Zara Franchise- Business Plan

Zara Franchise- Business Plan

What does the business do? What is the unique value proposition (if any)? What is the competitive landscape?

Zara Franchise is a Spanish accessory and clothing retail company. It is imperative to indicate the primary business operations of the Zara franchise are to offers kids, women, and men clothing line as the major products. More so, the business entails cosmetics as well as other beauty products and fashion accessories on retail. Most of its products are manufactured in various countries. Some of its products are manufactured in Europe, Africa, and Asia, whereas some are manufactured in Spain. It offers products that are low priced. The company is one of the most successful companies in the world due to its smooth flow of operations. This has resulted in a quick release of new and unique clothes and shoe designs bimonthly.

The unique value proposition of Zara is that it offers affordable and fashionable clothing by presenting unique styles that are hot and trendy for any given season. More so, the company has effective marketing strategies that bring new products with a strong brand that show the true spirit of fashion. More so, it is a trendsetter with very unique and stylish fashion trends, whether it is color, cut, or style.

Every company has its major competitors. The competitive landscape of Zara comprises significant clothing brands such as Gap, which is among the most prominent America multinational fashion clothing line.  Another is H &M, which is a leading global brand and has outlets in almost 53 countries. Ralph Lauren is another competitor, and it is large retains clothing which provides various accessories to global customers. Despite having these competitors, Zara has a competitive advantage that still makes it thrive and be successful. First, it has already won the hearts of most customers who have become loyal customers. Secondly, Zara believes in targeting all consumers with affordable clothes and accessories. Lastly, the company has a great marketing team that markets its products through various avenues, mostly social media platforms.

What is the operating structure: franchise, family, sole, partnership, corporation…etc all that apply?

Franchise; There are certain things that one needs to do or fulfill to become a franchise of Zara. First is to understand the cost of opening a Zara store, which varies from one country to another. The average amount of opening a franchise $30,000. Other factors that one need to consider include; advertising fee, royalty fee, furniture’s, fixtures, and equipment.  Also, Zara has partnered with various clothing stores all over the world.

Describe your anticipated: customers, vendors, employees, business advisors

Anticipated Customers

Since Zara Company focuses on ensuring that people look great and are fashionable, my customers expected are the kids, teenagers, and young adults. I believe that customers play a significant role in the growth and development of any business. As a result, I will ensure that they are served with the best services and are provided with high-quality products. One primary focus is to make the products affordable for all customers. This will not only increase the sales margin but will also increase the customer base. When customers are served with the best service provided with high quality, unique, and affordable products, then, they s no doubt that they will be in the return list of customers. The customers will also refer their friends to the store.

Anticipated Vendors

The primary vendors of the Zara franchise will be suppliers who are mainly based in Spain and Europe. This is to ensure that the store is closer to the main sullies and that there is a low shipping cost. When supplies are within reach, the business is likely to be run efficiently in a manner that it can manufacture and sell new trends and fashion accessories to its customers. Vendors play a significant part, and it is, therefore, crucial to have a long-term working relationship that is based on trust.

Anticipated Employees

My anticipated employees will be young, aggressive, outgoing, and experienced. They must have worked in a clothesline store and must have a good recommendation letter from their previous employees. More so, the employees must have a minimum of two years’ experience in any clothes lie business. Also, age is an essential factor that needs to be considered. I will only employ employees who are between the ages of 18 to 50 years. Education background is a must check as each employee will be assigned roles depending on their education background as well as experience. Another vital key to consider is that there will be gender equality within the organization to make everyone feel appreciated and valued.

Anticipated Business Advisors

I cannot run the business based on my knowledge only; I, therefore, need some business advisors that will guide me through the whole process. Some of the business advisors include; accountants who will advise on how to run a business smoothly by ensuring that I have an updated book of records; I comply with tax regulations, among other financial factors. Another adviser will be business bankers who will advise me on issues regarding business credit cards, online banking services, and finance and loan options, among others. I will also require a financial adviser who will help me develop an overall financial strategy for my business. Last but not least, I will also need a legal adviser who will help me in case of any disputes; Last, I will need business mentors who will act as my role model, consultant, adviser, and critic. The mentor can be family friends, business contacts, among others.

What is the physical or virtual footprint of the business (i.e., Retail, Home Based, Web Subscription…?, etc.) – be sure to address both customers facing and back-office operations.

We are living in a digital world, and it is no doubt that almost every organization, most business organizations, is going the digital way. Also, for a business to be successful, it has to ensure that it reaches all the target consumers through the available platforms (Burns & Dewhurst, 2016). And since Zara franchise is an organization that targets kids, teenagers as well as young adults, it is therefore essential to have a physical home-based store as well as an online business platform. The physical home-based store will serve the surrounding customers, especially parents who want to buy some clothes and kids accessories from the store. In most cases, parents are usually busy working and have no ample time to serve on the internet. Therefore, the home-based store will serve such customers effectively. I addition, to reach the broader customer target, the business will also be run through online platforms such as Facebook, Instagram, and Twitter. It is essential to understand that most youths and young adults have access to a digital gadget as well as the internet. This means that there are a vast number of potential customers on online platforms. Also, the business will have to register for a website. A website plays a significant part in the industry as it builds trust.

Customer Facing and Back Office Operations

Customer-facing operations will include the customer service department, which will be involved in communicating with the clients and customers through various avenues such as emails, phones, messages, among others.  Another customer-facing is the sales representatives who will always be interacting with the customers or clients as they try to convince them to buy a particular product or service from the company.

The back-office operations will consist of the portion of the organization that will be made up of support personnel and administration who are not primarily client-facing. The back office will include departments such as human resources, administration, Information technology, accounting, and regulatory compliance. The functions of these departments will consist of; record maintenance, ensuring that there are enough employees who are running the business, payrolls are made, the financial records of the company are updated and record, tax is cleared in time, among other functions.

Where will start-up funding/seed capital come from, and what are the likely terms for securing it? How much will you need, over what periods?

Raising seed capital is a vital part of developing my own business as an entrepreneur. As an entrepreneur, I believe that startup capital is the fuel of any business. It is, therefore, essential to find the best startup capital options that will suit my business. The following are some of the venues I will use to raise the startup capital;

Self-financing

This is my first option of financing and the best option since I will not have to worry about loans. This is a business that I have always wanted to start, and this prompted me to start saving some of my income into a savings account. However, the savings are not enough to start and smooth run the business. I will, therefore, have to sell some personal investments, such as my private vehicle. As an entrepreneur, I will have to ensure that I utilize the capital effectively because, based on several studies, it is indicated that there are significant risks involved because I run the risk of losing my savings and assets if the business fails to succeed.

Microloans or bank loans.

In this case, I will have to visit my bank and ask to apply for a loan. The microloans are said to be a useful source of investments that are managed by an intermediary. There are, however, some factors that I have to consider before applying for this type of loan. These include; interest rates and the payback period. These will be major determinants that will determine what amount of credit I will apply for. Without putting these factors into account, they may be significant drawbacks to the success of not only my new business but any business.

Family and Friends

My friends and family will also play a significant part in financing my business. Luckily, I have a very supportive family that always has someone’s back. This is an essential source because there will be better repayment terms as compared to those offered by banks or micro-financing institutions. More so, some friends may decide to provide some services if not capital. It is, however, essential to ensure that there are well laid out terms and conditions of the family finances because I may risk having a straining relationship with my family members if I fail to meet the agreed terms.

How will this business help you to meet your wealth and career goals?

This business will play a vital role in my wealth because it is through it that I will be able to pay myself. Any entrepreneur desires to start a business that will succeed and be able to repay itself as well as its workers. In this business, I am one of the workers, and so I have been included in the payroll list. This means that it is through Zara Franchise that I will be able to pay my bills, buy assets, and get involved in various investment options.

In regard to my career goals, I have always had a passion for starting a business and being my boss. Having this business, therefore, means that I will have achieved one of my career goals. Secondly, I have pursued several business short courses, and my skills will thus play an essential role in the running process of the business. It is always necessary to have an education background in running and managing a business. This knowledge is of great importance if it is put into practice. Thus, the company will help me meet my career goals by ensuring that I put into practice what I studied in higher learning institutions. Also, I have a desire to further my education. It is through my income that I will be able to pay for my education expenses and pursue a course in Human resource management. It is imperative to understand that this will have a significant impact on my career path, as well as the growth and development of my business.

How long do you anticipate maintaining ownership of the business?

Ever since I was a child, I have always had a dream of owning a business. Since opening the Zara Franchise will be a dream comes true, I thus anticipate to own it for a very long. This one of the company I want to see it succeed and be there in every step. I am determined to do everything, and go the extra mile of working extra hours, add more unique and affordable products to the enterprise. However, according to various researches, it is claimed that owning a business is not a bed of roses as it comes with so much sacrifice, determination, and commitment (Baena, 2015). I am determined to go through all the challenges and find suitable and effective ways of addressing any problems I may encounter on the way. It is essential to start that, I may think of having a partnership with an investor who will bring more of human and capital resources as well as experience. The investor will play a vital role in the rapid growth and development of the business. As for now, I am not sure if I will ever sell the business to another entrepreneur.

Provide 3 – 5 years of financial projections

What are your plans for profitability?

Based on the above cash flow statement of a span of five years, it is evident that the business is on the right track. It is thus essential to ensure that the company continues to run its operations smoothly and effectively. I wish to have more sales revenue, which will, therefore, increase the profitability of the business. Some of the significant things that I consider to do to improve the profitability include;

Extensive advertisement; this is essential as it will reach out to all potential customers within the target market (Rickman, 2012. Currently, there are various advertisement avenues that one can use in order to advertise the products and services of a given business. In my case, I wish to reduce advertising expenses, and thus I will focus more on the social media platform, which is affordable and cheap. These are the most critical p-platforms that will increase my customer base. The use of social media platforms will not only retain my existing customers but also attract new customers.

Another way that I intend to use in order to keep my profitability levels afloat is to expand on the available products in a way that the customers will have a variety of choices to choose from. More so, I will attract more sales by using marketing strategies such as offering discounts on certain products. Customers tend to buy more of the products that have a discount attached to it. The main aim of this is to incase the sales volume hence an increase in productivity levels.

What unique tax challenges might your business face?

In almost all business, various challenges are likely to be faced. Some of them include issues regarding tax. Although I will be cautious about issues regarding tax and ensuring that my business is run effectively and putting all the ethical factors into consideration, I will ensure that I meet all that is required. However, it is also essential to discuss a few of the challenges that I may likely to face. Some of the following are some of the tax challenges that my business might face;

Timing.  Timing is an issue that my business may encounter. Between the long term management and daily operations, I have enough to worry about because adding a heap of tax considerations at the start of the business makes it even more challenging to manage my time. As a result, I may fail to pay my tax on time, which may result in more challenges that are likely to affect the development of the growing business.

Recordkeeping. There is so much to keep track of in a business, including expenses as well as revenue. Since this is a challenge I am likely to face, I should thus have every receipt for any transaction related purchases. The receipts should be stored in a place that I can access easily. I, therefore, need to have a significant focus throughout the years, ensure that every detail is recorded appropriately, correctly, and on time. It is thus essential to have a committed financial worker who will ensure that all financial information is in place.

In order to address these challenges, I will, therefore, have to plan as this will help me keep my records better organized and will thus help me manage time so that I can file the tax before the deadline. More so, I will need to work with a professional who will ensure that I work and update my financial records professionally. Lastly, I will have to keep things organized. As much as possible, I will make sure that my documents are organized and within reach throughout the year. This will save me stress and time come tax season.

What unique financial challenges might your business face? (Is a seasonal business, etc.?)

Since Zara Franchise will be a new business, there are various unique financial challenges that it is likely to face.  Based on the above discussion, it is evident that I will have to borrow some money from my bank as well as family and friends. This is money that needs to be repaid within a given period. Therefore, one major challenge that the business is likely to face is debt repayment. Since the company is just starting up and I am still not sure about how the products and services will perform in the market, it is thus inevitable that I will have to strain financially as I try to clear the loan or debt.

Unexpected expenses are another financial challenge. This may be a result of the breakdown of vital equipment to accidents. I understand that unanticipated costs can be a threat to a business budget. However, while insurance may cover some of these accidents at a certain level, any accident will significantly affect the smooth running of the business.

Lastly, the business might face the challenge of not paying the workers in time. I, however, understand that employees play a vital role in the growth and development of a business; however, for a startup business that has no constant sales revenue, there might be delays in paying the workers. I, therefore, hope to work with understanding employees who will understand that this is a new business. However, this should not be a routine. I will thus have to pull up my socks and ensure that the employees are paid in time. Failure to do so may result in employee turnover, which may cost my business. The hiring of new employees is also a process that needs a lot of resources and time.

References

Baena, V. (2015). European franchise expansion into Latin America: Evidence from the Spanish franchise system. Management Research Review, 38(2), 149-165.

Burns, P., & Dewhurst, J. (Eds.). (2016). Small business and entrepreneurship. Macmillan International Higher Education.

Rickman, C. D. (2012). The digital business start-up workbook: The ultimate step-by-step guide to succeeding online from start-up to exit. Chichester: Capstone.