Business Plan on Hand Made Items

reative, We Make Your Special for You! C reative,

We Make Your Special for You!

1


MBA 3RD - ENTREPRENEUR PROJECT For

reativeµ C reativeµ

´

Presented to:

Ms Qurat-ul-Ail Presented By: VITALS Shaher Bano Hashmi

09041020-010

Syeda Anam Rehna

09041020-034

Nayaab Zafar

09041020-002

Anam Naz

09041020-017

Shamma Noreen

09041020-016

Submission Date:

January 17, 2010

2


DEDICATION

³Dedicated to the hope that is still alive in our hearts for the better future of our beloved homeland² PAKISTAN ´ ´

3


ACKNOWLEDGEMENT All

the acclamation and appreciation is for Almighty

Allah

the most merciful, gracious and

beneficent who is entire source of all the knowledge and wisdom endowed to mankind. All the prayers are forever in the name of Almighty Allah, who he ped l ped us in setting goals and objectives and blessed us to reach the destination. Without His assistance none is capable of accomplishment. We would like to thank The Business

Administration

Department for giving us the opportunity

and providing us with a platform to prove our mett le. We would be doing injustice without mentioning the name of the person who hel ped us throughout the semester and made us understand the major concepts of o f Entrepreneurship. So our special thanks go to Ms Qurat-ul-Ain. Heartiest gratitude and compliments to our Parents, without their continuous love and encouragement we could not complete this task and in the end we would like to thank our worthy teachers without them we won¶t be able to complete this task. The Project in hand is the co llection of our observation observation and research.

The sources of

information for the preparation of project include a thorough research conducted on the internet, information obtained from the Gujrat Chamber of Commerce, prestigious hel p by well known business ³Eventive´ invo lved in handmade items.

4


TABLE OF CONTENTS CONTENTS

Page No.

Dedication

iii

Acknowledgment

iv

Table of Contents

v

Executive Summary Introduction

vii 1

Business description

2

Vision

3

Mission

4

Over All Objectives

5

Specific Objectives

6

Strategic Goals

7

Segmentation

8

Industry Analysis y

Economic Analysis

8 8

y

Over All Market Analysis

9

y

Specific Market analysis

9

y

Competitive Analysis

10

y

Competitive Grid

11 12

Macro Environment Organizational Plan y

13

y

Form of Business

13

y

Partnership deed

13

y

Organizational Hierarchy

14

y

Authorities and Responsibilities

15

Production Plan

17

y

Manufacturing

17

y

Merchandising

18

y

Strategic Production Resources

18

Marketing Plan

19

y

Product

19

y

Price

22

y

y

Pricing strategies

22

y

Pricing structure

23 23

Place y

24

Distribution Channels 5

reative, We Make Your Special for You! C reative, y

25

Promotion

Financial Plan

28

SWOT Analysis

33

Critical Risk Factors

34

Exit Strategies

36

Annexure y

37

References

6


INTRODUCTION A

wedding, the birth of a child, a new home, an important birthday« All of these are events that

mark our lives forever and should be celebrated with a gift you can cherish for a lifetime. Every person is in search of attractive and innovative products for purpose of exchanging gifts. There are numerous businesses offering a variety of products for customers to fu lfill their needs. But demand for handmade gift items is substantial. People like to purchase handmade items as gift because when an item is handmade, a little part of the creator of that piece goes into it.

Artists

put their ideas, personality, style, and often blood, sweat, and tears into their work which makes that work unique. The fashion for handmade items as a gift is Evergreen. People prefer to purchase handmade stuff as it provides them with a leve l of individuality which is not available from mass market retailers. They prefer personalized gifts on lavish items. An

informal survey of Gujrat showed that there are many House gir ls who have keen interest in

making different handmade items. They duly create many innovative ideas but unfortunately most of them have no platform to expose their talent and skills. Thus idea of ³Creative´ is to establish an outlet that makes available a variety of handmade items under one roof and to provide a platform that will facilitate both i-e talented house gir ls and customers. By offering a variety of handmade products to customers having demand for them we will enable these homemade gir ls to earn being at home. In order to check the demand and potential for our idea we conducted a survey in our target market. We came to know that it is a good time to launch such a project as people showed a high interest for it. First of a ll we are going to launch it only in the Gujrat. In future, in response to its scope we shall expand it throughout province of Punjab. our intention is to enter into international market.

7

After

achieving this long term object


BUSINESS DESCRIPTION Idea of ³Creative´ is to provide a large variety of innovative and creative handmade items under one roof. The name of our organization is ³Creative´ which is actually an effort to provide exceptional items for special celebrations and occasions. It is basically a manufacturing as well as merchandising business in which we are going to present a wide assortment of handmade items. We have started our business as partnership business. We are five partners who share equally in startup capital and hence are entitled to share equally in profits.

Any

other need for capital will

be entertained by respective bank. Point Of Uniqueness: All

the things and the services we are providing may not be unique according to the range of

things now days. Present businesses may be providing a large variety of gift items But the difference is there that the things provided by us are purely handmade. Creative ideas are used to turn a rubbish and useless stuff into innovative design. There is no such business prevailing in our target market. This is the point of uniqueness in the particular geographical area in which our business lies. Products: A

variety of hands made items are provided pro vided under one roof which include: y

Handmade Gift boxes

y

Handmade Wedding boxes

y

Handmade Cards

y

Handmade Baskets

y

Handmade Candles

y

Handmade Jewelry

y

Handmade decoration pieces

8


VISION OF

REATIVE C REATIVE

To become the creative house of first choice in our chosen areas by building beneficial and lasting relationship with customer through a process of continuous improvement.

9


MISSION STATEMENT

To convert the creativity into reality in hand!

10


OVER ALL OBJECTIVES Main Objectives:

Main objective of Creative is to glorify the different occasions of our customers by providing exclusive and quality products. Our modish style ref lects a sense of taste that urges the customer to express his or her feelings by selecting a gift from a variety of innovative product for their dear ones. Commitment To Well-Being

We believe well-being is the cornerstone of personal and professional growth. Without personal and professional well-being our mission cannot be achieved. Commitment To The Team Objective

We believe in total commitment to the team. The team objective is a guide for us to follow in our service to our clients, support of each other, and team growth. Commitment To Goal Attainment

We believe every individual should have personal and economic goals.

A

joint effort will

be put forward to identify and achieve our long-term objectives. Commitment To Our Time Management System

We believe our time management system should be utilized in all business activities to provide maximum efficiency and effectiveness for our customers. We will move towards managing our time and setting specific goals within that time. Commitment To Excellence In All We Do

our philosophy is to achieve excellence in all that we do. directed towards achievement of maximum quality.

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All

efforts of our team are

reative, We Make Your Special for You! C reative, Commitment To Incredible, Outstanding, Unbelievable customer Service

We believe in extending such incredible service to all customers that they feel real sense of creativity in our establishment. We constantly anticipate, meet, and exceed our customers' expectations. Commitment To Value-Added Service Value-added

means doing and giving more than what is expected. We believe each of us

needs to go above and beyond the call of duty. By developing creative ideas value addition will be ensured in our products. Commitment To Innovation

We believe our strength lies in our passion to implement new ideas and embrace change. We realize that innovation involves risk of fai lure, but we choose to face risk of failure in our pursuit of success rather than fail passively Specific Objectives: Short Term Objectives:

To make successful entry in Gujrat market To provide a wide range of Innovative and creative products To Act as a team

Long Term Objectives:

To expand business in other cities of Punjab especially in Lahore, Gujranwala and Sialkot. To satisfy customers who use our products prod ucts and services every time To provide a Commercial plate form to young Home-Artisans To be socially responsible by utilizing the waste materials for making new and innovative products

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STRATEGIC GOALS Through strong commitment and efficient strategic goals, ³Creative´ will be first choice of customers and be recognized as a business leader. We feel very confident that the goals can be reached. These Strategic goals include fo llowing: Customer satisfaction Building strong customer relationships Making contracts with with different stakeholders (Suppliers) Maximize the switch over Cost Capturing Maximum Market Share Plans To Achieve Those Goals

The very first resu lt that a customer wants is that, satisfaction and contentment from the product. Customer will only visit for second time, if he was satisfied fu lly the first time. By providing innovative and quality products Creative can build strong relationships with customers. Keeping our suppliers with us for a long period of time is a challenging task. Contracts will be made to home-artisans to provide their products on o nly to ³Creative´. After

building relationship with customers and suppliers, our main focus is to maximize the

switch over cost of the customer. By issuing annual, semiannual and quarter ly discount offers we will bind the customer to carry with us. When we are successful to retain the old customer for the maximum period of time it will be easy for Creative to focus and spend more in attracting the new customers and to capture captu re the maximum share of the market.

13


SEGMENTATION Creative¶s target segment are all the people of Gujrat, who love creativity, which includes upper, middle and lower middle class.

Along

with this Creative has segmented its target segment into

the fo llowing category: Geographical Segmentation

Creative is a start up business; therefore it has geographica lly segmented its target market. This geographical region is Gujrat. Psychological Segmentation

Psychologically targeting, Creative is concentrating its focus on Elite class, Middle Class and Lower Middle class.

INDUSTRY ANALYSIS Economic Analysis:

The economic position of the country as well as the people allows this industry to f lourish and grow. A quick view on main glimpse on economic position pos ition is as follow: Real GDP grew by 4.3percent in 2009-10 as against 2.7percent last year Consumer Price Index (CPI ) inf lation is estimated to have declined from 20.3 percent

in December 2009 to 13.60 percent in December 2010. Pakistan¶s per capita real income has risen by 0.4 percent in 2009-10 as against 0.3 percent last year. Per capita income in dollar term rose from $ 1046 last year to $ 1051 in 2009-10, thereby showing marginal increase of 0.4 percent. The industry of handmade items is most ly operated in loca l environment. And in this perspective the rate of advancement is slow. However, there is possibility of high advancement in the market because a big segment of market has psyche of been attracted by creative handmade talent much quick ly. Due to that, industry contains more potential and depth to invest in that business.

14

reative, We Make Your Special for You! C reative, As

per the rules and regulations of the government of Pakistan, there is not any restriction on

establishing such business business and the working. working. Our firm firm is established according to Partnership act 1932. Overall Market Analysis

Market for different handmade items is widespread in Pakistan. Despite of presence of different manufacturers that provide a large variety of readymade item, demand for handmade items is substantial. People prefer handmade items for exchange of gifts or fashion wears because they provide a sense of individuality and uniqueness. This tendency of people indicates towards potential and depth to invest in this business.

Although

the handmade items industry is spread in

all over the country, it is mostly operated in loca l environment. There are no big players in market of this industry .Most of operator in markets are having their businesses as sole proprietorship or partnership.

A

bout 70% of players in Market are sole

proprietors. This trend in industry caused ³Creative´ to be a partnership business. Due to advancement in technology and rapid adoptability of internet, this industry is being promoted online. Major players in Market use the internet based promotional too ls. They have published their products online to attract the t he potential customers. Specific Market Analysis As

mentioned ear lier, handmade items industry is mostly operated in local environment so

³Creative´ has also targeted a small loca l segment of Market i-e Gujrat city. c ity. Economic condition of people living in Gujrat is a good signal for business. Per capita income of people in Gujrat is 45000 PKR ,which indicates high purchasing power of residents. Such economic condition supports skimming pricing strategy of ³Creative´. Competitive position is also in favor of our business in market.

Although

there are many players

in the market offering same products but no one is offering the same things in terms of handmade creative ideas.

As

there is no such business already existing in market so there is no

direct competitor.

15

reative, We Make Your Special for You! C reative, Competitive Analysis:

Competitive analysis invo lves a look on competitors of Creative and competitive position of creative. While discussing the competitive position pos ition of ³Creative´ following factors can have greatly inf luence: Threat of new entrants Bargaining power of buyer Bargaining power of supplier Rivalry among competitors Substitutability Threat Of New Entrant (HIGH)

Threat of new entrants for Creative is high. This is because trend for use of handmade items is evergreen. Start up cost is also low which shows that there are low entry barriers. This attracts the new entrants to get enter into this business. This threat can be lowered by maintaining a sustainable competitive advantage of providing quality products and innovative designs. Rivalry Among Competitors (LOW)

Rivalry among competitors is low for Creative as there are a few competitors in whole industry. In target market no direct competitor exists so Creative has a go lden opportunity to capture maximum market share. Substitutability (HIGH)

Threat of substitute for Creative is very high. There are a lot of substitutes available in market for products of Creative. High prices of Creative Creat ive than prices of readymade items in market have lowered

switching cost for Creative¶s products.

Bargaining power of Buyer (HIGH)

Bargaining power of the buyer with Creative is high because of the availability of so many substitutes in the market.

16

reative, We Make Your Special for You! C reative, Bargaining Power Of The Supplier (LOW)

Bargaining power of the supplier is low. Because of availability of large number of suppliers in the market, Creative is in better position to defend its interest. There is significant number of home artisans who are willing to supply their products to Creative for sa le. Creative¶s power to negotiate with them in its own favor is high.

COMPETITIVE GRID COMPETITIVE FORCES

THREAT TO INDUSTRY PROFITABILITY

LOW

MEDIUM

HIGH

THREATS OF NEW ENTRANTS



BARGAINING POWER OF BUYER



BARGAINIG POWER OF SUPPLIER



RIVILARY AMONG COMPETITORS THREATS OF SUBSTITUES

 

17


MACRO ENVIRONMENT Macro environment of Creative includes the fo llowing factors: Political Forces

Legal & politica l forces can highly inf luence any business. In Pakistan, there is so much political instability which direct ly affects economy because purchasing power of people will be reduced. It can highly inf luence Creative to o perate. Coping with this threat is a challenge for Creative. Technological Forces

Technological factor is invo lved in this project in a way that customers can order products on line for ceremonies. No rocket science will be adopted by Creative for production process. Basically, idea is providing handmade items, so creative ways of utilizing waste material will be explored. Social Forces

Social forces of any country show how the values, needs and culture of that country¶s people can affect the organization. In case of Creative this factor is high ly in favor of organization because people have great tendency to like hand work for gifts and fashion fashion wears. Economic Forces

Economic forces of any country can affect the availability, production and distribution of resources among competing users. Now a day in Pakistan inf lation is prevailing and it can affect Creative to a great extent. Cost of doing business can be increased. However this threat is minimized by adopting boot strapping strategy. strategy.

18


ORGANIZATIONAL ORGANIZA TIONAL PLAN Form of Business:

Creative is a partnership business in which 5 partners are contributing towards capital and sharing the proceeds of business. It has been bee n established on base of Partnership act, 1932. PARTNERSHIP DEED:

The partnership deed includes the basic agreement between the partner explaining their duties and liabilities. It also explain the which function will be performed by whom. Members

We are five main members of the partnership firm who shares equa lly in the capital and profit. These members include: Names Shaher Bano Hashmi Anam Naz Anam Rahna Nayab Zafar Shamma Noreen

Capital Invested 1.25 lac 1.25lac 1.25lac 1.25 lac 1.5 lac

Duties and Responsibilities

Duties and responsibilities of each member are assigned according to the interest and qualification of each of the member. Other criterion is that, if someone has specia lized in some field then he will be proffered. Additional benefits and remuneration will be paid on giving extra services and performing additional work not included in the basic job specification. Liability

Liability of all the members is unlimited. Personal property will also be held liable to pay the debts. This clause is inc luded to maximize the interest of all members in the venture. The more the interest is the more the effort will be added by the members. All the members have the basic right to point out the steps taken t aken by other members in the meeting. And the others have to answer in a reasonable manner. 19

reative, We Make Your Special for You! C reative, Decision criteria

There is a decentralized approach in decision making. Every member is free to take decision in his relevant department without the consent of others. But decision about the whole firm can¶t be taken without the consent of every member. Special meeting will be arranged and the majority decision will be approved. The decision about working of the firm required the acceptance of three out of five while the major decision about the firm like big investment, changing the form of business required four out of five members accept ance. Termination of partnership

If any partner wants to leave the firm she will also be held liable in the case of inso lvency of the firm for the year, if any. This c lause is added to make strong the firm and to avoid any kind of fraud. Allocation of assets/ repayment

The payment of all invested capital will be paid in installments to leaving partner. The maximum time for repaying all amounts will be six months. The will be no claims on the revenues and profits from the date he left the firm. There will be revised partnership deed after one year.

ORGANIZATIONAL HIRARCHY

BOD Finance Manager

Marketing Manager

Supply -chain Manager

Production Manager

Operationa l Manager

Sweeper

Wacthman

Office Boy

20


AUTHORITIES AND RESPONSIBILITIE RESPONSIBILITIES S (JOB SPECIFICATION)

Creative will be run by the current team, composed of five members. Each of team members has developed skills in specific areas that will hel p the firm to reach its goals. There will not be involvement tremendous financial resources in the human resource field because the firm intends to remain close ly supervised for the first couple of year. Shaher Bano Finance manager The manager alone looks after all jobs of accounts and approves all investment decisions on the

basis of their logical and analytical analysis. She alone is responsible of recording all revenues and making all expenses accordingly. He has to maintain all financial statements of the firm, which are required for auditing. Nayab Zafer Marketing Manager Manager of marketing department is mainly responsible for all advertisement and promotions of

business and to take feedback of the customers. Market surveys will be made by her and changes according to the demand of customer will be made. The manager will be the final authority to take decision of all the matters of that department. The complaints of customers will be discussed in monthly meeting and the manager is answerable to that. Anam Rehna Supply-chain Manager Supply-chain manager has duty to deal with the suppliers and contractors for the raw materia l

and final products. She has authority to take the decision about the matters of that department. She can change the suppliers and contractors according to the requirements of raw materia l and products quality. Maintaining strong Relationships with house artisans who are providing their products to our business is also her responsibility. Shama Noureen Production Manager Manager of production department is responsible to supervise all the activities of production

process. She has the authority to evaluate the performance and quality of products being produced. She is also responsible to approve new designs of products to be produced. 21

reative, We Make Your Special for You! C reative, Anam Naz Operational Manager Operational manager is mainly responsible for all operations that are performed on daily basis.

She is responsible to deal with Customers and the courier company for distribution of products that are ordered by the customers in other cities. She is supposed to keep a deep eye on production process by gir ls and all daily happenings in outlet. OTHER JOBS Guard

³Creative´ needs only one guard for its security. He will be responsible of providing security for outlet during business. He must have training to use weapons and retired army men will be preferred. Sweeper

One sweeper will be hired. He is required to maintain the clean liness of who le outlet. Office Boy An

office boy will assist operational manager in her routine business works especially for

performing outdoor tasks.

22


PRODUCTION PLAN Manufacturing Our products will be manufactured in our production outlet. There will be a separate portion behind outlet that will serve as production area. We will produce the products our self. contribution will be made by all five members for production process.

All

A

joint

of gir ls will work

directly under authority of operational manger. Creative ideas for innovative products will be explored through thro ugh brain storming sessions. sessions. Production process of Creative involves fo llowing steps: Purchase of material and accessories

For making cards and shopping bag, chart paper is essential thing. Satin ribbons, shimmering bows, Laces, glue and other material will also be needed to make glorious products. Including all these, other necessary accessories will be purchased from our regular suppliers in bu lk so that cost minimization can be made. Necessary raw material required for making different types of ³Dough³ will also be purchased. To produce unique styles of candles, wax gel will be purchased in bulk along moulds of different designs. Other than above material, waste jewelry accessories will be acquired to be used as base for handwork. Production Process

Cards of inspiring designs, gift boxed of various sizes and unique wedding boxes will be made through handwork and using appropriate appro priate stuff. Dough will be kneaded in quantity enough for use in whole months. Once the dough is prepared, it will be kept in special greased containers. Different jewelry items will be made using moulds of various sizes. Artistic designing will be made on these items using dough f lowers. Using handwork and special techniques wax gel will be converted into candles of different designs and will be embellished using different accessories.

23

reative, We Make Your Special for You! C reative, Packing:

Different gift and jewe lry items will be made available in striking packing. Creative¶s monogram will be printed on each item¶s packing going to be sold at outlet.

Merchandizing: Creative has also planned to acquire finished products from house hold artisans and to sell them on reasonable prices for earning profit for both parties. Thus Creative is not only earning for itself but also serving as a p latform for those innovators who want to commercialize their handmade products. Supply Chain Manager is responsible to seek and develop good relations with these suppliers. Strategic Production Resources

Designs and artistic techniques of production are the basic and primary assets of creative. With these two resources we will be able to develop the most unique and genuine variety of products in the marketplace. Firm¶s creative management is also a strategic resource for Creative. Management team is required to be innovative and has a passion to pursue opportunities related to hand-made items. As

the business grows we will carry on developing new designs and will strive to hire people

who also possess the drive to continue the Creative¶s goa l to develop the new designs and bring innovation.

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MARKETING PLAN The most important plan for a new starting venture is a marketing p lan because without the marketing plan, a business can never exist. The marketing is a main portion, and the success of any venture heavily relies on its market strategies. Creative is going to make its customers aware through efficient marketing plan that we value our customer at each and every point. Through effective marketing strategies it will be realized to customers that if they want to add seven colors of rainbow in the precious moments of their life then they must have the spell bound charm of Creative. "Creative¶s marketing efforts focus on making its customers realize that: We are offering variety of imaginative hand-made articles that can embellish their specia l movements Our ideas are creative and innovative that is what others are lacking. We are going to establish a new trend in that society by giving variety of handmade ingenious items under one roof.

PRODUCT A list

of magnificent products of creative involves fo llowing product lines: Handmade Cards Handmade Gift boxes Handmade Wedding boxes Handmade Shopping Bags Handmade Candles Handmade Jewelry Handmade decoration pieces

25

reative, We Make Your Special for You! C reative, Handmade Cards

Handmade greeting cards in a variety of styles and sizes are offered for special occasions. Unique ideas are used to embellish the cards for making special movements more special. Birthday cards, wedding cards, anniversaries card, friendship cards and beautiful cards for many other special events are offered.

Wedding Boxes

Gorgeous Boxes of different sizes to carry different things that are usually used in wedding ceremonies as gifts are offered by creative. Wedding gifts are always very appealing when they come in adorable packaging. Our unique wedding gift boxes will surely do the job of impressing customers while ref lecting their unique style.

26

reative, We Make Your Special for You! C reative, Handmade Shopping Bags

Our talented and creative team members have poured their heart out to create the exotic collection of handmade shopping bags. These handmade paper shopping bags are made with durable and strong card papers that combine both utility and aesthetics.

All

these handmade paper bags are

f lawlessly designed with beautiful papers and meet the demands of diverse clients. Handmade Candles

Decorative candles are uniquely versatile decor items that add a new look and spark to our home and our special events as well. Buying the Decorative candles for your home or for gifting to someone special, is the best thing you can do to please yourself. Beautiful candles with innovative designs are splendid offer by Creative. Creat ive. Handmade Decoration Pieces

Different decoration pieces ornamented with beautiful work of handmade dough f lowers to decorate the houses and even for offices, are also included in creative¶s creat ive¶s offerings Handmade Jewelry

Flashy & filled with stylish & e legance designs, different items of jewelry are offered. Rings, ear rings, bangles and neck laces are included in offered jewelry item. manufactured using different moulds and dough f lowers.

27

All

these items are


PRICE Customer¶s decision to purchase a product is greatly inf luenced by Price tag placed on it. Creative has assigned reasonable and justified prices of its products which may realize the customers that they have made their moments cherished in a unique way in very cheap prices. Pricing Objectives

Creative is a new business in market with unique and innovative ideas. It wants to have high growth rate hence it has to set that price for its product which gives maximum possible profits in the initial couple of years. Creative¶s handmade products are more expensive than those from a factory assembly line, but, for very good reasons. The extra time, effort, passion and expertise that goes into its handmade products are what make them worth wort h the extra price to buyers.

PRICING STRATEGIES In pricing, Creative is focusing in the fo llowing strategies: Market Skimming Strategy

Creative is using market skimming strategy in which it is offering high quality and creative products on slight ly increased prices than prices factory assembly line products. Creative want to have maximum possible profit through introduction of its creative and u nique ideas. Product Bundle Pricing

In order to move stock that is kept as unso ld inventory, Creative will use Product bundle pricing strategy. It will combine several products that have left behind in stock in the one package and will offer them on reduced rates so that potential loss of unso ld inventory can be avoided. Value Based Strategy

For the pricing of products, Creative is following the value based strategy. In order to cover up the cost and to gain maximum possible profit, Creative has decided to take 40% markup on cost price of each product. Such high rate of mark up is set on base of effective value of the customer for handmade items. 28


PRICING STRUCTURE

Name of items Greeting cards Wedding Boxes Gift Boxes Candles Decoration pieces jewelry Shopping bags

Price 100-150 200-250 150-200 350-400 500-2000 500-1000 100-150

Mark Up 35% 35% 35% 35% 35% 35% 35%

PLACE Creative has planned to acquire a Shop on rent in Sarwar Gold Plaza, Gujrat. It is situated at centre of city. The main reason behind selecting this location is this, it is growing area for all branded shops and it is now one of the best shopping place in Gujrat. The shops like Breeze¶s, Beeji¶s, sStylo, Mother Care. Cash & carry, Adrees Cloth house, Service and many other brands are by side with our outlet. So there are many chances that people will visit our outlet along their shopping. Address:

Sarwar Gold P laza Khawajgan road Gujrat Contact:

Email:

[email protected]

Phone:

0333-8445025 0331-5832183

Web site:

www.creativeitmes.pk

29

reative, We Make Your Special for You! C reative, DISTRIBUTION CHANNELS Initially Creative is operating only from one outlet, so it doesn¶t have any complicated distribution channel right now. Creative is mainly using the fo llowing approaches for distribution: Direct Selling

Creative will direct ly sell its products to target consumers. First it takes the raw material from the suppliers. Using that raw material a variety of innovative and appealing products will be produced on the outlet of it by its ski lled staff. These products are sold to customer when he/she visits the out let. In direct selling fo llowing model is used by Creative:

Creative

Suppliers

End consumers

Courier Service:

Creative will also conduct business online. Due to advancement in technology and rapid adaptability of internet it has been crucia l for it to expand its business activities over internet. Online orders in response of effective electronic advertisement will be received and shipment of these orders will be made through Courier Co urier Company. Creative has fo llowing model for online trading:

Online Orders

Shipment

End consumers

30

Online Receipt


PROMOTION Creative will use Marketing communication strategy for promotion of its products. This Strategy involves promoting heavily to potential customers which will create a demand that will pull the products through the distribution channels.

A

handsome amount is set aside from financial

resources for heavy promotion of business in starting years. For promotional activities unique logo

and corporate colors will be used in all means communications.

Following promotional too ls will be used to build Brand image of o f creative in mind of customers:

ADVERTISING Brochure

Brochures describing product specifications of Creative will be designed. Creative¶s offering along with its unique logo will be printed on it. These brochures will be distributed door to door with hel p p of loca l news papers including: Jang

y

y

Nawa e Waqt

y

Jazba

y

Shana Bashana

Hoardings

The location where we¶ll use hoardings for advertising of outlet along with estimated budget is given bellow: Hoarding Campaign for the First Month LOCATION

QTY.

SIZE

RATE (RS.)

01

60×24

10,000

GTS Chowk

01

60×24

10,000

Jail Chowk

01

60×20

10,000

Total

03

-

30,000

Fawara Chowk

31

reative, We Make Your Special for You! C reative, Press Advertisement:

Press advertisements will be released in newspapers to which potential customers in target market have easy access. Newspapers in which ads will be given are mentioned below a long their estimated cost: Newspaper

No.

Cost/Ad

Daily Jang

1

35000

Daily N.Waqt

1

30000

Jazba

1

10000

Shana Bashana

1

8000

Total

4

83,000

Internet marketing

Today most effective way of advertisement is through internet. Creative has developed its own Website at which products are published and online orders are taken. Other than developing its own website, Creative has planned to promote its business through social networking sites. Recently there is a great trend of o f public to move towards these sites to establish social networks. Following are some a web point at which creative has decided to promote business by giving business ads. Web Point

No

Cost/Ad

Face Book

1

9000

Linked In

1

5000

Tagged

1

6000

Total

3

20,000

Give Aways:

Other than giving ads, Creative has planned to manage different online contest so that maximum people may be attracted to web page. Exclusive surprise gifts will be given to winners of these contests.

32

reative, We Make Your Special for You! C reative, Transport advertising:

Creative logo along its message will be promoted through transport advertising. Such medium for promotion is se lected for conveying message to far areas of target market. Broadcast Advertisement:

These days use of radio has been increased in young generation. In order to convey business message to them, Creative has decided to give an ad on FM

Awaz

105. Other than radio

advertisement ads will also be given on local cable channels. Exhibition:

For bringing our offerings into knowledge of potential customers, Creative has decided to participate in Exhibitions which are managed by chamber of Commerce Co mmerce for support of SMEs. Note:

Here it should be noted that any combination of the above mentioned promotional channels will be used depending upon the promotion costs involved therein.

33


FINANCIAL PLAN Creative being a new business needs a high capital investment to recover its expenses like advertisements, salaries along with the cost of production. Thus Creative is investing 625,000 PKR as its initia l capital investment. Sources of funds:

Creative has five active partners, who are fulfilling the who le capital requirements to meet its startup cost. Capita l Structure of Creative includes only Equity. No debt is included to raise funds because it has an extra e xtra burden of expenses as interest, which results in lower profits. Equity Structure

Names Shaher Bano Hashmi Anam Naz Anam Rahna Nayab Zafar Shamma Noreen

Capital Invested 1.25 lac 1.25 lac 1.25 lac 1.25 lac 1.25 lac

Budget for production of units:

JAN

FEB

MAR APR MAY

JUN

JUL

AUG

SEP

OCT

NOV

DEC

Total

Sales (Estimated)

100

130

140

145

145

155

160

165

175

185

190

200

1890

+Ending Inventory

10

20

25

20

15

25

25

30

35

40

40

45

-

Units Available For Sale

110

150

165

165

160

180

185

195

210

225

230

245

-

-Opening Inventory Units To Be Produced

0

10

20

25

20

15

25

25

30

35

40

40

-

110

140

145

140

140

165

160

170

180

190

190

205

1935

34

reative, We Make Your Special for You! C reative, Estimated Production Cost

JAN

FEB

MAR

APR

MAY

JUN

JUL

AUG

SEP

OCT

NOV

DEC

Total

Material

2310

2940

3045

2940

2940

3465

3360

3570

3780

3990

3990

4305

40635

Laces

2640

3360

3480

3360

3360

3960

3840

4080

4320

4560

4560

4920

46440

FOH

5000

6000

6500

6000

6000

7000

6500

7000

7000

7500

7500

8000

80000

Total

9950

12300

13025

12300

12300

14425

13700

14650

15100

16050

16050

17225

167075

Per Unit Cost =

Cost of units produced Number of units produced

=

167075 1935 86.34

=

Estimated Operating Cost of Creative

JAN

FEB

MAR

APR

MAY

JUN

JUL

AUG

SEP

OCT

NOV

DEC

Rent

20000

20000

20000

20000

20000

200 00

20000

20000

20000

20000

20000

20000

240000

Salaries

11500

11500

11500

11500

11500

115 00

11500

11500

11500

11500

11500

11500

138000

Dep

5000

5000

5000

5000

5000

5000

5000

5000

5000

5000

5000

5000

60000

Advert

3000

5000

6000

4500

4500

5500

5000

5500

5500

6000

5000

4500

60000

Courier

500

1500

2000

1000

1000

1000

1500

2000

1500

2000

2000

2000

18000

Total

40000

43000

44500

42000

42000

43 000

43000

44000

35

43500

44500

43500

43000

Total

516000

reative, We Make Your Special for You! C reative, PRO-FORMA INCOME STATEMENT

Following is Creative¶s projected income statement based on estimated operating expenses. Projected net profit is calculated from projected revenues less projected costs and expenses.

Pro-Forma Income Statement Creative For the period 2010-2011 Sales

Rs 756000*

-CGS

163189

Gross profit

592810

Less Operating Expenses: Rent

240000

Salaries

138000

Depreciation

60000

Advertisement

60000

Courier expenses

18000

Net profit transferred to B/S

76810

*Sales amount = Average sale prices x Estimated number of o f units sold = 400 x 1890 =

756,000

36

reative, We Make Your Special for You! C reative, PRO-FORMA BALANCE SHEET

A summary of a Creative¶s financial position at end of year 2011 shows projected assets, liabilities, and net worth of it. Pro Forma Balance Sheet of Creative is as follow:

Pro-Forma Balance sheet Creative st

As on 31 Dec, 2011 Assets Fixed Assets Gas generator Fixtures Equipment Furniture Digital camera Computer Total fixed assets less Depreciation Building security Preliminary expenses Advertisement Less amortization Current assets Closing stock Cash in hand Bank Account

Amount Rs

125,000 100,000 50,000 5000 25000 35000 340,000 60000

300000 60000

Liabilities

Amount Rs

Owner¶s Equity Sheher Bano Anam Naz Anam Rehna Nayab zafer Shama Noureen Total Capital

125000 125000 125000 125000 125000 625000

Net Profit

76810

280,000 100,000

240,000 3,886 50,000 27,924 701810

701810

*Creative don¶t have any account payable because we will pay cash on the daily basis.

37

reative, We Make Your Special for You! C reative, PRO-FORMA CASH FLOW STATEMENT CASH FLOWS STATMENT 3RD YEAR 2011-2012

Operating Profit

76,810

+Depreciation

60,000

Less cash flow from Operating activities

Stock

(3,886)

Bank

(27,924)

Building security

(100,000)

Cash flow from capital Expenditure

Gas generator Fixtures Equipment Furniture Digita l camera Computer

(125,000) (100,000) (50,000) (5,000) (25,000) (35,000)

Cash flow from Financing

Share capital

625,000 50,000

Net cash in hand

38


SWOT ANALYSIS STRENGTHS Innovative and Passionate partner Huge Profit Margin Strong market research before entry in the market. First mover advantage to provide handmade unique unique item in targeted market market Operators have completed degree in Business Administration Not necessary to rely on banks for startup finance Provides discount for the regular customer. Customer oriented. Waste recourses are utilized in the best way. Availability

of significant sponsors.

On line handmade item purchasing facilities.

WEAKNESSES Lack of practical experience in mass production of stock Low profits in the ear ly stages of the business. Lack of awareness among public regarding the business. Uncertainty about the business success.

OPPORTUNITIES Level of the demand of cultural items is increasing day by day. Drive away of Consumers from lavish items toward more personalized gifts. No Direct Competitor Competitor in Gujrat market market Easy availability suppliers providing innovative products People are fed up with consistency so handmade products can give them uniqueness. Serving the under-served markets

THREATS Decreasing purchasing power of people due to political instability in country. 39

reative, We Make Your Special for You! C reative, Possibility of new entrants in the market due to low entry barriers. Rapid use of readymade gift g ift items in the society. If any other outlet of handmade products is going to open then our market share will reduce

CRITICAL RISK FACTORS Risk Management:

The objective of risk management is to reduce different risks re lated to business. It may refer to numerous types of threats caused by environment, technology, humans, organizations and politics. Critical Risks Analysis

For startup business there are many risks invo lved that are caused by different factors. The risks which are analyzed by Creative are as follow: y

Management Risks

y

Marketing Risks

y

Operational Risks

y

Financial Risks

Management Risk:

In this risk we rea lize that there may be any dispute in the management team due to any unforeseen reasons which may result to terminate any of the members. Remedy:

In this case when any of the management team members leaves the firm she is not entit led to use the name of the firm. She cannot start the same business with any other name. Such risk is attempted to be contro co ntrolled by including exclusive clauses in partnership deed. Marketing Risk:

In case of marketing we realize that there may be any fault in our marketing plan due to which business can suffer. 40

reative, We Make Your Special for You! C reative, Remedy:

For the backup of this risk we have different marketing plans with f lexibility, as if in any case plan A does not work the plan B will be executed. Operational Risk:

There may be a risk which can disturb the operations of the business such as production. There may be load shedding problem etc Remedy:

For minimizing this risk we have adopted proactive measures by having firm¶s own own generator. Financial Risk:

We realize that in case of termination of any member there is a risk of finance that she may take her equity away which causes the business to suffer. Moreover startup capital may be proved insufficient to cope with un expectancies. Remedy:

To avoid this risk we have made certain clauses in our agreements that if any member decides to leave

the firm she will not take her equity out of the business immediately. The time period to

pay back the equity will be minimum 6 months. To meet unexpected financial needs, Creative has asked for various sponsors.

41


EXIT STRATEGIES Creative, after analyzing every risk and exit ways of the business, has devised an exit strat egy in case our idea of introducing introd ucing handmade items does not work. The T he exit strategies of Creative are as follow: Legal documents of partnership will be signed by the partners that partnership will not be resolved until 3 years. After least

five years if any partner wants to exit then he has to inform to the organization at

6 months before.

If any partner exits from the business, she wi w ill get his or her share after 6 months In case of losses every partner will be just liable for her share in organization. In case of winding up the business amount received from sale of asset will be divided among partners equally.

42

reative, We Make Your Special for You! C reative, References: Robert D. Hisrich, Michael P. Peters, Dean

A.

Shepherd, Entrepreneurship, 7th edition,

page 209-219, 233-255, 289-305 http://www.indexmundi.com/pakistan/gdp_real _growth_rate.htm _growth_rate.html http://www.ranchodelarte.com/articles/why-handmade-gifts-rock www.Eventive.com

Personal Visit in fie lds Discussions with respected teachers and seniors.

43

Business Plan on Hand Made Items

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