Business plan for children’s clothing store

1. A brief investment memorandum. Many beginning entrepreneurs who are already ripe for starting their own business, but have not yet settled on a certain business idea, are seriously considering the possibility of opening a clothing store. The attractiveness of this business is the lack of the need to create its own production. You just need to analyze the demand market, find suppliers of quality products, determine the format of working with brands, open your own outlet and start work.

All these stages take about one to two months, and the main investment costs are for working capital, which allows you to quickly convert them into money if necessary. That is, after two months you will sell, make a profit and gradually pay back the invested funds.

However, before you start implementing a project to open your own clothing store, you need to make sure there is a demand for products, as well as choose a niche.

The company «Choupette» offers to stop their choice on the sale of clothes and shoes for children. The arguments in favor of choosing this category of goods are more than enough.
According to data provided by GFK analysts with the support of Yandex.Market, children’s products are in the top of the categories where spontaneous purchases are most made. This allows you to save revenue even during the fall in the overall level of demand.

The popularity of the brand «Choupette», as well as a carefully planned marketing plan, which includes events at both the federal and local levels, increases the confidence in the successful implementation of the project.

The initial investment in the project is 2 173 500 rubles. Half of this amount is invested in working capital, to purchase the assortment.
The payback period of the project is 18 months.

2. Description of business, product or service

The main characteristic, which is emphasized by customers when buying children’s clothing, is the quality of products. That’s why 60% of consumers make purchases in chain stores, and preference is given to well-known brands.

As for the country producing the products, due to the changing conditions of the market environment and high fluctuations in the exchange rate, Russian production has an advantage.

Clothing and footwear under the brand «Choupette» is made in the Moscow region, and all components are imported from Europe. That is why the cost of products of the company is lower than foreign analogues at a comparable level of quality.

Store Assortment

Assortment matrix of the store «Choupette» covers a wide target audience and meets the needs of children from 0 to 14 years. Moreover, the product line includes both standard seasonal collections and highly specialized sets for certain life events: envelopes for discharge from the maternity hospital, christening clothes, collection clothes, and sets for festive ceremonies.

Twice a year the company produces new seasonal collections. In February the collection «spring – summer» is issued, and in September «autumn – winter». Franchisees purchase seasonal collections in full. In addition, once every two to three months, capsule collections are developed and manufactured. Capsule collection is a clothing line, timed to an event and executed in an appropriate style. For example, a New Year’s collection or school uniform. These collections are limited and include the production of exclusive items.

Providing a full range of products ensures the uniformity of demand throughout the year. Thus, your company protects itself from the risks associated with the seasonality of demand for certain types of goods.

Below is the complete list of Choupette products:

• Envelopes and kits for discharge;
• Baptismal sets;
• Fashion- and basic-collections for children from 0 to 8 years;
• Elegant clothes for holidays and ceremonies;
• School uniform for grades 1-8;
• Outerwear and hats;
• Underwear, pantyhose and socks;
• Children’s footwear;
• Bed linen and exclusive handmade furniture.

In the event that you have not sold a part of the product, and the season has already passed, you have the right to return the products to the franchisor at an agreed cost. The cost adjustment takes place on an individual basis.

A wide assortment matrix, an optimal combination of price and quality, as well as regular renewal of collections make the Choupette brand especially attractive for both clients and investors and franchise partners.

3. Description of the market

The target audience

The target audience of the project is families with children. It is worth noting that women are showing increased shopping activity. Only 30% of men are engaged in purchasing goods for their children. Depending on the age of the children, the circle of potential buyers can be detailed.

The goods of the company «Choupette» are designed mainly for two price segments: «medium» and «medium +». These are people with an average income of 30,000 rubles.
The age limit is women from 20 to 55 years. The scope of work and education does not matter. Watch fashion trends, read fashion magazines.

By geographical parameters, the customers of «Choupette» are residents of large cities.
As a rule, these people attend cultural events, lead an active lifestyle. They are willing to pay for the individual style and unique image of their children. They prefer to make purchases in branded stores, appreciate the quality of the goods, as well as the high level of service.

Clients of the «middle +» class are guided by who of the known people is a user of the company «Choupette».

Competitive advantages

In this regard, we will outline the main competitive advantages of the Choupette brand:

1. Famous brand, recognizable brand;
2. A marketing strategy supported at the federal level;
3. Favorable location;
4. Regular use of shares and attractive offers;
5. The presence of an online store that allows you to make a reservation;
6. Exclusive collections that convey the unique style of the company;
7. Following the advanced trends of the fashion world, cooperation with the New York fashion agency.

4. Sales and marketing

When developing a company’s marketing strategy, it is important to determine the tools that will help increase the efficiency of the store:

• original concept and non-standard idea;
• regular holding of shares stimulating additional sales;
• systematic control over changes in fashion trends;
• orientation to each individual segment of the target audience;
• staff training to improve the level of service;
• development and strict adherence to marketing strategy.

A large part of the audience of the store is made up of the fans of the brand «Choupette», who appreciate the quality of the products, as well as the inimitable refined style of each collection. Consequently, marketing aims to increase brand awareness. This strategy is implemented at the federal level.

To increase recognition, maintain customer loyalty and attract new brands, Choupette uses all kinds of advertising and promotion:

• Participation in international specialized exhibitions;
• Advertising in leading federal media;
• Attracting famous personalities of show business for advertising, as well as sponsorship in popular television projects.

The company’s saturated marketing plan is constantly expanding, affecting many dimensions: media, social networks, BTL-tools. For example, the company Choupette cooperates with such companies as ROMART, «I’ll be a mom», a gallery «Yakimanka», with the Lego brand and many others.

Marketing Tools

The location of the store inside the shopping center is of great importance for the effectiveness of the actions held and sales . The department, which is located on the first floor of the shopping center or in the immediate vicinity of the exit, has the maximum cross-country ability and, as a consequence, the visibility of the windows. Practice shows that even an elementary installation of a pillar in the corridor contributes to the increase in passive sales by 5%.

In connection with seasonal weather changes, promotions are regularly held , giving discounts to the previous collection. Such sales can be arranged in advance, i. E. before the start of discounts in all other stores.

Internet sales also constitute a significant part of the company’s turnover. In addition, customers can pre-order things they like from the new Choupette collections, and then pick them up in the store. Payment can be made both in advance and in fact.

For such a product category as clothing, self-promotion can be actively used . With the release of the new collection, a careful selection of various elements and accessories is made, and completed images using mannequins are formed.

5. Production plan

1. Company registration;
2. Premises for rent;
3. Coordination and design of a design project;
4. Purchase of commercial equipment;
5. Room repair;
6. Hiring employees;
7. Initial purchase of goods;
8. The final design of the store, the filling of the warehouse and the trading floor;
9. Carrying out the initial advertising campaign of the opening.
10. Beginning of work.

The project starts with the registration of IP and registration with the tax authorities. The preferred system of taxation is UTII.
After registration, you need to find a room for the store. The trading hall must be at least 50 sq.m., and a warehouse of at least 10 sq.m. The area of ​​the hall should be quite large, which is due to the need for an advantageous placement of the collection.

The choice of the location of the store must be taken very seriously. It is best to rent a room in a large shopping center. As the long-standing practice of opening Choupette stores in many regions shows, the boutique’s surroundings with clothing stores for adults help to increase revenue several times. 90% of Choupette franchisees are opened in shopping malls. A significant disadvantage of this choice is a high rental rate.

You can also choose to work in a street retail format. In this case, you have to persuade the franchisor in the high terrain of the chosen place. To do this, a marketing study is conducted, as a result of which your assumptions should be supported by specific indicators.

After the premises are selected, it is subject to agreement with the franchisor. If the parent company approved the selected location, then within two weeks, it sends out a design project that corresponds to the general concept of the company «Choupette» and developed according to the individual plan for the franchisee.

Then the equipment is purchased. All the necessary equipment is ordered from the franchisor, but its list can vary depending on your wishes. The minimum set of equipment will cost 300,000 rubles.

For the repair of the premises, as well as the installation of commercial equipment, it takes about one month and 150,000 rubles.

The minimum staff consists of 2 administrators and 2 sales consultants. Since the warehouse adjoins the trading hall, and its area is small, hiring a storekeeper for a separate post does not make sense.

Then you need to purchase the first batch of goods. The minimum purchase volume is 1 000 000 rub. This amount is enough to purchase all the necessary sizes of a seasonal collection, a basic collection and topical capsules.

The next step is the final registration of the trading floor, the layout of the goods, and also the filling of the warehouse. At this stage, the store takes the most presentable appearance, which meets the first buyers.

The initial advertising campaign of the opening includes preliminary placement of advertising materials, as well as bright banners informing about the date of opening the store. The opening itself is positioned as a big holiday. The opening campaign takes place according to the script, which carefully spells out all the components of the ceremony: creation of the appearance of the store (decoration with balls, advertising banners), scripts for sellers to communicate with customers, …

The first month of work the owner will have to carefully analyze every day all the stages of the store, as well as perform planning and control functions:

1. Analysis of demand for certain categories of goods;
2. Planning the volume and structure of purchases for the next sales period;
3. Analysis of the effectiveness of the channels used to attract customers;
4. Control over the work of sales consultants: from the timely opening of the store to the level of customer service;
5. Attracting famous people in the city to create a reputation and increase demand in the «medium +» segment;
6. Control over document management, disposal of released working assets.

At the initial stage, it is important to organize the shop in such a way that in the future the owner was engaged only in strategic planning and attracting customers of the premium class.

6. Organizational structure

Perhaps the most important point in terms of production is the selection of personnel. To open a store you will need to hire two sellers and two administrators. It is assumed that they will work in a pair of seller-administrator. The schedule of work is 2 working days / 2 days off. Opening hours of the store from 10.00 to 22.00.
The salary of the staff consists of a fixed salary and a percentage of sales. For this purpose, a sales plan is being developed, for which overfulfilment, sellers and administrators receive remuneration in cash equivalent.

Financial motivation of the staff

Financial motivation of employees is presented in the following table.

Employee’s position	Revenues	The folding part	The premium part	Total
Shop assistant			2% of the amount of excess revenue plan
	up to 500 000	15,000	0	15,000
	up to 1 500 000	15,000	20,000	35,000
Administrator			4% of the amount of excess revenue plan
	up to 500 000	20,000	0	20,000
	up to 1 500 000	20,000	40,000	60,000

The minimum revenue per month is set at 500,000 rubles. According to the franchisor Choupette, the average revenue figure varies from 1,500,000 rubles. and higher. This allows employees to earn a wage higher than the average for the market.

Staff Responsibilities

The duties of sales consultants include:

1. Customer service and consultation;
2. Opening and closing the store;
3. Acceptance of goods and its layout on the site;
4. Layout of the assortment in the trading hall and window dressing;
5. Knowledge of the size range of goods, as well as the characteristics of materials used in the manufacture of clothing;
6. Implementation of administrative orders.

The duties of the administrator include:

1. Cash settlement of customers;
2. Control over the work of sellers;
3. Calculation of cash balances in the cash register;
4. Formation of an order for suppliers with indication of the quantity of goods by items;
5. Organization of advertising events;
6. Work with regular customers.

The employees of the store are an intangible asset of the company. For successful trading it is extremely important that every employee of the store has the following qualities:

1. Ability to establish contact and identify the need of the buyer;
2. Orientation in fashion trends and innovations in the market;
3. Goodwill and initiative in communicating with the client;
4. Responsibility and accuracy in the performance of work duties.

The owner should not forget that the level of service can both increase the turnover of the company several times, and reduce the revenue to a minimum. To maintain the standard of quality of the work of staff will help to set out clear written job descriptions, as well as regular monitoring of their implementation.

7. Financial plan

Investments

Investments in the opening of the own children’s clothing store of the Choupette trade mark are made up of the cost of the franchise, the expenses for fixed and working capital, the costs of registering the form of ownership, and the operating costs for running the business during the first month. The largest share in the structure of costs is the cost of the initial batch of goods.

Choupette franchisees will give you recommendations on the formation of the assortment line of your store, and also tell you in which ratio it is preferable to buy seasonal and capsule collections.

Rent a room in a shopping center with an area of ​​65 sq.m. is recorded at a cost of 2,500 rubles. for 1 sq.m.
Since franchisors «Choupette» advise to open a new store at the beginning of the season, the sales plan is set at least 500 000 rubles. in the first month. At the same time, the necessary amount of investment in working capital is 1 000 000 rubles. The general structure of investments is presented in the table. All amounts are in rubles. The total amount of investment in the project – 2 173 500 rubles.

Investments
Cost of a franchise	130 000
Main capital
Retail store equipment	300 000
Working capital
Purchase of goods	1 000 000
other expenses
Advertising campaign	100,000
Repair (including sign)	150,000
Cash register equipment	100,000
Costs current for 1 month	393 500
TOTAL	2 173 500

Income and expenses

The main expenses of a clothing store are associated with a high rent in the shopping center, as well as a rapid increase in wages to employees with an increase in working capital. The employee motivation system, consisting of an overhead and a percentage, encourages sellers to work more actively with customers. More than half of the costs fall on the cost of production. The margin is taken into account equal to 70%, which is the average indicator. The cost of marketing is 5% of revenue. This is the minimum advertising costs prescribed in the contract with the franchisor. All amounts in the table are indicated in rubles.

Recurrent costs	1 month	2 month	3 month	4 month	5 month	6 month
Rent office	162 500	162 500	162 500	162 500	162 500	162 500
Salary fund	70 000	130 000	174 000	190,000	190,000	190,000
Social contributions and contributions	3,679	3,679	3,679	3,679	3,679	3,679
Communication and communication costs	1,000	1,000	1,000	1,000	1,000	1,000
Expenses for raw materials and materials	294 117	441 176	588 235	705,882	882,353	882,353
Marketing and advertising costs	25 000	37 500	50,000	60,000	75,000	75,000
TOTAL	556 296	775855	979414	1123061	1314532	1314532
Income	1 month	2 month	3 month	4 month	5 month	6 month
Proceeds from the sale of goods	500 000	750,000	1 000 000	1 200 000	1 500 000	1 500 000
TOTAL	500 000	750,000	1 000 000	1 200 000	1 500 000	1 500 000
Profit before taxation	-56 296	-25,855	20 586	76,939	185,468	185,468
Income Taxes	30 000	30 000	30 000	30 000	30 000	30 000
Profit after taxation	-86 296	-55 855	-9,414	46,939	155 468	155 468
TOTAL	-86 296	-55 855	-9,414	46,939	155 468	155 468

The period of the store’s exit to the breakeven point is 4 months. The payback period for the creation of a children’s clothing store is 18 months. The experience of Choupette shows that the payback period for the opening of a new boutique does not exceed this figure even with a negative scenario for implementing a sales plan.

8. Risk factors

Risk factors can be divided into two categories: internal and external risks. Both categories are fully reflected in the table.

Risks	Content	Evaluation
Financial risk	It is connected with the fact that instability of the dollar’s exchange rate can lead to a significant increase in prices for manufactured products.	Financial risks of the Project can be considered «high», as only for the period from 22.10.2015 to 22.01.2016 the dollar in the ruble equivalent grew by 30%.
Conjuncture risk	It is connected with the fact that the product will not have demand in the market.	The conjuncture risk of the project can be considered «moderate», since despite the fact that people cut costs, they try not to save on children.
Commercial risk	It is connected with the fact that the proceeds from the sale of goods may not cover the costs of investing.	The commercial risk of the project can be considered «moderate», because the project’s monthly costs are covered even at 70% of the implementation of the sales plan.
The risk of increasing costs	Associated with the increase in rent in the shopping center due to an increase in attendance	This risk can be leveled by concluding a long-term lease agreement
The risk of increasing competition	Associated with the opening of other children’s clothing stores in the immediate vicinity	The risk of increasing competition is reduced by increasing the uniqueness of the product range, as well as the brand recognition
The risk of changing the fashion trends	It is connected with the fact that the available assortment of clothes will not be in demand due to inopportunity	This risk can be considered «low» because the company «Choupette» is cooperating with the New York fashion agency and keeps track of all the latest trends in the global fashion