1.

0 Business Plan Pitch

1.1 Written pitch
Everyone loves fashion and in the 21st century everything being fast made fashion fast as well.
Fashion is a tool to express oneself through clothing, footwear, and accessories. According to
Ghemawat, Nueno, and Dailey (2003) fast fashin is immitatation of celebrity culture and making
those garments available at cheap prices. They also noted that the demand for such cheap
garments increases when fashion changes fast. Our business plan is to launch a clothing brand
“Lebowski” which will target young, cool and dude kind of guys and girls. The key stakeholders
of the business are the customers, fashion artists, backers, government and investors. The
customers will get a new line of items at low prices, fashion artists will get business opportunity
and a platform to showcase their talent, backers will get reward, government will get benefit
from taxes and economic contribution to the society by our business model and finally the main
reward for inverstors will be increased wealth over a long period of time.

1.2 Visual pitch

1.3 Backer reward
Backers will be given the opportunity to invest in the four ways through a contribution of $10,
$25, $50, $100. It is expected that the volume of lesser contribution will be high but to keep all
the alternatives attractive we have attached good rewards for every type of contribution. The
table below shows the composition of backer’s contribution and rewards offered by our business.

PLEDGE $10 $25 $50 $100 TOTAL

NUMBER 10,000 2,000 500 250 12,750

TOTAL $100,000 $50,000 $25,000 $25,000 $200,000

REWARD Thank you Greet card T-Shirt with T-Shirt and a

letter name printed Memento
on it.

2.0 Business Opportunity

2.1 Customer need and target market
The fast fashion industry is growing fast and over the last three years, the growth rate was 21%
(Young, 2018). Besides, the industry is full of demand, seasonal shifts, and timeframes that
change from a week to month in normal course. The celebrity influence has enhanced over the
last few years primarily due to internet and social networking sites like Instagram and Facebook.
It is more easy and convenient to follow celebrities now. Further, the fashion that celebrities
endorse gets change very fast. So, people following celebrities, fashion shows, and pop trends
are inclined to change their wardrobe in order to follow their liked personalities. The need arises
for providing these customers with latest trendy clothes that they see in fashion magazines,
shows, and their liked one celebrities. The target market for our business will be the Gen-Y and
Gen-Z aged between 25-39 and 16-24 years respectively. The people of this generation are
young, dynamic, open-minded and care much about fashion.

2.2 Social Impact

The social impact of “Lebowski” will be wide. The magnitude of the impact will depend upon
the success of the company which is expected to be achieved through high growth and better
profitability. The two key stakeholders are fashion designers (artists) and fashion users
(customers). For many people clothing is an expression of their thoughts, opinions,
communication and an important tool to reflect their personality. When anyone is able to express
himself at easy he feels happy and through his good vibes, the society also develops a happy
environment. The fashion artists will get an opportunity to sell their designs, get am early
feedback from market and opportunity to excel if their designs are liked by customers. It is all
human-based and less involvement of machines will allow handmade craftsmanship that is
adored by fashion lovers and is equally good for artists in terms of their skill development and
better pay. Further, Bill (2012) observed that creativity in the fashion industry makes a positive
impact on the people engaged in the industry and contributes to a healthy work environment
which in turn makes the employees and associated professionals highly productive in the nations'
cultural economy. The government will get benefit not only in terms of economic growth but
also the taxes paid by the business and its employees. The idea of the venture also includes plans
for opening a training and skill development center in the near future on the success of the
business. These centers will train young professionals, give them space and resources for
enhancement of their skills and opportunity to join the company on successfully completing
various programs. This will contribute to fashion education and job creation for society. Lastly,
the main incentive for investors is their investment value appreciation. The exit models for
investors are defined in such a way that they get option to exit after three years or remain in the
business if they want to.

2.3 Relevant megatrend

Fast fashion is a new design paradigm. According to a Forbes (2018) report the fast fashion
industry has low R&D cost as compared to the traditional business model in the retail apparel
where 3-6 months designing process used to take place for seasonal collection, under fast fashion
it takes only few weeks. The manufacturing and logistics are also fast which shrink the lead time.
The companies in the industry are also emphasizing on recycling their products and promoting
fashion bins. Zara and H&M started to install fashion recycle bin in many parts of Europe where
people can through their used garments and these can be given to those who lack affordability to
clothing (The Guardian, 2017). The other important megatrends are: Staying competitive, online
presence, green stores, striving to create brand loyalty, investment in R&D, efficient business
model and fostering innovation (Henninger, Alevizou, & Oates, 2016). A.T. Kearney found in
his study that the survey conducted through Google revealed that out of total respondents 84%
said they brought clothes online as against 79% for electronic goods and 52% grocery (Forbes,
2018). So, online selling is a huge opportunity for new business entrants.

2.4 Similar successful campaign

A startup named Gabe was launched in 2009 was oriented towards developing fancy bags
through the waste of premium textile used in the fashion industry. Most of the cutaways are
collected and dumped in landfills by many major fashion labels, these did not result in revenue
and end up damaging the environment as well (The Independent, 2019). The startup was able to
raise €2,000 through crowdsource campaigning website “Zaar” to buy special equipment. Their
final product is made through variety of materials obtained from this waste. It requires highly
effective art in developing these bags as the selection of appropriate material for products is
essential and deterministic to the final looks and feel. Gabe was able to sell their products
effectively through online platforms like bags, clutches, passport covers, mini pouches, leather
mini handbags and many more. They also do B2B business offering corporates the stationary and
materials with their logo printed on it. They were able to reward their backers on Zaar well by
giving them Gabe products as reward.

2.5 Opportunity testing plan

The easiest way to test the marketing plan is to conduct surveys. These can be conducted online
and offline. It is important to understand that the large proportion of target customers can be
found near colleges and corporate zones. The offline survey can be conducted at various parts of
major cities of Australia and an online google form must be created that will be circulated
through social media with some rewards associated with it to lure participants to give response.
These rewards can range from personal thank you messages to small discount coupons. The
questionnaire should be small and to the point collecting data that is essential for forecasting the
demand. For instance, it may include questions like “How much you spend on fashion apparel in
a year” to understand the spending capacity of respondents, “How often do you purchase
apparel” to understand their orientation towards fast fashion.

3.0 Sales and Marketing strategy

3.1 Fundamentals
The four principles of marketing strategy are Product, Price, Place and Promotion (Kotler,
Burton, Deans, Brown, & Armstrong, 2015). The main products that we will start with are
garments for both the genders in the standard size. The sophisticated products will not be dealt
with in the initial phase of the business life cycle and will be introduced later, however, the
variety of products offered will be high. Further, since the objective behind fast fashion is to
make high fashion available at a low price that can be replaced easily and frequently the low
price is essential. So, the products will be priced low and discounts are offered initially. The
target place for launch will be cosmopolitan area of Sydney and online marketplace. Large multi-
brand retail stores will be contacted in Sydney to put our company’s products there; it will not be
possible in the initial stage to launch our own store but that will remain first priority for non-
working capital investments. The online selling platforms like Amazon will be partnered as well
as own online store will be created which will provide unique interface to the customers in which
they can know product details like the material used, the philosophy behind the design, and artist
information. The promotion will be mostly done through online channels.

3.2 Social media and free publicity

There are three ways of promotion that exist as argued by Kotler, Burton, Deans, Brown, and
Armstrong (2015). These are paid media, own media and earned media. The own media and
earned media are appropriate for initial stage startup as these do not require any expenditure. The
paid media will be used very less just to boost attention through social media in the week before
and after the launch of the product. Google ads are effective way of reaching our target audience.
However, the cost is high, so these will have high marginal benefit only in the initial stage when
the brand will be launched. The own media will include own websites, Facebook and Instagram
pages that will give opportunity to the startup to communicate fast and effectively. However, the
real economic benefits lie with the use of earned media. Earned media is most effective as it is
built by recommendations and signal of a positive impression on customer’s mind. It can be
witnessed when people talk about the product in their everyday life conversations, bloggers write
about the product and/or people giving their feedback and suggestions.

3.3 Measurement and information

The key performance indicators to monitor the performance are target sales, sales growth rate,
consumer satisfaction level, customer engagement and inventory turnover ratio. Most of these
indicators are linked with revenue, it is important to note that the revenue is important in the
initial stage of business but it cannot be compromised with the consumer satisfaction level. There
are both internal and external sources of data for measuring this perfromance. The internal data
include ratios such as sales, sales growth rate, and turnover ratios. The customer satisfaction
level can be obtained from their feedback and rating on the amazon and our websites. The data
for customer satisfaction will be on Likert scale and can be used for conducting various analysis.
The other market information can be obtained through business magazines, journals and online
databases like HBR and Statista.

1.0 Operational Strategy

4.1 Operational structure
The business structure will be simple. Ideally, there are four types of organizational structure vis
functional, divisional, matrix, and flat organizational structure (Su, Chen, & Wang, 2019). The
flat organizational structure will be followed, the business will be headed by a CEO who will
take care of recruitment, cash flows and leading the whole team to the common objective which
is sustainably developing business through expansion in terms of both product and new markets.
There will be a Chief Designing Officer who will take care of getting samples of designs
developed from independent artists and approving them for production and again getting them
quality checked. The third and the last position will be Chief Marketing Officer who will ensure
that all the marketing activities are aligned with business objective and are supporting other
functions of the business well. The other supporting staff will be hired and trained as per the
need of the business.

Lebowski

CEO CDO CMO

4.2 Outsourcing
The key functions that will be outsourced are designing and development of apparels through
independent artists. Although they will be provided a workshop where they can work at ease but
the nature of their engagement with the company will remain as independent professionals. The
other outsourced activity will be logistic. Transportation will be huge and frequent, a
professional service will be required to stay efficient and effective in transporting the materials
and finished goods. However, a mini-van will be purchased in order to cover the risk of high
costs in emergency situations. The online service of Amazon can also be classified as outsourced
activity where its platform will be used to sell our products and it will be paid certain amount of
commission.

4.3 Operational risks

The key risk involved in the business is designing error, changing trends, and unsold stock.
Changing trends are core to the fast fashion, it acts as a threat to the unsold stock and provides
opportunity to develop new designs. In the event of sudden change in trend it is very difficult to
sell the stock. The huge discounting policy is adopted by companies like H&M at the end of
season sale but the nature of business model in fast fashion is different. If the bad stock is sold on
discount, it will impact the brand and customer loyalty will be affected. So, companies in fast
fashion scrap their outdated products and recycle them. The cost of unsold stock will be huge in
the initial phase. The designing error probability will be high again in the initial stage as proper
market feedback will be unavailable and the designs developed may not attract customers.

Risk Matrix

Minor consequences Disciplie issues among employees Missing targets and deadlines

Major Consequences Designing error Unsold stock, changing trend

Low Likelihood High Likelihood

2.0 Financial plans

5.1 P&L and Balance Sheet
The profit and loss accounts are prepared based on the best estimates available. The year on year
growth in revenue is expected to be 50% and the corresponding expenses will increase in
different proportion as economies and learning curve will result in better efficiency in terms of
finance. Further, most of the parts will be invested in working capital as the nature of the
business is not in house production but outsourcing to designers.
 Profit and loss account - 3 years
Particulars Year 1 Year 2 Year 3
Revenue $1,000,000 $1,500,000 $2,250,000
Expenditure:
Cost of conversion $400,000 $600,000 $900,000
Salary $100,000 $120,000 $144,000
Other Expenditures $100,000 $150,000 $225,000
$600,000 $870,000 $1,269,000

Profit $400,000 $630,000 $981,000

Balance Sheet - 3 years

1 year 2 year 3 year
Assets
Fixed $100,000 $200,000 $400,000
Working Capital $550,000 $780,000 $1,131,000
Total $650,000 $980,000 $1,531,000

Equity and Liabilities

Owner's Equity $50,000 $100,000 $100,000
Backer's Equity $200,000 $100,000 $100,000
Retained earnings $400,000 $630,000 $981,000
Other Liabilities $0 $150,000 $350,000
Total $650,000 $980,000 $1,531,000

5.2 Capital requirements and funding plan

The capital requirement for business will be more for working capital and less for fixed assets.
The table below illustrates the investments where these funds will be utilized.

Capital Requirements - 3 years

Particulars Year 1 Year 2 Year 3
Office Setup $20,000 $40,000 $80,000
Computer $30,000 $60,000 $120,000
Furniture $35,000 $70,000 $140,000
Van $10,000 $20,000 $40,000
Other Assets $5,000 $10,000 $20,000
Fixed Capital $100,000 $200,000 $400,000

Working Capital $550,000 $780,000 $1,131,000

Total $100,000 $200,000 $400,000

5.3 Valuation and justification
The valuation is done based on a simple book value method. The net estimated book value is
calculated for all the years and the net worth is the Asset minus Liabilities or the value of Equity.
In another alternative, market value can also be taken along with the goodwill generated through
these years but the estimation of market value and goodwill will become too complex and a
simple valuation at this stage seems appropriate.

Valuation
1 year 2 year 3 year
Current Asstets
Cash $60,000 $100,000 $150,000
Debtor $150,000 $200,000 $300,000
Inventory $260,000 $400,000 $600,000
Other Current Assets $80,000 $80,000 $81,000
$470,000 $700,000 $1,050,000

Non-current Assets $100,000 $200,000 $400,000

Total Assets $570,000 $900,000 $1,450,000

Less: Liabilities $0 $150,000 $350,000

Net worth/Value of firm $570,000 $750,000 $1,100,000

References
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49-65.
Forbes. (2018, May 23). What's trending in the fashion industry. Retrieved from Forbes:
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Ghemawat, P., Nueno, J. L., & Dailey, M. (2003). ZARA: Fast fashion. Boston: Harvard Business School.
Henninger, C. E., Alevizou, P. J., & Oates, C. J. (2016). What is sustainable fashion? Journal of Fashion
Marketing and Management: An International Journal, 400-416. Retrieved from Journal of
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Kotler, P., Burton, S., Deans, K., Brown, L., & Armstrong, G. (2015). Marketing. Sydney: Pearson
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Su, Z., Chen, J., & Wang, D. (2019). Organisational structure and managerial innovation: the mediating
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The Guardian. (2017, May 26). Zara and H&M back in-store recycling to tackle throwaway culture.
Retrieved from The Guardian: https://www.theguardian.com/sustainable-
business/2017/may/26/zara-hm-step-up-instore-recycling-tackle-throwaway-culture
The Independent. (2019, June 25). Tackling fast fashion through crowdfunding. Retrieved from The
Independent: https://www.independent.com.mt/articles/2019-06-25/newspaper-
lifestyleculture/Tackling-fast-fashion-through-crowdfunding-6736209994
Young, J. (2018, August 28). Understanding Fast Fashion. Retrieved from The London Economic:
https://www.thelondoneconomic.com/lifestyle/fashion/understanding-fast-fashion/13/12/