PDF Business Plan Walkabout Shoe Company

[Pages:14]Business Plan

Walkabout Shoe Company

Daniel Vera 801.440.7159 danovera@ 4810 Whisper Wood Dr. Lehi, UT 84043

Walkabout Shoe Company

Executive Summary

WalkaboutShoeCompanywillsellspecialtydress,casual,andathleticshoes.This shoestorewilltargetcustomerslookingforcomfortableorthopaedicshoesthatwill fittheirspecificfootneeds.Besidesspecialtyshoes,Walkaboutwillcarryother accessories,includingOTCinserts,footcareproducts,andpossiblysometravel accessories. WalkaboutShoeCompanywilltargetthegrowingpopulationofthe Herriman/Rivertonarea.Thisareaiscurrentlyunoccupiedbyshoestorespecialists, sonodirectcompetitionwouldbeencounteredinthisarea.Theshoestoreindustry isexpectedtogrowat5%annually,sonowisaperfecttimetostartanew specializedshoestore. IndirectcompetitionmightcomefromothergeneralshoestoreslikePaylessand FamousFootwear.However,WalkaboutShoeCompanywillhaveadistinct advantageinspecializedshoesbyofferingsupportiveandorthopaedicshoesthatare generalshoestoresdonotcarry.Walkaboutwilltargetcustomerslookingforshoes thatofferbettersupportandmorecomfortthanshoesatregularshoestores. Walkaboutwillattempttoattractcustomerswhohavefootpainandspecificfoot needswithspecializedshoesnotfoundinotherdepartmentstores. Inordertostartthecompany,aninitialinvestmentofabout$75,000willbeneeded forinventoryandstart-upexpenses(seefinancialrequirementsforspecificsand explanation).Walkaboutwilllooktoturntheir$50,000worthofshoeinventory4 timesandtheir$5,000footcareaccessoryinventory4timesaswell.Thiswillresult inanetprofitofaround$16,750attheendofoneyearafteralloverheadcostsand expenses. Becausethisnetprofitisfairlylowforallthemoneyinvestedinthecompany,we havetwosuggestionsforalternativebusinessplansthatposelessriskandwould likelyrequirelessmoney.First,thisspecialtyshoesstorecouldbeajointbusiness venturewithSkipChandlerwhoisthinkingaboutopeningasimilarspecialtyshoe storeinthearea.Hehasalreadyhadsuccessinrunningashoestore,andbeingin businesswithhimwouldlikelyincreasechancesofsuccessinthespecialtyshoe storemarket.Second,Walkaboutcouldbeanonline-basedbusiness.Walkabout couldhouseinventoryinasmallwarehouseorevenbelocatedinahome. Customerscouldordershoesonlinewithouthavingtoenterastore.Anonlineonly businesswouldeliminatethechanceforcustomerstotryonshoesandgettheexact fittheydesired,butthesearejusttwopossiblealternativestoconsiderifopeningup afullyoperativeandselfownedspecialtyshoestoreseemsunachievable. Asofrightnow,thebusinessisinthedevelopingandcreativestages.Theideahas beenpresented,andthepointofthisbusinessplanistoshowtheplausibilityand possibilityofsuccessforWalkabout.

Private and Confidential.

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Walkabout Shoe Company

Table of Contents

2ExecutiveSummary 3TableofContents 4IntroductiontotheBusinessanditsManagement 5ProductsandServices 8TheMarket 9SWOTAnalysis 10MarketingPlan 11SalesandDistribution 12FinancingRequirements 13KeyFinancialDataandFinancialProjections ImportantInformation:Thisdocumentdoesnotconstituteapublicofferorinvitation tothepublic.Investmentsinunquotedsecuritiesarespeculative,carryinghighrisk aswellasthepotentialforhighrewards.Thereisnoreadymarketfortherealization ofthatinvestment,oritsvaluation,ortheriskstowhichaninvestmentisexposed. Thefiguresstatedarepurelyillustrativeanddonotconstituteaforecast.Before investinginaprojectreadersarestronglyadvisedtoverifyallmaterialfactsand informationforthemselvesandseekadvicefromapersonauthorizedunderthe FinancialServicesAct.

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Walkabout Shoe Company

Introduction to the Business and its Management

WalkaboutShoeCompanywillsellspecialtydress,casual,andathleticshoes.This shoestorewilltargetcustomerslookingforcomfortableorthopaedicshoesthatwill fittheirspecificfootneeds.Besidesspecialtyshoes,Walkaboutwillcarryother accessories,includingOTCinserts,footcareproducts,andpossiblysometravel accessories. Management ErinElkinswillbethestoremanager.Asmanager,shewillbeoverseeingthestore fromamanagementperspective.Erinwillnotwanttobeonsiteatthestoreallthe time;rather,shewillwanttocheckineveryonceinawhiletobesurethestoreis runningsmoothly.Shewillwanttohaveanassistantmanagerwhoisonsite,and theassistantmanagerwillhavebetweenoneandthreeemployeeswhohelp customersanswershoequestion,helpcustomersfitshoes,stockandtrack inventory,andrunthecashregister.Forthesakeoffinancialdataandanalysis,we haveusedthesalaryof1.5employeesgettingpaid$10anhourworking6daysa weekfrom9to5. Employeeswillhavespecialtraininginfittingtheindividualinthecorrectshoefor theappropriateshoemanufacture.

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Walkabout Shoe Company

Products and Services

Consumerslookingtobuyshoesoftendonotgetthesupportorcomforttheyneed inashoewhentheybuyfromretailshoestores.Walkaboutwilloffershoesthat catertoconsumerslookingforcasualdressshoesthatofferappropriatesupportand desiredcomfort. Walkabout Products WalkaboutShoeCompanywillsellspecialtyshoes,focusingmostlyonthedress casualshoetype.Thisshoestorewilltargetcustomerslookingforcomfortable orthopaedicshoesthatwillfittheirspecificfootneeds.Besidesspecialtyshoes, Walkaboutwillcarryotheraccessories,includingOTCinserts,footcareproducts, andsometravelaccessories. Thetopfivebrandsofshoesformenareasfollows:Clarks,Merrells,NewBalance, Asics,andEcco.Thetopfivebrandsofshoesforwomenareasfollows:Dansko,New Balance,Clarks,Merrells,Ecco Itiscommonfor80%oftotalsalestocomefromabout20%ofinventory,sowewill wanttostockthesetopfivebrandsdeeperthantherestoftheshoesinthe inventory.Forthefinancialprojections,weusedthesetoptenbrandsofshoesto createourdata. Othershoebrandsthatwewillpossiblycarryareasfollows:Aravon,Brooks,FitFlop, Keen,MBT,Memphisto,Mizuno,Naot,Propet,Reebok.Wewillnotneedasmanyof thesebrandsinourinventorybecausetheywillnotmoveasfastasourtopfive brands. ThefollowingarebrandsthatwemaynotcarryuntilWalkaboutisanestablished andflourishingbusiness:Aetrex,Alegria,ElNaturalista,FinnComfort,Saucony, Wolky. Walkaboutwillcarryoverthecounter(OTC)insertsincludinggreenSuperfeet,blue Superfeet,andredboxtopPowersteps.Wewillalsocarrysocks,moleskin,feltpads, toespacers,andtravelshoebags. Apricelistoftheabovenotedproductshasbeenattachedinanexceldocument.

The Need Being Served Walkaboutwillnotbecompetingwithretailordesignershoesstores.Walkabout willnotbeattemptingtohavethelateststylesorthenewestfads;rather, Walkaboutwilloffershoesthatcatertoconsumerslookingforcasualdressshoes thatofferappropriatesupportanddesiredcomfort.Walkaboutwilloffer comfortableandsupportiveyetstylishshoesthatconsumerscannotbuyfromretail shoestores.

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Walkabout Shoe Company

Accessoriessuchasorthoticsandfootcareproductsarealsoproductsthatmost regularshoesstoresdonotoffer.Thiscanbeahelpfulwayofgeneratingsales becauseaccessoriesoftenhavehighergrossmarginsthatshoesdo.Weestimateda 50%markuponfootcareaccessoriesforourfinancialprojections. Pricing Strategy Theaveragesalepriceofeachpairofshoesis$121.82fromthelistyougaveus. Shoesstores,especiallyspecialtyshoesstores,haveanaveragemarkuppriceof40 percent,whichmeansthattheaveragecostperpairofshoeswouldbe$87.01. Ifwestock$30,000ofinventorylikeyouwanted,thatwouldgiveus345pairof shoestotalininventoryatatime.Ifwestock16sizes,includinghalfsizes,wewould havesizes4through11or5through12foreachtypeofshoe.Ifweonlystockthe topfivebrandsformenandtopfiveforwomenwithonestyleineachbrand,that wouldgiveus160pairsofshoes.With$30,000ofinventory,youcouldget approximately2differentstylesofshoeswithonepairineachsize5through12, includinghalfsizes,ifwehavetendifferentbrandstotal.Ofcoursewewouldwant tocarrymoreofthebrandsthatsellthemostandlessoftheslowermoving inventory,butthisissimplemaththatshowshowlittle$30,000ofinventorywill reallygetus. With$30,000ofinventory,ourtotalrevenuewouldbe$42,000,withagrossprofit of$12,000.Ifweturnedourinventoryfourtimes,whichisanachievablegoal,we wouldearn$168,000,withagrossprofitof$48,000. Werecommend$50,000ofinventorytobegin.Thatwouldgiveus575pairsofshoes toworkwith.Thatwouldgiveus$70,000inrevenue(grossprofitof$20,000)ifwe turnedourinventoryonce.Ifweturnourinventory4times,whichweareaiming for,wewouldearn$280,000inrevenuefortheyear(grossprofitof$80,000).The financialprojectionswehaveattachedarebasedontheassumptionthatweturnour inventory4times. Thepricelistexplainingthesalepriceofourinventoryhasbeenattached.Weused thetypicalsalepricesofshoesasperstoremanager,Erin.Forgrossmargins,see below.

Gross Margins Accordingtoresearchgathered,grossmarginsareusuallybetween30and40 percentintheshoestoreindustry.Theseareforshoesstoresingeneral,sothere couldbeapossibilityofmakingcloserto40and50percentforspecializedshoeslike theonesWalkaboutwillbeselling.Customerslookingtobuyspecialized orthopaedicshoeswillbewillingtopaymoremoneythantheaveragecustomerata regularshoestoreswhoaremerelylookingorthebestprices.BecauseWalkabout willbefocusedonspecialtyshoes,wedecidedtocalculateourfinancialdatausing anaverageof40percentgrossmargin.Thismeanstherewillbeanaveragemarkup of40%perpairofshoes.

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Walkabout Shoe Company

Asstatedintheprevioussection,ouraveragecostperpairofshoewillbe$87.01. Theaverageamountwewillbemakingperpairofshoesis$121.82.Sowewillbe makingaround$34.81perpairofshoesfortheaverage40%markuponprice. Forcompletefinancialprojections,refertothefinancialprojectionssectionandthe Proformadocumentattached.

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Walkabout Shoe Company

The Market

Market Size and Segmentation OurtargetmarketdefinedbycitieswillbeRivertonandHerriman.TheHerriman areahadapopulationof21,785in2010andisgrowingrapidly.TheRivertonarea hadapopulationof40,420in2009andisalsocontinuingtogrow. Firstwewillwanttospecificallytargetwomenbetweentheages30and80because theywillbealargepartofourcustomers.Inregularshoestores,womenbetween theageof18and49makemostoftheshoedecisions.Whileourstorewillfocus lessonthenewstylishtrendsandmoreonthecomfortableandsupportiveshoes, wewillwanttocatertowomenmiddleagedanabovebecausetheywillbemaking mostofthedecisionsinbuyingshoes. Second,wewillwanttotargetmiddle-agedmenandabovewhoarelookingfor comfortable,supportiveshoes. Market Growth Trends Theshoestoreindustryisagrowthindustry.Themarketisexpectedtogrowatan annualcompoundedrateof5percenteachyearfrom2011to2015.Thiswouldbea perfecttimetoentertheshoestoreindustryandcapitalizeonthispotentialgrowth. Competitors Ourmaincompetitorisnotcurrentlyinourdesiredlocation,whichistheHerriman area.TheclosestcompetitorisonChandler'sWalkShoppeinSandy.Theowner thereisthinkingaboutopeningastoreintheHerriman/Rivertonarea,sothiscould possiblyposeathreatiftheownerwantedtodothis.Lookingintoopeninga specialtystoreinconjunctionwithSkipChandlerisafuturepossibilitytobeexplored ifheisseriousaboutopeningastoreintheHerrimanarea. OthershoestoresintheRiverton,HerrimanareaincludeFamousFootwear,Payless, andShoeCarnival.Theseshoestoresposelittletonothreatbecausemostofthem donotcarrythespecialtyorthopaedicshoesthatWalkaboutwillsell.Walkaboutwill havemoreofaboutiquefeelthananyoftheselargechainstores.

Private and Confidential.

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