Virtual Business Unit Naa Williams & Zoe Jones
Contents 3 Introduction Chapter One: Executive Summary 4 Mission Statement 5 Business Oppurtunity 6-7 Financial Projections Chapter Two: Industry Environment 8 Overview of the Industry 9 Projected Position for the Future 10-11 Customers and Consumers 12 Direct Competition 13-14 SWOT Analysis Chapter Three: Marketing 15 Business Oppurtunity 16 Company Marketing Strategy 17 Benefits & Needs Matrix Chapter Four: Operations 18 Organisational Structure 19-20 Funding Requirements 21 Core Operations - Risk Management Plan Chapter Five: Financail Projections 22 Financial Projections 23 Breakeven 24-25 Funding 26 Five Year Plan 27 Conclusion 28 Appendix 1 29 Appendix 2 30 Appendix 3 31-32 Bibliography
N&R Tailors is a partnership between Naa Williams and Zoe Jones. The brand would be located in a ‘bricks and mortar’ store in a market town approximately 50 minutes or less from London.
Brand Objectives: To create a classic retail apparel-shopping environment that caters to needs of working women. To enable customers to choose between ready to wear and bespoke alteration services. To promote a slow, sustainable, fashion industry.
Introduction
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Chapter One: Executive Summary
Mission Statement
N & R Tailors wants to address the lack of well-fitted clothing and the issues with sizing in retail. 55% of consumers feel that clothing size lacks consistency and differs from brand to retailer [See Appendix 1 for more information]. Our aim is to offer a slow fashion, ready to wear range for working women with good quality fabrics with a long shelf life. So the consumer can purchase a garment from our ready to wear range, have it specially altered to fit them but also be guaranteed that the garment will have a long sustainable shelf life.
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Market research has shown that there is a lack of retailers offering a bespoke service at a high street market level, and few that offer an alterations service. With women going back into work on the rise [See Appedix 1 for more information] and women’s rights supporting women in the workplace there is more demand for workwear fashion. N & R Tailors wants to capitalise on this by offering a ready to wear range of slow fashion pieces that are classic and timeless pieces but with a long lasting shelf life with fit at the utmost importance. We will achieve this through an alterations service, and fit our ready to wear range to our customers precisely. N&R Tailors will also alter our customer’s own garments to improve for the best fit possible.
Business Opportunity
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Financail Projections
Our business will make the main bulk of our income and profits through our ready to wear collection store sales. In the second year we start up our online store to sell our ready to wear collections further and to promote the alterations service. A small part of our business income will also include the alterations service we predict sales of: £3,168 in the first year £4,752 in the second year £5,976 in the third year Below is the projected profit/loss table:
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Year
Profit/Loss
First Year Profit Loss
-£77,354
Second Year Profit Loss
-£108,389
Third Year Profit Loss
-£63,092
Fourth Year Profit Loss
£50,423
This graph projects our annual income year on year without taking away expenditure.
This bar chart predicts our annual sales in units for the first three years.
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Chapter Two: Industry Environment
Overview of the Industry
Workwear has become an increasingly more important industry with consumers wanting to adhere to professional work wear policies, at the same time consumers like to incorporate their own personal style to what they wear to work [See Appendix 2 for more information]. More importantly “more than one quarter of employees say they select clothing for work that reflects the image they want to portray while at work.” [See Appendix 2 for more information] This part of the fashion industry is showing more women are working, and staying longer in jobs, there is a need to find quality work wear that lasts, longer. The majority of the women’s workwear sector is made up of: • • • • • •
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Value and high street brands offering value for money workwear. (Tesco, New Look) A large part of the high street workwear sector is made up of concessions and brands selling through department stores, which have a high purchasing statistics from this area of the industry. (Jaeger at House of Fraser) A menswear brand, which has branched into womenswear. These labels already have a strong customer base from their menswear department. (T.M Lewin) Fashion brands from the mid-market level of the high street upwards which offer an alter ations service as well as a ready to wear range. (Reiss) Niche boutiques offering bespoke made to measure service. (Mini Bespoke) High end bespoke services such as designers up to the very best at Savile Row.
N & R Tailors positioning within the women’s workwear arena would be at mid to high level of the retail high street. As a brand we aim to deliver quality, long lasting clothing at a reasonable price. To meet our competitors’ prices at the same market level we have looked at keeping our ready to wear garments pricing as realistically low as possible but in keeping with our high quality, sustainable ethos so that when adding an average alteration price to the garments we meet our competitors’ prices. For the future we aim to be well established at this market level with competitive pricing but also offering an affordable luxury bespoke service.
Projected Position for the Future
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Customers & Consumers 35 Years Old Plus 1 or 2 holidays a year Commute to work in an office full time Suburbs/Country Life Local Country Pubs Conservative Status Quo
Reads The Times Daily Mail Marie Claire Red
Hobbies Garden Centre, Gardening, Exercise as a social group e.g. tennis
Shops Sainsbury’s Food Waitrose for special occasions e.g. dinner parties Department Stores M&S
Watches BBC News The One Show Law & Order Graham Norton Downton Abbey Strictly Come Dancing QI
Buying Habits Frustration with fit and trying things on. Getting hot in store from crowds or the lack of success with trying something on. Not as much of a frequent shopper anymore, as they have older kids they got out of the habit of shopping. Hate it when their favourite and most comfortable work jumper/shirt starts to unravel because of the lack of quality. The 35-44 age group is less predictable, because browsing and buying in store is at 33%, closely followed by browsing and buying online at 30% showing a need for a suitable online selling platform. However the later age groups favour browsing and buying in store which is where most of our customer interaction will be. [See Appendix 3 for more information]
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Direct Competition
N&R Tailors direct competition is Reiss and T.M.Lewin. Both these brands have a women’s ready to wear range also offering an alterations service, however neither brand offers a bespoke service for women. Other less direct competition is women’s workwear collections such as Basler and Planet, which are mainly seen in department stores. Although department stores and brands like Basler and Planet do not offer alteration services, our target consumer frequently likes to shop in department stores and the competition will be in the customer’s convenience to get everything in one place like a department store.
USP’s: Reiss’s unique selling point of “affordable luxury.” T.M Lewin’s hand-finished professional look for women. Planet from the Jacques Vert group endorsing “proudly designed in Britain.” Basler reaching out to women no matter their “age, clothing size or nationality”
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Strengths N&R Tailors Slow, sustainable good quality fashion with a long shelf life. Clothing which can be altered to fit on a one-to-one basis.
Reiss A very big brand reputation with the support of the Royal Duchess of Cambridge, Kate Middleton.
Planet Provides for all different body shapes and sizes and the best value for money.
Basler Very good brand philosophy, “Fashion by Brian Rennie underlines the personality of quality and style-conscious women, regardless of age, clothing size or nationality. Real clothes for real women!”
T.M.Lewin Trendy and modern style with colours and prints that wouldn’t deter women in this target market, the right amount of print and colour they would feel comfortable to wear.
Weaknesses N&R Tailors Price, as alterations would be on top of purchasing the ready to wear garments for the cost of labour and any additions. Also our competitors producing more garments with a quicker turn around as opposed to our slow fashion philosophy.
Reiss Not always timeless pieces, people may not want to buy affordable luxury for garments that are going to go out of fashion.
Planet Confusing that the Jacques Vert group champions elegant British brands yet they don’t manufacture in the UK, they manufacture abroad.
Basler Over stretching themselves with target market, could cause a lack of quality or downfall in another area of the business.
T.M.Lewin Sizing is XS S M L, can be misleading and hard to get a good fit.
SWOT Analysis
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SWOT Analysis Opportunities N&R Tailors Introducing the future bespoke service, as there is a lack of women workwear bespoke services.
Reiss Promote their alterations service more.
Planet Look into manufacturing in the UK to promote the fact that they believe they are an “elegant British brand.”
Basler Basler don’t sell through their website which doesn’t fit with the fact that they have 80 stand-alone stores worldwide. They sell through other people but it would benefit them more to sell through their own website.
T.M.Lewin Create a bigger presence; not a well known about brand before so there are advertising and promotion opportunities to build awareness.
Threats N&R Tailors Companies with big reputations such as Reiss, they are more trusted and well known about.
Reiss They don’t offer larger sizes, in some areas of the country only older women can afford Reiss and their sizes vary up and down the scale a lot, also Reiss can be seen as a bit young and trendy, thirty-five plus women may not shop there.
Planet Other concessions within Debenhams, House of Fraser and John Lewis that they are competing against.
Basler Basler’s latest look book shows a lot of bold animal prints and younger styles which is not always suitable for thirty-five plus women even though their philosophy states “regardless of age.” They are almost defying their own statement, and over-stretching themselves.
T.M.Lewin A predominantly womenswear brand like Reiss, whereas TM Lewin is a menswear brand which has branched into womenswear.
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fits and lasts,
with timeless styles that will never go out of fashion creating a more
sustainably
fashion future.
slow
Chapter Three: Marketing
Tailoring that
Fit of clothing is becoming a major issue in the fashion industry, the sizing debate is a constant issue with 55% of consumers feel that clothing size lacks consistency and differs from brand to retailer [See Appendix 1 for more information]. With the population staying in work longer there is more of a need for workwear clothing that lasts. N&R Tailors will target women at the age of 35 years plus as the key age group, which can afford mid-market prices, figures show that older spenders are more likely to spend ÂŁ300 or more on new clothes [See Appendix 3 for more information]. N&R Tailors will work as a business as the companies pricing will be competitive so that with the cost of alterations to a garment we will be approximately meeting our direct competitors. For our marketing strategy, as a bricks and mortar store we want to have a traditional take on marketing by being involved within the community and by word of mouth like other traditional tailors. However we will still strive to have an online presence and keep up to date with existing technologies of today.
Business Opportunity
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Company Marketing Strategy
Peer Marketing: In the office Go into offices and other business put a poster/business card/ leaflet of our business on the pin board for everyone to see. Offers for recommending a friend is a possible idea for the future.
Community Marketing Promotion N&R Tailors location would also centralize itself directly with the residents and activities of our target market. Sponsor at local events especially charity fundraisers, make sure these events have our logo to print as well as leaflets, business cards or posters to hand out. Group together with similar businesses in the area, such as independent alteration companies. Create a group to meet and discuss new business ideas with these businesses.
Campaign Ideas Try to get this age group excited about fashion again and talking about fashion again. Hold almost like a press day at the store with other local businesses or a store event/coffee afternoon, to group women together to like fashion and not dislike because it doesn’t fit right. Get the customers feedback on the collection and the piece that they all really like. Talk about and promote value for money rather than cheap fashion: Price £ / Times Worn = Value
Viral Marketing Push the above campaign through online Facebook/Twitter Social Medias Mailing List for newsletters send out every two - four weeks so as not to bombard this age group with emails which they find annoying. Or get the customers to write their name on one of our swing tags with a board in store displaying them with feedback.
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Alterations Service The customer’s frustration with ill-fitting clothes, for example, being a size 12 in one shop and a size 14 in another. Being frustrated with trying on clothes in store, and not fitting in what should be your size, the alterations service removes this frustration by fitting clothing perfectly to the body.
Bespoke Service in the Future Properly fitting clothes. Also bespoke at this level is seen as “affordable luxury”, something that this target customer aspires for, having one or two really well made pieces in their wardrobe that will last.
Ready to Wear Collection There is a need for classic yet trendy tailoring and work wear pieces to feel comfortable and well presented at work. Comfort will come from appropriate fitting clothing and styles for the target age group. The customer is able to speak face-to-face with a member of staff not over the phone or through the Internet. A place to go and relax from the work schedule while the business alters the garments to the customer’s measurements (almost like a hairdresser’s). Not as much of a frequent shopper anymore so shopping needs to be an experience.
Online Store For the portion of target customers who say they “have no time for shopping”. The website is easy to use for the customer to order clothing or book an alterations appointment or get in touch about an alterations enquiry. Mintel figure shows a fairly even split between buying and browsing instore and online.
Quality, Long Shelf Life & Slow Sustainable Fashion Hate it when their favourite and most comfortable work jumper/shirt starts to unravel because of the lack of quality. Our fabrics will be of good quality to ensure a long shelf life and fit our sustainable fashion ethos.
Benefits & Needs Matrix
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Chapter Four: Operations
Organisational Structure
Level 4:
Zoe
Naa
Finance Marketing Promotion
Design Production Alterations
Online Presence
Level 3: Investors and Stakeholders
Level 2: Manufacturers and Suppliers
Level 1: Sales Assistants and Factory Employees
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N&R Tailors key expenditures are mainly materials and production. The bulk of our funding will be driven into the making and quality of our products. Production for our business is essential, our products need to be of good quality so that they have a long lasting shelf life and are more sustainable, so that the products are true to and reflect the brand ethos. As a partnership we feel it is worth spending a good amount of money on production so that we can ensure our long lasting products, but also so that the factory workers and manufacturers earn a wage they can live on. Our materials have been sourced to be sustainable and long lasting; a lot of our funding is also driven into materials. Our materials are also a really important expenditure, we cannot afford to damage our brands reputation through cheaper materials which may wear or fray in a few weeks or even a year.
Materials
Production
First Year
£51,094
£21,600
Second Year
£68,502
£28,350
Third Year
£93,520
£37,800
Fourth Year
£124,381
£50,274
Funding Requirements
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Funding Requirements
Another smaller capital expenditure is the cost of our sewing machines and equipment for our alterations service and in the future our bespoke service. This is an important investment for our company and as a business we have also outlined a payment holiday from our soft loan to reinvest in our main capital assets. As our business grows we will need this reinvestment to prolong the life of our alterations service and to ready for the development and introduction of our future bespoke service.
Equipment and Sewing Machines
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Straight Stitch Sewing Machine
£200
Overlocker
£300
Industrial Iron and Board
£789
Studio Table
£500
Twin Needle Machine
£659
Total
£2,448
This table shows the main three concerns and risks with N&R Tailoring. Other risks which we have included in our risk management plan are: business entity filing, employmenmt laws, environmental laws and acts of God. Risk
Examples & Why?
Management
Start-up money & loans
Enough money to go into production and the start-up cost for a store. Bank could ask for their money back sooner.
Look into networking and funding events and corporations, competitions, personal savings. Avoid banks but if an investor asked for money back keep a certain ‘safety’ amount in a deposit bank account.
Location of store
Could be a failure if we do not get enough custom.
Find short leases to start. Complete as much research into the location as possible to make sure our consumer will come into store.
Production Issues Timings of production, could be late or not the quality we ordered.
Order way ahead of schedule and leave ample of time for stock needed to be out on the shop floor. Check out factories where N&R Tailors could potentailly produce garments in person, quality of clothing samples but also the work environment forworkers.
Core Operations - Risk Management Plan
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Chapter Five: Financail Projections
Financail Projections
The table below states our annual income, pieces or units sold, expenditure and profit and/or losses. Year
Income
Units Sold
Expenditure
Profit/Loss
First Year
£131,407
2880
£212,831
-£77,354
Second Year
£196,626
3780
£231,731
-£108,389
Third Year
£286,626
5040
£245,399
-£63,092
Fourth Year
£423,575
6660
£309,534
£50,423
• • •
Highlighted is the money required each year to fund the business. The profit and loss column shows that we will breakeven in our fourth year. As the income and sales of the business increases so does the capital needed to run the business to meet the demand of predicted sales.
Earnings & Salaries As the owners of the business, we will not be taking a salary out of the business till the business is more self-sufficient and until we need to work on the business full time. As our business is based around a shop we would employ two trustworthy sales assistants who would work 4/5 days a week each to take charge and care of the shop while myself and Naa are at our full time jobs. Then we would work 1-2 days at the store from Thursday to Sunday taking care of alteration orders and appointments but also any office paperwork that needs completing.
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Year
Breakeven Line
First Year Profit Loss
-£81,424
Second Year Profit Loss
-£116,529
Third Year Profit Loss
-£75,302
Fourth Year Profit Loss
£46,353
From our breakeven figures and graph we can tell that we will break even at the beginning of the fourth year.
Breakeven
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Funding Requirements
Our business requires a substantial amount of funding for its start up. As previously said the businesses main expenditure is materials and production to make our garments, not only to make the garments but to ensure they are of a good quality, will support slow sustainable fashion, and have a long shelf life. When as a partnership thinking about this business we imagine setting it up in the future at the age of about 30 – 35. By this time we would have years of experience within the industry and also a small amount of savings to contribute towards the start up year. When looking into finance we found crowd sourcing and sites like Kickstarter would not work for our traditional business idea, these sites also don’t work for the amount of capital we need to raise. Our main sources of financing are in shareholders and investors taking a percentage of the business and a soft loan like the Enterprise Finance Guarantee. To sell off percentages of the business it had to be valued to calculate the full 100% value. This was calculated through banking and multiple online sites, as our business is a start up it will not have a high value. As a partnership we do not want to sell off too much of our business at a small price also wanting to hold on to majority shares between us. However the business needs as much funding as possible outside of receiving a bank loan and having to repay debts. In our first year we sell off 30% of our shares for £35,000 and in the second year a further 10% for £11,667. As our business is on quite a large sale and needs a lump sum each year to keep it financed a loan was one of the options, which works for our business. This meant for the first three years we would have £190,000 injected into our funding. As a business it was important to keep the cost of the loan down as much as possible. Other small funding options such as our own savings, our friends and family lending us money and the possibility of getting a start up grant prevented us from taking out a larger loan. By the fourth year our business starts to profit and become more self-sufficient meaning we can pay back our loans and decrease the amount of money we are borrowing and being lent by our multiple sources
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Pay back over 10 years (120 months) at 2% (Of total amount - £570,000) Loan pay back a month
4750
Payments a year
57000
Interest a year
£11,400
Interest a month
£950
Total Interest over 10 years
£114,000
Total payments per year
£68,400
Enterprise Finance Guarantee (First Year Payment)
£190,000
Repayments Concerning repayments we can afford each year at £68,400, in our third year we will be seeking to take a repayment holiday of 6 months to invest in our capital assets such as sewing machines and equipment to prolong the life of our alterations service and with the aim of developing and setting up our bespoke service. In the third year of funding and costing the business it was considered to repay the shareholders a dividend of 10% as well as a sum of money to our friends and family, however it was more beneficial to pay dividends when we have broken even.
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5 Year Plan
Our most important future plan for the business is to set up our bespoke tailoring service. This was the original idea for the business but financially a bespoke service alone would not be enough income for a start-up business with a bricks and mortar set up to fund. Therefore this is a part of the five-year plan. Within the financial projections we have already planned in the third year to re-invest through a loan repayment holiday in sewing machines and equipment ready to set up this service when the business is more self-sufficient. Other plans for the business in five years is to develop the ready to wear collection slowly as demand grows, also to put more money into promotions and marketing.
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N&R Tailors will be driven to produce products that last longer in both quality and durability. We are confident we will be able to break even in the fourth year. N&R Tailors direct competitors are already established brands such as T.M Lewin, Reiss, and concessions in department stores. However our closest competitor is Reiss in terms of affordable fashion, growth, popularity, and product lines At N&R Tailors management we have carefully considered our market base, potential customer base, and its ability to grow its sales average, to cater for working women This business has the potential to become a highly regarded resource in local, regional, work wear national markets.
Conclusion
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Appendix 1
[1] Mintel Report – Clothing Size UK, July 2012 Consumer attitudes to buying clothing. 2] BBC News Article, Rise in working women could boost UK growth, study says, 4/6/13. http://www.bbc.co.uk/news/business-22766643 If women were represented in the same numbers as men in the workforce, GDP growth would be up to 10% higher by 2030, the study claims. The study, carried out by the Women’s Business Council, estimates 2.4m more women want to work, while 1.3m want to boost their hours. The government set up the body in 2012. “There is an overwhelming business case for maximising women’s contribution to growth,” the Women’s Business Council says.
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[3] For more information see Mintel’s Men’s and Women’s Workwear – US, July 2013 “Business casual and casual attire is worn by most adults while in the workplace. Though adherence to certain guidelines when dressing for work is expected, they have the opportunity to incorporate their own personal styles through clothing worn on the job.” [4] Mintel, ‘Old Navy hopes celebrity influence will drive sales’, Analyst Insight, March 2014 68% of employed adults say it’s important to have a wide variety of work clothing and 41% say they enjoy shopping for work clothes. More than one quarter of employees say they select clothing for work that reflects the image they want to portray while at work.
Appendix 2
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Appendix 3
[5] Mintel Ages 35 to 50 are “active, balanced and happy.” “Freedom from factors such as family responsibilities, financial worries and work.” Three in ten think that they now socialise more than they used to, while a similar proportion keep in touch with people more. [6] Mintel Young spenders 16-24 are less likely than average to be high spenders and while they spend more than the older consumer they are less likely than consumers aged 25-54 to spend £300 or more on new clothes. [7] Mintel figures shows a fairly even split between buying and browsing instore and online. Ages 35-44: 33% mainly browse and buy in store 30% Mainly browse and buy online
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Basler. (2014). [online] Available through: www.basler-fashion.com [Accessed date: April 2014] BBC News Business. (2014). Rise in working women could boost UK growth, study says. [online] Available through: http://www.bbc.co.uk/news/business-22766643 [Accessed date: June 2014] Burke, S. (2008). Fashion Entrepreneur: starting your own fashion business. London: Burke Publishing. Direct Gov. (2014). [online] Available through: https://www.gov.uk Enterprise Finance Guarantee. (2014). [online] Available through: https://www.gov.uk/understanding-the-enterprise-finance-guarantee Finch, B. (2010). How to write a Business Plan. 3rd edition. London: Kogan Page Ltd. Jaeger at House of Fraser. (2014). [online] Available through: www.houseoffraser.co.uk/Jaeger Kickstarter. (2014). [online] Available through: https://www.kickstarter.com/ Lipson, A. and Mintel. (2014). Old Navy hopes celebrity influence will drive sales. [online] Available through: www.aublibrary.info [Accessed date May 2014] M&S. (2014). [online] Available through: www.marksandspencer.com Marie Claire. (2014). [online] Available through: www.marieclaire.co.uk/ Mini Bespoke. (2014). New Look. (2014). [online] Available through: www.newlook.com Planet. (2014) [online] Available through: http://www.planet.co.uk/ [Accessed date: April 2014]
Bibliography
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