Business Plan Matthew Kassin Executive Summary Wal*mart stores account for 1/8th of the economic growth. Without them, this country would be in a worse recession that it’s been in. However, with all of the growth that Wal*mart has undergone they are still lacking in one specific area, delivery. Wal*mart stores offer no delivery from their stores to customers’ homes. This is where Wally World Delivery comes in. In the following pages, you will see how we can average twenty-seven customers a week on average, each paying $55 plus mileage. Through market research and the use of Wal*Mart’s reporting we have come to an average sales forecast that will have Wally World Delivery come into profit within a month. By starting at one store and slowly growing, this part time business can turn to a full-time business in no time. Profit in the first year should be around $27,000 a year. This is only as a part time business with one store. This number does not even include the increased business that will come forth during the Christmas and Memorial Day period. I. Introduction In today’s world of discount chains, a new add onto the business is needed. Most major discount retailers do not offer a way for their customers to transport large or bulky items that they purchase to their home. Wal*Mart for instance, does not have any home delivery service except through their website. However, the website does not carry all the products that the stores carry and the expense for shipping larger items from the website warehouse to a customer’s home can be as much as the product. This is where Wally World Delivery comes in. The marketing section will show that there is a huge market for a service that will deliver bulkier items from stores such as Wal*Mart to a customer’s home. Wally World Delivery will be a complimentary service to the various Wal*Mart stores that we plan on working with. Many customers, as will be discussed later, are discouraged when they have no way of bringing home the big screen TV or patio set that they want to purchase. They have few choices, find a friend to bring the unit home for them, don’t purchase the product, or spend a lot more money somewhere else on the same product. Wally World Delivery will add a new option to their list of choices, the non-hassle approach of purchase and then delivery. We will be hired by a call from the consumer. They will place their product on layaway. They will pay for all but $1. We will then pick up the product off of layaway and then deliver the product to the customer’s home. This is option one. Option two will be a deal struck with the management of the East Meadow Wal*Mart chain to hold the merchandise on the side for their customer base. II. Organizational Structure Wally World Delivery will be incorporated under the bi-laws of the State of New York, County of Nassau and as so will be governed by set laws. The owner of the incorporated entity shall be myself, Matthew Kassin. Wally World Delivery will be run as a part-time business with a greater emphasis on the Christmas and Memorial Day time periods. As stated before, the business will be run by myself. I have an Associates degree from Nassau Community College and a Bachelors of Science degree with a concentration in Business Management from Long Island University, C.W. Post campus. I have personally been working in retail most of my life. In the past I have worked at such chains as Pergament Home Centers and I am currently employed at East Meadow Wal*Mart (2916). I have vast experience in receiving, clerical, accounting, marketing, customer service, and I am about to enter the Assistant Manger Trainee Program at Wal*Mart. With my vast knowledge of retail I can see what areas are lacking in this area of the retail world, and home delivery is one such area. I plan to personally take care of all marketing, hiring, financing, accounting, and all day to day operations of Wally World Delivery. III. Marketing The following is the marketing survey that was used: Wally World Delivery Marketing Survey Wally World Delivery is a corporation that is in the business of helping customers bring their newly purchased products home. We specialize in delivering TVs, Big Screen TVs, Furniture, Grills, Patio Sets, or anything that the consumer needs delivered from the store to their home. Would you please take a few moments out of your busy schedule to give your opinions on our new service? I would use this service: Yes I know of someone who would use this service: Yes No No If you answered yes to either of the questions above would you please indicate your opinion concerning the following statements as follows: SA: if you strongly agree with the statement A: if you agree with the statement U: if you are undecided concerning the statement D: if you disagree with the statement SD: if you strongly disagree with the statement 1. I think this service would be helpful. SA A U D SD 2. I know of friends or customers that would use this service. SA A U D SD 3. My preferred day of delivery would be: Sunday Thursday Monday Friday Tuesday Wednesday Saturday 4. I would use this service because it is: Economical SA Convenient SA Better than existing SA A U D SD A U D SD A U D SD 5. For a quality service of this type, you the customer would be willing to pay the following per delivery rate: $45 $50 $55 $60 SA SA SA SA A A A A U U U U D D D D SD SD SD SD 6. I am willing to pay an added charge of 75 cents a mile for delivery of product in to my home: SA A U D SD 7. I would like more information on this service SA Please Circle One. Age Group: 18-24 25-34 Education: Sex: Male High School Female Single Married under 10,000 Divorced 10-30 30-50 Separated 50-75 Widowed Over 75,000 35-44 45-54 College Over 55 Graduate Degree A U D SD Marital Status: Income Level: I think the service would be useful SA A U D SD 11% 32% 27% 17% 13% I know of friends or customers that would use this service SA A U D SD 2% 37% 35% 22% 4% my preferred deliver day would be Saturday Sunday Monday Tuesday Wednesday Thursday Friday 25% 22% 26% 11% 5% 2% 9% I would use the service because Better then existing SA A U D SD 11% 27% 32% 21% 9% Convenient SA A U D SD 12% 38% 17% 15% 18% Better then existing SA A U D SD 30% 40% 15% 7% 8% For a quality service of this type, I/my customers would be willing to pay the following per delivery rate: $ 50.00 $ 55.00 $ 60.00 SA 10% SA 13% A 15% A 22% U 45% U 35% D 15% D 20% D 29% D 15% D 26% 45-54 17% SD 15% SD 10% SD 45% SD 18% SD 15% over 55 20% SA A U 5% 13% 8% I am willing to pay an added charge of .75 cents per mile SA A U 15% 22% 30% I would like more information on this service SA A U 24% 17% 18% Age Group 18-24 25-34 35-44 15% 20% 28% Education Graduate High School College Degree 68% Sex Male 45% Marital Status Single 40% Income Level under 10,000 12% 32% Female 55% Married 43% 10,00030,000 65% 0% Divorced 5% 30,00050,000 15% Separated 2% 50,00075,000 6% Widowed 10% over 75,000 2% Analysis: Question 1 and 2: I think the service would be useful. 43% stated that they believed this service would be either useful to themselves or to acquaintances of theirs. Question 3: The majority of the people questioned felt that Monday, Saturday, and Sunday were the days that they wanted delivery. By this data, we feel that our best delivery days will probably be Sunday and Monday. This allows for people to shop on the busiest days of the week and then receive their product the next day. However, this leads to a problem with the people who purchase their merchandise throughout the week. They would have to wait for the next delivery day the following week. As the business grows we plan on adding more delivery days to our schedule. We would do this as we expand to markets that are nearby us. For instance, the East Meadow store and the Uniondale store can share delivery days. With the added store, we would have a total of four delivery days for both stores. This would allow for deliveries to either community on the four scheduled days. Question 4: The number one reason for using this service is that it is better than any existing one. This answer received 30% strongly agree and 40% agree. Also, the convenience of our service ranked second with 50% in the agree side. Question 5 and 6: The people interviewed seemed to mostly agree that $55 and the .75 cents a mile was a reasonable cost for this service. Many have told me that it cost them a lot more for delivery from other store chains. The average age of the consumers that would use this service is between the ages of 25 and 44 and those over the age of 55. There average salary is around $25,000. Through various research at East Meadow Wal*Mart (2916), Wally World Delivery has found that the average number of deliveries per week will be 27 deliveries. This includes delivery of big screen televisions, furniture, and special orders. As the summer months approach, we will see an increase in the amount of deliveries required. These deliveries will include patio sets and ready built grills. Christmas time will bring a need for extra seasonal help and delivery days to allow for the increased business. From analyzing the data received from East Meadow Wal*Mart, it was determined that business will, at the very least, close to triple in the Christmas season. At this time, Wally World Delivery will switch from a two day schedule to a three to four day schedule. The following is our break even analysis. It is based on the data obtained from the marketing survey and the costs associated with running the business. These numbers include the renting of a Ryder Truck and the cost of phone service from Verizon Wireless. Break Even Analysis Number of Customers Revenue Fixed Expenses per week Sales Van Salary Phone Mileage 8 442.55 39.90 192.50 17.50 90.52 340.42 102.13 0.0 $ Operating Expense Total Expenses Taxes (@ 30%) Break Even As the above chart shows, Wally World Delivery only needs eight customers per week. However, our research shows that we will on average have twenty seven customers per week on a normal week. This, as stated above, does not include Christmas time when we see an increase of 200% or during the summer months when we will have an increase of 75 to 150%. Wally World Delivery plans to get its business through word of mouth from the various stores we will eventually work with and through advertising by the use of flyers. The East Meadow Wal*Mart store will be our test market store. After we succeed at this store, and we will, we will expand our business to other Wal*Mart stores in the chain and possibly to other chains as well. A Wal*Mart super center only needs 150,000 people to sustain itself. There is currently a scheduled store opening in May in Massapequa and one in Valley Stream in the later part of the year. In the U.S. alone, there were over 30 openings in April and 20 are scheduled for May. Out of the 150,000 people there will be a need for people to deliver customers’ bulk items. That is where we will make our niche. Wal*Mart sees that they have a wide area to expand in and so do we. Wal*Mart sees a 30-40% increase in its sales of big screen Televisions; these are TV’s that are larger then 32”. They forecast a 20% growth in large furniture sales and a 45% increase in the sales of grills and patio sets this year. Not everyone has the means to transport these products. However, the service will be only a phone call away. We currently have no competitors in this field. We are the first of its kind in the Tri-State area. However, this is also a threat for our business. With the low capital needed and ease of operation, many companies can startup and compete with us. IV. Accounting Income Statement (weekly) Revenue Sales Fixed Expenses Van Salary Phone Operating Expenses Profit Taxes (@ 30%) Net Profit Net Profit per month Mileage Start-up Cost 39.90 192.50 17.50 135.00 77.49 32.61 9.78 22.83 91.315 Income Statement (weekly) Revenue Sales Fixed Expenses Van Salary Phone Operating Expenses Profit Taxes (@ 30%) Net Profit Net Profit per month Mileage 39.90 192.50 17.50 405.00 830.10 249.03 581.07 2324.28 3% 13% 1% 27% 56% 17% 39% $1,485.00 100% After startup 8% 39% 4% 27% 16% 7% 2% 5% $495.00 100% During Startup Balance Sheet Current Assets Cash Total Current Assets Liabilities & Equity Current Liabilities Truck (1 month) Phone (1 month) Interest 27395.1 $27,395.10 79.8 100 1.48335 Total Current Liabilities $ 181.28 Stock Holders Equity Dividends Common Stock Retained Earnings $20,410.36 $300 $ 6,503.45 The number used in the Income Statement (weekly) are taken from the averages from the marketing survey and the SWAS (store with-in a store) reports obtained from the East Meadow Wal*Mart location. We see an average of two delivery days per week with twelve to fifteen deliveries per day. These delivers will be in the general area of the store, within a fifteen to twenty mile radius. We plan on using Delorme Street Atlas software to calculate the best routes for the delivery. Wally World Delivery will rent a van from Ryder Truck service for a set fee of $19.95 month and 75 cents a mile. The phone we will be using is a Verizon Wireless phone that will cost approximately $17.50 a week. The salary is an estimate of 192.50 per week. This is two eleven hour days at $8.75 an hour. V. Finance The financing needed for this company is only $309.95. This will be obtained by the use of no interest credit card (introductory offer). Within a month of this service being operational the beginning balance will be paid. This start up cost includes the cost of printing flyers ($50), setting up a phone ($60), purchase of a hand truck, and the first day’s rental of a Ryder truck ($19.95). The cost of incorporating the business $125 ($5 for a NYS name hold) is included in this initial amount. There are no long term funding issues with this business. Everything is essentially cash and deliver. As soon as delivery is made, so is payment. The money will be paid back through the first month’s profits. One of the greatest ideas of this corporation is that we will get paid upon delivery but will not have to pay our expenses for up to a month (minus salary). This will give us time to use the collected money to make even more money, through the use of interest bearing accounts or simply expansion in the market place. Ratios: Current Ratio for First Period $1485/732 2.03:1 Quick Ratio ($1485-732)/732 1.03:1 Profit Margin on Sales 526.83/1485 .35 VI. Operational In the pages following this section you will find a copy of our articles of incorporation and copy of our paperwork for our tax identification number. Wally World Delivery will obtain it workers from employment agencies on a temporary basis. This will allow us to avoid the hassle and cost associated with hiring employees. The ease of employees also allows us not to have to deal with the problems of hiring and firing and general human resource problems that are associated with employees. VII. Conclusion In conclusion, the above business plan shows all aspects of Wally World Delivery. The design of this business shows how a part time delivery business can lead to a great addition to one’s financial future. With a low capital need, Wally World Delivery is sure to bring forth a great success in the business world filling a need for a society of people with wants.