market as well.
Western Wear Tops, Pants and various other styles.
University of Management and Technology
11
Man`Chali
Introduction to Business
The combination of outfits for the proposed outlet will be as follows
Product Mix Category Casual Wear Semi Formal Wear Formal Wear
% Of Total Outfits 34% 33% 33%
Average Sale Price Category Casual Wear Semi Formal Wear Formal Wear
Ave. Price per outfit 3,200 6,000 15,500
Costs of Goods Sold and other Expenses Cost of goods sold has been taken as a percentage of the sale price. The percentage of cost for each product category is as below:
Percentage of Cost Category Casual Wear Semi Formal Wear Formal Wear
Cost (percentage of sales) 35% 32% 30%
HUMAN RESOURCE REQUIREMENTS The project of Boutique requires the following Human Resources/Staff:
Staff Salaries Positions Production Staff Designer Tailor
Require d
Salary Month
1 5
15,000 7,000
University of Management and Technology
per Salary Annum
per
180,000 420,000 12
Man`Chali
Introduction to Business
Press/iron man/finishing Dyer Total Administrative Salaries Sales girl Office boy Guard Peon/sweeper Total
1 1
4,000 5,000
48,000 60,000 708,000
2 1 1 2 14
6,000 3,500 5,000 2,500
144,000 42,000 60,000 60,000 306,000
MACHINERY/EQUIPMENT DETAILS The boutique will require a small in-house stitching unit. The cost of the stitching machinery will be as follows:
Machinery Detail Stitching Machinery Single needle lock stitching machine Over lock Machine Embroidery Total
No . 8 1 1
Rs/Unit 19,900 56,800 29,900
Rs 159,200 56,800 29,900 245,900
Note: Pric Prices es have have been been quot quoted ed by SING SINGER ER sewi sewing ng comp compan any y, Paki Pakist stan an.. Though the prices here are given of the new machines but second hand machines are also widely available which can function properly and can reduce the project cost too.
Furthermore, the following will also be required to setup a Boutique:
Office Equipment Other Equipment Computers Computer printer Telephones
No . 1 1 2
Rs/Unit 25,000 12,000 3,500
University of Management and Technology
Rs 25,000 12,000 7,000 13
Man`Chali
Introduction to Business
Fax machines Software Total
1 1
12,000 30,000 86,000
12,000 30,000
PREMISES FOR SHOP AND STITCHING UNIT Recommended Recommended Mode for Renting Renting a Shop It is recommended that the proposed location for the said enterprise be a posh area, where people have the buying capacity for women fashion wear. wear. The size of the shop should be at least 800 Sq.ft i.e. 20 feet front and 40 feet depth. Furthermore, a small building will be required to establishing the stitching unit. One viable option is to rent a small house for this purpose. The shop will be obtained on rental basis, and the rent estimation for such a shop is Rs 56,000/month. According to the prevailing practice, 6 months rent as advance and three months rent as security would be required for renting the shop. It is assumed that security is a one-time expenditure, whereas pre-paid rent will only be given at the beginning, while establishing the boutique. After first six months, rent will be paid on monthly basis. The cost estimates for setting up the Boutique are as follows:
Rent Cost Detail Rs 168,000
Security for renting shop/outlet (Rent @ Rs.56,000 per month. 3 months rent as security) Interior decoration (installing lighting, mannequins, 437,884 hanging racks, mirrors, glass panes, cash counter, and other décor, etc.) Security for renting a house for installing the 45,000 stitching unit (Rent @ Rs15,000 per month)
Infrastructure requirements
University of Management and Technology
14
Man`Chali
Introduction to Business
The project will have the following infrastructure components: Description Main shop Try Room Small Store Kitchen Building for Stitching Unit
Sq.ft 600
36 100 64 10 Marla House
PROJECT ECONOMICS Project Cost Description Machinery & equipment Furniture & Fixture (Interior Decoration) Office equipment Security Deposits for Premises Pre-operating expenses Salaries Promotional Expenses Total Capital Cost Working Capital Raw material (Fabric & Accessories) Prepaid Re Rent (B (Boutiq tique an and St Stitching Un Unit) Total Working capital Project Cost
Cost (Rs.) 166,300 437,884 86,000 213,000
31,000 67,246 1,299,430 104,680 426,000 530,680 1,830,110
Project Returns Internal Rate of Return (IRR) Payback Period (Years) Net Present Value (NPV)
67% 1.50 3,684,374
Financing Plan Financing Equity Debt
60% 40%
R s. 1,098,066 732,044
University of Management and Technology
15
Man`Chali
Introduction to Business
KEY SUCCESS FACTORS FACTORS There are a number of factors, which contribute towards the success of a project. In case of the project of Boutique, some of the Key Success Factors are as follows: Proper care while producing dresses should be adopted Proper Inventory management i.e. keeping minimum inventory as per past sales trends. The dress designs should be according to the emerging trends and fashions. Designing of dresses according to the consumer tastes/preferences gathered through consumer surveys. The The loca locati tion on of the the outl outlet et shou should ld be prop proper erly ly sele select cted ed and and attractively decorated so as to target the clientele effectively. The The custo custome merr satisf satisfac actio tion n should should be given given due due import importan ance, ce, because it is the customer satisfaction, which can increase the sales. Hence, excellent customer service should be provided. • •
•
•
•
•
Threats for the Business •
Competitive Structure of the market
The market market of the boutiques boutiques is highly highly competitive competitive;; therefor therefore e if the entrepreneur is not well responsive to the tastes and response of the clientele as well as the fashions in vogue he/she may not be able to capitalize the opportunity properly. . Do not partner with a competing store.
•
Pilferage in the designs
The designs which a designer produces can be sold by the staff even before that design is launched and that can pose serious threat to the business because in the fashion industry it is the uniqueness of the design which matters. •
Selection of the wrong venue
Selection of the wrong venue can be a major hurdle in achieving the desired business objectives. •
Selection of the wrong design
If the designs are not selected according to the tastes of the clientele then then it can be detrim detriment ental al for the business business,, so the client clientele ele taste taste should be properly tracked. •
Tax
Impr Improp oper er docu docume ment ntat atio ion n of the the sale sales s recei eceipt pt recor ecord d may may lead lead to problems with wi th Tax Tax department. departm ent.
University of Management and Technology
16
Man`Chali
Introduction to Business
KEY ASSUMPTIONS Production Assumptions Number of Stitching Machines Production Capacity (No. of dresses per month) Capacity Utilization for the first year Self Production (% of total production) Dress Dresses es manu manufac factur tured ed on CMT CMT basi basis s (% of total total pro produ ducti ction on))
5 750 55% 60% 40%
Operating Assumptions Hours operational per day Days operational per month (Production) Days operational per month (Boutique)
8 25 25
Cash flow Assumptions Account Payable Cycle (Days) Account Receivable Cycle (Days)
10 15(of 30% of sales)
Expense Assumptions Prom Promot otio ion n Expe Expens nses es afte afterr Yea Yearr 1 (% of expe expect cted ed sale sales) s) Machine Maintenance Raw Material Price Growth rate Payroll growth rate Machine Maintenance growth rate Rent growth rate
2% 1%of machinery cost 1% 5% 5% 10%
Financial Assumptions Project Life Debt: Equity Interest Rate on Long Term Debt Debt Tenure Debt Payment per year
University of Management and Technology
10 Years 40:60 14% 5Years 2
17
Man`Chali
Introduction to Business
University of Management and Technology
18
