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The vision of the business is to establish a high-end fashion label that will be focused on producing quality women wear that will be cost effective and competitive in the fashion industry market. In addition, the business will look to in co-operating new emerging trends in business advertisements and distributions such as the use of online marketing platforms and social media in order to reach a wide customer base and mitigate the cost of using traditional methods. The venture will be founded on the basis of being a difference maker female customers all around the world and bring a whole new experience to the fashion industry by designing clothing brands that will be truly feminine, elegant and sexy. As mentioned earlier, the business will work to establish a strong online presence that will be important in helping the venture to showcase products to prospective customers, establish a market for the brand and raise awareness in the fashion industry. Furthermore, it is expected that the first bunch of customers will be able to purchase the fashion products from online integrated web shops hence the company will build on this early revenue to establish a higher cash flow system that will enable it to be less dependent on high volume contracts from retail and wholesale customers.
The long-term plan is to make an analysis of the possibility of expanding the business globally but this will be done after the company attains some of the set objectives in the early stages of development to avoid costly mistakes. Such objectives include attaining a 40% control of the home market and ensuring that consumers have enough information about the fashion brands in addition to reliable profit margins that portray the possibility of further expansion.
The main aim of the business will be to design and sell ready to wear women clothes that are all rounded in nature such that one can wear them to work or other events such as parties and still be presentable in addition to being comfortable. Currently, the available fashion brands in the market are tailored to be worn at specific time and functions (Gurin 2014, n. p.). Take for example a woman working in an office cannot go to a party directly from work without having to go home and change into something that fits a party. The venture will focus on this market need for something that is more compatible with any event and design affordable, quality brands that will have a touch of luxurious finish, arouses the feeling of elegance and something special. The venture will focus on designing brands that have national recognition and acceptance. Selections will vary from basic cultural wears to more trendy European type of brands that meet British standards. Furthermore, the selection will be available in a variety of measurements that will vary between size 6-18 as well as different style and colors to fit our target market which will comprise of women between the ages of 20 and 35. Over time, the business will depend on consumer feedback, sale reports and suggestions to either face out unwanted brands or introduce new ones that meet the client’s taste and preferences. Much of the selections will be designed according to the business mission statement and will be aimed at ensuring that there will be a range of labels that vary from simple British wear to more sophisticated European styles.
To have a good understanding of the market environment in the UK today, it is important to have an analysis of the available statistics regarding the retail market in the country with a special focus on the fashion industry. The next step would be to examine the available market for women brands and information regarding the target customers.
Over the past one year, the retail market in the country has been reported to have a turnover of around £5 trillion which is an increase of approximately 10% in sales over the previous year (Gurin 2014, n.p.). Currently, the country’s clothing industry comprises of about 50,000 business that runs a total of 100,000 stores and jointly makes an annual revenue turnover of £ 150 billion (Crewe, 2017 n.p).Basically, the fashion industry in the UK is very much divided and concentrated at the top with the top companies managing around 50 thousand stores which translates to around 70% of the overall market share. The other businesses run less than two fashion outlets although it is estimated that some have more than 2 stores (Crewe, 2017 n.p). According to analysts, the demand for fashion clothes is likely to increase as the economy grows and personal income increase. Furthermore, Brexit will accelerate the demand for local designers to supply the local market.
Recent trends suggest that the fashion industry is becoming more dependent on e-commerce and it is estimated that online shoppers in the country are spending almost £350 billion according to Forrester Research firm and this is likely to grow at a rate of 10%. The report further suggests that much of the increased sells by fashion retailers have improved due to use of websites for advertisements and online services.
Taking in to account the fact that much of the population in the UK comprises of mostly women, about three-quarters of these women are in the age bracket of our target customers. In addition, the average income of this women ranges around £ 50,000 with 30% of these women making between £100 and £250 annually meaning that the business will not have to worry about getting clients with enough purchasing power (Crewe, 2017 n.p). As earlier stated, the business will focus on the local market during the initial stages but will look top spread out globally as soon as the brand and image are secured. Actually, the global clothing and textile industry have been experiencing tremendous growth and according to the market line research agency, the industry has hit over $ 5 trillion in 2017 which is approximately 55% and this trend is likely to continue. Market line research firm further states that the womenswear industry is also growing with the EU market accounting for a huge chunk of the market share.
Competition wise, the business will in doubt experience fierce rivalry as the fashion industry is always competitive. Although the venture is based on the promise of offering distinctive fashion dresses and other brands to the market, there will still be other companies that will run similar designs that overlap our models. However, the business will put up measures to deal with competition offered by each by brand and enable the venture to cope with the rivalry and differentiating itself so as to be able to survive in such a competitive environment.
It is important to note that much of the completion and threat to the business is likely to come from the established and specialized manufactures if they decide to produce products that bear similar designs to ours in terms of style and multi-purposes dresses. This has been a common phenomenon in the fashion industry and although the danger of competition from incumbent business is a realistic one, the firm will try its level best to mitigate the threat by acquiring the necessary patent rights. Additionally, the company will look to differentiate itself by concentrating on designing brands that will be more exclusive and limited as well as offer selections that will be very feminine in nature, elegant and sexy. Actually, the firm will look to compete effectively with the large business by diversifying our products to meet different customer needs despite the fact that our firm will be less developed and we will not be able to benefit from the economics of scale. Another form of competition is likely to arise from discounter firms and internet retailers that offer an irregular but economic selection of wears. But the firm will look too much this competition by offering high-quality dresses and other brands that will of greater likability. These coupled with the targeted market approach system will suffice to help the venture perform satisfactorily and fend off competition from the discounter firms. Reliable supplier relationship and quality brand offering will help in preventing future competition from start-ups as it will take a considerable amount of time for any new venture to establish a strong market base similar to ours and even if they do try to catch up, the business would already lay a strong foundation.
The target consumers are mostly women between the ages of 20-40. Female consumers of these age bracket are trendsetters when it comes to fashion. They value unique selection, quality service delivery as well as convenience. Furthermore, they do not mind spending and money is not such a big factor when it comes to decision making. Most of the fashion enthusiastic women are financially independent and reside in developed cities implying that the market is readily available in London. However, this is not mean that the brands will only be meant for high-income customers only. The business will focus on coming up with selections that will be cost-effective and off better quality to suit all clients.
The business location will be set up at the center of London. For years now, the city has had a rich history of being a center of fashion design and upcoming innovative ventures in different fields. Albeit the fact that London is an expensive city to set up a start-ups venture in terms of daily operational costs, the city offers a unique advantage geographically that out outweigh the elevated costs.
Developed infrastructure, ease of access to potential business partners as well as the availability of high-quality textile materials and a variety of relevant events such as fashion design exhibitions and abundant supply of qualified labor are some of the key factors that played a role in deciding where to set up the business headquarters.
The enterprise will start operations will a fairly small team of about 10 employees. The team will be made up of 3 designers, 2 IT experts who will be in charge of conducting online marketing research and responding to customers concerns. We will also have 1 PR specialist who will work to ensure that the business is invited to many fashion exhibitions as possible and will. In addition, the enterprise will have a legal personnel who make sure that all government regulations are met as well as protecting the business interest by obtaining patent rights to protect our design from competitors.
The fashion design venture will need a minimum of £ 950 to launch successfully and cater for operational cost within the first 3 years until the business can start to have a stable cash flow. The fundraising process will be broken down stages whereby stage one will in cooperate all the expenses required for design prototypes and sourcing for the first orders. This will mostly include the material cost for prototypes, taxes and shipping cost materials as well as pattern making expenses. Stage two funding will cover all the expenses to need to meet client’s orders in time and this stage is likely to consume much of the funds raised since the business will be in the process going into full production.
Much of the start-ups capital will be will be sourced from personal savings, friends and family members. They will be used to establish the line, coming up will prototypes for the next period as well as covering operational costs such as rent, payrolls, and utilities. Additionally, much of the initial capital will be invested in purchasing equipment such as sewing machines, laptops, and overlockers all of which will of benefit to the business even in the future.
About £500 of the raised funds will go to covering the cost of all equipment required as well as paying for the employee’s salaries until the venture can be in a position to support itself. £ 300 of the remaining funds will be used in purchasing fabrics, constructing prototypes, paying for contractors and warehouse expenses. The other £100 will be set aside as an emergency fund to account for any unforeseen financial needs in case of any.
Production of the designs will largely depend on the use of sewing machines in order to save time and guarantee efficiency. Also, the firm will partner with Mnet which is an online enterprise that specializes in branding as well as web and logo designing. Furthermore, Mnet conducts market intelligence that is helpful in determining what the consumers want at any particular point in time. The company is very well established in the fashion industry with an experience of over 10 years and we believe that our new venture can learn a lot from them. Additionally, we will partner with other organizations such as the chamber of commerce who will offer strategic partnership in terms of helping the business to get connections to local fashion events and exhibition hence publicize the firm and broaden our market base within our targeted demographics. Such organizations work to support start-ups and partnering with them will be helpful in getting market exposure, business contacts and get to benefit from association advertising. The business will also carry out promotional marketing by allowing 10% discounts our first customer in addition to in cooperating the use of social platforms such as Instagram and Facebook.
According to our marketing projections, venture location, store size and product discounts we estimate that the total annual turnover sales within the first one year will be in the region of £200, £300 in the second year and £400 in the third year. The mean cost of goods sold hence will be 80% hence the business will be left with a gross profit of about 20%. We expect our minimum monthly spending’s to be in the region of £200 which is exclusive of rent salaries and other utilities hence we will have to generate sales above this numbers in order to make a profit and remain in business. The third year of operation is likely to generate more income as a result of reduced cost of operation. Even though promotional discounts are likely to hurt the business, the long-term benefits will outweigh the overall losses by building a strong customer base. Additionally, trade discounts will encourage bulk purchases and therefore the short term loses impact will be minimal.
Considering that much of our business transactions will be conducted online, we will not be able to collect immediate payments from clients thus the statement of income is likely to be quite different and hence there will be a need to prepare bank reconciliation statement. On the other hand, it is quite challenging to forecast the prices of materials and therefore we cannot for tell what our profit margins are likely to be but the venture will try hard to source material fabrics from cheaper markets such as China and the middle east. Other than that we can also rely on local suppliers such as shepherd bush who supply quality material at affordable prices.
Much of our projections will be based on the assumption that the current economic trends, population increase, and consumer spending habits will remain the same for the next five years or so. Additionally, we expect our customers to continue making purchases from us at reasonable prices that will support our profit margins as well as employment of employees on affordable wages.
One of the major problems that are likely to affect the business has to do with Brexit. Even though the business will majorly depend on the local market, having an opportunity to serve the whole EU market would have been great for business. Secondly, market competition from the already established firms as well as start-ups would still be a great challenge to our venture. Additionally, the initial launching cost will limit our ability to diversify our selection which means that we may lose a number of potential customers. Also considering that I will be running the business alone most of the times, it will be challenging to manage the enterprise and still pay attention to other personal responsibilities like studies with experiencing a burnout. Furthermore, since we as the founders have no practical experience in the field of fashion design, the start may be shaky but we hope to whether all the storm the field has to offer by being resilient and dedicated.
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