westmont in haiti- retail clothing business plan

Westmont in Haiti 2015 Retail Clothing Business Plan

Owner: Josette

Primary Consultant: Kyle Jorgensen

Secondary Consultants: Amanda Kellogg, Heather Chmura, Annie Koeller, and Nate Evans

Other Consultants: Chandler Nahigian, Stephen Sutter, Dylan Harrison, Avery Osborn, Becky Collier, Zoe Newcomb, and Professor Rick Ifland

On Sight Supervisor: Handson, Maxime and Simone

Investor: Westmont College

Program: Westmont College, Economics & Business: Eaton Center for Entrepreneurship & Innovation

Class: Business at the Bottom of the Pyramid (EB 107)

WESTMONT IN HAITI 2015 !1

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Table of Contents

Business Overview ………………………………………….3 Entrepreneur Background………………………………….5 Marketing……………………………………………………..5 Loan Specifications………………………………………….7 Implementation.……………………………………………..8 Project Costs………………………………………………….9 Appendix .……………………………………………………11


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Business Overview Purpose The purpose of this business plan is to celebrate, inspire and educate Josette through the implementation of basic business principles. Haiti is the poorest country in the western hemisphere, with Port-de-Paix described as one of the poorest cities within that country. The purpose of this program is to raise the income of participating entrepreneurs, like Josette, in order to increase their living standards, allow for participants to easily pay back their loan and ultimately save for future needs. Now in the second year of Westmont’s Business at the Bottom of the Pyramid course (EB 107), Josette is perfectly positioned to receive the benefits and adaptations of learned experiences from 2014.

Business Description Our goal is to simplify and convenience our Haitian entrepreneurs participating in the retail clothing business model with a sustainable influx of new, gently used and warm-climate shirts, jeans, shorts, and shoes that are highly demanded within Haiti. Utilizing this model, business owners will be able to purchase, at a wholesale price, clothing in which they desire to sell. This replaces the existing pepe model in which business owners purchase boxes of clothing blindly with miscellaneous assortments of clothing and/or other fabrics within their contents.

The solution to this problem will be to ship and personally bring clothing obtained from a clothing drive held at Westmont College from Santa Barbara to Haiti utilizing a logistics company with close ties to the college. Business owners will now be able to visible survey, choose and purchase at a wholesale price the items in which they would like to sell in the market.

Opportunities Josette has the opportunity to offer her customers a unique range of quality new and gently used clothing inventory that have been donated by those with direct connections to Westmont College. While Josette will not receive these items free of charge, she will be able to purchase them at a low wholesale price. This price will cover shipping and some management costs. She will be able to sell the clothing items at double the wholesale price allowing for a 50% margin.


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Risks There will be multiple challenges associated with implementing a new and entrepreneurial venture within Port-de-Paix, Haiti. Josette will be susceptible to numerous risks including, but not limited to the following:

• Competition: There is an expansive array of clothing businesses that pre-exist within Port-de-Paix, particularly located in clusters within the marketplace.

• Inventory: There is a considerable risk that inventory for Josette and other entrepreneurs will be depleted as Business at the Bottom of the Pyramid (EB 107) will only be directly responsible for restocking materials during the spring semester, or whenever the course is offered.

• Sales: In Haiti, transactions occur purely on a barter system. There is a risk that Josette will not sell her clothing items at a high enough margin in order to be able to allocate appropriate funds toward living expenses, business expenses, loan payoff, and savings. The concept of savings and paying off debt is not a concept that Haitian’s commonly understand and thus an exceptionally difficult notion to teach. Bribery and favors are also a common practice within the country, placing Josette in risk of potentially falling victim to these malpractices.

• Infrastructure: Additionally, Haiti faces several infrastructure challenges. This culminates in two different ways. 1) Shipping products directly to Port-de-Paix is exceptionally challenging. Further items must be shipped to Port-de-Prince and driven 6-7 hours on rough roads to Port-de-Paix. There is risk of theft, damage and miscommunication within this process. 2) Provided with Haiti’s recent natural distaster, the 2010 Haiti Earthquake, and susceptibility to tsunamis and mud slides from erosion, Haitian’s face multiple infrastructure and economic dynamics that would be exceptionally difficult to recover from if significantly compromised.

Company Structure Josette will be the sole proprietor of the retail clothing business. No known partners exist. However, Josette will receive direct oversight and accountability action steps implemented by Rick Ifland (Director of Westmont’s Eaton Center for Entrepreneurship & Innovation) and on sight supervisors: Handson, Maxime and Simone. No formal or legal action structures are needed, other than the loan repayment system, which is governed under contract, by Handson.


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Entrepreneur Background Josette is one of eleven aspiring entrepreneurs chosen by Handson and his team to participate in the 2015 Westmont program. Josette is an exceptionally bright, yet quiet individual. She demonstrates a keen ability to listen and desire to learn about business. Josette has one brother and recently became engaged. She lives approximately five minutes walking distance from the marketplace in Port-de-Paix where she has plans of initially establishing her retail clothing business.

She has dreams of operating her own salon and beauty parlor one day. She is excited to learn more about business while participating in the program. Josette will utilize her entrepreneurial business model in order to begin saving for an education/training with the goal of ultimately opening her own salon.

Marketing Industry & Market Overview Merchants selling new and used clothing within the Haitian marketplace primarily get their clothing from large boxes of mixed clothing called pepes. These boxes are shipped primarily from the United States and sold in primary ports throughout Haiti. The price largely depends on supply and demand for pepes in any given region. Clothing businesses rarely get the opportunity to look through each pepe in order to know exactly what is within the box. In sum, purchasing a pepe is largely a gamble, however it remains the main and preferred source of purchasing clothing at “wholesale.” However, Josette will be at a distinct advantage within the market, as she will be able to visibly select her inventory. This eliminates the risk of purchasing a pepe with products that will not sell in the Haitian marketplace.

Customers Josette’s primary customers are clients looking to purchase new or very gently used clothing, shoes and appearance accessories. Haitians pride themselves on their appearance, thus customers will pay a premium for clothing that is quality and stylish. As a result of their diet, Haitians tend to have a slimmer physique, further demanding clothing with small to medium fits.


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Competition Josette initially established her business inside the marketplace. Here, she faces direct competition from approximately 80+ other clothing stands that are in exceptionally close proximity to Josette. All of these vendors sell a similar assortment or both new, used and donated clothing obtained from pepes. It will be important for Josette to distinguish herself from her competition. Thus, changing her current location and locating herself in a busy section of town outside the marketplace is strongly recommended, if not critical for her business’s survival.

Pricing Pricing in Haiti is largely determined by bartering for items, and thus is not a fixed price. However, Josette and other business owners will need to purchase their clothing from Handson’s inventory at a fixed, non-negotiable wholesale price (see estimated price description below) in order to then sell in the market at a retail price. While, the Haitian price system is largely negotiated, Josette should be able to sell each clothing item purchased at a specific price point for double. For example, if Josette purchases a H$10 t-shirt, she should be able to sell that t-shirt in the market for at least H$20.

Business owners must sell their items at a retail price that is higher than a wholesale price in order to achieve a positive gross profit. This model, while largely dependent on Josette’s bartering skills, should allow her and other participating clothing business owners to achieve a gross profit margin of 50% in which they can use to pay back their loan, purchase new inventory, allocate funds toward saving, and contribute toward living expenses.

WHOLESALE INVENTORY PRICING DESCRIPTION

HAITAIN DOLLAR DESCRIPTION OF ITEMS

H$5 Most basic used t-shirts and other outdated clothing

H$10 Brightly colored shirts and t-shirts

H$15 Gently used men’s & women’s jeans, pants and shorts

H$20 Used men’s & women’s clothing that is like-new; nicer shirts, pants, jeans and shorts

H$25 New Sweatshirts, like-new men’s dress shirts

H$30 Premium, like-new dresses


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Promotion Josette must locate herself in a unique, high-traffic location outside the marketplace in order to attract customers without directly competing with a clothing stand in close proximity. Establishing a reputation for quality products and a clean, organized stand will set Josette apart from her competition that typically locate themselves within the marketplace. Additionally, Josette’s business - if located far enough away from the marketplace - can be a more centralized and convenient location for patrons to purchase clothing items without traveling to the busy and tight corridors of the marketplace downtown.

Loan Specifications Investment Logistics Westmont College will provide a micro-finance loan of up to H$8,000 ($1,000 US Dollars). However, Josette and other participating clothing businesses will purchase clothing from Handson’s store at up to 50 items at a time (See price breakdown under Marketing: Pricing). Therefore business owners won’t have to worry about borrowing the full amount of the loan all at once and can pay it off more quickly. Handson will handle all loan logistics and loan payback allocations for business owners from Haiti.

Financial Planning & Education Haitians are largely unaware of the concept of paying back a loan and allocating funds toward savings. Furthermore, education is an important principle in the implementation of businesses within Haiti. I utilized Appendix A in order to teach entrepreneurs the importance of tracking their inventory and business expenses in order to then allocate funds toward paying back their loan, budgeting for living expenses and contributing toward savings.

Post-trip Evaluation: Appendix A was largely unsuccessful as Haitian businesses are not yet at the level where they believe in tracking their purchases and sales. This form was also very difficult to utilize especially with a barter payment system which Haitian business owners want to stick with. Ultimately, the form was too complex for use at that time and place.


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Principle Payback Plan There are no specifics or exact amounts that are agreed upon in paying back the loan. This area is largely flexible and ultimately determined by sales in any given day/week. Handson, Maxime and Simon will be visiting Josette each day in order to check on progress and help her decide on appropriate amounts to allocate to loan payback. Given that Josette will only be borrowing smaller amounts from her total loan amount, she should be able to easily pay this loan back within 12-15 months. Eventually, Josette will get to a point where she will no longer need to use a loan and will be able to purchase clothing directly from Handson or any other vendor with her own funds.

Implementation Timeline of Events January - March 2015: Due diligence & research on Haiti and their market systems, business plan outline/development, communication with Handson, preparing for implementation trip.

March 30, 2015: Dinner for new business owners, presentation of certificates on behalf of Westmont College.

March 31, 2015: Relationship building with entrepreneur, teaching of basic business principles, discussion of business plan.

April 1, 2015: Business launch, first day in operation.

April 2, 2015: Second day in operation, fine-tune details & practices.

April 3, 2015: Third day in operation, finalize implementation.

April - Ongoing: Intentional follow-up with Handson and his team.

Inventory Inventory at Handson’s store will initially be stocked by donations from Westmont College, which will be shipped as well as brought down by EB 107 students. Inventory for clothing businesses can then be purchased from Handson’s store, which will be located adjacent to his office. Prices in the store are non-negotiable, fixed amounts. Hanson will track purchases from his store with Appendix B. This form will allow Handson to charge each entrepreneurs loan account properly and will provide a history of purchases in which Handson can then follow up with.


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Accountability & Oversight Handson, Maxime or Simone will meet with each business owner daily in order to check in with his or her progress. The purpose of this interaction is to continually hold each entrepreneur accountable for their sales, provide advice and ways to improve on future business decisions and to assist in allocating funds toward future business expenses and paying back their loan.

In addition, all entrepreneurs will meet together as a group every Friday evening at 5pm in order to share their stories about progress, success and shortcomings. The purpose of this meeting is to have business owners work together in order to share the items in which brought success and the decisions that may not have. Learning from their peers will allow businesses to continually improve, which will benefit the whole of the group.

Project Costs Clothing Drive While not an immediate financial cost, a clothing drive does require a decent amount of time and effort on the part of students enrolled in EB 107. A clothing drive through Westmont College can be strategically arranged around school breaks in order to allow students to bring items from home. Advertisement is important, specifically at a college. Westmont College has an existing infrastructure and platform to easily advertise. Chapel slides and announcements, all student emails, DC slides, and dorm publicity through residence life are all viable options that work well. Appendix C provides an example of the media used for the 2015 clothing drive. In addition to Westmont College, a clothing drive has potential to succeed in local churches depending on connections students may have.

Shipping Company There is a cost associated with shipping clothing items to Haiti. It takes anywhere from 3-4 weeks to ship clothing to Port-de-Prince, Haiti utilizing ShipHawk, a Santa Barbara based logistics company founded by a Westmont alumni. Appendix D provides the 2015 invoice, which consisted of shipping three large boxes of clothing. When business owners purchase clothing from Handson’s store at a wholesale amount, the price covers shipping and some administrative costs, while still allowing business owners to maintain at least a 50% margin.


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Supplemental Pepe Purchases Lastly, clothing shipped and brought down from clothing drives may not adequately stock and supply Handson’s store for business owners. In this instance, Handson and his team will need to purchase, price and display additional items. In doing so, they will need to purchase pepes. However this allows Westmont College and Handson’s administration to take the risk on pepe purchases rather than business owners who may be struggling and cannot afford to risk a poor pepe inventory.


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Appendix Appendix A


ITEM WHOLESALE+PRICE

QUANTITY+PURCHASED SALE+PRICE QUANTITY+

SOLD REVENUE

MONDAY

LOANSAVINGS

Oversight1Signature: BUSINESS1EXPENSESLIVING

TUESDAY

LOANSAVINGSBUSINESS1EXPENSESLIVING

WEDNESDAY


THURSDAY


FRIDAY


SATURDAY


SUNDAY


Oversight1Signature:






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Appendix B

Appendix C


5

10

15

20

25

30

OTHER

OTHER

OTHER

WHOLESALE/PRICEDAILY/INVENTORY

Monday' Tuesday Wednesday Thursday Friday Saturday Sunday

ENTREPRENEUR/NAME/

Quantity/ Quantity/ Quantity/ Quantity/ Quantity/ Quantity/ Quantity/

ENTREPRENEUR/SIGNATURE

TOTAL/WHOLESALE/PRICE/(ADD/TO/LOAN)

CLOTHES FOR HAITI HELP US CHANGE LIVES

Clear out your closets with any gently used, warm-climate

shirts, jeans, shorts and shoes

February 6th - February 18th

DROP OFF LOCATIONS: All Dorm Lounges and Upper Kerr Student Center

Donated items will be used to help Haitians start sustainable businesses

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Appendix D


PAYMENT ADVICETo: ShipHawk

3463 State StreetSuite 245SANTA BARBARA CA 93105USA

Customer Rick IflandInvoice Number INV-7565

Amount Due 513.78Due Date Apr 16, 2015

Amount Enclosed

Enter the amount you are paying above

Registered Office: 3463 State Street, Suite 245, Santa Barbara, CA, 93105, USA.

INVOICERick Ifland

Invoice DateFeb 20, 2015

Invoice NumberINV-7565

ReferenceSH1014032

ShipHawk3463 State StreetSuite 245SANTA BARBARA CA 93105USA

Description Quantity Unit Price Amount USD

SH1014032 - 3 items (CA-CA) 1.00 513.78 513.78

Subtotal 513.78

TOTAL TAX 0.00

TOTAL USD 513.78

Due Date: Apr 16, 2015Unless explicitly specified between ShipHawk and Customer, all payments are due upon receipt. Payment by any method to Hawk Applications Corp,dba ShipHawk, for the invoice referenced here represents your agreement to ShipHawk's Terms of Service.

You may review ShipHawk's Terms of Service any time at: https://shiphawk.com/terms-of-service/

Pay online now (you will be taken to the online invoice)

westmont in haiti- retail clothing business plan

Documents

economics business

business description

retail clothing business

business overview purpose

clothing items

westmont college program

clothing drive

clothing inventory