Entrepreneurship Essentials - Essay Example

? Entrepreneurship Inserts His/Her Inserts Grade Inserts (29, August, Introduction The business proposed in this paper will be a clothing retail outlet in United Kingdom. People in the country spend a lot on clothing and therefore a clothing business will be the most suitable for United Kingdom. Retail industry took a hit because of the recent economic crisis but things are recovering. The financial situation is therefore also attractive for such a business. Average household in United Kingdom spends more than 400 pounds a week on clothes and this shows that the proposed business is very feasible (Fashion United, 2009). A Retail clothing store is also chosen because of the relative ease with which it can be started. Usually clothing retailers do not manufacture their own garments and outsource all their manufacturing to third parties. This is done to keep the focus on the main business activity that is selling garments. In this paper a discussion will be made on how to start a clothing retail business in United Kingdom. A brief outline will be given regarding the idea of the business in the paper. Business developed alongside with costs and market research will also be included in the paper. Major operational issues will also be discussed alongside with the target market and consumer in the paper. Outline of the business Idea The idea behind the business is to open a discounted clothing retail store. The store will offer garments at very affordable rates to the consumers. The aim is to cater to the needs of the consumers in the most affordable form. Low priced clothing will be the unique selling proposition of the business. The notion of selling clothing at lower price is justified because there are many people who would prefer buying clothes at affordable rates. Not many people can afford high prices, even for fashionable clothes, and therefore this store might be able to attract a large number of people. Profit margins will have to be slashed but large amount of sales is likely to compensate for lower profit margins. Another important part of the business strategy will be outsourcing of manufacturing to countries like China and India. These countries are well known for their textile products and can produce garments at very low rates, and European Union countries are already buying textile products from these countries (European Commission, 2012). The business will be outsourcing its manufacturing in order to make sure that enough attention is given to things that are important like marketing and sales. Also expertise of producing clothes at affordable rates is not available in the country and therefore taking help from specialized the developing countries might be the only possible option. The strategy of outsourcing also complements the overall business strategy of the company as it will allow us to order large quantities which will be necessary for large number of sales. The idea behind the business is to attract people who look for clothing at lower prices. The retail clothing store will also focus on quality and this will also attract consumers. After the economic crisis of 2008 people have seen their purchasing power reduced. This is why people will be interested in such economic times in affordable clothing line. Lower prices will be the main focus of the business and this will also be used in the marketing of the business in the country. Market and Consumers The main target market for the business will be the younger generation. Young people usually are short of money; therefore, they look for good bargains when it comes to clothing. They look for new and trendy garments which are affordable, and this is exactly what will we provide them. Younger generation is also the main target market because of the ease with which they can be targeted using social media and other cost effective method. Another major target market for the business will be middle aged people. Economic recession has created many financial problems for middle class people and this is why they will also be a target market for the proposed business. A clothing retail outlet might provide good deals for middle aged people who are still feeling the pinch from the financial crisis that started in 2008. This market is also appropriate for the proposed clothing retail outlet because they are usually responsible for buying clothes for their young children. This is why attracting them will also mean attracting their young children which is why this target market will be appropriate for the business. Consumers living in United Kingdom have a good standard of living and therefore they shop often. Young people are usually interested in new clothes all the time and therefore they shop regularly. This is why they will prefer buying more often which is the main element of the business strategy of the proposed business. The strategy that is devised is in line with the characteristics of the consumers the business aims to target. Young people buy often for their clothes and this is why offering clothes at lower prices might be very appropriate for the business. Development of Business The main costs of the business will be the purchased inventory of clothes. The clothing store will charge less than $10 for t shirts and tops, and less than $15 for jeans and trousers from the customers. These prices are justified given the recent increase in prices in the clothing industry in United Kingdom (Neate, 2011). The store will take into account these prices when finding manufacturers of clothes in India and China. Another significant cost will be of the store and its constructions. The store will be rented so that risk of the venture can be minimized, however constructions expenses will be a significant sunk cost. Rent cost will be between 15000 pounds to 30000 pounds annually (Right Biz, 2012). Hiring employees will be another area where significant funds will be required. In a store a staff of 15 people will be more than enough. In today’s world no retail business can survive without effective communication strategy. Marketing expenses will be another significant expense the store will have to bear. Initially marketing expenditure will be very high because it is important to make people aware of the new brand. Social media will be used effectively and expert agencies will be hired to make sure that people are aware of the new brand. Billboard advertisements and limited television advertisement will also be used. Overall marketing budget will be approximately 50,000 pounds from which majority will be spent on internet and social media marketing. The basic idea behind the communication strategy will be to communicate to the consumers how the store can solve their problems by allowing them to buy clothes at lower prices. A viral campaign will be designed around how lower prices on clothing can improve the lives of teenagers and middle aged people. People will be communicated how they might be able to buy more clothes at lower prices using our clothing stores. An online store will also be set in order to make sure that people are able to buy products from their homes as well. Online purchasing is common in the country and most people go for it in order to increase their range of products (Experian White Paper, 2011). This is why an online store is essential for the proposed clothing retail outlet. Operational Issues and Sales Target The store will be targeting sales of around 100,000 pounds in the first 3months of the business. In the second quarter the store will aim to bag 150,000 pound sales and for the next 2 quarters the sales target will be increased to 250,000 pounds per quarter. These sales targets are set keeping in mind the overall business strategy of the clothing store. The aim is to attract bulk buying and therefore high volumes of sales might not be difficult to achieve given the lower prices of the products being offered. Payment of salaries to employees will be done on a monthly basis using the cash flows of the month. Employee salaries will also be on the lower end because cost cutting is the main goal of the business. Suppliers of garments will be paid through letter of credit in order to avoid any fraud. A very important operational issue will be of matching supplies with seasonal sales. The store will have to order clothes earlier in anticipation of higher sales during the Easter and Christmas season. In order to solve this problem, the clothing store will order large amounts of inventory so that there are no shortages in the season. Also to avoid losses arrangements will be made with local buyers so that the store can sell the garments at cost to them. This will secure the store from any losses in the case of a mismatch between inventory supplies and seasonal spikes in demand. There are special regulations that the store will have to focus on specially. The store will chose suppliers that are already supplying to the UK market so that they have an idea about the local demand. Communication messages and designs will be unique so that there are no issues of copyright infringements. Other than that there are not significant regulatory requirements which the business has to keep in mind. Conclusion A clothing retail store is the business proposed above. The business strategy will be to attract customers by offering the lower prices and in turn increasing sales volume. The lower profit margins will be compensated by large sales volumes. Supplies will be ensured through outsourcing and the space will be rented. For marketing, social media will be used alongside with other mediums so that people can be made aware of the store. The main target market of the store will be young and middle aged consumers as they are the people who can benefit the most from lower prices. Bibliography European Commission. (2012). Textile and Clothing. Viewed August 29, 2012 < http://ec.europa.eu/enterprise/sectors/textiles/external-dimension/trade-issues/index_en.htm > Experian. (2011). The changing face of UK retail in today’s multi-channel world. Viewed August 29, 2012 < http://www.experian.co.uk/assets/business-strategies/white-papers/wp-the-changing-face-of-uk-retail.pdf> Fashion United UK. (2009). Facts and Figures in the UK fashion industry. Viewed August 29, 2012 < http://www.fashionunited.co.uk/facts-and-figures-in-the-uk-fashion-industry> Neate, R. (2011). Rising cost of clothes could signal end to 'cheap chic', The Guardian UK. Viewed August 29, 2012 Right Biz. (2012). Cloths and fabric shops for sale. Viewed August 29, 2012 < http://www.rightbiz.co.uk/uk/127_cloths_&_fabric_shops.html> Read More