woosh final business plan - the college of...

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WOOSH

! Business Plan

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Project Consulted By: Hannah Dauber, Tin Nguyen, Sara Tebeau Advised By: Matthew Gardzina, Director of Instructional Technology

Client: Lisa Verdon, Asst. Prof./Economics/Director of Social Entrepreneurship

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Table of Contents I. EXECUTIVE SUMMARY………………………….3 II. ORGANIZATIONAL PLAN……………………….4 Business Summary………………………………….4

Products and Services………………………………6 Administration………………………………………6 Legal………………………………………………....7 III.MARKETING PLAN……………………………….8

Market Analysis………………………………………8 Marketing Strategy…………………………………...13 Public Relations………………………………………16 Customer Service……………………………………..16

IV.FINANCIAL PROJECTIONS……………………..17 Statement of Financial Needs………………………..17 Use of Funds………………………………………….18 Revenue……………………………………………….20

V. GANTT CHART……………………………………..23 VI. APPENDIX……………………………………………..24

VII. BIBLIOGRAPHY……………………………………..32

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I. EXECUTIVE SUMMARY WOOSH is a social-entrepreneurial, small business endeavor that was designed as a self-sustainable, high-end running shoe store. WOOSH will be located in downtown Wooster, a community that is lacking a specialty running equipment provider. Although WOOSH’s storefront will aim to provide quality running gear to the city of Wooster and the surrounding communities, the soul of WOOSH rests in its dedication to a valuable, two-fold social mission. Foundationally, WOOSH is designed to provide experiential learning opportunities to College of Wooster students, in accordance with the College’s “Strategic Planning Framework” detailed in the fall of 2010. These opportunities will be provided to students in the form of semester long, credit-bearing internships that focus on one of three core economic components: finance, marketing, and management. Throughout the course of these immersive internships, students will learn marketable skills that cannot be obtained solely in the context of a classroom. These internships will help “bring theory to practice,” in the spirit of the College’s strategic objectives. In addition to providing educational experiences to students, WOOSH will supply work-study opportunities to College of Wooster students through part-time employment. The second component of WOOSH’s social mission gives its operation true significance within the Wooster Community. After all fixed costs have been dealt with, the additional revenue generated from sales will be filtered into a weekly, after-school athletic program for Wooster elementary school students named WOOSH Club. Technically, WOOSH Club is intended to encourage health and fitness among Wooster youth and promote athletic participation within the school systems. We like to believe, however, that each pair of shoes sold at WOOSH will ideally provide a safe after-school environment and positive role models for children who might not otherwise have access to these priceless resources. Although WOOSH will be closely affiliated with the College of Wooster through its internship, volunteer, and student employment opportunities, it has been determined that it cannot be adopted under the college’s non-profit entity. Therefore, the implementation of this venture requires a separate application for 501(c)(3) non-profit status. In addition, start-up funds from a generous outside donor(s) need to be acquired, totaling around $130,200. These funds will be used for the initial rent, inventory, utilities, marketing, and all other one-time cash flows. WOOSH will then be run utilizing these initial start-up funds until it reaches its break-even point and self-sustainability. This point will be reached after 4.5 years. At this point, WOOSH will begin to see positive cash flows, enabling it to fully fund its dual social programs and storefront without revenue loss.

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II. ORGANIZATIONAL PLAN Business Summary Mission At WOOSH, we strive to “bring theory to practice” for College of Wooster students by providing experiential learning opportunities within a small business model, designed as a high-end running supplies store. The heart of WOOSH, however, rests in promoting physical fitness and healthy development through WOOSH Club, an after-school sports and mentorship program for elementary school children in the Wooster Community. WOOSH- connecting the college and the community, one pair of shoes at a time. Business Model WOOSH will be a running-goods store located in downtown Wooster that will generate revenue through providing high-end running supplies that are not currently available in the Wooster area. Unlike a typical small business corporation, however, the revenue generated by WOOSH will be used to fund a unique, two-tiered social mission. As detailed in WOOSH’s mission statement, WOOSH will implement an experiential learning program in the form of internships at the College of Wooster, as well as run WOOSH Club, a weekly after-school fitness program for elementary school children. WOOSH’s innovative fusion of ideas provides a clever and connected way to fund important social programs while filling a current consumer need in the Wooster and Wayne County area. WOOSH’s storefront will be managed by one outside full-time managerial position; the remainder of managerial positions will be filled by student interns from the College of Wooster. These internships will focus specifically on three fields we have identified as central to the successful running of a store:

1. Financial 2. Marketing 3. Managerial

Three internships will be offered within WOOSH’s storefront per semester. These internships will provide students with one full course credit in place of monetary compensation. Interns will work a 20 hour work week and receive preliminary training from the full-time manager as well as the College of Wooster business office in their specific field. All other sales associate positions at WOOSH will be filled by College of Wooster work-study students, who will be referred to WOOSH through the Student Employment Office. WOOSH’s second social program will be WOOSH Club, a weekly after-school fitness program for elementary school kids in the Wooster community focusing on improving health and fitness.

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This program will be headed by a fourth internship position for College of Wooster students, falling within the managerial field. The program will be facilitated at The Scot Center on the College of Wooster campus and will be run by student volunteers. This overlaps further with the experiential learning mission of WOOSH, giving college students the opportunity to develop worthwhile skills in mentorship, supervision, and teaching. WOOSH Club will be held every Friday and will be a two-hour long program. Throughout the week, kids will fill out physical fitness charts with a goal of getting 60 minutes of exercise per day. On Friday, they will be rewarded for achieving their goal. The kids will each be assigned a student volunteer mentor that they will develop a relationship with throughout the course of the program. Each Friday, student volunteers will teach and facilitate a new sport or game for the kids to play in order to get to know each other better and have a good time. Through the combined efforts of WOOSH’s storefront as well as its two-tiered social programming, WOOSH aims to provide four main long-term outcomes to the Wooster and surrounding Wayne County Community:

1. Provide a self-sustaining, non-profit shoe store that will service the needs community for years to come

2. Provide invaluable skills to College of Wooster students that will further their knowledge and careers

3. Improve the health and fitness of Wooster youth and encourage healthy emotional and mental development

4. Improve the relations between the College of Wooster and the Wooster Community WOOSH will achieve these long-term outcomes by providing a variety of short-term outputs that will serve as success markers for WOOSH as a whole. These short-term outputs are:

1. Achieve break-even point after 4.5 years, after which WOOSH will be self-sustainable

2. Maintain steady customer base up until break-even point 3. Maintain good public relations with Wooster/Wayne County community as

determined by Marketing Plan 4. Sustain internship program at the college and provide students with credit and

experiential learning knowledge 5. Maintain good public relations and reputation with College of Wooster academic

departments, Business Office, and Student Employment as well as student body as determined by Marketing Plan

6. Provide students with an internship to put on their resume 7. Maintain WOOSH Club 8. Measure improved fitness in WOOSH Club participants through physical fitness

charts 9. Provide Mentorship relationships between elementary students and College of

Wooster volunteers

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Our strategy in pursuit of our mission, including short-term outputs and long-term outcomes is to first fundraise through marketing our social mission and take action in other ventures such as pursuing investors that will allow us to raise the start up cost funds for WOOSH. This proposal’s strategy is strongest when projecting into the long term, due to its self-sustainability. Once start- up costs are incurred, the sales from the store, as well as employee salary coverage from College of Wooster grants, will cover the costs of the store as well as have enough additional revenue to pay off loans, and run social programs. Products and Services The store provides running shoes and running gears for all purposes from training to racing to all-terrain running. The products will be from top brand names in the industry so that customers can choose from a wide range of high quality products equipped with the latest technology. We will obtain our products directly from the manufacturers by becoming authorized retailers of these companies. The products will be carefully chosen depending on their success in the past while keeping up with the latest trends in the industry. The distribution process will begin with our orders directly to the manufacturers. These orders will be delivered to our store location, where they will be stored and then stocked on shelves where customers can easily browse through and try them on. We do not stop, however, at just providing these products. At the store, we will also provide personal service with our staff of student employees that are provided with an arsenal of knowledge regarding high-end running gear. As customers walk in our stores, the staff will always be there to provide information of the new stocks, insights on each product and any other questions the customers might have. Administration Management Woo Shoe, run as a non-profit organization, requires two Executive Director positions: one paid position that holds responsibility for the store and experiential learning component and one unpaid advisor position that holds responsibility for the after-school elementary athletic programs. The Executive Director that serves as “owner” of the store and administrator of the experiential learning component will make all executive decisions for the store, as well as serve as the primary link between The College of Wooster and WOOSH regarding student employment. WOOSH also requires one in-store manager with training and expertise about running and runner’s merchandising. This manager would work as a full-time employee (40 hour work week), would not be employed through the college, and would hire and train all student employees. The manager would be a salaried employee. Additionally, WOOSH requires one out-

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of-store volunteer coordinator who serves as the link between The College of Wooster volunteer base and the City of Wooster school system for the after-school athletic programming targeted towards elementary school children. This volunteer coordinator would be present at the weekly after-school program, would be in charge of figuring out the volunteer base/child participants, and keep in close contact with both the Executive Director of WOOSH, The College of Wooster, and the Wooster City School System. Personnel Needs WOOSH will employ College of Wooster students as part of its social mission to provide employment opportunities to COW students as well as experiential learning in store management and entrepreneurship. These students will be trained thoroughly by the full-time in-store manager regarding running, running merchandise, and the ins and outs of managing a small business/non-profit. These students will be selected from the pool of students eligible for work-study funds as part of the College’s non-profit, volunteer based work-study program. The student employees will be paid Ohio’s minimum wage through the College’s payroll, as approved by the College of Wooster Student Employment office. WOOSH will require a minimum of 5 student employees to fill a 10-6 PM business week (Sunday-Saturday). There will be 14 student shifts available per week. Shifts will be 5 hours long, with 2 shifts throughout the work day: 10-3 PM and 1-6 PM, providing two student employees from 1-3 PM, our predicted peak hours. These employees will be needed to provide customer service, provide store surveillance, maintain the on-floor stock, serve as cashiers, etc. They will be hired prior to the grand opening of the WOOSH store front. Additionally, WOOSH’s after-school elementary program will require a steady volunteer base for each weekly session. A minimum of 2 volunteers will be required per 10 elementary participants. These volunteers will be solicited through the Wooster Volunteer Network on the College of Wooster campus. Location WOOSH will be located in Liberty Commons in Downtown Wooster. The after-school program will be located in the Scot Center on the College of Wooster campus. LegalTo apply to become a 501(c)(3) non-profit entity, WOOSH first must file to be recognized as an official trust, corporation, or association through the IRS. After WOOSH has been determined a corporation through the IRS, it must complete Form 1023 through the IRS, “Application for Recognition of Exemption.” After these two steps have been completed, WOOSH can officially apply to receive 501(c)(3) status, the process for which is laid out by the IRS on their official website, www.irs.gov.

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III.Marketing Plan

Marketing Analysis WOOSH’s storefront, along with its two-tiered social programming (the experiential learning program and after-school athletic program) target specific demographics within the Wooster community. The target niche market for each of these two divisions of WOOSH is individualized according to the unique products and services provided. Below is a market analysis break-down of each of the three divisions of WOOSH, including general demographics and the target niche market as well as the desire for the products and services within that niche market.

WOOSH Storefront

According to census information from 2009 provided by city-data.com displayed in Table 1, the current population in Wayne County is 26,213. Out of these residents, 12,512 are male and 13,701 are female. The average age of residents is 36 years, with an average income of $38,291 annually. 84.4% of residents have a high school degree or higher, with an additional 27.4% with a Bachelor’s degree or higher. As Wayne County residents are most likely to be WOOSH’s main demographic, these statistics give us a general overview of the market we will be serving. Due to the nature and scarcity of a high-end running shoe supply store in North-Eastern Ohio, we also predict that we will service demographics from neighboring communities.

WAYNE COUNTY DEMOGRAPHICS

Table 1:

Population 26,213

-Male 15,512

-Female 12,701

Average Income $38,291

High school diploma or higher 89.4%

-Bachelor’s degree or higher 27.4%

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The target niche market within these general demographics of Wayne County will be adult runners of both sexes. Our primary product, specialty running shoes, will average at $100 a pair, meaning that our niche market will be middle to upper socio-economic level. Wayne County’s average income falls well into the median tax bracket for United States citizens ($34,000-83,600), so the average adult runner in Wayne County would be able to afford the products provided by WOOSH. A recent market survey conducted for Main Street Wooster by former Local Social Entrepreneurship consultants (detailed in Table 2) suggests that a running shoe store is something that Wayne County community members have a high interest in seeing in the downtown area. Results of this market survey show that the niche market in Wayne County for a shoe store would be residents ages 41+ within all income brackets. This solidifies our niche market within Wayne County and the surrounding areas.

MAIN STREET WOOSTER SURVEY RESULTS

TABLE 2:

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0%

18%

35%

53%

70%

<$15k $25k-$34.9k $50k-$74.9k $100k-$150k

RestaurantApparel StoreShoe Store

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TABLE 3:

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Experiential Learning Program

According to The College of Wooster homepage, there are currently 2,000 students enrolled fulltime. Of these 2,000 students, 54% are female and 46% are male. These figures provide a general overview of the student population who would form the demographic pool that the experiential learning programs would be available for.

The recent “Strategic Planning Framework” as detailed by the college places emphasis on providing more opportunities for students to “Bring Theory to Practice,” stating: “We will increase opportunities for students to connect theory and practice through campus life and “real

0%

18%

35%

53%

70%

18-21 22-30 31-40 41-50 50+

RestaurantApparel StoreShoe Store

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world” projects and experiences that strengthen the quality of student learning.” This illustrates the demand for more experiential learning opportunities for students across disciplines. The College already provides four forms of Internship/Mentorship programs, all of which the internship positions available through WOOSH would fit into. These four programs are as follows:

1. “Match Me” Entrepreneurial Internship

2. C4E Summer Internship Program

3. “Create Your Own” Internship Competition

4. “Start Your Business” Internship

WOOSH’s marketing, financial, and managerial internship positions could easily be used in conjunction with any of these pre-existing internship programs in an effort to enhance the opportunities provided to College of Wooster students.

The target niche market for WOOSH’s specialized internship positions would technically be economics and business economics majors due to the financial nature of the positions; however, the positions would be available to the entire student body and would not be major-specific. The hope is that the niche market will extend to every College of Wooster student.

After-School Athletic Programs

Within the city of Wooster, there are 8 public elementary schools with 2629 total students. The following table from elementaryschools.org illustrates the specific demographics for each public Wooster elementary school:

TABLE 3: Public Elementary Schools in Wooster, OH

SCHOOL SCHOOL DISTRICT

STUDENTS

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WOOSH believes that there is a need for after-school programming for Wooster Elementary School students based on the current lack of any such program that provides after-school care and student mentorship, as well as the existence of shocking national statistics regarding childhood obesity rates.

Childhood obesity leads to life-long health complications and disease. Statistics not only show that childhood obesity exists, but serve as proof that it is a reality for a large number of youth today. Wooster is no exception. Childhood obesity has been addressed as a result from in active youth. When exploring solutions to this it became clear that offering youth opportunities to be active through supervised program emphasizing sports not only directly addresses the problem, but yielding good results. For example the social program “Run for Good” points out that physical activity is the key to combating childhood obesity. Run for Good gives testimony of several youth athletic programs used to help keep kids healthy. This is the reason we believe after school programs offered for Wooster elementary students would be the best way to address this important issue.

The Center for Disease Control and Prevention collected data that showed that child obesity rates are on the rise. Currently 16% of 6-19 year olds are overweight, as shown by Table 4.

TABLE 4:

Cornerstone Wooster City 320

Franklin Twp Triway Local 212

Kean Wooster City 340

Lincoln Wooster City 297

Melrose Wooster City 409

Parkview Wooster City 309

Wayne Wooster City 317

Wooster Twp Triway Local 425

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This growing childhood obesity epidemic places elementary school children in the niche market for athletic health and fitness programming like the after-school program being offered through WOOSH. Additional research by the CDC shows that children should get 60 minutes of aerobic exercise per day to stay fit. This information further displays the demand for a physical fitness program geared towards children in the Wooster community.

Although WOOSH Club serves as a physical fitness program for elementary school students, it also doubles as a student mentorship program. A study was conducted by The Official Journal of the American Academy of Pediatrics that concluded: “Mentoring relationships are associated with positive adjustment during the transition to adulthood. Strategies to support natural mentoring relationships…should be developed and evaluated.” This positive association between youth development and mentorship increases the demand for WOOSH’s athletic programs.

Competition Analysis

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In an assessment of the current running supplies/athletic supplies market in the Wayne County area, we have defined our main competition to be concentrated into the following five corporations:

1. Wal-Mart

2. Kohls

3. MC Sports

4. Dunhams Sport

5. Pierce’s Team Sports

Although all five of these corporations sell athletic gear and shoes of varying forms, none of them sell the type of high-end running supplies that WOOSH intends to provide. This eliminates any fear of being overtaken by competition within the athletic supplies market in Wooster.

Market Trends

Waynecountytrails.org indicates that by April 2012, a new County Line Hike and Bike trail will be opened in Wayne County. This trail promises to enhance the running community within Wayne County and attract more runners to the Wooster area.

Wayne County also hosts a variety of 5K, 10K, Half and Full Marathon events annually, including the popular Buehler’s Heart and Sole Community Run. These events indicate a trend in recreational and competitive running in Wooster and the surrounding communities, rendering WOOSH a valuable resource to the running community at large.

Marketing Strategy

Following the same format as the Marketing Analysis, WOOSH’s marketing strategy will be broken up into three facets: storefront, experiential learning programs, and after-school athletic

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programs. Each of these three marketing strategies will be targeted at the specific niche demographic for that particular section of WOOSH.

WOOSH Storefront

Out of our total allocated start-up funds, $2200 will be used for WOOSH’s initial storefront marketing in the Wayne County community. These funds will be divided into various methods of advertisement and sales techniques in order to attract our preliminary client base. These methods are as follows:

• Website development- WOOSH will use a portion of its marketing funds to design a webpage that will detail WOOSH, the running gear it offers, its ties to the college in relation to internship opportunities and student employment, and its after-school athletic program for elementary aged students. It will also advertise market trends within the Wooster Community, such as the Heart and Sole run and other local events. The website will be advertised through the storefront banner and newspaper advertisements, as well as word of mouth through hired staff.

• Storefront banner- WOOSH will purchase a banner to place in the storefront window before its grand opening to attract the attention of downtown Wooster shoppers and clientele and alert the public of its impending opening

• Newspaper advertisements- Prior to its grand opening, WOOSH will release a series of newspaper advertisements that will alert Wooster and Wayne County community members of its impending opening.

• Social media- WOOSH will create a facebook and a twitter page to communicate with/advertise to the Wooster and Wayne County community through popular social media platforms

These three methods of advertising will directly impact the niche market of Wayne County community members in the median income bracket.

Experiential Learning Program

Funds will not be allocated to advertise the Experiential Learning Program aspect of WOOSH, because advertising will occur through the College and will require minimal funding, save for

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printed flyers and catering for informational sessions. The following methods will be employed to advertise the internships and work-study employment offered by WOOSH:

• Flyer/Poster advertising- Flyers and posters detailing the available internship positions through WOOSH and the subsequent application process will be hung throughout the College of Wooster’s campus a month prior to the due date of the internship applications. Flyers will also be distributed to campus mailboxes of students whom the program feels would have a stronger interest in applying through department and Professor nominations. An advertisement will be submitted electronically to Wooster Headline News as well.

• Informational sessions- WOOSH will hold two informational sessions two weeks before the internship applications are due to explain the nature of the internships and what criteria are considered when reviewing applications. Snacks and beverages will be provided to give further incentive to students to attend said sessions.

• Inter-departmental Advertising- WOOSH will ask the Economics, Business Economics, and other related academic department heads to make an announcement to their classes about the available internship positions via email or word of mouth about two weeks to a month before applications are due. WOOSH will ask that these department heads remind their students a week before applications are due.

• Student employment- For the work-study positions available to students, the Student Employment office will include WOOSH as one of their non-profit work-study options for students.

After-school Athletic Program

Specific funding will not be provided to advertise to the participating Elementary School(s) within the After-School Athletic Program, once again because minimal funding will be required to print informational packets and provide catering at informational parent meetings. The following methods will be utilized to advertise our after-school athletic program to Elementary School children and families:

• Informational packets- These packets will detail the location, purpose, and management of the program as well as explain the physical activities that students will be participating in. It will include a permission/parental consent form as well as the dates of the two informational sessions that parents are welcome to attend for further information.

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• Informational sessions- Similar to the informational sessions provided for College of Wooster students, these sessions will be held twice at the elementary school/(s) participating in the program. Refreshments will be provided as further incentive for attendance and parents will be given a more detailed description of what it is that the program entails, including the physical fitness aspect as well as the mentorship aspect.

Public Relations

WOOSH will employ a number of different strategies in the hopes of developing strong relationships with the Wooster/Wayne County community, the College of Wooster, and local elementary schools. While public relations cannot be entirely pre-determined, these strategies will hopefully add to and enhance WOOSH’s reputation and further serve to advertise for and expand each of WOOSH’s three core components. The public relations strategies are as follows:

• Website development- As well as means of advertising WOOSH’s storefront and social programming, the development of an easily usable website will improve public relations by allowing customers, interns, employees, volunteers, and parents of students to know all there is to know about WOOSH by accessing one webpage. Additionally, it will provide the public with a place to go if they have questions or curiosities regarding WOOSH or any of its programming.

• Event sponsorship- WOOSH will sponsor local running events in the Wooster and Wayne County community such as the Heart and Sole run. By sponsoring these local events, WOOSH will not only gain easy publicity but also improve their reputation as a non-profit corporation that is involved with and invested in the community.

• News/Media Coverage- Although WOOSH cannot instigate this coverage on its own, the hope is that before and after its grand opening it will receive media coverage in the form of reviews and advertisement within local news media such as the Wooster Daily Record, The College of Wooster Voice, etc. If reviews are positive, WOOSH’s public relations will benefit.

Customer Service

WOOSH will maintain a high standard of customer service, including in-store and out-of-store assistance. In-store customer service will be provided by the presence of a full-time manager as well as one intern at all times, in addition to a trained staff of work-study employees familiar with the specifics of running and running specific athletic gear.

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Out-of-store, WOOSH’s phone lines will be open during store hours. WOOSH will also have an email address that is checked daily by the full-time manager and is provided to customers on their receipt.

For the experiential learning component, an additional email account will be checked daily and will serve as the contact email for prospective interns and work-study employees as well as the link between the College of Wooster and WOOSH.

For WOOSH’s athletic program, a third email address will be provided that is directly linked to the management intern in charge of facilitating the program. This email will also be checked daily. The phone number of the management intern will be provided to all parents of participants in case of emergency or in case of questions.

IV.Financial Projections This part of the business plan seeks to explain the financial predictions of the stores, based on which conclusions about the viability of the store can be drawn and appropriate recommendations can be made.

There will be three parts to the financial projection; the first is Start-up Cost which aims to account for all the possible costs faced in starting up the physical stores. Based on the start-up cost estimated, we move on to set up the Income statement for the store, which includes projection of sales revenues and all the cost related to the operation of the stores. This will provide further information about how effective the store will be in turning around profit from its daily activity. Lastly, the Cash-flow Analysis will use information provided by the previous two parts to determine the inflows and outflows of cash, the amount of cash held by the store at any given moment. This is very crucial to the daily operation of the store, and it helps us predict any future challenges in running the store.

Statement of Financial Needs

Working Capital

Working Capital will be used to start up the business and fund the operations for the first year of operation. It includes all the costs associated with starting up the physical store, from inventory to marketing and insurance. This figure represents the initial amount needed to get the store started and running.

Below is the break-down of these costs, totally at $100,200.

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Growth Capital

As the business continues to operate through the years, it will expand to bring more products to an increasing customer base. Projected increase in sales is posted below, with sales is expected to double after 4 years and triple after 6 years.

Items Prefered

Store rent $10,000.00

Store Fixtures, Signs & Equipment $10,000.00

Computers, POS $2,000.00

Inventory $20,000.00

Phone service $600.00

Licenses, Fees, Permits $1,000.00

Marketing $2,200.00

Salary $40,000.00

Uilities $2,400.00

Insurance $12,000.00

Total $100,200.00

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The increase in sales volume is due to a variety of factors, including a more mature business, with better reputation, better marketing strategies, and higher demand due to the open of the running trail. To meet this increase in demand, the store will have to invest more in having a better location, more staff and better marketing.

Uses of Funds

Based on the prediction in (i), we recommend an initial minimum amount of $130,200 dollars to start up this store. Of this amount, $100,200 will be channeled to starting up the physical store, including the cost of rent, other store-related expenses and inventory cost during the initial year. The rest $30,000 will be kept to maintain the liquidity of the store during operation of the first 5 years.

Cash-flow Statement

The cash-flow statement shows the annual cash balance of the store. Assuming all payments are cash or relatively as liquid (which is a reasonable assumption for a new, small business), the firm would have a negative cash balance for the first few years as the firm only reaches break-even point after the fourth year. As discussed in Growth Capital, with an additional of $30,000 from start-up cost, the store will be able to stay liquid in the future and avoid the expensive option of borrowing from banks.

Sales Volume

0

350

700

1050

1400

Year 1 Year 2 Year 3 Year 4 Year 5 Year 6

Sales Volume

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To illustrate this, below is the cash-flow analysis for the store without the additional $30,000

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With the additional $30,000, the firm can avoid taking out loans from the bank, hence resulting in lower expenses. With additional cash on hand, the store will be able to make crucial investment to improve sales, such as higher quality inventory or store improvement. The analysis for this scenario is followed:

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Detailed Cash-flow statements for the first six year of operation are attached in the Appendix.

Cash Flow Analysis ($100,200 start-up)

-$37,500.00

-$25,000.00

-$12,500.00

$0.00

$12,500.00

$25,000.00

$37,500.00

$50,000.00


Cash balance

Cash Flow Analysis ($130,200 start-up)

$0.00

$20,000.00

$40,000.00

$60,000.00

$80,000.00

Cash-flow analysis Year 2 Year 4 Year 6Year 6

Cash balance

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Income statement

The Income statement seeks to explain the operation details of the shoes store. The operation of Woosh is not different from a normal retailer, with our revenue stream comes from the selling of the high-class running shoes displayed in our physical store. This revenue is then used to pay for the cost of purchasing the inventory, the operational cost of running the stores, and other marketing costs. Any profit generated from the business is either channeled to the operation of Woosh Club or store expansion.

The income statements for the first six years of operation are attached in the Appendix.

Revenue

The store sells a variety of running shoes from different trusted brands. The selection of these shoes is based on the expertise of the store as well as the demand of the customers. Due to the variety of shoes and the varying prices, the assumption that on average a pair of shoe costs $100 is made to simplify our financial projection.

The annual sales revenue is also broken into two periods as the business demand is seasonal, strong during the running season and weaker during the colder months. The first season is the peak season, which roughly correlates to the seasons of spring and summer. This season starts from April 1st every year and ends on Octorber 31st. The second season is off-peak season, which starts from November 1st to March 31st annually. Therefore our fiscal year starts on April 1st and ends on March 31st. To reflect variation in demand, the revenue is computed semi-annually with separate sales assumption to reflect the two seasons. As we first start out, we expect to sell around 12 pairs of shoes per week, which is roughly 1 pair a day during the weekday and 3.5 pairs each day during the weekend. This is a reasonable estimation for sales as it is achievable for a new shoes store open downtown Wooster. During the off-peak season, we only hope to sell 9 pairs per week, as the number of runners decreases.

We forecast our sales will slowly pick up over the year, with around 17% growth in sales in the second year, this growth will continue to around 21% in the second year. Our growth is expected to peak at around 30% in the third and fourth year, due to a number of assumptions. First of all, sales usually peaks at this time for most retailers of this kind, and secondly, with the economy picking up and the completion of the Ohio running trail passing through Orville, we expect to see more customers spending larger amount during these years.

Below is our revenue prediction:

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Expenses

As this is a retailing business, our inventory cost is very much dependent on our suppliers, and it is almost out of our control. We hope to establish good relationship with the suppliers so that we can enjoy any special promotion programs provided by the suppliers. The details of inventory contracts are still unclear until our store is created; however, based on our research with existing store owners, we can estimate the inventory cost approximately at 40% the Manufacturer Suggested Retail Price. Hence, we have a 60% margin to work with to turnover profit. The bulk of our other expenses come from marketing expenses and overhead expenses such as rent, salary, etc. We hope to keep these costs as low as possible to boost profit

Income (loss)

Simply speaking, the income is the remainder amount after all expenses have been paid. As a new store, we expect to post some losses for the first few years as we start up and attract more customers. However, we hope to start generating profit as soon as the fifth year. Below is our income projection.

Revenue

$0

$35,000

$70,000

$105,000

$140,000


Revenue

� 23

!

As such, our break-even analysis shows that the store will reach its break-even point after four years of operation. Beyond this point, the store will be able to pay back any debt it owes and use the profit generated for Woosh Club.

Profit (loss)

-$40,000

-$30,000

-$20,000

-$10,000

$0

$10,000

$20,000


Profit (loss)

� 24

V. GANTT Chart

The GANTT chart provided on the following page provides a timeline that projects the order in which specific steps should take place in order to see WOOSH to fruition. This chart is meant to be used as a guideline for the project schedule dictating WOOSH’s development.

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VI. Appendix

Income Statement

Year 1

Revenue Assumption: $100 per pair

Peak Non-Peak Yearly

Sales (pairs/week) 12 9

Volume of Sales 288 216 504

INCOME STATEMENT 3/31/1310/31/1

2 4/1/12 YearlyAnnual Change

Revenues$28,80

0$21,60

0 $50,400

Cost of goods sold 11,520 8,640 0 $20,160

Gross margin 17,280 12,960 0 $30,240

Demand creation expense 1,100 1,100 0 $2,200

Advertising 600 600 $1,200

Running events 500 500 $1,000

Operating overhead expense 30,800 30,800 2,200 $61,600 13

Rent 3,600 3,600 600 $7,200

Insurance 6,000 6,000 0 $12,000

Utilities 1,200 1,200 100 $2,400

� 26

Salary 20,000 20,000 1,500 $40,000

Total selling and administrative expense 31,900 31,900 2,200 $63,800 1350.00%

Other expense, net 1,000 1,000 1,000 $2,000 0.00

Interest (income), net 0 0 $0 0.00

Total 1,000 1,000 1,000 $2,000

Net Income(15,620

)(19,940

) (3,200)$(35,56

0) 13%

� 27

Year 2


Peak Non-Peak





Revenues$33,60

0$24,00

0 $28,800 $57,600 16.67%

Cost of goods sold 13,440 9,600 $11,520 $23,040 16.67%

Gross margin 20,160 14,400 $17,280 $34,560 16.67%

Demand creation expense 1,100 1,100 $1,100 $2,200 0.00%

Advertising 600 600 $600 $1,200

Running events 500 500 $500 $1,000

Operating overhead expense 30,800 30,800 $30,800 $61,600 0.00%

Rent 3,600 3,600 $3,600 $7,200

Insurance 6,000 6,000 $6,000 $12,000

Utilities 1,200 1,200 $1,200 $2,400

Salary 20,000 20,000 $20,000 $40,000

Total selling and administrative expense 31,900 31,900 $31,900 $63,800 0.00%

� 28

Other expense, net 1,000 1,000 $1,000 $2,000 0.00%

Interest (income), net 0 0 $0 $0

Total 1,000 1,000 $1,000 $2,000 0.00%

Net Income(12,74

0)(18,500

) (15,620)$(31,24

0) -18.44%

� 29

Year 3


Peak Non-Peak





Revenues$42,84

0$30,24

0 $33,600 $73,080 27.50%


Gross margin 25,704 18,144 $20,160 $43,848 27.50%


Advertising 600 600 $600 $1,200 0.00%

Running events 1,000 500 $500 $1,500 100.00%


Rent 6,000 6,000 $3,600 $12,000 66.67%

Insurance 6,000 6,000 $6,000 $12,000 0.00%

Utilities 1,200 1,200 $1,200 $2,400 0.00%

Salary 20,000 20,000 $20,000 $40,000 0.00%


� 30



Total 1,000 1,000 $1,000 $2,000 0.00%

Net Income(10,09

6)(17,156

)$(12,74

0)$(27,25

2) -20.75%

� 31

Year 4


Peak Non-Peak



INCOME STATEMENT3/31/1

610/31/1


Revenues$55,44

0$35,28

0 $42,840 $90,720 29.41%


Gross margin 33,264 21,168 $25,704 $54,432 29.41%


Advertising 600 600 $600 $1,200 0.00%

Running events 1,000 500 $1,000 $1,500 0.00%


Rent 6,000 6,000 $6,000 $12,000 0.00%

Insurance 6,000 6,000 $6,000 $12,000 0.00%

Utilities 1,200 1,200 $1,200 $2,400 0.00%

Salary 20,000 20,000 $20,000 $40,000 0.00%


� 32



Total 1,000 1,000 $1,000 $2,000 0.00%

Net Income (2,536)(14,132

)$(10,09

6)$(16,66

8) -74.88%

� 33

Year 5


Peak Non-Peak




610/31/1


Revenues$79,20

0 $58,080$55,44

0$137,28

0 42.86%

Cost of goods sold 31,680 23,232$22,17

6 $54,912 42.86%

Gross margin 47,520 34,848$33,26

4 $82,368 42.86%


Advertising 600 600 $600 $1,200 0.00%

Running events 1,500 500 $1,000 $2,000 50.00%

Operating overhead expense 33,200 33,200$33,20

0 $66,400 0.00%

Rent 6,000 6,000 $6,000 $12,000 0.00%

Insurance 6,000 6,000 $6,000 $12,000 0.00%

Utilities 1,200 1,200 $1,200 $2,400 0.00%

Salary 20,000 20,000$20,00

0 $40,000 0.00%

� 34

Total selling and administrative expense 35,300 34,300

$34,800 $69,600 1.44%



Total 1,000 1,000 $1,000 $2,000 0.00%

Net Income 11,220 (452)$(2,536

) $10,768 -542.43%

� 35

Year 6


Peak Non-Peak




610/31/1


Revenues$84,48

0$63,36

0$79,20

0 $147,840 6.67%

Cost of goods sold 33,792 25,344$31,68

0 $59,136 6.67%

Gross margin 50,688 38,016$47,52

0 $88,704 6.67%


Advertising 600 600 $600 $1,200 0.00%

Running events 1,500 500 $1,500 $2,000 0.00%

Operating overhead expense 33,200 33,200$33,20

0 $66,400 0.00%

Rent 6,000 6,000 $6,000 $12,000 0.00%

Insurance 6,000 6,000 $6,000 $12,000 0.00%

Utilities 1,200 1,200 $1,200 $2,400 0.00%

Salary 20,000 20,000$20,00

0 $40,000 0.00%

� 36

Total selling and administrative expense 35,300 34,300

$35,300 $69,600 0.00%

$0



Total 1,000 1,000 $1,000 $2,000 0.00%

$0

Net Income

14,388 2,716 $11,22

0 $17,104 28.24%

� 37

Cash-flow Statement

Year 1

Cash Inflow Cash Outflow

Grant $130,200.00 Start-up $100,500.00

Revenue $50,400.00Other expenses $2,000.00

Total Inflow $180,600.00Total Outflow $102,500.00

Cash Carried forward $0.00

Cash balance $78,100.00

Year 2

Cash InflowCash Outflow

Grant $0.00 Inventory $23,040.00

Revenue $57,600.00 Fixed cost $61,600.00

Variable Cost $4,200.00


Cash Carried forward $78,100.00


Year 3

� 38








Year 4








Year 5





� 39




Year 6








� 40

VII. BIBLIOGRAPHY "Saucony Run For Good Foundation Awards: March 2010." Run for Good. N.p., n.d.

Web. 27 Nov. 2011. <http://www.sauconyrunforgood.com/category/news/>.

Web. 14 Nov. 2011. <http://www.city-data.com.>/

Web. 14 Nov. 2011. <http://www.bargaineering.com.>/

Web. 14 Nov. 2011. <http://www.mainstreetwooster.org./

“Strategic Planning Framework.” College of Wooster. Web. 14 Nov. 2011.

<http://www.wooster.edu.>/

“Prevention Pediatrics.” Center of Disease Control. Web. 14 Nov. 2011.

http://aappublications.org/content/121/2/e246.full./

“Consumer Price Index” Bureau of Labor Statistics. Web. 22 Nov, 2011 http://www.bls.gov/cpi/ “Consumer Spending” Bureau of Economic Analysis. Web. 20 Nov 2011 http://www.bea.gov/newsreleases/national/pi/pinewsrelease.htm “Main Street Wooster Project” Local Social Entrepreneurship Spring 2011 “Local Roots Project” Local Social Entrepreneurship Spring 2011

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