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Man`Chali Introduction to Business

Man`
Chali

ACKNOWLEDGEMENT

We wish to acknowledge our regards and indebtedness to our guide


and benevolent Prof: MR. Ghulam Ahmad Rana teaching Introduction to
Business in University Of Management and Technology (UMT) Lahore.
Whose kind and precious suggestions enriched our thoughts and
helped us to accomplish this Business plan. We also want to thank our
families who supported us. Thanks to Almighty ALLAH for giving us
such will and power to complete this business plan on time

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Man`Chali Introduction to Business

PREFACE

We have chosen this Boutique to make our project on it. We had a good
time while doing the survey and gathering the information about the
topics, and then developing a fictitious company into a project.
The project is basically about the Business plan of the day care centre.
We also used the source of internet for gathering information. We think
that we have done our job in making the business plan we hope that

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Man`Chali Introduction to Business

we have given all the complete information required by our teacher,


and hope that our hard work pays off.

Course name
Introduction to Business

Project Name
Business plan for boutique

Submitted to
MR. Ghulam Ahmad Rana

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Man`Chali Introduction to Business

Group 1
Section D

Submitted by
Shurahbil Bin Nasim
Hafiz Mohammad Haris Qadri
Zeeshan Arshad
Shahbaz Ahmad
Jahazeib Haider

INTRODUCTION

Name of the business


We open ladies boutique in DHA and we are dealing ladies casual wear,
formal wear and semi formal wear.

Boutique Name

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Man`Chali Introduction to Business

Man`chali
Our Slogan

The fashion world


MISSION

“Satisfying our costumers by providing them best qualitative stuff and


unique designs keeping in view their comforts and excellence”
.

Our Objectives

NON-FINANCIAL OBJECTIVE:
.
• To be among the top ten favorite brands.
• To add new design in every season.

FINANCIAL OBJECTIVE:
• To maintain an inflation growth in earning per year at a rate of
12%.
• To obtain a return on equity of at least 30%.
• Providing stitching facilities to other boutiques in 2010 which are
lacking this facility.

Boutique business
Clothing is a beautiful visual demonstration of the social and emotional
needs of people wearing it. It also portrays in a clearly understood
visual manner, what people of different cultures and styles want
socially. Fashion, through times, has gone through so many rapid
changes and bizarre extremes that it has examples of nearly every
kind of clothing function.
However, in a boutique business, the specifications and descriptions of
the designs and clothes are so general that they can fit more than one

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costume, which actually are quite different in nature from each other
and this is solely dependent on the taste of the people.
The range of Pakistani dresses is remarkably wide, according to the
vast cultures, geographical differences, purchasing capacities,
influence of the western culture, and bewildering diversities of the
ethnic groups. One has, therefore, to sift and isolate, and then relate
and bring together, the ideas for creating various designs, which can fit
in the context of the fashion in vogue and the culture in practice.
In reference to Pakistan, the Boutique business is quite in vogue but
has yet to be formalized. The market of this enterprise is quite
scattered and unorganized. There are a few major players in Boutique
business and these entrepreneurs have also taken an initiative based
on their caprice and experience in the field of fashion design. However,
there is a massive potential in this field, if one has the ability to design
and market his/her products through introducing innovative designs
both in stitching as well as the fabric sector.
Furthermore, there is massive export potential in this sector, as the
demand of Pakistani dresses, especially in countries like UAE, USA, and
UK, is massive due to a high number of Pakistani expatriates who have
settled in these countries.

Proposed Capacity
The Boutique business capacity is greatly dependent on the market
size and the number of potential clientele one can attract.
Furthermore, the women fashion wear garments will be designed
through a contracted designer and then stitched through in-house
stitching unit. On average, a designer can supply forty designs per
month from which nearly thirty designs are selected on average.
Approximately, total capacity of the defined unit with 5 stitching
machines (basis on 8-10 hours shift) will be about 750 dresses. The
breakup of the total number of dresses will be as follows:

Total designs selected by designer 20


Number of dresses in each design 50
Number of dresses in each size 50
Total Number of dresses 1000

This production and sales capacity is estimated to be economically


viable and justifies the capital as well as operational costs of the
project.

Total Project Cost


The Boutique shop needs a total investment of about Rs. 1.83 million.
This includes a capital investment of Rs.1, 299,430 and a sum of
Rs.530, 680 as working capital.

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CURRENT STRUCTURE OF THE INDUSTRY


Currently, the boutique industry is relatively unorganized and is
scattered in and around the posh areas of the metropolitan cities of
Pakistan i.e. Lahore, Islamabad, Karachi, Peshawar, and Quetta. The
boutiques in Peshawar and Quetta, mostly sell the traditional dresses
having indigenous/local designs, whereas the ones in Lahore,
Islamabad, and Karachi deal in fashion wear greatly influenced by the
west and the local trends in vogue. As such, there is no exact detail
available of the number of boutiques, especially in women wear,
because there is no association or link between these enterprises. The
reason being the business rivalries and the competitive structure of
this industry. However, one can name a few major players in the
business such as
• Indifference,
• Generation, Parahan,
• Nee Punhal,
• Bossini,
• Kapre Waghera,
• Maria B,
• Nina’s,

Some individual designer players like


• Beegee’s,
• Nilofar Shahid,
• Nadia Mistri,
• Amir Adnan,
• Shayan Malik, and
• Sahar Saigol.

MARKETING PLAN
The marketing of boutique follows the conventional marketing pattern
which is dependent on selection of venue of the outlet/s and the
product mix (designs and sizes), as well as the promotional strategy.
Furthermore, the boutique owner has to marketing techniques like:
• Usage of print media i.e. printing of posters and pamphlets as
well as displaying it and distributing it at proper places
• Advertisement in print media i.e. newspapers and fashion
magazines, etc.

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• Usage of electronic media i.e. projection of the boutique in


fashion programs, advertisement on television, and provision of
dresses to various television plays and films.
• Event arrangement like fashion shows and photo-shoots.
• Usage of e-commerce i.e. launching of website and advertising
on web.
• Word-of-Mouth: Let your friends and family do the raving for
you and the word will get out and you will start gaining a
business reputation for offering this that or the other thing. Cost:
FREE
• Radio: Call the advertising department for an appointment. They
show you what they offer. You get to hear your business name
advertised on the radio or. You can make a choice or not. Costs:
Yes
• Direct Mail: Send out a post card about your business to mailing
list, friends and family and maybe former co-workers. Costs: Yes
• Membership cards
• Telemarketing
• Exhibitions in universities
• Fliers & Brochures These can be easily done on your computer. If necessary you
can download free software programs online. Costs: Yes
• Business Cards Business cards identify your business. Hand one out every time
you meet somebody new or speaking with somebody who has a similar business.
It is a simple marketing strategy, Costs: Some
• Promote for Seasons & Holidays Set up sales days for seasons, holidays, Elvis's
birthday, Queen's birthday. Be sensitive to faith and ethnic related holidays.
• Special Sales Hold special sales on specific items during specific hours (down
time hours) of your business. This will draw customers in search of these items.
• Diet Sale Offer a discount percentage equal to pounds lost for your customers.
Advertise to health stores, fitness centers, diet groups.
• Cross Promote with Other Stores Exchange store items and label with each
others store name and hours. This will help generate traffic and recognition for
customers for both stores
• Store Draw Offer a Draw to customers at the store. Select a popular item and get
customers to leave their name in a ballot box. The more they frequent the store the
more submissions are made therefore higher chance of winning. We promote a
month in advance.

Moreover, in order to keep abreast with the emerging trends and client tastes, surveys
regarding customer satisfaction/needs should be a regular feature of this project. As this
project of Boutique deals in designer women wear, therefore the product mix will
comprise of different styles of the female dresses in different sizes. Whereas, the styles
will be Shalwar Kameez, Q-lots, Pajama Kameez, Frocks, Kurta, Peeshwaz,

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Party dresses, Casual Dresses and other prevalent dresses based on


the market Trends.

Note:
This production also includes additional suits that will be prepared on
orders/outsourcing/CMT (Cutting, Manufacturing] and Trimming) per
month in order to utilize the maximum capacity of the stitching unit.

RAW MATERIAL

Raw Material
The raw-material required for such sort of projects, would be as
follows:

• Fabric: The fabric, which is the basic raw material requirement


for a boutique and a major component of the cost, can be
obtained from wholesale markets or from markets specializing in
designer cloth at Faisalabad, Karachi, and Lahore.
• Accessories: Accessories such as buttons, laces, zippers,
elastics, threads, needles, embroidery threads, glasses, etc. will
be procured from the local market at competitive rates.
• Labels, tags and packaging: Labels and tags can be
obtained on order, as these serve as an identity for the boutique
and are useful for promotion.

PRODUCTION PROCESS FLOW

Production Process Flow


The process for converting fabric in designer wear garments follows
the below mentioned sequence:

• Design: The initial process starts from the designing phase.


Various patterns of clothing and the fashions in vogue, which also
relate to the tastes of the concerned clientele, are designed. This
is done by the contracted designer as he/she will provide the
basic designs of which the fabric will be converted into the
designer wear garment. On average, a designer is supposed to
provide 40 designs per month or 100-120 designs per season i.e.
three months. From these designs, approximately 50% of the
designs are selected for further development of clothes.
• Pattern Making/Cutting: Based on the designs selected,
patterns for cutting are developed and based on these patterns,

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fabric is cut, embroided, block printed, and processed


accordingly.
• Stitching: The cutting is then followed by stitching, which can
either be done by the in-house stitching unit or by outsourcing it.
Labels are also attached to the apparels in this process.
• Finishing: The final phase is that of finishing, in which the
garment will be checked for quality control and will cleaned (if
required) for final presentation at the outlet. The garments will
also be tagged for identification of sizes, prices, addresses,
handling instructions, etc.
• Presentation/Market: Once the designer wear garment is
ready after going through the above-mentioned process, it is
presented at the outlet/shop for sale to the clientele.

Note:
In case of over-lock stitching, it will be done in-house. The stitching of
buttonholes as well as elastic embedding will be outsourced. This will
cost approximately @Rs.5 per dress.

PRODUCTS

Product Mix
Products will be priced at the high end to reflect the quality and
exclusiveness associated with the brand. High-end materials such as
Crinkle Chiffon, Georjot Chiffon, Chinese Raw Silk, Medium Silk, Leafy
Print Jamawar, Chamose Silk etc will be used. This boutique will offer
following product categories of men wears:
• Casual Wear
• Semi Formal Wear
• Formal Wear

Each product category will include the following product lines:

Ethnic Wear
Formal Wear – Party dresses and special occasion dresses.

Contemporary Wear
Fusion Wear – Combination of eastern and western wear, suitable for
the international market as well.

Western Wear
Tops, Pants and various other styles.

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The combination of outfits for the proposed outlet will be as follows

Product Mix
Category % Of Total Outfits
Casual Wear 34%
Semi Formal Wear 33%
Formal Wear 33%

Average Sale Price


Category Ave. Price per outfit
Casual Wear 3,200
Semi Formal Wear 6,000
Formal Wear 15,500

Costs of Goods Sold and other Expenses


Cost of goods sold has been taken as a percentage of the sale price.
The percentage of cost for each product category is as below:

Percentage of Cost
Category Cost (percentage of sales)
Casual Wear 35%
Semi Formal Wear 32%
Formal Wear 30%

HUMAN RESOURCE REQUIREMENTS


The project of Boutique requires the following Human Resources/Staff:

Staff Salaries
Positions Require Salary per Salary per
d Month Annum
Production Staff
Designer 1 15,000 180,000
Tailor 5 7,000 420,000

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Press/iron man/finishing 1 4,000 48,000


Dyer 1 5,000 60,000
Total 708,000
Administrative Salaries
Sales girl 2 6,000 144,000
Office boy 1 3,500 42,000
Guard 1 5,000 60,000
Peon/sweeper 2 2,500 60,000
Total 14 306,000

MACHINERY/EQUIPMENT DETAILS
The boutique will require a small in-house stitching unit. The cost of the
stitching machinery will be as follows:

Machinery Detail
Stitching Machinery No. Rs/Unit Rs
Single needle lock stitching machine 8 19,900 159,200
Over lock Machine 1 56,800 56,800
Embroidery 1 29,900 29,900
Total 245,900

Note:
Prices have been quoted by SINGER sewing company, Pakistan.
Though the prices here are given of the new machines but second
hand machines are also widely available which can function properly
and can reduce the project cost too.

Furthermore, the following will also be required to setup a Boutique:

Office Equipment
Other Equipment No. Rs/Unit Rs
Computers 1 25,000 25,000
Computer printer 1 12,000 12,000
Telephones 2 3,500 7,000

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Fax machines 1 12,000 12,000


Software 1 30,000 30,000
Total 86,000

PREMISES FOR SHOP AND STITCHING UNIT

Recommended Mode for Renting a Shop


It is recommended that the proposed location for the said enterprise be
a posh area, where people have the buying capacity for women fashion
wear. The size of the shop should be at least 800 Sq.ft i.e. 20 feet front
and 40 feet depth. Furthermore, a small building will be required to
establishing the stitching unit. One viable option is to rent a small
house for this purpose.
The shop will be obtained on rental basis, and the rent estimation for
such a shop is Rs 56,000/month. According to the prevailing practice, 6
months rent as advance and three months rent as security would be
required for renting the shop. It is assumed that security is a one-time
expenditure, whereas pre-paid rent will only be given at the beginning,
while establishing the boutique. After first six months, rent will be paid
on monthly basis.
The cost estimates for setting up the Boutique are as follows:

Rent Cost Detail


Rs
Security for renting shop/outlet (Rent @ Rs.56,000 168,000
per month. 3 months rent as security)
Interior decoration (installing lighting, mannequins, 437,884
hanging racks, mirrors, glass panes, cash counter,
and other décor, etc.)
Security for renting a house for installing the 45,000
stitching unit (Rent @ Rs15,000 per month)

Infrastructure requirements

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The project will have the following infrastructure components:

Description Sq.ft
Main shop 600
Try Room 36
Small Store 100
Kitchen 64
Building for Stitching Unit 10 Marla House

PROJECT ECONOMICS
Project Cost

Description Cost (Rs.)


Machinery & equipment 166,300
Furniture & Fixture (Interior Decoration) 437,884
Office equipment 86,000
Security Deposits for Premises 213,000
Pre-operating expenses
Salaries 31,000
Promotional Expenses 67,246
Total Capital Cost 1,299,430
Working Capital
Raw material (Fabric & Accessories) 104,680
Prepaid Rent (Boutique and Stitching Unit) 426,000
Total Working capital 530,680
Project Cost 1,830,110

Project Returns
Internal Rate of Return (IRR) 67%
Payback Period (Years) 1.50
Net Present Value (NPV) 3,684,374

Financing Plan
Financing Rs.
Equity 60% 1,098,066
Debt 40% 732,044

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KEY SUCCESS FACTORS


There are a number of factors, which contribute towards the success of
a project. In case of the project of Boutique, some of the Key Success
Factors are as follows:
• Proper care while producing dresses should be adopted
• Proper Inventory management i.e. keeping minimum inventory
as per past sales trends.
• The dress designs should be according to the emerging trends
and fashions.
• Designing of dresses according to the consumer
tastes/preferences gathered through consumer surveys.
• The location of the outlet should be properly selected and
attractively decorated so as to target the clientele effectively.
• The customer satisfaction should be given due importance,
because it is the customer satisfaction, which can increase the
sales. Hence, excellent customer service should be provided.

Threats for the Business

• Competitive Structure of the market


The market of the boutiques is highly competitive; therefore if the
entrepreneur is not well responsive to the tastes and response of the
clientele as well as the fashions in vogue he/she may not be able to
capitalize the opportunity properly. . Do not partner with a competing store.

• Pilferage in the designs


The designs which a designer produces can be sold by the staff even
before that design is launched and that can pose serious threat to the
business because in the fashion industry it is the uniqueness of the
design which matters.
• Selection of the wrong venue
Selection of the wrong venue can be a major hurdle in achieving the
desired business objectives.
• Selection of the wrong design
If the designs are not selected according to the tastes of the clientele
then it can be detrimental for the business, so the clientele taste
should be properly tracked.
• Tax
Improper documentation of the sales receipt record may lead to
problems with Tax department.

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KEY ASSUMPTIONS
Production Assumptions
Number of Stitching Machines 5
Production Capacity (No. of dresses per month) 750
Capacity Utilization for the first year 55%
Self Production (% of total production) 60%
Dresses manufactured on CMT basis (% of total production) 40%

Operating Assumptions
Hours operational per day 8
Days operational per month (Production) 25
Days operational per month (Boutique) 25

Cash flow Assumptions


Account Payable Cycle (Days) 10
Account Receivable Cycle (Days) 15(of 30%
of sales)

Expense Assumptions
Promotion Expenses after Year 1 (% of expected sales) 2%
Machine Maintenance 1%of
machinery
cost
Raw Material Price Growth rate 1%
Payroll growth rate 5%
Machine Maintenance growth rate 5%
Rent growth rate 10%

Financial Assumptions
Project Life 10 Years
Debt: Equity 40:60
Interest Rate on Long Term Debt 14%
Debt Tenure 5Years
Debt Payment per year 2

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