FEASIBILTY REPORT

BOUTQUE-BUSINESS VENTURE

Group Members:
Ariba Farrukh-16671
Daniyal Mustafa- 16726
Humaira Parvez-16685
Minhaj Uddin-16717
Zahra Waheed-16817
Contents
EXECUTIVE SUMMARY.....................................................................................................................2
INTRODUCTION TO SMALL AND MEDIUM ENTERPRISE:.................................................................2
SME SECTOR IN THE GLOBAL ECONOMY:.......................................................................................2
SME SECTOR IN PAKISTAN:..............................................................................................................3
INTRODUCTION TO SMEDA.............................................................................................................3
INTRODUCTION TO BOUTIQUE BUSINESS.......................................................................................4
BOUTIQUE BUSINESS IN PAKISTAN:................................................................................................5
CRITICAL FACTORS FOR A SUCCESSFUL NEW BOUTIQUE BUSINESS:..............................................5
FINANCIAL STATISTICS ABOUT NEW BOUTIQUE BUSINESS VENTURE:...........................................6
MARKET SEGMENTATION................................................................................................................6
TARGET MARKET:.............................................................................................................................7
POSITIONING...................................................................................................................................7
SWOT ANALYSIS:..............................................................................................................................7
PLACE:..............................................................................................................................................9
STRATEGIES:.....................................................................................................................................9
SALES:.............................................................................................................................................10
PRODUCTION PROCESS FLOW.......................................................................................................10
MACHINERY, EQUIPMENT AND FURNITURE.................................................................................11
HUMAN RESOURCE REQUIREMENT..............................................................................................12
RAW MATERIAL REQUIREMENTS..................................................................................................12
REVENUE GENERATION.................................................................................................................12
KEY ASSUMPTIONS:.......................................................................................................................13
EXECUTIVE SUMMARY
This feasibility study is part of our business finance project. The purpose of this study is to
evaluate the viability of launching a new project or a business in a small and medium
enterprise. Our study is based on Boutique business for Women Designer Wear. This study
assesses various aspects of start-up which includes production, marketing, finance and business
management which may form the basis of an important investment decision.
Since boutique business also falls under small and medium enterprise sector, we will begin with
a brief introduction about Small and medium enterprise in Pakistan and throughout the globe

INTRODUCTION TO SMALL AND MEDIUM ENTERPRISE:

The SME sector is the mainstay of the economy in developed countries, but is less developed in
most of the third world countries. The Organization for Economic Co-operation and
Development (OECD) reports that more than 95% of enterprises in the OECD area are SMEs.
These enterprises account for almost 60% of private sector employment, make a large
contribution to innovation, and support regional development and social cohesion.

SMEs include a wide range of businesses, which differ in their dynamism, technical
advancement and risk attitude. Many are relatively stable in their technology, market and scale,
while others are more technically advanced, filling crucial product or service niches. Others can
be dynamic but high-risk, high-tech “start-ups”. Researchers and practitioners agree that SMEs
are crucial contributors to job creation and economic growth in both high and low-income
countries

SME SECTOR IN THE GLOBAL ECONOMY:

Increased SME growth has a direct effect on GDP growth due to increased output, value
addition and profits. The GDP contribution per SME is the difference between the return on
capital and the cost of capital. Returns on capital are often high, with different datasets
showing ranges up to 20-30% a month (for the most capital-strained firms), which is
considerably higher than typical interest rates.

World Bank defines SMEs as those enterprises with a maximum of 300 employees, $15 million
in annual revenue, and $15 million in assets.

As far as the contribution of SMEs to GDP and economic growth is concerned the available data
do not provide a full picture of the contribution of SMEs to GDP. A comprehensive study which
was carried out in 2007 using a sample of 76 countries (33 developed, 43 developing), with data
averaged over the 1990-99 period and including only formal SMEs, mostly in the manufacturing
sector, and excludes micro enterprises. According to the study the median GDP contribution of
SMEs in is 45 percent (49 per cent in developed countries, 35 per cent in developing countries).
E-commerce and more generally Information and Communication Technology (ICT)-enabled
services offer new opportunities to access international markets and help circumvent obstacles
to trade. In recent years, digital technology and the Internet have provided many more avenues
for SMEs to reach customers in both domestic and global markets. The benefits from the ICT
revolution are particularly high for SMEs. First, access to telecommunications infrastructure is
essential to reduce information and distribution costs, foster trade, improve market efficiency
and keep pace with a changing business landscape. Recent researches looking at exports of
goods traded through B2B & B2C show that e-commerce reduces the costs associated with
physical distance between sellers and consumers by providing both confidence and information
at a very low cost.

SME SECTOR IN PAKISTAN:

Small and Medium Enterprises (SMEs) account for approximately 70% of businesses in Pakistan
and play a major role in spurring economic activity with a contribution. Export of 25%
manufacturing goods, 78% of non-agriculture GDP, 25 % of exports of manufactured goods, 35
% of manufacturing value added and 30% of GDP is the outcome of business efforts of SMEs.
The 3.2 million SMEs in Pakistan constituting more than 90% of all private sector enterprises,
have the ability to grow at a phenomenal pace and create jobs for the expanding workforce.
Thus, the impact of financial exclusion on this sector has important implications for economic
growth, competitiveness, and job creation. The potential of this sector to contribute to the
economic development objectives of Pakistan, including generating employment, increasing
incomes, and reducing poverty is the justification for support of the SME sector by the
government and other relevant stakeholders.

INTRODUCTION TO SMEDA
The Small and Medium Enterprises Development Authority (SMEDA) was established in October
1998 with an objective to provide fresh impetus to the economy through development of Small
and Medium Enterprises (SMEs).
With a mission "to assist in employment generation and value addition to the national income,
through development of the SME sector, by helping increase the number, scale and
competitiveness of SMEs" , SMEDA has carried out ‘sectoral research’ to identify policy,
access to finance, business development services, strategic initiatives and institutional
collaboration and networking initiatives.
Preparation and dissemination of prefeasibility studies in key areas of investment has been a
hallmark of SME facilitation by SMEDA.
Concurrent to the prefeasibility studies, a broad spectrum of business development services is
also offered to the SMEs by SMEDA. These services include identification of experts and
consultants and delivery of need based capacity building programs of different types in addition
to business guidance through help desk services.
INTRODUCTION TO BOUTIQUE BUSINESS

A boutique is "a small store that sells stylish clothing, jewelry, or other usually luxury
goods. The word is French for "shop", which derives ultimately from the Greek word or
"storehouse".
The term "boutique" and also "designer" refer (with some differences) to both goods and
services which are containing some element that is claimed to justify an extremely high price,
itself called boutique pricing.In our study we are just reffering to women designer wear.

BOUTIQUE BUSINESS IN PAKISTAN:

Growing number of boutiques have become an emblem of successful clothes business in
Pakistan. Most people especially women prefer them over ordinary garment brands. There has
been a mushroom growth in women designer wear boutiques since the last decade as they
offer versatility and sophistication. This trend is not confined to metropolis alone but has also
spread to small cities and towns. The rise is attributed to a growing middle class, exposure to
media, entertainment, movies, internet and also to a fleet of qualified fashion designers
graduating from fashion schools every year. Aspiring fashion graduates or potential
entrepreneurs may find this growing sector a good prospect to capitalize on their potential,
talent and market opportunity.

Boutique sector (women design wear) has mushroomed over the last few years, mostly in posh
areas of big cities of Pakistan such as Lahore, Islamabad, Karachi, Peshawar, Quetta, Faisalabad,
Sialkot, Multan, etc
The boutique will offer a wide choice of clothes to its clientele ranging from traditional dresses,
prêt a porter casual, semi casual to formal / bridal wear. Both traditional and western dresses
tailored to local needs will be offered to the customers. There is also a good potential for
exports of Pakistani dresses abroad also as there is a large population of Pakistani expatriates in
Canada, KSA, EU, UAE, USA and UK.

CRITICAL FACTORS FOR A SUCCESSFUL NEW BOUTIQUE BUSINESS:

Following are the factors critical for the success of this business venture;
• Selection of a good location for the outlet.
• Ability to produce / acquire unique designs and safe guarding such design from piracy.
• Selection of affordable and quality raw materials i.e. fabric, accessories, etc.
• Emphasis on quality i.e. stitching and finishing, appropriate labelling, display and packaging.
• Marketing and promotion through various channels i.e. catalogues / pamphlets, outdoor
advertisement, hoardings / flex signs, TV & cable ads, fashion shows, participation in
exhibitions, promotion through social media (Facebook etc.).
• Right product mix, proper inventory management, emphasis on customer services.
• Employing and retaining skilled labor.
• Higher return on investment and a steady growth of business is expected with the
entrepreneur having some prior experience in the related field of business.

FINANCIAL STATISTICS ABOUT NEW BOUTIQUE BUSINESS VENTURE:

The boutique business venture entails a total investment of about Rs. 2.5 Million. This includes
a capital investment of Rs.1 million and a sum of Rs. 1.5 million as working capital. The project
is financed through 60% equity and 40% debt. The Net Present Value (NPV) of the project is
around Rs.3.825 Million with an Internal Rate of Return (IRR) of 17.45% and a payback period of
5 years. The project will generate direct employment opportunity for 25 persons. Higher return
on investment and a steady growth of business is expected with the entrepreneur having some
prior experience in the related field of business. This feasibility study encompasses essential
information regarding various aspects of starting a Boutique Women Designer Wear business in
Pakistan.

MARKET SEGMENTATION
The market segmentation of the boutique business is based on following factors which
includes:

Demographics
Following demographic characteristics can be used to segment the market:
1. House wives, Professional woman, college or university girls (ages 20-55).
2. Household income
3. Social status
4. Living standard
5. Education (awareness of fashion, trends and designs through various social media
platforms such as (YouTube, Facebook, Instagram) tv channels (style 360) Fashion
magazine (ideas, sanasafinaz etc)

Psychographics
Some of the psychographic factors include:
1. Bargaining power
2. Willingness to spend money on quality, core items.
3. Availability of time to understand different patterns, designs and seasonal fashion.  

Other factors which can be used to segment boutique business target market can be

Geographic segmentation
Behavioral segmentation

TARGET MARKET:
The potential target market for this boutique business startup is elite and upper middle class
belonging to socio economic class A and B.
The recommended location for setting up a boutique business will be a posh or semi-posh area
of a metropolitan city that can offer easy access of customers to the outlet. It is further
recommended that the proposed location should be taken on rent.
The target market will be the city in which the sales outlet shall be opened, however, there is a
good potential for exports of Pakistani dresses as there is a large population of Pakistani
expatriates in UAE, USA, Canada and UK.

POSITIONING
Positioning of boutique business can be done on various factors such as less time, latest and
trendy fashions, one stop shop (single place to buy), less effort and energy required to shop,
etc.

Apart from that other factors includes upscale designer clothing and exclusive personal
services, unique Style Assessment and education emphasis in helping women develop their
personal style.

SWOT ANALYSIS:
Strengths:
 Clothing trend in Pakistan is increasingly moving towards ready-to-wear due to a
growing middle class, increasing number of working women and exposure to media.
Owing to their busy lifestyle and higher disposable income, women now prefer buying
off- the rack in boutiques that offer a range of ready-to-wear options. This is time saving
as compared to the traditional approach of buying unstitched clothes, embellishments
and multiple visits to the tailor. Therefore, our boutique will offer a range of options in
stitched clothing that include Kurti (casual), 2 piece (semi-formal) and 3 piece (formal).
This wide range would allow us to cater different needs of our customers under one
roof. Although a growing number of boutiques have emerged over the years, there are
few that offer all three options.
 Another advantage we have is that our average price for each type of clothing is higher
than most boutiques but slightly lower than well established brands. This sets us apart
from most other boutique start-ups as a sign of quality and uniqueness in our designs.
Our designers are graduates from well reputed fashion schools of Pakistan.
 Our promotional expense is set at 15% of sales each year. This would allow us to market
our brand and establish ourselves in the eyes of customers using different marketing
mediums. Not a lot of boutiques spend this much or at all on promotional expense and
most resort to social media promotions only.
 Offering discounts to customers during end of season sales and holidays would boost
sales with discount set at 20% of revenue.
 Our outlet’s location at a prominent semi-posh area in a metropolitan city would allow
us to cater to a large segment of the market with easy access for customers.
Weaknesses:
 One major weakness that may count against us is the fact that we are a new clothing
store and donot have the financial capacity to engage in the kind of publicity that we
intend giving the business. Our promotional expense is dependent on our annual sales
and we expect it to grow as our sales increase over the years. This is crucial since
boutique business is highly competitive and constant promotion is necessary for growth
of our business.
 Competitors can offer similar products quickly therefore, we need to constantly
innovate our designs, offer promotions and provide excellent customer service in order
to differentiate ourselves from other clothing stores. This adds to our direct and indirect
expenses.
 Limited flexibility in pricing since the market is saturated and highly competitive.
 Since this is a start-up, we lack experienced management and labor costs are high.
 We are accepting cash payments only which customers may find inconvenient as most
stores now offers a range of payment options.

Opportunities:
 The fact that we are going to operate our clothing store in one of the busiest shopping
areas of the city provides us with unlimited opportunities to sell our items to a large
number of people. Since we will be located amongst successfully running boutiques that
have a similar business model, this would provide us brand equity and instant visibility.
 We have been able to conduct a market survey and we know what our potential
customers reside near the area where our clothing store will be located. Therefore, we
are well positioned to take on the opportunities that will come our way
 Opportunity to offer online shopping since our target market would find it a convenient
option.
 Since our clothing line is targeted towards a slightly affluent segment of the market, we
can gradually increase our prices over the years.
 Improving customer service by adding more sales persons over the years will provide a
better shopping experience, increase customer satisfaction and give us an advantage
over other boutiques that do not pay much attention to this aspect.

Threats:

 One of the major threats that we are likely going to face is starting a business during an
economic downturn. It is a fact that economic downturn affects purchasing and
spending power and Pakistan is currently facing an economic crisis. Therefore, starting a
clothing business in a time where people have less purchasing power can be risky.
  Another threat that may likely confront us is the arrival of a new clothing store in same
location with similar range as ours but with better pricing. We are already planning to
operate in an area where competition is tough.
 Imported raw material/ machinery costs are higher due to rupee devaluation and rising
import duties and this can affect our bottom line.
 Rising labor costs may not allow us to expand our team and therefore, our business as
much as we intend to.

PLACE:
As per the assortment offered by the boutique and the price point, we need to enter an area
where the foot fall is high and is well known for ladies’ apparel. Considering the demographics
of Karachi, the below mentioned areas can be targeted as per our budget:

 Hyderi
 Tariq road
 Gulf
 Bukhari Commercial
Although Hyderi, Tariq road and Gulf may have a higher foot fall as compared to Bukhari
Commercial but the average spending of customers is lower than our price point. Also, in areas
like Hyderi, Tariq Road and Gulf the consumers are more focused in purchasing unstitched
clothes rather than stitched designer wear. Bukhari commercial is an area in which there are a
lot of boutiques, both new and well established.
Considering our rental budget, price point, assortment and strategy the ideal location would be
Bukhari commercial. Opening a boutique there naturally develops a certain equity as we will be
placed with some of the top boutiques in the city. The audience that we are targeting usually
shops within that area.

STRATEGIES:
Since this is a highly competitive business, we plan to constantly innovate and introduce new
designs on a weekly basis for our range of kurtis and on a monthly basis for 2 piece and 3 piece
suits. Besides this we will offer discounts as part of end-of-season sales and holidays in order to
boost sales. The discounts are set at 20% of revenue.
Our main strategy is to cater to different needs of women for various occasions. Our range will
offer clothes that can be worn at work, casual wear as well as formal wear. Our outlet’s location
is therefore offering the right product at the right place catering to the needs of our target
customers.
In the future, we also plan to launch online shopping website as it will increase our reach and
expand our customer base.
SALES:
Daily and hourly tracking of sales so as to monitor foot fall and measure high traffic. Based on
this data, promotions and discounts may be implemented.
Sales person in the shop are there to assist and provide great customer service and therefore
will be trained to meet these requirements.
Our promotional budget will be used to boost sales through marketing campaigns on social
media, print and radio.

PRODUCTION PROCESS FLOW

As per Small and Medium Enterprises Development Authority Ministry of Industries &
Production, a boutique’s process of converting fabric into designer wear garments mainly
follows the below mentioned sequence.
MACHINERY, EQUIPMENT AND FURNITURE
Following table provides list of machinery, equipment and furniture required for workshop and
boutique respectively:

List of Machinery, Equipment and Furniture cost per Total Yearly

Units
for Workshop(as per year 1)Description unit Cost Total Cost
1 6
Sewing Machine 5
3,000 5,000 65,000
2 6
Embroidery Machine 3
0,000 0,000 60,000
5 5
Computer/Laptop 1
0,000 0,000 50,000
Workshop Lightning 2 2
one time
(lights, iron, cctv, fan) 5,000 5,000 25,000
Furniture 8 8
one time
(iron, cutting table, chairs, cabinet) 0,000 0,000 80,000
1 1
Workshop Accessories one time
5,000 5,000 15,000
Telephone Set 2
1,000 2,000 2,000

cost
List of Boutique Furniture and Total Yearly Total
Units per
Equipment(as per year 1)Description Cost Cost
unit
120,00
Computer/Laptop 2 60,000 0 120,000
120,00
Cash Register 4 30,000 0 120,000
Printer 1 20,000 20,000 20,000
150,00 150,00
Furniture and Upholstery one time 0 0 150,000
225,00 225,00
Interior Designing and refurbishing one time 0 0 225,000
120,00
Air Conditioners 3 40,000 0 120,000
Energy savers 10 2,500 25,000 25,000
2.5 KVA Generator 1 60,000 60,000 60,000
Telephone Set 3 1,000 3,000 3,000
HUMAN RESOURCE REQUIREMENT
Following table provides details of human resource required for the business along with
monthly salaries. Furthermore, following table is for the first year. Each subsequent year, few
employees have increments in their respective salary package and few employees have a
commission-based salary hence, the salaries differ in the subsequent years.

Human Resource Requirement (as per Yearly

Salary/ Total
year 1) Description Number Salary
person Salary
Expense
25,
Owner/Boutique Manager 1
25,000 000 300,000
40,
Designer 1
40,000 000 480,000
Production Manager/Supply chain 30,
1
manager 30,000 000 360,000
30,
Marketing 1
30,000 000 360,000
432,
Sales person 2
18,000 000 432,000
120,
Guards 1
10,000 000 120,000

RAW MATERIAL REQUIREMENTS

Normally raw material cost of the dress varies between 15% to 30% of its sales price, but in this
feasibility study, it is assumed that cost of a dress will be 35% of its sales price.
REVENUE GENERATION
Revenue Generation Following tables provide assumption for revenues and production as per
year 1.

Annual Units
Item Average Price Production sold Revenue
Kurti
(casual) 5000 500 375 1875000
2 Piece
(semi-Formal) 9000 330 248 2227500
2475000
3 Piece
(Formal) 15000 220 165
6577500
Total Revenue year 1
6248625
Total Revenue year 1 (after discounts)

Product Mix (approximately)

Category % of Total Outfits
Casual 48%
Semi-Formal 31%
Formal 21%

Average Price
Category Average price per outfit
Casual 5000
Semi-Formal 9000
Formal 15000
KEY ASSUMPTIONS:
Description Assumption
Raw Material 30% of average sale price
Promotional Expense 15% of sales
Discount (sales for 3 Months) 20% of revenues
Average Price of goods 15% increase each year
Annual Production 20% increase each year
Sales All in cash
Inventory 75% is sold during the year
Discounts are given in holidays and sales related periods
Additional money is given to direct laborer with respect to sales occurring during the year
Salaries are increased as per need and requirement
Frequent addition to variable laborer as per business’s need
75% of the raw material cost is paid within the year and remaining 25% is paid over next year
Long term debt is 10,00,000 for five years with repayment @18.82% (12.82% 5-year Kibor+ 6%
spread)
No further Capex is expected within the next Six years of the business

CONCLUSION
As per the above-mentioned assumptions and business conditions including demand of
boutiques in Pakistan, else than the first year, this business venture has positive Net Income
from year 2. Starting from Rs. 95,121 in year 2 to Rs. 7,287,530 forecasted in year 6. Positive
Net Income from year 2 indicates that this boutique business is profitable which is further
reinforced by Boutique’s positive NPV (Net Present Value) of Rs 618,765 and Internal rate of
return of 17.45%. Thus, this feasibility report suggests that the investment in this new boutique
business is favorable and profitable.