NEW business plan (BOUTIQUE)

Man`Chali Introduction to Business

Man`Chali

A C K N O W L E D G E M E N TA C K N O W L E D G E M E N T

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 kind and precious suggestions enriched our thoughts 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


P R E F A C E

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 we have given all the complete information required by our

teacher, and hope that our hard work pays off.

Course nameIntroduction to Business

Project NameBusiness plan for boutique

Submitted toMR. Ghulam Ahmad Rana



Group 1Section D

Submitted byShurahbil Bin NasimHafiz Mohammad Haris QadriZeeshan ArshadShahbaz AhmadJahazeib Haider

INTRODUCTION

Name of the businessWe open ladies boutique in DHA and we are dealing ladies casual wear, formal wear and semi formal wear.



Boutique Name

Man`chaliOur Slogan

The fashion worldMISSION

“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 stitching facilities to other boutiques in 2010 which are

lacking this facility.

Boutique businessClothing is a beautiful visual demonstration of the social and emotional needs of people wearing it. It also portrays in a clearly understood visual manner, what people of different cultures and styles want socially. Fashion, through times, has gone through so many 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



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 cultures, geographical differences, purchasing capacities, influence of the western culture, and bewildering diversities 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 yet to be formalized. The market of this enterprise is quite 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 market his/her products through introducing innovative designs both in stitching as well as the fabric sector.Furthermore, there is massive export potential in this sector, as the demand of Pakistani dresses, especially in countries like UAE, USA, and UK, is massive due to a high number of Pakistani expatriates who have settled in these countries.

Proposed CapacityThe Boutique business capacity is greatly dependent on the market size and the number of potential clientele one can attract. Furthermore, the women fashion wear garments will be designed through a contracted designer and then stitched through in-house stitching unit. On average, a designer can supply forty designs per month from which nearly thirty designs are selected on average. Approximately, total capacity of the defined unit with 5 stitching 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 20Number of dresses in each design 50Number of dresses in each size 50Total Number of dresses 1000

This production and sales capacity is estimated to be economically viable and justifies the capital as well as operational costs of the project.

Total Project CostThe Boutique shop needs a total investment of about Rs. 1.83 million. This includes a capital investment of Rs.1, 299,430 and a sum of Rs.530, 680 as working capital.



CURRENT STRUCTURE OF THE INDUSTRY Currently, the boutique industry is relatively unorganized 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 having indigenous/local designs, whereas the ones in Lahore, 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 available of the number of boutiques, especially in women wear, because there is no association or link between these enterprises. The reason being the business rivalries and the competitive structure of this industry. However, one can name a few major players 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 PLANThe marketing of boutique follows the conventional marketing pattern which is dependent on selection of venue of the outlet/s 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 print media i.e. newspapers and fashion magazines, etc.

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 and the word will get out and you will start gaining a business 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

Business Cards Business cards 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, Costs: Some

Promote for Seasons & Holidays Set up sales days for seasons, holidays, Elvis's birthday, Queen's birthday. Be sensitive to faith and ethnic related holidays.

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 project of Boutique deals in designer women wear, therefore the product mix 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,

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/outsourcing/CMT (Cutting, Manufacturing] and Trimming) per month in order to utilize the maximum capacity of the stitching unit.

RAW MATERIAL

Raw MaterialThe raw-material required for such sort of projects, would be as follows:

Fabric: The fabric, which is the basic raw material requirement for a boutique and a major component of the cost, can be obtained from wholesale markets or from markets specializing in designer cloth at Faisalabad, Karachi, and Lahore.

Accessories: Accessories such as buttons, laces, zippers, elastics, threads, needles, embroidery threads, glasses, etc. will be procured from the local market at competitive rates.

Labels, tags and packaging: Labels and tags can be obtained on order, as these serve as an identity for the boutique and are useful for promotion.

PRODUCTION PROCESS FLOW

Production Process FlowThe 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 clientele, are designed. This is done by the contracted designer as he/she will provide the basic designs of which the fabric will be converted into the



designer wear garment. On average, a designer is supposed to provide 40 designs per month or 100-120 designs per season i.e. three months. From these designs, approximately 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, fabric is cut, embroided, block printed, and processed 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 be tagged for identification of sizes, prices, addresses, handling instructions, etc.

Presentation/Market: Once the designer wear garment is ready after going through the above-mentioned 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 MixProducts will be priced at the high end to reflect the quality 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 WearFormal Wear – Party dresses and special occasion dresses.



Contemporary WearFusion Wear – Combination of eastern and western wear, suitable for the international market as well.

Western WearTops, Pants and various other styles.

The combination of outfits for the proposed outlet will be as follows

Product Mix

Category % Of Total OutfitsCasual Wear 34%Semi Formal Wear 33%Formal Wear 33%

Average Sale Price

Category Ave. Price per outfitCasual Wear 3,200Semi Formal Wear 6,000Formal Wear 15,500

Costs of Goods Sold and other ExpensesCost 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 Cost (percentage of sales)Casual Wear 35%Semi Formal Wear 32%Formal Wear 30%

HUMAN RESOURCE REQUIREMENTSThe project of Boutique requires the following Human Resources/Staff:



Staff Salaries

Positions Required

Salary per Month

Salary per Annum

Production StaffDesigner 1 15,000 180,000Tailor 5 7,000 420,000Press/iron man/finishing 1 4,000 48,000Dyer 1 5,000 60,000Total 708,000Administrative SalariesSales girl 2 6,000 144,000Office boy 1 3,500 42,000Guard 1 5,000 60,000Peon/sweeper 2 2,500 60,000Total 14 306,000

MACHINERY/EQUIPMENT DETAILSThe boutique will require a small in-house stitching unit. The cost of the stitching machinery will be as follows:

Machinery Detail

Stitching Machinery No. Rs/Unit RsSingle needle lock stitching machine 8 19,900 159,200Over lock Machine 1 56,800 56,800Embroidery 1 29,900 29,900Total 245,900

Note:Prices have been quoted by SINGER sewing company, Pakistan. 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 No. Rs/Unit RsComputers 1 25,000 25,000Computer printer 1 12,000 12,000Telephones 2 3,500 7,000Fax machines 1 12,000 12,000Software 1 30,000 30,000Total 86,000

PREMISES FOR SHOP AND STITCHING UNIT

Recommended Mode for Renting a ShopIt is recommended that the proposed location for the said enterprise be a posh area, where people have the buying capacity for women fashion 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

RsSecurity for renting shop/outlet (Rent @ Rs.56,000 per month. 3 months rent as security)

168,000

Interior decoration (installing lighting, mannequins, hanging racks, mirrors, glass panes, cash counter, and other décor, etc.)

437,884

Security for renting a house for installing the 45,000



stitching unit (Rent @ Rs15,000 per month)

Infrastructure requirements

The project will have the following infrastructure components:

Description Sq.ftMain shop 600Try Room 36Small Store 100Kitchen 64Building for Stitching Unit 10 Marla House

PROJECT ECONOMICS

Project Cost

Description Cost (Rs.)Machinery & equipment 166,300Furniture & Fixture (Interior Decoration) 437,884Office equipment 86,000Security Deposits for Premises 213,000Pre-operating expensesSalaries 31,000Promotional Expenses 67,246Total Capital Cost 1,299,430Working CapitalRaw material (Fabric & Accessories) 104,680Prepaid Rent (Boutique and Stitching Unit) 426,000Total Working capital 530,680Project Cost 1,830,110

Project Returns

Internal Rate of Return (IRR) 67%



Payback Period (Years) 1.50Net Present Value (NPV) 3,684,374

Financing Plan

Financing Rs.Equity 60% 1,098,066Debt 40% 732,044

KEY SUCCESS FACTORSThere 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 location of the outlet should be properly selected and

attractively decorated so as to target the clientele effectively. The customer satisfaction should be given due importance,

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 marketThe market of the boutiques is highly competitive; therefore 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 designsThe 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 designIf the designs are not selected according to the tastes of the clientele then it can be detrimental for the business, so the clientele taste should be properly tracked.

TaxImproper documentation of the sales receipt record may lead to problems with Tax department.

KEY ASSUMPTIONSProduction Assumptions

Number of Stitching Machines 5Production Capacity (No. of dresses per month) 750Capacity Utilization for the first year 55%Self Production (% of total production) 60%Dresses manufactured on CMT basis (% of total production) 40%

Operating Assumptions

Hours operational per day 8Days operational per month (Production) 25Days operational per month (Boutique) 25

Cash flow Assumptions

Account Payable Cycle (Days) 10Account Receivable Cycle (Days) 15(of 30%

of sales)

Expense Assumptions

Promotion Expenses after Year 1 (% of expected sales) 2%Machine Maintenance 1%of

machinerycost

Raw Material Price Growth rate 1%



Payroll growth rate 5%Machine Maintenance growth rate 5%Rent growth rate 10%

Financial Assumptions

Project Life 10 YearsDebt: Equity 40:60Interest Rate on Long Term Debt 14%Debt Tenure 5YearsDebt Payment per year 2


NEW business plan (BOUTIQUE)

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Transcript of NEW business plan (BOUTIQUE)