Saskatoon kid’s wear shop is a new children’s clothing line for kids between the age of two to eleven years old
Saskatoon kid’s wear shop is a brand that sells designer, trending, and designer kids’ clothes for children between the age of 2-13 years. The business has a physical shop and store is located, products to be sold online are stored in the store. We also sell our products online through our website and social media platforms. Using our online platforms, a client can order any product, and the product will be delivered to them on time at no cost or at small charges for those clients who are far from our physical store. The clothes being sold at our shop are trendy, unique, and with different colors and designs. The clothes are targeted to be sold to all kids, including those from the wealthy class, famous kids, and kids from humble backgrounds in Saskatoon and the surrounding area. The other target clients will be parents because they are the ones who will be buying clothes for their children as required by children protection rights not to advertise products to kids under the age of thirteen years. The shop aims at being a famous brand that sells kids wear both in the local market and international market because of quality products being sold. The rate of giving birth has increased in the last decade, resulting from rising demands for children’s clothes, and the market will continue growing.
Table of Contents
3.2.1. Fixed Capital Requirement. 6
3.3. Risk Management Strategies. 8
3.4.2. Transportation Services. 11
3.4.3. Manufacturing Services. 11
3.5. Organization Structure. 11
4.1. Leadership and Management Strategies. 12
4.2. Recruitment and Retention Methods. 13
4.4. Employees Performance Appraisals and Individual Responsibilities. 14
5.2.1 Competition Strengths. 22
5.2.2. Competition Weakness. 23
5.3. Organizational Analysis. 23
5.3.1. Strengths and Weaknesses. 23
5.3.2. Opportunities and Threats. 24
5.4.1. Product and Service Strategy. 24
5.4.3. Distribution Strategy. 25
6.1. Proforma Income Statements. 26
6.2. OPENING DAY BALANCE SHEET. 28
6.3. Proforma Cash Flow Statements. 31
List of Tables
Table 1: Risk management strategies. 16
Table 2: Projected profit and loss. 33
Table 3: Opening Day Balance Sheet 35
Table 4: Proforma Cash Flow Statements. 38
List of Figures
Figure 1: Value proposition. 7
Figure 2: Start-up Expenses. 13
Figure 3: Organizational Structure. 17
Figure 4: Break-even Analysis. 38
Figure 5: Percentage sales per sub-sector 2020. 39
Figure 6: 12 months projected cash flow.. 39
1. Introduction
Saskatoon kid’s wear shop is a new children’s clothing line for kids between the age of two to eleven years old. The clothing brand deals with high-quality fabrics with a fashion-oriented outline. Saskatoon kid’s wear shop is among the top brands where one can find the newest and trending clothes of the season for children. Social media will be one of our main focus as well as looking to the top authoritative runway shows as our inspiration. Also, we will focus on making sure that children are styled and dressed in a way that mirrors their parents as well as their favorite adult trend makers and labels. Apart from being community advocates, we will also sell our products via privately organized trunk shows. The shows will be beneficial to our stylist individuals who run the retail by getting all markups individually while creating real relationships with close friends and also our customers. We offer and believe in high and trending fashion in your homestead, and the products we offer are of high quality as well as our partnership. The children’s wear at Saskatoon kid’s wear shop is produced using different types of fabrics such as cotton, wool, silk, among other types of materials. The clothes are also available in different varieties of designs, prints, and colors.
1.1. Value proposition
The primary value proposition for Saskatoon kid’s wear shop is to add value to the children’s clothes. This will be achieved by manufacturing unique kids wears that are of different varieties, attractive designs, comfortable, high quality, delivered on time, and provide secure methods of payment mode. The following image shows that value addition to products is one of the significant priorities of Saskatoon kid’s wear shop. Clients who purchase our products are assured of high value (Blakely, 2013).
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1.2.Business Concept
Saskatoon kid’s wear shop will manufacture and sell kids luxury clothes that are of high quality, unique, new, fashionable, trending, and at affordable prices. The business is to capture a wide range of customers since we have a store, and we still sell our clothes on online platforms such as social media and also a website. The above will help us to compete favorably with our competitors, but the quality of our products will help us outshine our competitors. Some of the products to be sold include; formal wear, jackets, cotton-snickers, shoes, full-sleeve T-shirts, half-sleeve T-shirts, hooded T-shirts, printed T-shirts, and hats will be produced as well. We will also provide delivery services to those clients who cannot make it to our physical store. Our main targets are kids who, at times, are left behind when it comes to fashion and trends.
1.3. Vision
The vision of Saskatoon kid’s wear shop is to be a famous children’s wear store globally that is well known for high-quality kid’s wear, which sets trends and changing children’s lifestyles.
1.4.Mission
Provide the best products and services to our clients at affordable prices. Our purpose will be achieved by making sure that the products we sell to our clients are unique, trendy, high quality, innovative, and building a genuine relationship with our clients, making them be completely satisfied.
1.5.Values
Our values are practicing discipline and integrity towards satisfying the needs of our clients.
1.6. Major Goals
The following are our primary goals
- Providing quality and trending Kids Fashions
- Getting and staying profitable
- Creating a good relationship with our clients
- To be among the top kids wear brand in the world
2. Operating Environment
The physical location of the shop will be on the east side of the Saskatchewan River, where the Saskatoon Forestry Farm Park and Zoo are located to target children visiting the Zoo, children surrounding that location as well as the major annual events in saskatoon. An online shop will also be available for those who will not be able to come to the shop. The location is crucial since it is near our target clients; thus, they will not have to go for long distances to our area. We expect stiff competition since our competitors will be close to us. The location is perfect as it has enough parking space and the store is enough to accommodate both the store and the retail shop.
3. Operations Plan
3.1.Operations timeline
Our execution of operations will follow a step by step procedure. We will begin with location identification and renting a room. After paying for the room decorating and partitioning of the place to store and shop will follow, hiring skilled professionals to help in designing manufacturing clothes, purchasing required equipment, and clothes from manufacturers who offer quality products. The other step will be evaluation and revision, followed by maintaining and planning for the future.
2020 – Starting of Operations
We will start by identifying a room in our preferred location, which will accommodate both the store and the retail. Decorating and equipping the room with the required furniture will follow, which will take approximately two months to finish. After the decoration is over, the following month should be of hiring interviewing and hiring individuals with the right qualifications and skills which meet the quality we want. The work of the employees will be to design and make new clothes, sell products in our shops, managing social media platforms, and also delivery individuals who will be delivering products to our clients. Creating social media platforms and website will be the next step. The other action will be to advertise our products on our social media platforms as well as on our website. The other procedure will be to purchase clothes from our preferred manufacturers who offer quality products at favorable prices and manufacturing our own garments from the trending fashions as well as considering our clients’ preferences.
2021- Evaluation and revision
Evaluating the available facilities and seeing whether they are meeting their specific needs and monitoring buying rates of the manufactured clothes compared to those being bought from outside. Getting feedback from clients on their satisfaction with our products and the services being given by our employees. Adding offered products and providing offers to our frequent customers will also be included in this section.
2022- Maintenance
Constant and continuous advertisement to increase client base and making seasonal customers be regular customers. Purchasing a vehicle which will be helpful in making timely delivery and going for materials.
2023- Planning for the Future
Follow the same plan as 2022 and begin working on significant goals. This will include saving money in banks and having discussions with banks on getting loans to facilitate the opening of new branches to grow the company. The plan will also consist of full production of the clothes we sell instead of buying from other cloth lines.
3.2. Start-up
In this section, start-up expenses and the capital required to operate the business are put into detail. During the first and the second year, a significant amount of money is set to keep the business running. A large percentage of the capital will be used to decorate and design the store and shop as well as purchasing required equipment to be used in making clothes.
3.2.1. Fixed Capital Requirement
The main capital asset to be purchased will be a car, stock, furniture, and the machines that will be used to manufacture clothes. Since the room is 100 meters square, the store will take 25 meters squared while the rest will be the shop, although there will be a small office that will be 4 meters squared. The prices of materials and equipment might change depending on the materials used or if the costs of specific materials are increased. The following table shows the fixed capital requirements
3.2.2. Start-Up Expenses
This section looks at how capital will be used during our first year as well as in the future to make sure that the business is up and running. This will include a promotion strategy, consultation fee, and the cost of decorating and repairing our retail shop.
Sources of Capital
Investment Required $10,000
Total Investment $10,000
Startup Expenses
Retail store designing and decoration $2850
Purchasing Equipment $2500
Employees Salary $2000
Capital expenditure $1150
Consulting Services $300
Promotion $1000
Website design and maintenance $150
Total startup expenses $9950
3.3. Risk Management Strategies
The significant risk in any business is to operate without making any profit or at break-even. To deal with the issue, effective strategies should be put into place, and the first action is to perform a break-even analysis. t Break-even point for our shop when calculated is different every year. The break-even points are shown below:
Year one: If no profits made it is not applicable
Year two: When there are approximated expenses, the break-even points should be ten units.
Year three: Since more expenses are done this year, it becomes more complicated since break-even is too high, thus not relevant.
Year Four: The break-down point is 16 units while there are estimated expenses.
Year Five: The break-down point is 18 units while there are estimated expenses.
Units refer to the number leased and seasonal lots that are filled in a given year. The number is not inclusive of monthly lots.
Break-even analysis refers to the number of products a firm should sell or target to be achieved to cover the expenses used. For a company to exceed or reach that point, the organization should advertise its products to attract many customers. It comprises of making sure that the company is operational at all times and communicating with the people surrounding the area of our shop and making them aware of what is being offered. The products being delivered will be one of the important selling factors.
Another risk will be to invest in expanding the company before even the set time reaches. This will be by opening new branches in Saskatoon and other towns to achieve our vision of being a famous children’s wear store globally. If the approximations of cash flows are correct, then expanding the business will take place at best suited time. If the estimations are high than the real cash flow situation developing into other branches will have to move slowly.
In case both or one of the above happens, the best action to execute is first to stop the expansion plans. In this situation, evaluating the state of the business and methods being used to approach potential customers is very crucial. The planned advertising methods are to advertise on social media platforms, on our website, advertising on other websites, printing business cards and brochures, and making our friends and relatives our of what we are selling. If the above methods of advertising are not adequate, the next step would be changing targeted clients and advertising on print media as well as on TV and radio stations.
Theft, fire, and vandalism would significantly affect the operations of our shop. To deal with the risk, security systems such as CCTV cameras, motion detector cameras, alarm systems, powerful, secure locks, and sensors should be installed. Another way to deal with this risk is to employ a full-time person to guard the premises to deal with the issue of theft, although chances of people breaking into the shop are very low because the shop is located in the town center.
Table 1: Risk management strategies
| Type of risk | Chances of Occurring | Magnitude | Strategy |
| Fail to Break-even | High (At the beginning) | Low to Medium (within the first few years) Medium to High (After the business is fully grown) | Get feedback from clients, restrain from increasing debt, and using effective methods of advertising. |
| Saskatoon residents not cooperating | Medium | High | Bring unique and stylish clothes to maintain clients. |
| Vandalism, Fire or Theft | Low to medium | Medium to high | Deal with security issues. Such as security systems installation, and employ a guard to secure the premises. |
3.4.Facilities
The room where the Saskatoon Kids Wear Shop will be situated is square, although the shape will change after the room is partitioned. Clothes will be hanged in rows where each type of cloth will take one row, and at the entrance, there will be a counter where clients are allowed to consult and pay for their products, and at the far end, it is where the store will be.
3.4.1. Delivery services
After a client has placed an order either by a phone call or using our social media platform, the order will be processed for delivery, and our delivery personnel or our driver could be sent to deliver the products. The means to use will be determined by the distance of the client from our shop, as well as the quantity of the items being delivered. Also, delivery services will be available to those clients who come to our physical store and buy our products in a large amount.
3.4.2. Transportation Services
Employees will be offered transportation services to and from the shop, and also clients who are not familiar with the location of our shop are going to be provided with transportation to our shop. Residents of the area will be provided with transportation if their destination machines our delivery area.
3.4.3. Manufacturing Services
Making clothes will be done when a client demands a unique outfit, our designers feel the need of coming up with new designs which will trend, or following up the trends set by other companies to satisfy our customers need
3.5. Organization Structure
The organization of Saskatoon kid’s wear shop is governed by a hierarchical structure from the topmost management to the subordinate staff of the shop. For the time being, there is only one manager who reports to the owner of the shop, but in the future, there will be branch managers each deployed in one branch; hence, the number of branch managers will be determined by the number of branches. The figure below shows an illustration of the organizational structure.
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4. Human Resource Plan
4.1. Leadership and Management Strategies
Our shop will hire employees from the surrounding areas and will improve our employees’ lives by giving them allowances and promotions. By doing so, we improve the lives of Saskatoon residents since we intend to prioritize on the people of Saskatoon and the community in everything that we will be undertaking. This will be applied in our employment policies and market relationships through acquiring goods and services. The guidelines and prioritizing in the community will influence our management and leadership strategies.
Management of the store, both online and physical, will attempt to enhance a positive and conducive leadership environment. The conducive environment will vigorously represent our organization as one that values honesty, inclusive, respect, and the community. Sourcing resources from the surrounding community, employing Saskatoon’s residents, will make our clients feel catered for and secure while shopping with us.
4.2. Recruitment and Retention Methods
The main aim of recruiting employees is to hire individuals from Saskatoon Town. With so doing, the qualified individuals from Saskatoon and its surroundings will gain skills and work experience while, in return, we will get to interact with the residents of the surrounding area. They will also share their own experiences and knowledge with the residents. Sourcing of employees from other locations will only happen if there were no enough local candidates who showed interest.
During the process of recruiting and hiring, we will put emphasis on shared values and cultural fitness. The chosen individuals will have to meet our expectations and qualifications so as to match with the aim and goals of our organization. The main purpose of our business is to supply our clients with trending and quality products at affordable prices as well as being the leading company in kids’ clothes globally, and this should be well communicated to our employees. Emphasizing looking for employees whose personal values match with those of the community and the importance of cultural fitness, we will manage to improve the quality of products and services offered and experiences our clients get while shopping at our shop. The interview session will include behavioral questions so as to compare how different individuals will react in different situations. The interview process will also include the touring of the working area and getting an opportunity to see the environment they will be working in if given a chance.
4.3. Training
It will be the work of the management to come up with training strategies for each of the employees as a way of unifying the execution of administrative activities. The strategies should be documented and include explained ways of performing specific tasks. For example, taking orders, explaining to clients the available products, and giving them their specific prices, welcoming clients, payment methods available for those clients who want their items to be delivered to them.
The training document will change as the business grows. The papers will, in the future, be used to train new employees joining the company. With the growth of the company, which will lead to the opening of new branches and expanding our store, new duties and positions will be created. The location of branch managers will be created; thus need for training them about their roles and responsibilities emerges. The existing staff will also require further training on how to operate new equipment.
4.4. Employees Performance Appraisals and Individual Responsibilities
Individual appraisals and responsibilities of each of the employees will be different at each position level. The following are the roles and responsibilities of everyone in the organization.
4.4.1. Owners
The owners, including members of the family and they, should appraise one another frequently to ensure that each and every one of them contributes equally to the organization and ensure that they are meeting the group’s expectations. Meeting should be held every four months to evaluate the percentage of involvement of each member, sharing of profits, and the company’s strategy towards the future and what to expect at what time. During the meeting, they will evaluate the performance of the manager as well as other employees. As the years go by, meeting times may be changed if it is necessary.
4.4.2. Manager
Some of the responsibilities of the manager will be to recruit employees, schedule activities each employee is supposed to carry out, get feedback from clients, and will also be responsible for processing employees’ payments. As the organization grows, the above jobs will be done by the overall manager. At the same time, the role of the branch manager will be to get feedback from clients, scheduling employees’ tasks, and also being part of the recruitment process. Owners have to evaluate the managers both overall and branch managers with crucial attention on the below areas:
Culture of the shop – This section checks whether the shop is running smoothly according to values set by the organization. It also looks at whether the community and its members are being involved by hiring residents of Saskatoon, and purchasing materials from the surrounding area. The evaluation still assesses the interaction of employees with one another as well as with clients. It will also evaluate whether issues being raised by residents of Saskatoon are being solved with immediate effect and whether marketing strategies are conducted in a way that will influence achieving the organization’s goals.
Organization’s capacity – In this section, the managers capable of running the shop effectively by analyzing and estimating the organization’s performance at a specific period of time and the expected profit to be made at specific intervals. It will also evaluate whether the client base is growing, the products being sold frequently, and whether extra programs and facilities to be added will assist in meeting the clients’ demands.
Employees’ interaction – Customer is always right, and the services given to a customer will determine whether they will come again to purchase products at the same place. It is, therefore, essential for the manager to evaluate the interaction between employees and clients to avoid losing clients for poor services given to them. The manager should also maintain good relations and communication with the employees to provide a conducive working environment.
Marketing Effectiveness – The manager will assess the effectiveness of marketing strategies used by looking at the methods of advertisement applied, such as social media, website, business cards, and brochures. By comparing the approaches implemented, the manager will be able to determine the effectiveness of each method applied. Performance evaluation of the manager to the employees provides a chance to analyzes the marketing strategies to be adopted in the future.
4.4.3. Sales personnel
The employees will have several duties, which include receiving calls from clients, managing social media accounts and responding to client’s orders, selling our products at the shop, and going to the field to advertise what our organization offers. They will be under the manager and should accord the necessary respect to him/her as well as to the owners. They are assigned duties by the manager, and the manager is the one to process and arrange for their payments. The sales employees will be assessed in the following areas.
Attention to detail – their performance will consist of the accuracy of responses from clients, payroll administration, and also inquiries from other employees on how they relate. It will also evaluate the effectiveness and timekeeping of the employees and assess to what percentage their performance is free from errors.
Participating in activities – This area will evaluate the accuracy of employees at given tasks and whether the services provided to clients are excellent and that their needs are satisfied when they visit our shop or online platforms. Also, measure the degree at which raised issues and complaints from clients are being solved to avoid the same mistakes happening future as well as the degree of client involvement while addressing the problems.
Employee Interaction – This area evaluates how sales employees interact with other employees and clients. It includes their behavior towards coworkers, their demonstration of the company’s values. In general, the evaluation will look at how sales employees interact with their colleagues, whether they are kind, welcoming, and enhances a conducive working environment.
4.4.4. Driver
The driver is responsible for delivering products to clients if they are in large quantities, bringing materials and other equipment to the shop. Their tasks will also include giving a lift to residents of Saskatoon if they are headed in the same direction as well as going for workers at their homes and taking them back in the evening. Assessment methods are given below.
Quality of Driving – The assessment will focus on safety and timely delivery with the capacity to observe arrival and departure time and be able to keep the integrity of a day’s schedule. Safety will consider the experience of the driver and answer these questions; is the driver free from incidents, did the products arrive safely and do the driver use defensive driving skills.
Employee Interaction – In this section, the manager will assess whether the driver interacts with other employees and clients in a welcoming way, good at keeping time and following schedule. They should also be trustworthy when it comes to delivering products to clients, and evaluation should be done on whether the products arrive safely and intact.
4.4.5 Delivery Person
The work of the delivery guy will be to deliver products to clients surrounding Saskatoon town. If there are no orders to deliver, he can assist in selling at the store or going with the driver to make deliveries. The manager will assign his duties. The assessment strategies are provided below.
Activity participation – Evaluation of the degree at which activities given to them are performed. It will also look at their ability to keep time and deliver products on time and intact to clients, so meet and satisfy the client’s wants. Also, it involves evaluating how issues raised by clients are handled and strategies to be implemented to avoid such errors so as to offer genuine products and services to our clients.
Employee Interact – Involves assessing the ability of delivery employees to relate and interact with seniors, colleagues, and clients. It looks at reaction towards clients, how they interact with one another, and their capacity to fulfill and obey the organizational values.
- Safety and Health
It is the concern of Saskatoon Kid’s Wear Shop owners to maintain good health and safety of the employees at the place of work so as they can remain productive. To accomplish the above, employees are trained on how to apply safety measures to avoid getting injuries and preventing them from having health problems. The organization will make sure its employees are insured with health insurance so as they can receive excellent and timely treatment in case of health issues. This will be included in the job descriptions, and workers will be frequently requested to provide evidence of their training. For drivers, they will be required to give drivers abstract to determine their competency and see their driving history.
- Compensation
Employees’ performance and their relation & interaction with colleagues and clients are very crucial in our organization so as to meet the needs of clients and feel comfortable while purchasing our products. Therefore, employees will be compensated if the amounts received are beyond the company’s expectations. We want to include our employees to b part of the organization and making them feel that the success of the company is their success as well. So as to compensate employees equally, strategies have been laid down to determine median compensation for different positions. For permanent roles, the salary is multiplied by 25 percent while seasonal position their earnings are increased by 20 percent. The multiplied factor was evaluated before coming into a conclusion, and they were between 20% to 25% (Pay Scale, 2018; Bureau of Labor Statistics, 2018).
Below is a list of employees’ positions and their payment for the entire employment year. Wages and salaries will later increase at 3% per year to cover inflation. The employees will also get more benefits based on their performance. This will be issued after the owners and managers assess employees.
Manager
- Employment Year: 2020
- Term: Full time
- Type: salaried
- Compensation: $98,500 per year
- Source: (Pay Scale, 2018; Bureau of Labour Statistics, 2018)
Sales Employees
- Employment Year: 2021 to 2023
- Term: Full time, seasonal
- Type: Salaried
- Compensation: $43,100
- Source: (Pay Scale, 2018; Bureau of Labor Statistics, 2018)
Driver
- Employment Year: 2021 to 2023
- Term: Full time, seasonal
- Type: Salaried
- Compensation: $25,600
- Source: (Pay Scale, 2018; Bureau of Labor Statistics, 2018)
Delivery Person
- Employment Year: 2021 to 2023
- Term: Full time, seasonal
- Type: Salaried
- Compensation: $12,450
- Source: (Pay Scale, 2018; Bureau of Labor Statistics, 2018)
Design Specialists
- Employment Year: 2020
- Term: Seasonal
- Type: Hourly
- Compensation: $12 per hour
- Source: (Pay Scale, 2018; Bureau of Labor Statistics, 2018)
5. Marketing Plan
5.1. Market Analysis
Through private and trunk shows, we will be able to join the competitive kid’s wear market. The shows’ aim is to give our targeted clients quality, new, fashionable, and trending clothes to provide comfort and luxury to their children as well as updating their kid’s wardrobes (Drori, 2013). The place where our shop will be located in a potential market for children’s clothes since there are many kids as well as those kids who will be visiting Saskatoon Forestry Farm Park and Zoo located in that area. The shop is estimated to collect annual revenues of up to $152,000 and make profits of approximately $82,400 annually. The business is also expected to grow at a rate of 1.9% annually (Couillard, 2018).
Because of low barriers to market entry, the kids wear market is run by small-scale businesses that only cover 2 percent of the entire market. Due to these local entrepreneurs often succeed due to minimal focus supplying their products in their locations, capacity to adjust quickly to the needs of clients, and understanding of the surrounding market. Our target is children, and as they continue to grow and families surrounding an increasing number of children, our client base will continuously improve (Consumer Trends, 2011). The market is also faced with high expectations on the trending fashions in which our store will come to feel the gap and satisfy customers’ wants and desires. After carrying out market analysis, the following were identified while considering market factors.
- Barriers to joining market: Low – Medium
- Percentage of competition: Medium – High
- Ability to supply: High
- The capability of buyers: Low – High
- Fear of Substitutes: High
5.2. Competitive Analysis
The level of competition is medium to high, which shows that competition is stiff and the competition in terms of prices of products, however with our plan to offer quality and unique products at favorable prices, we will stand a chance to compete fairly with our competitors. Considering the information gathered, we had analyzed our competitors’ pricing factors and the quality of the products being offered. In our case, we will offer a conducive and friendly environment that will make our clients feel at home and also provide offers and soft drinks to our clients. Competition has both strengths and weaknesses that are discussed below
5.2.1 Competition Strengths
Careful strategies should be used to determine and utilize the high potential chances available to the brand itself. If going solo is risky, an organization can collaborate so as they can understand the market. Competitors use this to reach many clients with ease and have instant trustworthiness (McKenzie, 2014). This is a good method to use, but in order to reach the community of Saskatoon, we will advertise and sell our products via trunk shows. Methods of communication are also crucial, and since many kids have Instagram accounts that are operated by their parents, we can utilize the opportunity to market our products.
5.2.2. Competition Weakness
Competitive companies have the power to advertise and reach many clients through social media platforms and work on the following, reaching famous children and change their wardrobe which mirrors on Instagram accounts by posting photos and red-carpet experiences (Morecroft, 2015). The luxury brands lack the ability to adapt to clients’ preferences and to turn design and concepts into trending and unique clothes effectively. A localized brand like Saskatoon Kids’ wear shop can utilize on the vulnerability of the competing labels. This can be achieved by analyzing steps and posts of trend makers on online platforms, including luxury labels and celebrity kids, and it will assist in forecasting and following big trends. In areas where companies cannot easily adapt and expand to cover the global market, our organization will see the benefits of the global market (Schaper, 2014). Dealing with customers’ preferences, adapting to trends and new and unique fashions will help our organization to grow and manufacture quality products. Remaining competitive in the quality of products offered and prices will help our brand proliferating and trustworthiness, which can be expanded as the organization develops and demand increases.
5.3. Organizational Analysis
5.3.1. Strengths and Weaknesses
This kind of business has a variety of strengths, the first one being the location of the shop, which makes residents of Saskatoon be able to purchase quality products at affordable prices. The employees will be able to improve their lives as well as support family members and friends with the salaries and benefits they receive. The other strength is the foundation to which the business is built and operated on; this is a result of the skills of the owners, managers, and other employees, which makes them remain productive and competent. The capability of employees will enable us to deal with the client and create a strong relationship with them.
5.3.2. Opportunities and Threats
Apart from the experience of the owners and employees will promote the success of the organization and venturing into new opportunities to expand the company. The company will act as a trendsetter, improve kids’ lifestyle, valuing customers’ preferences, desire to shop locally and develop local society.
5.4. Marketing Strategy
The major marketing strategy will be to start the business by selling children clothes that will satisfy their needs in general. We will later introduce designed, luxurious, and stylish clothes, which will be delivered on time and to be paid using different methods of payment. The clothes will be designed according to the specifications of a client (Blakely, 2013).
5.4.1. Product and Service Strategy
Since the competition is high and clients are interested in products that meet their needs as well as the quality of services offered out, an organization will relate well with clients and the community. Services offered will include a follow-up on whether the product met its specification and getting feedback on what areas should be improved to perfect services and products offered at our shop.
5.4.2. Pricing Strategy
The pricing strategy will involve the evaluation of prices of similar products in our competitors’ organizations, and our main focus will be to manufacture quality products to attract and meets customers’ needs. Although low prices attract more clients, many individuals check on quality first before evaluating product prices. Our shop will not offer products on credit (Jeston, 2014).
5.4.3. Distribution Strategy
Our products will be supplied using our physical retail shop where individuals can come and purchase clothes at our working hours, Those who will not make it to our shop can place orders using social media platform, websites, and they can as well call us using our telephone number, and free delivery will be available to those clients who are not far from our physical shop. For clients who are far from our shop, they will be charged a small delivery fee.
5.4.3. Promotion Strategy
Product promotions will be carried out using varies ways of advertising, such as; internet, printed media, radio, and TV stations. It will also use other forms of advertisement such as business cards, and brochures which will be issued to individuals. The image to be portrayed to clients is that of an organization that provides high-quality products and values clients and their needs (Goss, 2015). The decorations and designs are children friendly hence will attract customers to come and purchase our products. As a way of showing that we value our customers, we will have a way of identifying frequent clients and reaching to them to see whether the product met their expectations.
6. Financial Plan
6.1. Proforma Income Statements
Table 2: Projected profit and loss
| Projected Profit and Loss | ||||||||||||||
| Month 1 | Month 2 | Month 3 | Month 4 | Month 5 | Month 6 | Month 7 | Month 8 | Month 9 | Month 10 | Month 11 | Month 12 | |||
| Sales | $4,100 | $7,200 | $9,350 | $12,500 | $17,000 | $20,000 | $20,000 | $23,000 | $26,000 | $29,000 | $15,000 | $13,500 | ||
| Direct Cost of Sales | $1,130 | $1,530 | $2,400 | $3,100 | $4,500 | $5,200 | $5,200 | $5,800 | $6,800 | $7,300 | $5,000 | $3,150 | ||
| Other Production Expenses | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | ||
| Total Cost of Sales | $1,130 | $1,530 | $2,400 | $3,100 | $4,500 | $5,200 | $5,200 | $5,800 | $6,800 | $7,300 | $5,000 | $3,150 | ||
| Gross Margin | $2,970 | $5,670 | $6,950 | $9,400 | $12,500 | $14,800 | $14,800 | $17,200 | $19,200 | $21,700 | $10,000 | $10,350 | ||
| Gross Margin % | 72.44% | 78.75% | 74.33% | 75.20% | 73.53% | 74.00% | 74.00% | 74.78% | 73.85% | 74.83% | 66.67% | 76.67% | ||
| Expenses | ||||||||||||||
| Payroll | $4,500 | $4,500 | $4,500 | $4,500 | $4,500 | $4,500 | $4,500 | $4,500 | $4,500 | $4,500 | $4,500 | $4,500 | ||
| Sales and Marketing and Other Expenses | $2,500 | $2,500 | $2,500 | $2,500 | $2,500 | $2,500 | $2,500 | $2,500 | $2,500 | $2,500 | $2,500 | $2,500 | ||
| Depreciation | $595 | $595 | $595 | $595 | $595 | $595 | $595 | $595 | $595 | $595 | $595 | $595 | ||
| Leased Equipment | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | ||
| Utilities | $500 | $500 | $500 | $500 | $500 | $500 | $500 | $500 | $500 | $500 | $500 | $500 | ||
| Insurance | $500 | $500 | $500 | $500 | $500 | $500 | $500 | $500 | $500 | $500 | $500 | $500 | ||
| Rent | $2,000 | $2,000 | $2,000 | $2,000 | $2,000 | $2,000 | $2,000 | $2,000 | $2,000 | $2,000 | $2,000 | $2,000 | ||
| Payroll Taxes | 15% | $675 | $675 | $675 | $675 | $675 | $675 | $675 | $675 | $675 | $675 | $675 | $675 | |
| Other | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | ||
| Total Operating Expenses | $11,270 | $11,270 | $11,270 | $11,270 | $11,270 | $11,270 | $11,270 | $11,270 | $11,270 | $11,270 | $11,270 | $11,270 | ||
| Profit Before Interest and Taxes | ($8,300) | ($5,600) | ($4,320) | ($1,870) | $1,230 | $3,530 | $3,530 | $5,930 | $7,930 | $10,430 | ($1,270) | ($920) | ||
| EBITDA | ($7,705) | ($5,005) | ($3,725) | ($1,275) | $1,825 | $4,125 | $4,125 | $6,525 | $8,525 | $11,025 | ($675) | ($325) | ||
| Interest Expense | $410 | $403 | $397 | $390 | $383 | $377 | $370 | $363 | $357 | $350 | $343 | $337 | ||
| Taxes Incurred | ($2,613) | ($1,801) | ($1,415) | ($678) | $254 | $946 | $948 | $1,670 | $2,272 | $3,024 | ($484) | ($377) | ||
| Net Profit | ($6,097) | ($4,202) | ($3,302) | ($1,582) | $593 | $2,207 | $2,212 | $3,897 | $5,301 | $7,056 | ($1,129) | ($880) | ||
| Net Profit/Sales | -148.71% | -58.37% | -35.31% | -12.66% | 3.49% | 11.04% | 11.06% | 16.94% | 20.39% | 24.33% | -7.53% | -6.52% | ||
12-MONTH PROFIT AND LOSS PROJECTION
6.2. OPENING DAY BALANCE SHEET
Table 3: Opening Day Balance Sheet
| Opening Day Balance Sheet | |||||||||||||
| Assets | Starting Balances | ||||||||||||
| Current Assets | |||||||||||||
| Cash | $10,000 | ||||||||||||
| Inventory | $3,000 | ||||||||||||
| Other Current Assets | $900 | ||||||||||||
| Total Current Assets | $19,900 | ||||||||||||
| Long-term Assets | |||||||||||||
| Long-term Assets | $5,000 | ||||||||||||
| Accumulated Depreciation | $0 | ||||||||||||
| Total Long-term Assets | $5,000 | ||||||||||||
| Total Assets | $24,900 | ||||||||||||
| Liabilities and Capital | |||||||||||||
| Current Liabilities | |||||||||||||
| Accounts Payable | $25,000 | ||||||||||||
| Current Borrowing | $0 | ||||||||||||
| Other Current Liabilities | $0 | ||||||||||||
| Subtotal Current Liabilities | $25,000 | ||||||||||||
| Long-term Liabilities | $50,000 | ||||||||||||
| Total Liabilities | $75,000 | ||||||||||||
| Paid-in Capital | $10,000 | ||||||||||||
| Retained Earnings | ($9,100) | ||||||||||||
| Earnings | $0 | ||||||||||||
| Total Capital | $900 | ||||||||||||
| Total Liabilities and Capital | $75,900 | ||||||||||||
| Net Worth | $900 | ||||||||||||
6.3. Proforma Cash Flow Statements
Table 4: Proforma Cash Flow Statements
| Projected Cash Flow | |||
| 2020 | 2021 | 2022 | |
| Cash Received | |||
| Cash from Operations | |||
| Cash Sales | $19,650 | $24,000 | $27,000 |
| Subtotal Cash from Operations | $19,650 | $24,000 | $27,000 |
| Additional Cash Received | |||
| Sales Tax, VAT, HST/GST Received | $0 | $0 | $0 |
| New Current Borrowing | $0 | $0 | $0 |
| New Other Liabilities (interest-free) | $0 | $0 | $0 |
| New Long-term Liabilities | $0 | $0 | $0 |
| Sales of Other Current Assets | $0 | $0 | $0 |
| Sales of Long-term Assets | $0 | $0 | $0 |
| New Investment Received | $0 | $0 | $0 |
| Subtotal Cash Received | $19,650 | $24,000 | $27,000 |
| Expenditures | Year 1 | Year 2 | Year 3 |
| Expenditures from Operations | |||
| Cash Spending | $14,000 | $16,000 | $20,000 |
| Bill Payments | $4,893 | $7,509 | $8,158 |
| Subtotal Spent on Operations | $18,893 | $23,509 | $28,158 |
| Additional Cash Spent | |||
| Sales Tax, VAT, HST/GST Paid Out | $0 | $0 | $0 |
| Principal Repayment of Current Borrowing | $0 | $0 | $0 |
| Other Liabilities Principal Repayment | $0 | $0 | $0 |
| Long-term Liabilities Principal Repayment | $3,600 | $3,600 | $3,600 |
| Purchase Other Current Assets | $0 | $0 | $0 |
| Purchase Long-term Assets | $0 | $0 | $0 |
| Dividends | $0 | $0 | $0 |
| Subtotal Cash Spent | $18,493 | $23,109 | $26,758 |
| Net Cash Flow | $10,157 | $2,891 | $13,242 |
| Cash Balance | $50,157 | $53,048 | $66,290 |
6.4. Investment Analysis
The financials above are predictions of revenues and expenses to be used and what to get in return to ensure that the business is not running at a loss. The costs have been created to mirror the organization averages via discussions and researches with differing professionals. The inflation rates were placed at 3 percent so as to accommodate expenses increment over time as well as provide a range to deal with other differences. The number of revenues is determined by forecasting how applicable the business plan is and whether the prices offered are favorable so as to compete well in the market. Issues to deal with debt and equity capital may differ based on the final expenses on repairing the store and shop, and when the amount owners pledged to contribute is adjusted.
6.5. Break-Even Analysis
The monthly break-even revenue for Saskatoon Kids Wear Shop is $14,564 as per the estimations that the average percentage variable cost is 30%, and the estimated monthly fixed expense is $ 11,950.
Figure 5: Percentage sales per sub-sector 2020
Figure 6: 12 months projected cash flow
7. References