Module 05 Project – Present Your Business Plan

    The business environment is a highly competitive hence one ought to make proper choices when arriving at investment decisions. The best solution is to concentrate on an unexploited market gap where there is minimal competition. In that regard, therefore, the fashion industry has gained increased momentum with a significant demand for the latest clothes portraying an upsurge turn. Therefore, the proposed business establishment will be offering fashion brands to the customers, and the target market is the youth. This is because this niche is highly dynamic and their demand for the latest fashion clothes in the markets is relatively high (Gekonge, 2017). The business will be dealing with men shirts and trousers and ladies dresses, skirts, blouses and trench coats. The drive herein is to quench the thirst for fashion clothes associated with the young people. It is important to understand that in this era of technology, it has become extremely easy and cost-effective to market products to reach the target audience. With a huge population of young people surfing online, it is easier to post the available products online to inform them of their existence so that they can place orders at will.

    Finding issues are likely to arise especially when penetrating a new market before the business becomes self-sustaining. For instance, the initial capital to stock all the proposed brands will require huge capital hence raising this amount at startup is relatively challenging (Harrington, 2017). Secondly, pricing is also a challenge. It is important to understand that there are other players who are offering the same products as ours though not that diverse. Pricing relatively low is one of the distinguishing penetration strategies that the business will adapt. This will certainly lead to reduced profitability hence raising further funding issues.

    Fashion Business

    Executive Summary

    The Young Generation Clothe Line (YGCL) as the name of my business will exclusively be a wearable retail store. I will be targeting high walk-by traffic as the location for my business. The business will begin by providing varieties of clothes suitable for both genders. The target market will be the youths between the ages of 15 to 30 years. For a start, I will need a loan of $ 150,000. 31% of the credit will be used for up-front expenses while 69% will be for working capital needs. The business will operate between 7.00 am to 7.00 pm daily with assistance from sales agents whom I will employ. On a proper season, I expect a profit of about 60% after the tax and return on investment to accumulate at 20%.

    Description of the Product

    YGCL will exclusively deal with young men and ladies’ clothes. There will be men’s shirts, shorts, and trousers. On the side of ladies, there will be ladies’ dresses, skirts, blouses and trench coats. These categories of clothes will be purely dependent on the current existing fashion styles in the United States and beyond. Though a more substantial portion of my stock will be acquired internally, I expect to import share of my stock from neighboring nations such as Mexico.

    Discussion of the Industry and Market Conditions

    Fashion business has been categorized among the junior businesses in the America for the last ten years (In Choi, 2016). Most of the entrepreneurs have never considered this kind of business as lucrative due to ignorance which majority of this entrepreneur is assumed to be having. For this reason, venturing into the fashion business is more of easy since there are less legal constraints that are required.

    Competition

    Clothes as Art Inc. and Artwear designers are the two leading fashion businesses in my locality which might pose a direct competition to my business. This is because these two enterprises have strong financial muscles as compared to my business. Apart from the two, other competitors that my business might face will come from other small vendors of clothes scattered across my locality which according to my estimations would never be too severe.

    Marketing and Sales Plans

    The more significant portion of my fashion business will be promoted through advertisement which will involve providing samples of my stock to groups such as high school students, and dancing groups as a form of building local support among the targeted groups. There will also be sales agents who will be involved in promoting some brands of cloths through the business social media platform and to some extension their accounts in the social media.

    Management Team

    Being a fashion and designer graduate, I will personally take charge at the helm of my fashion business for the first two years of business operation. In the subsequent years, I will employ one manager with two outstanding abilities. First, the manager will have to perform all the required managerial duties such as scheduling, sales computing, and employee guidance. Secondly, the manager will have to pose artistic abilities which he or she will apply in sales process through providing distinctive advice to prospective customers.

    Basic Financial Analysis

    All the sales returns will be recorded in the financial books of accounts. All the commercial books will be reconciled daily. All will have to get recorded down carefully, and appropriate plans will be needed for overcoming such loses. By taking all financial measures, I assume that my business will witness a 20% growth in its sales for two years to come.

    Young Generation Clothe Line (YGCL)

    Exchange rate used is that of the Year End reported date

    As Reported Annual Balance Sheet

    Report Date

    12/3/2017

    12/3/2016

    Currency

    USD

    USD

    Audit Status

    Not Qualified

    Not Qualified

    Consolidated

    Yes

    Yes

    Scale

    Thousands

    Thousands

    Cash & cash equivalents

    100108

    88283

    Investments

    39450

    33572

    Accounts receivable trade, gross

    45221

    42763

    Less: allowances

    1968

    2042

    Accounts receivable trade, net

    43253

    40721

    Other receivables

    3577

    4616

    Finished goods & work-in-process

    44549

    37012

    Raw materials & supplies

    25830

    24844

    Prepaid expenses

    6060

    5581

    Deferred income taxes

    1794

    5482

    Total current assets

    264621

    240111

    Land

    22360

    21683

    Buildings

    113279

    111044

    Machinery & equipment

    350929

    340405

    Construction in progress

    1641

    3403

    Property, plant & equipment, at cost

    488209

    476535

    Less: accumulated depreciation

    298128

    279619

    Property, plant & equipment, net

    190081

    196916

    Goodwill

    73237

    73237

    Trademarks

    175024

    175024

    Investments

    163579

    148532

    Split dollar officer life insurance

    33632

    40296

    Prepaid expenses

    6927

    10260

    Restricted cash

    1589

    Equity method investment

    Deferred income taxes

    1696

    4033

    Total other assets

    455684

    451382

    Total assets

    910386

    888409

    Accounts payable

    11641

    9153

    Bank loans

    124

    Dividends payable

    4814

    4742

    Accrued compensation

    9788

    9445

    Other accrued employee benefits

    7185

    7825

    Accrued taxes, other than income

    3284

    2776

    Accrued advertising & promotions

    19805

    19133

    Other accrued liabilities

    6420

    6401

    Accrued liabilities

    46482

    45580

    Postretirement health care benefits

    328

    319

    Income taxes payable

    1070

    327

    Total current liabilities

    64459

    60121

    Deferred income taxes

    47356

    54939

    Bank loans

    694

    Postretirement health care benefits

    11983

    8857

    Industrial development bonds

    7500

    7500

    Liability for uncertain tax positions

    8584

    7167

    Deferred compensation & other liabilities

    78674

    69520

    Total noncurrent liabilities

    154791

    147983

    Common stock

    25892

    25702

    Class B common stock

    15894

    15455

    Capital in excess of par value

    599186

    572669

    Retained earnings, per accompanying statement

    64927

    73109

    Foreign currency translation adjustment

    -17499

    -13527

    Unrealized gain (loss) on investments

    -332

    54

    Unrealized gain (loss) on foreign currency derivatives

    -1236

    -532

    Unrealized gain (loss) on commodity derivatives

    -470

    Unrealized gain (loss) on postretirement & pension benefits

    6439

    9367

    Accumulated other comprehensive income (loss)

    -13098

    -4638

    Treasury stock, at cost

    1992

    1992

    Total Tootsie Roll Industries, Inc. shareholders' equity

    690809

    680305

    Non-controlling interests

    327

    Total equity

    691136

    As Reported Annual Income Statement

    Report Date

    12/3/2017

    12/3/2016

    Currency

    USD

    USD

    Audit Status

    Not Qualified

    Not Qualified

    Consolidated

    Yes

    Yes

    Scale

    Thousands

    Thousands

    Net product sales

    539895

    539627

    Rental & royalty revenue

    3630

    3756

    Total revenue

    543525

    543383

    Product cost of goods sold

    340933

    350960

    Rental & royalty cost

    947

    937

    Total costs

    341880

    351897

    Product gross margin

    198962

    188667

    Rental & royalty gross margin

    2683

    2819

    Total gross margin

    201645

    191486

    Selling, marketing & administrative expenses

    117722

    119133

    Earnings (loss) from operations

    83923

    72353

    Interest & dividend income

    1582

    1445

    Gains (losses) on trading securities relating to deferred compen

    4901

    10588

    Interest expense

    99

    92

    Pretax gain on step acquisition

    1821

    Impairment of equity investment

    -975

    Equity method investment loss

    -967

    Foreign exchange gains (losses)

    -861

    -790

    Capital gains (losses)

    -219

    2576

    Miscellaneous income (expense), net

    246

    345

    Other income (expense), net

    7371

    12130

    Earnings (loss) before income taxes – domestic

    81255

    73362

    Earnings (loss) before income taxes – foreign

    10039

    11121

    Earnings (loss) before income taxes

    91294

    84483

    Provision (benefit) for current federal income taxes

    25173

    16192

    Provision (benefit) for current foreign income taxes

    549

    219

    Provision (benefit) for current state income taxes

    1538

    891

    Total provision (benefit) for current income taxes

    27260

    17302

    Provision (benefit) for deferred federal income taxes

    -172

    4286

    Provision (benefit) for deferred foreign income taxes

    2032

    1823

    Provision (benefit) for deferred state income taxes

    -686

    223

    Total provision (benefit) for deferred income taxes

    1174

    6332

    Provision (benefit) for income taxes

    28434

    23634

    Net earnings (loss)

    62860

    60849

    Less: Net loss attributable to noncontrolling interests

    438

    Net earnings attributable to Tootsie Roll Industries, Inc.

    63298

    Weighted average shares outstanding – basic

    62378.86

    61423.02

    Year-end shares outstanding

    61896.82

    60966.73

    Net earnings (loss) per share – basic

    1.019

    0.99

    Dividends per common share

    0.311

    0.233

    Total number of employees

    2000

    2000

    Number of common stockholders

    3000

    3200

    Number of class B common stockholders

    1100

    1200

    Number of common beneficiary stockholders

    11800

    17000

    Number of class B common beneficiary stockholders

    4300

    4500

    As Reported Annual Retained Earnings

    Report Date

    12/3/2017

    12/3/2016

    Currency

    USD

    USD

    Audit Status

    Not Qualified

    Not Qualified

    Consolidated

    Yes

    Yes

    Scale

    Thousands

    Thousands

    Previous retained earnings

    73109

    80210

    Cash dividends

    19199

    18922

    Stock dividends

    52281

    49028

    Retained earnings

    64927

    73109

    As Reported Annual Cash Flow

    Report Date

    12/3/2017

    12/3/2016

    Currency

    USD

    USD

    Audit Status

    Not Qualified

    Not Qualified

    Consolidated

    Yes

    Yes

    Scale

    Thousands

    Thousands

    Net earnings (loss)

    62860

    60849

    Depreciation

    20758

    20050

    Net loss on step acquisition

    529

    Impairment of equity method investment

    975

    Loss from equity method investment

    967

    Amortization of marketable security premiums

    3261

    3035

    Accounts receivable

    -2007

    1330

    Other receivables

    1289

    253

    Inventories

    -7329

    503

    Prepaid expenses & other assets

    9524

    14922

    Accounts payable & accrued liabilities

    -1268

    418

    Income taxes payable & deferred

    -1024

    68

    Postretirement health care & life insurance benefits

    -1289

    2861

    Deferred compensation & other liabilities

    3465

    3592

    Other operating assets & liabilities

    -14

    Net cash flows from operating activities

    88769

    109809

    Net cash acquired in step acquisition

    161

    Change in restricted cash

    224

    Capital expenditures

    -10704

    -15752

    Net purchases of trading securities

    -3567

    -5500

    Purchase of available for sale securities

    -54882

    -66324

    Sale & maturity of available for sale securities

    38309

    39613

    Net cash flows from investing activities

    -30459

    -47963

    Shares repurchased & retired

    -25020

    -23143

    Dividends paid in cash

    -19241

    -14282

    Repayment of bank loans

    -403

    Net cash flows from financing activities

    -44664

    -37425

    Effect of exchange rate changes on cash

    -1821

    Increase (decrease) in cash & cash equivalents

    11825

    24421

    Cash & cash equivalents at beginning of year

    88283

    63862

    Cash & cash equivalents at end of year

    100108

    88283

    Income taxes paid

    26599

    24225

    Interest paid

    34

    21

    12/3/2015

    12/3/2014

    12/3/2013

    USD

    USD

    USD

    Not Qualified

    Not Qualified

    Not Qualified

    Yes

    Yes

    Yes

    Thousands

    Thousands

    Thousands

    63862

    78612

    115976

    18746

    10895

    7996

    44250

    43626

    38925

    2142

    1731

    1531

    42108

    41895

    37394

    5528

    3391

    9961

    37046

    42676

    36935

    25337

    29084

    22141

    4148

    5070

    6499

    466

    578

    689

    197241

    212201

    237591

    21687

    21939

    21619

    108391

    107567

    102934

    331110

    322993

    307178

    2539

    2598

    9243

    463727

    455097

    440974

    262437

    242935

    225482

    201290

    212162

    215492

    73237

    73237

    73237

    175024

    175024

    175024

    124685

    96161

    64461

    66911

    74209

    74441

    3212

    6680

    2127

    3935

    4254

    6222

    7715

    9203

    448206

    433493

    407300

    846737

    857856

    860383

    8942

    10683

    9791

    4603

    4529

    8948

    8817

    9750

    7121

    2004

    2030

    2618

    1954

    1966

    21431

    20568

    20775

    5032

    9726

    9664

    45150

    43069

    44185

    555

    6118

    60765

    58355

    58505

    38748

    43521

    48743

    26826

    26108

    20689

    7500

    7500

    7500

    7866

    8345

    9835

    55217

    48092

    46157

    136157

    133566

    132924

    25450

    25333

    25040

    15018

    14601

    14212

    547576

    533677

    505495

    80210

    114269

    137412

    -13406

    -14686

    -12236

    908

    -351

    -999

    -111

    257

    5252

    -3838

    -5173

    -3230

    -16447

    -19953

    -11213

    1992

    1992

    1992

    649815

    665935

    668954

    12/3/2015

    12/3/2014

    12/3/2013

    USD

    USD

    USD

    Not Qualified

    Not Qualified

    Not Qualified

    Yes

    Yes

    Yes

    Thousands

    Thousands

    Thousands

    545985

    528369

    517149

    3885

    4136

    4299

    549870

    532505

    521448

    365573

    365225

    348313

    976

    1038

    1088

    366549

    366263

    349401

    180412

    163144

    168836

    2909

    3098

    3211

    183321

    166242

    172047

    113842

    108276

    106316

    69479

    57966

    65731

    1369

    1087

    879

    4616

    29

    3364

    137

    121

    142

    -850

    -1019

    -194

    -342

    442

    2098

    4090

    -59

    -227

    -28

    323

    274

    537

    4685

    2946

    8358

    64173

    56651

    60329

    9991

    4261

    13760

    74164

    60912

    74089

    24312

    15568

    10251

    231

    559

    806

    1914

    863

    1455

    26457

    16990

    12512

    -6857

    -1230

    5992

    1710

    1221

    2518

    850

    -7

    -647

    -4297

    -16

    7863

    22160

    16974

    20375

    52004

    43938

    53714

    64188.969

    63260.152

    64150.626

    63599.99

    62758.59

    63539.474

    0.815

    0.696

    0.835

    0.824

    0.284

    2200

    2200

    2200

    4100

    4100

    4100

    1500

    1500

    1500

    18000

    18000

    18000

    5000

    5000

    5000

    12/3/2015

    12/3/2014

    12/3/2013

    USD

    USD

    USD

    Not Qualified

    Not Qualified

    Not Qualified

    Yes

    Yes

    Yes

    Thousands

    Thousands

    Thousands

    114269

    135866

    148582

    47729

    18360

    18078

    38334

    47175

    46806

    80210

    114269

    137412

    12/3/2015

    12/3/2014

    12/3/2013

    USD

    USD

    USD

    Not Qualified

    Not Qualified

    Not Qualified

    Yes

    Yes

    Yes

    Thousands

    Thousands

    Thousands

    52004

    43938

    53714

    19925

    19229

    18279

    850

    1019

    194

    342

    1770

    1267

    522

    272

    -5448

    717

    -2720

    3963

    -2373

    9588

    -15631

    -2468

    11295

    5106

    4936

    199

    84

    2180

    1369

    -5772

    2692

    2829

    2022

    6601

    3018

    2146

    -2647

    501

    -708

    310

    101919

    50390

    82805

    -8886

    -16351

    -12813

    -2994

    -3234

    -2902

    -39016

    -39252

    -9301

    10461

    7680

    8208

    -40435

    -51157

    -16808

    -23803

    -18190

    -22881

    -52431

    -18407

    -18130

    -76234

    -36597

    -41011

    -14750

    -37364

    24986

    78612

    115976

    90990

    63862

    78612

    115976

    21312

    16906

    20586

    31

    38

    49

    References

    Gekonge, C. O. (2017). Emerging business opportunities in the world: market entry, competitive strategy, and the promotion of foreign direct investments. Hershey, PA: Business Science Reference.

    Harrington, K., & Cohen, M. N. (2017). The 100 best spare-time business opportunities today. New York: Wiley.

    In Choi, T.-M. (2016). Analytical modeling research in fashion business.

    Dollinger, M. J. (2008). Entrepreneurship: Strategies and resources. New York: Marsh    Publications.

    Gehlhar, M. (2008). The Fashion Designer Survival Guide: Start and Run Your Own Fashion    Business. New York: Kaplan.

    Granger, M., & Sterling, T. (2003). Fashion entrepreneurship: Retail business planning (Vol. 1).    Fairchild Books.

    Skov, L. (2006). The role of trade fairs in the global fashion business. Current Sociology, 54(5),    764-783.

    Timmons, J. A., Spinelli, S., & Tan, Y. (1994). New venture creation: Entrepreneurship for the    21st century (Vol. 4). Burr Ridge, IL: Irwin.

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