Business Plan (стр. 2 из 3)
The information will be deliver to customers on printed lists, if they get information directly in the market building from an operator. Next, it will be delivered electronically, if customers get information by using the Internet. Finally, it will be delivered by fax or orally, if customers get information by phone.
MARKET DATA
To analyze and collect the market data I used as the statistical sources, so and my own experience and knowledge.
Target Market Information
The shopping center “Irkutskiy” is the biggest nonfood market in Irkutsk, in which everybody can buy everything, what is used in everyday life, for example clothes, shoes, satchels, wallets, kitchen-ware and etc. It unites three shopping centers and contains up to 500 small shops. The shopping center “Irkutskiy” is the only big nonfood shopping center with such range of goods in Irkutsk and, consequently, serves most of the Irkutsk population. The shopping center ``Fortuna`` is the biggest car spare part market. The “Complex” is also a big nonfood market, but it is smaller than “Irkutskiy”.
Social Environment
Demographic
The Irkutsk population today is 592,4 thousand people. (http://www.centerru.com/regions/regions.asp?id=7). The potential clients of the shopping center “Irkutskiy”, where I plan to open the first consulting center, and also the potential clients of my database are people from 18 to 60 years. It is 60% of the whole population 355,2 thousand people. (http://www.centerru.com/regions/diagrams/d1_r.html). I do not take into account people below 18 and over 60 because their parents or children usually maintain such people. The people over 60, who are not maintained by their children, usually have very small pension.
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In addition, the shopping center “Irkutskiy” is oriented on the people and households from the middle class with revenues from 120,000 to 240,000 rubles per year. According to the statistical information and my knowledge it is approximately 10% of able-bodied citizens or 35,5 thousand people. (http://www.centerru.com/regions/regions.asp?type=reg&id=7). I also made a small survey, which tells that approximately once for three months respondents of such people make purchases of clothes, shoes, or some other similar products. I assumed that for year potential clients make 142 thousand purchases, 0,38 thousands a day. If every second makes such purchase in of the shopping center “Irkutskiy”, than there may be approximately 190 potential clients of my database a day according to demographic analysis.
Culture
According to my survey and experience, I divided all potential clients into two categories. The first is people, who like go shopping and do it for rest. They are approximately 70% of respondents. The second is people, who do not like go shopping and do it as necessity 30%. The second category is my potential clients. So, I assumed that there are about 57 (190*30%) potential clients of my database a day.
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Political Environment
For last years, the local government has made attempts to increase the power of the consumer protection law. It reflects in the increasing quantity of people, who are content from purchases. As a result, more people are ready to make a purchase and companies increase their quality of service and products. It can be applied also to theshopping center “Irkutskiy” because for the last year more people have made purchases there than for previous years. These political attempts and other economical factors are the causes of the increasing quantity of clients in theshopping center “Irkutskiy”, and, consequently, my potential clients.
Economic Environment
For last years, the level of revenues of population in Irkutsk is constantly increasing. (http://www.centerru.com/regions/regions.asp?type=reg&id=7). It increases the purchasing power of population. As a result, theshopping center «Irkutskiy» has constantly increasing quantity of clients that can be the potential clients of my database.
The increase in the level of revenue results in the increase quantity of nonfood purchases because this sector of household is only 15% of all households revenues (about 60% of revenue are spent for food in Russia). It is significantly less than in developed countries. So, the increase of revenues increases the quantity of nonfood purchases.
Competitive Environment
There is no such service in the shopping center «Irkutskiy» and other markets. So, there are no direct competitors.
Indirect competitors are different print media that usually give brief information, where people can buy some kinds of clothes, shoes and etc. Such information is usually about one product or one company and does not give potential clients the picture of the whole market to choose the most appropriate product. So, these competitors can not influence my business very much.
Potential Problems
1. My assumption that every second purchase is made in the shopping center “Irkutskiy” may be overrated, so there are may be the smaller quantity of potential clients of my database.
2. The results of my survey may be not valid. It also may change the quantity of potential clients.
Market Data Summary
Target Clients
Target clients are people between 18 and 60 years old, who have revenues from 120,000 to 240,000 rubles per year and go shopping as necessity. They will use my service as they do not want to spend much time on shopping and want to save their time.
Target Market Size
There are 355,2 thousand people between 18 and 60 years old. Ten percent of them 35,5 thousand have an average annual income between 120,000 to 240,000 rubbles. Thirty percent of them do shopping as necessity. So, my target market size is 10,650 clients a year. If every client makes four purchases a year in average than total annual purchases are 42,600.
MARKET STRATEGY
Product
The product of the venture will be the information about available goods in the shopping center «Irkutskiy» at first. Then we will broad our service and offer information about the shopping center «Fortuna». Finally, we will create database, where each person will be able to get information about products that are available at the shopping center «Irkutskiy», the shopping center «Fortuna», and the shopping center “Complex”.
Price
Price policy will be based on the market demand. The small survey, I made, gave information that the best price will be 24 rubles ($ 0,8).
Place
We plan to develop three ways of delivering information. First, we open the consulting center in the shopping center «Irkutskiy», then in the shopping center «Fortuna», and finally in the shopping center “Complex”. Each center will have one consultant that will sell clients necessary information for cash. Second, after the establishment of the consulting center in the shopping center «Fortuna» we plan to create the wed site, which will offer the same service as consulting centers. After the establishment of the consulting center in the shopping center “Complex” we plan to offer phone consultation about available products at these markets.
Promotion
The key promotion tactics will be that clients will lose nothing. I plan to sell necessary information and give a coupon that will offer a client a discount of $0,8 (the price of my service). He or she will give this coupon to salesperson when will make a purchase, as a result a client of a market will lose nothing. In addition, before the beginning of operations I will make contracts with the managers of pavilions and shops. The main point of them is that I will publish information about their product in my database and will take nothing from them, but they will have to compensate clients the $0,8, when they will make purchases in the pavilions with my coupons. So, clients will be motivated to make a purchase in the pointed pavilions and managers will get new clients.
I also will give advertisement in newspapers and on printed buckets that will be spread at the doorways of the shopping centers.
Finally, I plan to use the Internet advertising; mostly banners that will be located at the Irkutsk on-line shops. I plan to make the exchange of banners to avoid the payment for advertisement.
SELLING TACTICS
Cash and Accounts Receivables
All sales will be made in cash, as invoices and credit cards are not yet actively used in Russia. So for the first three year I will not plan to use accounts receivables. Only after the third year, when the phone-consulting center will be opened, I plan to sell information on credit by phone bills. Such system assumes that the phone companies will clear these bills, and then their clients pay for the whole phone bill, in which the amount of my bill will be included. So, the management of account receivables will not be complex, and will be secured by the phone companies’ liabilities.
Peak sales
As I plan to establish consultant service by using database that helps to find products, my sales will depend on the sales of market. Within Russia, most retail sales occur during the New Year holiday season and during the season of the men’s and the women’s holidays (February 23 and Mart 8). As a result, the biggest sales will be during the winter season because during that time there are the biggest quantity of clients, but at this time there is also a downturn in cash. I think that some decline will be at other seasons, especially during summer because a lot of people are going on vocation. There is an increase in sales at the end of summer because students prepare for school and colleges and buy a lot of non-food things. So, the best time is the end of December, the end of February, the beginning of Mart, the end of August and the beginning of September. During this time, I will have the biggest cash inflow.
OPERATIONS PLAN
Each consulting center will be located at the doorways of the shopping centers. The average square of a center will be 16 m2. One center will have the computer (Pentium 3, 550-750 hertz, 128 RAM) with a monitor and a modem, the printer (Canon LBP-800) and a telephone/fax. Each computer will have the database of goods at markets, Windows 2000, Microsoft Office package, the Internet application and Web-design programs. Office equipment will be a computer table, a chair, and the document cupboard. In addition each consulting center will have the pack of paper for printing and some writing implements. A manager will deliver the cartridges for a printer, when they are necessary.
The working time of my business will be the same as the working time of the shopping center «Irkutskiy», the shopping center «Fortuna», and the shopping center «Complex». The «Irkutskiy» and the «Complex» working hours are from 10 am to 8 pm, so the consulting centers in these markets will be opened during this time. The consulting center in the shopping center «Fortuna» will work from 9 am to 7 pm. The web site will be available 24 hours a day. The phone center will work from 9 am to 9 pm.
The information will be updated by consultants of consulting centers that have liabilities to collect changes in information after the workday and put it in the database.
FINANCIAL PLAN
Necessary Financing
For my operation I will need $2,250 at the beginning of the second year of existence. If the demand for my service will be as projected then I will open the second consulting center in the shopping center «Fortuna», so I will need financing to buy the fixed assets. This loan will be necessary to support my development.
Cash Budget
| 2003 | 2004 | 2005 | |
| Operating activities | |||
| Net income | $1 331 | $3 075 | $3 510 |
| Depreciation | $694 | $1 674 | $2 073 |
| Net cahs provided by operating activities | $2 025 | $4 750 | $5 583 |
| Long-term investing activities | |||
| Cash used to acquire fixed assets | -$1 273 | -$1 336 | -1403,31 |
| Cash used to acquire intangible assets | -$829 | -$871 | -$914 |
| Net cash provided by investing activities | -$2 102 | -$2 207 | -$2 317 |
| Financing activities | |||
| Owner's investments | $2 102 | $0 | $0 |
| Increase in notes payable | $0 | $2 207 | $0 |
| Net cash provided by financing activities | $2 102 | $2 207 | $0 |
| Net change in cash | $2 025 | $4 750 | $3 266 |
| Cash at the beginning of year | $0 | $2 025 | $6 774 |
| Cash at the end of year | $2 025 | $6 774 | $10 040 |
Balance Sheet
| Assets | |||
| 2003 | 2004 | 2005 | |
| Current assets: | |||
| Cash | $2 025 | $6 774 | $10 040 |
| Fixed assets: | |||
| a computer | $500 | $1 025 | $1 576 |
| a monitor | $250 | $513 | $788 |
| a modem | $80 | $165 | $253 |
| a printer | $153 | $313 | $481 |
| office equipment | $200 | $410 | $631 |
| a telephone/fax | $90 | $185 | $284 |
| Less accum. depreciation | $420 | $1 434 | $2 689 |
| Total fixed assets | $853 | $1 175 | $1 323 |
| Intangible assets: | |||
| a database | $661 | $1 355 | $2 083 |
| Other software | $168 | $345 | $531 |
| Less accum. depreciation | $274 | $934 | $1 752 |
| Total intangible assets | $556 | $766 | $862 |
| Total assets | $3 433 | $8 715 | $12 225 |
| Liabilities | |||
| Long-term notes payable | - | $2 207 | $2 207 |
| Owner's equity | |||
| Nikolay Belih, capital | $3 433 | $6 508 | $10 018 |
| Total Liab. and Equity | $3 433 | $8 715 | $12 225 |
Income Statement
The amounts are given as they are in Russia
| 2003 | 2004 | 2005 | |
| Revenues | $8 464 | $18 050 | $33 940 |
| Operating expenses: | |||
| Salary expense | $2 400 | $5 040 | $15 876 |
| Office rent expense | $1 600 | $3 480 | $6 854 |
| Depreciation furniture and equipment | $694 | $1 674 | $2 073 |
| Advertising | $659 | $631 | $609 |
| Insurance | $105 | $210 | $315 |
| Utilities expenses | $62 | $131 | $413 |
| Total operating expenses | $5 520 | $11 167 | $26 141 |
| General expenses: | |||
| Telephone & Internet | $525 | $630 | $756 |
| Other expenses: | |||
| Interest | $0 | $662 | $662 |
| Total expenses | $6 045 | $12 458 | $27 559 |
| Net income before taxes | $2 420 | $5 591 | $6 381 |
| taxes (45%) | $1 089 | $2 516 | $2 872 |
| Net income | $1 331 | $3 075 | $3 510 |
Ratio Analysis
| 2003 | 2004 | 2005 | |
| Leverage ratios | |||
| Debt ratio | - | 0,25 | 0,18 |
| Debt -to-net worth ratio | - | 0,46 | 0,30 |
| Times interest earned ratio | - | 8,44 | 9,64 |
| Asset Management | |||
| Fixed assets turnover | 9,93 | 15,36 | 25,65 |
| Total assets turnover | 2,47 | 2,07 | 2,78 |
| Profitability ratios | |||
| Profit margin on sales | 0,16 | 0,17 | 0,10 |
| Return on total assets | 0,39 | 0,35 | 0,29 |
| Return on equity | 0,39 | 0,47 | 0,35 |
I did not indicate accounts receivables and accounts payables, as my business will be very small and all operations will be done in cash by personal sales during first three years. In addition, invoices and credit cards are not common in Russia, so it is one more reason of not indicating them. So, I did not count liquidity ratios, as all of them are based on current liabilities.