Thorough planning is crucial for an entrepreneur in order to achieve success when discovering an opportunity to establish a new business. One essential aspect of this process involves crafting a business plan. To evaluate the effectiveness of a business plan, conducting a SWOT analysis is valuable. In this article, I will perform a SWOT analysis on a sample business plan for a new clothing store. The entrepreneur has conceived an innovative product idea, but how does one transform this idea into a profitable endeavor? This extensive process consists of numerous steps.
One of the initial tasks is to create a business plan, followed by conducting a SWOT analysis to evaluate the plan’s effectiveness in achieving company success. The SWOT analysis helps identify the idea’s internal strengths and weaknesses while also assessing external opportunities and threats in the competitive landscape. The particular business plan chosen for this analysis was De Kliek Style Studio, which means “the clique” or “circle of friends” in Dutch.
It is an elegant clothing boutique that is set to open in Noe Valley in Los Angeles, CA. This establishment is structured as a Sole Proprietorship. Vrootje Magen, the proprietor, boasts 20+ years of experience in marketing and retail. The boutique will specialize in offering designer clothing and accessories tailored for women seeking a polished and professional appearance. They will stock three primary lines of ready-to-wear attire. Moreover, they will provide additional services including Style Assessments, alterations, and personal shopping. Given this business strategy, the boutique possesses numerous internal strengths, particularly due to the owner’s extensive 12 years in the industry.
The chosen location is favorable, specifically Los Angeles where the average family household income is $180,903. (source). The marketing strategy includes various approaches such as word of mouth advertising, magazine articles, and local ads, and potentially celebrity endorsements. Additionally, offering style assessments is another strong aspect of their business model, as it caters to women who may struggle or lack time to create complete professional outfits. The purpose of the style assessments is to understand a woman’s personality and guide her towards clothing and style choices that suit her best.
Every employee at this boutique is a member of the Association of Image Consultants, an esteemed professional organization that offers training in assisting customers with their image development. Unlike employees at other nearby or competing boutiques, these employees are part of this association. Moreover, they place great importance on providing excellent customer service, which is regarded as a significant advantage. Furthermore, the owner’s marketing expertise from 12 years of experience is anticipated to positively impact the company’s marketing endeavors.
The company’s profit and expense plans, if proven valid and well-thought-out, should result in a favorable annual profit. However, the business plan has certain weaknesses. A notable weakness is the lack of diversity in their customer market. Their target audience consists solely of professional women earning over $100k per year with a job title within the Director-CEO range. Furthermore, these potential customers are relatively small in size, ranging from 2 to 10 individuals. These specific criteria significantly restrict their potential customer base.
Despite having 20 years of business field experience, Vrootje Magen, the owner, has a weakness. Only the first 8 years of experience were in banking and managing a successful boutique, while the following 12 years were solely focused on marketing. While this could be advantageous for product marketing, it may be a disadvantage for someone wanting to run their own business.
The current capital or investment is $42,707 but the estimated overall start-up expenses amount to $45,108. This indicates that there is insufficient capital to sustain the business for six months to a year.
The business plan details multiple opportunities for this venture, specifically in the Los Angeles region where there is a significant presence of wealthy customers willing to invest in luxurious clothing. Moreover, there is potential for future growth by opening another boutique nearby, thereby attracting a more diverse customer base. To provide an even better customer experience, employees will undergo training and certification from the Association of Image Consultants, enabling them to improve their skills.
With the improvement of the economy, there is an expected increase in demand for high-end clothing from this boutique. This presents opportunities to develop new services based on customer feedback. If De Kliek’s initial inventory does not meet customer demand, the company can take advantage of the opportunity to buy a diverse range of products from different designers worldwide, as there are abundant choices in the high-end clothing market.
During the analysis, various threats to the proposed business idea were identified. A key concern is the availability of similar products at nearby stores such as Target, Sears, and Wal-Mart. These retailers have successfully stocked high-end clothing in their establishments. In times of economic hardship, customers may opt to shop at these well-known retailers instead of De Kliek. Additionally, De Kliek faces competition from eight other boutiques in the area. The market analysis included in the business plan reveals that there are only approximately 2,400 women over the age of 30 with a high income in this particular region, indicating a limited market potential.
Customers are attracted to a shop because of its reasonable prices, such as at De Kliek boutique where the average price per item is $200. However, some consider this price unreasonable, even for those earning an average annual salary of $100k. Despite its carefully crafted business plan and potential success in Los Angeles area, the store’s ability to operate is limited due to its high-end products.
The business plan covered important aspects to consider when starting a new business. The SWOT analysis I performed helped assess different areas such as marketing, employees, finances, and management.
References
The Bplans.com website “Your Business Plan Starts Here” features the business plan for The De Kliek Style Studio’s Women’s Clothing Boutique. You can find it at http://www.bplans.com/sample_business_plans.cfm. This plan is also referenced in Jones’ (2007) book titled “Introduction to Business: How Companies Create Value for People,” published by The McGraw-Hill Companies.
