Enterprise and Entrepreneurial Management - Yankee Clippers - Essay Example

? Yankee Clippers A Revolution in Hair Care BY YOU YOUR SCHOOL INFO HERE HERE Yankee Clippers: A Business Plan Introduction Yankee Clippers is a sole trader business concept, falling under the Class 2 NIC income tax rate; the personal taxation rate of between 20 and 28 percent dependent upon total annual net income. The sole trader is the most viable business structure as it eliminates the risk of partnership liabilities and provides more operational controls to the sole trader. Yankee Clippers will procure financing through traditional banking and lending facilities to ensure successful start-up management and subsequent launch of this new, inspirational brand. Yankee Clippers is a revolutionary innovation in men’s grooming, providing a variety of beauty services and products to the male clientele. The target market is the youthful male consumer, between ages 16 and 35, a market segment with the most revenue earnings potential for this business concept due to specific market characteristics, socio-economic demographics, and lifestyle relevancy associated with this brand concept. Outside of the traditional hairstyling service dimension, Yankee Clippers will offer consultation services, skin peeling and bleaching, and provide in-house merchandising talent as part of the sales model to generate more direct salesmanship and higher profitability through product sales commitments achieved with in-store patrons. Consultation services for men seeking beauty enhancement will generally occur via appointment in which 30-minute or 60-minute consultations will be contracted. The essential brand philosophy of Yankee Clippers (the organisational mission) is that men will benefit from taking more proactive responsibility for grooming and beauty, offering consumers social competitive advantage through Yankee Clippers expert beauty systems operational model. Yankee Clippers will offer top-quality beauty and grooming products along a moderate pricing structure, procured from a variety of top-known beauty brands catering to the male consumer. The main branding goal of the organisation is establishment of service quality and product quality, which will ultimately provide justification for a premium service and sales model for the discriminating client in which beauty and grooming are significant lifestyle attributes and needs. Unlike other competition in this market, Yankee Clippers will differentiate through talent management modelling internally, exclusivity, and choice related to the premium positioning strategy. The beauty industry for men is growing explosively, providing excellent market opportunity so long as Yankee Clippers develops a strong emphasis on the marketing and promotional functions. In 1998, 42 billion USD were spent in salons (Hairstyles-7.com 2004). By 2004, nearly seven billion USD were spent on colouring treatments, hairsprays, shampoos, conditioners, and other relevant grooming products (Hairstyles-7.com 2004). This represents a significant market opportunity that continues to expand as more men become cognizant of the importance of grooming for social and professional growth. In 2010, as one example, L’Oreal experienced a 30 percent increase in sales revenue stemming from male grooming product sales (CBS Chicago 2011). The international and domestic sales markets for male grooming products continues to predict ongoing sales growth, in which Yankee Clippers believes it will be able to successfully capitalise to gain a prominent male-oriented, consumer-centric beauty business brand with superior competitive advantage in the local market. 2. Description of the business Brand recognition and the pursuit of establishing brand loyalty and brand equity are the primary drivers of the Yankee Clippers marketing and sales model. In the UK, Yankee Clippers maintains minimal competition for male-centric beauty services, thus giving the business a competitive advantage immediately after launch. Marketing theory provides research-supported knowledge that brand loyalty is a product of companies that are able to provide consumers with perceptions of self-expansion (Aron et al 1992; Muniz and O’Guinn 2001). “Branding represents one of the core marketing practices that emphasises the continuity and connectedness of the firm with its external environment of which customers are important constituents” (Abimbola 2001, p.99). The main branding goal of Yankee Clippers is to establish a recognised and respected brand personality, which is essentially transcending traditional service and product to make intangibles of service appear more valuable to consumers (Aaker 1996). The company’s brand positioning and value proposition will involve establishment of a brand personality that is sincere, exciting, competent, sophisticated and rugged which are critical dimensions of establishing a brand personality (Aaker). In order to make marketing and promotion a considerable strategic imperative and meet with market success for branding practices, the organisation must first develop strong interpersonal relationships with target consumers. This requires being transparent and trustworthy, embracing opportunities for Internet and social media for low-cost promotion (Goodson 2011). Yankee Clippers must express to consumers the values the brand maintains and strike a proverbial nerve with lifestyle and attitudinal needs in male target customers. Though branding in this fashion will require more capital investment, the long-term gains associated with a competitive and respected brand reputation will off-set these expenditures. It cannot be expressed enough, due to the market environment, the importance of branding function as a superior strategic tool over all other strategic imperatives. In order to understand and analyse cash flow, it is necessary to describe the pricing structure and service/product varieties available to consumers as it is linked to demographic patronage opportunities. The following represents the pricing structure for products and services at Yankee Clipper: MASTER cut $20 EXPERT cut $25 Consulting $30 Manicure $22 Colouring $50 Skin enhancement $50 - $250 (for premium holistic packages) Product sales $8 - $75 (includes creams, conditioners, leave-in treatments, etc) Revenues earned will be highly dependent on daily and weekly patronisation levels, procured through innovative marketing processes. It will be quite difficult, during the first preliminary months post-launch, to accurately determine the expected customer volume on a daily or weekly basis until the fundamentals of evaluation have occurred through analysis of sales receipts. However, in the local market, an expectation of servicing between 25 and 35 premium-seeking male customers is not an unrealistic projection that will likely increase after establishing a well-recognised and respected premium brand. Key assumptions: Assuming no product sales in a daily operation, but achievement of 25 expert cuts, will provide Yankee Clippers with $625 in daily revenues, or $17,500 monthly. Under this assumption, Yankee Clippers will earn $210,000 annually, supported solely by hair-cut seeking customers. Supplementary consultations occurring daily, with modest product sales and skin enhancement purchases, will radically increase annual earnings and provide the organisation with substantial cash flow to support increased labour payments, supply chain accounts payables, and many other dimensions of the operational model. In order to effectively launch and sustain Yankee Clipper, the business must consider multiple dimensions of business strategy to maximise enterprise value and ensure more premium product demand. This business model has an extended product and service lifestyle, thus minimising risks of sales decline and the need to establish innovation in procurement. Komninos (2002) offers that it is very difficult for a business to recognise the cues when a product or service has reached its decline stage, that is, until revenues suddenly begin to drop and demand falters in key target markets. When a product or service reaches decline in the life cycle, inventory control and management becomes significantly complex to predict (Dooley 2005). Thus, Yankee Clippers must be aware of managerial and marketing-related practices that ensure longevity and sustainability of procured products and maintain innovation in consulting and skin care services to avoid demand drops. Accuracy in inventory management and lean procurement will be necessary to ensure cost reductions in all areas of operations at Yankee Clippers. Cost of goods sold should not exceed 30 percent of the total operational budget in order to attain a positive return on investment for the high capital investment in sales and promotion. Start-up costs will require fundamental equipment and product procurement, to include tangible assets (styling chairs, skin resurfacing materials, signs, and other capital asset investments). Yankee Clippers will utilise commercial leased property to lessen the operational costs of facilities management, allowing for better capital allocation to important marketing function and ease-of-dismantle in the event of business failure, expansion or future relocation. Summary of start-up costs: Total Long-term Capital Assets $20,000 Cash Required at Launch $ 5,000 Inventories $ 5,000 Legal $ 2,500 Office Equipment $ 3,000 Initial Promotion Pre-Launch $ 3,000 Rent $10,000 Car, Delivery and Travel $25,000 Telephone/Utilities $ 2,000 Outside Services $ 1,500 Insurance $ 2,500 Total Start-up Costs $79,500 The cash flow statement (provided over two six month periods of forecast), see Appendix A, illustrates the projected revenue gains experienced by Yankee Clippers under a singular predictive model of consumer volume. Under the assumption of 30 customers average daily, with four weekly consultation appointments, approximately $700 daily in hairstyling revenues, and approximately $250 daily in product and service sales, a reasonable projection of monthly revenues can be established. As indicated by the cash flow analysis in Appendix A, monthly revenues are expected to increase post-launch as a result of the significant capital investment in the marketing function to gain brand recognition and brand loyalty. The first step in this venture, as it pertains to initial inventory purchases and subsequent procurement, is to establish a cooperative supply chain, a fundamental for an SME to build cost sustainability (Attran and Attran 2007). Deming (2002) offers that nearly 85 percent of all business failures occurring today are a direct result of managerial lack of oversight and lack of competence. Yankee Clippers must maintain ongoing strategic management accounting practices under a respected model of strategic leadership that recognises a holistic accounting structure (Wu 2007). Trends in legitimate real costs of the operational model, market share, cash flow, and costs within the external market must be a constant focus to ensure proper expenditure allocation and cost recognition function (Collier and Gregory 1995). The role of strategic management accountant will be undertaken by the sole trader as well as other imperative budgeting activities. In order to attain higher market share, the business must be focused on establishing a customer relationship management system. Farris et al. (2010) define customer satisfaction as the total volume of consumers that have reported exceptional experiences with a product or brand. Yankee Clippers will develop a series of surveys and questionnaires, with coupon-based incentives, to provide the motivation for consumers to express their opinion about the service quality and product sales model; routinely. This will provide substantially important external market knowledge that will allow for flexibility in service dimension to provide more reporting of exceptional service at Yankee Clippers. Recurring market research, either qualitative or quantitative, will be a key strategic factor in the marketing function to help the business understand consumer lifestyles, values and attitudes related to beauty and beauty service delivery. Grieves (2010) strongly reinforces the importance of negotiation in any change process in order to gain commitment and loyalty, thus organisational changes to the service model must be aligned with customer needs and values to sustain brand loyalty. The rank order scale in quantitative research, as one example, will allow customers to rank service and product quality and expertise on a ranked scale to allow for managerial correlations to identify weaknesses or strengths in the service delivery model (Kuiper and Rogers 1979). The goal of the business is to create a collectivist culture internally, “people who are we-conscious” (Cheung et al 2008, p.83). To establish this, however, Yankee Clippers must utilise a transformational leadership design, one that inspires, coaches and develops and where leaders consistently reinforce mission and vision through interpersonal relationship and communications development (Fairholm 2009; Schlosberg 2006). This will require investment, both labour and financial, for inservice training imperatives allowing for swift implementation of new policies and procedures or to ensure employees are well-trained on equipment usage (Staff Educator 2009). For cultural development and to ensure dedication and focus for maintaining expert systems in the consumer-centric business model, communities of practice should be the leadership model related to training. This is groups of industry and internal experts that come together to brainstorm and provide solutions to multiple business needs through knowledge exchanges and effective training transfer (Brown and Duguid 1998; Davenport and Prusack 1998 Boland and Tenkasi 1995). These are critical service imperatives that are necessary as part of brand positioning to justify the expert and premium/exclusive characteristics of the long-term branding strategy. 3. Critical evaluation of Yankee Clippers As previously identified, it is highly imperative that Yankee Clippers understand the market characteristics of the 16-35 year old target markets most viable to sustaining long-term revenue growth. Executive Digest (2008) provides that most 25-34 year old consumers are content with their lifestyles and seek self-expansion and identity justification through attraction to premium products. This should, theoretically, provide considerable value to Yankee Clippers so long as the business produces lifestyle-relevant communications and imagery in all promotional content. This is to include guerrilla marketing, direct mailings, local newspaper advertisements, and events sponsorship to include visual representation of the Yankee Clippers established brand logo. Because advertising and promotion are critical dynamics to ensure success, managers must adopt a participative leadership model whereby consensus internally and high visibility must be present in the business model (Yousef 2000). Such consensus and transformational leadership will consistently reinforce mission and vision, as identified by Fairholm (2009), and allow internal staff and managers to reach consensus on service and product improvements relevant to correlated market research data and how best to meet consumer lifestyle imperatives uncovered through research or external market analyses. The business simply will not be able to differentiate or compete effectively against lesser hairstyling competitors without making consumer-centric procedures and policies linked to the promotional function. Kramer and Tyler (1996) emphasise the importance of establishing trust with consumer target groups in order to gain brand loyalty. Trust is defined as “the willingness to be vulnerable” (Kramer and Tyler 1996, p.4). In business, when trust stemming from consumers begins to decline, consumers will be much less apt to take risks associated with purchases (Kramer and Tyler). Additionally, lost trust in the business can apply significant bargaining pressure to Yankee Clippers in the marketplace, giving consumers too much control over sanctioning as it pertains to potential brand defection (Mayer et al 1995). The whole imperative of Yankee Clipper’s business model is brand-building, positioning the organisation in the competitive market as an expert and exclusive leader with the utmost in service quality and delivery. Trust in the brand is one of the most fundamental characteristics to ensure longevity in this market that must be established and maintained. This will stem from tangible excellence in service activity as well as staying consistent in reinforcing the value proposition, holistic corporate values, and through the creation of promotional material strongly linked to lifestyle and attitude of the selected, viable target markets. Muniz and O’Guinn (2001) identified the importance of providing consumers with the perception of self-expansion in order to gain brand loyalty and dedication to Yankee Clippers as a trusted beauty resource. To ensure revenue increases, the organisation must develop a superior value proposition that highlights how Yankee Clippers can expand lifestyle, professional life, or even dimensions of intimate relationship to illustrate how the business can assist in holistic consumer life improvements. Local celebrities will periodically be recruited for endorsement of the business, those that maintain lifestyle-related characteristics similar to the target market. According to Pornpitakpan (2003), when celebrity endorsers are deemed credible, expert and attractive, it will provide better brand equity and gain more market attention. Thus, Yankee Clippers will periodically seek out endorsements that can provide more brand interest, within reason of budget constraints or the ability to work out contracts that provide short-term free service provision in exchange for such endorsements. These celebrity leaders will include local sports heroes, business leaders, or television personalities maintaining similar socio-demographic characteristics to the younger, male target audience identified as the most viable for long-term revenue growth and sustainability. When attempting to critically evaluate the realistic opportunities for gaining market share and increasing revenues, Yankee Clippers must be realistic in recognising that brand development takes time and will not occur overnight or in a proverbial vacuum without other support strategies in place. Leadership, cultural development, branding focus as major strategic policy, and premium market positioning will asset in building a sustainable model with many positive attributes along the entire value chain. 4. Conclusion As identified through research, Yankee Clippers maintains numerous opportunities to create a brand reputation that stands out among lesser-priced, non-exclusive competition in the beauty and grooming industry. The proposed business model includes emphasis on the strategic management accounting function, development of promotional strategies aligned with known or expected target market values, and building a culture that is dedicated to service excellence and provision of expert service delivery. The proposed business plan is holistic in nature, with a majority of business activity involving psycho-social relationship development, a psychographic segmentation and targeting approach, to make Yankee Clippers be perceived as a superior brand option for securing a positive self-image leading to self-expansion capabilities. It will be quite difficult for Yankee Clippers to project cash flow opportunities farther than one year (two six month periods of analysis), as branding success or failures will determine the customer patronage volume. However, estimating approximately 30 service encounters daily is a reasonable projection based on local male, youth market demographics and the tangible capacity of Yankee Clippers to carry out the service effectively (e.g. labour availability, costs of payroll, etc). However, monthly revenue gains of approximately four percent would be satisfactory, showing an increasing, quantitative verification that the high capital investment in marketing and brand-building is meeting with expected return on investment. In order for this to occur effectively, trust and belief in expertise associated with the Yankee Clippers brand name and logo must be established and maintained. Though it might appear that this is a complicated and dynamic model of management, strategy and marketing, these dimensions are critical to ensure longevity for the business in this market. Culture will be significantly imperative for providing perceptions of business excellence, thus training, periodic use of relevant celebrities, and extending perceptions of consumer self-expansion must be accomplished. When blended with adequate and knowledgeable management accounting function and leadership design, Yankee Clippers will achieve its long-term revenue goals and stand out as a leader in male grooming and beauty services. References Aaker, D.A. (1996). Measuring brand equity across products and markets, California Management Review, 38(Spring), pp,.102-120. Abimbola, T. (2001). Branding as a competitive strategy for demand management in SMEs, Journal of Research in Marketing and Entrepreneurship, 3(2), pp.97-106. Aron, A., Aron, E. and Smollan, D. (1992). 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Appendix A: Cash Flow Analysis 2 Period 6 month cash flow projections Yankee Clippers Fiscal Year Begins: Jan-13 Pre-Startup EST Jan-13 Feb-13 Mar-13 Apr-13 May-13 Jun-13 Jul-13 Aug-13 Sep-13 Oct-13 Nov-13 Jan-13 Total Item EST Cash on Hand (beginning of month) 5,000 -41,600 -26,500 -11,400 6,200 23,600 41,000 60,900 80,800 100,700 122,100 143,400 164,500 164,500                               CASH RECEIPTS                             Cash Sales 20,000 20,000 20,000 22,000 22,000 22,000 24,000 24,000 24,000 25,000 25,000 25,000 26,000   Collections fm CR accounts 8,500 8,500 8,500 9,000 9,000 9,000 9,500 9,500 9,500 10,000 10,000 10,000 11,000   TOTAL CASH RECEIPTS 28,500 28,500 28,500 31,000 31,000 31,000 33,500 33,500 33,500 35,000 35,000 35,000 37,000 0 Total Cash Available (before cash out) 33,500 -13,100 2,000 19,600 37,200 54,600 74,500 94,400 114,300 135,700 157,100 178,400 201,500 164,500                               CASH PAID OUT                             Purchases (merchandise) 5,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000   Outside services 1,500 0 0 0 0 0 0 0 0 0 0 0 0   Supplies (office & oper.) 3,000 200 200 200 200 200 200 200 200 200 200 200 200   Advertising 3,000 1,000 1,000 1,000 1,000 1,000 1,200 1,200 1,200 1,200 1,300 1,300 1,300   Car, delivery & travel 25,000 0 0 0 200 200 0 0 0 0 0 200 200   Accounting & legal 2,500 0 0 0 0 0 0 0 0 0 0 0 0   Rent 10,000 10,000 10,000 10,000 10,000 10,000 10,000 10,000 10,000 10,000 10,000 10,000 10,000   Telephone 400 100 100 100 100 100 100 100 100 100 100 100 100   Utilities 1,600 400 400 400 400 400 400 400 400 400 400 400 400   Insurance 2,500 100 100 100 100 100 100 100 100 100 100 100 100   SUBTOTAL 54,500 12,800 12,800 12,800 13,000 13,000 13,000 13,000 13,000 13,000 13,100 13,300 13,300 0 Loan principal payment 600 600 600 600 600 600 600 600 600 600 600 600 600   Capital purchase (specify) 20,000 0 0 0 0 0 0 0 0 0 0 0 0   Other startup costs 0 0 0 0 0 0 0 0 0 0 0 0 0   TOTAL CASH PAID OUT 75,100 13,400 13,400 13,400 13,600 13,600 13,600 13,600 13,600 13,600 13,700 13,900 13,900 0 Cash Position (end of month) -41,600 -26,500 -11,400 6,200 23,600 41,000 60,900 80,800 100,700 122,100 143,400 164,500 187,600 164,500 According to the cash flow projections for two six month periods, Yankee Clippers will achieve profitability in month four, due to the high cost of initial start-up expenditures. Revenues increase modestly in both six month periods, based on the expectations of marketing return on investment and brand building exercises. Total cash flow for the end of the first six months is 41,000 whilst at the end of the year period, Yankee Clippers should maintain $187,600 cash availability. Read More