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Business Plan for a

Bookshop

BBA-E, 2nd semester(session


2008-12)
Submitted to: Madam Shandana
Shoiab
BOOKS N BOOKS
20-city towers
university road
Peshawar

Business Plan
Principals:
NUAMAN ZAHID
NADEEM AFZAL
SHAHID NAWAZ MUGHAL
EXECUTIVE SUMMARY
 Books n Books will be a general partnership type of
business. The shop will be jointly owned by Nuaman Zahid,
Nadeem Afzal and Shahid Nawaz Mughal. Books n Books will
be establishing its shop in citytowers main university road
Peshawar. This area is well known for every sort of shopping.
Our facility is a 5,500 square ft. shop which allows us to stock
a large amount of inventory.
 Our start-up expenses come to Rs 25 million, which are
single time fees associated with opening the shop. These
costs are financed by a bank loan and our investment as well.
 We have divided the market into three segments of
potential customers. They include casual shoppers, hard to
find shoppers and specific category shoppers.
 We will provide our customers a relaxed atmosphere for
reading the books by the arrangement of comfortable chairs
and tables.
EXECUTIVE
SUMMARY(continued….)
 We will be having a buyback program to lower inventory
acquisition costs and allow the customers to discard unwanted
literature and music.
 Books n Books will offer a wide range of every kind of books
and music CD’s and DVS’s on low prices.
 Our main competitors are London Book Shop and Saeed Book
Bank and also local bookshops
 Our competitive edge will be the lower prices we will charge
our customers and the larger selection we can offer.
 One of the most critical elements of Books n Books’ success
will be its marketing and advertising.
 Our sales forecastYearfor
1 the first three
Yearyears
2 is estimated
Year 3to be as
under:
Rs.1,304,000 Rs.1,357,000 Rs.1,428,000
NATURE OF THE BUSINESS

Books n Books is a bookshop on main


university road. It is the goal of the
management to acquire local market share in
the bookshop industry through low price, a
dominant selection of products, a competitive
variety of services including a buyback/trade
program and hard to find book search, plus a
relaxing, friendly environment that
FINANCES REQUIRED
Our start-up expenses come to Rs 25 million,
which are single time fees associated with
opening the shop. These costs are financed
by a bank loan and our investment as well.
We expect to be operating at a loss for the
first couple of months before advertising
begins to take effect and draw in customers.
Books n Books will be receiving periodic
influxes of cash to cover operating expenses
during the first two years as it strives toward
INDUSTARY ANALYSIS
Market Segmentation
We anticipate serving the needs of all the potential
customers within a ten to fifteen mile radius in which
the approximate population is 150,000 (estimate).
Bookshops serve the entire purchasing population of
its geographical area but focuses on customers who
desire to purchase books/music at low prices
because they are seen either as near commodity
items or, in the case of books, are not considered to
be a long-term investment (i.e. they will trade them
back). This is especially true with people seeking to
cut costs with the bad economy. Even though we
service the entire book reading population in
University road and the surrounding area, we can
Continued…..

Casual Shoppers: These are customers who go to the bookshop


with no set idea of what they want to purchase. They seek to spend
a fair amount of time browsing the store and often are considered
impulse buyers. Often they leave the store with small purchases or
without buying anything. These customers are attracted to
bookshops with low prices and large inventory.
"Hard to Find" Shoppers: These are customers with very specific
needs. They are looking for a difficult to obtain item, usually a book
that is out of print. If we can satisfy this customer, then we are able
to build significant customer loyalty. These clients are generally
price insensitive and are also drawn to bookshops that have large
inventory.
Specific Category Shoppers: These customers are those types
that generally buy books or music of one category, such as fiction or
textbooks. These customers generally have a good idea of what they
want to purchase and have the greatest buyback/trade potential.
These customers represent the highest volume purchaser, often
leaving the store having spent Rs500-1500.
COMPETITORS
Our main competitors are: London Bookshop (which holds
approximately 30% local market share), Saeed Book Bank (which
holds approximately 20%), and other local new and used bookshops.
DESCRIPTION OF THE
VENTURE
Products and Services
Books n Books will offer a wide range of book, magazine, and music
selections. This includes just about every conceivable category
including fiction, non-fiction, business, science, children's, hobbies,
textbooks, and other types of books. Our music selection will
concentrate on CD's and DVD’s as these are the most popular and
take up the least amount of floor space. In addition, we will be
offering a competitive buy and trade service to assist in lowering our
inventory acquisition costs and making our store more attractive to
our customers. In addition, we offer a search and order service for
customer seeking to find hard to get items. Books n Books will have a
relaxed "reading room" type atmosphere that we will encourage
through the placement of chairs, couches, etc. We strongly encourage
our customers to spend as long as they like reading through our book
selection and enjoying a quiet, relaxing environment. Our store hours
will be 8:30 a.m. to 8:00 p.m. Monday-Saturday and 10:00 a.m. to
6:00 p.m. Sunday. Once profitability becomes stable, we will extend
these hours.
Continued…..

Office Equipment and Personnel


We will initially recruit 3 computer
operators and 8 salesmen. The
computer operators will be working
on separate computers on separate
counters. The computers will help us
in recording day to day sales and
will also give us the inventory data.
The sales men will be paid a good
salary and will be recruited by the
basis of their relevant experience.
The store will be requiring racks of
different sizes in which books and
CD’s/DVD’s will be placed.
As we are providing reading facility
also, so for that purpose we will
arrange chairs and tables.
BACKGROUND OF THE
ENTREPRENEURS
 Nuaman Zahid
BBA in progress.
No experience in this field.

 Nadeem Afzal
BBA in progress
Have served in a local book shop as a salesman.

 Shahid Nawaz Mughal


BBA in progress
Have served in Saeed Book Bank as a salesman.
OPERATIONAL PLAN
 The business and science books will be purchased from
National Book foundation, as they give discounts and offer
attractive packages for the retailers. For the textbooks we will
have to get registered with the local textbook board. And for
the other type of books including fiction, hobbies, children and
story books will be purchased from the distributors in Lahore.
Music CD’s and DVD’s will be purchased the markets of
Karachi, Lahore and from foreign distributors as well.
 For the inventory control system we will buy software
through which we can keep the management informed about
day to day sales, quantity of stock and also about the
customers who visit us regularly.
 The customers will select books or music selections from
the display in the racks and the salesmen will provide the
item. Customers can also give orders for the books which are
not available with us, we will request the distributor for that
MARKETING PLAN
Competitive Edge
The firm's competitive edge will be the lower prices we will
charge our customers and the larger selection we can offer:
through our large store, buyback/trade program, and
leveraging management excellent supplier contacts. As stated
before, in the bookstore industry, low cost and dominate
selection are the two success criteria. We plan to create these
advantages in a new, comforting environment that will retain
customers.
MARKETING PLAN(continued…..)
Marketing Strategy
One of the most critical elements of Books n Books’ success
will be its marketing and advertising. In order to capture attention and
sales we will use prominent signs at the store location, billboards,
media bites on local news, and radio advertisements to capture
customers. We will arrange book fairs in colleges and universities and
will offer books to the students on discount rates.
 
MARKETING PLAN(continued….)
Sales Strategy
Since our store will be a standalone facility, there is little in
the way to directly influence how we close the sale other than to have
an attractive storefront with our low prices and excellent selection.
We believe this in itself is its own seller. One critical procedure we will
be establishing is to insure top customer service and reliability and
that our store always has enough inventory of all our products. We
will be using industry data on inventory for bookstore chains to assist
us.
 
MARKETING PLAN(continued….)
Sales
Sales Forecast
Year 1 Year 2 Year 3

Fiction Books Rs.164,292 Rs.172,507 Rs.182,512

Sci-Fi Books Rs.184,829 Rs.194,070 Rs.205,327

Textbooks Rs.143,756 Rs.150,944 Rs.159,698

Children's Rs.184,829 Rs.194,070 Rs.205,327


Books
Biography Rs.123,219 Rs.129,380 Rs.136,884
Books
Business Books Rs.112,951 Rs.118,599 Rs.125,477

CD's and Music Rs.184,829 Rs.188,526 Rs.199,460

Other Rs.205,366 Rs.209,473 Rs.214,081

Total Sales Rs.1,304,071 Rs.1,357,569 Rs.1,428,767


ORGANIZATIONAL PLAN
Form of ownership
Books n Books will be a
general partnership type of
business. The shop will be
jointly owned by Nuaman Zahid,
Nadeem Afzal and Shahid
Nawaz Mughal. We expect to
begin offering services in
December.
 
Roles of owners
All the owners will have to
attend any type of meeting and
business deal. The members will
FINANCIAL PLAN
Pro Forma Balance
Sheet Year 1 Year 2 Year 3
Assets
Current Assets
Cash Rs.179,568 Rs.182,408 Rs.220,036
Inventory Rs.122,562 Rs.125,933 Rs.130,793
Other Current Assets Rs.8,000 Rs.8,000 Rs.8,000
Total Current Assets Rs.310,130 Rs.316,341 Rs.358,830
Long-term Assets
Long-term Assets Rs.8,000 Rs.8,000 Rs.8,000
Total Long-term Assets Rs.8,000 Rs.8,000 Rs.8,000
Total Assets Rs.318,130 Rs.324,341 Rs.366,830
Liabilities and Capital Year 1 Year 2 Year 3
Current Liabilities
Accounts Payable Rs.125,904 Rs.97,722 Rs.101,894
Current Borrowing Rs.20,000 Rs.13,000 (Rs.2,000)
Other Current Liabilities Rs.10,000 Rs.10,000 Rs.10,000
Subtotal Current Liabilities Rs.155,904 Rs.120,722 Rs.109,894
Long-term Liabilities Rs.125,000 Rs.120,000 Rs.110,000
Total Liabilities Rs.280,904 Rs.240,722 Rs.219,894
Paid-in Capital Rs.124,000 Rs.124,000 Rs.124,000
Retained Earnings (Rs.112,180) (Rs.86,774) (Rs.40,381)
Earnings Rs.25,406 Rs.46,394 Rs.63,316
Total Capital Rs.37,226 Rs.83,619 Rs.146,935
Total Liabilities and Capital Rs.318,130 Rs.324,341 Rs.366,830
Net Worth Rs.37,226 Rs.83,619 Rs.146,935
FINANCIAL PLAN(continued….)
Pro Forma Income
statement
Year 1 Year 2 Year 3

Sales Rs.1,304,071 Rs.1,357,569 Rs.1,428,767

Direct Cost of Sales Rs.1,004,135 Rs.1,031,752 Rs.1,071,575

Total Cost of Sales Rs.1,004,135 Rs.1,031,752 Rs.1,071,575

Gross Margin Rs.299,936 Rs.325,817 Rs.357,192

Gross Margin % 23.00% 24.00% 25.00%

Expenses

Payroll Rs.111,000 Rs.125,600 Rs.130,600

Sales and Marketing and Other Rs.36,000 Rs.15,000 Rs.15,000


Expenses
Rent Rs.60,000 Rs.65,000 Rs.68,000

Utilities Rs.3,600 Rs.4,000 Rs.4,000

Insurance Rs.7,200 Rs.7,200 Rs.7,500

Payroll Taxes Rs.17,093 Rs.18,840 Rs.19,590

Other Rs.15,000 Rs.10,000 Rs.10,000

Total Operating Expenses Rs.249,893 Rs.245,640 Rs.254,690

Profit Before Interest and Taxes Rs.50,044 Rs.80,177 Rs.102,502

Interest Expense Rs.13,750 Rs.13,900 Rs.12,050

Taxes Rs.10,888 Rs.19,883 Rs.27,136

Net Profit Rs.25,406 Rs.46,394 Rs.63,316

Net Profit/Sales 1.95% 3.42% 4.43%


FINANCIAL PLAN(continued….)
Pro Forma Cash
Flow Year 1 Year 2 Year 3

Cash Received

Cash from Operations

Cash Sales Rs.1,304,071 Rs.1,357,569 Rs.1,428,767

Subtotal Cash from Operations Rs.1,304,071 Rs.1,357,569 Rs.1,428,767

Additional Cash Received

New Current Borrowing Rs.5,000 Rs.0 Rs.0

New Long-term Liabilities Rs.50,000 Rs.0 Rs.0

New Investment Received Rs.54,000 Rs.0 Rs.0

Subtotal Cash Received Rs.1,413,071 Rs.1,357,569 Rs.1,428,767

Expenditures Year 1 Year 2 Year 3

Expenditures from Operations

Cash Spending Rs.111,000 Rs.125,600 Rs.130,600

Bill Payments Rs.1,156,323 Rs.1,217,129 Rs.1,235,539

Subtotal Spent on Operations Rs.1,267,323 Rs.1,342,729 Rs.1,366,139

Additional Cash Spent

Principal Repayment of Current Rs.0 Rs.7,000 Rs.15,000


Borrowing
Long-term Liabilities Principal Rs.0 Rs.5,000 Rs.10,000
Repayment
Subtotal Cash Spent Rs.1,267,323 Rs.1,354,729 Rs.1,391,139

Net Cash Flow Rs.145,748 Rs.2,840 Rs.37,628

Cash Balance Rs.179,568 Rs.182,408 Rs.220,036


FINANCIAL PLAN(continued….)

Break Even
Analysis
Monthly Revenue Break-even Rs.90,541

Assumptions:

Average Percent Variable Cost 77%

Estimated Monthly Fixed Cost Rs.20,824


FINANCIAL PLAN(continued….)
 All the partners will contribute initially Rs.15million. It means
each of the partners will invest 5million. The remaining 10million
will be obtained from a bank by taking a loan.

 We expect Rs.3million to be the expenses of store decoration,


reading room arrangements, computer systems and initial
promotions.

 Of the remaining 2.2million, we will have our inventory.


ASSESSMENT OF RISK

Weaknesses of the
business
Though two of the
partners have experience of
sales in bookshops but are
not having the experience to
manage such a large scale
shop. The local community is
not that much attracted
towards reading and studying
books other than their text,
so this may also be a
weakness of our business.
MISSION

Books n Books’ mission is to provide quality literature of all


types at the lowest possible prices in Peshawar. The firm
additionally seeks to provide a comfortable atmosphere for
its clients that promote browsing, relaxation, and an
enjoyable environment to spend extend time in. Books n
Books’ attraction to its customers will be our large selection
of books, magazines, music CD's and DVD’s and our
purchasing/buyback option, which lower our book acquisition
costs and allows our customers to discard unwanted
OBJECTIVES

These are the goals for the next three years for Books n Books:
 Achieve profitability by the mid of Year 2.
 Earn approximately Rs.200,000 in sales by Year 3.
 Pay owners a reasonable salary while running at a profit.
KEYS TO SUCCESS
In order to survive and expand, Books n Books must keep the
following issues in mind:
 We must attain a high level of visibility through the media,
billboards, and other advertising.
 We must establish rigid procedures for cost control and
incentives for maintaining tight control in order to become THE low-
cost leader in books.
 In order to continually attract customers, we must be able to
keep the maximum amount of inventory available and achieve a
high level of customer service.