Business Plan on Hand Made Items

Creative, We Make Your Special for You!

We Make Your Special for You!

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MBA 3RD - ENTREPRENEUR PROJECT

For

“Creative”

Presented to:

Ms Qurat-ul-Ail

Presented By:

VITALS

Shaher Bano Hashmi 09041020-010

Syeda Anam Rehna 09041020-034

Nayaab Zafar 09041020-002

Anam Naz 09041020-017

Shamma Noreen 09041020-016

Submission Date: January 17, 2010

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DEDICATION

“Dedicated to the hope

that is still alive in our hearts

for the better future of

our beloved homeland—PAKISTAN”

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ACKNOWLEDGEMENT

All the acclamation and appreciation is for Almighty Allah the most merciful, gracious and

beneficent who is entire source of all the knowledge and wisdom endowed to mankind. All the

prayers are forever in the name of Almighty Allah, who helped us in setting goals and objectives

and blessed us to reach the destination. Without His assistance none is capable of

accomplishment.

We would like to thank The Business Administration Department for giving us the opportunity

and providing us with a platform to prove our mettle. We would be doing injustice without

mentioning the name of the person who helped us throughout the semester and made us

understand the major concepts of Entrepreneurship. So our special thanks go to Ms Qurat-ul-Ain.

Heartiest gratitude and compliments to our Parents, without their continuous love and

encouragement we could not complete this task and in the end we would like to thank our worthy

teachers without them we won’t be able to complete this task.

The Project in hand is the collection of our observation and research. The sources of

information for the preparation of project include a thorough research conducted on the internet,

information obtained from the Gujrat Chamber of Commerce, prestigious help by well known

business “Eventive” involved in handmade items.

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TABLE OF CONTENTS

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CONTENTS Page No.Dedication iiiAcknowledgment ivTable of Contents vExecutive Summary viiIntroduction 1Business description 2Vision 3Mission 4Over All Objectives 5Specific Objectives 6Strategic Goals 7Segmentation 8Industry Analysis 8

Economic Analysis 8 Over All Market Analysis 9 Specific Market analysis 9 Competitive Analysis 10 Competitive Grid 11 Macro Environment 12

Organizational Plan 13 Form of Business 13 Partnership deed 13 Organizational Hierarchy 14 Authorities and Responsibilities 15

Production Plan 17 Manufacturing 17 Merchandising 18 Strategic Production Resources 18

Marketing Plan 19 Product 19 Price 22

Pricing strategies 22 Pricing structure 23

Place 23 Distribution Channels 24

Promotion 25Financial Plan 28SWOT Analysis 33Critical Risk Factors 34Exit Strategies 36Annexure

References 37


INTRODUCTION

A wedding, the birth of a child, a new home, an important birthday… All of these are events that

mark our lives forever and should be celebrated with a gift you can cherish for a lifetime. Every

person is in search of attractive and innovative products for purpose of exchanging gifts. There

are numerous businesses offering a variety of products for customers to fulfill their needs. But

demand for handmade gift items is substantial. People like to purchase handmade items as gift

because when an item is handmade, a little part of the creator of that piece goes into it. Artists

put their ideas, personality, style, and often blood, sweat, and tears into their work which makes

that work unique.

The fashion for handmade items as a gift is Evergreen. People prefer to purchase handmade stuff

as it provides them with a level of individuality which is not available from mass market

retailers. They prefer personalized gifts on lavish items.

An informal survey of Gujrat showed that there are many House girls who have keen interest in

making different handmade items. They duly create many innovative ideas but unfortunately

most of them have no platform to expose their talent and skills.

Thus idea of “Creative” is to establish an outlet that makes available a variety of handmade items

under one roof and to provide a platform that will facilitate both i-e talented house girls and

customers. By offering a variety of handmade products to customers having demand for them we

will enable these homemade girls to earn being at home.

In order to check the demand and potential for our idea we conducted a survey in our target

market. We came to know that it is a good time to launch such a project as people showed a high

interest for it. First of all we are going to launch it only in the Gujrat. In future, in response to its

scope we shall expand it throughout province of Punjab. After achieving this long term object

our intention is to enter into international market.

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BUSINESS DESCRIPTION

Idea of “Creative” is to provide a large variety of innovative and creative handmade items under

one roof. The name of our organization is “Creative” which is actually an effort to provide

exceptional items for special celebrations and occasions. It is basically a manufacturing as well

as merchandising business in which we are going to present a wide assortment of handmade

items.

We have started our business as partnership business. We are five partners who share equally in

startup capital and hence are entitled to share equally in profits. Any other need for capital will

be entertained by respective bank.

Point Of Uniqueness:

All the things and the services we are providing may not be unique according to the range of

things now days. Present businesses may be providing a large variety of gift items But the

difference is there that the things provided by us are purely handmade. Creative ideas are used to

turn a rubbish and useless stuff into innovative design. There is no such business prevailing in

our target market. This is the point of uniqueness in the particular geographical area in which our

business lies.

Products:

A variety of hands made items are provided under one roof which include:

Handmade Gift boxes

Handmade Wedding boxes

Handmade Cards

Handmade Baskets

Handmade Candles

Handmade Jewelry

Handmade decoration pieces

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VISION OF C REATIVE

To become the creative house of first choice in our chosen areas

by building beneficial and lasting relationship with customer

through a process of continuous improvement.

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MISSION STATEMENT

To convert the creativity into reality in hand!

OVER ALL OBJECTIVES

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Main Objectives:

Main objective of Creative is to glorify the different occasions of our customers by providing

exclusive and quality products. Our modish style reflects a sense of taste that urges the customer

to express his or her feelings by selecting a gift from a variety of innovative product for their

dear ones.

Commitment To Well-Being

We believe well-being is the cornerstone of personal and professional growth. Without

personal and professional well-being our mission cannot be achieved.

Commitment To The Team Objective

We believe in total commitment to the team. The team objective is a guide for us to

follow in our service to our clients, support of each other, and team growth.

Commitment To Goal Attainment

We believe every individual should have personal and economic goals. A joint effort will

be put forward to identify and achieve our long-term objectives.

Commitment To Our Time Management System

We believe our time management system should be utilized in all business activities to

provide maximum efficiency and effectiveness for our customers. We will move towards

managing our time and setting specific goals within that time.

Commitment To Excellence In All We Do

our philosophy is to achieve excellence in all that we do. All efforts of our team are

directed towards achievement of maximum quality.

Commitment To Incredible, Outstanding, Unbelievable customer Service

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We believe in extending such incredible service to all customers that they feel real sense

of creativity in our establishment. We constantly anticipate, meet, and exceed our

customers' expectations.

Commitment To Value-Added Service

Value-added means doing and giving more than what is expected. We believe each of us

needs to go above and beyond the call of duty. By developing creative ideas value

addition will be ensured in our products.

Commitment To Innovation

We believe our strength lies in our passion to implement new ideas and embrace change.

We realize that innovation involves risk of failure, but we choose to face risk of failure in

our pursuit of success rather than fail passively

Specific Objectives:

Short Term Objectives:

To make successful entry in Gujrat market

To provide a wide range of Innovative and creative products

To Act as a team

Long Term Objectives:

To expand business in other cities of Punjab especially in Lahore, Gujranwala and

Sialkot.

To satisfy customers who use our products and services every time

To provide a Commercial plate form to young Home-Artisans

To be socially responsible by utilizing the waste materials for making new and

innovative products

STRATEGIC GOALS

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Through strong commitment and efficient strategic goals, “Creative” will be first choice of

customers and be recognized as a business leader. We feel very confident that the goals can be

reached. These Strategic goals include following:

Customer satisfaction

Building strong customer relationships

Making contracts with different stakeholders (Suppliers)

Maximize the switch over Cost

Capturing Maximum Market Share

Plans To Achieve Those Goals

The very first result that a customer wants is that, satisfaction and contentment from the product.

Customer will only visit for second time, if he was satisfied fully the first time. By providing

innovative and quality products Creative can build strong relationships with customers.

Keeping our suppliers with us for a long period of time is a challenging task. Contracts will be

made to home-artisans to provide their products only to “Creative”.

After building relationship with customers and suppliers, our main focus is to maximize the

switch over cost of the customer. By issuing annual, semiannual and quarterly discount offers we

will bind the customer to carry with us. When we are successful to retain the old customer for the

maximum period of time it will be easy for Creative to focus and spend more in attracting the

new customers and to capture the maximum share of the market.

SEGMENTATION

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Creative’s target segment are all the people of Gujrat, who love creativity, which includes upper,

middle and lower middle class. Along with this Creative has segmented its target segment into

the following category:

Geographical Segmentation

Creative is a start up business; therefore it has geographically segmented its target market. This

geographical region is Gujrat.

Psychological Segmentation

Psychologically targeting, Creative is concentrating its focus on Elite class, Middle Class and

Lower Middle class.

INDUSTRY ANALYSIS

Economic Analysis:

The economic position of the country as well as the people allows this industry to flourish and

grow. A quick view on main glimpse on economic position is as follow:

Real GDP grew by 4.3percent in 2009-10 as against 2.7percent last year

Consumer Price Index (CPI) inflation is estimated to have declined from 20.3 percent

in December 2009 to 13.60 percent in December 2010.

Pakistan’s per capita real income has risen by 0.4 percent in 2009-10 as against 0.3

percent last year. Per capita income in dollar term rose from $ 1046 last year to $ 1051 in

2009-10, thereby showing marginal increase of 0.4 percent.

The industry of handmade items is mostly operated in local environment. And in this perspective

the rate of advancement is slow. However, there is possibility of high advancement in the market

because a big segment of market has psyche of been attracted by creative handmade talent much

quickly. Due to that, industry contains more potential and depth to invest in that business.

As per the rules and regulations of the government of Pakistan, there is not any restriction on

establishing such business and the working. Our firm is established according to Partnership act

1932.

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Overall Market Analysis

Market for different handmade items is widespread in Pakistan. Despite of presence of different

manufacturers that provide a large variety of readymade item, demand for handmade items is

substantial. People prefer handmade items for exchange of gifts or fashion wears because they

provide a sense of individuality and uniqueness. This tendency of people indicates towards

potential and depth to invest in this business. Although the handmade items industry is spread in

all over the country, it is mostly operated in local environment.

There are no big players in market of this industry .Most of operator in markets are having their

businesses as sole proprietorship or partnership. About 70% of players in Market are sole

proprietors. This trend in industry caused “Creative” to be a partnership business.

Due to advancement in technology and rapid adoptability of internet, this industry is being

promoted online. Major players in Market use the internet based promotional tools. They have

published their products online to attract the potential customers.

Specific Market Analysis

As mentioned earlier, handmade items industry is mostly operated in local environment so

“Creative” has also targeted a small local segment of Market i-e Gujrat city.

Economic condition of people living in Gujrat is a good signal for business. Per capita income of

people in Gujrat is 45000 PKR ,which indicates high purchasing power of residents. Such

economic condition supports skimming pricing strategy of “Creative”.

Competitive position is also in favor of our business in market. Although there are many players

in the market offering same products but no one is offering the same things in terms of

handmade creative ideas. As there is no such business already existing in market so there is no

direct competitor.

Competitive Analysis:

Competitive analysis involves a look on competitors of Creative and competitive position of

creative. While discussing the competitive position of “Creative” following factors can have

greatly influence:

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Threat of new entrants

Bargaining power of buyer

Bargaining power of supplier

Rivalry among competitors

Substitutability

Threat Of New Entrant (HIGH)

Threat of new entrants for Creative is high. This is because trend for use of handmade items is

evergreen. Start up cost is also low which shows that there are low entry barriers. This attracts

the new entrants to get enter into this business.

This threat can be lowered by maintaining a sustainable competitive advantage of providing

quality products and innovative designs.

Rivalry Among Competitors (LOW)

Rivalry among competitors is low for Creative as there are a few competitors in whole industry.

In target market no direct competitor exists so Creative has a golden opportunity to capture

maximum market share.

Substitutability (HIGH)

Threat of substitute for Creative is very high. There are a lot of substitutes available in market for

products of Creative. High prices of Creative than prices of readymade items in market have

lowered switching cost for Creative’s products.

Bargaining power of Buyer (HIGH)

Bargaining power of the buyer with Creative is high because of the availability of so many

substitutes in the market.

Bargaining Power Of The Supplier (LOW)

Bargaining power of the supplier is low. Because of availability of large number of suppliers in

the market, Creative is in better position to defend its interest. There is significant number of

home artisans who are willing to supply their products to Creative for sale. Creative’s power to

negotiate with them in its own favor is high.

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COMPETITIVE GRID

COMPETITIVE FORCES THREAT TO INDUSTRY PROFITABILITY

LOW MEDIUM HIGHTHREATS OF NEW ENTRANTS

BARGAINING POWER OF BUYER

BARGAINIG POWER OF SUPPLIER

RIVILARY AMONG COMPETITORS

THREATS OF SUBSTITUES

MACRO ENVIRONMENT

Macro environment of Creative includes the following factors:

Political Forces

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Legal & political forces can highly influence any business. In Pakistan, there is so much political

instability which directly affects economy because purchasing power of people will be reduced.

It can highly influence Creative to operate. Coping with this threat is a challenge for Creative.

Technological Forces

Technological factor is involved in this project in a way that customers can order products online

for ceremonies. No rocket science will be adopted by Creative for production process. Basically,

idea is providing handmade items, so creative ways of utilizing waste material will be explored.

Social Forces

Social forces of any country show how the values, needs and culture of that country’s people can

affect the organization. In case of Creative this factor is highly in favor of organization because

people have great tendency to like hand work for gifts and fashion wears.

Economic Forces

Economic forces of any country can affect the availability, production and distribution of

resources among competing users. Now a day in Pakistan inflation is prevailing and it can affect

Creative to a great extent. Cost of doing business can be increased. However this threat is

minimized by adopting boot strapping strategy.

ORGANIZATIONAL PLAN

Form of Business:

Creative is a partnership business in which 5 partners are contributing towards capital and sharing the proceeds of business. It has been established on base of Partnership act, 1932.

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PARTNERSHIP DEED:

The partnership deed includes the basic agreement between the partner explaining their duties

and liabilities. It also explain the which function will be performed by whom.

Members

We are five main members of the partnership firm who shares equally in the capital and profit.

These members include:

Names Capital InvestedShaher Bano Hashmi 1.25 lacAnam Naz 1.25lacAnam Rahna 1.25lacNayab Zafar 1.25 lacShamma Noreen 1.5 lac

Duties and Responsibilities

Duties and responsibilities of each member are assigned according to the interest and

qualification of each of the member. Other criterion is that, if someone has specialized in some

field then he will be proffered. Additional benefits and remuneration will be paid on giving extra

services and performing additional work not included in the basic job specification.

Liability

Liability of all the members is unlimited. Personal property will also be held liable to pay the

debts. This clause is included to maximize the interest of all members in the venture. The more

the interest is the more the effort will be added by the members. All the members have the basic

right to point out the steps taken by other members in the meeting. And the others have to answer

in a reasonable manner.

Decision criteria

There is a decentralized approach in decision making. Every member is free to take decision in

his relevant department without the consent of others. But decision about the whole firm can’t be

taken without the consent of every member. Special meeting will be arranged and the majority

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decision will be approved. The decision about working of the firm required the acceptance of

three out of five while the major decision about the firm like big investment, changing the form

of business required four out of five members acceptance.

Termination of partnership

If any partner wants to leave the firm she will also be held liable in the case of insolvency of the

firm for the year, if any. This clause is added to make strong the firm and to avoid any kind of

fraud.

Allocation of assets/ repayment

The payment of all invested capital will be paid in installments to leaving partner. The

maximum time for repaying all amounts will be six months. The will be no claims on the

revenues and profits from the date he left the firm. There will be revised partnership deed after

one year.

ORGANIZATIONAL HIRARCHY

AUTHORITIES AND RESPONSIBILITIES

(JOB SPECIFICATION)

Creative will be run by the current team, composed of five members. Each of team members has

developed skills in specific areas that will help the firm to reach its goals. There will not be

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BODFinance Manager Marketing Manager Supply -chain

ManagerProduction Manager Operational Manager

Sweeper

Wacthman

Office Boy


involvement tremendous financial resources in the human resource field because the firm intends

to remain closely supervised for the first couple of year.

Shaher BanoFinance managerThe manager alone looks after all jobs of accounts and approves all investment decisions on the

basis of their logical and analytical analysis. She alone is responsible of recording all revenues

and making all expenses accordingly. He has to maintain all financial statements of the firm,

which are required for auditing.

Nayab Zafer Marketing ManagerManager of marketing department is mainly responsible for all advertisement and promotions of

business and to take feedback of the customers. Market surveys will be made by her and changes

according to the demand of customer will be made. The manager will be the final authority to

take decision of all the matters of that department. The complaints of customers will be discussed

in monthly meeting and the manager is answerable to that.

Anam RehnaSupply-chain ManagerSupply-chain manager has duty to deal with the suppliers and contractors for the raw material

and final products. She has authority to take the decision about the matters of that department.

She can change the suppliers and contractors according to the requirements of raw material and

products quality. Maintaining strong Relationships with house artisans who are providing their

products to our business is also her responsibility.

Shama NoureenProduction ManagerManager of production department is responsible to supervise all the activities of production

process. She has the authority to evaluate the performance and quality of products being

produced. She is also responsible to approve new designs of products to be produced.

Anam NazOperational ManagerOperational manager is mainly responsible for all operations that are performed on daily basis.

She is responsible to deal with Customers and the courier company for distribution of products

that are ordered by the customers in other cities. She is supposed to keep a deep eye on

production process by girls and all daily happenings in outlet.

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OTHER JOBS

Guard

“Creative” needs only one guard for its security. He will be responsible of providing security for

outlet during business. He must have training to use weapons and retired army men will be

preferred.

Sweeper

One sweeper will be hired. He is required to maintain the cleanliness of whole outlet.

Office Boy

An office boy will assist operational manager in her routine business works especially for

performing outdoor tasks.

PRODUCTION PLAN

Manufacturing

Our products will be manufactured in our production outlet. There will be a separate portion

behind outlet that will serve as production area. We will produce the products our self. A joint

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contribution will be made by all five members for production process. All of girls will work

directly under authority of operational manger. Creative ideas for innovative products will be

explored through brain storming sessions.

Production process of Creative involves following steps:

Purchase of material and accessories

For making cards and shopping bag, chart paper is essential thing. Satin ribbons, shimmering

bows, Laces, glue and other material will also be needed to make glorious products. Including all

these, other necessary accessories will be purchased from our regular suppliers in bulk so that

cost minimization can be made. Necessary raw material required for making different types of

“Dough“ will also be purchased. To produce unique styles of candles, wax gel will be purchased

in bulk along moulds of different designs.

Other than above material, waste jewelry accessories will be acquired to be used as base for

handwork.

Production Process

Cards of inspiring designs, gift boxed of various sizes and unique wedding boxes will be made

through handwork and using appropriate stuff.

Dough will be kneaded in quantity enough for use in whole months. Once the dough is prepared,

it will be kept in special greased containers. Different jewelry items will be made using moulds

of various sizes. Artistic designing will be made on these items using dough flowers.

Using handwork and special techniques wax gel will be converted into candles of different

designs and will be embellished using different accessories.

Packing:

Different gift and jewelry items will be made available in striking packing. Creative’s monogram

will be printed on each item’s packing going to be sold at outlet.

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Merchandizing:

Creative has also planned to acquire finished products from house hold artisans and to sell them

on reasonable prices for earning profit for both parties. Thus Creative is not only earning for

itself but also serving as a platform for those innovators who want to commercialize their

handmade products. Supply Chain Manager is responsible to seek and develop good relations

with these suppliers.

Strategic Production Resources

Designs and artistic techniques of production are the basic and primary assets of creative. With

these two resources we will be able to develop the most unique and genuine variety of products

in the marketplace.

Firm’s creative management is also a strategic resource for Creative. Management team is

required to be innovative and has a passion to pursue opportunities related to hand-made items.

As the business grows we will carry on developing new designs and will strive to hire people

who also possess the drive to continue the Creative’s goal to develop the new designs and bring

innovation.

MARKETING PLAN

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The most important plan for a new starting venture is a marketing plan because without the

marketing plan, a business can never exist. The marketing is a main portion, and the success of

any venture heavily relies on its market strategies.

Creative is going to make its customers aware through efficient marketing plan that we value our

customer at each and every point. Through effective marketing strategies it will be realized to

customers that if they want to add seven colors of rainbow in the precious moments of their life

then they must have the spell bound charm of Creative. "Creative’s marketing efforts focus on

making its customers realize that:

We are offering variety of imaginative hand-made articles that can embellish their special

movements

Our ideas are creative and innovative that is what others are lacking.

We are going to establish a new trend in that society by giving variety of handmade

ingenious items under one roof.

PRODUCT

A list of magnificent products of creative involves following product lines:

Handmade Cards

Handmade Gift boxes

Handmade Wedding boxes

Handmade Shopping Bags

Handmade Candles

Handmade Jewelry

Handmade decoration pieces

Handmade Cards

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Handmade greeting cards in a variety of styles and sizes are offered for special occasions.

Unique ideas are used to embellish the cards for making special movements more special.

Birthday cards, wedding cards, anniversaries card, friendship cards and beautiful cards for many

other special events are offered.

Wedding Boxes

Gorgeous Boxes of different sizes to carry different things that are usually used in wedding

ceremonies as gifts are offered by creative. Wedding gifts are always very appealing when they

come in adorable packaging. Our unique wedding gift boxes will surely do the job of impressing

customers while reflecting their unique style.

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Handmade Shopping Bags

Our talented and creative team members have poured their

heart out to create the exotic collection of handmade

shopping bags. These handmade paper shopping bags are

made with durable and strong card papers that combine both

utility and aesthetics. All these handmade paper bags are

flawlessly designed with beautiful papers and meet the

demands of diverse clients.

Handmade Candles

Decorative candles are uniquely versatile decor items that

add a new look and spark to our home and our special events

as well. Buying the Decorative candles for your home or for

gifting to someone special, is the best thing you can do to

please yourself. Beautiful candles with innovative designs

are splendid offer by Creative.

Handmade Decoration Pieces

Different decoration pieces ornamented with beautiful work of handmade dough flowers to

decorate the houses and even for offices, are also included in creative’s offerings

Handmade Jewelry

Flashy & filled with stylish & elegance designs, different items of jewelry are offered. Rings, ear

rings, bangles and necklaces are included in offered jewelry item. All these items are

manufactured using different moulds and dough flowers.

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PRICE

Customer’s decision to purchase a product is greatly influenced by Price tag placed on it.

Creative has assigned reasonable and justified prices of its products which may realize the

customers that they have made their moments cherished in a unique way in very cheap prices.

Pricing Objectives

Creative is a new business in market with unique and innovative ideas. It wants to have high

growth rate hence it has to set that price for its product which gives maximum possible profits in

the initial couple of years.

Creative’s handmade products are more expensive than those from a factory assembly line, but,

for very good reasons. The extra time, effort, passion and expertise that goes into its handmade

products are what make them worth the extra price to buyers.

PRICING STRATEGIES

In pricing, Creative is focusing in the following strategies:

Market Skimming Strategy

Creative is using market skimming strategy in which it is offering high quality and creative

products on slightly increased prices than prices factory assembly line products. Creative want to

have maximum possible profit through introduction of its creative and unique ideas.

Product Bundle Pricing

In order to move stock that is kept as unsold inventory, Creative will use Product bundle pricing

strategy. It will combine several products that have left behind in stock in the one package and

will offer them on reduced rates so that potential loss of unsold inventory can be avoided.

Value Based Strategy

For the pricing of products, Creative is following the value based strategy. In order to cover up

the cost and to gain maximum possible profit, Creative has decided to take 40% markup on cost

price of each product. Such high rate of mark up is set on base of effective value of the customer

for handmade items.

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PRICING STRUCTURE

PLACECreative has planned to acquire a Shop on rent in Sarwar Gold Plaza, Gujrat. It is situated at centre of city. The main reason behind selecting this location is this, it is growing area for all branded shops and it is now one of the best shopping place in Gujrat.

The shops like Breeze’s, Beeji’s, sStylo, Mother Care. Cash & carry, Adrees Cloth house, Service and many other brands are by side with our outlet. So there are many chances that people will visit our outlet along their shopping.

Address:

Sarwar Gold Plaza

Khawajgan road

Gujrat

Contact:

Email: [email protected]

Phone: 0333-8445025

0331-5832183

Web site:

www.creativeitmes.pk

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Name of items Price Mark UpGreeting cards 100-150 35%Wedding Boxes 200-250 35%Gift Boxes 150-200 35%Candles 350-400 35%Decoration pieces 500-2000 35%jewelry 500-1000 35%Shopping bags 100-150 35%

http://www.creativeitmes.pk/


DISTRIBUTION CHANNELS

Initially Creative is operating only from one outlet, so it doesn’t have any complicated

distribution channel right now. Creative is mainly using the following approaches for

distribution:

Direct Selling

Creative will directly sell its products to target consumers. First it takes the raw material from the

suppliers. Using that raw material a variety of innovative and appealing products will be

produced on the outlet of it by its skilled staff. These products are sold to customer when he/she

visits the outlet. In direct selling following model is used by Creative:

Courier Service:

Creative will also conduct business online. Due to advancement in technology and rapid adaptability of internet it has been crucial for it to expand its business activities over internet. Online orders in response of effective electronic advertisement will be received and shipment of these orders will be made through Courier Company.

Creative has following model for online trading:

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Suppliers Creative End consumers

Online Orders

Shipment End consumers

Online Receipt


PROMOTION

Creative will use Marketing communication strategy for promotion of its products. This Strategy

involves promoting heavily to potential customers which will create a demand that will pull the

products through the distribution channels. A handsome amount is set aside from financial

resources for heavy promotion of business in starting years. For promotional activities unique

logo and corporate colors will be used in all means communications.

Following promotional tools will be used to build Brand image of creative in mind of customers:

ADVERTISING

Brochure

Brochures describing product specifications of Creative will be designed. Creative’s offering

along with its unique logo will be printed on it. These brochures will be distributed door to

door with help of local news papers including:

Jang

Nawa e Waqt

Jazba

Shana Bashana

Hoardings

The location where we’ll use hoardings for advertising of outlet along with estimated budget is

given bellow:

Hoarding Campaign for the First Month

LOCATION QTY. SIZE RATE

(RS.)

Fawara

Chowk

01 60×24 10,000

GTS Chowk 01 60×24 10,000

Jail Chowk 01 60×20 10,000

Total 03 - 30,000

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Press Advertisement:

Press advertisements will be released in newspapers to which potential customers in target

market have easy access. Newspapers in which ads will be given are mentioned below along

their estimated cost:

Newspaper No. Cost/Ad

Daily Jang 1 35000

Daily N.Waqt 1 30000

Jazba 1 10000

Shana Bashana 1 8000

Total 4 83,000

Internet marketing

Today most effective way of advertisement is through internet. Creative has developed its own

Website at which products are published and online orders are taken. Other than developing its

own website, Creative has planned to promote its business through social networking sites.

Recently there is a great trend of public to move towards these sites to establish social networks.

Following are some a web point at which creative has decided to promote business by giving

business ads.

Web Point No Cost/Ad

Face Book 1 9000

Linked In 1 5000

Tagged 1 6000

Total 3 20,000

Give Aways:

Other than giving ads, Creative has planned to manage different online contest so that maximum

people may be attracted to web page. Exclusive surprise gifts will be given to winners of these

contests.

Transport advertising:

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Creative logo along its message will be promoted through transport advertising. Such medium

for promotion is selected for conveying message to far areas of target market.

Broadcast Advertisement:

These days use of radio has been increased in young generation. In order to convey business

message to them, Creative has decided to give an ad on FM Awaz 105. Other than radio

advertisement ads will also be given on local cable channels.

Exhibition:

For bringing our offerings into knowledge of potential customers, Creative has decided to

participate in Exhibitions which are managed by chamber of Commerce for support of SMEs.

Note:

Here it should be noted that any combination of the above mentioned promotional channels will

be used depending upon the promotion costs involved therein.

FINANCIAL PLAN

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Creative being a new business needs a high capital investment to recover its expenses like

advertisements, salaries along with the cost of production. Thus Creative is investing 625,000

PKR as its initial capital investment.

Sources of funds:

Creative has five active partners, who are fulfilling the whole capital requirements to meet its

startup cost. Capital Structure of Creative includes only Equity. No debt is included to raise

funds because it has an extra burden of expenses as interest, which results in lower profits.

Equity Structure

Names Capital InvestedShaher Bano Hashmi 1.25 lacAnam Naz 1.25 lacAnam Rahna 1.25 lacNayab Zafar 1.25 lacShamma Noreen 1.25 lac

Budget for production of units:

JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC Total

Sales (Estimated)

100 130 140 145 145 155 160 165 175 185 190 200 1890

+Ending Inventory

10 20 25 20 15 25 25 30 35 40 40 45 -

Units Available For Sale

110 150 165 165 160 180 185 195 210 225 230 245 -

-Opening Inventory

0 10 20 25 20 15 25 25 30 35 40 40 -

Units To Be Produced

110 140 145 140 140 165 160 170 180 190 190 205 1935

Estimated Production Cost

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Material 2310 2940 3045 2940 2940 3465 3360 3570 3780 3990 3990 4305 40635

Laces 2640 3360 3480 3360 3360 3960 3840 4080 4320 4560 4560 4920 46440

FOH 5000 6000 6500 6000 6000 7000 6500 7000 7000 7500 7500 8000 80000

Total 9950 12300 1302

5

12300 1230

0

14425 1370

0

14650 1510

0

16050 1605

0

17225 167075

Per Unit Cost

= Cost of units produced

Number of units produced

= 167075

1935

= 86.34

Estimated Operating Cost of Creative


Rent 20000 20000 20000 20000 20000 20000 20000 20000 20000 20000 20000 20000 240000

Salaries 11500 11500 11500 11500 11500 11500 11500 11500 11500 11500 11500 11500 138000

Dep 5000 5000 5000 5000 5000 5000 5000 5000 5000 5000 5000 5000 60000

Advert 3000 5000 6000 4500 4500 5500 5000 5500 5500 6000 5000 4500 60000

Courier 500 1500 2000 1000 1000 1000 1500 2000 1500 2000 2000 2000 18000

Total 40000 43000 44500 42000 42000 43000 43000 44000 43500 44500 43500 43000 516000

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PRO-FORMA INCOME STATEMENT

Following is Creative’s projected income statement based on estimated operating expenses.

Projected net profit is calculated from projected revenues less projected costs and expenses.

Pro-Forma Income Statement

Creative

For the period 2010-2011

Sales Rs 756000*

-CGS 163189

Gross profit 592810

Less Operating Expenses:

Rent 240000

Salaries 138000

Depreciation 60000

Advertisement 60000

Courier expenses 18000

Net profit transferred to B/S 76810

*Sales amount = Average sale prices x Estimated number of units sold

= 400 x 1890

= 756,000

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PRO-FORMA BALANCE SHEET

A summary of a Creative’s financial position at end of year 2011 shows projected assets, liabilities, and net worth of it. Pro Forma Balance Sheet of Creative is as follow:

Pro-Forma Balance sheet

Creative

As on 31st Dec, 2011

Assets Amount Rs

Liabilities Amount Rs

Fixed Assets Owner’s EquityGas generator 125,000 Sheher Bano 125000Fixtures 100,000 Anam Naz 125000Equipment 50,000 Anam Rehna 125000Furniture 5000 Nayab zafer 125000Digital camera 25000 Shama Noureen 125000ComputerTotal fixed assets

35000340,000

Total Capital 625000

lessDepreciation 60000

280,000

Net Profit 76810

Building security 100,000Preliminary expenses Advertisement 300000Less amortization 60000 240,000Current assetsClosing stock 3,886Cash in hand 50,000Bank Account 27,924

701810 701810

*Creative don’t have any account payable because we will pay cash on the daily basis.

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PRO-FORMA CASH FLOW STATEMENT

CASH FLOWS STATMENT 3RD YEAR 2011-2012

Operating Profit 76,810

+Depreciation 60,000

Less cash flow from Operating activities

Stock (3,886)

Bank (27,924)

Building security (100,000)

Cash flow from capital Expenditure

Gas generator (125,000)Fixtures (100,000)Equipment (50,000)Furniture (5,000)Digital camera (25,000)Computer (35,000)

Cash flow from Financing

Share capital 625,000

Net cash in hand 50,000

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SWOT ANALYSIS

STRENGTHS

Innovative and Passionate partner

Huge Profit Margin

Strong market research before entry in the market.

First mover advantage to provide handmade unique item in targeted market

Operators have completed degree in Business Administration

Not necessary to rely on banks for startup finance

Provides discount for the regular customer.

Customer oriented.

Waste recourses are utilized in the best way.

Availability of significant sponsors.

On line handmade item purchasing facilities.

WEAKNESSES

Lack of practical experience in mass production of stock

Low profits in the early stages of the business.

Lack of awareness among public regarding the business.

Uncertainty about the business success.

OPPORTUNITIES

Level of the demand of cultural items is increasing day by day.

Drive away of Consumers from lavish items toward more personalized gifts.

No Direct Competitor in Gujrat market

Easy availability suppliers providing innovative products

People are fed up with consistency so handmade products can give them uniqueness.

Serving the under-served markets

THREATS

Decreasing purchasing power of people due to political instability in country.

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Possibility of new entrants in the market due to low entry barriers.

Rapid use of readymade gift items in the society.

If any other outlet of handmade products is going to open then our market share will

reduce

CRITICAL RISK FACTORS

Risk Management:

The objective of risk management is to reduce different risks related to business. It may refer to

numerous types of threats caused by environment, technology, humans, organizations and

politics.

Critical Risks Analysis

For startup business there are many risks involved that are caused by different factors. The risks

which are analyzed by Creative are as follow:

Management Risks

Marketing Risks

Operational Risks

Financial Risks

Management Risk:

In this risk we realize that there may be any dispute in the management team due to any

unforeseen reasons which may result to terminate any of the members.

Remedy:

In this case when any of the management team members leaves the firm she is not entitled to use

the name of the firm. She cannot start the same business with any other name. Such risk is

attempted to be controlled by including exclusive clauses in partnership deed.

Marketing Risk:

In case of marketing we realize that there may be any fault in our marketing plan due to which

business can suffer.

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Remedy:

For the backup of this risk we have different marketing plans with flexibility, as if in any case

plan A does not work the plan B will be executed.

Operational Risk:

There may be a risk which can disturb the operations of the business such as production. There

may be load shedding problem etc

Remedy:

For minimizing this risk we have adopted proactive measures by having firm’s own own

generator.

Financial Risk:

We realize that in case of termination of any member there is a risk of finance that she may take

her equity away which causes the business to suffer. Moreover startup capital may be proved

insufficient to cope with un expectancies.

Remedy:

To avoid this risk we have made certain clauses in our agreements that if any member decides to

leave the firm she will not take her equity out of the business immediately. The time period to

pay back the equity will be minimum 6 months. To meet unexpected financial needs, Creative

has asked for various sponsors.

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EXIT STRATEGIES

Creative, after analyzing every risk and exit ways of the business, has devised an exit strategy in

case our idea of introducing handmade items does not work. The exit strategies of Creative are as

follow:

Legal documents of partnership will be signed by the partners that partnership will not be

resolved until 3 years.

After five years if any partner wants to exit then he has to inform to the organization at

least 6 months before.

If any partner exits from the business, she will get his or her share after 6 months

In case of losses every partner will be just liable for her share in organization.

In case of winding up the business amount received from sale of asset will be divided

among partners equally.

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References:

Robert D. Hisrich, Michael P. Peters, Dean A. Shepherd, Entrepreneurship, 7th edition,

page 209-219, 233-255, 289-305

http://www.indexmundi.com/pakistan/gdp_real_growth_rate.html

http://www.ranchodelarte.com/articles/why-handmade-gifts-rock

www.Eventive.com

Personal Visit in fields

Discussions with respected teachers and seniors.

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http://www.Eventive.com/

http://www.ranchodelarte.com/articles/why-handmade-gifts-rock

http://www.indexmundi.com/pakistan/gdp_real_growth_rate.html

Documents

Business Plan on Hand Made Items