Summarized Cash Flow and Proforma for 6 months
“Spend your whole year in Summer”
995 Elmwood Avenue, Buffalo NY, 14222
p: (716) 750-2198 f: (716) 366-3250
www.summerstores.com
CEO: Summer Georger
19 Hodge Avenue, Buffalo NY, 14222
(585) 750-2198
Prepared: May 2nd, 2017
Table Of Contents
Executive Summary
SUMMER Business & Operation
Industry, Target Customer, and Competitor Analysis
Product/Service Plan
Marketing Plan
Operations and Development Plan
Management Team
Critical Risks
Exit Strategy
Financial Plan
Executive Summary
SUMMER Business & Operation
SUMMER is going to be the first of it’s kind on the Elmwood strip in Buffalo, NY. This low cost, yet trendy clothing store will open up Friday, May 18th, 2018 just before Memorial Day weekend to kick off the summer season. It is located in the heart of Elmwood Village, at 995 Elmwood Avenue. This is a prime location due to high foot traffic, with cafes, bakeries, restaurants, shoe stores, gyms, etc. in close proximity. It is just around a mile away to Buffalo State College, and in the other direction just miles from D’Youville College. It is also a short distance off of the Scajaquada Expressway, therefore making it easily accessible to the young women who live in surrounding areas.
SUMMER’s layout will be clean and un-cluttered. This boutique will have clothing hanging on the walls in an aesthetically pleasing layout, and have 4 circle racks on the floor, as well as eye level bars against opposing walls with clothing on them as well. There will be 4 fitting rooms in the back, with small yet comfortable seating areas in front for families and friends to aid in the trying on and picking out process. With 77% of customers who enter the fitting room buying at least one item, it is important to make this part of the shopping trip pleasurable and satisfying. I mean to keep a limited amount of racks around the store, as it is my experience that when there is too much product on the floor, it makes the shopping experience a frustrating one rather than an enjoyable one. I have worked in the retail industry and found that when there are too many clothes and hangers forced into limited space on the rack, it makes for an unkempt appearance as well as a challenging task to try to pull them apart to find your size. At SUMMER, I will have a maximum of 2 items of each size of each item on the rack at all times, with the extra sizes in back. I will keep this up because I will have at least 2 employees (myself included) on the floor at all times, and a maximum of 3 employees (myself included) on the floor during busy times. This will allow 1-2 employees to assist each customer’s needs as well as 1-2 employees to keep the store up to standards.
SUMMER will be open for business seven days a week, though the hours of 11:00am and 7:00 pm, Sundays included. Although this will mean more pay roll, since it’s target market consists of mainly school aged females and young women in the work force, this will make it more easily accessible to them once they get out of school or work. This boutique will also have an easy-to-navigate online site, making it convenient for the shopper who prefers the confines of her own home to try on.
Another unique aspect of SUMMER is that it will have an iPhone and Android compatible app that customers can download. There, customers and prospective customers will be able to browse the selection of styles we offer, as well as the amount of each size and/or color we currently have in stock. This will make it easier for the customer as they wont have to come into the store only to find out that we have sold out of the specific item they want. The app will also be easy to navigate, and have our hours of business, contact information, and a forum in which customers can submit suggestions of what they would like to see in the store. I believe this app will give us a leg up on the competition as is it something that has only been available with larger retailers in the past, and has proven to be a great tool to improve shopping experience and overall customer satisfaction.
The current economic state in the boutique industry is, truthfully, a rocky one, but one that shows promise for SUMMER’s specific type of store. The retail industry’s sales as a whole have increased 4.5% between 1995 and 2015. Also, stores that provide a clear, transparent product and mission are expected to thrive in upcoming years as the customer base preference has shifted toward a more pleasurable experience as whole rather than a quick in and out one.
Looking to the economic status of the country as a whole, the U.S. Gross Domestic Product will rise to 2.1 percent in 2017, and continue in 2018. The unemployment rate in our country is also on the decrease, which is a positive indicator of how businesses will do in the future economy. Since the economic crisis of the last decade is on the way out, and with customer buying trends shifting towards a more personalized experience, I have faith that a company that maintains a low enough price point that allows the customer to be comfortable, as well as a high standard of convenience and service will thrive.
SUMMER’s main objective is to provide an easy option to obtain high quality service and clothing at a low cost. As this is a brand new company, no changes have been made in structure or ownership and I’m very confident in saying that there will not be any time soon. I, Summer Georger, am the sole owner of this company and am committed to my mission.
Looking toward the future, I do not intend to sell SUMMER to any other company or investment group. I intend to keep it a relatively small business, expanding to 15-20 stores at most if and when the time comes. This way I can ensure my product will be sold the way I intend – at a high standard. When there comes a time I can no longer run the company, I intend to transfer ownership to an employee of my choosing, who has proved to be loyal to the company and I, and share the same values as me.
Industry, Target Customer, & Competitor Analysis
The boutique industry is an industry unlike many others. It deals with small-scale day-to-day and business operations as well as a highly specific niche. For this reason, I feel SUMMER would do extremely well in the Elmwood Village. In 2015, the U.S. retail industry showed expansion despite some lingering effects from the Great Recession. As of September 2016, the total industry size of clothing boutiques in the U.S. was a total of 140,080 businesses, and the total number of employees was 250,737. Also as of September 2016, annual revenue for the clothing boutique industry was $22 billion, and earning trends for small businesses were up 4 points from February to March 2017. Although small business optimism dropped .6 points to 104.7 from February to March, the graph still shows a very strong optimism for small business ventures, and shows a reasonable upward trend since the Recession in ’09, when it was around 81 points.
Since clothing boutiques are generally small businesses that typically hold no more than 3 or 4 locations, there are no major competitors nationally, although there are competitors who were aforementioned in the surrounding area. Boutiques are by definition highly niche-oriented businesses, however some do sell more accessories and home decor than clothing. SUMMER will do the opposite and participate specifically in the clothing boutique niche. Boutiques also often come with the conception that they are pricey, however SUMMER will stand out in that it will be a low cost boutique.
The effects that the Recession did have on the retail industry, though, actually work in SUMMER’s favor. Customer’s buying habits and preferences shifted towards being an empowered customer, one that is able to trust what they are buying, who they are buying from, how quickly they receive it and if it is in the way that they want to receive it.
According to Forbes, “small will be the next big.” Young millennials (who compose a large portion of SUMMER’s target market, and whom are the role models for the other portion of it) are looking for a more personalized shopping experience. “Demographic shifts … will favor the special services and products that only small local businesses can provide.” Many have heightened expectations of what the shopping experience should and can be, and SUMMER will deliver just that.
As I mentioned above, SUMMER’s target market is young females, aged 16 to 26, in the Greater Buffalo area. The reasoning behind this is because at 16 years old, girls are just acquiring their license and more independence from their parents. They want to go out shopping with their girlfriends, and they want to have the freedom to choose their own clothes and dress how they want. They feel they are finally mature and able to make the decision on how and when to spend their money, although at 16, generally speaking, they don’t have a ton of it (hence the cheaper price point of the products). Most 16-year-old girls are worried about popularity in high school. In other words - they want to be liked and respected by their peers. A large part of this comes from the way they present themselves – are their clothes out of date and hand-me-downs? Or are they new, fashionable, and fitting? Think back to High School and recall who the “popular kids” were – I’m willing to bet it was the ones in the current trends. This mindset carries though out the rest of my target market’s life, and, more broadly, society as whole. In school, college, and just every day life in general, young women use common spaces like malls, restaurant’s, and streets as their runway – hence where the term “street style” came from. Females constantly wear their best to not only feel at their best, but to show that they are a force to be reckoned with. Think: who are you more likely to have respect for? a young women walking around in sweats - hair tied up and no makeup? Or are you more likely to have respect for a young woman who is wearing a chic outfit, fitted to her body, in current trend, and looking like she has done something with herself? With SUMMER opening and available to the Buffalo area, this look will no longer be so difficult and costly to achieve. The target market is capped around 26 because although the boutique is selling trendy clothing, this is around the age that females begin to engage more in career driven lives and/or family life. Since the clothes at my store are more in line with a younger target market, I expect to see around 26 the age that less young women are coming in and buying SUMMER’s clothing.
SUMMER’s competitors include shops such as Blush Boutique, Half & Half, Urban Leisure and Luxury, Village Designs Elmwood, and select others. These boutiques are most often costly to the customer and require a decent paying job, or another good source of income (often parents in SUMMER’s target market’s case). As an example, when shopping at Blush Boutique, expect to see a minimum average price tag of $40-$50 on a shirt, and upwards of $120 on a pair of pants. This is neither practical nor enjoyable for most 16-26 year old females. Also lacking in my competitors is a solid web page. When searching Half & Half, search results yield only a Facebook page with a few pictures. They do not have a website and they do not have an app. Urban Leisure and Luxury has a website with a good description of who they are, but only list the categories and brands that they carry rather than even showing pictures of their products they have in store.
Product/Service Plan
SUMMER stands alone in the quality of service, as well as the quality of high fashion clothing and accessories at a much lower price point. This boutique will offer young women aged 16-26 living in the Buffalo area a wide selection of the most current trends at a highly competitive cost. Full price clothing items will range between $15.00 for simple staple pieces (plain color tees, bralettes, tank tops) and $60 for heavier items like denim and jackets. Full price jewelry will retail for between $13 and $30 depending on how much material is used and also the quality of material being used (nickel or sterling silver). Full price shoes will retail between $20 for sandals and $40 for shoes, as SUMMER will not be selling name brand products. These prices are just enough lower than the boutiques that already exist on the Elmwood strip, yet still high enough where I will make a profit. I am certain of this as the cheaper staple items, I will buy more of, as they never go out of style and this way I can get better deals on them. For more expensive items I will order less of them but charge more, still making sure I make a profit. As I mentioned above, my competitor’s boutiques retail tops for an average minimum price tag of $40-50, while my fashion tops will retail for an average of $25-35.
However, the price of the clothing alone is not what will propel my business to the top. SUMMER will provide a unique in-store experience by making sure each member of the staff is highly knowledgeable about each product, the measurements, the fabric, the washing instructions, the best fit for each body type, and more. This will help increase customer satisfaction and trust in buying from us because they feel confident that when they walk out there will be no hidden surprises come wear or wash as happens with a lot of other clothing retailers. Often times the sales associates are just there for a source of some income, don’t really care about fashion or the company, and in turn provide sub-par service to their customer. You tend to see this more at SUMMER’s major retailer competitors such as Forever 21 and H&M. Frequently a customer can walk in one of these stores and not even be greeted, much less helped on a personal level. When shopping at these stores, the customer usually walks in, browses the literal hundreds of clothes that are thrown together haphazardly on racks, chooses one or two items to take to the fitting room, tries them on with little to no assistance, buys them because – hey, why not at this price, and walks out feeling confused and speaking from experience, with a little bit of a headache. SUMMER offers these low prices but without the loads and loads of clothing that you can barely sort though, and with an unparalleled level of customer service.
As I explained before, SUMMER will be set up in a clean and highly organized, aesthetically pleasing way. All clothes available will be able to be clearly seen, no rack over-crowded, with no more than 2 of each size on the rack at a time. From market research, we know that the more focused your market and sales are, the better the business can do. We will also offer beverage service at the fitting rooms with a selection of water, San Pellegrino, and a variety of other soft drinks, providing a high-end and individualized feel to the experience (but at an extremely low cost to the business, with soda cans and water bottles costing just cents to a dollar.)
One thing that will make SUMMER soar above the competition is its online presence. A website and an app will be set up with easy to navigate tabs, white background, and monochromatic tones. Right now, in 2017, that is what is in trend: sleek white and black, touches of marble design. Of course, the good thing about websites and apps is that they are a tool that can, and will, constantly be updated. If the trend starts shifting to bright colors, so is the direction our online portals will go – we are a trend-based company, and understand that to survive, you must go with the times. Also constantly updated will be the clothing on our webpage and app. We will implement software that tracks in real time what is being sold, and how many of each item we have in stock. We will accept online orders though the website and the app, and they will be sent directly to the in-store computer and then immediately accounted for in stock numbers. This will make it much easier for the customer who likes to shop from the comfort of their own home. However, once the order is placed, it will not be sent to their address. It will be ready for in-store pickup immediately. This is a business tactic to bring paying customers into the store. This way, our staff has a chance to sell even more items to the customer. For example, “I see you bought this top, it would look amazing with this pair of shorts!”
Great clothes, competitive cost, unparalleled customer service, and technological accessibility are the four elements I truly believe will ensure the success of SUMMER. Given there is success the first year, I plan on expanding SUMMER into first Williamsville. There, I believe there is a large market for trendy young women wanting to look and feel their best at all times. Williamsville is also bordered by Clarence, two of which are on the wealthier side of suburbs, with residents that enjoy the personalized and unique boutique experience rather than a large, confusing, and generic retail store. If these two locations prove to be lucrative, then I would like to expand into the metropolitan area of Rochester, on Park Avenue – a strip much like Elmwood Ave. in Buffalo. All three of these markets hold high value in retail, and especially personalized boutique retail.
Marketing Plan
First, SUMMER will need to identify prospective customers. I will do this by using the one thing that the overwhelming majority of young females aged 16-26 are absolutely attached to – social media. Using Facebook’s “Create an Ad” tool, I created an expected market size in about 5 minutes. Using the parameters of “People who live within a 50 mile radius of 995 Elmwood Avenue”, “Age 16-26”, “Women”, and detailed targeting interests in Clothing, Fashion & Style, Trendy Fashion, Women’s Fashion, Women’s clothing, Women’s Accessories, and Boutiques, I generated an estimated potential reach of 91,000 people – that is to say 91,000 potential accounts on Facebook my Ad would pop up on. Estimated daily results yielded a smaller, but still significant number since my business is small – a number of anywhere between 4,800 and 9,200. Therefore, as a part of my marketing strategy, I will use the Facebook Ad tool to identify and reach these potential customers at a cost of $35.00/ week.
In addition, SUMMER will use Instagram sponsored ads. Since Instagram is owned and operated by Facebook, creating an ad is very much the same in the fact that you can choose parameters of who will see your ad. The numbers of my potential reach were similar, although I narrowed my search to only a 30-mile radius of 995 Elmwood. My potential reach showed at 100,000 people. What showed different numbers was my Estimated Daily Reach was 1,300 to 4,100 people. Again, the market parameters were similar, including things like Women’s Clothing, Shopping and Fashion, Fashion Accessories, and Boutiques. Again, cost is at $35.00 a week for constant promotion. The number of potential customers who will see my ad proves Instagram and Facebook are a very important part of my marketing strategy.
Since I expect the majority of my customer base to be college aged girls, another marketing tool I will use is employing campus representatives. Since SUMMER is located right on the Elmwood strip, just about a mile from Buffalo State campus, I will definitely utilize young women from that school, as well as campus representatives from University at Buffalo, D’Youville College, and Canisius College since these schools are the closest in proximity and will bring in the most people. I’ve decided to forego campus representatives at Daemen College as it is too far away, and underclassmen are not allowed cars. As we all know too well – college girls love to talk. Once a trendy girl is seen wearing an item from my store and is asked about it, it automatically puts the name in the other girl’s mind. I will have two campus reps hand out fliers for the grand opening two days a week, two weeks prior to the opening for two hours at a time. These fliers can be handed out to people individually, or they can be scattered in common areas, such as the student union, library, classrooms, food courts, etc. They will be allowed to purchase a top from the store for 50% off to wear while handing out the fliers, and get to keep that top as a thank you in addition to their pay of $10 an hour. That makes for a total cost of $640 for pay of the campus representatives.
To collect some primary data, these flyers that the campus representatives hand out will have a short anonymous survey on the back, with questions pertaining to monthly income, amount willing to be spent monthly on clothes, how far they are willing to travel for unique clothes, do they think there is a need for more unique clothes in Buffalo area, how often they shop at the existing boutiques and why, etc. If they bring this flyer back to the table that the campus representatives are at, they will receive a coupon for 15% off their first purchase. Since the flyers are already being printed as a marketing tool, the cost of this research will be zero dollars.
As for pricing strategies, my approach is straightforward: aim to be the most affordable without losing any significant profit and still having quality clothing that you can wear more than once. The companies I will buy from will be wholesale suppliers that I will find from publications and from attending trade shows. I am confident in my buying abilities as I have spent years sewing my own clothes and am familiar with different materials, stitches, and other factors that make a product quality. The selling approach I will use is extremely attentive, highly knowledgeable, yet understand social clues when a shopper may not want to be helped and just browse. The sales force will be composed of me, Summer Georger, a manager, and four to five employees aged 19 and up. The employee’s will be compensated at $10.00 an hour and also enjoy a discount of 40% off full price merchandise, and an additional 20% off sale merchandise. SUMMER’s ideal employee is a young, fashionable girl who is interested in not only wearing the latest trends, but also keeping an eye on what’s up and coming. I will enlist the help of my employees as a marketing tool by letting them make suggestions on what to buy, aiding in the buying process, and also letting them put together stylish outfits to dress mannequins in. I will also have them put on outfits to “model” them, taking pictures to post on the web page, on Facebook, and on Instagram. This will show our inventory in a better light, as it is not always easy to tell what the clothes will look like once on the body. It will also give our customers inspiration to come in and put together full outfits, rather than just buy one top or one bottom.
In addition to using only employee’s on our website, Facebook, and Instagram, I will ask permission of our customers to snap pictures in their outfits. If they consent, I can post those online and tag them, therefore increasing the chance that their friend base will see our clothes and go to our page.
Promotions also will be used as a marketing tool for SUMMER. Again, mainly though social media platforms, I will host promotions such as on Instagram: “1. Follow @summerstores, 2. Repost this picture and 3. Tag us in your post to get entered for a chance to win a $40 gift card to SUMMER!” I can use the same model on Facebook by reposting pictures that we post to be entered into contests. The pictures that will be reposted and shared will be of our employees modeling our clothes in front of our store. By sharing and reposting the photos, it will generate more notice of the stores name and generate more traffic on our sites, creating more of a chance for potential customers to browse the clothes and shop.
In addition to social media promotions, the store will hold weekly promotions such as “Deal of the Week” in which we will choose an item a few weeks in advance to order double sizes of, and sell it for an additional percentage off. In an effort to increase sales, the Deal of the Week will often be either one part of a set (a top is the deal and the bottoms are full price), or it will be presented as part of an outfit on a mannequin that is adjacent to it. Also, at the end of each season, we will have “clear out” sales in which the items from last season will be sold at a discounted price. These promotions and social media ads will attract the whole range of the target market.
As for the older segment of the target market, those young women aged 21-26, I feel social media in conjunction with word of mouth will be enough. Since SUMMER is a small business start up, I chose to implement a single-segment strategy in which I concentrate on the most profitable segment of my market, which I believe will be college age young women, looking to stand out from their peers on campus and at parties. That being said, the demographics of the Elmwood strip are also very promising as far as SUMMER’s older target market goes. There are 9,892 females in the Elmwood Village alone, which make up almost exactly half of the entire population of the village. The majority of residents in Elmwood Village are white-collar workers, at 75.8%, which means that they most likely have money to spend on material goods such as trendy clothing. As I mentioned before, Elmwood Village is an area of very high foot and bike traffic, with Elmwood Strip experiencing the highest numbers. If the majority of the population passes through the Elmwood strip at least once or twice a week, the design of the store front and the posters in the window will create a decent amount of buzz to the point where they will want to check out the incoming business in their area.
Market potential is high in the geographic location where SUMMER is to be operated. What is good about the Elmwood Village is that it is loyal to small businesses. Almost every storefront is occupied by a small business, with a few chains such as Jimmy Johns, Panera, and Starbucks, which although they are all chains, still all have lots of small business character to them (café feel, and in Jimmy John’s case, quirky signs, slogans and mottos). There was even a point in time when the residents of the area protested a modern apartment complex for fear it would ruin the authentic, artistic and unique atmosphere. For these reasons I am confident that SUMMER would thrive as a new up and coming clothing boutique.
Operations and Development Plan
SUMMER will be located at 995 Elmwood Avenue, right in the heart of Elmwood Village. The storefront is 1,000 square feet, and has an open layout so will be easily transformed into an open layout store space. There is already an office area in the back; all that I plan to put in is a wall to connect the front wall of the office to the adjacent wall to create a room for back stock. Against the back wall of the back stock room is where there will be walls for four fitting rooms, with curtains enclosing the front. As far as equipment goes, all I will need is 2 large tables and 2 small tables for folded clothing, and 4 circle racks for hanging clothing. On the walls, I will have eyelevel bars extending from front to back with clothes evenly spaced out all along. Above that I will have two tiers of face out items, accessible only by asking an associate for help.
The day-to-day and overall operation of SUMMER will contribute to the firm’s competitive advantage by adding value for the customer in numerous ways. For one, as I’ve mentioned before but can’t mention enough, the customer service will be exemplary on a personal level. The employees will learn to build a relationship with the customers as to make them want to come back over and over again for a truly enjoyable experience. Also, the operation of ordering and making sure everything is kept stocked, organized and accessible is of important value to the shopper.
Management Team
My management team will consist of myself and one other manager who is a long time friend and colleague of mine, Marisa Gamble. Together, we have worked in the retail industry for 5 years, moving our way up from associates, to stylists, to sales leads, to managers. We both know the industry and how it operates, we both know how to do scheduling for employees, and keep them motivated and the morale high. As I have experience in fashion merchandising and she has graduated with an Accounting degree, I will handle the buying and merchandising, and she will handle the budget and the payroll. Both Marisa and myself will work there an average of 28 hours a week, with one of us being there at all times.
Under the upper management, SUMMER will employ four to five employees who will be called stylists, as that’s what they are. They will have extensive knowledge about the products we carry, and also an eye for styling outfits that look great that someone otherwise may not have put together.
Critical Risks
