1.0 Executive Summary
Buy the Time will be a shopping service that allows customers to purchase gifts and necessities of life at little inconvenience to their schedule and workday. We will do this with the aid of a shopping consultant to provide each customer with quality solutions to their shopping concerns at reasonable prices. The owner has had years of experience in the retail market and is aware of trends and the shopping environment. In time, this service will evolve to incorporate a larger market instead of a luxury for the more wealthy customers.
Highlights
1.1 Objectives
The objectives for the company are outlined below: Obtain and service clients with a knowledgeable sales team offering purchases of goods based on desires and needs. For a low charge, allow people to obtain custom items with minimal interruption into their day and life. Grow into a large franchise with a reputation for getting the desired item at a reasonable cost.
1.2 Mission
The mission of Buy the Time is to offer custom goods for all occasions with minimal interruptions into our clients' daily activities. We want our customers to be able to give special gifts to their loved ones without it being a stressful event. We will strive to provide expert consultants in order to guide the client from start to finish with low-cost, reliable information in a timely fashion.
1.3 Keys to Success
In order to ensure a healthy profit and low customer turnover, Buy the Time will have to:
Provide a significantly easier, more convenient, and customised shopping experience than can be found in high-end stores. Ensure 100% customer satisfaction. Establish close ties with the clients to ensure repeat business, encourage customer feedback to enhance further customised service, and promote word-of-mouth marketing.
2.0 Company Summary
Buy the Time is a shopping service which allows the client to purchase custom items without stress. With our expert staff, we intend to grow into a larger market where we can still be personable, yet offer greater choices. Our ideal larger market will expand from the Seattle area to include New York, San Francisco, Los Angeles, Chicago, and Miami.
2.1 Company Ownership
Buy the Time will be a Seattle, WA-based company. It will be formed as a simple sole trader. The company will operate as a home business until such time as expansion is required. Jade Kousky is the owner and sole trader. With many years of retail experience, she brings a unique knowledge of discovering solutions to personal needs at low cost. Many have known her to have a personal flare for anticipating trends and an ability to match purchases to a client's desires. With growth, Ms. Kousky plans to convert the sole trader into a corporation, still maintaining major control. Each location manager will operate as a key figure in the growth and evolution of Buy the Time.
2.2 Start-up Summary
Originally, operation will be based out of the owner's residence. One-to-one service can be provided by meeting the client at a time and place most convenient for them. This will cut unnecessary costs while still providing superb service.
Start-up Start-up Requirements Start-up Expenses Legal Stationery etc. Brochures Consultants Insurance
£300 £150 £200 £0 £0
Rent Research and development Expensed equipment Other Total Start-up Expenses Start-up Assets Cash Required Other Current Assets Fixed assets Total Assets Total Requirements Start-up Funding Start-up Funding Start-up Expenses to Fund Start-up Assets to Fund Total Funding Required Assets Non-cash Assets from Start-up Cash Requirements from Start-up Additional Cash Raised Cash Balance on Starting Date Total Assets
£0 £100 £500 £0 £1,250
£1,250 £400 £2,000 £3,650 £4,900
£1,250 £3,650 £4,900
£2,400 £1,250 £0 £1,250 £3,650
Liabilities and Capital Liabilities Current Borrowing Fixed liabilities Accounts Payable (Outstanding Bills) Other Current Liabilities (interest-free) Total Liabilities Capital
£0 £0 £0 £0 £0
Planned Investment Owner Private Investor Other Additional Investment Requirement Total Planned Investment Loss at Start-up (Start-up Expenses) Total Capital
£3,250 £1,650 £0 £0 £4,900 (£1,250) £3,650
Total Capital and Liabilities Total Funding Start-up
£3,650 £4,900
3.0 Services
Buy the Time will offer an expert consultant for all occasions. This consultant will specialise in personal gifts and ideas for people who desire the latest fashions and/or gift solutions for individuals who are hard to shop for. This service will provide insight, research, purchases, and delivery in custom packaging. The focus of the company is the needs of the client. It is the job of the consultant to translate those needs into low-cost solutions.
4.0 Market Analysis Summary
Buy the Time will target the middle-aged, busy executive. These individuals often have extremely busy schedules, including a great deal of travel time. In addition, they possess a large proportion of disposable
income that allows them to afford custom services. This service will allow them more concentration on work, while allowing them to obtain great products for personal and business life.
4.1 Market Segmentation
The target market for Buy the Time is broken into three segments:
1. Busy executives desiring to keep pace with the trends, yet not having the time to facilitate their
needs.
2. Younger business persons who choose to have the luxury and convenience of a personalised 3.
shopping service. Those needing consultation in gifts and/or not wanting the pressures that are associated with finding custom gifts for special occasions.
Market Analysis (Pie)
Market Analysis Market Analysis 2001 Potential Customers Executives Business Persons Other Total Growth 52% 32% 15% 96.16% 500 260 60 820 900 500 240 1,640 1,300 800 400 2,500 4,000 2,010 1,000 7,010 6,400 3,900 2002 2003 2004 2005 CAGR 89.15% 96.80%
1,840 135.32% 12,140 96.16%
4.2 Target Market Segment Strategy
The best way to develop the company is to make our service necessary and accessible to the public. By facilitating their needs easily, we offer a great service at little inconvenience to them in a time where convenience matters the most. In its broadest definition, the American shopping market consists of every American who needs to buy goods and services for themselves and their families. Although it is the aim of Buy the Time to eventually reach out to a wide range of shoppers, including middle income families, busy professionals, and people looking for "hard to find" items, the company will focus first on the busy executive-type shopper.
4.3 Market Needs
Buy the Time's primary market, the executive or high-end professional individual, has certain needs that are outlined below. They often find that their image is very important, both professionally and personally. They need advice or information on what the latest trends and fashions are. They keep busy schedules that often involve a lot of travel. This leaves little time for shopping that is time consuming, such as gift buying. They have a desire to be pampered and willingly spend money as a symbol of status.
4.4 Service Business Analysis
Buy the Time offers the service of shopping advice/expertise in trends, fashions, and emerging products, along with the purchasing and delivery of such items to the customer's residence. It is assumed that most of the items purchased will be in single or small quantities. The primary attraction of such a service is that it significantly cuts down on shopping time for busy customers who wish to utilise their time for other purposes. With the advent of computers and the Internet, it is believed that this service can be offered at a low cost, and can be enhanced through the use of an established-customer database to track individual preferences.
4.5 Competition and Buying Patterns
This is a luxury service. An affordable cost will be needed to maintain clients and keep their needs constant. This requires being aware of economic changes, as well as alterations in trends. At the moment, there are few services like this in the Seattle area. Therefore, there is a tremendous opportunity to build and retain significant market share. Customers choose and retain services like this often through word-of-mouth, when the company is able to achieve a high level of customer satisfaction. Although it is the aim of Buy the Time to significantly lower costs of this luxury service, at this time, cost does not play a significant factor in how customers choose a shopping service. The bottom line is establishing a strong intimate relationship with customers to capture the long-term profits through repeat business and create the enthusiasm among customers that will spur on word-of-mouth marketing.
5.0 Strategy and Implementation Summary
Buy the Time will concentrate on expanding in metropolitan areas that have significant growth of young business persons and executives. Starting in Seattle, it will grow down the west coast to San Francisco and Los Angeles. From there we will target the east coast with locations in New York City, Miami, and Chicago.
The target customer is a busy business person unable to find time for purchasing custom goods. We will provide this tailored service to work around their schedules, while maintaining a low cost.
5.1 Competitive Edge
Our competitive edge lies in our expert service at a reasonable price. We will transform this service from a luxury into a demand service. We will provide a database for remembering occasions and dates, this will allow the client to remain stress-free. Buy the Time was created by an expert shopper who knows trends, prices, and details, such as fabrics and colours. We are aware that there will be others trying to offer such a service, but only we will be able to provide such services at a low cost, with friendly consultants, and an ability to find exactly what our clients desire.
5.2 Sales Strategy
Our sales will be generated from repeat clients. This service will be established as an easy and friendly way to shop without the hassle. We will offer low introductory costs for our services. To ensure that all purchases will be worthwhile for the consultant, all of our orders will have a minimal amount required to cover any expenses incurred. This will be minimal, allowing for our services to be affordable. Ms. Kousky has enough contacts in the Seattle area who have expressed interest in the service that no advertising will be needed for the first year of operation. Subsequent advertising (which may not start until year four or five) will depend on word-of-mouth, a website, telephone directory ads, local newspaper ads and articles, and brochures.
5.2.1 Sales Forecast
The following chart and table document forecasted sales. In both April and May we expect a two percent growth each month. From June to September, each month should reflect a growth of five percent, since many activities occur during the summer months. October will show approximately four percent, since this is usually a time of transitions. November and December will show an increase to seven percent, with many people buying for the holidays. January through April will be an increase of one percent each month, since this is a slow retail period. This will result in a growth of 68% after the first year. From that, sales in 2002 will see a growth of 57% as we develop our team of consultants. By 2003, sales will show a 78% growth. By the end of the third year, we will be able to move into markets outside the Seattle area.
Sales Monthly
Sales Forecast Sales Forecast FY 2002 Sales Jade Kousky - Owner Retail Consultant 1 Total Sales Direct Cost of Sales Jade Kousky - Owner Retail Consultant 1 Subtotal Direct Cost of Sales 6.0 Management Summary
As Buy the Time grows, we will add consultants so that we may continue to offer personalised service in a timely fashion. Originally, it will start with the owner as the sole employee. By the end of the first year, another consultant will be added. From that point we will add a consultant when we choose to grow into different markets. We will shape our team depending on sales and growth. Marketing and public relations will be handled mainly by the owner. If there is a greater need, a marketing consultant will be used.
FY 2003 £41,000 £25,000 £66,000 FY 2003 £18,750 £9,000 £27,750
FY 2004 £50,000 £33,000 £83,000 FY 2004 £22,500 £15,000 £37,500
£32,365 £0 £32,365 FY 2002 £11,250 £0 £11,250
Personnel Personnel Plan Owner Other FY 2002 £15,000 £0 FY 2003 £30,000 £0 FY 2004 £37,000 £0
Total People Total Payroll 7.0 Financial Plan
0 £15,000
0 £30,000
0 £37,000
Growth will occur according to the number of clients and cash flow. With approximately half of our services provided on credit, collection will be essential. With this still being a service that is not essential to everyday living, we will show that payments are necessary immediately. With a concrete system for cash flow, we will be able to keep debt to a minimum, while still providing a high level of sales.
7.1 Important Assumptions
The following assumptions are made responding to growth, and are based on economic trends from the preceding two years. A strong economy is expected to continue in the future. Many people have annual dates on which purchases are made. It is assumed that people are willing to pay for a service if it is an agreeable and convenient experience.
The table below outlines some business assumptions that are the basis for Buy The Time's growth, including tax rate and payment days.
General Assumptions General Assumptions Plan Month Current Interest Rate Long-term Interest Rate Tax Rate Other 7.2 Break-even Analysis
Our break-even analysis is shown in further detail in the following chart and table. This is a conservative figure since contacts have been made, and have already generated many orders for our services. Buy the Time's goal is to generate twice as much as the break-even point for a monthly standard.
FY 2002 1 10.00% 10.00% 25.42% 0
FY 2003 2 10.00% 10.00% 25.00% 0
FY 2004 3 10.00% 10.00% 25.42% 0
Break-even Analysis
Break-even Analysis Break-even Analysis Monthly Revenue Break-even Assumptions: Average Percent Variable Cost Estimated Monthly Fixed Cost 7.3 Projected Profit and Loss
Buy the Time's projected profit and loss is indicated in the following table. Gross margin should remain between 50-70% the first year, with highest profits due near the end of the year. This should prove to be accurate, since that is a time when many clients increase their spending.
£2,108
35% £1,375
Profit and Loss Pro Forma Profit and Loss Sales Direct Cost of Sales Other Total Cost of Sales Gross Margin FY 2002 £32,365 £11,250 £0 -----------£11,250 £21,115 FY 2003 £66,000 £27,750 £0 -----------£27,750 £38,250 FY 2004 £83,000 £37,500 £0 -----------£37,500 £45,500
Gross Margin %
65.24%
57.95%
54.82%
Expenses Payroll Sales and Marketing and Other Expenses Depreciation Leased Equipment Utilities Insurance Rent Payroll Taxes (National Insurance) Other Total Operating Expenses Profit Before Interest and Taxes EBITDA Interest Expense Taxes Incurred Net Profit Net Profit/Sales 7.4 Projected Cash Flow
£15,000 £0 £0 £0 £0 £0 £0 £1,500 £0 -----------£16,500
£30,000 £0 £0 £0 £0 £0 £0 £3,000 £0 -----------£33,000
£37,000 £0 £0 £0 £0 £0 £0 £3,700 £0 -----------£40,700
£4,615 £4,615 £0 £1,147 £3,468 10.72%
£5,250 £5,250 £0 £1,313 £3,938 5.97%
£4,800 £4,800 £0 £1,220 £3,580 4.31%
The following chart and table outline the cash flow for fiscal years 2002, 2003, and 2004. For a monthly analysis, please see the attached appendix.
Cash
Cash Flow Pro Forma Cash Flow FY 2002 Cash Received Cash from Operations Cash Sales Cash from Receivables Subtotal Cash from Operations Additional Cash Received VAT, VAT, HST/GST Received New Current Borrowing New Other Liabilities (interest-free) New Fixed liabilities Sales of Other Current Assets Sales of Fixed assets New Investment Received Subtotal Cash FY 2003 FY 2004
£17,801 £11,759 £29,560
£36,300 £26,785 £63,085
£45,650 £35,877 £81,527
£0 £0 £0 £0 £0 £0 £0 £29,560
£0 £0 £0 £0 £0 £0 £0 £63,085
£0 £0 £0 £0 £0 £0 £0 £81,527
Received Expenditures Expenditures from Operations Cash Spending Bill Payments Subtotal Spent on Operations Additional Cash Spent VAT, VAT, HST/GST Paid Out Principal Repayment of Current Borrowing Other Liabilities Principal Repayment Fixed liabilities Principal Repayment Purchase Other Current Assets Purchase Fixed assets Dividends Subtotal Cash Spent Net Cash Flow Cash Balance 7.5 Projected Balance Sheet
The Balance Sheet table for fiscal years 2002, 2003, and 2004 follows. For a monthly analysis, please see the attached appendix.
FY 2002
FY 2003
FY 2004
£15,000 £12,659 £27,659
£30,000 £30,665 £60,665
£37,000 £41,569 £78,569
£0 £0 £0 £0 £0 £0 £0 £27,659 £1,901 £3,151
£0 £0 £0 £0 £0 £0 £0 £60,665 £2,420 £5,571
£0 £0 £0 £0 £0 £0 £0 £78,569 £2,958 £8,529
Balance Sheet Pro Forma Balance Sheet FY 2002 Assets FY 2003 FY 2004
Current Assets Cash Accounts Receivable Other Current Assets Total Current Assets Fixed assets Fixed assets Accumulated Depreciation Total Fixed assets Total Assets Liabilities and Capital Current Liabilities Accounts Payable Current Borrowing Other Current Liabilities Subtotal Current Liabilities Fixed liabilities Total Liabilities Paid-in Capital Retained Earnings Earnings Total Capital Total Liabilities and Capital Net Worth 7.6 Business Ratios
£3,151 £2,805 £400 £6,356
£5,571 £5,721 £400 £11,691
£8,529 £7,194 £400 £16,123
£2,000 £0 £2,000 £8,356 FY 2002
£2,000 £0 £2,000 £13,691 FY 2003
£2,000 £0 £2,000 £18,123 FY 2004
£1,238 £0 £0 £1,238 £0 £1,238 £4,900 (£1,250) £3,468 £7,118 £8,356
£2,635 £0 £0 £2,635 £0 £2,635 £4,900 £2,218 £3,938 £11,056 £13,691
£3,487 £0 £0 £3,487 £0 £3,487 £4,900 £6,156 £3,580 £14,636 £18,123
£7,118
£11,056
£14,636
The following table provides significant ratios for the personal services industry. The final column, Industry Profile, shows ratios for this industry as it is determined by the Standard Industrial Classification (SIC) Index 7299, "miscellaneous personal services."
Ratios Ratio Analysis Sales Growth Percent of Total Assets Accounts Receivable Other Current Assets Total Current Assets Fixed assets Total Assets Current Liabilities Fixed liabilities Total Liabilities Net Worth Percent of Sales Sales Gross Margin Selling, General & Administrative Expenses Advertising Expenses Profit Before Interest and Taxes Main Ratios FY 2002 0.00% FY 2003 103.92% FY 2004 Industry Profile 25.76% -8.50%
33.57% 4.79% 76.07% 23.93% 100.00% 14.81% 0.00% 14.81% 85.19%
41.78% 2.92% 85.39% 14.61% 100.00% 19.25% 0.00% 19.25% 80.75%
39.70% 2.21% 88.96% 11.04% 100.00% 19.24% 0.00% 19.24% 80.76%
6.70% 26.40% 43.50% 56.50% 100.00% 19.50% 21.40% 40.90% 59.10%
100.00% 65.24% 51.07%
100.00% 57.95% 54.26%
100.00% 54.82% 47.14%
100.00% 50.80% 34.40%
0.00% 14.26%
0.00% 7.95%
0.00% 5.78%
0.20% 1.50%
Current Quick Total Debt to Total Assets Pre-tax Return on Net Worth Pre-tax Return on Assets Additional Ratios Net Profit Margin Return on Equity Activity Ratios Accounts Receivable Turnover Collection Days Accounts Payable Turnover Payment Days Total Asset Turnover Debt Ratios Debt to Net Worth Current Liab. to Liab. Liquidity Ratios Net Working Capital Interest Coverage Additional Ratios
5.13 5.13 14.81% 64.83% 55.23%
4.44 4.44 19.25% 47.49% 38.35%
4.62 4.62 19.24% 32.80% 26.49%
2.09 1.03 40.90% 1.10% 1.90%
FY 2002 10.72% 48.72%
FY 2003 5.97% 35.61%
FY 2004 4.31% 24.46% n.a n.a
5.19 57 11.23 27 3.87
5.19 52 12.17 22 4.82
5.19 63 12.17 26 4.58
n.a n.a n.a n.a n.a
0.17 1.00
0.24 1.00
0.24 1.00
n.a n.a
£5,118 0.00
£9,056 0.00
£12,636 0.00
n.a n.a
Assets to Sales Current Debt/Total Assets Acid Test Sales/Net Worth Dividend Payout
0.26 15% 2.87 4.55 0.00
0.21 19% 2.27 5.97 0.00
0.22 19% 2.56 5.67 0.00
n.a n.a n.a n.a n.a