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MSM 520 – Assignment 10.1: Baenique Business PlanJamie Angove 1

MSM 520: Baenique Business Plan

Jamie Angove

Bellevue University

Dr. Boysen-Rotelli


Introduction

Baenique will be an online personal shopping site offering customers an exciting and

delightful experience by offering them unique apparel designs styled specifically for them and

available exclusively at Baenique. The company will offer the most unique and personalized at-

home styling experience, reaching a market intrigued by inspired designers and stylists and high-

end affordability.

Customers can avoid the hassle of store shopping and save time by having a stylist select

apparel just for them. Women are often too busy to manage apparel shopping, trying on clothing,

and traveling back to the store for returns. Baenique will focus on giving the experience of

having an in-person expert even when they are not meeting with stylist face-to-face. The

company’s goal is to make customers feel special and catered to. Customers will have the

freedom of a no-hassle process: they can try on clothes at home, supported by a guarantee that

their unwanted items can be returned. Most importantly, Baenique will challenge women to try

things they would not normally wear, offering liberation from predetermined personal norms and

helping women identify something new about themselves.

Company Profile

Baenique will begin as a small company operated by three employees: the owner/stylist,

one additional stylist, and a statistician. The company will use this small start-up size to build

and invest in algorithm technology, perfecting the system of finding the perfect look for each

individual customer before vastly expanding the market. Spending will be very limited. Travel

expenses will be allocated for meetings with designers, key partners in creating unique styles for

customers, and funds will be used to keep a web designer on retainer to ensure the website


remains up and running at all times. Additional funding will be used on marketing to build

market presence as the company starts out.

Market Assessment

The target market for Baenique is women, ages 27 to 37 in “fashion desert fly over

states” (Casserly, 2013), meaning states where high fashion is not readily available. Most

customers will be either mothers and/or busy women with disposable income. They will often be

time-starved due to raising children or a hectic work schedule, and eager to have a stylist pick

their wardrobe for them. Household income will likely be between $75,000 and $150,000.

Baenique caters to women seeking business casual or casualwear, typically residents of

Midwestern states that experience all four seasons of the year. Many customers will also be

teachers, based on findings from competitors in the market (Hull, 2014).

Baenique will utilize a combination of a starting questionnaire and follow-up questions

asked when a customer keeps or returns each item to proficiently identify and track customer

preferences. Using this data, the company will create an algorithm to mathematically determine

which items a customer will have a higher propensity to keep. Unlike other in-person personal

shopping experiences, using a statistician to build this technology will allow the company to

employ fewer stylists while still offering significant customer value.

IBISWorld states the current environment for personal shopping is growing (IBISWorld,

2015). Furthermore, customers in flyover fashion states do not have access to high-end fashion

available in large department stores like Barney’s and Bloomington or boutiques. These women

are still interested in fashion and can have their needs met by online services. Similar concept


companies see up to 60 percent of their customers becoming repeat clients after their first styling

experience (Sanders, 2013).

There are currently no companies with dominant market share in the overall personal

stylist industry, according to IBISWorld (2015). Personal shoppers are in high demand due to

less available time to shop, but the industry will begin slowing in the next five years. Since 2011,

at least three companies have entered the online personal shopping market. Baenique will begin

slowly in the market as they continue refining their strategy and algorithm, and therefore

expects .02 percent market share at most in the first one to two years.

As the company launches, services will initially be available only in the Midwest. This

includes women in the 25 to 34 age range for the following states and populations, based on data

from Infoplease: Missouri: 739,000, Kansas: 349,000, Illinois: 1,812,000, Iowa: 364,000,

Indiana: 831,000, Michigan: 1,362,000, Minnesota: 673,000, Nebraska: 223,000, North Dakota:

77,000, Ohio: 1,520,000, South Dakota: 8,000, and Wisconsin: 706,000 (Infoplease, 2015). The

total population in this demographic is 8,664,000.

As with any new company, Baenique will face several large risks in establishing itself in

the personal shopping market. The first and largest risk is that the company will be unknown

amongst several large players in the online personal shopping business, and may struggle to gain

brand awareness. The company also faces the risk of too much recognition and orders coming in

faster than they can keep up with since the company has a very small workforce. A significant

opportunity for Baenique is that competitors do not offer unique designs by exclusive designers,

which may provide Baenique with a competitive advantage.


Competitive Assessment

Key competitors of Baenique are other online stylist companies. Stitch Fix offers casual

clothing in limited labels and at affordable prices. Keaton Row provides key basic pieces for

each season and is more expensive. Sylit is similar to Stitch Fix, but adds additional style tips

online for pairing their designs with accessories, shoes and cosmetics. Shop Bop may be an

indirect competitor, although their business model is based on customers browsing their

Lookbook for style ideas rather than providing a true styling experience.

Stitch Fix is biggest competitor in the online personal shopping market, due to how well-

known it has become and the similarities in business model to Baenique. The company offers a

true online personal shopping experience where a stylist personally selects items to ship to a

customer in a “Fix” based on their preferences recorded through an initial style questionnaire.

The average cost per item is $65, and the company focuses primarily on business casual and

casual clothing as well as accessories and handbags. The styles provided are from lesser-known,

more independent brands usually found in boutiques and not at major retailers or department

stores.

Strengths and Weaknesses of Stitch Fix

Stitch Fix offers the experience of having a personal shopper, even providing a

customized message from a stylist with each Fix. They provide a styling guide in each shipment,

recommending pairings with certain shoes and accessories. Upon account set-up, the company

allows for customers to set a maximum price point for each item, ensuring the customer will be

comfortable with the price of each Fix. This initial questionnaire also allows for customers to

eliminate certain unwanted items such as accessories, outerwear or formalwear. Stitch Fix


provides free shipping and free returns, and up to 70 percent of customers return after their first

fix (Brown, 2013). They use an algorithm to record and track customer likes and dislikes,

enabling them to customize and improve each Fix for each customer (Laporte, 2014).

Due to the popularity of Stitch Fix, there may sometimes be up to a three week wait for a

new Fix (Brown, 2013). Additionally, each Fix is picked by a new stylist; the customer does not

have the option of selecting and keeping the same stylist for each Fix. Keeping a diverse

assortment of subscribers satisfied is also an ongoing challenge, as is coordinating a broad

assortment of constantly changing products (Laporte, 2014).

Stitch Fix Strategies and Threats to Baenique

Stitch Fix plans to build an intensive training program for on-boarding remote stylists

(Brown, 2013). They are also attempting to be more proactive about finding the right products

for customers, identifying something that maybe the customer did not even know they were

looking for (Brown, 2013). In addition, the company will be offering plus sizes soon which will

expand their market drastically.

The primary threats to Baenique include the already well-developed algorithm used to

identify customer likes and dislikes, as well as the established brand recognition and competitive

pricing. Stitch Fix already has somewhat of a cult following, and Baenique will not easily be able

to sway customers in a different direction.

Appeal of Baenique over Stitch Fix

The primary benefit that Baenique can offer is the availability of completely unique

designs unavailable anywhere else. Baenique will provide much of the same experience as Stitch

Fix, but with a more unique and intimate approach given the company’s start-up size.


To differentiate itself from competitors, Baenique will be positioned based on its designer

apparel. Clothing provided through the service will be exclusive to Baenique and help support

small businesses. In addition, where some competitors have not done any marketing, Baenique

plans to launch a marketing campaign triggered at its target demographic. The company will

partner with cosmetic companies, offering advertising for their products through Baenique’s

online style pairing guides while asking in return for promotion on the cosmetic companies’ sites

that meet Baenique’s target demographic.

Market Strategy

Baenique’s marketing strategy will be heavily focused on social media advertising, with

additional cross-marketing and public relations venues utilized. The company has an underlying

assumption that social media venues will also result in strong word-of-mouth referrals, supported

by proof in a study conducted by Michael Trusov, Randolph Bucklin and Koen Pauwels showing

that word-of-mouth referrals have a significant impact on new customer acquisition (2009).

Following the path of wildly successful competitor Stitch Fix, overall advertising for Baenique

will be fairly limited. Stitch Fix has also seen significant success in word-of-mouth marketing

through Facebook and YouTube, witnessed through excited customers sharing their “fixes”

through social media venues (Del Rey, 2015).

Baenique’s product line will be focused on unique apparel designed by startup designers,

primarily selling their products currently on independent sales sites like Etsy. The line will

include business casualwear such as blouses, pants, dresses, skirts, blazers and sweaters as well

as casualwear like t-shirts, jeans, and less dressy counterparts to the business casualwear.

Apparel in these two categories will satisfy the target audience, seeking clothing both for work


and nicer weekend-wear. The unique designs will be sure to delight customers, as these fashions

will only be available through Baenique.

The company will focus on a slow market-integration, first introducing products strictly

in the Midwest. This strategy will allow the company to refine the strategy and algorithm to

calculate customer’s style profile. As a result, market share will not grow to over .02 percent

within the first two years. Initial sales are estimated to be roughly $135,960 in the first year,

which will represent .018 percent of the personal shopping market share of $762,000,000.

Marketing Plan

Baenique will focus primarily on Facebook advertising. Each designer featured in the

Baenique collection will link their own Facebook page back to Baenique’s main page and

advertise freely for the company. Baenique stylists will be responsible for maintaining social

media sites and posting advertisements since the company will not have a marketing department

at inception.

When revenues begin flowing in and Baenique is staffed to handle larger volumes of

customers, Kenshoo Social will also be utilized to offer advanced targeting capabilities, creative

testing, and extensive analytics to manage and optimize campaigns (Ruszkowski, 2014). This

marketing functionality has the possibility to increase leads 247 percent, decrease the cost per

lead by 13 percent, and increase click-through by 64 percent. The minimum cost for this service

is $5,000 per month.

The cost for utilizing Facebook is free initially. This advertising will be implemented

immediately, and can reach 75 percent of followers using the new Reach Generator. Beginning

with the three employees’ initial friends and friends-of-friends, the estimated initial friend count


of Baenique will be 1,000 potential customers. Boosting a post in the second month at a cost of

$30 will generate up to an additional 19,000 potential customers.

Baenique estimates that about 25 percent of the initial 1,000 friends will sign up for an

initial style, equaling 250 immediate customers. The company will assume the minimum

potential sale per customer throughout this assessment, which is one item averaged at $60. This

equals $15,000 in sales from Facebook friends, or $7,500 after 50 percent markup is calculated.

Of the 19,000 Facebook customers reached through the boosted post, Baenique estimates five

percent will purchase, or 950 new customers. After markup, this equals $28,500 in potential

revenue. The total Facebook advertising revenue is then $36,000.

Strengths of Facebook advertising include the inexpensive cost, potential large reach, and

the ability to quickly share success stories posted by customers. A study conducted showed that

likes on Facebook are strong long-term sales drivers, and visits to the company’s Facebook page

are strong short-term sales drivers (Brettel, Reich, Gavilanes, & Flatten, 2015). Weaknesses for

this advertising include the amount of effort it requires to keep the site current and to regularly

post, as well as the potential negative impact of “streaming” to customers’ news feeds.

Baenique’s designers are the heart of the company. Since the company will only be

focused on apparel, this offers a unique partnership with designers that also craft other products

such as accessories or shoes. The company will partner with designers to advertise through the

designer’s Etsy site, allowing customers to navigate to Baenique’s website where their favorite

accessory designer’s apparel is available exclusively. Baenique will offer customers the

opportunity in their style profile to select favorite designers, ensuring that they receive apparel

from these specific individuals.


The cost of this advertising is also free and will be available immediately. Assuming

Baenique begins with a minimum of 50 employed designers that each have a minimum of 10

people visiting and favoriting their items each day, the reach would be 500 customers a day and

roughly 15,000 potential views a month. The company expects a very small portion of these

views to become customer purchases, likely no more than .5 percent. This would equal 75 new

customers a month, or $2,250 in revenue, and $27,000 a year to begin.

Baenique also plans to partner with a cosmetic company to expand their reach as they

grow. The company will find one specific brand to focus an ad campaign around. Urban Decay is

a good example: they were founded in the nineties as an alternative to neutral and traditional

cosmetic colors. They have partnered with hit movies in the past to offer specifically designed

cosmetics to complement the media. As the company has become somewhat more mainstream

over the years, they offer more neutral colors that attract all audiences and could suit our

customers: they likely grew up in the nineties and have a positive association with this product.

Baenique expects that this endeavor will also be free, as it will offer advertising for the

cosmetic company as well. The implementation timeline for this advertising will be two years

out, to allow time for the company to be fully operational. The average volume of potential

customers on Urban Decay’s website monthly is 183,017. Assuming .5 percent of these

customers become Baenique customers, $27,450 will be generated in revenue. Strengths of these

advertising venues are the cost, cross-promotion and relationship-development. Weaknesses

include the difficulty to get a partnership started with a large cosmetic company.

To attract customers in Midwestern states, the company will work with universities that

have apparel merchandising and design programs. Baenique will get involved with fashion week


and senior student-produced fashion shows. While these customers may be young for the product

line, they will be able to identify with up-and-coming designers. These students will likely be

eager to spread the word to friends and family, and potentially ready to commit to one or two

nicer items for their wardrobes as they enter the working world. Baenique will also work with

young professional publications in cities where its designers are employed. Examples include the

Des Moines Juice and Cityview magazines. These publications will provide press releases to

boost the company’s visibility in the young professional market.

Both of these advertising sources are also free. Baenique plans to launch them within six

months of starting the organization, allowing time to test on a smaller market and advertise

success within these media outlets. Iowa State University puts on an annual fashion show that

has about 2,500 attendees. The Iowa State Daily reaches about 32,647 students and faculty.

Estimating .25 percent of these individuals will become customers, this will generate revenue of

$2,460. The Des Moines Juice website has monthly traffic of 35,065 potential customers and

Baenique estimates .5 percent of these individuals will become customers. This generates an

additional $63,000 annually. Strengths of these methods include the ability to reach the key

target market region and no cost of implementation. The primary weakness is that the college

aged audience is not as strong of a market, income-wise.

In preparation for new competitors entering the market, Baenique will continue to

position itself as a unique and exciting experience-providing company with exclusive designs

unavailable through other companies. Continuing to provide services to this niche market and

offering a product unavailable anywhere else will help Baenique maintain its competitive

advantage.


Operational Requirements

Baenique will be a small business, employing only two stylists (one is the owner) and one

part-time statistician. The company’s primary partners, independent apparel designers, will send

style catalogs to the company on a seasonal basis. Upon receiving the style catalogs, the stylists

will analyze new styles and make recommendation to update the customer profile-capturing

algorithm. If changes are needed to the algorithm, the statistician will make necessary changes in

preparation for customer orders.

Customers will order through an online website, completing their style profile and

submitting their request for their first purchase. When the first purchase is received, the

statistician will run the customer’s style, color, and size preferences through the algorithm and

provide the style guidelines to the stylists. The stylists will review the customer’s preferences

and send requests to designers for specific items based on the designer’s available apparel

cataloged in the style guide. Designers will collect the requested items and ship them to the

stylist.

Baenique stylists will be responsible for validating that the order is complete before

shipping it to the customer. They will also create a paired items guide for the customer, featuring

accessories, shoes and cosmetics that will complement the items shipped. Once the customer

receives the order, they will complete their official check-out, specifying which items they liked

and disliked and why. If they decide not to keep certain items, they will be able to ship those

items back. The statistician will update their style profile within the algorithm, and the stylists

will ship unwanted items back to designers for them to replenish their stock. At this time, the

transaction will be complete. See Appendix A for a detailed process map.


Designers will be expected to uphold the highest standard of quality control, and

minimum tolerances will be set. If tolerances are not maintained, Baenique will be required to

eliminate that designer from their style portfolio.

The algorithm is one of the company’s most valued assets; without it operational, the

stylists will be unable to review a customer’s preferences and ship their order. The statistician

will be responsible for maintaining the algorithm and ensuring technology is up to date in order

to keep it functioning properly. See Table 1 for a full list of operational strengths and

weaknesses.

In order to launch Baenique, a logo and website will be required. The company will

operate out of the owner’s home, and each employee will work from their respective homes.

Laptops will be purchased for each employee. Merchant account software will be procured

through vendor FreeAuthNet to charge customers for their purchases, a secure server utilized

from Thawte and online fraud detection through Maxmind.

A one-time attorney consultation fee may be required to ensure all regulation and

licensing is secured. A Federal Employer Identification Number will be obtained as well as a

sales tax permit. To establish relationships with at least 50 independent designers across the

Midwest, the owner will travel to their locations several times throughout the year. These

designers will also be kept on retainer to ensure they will work exclusively with Baenique.

A business continuity plan will be developed and revisited on an annual basis to establish

practices which will ensure the business continues operations if it impacted by disaster (Smith,

2013). A Board of Directors will not be created due to the size of the organization, and each

employee will work from home which moderates some of the risk associated with a permanent


loss of buildings. Loss of designers, technology, and staff out of the office are the biggest risks to

operations. See Table 2 for the impacts of each potential risk and applicable mitigation plans.

Management Processes

The management team at Baenique will consist solely of the owner and proprietor.

Identified and tested key competencies for small business owners include: managing

opportunities, relationships, concepts, administration, strategy, and compromise (Vilas Boas,

Vasconcellos Dias, & Amtmann, 2014). Managing opportunities translates to knowing how to

act, observing processes and making adjustments as needed. Relationship management is

primarily driven by communication skills, which are essential for a small business. Conceptual

management relates to knowing how compromise and take responsibility for both every day

actions as well as the direction of the company, and administrative relates to planning. A small

business manager should always have strategic vision and know how to compromise with

employees and vendors (Vilas Boas, Vasconcellos Dias, & Amtmann, 2014).

The owner will also be responsible for outlining employee competencies, interviewing

and hiring these positions. Stylist competencies include: Bachelor’s Degree in apparel design or

merchandising or equivalent experience, the proven ability to match customer’s tastes with

trending apparel, two to three years advertising or marketing experience or equivalent, and the

ability to visually convey a look in a way that will appeal to large audiences. The statistician will

be expected to have a Bachelor’s Degree in mathematics, statistics or technology, have a proven

history of working with algorithms, two to three years’ experience designing trials, assessing

results and analyzing trends, two to three years using statistics to forecast and project figures,

and technology implementation and maintenance experience.


Baenique’s owner will act as the primary manager and administrator, as well as key

stakeholder for marketing, human resources and finance. The owner will have the ability to set a

strategic vision and implement goals that will support that vision. She will have experience in

people management including assignment and overseeing tasks, coaching and development. The

owner will have marketing or related experience, human resource experience, and basic finance

knowledge. She will be responsible for recruiting new employees, and preparing a methodology

for quality assurance and a management plan for quality failure.

The statistician and stylist will also have stakeholder roles in the organization. The

statistician will act as product developer and technology leader. He or she will have experience

in technology product development, and technology implementation and maintenance. The

stylist will act as the design lead, managing relationships with designers. He or she will help

identify upcoming trends and ensure designers are incorporating new fashions into their

offerings.

Objectives and Performance

The mission of Baenique is to provide an exciting and delightful experience to customers

by offering them unique apparel designs styled specifically for them and unavailable through any

other channel. To deliver this mission and the vision of being the most unique and personalized

at-home styling experience, Baenique will set unique and measurable objectives, or goals. A goal

can be defined as “an end toward which you direct specific effort” (Rouillard, 2009). It must be

tangible and something that employees of the organization are willing to work hard for

(Rouillard, 2009).

Baenique’s goals will follow the S.M.A.R.T. methodology, that is, they will be specific,

measureable, action-oriented, realistic, and time- and resource-constrained (Rouillard, 2009).


Goals will be established to meet the company’s core values: provide a unique and exciting

customer experience, maintain inspired designers and stylists, and provide high-end

affordability.

The first measurable goal is to become known in the Midwest as an organization that

provides a personalized at-home styling experience within three years. This will be measured by

sales income and market share, and will be evaluated every six months to identify whether

progress is being made, if there have been issues identified, and how to increase visibility in the

market. The second goal is to provide a unique and exciting experience for customers. It will be

measured by the number of returns (or unkept shipments) and the number of customer

complaints. This goal will be measured monthly. The last goal is to maintain inspired designers

and stylists. It will be measured by employee and designer satisfaction surveys (annually) and

turnover rate (monthly or as needed).

Improvements or declines in performance can be directly tied to Human Capital Drivers,

so it will be important for Baenique to frequently revisit these principles (Bassi & McMurrer,

2007). These drivers are summarized into five categories: leadership practices, employee

engagement, knowledge accessibility, workforce optimization, and learning capacity (Bassi &

McMurrer, 2007).

The largest driver within leadership practices for Baenique is communication. Since all

employees will be remote, the owner will hold weekly staff meetings and monthly meetings with

each designer to manage processes, look for efficiencies, and ensure alignment. During the

weekly meetings, employee engagement will frequently be discussed, information will be shared,

and individual accountability discussed. Communication will also be key to innovation, and

weekly meetings will be used to brainstorm new ideas. Overall communication style needs to be


open and direct, providing and being open to constructive criticism because there is little

opportunity for mistakes while ensuring customer satisfaction and sales increases.

Leadership practices also incorporate inclusiveness, especially as a way of improving

morale and decreasing employee turnover. The owner will work to collaborate with the team,

and plan quarterly team building exercises in addition to the weekly meetings, including our web

designer and advertising partner. The owner will include employees in travel to meet with

designers in order to increase inclusiveness with those designers.

As a small organization, leadership practices also incorporate the owner acting as

supervisor and executive. It will be important for her to keep in mind the company’s strategy

while also finding ways to make tactical changes to support the company mission. The owner

will ask employees to hold her accountable to being open to new ideas and trying to be risk-

adverse while still excited to consider new concepts.

Employee engagement captures key components of job design, commitment, and time.

Employees will be hired for very specific roles, but the owner will want to ensure job satisfaction

and will be open to feedback and employee adjustment of job design. She will strive to motivate

the team through job satisfaction, as salary increases will be unlikely during the first few years of

operation. Commitment means that the owner will try as much as possible to keep jobs and make

sure employees know they are valued by providing frequent praise and recognition. Time

commitments will be required from employees, sometimes outside of regular hours due to the

nature of a start-up organization, but the owner will be dedicated to compensating employees for

their additional hours worked monetarily or through flexible time off benefits.

Knowledge accessibility is best summed up for Baenique through the principle of

collaboration. Teamwork will be mandatory and daily, and constant communication between the


stylists and statistician will be required to gauge the effectiveness of each role’s processes.

Workforce optimization will be delivered through process improvements, demonstrated by each

employee designing their own work processes, and through systems created for twice-yearly

performance reviews and monthly performance discussions with employees.

The last driver, learning capacity, incorporates primarily development and value and

support for Baenique. Development will be seen through opportunities offered for the team to

grow their skills. Stylists will be encouraged to attend design conferences, and the statistician to

attend technology summits. Value and support will come from engagement with the community.

The owner will schedule twice-yearly volunteer events and offer employees time off, within

reason, to pursue other community support activities.

Financial Planning

Small businesses are continuing moderated growth, with 74 percent of participants in a

survey stating they are meeting or exceeding their 2015 performance objectives (Fuel Oil News,

2015). These results are down from 87 percent in January but up from the previous year. As a

result, Baenique is taking a conservative approach to pricing, expected sales and planned

advertising.

A common mistake when starting up a new company is to set the selling price too low

(Barrow, Brown, & Barrow, 2012). When defining prices for Baenique, customer perceptions

were considered as well as the cost of preparing style sheets and purchasing packaging for

shipments. For these reasons, keystone markup of 50 percent was selected. As a method to

recoup losses from customers that decide not to keep anything from their shipment, a $20 return

fee will be charged. This covers $10 in shipping costs and allows Baenique a slight profit for the

work done to compile the order.


Competition was considered when estimating the average price per item, used to

calculate sales revenue (Barrow, Brown, & Barrow, 2012). Stitch Fix charges approximately $50

per item, and Baenique will be slightly more exclusive and unique. Items will be priced at an

average of $60 per item. Sales revenues were estimated based on the assumption that most

customers will keep an average of one item out of their shipment.

Based on recommendations from “The business plan workbook,” a new business does not

have the need for a quarterly budget (Pinson, 2013). Cash to be paid and sources of cash

worksheet were used to create the pro forma cash flow statement. The pro forma provides an

annual summary and projection for profitability of the business (Pinson, 2013). These

calculations were also used to determine the amount of startup expenditures Baenique will

encounter as well as the amount of money to request in a small business loan (Pinson, 2013). See

Table 3 for the full pro forma cash flow statement.

Baenique will need a $95,000 loan for initial startup expenses. The loan calculations were

based on a seven-year term with 3.5 percent interest. Figured into this loan amount is a planned

$26,000 on hand for emergencies, particularly to be able to pay bills and employees if sales do

not meet planned minimums in the first year.

The first month of sales revenues, January, were calculated based solely on planned sales

from family and friends of the owner, employees and designers. The second month, February,

included an additional volume of customers attracted by planned advertising through a Facebook

boost. This increased sales volume is expected to last six months and the sales revenues were

divided accordingly. Additionally in February, Etsy referrals are expected to pick up. Customers

that follow Baenique’s designers on Etsy will see referrals to the site and become new customers.


This volume is also expected to last approximately six months, at which time sales will likely

wain.

In the seventh month, July two months of boosted sales are expected from the outreach to

Iowa State University design students. Advertising is planned for the summer intentionally,

knowing that college students are more likely to have jobs and disposable income. July also adds

six months of boosted sales from advertising in the local publication, The Des Moines Juice. An

additional income of $4,714 has been estimated as a result of customers that may not keep their

orders, likely to be higher in the first month as the organization is just figuring out their styling

model then leveling out over the rest of the year. See Table 3 for full income details throughout

the year.

Most variable costs are expected to be paid at startup when initial supplies are purchased.

The exception will be travel expenses, accrued throughout the year as the owner travels quarterly

to meet with designers. Cash to be paid out also includes salaries and a small utility expenditure.

The loan repayment amount is calculated at $1,275 per month.

Due to careful planning and intentional underestimating of potential sales, Baenique will

end its first year with a positive balance of $36,799. The company will plan to boost advertising

and consider adding an additional stylist midway through 2017 with these additional funds.

Conclusion

Baenique will be an innovator in the at-home personal shopping market, and vigilant

planning will bring the company success. Through market analysis, budgeting and ongoing

strategic planning, Baenique will provide a unique product for a niche market.


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Appendix A

Baenique Process Flow


Table 1

Operational Strengths and Weaknesses

Strengths Weaknesses

The small size of the organization and lack of BOD enables quick changes and decision-making

The small size of the organization makes it very dependent on the people that do work there, and opens the company up for large risk if there were to be a disaster

A brick-and-mortar location is not required since the organization operates entirely online

Virtual working relationships can sometimes be strained, and all employees will have to be accountable for their own work performance

Algorithm will provide unique and customer preference-driven style sessions, ensuring high customer satisfaction

The organization is very dependent on the algorithm and its active functionality

Designers operate independently and do not work for the company, allowing relationships to be severed if needed

Designers are the heart of the organization, and are located across the Midwest, making it sometimes difficult to maintain strong relationships

The organization does not need to keep large amounts of stock since shipments come from designers on demand

Baenique only works with designers that will promise exclusivity which means they will likely leave Baenique as they decide to grow their business

Few employees within the organization make process quality easier to control

Designers are accountable for their own quality control standards which could conflict with the organization's standards

This business model and the respective operational techniques have been proven effective by competitors

New competitors may look to steal Baenique's human resources

With relatively low initial sales estimated, operational costs outside of salaries and designer retainers are somewhat low

Limited marketing will be afforded in the first year due to the small size of the organization and limited budget


Table 2

Risks and Impacts

Risk

Short-Term Impact

1-3 DaysMedium-Term Impact

4 Days - 2 WeeksLong-Term Impact

3+ Weeks Mitigation Plan

Building outage - equipment unavailable in stylists homes

Minimal; minor delay in shipping customer orders

Medium; customer dissatisfaction due to delays, designer dissatisfaction due to delays in shipping returns and making payments

High risk; customer loss, designer loss, employee loss, delays in marketing/advertising campaigns

Establish employee deferred compensation agreement to support times of additional income needs; maintain software and designer contact information on additional PCs and flash drives

Building outage - equipment unavailable in statistician's home

Minimal; minor delay in updating customer profiles and shipping new customer orders

Medium; customer dissatisfaction due to delays, potential for orders backing up to the point that additional help will be needed to clear the backlog

Very high risk; customer loss, designer loss, employee loss, total company loss potential

Consider keeping one or two additional stylists on retainer to handle backlogs created by building outage; maintain software additional PCs and flash drives

Vendor/designer outage

Minimal to no impact; one or two designers being out will probably not impact shipping times

High risk; designers out unexpectedly will cause inability to ship customer preferences and potential loss of customers


Keep a detailed calendar of designer time off in order to ensure apparel selections are only made from available designers; create a style guide which has similar items from two different designers in the event that one of them is out unexpectedly

Staff outage - stylists

No impact; if one stylist is available in a planned event, the other one can continue with slightly longer hours

Medium; customer dissatisfaction due to delays, designer dissatisfaction due to delays in shipping returns and making payments

High risk; customer loss, designer loss, employee loss, delays in marketing/advertising campaigns

Consider keeping one or two additional stylists on retainer to provide relief during time off; maintain time off calendars for stylists

Staff outage - statistician

Minimal; minor delay in updating customer profiles and shipping new customer orders

Medium; customer dissatisfaction due to delays, potential for orders backing up to the point that additional help will be needed to clear the backlog


Consider keeping one or two additional statisticians on retainer to handle backlogs created by building outage; maintain software additional PCs and flash drives; determine if web designer can assist by being cross-trained on the algorithm for statistician time off


Year: 2016

JanFeb

Mar

Apr

May

JunJul

Aug

SepO

ctN

ovD

ec12-M

onth T

otalsB

eginning Cash B

alance95,000.00

26,474.5032,551.00

38,657.5043,514.00

37,580.5031,687.00

36,273.5036,380.00

37,716.5036,573.00

36,679.50489,087.00

Cash R

eceiptsA

. Sales/Revenues

625.0017,125.00

17,125.0017,125.00

5,125.005,125.00

16,855.0011,125.00

12,355.0011,125.00

11,125.0011,125.00

135,960.00B

. Interest Income

0.500.50

0.500.50

0.500.50

0.500.50

0.500.50

0.500.50

6.00C

. Income from

Returned

Shipments

785.00356.00

356.00356.00

356.00356.00

356.00356.00

356.00356.00

356.00369.00

4,714.00T

otal Cash A

vailable96,410.50

43,956.0050,032.50

56,139.0048,995.50

43,062.0048,898.50

47,755.0049,091.50

49,198.0048,054.50

48,174.00C

ash Payments

A. Startup C

osts1. Purchases

53,788.000.00

0.000.00

0.000.00

0.000.00

0.000.00

0.000.00

53,788.00T

otal Startup Costs

53,788.000.00

0.000.00

0.000.00

0.000.00

0.000.00

0.000.00

53,788.00B

. Variable E

xpenses1. A

dvertising1,000.00

0.000.00

0.000.00

0.000.00

0.000.00

0.000.00

0.001,000.00

2. Social Media Expense

0.0030.00

0.000.00

0.000.00

0.000.00

0.000.00

0.000.00

30.003. Shipping

0.000.00

0.000.00

0.000.00

0.000.00

0.000.00

0.000.00

0.004. Style G

uides (Materials and

Print Costs)

283.000.00

0.000.00

0.000.00

0.000.00

0.000.00

0.000.00

283.005. Packaging C

osts2,240.00

0.000.00

0.000.00

0.000.00

0.000.00

0.000.00

0.002,240.00

6. Travel1,250.00

0.000.00

1,250.000.00

0.001,250.00

0.000.00

1,250.000.00

0.005,000.00

Total V

ariable Expenses

4,773.0030.00

0.001,250.00

0.000.00

1,250.000.00

0.001,250.00

0.000.00

8,553.00C

. Fixed Expenses

1. Stylists Salaries6,666.67

6,666.676,666.67

6,666.676,666.67

6,666.676,666.67

6,666.676,666.67

6,666.676,666.67

6,666.6380,000.00

2. Statistician Salary3,333.33

3,333.333,333.33

3,333.333,333.33

3,333.333,333.33

3,333.333,333.33

3,333.333,333.33

3,333.3740,000.00

3. Rent

0.000.00

0.000.00

0.000.00

0.000.00

0.000.00

0.000.00

0.004. U

tilities100.00

100.00100.00

100.00100.00

100.00100.00

100.00100.00

100.00100.00

100.001,200.00

Total Fixed E

xpenses10,100.00

10,100.0010,100.00

10,100.0010,100.00

10,100.0010,100.00

10,100.0010,100.00

10,100.0010,100.00

10,100.00121,200.00

5. Loan Payments

1,275.001,275.00

1,275.001,275.00

1,275.001,275.00

1,275.001,275.00

1,275.001,275.00

1,275.001,275.00

15,300.00T

otal Cash Paid O

ut69,936.00

11,405.0011,375.00

12,625.0011,375.00

11,375.0012,625.00

11,375.0011,375.00

12,625.0011,375.00

11,375.00198,841.00

Cash B

alance/Deficiency

26,474.5032,551.00

38,657.5043,514.00

37,580.5031,687.00

36,273.5036,380.00

37,716.5036,573.00

36,679.5036,799.00

36,799.00

Table 3Pro Form

a Cash Flow

Statement

Documents

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