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Development of A Business Plan For Launching An Online Clothing ... - Publish Your Master's Thesis, Bachelor's Thesis, Essay or Term Paper PDF
Development of A Business Plan For Launching An Online Clothing ... - Publish Your Master's Thesis, Bachelor's Thesis, Essay or Term Paper PDF
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7/3/2020 Development of a business plan for launching an online clothing ... | Publish your master's thesis, bachelor's thesis, essay or term paper
Homepage > Catalog > Business economics > Company formation, Business Plans
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Table of Contents
1.0 Business description
1.1 Background and history of the online retail clothing industry
1.2 Description of the product
1.3 Goals and objectives of the business
1.4 Supplier Information and agreements
1.5 Ownership structure
1.5.1 Investment of funds
1.6: Legal consideration
5.0 Finances
5.1 Expenses
5.2 Revenue
5.3 Final Projections
The online clothing industry has doubled over the last five years, as the increasing number of users has access to broadband and smart phone and forsaken the high street (Telegraph, 2011). According to a report by Mintel, 4.3
billion £ worth of the clothes are bought online in the year 2011, up from 26 percent in the year 2010 (Telegraph, 2011). Online shoppers spent 10.1 billion pounds in November, 2013 (IMRG, 2013). On the other hand, mobile
commerce is also becoming an important medium for sellers to sell their products (Capgemini, 2013). Online business has various advantages compared to traditional business, which can be seen in the figure below:
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Source: SAS, 2013.
Hence, stepping in to online clothing retail business can help entrepreneur to sustain, grow and make profits with the extremely positive market growth.
Goals are important to the business and they define destination and shape future of the business (Marshall, 2005). According to (Zimmerman, 2011) following are the goals of internet business, which must be taken into
consideration while starting an online business:
The ownership structure followed by entrepreneur will be sole trader. According to BBC (2013); following are the advantages of sole trader:
- Generally small amount of capital is needed which reduces the initial start-up cost.
- It is easier to make decisions
- The wage will be low because there are few employees
Contrary to this there are some disadvantages as well such as; unlimited liability and bankruptcy (BBC, 2013). But keeping the business plan, objectives and goals in view, Sole trader organisational structure is best to be
opted.
All the investments will be done by entrepreneur himself, by investing from savings and using credit cards and over-draft facilities by different banks. According to (Timmons, 1990), entrepreneur must arrange all the finances
by himself and should not try to find any investors. Moreover, this is a small project with low investment and high growth potential. Keeping in view the amount and future growth opportunities, entrepreneur will invest by
himself.
Considering legal obligations, entrepreneur first needs to get a domain name to register the website. Similarly according HM Revenue and customs, UK (2013), following is the criteria for registering sole trader business in
UK:
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- Self Assessment (Information about sole trader)
- National Insurance details.
- PAYE information if there are any employees in the company.
Here are some latest statistics of internet users given by national statistics (2013):
Figure 2.1 Internet Users and non users by age group (years) in UK, Q1 2013
It can be seen from the figure 2.1, 100 percent of males and females use internet between the age group 16 and 44. In the light of the data examination, selection of potential customers between the age group of 16 and 40 is
ideal, as they all use internet and follow latest fashion trends. Since 100 percent of the males and females use internet between the age group of 16 to 40 years in the United Kingdom, so they all will be target across the
country. As internet users between 16-40 years of age are the target group in the UK.
Differentiation is very important in online business industry, as competition is very high due to its high growth and profitability (Tuunainen & Rossi, 2002). Bummat model bsed on (based on Järvelä & Tinnilä, 2000) to
implement the overall online business plan in order to be effective, efficient and be different from competitors.
In analysis, (Tuunainen & Rossi, 2002) have examined that successful websites such as; feelpretty.com has used and focused on all these components, which are highlighted in the model to be successful and different from
competitors and sustain in the market.
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websites are selling from 17-20 pounds per item.
Similarly, there are some advantages of using all these activities for the marketing plan as they are very cost effective and majority of them are free. According to (The prince’s trust, 2013) Following are the advantages of
using internet based marketing activities:
Hence, due to several advantages and existence of business in the online platform, all the internet activities will be used to market and advertise the online clothing brand, as shown in the figure 3.2 above.
4.2 Personnel
As the business is started up and handled by the entrepreneur himself, so there will be no personnel in start-up of the business. All the business operations will be handled by entrepreneur himself. On the other hand, Website
infrastructure management, website design, mobile application and all the technology related issues will be outsourced to an information technology company, which will be available to resolve any issues in the system when
needed. So the costs related to the personnel associated with the business are variable and will vary according to the help needed to call professionals to resolve any technical issues related to the website.
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5.0 Finances
This part of the business plan focuses on the Revenue, expenses and final projections:
5.1 Expenses
Identifying the start-up costs for a venture helps to know the amount of money needed before opening the doors of the business (Fasttrac, 2005). By examining and analysing the expenses related to the business, following are
the expenses which are needed in the start –up to start the business.
As it can be seen in the table above, total expenses required to start-up are 10,000 pounds. While 5700 pounds are assets which includes cash in hand and inventory at start, while on the other hand 4300 pounds are expenses,
which include different costs, which will incur at start.
5.2 Revenue
According to (SAS,2013), out of 88 visitors to the website, 4 of them buy the product in a day from an average retailer’s website. Hence, due to diversified online marketing, it is being assumed that, in the beginning, 4
products will sell in a day at start- up. On the basis of this, the revenue and profits have been calculated as follows:
As it can be seen in the table above the average cost per unit is 3 pounds after including all expenses. Moreover, the monthly fixed cost is 350 pounds which includes the rent of the store, where stock is kept to dispatch for the
final delivery. Hence the breaks – even which will cover all cost and bring the owner to no – profit and no loss situation is calculated as follows:
Hence 88 units are required to come to the break even position. Similarly as four units a day are getting sold, total revenue is calculated as follows:
As 32 units are profit for a month in terms of cash, entrepreneur will earn 320 pounds a month in start which will start increasing with passage of time, due to extensive growth rate of the industry.
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It has been calculated earlier that the sale will increase by 5 percent in the first year, 10 percent in the second year and 15 percent in the third year. Based on that, following are the final projections in terms of sale and year.
It can be seen from the figure 5.2 sales are continuously increasing every single year. In the first year sales are 1440 pounds, in the second year 15840 and in the third year 18216 pounds subsequently.
Bloomberg (2013), ’90 cents- the cost of manufacturing a jeans in bangladesh’. [Online] Available at: http://hereandnow.wbur.org/2013/07/10/bangladesh-factory-safety [Accessed: 4 December, 2013].
Capgemini (2013), ‘ £87 billion to be spent online in 2013, [Online] Available at: http://www.uk.capgemini.com/news/87-billion-to-be-spent-online-in-2013_pr2411 [Accessed: 28 November, 2013].
Ecommerceweek (2013),’ online retailers offer the highest standards of customer service’ [Online] Available at: http://www.ecommerceweek.co.uk/item.php?news_id=115 [Accessed: 7 December, 2013].
Ibisworld (2013), ’Online womens clothing sales in the UK: Market research report. [Online] Available at: http://www.ibisworld.co.uk/market-research/online-womens-clothing-sales.html [Accessed: 2 December, 2013].
IMA (Internat marketing academy (2013), ‘ developing an internet marketing strategy ’ [Online] Available at: http://www.ftvs.cuni.cz/hendl/metodologie/developing-an-internet-marketing-strategy.pdf [Accessed: 11
December, 2013].
IMRC (2013), ‘ Highest ever monthly online spend in November’ [Online] Available at: http://www.retailgazette.co.uk/articles/03341-highest-ever-monthly-online-spend-last-month-says-imrg-capgemini [Accessed: 01
December, 2013].
Linton (2013), ‘Best practices for online retail operations’ [Online] Available at: http://smallbusiness.chron.com/practices-online-retail-operations-36326.html [Accessed: 25 November, 2013].
Marshall.I.M (2005), ’Defining your business through goals and objectives: First steps for new entrepreneurs’. [online] Available at: http://www.extension.purdue.edu/extmedia/ec/ec-727.pdf [Accessed: 4 December, 2013].
National statistics (2013), ‘Internet access quarterly update: Q1 2013’ [Online] Availabe at: http://www.ons.gov.uk/ons/dcp171778_310435.pdf [Accessed: 29 November, 2013].
Price’s trust (2013 ), ‘Marketing methods’ [Online] Available at: http://www.princes-trust.org.uk/pdf/eec-workbook-page%2079-80-81.pdf [Accessed: 3 December, 2013].
SAS (2013), ‘How UK will shop: 2013’ [Online] Available at: http://www.sas.com/offices/europe/uk/downloads/retail/retail-predictions2013.pdf [Accessed: 25 November, 2013].
Telegraph (2011), ‘ online clothing sales double’ [online] Available at: http://fashion.telegraph.co.uk/news-features/TMG8451109/Online-clothing-sales-double.html [Accessed: 01, December, 2013].
Tuunainen.K, Rossi.M. (2002), ‘E-Business in apparel retailing industry: critical issues’ [Online] Available at: http://is2.lse.ac.uk/asp/aspecis/20020147.pdf [Accessed: 4 December, 2013].
World Bank (2010), ‘The global apparel value chain: ride and crisis’ [Online] Available at:
http://www.researchgate.net/publication/46444042_The_global_apparel_value_chain_trade_and_the_crisis__challenges_and_opportunities_for_developing_countries/file/32bfe50d85b7f78c48.pdf [Accessed: 25 November,
2013].
Zimmerman.J (2011), ‘ Web marketing for dummies’ [Online] Available at: http://www.dummies.com/how-to/content/setting-goals-for-your-online-business-presence.navId-811455.html [Accessed: 2 December, 2013].
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Details
Title
Development of a business plan for launching an online clothing retail shop
College
Cardiff University
https://www.grin.com/document/309157 8/23
7/3/2020 Development of a business plan for launching an online clothing ... | Publish your master's thesis, bachelor's thesis, essay or term paper
Course
MANAGING HUMAN CAPITAL AND ENTREPRENEURSHIP
Author
Ali Hammad (Author)
Year
2013
Pages
16
Catalog Number
V309157
File size
669 KB
Language
English
Tags
business plan, online clothing store, marketing strategy, business opportunities
Quote paper
Ali Hammad (Author), 2013, Development of a business plan for launching an online clothing retail shop, Munich, GRIN Verlag, https://www.grin.com/document/309157
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