Gift Store Business Plan


CRYSTAL CREEK GIFTS

1329 Thompson Blvd.

Charlevoix, MI 49625

This gift and clothing store is located in a thriving tourist location. The summer season's influx of travelers will make up the bulk of this store's clientele, which has prepared carefully for it's market by choosing affordable and attractive products with wide appeal. This business plan is thorough in it's analysis of patrons and financing.


  • STATEMENT OF PURPOSE
  • BASIC BUSINESS DEFINITION
  • MARKET ANALYSIS
  • MARKETING PLAN
  • ORGANIZATION AND MANAGEMENT
  • MANAGEMENT
  • SUMMARY OF SOURCES AND USE OF FUNDS
  • CAPITAL EQUIPMENT
  • START-UP COSTS
  • WORKING CAPITAL

STATEMENT OF PURPOSE

This business Plan has been developed as a planning, operating, and policy guide for the owners of Crystal Creek and as a financing proposal to submit to local financial institutions.

Mike and Hannah Taylor are requesting a loan of $70,000 and a credit line of $25,000. This sum will be sufficient to purchase capital equipment and beginning inventory to cover start-up costs and to provide adequate working capital to successfully initiate this new business. The legal structure will be set up as a proprietorship. The anticipated opening date is April 1, 1997.



BASIC BUSINESS DEFINITION

The Crystal Creek Gifts is a year-round retail clothing store, located at 1329 Thompson Blvd. in Charlevoix, Michigan. It will service the summer tourist trade (80% of business between May-October). The merchandise carried will be men's sportswear (20%), ladies' sportswear (50%) with accessories at (10%), and gift items (20%). We aim to carry unique products and high quality apparel.



MARKET ANALYSIS

The target market for Crystal Creek is concentrated on the tourist to our area. He/she is a professional, well-educated, up-scale clientele who's taste in clothing and gifts reflect an unique, active, lifestyle. The target market income is $25,000 and higher. Crystal Creek will focus on these individuals during the tourist season, May through October.

Downtown Charlevoix attracts tourists who are walking up and down Thompson looking for items which they don't find at big city malls and an item which will remind them of their trip to Charlevoix.Thompson Boulevard also attracts a local or seasonal resident who enjoys the amenities of downtown. These include personal service, holiday shopping nights, "Friday Night Live," and the friendly atmosphere.



MARKETING PLAN: PRODUCT DIFFERENTIATION STRATEGY

To offer products that are different from competition in ways other than price.




Products and Services

Ladies apparel will consist of "groupings" of clothing which coordinate and sell each other. An example of this would be shorts, tees, and sweaters in sporty colors; cotton and twill bottoms, funembroidered sweatshirts. Menswear includes Rugby-stripe golf shirts, cotton sweaters, golf caps, and nautical and golf-embroidered sweatshirts. Brand names will be recognizable for their quality. Gift items will be moderately prices items: flowerpots, calendars, frames, birdhouses, many impulse items which will intrigue customers from the front display window.



Pricing

Crystal Creek will use a 50% mark-up for fashion goods. A 60% mark-up for fleece embroidered goods will compensate for seasonal markdowns. Gift items will be evaluated for quality and priced accordingly.



Promotion

The promotional budget for Crystal Creek is approximately $200 a month in the off-season, which would cover the cost of small newspaper ads. During the season, in addition to newspaper ads, the store plans to run ads in up-scale local magazines, possibly do a postcard mailing to customers.

Location

The advantage for Crystal Creek's to be on Thompson Boulevard is tremendous. Not only does Thompson Boulevard have the best walking traffic, but being in an area of other successful stores attracts people to the area. Other advantages to downtown include participation in the Downtown Development Authority which promotes downtown throughout the year via craft shows, "Friday Night Live," holiday shopping nights, etc.



ORGANIZATION AND MANAGEMENT

Attorney: David Stanford, Esq., 410 S. North Street, Charlevoix, MI 49625

Accountant: Linda Persimmons, 346 E. Thompson Boulevard, P.O. Box 2050, Charlevoix, MI 49625


Insurance Agent: Jerry Smith 515 Baylor Street, Charlevoix, MI 49625

Other: Rick Bameldi, Economic Development Contact for Northwest Michigan Council of Governments, P.O. Box 67809, Charlevoix, MI 49625



MANAGEMENT

Mike and Hannah Taylor, the owners of Crystal Creek, will be responsible for ordering inventory, merchandising, maintaining accounting and inventory records, supervising dayto-day records operations and hiring, training, and scheduling employees other than part-time help in the busiest part of the season. Mike and Hannah will be responsible for the majority of working hours.

Mike Taylor has a marketing degree from Ferris State University. He also has 15 years' experiencein merchandising day-to-day operations of a business in addition to experience in hiring, training employees.

Hannah Taylor is a graduate of Michigan State University's merchandising program and has many years experience as a buyer and shop manager at private golf clubs, resorts, and retail stores.

Mike and Hannah Taylor have owned their own shop before. In 1989, they secured a loan from Second National Bank in Newton, Michigan, to operate the ProShop Express at Wanatchee Country Club. The loan was paid back, on time, over the course of the golf season. The following year, 1990, a loan was also taken out and paid back on time.



SUMMARY OF SOURCES AND USE OF FUNDS

Sources  
Owners' Equity Investment $7,000
Requested Bank Loan 95,000
Total $102,000
Uses  
Capital Equipment $13,900
Beginning Inventory 50,000
Start-Up Costs 9,500
Working Capital 28,600
Total $102,000
   
Security Collateral:  
Business Assets (capital, equipment, inventory) $63,900
Lien against equity in personal residence 17,100
Common Stock - Bill Knapp 14,000
Total Collateral $95,000

Summary of Sources and Uses of Funds

Sources  
Owner(s) investment (including cash, equipment, inventory, etc.) $7,000
Requested bank loan 70,000
Other source: Line of Credit 25,000
Other source:  
Total $102,000
Uses  
Capital equipment (total from Worksheet 20) 13,900
Beginning inventory (total from Worksheet 21) 50,000
Start-up costs (total from Worksheet 22) 9,500
Working capital (total from Worksheet 23) 28,600
Other: (with inventory) $102,000


CAPITAL EQUIPMENT

Office furniture, business machines (computer equipment, copier, FAX machine, cashregister, typewriter), store fixtures (display cases, shelves, stands, counters), delivery equipment, air conditioners, production machinery and construction equipment

List of only the equipment needed to start business, not what is already owned:

Equipment Cost  
Fixtures $9,000
Computer 3,000
Copier 600
Fax 500
Cash Register 500
Stereo 500
Television 300
Total $13,900

BEGINNING INVENTORY

Products Cost  
Merchandise & Gifts $50,000
Total $50,000


START-UP COSTS

Start-up costs are one-time expenses that are incurred prior to opening our business. Some of these expense categories, such as professional services and advertising, also may be on-going expenses. Therefore, they may be part of your working capital estimate for the first six months of operation.

Remodeling and decorating $3,000
Interior and exterior signs 1,000
Installation of fixtures and equipment 1,000
Telephone installation 200
Rent deposit 1,000
Utility company deposits 500
Licenses and permits 500
Legal, accounting and other professional fees (for start-up) 300
Advertising and promotion (for start-up) 1,000
Office supplies (initial inventory) 500
Other supplies (initial inventory) 500
Total $9,500

WORKING CAPITAL

Minimum working capital requirements should be estimated by totaling projected expenses for the first six months of Year 1.

Item Total Estimated Expenses for Months 1 through 6
Advertising $5,900
Dues and subscriptions 400
Insurance 750
Interest 3,600
Maintenance and repairs 500
Postage and supplies 1,000
Professional services 1,000
Rent 7,800
Salaries/wages 3,000
Taxes 350
Telephone 600
Travel/entertainment 3,150
Utilities 550
Total $ 28,600

Projected Income Statement: Detail by Month

  Jan Feb March April May June
Gross Sales       10,000 15,000 20,000
Less: Cost of good sold       6,000 8,000 11,000
Gross Profit       4,000 7,000 9,000
Expenses            
Advertising     700 1,200 700 1,300
Credit card service charges       75 75 200
Depreciation     225 225    
Dues and subscriptions     200 200    
Insurance     375      
Interest     700 700 700 700
Maintenance and repairs   80 45 40 40 45
Postage and supplies   225 275 100 200 200
Professional services   150 150 500 100 200
Rent   1,300 1,300 1,300 1,300 1,300
Salaries/wages: Employees           1,000
Taxes           100
Telephone   150 150 100 100 100
Travel and entertainment   2,200 300 100 200 200
Utilities   105 105 80 80 90
Other operating expenses   200 100 100 100 100
Total expenses   4,410 4,250 5,095 3,595 5,535
             
Profit (or Loss) Before Taxes   (4,410) (4,250) (1,095) 3,405 3,465

Projected Income Statement: Detail by Quarter Year 1

  1st qtr 2nd qtr 3rd qtr 4th qtr Total
Gross Sales   45,000 85,000 60,000 190,000
Less: Cost of goods sold   25,000 50,000 35,000 110,000
Gross Profit   20,000 35,000 25,000 80,000
           
Expenses          
Advertising 700 3,200 3,100 1,000 8,000
Credit card service charges   350 650 400 1,400
Depreciation 225 225 225 225 900
Dues and subscriptions 200 200 200 200 800
Insurance   375 375 375 1,125
Interest 700 2,100 2,100 2,100 7,000
Maintenance and repairs 125 125 125 125 500
Postage and supplies 500 500 500 500 2,000
Professional services 300 800 600 300 2,000
Rent 2,600 3,900 3,900 3,900 14,300
Salaries/wages: Employees   1,000 5,000   6,000
Taxes   100 600   700
Telephone 300 300 300 300 1,200
Travel and entertainment 2,500 500 500 500 4,000
Utilities 210 250 260 210 930
Other operating expenses 300 300 300 300 1,200
Total expenses 8,660 14,225 18,735 10,435 52,055
Profit (or Loss) Before Taxes (8,660) 5,775 16,265 14,565 27,945
July August Sept. Oct. Nov. Dec. Total
32,500 30,000 22,500 18,000 16,000 26,000 190,000
19,000 18,000 13,000 11,000 10,000 14,000 110,000
13,500 12,000 9,500 7,000 6,000 12,000 80,000
             
1,400 1,300 400 400 200 400 8,000
200 250 200 100 100 200 1,400
225     225     900
200     200     800
375     375     1,125
700 700 700 700 700 700 7,000
40 45 40 40 45 40 500
200 200 100 100 100 300 2,000
200 200 200 100 100 100 2,000
1,300 1,300 1,300 1,300 1,300 1,300 14,300
2,000 2,000 1,000       6,000
250 250 100       700
100 100 100 100 100 100 1,200
150 150 200 150 150 200 4,000
90 90 80 70 70 70 930
100 100 100 100 100 100 1,200
7,530 6,685 4,520 3,960 2,965 3,510 52,055
             
5,970 5,315 4,980 3,040 3,035 8,490 28,945

Projected Income Statement: Detail by Quarter Year 2

  1st qtr 2nd qtr 3rd qtr 4th qtr Total
Gross Sales $20,000 50,000 90,000 65,000 225,000
Less: Cost of goods sold 13,000 28,000 53,000 37,000 131,000
Gross Profit 7,000 22,000 37,000 28,000 94,000
           
Expenses          
Advertising 600 1,800 2,400 1,200 6,000
Credit card service charges 150 400 700 450 1,700
Depreciation 450 450 450 450 1,800
Dues and subscriptions 250 250 250 250 1,000
Insurance 200 200 200 200 800
Interest 1,800 1,800 1,800 1,800 7,200
Maintenance and repairs 125 125 125 125 500
Postage and supplies 500 500 500 500 2,000
Professional services 300 800 600 300 2,000
Rent 4,050 4,050 4,050 4,050 16,200
Salaries/wages: Employees   1,100 5,500   6,600
Taxes   120 730   850
Telephone 300 300 300 300 1,200
Travel and entertainment 2,500 500 500 500 4,000
Utilities 225 240 255 225 945
Other operating expenses 350 350 350 350 1,400
Total Expenses $11,800 12,985 18,710 10,700 54,195
Profit (or Loss) Before Taxes ($4,800) 9,015 18,290 17,300 39,805

Projected Cash Flow Statement: Detail by Month

  Jan Feb March April May June
Beginning Cash     84,090 64,265 15,995 18,000
Add:            
Cash sales       10,000 15,000 20,000
Collection on receivables            
Loan/other cash injection   102,000        
Total Cash Available   102,000 84,090 74,265 30,995 38,000
Deduct:            
Advertising     700 1,200 700 1,300
Bad debts            
Credit card service charges       75 75 200
Dues and subscriptions     200 200    
Insurance     375      
Interest     700 700 700 700
Maintenance and repairs   80 45 40 40 45
Postage and supplies   225 275 100 200 200
Professional services   150 150 500 100 200
Rent   1,300 1,300 1,300 1,300 1,300
Salaries/wages           1,000
Taxes           100
Telephone   150 150 100 100 100
Travel and entertainment   2,200 300 100 200 200
Utilities   105 105 80 80 90
Capital expenditure including start-up   11,000 12,400      
Loan principal payment     800 800 800 800
Owner's draw   2,700 2,700 2,700 2,700 2,700
Purchases (merchandise)       50,000 6,000 8,000
             
Total Cash Paid Out   17,910 19,825 58,270 12,995 16,935
Net Cash Available   84,090 64,265 15,995 18,000 21,065
July August Sept. Oct. Nov. Dec. Total
21,065 6,860 2,275 (675) (2,840) (4,205)  
             
32,500 30,000 22,500 18,000 16,000 26,000 190,000
             
            102,000
53,565 36,860 25,275 17,325 13,160 21,795 292,000
             
1,400 1,300 400 400 200 400 8,000
             
200 250 200 100 100 200 1,400
200     200     800
375     375     1,125
700 700 700 700 700 700 7,000
40 45 70 70 45 40 500
200 200 100 100 100 300 2,000
200 200 200 100 100 100 2,000
1,300 1,300 1,300 1,300 1,300 1,300 14,300
2,000 2,000 1,000       6,000
250 250 100       700
100 100 100 100 100 100 1,200
150 150 200 150 150 200 4,000
90 90 80 70 70 70 930
            23,400
5,800 5,800 800 800 800 800 18,000
2,700 2,700 2,700 2,700 2,700 2,700 29,700
31,000 19,000 18,000 13,000 11,000 10,000 166,000
             
46,705 34,085 25,950 20,165 17,365 16,910 287,115
6,860 2,775 (675) (2,840) (4,205) 4,885 4,885

Projected Cash Flow: Detail by Quarter Year 1

  1st qtr 2nd qtr 3rd qtr 4th qtr Total
Beginning Cash   64,265 21,065 (675)  
           
Add:          
Cash sales   45,000 85,000 60,000 190,000
Collection on receivables          
Loan/other cash injection 102,000       102,000
Total Cash Available   109,265 106,065 59,325  
           
Deduct:          
Advertising 700 3,200 3,100 1,000 8,000
Bad debts          
Credit card service charges   350 650 400 1,400
Dues and subscriptions 200 200 200 200 800
Insurance   375 375 375 1,125
Interest 700 2,100 2,100 2,100 7,000
Maintenance and repairs 125 125 125 125 500
Postage and supplies 500 500 500 500 2,000
Professional services 300 800 600 300 2,000
Rent 2,600 3,900 3,900 3,900 14,300
Salaries/wages   1,000 5,000   6,000
Taxes   100 600   700
Telephone 300 300 300 300 1,200
Travel and entertainment 2,500 500 500 500 4,000
Utilities 210 250 260 210 930
           
Capital expenditures 23,400       23,400
Loan principal payment 800 2,400 12,400 2,400 18,000
Owner's draw 5,400 8,100 8,100 8,100 29,700
Purchases (merchandise)   64,000 68,000 34,000 166,000
           
Total Cash Paid Out 37,735 88,200 106,740 54,440 287,115
Net Cash Available 64,265 21,065 (675) 4,885 4,885

Projected Cash Flow: Detail by Quarter Year 2

  1st qtr 2nd qtr 3rd qtr 4th qtr Total
Beginning Cash $4,885 (2,515) (3,985) 6,705  
           
Add:          
Cash sales 20,000 50,000 90,000 65,000 235,000
Collection on receivables          
Loan/other cash injection          
Total Cash Available 24,885 47,600 86,015 71,705  
           
Deduct:          
Advertising 600 1,800 2,400 1,200 6,000
Bad debts          
Credit card service charges 150 400 700 450 1,700
Dues and subscriptions 250 250 250 250 1,000
Insurance 200 200 200 200 800
Interest 1,800 1,800 1,800 1,800 7,200
Maintenance and repairs 125 125 125 125 500
Postage and supplies 500 500 500 500 2,000
Professional services 300 800 600 300 2,000
Rent 4,050 4,050 4,050 4,050 16,200
Salaries/wages   1,100 5,500   6,600
Taxes   120 730   850
Telephone 300 300 300 300 1,200
Travel and entertainment 2,500 500 500 500 4,000
Utilities 225 240 255 225 945
           
Capital expenditures          
Loan principal payment 2,400 2,400 2,400 2,400 9,600
Owner's draw 9,000 9,000 9,000 9,000 36,000
Purchases (merchandise) 5,000 28,000 50,000 40,000 123,000
           
Total Cash Paid Out 27,400 51,585 79,310 61,300 219,595
Net Cash Available 2,515 (3,985) 6,705 10,405 10,405

Projected Balance Sheets

  Start-Up End Yr 1 End Yr 2
Assets
      
       
Current Assets      
Cash $31,000 $4,885 $10,405
Accounts receivable      
Inventory 50,000 70,000 70,000
Prepaid expenses      
Total Current Assets 81,000 74,885 80,405
       
Fixed Assets      
Land      
Building      
Equipment 14,000 14,000 14,000
Less accumulated depreciation 0 900 1,800
Net Fixed Assets   13,100 12,200
       
Total Assets $95,000 $87,985 $92,605
       
Liabilities      
       
Current Liabilities      
Accrued expenses      
Taxes payable      
Short-term notes payable (Credit Line) 25,000 15,000  
Current portion long-term debt      
Total Current Liabilities 25,000 15,000  
Long-term debt 70,000 62,000 54,000
       
Total Liabilities 95,000 77,000 54,000
Total Equity   10,985 38,605
       
Total Liabilities      
and Equity (Net Worth) $95,000 87,985 92,605