Business plan: Grace Clothing Consulting Ltd- Online Cloth Matching Consultancy

1.0 Executive summary

The business to be introduced is to be called the Grace Clothing Consulting Ltd. It shall focus on providing consultancy for the appropriate matching of clothes for various occasions. The business is to be conducted exclusively over the internet with all transactions and interactions expected to be via the same medium. Grace Clothing Consulting Ltd shall have its offices in Trafford and shall be situated in Winter House along Moorside Rd.  

This business intends to tap into the growing trend among consumers to search for goods and services from the comfort of their homes. It intends to grow its market share by exploiting its economies of scale and also be maintaining a focus on the clients in a manner that enables them to offer specialised services. The continual low levels of disposable incomes have also seen consumers look for alternatives to the expensive shopping exercises without compromising on their need to look unique and fit in whenever attending to various activities.

The business will require a capital outlay of around £500,000 which will be spent on developing the website, marketing and running other operations. As per the projections, the business is expected to produce a net profit of about £1.3 million by the end of year 3. It is expected that the business will reach its break even point within 5 months of operation.

2.0 Business concept

2.1 Business overview

Grace Clothing Consulting Ltd intends to launch an Online Cloth Matching Consultancy. The business shall provide consultancy to clients wishing to come up with a unique match that can suit the different occasions that they intend to attend. As opposed to most current players whose matching consultation services are informed by the clothes available for sale, Grace Clothing Consulting Ltd shall be making use of the clothes already owned by clients with an aim to helping them come up with an appropriate outlook without having to change their wardrobes. This service is expected to help the clients fit in while attending functions and where possible, stand out above the rest.  Service delivery as well as transactions shall all be done online with applications such as live chats, skype and others specialised applications expected to facilitate audio visual communication between Grace Clothing Consulting Ltd’s employees and our clients. The business location will be in Trafford and shall be situated in Winter House along Moorside Rd.

2.2 Product/ service description

The Grace Clothing Consulting Ltd will seek to provide customers with designs for clothes and appropriate matching via the internet. This will entail either providing advice on how the set of garments owned can be matched to suit a certain occasion or involve the design and proposal of unique sets of attire to be worn by clients. The input of the clients will be crucial to the production process with the company members taking full advantage of their expertise and experience to ensure that their clients stand out in their uniquely designed sets of clothes. Consideration shall be made to consider the clients’ preferences while also endeavouring to provide the best advice based on the options available. There will be two approaches to this business. In one, clients will be advised based on the sets of clothes they already have. They will communicate online and showcase the different options they are considering then receive advice on what would be the best match for the occasion. The second approach will be to evaluate the range of clothes that the clients have and offer proposals on what additional clothes should be acquired to suit their matching needs. The focus shall be on items such as women’s active wear, essentials, casual wear, outer wear and occasion-wear among others.

Matching of clothing comes as a cheaper alternative to the stocking of new wardrobes with a wide array of attires. It focuses on enabling customers to make do with what they already have and therefore helps them in remaining relevant to a wide range of occasions without having to spend large sums of money on new clothes. This service is timely especially when it is considered that most consumers in the market are still suffering from depressed disposable incomes as a result of the slow economic recovery from the global recession. It will also help in boosting the confidence levels among clients who will be able to go about their business in full awareness of the fact that their dressing is up to standard and that there are lower chances of suffering unnecessary embarrassments.

3.0 Market analysis

3.1 Target customers

The business shall target customers and especially women within the UK. This is in recognition of the fact that clothing styles are dictated by culture and the business’s core competence is in the knowledge of how UK women dress for various occasions. Given that the business will be online, it will be able to serve the target market without much strain. It is also important to understand the psychology of customers and the factors that influence their decision to use any product. To begin with, it is important to appreciate the fact that most consumers view clothes are more than just products (Blythe, 2010). They see them as tools through which they can express their personality and fit in the society. Customers will therefore desire to dress for the occasion to display their commitment to the agenda of the occasion, to display the meticulous nature in terms of choice or even to ‘show off’ and establish their superiority over their colleagues. This is what makes matching very important.

3.2 Market analysis

The reason for targeting women is because they constitute the largest spenders on clothing. Statistics in the UK indicate that the total revenues spent on women’s clothing are at least 5 times the amount spent on menswear (Verdict, 2011). This implies that the business’ chances of success will be reasonably high with the application of the right business and operational strategies. With the recovery of the UK economy from the recently ended global recession, it is expected that the average client will have more disposable income to spend on these services (Datamonitor, 2010). However, the projected growth levels in the industry are quite low and it is expected that the levels of industry rivalry are bound to be high for the next few years. 

Women are also known to be quite trendy. They seem to have an innate desire to fit in to the occasion and where possible; be seen to be a step ahead of the pack. They also tend to attach great significance to their appearance with their choice of clothing and matching as crucial components. This is the characteristic that the business will seek to explore by providing these women with the uniqueness desired. It is also a general trend among UK consumers that has seen many women opt to go for specially designed clothes instead of using the usual designed in the supermarkets and shopping malls. Trends change fairly fast and it is very easy for clothes to run out of fashion within a very short time. This provides Grace Clothing Consulting Ltd with the opportunity to capitalise on the changing needs to carve a niche for itself.

Statistics indicate that the industry is projected to grow at a dismal 1.6% annually with the total revenues expected to rise from £34.5 in 2009 to £37.5 by the end of 2014 (Datamonitor, 2010). This growth rate is high compared to other European countries such as France and Germany whose growth rates are projected at 0.7% and 0.4% respectively (Datamonitor, 2010). With low growth rate, it is expected that the disposable incomes among target consumers are to remain low and this will mean that they will need to do with matching consultancy. This will be the approach to ensure that they can have a new look without necessarily having to purchase new sets of clothes. The business will take a creative approach and grow in the market by capitalising on the rapidly changing trends in the market.

4.0 Competition analysis

The women’s wear industry is largely fragmented with the specialised cloth retailers generating over 77% of the industry’s revenue (UKFT, 2012). Clothing retailers tend to provide some level of advice on how to dress for various occasions with many of the giant retailers employing consultants in their shopping malls to provide the advice. This makes giant retailer indirect competitors due to the fact that their main focus is not the provision of advisory services.  Some of the well known retailers of clothes include Arcadia Group, Debenhams plc, Marks and Spencer, and Next plc (Datamonitor, 2010). These are companies with established brand names and with a well established distribution system that enables them serve the market comprehensively. Most of these giant retailers have also introduced online portfolios through which they show case the different matching styles and this further heightens the level of market rivalry. Many of the retailers also tend to use similar designs for the clothes stocked and the apparent homogeneity of products increases the level of market rivalry.

Stronger competition is expected from small scale retail shops which mainly seek to create a competitive advantage by providing advisory services for their clients. In order to attract and maintain their customers, such retailers will want to have meaningful interactions with customers by helping them make matching decisions where possible. However, since these small retailers are stock clothes, they would tend to limit their advice based on the range of clothes they have to offer. This makes many clients seem them as biased towards their own preferences and not necessarily motivated by what is suitable for the client. Grace Clothing Consulting Ltd provides unbiased advice based on what is good for the client and does not exhibit bias for particular clothes. This helps in gaining the confidence of the clients.  

Online fashion magazines also tend to be a source of competition. They tend to provide advice on the etiquette and appropriate appearance for various occasions and even goes on to provide pictures of how different clothes can be matched to produce the desired effect (Verdict, 2008). These magazines are mostly available online and can be accessed by customers with ease. Whereas the magazines may offer advice on matching, they tend to be pre-determined with priority given to the latest designs in the market. The main aim of such magazine tends to be the generation of sales for fashion designers and providers of trendy clothes. Grace Clothing Consulting Ltd distinguishes its services by focusing on specific clients and provides advice based on the range of clothes already possessed. 

5.0 Business objectives and strategies

5.1 Objectives

• To achieve a cumulative revenue of £500,000 for the first six months of operation as a direct contribution of the online portfolio
• To achieve a 100% growth in sales revenues for the next three years
• To ensure attraction and retention of top talent in the organisation

5.2 Strategies

The business shall endeavour to portray itself as a genuine partner to the clients with the sole purpose of helping them fit in the various occasions they may be engaged in. The process of providing advice shall be refined in a manner that allows for ease of transaction and delivery of advisory services. By working with clients online, the business will be able to tap into a growing market segment that prefers to source for solutions from the comfort of their homes. Providing advice based on the preferences and clothes possessed will make it cheaper and it is expected that more and more people will desire these services as an alternative to the more expensive process of restocking their wardrobes. The use of live chat systems that allow for the clients to display their clothes shall be embraced to ensure ease of providing the much needed advice.

  

5.3 Sources of competitive advantage

The business will take advantage of its small size to ensure flexibility and offer specialised services to the clients. It shall also capitalise in establishing special relationships with clients hence ensuring a stable customer base on which future growth can be based. The business shall also employ highly qualified consultants whose vision is aligned to the vision of the company. This will ensure that they serve with dedication and provide customers with the desired quality. Given that the business will be targeting customers who prefer to obtain solutions from the comfort of their homes, the business shall adopt a flexible routine with working hours modified to suit the timing of the clients. The business shall also benefit from the fact that its cost outlay is bound to be low. Given that the business will be conducted online, it will not be necessary to have an elaborate business premise and this will lower the operation costs.

6.0 SWOT Analysis

Strengths	Weaknesses
. Low operation costs	. Unknown brand
. Ability to provide specialised services	. Little experience in the field
. Ability to maintain close relationship with clients
Threats	Opportunities
. Risk of competitors venturing into similar services	. Low income levels prompting people to maintain current sets of dresses
	. Increased willingness for people to shop online

7.0 Marketing strategy

The best way to evaluate the marketing strategy is vide the marketing mix model. The product has already been described as the provision of consultancy services on cloth matching for various occasions.

7.1 Price

This business shall focus on charging reasonable fees for the services. Given that no other businesses are known to do the same business exclusively, there are no prices against which to benchmark our prices. However, in consideration of the fact that we’ll aim to encourage more sales, our prices will be relatively low. A fee of £30 shall be charged for every counselling session which would most likely last for not more than 10 minutes.

7.2 Place

The location of the business will be online. Given that the majority of targeted clientele have ready access to the internet, it is expected that they will be able to access the consultancy services with ease. Back office operations shall be coordinated from an office in a low-rent area in Northern London and this will be to keep the operation costs at bay.

7.3 Promotion

Given that the business shall aim at service clients online, advertising efforts shall be conducted via the internet. The business shall engage the use of social sites to propagandise the services and generate the desired levels of brand awareness. Viral marketing shall also be engaged in order to enhance the effectiveness of internet marketing. A collaborative approach shall also be taken in conjunction with retailers of clothes in order to introduce the consultancy services to the clients. Participation in awareness campaigns and in shows that deal with fashion shall also be considered as a costless way of generating the requisite levels of publicity which will also help in boosting the brand awareness. The business shall also seek to capitalise on endorsements by satisfied clients who will testify to the quality of our services. A budget sum of £200,000 has been allocated for use over the first 6 months. This sum is to be distributed between online marketing (30%), advertisement in collaboration with retailers of clothes (40%) and email and mail marketing (30%).  

8.0 Financial Plan

The starting capital needed is £500,000

Initial expenses will be as follows:

Legal expenses                                    £1,000

Premises restructuring                         £5,000

Initial advertisement                           £30,000

Cost of recruiting staff                       £3500

Website development and establishment of online transaction systems: £100,000

Miscellaneous                          £5,000

Amount held in cash to facilitate further operations £355,500

8.1 Sources of funds and structure of the company

Company will be comprised of 10 shareholders who have contributed to make contributions towards the establishment of the company. The whole amount of capital £500,000 will therefore comprise of equity. The CEO shall be a shareholder with the rest of the shareholders limiting their role in the business to the exercise of supervisory authority through the board of directors and its constituent committees.  

8.2 Initial expenditures for the business

 8.3 Cash flow forecasts

The cash flow forecast for the first 6 months indicating that break-even point will be reached after 5 months is as shown below:

Column1	February	March	April	May	June	July	Totals
Sales forecast
Cash sales	24000	30000	39000	57000	75000	75000	300,000.00
Total Receipts	24000	30000	39000	57000	75000	75000	300000
Forecast raw materials
Legal fees	1000	0	0	0	0	0	1,000.00
Premises rent	800	800	800	800	800	800	4,800.00
Premises refurbishment	5000	0	0	0	0	0	5,000.00
Cost of recruiting	3500	0	0	0	0	0	3,500.00
Wages	25000	25000	25000	25000	25000	25000	150,000.00
Website design and maintenance	100000	20000	10000	10000	5000	5000	150,000.00
Promotion Overheads	45000	47000	28000	30000	25000	25000	200,000.00
Other overheads	1000	900	1100	500	600	900	5,000.00
Total expenses	181300	93700	64900	66300	56400	56700	519,300.00
							-
Opening balance	500000	342700	279000	253100	243800	262400
Net Cash flow	-157300	-63700	-25900	-9300	18600	18300
Closing balance	342700	279000	253100	243800	262400	280700

A summary of the cash flow projection for the first three years is as follows:

The net cash flows are as represented below:

8.4 Cash flow forecasts for 3 years

Column1	Column2	Column3	Column4	Column5
	Year 1	Year 2	Year 3	Item Totals
Sales forecast
Cash sales	700,000.00	1,260,000.00	2,000,000.00	3,960,000.00
Total Receipts	700,000.00	1,260,000.00	2,000,000.00	3,960,000.00
Forecast raw materials
Legal fees	1,000.00	2,000.00	4,000.00	7,000.00
Premises rent	9,600.00	15,000.00	30,000.00	54,600.00
Premises refurbishment	5,000.00	5,000.00	9,000.00	19,000.00
Cost of recruiting	3,500.00	3,500.00	3,500.00	10,500.00
Wages	300,000.00	500,000.00	800,000.00	1,600,000.00
Website design and maintenance	150,000.00	50,000.00	50,000.00	250,000.00
Promotion Overheads	400,000.00	550,000.00	650,000.00	1,600,000.00
Other overheads	10,000.00	20,000.00	40,000.00	70,000.00
Total expenses	879,100.00	1,145,500.00	1,586,500.00
Opening balance	500,000.00	320,900.00	435,400.00
Net Cash flow	(179,100.00)	114,500.00	413,500.00
Closing balance	320,900.00	435,400.00	848,900.00

8.4 Profit and loss projection for 3 years

items	Year 1	Year 2	Year 3	Item Total
Cash sales	700,000.00	1,260,000.00	2,000,000.00	3,960,000.00
Total sales	700,000.00	1,260,000.00	2,000,000.00	3,960,000.00
cost of materials necessary for delivery	10,000.00	18,000.00	30,000.00	58,000.00
Gross profit	690,000.00	1,242,000.00	1,970,000.00
Overheads:
Advertising and promotions	400,000.00	550,000.00	650,000.00	1,600,000.00
Transport and other overheads	10,000.00	20,000.00	40,000.00	70,000.00
Total overheads	410,000.00	570,000.00	690,000.00
Net profit before drawings and National Insurance	280,000.00	672,000.00	1,280,000.00

9.0 Staffing plan

The business shall start with a total of 9 employees including the CEO. The rest of the employees will include 5 fashion consultants, one network engineer and two marketing employees. The marketers will be charged with the responsibility of building brand awareness, identifying potential clients and general marketing of the organisation and its services. The consultants shall provide the core service of providing the advisory services to clients. The network engineer shall be tasked with the responsibility of ensuring the information systems in place work efficiently and provide the desired benefits. He shall also ensure that the most effective technologies for communication and facilitating transactions are in place and functioning properly at all times. The CEO shall oversee all other functions and shall also take charge of financial management in the interim period. Over the three year period under consideration employees shall grow from 9 in the first year to 15 in the second year and to 25 in the third year.

10.0 Location

Given that the location of the business is not a key determinant for success; the business shall be located in a remote location where the rates of rent are relatively low. The business location will be in Trafford and shall be situated in Winter House along Moorside Rd. 

References

Blythe, J., 2010. Marketing planning: strategy, environment and context. New York: Prentice Hall

Datamonitor, 2010. Industry Profile: Womenswear in the United Kingdom. (Online) Available at: http://globalbb.onesource.com/Web/Reports/ReportMainIndustry.aspx?SicCodeID=220582&Report=DATAMONITORINDUSTRYPROFILE&Process=IP&Type=GetReport&FileFormat=PDF&ReportID=62449&FileName=0183-2278-2009.pdf&VendorName=Datamonitor (Accessed 8 February 2012)

Free Office Finder, 2012. Office Space to rent: High Road Tottenham London. (Online) Available at: http://www.freeofficefinder.com/uk/officespace-Tottenham-HighRoad-71974.php (Accessed 8 February 2012)

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UKFT, 2012. UK Fashion and Textile Association: Industry Reports and News. (Online) Available at: http://www.ukft.org/ (Accessed 8 February 2012)

Verdict, 2008. UK Womenswear retailers 2008. (Online) Available at: http://www.verdict.co.uk/Marketing/dmvt0380m.pdf (Accessed 8 February 2012)

Verdict, 2011. UK Niche Clothing. (Online) Available at: http://www.datamonitor.com/store/Download/Brochure/?productId=CM00005-003 (Accessed 8 February 2012)