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SAMPLE BUSINESS PLAN OF ILL BE DENIM

EXECUTIVE SUMMARY

I'll Be Denim is an organic denim clothing line headquartered in Los Angeles that
currently focuses exclusively on locally producing a slim fit, straight fit, and
regular fit line of jeans for men and women. Founded by Elena Horowitz, a retail
industry veteran with experiences at JCrew, the Gap, and Levis, and James
Foster, a serial entrepreneur, the duo is out to bring socially conscious fashion to
the masses.
Currently selling online and through partnerships with a handful of
local boutiques in LA, the company is projecting to sell upwards of
$400,000 in year 1 and reaching $750,000 in 3 years. Plans for
expansion include setting up distribution and manufacturing
relationships in New York, another fashion centric goldmine where the
company aims to gain greater market penetration.
With an emphasis on environmentally responsible fashion, Ill Be Denim
will also be starting a jeans recycling program where consumers will be
able to ship or drop off old pairs of jeans and have them used in the
manufacturing process for new ones.
Industry research has found that US consumers own on average 7 pairs
of jeans and stick to one brand based one one important variable, fit.
Given that statistic the companys designs center around providing the
best fit, with a tagline of denim so good, youll never take your clothes
off. To further take advantage of this insight, Ill Be Denim will be
launching a custom tailor option where users will be able to request
custom fit jeans through an online portal.

The primary competition comes from three foreign brands namely


Kuyichi, Hiut Denim, and Nudie Jeans, all which have been committed
to sustainable fashion since the onset and are huge advocates for the
organic cotton movement. The brand value proposition and
differentiation will come from being an American brand with images of
patriotism and ruggedness that shows both fashion forward thinking
and a concern for the environment.
Primary means of marketing will be online through analytic-driven
approaches like SEO and paid search, in addition to capitalizing on
social channels like Instagram, Facebook, Twitter, and Pinterest. User
generated content and engagement will be key as product pages will
include Instagram photos and promote consumer pride in our products.
The organic cotton will be sourced from two mills, one based in Turkey
and the other in Japan where it will be transformed to denim and dyed
in natural indigo colors and shipped to our manufacturing and shipping
partner DenimsRUs in LA. Day to day operations are handled through
an office in LA with a second office in New York to be opened in a years
time.
The company has been funded through the two founders, their family
and friends, alongside some private investment.
OUR STORY

Ill Be Denim is a denim clothing line based out of Los Angeles focused
on bringing the highest quality organic denim wear to North America.
Founded by reputable designer Elena Horowitz and business partner
James Foster in October, 2012 with the duo having gone from a small
basement operation in Elenas home to successfully launching their
online store and scaling their operations.

After both founders worked for several years in the retail and fashion
industries respectively, one thing became increasingly clear to both of
them, the industry is in the midst of a deep moral and ethical crisis.
With cheap labour being continuously exploited with abysmal working
condition overseas and traditionally manufactured cotton using
upwards of 25 percent of the worlds entire agrochemicals consisting of
unimaginable amounts of insecticides and pesticides, Elena and James
decided enough is enough.
The duos vision for Ill Be Denim is simple, fashionable denim wear
made with organic materials thats manufactured locally and created
with the intent to make the fit so comfortable that youll never want to
take their clothes off. To achieve such a grand vision, the company is
committed to providing the best in class customer service in addition
to working with only the most detail oriented local manufacturers and
promoting eco-friendly fashion to the mainstream.
The guiding values and principles for the company are guilt-free
fashion (letting customers purchase high-quality apparel without
shutting out their conscious), the denim is in the details (working
with only the best local production factories), and eco is not a fad, but
our last chance (sourcing organic denim from certified suppliers).
CURRENT COMPANY STATUS

Ill Be Denim was incorporated in October, 2012 and operates as a


partnership between Elena Horowitz and James Foster. All company
shares are held by the founding duo. Since sourcing, manufacturing,
and selling out of Elenas basement to friends, family, and through
local boutiques, the company has grown to have its own online store,
relationships with suppliers of premium organic denim in Turkey, and

local manufacturers in LA. The company has had its revenues double
every two months.
ILL BE DENIM OBJECTIVES

Ill Be Denim is currently selling denim jeans online through its Shopify
ecommerce store shipping primarily within Southern California with
market penetration in New York, another in addition to sporadic orders
north of the border to Canada in Toronto and Montreal. It also currently
partners with two local fashion boutique stores focused on selling ecofriendly apparel that looks and feels good. The company is laserfocused on growing its sales and operations as broken down in the two
phases listed below:
PHASE I (NEXT 6 MONTHS)

Increase online sales by 20 percent by end of year through


influencer and social media marketing tactics

Partner with 3 additional local high-end fashion boutiques with


shared values as distribution channels

Increase online social presence on Facebook, Twitter, Instagram,


and Pinterest by 30 percent

Build out a custom apparel line of the business giving online


consumers the ability to create their own denim jeans and jackets
PHASE II (NEXT 12 MONTHS)

Explore possibility of brick-and-mortar operations through testing


pop-up stores in LA region

Create strategic partnerships with local fashion boutiques in New


York for distribution in the area

Scope out local manufacturers in New York area for quality


production with aim of opening operations for denim jackets as the
next product line and increased delivery within region

Initiate a jean recycling program whereby consumers will be able


to deposit their denim and have them be reused in the creation of new
jeans
THE TEAM

Elena Horowitz is an award-winning fashion designer who graduated


from the Rhode Island School of Design and worked at top retail brands
like J Crew, the GAP, and Levis for the past 15 years. Fed up with the
lack of speed with which most retail brands were moving towards
embracing eco-friendly means of production, she decided to quit her
job and start Ill Be Denim. She serves as Chief Design Officer (CDO)
and works with partner manufacturers to ensure quality of product.
James Foster dropped out of the University of Berkeley after finding
success with his first online store selling fertilizer and garden
equipment with his college roommate. After successfully exiting the
company, he went on to hold operational positions in management for
a slew of ecommerce companies before meeting Elena at a party and
hitting it off. The two discussed their guilt over buying from traditional
fashion brands and decided to combine forces to launch their own
label. He serves as the Chief Executive Officer (CEO) and oversees all
supplier relationships, business logistics and strategic partnerships.
MARKET SIZE AND DEVELOPMENT
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A recent report looking at the Global Denim Consumption and


Production through the years 2011 to 2021 by Denimandjeans.com
found that in 2007 the world jeans market was worth an estimated
$51.6 billion and is at pace to grow to $56.2 billion by the year 2014.
The report also revealed that North America consumes an estimated
39 percent of denim purchased worldwide while more than 50 percent
of production is still based in Asia, specifically in countries like China,
India, Turkey, Pakistan and Bangladesh.
Another report that focused exclusively on the denim consumption
habits in the US found that an average US consumer owns 15 denim
garments on average, 7 of which are pairs of jeans. Out of all apparel
purchased denim makes up 17 percent which explains why it continues
to be the highest selling clothing item in the world.
However, when it comes to consumer behaviour and trends most US
denim purchasers buy jeans for fit at 66 percent citing the reason over
its brand name. Interestingly enough though, 73 percent prefer to
purchase the same brand as the one they own with men showing more
loyalty at 64 percent than women at 45 percent.
Going deeper into the growing level of awareness around
environmental sustainability and climate change, the Cotton
Incorporated 2013 Environment Survey found that 51 percent of
consumers say that environmentally friendliness is important to their
apparel purchase decisions. Digging a little further, about 33 percent
are actually more likely to seek out environmentally clothes for
themselves.
When it comes to the material of their clothes though, nearly 72
percent of survey respondents say that natural fibres are better for the
environment than synthetics, with 51 percent of consumers willing to
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pay more for them. Such trends are driving global brands like Gucci,
Timberland, and others to focus on making their products and supply
chain more environmentally friendly.
Pair all those facts together and you get a winning combination
championed by Ill Be Denim, provide consumers with organic denim
manufactured locally with an emphasis on designing for fit while also
offering custom fit solutions.
COMPETITION

KUYICHI - Based in the Netherlands, the company has been in the

market since 2001 selling organic denim wear while simultaneously


using natural indigo dyeing techniques and running a robust jeans
recycling program

HIUT DENIM - Based in the UK, the company operates out of a

small town known for manufacturing jeans. It currently offers a


selection of organic denim jeans targeted at both men and women,
making only 100 pairs a week and resolving to only make jeans

NUDIE JEANS - Headquartered in Sweden, the company achieved

its goal of launching an organic denim jeans collection in 2012 and has
both online and brick-and-mortar locations. They also have a wide
assortment of sustainable efforts ranging from providing a fair living
wage to everyone involved in the manufacturing process and recycling
jeans.
BRAND DIFFERENTIATION AND VALUE PROPOSITION

Though there are more than a handful of organic denim startups, at Ill
Be Denim, we firmly believe that with the founders combined
experience, industry partnerships, and focus on providing the quality
denim jeans produced with sustainability in mind from cradle to grave,
the brand can stand out. Our plan is to leverage our American heritage
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and love for the fabric and use a marketing strategy that is closely
aligned with building personal relationships with our target market. In
addition, with fit being the biggest variable in jean purchase decisions,
our custom fit program in addition to our slim, straight, and regular fit
jeans will help us delight our customers who in turn will spread the
word.
TARGET MARKET

With our initial line of slim fit, straight fit, and regular fit denim jeans,
were looking to target the following consumer segment:

AGE: 17-35

SOCIAL MEDIA SAVVY: Voraciously active on popular social

networks like Facebook, Twitter, Instagram, Pinterest, and Tumblr

FASHION FORWARD: With a keen eye on their day to day wear,

these male and female fashionistas dress to impress

ADDICTED TO MOBILE: They Instagram their food, check their

Facebook status while waiting in line, and tweet every traffic disruption
they experience.

ECO-FRIENDLY: They feel a pinch everything they know their

clothes were manufactured unethically or are aware of the ecofootprint they have by consuming clothes made with regular cotton

LOCATION: The beachheads for the company will be LA and New

York, however, with the ability to shop online, well heavily promote
ourselves throughout southern California
MARKETING PLAN

SEO: Our content and blogging efforts will be targeted at having

us rank competitively for keywords like organic denim, organic


jeans, and eco-friendly garments

PAID SEARCH: We will invest in both Google Adwords and

Facebook Ads to take advantage of their PPC services with optimized


landing pages for conversion

INSTAGRAM: We will launch campaigns and contest to encourage

user-generated images which we will then upload to our product pages


to build a community around our brand and the values we stand for

OTHER SOCIAL MEDIA: We will subcontract a community

manager to regularly engage our Facebook, Twitter, and Pinterest


communities

PR: We will promote our story, values, and fashion to leading

fashion blogs and print magazines emphasizing our earth-friendly and


ethically manufactured clothing

BUSINESS DEVELOPMENT: We will actively look for the most

popular local fashion boutiques frequented by our target market that


shares in our values and beliefs
Another point to highlight is our focus on customer service with a 100
percent fit satisfaction guarantee or reimbursement for any
alternations, in addition to a complete refund policy effectively in
place.
DAILY OPERATIONS

For our day to day operations, Ill Be Denim has established several key
partnerships that ensure long-term durability and the ability to scale
alongside demand for our goods.
We will source the best organic cotton from two suppliers, one located
in Turkey and the other in Japan which means that their supplies were
produced without the use of any pesticides and was dyed in indigo
using a natural means. Once the shipment arrives in the US, itll be
routed to our production and shipping partner, DenimsRUs located in
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the outskirts of LA who the company will work closely with to ensure
quality through regular checks and audits. It is also where the products
will ship out of through an integrated backend system and order
processing mechanism.
The Ill Be Denim office is located on 2029 Century Park East where the
two co-founders in addition to two admin and one sales and marketing
support staff will work out of handling all online order processing and
ensuring the purchase to delivery of their denim products runs
smoothly. Its also where all requests for refunds will be handled in
addition to the future launch of the jean recycling program.
FINANCIAL PLAN
PRO FORMA INCOME STATEMENT
YEAR 1

YEAR 2

YEAR 3

SALES

$395650

$610000

$750000

Direct Cost of Sales

$50370

$82000

$105000

Other Production Expenses

$50370

$82000

$105000

Total Cost of Sales

$100740

$164000

$210000

Gross Margin

$294910

$446000

$540000

Gross Margin %

74.54%

73.11%

72%

$177600

$192600

$212000

$0

$130000

$150000

EXPENSES
Payroll
Sales and Marketing and Other
Expenses

10

Depreciation

$7140

$7140

$7140

Leased Equipment

$0

$0

$0

Utilities

$6000

$6000

$6000

Insurance

$6000

$6000

$6000

Rent

$24000

$24000

$24000

Payroll Taxes

$26640

$28890

$31800

Other

$0

$0

$0

TOTAL OPERATING EXPENSES

$247380

$394630

$436940

Profit Before Interest and Taxes

$47530

$51370

$103060

EBITDA

$54670

$58510

$110200

Interest Expense

$13830

$12750

$12570

Taxes Incurred

$10110

$11586

$27147

NET PROFIT

$23590

$27034

$63343

NET PROFIT/SALES

5.96%

4.43%

8.45%

PRO FORMA CASH FLOW

YEAR 1

YEAR 2

YEAR 3

CASH RECEIVED
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Cash from Operations


$39565

$61000

$75000

Cash Sales

SUBTOTAL CASH FROM OPERATIONS

$395650

$610000

$750000

Sales Tax, VAT, HST/GST Received

$0

$0

$0

New Current Borrowing

$0

$0

$0

New Other Liabilities (interest-free)

$0

$0

$0

New Long-term Liabilities

$0

$0

$0

Sales of Other Current Assets

$0

$0

$0

Sales of Long-term Assets

$0

$0

$0

New Investment Received

$0

$0

$0

SUBTOTAL CASH RECEIVED

$395650

$610000

$750000

EXPENDITURES

YEAR 1

YEAR 2

YEAR 3

$17760

$19260

$21200

$10395

$36497

$46354

Additional Cash Received

Expenditures from Operations

Cash Spending

Bill Payments

12

SUBTOTAL SPENT ON OPERATIONS

$281557

$557575

$675540

$0

$0

$0

Borrowing

$0

$0

$0

Other Liabilities Principal Repayment

$0

$0

$0

Repayment

$21600

$1800

$1800

Purchase Other Current Assets

$19800

$19800

$19800

Purchase Long-term Assets

$0

$0

$0

Dividends

$0

$0

$0

SUBTOTAL CASH SPENT

$322957

$579175

$697140

NET CASH FLOW

$72693

$30825

$52860

CASH BALANCE

$137293

$168118

$220978

Additional Cash Spent


Sales Tax, VAT, HST/GST Paid Out
Principal Repayment of Current

Long-term Liabilities Principal

PROJECTED BALANCE SHEET

YEAR 1

YEAR 2

YEAR 3
13

ASSETS
Current Assets
Cash

$137293

$168118

$220978

Inventory

$6270

$10207

$13070

Other Current Assets

$19800

$39600

$59400

TOTAL CURRENT ASSETS

$163363

$217926

$293448

Long-term Assets

$50000

$50000

$50000

Accumulated Depreciation

$7140

$14280

$21420

TOTAL LONG-TERM ASSETS

$42860

$35720

$28580

TOTAL ASSETS

$206223

$253646

$322028

LIABILITIES AND CAPITAL

YEAR 1

YEAR 2

YEAR 3

Accounts Payable

$9633

$31822

$38661

Current Borrowing

$0

$0

$0

Other Current Liabilities

$0

$0

$0

SUBTOTAL CURRENT LIABILITIES

$9633

$31822

$38661

Long-term Liabilities

$128400

$126600

$124800

TOTAL LIABILITIES

$138033

$158422

$163461

Long-term Assets

Current Liabilities

14

Paid-in Capital

$200000

$200000

$200000

Retained Earnings

$155400

$131810

$104776

Earnings

$23590

$27034

$63343

TOTAL CAPITAL

$68190

$95224

$158567

TOTAL LIABILITIES AND CAPITAL

$206223

$253646

$322028

NET WORTH

$68190

$95224

$158567

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