MSM 520 – Assignment 10.1: Baenique Business PlanJamie Angove 1
MSM 520: Baenique Business Plan
Jamie Angove
Bellevue University
Dr. Boysen-Rotelli
MSM 520 – Assignment 10.1: Baenique Business PlanJamie Angove 2
Introduction
Baenique will be an online personal shopping site offering customers an exciting and
delightful experience by offering them unique apparel designs styled specifically for them and
available exclusively at Baenique. The company will offer the most unique and personalized at-
home styling experience, reaching a market intrigued by inspired designers and stylists and high-
end affordability.
Customers can avoid the hassle of store shopping and save time by having a stylist select
apparel just for them. Women are often too busy to manage apparel shopping, trying on clothing,
and traveling back to the store for returns. Baenique will focus on giving the experience of
having an in-person expert even when they are not meeting with stylist face-to-face. The
company’s goal is to make customers feel special and catered to. Customers will have the
freedom of a no-hassle process: they can try on clothes at home, supported by a guarantee that
their unwanted items can be returned. Most importantly, Baenique will challenge women to try
things they would not normally wear, offering liberation from predetermined personal norms and
helping women identify something new about themselves.
Company Profile
Baenique will begin as a small company operated by three employees: the owner/stylist,
one additional stylist, and a statistician. The company will use this small start-up size to build
and invest in algorithm technology, perfecting the system of finding the perfect look for each
individual customer before vastly expanding the market. Spending will be very limited. Travel
expenses will be allocated for meetings with designers, key partners in creating unique styles for
customers, and funds will be used to keep a web designer on retainer to ensure the website
MSM 520 – Assignment 10.1: Baenique Business PlanJamie Angove 3
remains up and running at all times. Additional funding will be used on marketing to build
market presence as the company starts out.
Market Assessment
The target market for Baenique is women, ages 27 to 37 in “fashion desert fly over
states” (Casserly, 2013), meaning states where high fashion is not readily available. Most
customers will be either mothers and/or busy women with disposable income. They will often be
time-starved due to raising children or a hectic work schedule, and eager to have a stylist pick
their wardrobe for them. Household income will likely be between $75,000 and $150,000.
Baenique caters to women seeking business casual or casualwear, typically residents of
Midwestern states that experience all four seasons of the year. Many customers will also be
teachers, based on findings from competitors in the market (Hull, 2014).
Baenique will utilize a combination of a starting questionnaire and follow-up questions
asked when a customer keeps or returns each item to proficiently identify and track customer
preferences. Using this data, the company will create an algorithm to mathematically determine
which items a customer will have a higher propensity to keep. Unlike other in-person personal
shopping experiences, using a statistician to build this technology will allow the company to
employ fewer stylists while still offering significant customer value.
IBISWorld states the current environment for personal shopping is growing (IBISWorld,
2015). Furthermore, customers in flyover fashion states do not have access to high-end fashion
available in large department stores like Barney’s and Bloomington or boutiques. These women
are still interested in fashion and can have their needs met by online services. Similar concept
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companies see up to 60 percent of their customers becoming repeat clients after their first styling
experience (Sanders, 2013).
There are currently no companies with dominant market share in the overall personal
stylist industry, according to IBISWorld (2015). Personal shoppers are in high demand due to
less available time to shop, but the industry will begin slowing in the next five years. Since 2011,
at least three companies have entered the online personal shopping market. Baenique will begin
slowly in the market as they continue refining their strategy and algorithm, and therefore
expects .02 percent market share at most in the first one to two years.
As the company launches, services will initially be available only in the Midwest. This
includes women in the 25 to 34 age range for the following states and populations, based on data
from Infoplease: Missouri: 739,000, Kansas: 349,000, Illinois: 1,812,000, Iowa: 364,000,
Indiana: 831,000, Michigan: 1,362,000, Minnesota: 673,000, Nebraska: 223,000, North Dakota:
77,000, Ohio: 1,520,000, South Dakota: 8,000, and Wisconsin: 706,000 (Infoplease, 2015). The
total population in this demographic is 8,664,000.
As with any new company, Baenique will face several large risks in establishing itself in
the personal shopping market. The first and largest risk is that the company will be unknown
amongst several large players in the online personal shopping business, and may struggle to gain
brand awareness. The company also faces the risk of too much recognition and orders coming in
faster than they can keep up with since the company has a very small workforce. A significant
opportunity for Baenique is that competitors do not offer unique designs by exclusive designers,
which may provide Baenique with a competitive advantage.
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Competitive Assessment
Key competitors of Baenique are other online stylist companies. Stitch Fix offers casual
clothing in limited labels and at affordable prices. Keaton Row provides key basic pieces for
each season and is more expensive. Sylit is similar to Stitch Fix, but adds additional style tips
online for pairing their designs with accessories, shoes and cosmetics. Shop Bop may be an
indirect competitor, although their business model is based on customers browsing their
Lookbook for style ideas rather than providing a true styling experience.
Stitch Fix is biggest competitor in the online personal shopping market, due to how well-
known it has become and the similarities in business model to Baenique. The company offers a
true online personal shopping experience where a stylist personally selects items to ship to a
customer in a “Fix” based on their preferences recorded through an initial style questionnaire.
The average cost per item is $65, and the company focuses primarily on business casual and
casual clothing as well as accessories and handbags. The styles provided are from lesser-known,
more independent brands usually found in boutiques and not at major retailers or department
stores.
Strengths and Weaknesses of Stitch Fix
Stitch Fix offers the experience of having a personal shopper, even providing a
customized message from a stylist with each Fix. They provide a styling guide in each shipment,
recommending pairings with certain shoes and accessories. Upon account set-up, the company
allows for customers to set a maximum price point for each item, ensuring the customer will be
comfortable with the price of each Fix. This initial questionnaire also allows for customers to
eliminate certain unwanted items such as accessories, outerwear or formalwear. Stitch Fix
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provides free shipping and free returns, and up to 70 percent of customers return after their first
fix (Brown, 2013). They use an algorithm to record and track customer likes and dislikes,
enabling them to customize and improve each Fix for each customer (Laporte, 2014).
Due to the popularity of Stitch Fix, there may sometimes be up to a three week wait for a
new Fix (Brown, 2013). Additionally, each Fix is picked by a new stylist; the customer does not
have the option of selecting and keeping the same stylist for each Fix. Keeping a diverse
assortment of subscribers satisfied is also an ongoing challenge, as is coordinating a broad
assortment of constantly changing products (Laporte, 2014).
Stitch Fix Strategies and Threats to Baenique
Stitch Fix plans to build an intensive training program for on-boarding remote stylists
(Brown, 2013). They are also attempting to be more proactive about finding the right products
for customers, identifying something that maybe the customer did not even know they were
looking for (Brown, 2013). In addition, the company will be offering plus sizes soon which will
expand their market drastically.
The primary threats to Baenique include the already well-developed algorithm used to
identify customer likes and dislikes, as well as the established brand recognition and competitive
pricing. Stitch Fix already has somewhat of a cult following, and Baenique will not easily be able
to sway customers in a different direction.
Appeal of Baenique over Stitch Fix
The primary benefit that Baenique can offer is the availability of completely unique
designs unavailable anywhere else. Baenique will provide much of the same experience as Stitch
Fix, but with a more unique and intimate approach given the company’s start-up size.
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To differentiate itself from competitors, Baenique will be positioned based on its designer
apparel. Clothing provided through the service will be exclusive to Baenique and help support
small businesses. In addition, where some competitors have not done any marketing, Baenique
plans to launch a marketing campaign triggered at its target demographic. The company will
partner with cosmetic companies, offering advertising for their products through Baenique’s
online style pairing guides while asking in return for promotion on the cosmetic companies’ sites
that meet Baenique’s target demographic.
Market Strategy
Baenique’s marketing strategy will be heavily focused on social media advertising, with
additional cross-marketing and public relations venues utilized. The company has an underlying
assumption that social media venues will also result in strong word-of-mouth referrals, supported
by proof in a study conducted by Michael Trusov, Randolph Bucklin and Koen Pauwels showing
that word-of-mouth referrals have a significant impact on new customer acquisition (2009).
Following the path of wildly successful competitor Stitch Fix, overall advertising for Baenique
will be fairly limited. Stitch Fix has also seen significant success in word-of-mouth marketing
through Facebook and YouTube, witnessed through excited customers sharing their “fixes”
through social media venues (Del Rey, 2015).
Baenique’s product line will be focused on unique apparel designed by startup designers,
primarily selling their products currently on independent sales sites like Etsy. The line will
include business casualwear such as blouses, pants, dresses, skirts, blazers and sweaters as well
as casualwear like t-shirts, jeans, and less dressy counterparts to the business casualwear.
Apparel in these two categories will satisfy the target audience, seeking clothing both for work
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and nicer weekend-wear. The unique designs will be sure to delight customers, as these fashions
will only be available through Baenique.
The company will focus on a slow market-integration, first introducing products strictly
in the Midwest. This strategy will allow the company to refine the strategy and algorithm to
calculate customer’s style profile. As a result, market share will not grow to over .02 percent
within the first two years. Initial sales are estimated to be roughly $135,960 in the first year,
which will represent .018 percent of the personal shopping market share of $762,000,000.
Marketing Plan
Baenique will focus primarily on Facebook advertising. Each designer featured in the
Baenique collection will link their own Facebook page back to Baenique’s main page and
advertise freely for the company. Baenique stylists will be responsible for maintaining social
media sites and posting advertisements since the company will not have a marketing department
at inception.
When revenues begin flowing in and Baenique is staffed to handle larger volumes of
customers, Kenshoo Social will also be utilized to offer advanced targeting capabilities, creative
testing, and extensive analytics to manage and optimize campaigns (Ruszkowski, 2014). This
marketing functionality has the possibility to increase leads 247 percent, decrease the cost per
lead by 13 percent, and increase click-through by 64 percent. The minimum cost for this service
is $5,000 per month.
The cost for utilizing Facebook is free initially. This advertising will be implemented
immediately, and can reach 75 percent of followers using the new Reach Generator. Beginning
with the three employees’ initial friends and friends-of-friends, the estimated initial friend count
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of Baenique will be 1,000 potential customers. Boosting a post in the second month at a cost of
$30 will generate up to an additional 19,000 potential customers.
Baenique estimates that about 25 percent of the initial 1,000 friends will sign up for an
initial style, equaling 250 immediate customers. The company will assume the minimum
potential sale per customer throughout this assessment, which is one item averaged at $60. This
equals $15,000 in sales from Facebook friends, or $7,500 after 50 percent markup is calculated.
Of the 19,000 Facebook customers reached through the boosted post, Baenique estimates five
percent will purchase, or 950 new customers. After markup, this equals $28,500 in potential
revenue. The total Facebook advertising revenue is then $36,000.
Strengths of Facebook advertising include the inexpensive cost, potential large reach, and
the ability to quickly share success stories posted by customers. A study conducted showed that
likes on Facebook are strong long-term sales drivers, and visits to the company’s Facebook page
are strong short-term sales drivers (Brettel, Reich, Gavilanes, & Flatten, 2015). Weaknesses for
this advertising include the amount of effort it requires to keep the site current and to regularly
post, as well as the potential negative impact of “streaming” to customers’ news feeds.
Baenique’s designers are the heart of the company. Since the company will only be
focused on apparel, this offers a unique partnership with designers that also craft other products
such as accessories or shoes. The company will partner with designers to advertise through the
designer’s Etsy site, allowing customers to navigate to Baenique’s website where their favorite
accessory designer’s apparel is available exclusively. Baenique will offer customers the
opportunity in their style profile to select favorite designers, ensuring that they receive apparel
from these specific individuals.
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The cost of this advertising is also free and will be available immediately. Assuming
Baenique begins with a minimum of 50 employed designers that each have a minimum of 10
people visiting and favoriting their items each day, the reach would be 500 customers a day and
roughly 15,000 potential views a month. The company expects a very small portion of these
views to become customer purchases, likely no more than .5 percent. This would equal 75 new
customers a month, or $2,250 in revenue, and $27,000 a year to begin.
Baenique also plans to partner with a cosmetic company to expand their reach as they
grow. The company will find one specific brand to focus an ad campaign around. Urban Decay is
a good example: they were founded in the nineties as an alternative to neutral and traditional
cosmetic colors. They have partnered with hit movies in the past to offer specifically designed
cosmetics to complement the media. As the company has become somewhat more mainstream
over the years, they offer more neutral colors that attract all audiences and could suit our
customers: they likely grew up in the nineties and have a positive association with this product.
Baenique expects that this endeavor will also be free, as it will offer advertising for the
cosmetic company as well. The implementation timeline for this advertising will be two years
out, to allow time for the company to be fully operational. The average volume of potential
customers on Urban Decay’s website monthly is 183,017. Assuming .5 percent of these
customers become Baenique customers, $27,450 will be generated in revenue. Strengths of these
advertising venues are the cost, cross-promotion and relationship-development. Weaknesses
include the difficulty to get a partnership started with a large cosmetic company.
To attract customers in Midwestern states, the company will work with universities that
have apparel merchandising and design programs. Baenique will get involved with fashion week
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and senior student-produced fashion shows. While these customers may be young for the product
line, they will be able to identify with up-and-coming designers. These students will likely be
eager to spread the word to friends and family, and potentially ready to commit to one or two
nicer items for their wardrobes as they enter the working world. Baenique will also work with
young professional publications in cities where its designers are employed. Examples include the
Des Moines Juice and Cityview magazines. These publications will provide press releases to
boost the company’s visibility in the young professional market.
Both of these advertising sources are also free. Baenique plans to launch them within six
months of starting the organization, allowing time to test on a smaller market and advertise
success within these media outlets. Iowa State University puts on an annual fashion show that
has about 2,500 attendees. The Iowa State Daily reaches about 32,647 students and faculty.
Estimating .25 percent of these individuals will become customers, this will generate revenue of
$2,460. The Des Moines Juice website has monthly traffic of 35,065 potential customers and
Baenique estimates .5 percent of these individuals will become customers. This generates an
additional $63,000 annually. Strengths of these methods include the ability to reach the key
target market region and no cost of implementation. The primary weakness is that the college
aged audience is not as strong of a market, income-wise.
In preparation for new competitors entering the market, Baenique will continue to
position itself as a unique and exciting experience-providing company with exclusive designs
unavailable through other companies. Continuing to provide services to this niche market and
offering a product unavailable anywhere else will help Baenique maintain its competitive
advantage.
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Operational Requirements
Baenique will be a small business, employing only two stylists (one is the owner) and one
part-time statistician. The company’s primary partners, independent apparel designers, will send
style catalogs to the company on a seasonal basis. Upon receiving the style catalogs, the stylists
will analyze new styles and make recommendation to update the customer profile-capturing
algorithm. If changes are needed to the algorithm, the statistician will make necessary changes in
preparation for customer orders.
Customers will order through an online website, completing their style profile and
submitting their request for their first purchase. When the first purchase is received, the
statistician will run the customer’s style, color, and size preferences through the algorithm and
provide the style guidelines to the stylists. The stylists will review the customer’s preferences
and send requests to designers for specific items based on the designer’s available apparel
cataloged in the style guide. Designers will collect the requested items and ship them to the
stylist.
Baenique stylists will be responsible for validating that the order is complete before
shipping it to the customer. They will also create a paired items guide for the customer, featuring
accessories, shoes and cosmetics that will complement the items shipped. Once the customer
receives the order, they will complete their official check-out, specifying which items they liked
and disliked and why. If they decide not to keep certain items, they will be able to ship those
items back. The statistician will update their style profile within the algorithm, and the stylists
will ship unwanted items back to designers for them to replenish their stock. At this time, the
transaction will be complete. See Appendix A for a detailed process map.
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Designers will be expected to uphold the highest standard of quality control, and
minimum tolerances will be set. If tolerances are not maintained, Baenique will be required to
eliminate that designer from their style portfolio.
The algorithm is one of the company’s most valued assets; without it operational, the
stylists will be unable to review a customer’s preferences and ship their order. The statistician
will be responsible for maintaining the algorithm and ensuring technology is up to date in order
to keep it functioning properly. See Table 1 for a full list of operational strengths and
weaknesses.
In order to launch Baenique, a logo and website will be required. The company will
operate out of the owner’s home, and each employee will work from their respective homes.
Laptops will be purchased for each employee. Merchant account software will be procured
through vendor FreeAuthNet to charge customers for their purchases, a secure server utilized
from Thawte and online fraud detection through Maxmind.
A one-time attorney consultation fee may be required to ensure all regulation and
licensing is secured. A Federal Employer Identification Number will be obtained as well as a
sales tax permit. To establish relationships with at least 50 independent designers across the
Midwest, the owner will travel to their locations several times throughout the year. These
designers will also be kept on retainer to ensure they will work exclusively with Baenique.
A business continuity plan will be developed and revisited on an annual basis to establish
practices which will ensure the business continues operations if it impacted by disaster (Smith,
2013). A Board of Directors will not be created due to the size of the organization, and each
employee will work from home which moderates some of the risk associated with a permanent
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loss of buildings. Loss of designers, technology, and staff out of the office are the biggest risks to
operations. See Table 2 for the impacts of each potential risk and applicable mitigation plans.
Management Processes
The management team at Baenique will consist solely of the owner and proprietor.
Identified and tested key competencies for small business owners include: managing
opportunities, relationships, concepts, administration, strategy, and compromise (Vilas Boas,
Vasconcellos Dias, & Amtmann, 2014). Managing opportunities translates to knowing how to
act, observing processes and making adjustments as needed. Relationship management is
primarily driven by communication skills, which are essential for a small business. Conceptual
management relates to knowing how compromise and take responsibility for both every day
actions as well as the direction of the company, and administrative relates to planning. A small
business manager should always have strategic vision and know how to compromise with
employees and vendors (Vilas Boas, Vasconcellos Dias, & Amtmann, 2014).
The owner will also be responsible for outlining employee competencies, interviewing
and hiring these positions. Stylist competencies include: Bachelor’s Degree in apparel design or
merchandising or equivalent experience, the proven ability to match customer’s tastes with
trending apparel, two to three years advertising or marketing experience or equivalent, and the
ability to visually convey a look in a way that will appeal to large audiences. The statistician will
be expected to have a Bachelor’s Degree in mathematics, statistics or technology, have a proven
history of working with algorithms, two to three years’ experience designing trials, assessing
results and analyzing trends, two to three years using statistics to forecast and project figures,
and technology implementation and maintenance experience.
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Baenique’s owner will act as the primary manager and administrator, as well as key
stakeholder for marketing, human resources and finance. The owner will have the ability to set a
strategic vision and implement goals that will support that vision. She will have experience in
people management including assignment and overseeing tasks, coaching and development. The
owner will have marketing or related experience, human resource experience, and basic finance
knowledge. She will be responsible for recruiting new employees, and preparing a methodology
for quality assurance and a management plan for quality failure.
The statistician and stylist will also have stakeholder roles in the organization. The
statistician will act as product developer and technology leader. He or she will have experience
in technology product development, and technology implementation and maintenance. The
stylist will act as the design lead, managing relationships with designers. He or she will help
identify upcoming trends and ensure designers are incorporating new fashions into their
offerings.
Objectives and Performance
The mission of Baenique is to provide an exciting and delightful experience to customers
by offering them unique apparel designs styled specifically for them and unavailable through any
other channel. To deliver this mission and the vision of being the most unique and personalized
at-home styling experience, Baenique will set unique and measurable objectives, or goals. A goal
can be defined as “an end toward which you direct specific effort” (Rouillard, 2009). It must be
tangible and something that employees of the organization are willing to work hard for
(Rouillard, 2009).
Baenique’s goals will follow the S.M.A.R.T. methodology, that is, they will be specific,
measureable, action-oriented, realistic, and time- and resource-constrained (Rouillard, 2009).
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Goals will be established to meet the company’s core values: provide a unique and exciting
customer experience, maintain inspired designers and stylists, and provide high-end
affordability.
The first measurable goal is to become known in the Midwest as an organization that
provides a personalized at-home styling experience within three years. This will be measured by
sales income and market share, and will be evaluated every six months to identify whether
progress is being made, if there have been issues identified, and how to increase visibility in the
market. The second goal is to provide a unique and exciting experience for customers. It will be
measured by the number of returns (or unkept shipments) and the number of customer
complaints. This goal will be measured monthly. The last goal is to maintain inspired designers
and stylists. It will be measured by employee and designer satisfaction surveys (annually) and
turnover rate (monthly or as needed).
Improvements or declines in performance can be directly tied to Human Capital Drivers,
so it will be important for Baenique to frequently revisit these principles (Bassi & McMurrer,
2007). These drivers are summarized into five categories: leadership practices, employee
engagement, knowledge accessibility, workforce optimization, and learning capacity (Bassi &
McMurrer, 2007).
The largest driver within leadership practices for Baenique is communication. Since all
employees will be remote, the owner will hold weekly staff meetings and monthly meetings with
each designer to manage processes, look for efficiencies, and ensure alignment. During the
weekly meetings, employee engagement will frequently be discussed, information will be shared,
and individual accountability discussed. Communication will also be key to innovation, and
weekly meetings will be used to brainstorm new ideas. Overall communication style needs to be
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open and direct, providing and being open to constructive criticism because there is little
opportunity for mistakes while ensuring customer satisfaction and sales increases.
Leadership practices also incorporate inclusiveness, especially as a way of improving
morale and decreasing employee turnover. The owner will work to collaborate with the team,
and plan quarterly team building exercises in addition to the weekly meetings, including our web
designer and advertising partner. The owner will include employees in travel to meet with
designers in order to increase inclusiveness with those designers.
As a small organization, leadership practices also incorporate the owner acting as
supervisor and executive. It will be important for her to keep in mind the company’s strategy
while also finding ways to make tactical changes to support the company mission. The owner
will ask employees to hold her accountable to being open to new ideas and trying to be risk-
adverse while still excited to consider new concepts.
Employee engagement captures key components of job design, commitment, and time.
Employees will be hired for very specific roles, but the owner will want to ensure job satisfaction
and will be open to feedback and employee adjustment of job design. She will strive to motivate
the team through job satisfaction, as salary increases will be unlikely during the first few years of
operation. Commitment means that the owner will try as much as possible to keep jobs and make
sure employees know they are valued by providing frequent praise and recognition. Time
commitments will be required from employees, sometimes outside of regular hours due to the
nature of a start-up organization, but the owner will be dedicated to compensating employees for
their additional hours worked monetarily or through flexible time off benefits.
Knowledge accessibility is best summed up for Baenique through the principle of
collaboration. Teamwork will be mandatory and daily, and constant communication between the
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stylists and statistician will be required to gauge the effectiveness of each role’s processes.
Workforce optimization will be delivered through process improvements, demonstrated by each
employee designing their own work processes, and through systems created for twice-yearly
performance reviews and monthly performance discussions with employees.
The last driver, learning capacity, incorporates primarily development and value and
support for Baenique. Development will be seen through opportunities offered for the team to
grow their skills. Stylists will be encouraged to attend design conferences, and the statistician to
attend technology summits. Value and support will come from engagement with the community.
The owner will schedule twice-yearly volunteer events and offer employees time off, within
reason, to pursue other community support activities.
Financial Planning
Small businesses are continuing moderated growth, with 74 percent of participants in a
survey stating they are meeting or exceeding their 2015 performance objectives (Fuel Oil News,
2015). These results are down from 87 percent in January but up from the previous year. As a
result, Baenique is taking a conservative approach to pricing, expected sales and planned
advertising.
A common mistake when starting up a new company is to set the selling price too low
(Barrow, Brown, & Barrow, 2012). When defining prices for Baenique, customer perceptions
were considered as well as the cost of preparing style sheets and purchasing packaging for
shipments. For these reasons, keystone markup of 50 percent was selected. As a method to
recoup losses from customers that decide not to keep anything from their shipment, a $20 return
fee will be charged. This covers $10 in shipping costs and allows Baenique a slight profit for the
work done to compile the order.
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Competition was considered when estimating the average price per item, used to
calculate sales revenue (Barrow, Brown, & Barrow, 2012). Stitch Fix charges approximately $50
per item, and Baenique will be slightly more exclusive and unique. Items will be priced at an
average of $60 per item. Sales revenues were estimated based on the assumption that most
customers will keep an average of one item out of their shipment.
Based on recommendations from “The business plan workbook,” a new business does not
have the need for a quarterly budget (Pinson, 2013). Cash to be paid and sources of cash
worksheet were used to create the pro forma cash flow statement. The pro forma provides an
annual summary and projection for profitability of the business (Pinson, 2013). These
calculations were also used to determine the amount of startup expenditures Baenique will
encounter as well as the amount of money to request in a small business loan (Pinson, 2013). See
Table 3 for the full pro forma cash flow statement.
Baenique will need a $95,000 loan for initial startup expenses. The loan calculations were
based on a seven-year term with 3.5 percent interest. Figured into this loan amount is a planned
$26,000 on hand for emergencies, particularly to be able to pay bills and employees if sales do
not meet planned minimums in the first year.
The first month of sales revenues, January, were calculated based solely on planned sales
from family and friends of the owner, employees and designers. The second month, February,
included an additional volume of customers attracted by planned advertising through a Facebook
boost. This increased sales volume is expected to last six months and the sales revenues were
divided accordingly. Additionally in February, Etsy referrals are expected to pick up. Customers
that follow Baenique’s designers on Etsy will see referrals to the site and become new customers.
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This volume is also expected to last approximately six months, at which time sales will likely
wain.
In the seventh month, July two months of boosted sales are expected from the outreach to
Iowa State University design students. Advertising is planned for the summer intentionally,
knowing that college students are more likely to have jobs and disposable income. July also adds
six months of boosted sales from advertising in the local publication, The Des Moines Juice. An
additional income of $4,714 has been estimated as a result of customers that may not keep their
orders, likely to be higher in the first month as the organization is just figuring out their styling
model then leveling out over the rest of the year. See Table 3 for full income details throughout
the year.
Most variable costs are expected to be paid at startup when initial supplies are purchased.
The exception will be travel expenses, accrued throughout the year as the owner travels quarterly
to meet with designers. Cash to be paid out also includes salaries and a small utility expenditure.
The loan repayment amount is calculated at $1,275 per month.
Due to careful planning and intentional underestimating of potential sales, Baenique will
end its first year with a positive balance of $36,799. The company will plan to boost advertising
and consider adding an additional stylist midway through 2017 with these additional funds.
Conclusion
Baenique will be an innovator in the at-home personal shopping market, and vigilant
planning will bring the company success. Through market analysis, budgeting and ongoing
strategic planning, Baenique will provide a unique product for a niche market.
MSM 520 – Assignment 10.1: Baenique Business PlanJamie Angove 21
References
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MSM 520 – Assignment 10.1: Baenique Business PlanJamie Angove 23
Appendix A
Baenique Process Flow
MSM 520 – Assignment 10.1: Baenique Business PlanJamie Angove 24
Table 1
Operational Strengths and Weaknesses
Strengths Weaknesses
The small size of the organization and lack of BOD enables quick changes and decision-making
The small size of the organization makes it very dependent on the people that do work there, and opens the company up for large risk if there were to be a disaster
A brick-and-mortar location is not required since the organization operates entirely online
Virtual working relationships can sometimes be strained, and all employees will have to be accountable for their own work performance
Algorithm will provide unique and customer preference-driven style sessions, ensuring high customer satisfaction
The organization is very dependent on the algorithm and its active functionality
Designers operate independently and do not work for the company, allowing relationships to be severed if needed
Designers are the heart of the organization, and are located across the Midwest, making it sometimes difficult to maintain strong relationships
The organization does not need to keep large amounts of stock since shipments come from designers on demand
Baenique only works with designers that will promise exclusivity which means they will likely leave Baenique as they decide to grow their business
Few employees within the organization make process quality easier to control
Designers are accountable for their own quality control standards which could conflict with the organization's standards
This business model and the respective operational techniques have been proven effective by competitors
New competitors may look to steal Baenique's human resources
With relatively low initial sales estimated, operational costs outside of salaries and designer retainers are somewhat low
Limited marketing will be afforded in the first year due to the small size of the organization and limited budget
MSM 520 – Assignment 10.1: Baenique Business PlanJamie Angove 25
Table 2
Risks and Impacts
Risk
Short-Term Impact
1-3 DaysMedium-Term Impact
4 Days - 2 WeeksLong-Term Impact
3+ Weeks Mitigation Plan
Building outage - equipment unavailable in stylists homes
Minimal; minor delay in shipping customer orders
Medium; customer dissatisfaction due to delays, designer dissatisfaction due to delays in shipping returns and making payments
High risk; customer loss, designer loss, employee loss, delays in marketing/advertising campaigns
Establish employee deferred compensation agreement to support times of additional income needs; maintain software and designer contact information on additional PCs and flash drives
Building outage - equipment unavailable in statistician's home
Minimal; minor delay in updating customer profiles and shipping new customer orders
Medium; customer dissatisfaction due to delays, potential for orders backing up to the point that additional help will be needed to clear the backlog
Very high risk; customer loss, designer loss, employee loss, total company loss potential
Consider keeping one or two additional stylists on retainer to handle backlogs created by building outage; maintain software additional PCs and flash drives
Vendor/designer outage
Minimal to no impact; one or two designers being out will probably not impact shipping times
High risk; designers out unexpectedly will cause inability to ship customer preferences and potential loss of customers
Very high risk; customer loss, designer loss, employee loss, total company loss potential
Keep a detailed calendar of designer time off in order to ensure apparel selections are only made from available designers; create a style guide which has similar items from two different designers in the event that one of them is out unexpectedly
Staff outage - stylists
No impact; if one stylist is available in a planned event, the other one can continue with slightly longer hours
Medium; customer dissatisfaction due to delays, designer dissatisfaction due to delays in shipping returns and making payments
High risk; customer loss, designer loss, employee loss, delays in marketing/advertising campaigns
Consider keeping one or two additional stylists on retainer to provide relief during time off; maintain time off calendars for stylists
Staff outage - statistician
Minimal; minor delay in updating customer profiles and shipping new customer orders
Medium; customer dissatisfaction due to delays, potential for orders backing up to the point that additional help will be needed to clear the backlog
Very high risk; customer loss, designer loss, employee loss, total company loss potential
Consider keeping one or two additional statisticians on retainer to handle backlogs created by building outage; maintain software additional PCs and flash drives; determine if web designer can assist by being cross-trained on the algorithm for statistician time off
MSM 520 – Assignment 10.1: Baenique Business PlanJamie Angove 26
Year: 2016
JanFeb
Mar
Apr
May
JunJul
Aug
SepO
ctN
ovD
ec12-M
onth T
otalsB
eginning Cash B
alance95,000.00
26,474.5032,551.00
38,657.5043,514.00
37,580.5031,687.00
36,273.5036,380.00
37,716.5036,573.00
36,679.50489,087.00
Cash R
eceiptsA
. Sales/Revenues
625.0017,125.00
17,125.0017,125.00
5,125.005,125.00
16,855.0011,125.00
12,355.0011,125.00
11,125.0011,125.00
135,960.00B
. Interest Income
0.500.50
0.500.50
0.500.50
0.500.50
0.500.50
0.500.50
6.00C
. Income from
Returned
Shipments
785.00356.00
356.00356.00
356.00356.00
356.00356.00
356.00356.00
356.00369.00
4,714.00T
otal Cash A
vailable96,410.50
43,956.0050,032.50
56,139.0048,995.50
43,062.0048,898.50
47,755.0049,091.50
49,198.0048,054.50
48,174.00C
ash Payments
A. Startup C
osts1. Purchases
53,788.000.00
0.000.00
0.000.00
0.000.00
0.000.00
0.000.00
53,788.00T
otal Startup Costs
53,788.000.00
0.000.00
0.000.00
0.000.00
0.000.00
0.000.00
53,788.00B
. Variable E
xpenses1. A
dvertising1,000.00
0.000.00
0.000.00
0.000.00
0.000.00
0.000.00
0.001,000.00
2. Social Media Expense
0.0030.00
0.000.00
0.000.00
0.000.00
0.000.00
0.000.00
30.003. Shipping
0.000.00
0.000.00
0.000.00
0.000.00
0.000.00
0.000.00
0.004. Style G
uides (Materials and
Print Costs)
283.000.00
0.000.00
0.000.00
0.000.00
0.000.00
0.000.00
283.005. Packaging C
osts2,240.00
0.000.00
0.000.00
0.000.00
0.000.00
0.000.00
0.002,240.00
6. Travel1,250.00
0.000.00
1,250.000.00
0.001,250.00
0.000.00
1,250.000.00
0.005,000.00
Total V
ariable Expenses
4,773.0030.00
0.001,250.00
0.000.00
1,250.000.00
0.001,250.00
0.000.00
8,553.00C
. Fixed Expenses
1. Stylists Salaries6,666.67
6,666.676,666.67
6,666.676,666.67
6,666.676,666.67
6,666.676,666.67
6,666.676,666.67
6,666.6380,000.00
2. Statistician Salary3,333.33
3,333.333,333.33
3,333.333,333.33
3,333.333,333.33
3,333.333,333.33
3,333.333,333.33
3,333.3740,000.00
3. Rent
0.000.00
0.000.00
0.000.00
0.000.00
0.000.00
0.000.00
0.004. U
tilities100.00
100.00100.00
100.00100.00
100.00100.00
100.00100.00
100.00100.00
100.001,200.00
Total Fixed E
xpenses10,100.00
10,100.0010,100.00
10,100.0010,100.00
10,100.0010,100.00
10,100.0010,100.00
10,100.0010,100.00
10,100.00121,200.00
5. Loan Payments
1,275.001,275.00
1,275.001,275.00
1,275.001,275.00
1,275.001,275.00
1,275.001,275.00
1,275.001,275.00
15,300.00T
otal Cash Paid O
ut69,936.00
11,405.0011,375.00
12,625.0011,375.00
11,375.0012,625.00
11,375.0011,375.00
12,625.0011,375.00
11,375.00198,841.00
Cash B
alance/Deficiency
26,474.5032,551.00
38,657.5043,514.00
37,580.5031,687.00
36,273.5036,380.00
37,716.5036,573.00
36,679.5036,799.00
36,799.00
Table 3Pro Form
a Cash Flow
Statement