JC Indoor Soccer Complex
Clayton, NC
Business Plan
Prepared by:
This agreement is to acknowledge that the information provided by xxxxxxx on behalf of JC Soccer in this business plan is unique to this business and confidential; therefore, anyone reading this plan agrees not to disclose any of the information in this business plan without the express written permission of JC Soccer or designee. It is also acknowledged by the reader of this business plan that the information furnished in this plan, other than information that is in the public domain, may cause serious harm or damage to JC Soccer and will be kept in the strictest confidence. Upon request, this document is to be immediately returned to JC Soccer.
Signature _________________________
Name (typed or printed) ____________________________
Date _________________________
1. Introduction to the Business Plan
JC Soccer Complex, will bring the only indoor soccer complex to the fast growing population of Johnston County, NC. JC Soccer will provide two indoor soccer fields, soccer shop, and concessions for all ages young and old too enjoy. Soccer leagues will be available for all ages and fields will be available for rentals, birthdays, and camps. The facility will be located somewhere near the intersection of Interstate 40 and Hwy 42, providing easy access from surrounding towns.
JC Soccer covers many age groups, but our target group to register are kids ages four to twelve, as they will provide the best repeat business opportunity. Our secondary group will be adults ages 24 to 60, as they provide important adult league and nightly use of facility. This group will also be a key target for concessions as beer and food will be a good
JC Soccer will be a corporation owned by several investors. Majority ownership will be held by Scott Stephenson. To get JC Soccer to fruition, an estimated $500,000 will be needed to secure site, building, field prep, inventory, and concessions. Land and building will be financed over a defined period of time. Soccer shop and concession assests will be a secondary cost after initial enrollment numbers are received.
Table of Contents
2. Business Identification4
3. Business Purpose4
4. Description of Business4
5. Market Plan5
a. Target market segmentation5
1. What are the needs?6
2. Who are they?6
3. Where are they?7
4. Characteristics8
5. Attitudes8
6. Class9
b. Market research9
c. Marketing Strategy12
6. Competition13
7. Management14
Staffing needs & requirements16
Equipment needs18
Space needs19
Training needs19
Budget for strategic plan19
8. Business Location & Distribution considerations20
9. Financial Information—Pricing Strategy24
a. Capital requirements25
b. Depreciable assets26
c. Break-even Analysis26
d. Projected income statement26
e. Cash flow projection and analysis26
Expectations, summarization and overall coordination28
A. How does it all tie together28
B. Timing/Critical Dates28
C. Feedback for review/future planning29
Bibliography30
Appendix33
2. Business Identification
JC Soccer will be listed as an incorporation. Based on number of investors and recommendations of tax attorney and accountants, JC Soccer will form either an S-Corp or C-Corp.
Attorney will be hired to search name and its use, and will also be used to file incorporation papers with appropriate state and county departments. JC Soccer will operate at a temporary office located at 4299 Elevation Rd. Benson, NC 27504 until appropriate soccer facilities are finished.
3. Business Purpose—Statement of Purpose: Why are you presenting this business plan? The business plan for JC Soccer was developed to determine the potential for an indoor soccer complex within a fast growing area of North Carolina. With the growing popularity of the sport of soccer, the concept of indoor soccer and its benefits created an opportunity for a new business.
The information contained within the plan shows the concept, needs, costs, and growth potential of the business. The business plan is a guide to the creation of the business through the final potential of its successful implementation.
This business plan will be presented to 3-5 other pontential investors as
recommended by Scott Stephenson, and the plan will be presented to 2 banks for potential loans needed for building construction and/or land costs.
4. Business Description
JC Soccer will be an indoor soccer complex used for soccer leagues, birthday events, field rentals, and soccer camps. The main focus will be on 8 week rotating soccer leagues for all ages ( four to sixty+). The business will look to attract current outdoor soccer league players and new players. Adults will also be a major target of the business since little to no leagues are available to adults over 20 years in age.
5. Market Plan
JC Soccer will be located in the town of Clayton, NC. Clayton is a fast growing town inside of Johnston County. Clayton also provides a close proximity to Wake County, which will attract another key segment of people to market.
a. Target market segmentation
The primary target market of JC Soccer will be the fast growing youth soccer segment ages 4 – 14. Marketing will need to target the parents of these youth and the benefits of soccer and the ease of indoor soccer on scheduling.
A secondary market will consist of the adults ages 24–60 year olds. The secondary age group is key to facility at night hours and toward concessions where food and alcohol will be served.
The third target market will be individual pick- up games for people who due to work and schedules cannot play an entire season of soccer. This will provide additional cash flow and allow an introduction to facility as they start families or consider sport options for their kids.
Demographic information for Johnston County and Clayton township:
Johnston County, NC
Clayton, NC
Total Population 168,878
~49% male
~51% female
Total Population 16,116
~47% male
~53% female
Under 10, 15.6%
Age 10-19, 14.6%
Age 20-29, 10.8%
Age 30-59, 43.5%
Over 60, 15.4%
Under 5, 8.3%
Under 18, 30.9%
Age 19-64, 52.3%
Over 65, 8.5%
Population Increase (200-2010)
38.5%
Population Increase (200-2010)
131.1%
Education, 25 years and over
81.2% High School graduate or higher
Education, 25 years and over
91.5% High School graduate or higher
Median household income
$49,745
$22,473 (per capita)
Median household income
$50,282
$23,943 (per capita)
U.S. Census Bureau: American Factfinder
1. What are the needs?
Youth soccer is exploding in the area and there is no indoor soccer facility within Johnston County area. Many drive over 35 miles away to the closest indoor soccer facility. Also, there are no adult soccer programs in the area and the flexibity of JC Soccer will be very attractive to the adult population.
2. Who are they?
The primary target will be children ages 4 to 12. They provide the key to repeat business and word of mouth advertising. Also, this tartget group will be key toward party rentals, summer camps, and lessons.
The secondary target will be adults ages 30-60. Currently there are no type of recreational soccer programs for this age group. They flexibility of our nighttime hours will be attractive to this group and the concessions and alcohol will be a key focus to this age group 3. Where are they?
The focus is on a 35 mile area around the target location of Clayton, NC. Clayton, Cleveland, Smithfield, McGee’s Crossroads, Benson, and Four Oaks all of recreational and challenge programs throughout the year. Nearby Wake County has 3 local programs within close proximity to our projected location.
4. Characteristics
Based on population data from US Census Beauru, the projected area of JC soccer is in one of the largest growing areas of North Carolina. Population in Clayton has grown over 100% since 2000 and has a median income over $53,000 a year. The surrounding area also has above average growth vs. NC average and the Johnston County median income is above the state average. .
5. Attitudes
Parents continue to look for youth organized sports as a way to expand their childrens social skills. Other parents want their kids in what is perceived as a top tier program. Providing a year round indoor facility gives each type of attitude and personality a chance to excel. Parents and kids will prefer the indoor fast pace action vs. outdoor, and the fact that weather plays no role in having to reschedule games. Indoor soccer will play to the upscale attitude of many in the area and also allow for the casual fan/athlete to play.
Many companies in the area will have teams and the competitive nature of competing against local businesses, friends, and industry colleagues should help feed the desire for such adult leagues.
6. Class
Recreation leagues for youth and adults will target middle income families in the area. Challenge leagues will target middle to high income families who are willing to travel to various locations to play competitive leagues in the state. The projected area of the soccer facility is in a fast growing area with many local businesses and a growing workforce. Below a
Johnston County Statistics vs. USA Average
Economy
Johnston, NC
United States
Unemployment Rate
8.90%
9.10%
Recent Job Growth
-0.07%
-0.12%
Future Job Growth
30.96%
31.25%
Sales Taxes
6.75%
6.80%
Income Taxes
8.25%
6.25%
Income per Cap.
$22,133
$27,067
Household Income
$49,158
$52,954
ESTIMATED HOUSEHOLDS BY HOUSEHOLD INCOME
Income Less Than 15K
14.35%
12.10%
Income between 15K and 25K
10.20%
10.18%
Income between 25K and 35K
10.70%
10.56%
Income between 35K and 50K
15.44%
14.98%
Income between 50K and 75K
22.60%
19.53%
Income between 75K and 100K
13.16%
12.52%
Income between 100K and 150K
10.39%
12.14%
Income between 150K and 250K
1.52%
3.91%
Income between 250K and 500K
1.36%
3.34%
Income greater than 500K
0.26%
0.75%
POPULATION BY OCCUPATION
Management, Business, and Financial Operations
14.14%
13.81%
Professional and Related Occupations
18.85%
22.68%
Service
11.67%
14.51%
Sales and Office
28.58%
25.22%
Farming, Fishing, and Forestry
0.55%
0.68%
Construction, Extraction, and Maintenance
15.83%
9.37%
Production, Transportation, and Material Moving
18.52%
15.86%
Data provided by www.bestplaces.net
b. Market Research
Closest indoor facility is located 35 miles away and advertises approximately 15,000 players per year. Three local outdoor soccer clubs currently have approximately 7400 youth soccer participants from ages 4 to 16. Most adults in the area are driving over 35 miles to play at other indoor soccer arenas. JC Soccer will focus on capturing the current youth
in our target area and the adult population who currently has no league or is driving a long distance. With current gas prices and the added time constraints, a local indoor soccer facility will provide a strong option for the areas growing soccer participants.
Registration fees in the area range from $60-80 per season. By having a year round facility we can market to those who want year round skills or to those who want to play indoor only during offseason. W
c. Market Strategy
Objectives:
Secure land for soccer complex
Construct metal building approximately 40,000 sq feet
Hire two full-time employees and set volunteers for other positions Capture 5-10% (approximately 400 – 800 people) of competitive indoor soccer facilities registrants located in surrounding counties by end of year one Capture 10-15% (approximately 700 – 1050) of outdoor recreational league registrants by end of year one Registration of 200-300 adults by end of year one
Sign 8-10 corporate sponsors for fields by end of year one
Sign one field sponsor by end of year two
Establish training program and camp events
Promote the benefits of year round soccer and skills camps
Promote field rentals for corporate outings, birthday parties, or make up games for outdoor rec programs
JC Soccer will advertise using local newspapers, social networking sites, marketing at outdoor recreation facilities, and local churchs. 40/42.com is a local website that promotes businesses in the Greater Cleveland Community which includes Clayton area. Roadside signs and banners are currently the method of the competing companies. JC Soccer will market similiarly, but will focus also on the schools as a way to promote youth involvement in sports.
Local radio may be used as another advertising method once we have established a core marketing campaign on our target group. Our kids and parents will enjoy the benefits of indoor soccer and the convenience of JC Soccer facility. Parents will enjoy the atmosphere and concessions, but most importantly watching their child play a fun and beneficial game of soccer. JC Soccer will be committed to ensuring a safe facility that focus on skills improvement and fun for the average soccer player and family, and an advanced level focused on competition and preparation for the next level of soccer advancement.
6. Competition
In State USA, there are two known places that offer the Life is good® brand: Strong’s Country Store in ANY WHERE USA and State USA. Both of these retailer’s are of little threat as they both carry a token amount of Life is good® merchandise.
Strong’s Country store is located at 1511 Broadway, the same retail trade area in which T’ Sensation will be located. Strong’s Country store offers a wide variety of novelty and gift items. The Life is good® product line receives limited shelf space and that shelf space is devoted to the ceramic coffee mugs and there is a medium sized bookshelf filled with Life is good® T-shirts.
Bass Pro recently started carrying the Life is good® brand. Again, limited space is devoted to the product line: T-shirts, hoodies, sleepwear, socks, and tote bags. Bass Pro is 82.68 miles, one hour and 24 minutes from Scottsbluff. For the most part, consumers that travel to City to shop at Bass Pro go there to shop the “Bass Pro” brand. This store also offers a huge variety of top brand name sportswear. The Life is good® brand is just a corner among many other brands. Bass Pro targets a totally different consumer group than T’ Sensation would market to.
Lifeisgood.com will be T’ Sensation’s strongest competitor. It has been reported that Internet sales in 2007 increased by 30 percent. I have personally purchased most of my Life is good® merchandise through this website. Lifeisgood.com is an extremely user friendly and attractive site
to visit. The security for processing credit cards and debit cards is sound. Delivery of purchases is usually three to five business days and directly to the customers door step. With every shipment, Life is good® provides the consumer with well-written instructions for returning items, return mailing labels and free shipping on returns as part of their customer service strategy. (http://www.lifeisgood.com/)
As gas prices continue to soar, the shipping for online purchases also increases. Currently, shipping for one T-shirt through the Life is good® website is $10.93 for UPS Ground delivery. Although online shopping is convenient, consumers may not be able to justify paying $10.93 in shipping for a $25.00 t-shirt. There are many consumers’ that still like to see and touch what they spend their dollars on.
The price of gasoline is changing consumer behavior, and many are limiting their trips to the Scottsbluff area. Consumers are merely putting purchases on hold until a trip to the Scottsbluff area is deemed practical; they will spend more time in the service area completing tasks, shopping and keeping appointments. Consumers in the Region have little options as far as satisfying their needs and wants. Consumers will continue to shop in Scottsbluff as it provides a variety of retail stores, services, and medical care.
7. Management
T’ Sensation, a Life is good® Genuine Neighborhood Shoppe, will be independently owned and managed by Owner. Owner has a bachelor’s degree in business education and is currently enrolled in the master’s program at Chadron State College. Although an education major, her field of study has provided her with background in economics, accounting, marketing, management and entrepreneurship.
Before receiving her business education degree, JoAnn worked in the food service industry for 25 years. Her knowledge and experience in providing for the needs of the consumer will be an asset to the T’ Sensation retail store.
Management Philosophy (Based on Grimme’s Top Ten Tips to Attract, Retain, and Motivate) Create an organizational culture that is open, trusting, and fun Treat employees with respect
Be a good listener
Praise accomplishments and effort
Always reprimand in private
Involve employees in plans and decisions
Solicit their ideas
Encourage initiative
Recognize performance appropriately and consistently
Reward outstanding performance
Do not tolerate sustained poor performance, coach and retrain or remove Clearly communicate goals, responsibilities, expectations
Celebrate successes/milestones reached– organizational & personal
Staffing needs & requirements
For at least the first two years, the staff of T’ Sensation will consist of one full-time and two part-time employees. The owner will take responsibility for daily management of the store with the assistance of a full-time employee with experience in retail and management. Two part-time employees will be hired to help stock merchandise and provide quality customer service. The owner will handle purchasing, budgeting, and accounting, greet and assist customers and promote sales and good public relations. The owner will also be responsible for interviewing, hiring, and training employees. Preparing work schedules and assigning workers to specific duties will be done collaboratively with the assistant manager. I will follow a checklist in filling staffing needs:
Have a hiring policy in place that includes a written salary structure, commission compensation and employee discount on merchandise Create job descriptions for everyone
Conduct weekly meeting on Monday morning
Have written policies and procedures on handling customer complaints. Maintain clear guidelines for pricing policies and handling customer’s
inquiries.
Job Description: Assistant Manager
The ideal candidate for assistant manager will hold an associate or bachelor’s degree in business, or management. This position also requires that the assistant manager know how to use computers and access information on the internet; webpage development and maintenance will also be helpful. Previous retail sales experience is a requirement for becoming the assistant manager of T’ Sensation.
The assistant manager will oversee the work of the retail sales personnel and ensure that customers receive satisfactory service and quality goods. The assistant manager will also be expected to handle customers’ inquiries and deal with complaints. A large portion of the workday is spent on the sales floor, supervising employees or selling.
Responsibilities:
Greet and assist customers and promote sales and good public relations Supervise employees who price and ticket goods and place them on display; clean and organize shelves, displays, and inventories in stockrooms; and inspect merchandise to ensure that nothing is flawed Review inventory and sales records, develop merchandising techniques Coordinate sales promotions
Assist in completing merchandise orders or arranging work schedules Job Description: Retail Salesperson
Retail Salespersons enjoy selling merchandise and working with others and they must possess the tact and patience to deal with difficult customers. A neat appearance and the ability to communicate clearly and effectively are also important.
Typical duties:
Provide courteous and efficient service
Assist customers, try to interest customers in buying the merchandise Operate point-of-sale terminal
Make out sales checks, receive cash, checks, debit, and charge payments bag
or package purchases
Give change and receipts.
Handle returns and exchanges of merchandise, wrap gifts
Keep work areas neat, help stock shelves or racks
Mark price tags, take inventory, and prepare displays
(Job descriptions based on OOH, U.S. Department of Labor)
Projected Payroll Expense
The full time employee/assistant manager will be hired at $15.00 per hour and will be expected to work a minimum of 40 hours per week. One week of paid vacation is part of the employment agreement. Part-time retail salespersons will be hired at the average entry wage of $9.01. Part-time retail salesperson will be expected to work 25-30 hours per week.
Projected Payroll Expense
FY 1
FY 2
FY 3
FT Retail Salesperson
28,800.00
30,240.00
31,752.00
PT/Retail Salesperson 1
3,240.00
3,402.00
3,572.10
PT/Retail Salesperson 2
3,240.00
3,402.00
3,572.10
Total Payroll
35,280.00
37,044.00
38,896.20
Total People
3
3
3
Hourly wages were determined by average wages paid for similar positions in the ANY WHERE USAas reported by Twin Cities Development. Projected wages are based on a 5% increase across the board each year of service. Equipment needs
Electronics
Company
Item
Quantity
Unit Cost
Total Cost
heditrading.com
Point-of-sale Terminal
Two workstation bundle
Product # 91071lot2
1
2554.95
2554.95
Staples
Uniden (DXAI5688-3WB)
5.8 GHz Single -line cordless
Phone (3 Pack)
1
69.99
69.99
Staples
HP 1040 Inkjet Plain Paper FAX
1
99.98
99.98
Staples
Shredder
1
59.98
59.98
Dell
Desk Top computer
OPTIPLEX 755 (customized)
2
2442.00
4884.00
Dell
PowerEdge T300 Server
1 Socket, Quad-Core Tower
1
899.00
899.00
Dell
Laser Printer 1110
1
314.00
314.00
Total
$8,881.90
Furniture/Fixtures
Company
Item
Quantity
Unit Cost
Total Cost
Staples
Sentry Safe-Fire Proof
1.2 Cubic Foot
1
349.99
349.99
Mecco 4 foot Banquet Tables
(Folding work tables)
2
45.00
90.00
Meco Folding Chairs (4 Pack)
1
89.99
89.99
TechniMobili Mahogany L-Desk
1
239.99
239.99
Lane Black Tech Executive Chair
1
199.99
199.99
Vertical File Cabinet (4 drawer)
1
139.98
139.98
Storage Cabinet
2
127.49
254.98
Life is good®
Furniture/Fixtures
Build-out costs ($45.00 psf)
58,500.00
Total
$59,864.92
“By offering store design assistance (floor plans/elevations) Life is good® maintains a level of brand recognition and consistency that enhances the consumer’s shopping experience. This in turn strengthens the GNS program and further differentiates a GNS from a conventional retailer carrying Life is good® products. Each Shoppe owner will use the suggested Shoppe designs and the handcrafted fixtures and furniture for merchandising that is signature of Life is good®.”
Each approved GNS also receives the following:
One artisan dining table
Two artisan benches
One artisan coffee table
One artisan medallion
One small artisan mirror
One 36” exterior GNS blade sign
(Conroy)
Space needs
The Life is good®, Genuine Neighborhood Shoppe program requires a minimum of 1300 square feet and generates volume from a mix of local consumers and tourists (Conroy).
Towards the back of the store, a space 200’ X 300’square feet will be allotted for a “reception area.” This space is relatively open and can
serve many needs, such as, providing a place for customers to rest, confer with potential clients on special orders, employee breaks, and informal Monday morning staff meetings before the store opens.
Just off the reception area are entrances to the stockroom and the office. The office space will need to be 100’ X 150’ square feet to accommodate the owner’s needs when completing bookkeeping tasks, payroll, and purchasing merchandise.
In the hallway between the stockroom and the office will sit a water cooler for employee use. A public water fountain will be located between the entrances to the men’s and women’s public restrooms. A private restroom will be located in the stockroom for employee use.
Training needs
Although the staff of T’ Sensation will be relatively small in the early years of operation, I believe consistent training will be the key to building a successful sales team. T’ Sensation will develop an induction training program based on the article, Induction training design guide and free induction training check list. The training program will consist of three phases: General training, mandatory training, and Training evaluations:
General Training—Employees will learn the history and philosophy of the Life is good® product line. Employees will also be informed of the annual pumpkin festivals and the philanthropic commitment that must be made by the owner and employees of T’ Sensation in order to operate as a Life is good®–Genuine Neighborhood Shoppe. As a team, we will brainstorm ideas on how to demonstrate the attitude of Life is good® to our customers and co-workers.
Mandatory Training—During this phase of the training, new employees will receive and read the employee handbook which will include health and safety policies, employee benefits, customer service policies, T’ Sensation’s code of ethics an mission statement.
New hires will receive one-on-one training on the point-of-sale terminal and
in cash drawer check in/out procedures.
Training Evaluation—Employee follow-up evaluations will occur twice a year. This will be a time for both employer and employee to discuss any areas of concern (Chapman).
Budget required for strategic/marketing plan
Being a Genuine Neighborhood Shoppe means that T’ Sensation will be provided with wall decorations and display supplies from the parent company:
Burned LIG Coin Logo
Heritage Framed Poster
Burned LIG Jake Face Logo
LIG Mural
Festival Framed Poster
Display forms
Armoire, Nester sets etc.
The costs of the above items are included with the estimated Life is good® build-out costs.
Radio advertising will be heavy the first six months T’ Sensation is open for business. The advertising objective is to announce a new business in town and build consumer awareness of the Life is good® brand that is now available in the Region of State USA. T’ Sensation will purchase 10 radio spots per week. Radio stations receive the most listeners during the A.M. drive time of 6 a.m. to 10 a.m. People are getting their day started and travelling to work; they tend to be the most receptive to advertising messages during this time frame.
The best radio spots for midday listening runs from 10 a.m. until 3 p.m. To build awareness quickly it is recommend that the ad run at the same time daily; two spots will be purchased, one to run at 11:30 a.m. and the other to run at 2:00 p.m. The P.M. drive time, 3:00 p.m. until 7:00 p.m. is also a prime time frame for ads. Purchasing radio spots during the P.M. drive time will catch consumers on their way home; a time of day when they may be more in the buying mood
(BusinessTown.com). Media
Description
Annual Cost
T’ Sensation Web page
Ecommerce site w/Yahoo Merchant Solutions
Includes tools for site development/$39.95 a month
$479.40
Business cards
Print Express
No set up charge
Quantity of 500 (black and white)
36.75
Newspaper ad
Business Directory (1” X 2”)
Logo plus 5 lines of information
Run time—30 days @ $65.00
780.00
Radio spot
Home Town Family Radio
KMOR FM 93.3 – $14.00 per ad
KOZY FM 101.3 – $14.00 per ad
KOAQ AM 690 – $8.00 per ad
KOLT AM 1320 – $8.00 per ad
Purchase all 4 stations to run equally spot rate is $34.00.
Purchase all 4 stations/12 month contract/$28.00 per spot.
10 spots per week =$280.00 X 52 (($1,213.33 per month)
14,560.00
Pumpkin Festival
Budget for promotion, pumpkins, supplies $1000.00
Held at
½ space rents for $500.00
1500.00
Estimated Cost
$17,356.15
8. Business’s Location or Distribution considerations
Location
T’ Sensation will be located on Broadway in ANY WHERE USAas it is the shopping hub for the ANY WHERE USAand south-eastern Wyoming. From the State USA Department of roads, the average daily traffic count for South Beltline and Broadway is as follows:
East17, 495
West11, 045
North 9, 955
South15, 775
Currently, there is one vacant building on the corner of 15th Street and Broadway. I believe the traffic flow statistics above indicate T’ Sensation will have great drive-by exposure and will be easy for customers to access. Broadway and the side streets in downtown Scottsbluff offer non-metered parking and there are also two Public Parking lots close by the potential location for the T’ Sensation, GNS, adding to customer convenience.
The well-established specialty shops and professional services that are currently located on Broadway draw customers to the area. Twin City Development and the business owners on Broadway have worked diligently over the years to maintain an attractive “down town” commercial area.
Distinctive Competencies
The owner of T’ Sensation and her staff will continuously work to develop distinctive competencies in: The marketing of LIG products Providing a high level service to the consumer and the community Maintaining the image of the Life is good® brand
Distribution
Geoff Lancaster, author of Channels of Distribution, defines “exclusive distribution” as follows, “For some products, producers deliberately limits the number of intermediaries handling their products. They may wish to develop a high quality brand image. Exclusive distribution to recognized official distributors can enhance the prestige of the product. Exclusive (or solus) distribution is a policy of granting dealers exclusive rights to distribute in a certain geographical area. It is often used in conjunction with a policy of exclusive dealing, where the manufacturer requires the dealer not to carry competing lines.”
T’ Sensation will engage in “exclusive distribution” of Life is good® merchandise. No other brand will be sold in the store. Genuine Neighborhood Shoppes are not franchises. The stores are independently owned and operated; the parent company doesn’t require royalty fees for the use of their logo and brand. Becoming a distributor of Life is good merchandise will require the submission of an application for approval and proof of solid financial backing.
The Life is good® company is very protective of their brand image. This is one of the reasons the company is so willing to provide as much support as needed to an owner of a GNS; for example, store design assistance helps to differentiate the store and product line from conventional retailers in the area. In addition, each Shoppe also receives the following benefits: 10% off wholesale prices
Net 60 payment terms with approved credit
Priority listing on the retail locator of the lifeisgood.com website Support in merchandising and store build-outs/layouts
Exclusive product offerings
Priority access to sales programs
Dedicated, outstanding customer service (Conroy)
“A decision that is essential at the brand level is positioning. Options here may range from a high quality, premium product to a lower priced value product (Business Res Info-Distribution).” T’ Sensation will use a “high-low” method of retailing the Life is good® product line. Merchandise
will sell at the higher price most of the time with occasional sales with significant savings to the customers.
Product line objectives for T’ Sensation is to carry a wide variety of the core Life is good® product line, which will appeal to the primary target market. T’ Sensation will also carry a nice selection of the newly introduced, “Good Karma” line and the ever popular flip flops. The Good Karma clothing line is more suited to the younger generation who prefers a more tailored fit. Life is good® has also added athletic wear to their catalog of merchandise. Careful inventory tracking during the first year will determine purchasing decisions.
T’ Sensation will mimic the distribution behavior of the parent company. Life is good® doesn’t carry huge volumes of the same t-shirt design or color. It’s one of the reasons the brand is unique. T’ Sensation’s distribution strategy will involve carrying a wide selection of apparel with varying designs, followed by an intense focus on turning over the inventory quickly. As the inventory is depleted, the merchandise will be replaced with the new colors and designs.
E-commerce
One of the first things I noticed about the lifeisgood.com website was the differentiation focus the company uses to bring consumers back to their website. Each visit to the site offers the consumer new choices in colors, graphics, and style; I can do the same thing with the T’ Sensation store and the T’ Sensation website.
Based on my visits to the websites of other Genuine Neighborhood Shoppes, I’ve determined that GNS’s around the nation are able to compete with the parent company’s website by offering their customers free shipping on purchases of $50.00 or more in LIG merchandise. We can provide similar services to the consumers in our area. Consumers may even wish to special order LIG products through our website for in-store pickup. We too, could offer free-shipping on any purchase over $50.00 to encourage internet sales.
The primary purpose of having a website for T’ Sensation is to promote the store and build brand awareness; sales is secondary due in large part to the high cost of shipping. “The small businesses that are best able to make money from the Internet are those that have a niche market or unique product (Abrams, 2003).” Simply typing in “Life is good.” in Yahoo’s search engine netted 11 pages of hits for the product line. As a distributor, there are several ways that I can increase the probability that my business also lands amongst the consumers search results.
The following tips were taken from the article, Increasing Web-Site Traffic by Rhonda Abram.
1. Improve search ranking by
Using phrases that searchers are likely to key in
Refer to our geographic location
List products individually, “Life is good coffee mug”
2. Get listed in directories
Official Life is good® directory “Find a store or retailer near you!” Directories list websites by topic area, T’ Sensation will be submitted for inclusion in Yahoo’s search engine (for free) Scroll to the bottom of Yahoo home page and click “Suggest a site” 3. Register with local directory websites
Chamber of Commerce
Twin City Development
4. Include T’ Sensation’s web address on everything
Newspaper ads
Letterhead stationery, business cards
Promotional flyers, bags
Another important consideration for T’ Sensation doing business online is what has become known as, “Abandoned Cart Syndrome.” Abandoned Shopping Cart Syndrome refers to online shoppers leaving a website before finalizing their purchases. eMarket Research firm conducted a study and found that the most cited reasons customers abandon online shopping carts are as follows:
30%
Comparison shopping
27%
Shipping & Handling costs too high
27%
Customer ran out of time
16%
Product out of stock or back ordered
8%
Technical problems
In October of 2005, online retailers conducted a Direct Marketing Association Survey; from the results of the survey these suggestions for curbing abandoned shopping carts were offered: Try to limit clicks in shopping process
Avoid registration before buying
Limit steps customer has to take to pay for purchases
Make sure customers aren’t dumping cart because of “slow tech on your end” Transparency pricing
Better to inform customer of total cost quickly
Install S& H calculator for customer convenience
Test drive your own site from time to time
Have an electronic payment service (Staltzman, 2008)
A current trend for small business owners is to outsource the online store; maintaining and programming a shopping cart is time consuming. T’ Sensation will outsource their website to Yahoo! Merchant Solutions. The services that will be provided by Yahoo! Merchant Solutions will meet our needs: from tools for web page design and editing, programming the shopping cart, to 24-7 technical support and at an affordable price. Ecommerce plans vary in costs, features and benefits. All plans include a $50.00 setup fee and a 1.5% transaction fee. T’ Sensation will purchase the Standard Plan. Examples of monthly costs are shown in the table below: From Yahoo! Merchant Solutions:
Total Monthly Cost* if you have sales of
Express Plan
Starter Plan
Standard Plan
Professional Plan
* These examples exclude the one-time setup fee of $50 and fees paid directly to your merchant account provider or PayPal for transaction processing. There is no gateway fee for Yahoo! Merchant Solutions customers. $0
$19.95
$39.95
$99.95
$299.95
$100
$21.95
$41.45
$100.95
$300.70
$1,000
$39.95
$54.95
$109.95
$307.45
$5,000
$119.95
$114.95
$149.95
$337.45
$10,000
$219.95
$189.95
$199.95
$374.95
$50,000
$1,019.95
$789.95
$599.95
$674.95
$100,000
$2,019.95
$1,539.95
$1,099.95
$1,049.95
9. Financial Information—Pricing Strategy
T’ Sensation will use a “vendor pricing strategy.” “The Manufacturer suggested retail price (MSRP) is a common strategy used by the smaller retail shops to avoid price wars and still maintain a decent profit. Some suppliers have minimum advertised prices but also suggest the retail pricing (Waters, 2008).”
Pricing Objectives
Capture 10% of casual apparel retail market
Maximize long-run profits by using value-based pricing strategy Increase sales volume by 3.5% each year
Enhance the image of the store, brand and product line
Create interest and excitement about the product
a. Capital requirements
The owner has determined that $130,000 is required for the new business venture, T’ Sensation. Total start-up costs are estimated at $114,190 which
includes money placed in a contingency fund. A majority of the start-up capital requirements for T’ Sensation are wrapped up in the build-out costs for the store, $58,500. Furniture and equipment not included in the build-out costs are estimated at $10,246.82. Opening inventory is estimated at $5,900.00.
Contingency Fund
A contingency fund of $30,000 will be set up to cover unexpected conditions or losses while doing business. Payroll and rent are two expenses that must be met in order to keep the doors open. $30,000 will cover payroll and rent expense for three months.
Financing
There are several options for acquiring financing for the start-up costs of T’ Sensation. The owner, Owner, will contribute $25,000 from personal funds to help meet start-up expenses. Additionally, the owner’s mother, Margaret Cortright, has agreed to invest $20,000.00 in T’ Sensation. The bulk of the funds that are required to start this venture will come from loans. Applications for business loans will be completed for CityNational Bank and Bank of America.
A TIFF Direct Loan application will be submitted for consideration. “ TIFF Direct Loans are available for working capital, inventory, supplies, furniture, fixtures, machinery and/or equipment (TIFF, 2008).” The rate for a TIFF Direct loan is currently prime plus 4% or SBA maximum limit whichever is lower.
Since the collateral probably isn’t sufficient to cover start-up costs, the owner of T’ Sensation will submit seek SBA assistance in guaranteeing the loan. A loan application will be submitted to CityNational Bank for initial review. If the application is acceptable by CityNational Bank, the application and credit analysis will be forwarded to the State USA SBA office for approval. After SBA approval, CityNational Bank will close the loan and disburse the funds to T’ Sensations business account. “Interest rates on the guaranteed loan program are negotiated between the borrower and
the lender, subject to SBA maximums. Generally, interest rates for loans cannot exceed 2.75 percent over the prime rate (SBA).”
Assumptions: All loans approved
Bank, $30,000 at 8% for seven years
Bank of America, 20,000 at 6.99% for seven years
TIFF Direct Loan, $35,000 at 7% for seven years
The Yahoo Business Loan Calculator was used to determine loan payments. T’ Sensation will not sell on credit, cash, debit card or credit card sales only Taxes calculated using 15.5% rate
Please see Exhibit A: Start-up Costs in the appendix
b. Depreciable assets
T’ Sensation will lease retail store space for the first few years, rental space does not qualify as a depreciable asset. “Examples of depreciable assets are cars, computers, office furniture, machines, buildings, and significant additions or improvements (as opposed to repairs) to these kinds of property (Small Business Guide, 2008).” The depreciable assets of T’ Sensation will include furniture, computer, printer, phone/fax, point-of- sale terminals, and the server.
T’ Sensation will use a straight-line depreciation method to depreciate business assets.
c. Break-even Analysis
A break-even analysis spreadsheet has been completed on the basis of monthly estimated fixed and variable costs. Fixed costs are estimated as $2,759 a month and variable expenses set at 56.3% of sales. Refer to Exhibit B-1 for fixed and variable expense calculations in the appendix.
A sales volume break-even analysis was also completed using a financial calculator from KJE Computer Solutions, LLC. The results of the analysis indicate a breakeven point at 263 units or T-shirts (KJE Computer Solutions,
LLC). Please see Exhibit B-2 for the Break-even Analysis Summary report in the appendix.
d. Projected Income Statement
Based on the projected four year profit loss table, T’ Sensation has the potential for generating a modest profit over the next four years. The four year profit/loss projection was completed using the following assumptions.
Assumptions:
T’ Sensation generates half the average sales of a GNS in metropolitan area Meet sales growth of 3.5%
Payroll increases of 5% per year
Expenses increase 3% per year
Cost of goods increases 3% per year
Please see Exhibit C: 3 Year Profit/Loss
e. Cash Flow projection and analysis
The twelve-month cash flow table below indicates T’ Sensation has the potential to maintain a positive cash balance and still meet business expenses and repay loans. The Twelve-month cash flow table projects working capital as $42,087.
Please see Exhibit D: 12 Month Cash Flow Statement
Expectations, summarization and overall coordination
Throughout the process of writing this business plan, I tended to bounce back and forth on the feasibility of my business idea. I am still very passionate about Life is good® (LIG) products and the company that makes them. Throughout the research phase of this project I would visit the Life is good® website for information and of course a dose of optimism; recently on my visits to their site, I’ve begun to notice subtle changes in the product line. The look and feel of a T-shirt that I purchased recently is not like the T-shirts Life is good® sold originally. The changes the
company is making in their product line leads me to believe that LIG is re-aligning their marketing objectives to fit a different target market. Young baby boomers, like me, are not going to like the tighter fitting styles. I am beginning to realize that any changes that the parent company makes in how they do business will have a direct impact on my retail business.
A. How does it all tie together?
Writing this business plan has given me an opportunity to explore the possibility of being my own boss. The amount of planning involved in developing a business idea was at times overwhelming; but the conscientious effort to think through an idea was very rewarding. The whole purpose of a project like this is to test an idea.
The product line isn’t going to sell itself. The marketing plan is a huge contributor to the potential success of an enterprise. The research that I did on the target market indicated that there is a market out there for this type of apparel; they will like Life is good® products. Reaching that target market will be challenging and very expensive but it’s a necessary when it comes to opening a new business.
Once I reached the financing section of the business plan I could see why every aspect of the business idea had to be scrutinized and detailed carefully. It takes a lot of money to launch a start-up business; putting everything you have on the line is a risk that had better be well thought out. If I were to approach a banker for start-up capital I would want to be confident in the work I did on the business plan.
Anyone who invests time in writing a business plan for their business has already developed a competitive edge. Writing a business plan enables an entrepreneur to launch their business with eyes open wide; there will be surprises I’m sure, but the odds for success are greater with a sound plan of action.
B. Timing—are there any critical dates?
There are no critical dates for launching this enterprise. I will put this business idea on the backburner until the time is right to retire from my teaching profession. At that time, I will re-write the business plan.
C. How will you get feedback for your review and future planning?
Bill Baker has owned his own business for many years, Dawn Diversified Services, Inc. located in City, State USA. Bill agreed to review my business idea with me on June 17, 2008. Overall, Bill felt that my business idea was sound but he voiced his concern over selling Life is good products exclusively. “Selling anything exclusively will tie your hands; I don’t think you want that. What if you need to expand your product line or want to add services (Baker, 2008)?” He’s right, my business idea needs to be modified to allow me “wiggle room,” I believe is how Bill put it. To ensure success for T’ Sensation, I will scrap the idea of applying for a license to operate as a Life is good®, Genuine Neighborhood Shoppe. The business plan for T’ Sensation could be re-written to include the sale of other brands, possibly adding customized products with screen-printing or embroidery options. The build-out costs required for setting up the GNS made up a majority of the start-up expense. Re-thinking T’ Sensation could generate a proposal for a more sustainable business. Bill offered a few tips on writing a business plan: “Write the plan in clear, concise language, to a banker, time is definitely money. Be careful with absolute statements, especially with job descriptions, its back to needing wiggle-room down the line (Baker, 2008).” My discussion with Bill made a lot of sense. I would probably seek Bill out for advice on the next business idea; he’s the type of person that is always willing to help.
Lawrence (Skip) Lessert owns and operates Lessert Insurance, LLC in City, State USA. Skip is highly involved in the community and very knowledgeable on how to run a business. Skip’s personality fits perfect with the concept of Life is good products. I visited with Skip on June 18, 2008 about the type of insurance and the cost involved in running this type of business.
He said my estimate of $1200 per year for insurance wasn’t too far off the mark, but since I would be employing three employees, I would need Workman’s Compensation, another estimated $700.00. That estimate would include coverage for me. Skip shared his personal philosophy on life and business, “There’s more to life than a big paycheck, you’ve got prioritize the important things in your life. Since you have to make a living, make sure that it’s something that you enjoy (Lessert, 2008).”
I am very fortunate to have a wealth of business connections to draw upon when I decide it’s time to experience being an entrepreneur.
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Exhibit A:Start-up Costs
Exhibit: B-1 Breakeven Analysis (Excel)
Exhibit: B-2 Breakeven Analysis (online Calculator)
Exhibit: C Pro forma 3 Year Profit/Loss Statement
Exhibit: D Pro forma 12-Month Cash Flow Statement
Application for EIN
NE Tax Application Form
Unemployment Insurance Application Form
Trade Name Application Form
