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Module 05 Project – Present Your Business Plan

The business environment is a highly competitive hence one ought to make proper choices when arriving at investment decisions. The best solution is to concentrate on an unexploited market gap where there is minimal competition. In that regard, therefore, the fashion industry has gained increased momentum with a significant demand for the latest clothes portraying an upsurge turn. Therefore, the proposed business establishment will be offering fashion brands to the customers, and the target market is the youth. This is because this niche is highly dynamic and their demand for the latest fashion clothes in the markets is relatively high (Gekonge, 2017). The business will be dealing with men shirts and trousers and ladies dresses, skirts, blouses and trench coats. The drive herein is to quench the thirst for fashion clothes associated with the young people. It is important to understand that in this era of technology, it has become extremely easy and cost-effective to market products to reach the target audience. With a huge population of young people surfing online, it is easier to post the available products online to inform them of their existence so that they can place orders at will.

Finding issues are likely to arise especially when penetrating a new market before the business becomes self-sustaining. For instance, the initial capital to stock all the proposed brands will require huge capital hence raising this amount at startup is relatively challenging (Harrington, 2017). Secondly, pricing is also a challenge. It is important to understand that there are other players who are offering the same products as ours though not that diverse. Pricing relatively low is one of the distinguishing penetration strategies that the business will adapt. This will certainly lead to reduced profitability hence raising further funding issues.

Fashion Business

Executive Summary

The Young Generation Clothe Line (YGCL) as the name of my business will exclusively be a wearable retail store. I will be targeting high walk-by traffic as the location for my business. The business will begin by providing varieties of clothes suitable for both genders. The target market will be the youths between the ages of 15 to 30 years. For a start, I will need a loan of $ 150,000. 31% of the credit will be used for up-front expenses while 69% will be for working capital needs. The business will operate between 7.00 am to 7.00 pm daily with assistance from sales agents whom I will employ. On a proper season, I expect a profit of about 60% after the tax and return on investment to accumulate at 20%.

Description of the Product

YGCL will exclusively deal with young men and ladies’ clothes. There will be men’s shirts, shorts, and trousers. On the side of ladies, there will be ladies’ dresses, skirts, blouses and trench coats. These categories of clothes will be purely dependent on the current existing fashion styles in the United States and beyond. Though a more substantial portion of my stock will be acquired internally, I expect to import share of my stock from neighboring nations such as Mexico.

Discussion of the Industry and Market Conditions

Fashion business has been categorized among the junior businesses in the America for the last ten years (In Choi, 2016). Most of the entrepreneurs have never considered this kind of business as lucrative due to ignorance which majority of this entrepreneur is assumed to be having. For this reason, venturing into the fashion business is more of easy since there are less legal constraints that are required.

Competition

Clothes as Art Inc. and Artwear designers are the two leading fashion businesses in my locality which might pose a direct competition to my business. This is because these two enterprises have strong financial muscles as compared to my business. Apart from the two, other competitors that my business might face will come from other small vendors of clothes scattered across my locality which according to my estimations would never be too severe.

Marketing and Sales Plans

The more significant portion of my fashion business will be promoted through advertisement which will involve providing samples of my stock to groups such as high school students, and dancing groups as a form of building local support among the targeted groups. There will also be sales agents who will be involved in promoting some brands of cloths through the business social media platform and to some extension their accounts in the social media.

Management Team

Being a fashion and designer graduate, I will personally take charge at the helm of my fashion business for the first two years of business operation. In the subsequent years, I will employ one manager with two outstanding abilities. First, the manager will have to perform all the required managerial duties such as scheduling, sales computing, and employee guidance. Secondly, the manager will have to pose artistic abilities which he or she will apply in sales process through providing distinctive advice to prospective customers.

Basic Financial Analysis

All the sales returns will be recorded in the financial books of accounts. All the commercial books will be reconciled daily. All will have to get recorded down carefully, and appropriate plans will be needed for overcoming such loses. By taking all financial measures, I assume that my business will witness a 20% growth in its sales for two years to come.

Young Generation Clothe Line (YGCL)

Exchange rate used is that of the Year End reported date

As Reported Annual Balance Sheet

Report Date

12/3/2017

12/3/2016

Currency

USD

USD

Audit Status

Not Qualified

Not Qualified

Consolidated

Yes

Yes

Scale

Thousands

Thousands

Cash & cash equivalents

100108

88283

Investments

39450

33572

Accounts receivable trade, gross

45221

42763

Less: allowances

1968

2042

Accounts receivable trade, net

43253

40721

Other receivables

3577

4616

Finished goods & work-in-process

44549

37012

Raw materials & supplies

25830

24844

Prepaid expenses

6060

5581

Deferred income taxes

1794

5482

Total current assets

264621

240111

Land

22360

21683

Buildings

113279

111044

Machinery & equipment

350929

340405

Construction in progress

1641

3403

Property, plant & equipment, at cost

488209

476535

Less: accumulated depreciation

298128

279619

Property, plant & equipment, net

190081

196916

Goodwill

73237

73237

Trademarks

175024

175024

Investments

163579

148532

Split dollar officer life insurance

33632

40296

Prepaid expenses

6927

10260

Restricted cash

1589

Equity method investment

Deferred income taxes

1696

4033

Total other assets

455684

451382

Total assets

910386

888409

Accounts payable

11641

9153

Bank loans

124

Dividends payable

4814

4742

Accrued compensation

9788

9445

Other accrued employee benefits

7185

7825

Accrued taxes, other than income

3284

2776

Accrued advertising & promotions

19805

19133

Other accrued liabilities

6420

6401

Accrued liabilities

46482

45580

Postretirement health care benefits

328

319

Income taxes payable

1070

327

Total current liabilities

64459

60121

Deferred income taxes

47356

54939

Bank loans

694

Postretirement health care benefits

11983

8857

Industrial development bonds

7500

7500

Liability for uncertain tax positions

8584

7167

Deferred compensation & other liabilities

78674

69520

Total noncurrent liabilities

154791

147983

Common stock

25892

25702

Class B common stock

15894

15455

Capital in excess of par value

599186

572669

Retained earnings, per accompanying statement

64927

73109

Foreign currency translation adjustment

-17499

-13527

Unrealized gain (loss) on investments

-332

54

Unrealized gain (loss) on foreign currency derivatives

-1236

-532

Unrealized gain (loss) on commodity derivatives

-470

Unrealized gain (loss) on postretirement & pension benefits

6439

9367

Accumulated other comprehensive income (loss)

-13098

-4638

Treasury stock, at cost

1992

1992

Total Tootsie Roll Industries, Inc. shareholders' equity

690809

680305

Non-controlling interests

327

Total equity

691136

As Reported Annual Income Statement

Report Date

12/3/2017

12/3/2016

Currency

USD

USD

Audit Status

Not Qualified

Not Qualified

Consolidated

Yes

Yes

Scale

Thousands

Thousands

Net product sales

539895

539627

Rental & royalty revenue

3630

3756

Total revenue

543525

543383

Product cost of goods sold

340933

350960

Rental & royalty cost

947

937

Total costs

341880

351897

Product gross margin

198962

188667

Rental & royalty gross margin

2683

2819

Total gross margin

201645

191486

Selling, marketing & administrative expenses

117722

119133

Earnings (loss) from operations

83923

72353

Interest & dividend income

1582

1445

Gains (losses) on trading securities relating to deferred compen

4901

10588

Interest expense

99

92

Pretax gain on step acquisition

1821

Impairment of equity investment

-975

Equity method investment loss

-967

Foreign exchange gains (losses)

-861

-790

Capital gains (losses)

-219

2576

Miscellaneous income (expense), net

246

345

Other income (expense), net

7371

12130

Earnings (loss) before income taxes – domestic

81255

73362

Earnings (loss) before income taxes – foreign

10039

11121

Earnings (loss) before income taxes

91294

84483

Provision (benefit) for current federal income taxes

25173

16192

Provision (benefit) for current foreign income taxes

549

219

Provision (benefit) for current state income taxes

1538

891

Total provision (benefit) for current income taxes

27260

17302

Provision (benefit) for deferred federal income taxes

-172

4286

Provision (benefit) for deferred foreign income taxes

2032

1823

Provision (benefit) for deferred state income taxes

-686

223

Total provision (benefit) for deferred income taxes

1174

6332

Provision (benefit) for income taxes

28434

23634

Net earnings (loss)

62860

60849

Less: Net loss attributable to noncontrolling interests

438

Net earnings attributable to Tootsie Roll Industries, Inc.

63298

Weighted average shares outstanding – basic

62378.86

61423.02

Year-end shares outstanding

61896.82

60966.73

Net earnings (loss) per share – basic

1.019

0.99

Dividends per common share

0.311

0.233

Total number of employees

2000

2000

Number of common stockholders

3000

3200

Number of class B common stockholders

1100

1200

Number of common beneficiary stockholders

11800

17000

Number of class B common beneficiary stockholders

4300

4500

As Reported Annual Retained Earnings

Report Date

12/3/2017

12/3/2016

Currency

USD

USD

Audit Status

Not Qualified

Not Qualified

Consolidated

Yes

Yes

Scale

Thousands

Thousands

Previous retained earnings

73109

80210

Cash dividends

19199

18922

Stock dividends

52281

49028

Retained earnings

64927

73109

As Reported Annual Cash Flow

Report Date

12/3/2017

12/3/2016

Currency

USD

USD

Audit Status

Not Qualified

Not Qualified

Consolidated

Yes

Yes

Scale

Thousands

Thousands

Net earnings (loss)

62860

60849

Depreciation

20758

20050

Net loss on step acquisition

529

Impairment of equity method investment

975

Loss from equity method investment

967

Amortization of marketable security premiums

3261

3035

Accounts receivable

-2007

1330

Other receivables

1289

253

Inventories

-7329

503

Prepaid expenses & other assets

9524

14922

Accounts payable & accrued liabilities

-1268

418

Income taxes payable & deferred

-1024

68

Postretirement health care & life insurance benefits

-1289

2861

Deferred compensation & other liabilities

3465

3592

Other operating assets & liabilities

-14

Net cash flows from operating activities

88769

109809

Net cash acquired in step acquisition

161

Change in restricted cash

224

Capital expenditures

-10704

-15752

Net purchases of trading securities

-3567

-5500

Purchase of available for sale securities

-54882

-66324

Sale & maturity of available for sale securities

38309

39613

Net cash flows from investing activities

-30459

-47963

Shares repurchased & retired

-25020

-23143

Dividends paid in cash

-19241

-14282

Repayment of bank loans

-403

Net cash flows from financing activities

-44664

-37425

Effect of exchange rate changes on cash

-1821

Increase (decrease) in cash & cash equivalents

11825

24421

Cash & cash equivalents at beginning of year

88283

63862

Cash & cash equivalents at end of year

100108

88283

Income taxes paid

26599

24225

Interest paid

34

21

12/3/2015

12/3/2014

12/3/2013

USD

USD

USD

Not Qualified

Not Qualified

Not Qualified

Yes

Yes

Yes

Thousands

Thousands

Thousands

63862

78612

115976

18746

10895

7996

44250

43626

38925

2142

1731

1531

42108

41895

37394

5528

3391

9961

37046

42676

36935

25337

29084

22141

4148

5070

6499

466

578

689

197241

212201

237591

21687

21939

21619

108391

107567

102934

331110

322993

307178

2539

2598

9243

463727

455097

440974

262437

242935

225482

201290

212162

215492

73237

73237

73237

175024

175024

175024

124685

96161

64461

66911

74209

74441

3212

6680

2127

3935

4254

6222

7715

9203

448206

433493

407300

846737

857856

860383

8942

10683

9791

4603

4529

8948

8817

9750

7121

2004

2030

2618

1954

1966

21431

20568

20775

5032

9726

9664

45150

43069

44185

555

6118

60765

58355

58505

38748

43521

48743

26826

26108

20689

7500

7500

7500

7866

8345

9835

55217

48092

46157

136157

133566

132924

25450

25333

25040

15018

14601

14212

547576

533677

505495

80210

114269

137412

-13406

-14686

-12236

908

-351

-999

-111

257

5252

-3838

-5173

-3230

-16447

-19953

-11213

1992

1992

1992

649815

665935

668954

12/3/2015

12/3/2014

12/3/2013

USD

USD

USD

Not Qualified

Not Qualified

Not Qualified

Yes

Yes

Yes

Thousands

Thousands

Thousands

545985

528369

517149

3885

4136

4299

549870

532505

521448

365573

365225

348313

976

1038

1088

366549

366263

349401

180412

163144

168836

2909

3098

3211

183321

166242

172047

113842

108276

106316

69479

57966

65731

1369

1087

879

4616

29

3364

137

121

142

-850

-1019

-194

-342

442

2098

4090

-59

-227

-28

323

274

537

4685

2946

8358

64173

56651

60329

9991

4261

13760

74164

60912

74089

24312

15568

10251

231

559

806

1914

863

1455

26457

16990

12512

-6857

-1230

5992

1710

1221

2518

850

-7

-647

-4297

-16

7863

22160

16974

20375

52004

43938

53714

64188.969

63260.152

64150.626

63599.99

62758.59

63539.474

0.815

0.696

0.835

0.824

0.284

2200

2200

2200

4100

4100

4100

1500

1500

1500

18000

18000

18000

5000

5000

5000

12/3/2015

12/3/2014

12/3/2013

USD

USD

USD

Not Qualified

Not Qualified

Not Qualified

Yes

Yes

Yes

Thousands

Thousands

Thousands

114269

135866

148582

47729

18360

18078

38334

47175

46806

80210

114269

137412

12/3/2015

12/3/2014

12/3/2013

USD

USD

USD

Not Qualified

Not Qualified

Not Qualified

Yes

Yes

Yes

Thousands

Thousands

Thousands

52004

43938

53714

19925

19229

18279

850

1019

194

342

1770

1267

522

272

-5448

717

-2720

3963

-2373

9588

-15631

-2468

11295

5106

4936

199

84

2180

1369

-5772

2692

2829

2022

6601

3018

2146

-2647

501

-708

310

101919

50390

82805

-8886

-16351

-12813

-2994

-3234

-2902

-39016

-39252

-9301

10461

7680

8208

-40435

-51157

-16808

-23803

-18190

-22881

-52431

-18407

-18130

-76234

-36597

-41011

-14750

-37364

24986

78612

115976

90990

63862

78612

115976

21312

16906

20586

31

38

49

References

Gekonge, C. O. (2017). Emerging business opportunities in the world: market entry, competitive strategy, and the promotion of foreign direct investments. Hershey, PA: Business Science Reference.

Harrington, K., & Cohen, M. N. (2017). The 100 best spare-time business opportunities today. New York: Wiley.

In Choi, T.-M. (2016). Analytical modeling research in fashion business.

Dollinger, M. J. (2008). Entrepreneurship: Strategies and resources. New York: Marsh    Publications.

Gehlhar, M. (2008). The Fashion Designer Survival Guide: Start and Run Your Own Fashion    Business. New York: Kaplan.

Granger, M., & Sterling, T. (2003). Fashion entrepreneurship: Retail business planning (Vol. 1).    Fairchild Books.

Skov, L. (2006). The role of trade fairs in the global fashion business. Current Sociology, 54(5),    764-783.

Timmons, J. A., Spinelli, S., & Tan, Y. (1994). New venture creation: Entrepreneurship for the    21st century (Vol. 4). Burr Ridge, IL: Irwin.

 

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