Invest The Face of Future Fashion Retail
VOSE Prospectus Prepared by Hongsheng Zhang 25370197 Anuradha Menon 19382731 Copyright Š VOSE Group Pty Ltd 2014 All rights reserved. No part of this book may be reproduced without written permission, except for brief quotations used for critical articles or reviews. Printed in the Commonwealth of Australia To order additional copies call +61 3 8888 8888 or visit Vose.com.au/prospectus
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Contents Letter from the Chairman
5
1 Company Summary
6
2 Product Description
8
3 Marketing Plan
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4 Financial Planning
16
5 Other Operational Issues
21
6 Apendix
25
Corporate Directory
27
Invest The Face of Future Fashion Retail
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Letter from the Chairman 27 May 2014 Dear Investor On behalf of the directors, it gives me great pleasure to offer you the opportunity to become a part of VOSE Group Pty Ltd to change the face of future fashion retail. VOSE is a new initiative, utilizing 3D scanning technology and smartphones to visualize clothes “try on” effect when shopping at a fashion retailer. The technology was invented and developed by VOSE’s in-house technology team and design is pending registration. We believe the technology will change the environment of the clothing retail industry and enhance the competitiveness of the Australian retailer. The company was founded by a group of young and aspiring entrepreneurs with a lot of help from the senior industry professionals. We intend to use the proceeds from this offer to fund future asset growth and to increase the size and diversity of our startup enterprise. The dramatic and multifaceted transformation of the VOSE business is a credit to all our team members and the Management Team, led by Anuradha Menon. I commend them for their vision, hard work and ongoing commitment. Today is really the beginning of a new journey for VOSE Group, and I am personally very excited about the future of this business and about inviting you to be part of that future. This Prospectus contains detailed information about VOSE Group, the details of the Offer and a description of some of the key risks associated with an investment in VOSE. Some of the key risks that VOSE may face include the improbability of an ever changing retail environment, general economic conditions and VOSE’s turnaround initiatives, growth strategies and new implementation roll-out may not meet their objectives. See Section 5.3 for further information on the key risks of investing in VOSE. You should read this Prospectus carefully and in its entirety before deciding whether to invest in the Company. On behalf of the Board, I invite you to consider this investment opportunity.
Yours sincerely
Howard McDonald Chairman
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1
Company Summary
1.1 Start-up Summary
1.3 Key to Success
VESO is a company with limited liability, which offers 80% shares for outside investor. Other 20 % owned by its founders; Anu Menon and Hongsheng Zhang. The start-up costs associated with legal expenses, maintaining office and facilities, salaries, etc are to be financed by direct owner investment. We expect investor to finance purchase of technology, equipment, sof tware development and marketing. The assumptions are shown in Section 4.3: Financial Plans.
VOSE identifies several keys necessary to fulfill its goals and objectives in this niche industry:
1.2 Objective The objective of our company is to:
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1. Our management’s retail experience and ability to develop employees who appreciate and are passionate about the service we are attempting to provide, take pride in the company, and excel at providing excellent customer service. 2. Instilling employee loyalty to the company and the customer it serves. 3. Continuously listen to our customers and retailers in order to create loyal relationships.
1. Secure capital financing in the amount of $1,400,000 over the next three years to fund the start-up of our company, build the VOSE service software and set up at least one 3D body scanner in the first year at a local shopping mall in order to gain customer exposure.
4. Securing booths in local malls with high foot traffic and customers with middle and upper income levels.
2. Open up 2 additional booths within the 2 years thereafter.
6. Creating a company image that can be emulated in eventual expansion activities.
3. Secure gross revenues of AU$497,000, AU$734,000 and AU$ 1,171,500 in each of the first three years of operations.
7. Vigilantly monitoring cash flow, avoiding unnecessary expenses.
5. Maintaining quality service equivalent to if not better than the best any of our competitors can offer.
1.4 Board of Director
Howard McDonald
Chairman
Howard McDonald has been a Director of VOSE since October 2013. Howard brings significant retail and fashion experience to the VOSE business with 35 years of experience in consumer goods industries. Howard was previously Managing Director of Just Group, from December 1997 to September 2006, during which time he repositioned and expanded the company. He’s stable of brands includes Just Jeans, Jay Jays, Jacqui E, Portmans, Peter Alexander Sleepwear and Dotti. Howard holds a Bachelor of Economics degree from Monash University and is a member of the Australian Institute of Company Directors. Howard is involved with a number of charitable organisations
Anuradha Menon CEO and Co-founder
Anu Menon is the Chief Executive Officer (CEO) and co-founder of VOSE Group Pty Ltd. She is responsible for the company’s product development, business strategy, management systems and customer relations to help ensure the venture achieves its social and financial targets. Anu was previously an Instrumentation Engineer with WorleyParsons leading teams and managing budgets within multimillion dollar projects. She holds a Bachelor in Electronics Engineering and a Master in Business from Monash University.
Hongsheng Zhang COO and Co-founder
Hongsheng Zhang is the co-founder of VOSE Group Pty Ltd and plays a key role in the company’s day-to-day operation as Chief Operating Operator (COO). With his strong experience of design and marketing, he is responsible for business strategies, operational procedures and policy development. Hongsheng holds an undergraduate degree from Swinburne University of Technology, National School of Design in Interior Design, and postgraduate Marketing degree from Monash University. He is an honorary member of Design Institute of Australia and Australia Marketing Institute
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2
Product Description
VOSE is a mobile app styling software service that utilizes 3D body scanning technology to match the user’s dimensions to the apparels m e a s u re m e n t s . I t i n c o r p o r a te s a b o d y scanning system where individuals can have a visualized online shopping experience. There are 3 main steps for customer usage: 1. Scanning The user visits a 3D scanning booth to get their entire body scanned. Booths are located in local shopping centers across Melbourne. The data from the scan are stored in a centralised database and is accessed through the customers’ account. This account can be accessed through a mobile app and online website. 2. Discovering Now with a user account set up, the customer can view their shopping selections through an online platform and QR codes, which is a machine readable optical barcode that contains information about the attached item. Users use a mobile phone to scan a QR code that could be located on advertising materials, on clothing price tags, catalogues and on websites. 3. Presenting The system then retrieves information on the clothing and matches the dimensions to those of the user to produce a visualized image of the user in the correctly sized clothing. The user can then proceed onto either purchasing the item, saving the view for later and even sharing the view on social media for feedback. 8
2.1 Concept VOSE is a service based startup company which was founded to solve the frustrations of shopping online and through retail. Using software algorithms and Quick Response (QR) codes, the app can: • Automatically matches best fit clothing size varying between different designers • Displays a 360 degree interactive image of the user wearing the garment - without the hassle of taking off and trying on • Proposes brands and clothing items that compliment their figure – specially for taller, plus size or petite individuals • Offers bespoke tailoring, customising ready to wear items or in the future 3D printing options based on scanned data • Integrates with social media for easy sharing of images and styles •Accumulate seasonal repor t regarding to fashion trend, general pubic physique, purchase habit etc. Advantages for the consumer: 1. Shop online efficiently by knowing your size, what you look like in the clothing, with no hassle of dealing with returns and incorrectly fitting clothes
2. Reduce long queue waiting times for fitting rooms
4. Reduces retailer lease expenses as they hold lesser stock in stores base on VOSE report
3. Multiple designers and retailers under one platform – saves time and money
5. Increases sales for online shopping stores
4. Display image immediately using QR codes to retrieve data
6. Designers are able to retrieve analysed data and a cater to their most popular demographic of customers
Advantages for retailer: 1. Reduces stealing from retailer changing rooms 2. Reduces damage good during fittings 3. Reduces hygiene problems with inner wear
Manufacturer Input the parameter of clothing
Main Server Holding data of clothing parameter and 3D scan image
Share
3D Scan
Info
3D Model
Located in major shopping centre and retail store Online Store Imbedding QR code into product page
Retailer Implement QR code in clothing tag and marketing material
QR Code
End User
Figure 1 Product Fuction Map
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2.2 Income Streams and Product Pricing There are two main income streams; one is from the retailer, whether an online store or a bricks and mortar (B&M) store and from manufacturers or designers themselves.
PRODUCT
CUSTOMER
RETAILER
Free App Download in App store / Google Play
MANUFACTURER/DESIGNER
3% of each successful purchase sales price through VOSE App
AVERAGE POTENTIAL ANNUAL REVENUE
ESTIMATE PRICE
Free 3D body scan in major shopping centre and retail store
Manufacturer / Designer can manage inventory according to the data
Free
≈ $3 per sale
Free
≈ $511,725
Figure 2 Income Streams & Product Pricing
10
Seasonal Report based on trends / gender / age / body shape
≈ $2,500 per 1000 customers
≈ $213,000
3
Marketing Plan
3.1 Clothing Retailing in Australia Bricks –and – Mortar (B&M) Bricks-and Mortar (B&M) is a retail industry jargon that refers to a store that has a physical presence and location, as opposed to an online retailer that operate through a website. • Industry Overview The clothing B&M in Australia generated 12.8 billion dollars revenue and 536.8 million profits in year 2013-2014. But the growth has gradually declined for the last five years at the average speed of -0.9% per year. (IBIS World 2014) • Key Challenge The industr y is facing challenges from many aspects; from the reduction of household disposable income, entr y of international giants, consumer shopping habits shifting online. • Technology The B&M widely adapts the Computerised Point of Sale system (POS) to track merchandising, distribution, stock markdown, inventor y level and control supply chain process. Also Ratio Frequency Identification tag and barcode system (RFID) is becoming more common in the past five years. This system helps retailer to monitor products from manufacturer to sale and enhances the supply side efficiencies - limiting stock loss and minimising physical stock take requirements.
• Opportunity The B&M industr y is still reasonably big in terms of revenue and profit and the decline trend may increase as the economy improves. With the technology the industry uses today, more emphasis is put on improving the retail management process and hence leaves a gap for VOSE to enter and improve the customer experience side of the business. Online Retailing • Industry Overview The online clothing retail sector in Australia has generated 12.4 billion dollars of revenue and 481.7 million profits in year 2013-2014. The market is growth 24.1% annually for the past five years and analysts expect continued growth at the speed of 9.9% every year. (IBIS World 2014) • Key Challenge Online retailing is facing an experience barrier compared to B&M retailer. With intangible merchandise during prepurchase stage, customers have less incentive to buy and second thoughts towards the product. In addition, international competitors can offer competitive pricing than Australian online retailers, since they have a lower operational cost. • Technology Online retailers are developing their own mobile Apps to improve the online shopping experience. They also provide fast
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delivery and a free return/exchange policy to enhance the experience. • Opportunity VOSE is a possible solution for online retailers to make “tangible” their products and also in a short term to give Australia retailers an advantage to receive increased traffic over international online retailers. Conclusion In the industry of clothing retailing, whether the retailer operates in B&M or Online, the consumer experience is not been fully developed from a technology perspective. The implementation of technology to the above mentioned business aspect is a potentially promising market. VOSE can be a leading company in fashion technology and is expected to fill the gap and changing the face of Australian clothing retailing industry.
3.2 Competitive Analysis VOSE is facing competitive internationally; similar products are such as Intel’s Memory Mirror, where the product uses camera images to provide instant “try-on” effect. However the product is still in prototype and could be very costly to install. There is no sign of mass adoption of the technology from the clothing retail industry till today. On the other hand, VOSE could be much cheaper for the retailer to adopt and implement, with increased s m a r t p h o n e u s a g e a n d w i d e c o ve r a g e wifi zones, VOSE can be access very easily anywhere. Besides the Intel Memory Mirror, there are other potential competitors who exist and incorporate 3D scanning technology into their clothing business. Nevertheless, none of the known competitors’ products are based on mobile app technology, which indicates VOSE‘s technological and conceptual advantage.
3.3 SWOT Analysis
Strength
Weakness
• Easy access for general public
• Costly R&D
• Easy adoption for clothing industry
• Large initial investment
• Viral in public
• High maintenance cost
• Patented technology
• No technology been used in consumer experience enhancement
• Public interest wear out
• No direct rivalry
• Ageing population prefer physical/tangible experience
• Smartphones been adopted by general public very widely
• Technology evolving
• Easy to access to high speed internet/wifi • Opportunity to provide crucial data analytics to clothing industry
Opportunity 12
Threat
3.4 Marketing Strategy Market Segmentation
Positioning
The market segmentation for VOSE will be based on demographic and behavioural aspect.
We plan position VOSE in two different angles according to unique age groups:
• Demographic Age will play a vital role in
segmentation. The IBIS World report indicates that in clothing retailing, 39.7% of the customers are between 35-54 years old; follow by 15-34 years with 36.4%. Both age groups occupied more than 75% of the market, which should be considered.
• Behavioural The behavioural aspect is to
examine the online shopping adaptiveness to the above mentioned age groups. Research shows, consumers between 25-34 years old contribute to 23.4% of the market share to online shopping, followed by ages 35-44 years with a slightly lower margin of 22.8%. 45-54 year olds come third, contributing 19.1% of market share. Surprisingly, 15-24 year olds come last with only 17%. The reason for that could be due to the financial status of the 15-24 age group. However they have great influence over their parents/older generation and could be act as an opinion leader to push our product into more senior demographic segment. Target Audience From the previous section we can draw the conclusion that our target audience is male and female, aged 15-54 years old and live in Australia’s major metropolitan area.
Estimate Annual Growth Potential Customers
37%
• Age 15-34 In this age group, VOSE is positioned as a trendy, hip new technology which gives you the instant ‘try-on” effect for online and in store. The social media function will also be emphasised during the campaign. • Age 35-54 In this age group, the technology will be positioned more of a utilitarian tools rather than a trendy gear. The convenient, quick responding and auto size fit function will be the key unique selling proposition. Marketing Objective • Short Term - Reach 90% of awareness to target population who lives in Australian major metropolitan area in 3 months. - Install the first 4 VOSE 3D Scanning Booth in Melbourne and Sydney major shopping centres (2 in Melbourne, 2 in Sydney) within 3 years. - Implement VOSE tagging system in The Iconic, ASOS and Country Road online store in 3 Month. - Implement VOSE tagging system in Sports Girl, Cue, and Country Road B&M store in 6 month.
Year 1
Year 2
Year 3
Year 4
68,000
141,800
200,000
272,430
Figure 3 Estimate Customer Growth
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• Long Term - Install VOSE 3D Scanning Booth in all Australia capital cities’ major shopping centre in4 years. - Implement VOSE tagging system in all major online clothing retailers in 5 year. - Implement VOSE tagging system to 60% of B&M retailers in 2 year. - Enter Europe, Asian, and North America Market in 8 years. Communication Objective The marketing communication should focus on two aspects; one is consumer communication and the other is industry communication. Consumer communication is traditional B2C campaign to promote the product in order to achieve a wide base of awareness, curiosity and ultimately leads to 3D scanning/ downloading of the product. The industry communication is based on B2B channel, to achieve installation and implementation of the product into clothing retail store both online and B&M.
3.5 Implementation
Performance Monitor and Control Product Performance Product performance will be monitored by an in house engineer and be report daily to product manager and partner retailer liaison during crucial times. After stabilization, the report will be less frequent and will be set by the partner retailer and VOSE account manager to incorporate their needs. Communication Performance The communication effectiveness will be measured by Marketing Research Company on yearly basis or by demand. The awareness, advertising elasticity and product influence will be measured via a focus group, surveys and other marketing research tools. Marketing Expenses Item Website Design & Maintenance
$20,000
Database Design & Maintenance
$50,000
Social Media
$15,000
PR (Launching Party in Melbourne and Sydney)
$80,000
3D Scanning Booth
Implementation Strategy The B2C market implementation will take place in two phases at introductory stage; the key concept is to launch the product in younger generation and let younger people act as an opinion leader/market maven to introduce the product to the older generation. B2B side of the implementation will be taking place in several stages as well. The concept is to start with Australian local leading clothing manufacturer/retailer, such as Sports Girl, Cue and Country Road. Ideally operate both online and B&M We will provide our service with a discount price in order to getting access to the market. With the B2C customer base growth, we could use the customer base as bargaining power to negotiate with other industry giants, where we introducing our full price services and occupy the market. 14
Estimate Budget (AUD)
Booth Location Rent
$15,000/Booth $13,500/Month/Location
Partner Retailer Communication
$5,000
Government Expense
$10,000
Employment
$130,000/Year
3.6 Action Plan Time Frame
B2C
B2B
Communication Mix
Six month before launching
Start publicity in social media, and technology websites (e.g. Engage, Gizmodo)
Prepare database and redesign retailer’s online store
Social Media, Publicity
One month before launching
Announce the first installation in Melbourne CBD Emporium Shopping Centre
Retailer announce partnership
Social Media, PR, Publicity, Partner Retailer’s Advertising
Restock all B&M tag, New online store launching
Social Media, PR, Publicity, Partner Retailer’s Advertising
Launching
Install first two 3D Scanning Booths in Melbourne Emporium Shopping Centre with exclusive launching party with celebrity, teen idol, and partner retailer VIPs.
One week after launching
Booth Open to general public via online booking system through VOSE website
Closely monitor the performance of the product, Publicity, Social Media, Partner Retailer’s daily evaluation report to Advertising company director and partner retailer liaison.
Two weeks after launching
Launch two more 3D Scanning Booths in Sydney CBD Westfield Shopping Centre
Monitor product performance, and report to partner retailer weekly
Two month after launching
Start to cover major metropolitan shopping centre in Melbourne and Sydney
Pitch idea to other potential retailers
Six month after launching
Install 3D Scanning Booth to Brisbane, Adelaide and Perth
First seasonal report finalized and sent to partner Social Media, Local Newspaper, Partner retailer’s management Retailer’s Advertising
Twelve month after launching
Install 3D Scanning Booth to Darwin, Canberra, Geelong, Newcastle etc.
Social Media, PR, Partner Retailer’s Advertising
Social Media, Direct Selling (B2B)
Second batch of retailer store Social Media, Local launching Newspaper, Partner Seasonal report distribute to Retailer’s Advertising subscribe retailer / manufacturer
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4
Financial Planning
4.1 Funding Requirements To date, owner equity invested is $100,000. We are currently seeking additional funds for the next 3 years to purchase the scanner, open up 3 booths, software development, mobile app management and marketing and advertising expenses. The capital sought is $1.4 million, in return for an owner equity position to be determined at the time of negotiations. Venture Capitalist Ownership To amount the part of the business which belongs to the venture capitalist after having invested in our firm, we have to divide the total value of the company by the invested venture capital. To compute the firm’s value, we use the Discounted Cash-Flow method (DCF). Growth rate of CF year 5 + 6 = 30% Growth rate of CF year 7 - 10 = 10% Growth rate of CF year 11 – infinity = 5% Risk free rate of return = 5% Risk premium = 15% Risk adjusted rate of return = 5% + 15% = 20% Venture capitalist’s ownership = Venture Capital invested / Value of the company = 1,400,000 / 7,360,672 = 19.02% Owner’s Equity = 100,000 / 7,360,672 = 1.36% This means that about 20% of the company belongs to the Venture Capitalists and 1.5% belong to the owners. The venture capitalist will be allocated as part of the management whereby they have positions as directors where they will act in an advisory and guidance role and will be paid a monthly board of director’s fee. 16
4.2 Key Financial Ratios Gross and Operating Margins Year 2
Year 3
Year 4
2.41%
49.99%
53.64%
-23.35%
29.11%
37.82%
Gross Margins Operating Margins
Profit Potential and Durability
Year 4 Year 3 Year 2 Year 1 Year 0 -500,000
-400,000
-300,000
-200,000
-100,000
0
100,000
200,000
300,000
400,000
Figure 4 Yearly Profit
VOSE is expected to have positive net income by mid-year 3 and is expected to grow rapidly within the following years. VOSE has the potential to enduring standalone business, supported by a diversified revenue stream (from retailers, designers and in the future custom made clothing), with the opportunity to expand into other sub-segments of fashion and retail. Break Even Analysis Year 0
Year 1
Year 2
Year 3
Year 4
127,000
75,000
75,000
127,000
127,000
1.86
1.10
0.52
0.64
0.47
350,000
320,000
410,000
415,000
535,000
Variable cost per unit
5.14
4.71
2.89
2.08
1.96
Selling price per unit
8
8
8
8
8
Fixed cost Fixed cost per unit Variable cost
Months to break even: 12 months Months to reach positive cash flow: 34 months
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4.3 Financial Plans In this section, all the values in the financial statements are measured in Australian Dollars (AU$). 4.3.1 Balance Sheet Expected Case Year 0
Year 1
Year 2
Year 3
Year 4
+83,000
+148,000
+497,000
+734,000
+1,171,500
Accounts receivable
0
0
0
0
0
Prepaid expenses
0
0
0
0
0
+83,000
+148,000
+497,000
+734,000
+1,171,500
0
0
0
0
0
Intangibles
30,000
45,000
75,000
90,000
100,000
Equipment
30,000
60,000
90,000
90,000
120,000
-5000
-8000
-10,000
-10,000
-22,000
55,000
97,000
155,000
170,000
199,000
138,000
245,000
652,000
904,000
1,914,500
Current liabilities
0
0
0
0
0
Non-Current liabilities
0
0
0
0
0
Long-term debt
0
0
0
0
0
Total Non-Current Liabilities
0
0
0
0
0
560,000
1,020,000
1,480,000
1,480,000
1,480,000
Profit/Loss from period
-425,000
-330,000
-121,000
227,000
416,000
Total owner's equity
135,000
690,000
1,359,000
1,707,000
1,896,000
135,000
690,000
1,359,000
1,707,000
1,896,000
Current Assets Cash
Total Current Assets Fixed Assets Financial assets
Acc. Depreciation Total Fixed Assets Total Assets
Owner's Equity Initial Equity capital
Total Liabilities and Owners Equity
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4.3.2 Profit and Loss Statements Year 0
Year 1
Year 2
Year 3
Year 4
Net Sales
0
0
374,000
779,900
1,100,000
-Cost of Sales
0
0
365,000
390,000
510,000
9,000
389,900
590,000
Gross Profit - General and administrative
425,000
330,000
120,000
152,000
152,000
0
0
10,000
10,000
22,000
Operating Income (EBIT)
-425,000
-330,000
-121,000
227,000
416,000
Income before taxes
-425,000
-330,000
-121,000
227,000
416,000
0
0
0
90,800
116,400
-425,000
-330,000
-121,000
136,200
299,600
Year 0
Year 1
Year 2
Year 3
Year 4
0
0
374,000
779,900
1,100,000
330,000
330,000
330,000
330,000
450,000
70,000
20,000
20,000
30,000
30,000
30,000
15,000
15,000
30,000
30,000
-Advertising and Marketing
95,000
65,000
50,000
45,000
45,000
-Rental
27,000
40,000
40,000
67,500
67,500
-Others
25,000
25,000
30,000
40,000
40,000
-577,000
-495,000
-111,000
+237,400
+437,500
+Equity capital raised
560,000
460,000
460,000
0
0
Net Cash flow
+83,000
+65,000
+349,000
+237,400
+437,500
Cash Balance
+83,000
+148,000
+497,000
+734,000
+1,171,500
expenses - Depreciation
- Income tax expense Net income
4.3.3 Cash Flow Statements
Cash Flow from operating activities +Cash in -Net Salaries -Software Development and maintenance -Hardware Development and maintenance
Net operating cash flow (NOCF) Cash flow from financing activities
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4.3.4 Exit Strategy The worst case cash flow in the table below shows the financial risk for the investor. We can see that the critical income check Year 2 will determine whether the business will be closed or can be continued. Year 0
Year 1
Year 2
Year 3
Year 4
0
0
80,000
60,000
100,000
230,000
230,000
330,000
180,000
180,000
70,000
20,000
20,000
30,000
30,000
30,000
15,000
15,000
30,000
30,000
-Advertising and Marketing
95,000
65,000
50,000
45,000
45,000
-Rental
27,000
40,000
40,000
67,500
67,500
-Others
25,000
25,000
30,000
40,000
40,000
-477,000
-395,000
-405,000
-332,500
-292,500
+Equity capital raised
560,000
460,000
460,000
0
0
Net Cash flow
+83,000
+65,000
+55,000
-332,500
-292,500
Cash Balance
+83,000
+148,000
+203,000
-129,500
-422,00
Cash Flow from operating activities +Cash in -Net Salaries -Software Development and maintenance -Hardware Development and maintenance
Net operating cash flow (NOCF) Cash flow from financing activities
Here are some other options that could be considered: 1. Merge The best option would be to leverage off the strength of another company to keep the project going. Two businesses can create more value as one company. However, the only major pitfall is that management’s role will be diluted and further processes for buying will need to happen with the other company to ensure all parties are happy with decision made. 2. Liquidate The project can be sold at market value and the funds retrieved can be used to pay off any remaining debt. This is a simple approach, but also likely to reap the least revenue.
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5
Other Operational Issues
5.1 Policy on Growth Aggressive growth for the first 5 years is needed to make this company profitable. There are high investments such as software and hardware development and online marketing of the service. It is essential to grow the customer base consistently as that increases word of mouth and exposure. A bigger base also means more interest for retailers and online shops to be part of the services and tap into our customers - hence higher percentage of portion of sales can be administered. After the first five years, the company will then focus on a step-by-step sophisticated growth, meaning that a new booth will only be established when the last one has broken even. Through that plan and analyzing potential profits, it is estimated that a new booth will be launched each year. Future development after year 8 In the eighth year (not included in financial planning) there will be a further expansion to New Zealand; after which tapping into the Chinese markets. Once the company has achieved breakeven for New Zealand, VOSE will change its legal form to a public limited company and offer its shares on the stock market in Australia. There will be an expansion of local hubs in China, USA and United Kingdom (to cater for the European market). However all this depends on the success of the business in the first five years.
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5.2 Operations Plan The operations plan covers the venture from beginning to end. It involves turning the idea into the product, promoting your venture and having the power to improve as the venture matures. 2014 Activity
Q2
Q3
Partner identification
x
x
Develop proposal
x
x
Submit proposal to potential
x
x
2015 Q4
Q1
x
x
x
2016
Q2
Q3
x
x
x
x
x
x
x
Q4
Q1
Q2
2017
Q3
Q4
x
Q1
Launch Planning
funders Secure Funding Pre-Launch Build hardware and software development File for trademarks and patents Build e-commerce infrastructure Line up suppliers, affiliates
x
x
and service providers Pilot the system
x
Test, review and improve
x
Start advertising and
x x
x
marketing Launch Major launch
x
Monitor , review and
x
x
x
x
improve Ramp up promotions Post-Launch Start planning for next implementation location
22
x
5.3 Critical Risks and Mitigations Some risks of our business model would be running into issues finalizing the retailers to collaborate with, consumers feeling the service is trivial (difficulty penetrating the market), technical issues with scanners or software system and deciding how to work out returns from consumers even after using our site and service (if the retailers are not satisfied).
Risk
Mitigations
Market risk
If VOSE misjudges customer preferences or fails to provide appealing product offerings coupled with the technology when required, this may result in a decline in financial performance.
Competitive risk
Other companies may develop similar products to compete.
Ensure that VOSE appeals to the customer by it range of brands, ease of use and accessibility. Use marketing and promotions to make VOSE ‘the only’ dependable scanning system.
Technological risk
Technology failures may occur due to incompatible systems, database crash, power system failure, undependable external service providers.
Ensure that backups are in place and use reputable service providers.
Product risk
Even though we are providing the service, but customer satisfaction always depends on the whole shopping experience till they obtain the product.
It is essential that the brands which we associate with have good supply chain management, offer good quality products and have good customer service.
Execution risk
This venture is a step by step process, therefore if one stage is delayed or over budget, then every other stage is compromised.
Ensure there is time allocated for a buffer and funds allocated for contingencies.
Target the inclusion of the latest fashion brands and be responsive of the ease of use of the technology.
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5.4 Proprietary & Legal Issue Intellectual Property (IP) The VOSE core technology will be filed in Australia and other key market in the world for Intellectual Property registration, VOSE hire a Melbourne IP Law firm Davies Collison Cave Solicitors as our consultancy regarding to all IP related issue. The firm is been recognised as one of the top IP specialist in Australia. The firm could be reached via Davies Collison Cave Solicitors Level 15, 1 Nicholson Street Melbourne Victoria 3002 Australia
T: +61 3 9254 2777 F: +61 3 9254 2770 E: mail@davies.com.au
Other Legal Issues Other legal issue regarding to commercial law will be delegated to Hall & Wilcox Lawyers. Hall & Wilcox Lawyers Level 30, 600 Bourke Street Melbourne VIC 3000 Australia
T: +61 3 9603 3555 F: +61 3 9670 9632 E: information@hallandwilcox.com.au
Insurance Commercial insurance and public/product liability insurance has been covered by Allianz Australia Limited. Information regarding to insurance please contact VOSE Legal liaison on T: +61 3 9603 1212 Email: legal@vose.com.au.
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Appendix
Appendix 1 - Computer Rendering VOSE 3D Scanning Booth
Appendix 2 - App Interface Preview
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Appendix 3 - B&M Preview
Online
Retail Product Page
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Marketing Material Clothing Tag
Catalog / Advertisement ...
CORPORATE DIRECTORY REGISTERED AND HEAD OFFICE Level 80 28 Collin Street, Melbourne VIC 3000 Australia LEGAL ADVISERS TO VOSE GROUP Hall & Wilcox Lawyers Level 30, 600 Bourke Street Melbourne VIC 3000 Australia AUDITORS AND TAX ADVISORS TO VOSE GROUP Ernst and Young 120 Collins Street Melbourne VIC 3000
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Lv 80 28 Collin St, Melbourne VIC 3000 Australia T: +61 3 8888 8888 F: +61 3 9999 9999 www.VOSE.com.au