Coco business plan

COCO

COCO CULTURE BUSINESS PLAN

Confidential

WE PROVIDE HIGH-END PRODUCTS AND MARKETING TOOLS TO HELP ONLINE ENTREPRENEURS ACCELERATE THEIR BUSINESS GROWTH

Paula Cruz paulacruz369@gmail.com www.LivingBusinessSuccess.com +44 0781 7995027

COCO

Table of Contents 1. Executive Summary .......................................................................................................1 1.0 Executive Summary ......................................................................................................................... 1 1.1 Objectives ........................................................................................................................................ 2 1.2 Mission ............................................................................................................................................. 2 1.3 Keys to Success............................................................................................................................... 2

2. Company. ........................................................................................................................................... 3 2.0 Company Summary ......................................................................................................................... 3 2.1 Start-up Summary ............................................................................................................................ 3 2.2 Company Ownership ....................................................................................................................... 4 2.3 Company Location ........................................................................................................................... 4

3. Products and Services .................................................................................................5 3.0 Products and Services ..................................................................................................................... 5 3.1 Description of Products .................................................................................................................... 5

4. Market Analysis Summary.........................................................................................5 4.0 Market Analysis Summary ............................................................................................................... 5 4.1 Market Segmentation……………………...................……………………………………………….... 5 4.1.2 Trends ........................................................................................................................................ 6 4.1.3 Online Market Growth ................................................................................................................ 7 4.2 SWOT Analysis ............................................................................................................................. 8

5. Strategy and Implementation ....................................................................................... 8 5.0 Strategy & Implementation............................................................................................................ 8 5.1 Competitive Edge .......................................................................................................................... 8 5.2 Marketing Strategy ........................................................................................................................ 9

COCO 5.3 Sales Strategy ............................................................................................................................... 9 5.3.1 Sales Forecast ........................................................................................................................... 9

6. Financial Plan...................................................................................................................11 6.0 Financial Plan................................................................................................................................ 11 6.1 Break-even Analysis ..................................................................................................................... 11 6.2 Personnel Plan .............................................................................................................................. 12

7. Financial Statements ..................................................................................................13 7.1 Profit and Loss Statement ............................................................................................................. 13 7.2 Balance Sheet ............................................................................................................................... 15 7.3 Cash Flow Statement .................................................................................................................... 16

COCO

1. Executive Summary COCO is a clothing company that will be located in the Shoreditch area, London. COCO's first product range consists of the best fabric, designs and styling on the market aimed for women looking for distinctive outdoor clothing online. COCO will eliminate the middle man and offer creative outdoor clothing that is both functional and beautiful. The savings are passed on to our customers who will be paying a fraction of what they normally do for current retreated fashion in stores.

Erica Couto, the owner of COCO, has five years of experience in the outdoor garment industry.

Erica. Erica has been a senior clothing designer for JD Sports for the past four years. She also has also studied for a Master’s Degree in Fashion Marketing.

Another strength of COCO is that it will not maintain any clothing inventory. COCO has contracted with a production firm, located in the Shoreditch area, London, to produce and ship all COCO clothing. Our design team will work closely with the production firm-based manufacturing facilities. The production firm will maintain the inventory and will produce sufficient product to meet the planned demand.

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COCO 1.1 Objectives What follows is a listing of the core objectives for COCO: 

Develop a strong customer base. Developing a strong customer base will be the first priority. To achieve this end the founder will create an effective customer service model that adequately addresses all of the unique needs of the online consumer.



Create a broad marketplace. Having a broad marketplace with a variety of goods will be another of the core objectives.



Online Security. As the online shopping industry has continued to grow, so too has the need for online security. With that being said the founder will look to develop a secure environment that protects the consumer on all levels.



Drive profits. Driving profits will be the final objective for COCO as the founder will look to grow the revenue and profit streams exponentially over the course of the coming years.

1.2 Mission To present consumers with designs, styling and clothes that energizes any outdoor activity. Whether it be snowboarding, running along the beach, or drifting down a river, Liquid Culture has comfortable, durable clothing that will look and feel wonderful.

1.3 Keys to Success       

Quality product Outstanding customer service User friendly website that is entertaining to navigate. Like a trip to your favourite store where you always find something new that you want.

Establishing a strong digital marketing strategy and an advertising campaign in a traditional media vehicle; i.e. magazines.

Excellent vendor relationship that will facilitate quality manufacturing of COCO clothing and quick shipment of orders.

Acquiring an exceptional design staff.

Acquiring an excellent development and Website administrator.

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COCO

2. Company Summary COCO will offer creative women's outdoor clothing, online, that is both functional and beautiful. Erica Couto, the owner of COCO, will create a cost-effective operation that will eliminate the cost of inventory by having a third-party, the production firm Company, handle all manufacturing and shipping of clothing to the customer. COCO will process the order and collect the payment online. The order will then be sent to the production firm Company to be filled and shipped. COCO will focus on clothing design and marketing of its products.

2.1 Start-up Summary COCO's start-up costs consist mostly of design and marketing. COCO has £260,000 in investments and £200,000 in a short-term loan.

Start-up Table

Start-up Requirements Start-up Expenses Legal Stationery etc.

Brochures Consultants Insurance Rent Leased Office Equipment Computer Equipment/Software Website Other Total Start-up Expenses

£1,000 £500 £0 £5,000 £0 £2,000 £10,000 £30,000 £10,000 £0 £58,500

Start-up Assets Cash Required Start-up Inventory Other Current Assets Long-term Assets Total Assets

£401,500 £0 £0 £0 £401,500

Total Requirements

£460,000

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COCO Start-up Funding

Start-up Funding Start-up Expenses to Fund Start-up Assets to Fund Total Funding Required

£58,500 £401,500 £460,000

Assets Non-cash Assets from Start-up Cash Requirements from Start-up Additional Cash Raised Cash Balance on Starting Date Total Assets

£0 £401,500 £0 £401,500 £401,500

Liabilities and Capital Liabilities Current Borrowing Long-term Liabilities Accounts Payable (Outstanding Bills) Other Current Liabilities (interest-free) Total Liabilities

£0 £200,000 £0 £0 £200,000

Capital Planned Investment Investor 1 Investor 2 Other Additional Investment Requirement Total Planned Investment

£130,000 £130,000 £0 £0 £260,000

Loss at Start-up (Start-up Expenses) Total Capital

(£58,500) £201,500

Total Capital and Liabilities

£401,500

Total Funding

£460,000

2.2 Company Ownership Erica Couto is the sole owner of COCO. There are no other parties with liability to claim an ownership stake in this venture.

2.3 Company Location COCO will be located in the Shoreditch area, London with the ability to serve clients throughout the globe. Long-term plans are for this to remain the base of operations due to the familiarity of the founder with the area and to be in close contact with the production firm.

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COCO

3. Products and Services COCO will sell women's outdoor clothing online. We will offer outdoor clothing for almost every type of active use.

3.1 Description of Products We will focus on the seasonal clothing demands of our customers including the following:       

Fleece outerwear Rain gear, waterproof breathables, as well as coated nylon Synthetic clothing for outdoor activities Hats Shorts Trousers Shirts

4. Market Analysis Summary In the past 15 years, women's outdoor wear has grown into a billion dollar niche in the clothing industry. The popularity of the Internet has launched a number of online stores for women's outdoor wear but no company is exclusively selling their products online. There are a number of reasons for this but the strongest is that the concept is new and untested. Will customers buy something that they wear that can only be seen online? We believe they will, if the process is fun and the products are great and cheap. The key is marketing our target customers in the traditional advertising medium for fashion as well, i.e. women fitness magazines.

The ads will focused on the eliminating the middle man in your clothing budget and stepping up to the distinctive style of COCO. The company logo will also be an important marketing tool in bringing customers to our website.

4.1 Market Segmentation COCO will be focusing on two distinct groups of women that purchase outdoor clothing: 

Women 17-25 years of age: Youth drives the market so this is the important group to attract to the website. They have less money than the older group so we must give them what they want for less. The key is to have inexpensive selections in each clothing group that have the popular cut. The company's logo attractiveness to this group cannot be stressed strongly enough. The initial small purchases will grow larger over time.



Women 26-40 years of age: They are the core group that will drive COCO's success. This target group is responsible for the growth of outdoor women's wear. They will be harder to pull into the website. Once there, the key will be promoting the quality, attractiveness and savings. In addition, we will have to assure that the purchase will fit the way the customer wants it to. It will be crucial that the return policy is hassle-free and speedy.

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COCO Market Analysis

Market Analysis Year 1 Potential Customers Women Ages 16-25 Women Ages 26-40 Other Total

Year 2

Year 3

Year 4

Year 5

Growth 20% 15% 0% 17.81%

CAGR 6,000,000 5,000,000 0 11,000,000

7,200,000 5,750,000 0 12,950,000

8,640,000 6,612,500 0 15,252,500

10,368,000 7,604,375 0 17,972,375

12,441,600 8,745,031 0 21,186,631

20.00% 15.00% 0.00% 17.81%

4.1.2 Trends A seasonal colour palette is in: What does that mean? Lush green grass, vibrant blue water, dark blue sky, geraniums, and orchids. The colours of nature either as the main colour in your fashion pick or as an accent colour.

Tough enough for a woman: Finally, women’s outdoor clothing is held to the same standards that men’s clothing is. Outdoor clothing should be able to stand up to an active lifestyle and be lightweight, breathable, and odour inhibiting.

Sunwashed look: Sweatshirt made of French terry cotton. This sweatshirt is super soft and comfortable and has angled hand warmer pockets.

Feminine fit and style: outdoor shirts available with a feminine fit and style which is comfortable and stylish without being clingy and impractical for outdoor living. The shirt is available in Ink, White, Lavender, Natural Heather, Water, Orchid, Grass, Geranium, and Black.

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COCO 4.1.3 Online Market Growth Online Business as an industry has exponentially increased in growth and it is used widely across all industries. Online advertising will outpace traditional advertising, as improving digital advertising technology makes Internet advertising cheaper and more effective, while traditional methods will see a decline. Internet advertising is by far the fastest-growing medium. The increase is driven by growth in display advertising, online video, social media and mobile advertising. According to a news report from ZenithOptimedia, a division of ad firm Publicis, industry analysts expect global ad spending to grow 5.5% this year to $537 billion, while Internet ad spending will grow 14.8% and will account for nearly a quarter of total spending, at $121 billion.

Almost 3 billion people – 40% of the world’s population – are using the Web. Two-thirds of the world’s Internet users are from the developing world.

The growth in online ad spending is driven by an increased number of internet users.

Currently, more than 2.92 billion people worldwide access the internet—up from 394 million in 2000. With the increased Internet penetration and mobile usage, end customers around the world are driven more by technology. They prefer digital communication. This is an exciting opportunity for advertisers and marketers around the world. Through the Internet, they can reach the right audience, at the right time, and with the most effective message, globally.

It took Barnes and Noble 54 years to reach a billion dollars in sales… It took Amazon 4 years.

That is the Power of the Internet.

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COCO

4.2 SWOT Analysis In order to achieve our goals in a highly competitive industry like the fashion industry, we must ensure that we critically look through our strengths, our weaknesses, the opportunities available in the industry and the threats that we will are likely going to face. This is the summary of the SWOT analysis that was conducted for COCO:

Strengths

Opportunities

Knowledge of the founder. COCO founder Increase in online activity. More people are Erica Couto will bring her wealth of experience in beginning to turn to the Internet for their shopping Design and Fashion Marketing to the table which needs every day. Research conducted via will be invaluable during all phases of business IBISworld.com shows that appealing to specific growth and evolution. segments of the market will be one of the keys to success for companies like COCO that are Low overhead costs. COCO will have looking for long-term sustainability. extremely low overhead costs due to the fact that the business will not carry inventory or need Threats office space to operate effectively.

Growth of the industry. The growth of the industry is another of the core strengths of the COCO model. With more and more shopping traffic going online, the long-term prospects for COCO are nothing less than promising.

Larger competitors. Larger competitors such as Ebay.com and Amazon.com pose a threat as they are already firmly entrenched in the marketplace and have acquired a large share of the online shopping market.

Weaknesses Lack of funding. Lack of funding is the primary weakness for COCO as all of the other components of the business model and approach are extremely sound.

5. Strategy and Implementation COCO will win market share in the women's outdoor clothing niche by aggressively pursuing visibility with its target customers.

5.1 Competitive Edge COCO's competitive edge is its focus on the process than on product. The website is just the endpoint of an entire marketing program to drive customers' interest in COCO. Though we have

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COCO confidence in the quality and attractiveness of our products, we know that building the road to the website is our most important job.

COCO's agreement with the production firm is another strong competitive advantage. Our design team will work closely with the production firm-based manufacturing facilities. The production firm will maintain the inventory and will produce sufficient product to meet the planned demand.

This will keep production costs low for products and put a cap on COCO's overhead.

5.2 Marketing Strategy COCO will rely primarily on the internet to drive marketing efforts. Planned marketing efforts include the creation of a user friendly website developed using all the latest in design and online technologies. The website will also feature SEO (Search Engine Optimization) which will allow it to rank higher with popular search engines including Google and Yahoo.com among others. Social networking using Facebook, Twitter, Instagram, Pintrest and Blogging, will round out the COCO marketing model and approach with each being used extensively throughout the course of each calendar year.

In women's fitness magazines like Women’sHealth, Shape and Women’s Fitness, COCO will introduce customers to their products and website. We will also advertise in Cosmo and Glamour magazines.

For the first two months, COCO will offer 10% off for all purchases under £100 and 15% off all purchases over £100. We will offer the same discount strategy three more times during the year when new seasonal clothing is introduced.

COCO's pricing strategy is to pass on most of the store mark-up to the consumer in reduced price for clothing. This advantage has no negative impact on our sales profit and will also absorb some of the initial cost of offering discounts during our first three months of operation.

5.3 Sales Strategy COCO will launch a £245,000 ad campaign targeted at our core customer groups. The focus of the ads will be to "keep the money you give to the middleman" and use it to get outdoors and enjoy life. COCO's attractive logo will be heavily displayed in these ads. We estimate it will take most of the year to build our sales to the point where we begin to show a profit.

COCO will offer discounts at various times of the year to even out seasonality and build initial awareness of the website.

5.3.1 Sales Forecast We expect sales to increase at a steady rate for the first year. It will begin slow as we open, but will quickly pick up as our customer base increases. COCO will see a sales increase of 38% between the first and second year. We feel that we can accomplish this steady goal and maintain this amount of sales.

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COCO

Sales Forecast Year 1

Year 2

Year 3

Sales Clothing Other Total Sales

£2,170,000 £0 £2,170,000

£3,000,000 £0 £3,000,000

£4,300,000 £0 £4,300,000

Direct Cost of Sales Clothing Other Subtotal Direct Cost of Sales

Year 1 £1,249,000 £0 £1,249,000

Year 2 £1,800,000 £0 £1,800,000

Year 3 £2,580,000 £0 £2,580,000

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COCO

6. Financial Plan The following sections will outline important financial information.

6.1 Break-even Analysis 11

COCO Our break-even analysis is based on running costs, the costs we incur to keep the business running, not on theoretical fixed costs that would be relevant only if we were closing. Fixed costs include payroll, rent, utilities, and marketing costs.

Break-even Analysis

Break-even Analysis Monthly Revenue Break-even Assumptions: Average Percent Variable Cost Estimated Monthly Fixed Cost

£177,248

58% £75,228

Break-even Analysis £60,000 £40,000 £20,000 £0 (£20,000) (£40,000) (£60,000)

£0

£60,000 £120,000 £180,000 £240,000 £300,000 £30,000 £90,000 £150,000 £210,000 £270,000 £330,000

6.2 Personnel Plan Erica Couto will be in charge of the clothing design team. As senior clothing designer for JD Sports, she watched the JD Sports’ sales grow by 20% for the past five years. She will also manage the production of the designs by the production firm. Her clothing designs have been

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COCO praised in the industry and have spawned many imitators. With COCO, Erica is ready to change how quality women's outdoor clothing is sold.

Besides Erica, COCO will have a staff of eight:     

Three member clothing design team Web administrator Two member marketing team Office manager Accountant

Personnel Plan Personnel Plan Marketing/Website Director Design Director Designers Web Administrator Office Manager Marketing Staff Accountant Other Total People

Year 1 £84,000 £84,000 £144,000 £48,000 £36,000 £96,000 £39,600 £0 8

Year 2 £90,000 £90,000 £156,000 £52,000 £39,000 £104,000 £44,000 £0 8

Year 3 £95,000 £95,000 £166,000 £56,000 £42,000 £112,000 £48,000 £0 8

Total Payroll

£531,600

£575,000

£614,000

7. Financial Statements 13

COCO 7.1 Profit and Loss Statement Net Profit (or Loss) by Year

£400,000 £360,000 £320,000 £280,000 £240,000 £200,000 £160,000 ££20,000 £80,000 £40,000 £0 Year 1

Year 2

Year 3

Gross Margin by Year

£1,800,000 £1,600,000 £1,400,000 £1,200,000 £1,000,000 £800,000 £600,000 £400,000 £200,000 £0 Year 1

Year 2

Year 3

Profit and Loss Statement Pro Forma Profit and Loss

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COCO Sales Direct Cost of Sales Other Production Expenses Total Cost of Sales Gross Margin Gross Margin %

Expenses Payroll Sales and Marketing and Other Expenses Depreciation Leased Equipment Utilities Insurance Rent Payroll Taxes Other Total Operating Expenses Profit Before Interest and Taxes EBITDA Interest Expense Taxes Incurred Net Profit Net Profit/Sales

Year 1 £2,170,000 £1,249,000 £0 £1,249,000

Year 2 £3,000,000 £1,800,000 £0 £1,800,000

Year 3 £4,300,000 £2,580,000 £0 £2,580,000

£921,000 42.44%

£1,200,000 40.00%

£1,720,000 40.00%

£531,600 £265,000

£575,000 £340,000

£614,000 £440,000

£0 £0 £2,400 £0 £24,000 £79,740 £0

£0 £0 £2,400 £0 £24,000 £86,250 £0

£0 £0 £2,400 £0 £24,000 £92,100 £0

£902,740

£1,027,650

£1,172,500

£18,260 £18,260 £17,574 £206

£172,350 £72,350 £13,281 £47,721

£547,500 £547,500 £8,801 £161,610

£481 0.02%

£111,349 3.71%

£377,089 8.77%

7.2 Balance Sheet 15

COCO Balance Sheet Pro Forma Balance Sheet Year 1

Year 2

Year 3

Current Assets Cash Inventory Other Current Assets Total Current Assets

£404,264 £264,000 £0 £668,264

£373,956 £237,790 £0 £611,746

£697,330 £338,983 £0 £1,036,313

Long-term Assets Long-term Assets Accumulated Depreciation Total Long-term Assets Total Assets

£0 £0 £0 £668,264

£0 £0 £0 £611,746

£0 £0 £0 £1,036,313

Year 1

Year 2

Year 3

Current Liabilities Accounts Payable Current Borrowing Other Current Liabilities Subtotal Current Liabilities

£311,080 £0 £0 £311,080

£188,009 £0 £0 £188,009

£280,283 £0 £0 £280,283

Long-term Liabilities Total Liabilities

£155,204 £466,284

£110,408 £298,417

£65,612 £345,895

Paid-in Capital Retained Earnings Earnings Total Capital Total Liabilities and Capital

£260,000 (£58,500) £481 £201,981 £668,264

£260,000 (£58,019) £111,349 £313,329 £611,746

£260,000 £53,329 £377,089 £690,418 £1,036,313

Net Worth

£201,981

£313,329

£690,418

Assets

Liabilities and Capital

7.3 Cash Flow Statement 16

COCO Cash Flow Pro Forma Cash Flow Year 1

Year 2

Year 3

Cash from Operations Cash Sales Subtotal Cash from Operations

£2,170,000 £2,170,000

£3,000,000 £3,000,000

£4,300,000 £4,300,000

Additional Cash Received Sales Tax, VAT, HST/GST Received New Current Borrowing New Other Liabilities (interest-free) New Long-term Liabilities Sales of Other Current Assets Sales of Long-term Assets New Investment Received Subtotal Cash Received

£0 £0 £0 £0 £0 £0 £0 £2,170,000

£0 £0 £0 £0 £0 £0 £0 £3,000,000

£0 £0 £0 £0 £0 £0 £0 £4,300,000

Year 1

Year 2

Year 3

Expenditures from Operations Cash Spending Bill Payments Subtotal Spent on Operations

3531,600 £1,590,840 £2,122,440

£575,000 £2,410,513 £2,985,513

£614,000 £3,317,830 £3,931,830

Additional Cash Spent Sales Tax, VAT, HST/GST Paid Out Principal Repayment of Current Borrowing Other Liabilities Principal Repayment Long-term Liabilities Principal Repayment Purchase Other Current Assets Purchase Long-term Assets Dividends Subtotal Cash Spent

£0 £0 £0 £44,796 £0 £0 £0 £2,167,236

£0 £0 £0 £44,796 £0 £0 £0 £3,030,309

£0 £0 £0 £44,796 £0 £0 £0 £3,976,626

£2,764 £404,264

(£30,309) £373,956

£323,374 £697,330

Cash Received

Expenditures

Net Cash Flow Cash Balance

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