Gaian Adventure Fabrics is a small retail company that also operates an online store. The company is owned by Martha Thimble, operating as a sole proprietorship.
To start the business, Gaian Adventure Fabric and Notions will need the following items:
– Computer system with printer, CD-RW, Microsoft Office, QuickBook Pro, and scanner.
– Phone line with DSL Internet connection.
– Desk, chair, and file cabinet.
– Rack for fabric storage.
– Shelving for organizing notions.
– Large table for fabric cutting.
– Hand rotary fabric cutter, electric rotary fabric cutter, cutting boards.
– Inventory.
Note that long-term assets, such as the computer system, phone line, desk, chair, file cabinet, rack, and shelving, will be depreciated using the G.A.A.P. approved straight-line depreciation method.
Gaian Adventure Fabric and Notions specializes in selling outdoor fabrics and notions. The products they offer include fleece (Malden Mills 100, 200, 300, power stretch, wind bloc, and thermal stretch), coated nylons (ripstop, taffeta, oxford-poly, oxford-nitrile, packcloth-poly, packcloth-PVC, 1000 denier Cordura, 500 denier Cordura, and ballistic), breathable fabrics (no-seeum netting, sport mesh, micromesh, leno mesh, supplex, and taslan), waterproof breathables (3-layer Gore-Tex, 2-layer Gore-Tex, Sympatex, and Ultrex), and various notions (Nikwax waterproofing, hook and loop, nylon and polypropylene webbing, grosgraine ribbon, poly herringbone, zipper tape and fixed length zippers, thread, assorted plastic Fastex brand hardware, and patterns).
The market for Gaian Adventure Fabric and Notions can be divided into three segments: walk-in customers, Internet customers, and Internet customers from large companies. Each segment will be addressed separately.
Walk-in local customers are individuals who live nearby and visit the shop to purchase products for their projects.
Year 1 Year 2 Year 3 Year 4 Year 5
Potential Customers Growth CAGR
Walk-ins 9% 3,654 3,983 4,341 4,732 5,158 9.00%
Internet individuals 12% 26,545 29,730 33,298 37,294 41,769 12.00%
Internet company customers 8% 1,245 1,345 1,453 1,569 1,695 8.02%
Total 11.51% 31,444 35,058 39,092 43,595 48,622 11.51%
4.2 Target Market Segment Strategy
Gaian Adventure Fabric and Notions plans to target different groups in the following ways:
– Walk-in customers will be targeted through advertisements in the yellow pages and strategic relationships with local outdoor stores and sewing machine stores. This will provide easy access for local customers and utilize existing connections.
The consumer outdoor fabric industry was once small and focused on local needs. In recent years, a few mail order companies have emerged. However, most of these companies have not migrated to the internet and their websites are not comprehensive.
4.3.1 Competition and Buying Patterns
Gaian Adventure Fabric and Notions faces competition from mail order companies, internet retailers, and retail outlets.
– Mail order companies typically rely on catalogs and do not have a significant online presence. Their lack of online presence indicates stagnant management and is not a major concern.
– Internet retailers are similar to Gaian Adventure Fabric and Notions, but none of their websites offer a comparable product selection.
– Retail outlets, such as fabric stores and outdoor retailers, serve a limited local area.
In the Eugene area where Gaian Adventure Fabric and Notions is located, there are a few stores with a limited selection. People are increasingly willing to shop online, especially for outdoor fabrics and notions, due to the convenience and extensive product catalogs available.
Gaian Adventure Fabric and Notions recognizes that the brick and mortar store will be relatively insignificant compared to the e-commerce portion of the business. The internet allows them to reach a wide audience and the focus will be on building a robust website. Specials will be offered to encourage repeat visits.
They will use WebTrends Web traffic monitoring software to gain insight into customer needs and modify their products and services accordingly.
5.1 Competitive Edge
Gaian Adventure Fabric and Notions’ competitive edge is their focus on e-commerce. While they will have a brick and mortar store with the same product offerings, the website is the foundation of the business due to its cost-effectiveness and ability to reach a global market. Currently, there is no excellent website offering an extensive selection of outdoor fabrics and notions.
To gain market share, Gaian Adventure Fabric and Notions will focus on continually improving their website and meeting customer needs.
5.2 Sales Strategy
The sales strategy will differ for the brick and mortar store and the e-commerce side of the business.
– For the brick and mortar store, Gaian Adventure Fabric and Notions will offer superior customer support, approaching customers as soon as they enter the showroom. Employees will offer advice and suggest additional accessories for customers’ projects.
– For the e-commerce side, Gaian Adventure Fabric and Notions will focus on making the website easy to navigate and purchase from. They will have meaningful weekly specials to reward frequent website visitors.
5.2.1 Sales Forecast
The first month will be dedicated to setting up the store and website, with no sales activity. Sales will gradually increase over the first nine months, reaching profitability by month nine.
Sales Forecast:
| Sales Forecast | |||
| Year 1 | Year 2 | Year 3 | |
| Sales | |||
| Walk-ins | $14,122 | $21,509 | $24,112 |
| internet individual customers | $108,630 | $165,455 | $185,475 |
| internet company orders | $6,518 | $9,927 | $11,129 |
| Total Sales | $129,270 | $196,891 | $220,715 |
| Direct Cost of Sales | Year 1 | Year 2 | Year 3 |
| Walk-ins | $12,224 | $9,679 | $10,850 |
| internet individual customers | $48,884 | $74,455 | $83,464 |
| internet company orders | $2,933 | $4,467 | $5,008 |
| Subtotal Direct Cost of Sales | $64,040 | $88,601 | $99,322 |
5.3 Milestones
Gaian Adventure Fabric and Notions will have several milestones early on:
- Business plan completion. This will be done as a roadmap for the organization, an indispensable tool for ongoing performance and improvement.
- Office set up and website launching.
- Profitability.
- Revenues exceeding $75,000.
Milestones:
| Milestones | |||||
| Milestone | Start Date | End Date | Budget | Manager | Department |
| Business plan completion | 1/1/2001 | 2/1/2001 | $0 | ABC | Marketing |
| Office setup and website launching | 1/1/2001 | 2/1/2001 | $0 | ABC | Department |
| Profitability | 1/1/2001 | 9/31/2001 | $0 | ABC | Department |
| Revenues exceeding $75,000 | 1/1/2001 | 4/31/2002 | $0 | ABC | Department |
| Totals | $0 | ||||
The information normally contained in the Web plan summary can be found in several previous sections.
6.1 Website Marketing Strategy
The marketing strategy for the website, as stated early in the plan, will be precise submissions to all popular search engines so that Gaian Adventure Fabric and Notions is on the top of relevant search lists.
6.2 Development Requirements
The developmental requirements for the website will be tapping into the computer science department at the University of Oregon through a networking contact and finding an undergraduate or graduate student who is willing to construct the entire website at a below market rate. This should be fairly easy to do.
Martha Thimble is the founder and owner of Gaian Adventure Fabric and Notions. Educationally, Martha has a B.A. in marketing from the University of Portland. While at Portland Martha worked part-time in an R.E.I. store, providing insight into the outdoor recreation market. Upon graduation, Martha accepted a position to manage the Eugene R.E.I store.
While at R.E.I, Martha began to pick up sewing, specifically working with outdoor gear. She taught herself and learned from the R.E.I. repair person, an independent contractor who had equipment set up at the store for outdoor gear repairs.
Martha stayed at this position for three years, gaining insightful store management experience. Toward the end of her three years, she recognized that she needed to be her own boss and open her own store.
7.1 Personnel Plan
The first four months of business will only involve Martha. By month five, Martha will hire one person to work full-time. This employee will be used for order fulfillment and helping walk-in customers.
Personnel Plan:
| Personnel Plan | |||
| Year 1 | Year 2 | Year 3 | |
| Martha | $36,000 | $36,000 | $36,000 |
| Employee 1 | $12,800 | $19,200 | $19,200 |
| Total People | 2 | 2 | 2 |
| Total Payroll | $48,800 | $55,200 | $55,200 |
The following sections will outline important financial information.
8.1 Break-even Analysis
The following table and chart show our Break-even Analysis for the first year.
Break-even Analysis:
Monthly Revenue Break-even: $11,761.
Assumptions:
– Average Percent Variable Cost: 50%
– Estimated Monthly Fixed Cost: $5,935.
Projected Profit and Loss:
The table below indicates projected profit and loss.
Pro Forma Profit and Loss
| Pro Forma Profit and Loss | |||
| Year 1 | Year 2 | Year 3 | |
| Sales | $129,270 | $196,891 | $220,715 |
| Direct Cost of Sales | $64,040 | $88,601 | $99,322 |
| Other Production Expenses | $0 | $0 | $0 |
| Total Cost of Sales | $64,040 | $88,601 | $99,322 |
| Gross Margin | $65,229 | $108,290 | $121,393 |
| Gross Margin % | 50.46% | 55.00% | 55.00% |
| Expenses | |||
| Payroll | $48,800 | $55,200 | $55,200 |
| Sales and Marketing and Other Expenses | $600 | $600 | $600 |
| Depreciation | $0 | $0 | $0 |
| Leased Equipment | $696 | $696 | $696 |
| Phone line + DSL + web site maintenance | $3,000 | $3,000 | $3,000 |
| Insurance | $1,800 | $1,800 | $1,800 |
| Rent | $9,000 | $9,000 | $9,000 |
| Payroll Taxes | $7,320 | $8,280 | $8,280 |
| Other | $0 | $0 | $0 |
| Total Operating Expenses | $71,216 | $78,576 | $78,576 |
| Profit Before Interest and Taxes | ($5,987) | $29,714 | $42,817 |
| EBITDA | ($5,987) | $29,714 | $42,817 |
| Interest Expense | $0 | $0 | $0 |
| Taxes Incurred | $0 | $8,914 | $12,845 |
| Net Profit | ($5,987) | $20,800 | $29,972 |
| Net Profit/Sales | -4.63% | 10.56% | 13.58% |
8.3 Important Assumptions
The following table details important financial assumptions.
| General Assumptions | |||
| Year 1 | Year 2 | Year 3 | |
| Plan Month | 1 | 2 | 3 |
| Current Interest Rate | 10.00% | 10.00% | 10.00% |
| Long-term Interest Rate | 10.00% | 10.00% | 10.00% |
| Tax Rate | 30.00% | 30.00% | 30.00% |
| Other | 0 | 0 | 0 |
8.4 Projected Cash Flow
The following chart and table will indicate projected cash flow.
Pro Forma Cash Flow
| Year 1 | Year 2 | Year 3 | |
| Cash Sales | $129,270 | $196,891 | $220,715 |
Sales Forecast
| Month 1 | Month 2 | Month 3 | Month 4 | Month 5 | Month 6 | Month 7 | Month 8 | Month 9 | Month 10 | Month 11 | Month 12 |
| $0 | $5,171 | $5,805 | $7,122 | $8,632 | $10,171 | $11,002 | $12,445 | $14,824 | $16,015 | $18,395 | $19,689 |
Personnel Plan
| Month 1 | Month 2 | Month 3 | Month 4 | Month 5 | Month 6 | Month 7 | Month 8 | Month 9 | Month 10 | Month 11 | Month 12 |
| $3,000 | $3,000 | $3,000 | $3,000 | $3,000 | $3,000 | $3,000 | $3,000 | $3,000 | $3,000 | $3,000 | $3,000 |
General Assumptions:
Plan Month: 1 2 3 4 5 6 7 8 9 10 11 12
Current Interest Rate: 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00%
Long-term Interest Rate: 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00%
Tax Rate: 30.00% 30.00% 30.00% 30.00% 30.00% 30.00% 30.00% 30.00% 30.00% 30.00% 30.00% 30.00% 30.00%
Other: 0 0 0 0 0 0 0 0 0 0 0 0 0
Pro Forma Profit and Loss:
Month 1 2 3 4 5 6 7 8 9 10 11 12
Sales: $0 $5,171 $5,805 $7,122 $8,632 $10,171 $11,002 $12,445 $14,824 $16,015 $18,395 $19,689
Direct Cost of Sales: $0 $2,145 $2,763 $3,440 $4,135 $4,842 $5,355 $6,023 $7,247 $7,994 $9,458 $10,637
Other Production Expenses: $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Total Cost of Sales: $0 $2,145 $2,763 $3,440 $4,135 $4,842 $5,355 $6,023 $7,247 $7,994 $9,458 $10,637
Gross Margin: $0 $3,025 $3,042 $3,682 $4,497 $5,329 $5,647 $6,422 $7,577 $8,021 $8,937 $9,052
Gross Margin %: 0.00% 58.51% 52.40% 51.70% 52.10% 52.39% 51.33% 51.60% 51.11% 50.08% 48.58% 45.97%
Expenses:
Payroll: $3,000 $3,000 $3,000 $3,000 $4,600 $4,600 $4,600 $4,600 $4,600 $4,600 $4,600 $4,600
Sales and Marketing and Other Expenses: $50 $50 $50 $50 $50 $50 $50 $50 $50 $50 $50 $50
Depreciation: $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Leased Equipment: $58 $58 $58 $58 $58 $58 $58 $58 $58 $58 $58 $58
Phone line + DSL + web site maintenance: $250 $250 $250 $250 $250 $250 $250 $250 $250 $250 $250 $250
Insurance: $150 $150 $150 $150 $150 $150 $150 $150 $150 $150 $150 $150
Rent: $750 $750 $750 $750 $750 $750 $750 $750 $750 $750 $750 $750
Payroll Taxes: 15% $450 $450 $450 $450 $690 $690 $690 $690 $690 $690 $690 $690
Other: $0 $0 $0 $0 $
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