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ZINZINI MILAN BUSINESS PLAN
Table of Contents
1.0 EXECUTIVE SUMMARY 2
1.1 Objectives 3
1.2 Mission 3
1.3 Keys to Success 3
1.4. Start-up Summary 3
1.5 Start-up Expenses 5
2.0 PRODUCTS 6
3.0 MARKET ANALYSIS SUMMARY 6
Market Segmentation 6
4.0 COMPETITION AND BUYING PATTERNS 7
Competitive Edge 8
5.0 STRATEGY AND IMPLEMENTATION SUMMARY 8
Marketing: 8
Marketing Communications: 8
6.0 SALES AND DISTRIBUTION STRATEGY 9
Monthly Sales Forecast: 10
7.0 MANAGEMENT SUMMARY 10
8.0 FINANCIAL PLAN 11
Important Assumptions: 11
Projected Profit and Loss: 11
1.0 EXECUTIVE SUMMARY
Zinzini Milan start-up is a UK Clothing line that specializes in making and designing of high quality Italian cotton Clothing for men targeted at Celebrities, people in sports and Business class. Zinzini Milan will not only develops the clothing line, but it will supports it with advertising and promotion campaigns. The company plans to strengthen its partnership with local models, taxi drivers, use the social media to sell the brand and develop attractive bill boards that will be placed in busy areas of the streets to develop brand awareness. Zinzini Milan intends to market its line as an alternative to existing clothing lines, and differentiate itself by marketing strategies, exclusiveness, and high brand awareness.
The key message associated with the Zinzini Milan line is classy, upscale, versatile, and expensive clothing. The company's promotional plan is diverse and includes a range of marketing communications.
1.1 Objectives
The business mission is to offer quality, branded and well assortment Italian men shirts and t-shirts of all sizes and styles to accommodate all varying body styles and shapes.
1.3 Keys to Success
In order to succeed in the Italian men’s wear branding industry Zinzini Milan will be required to do the following:
Zinzini Milan wear's incorporation costs are listed below. The business will start with three months inventory on hand for apparel and accessories as this is the main revenue generator. The majority of the business assets will reside in inventory. The opening day’s cash on hand balance will be $384. The purpose of this business plan is to secure a $16,700 loan. This supplemental financing is required to work on site preparation, inventory, and operational expenses.
The loan amount appears in the long-term liability row of the start-up summary. Other financing will include an owner’s investment of $5,100 and a short term revolving line of credit of $2,000 for inventory replenishment during months of high receipts. Successful operation and building a loyal customer base will allow Zinzini to be self-sufficient and profitable in year two.
1.5 Start-up Expenses
EXPENSEAMOUNT
Rent$1,606
Telephone and Utilities$1,575
Travel$350
Business Insurance$600
Advertising & Promotions$1,010
Grand Opening Event$400
Computer/ cash register$950
Signage (Including Permits)$400
Organization dues & subscriptions$125
Office supplies$400
Store fixtures & decorations$1,500
Other$500
Total Start-up Expenses$9,416
2.0 PRODUCTS
Zinzini Milan clothing will be priced at the high end to reflect the quality and exclusiveness associated with its brand. The company will use high-end materials such as gold and high quality cotton blend to offer an attractive, durable and high quality finish. When a markup is placed on our products, customers are willing to pay the premium because of the perceived value and quality guarantee that comes with all products. The Zinzini Milan line is targeted at male Celebrities, sports men and business executives who value high quality and expensive products.
3.0 MARKET ANALYSIS SUMMARY
Market Segmentation
The company plans to target male celebrities, sports men, and business executives of all age and body sizes with a combined household income of more than $40,000. Within this group, price is not an issue so long as the brand is associated with class. The Zinzini customer is a versatile man who can fit into any environment and is willing to pay a high price for quality clothing.
The company's target group is seen as having enough disposable income to spend on high priced quality clothing. From 1984 to 1991, for example, disposable personal income grew at a healthy average annual of 7.0%. Apparel expenditures increased at a strong .2% annual rate during the same period. In the 1990s, however, growth in personal income slowed somewhat and so did apparel expenditures. From 1991 to 1998, disposable personal income rose at an average annual rate of 4.7%, while apparel expenditures grew 4.5% per year.
According to S&P's report, in the luxury men's apparel segment, much of the growth in spending is being driven by consumers with annual household incomes of more than $60,000. Spending in this segment increased by approximately 13% in 1998. Apparel purchases by men from households with incomes between $40,000 and $59,999 grew by 7% in 1998. Men's apparel sales at department stores and off-price retailers grew at double-digit rates in 1998.
Many apparel manufacturers see Europe, with a population of 350 million, as an attractive market. Tommy Hilfiger and Polo Ralph Lauren recently opened flagship stores in London in an effort to build up their brands in Europe. Expansion in Asia, however, has been sidelined by economic troubles.
4.0 COMPETITION AND BUYING PATTERNS
Although the apparel industry is mature and slow growing, it exists in a dynamic and competitive environment. In order to improve profitability, many companies are restructuring to create leaner organizations and adopt new technologies. Consolidation has been prevalent in this industry in the past few years, as larger companies gain leverage in market position and cost cutting. In the apparel industry, companies can operate as retailers or manufacturers (wholesalers) or both. For instance, Gap, Inc., a vertical retailer, manufactures and markets their own apparel and accessories. A company like VG Corporation is a manufacturer and sells solely to retail channels. A company like Tommy Hilfiger does both, selling its products to both retailers and consumers (through retail outlets).
Competitive Edge
In a market where consumers are barraged by advertising and marketing campaigns delivering an onslaught of lifestyle and fashion messages, a brand name is a powerful weapon. Brands have become an increasingly significant factor in apparel and footwear. Many consumers have less time to shop and are spending their disposable income more carefully. Established brand names like Hugo boss, Prada, Versace, Gucci, Kenzo, Michael Kors, Tommy Hilfiger with their quality image, make the shopping experience easier and faster for many consumers. For manufacturers, brands build consumer loyalty, which translates into repeat business.
The company's name, Zinzini Milan, is a competitive advantage in itself. The name is attached to people with high class life who are associated with luxury products. Another competitive advantage is the company's marketing strategy. Through the use of models, print and social media advertising, promotion, and giveaways, the company is therefore able to develop its presence in the market. Although the company is planning to use retailers to sell its line, most of the marketing and advertising will be done in-house.
5.0 STRATEGY AND IMPLEMENTATION SUMMARY
Marketing:
Zinzini Milan will not only develop the clothing line but will also support it with advertising and promotion campaigns. The company plans to strengthen its partnership with retailers by developing brand awareness.
Marketing Communications:
The key message associated with our clothing company is classy, upscale, versatile, and expensive clothing. The company's promotional plan is diverse and includes a range of marketing communications:
Print advertising-The company's print advertising program includes advertisements in large and attractive billboards that will be placed in busy streets. The billboard will convey the message about our Italian cotton clothing and attract more customers into our store.
Internet and Social media presence- Zinzini Milan plans to establish a presence on the Internet by developing a website. Plans are underway to develop a professional and effective site that will be interactive and from which sales will be generated worldwide. In the future, this is expected to be one of the company's primary marketing channels. The business will also run a Facebook page, twitter and Instagram to help in reaching the target audience through creating the brand awareness.
Promotional models- The business will hire models and give them free stock to drive consumer demand for our brand through interacting with potential customers. This method have been proved to make products or services more appealing and attract sales.
Taxi drivers- Local taxi drivers will act as brand ambassadors to create awareness about our Italian Shirt and t-shirt brand. The business will offer promotional clothing and show off branded accessories associated with our business.
6.0 SALES AND DISTRIBUTION STRATEGY
Zinzini Milan intends to build a sales team that will be tasked with generating sales leads on a regional and national basis. They will also be responsible for establishing connections with retail outlets.
A key factor in the success of Zinzini will be its distribution. The company plans to use the following retail distribution channels:
Consumers like the convenience of being able to shop from anywhere and at any time they wish. Manufacturers with Internet sites use them for marketing and informational purposes. With expected technological advances, shopping for apparel should gain popularity. Zinzini Milan will therefore utilize the power of internet to boost its sales.
Monthly Sales Forecast:
7.0 MANAGEMENT SUMMARY
The business’ management philosophy is based on responsibility and mutual respect. Zinzini has an environment and structure that encourages productivity and respect for customers and fellow employees.
PERSONNEL PLAN
FY1FY2FY3
All departments$565,217$800,000$1,000,000
Other$0$0$0
TOTAL PEOPLE152025
Total Payroll$565,217$800,000$1,000,000
8.0 FINANCIAL PLAN
The business is seeking a substantial long-term business loan for the purpose of developing the clothing line. This funding will cover operating expenses and clothe line development.
Important Assumptions:
The table below contains important assumptions which the business will use to ensure its success, the primary assumption is that the economy will remain in its present upturn.
GENERAL ASSUMPTIONS
FY1FY2FY3
Plan Month123
Current Interest Rate10.00%10.00%10.00%
Long-term Interest Rate10.00%10.00%10.00%
Tax Rate25.42%25.00%25.42%
Other000
Projected Profit and Loss:
Zinzini Milan is in the early stage of development, thus initial projections have only been made on accounts that are believed to most drive the income statement.
PRO FORMA PROFIT AND LOSS
FY1FY2FY3
Sales$5,000,000$50,000,000$150,000,000
Direct Cost of Sales$1,400,000$14,000,000$42,000,000
Other$50,000$50,000$50,000
TOTAL COST OF SALES$1,450,000$14,050,000$42,050,000
Gross Margin$3,550,000$35,950,000$107,950,000
Gross Margin %71.00%71.90%71.97%
Expenses
Payroll$565,217$800,000$1,000,000
Sales and Marketing and Other Expenses$1,188,058$9,260,000$11,830,000
Depreciation$26,400$26,400$26,400
Communications$26,400$90,000$150,000
Client Relations$24,000$120,000$200,000
Rent$9,600$30,000$30,000
Payroll Taxes$84,783$120,000$150,000
Other$0$0$0
Total Operating Expenses$1,924,458$10,446,400$13,386,400
Profit Before Interest and Taxes$1,625,542$25,503,600$94,563,600
EBITDA$1,651,942$25,530,000$94,590,000
Interest Expense$364,435$387,597$331,004
Taxes Incurred$322,231$6,279,001$23,950,785
Net Profit$938,876$18,837,002$70,281,811
Net Profit/Sales18.78%37.67%46.85%
ZINZINI MILAN BUSINESS PLAN
Table of Contents
1.0 EXECUTIVE SUMMARY 2
1.1 Objectives 3
1.2 Mission 3
1.3 Keys to Success 3
1.4. Start-up Summary 3
1.5 Start-up Expenses 5
2.0 PRODUCTS 6
3.0 MARKET ANALYSIS SUMMARY 6
Market Segmentation 6
4.0 COMPETITION AND BUYING PATTERNS 7
Competitive Edge 8
5.0 STRATEGY AND IMPLEMENTATION SUMMARY 8
Marketing: 8
Marketing Communications: 8
6.0 SALES AND DISTRIBUTION STRATEGY 9
Monthly Sales Forecast: 10
7.0 MANAGEMENT SUMMARY 10
8.0 FINANCIAL PLAN 11
Important Assumptions: 11
Projected Profit and Loss: 11
1.0 EXECUTIVE SUMMARY
Zinzini Milan start-up is a UK Clothing line that specializes in making and designing of high quality Italian cotton Clothing for men targeted at Celebrities, people in sports and Business class. Zinzini Milan will not only develops the clothing line, but it will supports it with advertising and promotion campaigns. The company plans to strengthen its partnership with local models, taxi drivers, use the social media to sell the brand and develop attractive bill boards that will be placed in busy areas of the streets to develop brand awareness. Zinzini Milan intends to market its line as an alternative to existing clothing lines, and differentiate itself by marketing strategies, exclusiveness, and high brand awareness.
The key message associated with the Zinzini Milan line is classy, upscale, versatile, and expensive clothing. The company's promotional plan is diverse and includes a range of marketing communications.
1.1 Objectives
The business mission is to offer quality, branded and well assortment Italian men shirts and t-shirts of all sizes and styles to accommodate all varying body styles and shapes.
1.3 Keys to Success
In order to succeed in the Italian men’s wear branding industry Zinzini Milan will be required to do the following:
Zinzini Milan wear's incorporation costs are listed below. The business will start with three months inventory on hand for apparel and accessories as this is the main revenue generator. The majority of the business assets will reside in inventory. The opening day’s cash on hand balance will be $384. The purpose of this business plan is to secure a $16,700 loan. This supplemental financing is required to work on site preparation, inventory, and operational expenses.
The loan amount appears in the long-term liability row of the start-up summary. Other financing will include an owner’s investment of $5,100 and a short term revolving line of credit of $2,000 for inventory replenishment during months of high receipts. Successful operation and building a loyal customer base will allow Zinzini to be self-sufficient and profitable in year two.
1.5 Start-up Expenses
EXPENSEAMOUNT
Rent$1,606
Telephone and Utilities$1,575
Travel$350
Business Insurance$600
Advertising & Promotions$1,010
Grand Opening Event$400
Computer/ cash register$950
Signage (Including Permits)$400
Organization dues & subscriptions$125
Office supplies$400
Store fixtures & decorations$1,500
Other$500
Total Start-up Expenses$9,416
2.0 PRODUCTS
Zinzini Milan clothing will be priced at the high end to reflect the quality and exclusiveness associated with its brand. The company will use high-end materials such as gold and high quality cotton blend to offer an attractive, durable and high quality finish. When a markup is placed on our products, customers are willing to pay the premium because of the perceived value and quality guarantee that comes with all products. The Zinzini Milan line is targeted at male Celebrities, sports men and business executives who value high quality and expensive products.
3.0 MARKET ANALYSIS SUMMARY
Market Segmentation
The company plans to target male celebrities, sports men, and business executives of all age and body sizes with a combined household income of more than $40,000. Within this group, price is not an issue so long as the brand is associated with class. The Zinzini customer is a versatile man who can fit into any environment and is willing to pay a high price for quality clothing.
The company's target group is seen as having enough disposable income to spend on high priced quality clothing. From 1984 to 1991, for example, disposable personal income grew at a healthy average annual of 7.0%. Apparel expenditures increased at a strong .2% annual rate during the same period. In the 1990s, however, growth in personal income slowed somewhat and so did apparel expenditures. From 1991 to 1998, disposable personal income rose at an average annual rate of 4.7%, while apparel expenditures grew 4.5% per year.
According to S&P's report, in the luxury men's apparel segment, much of the growth in spending is being driven by consumers with annual household incomes of more than $60,000. Spending in this segment increased by approximately 13% in 1998. Apparel purchases by men from households with incomes between $40,000 and $59,999 grew by 7% in 1998. Men's apparel sales at department stores and off-price retailers grew at double-digit rates in 1998.
Many apparel manufacturers see Europe, with a population of 350 million, as an attractive market. Tommy Hilfiger and Polo Ralph Lauren recently opened flagship stores in London in an effort to build up their brands in Europe. Expansion in Asia, however, has been sidelined by economic troubles.
4.0 COMPETITION AND BUYING PATTERNS
Although the apparel industry is mature and slow growing, it exists in a dynamic and competitive environment. In order to improve profitability, many companies are restructuring to create leaner organizations and adopt new technologies. Consolidation has been prevalent in this industry in the past few years, as larger companies gain leverage in market position and cost cutting. In the apparel industry, companies can operate as retailers or manufacturers (wholesalers) or both. For instance, Gap, Inc., a vertical retailer, manufactures and markets their own apparel and accessories. A company like VG Corporation is a manufacturer and sells solely to retail channels. A company like Tommy Hilfiger does both, selling its products to both retailers and consumers (through retail outlets).
Competitive Edge
In a market where consumers are barraged by advertising and marketing campaigns delivering an onslaught of lifestyle and fashion messages, a brand name is a powerful weapon. Brands have become an increasingly significant factor in apparel and footwear. Many consumers have less time to shop and are spending their disposable income more carefully. Established brand names like Hugo boss, Prada, Versace, Gucci, Kenzo, Michael Kors, Tommy Hilfiger with their quality image, make the shopping experience easier and faster for many consumers. For manufacturers, brands build consumer loyalty, which translates into repeat business.
The company's name, Zinzini Milan, is a competitive advantage in itself. The name is attached to people with high class life who are associated with luxury products. Another competitive advantage is the company's marketing strategy. Through the use of models, print and social media advertising, promotion, and giveaways, the company is therefore able to develop its presence in the market. Although the company is planning to use retailers to sell its line, most of the marketing and advertising will be done in-house.
5.0 STRATEGY AND IMPLEMENTATION SUMMARY
Marketing:
Zinzini Milan will not only develop the clothing line but will also support it with advertising and promotion campaigns. The company plans to strengthen its partnership with retailers by developing brand awareness.
Marketing Communications:
The key message associated with our clothing company is classy, upscale, versatile, and expensive clothing. The company's promotional plan is diverse and includes a range of marketing communications:
Print advertising-The company's print advertising program includes advertisements in large and attractive billboards that will be placed in busy streets. The billboard will convey the message about our Italian cotton clothing and attract more customers into our store.
Internet and Social media presence- Zinzini Milan plans to establish a presence on the Internet by developing a website. Plans are underway to develop a professional and effective site that will be interactive and from which sales will be generated worldwide. In the future, this is expected to be one of the company's primary marketing channels. The business will also run a Facebook page, twitter and Instagram to help in reaching the target audience through creating the brand awareness.
Promotional models- The business will hire models and give them free stock to drive consumer demand for our brand through interacting with potential customers. This method have been proved to make products or services more appealing and attract sales.
Taxi drivers- Local taxi drivers will act as brand ambassadors to create awareness about our Italian Shirt and t-shirt brand. The business will offer promotional clothing and show off branded accessories associated with our business.
6.0 SALES AND DISTRIBUTION STRATEGY
Zinzini Milan intends to build a sales team that will be tasked with generating sales leads on a regional and national basis. They will also be responsible for establishing connections with retail outlets.
A key factor in the success of Zinzini will be its distribution. The company plans to use the following retail distribution channels:
Consumers like the convenience of being able to shop from anywhere and at any time they wish. Manufacturers with Internet sites use them for marketing and informational purposes. With expected technological advances, shopping for apparel should gain popularity. Zinzini Milan will therefore utilize the power of internet to boost its sales.
Monthly Sales Forecast:
7.0 MANAGEMENT SUMMARY
The business’ management philosophy is based on responsibility and mutual respect. Zinzini has an environment and structure that encourages productivity and respect for customers and fellow employees.
PERSONNEL PLAN
FY1FY2FY3
All departments$565,217$800,000$1,000,000
Other$0$0$0
TOTAL PEOPLE152025
Total Payroll$565,217$800,000$1,000,000
8.0 FINANCIAL PLAN
The business is seeking a substantial long-term business loan for the purpose of developing the clothing line. This funding will cover operating expenses and clothe line development.
Important Assumptions:
The table below contains important assumptions which the business will use to ensure its success, the primary assumption is that the economy will remain in its present upturn.
GENERAL ASSUMPTIONS
FY1FY2FY3
Plan Month123
Current Interest Rate10.00%10.00%10.00%
Long-term Interest Rate10.00%10.00%10.00%
Tax Rate25.42%25.00%25.42%
Other000
Projected Profit and Loss:
Zinzini Milan is in the early stage of development, thus initial projections have only been made on accounts that are believed to most drive the income statement.
PRO FORMA PROFIT AND LOSS
FY1FY2FY3
Sales$5,000,000$50,000,000$150,000,000
Direct Cost of Sales$1,400,000$14,000,000$42,000,000
Other$50,000$50,000$50,000
TOTAL COST OF SALES$1,450,000$14,050,000$42,050,000
Gross Margin$3,550,000$35,950,000$107,950,000
Gross Margin %71.00%71.90%71.97%
Expenses
Payroll$565,217$800,000$1,000,000
Sales and Marketing and Other Expenses$1,188,058$9,260,000$11,830,000
Depreciation$26,400$26,400$26,400
Communications$26,400$90,000$150,000
Client Relations$24,000$120,000$200,000
Rent$9,600$30,000$30,000
Payroll Taxes$84,783$120,000$150,000
Other$0$0$0
Total Operating Expenses$1,924,458$10,446,400$13,386,400
Profit Before Interest and Taxes$1,625,542$25,503,600$94,563,600
EBITDA$1,651,942$25,530,000$94,590,000
Interest Expense$364,435$387,597$331,004
Taxes Incurred$322,231$6,279,001$23,950,785
Net Profit$938,876$18,837,002$70,281,811
Net Profit/Sales18.78%37.67%46.85%
ZINZINI MILAN BUSINESS PLAN
Table of Contents
1.0 EXECUTIVE SUMMARY 2
1.1 Objectives 3
1.2 Mission 3
1.3 Keys to Success 3
1.4. Start-up Summary 3
1.5 Start-up Expenses 5
2.0 PRODUCTS 6
3.0 MARKET ANALYSIS SUMMARY 6
Market Segmentation 6
4.0 COMPETITION AND BUYING PATTERNS 7
Competitive Edge 8
5.0 STRATEGY AND IMPLEMENTATION SUMMARY 8
Marketing: 8
Marketing Communications: 8
6.0 SALES AND DISTRIBUTION STRATEGY 9
Monthly Sales Forecast: 10
7.0 MANAGEMENT SUMMARY 10
8.0 FINANCIAL PLAN 11
Important Assumptions: 11
Projected Profit and Loss: 11
1.0 EXECUTIVE SUMMARY
Zinzini Milan start-up is a UK Clothing line that specializes in making and designing of high quality Italian cotton Clothing for men targeted at Celebrities, people in sports and Business class. Zinzini Milan will not only develops the clothing line, but it will supports it with advertising and promotion campaigns. The company plans to strengthen its partnership with local models, taxi drivers, use the social media to sell the brand and develop attractive bill boards that will be placed in busy areas of the streets to develop brand awareness. Zinzini Milan intends to market its line as an alternative to existing clothing lines, and differentiate itself by marketing strategies, exclusiveness, and high brand awareness.
The key message associated with the Zinzini Milan line is classy, upscale, versatile, and expensive clothing. The company's promotional plan is diverse and includes a range of marketing communications.
1.1 Objectives
- To create a shopping environment that caters for the high quality Italian cotton brand needed by Male celebrities, sports people and business men in UK.
- To earn 80% market share and become the number one Italian men’s wear apparel store in UK and achieve name recognition in the local community.
- To receive a 50% profit margin within the first year.
- To have a customer base of 1,000 by the end of the first operating year.
- To achieve a net profit of $75,000 by year two and $100,000 by year three.
The business mission is to offer quality, branded and well assortment Italian men shirts and t-shirts of all sizes and styles to accommodate all varying body styles and shapes.
1.3 Keys to Success
In order to succeed in the Italian men’s wear branding industry Zinzini Milan will be required to do the following:
- Provide customers with top notch personalized and branded Men wear.
- Advertise and promote in areas that our target customer base will learn about our store.
- Continuously review our inventory and sales and adjust our inventory levels accordingly
- Ensure our cloth line has all the sizes for any body size in the market.
Zinzini Milan wear's incorporation costs are listed below. The business will start with three months inventory on hand for apparel and accessories as this is the main revenue generator. The majority of the business assets will reside in inventory. The opening day’s cash on hand balance will be $384. The purpose of this business plan is to secure a $16,700 loan. This supplemental financing is required to work on site preparation, inventory, and operational expenses.
The loan amount appears in the long-term liability row of the start-up summary. Other financing will include an owner’s investment of $5,100 and a short term revolving line of credit of $2,000 for inventory replenishment during months of high receipts. Successful operation and building a loyal customer base will allow Zinzini to be self-sufficient and profitable in year two.
1.5 Start-up Expenses
EXPENSEAMOUNT
Rent$1,606
Telephone and Utilities$1,575
Travel$350
Business Insurance$600
Advertising & Promotions$1,010
Grand Opening Event$400
Computer/ cash register$950
Signage (Including Permits)$400
Organization dues & subscriptions$125
Office supplies$400
Store fixtures & decorations$1,500
Other$500
Total Start-up Expenses$9,416
2.0 PRODUCTS
Zinzini Milan clothing will be priced at the high end to reflect the quality and exclusiveness associated with its brand. The company will use high-end materials such as gold and high quality cotton blend to offer an attractive, durable and high quality finish. When a markup is placed on our products, customers are willing to pay the premium because of the perceived value and quality guarantee that comes with all products. The Zinzini Milan line is targeted at male Celebrities, sports men and business executives who value high quality and expensive products.
3.0 MARKET ANALYSIS SUMMARY
Market Segmentation
The company plans to target male celebrities, sports men, and business executives of all age and body sizes with a combined household income of more than $40,000. Within this group, price is not an issue so long as the brand is associated with class. The Zinzini customer is a versatile man who can fit into any environment and is willing to pay a high price for quality clothing.
The company's target group is seen as having enough disposable income to spend on high priced quality clothing. From 1984 to 1991, for example, disposable personal income grew at a healthy average annual of 7.0%. Apparel expenditures increased at a strong .2% annual rate during the same period. In the 1990s, however, growth in personal income slowed somewhat and so did apparel expenditures. From 1991 to 1998, disposable personal income rose at an average annual rate of 4.7%, while apparel expenditures grew 4.5% per year.
According to S&P's report, in the luxury men's apparel segment, much of the growth in spending is being driven by consumers with annual household incomes of more than $60,000. Spending in this segment increased by approximately 13% in 1998. Apparel purchases by men from households with incomes between $40,000 and $59,999 grew by 7% in 1998. Men's apparel sales at department stores and off-price retailers grew at double-digit rates in 1998.
Many apparel manufacturers see Europe, with a population of 350 million, as an attractive market. Tommy Hilfiger and Polo Ralph Lauren recently opened flagship stores in London in an effort to build up their brands in Europe. Expansion in Asia, however, has been sidelined by economic troubles.
4.0 COMPETITION AND BUYING PATTERNS
Although the apparel industry is mature and slow growing, it exists in a dynamic and competitive environment. In order to improve profitability, many companies are restructuring to create leaner organizations and adopt new technologies. Consolidation has been prevalent in this industry in the past few years, as larger companies gain leverage in market position and cost cutting. In the apparel industry, companies can operate as retailers or manufacturers (wholesalers) or both. For instance, Gap, Inc., a vertical retailer, manufactures and markets their own apparel and accessories. A company like VG Corporation is a manufacturer and sells solely to retail channels. A company like Tommy Hilfiger does both, selling its products to both retailers and consumers (through retail outlets).
Competitive Edge
In a market where consumers are barraged by advertising and marketing campaigns delivering an onslaught of lifestyle and fashion messages, a brand name is a powerful weapon. Brands have become an increasingly significant factor in apparel and footwear. Many consumers have less time to shop and are spending their disposable income more carefully. Established brand names like Hugo boss, Prada, Versace, Gucci, Kenzo, Michael Kors, Tommy Hilfiger with their quality image, make the shopping experience easier and faster for many consumers. For manufacturers, brands build consumer loyalty, which translates into repeat business.
The company's name, Zinzini Milan, is a competitive advantage in itself. The name is attached to people with high class life who are associated with luxury products. Another competitive advantage is the company's marketing strategy. Through the use of models, print and social media advertising, promotion, and giveaways, the company is therefore able to develop its presence in the market. Although the company is planning to use retailers to sell its line, most of the marketing and advertising will be done in-house.
5.0 STRATEGY AND IMPLEMENTATION SUMMARY
Marketing:
Zinzini Milan will not only develop the clothing line but will also support it with advertising and promotion campaigns. The company plans to strengthen its partnership with retailers by developing brand awareness.
Marketing Communications:
The key message associated with our clothing company is classy, upscale, versatile, and expensive clothing. The company's promotional plan is diverse and includes a range of marketing communications:
Print advertising-The company's print advertising program includes advertisements in large and attractive billboards that will be placed in busy streets. The billboard will convey the message about our Italian cotton clothing and attract more customers into our store.
Internet and Social media presence- Zinzini Milan plans to establish a presence on the Internet by developing a website. Plans are underway to develop a professional and effective site that will be interactive and from which sales will be generated worldwide. In the future, this is expected to be one of the company's primary marketing channels. The business will also run a Facebook page, twitter and Instagram to help in reaching the target audience through creating the brand awareness.
Promotional models- The business will hire models and give them free stock to drive consumer demand for our brand through interacting with potential customers. This method have been proved to make products or services more appealing and attract sales.
Taxi drivers- Local taxi drivers will act as brand ambassadors to create awareness about our Italian Shirt and t-shirt brand. The business will offer promotional clothing and show off branded accessories associated with our business.
6.0 SALES AND DISTRIBUTION STRATEGY
Zinzini Milan intends to build a sales team that will be tasked with generating sales leads on a regional and national basis. They will also be responsible for establishing connections with retail outlets.
A key factor in the success of Zinzini will be its distribution. The company plans to use the following retail distribution channels:
- Department stores
- Apparel specialty stores
- Internet store
Consumers like the convenience of being able to shop from anywhere and at any time they wish. Manufacturers with Internet sites use them for marketing and informational purposes. With expected technological advances, shopping for apparel should gain popularity. Zinzini Milan will therefore utilize the power of internet to boost its sales.
Monthly Sales Forecast:
7.0 MANAGEMENT SUMMARY
The business’ management philosophy is based on responsibility and mutual respect. Zinzini has an environment and structure that encourages productivity and respect for customers and fellow employees.
PERSONNEL PLAN
FY1FY2FY3
All departments$565,217$800,000$1,000,000
Other$0$0$0
TOTAL PEOPLE152025
Total Payroll$565,217$800,000$1,000,000
8.0 FINANCIAL PLAN
The business is seeking a substantial long-term business loan for the purpose of developing the clothing line. This funding will cover operating expenses and clothe line development.
Important Assumptions:
The table below contains important assumptions which the business will use to ensure its success, the primary assumption is that the economy will remain in its present upturn.
GENERAL ASSUMPTIONS
FY1FY2FY3
Plan Month123
Current Interest Rate10.00%10.00%10.00%
Long-term Interest Rate10.00%10.00%10.00%
Tax Rate25.42%25.00%25.42%
Other000
Projected Profit and Loss:
Zinzini Milan is in the early stage of development, thus initial projections have only been made on accounts that are believed to most drive the income statement.
PRO FORMA PROFIT AND LOSS
FY1FY2FY3
Sales$5,000,000$50,000,000$150,000,000
Direct Cost of Sales$1,400,000$14,000,000$42,000,000
Other$50,000$50,000$50,000
TOTAL COST OF SALES$1,450,000$14,050,000$42,050,000
Gross Margin$3,550,000$35,950,000$107,950,000
Gross Margin %71.00%71.90%71.97%
Expenses
Payroll$565,217$800,000$1,000,000
Sales and Marketing and Other Expenses$1,188,058$9,260,000$11,830,000
Depreciation$26,400$26,400$26,400
Communications$26,400$90,000$150,000
Client Relations$24,000$120,000$200,000
Rent$9,600$30,000$30,000
Payroll Taxes$84,783$120,000$150,000
Other$0$0$0
Total Operating Expenses$1,924,458$10,446,400$13,386,400
Profit Before Interest and Taxes$1,625,542$25,503,600$94,563,600
EBITDA$1,651,942$25,530,000$94,590,000
Interest Expense$364,435$387,597$331,004
Taxes Incurred$322,231$6,279,001$23,950,785
Net Profit$938,876$18,837,002$70,281,811
Net Profit/Sales18.78%37.67%46.85%
ZINZINI MILAN BUSINESS PLAN
Table of Contents
1.0 EXECUTIVE SUMMARY 2
1.1 Objectives 3
1.2 Mission 3
1.3 Keys to Success 3
1.4. Start-up Summary 3
1.5 Start-up Expenses 5
2.0 PRODUCTS 6
3.0 MARKET ANALYSIS SUMMARY 6
Market Segmentation 6
4.0 COMPETITION AND BUYING PATTERNS 7
Competitive Edge 8
5.0 STRATEGY AND IMPLEMENTATION SUMMARY 8
Marketing: 8
Marketing Communications: 8
6.0 SALES AND DISTRIBUTION STRATEGY 9
Monthly Sales Forecast: 10
7.0 MANAGEMENT SUMMARY 10
8.0 FINANCIAL PLAN 11
Important Assumptions: 11
Projected Profit and Loss: 11
1.0 EXECUTIVE SUMMARY
Zinzini Milan start-up is a UK Clothing line that specializes in making and designing of high quality Italian cotton Clothing for men targeted at Celebrities, people in sports and Business class. Zinzini Milan will not only develops the clothing line, but it will supports it with advertising and promotion campaigns. The company plans to strengthen its partnership with local models, taxi drivers, use the social media to sell the brand and develop attractive bill boards that will be placed in busy areas of the streets to develop brand awareness. Zinzini Milan intends to market its line as an alternative to existing clothing lines, and differentiate itself by marketing strategies, exclusiveness, and high brand awareness.
The key message associated with the Zinzini Milan line is classy, upscale, versatile, and expensive clothing. The company's promotional plan is diverse and includes a range of marketing communications.
1.1 Objectives
- To create a shopping environment that caters for the high quality Italian cotton brand needed by Male celebrities, sports people and business men in UK.
- To earn 80% market share and become the number one Italian men’s wear apparel store in UK and achieve name recognition in the local community.
- To receive a 50% profit margin within the first year.
- To have a customer base of 1,000 by the end of the first operating year.
- To achieve a net profit of $75,000 by year two and $100,000 by year three.
The business mission is to offer quality, branded and well assortment Italian men shirts and t-shirts of all sizes and styles to accommodate all varying body styles and shapes.
1.3 Keys to Success
In order to succeed in the Italian men’s wear branding industry Zinzini Milan will be required to do the following:
- Provide customers with top notch personalized and branded Men wear.
- Advertise and promote in areas that our target customer base will learn about our store.
- Continuously review our inventory and sales and adjust our inventory levels accordingly
- Ensure our cloth line has all the sizes for any body size in the market.
Zinzini Milan wear's incorporation costs are listed below. The business will start with three months inventory on hand for apparel and accessories as this is the main revenue generator. The majority of the business assets will reside in inventory. The opening day’s cash on hand balance will be $384. The purpose of this business plan is to secure a $16,700 loan. This supplemental financing is required to work on site preparation, inventory, and operational expenses.
The loan amount appears in the long-term liability row of the start-up summary. Other financing will include an owner’s investment of $5,100 and a short term revolving line of credit of $2,000 for inventory replenishment during months of high receipts. Successful operation and building a loyal customer base will allow Zinzini to be self-sufficient and profitable in year two.
1.5 Start-up Expenses
EXPENSEAMOUNT
Rent$1,606
Telephone and Utilities$1,575
Travel$350
Business Insurance$600
Advertising & Promotions$1,010
Grand Opening Event$400
Computer/ cash register$950
Signage (Including Permits)$400
Organization dues & subscriptions$125
Office supplies$400
Store fixtures & decorations$1,500
Other$500
Total Start-up Expenses$9,416
2.0 PRODUCTS
Zinzini Milan clothing will be priced at the high end to reflect the quality and exclusiveness associated with its brand. The company will use high-end materials such as gold and high quality cotton blend to offer an attractive, durable and high quality finish. When a markup is placed on our products, customers are willing to pay the premium because of the perceived value and quality guarantee that comes with all products. The Zinzini Milan line is targeted at male Celebrities, sports men and business executives who value high quality and expensive products.
3.0 MARKET ANALYSIS SUMMARY
Market Segmentation
The company plans to target male celebrities, sports men, and business executives of all age and body sizes with a combined household income of more than $40,000. Within this group, price is not an issue so long as the brand is associated with class. The Zinzini customer is a versatile man who can fit into any environment and is willing to pay a high price for quality clothing.
The company's target group is seen as having enough disposable income to spend on high priced quality clothing. From 1984 to 1991, for example, disposable personal income grew at a healthy average annual of 7.0%. Apparel expenditures increased at a strong .2% annual rate during the same period. In the 1990s, however, growth in personal income slowed somewhat and so did apparel expenditures. From 1991 to 1998, disposable personal income rose at an average annual rate of 4.7%, while apparel expenditures grew 4.5% per year.
According to S&P's report, in the luxury men's apparel segment, much of the growth in spending is being driven by consumers with annual household incomes of more than $60,000. Spending in this segment increased by approximately 13% in 1998. Apparel purchases by men from households with incomes between $40,000 and $59,999 grew by 7% in 1998. Men's apparel sales at department stores and off-price retailers grew at double-digit rates in 1998.
Many apparel manufacturers see Europe, with a population of 350 million, as an attractive market. Tommy Hilfiger and Polo Ralph Lauren recently opened flagship stores in London in an effort to build up their brands in Europe. Expansion in Asia, however, has been sidelined by economic troubles.
4.0 COMPETITION AND BUYING PATTERNS
Although the apparel industry is mature and slow growing, it exists in a dynamic and competitive environment. In order to improve profitability, many companies are restructuring to create leaner organizations and adopt new technologies. Consolidation has been prevalent in this industry in the past few years, as larger companies gain leverage in market position and cost cutting. In the apparel industry, companies can operate as retailers or manufacturers (wholesalers) or both. For instance, Gap, Inc., a vertical retailer, manufactures and markets their own apparel and accessories. A company like VG Corporation is a manufacturer and sells solely to retail channels. A company like Tommy Hilfiger does both, selling its products to both retailers and consumers (through retail outlets).
Competitive Edge
In a market where consumers are barraged by advertising and marketing campaigns delivering an onslaught of lifestyle and fashion messages, a brand name is a powerful weapon. Brands have become an increasingly significant factor in apparel and footwear. Many consumers have less time to shop and are spending their disposable income more carefully. Established brand names like Hugo boss, Prada, Versace, Gucci, Kenzo, Michael Kors, Tommy Hilfiger with their quality image, make the shopping experience easier and faster for many consumers. For manufacturers, brands build consumer loyalty, which translates into repeat business.
The company's name, Zinzini Milan, is a competitive advantage in itself. The name is attached to people with high class life who are associated with luxury products. Another competitive advantage is the company's marketing strategy. Through the use of models, print and social media advertising, promotion, and giveaways, the company is therefore able to develop its presence in the market. Although the company is planning to use retailers to sell its line, most of the marketing and advertising will be done in-house.
5.0 STRATEGY AND IMPLEMENTATION SUMMARY
Marketing:
Zinzini Milan will not only develop the clothing line but will also support it with advertising and promotion campaigns. The company plans to strengthen its partnership with retailers by developing brand awareness.
Marketing Communications:
The key message associated with our clothing company is classy, upscale, versatile, and expensive clothing. The company's promotional plan is diverse and includes a range of marketing communications:
Print advertising-The company's print advertising program includes advertisements in large and attractive billboards that will be placed in busy streets. The billboard will convey the message about our Italian cotton clothing and attract more customers into our store.
Internet and Social media presence- Zinzini Milan plans to establish a presence on the Internet by developing a website. Plans are underway to develop a professional and effective site that will be interactive and from which sales will be generated worldwide. In the future, this is expected to be one of the company's primary marketing channels. The business will also run a Facebook page, twitter and Instagram to help in reaching the target audience through creating the brand awareness.
Promotional models- The business will hire models and give them free stock to drive consumer demand for our brand through interacting with potential customers. This method have been proved to make products or services more appealing and attract sales.
Taxi drivers- Local taxi drivers will act as brand ambassadors to create awareness about our Italian Shirt and t-shirt brand. The business will offer promotional clothing and show off branded accessories associated with our business.
6.0 SALES AND DISTRIBUTION STRATEGY
Zinzini Milan intends to build a sales team that will be tasked with generating sales leads on a regional and national basis. They will also be responsible for establishing connections with retail outlets.
A key factor in the success of Zinzini will be its distribution. The company plans to use the following retail distribution channels:
- Department stores
- Apparel specialty stores
- Internet store
Consumers like the convenience of being able to shop from anywhere and at any time they wish. Manufacturers with Internet sites use them for marketing and informational purposes. With expected technological advances, shopping for apparel should gain popularity. Zinzini Milan will therefore utilize the power of internet to boost its sales.
Monthly Sales Forecast:
7.0 MANAGEMENT SUMMARY
The business’ management philosophy is based on responsibility and mutual respect. Zinzini has an environment and structure that encourages productivity and respect for customers and fellow employees.
PERSONNEL PLAN
FY1FY2FY3
All departments$565,217$800,000$1,000,000
Other$0$0$0
TOTAL PEOPLE152025
Total Payroll$565,217$800,000$1,000,000
8.0 FINANCIAL PLAN
The business is seeking a substantial long-term business loan for the purpose of developing the clothing line. This funding will cover operating expenses and clothe line development.
Important Assumptions:
The table below contains important assumptions which the business will use to ensure its success, the primary assumption is that the economy will remain in its present upturn.
GENERAL ASSUMPTIONS
FY1FY2FY3
Plan Month123
Current Interest Rate10.00%10.00%10.00%
Long-term Interest Rate10.00%10.00%10.00%
Tax Rate25.42%25.00%25.42%
Other000
Projected Profit and Loss:
Zinzini Milan is in the early stage of development, thus initial projections have only been made on accounts that are believed to most drive the income statement.
PRO FORMA PROFIT AND LOSS
FY1FY2FY3
Sales$5,000,000$50,000,000$150,000,000
Direct Cost of Sales$1,400,000$14,000,000$42,000,000
Other$50,000$50,000$50,000
TOTAL COST OF SALES$1,450,000$14,050,000$42,050,000
Gross Margin$3,550,000$35,950,000$107,950,000
Gross Margin %71.00%71.90%71.97%
Expenses
Payroll$565,217$800,000$1,000,000
Sales and Marketing and Other Expenses$1,188,058$9,260,000$11,830,000
Depreciation$26,400$26,400$26,400
Communications$26,400$90,000$150,000
Client Relations$24,000$120,000$200,000
Rent$9,600$30,000$30,000
Payroll Taxes$84,783$120,000$150,000
Other$0$0$0
Total Operating Expenses$1,924,458$10,446,400$13,386,400
Profit Before Interest and Taxes$1,625,542$25,503,600$94,563,600
EBITDA$1,651,942$25,530,000$94,590,000
Interest Expense$364,435$387,597$331,004
Taxes Incurred$322,231$6,279,001$23,950,785
Net Profit$938,876$18,837,002$70,281,811
Net Profit/Sales18.78%37.67%46.85%
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