Business Plan: “Rainbow” company

 
 
 
 
 
 
 
 
 
 
 
 
 
 

Business Plan:

“Rainbow” company

 

A start-up plan for a business of handmade jewelry production 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

Kyiv - 2011

Plan

Resume……………………………………………………………………………………...3

1. Company: Current position and Future ………………………………………………4

2.   Product………………………………………………………………………………..5

3.  Marketing research……………………………………………………………………6

4.   Marketing plan………………………………………………………………………..9

5.   Production plan……………………………………………………………………….12

6.   Organizational plan…………………………………………………………………..13

7.   Financial plan…………………………………………………………………………16

8.   Risk evaluation………………………………………………………………………..18 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

Resume 

Rainbow is a start-up business, which produces unique handmade jewelry. It is located in Kiev. The company plans to build a strong market position all throughout the country, due to the weak partners' industry and good access to the huge amount of a raw material in the area.

Our company suggests using quality raw materials. Our main competitors will be producers working in this business for longer time, those who got image and customers, promote their business for a long time.

Our production is really various – earnings, pins, bracelets and pendants – aimed at reaching different target markets – different segments of final consumer.

Rainbow will locate its office in a rented apartment in Kiev, and production lines will be based at the same place in separate room.

Rainbow aims at offering its products at a competitive price to meet the demand of the middle-to higher-income local market area.

The following business plan will provide the following information:

1. Company's current position (tendencies of current industry, customer needs that are being satisfied, geography of the business, founders and partners of the company, strategic targets of the firm, tactical aims)
2. Company's products (product description, competitiveness, production expenses, perspectives of business development)
3. Market research (market of the product or similar overall, target audiences, competitors analysis)
4. Marketing plan (aims of marketing activity of the firm, choice and substantiation of company's marketing activities, marketing budget development, sales prognosis and analysis)
5. Production plan (production structure of an enterprise, production process, machinery, materials, external factors influence)
6. Organizational plan (form of organization, personnel need, founders, management scheme, personnel policies)
7. Financial plan (sales and profit volumes, P&L, cash flow, planned balance, liquidity plan)
8. Risk evaluation (sources, types, methods of lowering)

 
 

Company Current Position and Future

Rainbow is a designer and manufacturer of unique handmade jewelry. Rainbow makes many different designs in the form of earnings, pins, bracelets and pendants. All of the products are designed and manufactured by our masters. In order to grow and achieve the desired level of market penetration, the company has outlined the following marketing/production goals over the next three years:

The Company Mission & Goal

Our company offers products different to those in the market introducing wide variety of styles and colors to satisfy customers.

The jewelry industry is highly fragmented with thousands of artisans competing for distribution contracts and fame. Some work and distribute locally, others have national distribution systems set up. Some artists will design products for larger companies to manufacture, others will design and make the pieces themselves. Competition for Rainbow takes the following forms:

• Artists creating designs that are then manufactured on a large scale and distributed nationally.
• Companies that has their own designers in-house. In this case everything is done in-house, design, marketing and wholesaling.
• Artists who design and make all of the pieces themselves, and then do the wholesaling or retailing themselves.
• To create a jewelry manufacturing company whose primary goal is to exceed customer's expectations.
• To increase the number of designs offered by 8% per year.
• To develop a profitable/sustainable home-based company. 
  Rainbow will be focusing on two distinct groups of customers. One is the end consumer, the other is galleries, to be used as a distribution channel. The end consumer will be interacting with our manager via website as well as through personal contact at exhibitions/shows. The galleries (museum shops, jewelry stores) will also be met through the exhibitions and shows.

Need for product:

Most of the handmade jewelry producers are just separate authors working time after time but we are going to unite designers and their work to build powerful production of unique handmade jewelry.

The Rainbow company as a start-up firm is established by an entrepreneur and third-party investors: the business will equally belong to:

60% - founder

40% - Ukrainian investor

Product

     As we have already mentioned, our choice is hand made jewelry. The reasons why are:

1) raw material is very cheap;

2) it doesn’t take much time to produce one piece.

     Nevertheless, the main reason is that all products are unique, you can make similar but never identical. That is why people like such products.

     Product’s description

     Hand made jewelry is exclusive products, which are made by hands. The design is unique and products can be made of diverse materials such as glass beads, fabric, acrylic, ceramic as well as organic /natural material such as wood, leather, and raffia grass. It all depends on the choice of the customer.

Assortments of the product

1. Jewelry for women:

• necklaces and pendants
• bracelets
• earrings
• rings
• brooches

3. Accessories:

• key chain
• charms

 

Production expenses will include:

• the cost of machines,
• rent expenditures
• salaries for workers
• raw materials
• supporting costs
• other costs

Competitors: 

 
 

Marketing Research 

Target markets:

• Corporate factors influence
• Implementation
• International market potential of the firm

     Our target markets are young people with creative ideas, also we plan to produce jewelry for women that will add some fashion details to business look. We have great sales potential in this segment and we are going to develop it to special accessories for men.

• Adjust jewelry especially for Kyiv market, add ethnic theme.
• Create product that will satisfy new demand on the market
• Expand product line to more unique business strategy

     Comparing the situation on the markets with different kinds of products we can choose which strategy is better for us. Ansoff’s product/market growth matrix suggests that a business’ attempts to grow depend on whether it markets new or existing products in new or existing markets. The output from the Ansoff product/market matrix is a series of suggested growth strategies that set the direction for the business strategy.

     New products to existing market:

Rainbow has two targeted groups of people, galleries and individuals:

• Galleries- These buyers are purchasing jewelry wholesale in quantity and reselling it to the public. Some of the galleries are private galleries, some are artisan jewely shops, some are museum stores. The margins are not as good compared to sales to individuals and there is also the expense of setting up relationships with the galleries to sell the art pieces, but galleries move a large quantity of work. The galleries and stores that typically are interested in Contemporary's work are more upscale and modern.   They appeal to a crowd that favors progressive or industrial design.
• Individuals- These buyers are familiar with Rainbow either from stumbling across the website, saw some examples of Steve's work at a showing or art festival, word of mouth, or some other avenue. The individual would then view the different available pieces on the website and place the order via the Web, phone, fax, or mail. The margins for individual sales are greater because there is not a distribution layer involved, it is direct from Rainbow to the end consumer. The individuals that are typically attracted to this type of art work are generally from cities and are fairly progressive. The reason for this is that the jewely, while not flashy, is not all that conservative looking. They are intricate pieces, typically using organic shapes and industrial design. This is the reason that more progressive people will appreciate the Rainbow pieces.

Geographical positioning:

As far as Rainbow is targeted on final consumer, we’ll differentiate place of selling:

Retail sale (pellets):

• In the store near production office;
• Through the website with delivery all over Ukraine.

Place of manufacturing will be located on the basis of office space in Kiev. Office will be located in Kiev in a rented apartment.

The delivery process will be organized in such way:

Final consumers will be served in such way:

• Our product will be delivered directly to consumers by UkrPoshta or Mail delivery services;
• From the main office to retail shops in Kiev, and in future all over Ukraine.

 

Matrix of choosing a place for an enterprise

Factors, that have the most influence towards start-up business are:

1. current competitors
2. future possible competitors
3. suppliers
4. government regulation

As long as our business is based on the supplier’s manufacturing point, the supplier problem is not so sharp for the company.

However, competitor evaluation needs to be done accurately, as long as our competitors have already gained position on the market.

Comparative analysis of market strategies of “Rainbow” and its closest competitors

 
 

     SWOT analysis:

     After evaluating our product we came to conclusion that main challenges for us will be creating an image of the product in the market and introducing it. We have to make strong promotion for our product and make it familiar, create demand.

     As to competition with jewelry sellers – we have something new to introduce to the market. Our product has great potential on the market. 

Marketing Plan 

Marketing Mix

Product

This product is rather new to the market. Main goal is to create strong brand. We have to represent our product as exclusive and unique. We have to intrigue our target audience at first then offer them something that they can’t find anywhere else.

For jewelry for women we should make emphasis on:

• Unique, handmade style jewelry
• Luxury product
• Creative ideas
• Great addition to any style

As to the accessories:

• “Stand out from the crowd”
• “Style in details”
• “Keep sweet things close”

 

Price

     As our product is unique, luxurious, the price level should meet its high class status. We make accent on its handmade origin and creative ideas so we are going to base our strategies on this.

     Our prices will range from budget options – starting from 50.00 UAH and luxurious up to 500.00 UAH. The price will depend on the materials and complication of the work.  

Place

     We are going to open our shops in big cities. So we are planning to have some storage space for our products.

     We will also have online store so customers can get their product at the store or get it shipped.  

Promotion

As far as many types of products are manufactured & aimed at different target markets, the promotion campaign will be divided into 2 parts l:

1. Promotion for final consumers through:

• Double-advertisement on billboards: particular supermarket (Velyka Kyshenya, Furshet in Kiev or smaller chains in other cities) introduces new product:creative handmade jewelry Rainbow;
• Advertisements in newspapers, mainly oriented on active and young people;
• Advertisements in magazines, such as “Liza”, “OK”, “Natali”, which are mainly oriented on woman and focused on fashion and style.

2. Promotion online:

• Advertisement on popular websites for young people;
• Creating blog with ideas for styles, promoting our products.
• Spreading information on special forums and participating in different exhibitions, fairs, festivals, etc.
• Supporting demonstrations on eco topics connected with young people;
• Direct promotion: making presentations for gallery directors;

Promotion plan:

1- 6 Months

The aim is to inform potential consumers. The main sources of information for final consumers will be billboards & thematic magazines. (Newspapers & magazines in other cities).

7- 18 Months

The aim is to persuade consumers to trust our company. We should provide supermarket chains & regional consumers beneficial delivery conditions. We should also persuade consumers that our product is quality:

• Ecologically friendly
• Cheap

18- 36 Months

The aim is to remind. Marketing approach such that doesn’t let customers to forget about our company. We’ll keep participating in youth-related events.

Cost of promotion will conduct (for the 1^st year):

• About 16 000 UAH per month in 1- 6 months
• About 11 000 UAH in 7- 18 months
• About 8 000 UAH in 9- 12 months

Further is the advertisement budget plan for 2 years (active promotion campaign)

 

Production Plan 

Production process is rather simple. We don’t need much equipment except some tools, furnaces and places to store work-in-process product.

The main difficulties are to create design and know how to make it real.

The production operations are the following:

1. Creating design
2. Purchase of raw materials
3. Forming piece of jewelry
4. Drying (machinery needed)
5. Finishing strokes and packaging
6. Sales

All the operations will be directed by the company, using company's resources, staff and vehicles. Only transportation will be partially conducted by external party: if the company sells its production to far distant places in Ukraine, it is going to be transported by UkrPoshta, be local shipping services and to local stores.

The material and technical sources, involved into production will be the following:

1. Raw materials (plastica)
2. Drying machines
3. Trays

 

All the prices include transporting and establishment expenses. All the machinery can be bought from regional retailers at good price as buying from abroad will bring more expenses than setting equipment from regional representatives.

The materials needed for production are plastica, small accessories for earrings (closures, beads). All these materials don’t need and further processing. In this way we can spend less time producing and getting more results.

 

The production place will be a rented office, which is a part of some office building with good location, therefore the access to resources will be constant and unlimited. No transportation cost for resources will be paid.

The machinery is wholly automatic, that is why the Rainbow Company will only need the following personnel in the office:

1. Technologist (1)
2. Master-designer (5, part-time job)

The company will rent one building:

1. Office: appartment, Kiev.

There exist external factors that can influence the process of production. For example:

1. Lack of materials delivered (not enough materials to produce desired masterpiece)
2. Unexpected productional problems (breaking of machines, etc)
3. Promotion campaign failure (weak interest, weak sales)

Organizational Plan

The Rainbow company as a start-up firm is established by an entrepreneur and third-party investors: the business will equally belong to:

60% - founder

40% - Ukrainian investor

Rainbow start-up costs will include the following equipment for the home-based business:

• Legal fees.
• Website creation fees.
• Home office furniture including desk, file cabinet, chairs.
• Computer including printer, CD-RW.
• DSL hookup.
• Copier and fax machine.
• Extra land phone line.
• Cutting tools.
• Raw materials (titanium sheet and wire).
• Anodizing equipment.

Rainbow is an open-stock share company. All the investors will receive dividends according to their shares in the establishment.

The founder is a start-up businessman from Kiev with an experience in many branches of business.

Ukrainian investor – is a «Ua-Gallery» company, that specializes on unique antique masterpieces (exclusive gallery for exquisite production). «Ua-Gallery» wants to own a part in a supported business.

The Rainbow company will need the following personnel categories:

For the office:

• Technologist (1)
• Master-designer (5, part-time job)
• CEO and CFO
• Marketing & Promotion Director
• Legal Dep-t Director (part-time)
• Accountant (part-time)

 

The investors are non-staff party according to such type of company organization. No external consultants will be hired. The technologist will be a full-time payed specialist from Sweden. 
 

 

Financial Plan

 
 

 
 
 
 
 

 

Risk Evaluation

There exist several factors of risks that the Rainbow company may meet in the beginning of its activity.

1. Production

This type of risks can be connected to some production failures, such as: