Financial Ventures
Essay by lhodge123 • September 30, 2015 • Term Paper • 4,415 Words (18 Pages) • 1,229 Views
Lewis Hodge
Financial Ventures
Paul Wilson
May 11, 2015
EXECUTIVE SUMMARY
“Sole mate” is a sneaker boutique that was established in 2015. “Sole Mate” focuses on meeting the needs of all sneaker collectors around the St. Louis area. As the company expands the target market will expand as well. The boutique will then cater to individuals all over the world. The scope of this business is very specific. there will be one main store, 1200 square feet, with a store front and two storage areas. This store will be located in Brentwood Missouri. With a very promising market plan, success will be definitely on the agenda of this company. This document highlights the great pricing, promotion, and distribution strategy of “Sole Mate”. The success of this business is not only based on false hope, the financial statement shows the projected revenue for the first two years of the business. This is shown on the income statement and balance sheet. Also, when doing business it is evident that there will be certain risk and opportunities. This document highlights how the company will deal with particular risk and what opportunities they will take.
BUSINESS DESCRIPTION
My business venture is a sneaker boutique. This sneaker boutique will go by the name of Sole mate. This may appear to be a simple business; however, this can be very lucrative as long as the correct approach is taken. This business will meet the need of sneaker collectors who buy collector shoes as they release every week. Also, individuals who buy sneakers for athletic purposes as well. Sole mate will fall into the industry of shoe retailers and the NAICS code is 448210. This industry is projected to have a seven percent growth rate; also, global footwear is projected to hit 211 billion dollars in sales by 2018. The boutique will be amongst few sneaker stores that sell retro collector's items in all brands.
LITMUS TEST
A litmus test was carried out in order to assess if this business was a good venture to pursue or not. Firstly, it was stated that this venture is timely as the demand for shoes increased significantly. Also, it was asked if there is a demand for these products on the current market. It was concluded that there is demand for this type of store as there is only one other store of this nature in the St. Louis area. Lastly it was asked whether this business would create any value to its owners. It was concluded that as business progresses, and debt is paid, investors will benefit from this venture.
VENTURE OPPORTUNITY SCREENING
FACTOR CATEGORIES | HIGH | AVG | LOW |
Industry/Market | |||
Market size potential | 2 | ||
Venture growth rate | 3 | ||
Market share (year 3) | 2 | ||
Entry barriers | 1 | ||
Pricing/Profitability | |||
Gross margins | 2 | ||
After-tax margins | 2 | ||
Asset intensity | 3 | ||
Return on Assets | 3 | ||
Financial/Harvest | |||
Cashflow breakeven | 2 | ||
rate of return | 3 | ||
IPO potential | 1 | ||
Founder's control | 3 | ||
Management Team | |||
Experience/expertise | 2 | ||
Functional Areas | 2 | ||
Flexibility/adaptability | 2 | ||
Entrepreneurial focus | 3 | ||
Total points by ranking | 18 | 16 | 3 |
Overal total points (OTP) | 36 | ||
Average Score | 2.25 |
SWOT ANALYSIS
Strengths
Competitive pricing. | Weaknesses
|
Opportunities Become a main distributor for established Brands. (Nike, Adidas, Jordan).
Expand store into a franchise. | Threats
|
START UP EXPENDITURES
Startup Expenses | Amount | Description |
Advertising | 1000 | Promotion for opening the business |
Starting inventory | 144000 | Amount of inventory required to open |
Building construction | Amount per contractor bid and other | |
Cash | 1500 | Amount needed for the cash register |
Decorating | 3000 | Estimate based on bid if appropriate |
Deposits | 2000 | Check with utility companies |
Fixtures and equipment | 5000 | Use actual bids |
Insurance | 1000 | Bid from insurance agent |
Lease payments | 0 | Fee to be paid before opening |
Licenses and permits | 3000 | Check with city or state offices |
Miscellaneous | 1000 | All other |
Professional fees | 10000 | Include CPA, attorney, etc. |
Remodeling | 0 | Use contractor bids |
Rent | 2800 (Monthly) | Fee to be paid before opening |
Services | 0 | Cleaning, accounting, etc. |
Signs | 500 | Use contractor bids |
Supplies | 50 (monthly) | Office, cleaning, etc. supplies |
Unanticipated expenses | 3400 | Include an amount for the unexpected |
Total Startup Costs | 95,600 | Amount of costs before opening |
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