Gift Shop at Avant-Garde Building in Jakarta, Indonesia, offers novelties and stationary. The new venture, PT. Avant-Garde Shop, in cooperation with PT. ABC Company Indonesia, will be the flagship store of Avant-Garde Building, targeting not only tenants but also neighbors and visitors. The grand opening is on December 9th. Our priority is to refurbish the existing outlet and align it with the lifestyle of our target market. This business plan outlines our strategy for re-positioning the Gift Shop to become the Official Store of Avant-Garde. We will provide services through a joint operation with ABC Company, with strategic recommendations to enhance the retail facility’s traffic and image. The market consists of tenants, neighbors, and visitors. Our primary target is the 1,500 white-collar workers who are tenants. The secondary target is the office community nearby. The last target is visiting guests. Our strategy is to leverage the Avant-Garde Building’s brand and image to reflect power, modernity, wealth, and global sophistication. We will enhance the retail space, supplement sales with catalog and website orders, and focus on selling the brand and image of the New Indonesia. Monetary amounts in this plan are in thousands of Indonesian Rupiahs (IDR).
1.1 Objectives
The Avant-Garde Shop has two goals. By developing and tracking progress towards these goals, the organization will push both PT. Avant-Garde and PT. ABC Company to perform their best.
1. To re-position the current "Gift Store" as the Official Store of Avant-Garde through remodeling and marketing programs, to generate more revenue and contribute to the overall Avant-Garde Building equity.
2. To achieve a net profit of Rp. 1,801,000 by year two and Rp. 6,807,000 by year three.
3. To achieve revenue of Rp. 90,299,000 by year one, Rp. 95,717,000 by year two, and Rp. 101,460,000 by year three.
1.2 Mission
The Avant-Garde Shop is a retail store specializing in the sale of novelty products. The store emphasizes the sale of official Avant-Garde brand merchandise, including apparel, accessories, stationary, and other lifestyle-related novelties.
Our goal at ABC Company is to be the sole supplier of these official Avant-Garde merchandise. We believe that to attain the Avant-Garde Shop positioning strategy, we need to be consistent with the lifestyle association of the target customers.
1.3 Keys to Success
In order to succeed in merchandising retail, the Avant-Garde Shop team must consider significant aspects for their customers:
– Carry a mix of products that fit the white-collar target customer base and create an image that visiting guests can associate with the merchandise.
– Provide top-notch personalized customer service in a professional and hospitable atmosphere.
– Advertise and promote in areas where our target customer base will learn about our store, using banners, leaflets, flyers, website, and other marketing mediums to attract visitors.
– Continuously review inventory and sales and adjust inventory levels accordingly.
The "Gift Shop" at Avant-Garde Building is an established retail business that offers a wide range of novelty products. Now operating with minimal overhead and limited staff, the new "Avant-Garde Shop" will serve a wider customer base that aligns with the image of Avant-Garde Building and Avant-Garde internationally.
ABC Company will assist the "Avant-Garde Shop" in establishing its new identity to attract customers to purchase merchandise.
The operating hours will be Monday-Saturday 10 a.m. – 6 p.m. and Sunday 12 p.m. – 6 p.m., with extended special hours during exhibition events. All merchandise will be purchased and supplied according to the company’s mission and customer focus profile, reflecting the image associated with Avant-Garde or Avant-Garde Building.
2.1 Company Ownership
"Avant-Garde Shop" is part of the nonprofit organization Avant-Garde. Through this joint cooperation, "Avant-Garde Shop" will share activities with ABC Company. Details of the profit-sharing agreement will be further discussed with interested parties.
2.2 Start-up Summary
The "Avant-Garde Shop" will start with three months of inventory for apparel and accessories, as this is the main revenue generator. The majority of the company’s non-cash assets will be in inventory.
The purpose of this business plan is to secure a Rp. 166,597,000 investment for the first year of operation. This financing is required for site preparation, inventory, and operational expenses.
Successful operation and building an exposure base will allow the Avant-Garde Shop to be self-sufficient and profitable in year two.
Start-up Requirements
Legal
$1,000
Stationery etc.
$1,000
Remodeling & Construction
$46,000
Marketing Collateral
$8,000
Computer and Database Merchandise
$13,000
Other
$3,000
Total Start-up Expenses
$72,000
Start-up Assets
Cash Required
$69,315
Start-up Inventory
$25,282
Other Current Assets
$0
Long-term Assets
$0
Total Assets
$94,597
Total Requirements
$166,597
Company Locations and Facilities
There are three levels of world-class restaurants, banks, cafes, shopping, and service facilities, such as a stationery shop, laundry, canteen, money changer, post office, and travel agency to service an impressive list of international and multinational tenants.
Restaurants:
-Nanking Noodle.
-Izzi Pizza.
-Rice & Co.
-Pho Hoa.
-Siam Square.
Cafes:
-Daily Bread.
-Pan de France.
-Starbucks.
-Country Style Donut.
-Cigar Bar.
-Quickly.
Mini Market/Convenient/Stationery:
-Century.
-AmPm.
-Martinizing Laundry.
-Paper Clip.
-NexCom/Fujitsu.
The Avant-Garde Shop will be located at the Mezzanine Level of Avant-Garde Building. On this level, there is also Cigar Bar. The Mezzanine Level offers a strategic point where outside visitors can observe the daily market activities from the observation balcony, affording us good exposure for visiting guests.
Another advantage of this location is the proximity to the library, which is located on the same level. This complex will attract many potential customers (visiting guests) to our immediate vicinity.
By locating in close proximity to the daily action of buying and selling, the Avant-Garde Shop will enjoy guided traffic that will build its customer base through word-of-mouth. The popularity of Avant-Garde Building will bring outside visitors that will help spawn traffic to the Avant-Garde Shop.
This space occupies 35 meters square and has been leased by the management of Avant-Garde Building. We feel it is essential to our initial and ongoing success that we locate ourselves in the heartbeat of the community. We also strive to create an atmosphere of acceptance, as well as a retail environment where individuals can identify and practice their lifestyle.
Products
Avant-Garde-themed merchandise will be the product focus of the Avant-Garde Shop. Our task is to make sure that the Avant-Garde-themed merchandise is keeping up with the latest category trend and needs. The following lists show examples of products within their respective categories:
Avant-Garde-Themed Novelties/Stationary:
-T-Shirts.
-Caps.
-Bags.
-Pens.
-Memopads.
-Calculators.
-Clocks.
-Umbrellas.
-Key chains.
-Mugs.
-Golf Balls.
-Golf Club Covers.
Indonesia’s Arts and Crafts (small size merchandise that will consist of 15% of total merchandise displayed):
-Silver jewelry.
-Masks.
-Other ethnic accessories.
Others:
-Books (history books about Avant-Garde and topics related to Indonesia’s commerce, politics, and social sciences).
-Magazines.
Merchandise will be managed by ABC Company; they will find the right supplier, propose a design concept, and day-to-day retail activity. Inventory management will be tracked through our computerized cash register so that each month, we are aware of the style, trend, and quantity on every item sold in the store for future planning. Re-orders are drop-shipped by ABC Company or can be rush-ordered directly through our channel if needed.
Product Description
Product pricing will be adjusted according to the re-positioning effort to enable premium charges to each product. All products are quality checked when they arrive and quality checked before the customer takes them home to ensure they meet the standards of the official store of Avant-Garde.
Products will not be limited to one type per category. For example, we will offer 3 types of different kinds of keychains or 5 different design types for caps or t-shirts because we know that customers want options!
Pricing example:
-Official Avant-Garde Caps: Rp. 55,000 – Rp. 150,000.
-Key Chains: Rp. 20,000 – Rp. 55,000.
-Golf Shirts: Rp. 120,000 – Rp. 350,000.
-Golf Balls (3): Rp. 70,000.
-Umbrellas: Rp. 20,000.
-Memo Pads: Rp. 45,000.
-Pen/Stylus/Pencils: Rp. 15,000 – Rp. 35,000.
-Clocks: Rp. 85,000.
-Coffee Mugs: Rp. 65,000 – Rp. 80,000.
-Key Chains: Rp. 45,000 – Rp. 55,000.
-Avant-Garde Theme Checker Game: Rp. 120,000.
-Bags: Rp. 130,000 – Rp. 350,000.
-Calculators: Rp. 30,000.
Competitive Comparison
When we positioned the “Gift Store” as the official “Avant-Garde Shop” for Avant-Garde Building, we narrowed our competition in a niche portion of the market as more than 80 percent of the inventory will be exclusively marked under Avant-Garde brand.
In general, however, our other product mixes, such as Indonesia’s ethnic arts and crafts, will face competition from other specialty souvenir stores in the area around the “Golden Triangle” and other establishments that carry ethnic merchandise.
Sales Literature
After much research, we found that the product mix we have compiled in the attached catalog most closely meets the needs of the consumer niche that we are focusing upon. An online catalog will also be offered to supplement the awareness of this new, revamped store of Avant-Garde Building.
Our sales literature is simple because we realize that most sales depend on existing foot traffic from visitors, tenants, and guests of Avant-Garde Building, thus the sales generation will depend on the image communication from the management of Avant-Garde. We will produce flyers in-house on an as-needed basis. These will primarily showcase new products or advertise special sales promotions. The flyers will be distributed inside Avant-Garde Building, especially in those areas with the most significant traffic, such as cafes and restaurants at Ground Level.
Avant-Garde Shop will use additional targeted advertising and sales programs to generate publicity and build a customer base.
-Standing banner or metal post with the new logo and color theme, announcing the opening of the new Avant-Garde Shop.
-2,000 flyers to be distributed inside Avant-Garde Building and in establishments surrounding the Golden Triangle.
Sourcing
Avant-Garde Shop will partner with ABC Company for all merchandise as outlined below:
-With ABC Company, who have the expertise of running the retail and supply chain management, the Avant-Garde Shop under ABC Company Management will place quarterly reorders with qualified manufacturers on all Avant-Garde-themed merchandise.
-For all other products, we will work directly with the manufacturer and minimize the selection by purchasing small amounts for store display.
-Seasonal gift orders will be handled personally with ABC Company and with direct communication to ABC Company office.
We will also work to solidify our relationships with manufacturers and suppliers so that we may achieve decreased cost of goods. Our competitors, both direct and indirect, purchase from the same sources, and we believe that through marketing programs and strategic alliances, we will begin to gain a competitive advantage.
Technology
Retail establishments have a tendency to have a high number of SKUs because of the level of inventory. It is imperative that an advanced inventory and point of sales program be utilized to maintain stock levels and track sales. The Avant-Garde Shop will utilize database merchandise software for all tracking and accounting purposes as well as inventory management and point of sale transactions that will be summed into one database for handling the online store as well.
Online commerce is becoming an increasingly attractive option due to the global reach of the medium; this could be an additional re-positioning element to increase the visibility of the Avant-Garde Shop.
Future Products
Future expansion may allow for a horizontal increase of our product line by offering additional product categories: sport gear and accessories. We won’t rule out the possibility of vertically integrating through our own line business gift products. We will also explore new services such as providing gift certificates for our customers or membership cards for discounted prices at affiliated retail establishments.
It is our dream to become more than just another souvenir store at Avant-Garde Building, but also an extended official representative of Avant-Garde to the public.
After the success of launching the official Avant-Garde Shop, we will plan to open another one as an “annex store” at another “over-the-counter” exchange establishment. Our effort at ABC Company will not stop within the boundary of Jakarta Metro Area but will expand to other cities as well, such as similar building themes for the Malang Stock Exchange, and so on.
Market Analysis Summary
The Avant-Garde Shop has identified three distinct market segments: tenants, neighbors, and visitors.
There are approximately 100 offices inside Avant-Garde Building, and roughly 1,000 visitors daily to Avant-Garde Building. The primary target customer of Avant-Garde Shop will be the tenants with large disposable income, around 1,500 people.
The secondary target customers are the surrounding office community in the area, who often visit Avant-Garde Building during lunch hour to meet their colleagues or friends.
The last target customer of Avant-Garde Shop is visiting guests. As the store’s popularity increases, we expect to see an assortment of curiosity seekers and local residents from the outside the Jakarta Metropolitan Area.
We are confident that we will capture the essence of the Avant-Garde brand appealingly, so when people visit Avant-Garde Building, they ought to purchase a memoir of the visit through Avant-Garde theme merchandise offered.
Market Segmentation
Tenants
This category commonly includes Avant-Garde employees, who possess the strongest “sense of belonging,” although this also includes all employees whose companies reside inside Avant-Garde Building.
This will comprise the largest segment of our target market (53%); we will focus on tenants for several simple reasons:
-The group will be the first to become aware that there is a new, revamped store.
-They have a sense of belonging or attachment to the whole idea of working inside one of the most prestigious buildings in Jakarta.
-This group will also make the most “lifestyle” purchases, either buying for themselves or as a gift for a friend or relative.
Neighbors
The second potential segment (26%) is nearby workers within the “Golden Triangle” radius, who are drawn to the Avant-Garde building by the handful of retail food establishments. Perhaps, they will not be aware of the store’s existence until their second visit to Avant-Garde Building, but as they repeatedly spend lunch/break time here, they will become aware of the existence of the Avant-Garde Shop via sales literature (flyers, banners, etc.).
-This group does not necessarily have an attachment to Avant-Garde but may make impulse purchases if the selection of merchandise fits their styles and needs.
-This also means that the merchandise aimed at them does not have to be Avant-Garde-themed, as it could be generic products such as trinkets or ethnic arts and crafts.
Guests/Visitors
This last segment (21%) has not yet been fully cultivated. This segment is as important as the other two, particularly in communicating the image of Avant-Garde Building itself as a destination spot within the Jakarta Metropolitan Area. They will maybe unaware of the store’s existence until several visits to Avant-Garde Building. We will implement advertising efforts such as guided tours, distribute flyers at the entry door, or positioning of banners inside the high traffic area of Avant-Garde Building.
-This group shops at Avant-Garde Building infrequently but may be subject to impulse purchases once they are in the store.
-They will likely purchase the Avant-Garde-themed merchandise as a memoir of their only or rare visits to Avant-Garde Building.
Market Analysis
Year 1 Year 2 Year 3 Year 4 Year 5 CAGR
Potential Customers Growth
Tenants 1% 1,590 1,606 1,622 1,638 1,654 0.99%
Neighbors 1% 780 788 796 804 812 1.01%
Guests or Visitors 1% 630 636 642 648 654 0.94%
Total 0.99% 3,000 3,030 3,060 3,090 3,120 0.99%
4.2 Target Market Segment Strategy
We want to differentiate the Tenants from the other two segments (Neighbors and Guests). The focus strategy for Tenants is to establish a sense of “belonging” by creating the Avant-Garde Shop as if it is their own. Customers should feel pride in owning an “Avant-Garde” coffee mug and displaying it in their office or home. This will provide opportunities for multiple sales and access into the community’s occasions, such as giving themed merchandise as tokens.
While Neighbors and Guests are important categories, they mostly fall under the category of “accidental” or impulse shoppers. Tenants make purchases after visiting the store multiple times due to close proximity and frequent visits to the Avant-Garde Building. Neighbors and Guests make purchase decisions instantly after viewing suitable merchandise.
4.2.1 Market Trends
People in Jakarta Metropolitan Area recognize Avant-Garde as an historical, elegant, and prestigious place. Avant-Garde Building is synonymous with modern Indonesia and its excellence in the global economy. Avant-Garde’s image is already featured in tenant’s logos or corporate names. PT. ABC Company plans to feature tenants’ logos in merchandise.
4.2.2 Market Needs
There are important needs in the official theme business that are currently underserved or not met at all. Avant-Garde and ABC Company plan to meet and service those needs.
– ABC Company will provide a large assortment of sizes to complement the theme series of all Avant-Garde Shop merchandise.
– Focus and attention to customer’s personal preferences and retention will be given high priority. The inconsistency in positioning the current Gift Store has caused a decline in the store’s image, preventing growth.
Retail businesses with similar target markets tend to concentrate together in malls. This trend is expected to continue with new shopping centers coming into operation. Smaller outlets in ITC Kuningan are dedicated to fashion retail, while STC Senayan targets youth fashion and sports merchandise. Plaza Senayan and Plaza Indonesia serve the high-end segments of the retail market.
Most low- to mid-range merchandise and knick-knacks are Chinese-manufactured products, offering a lower cost and slightly higher quality than locally-manufactured products.
Retail sales in Indonesia are expected to grow 8.0% to reach 120.1 trillion Rupiah in the first half of 2004. Consumer confidence in Indonesia has declined from 57.5 to 49.0, possibly due to rising uncertainty leading up to the presidential election.
Country Value Growth
Australia* A$ 77 Billion 4.5%
China Yuan 2,457 Billion 14%
Hong Kong* HK$ 86.2 Billion 6.8%
Indonesia Rp. 120.1 Trillion 8%
Japan* Y 57.1 Trillion 4.5%
Korea* Won 66.6 Trillion 8.2%
Malaysia RG 27.4 Billion 9.2%
New Zealand* NZ$ 15.2 Billion 5%
Philippines Peso 290.2 Billion 5.6%
Singapore* SG$ 12 Billion 3.9%
Taiwan* NT$ 1,376 Billion 5.5%
Thailand* Bath 856 Billion 10.8%
*Excludes hospitality, catering, and auto sales
Source: MasterIndex of Retail Forecast 2004.
Due to rapid retail expansion in Greater Jakarta, the retail property sector is expected to become saturated. Major retailers like Ramayana and Matahari plan to expand outside Java and Bali to take advantage of growth opportunities in the wider region.
Theme-based merchandise stores vary in the scope of their merchandise:
– One (Few) Merchandise Categories: many offer only apparel, such as Hard Rock Cafe or Planet Hollywood, along with their brand-building-through-merchandising strategy.
4.3.1 Competition and Buying Patterns
Competition in this retail area is relatively low, as the Avant-Garde Shop uniquely belongs to the whole identity of Avant-Garde Building and lifestyle. Knock-off products will be the biggest threat, so product differentiation and standards must be implemented to protect the Avant-Garde Shop’s image and value.
Ethnic arts and crafts based on Indonesia’s Sabang to Merauke will face competition from other stores in the area, such as Pasaraya Grande or Sarinah. A branding strategy must be implemented to differentiate between standard commodities and premium items.
Other items, such as magazines, books, and generic stationary, will face competition from retail vendors inside the Avant-Garde Building, such as AmPm and Paper Clip.
The Avant-Garde Shop sells the image of the Avant-Garde Building, which symbolizes Indonesia’s economic success. Customers buy merchandise to link themselves to this success. The key to the buying decision is the image the Avant-Garde brand communicates to its audience. The shop’s signage, interior, staff, and merchandise selection reinforce this image.
4.3.2 Main Competitors
The Avant-Garde Shop is the official specialty shop of Avant-Garde in the metropolitan area. It competes with other stores selling similar merchandise and icons of modern life in Jakarta. [Competitors’ data omitted.]
Strategy and Implementation Summary
Our strategy is based on serving the niche of collectors and shoppers. The Avant-Garde Shop will leverage its competitive edge to quickly gain market exposure. We will support our product selection with excellent customer service to create a memorable visiting experience.
The Avant-Garde Shop will rely on two forms of media for its marketing campaign. Our main priority is to raise awareness among Tenants. Additional prints such as flyers and catalogs will be considered for distribution during the first few months after the re-launching on December 9th, 2004.
Our second strategy is to use Customer Relationship Management to attract customers to the Avant-Garde Shop. This includes placing the shop as the last destination on guided tours or offering discounted prices in cooperation with retail food establishments inside the Avant-Garde Building. A loyalty card program will also be created.
5.1 Competitive Edge
The Avant-Garde Shop’s competitive edge is the recognition of Avant-Garde Building as the symbol of successful commerce in Indonesia. There is a sense of prestige to buying merchandise based on the Avant-Garde theme. Our complete assortment and latest product designs will immediately appeal to customers.
Once established, our selection of items and services will set us apart from similar stores. The Avant-Garde brand is associated with Indonesia’s finest, global sophistication, and money. We also aim to become a platform for ordering PT. ABC Company’s merchandise in the future.
Our store should appeal to a wider selection of the population. Some items may push the limits of taste to build the positioning of the Avant-Garde brand. Customers desire to explore the store and experience what it’s like to be inside the most important building in the nation’s commerce. Excellent customer service supports the Avant-Garde brand and appeals to a wide range of customers.
The Avant-Garde Shop believes it has a significant competitive advantage over similar stores on non-Avant-Garde-themed merchandise because of the following benefits:
– Sense of Belonging – Community.
– Valued Image.
– More Substantial Customer Service.
– Greater Product Selections.
– Higher Product Quality.
– Loyalty Program.
The retail marketing strategy of the Avant-Garde Shop centers on creating a corporate identity that clearly defines our market niche. Specific strategies include:
1. Print Ads – Keeping the Avant-Garde Shop name in all theme merchandise is necessary. Banners will be placed inside the Avant-Garde Building. Additional prints such as flyers and catalogs will be used to increase sales revenue.
2. Press Releases – Released through newsletters and websites. Local business magazines will run releases or stories about the Avant-Garde Shop.
3. Grand Opening – A successful in-store promotion on December 9th, 2004, to introduce the new Avant-Garde Shop along with an exhibition sponsored by PT. ABC Company.
4. Word of Mouth – By providing first-time customers with great service and a wide selection of products, word will spread. Existing contacts in the area will also help spread the word.
All marketing decisions will be carefully considered for returns generated.
5.2.1 Pricing Strategy
We will maintain a flexible pricing strategy to encourage impulse buying.
– Pricing will be based on competitive parity guidelines, not exceeding a 70% margin on theme merchandise.
– Unique products not available elsewhere in the region will be marked up to meet demand.
– A 10% discount will be offered to PT. Avant-Garde staff. Seasonal discounts will also be offered during special events.
5.2.2 Promotion Strategy
Brand identity is crucial. Direct mail in the form of postcard-sized mailings will be used. Press releases and public relations channels will also be utilized. Promotional merchandise will be given away, especially during sponsored events. Cooperation with vendors for sales programs and sweepstakes will enhance brand-building.
5.2.3 Distribution Strategy
Customers will buy products at our location. Mail order sales will also be significant. Orders will be received by mail, phone, or fax and processed immediately for shipment. PT. ABC Company vendors will offer drop shipping if an item is out of stock. Electronic commerce may be considered in the future.
5.2.4 Marketing Programs
– Distinctive Logo: A revamped logo that is recognizable and reflects the Avant-Garde brand.
– Distinctive Interiors: Maximizing space and creating an exclusive and modern ambience.
– Advertising and Promotion: Utilizing press releases and publicity to raise awareness. A publicist will be hired to promote the charitable contribution program and positive image.
– Positioning Statement: Transforming the Avant-Garde Shop into the official store of Avant-Garde.
5.3 Sales Strategy
The Avant-Garde Shop will approach sales from a salesperson-customer relationship basis. All sales associates will be trained to assist customers in a personal manner. Gathering customer information will help target marketing efforts effectively, develop product offers, enhance the shopping experience, and train sales associates. The store will showcase products to inspire multiple purchases.
Proper software will be implemented to enhance the CRM system, including point-of-sale, transaction tracking, customer management, inventory management, purchase orders, receiving, vendors, analysis, administration, and integrated accounting.
Sales are forecasted to increase at a rate of 1% per month for each product in the first few months, with a modest yearly 6% growth. Cost of goods sold will increase by 2% each year.
| Sales Forecast | |||
| Year 1 | Year 2 | Year 3 | |
| Sales | |||
| Apparel | $34,496 | $36,566 | $38,760 |
| Stationary | $12,048 | $12,771 | $13,537 |
| Novelty | $22,194 | $23,526 | $24,937 |
| Accessories | $10,146 | $10,755 | $11,400 |
| Traditional Arts & Crafts | $3,805 | $4,033 | $4,275 |
| Books & Magazines | $5,073 | $5,377 | $5,700 |
| Others | $2,537 | $2,689 | $2,851 |
| Total Sales | $90,299 | $95,717 | $101,460 |
| Direct Cost of Sales | Year 1 | Year 2 | Year 3 |
| Apparel | $9,659 | $9,852 | $10,049 |
| Stationary | $3,373 | $3,441 | $3,510 |
| Novelty | $6,214 | $6,339 | $6,465 |
| Accessory | $2,841 | $2,898 | $2,956 |
| Traditional Arts & Crafts | $1,065 | Rp.1,087 | Rp.1,108 |
| Books & Magazines | $1,420 | Rp.1,449 | Rp.1,478 |
| Others | $710 | Rp.725 | Rp.739 |
| Subtotal Direct Cost of Sales | $25,282 | $22,530 | $22,980 |
5.4 Value Proposition
Our message to the audience is that we will sell only 100% made in Indonesia products. A tag by ABC will be attached to each item to promote buying local. This will add value to Avant-Garde shop and communicate its identity as a helping institution for job creation and economic growth among Indonesia’s small businesses.
To encourage buying and positive communication, Avant-Garde Shop will provide community value by supporting the development of Small Scale Industries (SSI) in Indonesia through LB-ABC. For every purchase, LB-ABC will donate up to 5% of the sale for small business funding, as shown in the Pro Forma Profit and Loss under Marketing Expenses.
5.5 Milestones
The Milestone table reflects critical dates for renovating, redesigning, preparing, and launching the new Avant-Garde Shop. The table defines our break-even month and other key markers to measure success.
Milestones:
– Exploring Needs: 9/18/2004 – 10/5/2004, $0, All, Department
– Concept Development: 10/5/2004 – 10/20/2004, $0, Nicko W., Department
– Identity Development: 10/5/2004 – 10/20/2004, $0, Eric W., Department
– Find Suppliers: 10/5/2004 – 10/27/2004, $0, UKMI, Department
– Set Pricing: 10/27/2004 – 10/29/2004, $0, Nicko W., Department
– Business Plan Review: 10/28/2004 – 11/2/2004, $0, Nicko W., Department
– Refinement and Revision: 10/28/2004 – 11/2/2004, $0, Eric W., Department
– Waiting Approval: 11/3/2004 – 11/10/2004, $0, All, Department
– Brief Supplier and Contractor: 11/11/2004 – 11/12/2004, $0, Donny T., Department
– Interior Revamp Design: 11/13/2004 – 11/16/2004, $0, Havidhi, Department
– Marketing Collateral and POS: 11/19/2004 – 12/6/2004, $0, Eric W., Department
– Construction: 11/19/2004 – 12/6/2004, $0, Basuki T., Department
– Weekly Progress Report: 11/19/2004 – 12/8/2004, $0, Donny T., Department
– Launching: 12/9/2004, $0, All, Department
– Totals: $0
Web Plan Summary:
Avant-Garde Building launched its first international website in January of 2004. The website can be viewed at [proprietary and confidential information removed]. The Jakarta Stock Exchange also owns a domain that can be utilized for advertising the new Avant-Garde Shop and linking to our own website listing all the merchandise and services we offer.
Development Requirements:
Optional costs for developing the Avant-Garde Shop’s website include:
– Site Design: Rp. 22,000,000
– Hosting Fee (including 60 e-mail addresses): Rp. 1,700,000 per year
Ongoing Costs:
– Search Engine Registration: $200 per year
– Site Design Changes: Changes in the site, such as photography costs (estimated at Rp. 300,000 – Rp. 600,000 per shot), are part of Marketing and Advertising.
Management Summary:
The management of the Avant-Garde Shop consists of the interim management team from PT. ABC Company, who will monitor the growth of the retail store and make improvements and business maneuvers if necessary. The administrative functions of the Avant-Garde Shop will be the primary focus of the other team member, PT. Avant-Garde.
Organizational Structure:
The organization will be dynamic since most personnel are involved in both planning and operation. There are three functioning groups within the company: Shareholders, Interim Management and Business Development Consultants from PT. ABC Company, and the Corporate Communications Division of PT. Avant-Garde.
Personnel Plan:
The personnel plan is shown in the following table:
[table]
[tr]
[td colspan="4" style="text-align: left"]Personnel Plan[/td]
[/tr]
[tr]
[td style="text-align: left"]Year 1[/td]
[td style="text-align: right"]Year 2[/td]
[td style="text-align: right"]Year 3[/td]
[/tr]
[tr]
[td style="text-align: left"]Store Staff[/td]
[td]$9,600[/td]
[td]$11,000[/td]
[td]$11,000[/td]
[/tr]
[tr]
[td style="text-align: left"]Marketing/Store Manager[/td]
[td]$12,000[/td]
[td]$12,400[/td]
[td]$12,400[/td]
[/tr]
[tr]
[td style="text-align: left"]Total People[/td]
[td]2[/td]
[td]2[/td]
[td]2[/td]
[/tr]
[tr]
[td style="text-align: left"]Total Payroll[/td]
[td]$21,600[/td]
[td]$23,400[/td]
[td]$23,400[/td]
[/tr]
[/table]
The initial funding from investors (ABC Company and XYZ Company) will enable us to renovate the space and buy initial inventory. With heavy marketing and outreach to customers who work outside the Avant-Garde Building, we expect to reach the break-even point early in the second year of this plan. We will keep costs to a minimum with 2 full-time employees running the shop, while advisors and directors from AMC Company oversee operations under their existing duties at PT. ABC Company. We will begin paying dividends to these investors in the second year.
Please note that all tables and charts show data in 1,000’s of Indonesian Rupiah (Rp.).
Start-up Funding:
Approximately Rp. 166,597,000 will be needed from the shareholders for these purposes. Some funding is a priority as it’s crucial to move on to the next step of development. The remaining start-up capital required for the continuation of operations will be provided by the end of the project. We will start paying dividends to the investors in year two of operations (see Cash Flow table for details).
[table]
[tr]
[td colspan="2" style="text-align: left"]Start-up Funding[/td]
[/tr]
[tr]
[td style="text-align: left"]Start-up Expenses to Fund[/td]
[td]$72,000[/td]
[/tr]
[tr]
[td style="text-align: left"]Start-up Assets to Fund[/td]
[td]$94,597[/td]
[/tr]
[tr]
[td style="text-align: left"]Total Funding Required[/td]
[td]$166,597[/td]
[/tr]
[tr]
[td style="text-align: left"]Assets[/td]
[td][/td]
[/tr]
[tr]
[td style="text-align: left"]Non-cash Assets from Start-up[/td]
[td]$25,282[/td]
[/tr]
[tr]
[td style="text-align: left"]Cash Requirements from Start-up[/td]
[td]$69,315[/td]
[/tr]
[tr]
[td style="text-align: left"]Additional Cash Raised[/td]
[td]$0[/td]
[/tr]
[tr]
[td style="text-align: left"]Cash Balance on Starting Date[/td]
[td]$69,315[/td]
[/tr]
[tr]
[td style="text-align: left"]Total Assets[/td]
[td]$94,597[/td]
[/tr]
[tr]
[td style="text-align: left"]Liabilities and Capital[/td]
[td][/td]
[/tr]
[tr]
[td style="text-align: left"]Liabilities[/td]
[td][/td]
[/tr]
[tr]
[td style="text-align: left"]Current Borrowing[/td]
[td]$0[/td]
[/tr]
[tr]
[td style="text-align: left"]Long-term Liabilities[/td]
[td]$0[/td]
[/tr]
[tr]
[td style="text-align: left"]Accounts Payable (Outstanding Bills)[/td]
[td]$0[/td]
[/tr]
[tr]
[td style="text-align: left"]Other Current Liabilities (interest-free)[/td]
[td]$0[/td]
[/tr]
[tr]
[td style="text-align: left"]Total Liabilities[/td]
[td]$0[/td]
[/tr]
[tr]
[td style="text-align: left"]Capital[/td]
[td][/td]
[/tr]
[tr]
[td style="text-align: left"]Planned Investment[/td]
[td][/td]
[/tr]
[tr]
[td style="text-align: left"]PT. XYZ (32%)[/td]
[td]$63,307[/td]
[/tr]
[tr]
[td style="text-align: left"]PT. ABC Indonesia (62%)[/td]
[td]$103,290[/td]
[/tr]
[tr]
[td style="text-align: left"]Additional Investment Requirement[/td]
[td]$0[/td]
[/tr]
[tr]
[td style="text-align: left"]Total Planned Investment[/td]
[td]$166,597[/td]
[/tr]
[tr]
[td style="text-align: left"]Loss at Start-up (Start-up Expenses)[/td]
[td]($72,000)[/td]
[/tr]
[tr]
[td style="text-align: left"]Total Capital[/td]
[td]$94,597[/td]
[/tr]
[tr]
[td style="text-align: left"]Total Capital and Liabilities[/td]
[td]$94,597[/td]
[/tr]
[tr]
[td style="text-align: left"]Total Funding[/td]
[td]$166,597[/td]
[/tr]
[/table]
Important Assumptions:
– We assume that we have secured the purchase of merchandise in the first two years of operation.
– All employees except Store Staff are working under the Interim Management Team.
– The Avant-Garde Shop assumes medium growth in the beginning without a major recession.
– The Avant-Garde Shop assumes no unforeseen significant increase in retail space.
Key Financial Indicators:
The key indicators of financial success in our plan are positive: increasing sales, increasing control over costs, and increasing profit margins.
Our break-even analysis is summarized by the chart and table below (all numbers in 1,000’s of Rupiah). With a 28% variable cost of goods, we will break-even at Rp. 8,022,000 in monthly sales. We expect to reach the break-even point early in our second year.
Break-even Analysis:
Monthly Revenue Break-even: $8,022.
Assumptions:
– Average Percent Variable Cost: 28%
– Estimated Monthly Fixed Cost: $5,776.
8.5 Projected Profit and Loss:
The chart and table below show projected profit and loss. Our highest operating expense is rent, totaling Rp. 28,000,000 per month, due to the high cost per square meter in the Avant-Garde Building.
Pro Forma Profit and Loss:
| Pro Forma Profit and Loss | |||
| Year 1 | Year 2 | Year 3 | |
| Sales | $90,299 | $95,717 | $101,460 |
| Direct Cost of Sales | $25,282 | $22,530 | $22,980 |
| Other Costs of Sales | $0 | Rp.0 | Rp.0 |
| Total Cost of Sales | $25,282 | $22,530 | $22,980 |
| Gross Margin | $65,017 | $73,187 | $78,480 |
| Gross Margin % | 72.00% | 76.46% | 77.35% |
| Expenses | |||
| Payroll | $21,600 | $23,400 | $23,400 |
| Marketing/Promotion | $4,515 | $4,786 | $5,073 |
| Depreciation | $0 | $0 | $0 |
| Rent | $28,800 | $28,800 | $28,800 |
| Utilities | $12,000 | $12,000 | $12,000 |
| Other | $2,400 | $2,400 | $2,400 |
| Total Operating Expenses | $69,315 | $71,386 | $71,673 |
| Profit Before Interest and Taxes | ($4,297) | $1,801 | $6,807 |
| EBITDA | ($4,297) | $1,801 | $6,807 |
| Interest Expense | $0 | $0 | $0 |
| Taxes Incurred | $0 | $0 | $0 |
| Net Profit | ($4,297) | $1,801 | $6,807 |
| Net Profit/Sales | -4.76% | 1.88% | 6.71% |
8.6 Projected Cash Flow:
Cash flow projections are crucial to our success. The table below displays cash flow for the first three years, while the chart illustrates monthly cash flow in the first year. Monthly cash flow projections can be found in the appendix. The following table presents our planned dividends paid to investors in the second and third years.
Pro Forma Cash Flow
| Year 1 | Year 2 | Year 3 | ||
| Cash Received | ||||
| Cash from Operations | $90,299 | $95,717 | $101,460 | |
| Cash Sales | $90,299 | $95,717 | $101,460 | |
| Subtotal Cash from Operations | $90,299 | $95,717 | $101,460 | |
| Additional Cash Received | ||||
| Sales Tax, VAT, HST/GST Received | $0 | $0 | $0 | |
| New Current Borrowing | $0 | $0 | $0 | |
| New Other Liabilities (interest-free) | $0 | $0 | $0 | |
| New Long-term Liabilities | $0 | $0 | $0 | |
| Sales of Other Current Assets | $0 | $0 | $0 | |
| Sales of Long-term Assets | $0 | $0 | $0 | |
| New Investment Received | $0 | $0 | $0 | |
| Subtotal Cash Received | $90,299 | $95,717 | $101,460 | |
| Expenditures | Year 1 | Year 2 | Year 3 | |
| Expenditures from Operations | ||||
| Cash Spending | $21,600 | $23,400 | $23,400 | |
| Bill Payments | $59,711 | $66,981 | $71,309 | |
| Subtotal Spent on Operations | $81,311 | $90,381 | $94,709 | |
| Additional Cash Spent | ||||
| Sales Tax, VAT, HST/GST Paid Out | $0 | $0 | $0 | |
| Principal Repayment of Current Borrowing | $0 | $0 | $0 | |
| Other Liabilities Principal Repayment | $0 | $0 | $0 | |
| Long-term Liabilities Principal Repayment | $0 | $0 | $0 | |
| Purchase Other Current Assets | $0 | $0 | $0 | |
| Purchase Long-term Assets | $0 | $0 | $0 | |
| Dividends | $0 | $3,000 | $3,000 | |
| Subtotal Cash Spent | $81,311 | $93,381 | $97,709 | |
| Net Cash Flow | $8,988 | $2,336 | $3,751 | |
| Cash Balance | $78,303 | $80,639 | $84,390 | |
8.7 Projected Balance Sheet
The table shows the annual balance sheet results. After the first year, when we establish profitability, we project steady growth in net worth despite dividend payments to initial investors. Detailed monthly projections are in the appendix.
| Year 1 | Year 2 | Year 3 | ||
| Assets | ||||
| Current Assets | ||||
| Cash | $78,303 | $80,639 | $84,390 | |
| Inventory | $15,840 | $14,116 | $14,398 | |
| Other Current Assets | $0 | $0 | $0 | |
| Total Current Assets | $94,143 | $94,755 | $98,787 | |
| Long-term Assets | ||||
| Long-term Assets | $0 | $0 | $0 | |
| Accumulated Depreciation | $0 | $0 | $0 | |
| Total Long-term Assets | $0 | $0 | $0 | |
| Total Assets | $94,143 | $94,755 | $98,787 | |
| Liabilities and Capital | Year 1 | Year 2 | Year 3 | |
| Current Liabilities | ||||
| Accounts Payable | $3,844 | $5,654 | $5,880 | |
| Current Borrowing | $0 | $0 | $0 | |
| Other Current Liabilities | $0 | $0 | $0 | |
| Subtotal Current Liabilities | $3,844 | $5,654 | $5,880 | |
| Long-term Liabilities | $0 | $0 | $0 | |
| Total Liabilities | $3,844 | $5,654 | $5,880 | |
| Paid-in Capital | $166,597 | $166,597 | $166,597 | |
| Retained Earnings | ($72,000) | ($79,297) | ($80,496) | |
| Earnings | ($4,297) | $1,801 | $6,807 | |
| Total Capital | $90,300 | $89,101 | $92,908 | |
| Total Liabilities and Capital | $94,143 | $94,755 | $98,787 | |
| Net Worth | $90,300 | $89,101 | $92,908 | |
8.8 Business Ratios
The following table outlines some important ratios from the Gift, Novelty, and Souvenir Shop industry. The final column, Industry Profile, details specific ratios based on the industry’s Standard Industry Classification (SIC) code, 5947.
| Ratio Analysis | ||||
| Year 1 | Year 2 | Year 3 | Industry Profile | |
| Sales Growth | 0.00% | 6.00% | 6.00% | 0.44% |
| Percent of Total Assets | ||||
| Inventory | 16.83% | 14.90% | 14.57% | 34.88% |
| Other Current Assets | 0.00% | 0.00% | 0.00% | 23.80% |
| Total Current Assets | 100.00% | 100.00% | 100.00% | 76.55% |
| Long-term Assets | 0.00% | 0.00% | 0.00% | 23.45% |
| Total Assets | 100.00% | 100.00% | 100.00% | 100.00% |
| Current Liabilities | 4.08% | 5.97% | 5.95% | 34.24% |
| Long-term Liabilities | 0.00% | 0.00% | 0.00% | 15.29% |
| Total Liabilities | 4.08% | 5.97% | 5.95% | 49.53% |
| Net Worth | 95.92% | 94.03% | 94.05% | 50.47% |
| Percent of Sales | ||||
| Sales | 100.00% | 100.00% | 100.00% | 100.00% |
| Gross Margin | 72.00% | 76.46% | 77.35% | 39.04% |
| Selling, General & Administrative Expenses | 76.76% | 74.58% | 70.64% | 24.17% |
| Advertising Expenses | 0.00% | 0.00% | 0.00% | 1.96% |
| Profit Before Interest and Taxes | -4.76% | 1.88% | 6.71% | 1.36% |
| Pro Forma Balance Sheet | |||||||||||||
| Month 1 | Month 2 | Month 3 | Month 4 | Month 5 | Month 6 | Month 7 | Month 8 | Month 9 | Month 10 | Month 11 | Month 12 | ||
| Assets | Starting Balances | ||||||||||||
| Current Assets | |||||||||||||
| Cash | $69,315 | $74,502 | $75,918 | $77,405 | $78,964 | $80,597 | $82,304 | $84,086 | $85,943 | $87,877 | $89,887 | $91,448 | $78,303 |
| Inventory | $25,282 | $23,175 | $21,068 | $18,962 | $16,855 | $14,748 | $12,641 | $10,534 | $8,427 | $6,321 | $4,214 | $17,947 | $15,840 |
| Other Current Assets | $0 | ||||||||||||
| Total Current Assets | $94,597 | $97,678 | $96,986 | $96,366 | $95,819 | $95,345 | $94,945 | $94,620 | $94,370 | $94,197 | $94,101 | $109,395 | $94,143 |
| Long-term Assets | |||||||||||||
| Long-term Assets | $0 | ||||||||||||
| Accumulated Depreciation | $0 | ||||||||||||
| Total Long-term Assets | $0 | ||||||||||||
| Total Assets | $94,597 | $97,678 | $96,986 | $96,366 | $95,819 | $95,345 | $94,945 | $94,620 | $94,370 | $94,197 | $94,101 | $109,395 | $94,143 |
| Liabilities and Capital | |||||||||||||
| Month 1 | Month 2 | Month 3 | Month 4 | Month 5 | Month 6 | Month 7 | Month 8 | Month 9 | Month 10 | Month 11 | Month 12 | ||
| Current Liabilities | |||||||||||||
| Accounts Payable | $0 | $3,843 | $3,844 | $3,844 | $3,844 | $3,844 | $3,844 | $3,844 | $3,844 | $3,844 | $19,156 | $3,844 | |
| Current Borrowing | $0 | ||||||||||||
| Other Current Liabilities | $0 | ||||||||||||
| Subtotal Current Liabilities | $0 | $3,843 | $3,844 | $3,844 | $3,844 | $3,844 | $3,844 | $3,844 | $3,844 | $3,844 | $19,156 | $3,844 | |
| Long-term Liabilities | $0 | ||||||||||||
| Total Liabilities | $0 | $3,843 | $3,844 | $3,844 | $3,844 | $3,844 | $3,844 | $3,844 | $3,844 | $3,844 | $19,156 | $3,844 | |
| Paid-in Capital | $166,597 | $166,597 | $166,597 | $166,597 | $166,597 | $166,597 | $166,597 | $166,597 | $166,597 | $166,597 | $166,597 | $166,597 | |
| Retained Earnings | ($72,000) | ($72,000) | ($72,000) | ($72,000) | ($72,000) | ($72,000) | ($72,000) | ($72,000) | ($72,000) | ($72,000) | ($72,000) | ($72,000) | |
| Earnings | $0 | ($763) | ($1,455) | ($2,075) | ($2,622) | ($3,096) | ($3,496) | ($3,821) | ($4,070) | ($4,244) | ($4,340) | ($4,358) | ($4,297) |
| Total Capital | $94,597 | $93,834 | $93,142 | $92,522 | $91,975 | $91,501 | $91,101 | $90,776 | $90,527 | $90,353 | $90,257 | $90,239 | $90,300 |
| Total Liabilities and Capital | $94,597 | $97,678 | $96,986 | $96,366 | $95,819 | $95,345 | $94,945 | $94,620 | $94,370 | $94,197 | $94,101 | $109,395 | $94,143 |
| Net Worth | $94,597 | $93,834 | $93,142 | $92,522 | $91,975 | $91,501 | $91,101 | $90,776 | $90,527 | $90,353 | $90,257 | $90,239 | $90,300 |
Business Plan Outline
- Executive Summary
- Company Summary
- Products
- Market Analysis Summary
- Strategy and Implementation Summary
- Web Plan Summary
- Management Summary
- Financial Plan
- Appendix
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I’m Andrew Brooks, a seasoned finance consultant from the USA and the mind behind phonenumber247.com.
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