Think through planned changes that will help grow our business and expand to a second location
Confirm that we need a low–interest loan for $42,222 to increase our cash flow reserves

Company History

Founded in 2007.
Owned & operated by Marc Miskett.
We sell a large variety of gift decor items like vases, pictures, nick nacks and unique furniture.
Originally sold blinds and hardwood floorings.
Consequently decided to phase out flooring because Home Depot opened a store in our city and the result, all our clients felt they were getting better pricing from Home Depot. We changed our products because we were losing too many sales.
Moved to current location. Began offering e–gifts for both the home and the consumer. Business has really has taken off since. We were really impressed with how quickly our business started to grow.

Mission

We are committed to providing a unique assortment of gift and furnishings:

In a way that promotes our belief in quality of service.
So we can attract new customers and increase the variety of existing customers.
As measured by an annual increase in sales of 18 percent.

OBJECTIVES

Personal Objectives

Work less on weekends, spend more time doing hobbies.
Start second location, which will result in more revenue and profit allowing me to work less, yet make more money.
Earn enough to start taking winter vacations.
In the long run, be in a great position to either sell or grow the business further.

Short–Term Objectives

Hire two additional clerks in the next six months.
Hire designer in the next twelve months.
Identify markets that I can expand into.
Keep eyes on product lines I can expand into.
Watch competitors for trends.

Long–Term Objectives

Grow sales by 45 percent within three years.
Grow net profit before tax by 58 percent within two years.
Expand to a second location to better serve our market and keep out direct competitors.
Start increasing the staff so that we can spend more time on other family activities without working seven days a week.

COMPETITION

Wal–Mart:

Large selection of low– and mid–priced designers, including glassware.
Great location in downtown Fort Myers.
Part of a national chain.
Advertises every day in local newspaper.

Trinket Shoppe:

Good selection of products.
Around for over 18 years, so most residents know about it.
Centrally located.

Peter’s Gifts:

Good location in the mall.
Very popular for designers.
Cramped store.
High prices.

Fort Myers Tourist Trap:

Located in the largest mall.
Popular with young crowd.
Carry a lot of tourist type gifts.

Competitive Advantages

Our present store is located on the busiest shopping street in north–end Fort Myers.
Well–known in the city.
We have seen steady growth in the last four years.
We project a 28 percent increase in sales in 2008.

PRODUCTS & SERVICES

Franklin Mint
Lamps
Glass
Imported items
Ethnic items
Native handmade items
Picture frames, mirrors, kitchen accessories, theme and gift items currently account for 41percent of sales.
Six percent discount on items purchased in volume (more than 52 items).
Hand–carved pieces like mirror frames, frames, and rocking chairs currently account for 23 percent of sales.
Coffee tables, bedside tables, and chests.
Items for the bedroom and bathroom, including pillows, soap dishes, and toothbrush holders account for 14 percent of our sales.

MARKET ANALYSIS

Industry Factors and Trends

Rising age of Fort Myers population means more people will be giving gifts.
People choosing to stay and gift shop rather than travel.
Increased media coverage and the 500 TV channel universe has allowed a number of TV Shows that cover every type of home decor and gift item. This has increased the public’s desire to buy our products.
Strong market for gift accessories.
Not many stores offer merchandise that can’t readily be found elsewhere.
Some competitors’ shops are cramped or impersonal.
Opportunity for a gift decor store that offers unique items in a relaxing, attractive, personal atmosphere.

According to Financial Post American Demographics, $19 million was spent on furniture, appliances, home and furnishings in Greater Fort Myers in 2004. The 224,005 inhabitants spend more per capita on retail goods than any other product.

Economic Outlook

Economic downturn causes many to put off buying big–ticket “luxury” items.
Market for less expensive gifts strong.
Local market for gift decor shows strong growth.
Gift sales spike in the months leading up to a holiday, namely Christmas and Mother’s Day.
All of our product is purchased six months in advance, therefore tying up cash flow in mid–summer.

RISK FACTORS

Low– and mid–priced gift decor chains make it more difficult to compete on either price or selection.

We already have contingency plans in place:

Personal wills.
Money to invest.
Personal life insurance.
Commercial property insurance.
General liability insurance.
Workers’ Compensation insurance intended for new employees.
If something happens to one of us, the other one will continue running the store.
If something happens to both of us, we will have the right to either continue to run business or sell it.
Once our daughters come of age, they will be our replacements if they wish.
If a major competitor moves onto our doorstep, we will launch a flyer campaign to existing customers with the slogan, “What makes your gift giving easy?”
If one of our key suppliers ends our relationship, we will build alternate relationships with suppliers we identify.

CUSTOMERS

Our target market is made up of gift buyers, unique item collectors, and interior decorators. Specifically, gift buyers that buy 6–7 times per year) and people shopping for their own gifts that buy 4–7 times per year. They like to be the first person on the block with an unusual item. They appreciate fair value and clearly marked prices, and require the flexibility of a generous return policy. They also prefer personalized service. All of which we provide!

Customer Segment

Gift buyers and established residents of Minot looking for reasonably priced, unique gift items.
Our customers are mostly women between 24 and 55, either working or not.
They spend on each average visit to our store $14.57.
Our busiest days are Saturdays and Sundays along with Wednesday and Thursday evenings.
Our customers are from all parts of the city we service. We are located in the north end of the city, yet we get a lot of clients from the south end of the city. This is the reason we want to put a location in the south end of the city.

MARKETING & SALES

We want our customers to feel:

Excitement that goes with finding an unique item.
Sense of calm that comes with shopping in a comfortable, quiet, and beautiful store.
Feeling of confidence, as a result of our fairly extensive gift knowledge.

Pricing

We offer mid–range pricing on most items. With the exception of furniture, no item is priced higher than $188. Our picture frames are $23. We can’t charge very low prices, since we must afford special suppliers and shipping costs that accumulate. We can’t charge very high prices, because we want increase impulse buying by casual browsers.

Advertising

We have many advertising and promotional ideas.

Our posters and some decor items displayed in the coffee shop next door.
Sidewalk sign outside our store advertises sales.
“28 percent off” coupons included in merchant flyer to area residents every 6 months.
Advertisement in Saturday edition of Fort Myers newspaper.
By end of year, we will launch a quarterly newsletter for existing customers that provides gift tips and updates on new merchandise.

Sales

We are currently the only salespeople.
Customers pay by VISA, MasterCard, American Express, debit card, cash, or check.
Full refund with store receipt up to 62 days purchase after (5 percent of sales returned).
Free delivery services (within the city limits) of large furniture items costing more than $120.00.

Alliances

We have a professional alliance with Grinders Coffee Shop (our next door neighbor and the most popular coffee shop in Fort Myers). We allow them to put two tables of outdoor seating outside our store. Advertisements for our store are featured in the coffee shop, and clearly–marked products from our store (e.g. framed pictures, flower vases) decorate the coffee shop.

MANAGEMENT SUMMARY

Marc Miskett:

I keep the books and manage inventory.
Previously worked as an office manager.
We decide what merchandise to buy and how to display it in the store.
Previously a store manager for Wal–Mart.

Julia Steiner:

Store Assistant Manager
Manages the store 20 hours/week. In the past, she only managed the store anytime we were away.

Hiring Plan

We plan to hire two full–time salesclerks within six months. They must have experience working in retail. They may be promoted to Store Manager within two years, which will give us more flexibility to spend time away from the store. The Store Manager’s salary is $44,000 a year.

We will also hire more part–time salespeople within twelve months. This will accommodate increased store traffic. They will be paid $13 an hour.

We will post classified ads in the Fort Myers daily newspaper to find candidates. We will also find prospective high school student candidates through referrals

FINANCIAL ANALYSIS

Necessary Improvements

$20,000 for leasehold improvements.
Update fixtures to allow us to display gift and small accents.
Install new lighting to spotlight key items.
New shelving for stock room to allow greater small item inventory.
$25,000 for one–time increase in gift inventory.
$2,500 for another checkout, which will accommodate increased traffic and improve customer service.

TOTAL REQUIRED: $29,000; to be repaid from cash flow, with $4,000 annual repayments every March and annual interest at a rate of 8 percent.

Ratios

Ratio analysis	Industry profile	Ratio analysis	Industry profile
Sales growth	2.62%	Sales per employee	$82,122
Percent of total assets accounts receivable	17.07%	Survival rate	68.67%
Inventory	35.01%	Additional ratios
Other current assets	26.92%	Net profit margin	n.a
Total current assets	79.00%	Return on equity	n.a
Long-term assets	21.00%	Activity ratios accounts receivable turnover	n.a
Total assets	100.00%	Collection days	n.a
Current liabilities	35.69%	Inventory turnover	n.a
Long-term liabilities	14.48%	Accounts payable turnover	n.a
Total liabilities	50.17%	Payment days	n.a
Net worth	49.83%	Total asset turnover	n.a
Percent of sales		Debt ratios
sales	100.00%	debt to net worth	n.a
Gross margin	32.95%	Current liab. to liab.	n.a
Selling, general & administrative expenses	20.27%	Liquidity ratios
Advertising expenses	1.64%	net working capital	n.a
Profit before interest and taxes	1.81%	Interest coverage	n.a
Main ratios		Additional ratios
current	1.95	assets to sales	n.a
Quick	0.81	Current debt/total assets	n.a
Total debt to total assets	3.91%	Acid test	n.a
Pre-tax return on net worth	54.85%	Sales/net worth	n.a
Pre-tax return on assets	8.66%	Dividend payout	n.a
Business vitality profile	Industry

Class of worker

Unpaid family workers	27
Self-employed workers in own not incorporated business	527
Government workers	1,530
Private wage and salary workers	12,808

Household income

Median household income

$200,000 or more	89
$150,000 to $199,999	103
$100,000 to $149,999	528
$75,000 to $99,999	871
$50,000 to $74,999	2,329
$35,000 to $49,999	2,230
$25,000 to $34,999	1,759
$15,000 to $24,999	1,865
$10,000 to $14,999	843
Less than $10,000	1,419

Poverty status – Below poverty level

Families	975
With related children under 18 years	841
Families with female householder, no husband present	661
With related children under 18 years	625

Median resident age: 33.7 years
Median household income: $35,714 (year 2000)
Median house value: $85,400 (year 2000)

Races in Fort Myers

White non-hispanic (49.4%)
Black (34.8%)
Hispanic (10.5%)
Other race (4.6%)
Two or more races (3.1%)
American Indian (0.9%)
Vietnamese (0.8%)
Asian Indian (0.7%)
Chinese (0.6%)

(Total can be greater than 100% because Hispanics could be counted in other races)

Ancestries: Italian (16.6%), Irish (12.3%), German (9.8%), English (4.7%), Polish (3.3%), United States (2.2%).

Requirements

Start-up expenses

Legal	$ 2,000
Publications/membership	$ 200
Office equipment	$ 2,000
Consultants	$ 5,000
Insurance	$ 1,200
Website development/hosting	$ 1,500
Website management	$ 1 00
Expensed equipment	$ 2,000
Other	$ 8,000

Total start-up expenses

Start-up assets needed
Cash balance on starting date	$10,000

Total requirements

Funding	30,000
Investment	20,000

Sales forecast (planned)

Sales	2004	2005	2006	Direct cost of sales	2004	2005	2006
Gifts	$144,000	$168,000	$179,000	Gifts	$34,000	$46,000	$78,000
Seasonal items	$ 40,000	$ 60,000	$100,000	Seasonal items	$14,000	$19,000	$22,000
Total sales	$184,000	$228,000	$279,000	Subtotal direct cost of sales	$48,000	$65,000	$100,000