Documente Academic
Documente Profesional
Documente Cultură
SUBMITTED BY: NAME: Sachin Singal CLASS: MBA -2C ROLL NO. 129 E-MAIL: sachin623@gmail.com
Executive Summary
Keith's Sporting Goods (KSG) will be in the business of selling athletic equipment to people at every fitness level, from aspiring college athletes to weekend warriors. With our knowledgeable staff we will provide an environment where everyone feels comfortable coming in and asking for training advice and discussing equipment needs. Based in Delhi, KSG wants to be a recognized sporting goods store. An exact location has yet to be set, but owners are avidly searching for a high foot traffic location. Ideally that location would be in central Delhi where anyone can travel a short distance to find our store. We fully expect to grow quickly. Many businesses start under the same assumption but due to work ethic, desire, job enjoyment, KSG is expecting to make a profit in the early stages of its life. Sales are forecasted to be conservative in the first month but are expected to increase by 2% each month thereafter, with a first year growth rate of 12%. This assumption appears to be accurate given the fact that the sporting goods wholesale industry is growing at an 11.5% annual rate. Keith's Sporting Goods will be filed as an S Corporation where owners will be protected from various forms of liability and tax shields. In the early stages of business, we will be primarily debt financed through a local bank and the Small Business Association (SBA). We have forecasted the need for 60% debt, the owner and operator will invest the rest. Depending on the timing of financing, we expect to have the store open by January next year and to produce strong profits by the end of that same year.
Objectives
The primary objectives for the store are: 1. Brand recognition. KSG will be a recognized sporting goods and fitness store in Delhi. 2. To be operating at a profit by the end of the first year of business. 3. Achieve a 15% growth rate in sales from years one and two, and then maintain no less than a 11.5% growth rate thereafter.
Mission
KSG strives toward building long-term relationships with our customers and employees. Working within the community, promoting community service, and encouraging the additional education of our employees will be constantly emphasized by store management.
Company Summary
KSG intends to provide customers with the quality products they need to maximize athletic performance and accomplish their physical and mental goals. We will provide our customers with a knowledgeable staff that enjoys working in an athletic atmosphere and helping others. We will be located in Delhi where there is a high concentration of health conscious individuals and a devoted following to both high school and college athletics. Company Ownership With the intent to operate the store I will be considered the owner of Keith's Sporting Goods. However, I will not be the only one with a capital investment in the company. A local investor will have equal shares in the business. The investor will receive dividends starting in year 2, until he has recouped his initial investment, at which time the owner has reserved the option of buying out his shares. Under these circumstances, and the fact that the investment is a relatively small undertaking, KSG will be filed as an S Corporation. The ownership will be split up evenly between myself and the other investor, and the rest will be debt financed. Start-up Summary Keith's Sporting Goods will be financed through a combination of 60% debt and 40% equity. A local bank will provide the debt while the equity will be provided by an equal combination of owner investment and an angel investor. A large portion of the initial investment will be spent on beginning inventory (70%), which we forecast to be sold within the first two months. Total assets will amount to 80% of the initial investment. Start-up
Requirements Start-up Expenses
Legal Operating Assets Brochures Consultants Insurance Rent Renovation Other Total Start-up Expenses Rs. 5000 Rs. 0 Rs.0 Rs. 0 Rs.0 Rs. 60,000 Rs. 25,000 Rs. 0 Rs. 1,40,000
Start-up Assets Cash Required Start-up Inventory Other Current Assets Long-term Assets Total Assets Total Requirements Rs. 40,000 Rs. 5,20,000 Rs. 0 Rs. 100,000 Rs. 6,40,000 Rs. 800,000
Products
Keith's Sporting Goods will be a high quality fitness store that focuses on athletic performance and maximization of athletic potential. In other words, KSG will be designed to supply athletes with the essential products that are necessary for active lives. The core products we will carry are:
Market Segmentation
Parents (Elementary & Middle School) High School Athletes College Students Middle-aged Adults (35+)
Target Market Segment Strategy Because there are so many different sports and levels at which to compete, there is a broad range of markets for the company to target. At KSG, we will provide a marketplace that satisfies the needs of each group. We will stock a variety of goods for the wide variety of our customers. We strive to build long-term, personal relationships with our customers, in order to do this, we will need to attract customers at young ages. Therefore, our primary target market will be parents with young children. By building a trust relationship, we may be able to maintain a family right up through the child's college years. It will be important to target these groups because youth sports are growing at an incredible rate. Data has indicated that youth sports has the highest growth rate of any segment within the athletic industry. Capturing the market at a young age will lead to future sales when athletes spend more money on their athletic needs. Young parents and high school students will not be the only groups that we will focus on because they also make up the smallest population. Focusing on college students and active adults will also be key.
Competition and Buying Patterns To an athlete who is serious about achieving particular goals, having the correct athletic equipment is integral. Somebody who runs many miles over the course of a week needs to have shoes that not only last over time, but also protect joints from over use. It is the same for a basketball player who needs to wear light clothing that allows him/her to move freely. In either case, the athlete is looking for the best equipment and is always open to try new, innovative products that might help reach peak performance. In the sporting goods retailing many companies compete in different ways. For example, Copeland's tries to sell products more on a cost basis using their capitol power to sell products at the lowest price. When doing this, they sacrifice the customer service and support that many athletes are looking for. As a smaller company we intend to provide customers the support and knowledge they need to fulfill their goals.
Sales Strategy Our sales strategy will be built around fully educating customers about their purchases. Many of the activities that our store is promoting impacts the human body. It is important for the customer to be fully aware of the repercussions of the activity and how each piece of equipment effects him/her. With that in mind, sales people will take care of customers on a first come first serve basis. We want to build customer relationships without discriminating other potential future customers. Employees will be paid on an hourly wage with no commissions at the beginning of operations. After the store has a history, a commission package based on sales and education advancement can be implemented. KSG will carry a relatively low amount of inventory and have frequent order repurchases in an attempt to maintain inventory levels and storage costs. Finally, all sales will be in cash to prevent the problems brought along by late accounts receivable payments. Sales Forecast The primary products at KSG will include athletic shoes and apparel. We will also sell equipment, supplements, and health literature, but we forecast shoes and apparel to drive sales. We expect strong growth in the first year due to intense marketing and exposure in the Delhi market. Forecasted sales are expected to increase by 2% from month to month in the first year and then grow at the industry average of 11.50% per year.