Mission Statement 2
Driving Force 3
Market Position 3
Streanthes and Weaknesses 3
Opportunities and threats 3
External Opportunities: 3
External Threats 4
Key Factors For Success 4
Goals and Objectives 4
Target Market Information 7
Social Environment 7
Political Environment 9
Economic Environment 9
Competitive Environment 10
Potential Problems 10
Market Data Summary 10
Target Clients 10
Target Market Size 10
Cash and Accounts Receivables 12
Peak sales 12
Necessary Financing 13
Cash Budget 13
Balance Sheet 14
Income Statement 15
Ratio Analysis 16
Depreciation Estimation 17
Fixed Capital Estimation 17
Working Capital Estimation 18
Marketing Estimation 18
Rent Expense Estimation 19
This business plan was created to check the idea about the effectiveness of the creation of the database that will help clients at different shopping centers to find products more quickly. As a result, it saves their time and money.
The company name is Svetlana. The main idea of venture is the creation of the database of products that will help potential clients to find what are necessary for them.
The mission of it is to be the best consultants of defining the nonfood product location at the Irkutsk markets, to take care of our clients by saving their time and money, when they do shopping, to offer the best service by using modern computer technology and polite and affable consultants
The market of such informational service is quite big and has a lot of opportunities for development. In addition, Svetlana can use the greatest of them because there are no competitors at the market. It offer product that satisfy most of this market demand, as the product contain all main information potential clients want to get to find a product. The sales policy is build on the statement that clients lose nothing, but only save their time and money.
After the third year of existence, Svetlana reach the after-tax profit level of $3 510 and will have ROE 35%.
The structure of the company is simple as it is quite small, and it is ineffective to use complex system of the distribution of functions.
So, as a result of market opportunities, Svetlana have a lot of chances for succeed.
STATEMENT OF OBJECTIVES
We will be the best consultants of defining the nonfood product location at the Irkutsk markets. We will take care of our clients by saving their time and money, when they do shopping. By using the best computer technology and polite and affable consultants, we will offer the best service our clients can get.
We will create a positive working environment for our employees that will promote satisfaction and personal growth.
* Our company will offer service that does not exist yet at Irkutsk. It will create very good advantage for our development.
The main our clients are busy people who do not have time to go from shop to shop and want to find product as quickly as possible. Such people are the most likely users of our database.
Streanthes and Weaknesses
* Low-cost equipment
* The creation and updating of database may take a lot of time
* Changes in tax structure
* Increased competition
* The absence of competitors
* To create the consulting center that will cover all main nonfood markets
> The collection of information and the creation of the consulting center in the ``Irkutskiy`` market
> The collection of information and the creation of the consulting center in the ``Fortuna`` market
> The collection of information and the creation of the consulting center in the ``Complex`` market
* To create the centralized informational system
> The development of database
> The installation of the server station and user machines
> The market research of similar sites in Internet
> The creation of the site structure
> The creation of the site interface
As our service is new in the Irkutsk market, our company plans to
follow the differentiation strategy. The determining factors will be
clients and development. Price will not take the first place. We plan the
step by step development at first in the ``Irkutskiy`` market, then in the
Irkutsk is the biggest city of eastern Siberia. It has a lot of markets, but any of them does not have any consolidating data base that help people to find goods that is necessary. So, this database of products is a result of the demand of many people.
Such business is new for the Irkutsk market, so there are no examples of development and existence of similar service, where we can get information and some experience about our venture. The positive side of such situation is that we will be the first, and, as a result we can get the greatest benefits. The negative side is that we will have a lot of unpredictable situations that may create big obstacles for good development. Our informational service center can be classified as informational business, which is in the beginning stage in Russia today. It also creates some global opportunities and threats because during this stage the most prosperous ventures appear, but also many businesses force into insolvency.
So, current situation gives our venture a lot of opportunities for good development.
TECHNICAL DESCRIPTION OF SERVICE
Our product is information. We plan to offer information about non-
food products such as clothes, shoes, bags, home appliances and car spare
parts for potential clients in the Irkutsk markets such as ``Irkutskiy``,
Information about clothes and shoes will consist of the type of clothes, a season, the country of origin, the company name, the year of production, size, color, price range, and the location and number of the pavilion or the section of a market.
Information about bags will consist of the type of bags, the company name, the country of origin, the year of production, price range, and the location and number of the pavilion or the section of a market.
Information about home appliances will consist of the type of a home appliance, the company name, the year of production, size such as the length of diagonal for TV, price range, and the location and number of the pavilion or the section of a market.
Information about car spare parts will consist of the type of a spare part, the company name, the type of a car and other spare parts, where this spare part is used, the year of production, price range, and the location and number of the pavilion or the section of a market.
The example of list:
The Database will be created in the FoxPro 5.0. It will be adopted for using through the local net and the Internet. The design of the Internet site will be developed with the Microsoft FrontPage.
This database will be updated every second day. At first time it will be done manually by surveying the owners of the pavilions or the sections of a market, but then we plan to automate this process.
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
To analyze and collect the market data I used as the statistical sources, so and my own experience and knowledge.
The shopping center УIrkutskiyФ is the biggest nonfood market in
The Irkutsk population today is 592,4 thousand people.
In addition, the shopping center УIrkutskiyФ 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.
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.
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 the shopping center
For last years, the level of revenues of population in Irkutsk is
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.
There is no such service in the shopping center ЂIrkutskiyї 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.
1. My assumption that every second purchase is made in the shopping center
УIrkutskiyФ may be overrated, so there are may be the smaller quantity of potential clients of my database.
Market Data Summary
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.
The product of the venture will be the information about available goods in the shopping center ЂIrkutskiyї at first. Then we will broad our service and offer information about the shopping center ЂFortunaї. Finally, we will create database, where each person will be able to get information about products that are available at the shopping center ЂIrkutskiyї, the shopping center ЂFortunaї, and the shopping center УComplexФ.
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).
We plan to develop three ways of delivering information. First, we
open the consulting center in the shopping center ЂIrkutskiyї, then in the
shopping center ЂFortunaї, and finally in the shopping center УComplexФ.
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.
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.
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 companiesТ liabilities.
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
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 ЂIrkutskiyї, the shopping center ЂFortunaї, and the
shopping center ЂComplexї. The ЂIrkutskiyї and the ЂComplexї 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
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.
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 ЂFortunaї, so
| |2003 |2004 |2005 |
|Assets | | | |
The amounts are given as they are in Russia
| |2003 |2004 |2005 |
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.
From my analysis of projected future operations, we can see that debt ratio will decrease in 2004 and 2005 from 0,25 to 0,18. It tells about the decrease of funds provided by creditors and increase in the attractiveness of business for investments, as creditors prefer lower ratios. Debt -to-net worth ratio will also decrease in 2004 and 2005 from 0,46 to 0,30, what tells about the increase of businessТs ability to meet both its creditor and owner obligations in case of liquidation. The times interest earned ratio will decrease. It indicates that the firm will have fewer difficulties in meeting the interest payments of loan. The net income can decrease almost by ten times until the business will not be able to pay its interest obligations in 2005.
The fixed assets turnover will constantly increase, what indicates the
increase of effectiveness of the fixed asset usage. The total assets
turnover ratio will decrease from 2003 to 2004 and increase from 2004 to
The profit margin on sales ratio will slightly increase in 2004 and more significantly decrease in 2005. It indicates the decrease of income per dollar for the first three years of existence. The cause of the decrease in 2005 will be the more intensive use of debt.
The ROA will constantly decrease in the first three years of existence of the business. It indicates the decrease of the return on assets. The cause of it will be more significant increase in total assets and less significant in net income.
The ROE will increase from 2003 to 2004. It will indicate the increase in the rate of return on the ownerТs investments. The cause of it will be more intensive use of debt. But in 2005 there will decrease in ROE, what is explained by the more significant increase in equity and less significant in net income.
I will use the modified accelerated cost recovery system method of
depreciation. According to my opinion it is the best for me because it will
allow getting some tax savings because of the decrease of income due to
I made the estimation for the first year. As all assets are almost the
same in each consulting service than I determined the price for the next
period by making inflation adjustments.
I also made the estimation for the first year, as with the fixed
capital, and than determined the price for the next period by making
Basing on the cash receipt forecast, I will need
The sales estimation I based on the next assumptions:
1. The share of the ''Irkutskiy'' market will decrease, as there will appear some competitors.
The amount of purchases a day in average in the "Irkutskiy" market: in items
2. The share of the the ''Fortuna'' martet will decrease as there will appear some competitors.
The amount of purchases a day in average in the "Fortuna" market: in items
3. The share of the ''Complex'' market will stay constant.
The amount of purchases a day in average in the "Complex" market: in items
The projected sales price
Rent, a year
As I plan to organize small venture, I decided to use simple structure for management.
The responsibility of manager: develop database, programming, accounting,
transport, managing finance, human resource, and operational activities.
The manager of the firm should be able to use specific program tools.
The consultant should have computer skills, know programming and be able to work with the Internet effectively.
As I stated in the financing plan I plan to hire one more consultant each year because I plan to open new consulting center each year.
As my venture is small and does not have much financing I will not plan to pay for all medical insurance expense of employees, but I will provide transportation from home to work and from work to home. I plan to establish friendly environment that will help to organize work more effectively.
The motivation will be based on the salary % and on the opportunity of realization available knowledge.
This venture will help people to save their time and money. It will help to find what is necessary more quickly.
According to market plan it has good opportunities for development and if the market strategy is right than it might be quite profitable. Next, by using effective management tactics the organization of the work process will be on the highest level. In addition, the use of cash sales will help to held cash balance in good condition. Finally, prepared and qualified personal will be the guaranty of stable development.
As a result of this venture clients find products more quickly, and
sellers get new clients, consequently, everybody win. So, this venture has
a lot of perspectives.