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.