Scrapbooking Store Business Plan

Storing pictures in a scrapbook has been around for a long time. Unfortunately, the acid and wood by-products used in paper can damage photographs (ever noticed an older yellowed and faded photograph?). In recent years, new technology in acid-free and lignin-free paper has revolutionized this preservation method and made scrapbooking even more popular. Today’s scrapbooks are creative, colorful, decorated with everything imaginable, and really tell a story…your story. It is an amazing way of preserving and displaying precious memories that might otherwise fade away in a dusty box of photos.

The rising interest in scrapbooks as a hobby can bring frustration when supplies are not readily available. Craft stores that don’t specialize in the field may only carry limited inventory. Additionally, store clerks may lack the knowledge or experience to answer questions or explain different scrapbooking techniques.

It’s Scrappy! will focus on providing a wide variety of scrapbook supplies at competitive prices. The owner and her employees will stay informed and up to date on the products, tools, and techniques used in creating scrapbooks, aiming to establish themselves as the one-stop shop for scrapbookers in their community.

1.1 Keys to Success

Supply Availability: Offering unique supplies that cannot be found locally will make It’s Scrappy! the go-to place for scrapbook supplies.

• Prices: It’s Scrappy! will have competitive pricing and strive to offer the lowest prices for most scrapbook categories in the area. We constantly track and compare our competitors’ pricing to ensure we achieve our lowest price goal.
• Classes: It’s Scrappy! will offer a wide range of classes for all ages and skill levels in scrapbooking. Our staff stays updated on the latest techniques to help customers create memorable scrapbook pages.
• Page Design: For customers who lack time, It’s Scrappy! will provide one-on-one consultations to design and produce custom scrapbook pages.
• Location: Our store is conveniently located in a growing area with new businesses opening regularly. It offers ample parking and is easily accessible, serving not only the local community but also the surrounding areas.

1.2 Mission

The mission of It’s Scrappy! is to create a pleasant and enjoyable environment where customers can create scrapbooks that preserve their photo memories for a lifetime.

1.3 Objectives

Our objective is to prioritize customer satisfaction by offering unique items along with commonly found supplies.

• By monitoring competitor prices, we can keep our prices slightly lower and attract more customers.
• We stay updated on the latest trends and techniques in scrapbooking through attending classes and subscribing to magazines.

Company Summary

It’s Scrappy! is a scrapbook supply store that stocks hundreds of products used for this hobby. We also provide knowledge on where to find hard-to-find items that are not part of our regular stock.

We offer weekly classes to teach customers ongoing techniques for creating beautiful scrapbook pages and preserving their photographs. Additionally, we offer design and implementation of original scrapbook pages.

2.1 Company Ownership

It’s Scrappy! operates as a Sole Proprietorship. The owner is investing $20,000 of their own money to start the business.

2.2 Start-up Summary

The primary start-up expenses include inventory, shelving, point-of-sale equipment, and initial advertising. The owner will invest $20,000.

The table below shows the breakdown of expected start-up expenses.

"Start-up Funding"

"Start-up Expenses to Fund" -> $9,000

"Start-up Assets to Fund" -> $10,000

"Total Funding Required" -> $19,000

"Assets"

"Non-cash Assets from Start-up" -> $9,500

"Cash Requirements from Start-up" -> $500

"Additional Cash Raised" -> $1,000

"Cash Balance on Starting Date" -> $1,500

"Total Assets" -> $11,000

"Liabilities and Capital"

"Liabilities"

"Current Borrowing" -> $0

"Long-term Liabilities" -> $0

"Accounts Payable (Outstanding Bills)" -> $0

"Other Current Liabilities (interest-free)" -> $0

"Total Liabilities" -> $0

"Capital"

"Planned Investment"

"Owner" -> $20,000

"Other" -> $0

"Additional Investment Requirement" -> $0

"Total Planned Investment" -> $20,000

"Loss at Start-up (Start-up Expenses)" -> ($9,000)

"Total Capital" -> $11,000

"Total Capital and Liabilities" -> $11,000

"Total Funding" -> $20,000

"Start-up"

"Requirements"

"Start-up Expenses"

"RENT – TWO MONTHS" -> $3,000

"SHELVING" -> $2,000

"ADVERTISING" -> $1,500

"CASH REGISTER/CREDIT CARD TERMINAL" -> $900

"LEGAL FEES" -> $300

"STAFF TRAINING" -> $1,000

"INSURANCE" -> $300

"OTHER" -> $0

"Total Start-up Expenses" -> $9,000

"Start-up Assets"

"Cash Required" -> $500

"Start-up Inventory" -> $7,000

"Other Current Assets" -> $0

"Long-term Assets" -> $2,500

"Total Assets" -> $10,000

"Total Requirements" -> $19,000

"Products and Services"

"It’s Scrappy!" will strive to offer a wide range of scrapbook supplies to achieve various designs envisioned by customers.

"Products"

The following are supply categories that will be stocked:

– Photo albums (Post type or three-ring).

– Acid-free and lignin-free papers in various colors, brands, and sizes.

– Stickers from various designers and manufacturers.

– Embellishments, including brads, snaps, eyelets, fibers, charms, tags, and wire products.

– Assorted adhesives, including glue sticks/pens and mounting tapes/squares.

– Appliques such as chalk and walnut stain.

– Books and magazines (for ideas and techniques).

– Cutting tools such as scissors, precision knives, trimmers, circle cutters, and scoring blades.

– Die cuts of diverse shapes and colors (to match themes).

– Embossing equipment, thin metals, and tools.

– Organizers to hold papers, pens, punches, and stickers.

– Templates (to help achieve different writing fonts).

– Punches in various brands and shapes.

– Pens, pencils, and markers of different brands, sizes, and colors.

"Services:"

In addition to products, "It’s Scrappy!" will offer the following services:

– Classes ranging from teaching introductory level skills to the newest techniques and their implementation in easy ways.

– Customized page design for busy scrapbookers.

"Market Analysis Summary"

Statistics show that this hobby primarily appeals to women. Out of a total surrounding population of 139,750, 71,607 are women, giving our business an estimated 51% share of the potential market.

The average "scrappers" are women aged 20-45. Additionally, "It’s Scrappy!" aims to target the teen and pre-teen market (ages 10-19) by offering special classes and discounts on affordable supplies. This strategy aims to introduce them to scrapbooking as a hobby and teach them a craft they can be proud of. The above-45 age group will also be targeted, encouraging them to display and cherish their photos in a meaningful manner. Special mailings and class offers will be used to promote services.

"4.1 Market Segmentation"

The following groups offer the best opportunities for market segmentation:

The current target group consists of avid scrapbookers who already possess basic knowledge of the hobby and familiarity with most products. This group is also likely to be interested in learning new techniques and staying updated on the latest trends.

Market Analysis

4.2 Target Market Segment Strategy

It’s Scrappy! will focus on these customer groups:

• Teen and Pre-Teen customers: We will stay in touch by keeping up to date on teen activities in the community. We will use this information for special mailings and age-specific classes. Additionally, we will start a membership-only “Teen Scrappers” club offering discounts on supplies.
• Current scrapbookers: We will stay updated on trends and techniques to offer classes and demonstrate new materials.
• Ages 45 and up: We will target this group through mailings and special “50+” age discounts. We will educate them on proper photo storage and offer classes tailored to their needs.
• The Single Dad: We will target this group by offering acid-free albums/glues and papers instead of extensive supplies used for elaborate scrapbooking.
• Internet customers: It’s Scrappy! will have a website with information about our store and the supplies we carry. We plan to expand into an online store in the future.

4.3 Consumer Market Research

The following statistics came from the U.S. Census Bureau and American Demographics:

• Seniors represent 14% of total spending power (approximately $588 billion) with an average household spending of $26,533. Average age is 75.
• Empty Nesters represent 13% of total spending power (approximately $557 billion) with an average household spending of $39,340. Average age is 59.
• Old Baby Boomers represent 24% of total spending power (approximately $1 trillion) with an average household spending of $46,160. Average age is 49.
• Younger Baby Boomers represent 26% of total spending power (approximately $1.1 trillion) with an average household spending of $45,149. Average age is 40.
• Gen Xers represent 18% of total spending power (approximately $736 billion) with an average household spending of $38,945. Average age is 30.
• Gen Yers represent 5% of total spending (approximately $187 billion) with an average household spending of $22,543. Average age is 21.

Strategy and Implementation Summary

The main financial goal for It’s Scrappy! is to increase sales by 5% for years one and two. This will be achieved through regular advertising and mailings to target markets, along with monitoring competitor’s pricing and supplier’s costs to maintain a competitive edge.

5.1 Competitive Edge

We stock all standard exempt supplies in-store and provide reasonable pricing for special order items through our catalog.

• Our supplies are priced at or lower than competitors in our area.
• We offer special classes and a membership plan tailored to the children in our community.
• We keep our employees up to date on new exempt ideas and techniques to teach our customers.
• We have a website that supports our store, providing information and tips about the hobby.

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5.2 Sales Strategy

We track local competitor’s prices and compare them to our supplier’s prices. This helps us achieve our lowest price goals while staying within our target markup.

5.2.1 Sales Forecast

Our projected sales forecast shows a 5% increase for each of the first two years, resulting in a 10% increase in the third year compared to year one. These figures are estimates based on monthly overhead and supply costs, along with our markup percentage and prices for classes and page design.

Sales Forecast:

5.3 Milestones:

The following milestones outline the main tasks for the first year of operation.

5.4 Marketing Strategy:

We will promote the store via the local newspaper. We will also have a grand opening "Get to Know Us" scrapbook party where we will offer refreshments, introduce our staff, give tours of our store, and offer sale pricing on basic exempt supplies.

In the future, we will pursue mailings to regular customers and potential customers in our target market areas, as well as exploring billboard advertising.

Management Summary:

It’s Scrappy! will initially consist of the Owner/Manager and two part-time clerks. We hope to increase staffing as the store becomes more established.

6.1 Personnel Plan:

The following table shows the expected employees needed to run It’s Scrappy! along with their respective payroll.

The owner believes it is important to have herself and two part-time employees to effectively manage store hours. While this does make personnel expenses a significant cost, it is necessary to provide personalized customer service and cover the regular class schedule.

Financial Plan:

The following financial plan includes our projected Break Even Analysis, Profit and Loss, Cash Flow, and Balance Sheet.

7.1 Break-even Analysis:

Our break-even analysis table shows that we will need $7,667 per month to cover regular expenses and salary costs.

Break-even Analysis

Monthly Revenue Break-even: $7,667

Assumptions:

– Average Percent Variable Cost: 25%

– Estimated Monthly Fixed Cost: $5,750

Projected Profit and Loss

The store will take several months to turn a profit. This is partly because it takes time to spread the word about the store being open for business and offering more than our competition to local scrappers.

Although the winter is ideal for class participation, the initial monthly estimates are conservative. It is expected that the advertising campaign will generate more sales and class sign-ups than projected.

Despite high payroll costs for a start-up, the owner believes it is necessary to have two part-time employees to cover the store during open hours. If needed, the owner is willing to reduce her monthly salary to improve cash flow in the first year of operation.

Pro Forma Profit and Loss

7.3 Projected Cash Flow

Although the initial profit margins are small, the cash flow is sufficient to cover estimated monthly expenses and inventory purchases. As additional back-up, a personal loan equal to the initial cost of inventory will be secured so It’s Scrappy! can adapt to changes in supply costs over the first year and be more able to make special-order purchases of new supplies and materials.

Estimated sales are expected to increase during the Fall and into the second winter of operation, while costs will be held as close to the same levels as possible.

Pro Forma Cash Flow

7.4 Projected Balance Sheet

The balance sheet shows estimated assets and liabilities.

7.5 Business Ratios

The following comparison ratios are taken from the Standard Industry Code for "Hobby and Craft Supplies" (SIC code 5945). The estimates are within the standard ratios for this industry.

Pro Forma Cash Flow:

Andrew Brooks

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