BUSINESS PLAN
for
Bubba & Shirley Trading Company
Stylist to the Stars Shops
Lila Polite, Proprietor
New York
London
Paris
Confidentiality Agreement The undersigned reader acknowledges that the information provided by Lila Polite in this business plan is confidential; therefore, reader agrees not to disclose it without the express written permission of Lila Polite. It is acknowledged by reader that information to be furnished in this business plan is in all respects confidential in nature, other than information which is in the public domain through other means and that any disclosure or use of same by reader, may cause serious harm or damage to Lila Polite of Bubba and Shirley Trading Co. Upon request, this document is to be immediately returned to Lila Polite. ___________________ Signature ___________________ Name (typed or printed) ___________________ Date This is a business plan. It does not imply an offering of securities.
Table of Contents 1.0 Executive Summary ......................................................................................................................................1 Chart: Highlights ..............................................................................................................................1 1.1 Objectives............................................................................................................................................1 1.2 Mission ................................................................................................................................................2 1.3 Keys to Success ..................................................................................................................................2 2.0 Company Summary ......................................................................................................................................2 2.1 Company Ownership ..........................................................................................................................4 2.2 Start-up Summary ...............................................................................................................................4 Table: Start-up .................................................................................................................................6 Chart: Start-up .................................................................................................................................6 3.0 Products and Services ..................................................................................................................................6 4.0 Market Analysis Summary ............................................................................................................................7 4.1 Market Segmentation ..........................................................................................................................8 Table: Market Analysis ....................................................................................................................9 Chart: Market Analysis (Pie)..........................................................................................................10 4.2 Target Market Segment Strategy ......................................................................................................10 4.3 Service Business Analysis ................................................................................................................11 4.3.1 Competition and Buying Patterns .........................................................................................12 5.0 Web Plan Summary ....................................................................................................................................13 5.1 Website Marketing Strategy ..............................................................................................................14 5.2 Development Requirements .............................................................................................................15 6.0 Strategy and Implementation Summary .....................................................................................................15 6.1 SWOT Analysis .................................................................................................................................15 6.1.1 Strengths ..............................................................................................................................15 6.1.2 Weaknesses .........................................................................................................................16 6.1.3 Opportunities ........................................................................................................................16 6.1.4 Threats..................................................................................................................................16 6.2 Competitive Edge ..............................................................................................................................16 6.3 Marketing Strategy ............................................................................................................................16 6.4 Sales Strategy ...................................................................................................................................17 6.4.1 Sales Forecast......................................................................................................................18 Table: Sales Forecast..........................................................................................................18 Chart: Sales Monthly ...........................................................................................................19 Chart: Sales by Year............................................................................................................19 6.5 Milestones .........................................................................................................................................19 Table: Milestones ..........................................................................................................................20 Chart: Milestones...........................................................................................................................20 7.0 Management Summary ..............................................................................................................................20 7.1 Personnel Plan ..................................................................................................................................21 Table: Personnel ...........................................................................................................................21 8.0 Financial Plan..............................................................................................................................................22 8.1 Start-up Funding................................................................................................................................22 Table: Start-up Funding.................................................................................................................23 8.2 Important Assumptions .....................................................................................................................23 8.3 Break-even Analysis..........................................................................................................................23 Table: Break-even Analysis...........................................................................................................23 Chart: Break-even Analysis ...........................................................................................................24 8.4 Projected Profit and Loss ..................................................................................................................24 Table: Profit and Loss....................................................................................................................25 Chart: Profit Monthly......................................................................................................................25 Chart: Profit Yearly ........................................................................................................................26 Chart: Gross Margin Monthly ........................................................................................................26 Chart: Gross Margin Yearly ...........................................................................................................27 Page 1
Table of Contents 8.5 Projected Cash Flow .........................................................................................................................27 Table: Cash Flow ..........................................................................................................................28 Chart: Cash ...................................................................................................................................29 8.6 Projected Balance Sheet ...................................................................................................................29 Table: Balance Sheet ....................................................................................................................30 8.7 Business Ratios.................................................................................................................................30 Table: Ratios .................................................................................................................................31 Table: Sales Forecast .........................................................................................................................................1 Table: Personnel .................................................................................................................................................2 Table: Profit and Loss .........................................................................................................................................3 Table: Cash Flow ................................................................................................................................................4 Table: Balance Sheet ..........................................................................................................................................5
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B&S Plan 1.0 Executive Summary The purpose of this business plan is to raise $400,000 for the development of a beauty and lifestyle product manufacturing and retail emporium, while showcasing the expected financials and operations over the next eighteen months to three years. Bubba and Shirley Trading Company (''the Company'') is a New York-based LLC that will provide a diverse line of curated, branded and own-label beauty, fashion and lifestyle products and related accessories to customers in its targeted markets in the US, UK, France, Canada and Brazil. The Company was founded by Lila Polite.
1.1 Objectives The objectives for B&S Trading Co. are outlined below: 1. Create a service and product supply company to achieve earnings of $1,000,791 for FY 2013 with the following components: · · · · · · · · · ·
Create and actuate direct sales/home distribution opportunities and program Offer beauty, accessories and fashion products -own label and licensed Produce and sell fashion dolls Promotion of relationships with celebrity fashion and hair stylists, such as Ellin Lanvin and other high-profile stylists and product designers Launch website pursuant to online sales Open wig and beauty bars Establish licensing agreements with independent outlets i.e. salons Design and market hair collections comprised of wigs, hair pieces and related accessories Launch hair care product distribution Establish operations for hair processing plant
2. To realize sales of $3,303.334 in FY2014 3. Travel to United Kingdom, France, Brazil and several key cities in the United States to solidify relationships Page 1
B&S Plan pursuant to manufacturing, licensing, distribution and sales
1.2 Mission B&S's mission is to create a cutting edge and highly profitable business model based on fashion and direct sales of hair, fashion and beauty products, as well as business opportunities, for women in multiple global markets, including the United States, France, Great Britain and Brazil. B&S curates, licenses and develops a wide range of high-quality beauty, hair and fashion accessories and products. Uniting innovation, quality, celebrity and style, it brings coveted, on-trend, aspirational and luxurious beauty and style enhancement to women everywhere.
1.3 Keys to Success B&S has put itself in a position of strength by striking strategic agreements with key partners that are already firmly established in critical areas of the industry. These alliances are as follows: · ·
· · ·
·
Superior Market Coverage: By deploying a multi-tiered sales and marketing approach, the company is positioning itself to reach customers through a variety of means Exceptional Market Reception: Having already struck agreements with several of the most respected hair stylists in the entertainment industry, the company has established a strong line of credibility and recognition among critical segments of the fashion and beauty industries -- without having to undergo the time and expensive financial proposition usually involved in reaching such plateaus Assurance of Quality: By striking manufacturing agreements with Echelon, a premiere hair provider, B&S has a guaranteed supply of quality products to meet market demand Virtual Sales: By setting up multi-lingual websites, B&S will be able to reach a greater segment of the market, some of whom are underserved Customer Service: Another critical agreement the company has already successfully negotiated has to do with licensing. Multitple salons that will be carrying B&S products, will be able to provide a high quality face-to-face customer experience. The end-game is to have an ever-growing customer base supplied by established salons. Business Opportunity: The company will offer an "Avon-like" income opportunity for women. This grassroots approach will virtually ensure a growing market of potential buyers at minimal cost.
All told, these alliances will strengthen B&S' ability to identify, cultivate and monetize their position in their target markets around the globe.
2.0 Company Summary B&S sources and develops multi-ethnic and US designed and style-inspired hair, beauty, fashion and lifestyle Page 2
B&S Plan products. European, Canadian and Latin American markets covet these products. Customers will secure these products through retail and online sales. The potential for a rapid and smooth transition to European and global sales is tremendous. Stylist to the Stars, founded in 2012, is a creation of Bubba & Shirley Trading Co. a manufacturer and distributor of a portfolio of beauty, hair and fashion brands for professionals and selected retail outlets. Brands include: FRSH + FLYY, Primp Beauty Labs, WIG BAR, VIVA, B&S Private Label, E&L Hair International, Lavar and more. With over 30 years of combined experience in the beauty, fashion and entertainment industries, B&S has emerged as the arbiter of NY Chic and Hollywood Glam for market segments who have long clamored for access. These anchor products have already been acquired in the "Health and Beauty", and "Fashion and Accessories" and "Lifestyle" categories (home, toys and pet products). Product diversification eliminates the 'one product only' risk found in many of the Company's competitors. Stylist to the Stars borrows heavily from the Space-NK, ASOS, Dry Bar and Net-a-Porter business models as well as the restyled HSN "lifestyle network" approach with a mix of higher-end, higher value products and a mix of luxury multi-ethnic lines to serve a highly desired underserved market; this market has a tremendous and growing buying power. Our products are aimed at two key markets: fashion and beauty consumers and the underserved. We will initially launch in the UK, followed by Brazil, France and Canada -- with an online and US wholesale strategy as the core of our business model. As mentioned above, we have and continue to aggressively pursue key distribution and retail strategic alliances that will enable us to establish long-term business relationships. In our first year of operation, we believe we can capture 15 to 25% of the general market and 35 to 50% of the under-served market in the UK, which translates into significant sales in year one. Our market strategy is to capitalize on the relationships and products that our competitors do not offer. There are several companies with whom we will be competing. We have a competitive advantage, however, because our products are inspired and made for "US" by "US"; we are firmly aligned with the fashion, beauty and entertainment industries and their respective style trends. Furthermore, our depth of product specific experience and relationships within the industry are huge contributing factors to our eminent success. As stated above, the Company will develop, manufacture, and brand an expansive line of celebrity and US style inspired hair, makeup, perfumes, cosmetics and fashion accessories that are popular among female buyers. The proprietor, Ms. Polite, is currently sourcing a number of regional and national wholesalers that will acquire inventories of its produced products. In regards to the manufacturing process, the Company has struck up an agreement with an overseas manufacturing firm for the production of the Company's hair product(s); it is also pursuing agreements with companies that can produce proprietary cosmetics and fashion products. With regard to financing, the Company is seeking a loan in the amount of $400,000, which will be used to do the following: · · · · · · ·
Purchase inventory; Secure exclusive licenses; Acquire product packaging and display equipment; Development of the Company's office and manufacturing location Launch online marketing and sales effort; Establish presence in other core markets; and, Provide necessary operating capital for the first 12-18 months
Ms. Polite will contribute $25,000 to the venture. Page 3
B&S Plan
2.1 Company Ownership Bubba & Shirley Trading Co. is corporation that is fully owned by one person, Ms. Polite. Ms. Polite offers a grand vision to compliment her exceptional background in the beauty and fashion industry. Her vision entails the development, manufacturing, and branding of an expansive line of celebrity and style inspired products for hair, makeup, perfumes, cosmetics and fashion accessories that are popular among female buyers. Another important component of her vision involves the creation of a network of regional and national wholesalers that will acquire the company's products. In turn, this network, which includes home-based entreprenuers, will sell these products through an increasing number of customers in targeted global markets.
As a skilled negotiator and businesswoman, Ms. Polite conceived, implemented and managed multiple deals for manufacturing, licensing and distribution agreements across several continents. Well-rounded with multiple across several disciplines, Lila is an independent producer and filmmaker. In addition to producing her own film, SO FRESH, SO CLEAN, she has also worked on a number of highly successful and acclaimed projects. Before working in film, LILA was a marketing director and major concert promoter rep under the auspices of Al Haymon Productions. As a full-time writer and editor in publishing, LILA headed a twenty seven-person editorial and creative staff at Imagine Media. She also handled national marketing strategies for VIACOM, produced both on and offline programs for NFL teams, developed and produced infomercials and how-to fitness and lifestyle DVDs. She also co-owned a branding and digital agency and launched a school for sound arts and digital visual media. She publishes and edits books and online projects for her integrated media house, which boasts its own First Look program. LILA has authored digital magazines, and co-authored a three-volume set on “Lifestyle� for teens of color.
2.2 Start-up Summary Total start-up requirements comes to $425,000. The start-up costs are to be financed partially by the direct owner investment of $25,000 and financing in the amount of $400,000. The details are included in the following: 1.1 The Loan The company is seeking a loan in the amount of $400,000. These funds will be used to purchase inventory, secure licenses, package products, secure display equipment, launch websites, establish presence in other core markets and cover start-up expenses. Bubba & Shirley Trading Company expects to achieve profitability within the first year of operation. 1.2 The Products At stated above, the Company will develop manufacturing and brand an expansive line of hair, beauty, fashion and cosmetic accessories that are popular among female buyers. Ms. Polite is currently sourcing a number of regional and national wholesalers that will acquire inventories of its products. In regards to the manufacturing process, the Company will work with several overseas manufacturing firms to coordinate the production of the Company's proprietary hair, accessories and cosmetics products. In fact, it has Page 4
B&S Plan also struck a deal with a company based in the United Kingdom. A forthcoming section of the business plan will further describe the products and services offered by the Company. 1.2 Financing The financing will be used for the following: · · · · ·
Development of the Company's office and manufacturing location Establish licensing--salons, selected emerging and established manufacturers and product designers Financing for the first 12 months of operation Capital to purchase the initial inventories of proprietary goods and products Ms. Polite will contribute $25,000 to the venture
1.3 Mission Statement B&S's mission is to create a cutting edge and highly profitable business model based on fashion and direct sales that provides hair, fashion and beauty products, as well as business opportunities, for women in multiple global markets, including the United States, France, Great Britain and Brazil. B&S will offer curated, licensed, branded and own-labeled beauty, fashion and lifetyle products. Uniting innovation, quality, celebrity and style, it brings coveted, on-trend, aspirational and luxurious beauty and style enhancement to women everywhere. 1.4 Management Team Lila Polite founded the Company. Ms. Polite has more than 20 years of experience in the beauty, fashion and lifestyle industry. Through her expertise and strategic alliances, she will be able to bring the operations of the business to profitability within its first year of operation. 1.5 Operations During the start-up phase of this project, the following major events will occur, some of them simultaneously: · · · · · · · · · · ·
Initial travel to consummate agreements Legal Secure office and warehouse/storage space Shipping Licenses Launch multi-lingual website Hire and train key personnel (salaries) Marketing campaign Finalize operating procedures Order inventory Open for business
1.6 Sales Forecasts Ms. Polite expects a strong rate of growth at the start of operations. Below are the expected financials over the next year. Please note that projected sales are for 2013 and 1014. 1.7 Expansion Plan The founder and principal expects that the business will aggressively expand during the first three years of operation. Ms. Polite intends to implement marketing campaigns that will effectively target individuals within the desired market.
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B&S Plan Table: Start-up Start-up Requirements Start-up Expenses Legal Travel Insurance
$3,500 $12,500 $425
Total Start-up Expenses
$16,425
Start-up Assets Cash Required Start-up Inventory Other Current Assets Long-term Assets Total Assets Total Requirements
$10,000
$15,000 $25,000 $41,425
3.0 Products and Services Below is a description of the products offered by the Company. Manufacturing and Distribution of Hair, Cosmetics and Accessories The primary revenue source for the business will come from the direct sale of hair and cosmetics to consumers online. A second revenue source will come from product sales to select retailers, such as salons and wholesalers from the proprietor's extensive network. Page 6
B&S Plan Ms. Polite will produce and distribute a number of mid-to high-end brands of wigs, hair care products, makeup, fashion accessories, and other health and beauty products. To this end, Ms. Polite has entered into an agreement with Echelon, a major hair supplier and manufacturer. Next, her imminent agreement with a leading global trading and sourcing partner to develop lifestyle products, cosmetics and packaging to help to ensure delivery of inventory to regional, national and select global markets. The company will achieve this end by working with noted high-end American stylists, such as Ellin Lavar; it will also work closely with fashion models and designers to present inspired capsule collections and mid-range contemporary women and men’s apparel and accessories, such as: · · · · · · · · · · ·
Hair care products and hair (wigs, accessories, extensions, styling products, accessories and tools) Basic Lingerie and hosiery Jewelry-gold, silver, precious jewels Accessories-small leather goods and bags Home Goods (accessories, candles and art and decor) Beauty products across all categories (cosmetics, skin, body, fragrance, etc.) Health and wellness (fitness and wellness systems and equipment) Edibles (gourmet teas and coffees) Collectables Toys-fashion dolls, and Pet products
4.0 Market Analysis Summary Over the past five years, the Global Cosmetics Manufacturing industry has experienced steady growth, despite the global recession's adverse effect on consumers' discretionary spending. The industry's proven ability to adapt to changing markets and trends has allowed it to stay afloat during the global economic downturn. Over the next five years, the industry is expected to continue pursuing new niche products and technology to enhance their portfolios and cater to new and emerging markets. · · · · · · · ·
Study shows that emotional pull of beauty drives the market. The Company understands the consumer and has a marketing and social shopping strategy that speaks directly to the market Latin American beauty sales overtake northern neighbors with $72Bn in sales to $62Bn in sales. The Company is slated for start up in this region Direct selling stays strong in Europe and shows no signs of decline. The Company's Direct Sales strategy is on target Nail product sales outstrip other sectors dwarfing that of any other cosmetics category in US…. Packaged Facts July, 2012. The Company's niche nail range is competitive and poised for success Europe dominates global lip care market Brazilian market for toiletries, perfume, hair care and cosmetics market has grown 18.9% to $43Bn in 2011 Salon beauty continues to soar in UK in economic downturn with 17% growth Distribution and export markets drive US natural and ethnic hair care products
Demand from emerging economies and aspirational shoppers has also kept the industry growing over the past five years, with revenue increases averaging 3.2% per year to reach $233.3 billion by the end of 2012. Industry operators have consistently expanded their portfolios to cater to underserved markets, where average incomes are well below the average product price. Moreover, to capture the growing aspirational shopper market (i.e. consumers who spend $300 or less per designer purchase), firms have integrated high-end cosmetic brands under their umbrellas. "In addition, operators have responded to changing consumer preferences for chemical-free cosmetics formulas by introducing and reformulating popular products like shampoos, makeup and lotions," says Panteva. IBISWorld expects these efforts, along with improving economic conditions, will drive growth for the Global Cosmetic Manufacturing industry during 2012, with revenue increasing 4.6%. Page 7
B&S Plan While there are a number of small players in the industry specializing in a small number of product lines to serve niche markets, major players in the industry will continue to expand and gain greater market control. Merger and acquisition (M&A) deals of interest over the past decade that have served to change the face of the Global Cosmetics Manufacturing landscape include Procter & Gamble's takeover of Gillette, L'Oreal's acquisition of The Body Shop and Coty's acquisition of Unilever's fragrance division. Other key drivers underlying the ongoing spate of M&A activity include the expansion of geographic footprints, diversification into new product categories or market segments and the exploitation of new technologies, including greener processes. At the same time, IBISWorld anticipates the continued entry of new players from growing markets, such as India, China, South Korea, Indonesia and Brazil. As per capita disposable income rebounds more strongly over the five years to 2017, the industry will experience even stronger growth. IBISWorld forecasts revenue will climb at a healthy rate over the next five years. Armed with deeper pockets, consumers - especially those in developed markets - will be more willing and able to spend on higher-priced products, leading to higher average profit margins for operators. Additionally, players' efforts to cater to emerging economies will also continue to pay off, further boosting industry growth. For more information, visit IBISWorld's Global Cosmetics Manufacturing industry report page.
4.1 Market Segmentation As referenced throughout this document, the Company's target market is primarily women of color, ages 1854, in the United States, Great Britain, France, Canada and Brazil. Incomes for this group will vary from country to country. For purposes of this plan, demographic details will be confined largely to the United States and Brazil with a focus. United States (Source: U.S Census Bureau) 2010 African-American Female Population 21,800,000 2010 African-American Family Income $ 63,566 2010 African-American Female Single-Head of Household Income $ 25,370 2010 African-American Single Female, Individual Income $ 35,355 It is interesting to note that African-Americans tend to live in metropolitan as opposed to rural areas. In fact, more than one third of U.S. African-American women reside in 10 metropolitan areas. This is useful with regard to aiming marketing dollars, distribution and shipping costs and more. The breakdown of this segment follows: African-American Female Major Population Centers (Source: Black Demographics.com) Market Black Females New York City 1,681,308 Atlanta, GA 853,957 Chicago, Ill. 822,996 Washington, DC 719,218 Philadelphia, PA 620,890 Miami, FL 584,592 Houston, TX 512,886 Detroit, MI 490,225 Dallas-Ft. Worth, TX 480,935 Baltimore, MD 389,440 Total 7,156,447 Finally, it is important to note that the African-American female population in the U.S. is approximately 21 million. Hispanics United States (Source: U.S Census Bureau) 2010 Hispanic Female Population 26,840,000 2010 Hispanic Family Income $54,538 2010 Hispanic Female Single-Head of Household Income $19,850 Page 8
B&S Plan 2010 African-American Single Female, Individual Income
$27,101
With a population of 52 million with approximately half or 50 percent as women, this demographic is the second largest ethnic group in the U.S. While African-American women tend to live in metro areas, Hispanics tend to be represented in more significant numbers in rural areas due to their contributions to the agricultural labor market. Hispanic Female Major Population Centers (Source: U.S. Census Bureau) Below is a percentage breakdown of Hispanic women per state as a percentage of the population. (Due to lifestyle differences and migratory patterns, it is difficult to present an accurate, up-to-date "apples to apples" chart between African-American and Hispanic women.) Still, these percentages will greatly assist the Company in the assignment of marketing dollars pursuant to sales and outreach. Market Population Percentage California 14.1% Texas 9.3 Florida 4.4 New York 3.4 Illinois 2.0 Arizona 1.7 New Jersey 1.6 Colorado 1.1 All Other States 12.6 Total 26.8 million (approxiately)
Table: Market Analysis Market Analysis Potential Customers Live in Major Metro Areas Between 18-55 years old Annual Income Over $25,000 Spends More Than $25 Per Week on Cosmetics, Fashion and Beauty Products Total
2012
2013
2014
2015
Growth 6% 6% 6% 6%
30 million 21.5 million 16.3 million 13.6 million
31.8 million 22.8 million 17.3 million 14.2 million
33.6 million 24.1 million 18.3 million 15.3 million
35.4 million 25.4 million 19.4 million 16.2 million
0.00%
0
0
0
0
2016 CAGR #VALUE! #VALUE! #VALUE! #VALUE!
0
0.00%
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B&S Plan
4.2 Target Market Segment Strategy This section of the analysis will detail the economic climate, the cosmetics industry, and the customer profile, and the competition that the business will face as it progresses through its business operations. Presently, the economic market condition in the United States is sluggish. This slowdown in the economy has also greatly impacted real estate sales, which has halted to historical lows. Many economists expect that this sluggish will continue for a significant period of time, at which point the economy will begin a prolonged recovery period. However, the Company will earn significant gross margins on each item sold, and despite the current economic climate, the business will be able to maintain profitable and cash flow positive operations. Industry Analysis Within the United States there are approximately 82,000 companies that specialize in the manufacture and sale/distribution of beauty supply goods to the general public. Each year, these businesses aggregately generate more than $125 billion dollars of revenue and provide jobs for almost 1,000,000 Americans. For the last five years, annual payrolls have exceeded $20 billion dollars a year among these individuals. The industry has experienced solid growth over the last ten years as more people are becoming concerned with their appearance. This growth corresponds to the increase in capital stock and general wealth of the American public. As such, the industry has grown at an average annual rate of 6% per year for each of the last five years. This trend is expected to continue, and then taper off as the market normalizes and the industry becomes consolidated. Currently, this industry has a number of fragmented market agents that will most likely be rolled up as time progresses. However, this expansive growth rate may slow over the next 12 to 18 months as the current economy further depresses consumers' discretionary income. Customer Profile The cosmetics customer will typically be come an underserved target audience (Multi-ethnic, African American Latina) and can be described as a middle- to upper-middle class woman living in the Company's target market. Common traits among clients will include: Page 10
B&S Plan · · · ·
Annual household income exceeding $50,000 Will spend $25 to $100 on cosmetics Tech savvy Live within a metropolitan area
The key segment (African American women) of the Target audience spent $5.3 billion on apparel and accessories last year and $1.2 billion on health and beauty products. Below is a breakdown of their spending patterns: · · · ·
$771 million on beauty and personal care $684 million on fragrance $11.8 billion on apparel and accessories $905 million on shoes
Among retailers that will sell the Company's manufactured cosmetics, Management has outlined the demographics: · · · ·
Operates 10 or more retail locations Annual revenues exceeding $5,000,000 per year Annual EBITDA exceeding $350,000 per year And, will spend $25,000 to $50,000 with the Company.
Competition There are a number of competitors within the beauty supply and health product industry, and the market has become commoditized as all products essentially provide the same end user benefit. The key to maintaining successful operations is to properly market the Company's products to its core demographic of female purchasers. As such, it is imperative that Management uses a multifaceted marketing strategy that will showcase the premium quality of our products while concurrently showcasing the moderate pricing structure for sales. Major competitors within the market include Revlon, Cover Girl, L'Oreal, NIVEA, Chanel, Mac, NARS, Bumble and Bumble, Space NK, ASOS, ShopBop and Net-A-Porter.
4.3 Service Business Analysis In industries where the product purchased is very similar to products offered by the competition (such as shampoo, make up, moisturizers), businesses have long recognized the importance of finding innovative tools to win and maintain customers. Where a business cannot offer a price savings or some other clearly recognized advantage, celebrity-inspired communication products is just one avenue that has proven useful. B&S is fortunate to have a small but growing cadre' of such personalities at its disposal. Below is a list of situations B&S will use to communicate with potential customers about product: · · · · · ·
Customer Acquisition : To attract a new customers to purchase the products and make a good and lasting impression reinforced by the endorsement of presence of the stylist. Promotional Gifts: Keep customers coming back by sending them home with reminders of the practice (samples, coupons, etc.). Email: Periodic on-line promotions, beauty and fashion tips, newsletter articles, etc. Face to Face Service: Licensed salons that can provide personalized care and attention. Home-Based Representatives: To cultivate sales in each of the targeted markets and create income producing opportunities. Repeat Sales: Forge ongoing sales by providing superior products at competitive price points, while maintaining accessibility for the customer base.
This approach will have an important effect on the bottom line: People want to give their business to those who appreciate it. Skillful use of these approaches will bring in business on an ongoing basis. Page 11
B&S Plan Traditionally, beauty, fashion, hair and hair care products have been offered through a variety of means. B&S will be utilizing both traditional and non-traditional means to offer its products line to its target market both domestically and internationally. B&S will rely heavily on the personal touch offered by licensed salons and home-based representatives. This hybrid approach will assure a "personal" touch to sales transaction. B&S will establish a high-standard for customer care and appreciation that will be followed by those in its product and service network. The wig bars are an excellent example of interaction that calls for the customer to visit a site, and receive personalized attention, care and service. The products of much of the competition are standard. That is to say they are not tailored to the specific needs of that particular customer. In some respects, it's a one size fits all approach. Companies that sell generic products tend to do well. However, there is considerable room in the spectrum for a company that utilizes the approach as laid out in this plan. In a very great sense, stellar customer service bolstered by superior products and personalized attention and tailored products will define the Company's success.
4.3.1 Competition and Buying Patterns The company will operate on a business model based on hard work, integrity, competitive pricing and customer satisfaction. Moreover, has several competitive edges including: 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12.
Low overhead Flexible cost structure Compact organizational structure Excellent product-sourcing network Diversified portfolio of coveted and exclusive products Experienced and visionary management team Robust and strategic digital and retail plan Robust sourcing, manufacturing and distribution partners Superior packaging and marketing options and strategies Capable and credible industry partners Products not offered by any other competitor for an underserved market with tremendous but under appreciated buying power and influence Successful hands-on experience in product marketing, including brand creation, original web and TV programming and infomercial production, finance and corporate governance. B&STCo.'s lead management combines more than 25 years of top-level experience over several continents.
Individual members of the team have conceived and directed significant marketing, lifestyle and apparel brand development programs in North America and Europe. As private independent operators, Company management has been directly responsible for millions of dollars in product sales and ad revenues. B&S has already implemented the first stage of its strategy -- creation of the infrastructure required to successfully launch e-retail and retail sales. A global pipeline of new product opportunities has been established, engaging viral pieces have been produced, distribution and manufacturing have been secured, licensing agreements put in place and comprehensive testing of products has occurred. B&S' experienced team has developed a powerful business model with all necessary infrastructure and expertise in place to successfully build an enduring brand and lifestyle product distribution gateway. For the most part, buyers understand the concept and value of service and support, and are much more likely to pay for it when the offering is clearly stated. Furthermore, our research and experience has indicated that our target market segments think about price, but would buy based on quality service if the offering were properly presented. They think about price because that is what is traditionally presented to them first. We have very good indications that many would rather pay 10-20% more for a relationship with a long-term vendor providing quality service and support. Availability is also very important. Page 12
B&S Plan 5.0 Web Plan Summary Publisher's Intent B&STCo intends to establish a sleek, professional, informative, entertaining, and engaging online presence for its group of services and products via an ecommerce enabled branded site, series of stand alone category specific microsites (phase 2) and dedicated magalogs, apps and e-zines targeted at lifestyle, fashion and beauty, pop culture and celebrity obsessed enthusiasts and women. Our Content Mission · · · ·
To champion each core demographic and target audience's enthusiasm for fashion, style, technology, entertainment, culture and the good life Provide the artists, experts, culture, style, spirit and technology that define this audience's total core lifestyle experience To uniquely reflect all that comprises the beauty, entertainment, fashion and life and style universe in a manner that reflects and speaks directly to each carefully selected audience To engage each tech-savvy consumers' highly personalized and interactive desires by extending its editorial mix via enhanced wireless and broadcast technology.
Our Messaging Our voice is witty, irreverent, authoritative, informed, engaging, and always true, representing our perspective on beauty, fashion, lifestyle, and pop culture. These collections and products will be offered on our site and through our retail and other distribution channels. At B&STCo/Stylist to the Stars, we develop, curate, license, acquire, discover, produce, design and deliver products with authority because we are fans of what we bring to market and we are energized in our delivery to our patrons. Company's Intent The Company will be enthusiastic, engaging and responsive to the needs of its customers and followers on its website. It will offer a fasion-forward catalogue of style and savvy beauty for fashion enthusiasts. Those seeking the best in celebrity coveted products and services will find them in great supply on our site. Partners and suppliers will find all of the information and protocols they need in order to initiate and maintain strong business ties with the Company. The underseved will also find that we will cater to them strongly in order to meet their needs and turn them into long-term customers. The site will also be intuitive, in that it will be fairly easy for browsers to navigate it and discover new, useful and exciting information to enhance their lifestyle. Target Audience The target audience will consist of style-savvy, fashion forward women, and those who love the finer things in life: fashion, style, celebrity coveted and inpired products and services. Business/Site Goals The goals of the site are as follows: · · · ·
Showcase product, menu of services and solutions for beauty and fashion Incorporate commerce and acquisitions of new products Provide distribution and marketing channel to designers and product suppliers seeking international reach Create and cultivate an emerging global and small supplier sales/distribution network Page 13
B&S Plan · · · ·
Grow direct sales and independent rep opportunities Provide quality consumer beauty and fashion product discovery channel Provide salons and stylists with opportunities to browse products and services for resale, and Allow for monetization of the site.
Site Tech Goals Our site tech goals are as follows: · · · · · ·
Get folks to do what we want them to do by telling them how to do it "Call outs" on every page Allow user to get their desired information in 3 clicks or less Allow user to find information no matter where they are on the site and instruct them on what to do once they find it Provide the best in user experience at launch and through upgrades due to growth Be fully optimized, tested and cross browser friendly
Down and Dirty Revenue Model What is the down and dirty revenue model? · · · ·
Sale of beauty, hair and fashion products and accessories Sale of exclusive products and collections Ad supported e-zines and applications Distribution
We exhibit an nnwavering commitment to clients, partners and customers. We will be a champion to each core demographic and target audience's enthusiasm for fashion, style, technology, entertainment, culture and the good life. We will also feature the artists, experts, culture, style, spirit and technology that define this audience's total core lifestyle experience. Our firm will uniquely reflect all that comprises the beauty, entertainment, fashion and life and style universe in a manner that reflects and speaks directly to each carefully selected audience. And finally, we will engage each tech-savvy consumers' highly personalized and interactive desires by extending its editorial mix via enhanced wireless and broadcast technology.
5.1 Website Marketing Strategy The Company website will be the virtual business card and portfolio for the company, as well as its online "home." The website needs to be a simple, yet elegant and well designed website that stays current with the latest trends and provides information to the customers and a portal to our products and services. The site, by virtue of its international clientle, will drafted in English, French, Spanish and Portuguese. Efforts will also be undertaken to ensure that the culture of each of the targeted nations is reflected on the respective homepages. We will maintain a two-way link between our website and our product suppliers. In addition to using the page as a sales tool, we will develop a monthly newsletter and a links page for other women's health sites. We will also maintain two-way links between large women's beauty and fashion organizations and supporters. We will also provide substantial coverage for home-based representatives. Our site will be highly visual, robust and intuitive. We will build our database from visitors to our wig bars, affiliated salons, events and submissions by homebased representatives. Products and industry news and events will be marketed to the virtual readership. Informative articles and cosmetically appealing products be featured on the site, thus bolstering company sales. Sales will also be encouraged through the use special promotions. Page 14
B&S Plan 5.2 Development Requirements The website will be developed with adequate technical resources. A simple hosting provider will host the site and provide the technical back end. B&S will employ a user graphic and interface designer to develop the simple, elegant site. The vendor will design all website graphics and layout. The maintenance of the site will be done by a manager of Web Development Services. As the website rolls out future development such as newsletters and other related women's beauty and fashion related issues, a technical resource may need to be contracted to build the trackable download and the newsletter capabilities.
6.0 Strategy and Implementation Summary The Company will implement the following strategies to achieve its goals of becoming the leading independent fashion and beauty company through the following steps: 1. 2. 3. 4. 5. 6. 7.
Create a compelling value proposition for designers, beauty/fashion and lifestyle product manufacturers and established companies, retailers, distributors and private concerns Build strong brand recognition and leverage the brand equities affiliated with our partner companies Develop key industry relationships with stylists, designers, PR firms, suppliers, manufactures and more Provide a compelling presentation of products and services Leverage our inventory investments to create a measurable marketing and e-commerce platform that enables sales, measurability, personalization and integration with our partners and clients Provide a high level of personalized service and inventive products Build an “A-list� of experienced and passionate professionals and thought-leaders; establish a standout service based company.
Reaching the range of possible market segments will be the responsibility of strategic business partners, led by Lilia Polite and will include My Design Company, Li + Fung and possibly other entities. The effort will operate in in New York, Atlanta, Los Angeles, London, Paris and several cities in Canada and Brazil.
6.1 SWOT Analysis The SWOT analysis provides us with an opportunity to examine the internal strengths and weaknesses the Company must address. It also allows us to examine the opportunities presented to the Company as well as potential threats.
6.1.1 Strengths The Company has a valuable inventory of strengths that will help it succeed. These strengths include: a knowledgeable and astute management team, innovative grassroots sales team (forthcoming), state-of-theart website designed to drive sales, superior products, establishment of on-site wig bars for personalized service, oustanding partners, affiliation with well-known celebrity stylists, effective licensing agreements and a clear vision for filling market needs in several strategic niches around the globe.
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B&S Plan 6.1.2 Weaknesses Strengths are valuable, but it is also important to realize the weaknesses B&S must address. These weaknesses include: a dependence on third parties for product and sales, and the cost factor associated with establishing these relationships.
6.1.3 Opportunities B&S's strengths will help it capitalize on emerging opportunities. These opportunities include, but are not limited to, a growing market of Internet users, sales provided by home-based entrepreneurs, and transactions in wig bars.
6.1.4 Threats Threats that the Company should be aware of include emerging local competitors, strong national competitors and a poorly performing economy which could result in depressed sales.
6.2 Competitive Edge Our Competitive Advantage Our advantages can be concisely reflected as follows: · · · · · · · ·
Better distribution Extended distribution channels Key partnerships Technological resources and proprietary products and relationships Experience and credibility First to market Proprietary services and exclusive products and licenses Audience delivery and base
6.3 Marketing Strategy The Company intends to maintain an extensive marketing campaign that will ensure maximum visibility for the business in its targeted market. Below is an overview of the marketing strategies and objectives of the Company. The company's marketing objectives are as follows: · ·
Develop superior e-commerce functionality for the Company's website and produce faster shipping times And, develop ongoing relationships with cosmetics wholesalers and retailers throughout the United States, Canada, Europe and Brazil
Marketing Strategies Ms. Polite intends on using a number of marketing strategies that will allow Bubba and Shirley Trading Company to easily target retail stores and cosmetics wholesalers and manufacturers, designers and products for licensing within the target market. Primarily, Ms. Polite intends to develop an expansive independent sales organization that will directly promote and sell the Company's manufactured cosmetics to these entities in exchange for a commission. Management anticipates that commissions will range from 5% to 15% depending Page 16
B&S Plan on the ongoing success of the individual salesperson. Management may also develop territories for each independent salesperson so that salespeople do not need to compete within any one specific market. A partnership with a branding and product development agency has been secured (My Design Company) to assist Bubba and Shirley Trading Company with appropriately branding, packaging and marketing its products to the targeted demographics. As with many businesses these days, Management intends to develop a highly interactive website that showcases the products produced by the business, how to contact the Company for wholesale distribution agreements, and ecommerce functionality among end users that want to purchase cosmetic, hair and fashion and lifestyle products directly from the Company. Ecommerce functionality may also be integrated for wholesalers and retailers as well. Pricing As the Company intends to sell its manufactured products in bulk to wholesalers, Management cannot accurately determine the exact pricing that will be used as discounts will be applied for extremely large purchases. However, Management anticipates gross margins of approximately 70% on each dollar of revenue generated. B&STCo.'s marketing efforts will be directed toward executing the company strategies of building awareness of the brand, its products and services, and driving traffic to the site and building word of mouth relationships. The combination of strong creative marketing and partnerships with traffic generating sites, strategic partners, buzz and social media conversations is expected to result in many visitors and potential clients who will become loyal, repeat users, customers, followers and recommenders. The Company expects to use a variety of marketing tools including guerilla/grassroots marketing, Web advertising, POP Up events, celebrity stylist alliances, social media strategies, public relations, editorial buzz and key strategic alliances to drive traffic, convert sales and engage our customer. More important, we plan to exercise the best in client service to elicit word of mouth referrals. The Bubba & Shirley Trading Company family of brands will be marketed through two main promotional platforms - online by way of our Stylist to the Stars website, app, catazine, pop up events and strategic partnerships, and by way of store-in-store shops at select retailers. As brand identity is built through viral marketing, solid strategy and shopping programming, B&S management will aggressively target emerging designers and manufacturers, license and help them develop and market their products for sale in store and web through the B&S innovative and dynamic sales channel. This B2C strategy blends the branding affect of direct sales with the steady growth of online sales to time sensitive retail and e-tail sales. The risk of new product introduction is lowered while the potential of mass etail sales is realized. Direct and e-tail sales provide the foundation for promotion of B&S products. Central to the B&S plan is successful transition of products from the e-tail to retail market. The experience of the management team in crafting such transitions and sales promotions is a key competitive edge. National scale retailers, fashion magazines and high-end designers and makers of proprietary product lines are demonstrating ever increasing appetite for products pitched directly to the consumer by way of TV, online sample sales, concept shops, Smartphone and mobile devices--iPads and other tablets.
6.4 Sales Strategy B&STCo's sales strategy is directed toward closing the deals that marketing opens. This will occur in two primary ways -- the direct response sales/online market and pop up retail. Both markets show phenomenal Page 17
B&S Plan receptiveness to the product categories B&S will promote in the infomercial, e-mercial, editorial and pop up shopping showcases. In all cases the primary target audience is women 18-54. Direct response and home shopping sales have grown dramatically since 2003. HSN's-a leading DRTV channel-direct response sales were estimated at $541.9 million in 2011, a 16.6 percent increase over 2010. Direct-order sales were projected to compound 7.3 percent annually, exceeding $900 billion in 2008. While US online sales alone, reached 194.3 billion dollars in 2011. While the primary marketing method used by B&STCo. to reach the direct sales market will be web and infomercials and exposure by way of exclusive and highly targeted means, B&S has also created a fashion, beauty and lifestyle product-themed flash-sale microsite, editorial based app, catazine, pop up store strategy and official website as the gateway for tapping into the direct sales market. American Internet sales approximately generated $41 billion in 2003, an increase of 22 percent over 2002. Web-driven sales reached $178 billion in 2008 and 2011 US sales alone topped 194.3 billion in 2011. Global sales figures are estimated to be at $1.75 trillion in 2013!
6.4.1 Sales Forecast The following table and charts present the sales forecast for the Company.
Table: Sales Forecast Sales Forecast Sales Hair and Wigs Hair Care Products Beauty Products Jewelry Accessories - Leather Goods Health and Wellness Total Sales Direct Cost of Sales Hair and Hair Care Products Beauty and Fashion Products Jewelry, Accessories and Wellness Products Subtotal Direct Cost of Sales
FY 2013
FY 2014
FY 2015
$596,470 $323,350 $100,587 $110,820 $43,810 $33,365 $1,208,402
$1,036,360 $642,000 $275,260 $213,250 $160,250 $130,000 $2,457,120
$0
FY 2013 $67,500 $32,900 $20,724 $121,124
FY 2014 $295,700 $122,775 $57,895 $476,370
FY 2015
$0
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B&S Plan
6.5 Milestones The following table lists important program milestones, with dates and managers in charge, and budgets for each. The milestone schedule indicates our emphasis on planning for implementation.
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B&S Plan Table: Milestones Milestones Milestone Purchase Inventory Legal/Accounting Website Licenses and Permits Warehouse Advertising and Marketing Office Space Salaries
Totals
Start Date 11/19/2012 11/26/2012 11/28/2012 11/30/2012 12/3/2012 1/1/2013 2/4/2013 2/1/2013 11/8/2012 11/13/2012
End Date 11/27/2015 11/27/2015 11/27/2015 6/14/2013 2/22/2013 11/27/2015 11/30/2015 11/27/2015 12/13/2012 12/13/2012
Budget $360,000 $72,000 $10,000 $24,000 $8,000 $150,000 $54,000 $286,000
Manager Polite Conigland Polite Polite Russell Conigland Polite Polite
Department Department Department Department Department Department Department Department Department Department Department
$964,000
7.0 Management Summary Lila Polite Producer/Publisher/Brand Agent /Manufacturer Lila Polite is a New York based multimedia producer, publisher, entrepreneur and lifestyle marketing strategist. She graduated from the University of Michigan and as a sports fanatic, had hopes of turning that passion into a permanent gig as an agent. However, she soon discovered that female agents were not in vogue in the 80’s and instead, Lila took a position with the large telecommunications firm, NYNEX where she focused on event marketing, external affairs and big idea promotions. While during the day Lila was writing press releases and maki.ng appearances with the company mascot, she began moonlighting as a DJ and club promoter. Soon after, Lila transitioned to radio corporate sales and marketing promotions, where her talents were discovered by one of the station’s major clients, and the opportunity turned into a 10-year senior management position with a major concert promoter. After several years on the road, this single mother opted for the stability of a traditional work-week. In her new roles as Marketing Director, Lila gained professional experience with Viacom, Clear Channel, Page 20
B&S Plan Ex’Pression Center for New Media and Imagine Media, and committed to non-profit work as the Minority Enterprise Development Director for Young Community Developers in San Francisco. From that point, Lila produced a sports talk show; a web and TV based program for the Oakland Raiders; several custom print and digital titles for consumer brand giants, started a an educational program for those pursuing careers in the film and music industries, launched an art collective and produced a feature film! Lila’s work now includes all forms of digital and mobile media, web, film and broadcast TV show development and production, wonderfully creative thinking and product development and strategy for a number of global beauty and fashion brand products, and day to day management of her small publishing and integrated media house and startup beauty and fashion emporium. John Russell, Operations and Logistics Mr. Russell is a veteran of the entertainment industry. He also offers a solid background in operations, logistics and transportation. He will oversee these areas and also serve as a strategist for sales and marketing. Mr. Russell will also play a role in business development. Keenan Conigland, Marketing, Corporate Communications, Public Affairs Keenan Conigland has a strong background in presenting organization and products in the markeplace. For more than 15 years, he has handled media, marketing and corporate relations for multi-billion corporations. He began his career with WHUR-fm in Washington and WJZ-TV-13 in Baltimore, MD. In the public sector, he worked on Capitol Hill in Washington and also on K Street for a foreign policy think-tank. Later, he worked for the Federal Reserve Bank of Atlanta as well as the Federal Home Loan Bank of Atlanta. He also served as a publc affairs consultant to the world's busiest airport, Hartsfield-Jackson International Airport. Mr. Conigland will be providing assistance with stakeholder management, marketing, product launching and business development.
7.1 Personnel Plan The Personnel Plan reflects the staffing levels required to meet critical functions such as license and distribution agreements, manufacturing partnerships, home-based entrepreneurs and establishing the customer base needed to achieve the revenues projected and reach profitability. Please note that our three designations, Executive, Operations and Logistics and Administrative are categories and not neccessarily individual positions. We have projected a staff of 3 employees, with Ms. Polite drawing a partial salary by January 2013 and the full salary by February. The remaining personnel hit the payroll in March. Lastly, we have already begun to leverage our operations by adding distributors to facilitate the sale of our products; these individuals will not draw salaries from the Company. By way of information, the location of the distributors to date are Chicago and London.
Table: Personnel Personnel Plan Executive Operations and Logistics Administrative Total People
FY 2013 $188,830 $67,500 $52,497 4
FY 2014 $264,000 $108,000 $84,000 4
FY 2015 $219,996 $90,000 $69,996 4
Total Payroll
$308,827
$456,000
$379,992
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B&S Plan 8.0 Financial Plan Our financial plan is based on raising $400,000 (USD) by way of private equity to cover travel, purchase inventory, satisy legal and accounting vendors, develop the website, cover payroll, establish partnerships, grow and cultivate customer base and more for the first year. We will achieve profitability within the first years of this plan and due to the nature of the exponential growth anticipated through Ms. Polite's efforts and industry trends, we will realize a 5% net profit growth per month within the first year.
8.1 Start-up Funding Although we are treating the business as a start-up company, the financial plan is solidly based on past performance of Ms. Polite and the company's strategic partners. We have taken real market estimates for P&L income and expenses for the first year. We then projected income based on conservative projections. Please note that expect an immediate take-off in business due to pending orders secured by Ms. Polite coupled with the holiday shopping season. Ms. Polite will be investing $25,000 of her own money. We approached the financial planning from a conservative standpoint, and based those numbers on achievable gross margins. Also, our actual interest and tax rates will most likely be lower than the assumed rates.
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B&S Plan Table: Start-up Funding Start-up Funding Start-up Expenses to Fund Start-up Assets to Fund Total Funding Required
$16,425 $25,000 $41,425
Assets Non-cash Assets from Start-up Cash Requirements from Start-up Additional Cash Raised Cash Balance on Starting Date Total Assets
$15,000 $10,000 $385,360 $395,360 $410,360
Liabilities and Capital Liabilities Current Borrowing Long-term Liabilities Accounts Payable (Outstanding Bills) Other Current Liabilities (interest-free) Total Liabilities
$0 $400,000 $1,785 $0 $401,785
Capital Planned Investment Owner Investor Additional Investment Requirement Total Planned Investment
$25,000 $0 $0 $25,000
Loss at Start-up (Start-up Expenses) Total Capital
($16,425) $8,575
Total Capital and Liabilities
$410,360
Total Funding
$426,785
8.2 Important Assumptions The table below presents the assumptions used in the financial calculations of this business plan.
8.3 Break-even Analysis Apart from the direct cost of materials, total monthly fixed costs are running about $41,554 (exclusive of noncash charges). The company should run relatively smoothly from an cash/income standpoint after surpassing this threshold.
Table: Break-even Analysis Break-even Analysis Monthly Revenue Break-even
$48,190
Assumptions: Average Percent Variable Cost Estimated Monthly Fixed Cost
10% $43,360
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B&S Plan
8.4 Projected Profit and Loss Based on the realistic sales projections and efficient cost control measures in place, the Company will achieve profitability within two years. Gross margins reveal dramatic growth, because of the growth in revenues from sales of products.
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B&S Plan Table: Profit and Loss Pro Forma Profit and Loss FY 2013 $1,208,402 $121,124 $158,368 $279,492
FY 2014 $2,457,120 $476,370 $409,871 $886,241
FY 2015 $0 $0 $0 $0
Gross Margin Gross Margin %
$928,910 76.87%
$1,570,879 63.93%
$0 0.00%
Expenses Payroll Marketing/Promotion Depreciation Rent Utilities Insurance Payroll Taxes Other
$308,827 $110,400 $9,996 $18,000 $12,000 $6,300 $27,794 $27,000
$456,000 $60,000 $0 $18,000 $12,000 $6,000 $41,040 $27,000
$379,992
Total Operating Expenses
$520,317
$620,040
$379,992
Profit Before Interest and Taxes EBITDA Interest Expense Taxes Incurred
$408,593 $418,589 $30,000 $113,578
$950,839 $950,839 $9,168 $282,501
($379,992) ($379,992) $2 $0
Net Profit Net Profit/Sales
$265,014 21.93%
$659,170 26.83%
($379,994) 0.00%
Sales Direct Cost of Sales Other Costs of Sales Total Cost of Sales
$0
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B&S Plan
8.5 Projected Cash Flow Cash flow is projected to for theincrease for the first two years of operation based on the reasonable assumption of 30-day credit collections. The Company has calculated its financial plan so that it will have enough cash from investors and debt to survive as a positive cash flow is realized during the first year of operation.
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B&S Plan Table: Cash Flow Pro Forma Cash Flow FY 2013
FY 2014
FY 2015
Cash from Operations Cash Sales Cash from Receivables Subtotal Cash from Operations
$604,201 $521,624 $1,125,825
$1,228,560 $1,196,829 $2,425,389
$0 $114,308 $114,308
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 $1,125,825
$0 $0 $0 $0 $0 $0 $0 $2,425,389
$0 $0 $0 $0 $0 $0 $0 $114,308
FY 2013
FY 2014
FY 2015
$308,827 $550,324 $859,151
$456,000 $1,334,656 $1,790,656
$379,992 $135,271 $515,263
$0 $0 $0 $199,991 $0 $21,180 $108,300 $1,188,622
$0 $0 $0 $199,992 $0 $0 $0 $1,990,648
$0 $0 $0 $0 $0 $0 $0 $515,263
($62,798) $332,562
$434,741 $767,303
($400,955) $366,349
Cash Received
Expenditures Expenditures from Operations Cash Spending Bill Payments Subtotal Spent on Operations 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 Net Cash Flow Cash Balance
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B&S Plan
8.6 Projected Balance Sheet
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B&S Plan Table: Balance Sheet Pro Forma Balance Sheet FY 2013
FY 2014
FY 2015
Current Assets Cash Accounts Receivable Inventory Other Current Assets Total Current Assets
$332,562 $82,577 $12,750 $0 $427,890
$767,303 $114,308 $51,950 $0 $933,562
$366,349 $0 $51,950 $0 $418,299
Long-term Assets Long-term Assets Accumulated Depreciation Total Long-term Assets Total Assets
$36,180 $9,996 $26,184 $454,074
$36,180 $9,996 $26,184 $959,746
$36,180 $9,996 $26,184 $444,483
Liabilities and Capital
FY 2013
FY 2014
FY 2015
Current Liabilities Accounts Payable Current Borrowing Other Current Liabilities Subtotal Current Liabilities
$88,775 $0 $0 $88,775
$135,270 $0 $0 $135,270
$0 $0 $0 $0
$200,009 $288,784
$17 $135,287
$17 $17
$25,000 ($124,725) $265,014 $165,289 $454,074
$25,000 $140,289 $659,170 $824,459 $959,746
$25,000 $799,459 ($379,994) $444,465 $444,483
$165,289
$824,459
$444,465
Assets
Long-term Liabilities Total Liabilities Paid-in Capital Retained Earnings Earnings Total Capital Total Liabilities and Capital Net Worth
8.7 Business Ratios
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B&S Plan Table: Ratios Ratio Analysis Sales Growth
FY 2013 n.a.
FY 2014 103.34%
FY 2015 -100.00%
Industry Profile 13.07%
Percent of Total Assets Accounts Receivable Inventory Other Current Assets Total Current Assets Long-term Assets Total Assets
18.19% 2.81% 0.00% 94.23% 5.77% 100.00%
11.91% 5.41% 0.00% 97.27% 2.73% 100.00%
0.00% 11.69% 0.00% 94.11% 5.89% 100.00%
14.34% 2.18% 53.58% 70.11% 29.89% 100.00%
19.55% 44.05% 63.60% 36.40%
14.09% 0.00% 14.10% 85.90%
0.00% 0.00% 0.00% 100.00%
37.94% 54.53% 92.47% 7.53%
Percent of Sales Sales Gross Margin Selling, General & Administrative Expenses Advertising Expenses Profit Before Interest and Taxes
100.00% 76.87% 54.94% 9.14% 33.81%
100.00% 63.93% 37.10% 2.44% 38.70%
100.00% 0.00% 0.00% 0.00% 0.00%
100.00% 59.56% 28.35% 1.21% 8.19%
Main Ratios Current Quick Total Debt to Total Assets Pre-tax Return on Net Worth Pre-tax Return on Assets
4.82 4.68 63.60% 229.05% 83.38%
6.90 6.52 14.10% 114.22% 98.12%
2,993,705.84 2,621,906.82 0.00% -85.49% -85.49%
1.24 1.18 92.47% 696.33% 52.41%
Additional Ratios Net Profit Margin Return on Equity
FY 2013 21.93% 160.33%
FY 2014 26.83% 79.95%
FY 2015 0.00% -85.49%
n.a n.a
7.32 29 12.00 7.18 27 2.66
10.75 29 14.73 10.21 30 2.56
0.00 0 0.00 12.17 14,521,608 0.00
n.a n.a n.a n.a n.a n.a
1.75 0.31
0.16 1.00
0.00 0.01
n.a n.a
$339,114 13.62
$798,292 103.71
$418,298 -223,524.71
n.a n.a
0.38 20% 3.75 7.31 0.41
0.39 14% 5.67 2.98 0.00
n.a. 0% 2,621,906.82 0.00 0.00
n.a n.a n.a n.a n.a
Current Liabilities Long-term Liabilities Total Liabilities Net Worth
Activity Ratios Accounts Receivable Turnover Collection Days Inventory Turnover Accounts Payable Turnover Payment Days Total Asset Turnover Debt Ratios Debt to Net Worth Current Liab. to Liab. Liquidity Ratios Net Working Capital Interest Coverage Additional Ratios Assets to Sales Current Debt/Total Assets Acid Test Sales/Net Worth Dividend Payout
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Appendix Table: Sales Forecast Sales Forecast Sales Hair and Wigs Hair Care Products Beauty Products Jewelry Accessories - Leather Goods Health and Wellness Total Sales Direct Cost of Sales Hair and Hair Care Products Beauty and Fashion Products Jewelry, Accessories and Wellness Products Subtotal Direct Cost of Sales
Dec
Jan
Feb
Mar
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
$20,000 $7,500 $0 $0 $0 $0 $27,500
$23,000 $10,000 $3,575 $4,000 $2,000 $1,500 $44,075
$27,000 $13,600 $3,932 $5,570 $2,500 $1,750 $54,352
$32,500 $16,700 $5,500 $7,000 $2,750 $2,000 $66,450
$44,200 $21,000 $6,500 $7,750 $3,000 $2,215 $84,665
$48,900 $25,000 $8,000 $8,500 $3,350 $2,500 $96,250
$54,500 $28,550 $9,130 $9,250 $3,560 $2,750 $107,740
$59,000 $33,000 $10,000 $10,750 $4,000 $3,000 $119,750
$64,120 $37,000 $11,250 $12,000 $4,600 $3,350 $132,320
$69,000 $40,250 $12,450 $14,000 $5,200 $4,000 $144,900
$75,000 $43,750 $14,500 $15,500 $6,000 $4,800 $159,550
$79,250 $47,000 $15,750 $16,500 $6,850 $5,500 $170,850
Dec $4,500 $2,000 $0 $6,500
Jan $4,600 $2,100 $1,500 $8,200
Feb $4,800 $2,300 $1,600 $8,700
Mar $5,000 $2,500 $1,725 $9,225
Apr $5,100 $2,650 $1,800 $9,550
May $5,250 $2,700 $1,840 $9,790
Jun $5,750 $2,750 $1,900 $10,400
Jul $6,000 $2,800 $1,959 $10,759
Aug $6,250 $3,000 $2,000 $11,250
Sep $6,500 $3,200 $2,050 $11,750
Oct $6,750 $3,400 $2,100 $12,250
Nov $7,000 $3,500 $2,250 $12,750
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Appendix Table: Personnel Personnel Plan Executive Operations and Logistics Administrative Total People
Dec $6,500 $0 $0 1
Jan $6,500 $0 $0 1
Feb $10,833 $0 $0 1
Mar $18,333 $7,500 $5,833 4
Apr $18,333 $7,500 $5,833 4
May $18,333 $7,500 $5,833 4
Jun $18,333 $7,500 $5,833 4
Jul $18,333 $7,500 $5,833 4
Aug $18,333 $7,500 $5,833 4
Sep $18,333 $7,500 $5,833 4
Oct $18,333 $7,500 $5,833 4
Nov $18,333 $7,500 $5,833 4
Total Payroll
$6,500
$6,500
$10,833
$31,666
$31,666
$31,666
$31,666
$31,666
$31,666
$31,666
$31,666
$31,666
Page 2
Appendix Table: Profit and Loss Pro Forma Profit and Loss Sales Direct Cost of Sales Other Costs of Sales Total Cost of Sales
Dec $27,500 $6,500 $0 $6,500
Jan $44,075 $8,200 $4,325 $12,525
Feb $54,352 $8,700 $5,743 $14,443
Mar $66,450 $9,225 $6,689 $15,914
Apr $84,665 $9,550 $8,784 $18,334
May $96,250 $9,790 $10,832 $20,622
Jun $107,740 $10,400 $12,652 $23,052
Jul $119,750 $10,759 $14,635 $25,394
Aug $132,320 $11,250 $18,548 $29,798
Sep $144,900 $11,750 $21,390 $33,140
Oct $159,550 $12,250 $24,899 $37,149
Nov $170,850 $12,750 $29,871 $42,621
Gross Margin Gross Margin %
$21,000 76.36%
$31,550 71.58%
$39,909 73.43%
$50,536 76.05%
$66,331 78.35%
$75,628 78.57%
$84,688 78.60%
$94,356 78.79%
$102,522 77.48%
$111,760 77.13%
$122,401 76.72%
$128,229 75.05%
$6,500 $2,000 $833 $1,500 $1,000 $250 $585 $2,250
$6,500 $3,500 $833 $1,500 $1,000 $300 $585 $2,250
$10,833 $5,000 $833 $1,500 $1,000 $350 $975 $2,250
$31,666 $6,500 $833 $1,500 $1,000 $400 $2,850 $2,250
$31,666 $8,000 $833 $1,500 $1,000 $450 $2,850 $2,250
$31,666 $9,500 $833 $1,500 $1,000 $500 $2,850 $2,250
$31,666 $11,000 $833 $1,500 $1,000 $550 $2,850 $2,250
$31,666 $12,500 $833 $1,500 $1,000 $600 $2,850 $2,250
$31,666 $1,400 $833 $1,500 $1,000 $650 $2,850 $2,250
$31,666 $15,500 $833 $1,500 $1,000 $700 $2,850 $2,250
$31,666 $17,000 $833 $1,500 $1,000 $750 $2,850 $2,250
$31,666 $18,500 $833 $1,500 $1,000 $800 $2,850 $2,250
$14,918
$16,468
$22,741
$46,999
$48,549
$50,099
$51,649
$53,199
$42,149
$56,299
$57,849
$59,399
Profit Before Interest and Taxes EBITDA Interest Expense Taxes Incurred
$6,082 $6,915 $3,333 $825
$15,082 $15,915 $3,182 $3,570
$17,168 $18,001 $3,030 $4,241
$3,537 $4,370 $2,879 $197
$17,782 $18,615 $2,727 $4,516
$25,529 $26,362 $2,576 $6,886
$33,039 $33,872 $2,424 $9,184
$41,157 $41,990 $2,273 $11,665
$60,373 $61,206 $2,121 $17,476
$55,461 $56,294 $1,970 $16,047
$64,552 $65,385 $1,818 $18,820
$68,830 $69,663 $1,667 $20,149
Net Profit Net Profit/Sales
$1,924 7.00%
$8,330 18.90%
$9,896 18.21%
$461 0.69%
$10,538 12.45%
$16,067 16.69%
$21,430 19.89%
$27,219 22.73%
$40,776 30.82%
$37,444 25.84%
$43,914 27.52%
$47,014 27.52%
Expenses Payroll Marketing/Promotion Depreciation Rent Utilities Insurance Payroll Taxes Other Total Operating Expenses
9%
Page 3
Appendix Table: Cash Flow Pro Forma Cash Flow Dec
Jan
Feb
Mar
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
$13,750 $458 $14,208
$22,038 $14,026 $36,064
$27,176 $22,209 $49,385
$33,225 $27,378 $60,603
$42,333 $33,529 $75,861
$48,125 $42,526 $90,651
$53,870 $48,317 $102,187
$59,875 $54,070 $113,945
$66,160 $60,085 $126,245
$72,450 $66,370 $138,820
$79,775 $72,694 $152,469
$85,425 $79,963 $165,388
$0 $0 $0 $0 $0 $0 $0 $14,208
$0 $0 $0 $0 $0 $0 $0 $36,064
$0 $0 $0 $0 $0 $0 $0 $49,385
$0 $0 $0 $0 $0 $0 $0 $60,603
$0 $0 $0 $0 $0 $0 $0 $75,861
$0 $0 $0 $0 $0 $0 $0 $90,651
$0 $0 $0 $0 $0 $0 $0 $102,187
$0 $0 $0 $0 $0 $0 $0 $113,945
$0 $0 $0 $0 $0 $0 $0 $126,245
$0 $0 $0 $0 $0 $0 $0 $138,820
$0 $0 $0 $0 $0 $0 $0 $152,469
$0 $0 $0 $0 $0 $0 $0 $165,388
Dec
Jan
Feb
Mar
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
$6,500 $2,610 $9,110
$6,500 $24,922 $31,422
$10,833 $30,218 $41,051
$31,666 $33,314 $64,980
$31,666 $34,280 $65,946
$31,666 $42,152 $73,818
$31,666 $48,140 $79,806
$31,666 $54,620 $86,286
$31,666 $60,362 $92,028
$31,666 $60,066 $91,732
$31,666 $75,730 $107,396
$31,666 $83,911 $115,577
$0 $0 $0 $0 $0 $0 $9,110
$0 $0 $0 $18,181 $0 $1,460 $4,500 $55,563
$0 $0 $0 $18,181 $0 $1,600 $7,800 $68,632
$0 $0 $0 $18,181 $0 $1,650 $8,000 $92,811
$0 $0 $0 $18,181 $0 $1,725 $9,300 $95,152
$0 $0 $0 $18,181 $0 $1,800 $10,000 $103,799
$0 $0 $0 $18,181 $0 $1,920 $10,200 $110,107
$0 $0 $0 $18,181 $0 $2,000 $11,000 $117,467
$0 $0 $0 $18,181 $0 $2,125 $11,500 $123,834
$0 $0 $0 $18,181 $0 $2,200 $12,000 $124,113
$0 $0 $0 $18,181 $0 $2,300 $12,000 $139,877
$0 $0 $0 $18,181 $0 $2,400 $12,000 $148,158
$5,099 $400,459
($19,499) $380,959
($19,247) $361,712
($32,208) $329,504
($19,291) $310,214
($13,148) $297,065
($7,921) $289,145
($3,522) $285,623
$2,410 $288,033
$14,706 $302,739
$12,592 $315,332
$17,231 $332,562
Cash Received Cash from Operations Cash Sales Cash from Receivables Subtotal Cash from Operations 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 Expenditures Expenditures from Operations Cash Spending Bill Payments Subtotal Spent on Operations 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 Net Cash Flow Cash Balance
0.00%
Page 4
Appendix Table: Balance Sheet Pro Forma Balance Sheet Assets
Dec
Jan
Feb
Mar
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
Starting Balances
Current Assets Cash Accounts Receivable Inventory Other Current Assets Total Current Assets
$395,360 $0 $0 $0 $395,360
$400,459 $13,292 $6,500 $0 $420,250
$380,959 $21,303 $8,200 $0 $410,462
$361,712 $26,270 $8,700 $0 $396,683
$329,504 $32,117 $9,225 $0 $370,847
$310,214 $40,921 $9,550 $0 $360,685
$297,065 $46,521 $9,790 $0 $353,376
$289,145 $52,074 $10,400 $0 $351,619
$285,623 $57,879 $10,759 $0 $354,261
$288,033 $63,955 $11,250 $0 $363,238
$302,739 $70,035 $11,750 $0 $384,524
$315,332 $77,116 $12,250 $0 $404,698
$332,562 $82,577 $12,750 $0 $427,890
Long-term Assets Long-term Assets Accumulated Depreciation Total Long-term Assets Total Assets
$15,000 $0 $15,000 $410,360
$15,000 $833 $14,167 $434,417
$16,460 $1,666 $14,794 $425,256
$18,060 $2,499 $15,561 $412,244
$19,710 $3,332 $16,378 $387,225
$21,435 $4,165 $17,270 $377,955
$23,235 $4,998 $18,237 $371,613
$25,155 $5,831 $19,324 $370,943
$27,155 $6,664 $20,491 $374,752
$29,280 $7,497 $21,783 $385,021
$31,480 $8,330 $23,150 $407,674
$33,780 $9,163 $24,617 $429,315
$36,180 $9,996 $26,184 $454,074
Dec
Jan
Feb
Mar
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
$1,785 $0 $0 $1,785
$23,918 $0 $0 $23,918
$29,108 $0 $0 $29,108
$32,180 $0 $0 $32,180
$32,881 $0 $0 $32,881
$40,554 $0 $0 $40,554
$46,326 $0 $0 $46,326
$52,607 $0 $0 $52,607
$58,378 $0 $0 $58,378
$57,551 $0 $0 $57,551
$72,942 $0 $0 $72,942
$80,849 $0 $0 $80,849
$88,775 $0 $0 $88,775
Long-term Liabilities Total Liabilities
$400,000 $401,785
$400,000 $423,918
$381,819 $410,927
$363,638 $395,818
$345,457 $378,338
$327,276 $367,830
$309,095 $355,421
$290,914 $343,521
$272,733 $331,111
$254,552 $312,103
$236,371 $309,313
$218,190 $299,039
$200,009 $288,784
Paid-in Capital Retained Earnings Earnings Total Capital Total Liabilities and Capital
$25,000 ($16,425) $0 $8,575 $410,360
$25,000 ($16,425) $1,924 $10,499 $434,417
$25,000 ($20,925) $10,254 $14,329 $425,256
$25,000 ($28,725) $20,151 $16,426 $412,244
$25,000 ($36,725) $20,611 $8,886 $387,225
$25,000 ($46,025) $31,150 $10,125 $377,955
$25,000 ($56,025) $47,217 $16,192 $371,613
$25,000 ($66,225) $68,647 $27,422 $370,943
$25,000 ($77,225) $95,866 $43,641 $374,752
$25,000 ($88,725) $136,643 $72,918 $385,021
$25,000 ($100,725) $174,086 $98,361 $407,674
$25,000 ($112,725) $218,000 $130,275 $429,315
$25,000 ($124,725) $265,014 $165,289 $454,074
$8,575
$10,499
$14,329
$16,426
$8,886
$10,125
$16,192
$27,422
$43,641
$72,918
$98,361
$130,275
$165,289
Liabilities and Capital Current Liabilities Accounts Payable Current Borrowing Other Current Liabilities Subtotal Current Liabilities
Net Worth
Page 5