PREMIER
“Always on the Ball”
Business Plan
Ryan Mack
Table of Contents
1.0 Executive Summary .......................................................................................................... 4
2.0 Business Introduction ...................................................................................................... 5
2.1 Introduction .................................................................................................................................. 5
2.2 Mission Statement ....................................................................................................................... 5
2.3 Objectives ....................................................................................................................................... 5
3.0 Operations Plan.................................................................................................................. 5
3.1 Location........................................................................................................................................... 5
3.2 Floor Plan ....................................................................................................................................... 6
3.3 Business Hours ............................................................................................................................. 7
3.4 Suppliers ......................................................................................................................................... 8
3.5 Service Providers......................................................................................................................... 8
3.6 Capital Budget............................................................................................................................... 8
3.7 Operating Expenses .................................................................................................................... 9
3.8 Cost of Sales ................................................................................................................................... 9
3.9 Working Capital Planning ........................................................................................................ 9
4.0 Human Resources ........................................................................................................... 10
4.1 Organizational Structure ....................................................................................................... 10
4.2 Job Descriptions ........................................................................................................................ 10
4.3 Shareholders’ Agreement ...................................................................................................... 12
4.4 Human Resource Strategy ..................................................................................................... 12
4.5 Weekly Schedule ....................................................................................................................... 12
4.6 Human Resource Costs ........................................................................................................... 13
5.0 Marketing Plan ................................................................................................................ 13
5.1 Products/Service ...................................................................................................................... 13
5.2 Price .............................................................................................................................................. 14
5.3 Place .............................................................................................................................................. 14
5.4 Promotion ................................................................................................................................... 14
5.5 Competitors ................................................................................................................................ 15
5.6 Purchasing Patterns of Consumers .................................................................................... 16
5.7 Policies ......................................................................................................................................... 16
5.8 Marketing Expenses ................................................................................................................ 16
6.0 Financial Plan .................................................................................................................. 17
6.1 Capital Requirements ............................................................................................................. 17
5.2 Summary of Projected Income Statement ....................................................................... 17
5.3 Summary of Projected Balance Sheet................................................................................ 18
5.4 Critical Variables ...................................................................................................................... 18
5.5 Contingency Plan ...................................................................................................................... 19
5.5 Dividend Policy ......................................................................................................................... 19
5.6 Economic Forecast ................................................................................................................... 19
5.7 Break-Even Analysis ................................................................................................................ 19
5.8 Net Present Value ..................................................................................................................... 20
5.9 Internal Rate of Return........................................................................................................... 20
5.10 Average Owner Compensation .......................................................................................... 20
5.11 Risk Analysis ............................................................................................................................ 20
2
6.0 Summary............................................................................................................................ 20
3
1.0 Executive Summary
Premier is being created to offer soccer players knowledge and top quality products
in Saskatoon and Canada. The store has a retail front and also an e-commerce store.
It will be located at 1820 McCormond Drive in University Heights Square. The store
will be open seven days a week at convenient times. Premier will provide a good
experience for those who shop in-store on online.
Saskatoon currently has a large market of soccer players with little competition.
There is one brick and mortar store within the city and online stores across the
border. Although competitors have history and a good reputation, Premier will
strive to do the same by providing an excellent experience and great products to go
along with it. As long as a good reputation is built, Premier will become a threat in
the marketplace. The ideal location will also play a major strength in the store’s
presence.
The store will be owned and ran by Ryan Mack. Ryan is in his fourth year in the
Management program at the Edwards School of Business and will be graduating in
2013. He has been heavily involved in sales and marketing at retail stores and has
had previous experience in creating strong online presences.
Both bank and equity financing will provide funding. A $20 000 bank loan will be
taken, as well as a $60 000 equity financing by the help of two extended family
members.
The following document will provide more information on the operations
management, marketing, human resources and financials for this business venture.
4
2.0 Business Introduction
2.1 Introduction
Premier is a retail and online soccer store that provides customers with the
following products:







Footwear
Jerseys/Shorts
Shin pads/Socks
Balls
Referee Gear
Keeper Gear
Accessories
All products will be sold in-store and on an e-commerce website. Products will be
picked by staff themselves to ensure that the players back up the products sold. This
allows the employees to share personal experiences, which will result in creating
strong relationships.
2.2 Mission Statement
We supply essential gear for the competitive and recreational footballer.
2.3 Objectives
The objectives over the next year include:




Receiving financing of $80 000
Generate 25 customers a day, purchasing an average of $40 per sale
Generate a positive income in the first year
Become well known and respected in the Saskatoon soccer community
3.0 Operations Plan
3.1 Location
Premier is located in Unit 22 of 1820 McCormond Drive in University Heights
Square. This is a shopping centre in between Erindale, Evergreen and Willow Grove
in the Northeast area of Saskatoon.
5
Figure 1 – Map
3.2 Floor Plan
Premier’s building is 1 400 square feet, the length is specifically 70 feet and the
width is 20 feet. When entering the building, the left side will have an installed
locker spaces and the right side will have the shoe wall and till. The middle space
will have a table for a clean merchandising look. The back of the store will have two
6
change rooms, a staff washroom and a storage room for the footwear.
Figure 2 - Floor Plan
3.3 Business Hours
In an average week, Premier is open seven days a week. It will only be closed for
some holidays such as New Year’s Day and Christmas Day. Below are Premier’s
common hours of operation:
7
Monday, Tuesday, Wednesday, Friday and Saturday
Thursday
Sunday and Holidays
10 am- 6 pm
12 pm - 8 pm
12 pm – 5 pm
3.4 Suppliers
When setting up the building for opening day, a lot of products will be needed
considering that the space is brand new. Paint and painting supplies will be
purchased from Home Depot, a computer from Computer Trends, office supplies
from Supreme Basics, Furniture from Ikea and other electronics from Future Shop.
The products that the store will sell will be directly from adidas in Concord, Ontario
and Nike in Scarborough, Ontario.
3.5 Service Providers
Since the building is brand new, a lot of work must be done to it at the beginning. A1
Plumbing will install air conditioning, heating, plumbing and electrical. They will
install the units and complete the finish. The City of Saskatoon will handle the
business’s water and sewage system. SaskPower will supply electricity and Sasktel
will be Premier’s phone, Internet and security provider. Moneris will provide
services for online and in-store Interac transactions.
3.6 Capital Budget
Majority of the start up costs come from leasehold improvements. There is a lot to
be done to make the store look attractive. Also, because the store is meant to have a
clean and simple look, the equipment costs can be kept low.
Description
Leasehold Improvements
Electrical Installation
Plumbing Installation
Air Conditioning Installation
Heating Installation
Signage
Paint and Supplies
Total Leasehold Improvements
Equipment
Computer
Estimated
Costs
$14,000.00
$10,000.00
$3,500.00
$15,000.00
$1,395.00
$180.00
$44,075.00
A1 Plumbing
A1 Plumbing
A1 Plumbing
A1 Plumbing
Signcraft
Home Depot
$1,100.00 Computer Trends
8
POS Software
Moneris
Website and E-Store Setup
Cordless Phone
Furniture
Locker Room
Counter Installation
$495.00
$525.00
$2,500.00
$30.00
$666.00
$8,000.00
$2,970.00
Total Cost of Equipment
$16,286.00
Total Capital Costs
$60,361.00
Pc America
Moneris
Forte Ideas
Future Shop
Ikea
Table 1 - Capital Costs
3.7 Operating Expenses
In Table 2 – Operating Expenses, are Premier’s first year of operating expenses. The
benefits were calculated using 2.526% for employment insurance, 4.95% for
Canadian pension plan, 5.77% for holiday pay and 2% for workers’ compensation
Operating Costs
Building Lease ($50,400/12)
Moneris
Utilities
Phone/Internet/Security
Office Supplies
Wages
Benefits
Insurance
Total Operating Costs
$4,200.00
$50.00
$312.00
$180.00
$145.00
$7,144.50
$1,091.67
$2,000.00
$15,123.17
Table 2 - Operating Expenses
3.8 Cost of Sales
All products have a profit margin of 50%. This can be seen in greater detail in the
financials section of the business plan.
3.9 Working Capital Planning
The capital provided in the birth of the business pays for the capital costs and then
some. The reason for receiving more financing than needed is to act as a reserve for
emergencies. Dividends will only be paid out to the shareholders if the business
makes more than $20 000 profit that year. Inventory will be ordered by the owner
9
and manager with the help of sales staff in advance by season, colours, styles and
sizes will be selected by popularity and likelihood of selling.
Accounts receivable will not be an issue because the store will not offer any credit to
its customers. Payments will be required to be paid in full. Accounts payable on the
other hand is common in the retail industry. The suppliers will give the store the
opportunity to pay for the inventory in 30 days.
4.0 Human Resources
4.1 Organizational Structure
The organizational chart explains the hierarchy of Premier. The owner will be in
charge of the manager, but it does not mean that the blogger and sales team cannot
interact with the owner. The manager is to direct the blogger and sales team of
duties. This structure is meant to be flat so that communication is easy and
employees can contribute to problems or voice their concerns.
Owner
Manager
Blogger
Sales
Team
Table 3 - Organizational Chart
4.2 Job Descriptions
The owner of this business is Ryan Mack. Ryan will be graduated with his bachelor
of commerce by the midyear of 2013. He is currently in his fourth year of the
management program at the University of Saskatchewan. He has been involved in a
retail store in University Heights for the past three years. Ryan has played soccer for
10
15 years and plans to remain playing until the sport becomes too physically
demanding. He has a good reputation in Saskatoon’s soccer community and many
strong relations within it. Lastly, he has worked on a few websites and is heavily
involved in social media as an individual and for businesses.
This will entail the duties of the specific employee.
Owner:
 Oversee all activities
 Manage employees
 Buying products
 Sales
 Social media activities
 Hiring and dismissing staff
 Training
 Payroll
 Enter and analyze financials
Manager
 Creating monthly schedules
 Buying products
 Sales
 Stock and merchandise
 Interact with customers
 Training
 Social media activities
 Manage employees
 Warranty issues
Blogger
 Social media activities
 Posting information and pictures of new products
 Keep updated on soccer news
 Interview members in the soccer community
 Advertise sales
Sales team
 Sales
 Stock and merchandise
 Interact with customers
 Product knowledge
11
4.3 Shareholders’ Agreement
The owner will hold 100% of the shares for Premier and it will be a private
corporation.
4.4 Human Resource Strategy
Premier’s success relies a great deal on the staff hired and their happiness working
for the store. The employees will be attracted through the use of the Saskatoon
soccer community and social media. With the owner having good ties with soccer
clubs, referees, coaches and players in the city, it will allow him to reach potential
employees across the city. With social media being popular among University of
Saskatchewan Huskies players, it will also help spread the word of employment
opportunities at Premier.
It is important that the people hired are well respected in the soccer community and
already have prior knowledge to the products in the store. Staff will be offered
benefits and a 40% discount to help retention rates. There will be seasonal product
knowledge meetings and the staff will be encouraged to test products and to share
with the other members. Managers will be in charge of motivating the members to
do a good job by challenging the staff and with bonding activities. All staff will be
encouraged to communicate with the owner and manager to improve the work
environment and the store itself.
4.5 Weekly Schedule
Below is an average weekly schedule at Premier.
Monday
Tuesday
Wednesday
Thursday
Friday
Saturday
Sunday
TOTAL
HOURS
Owner
10-6
10-6
12-6
10-6
12-5
35
Total Hours of Work
Full Part time
Part
Time
1
time 2
12-6
10-6
10-6
10-6
12-8
4-8
10-6
10-6
10-6
12-5
12-5
40
19
17
Part Time
3
12-6
12-6
12-6
18
Blogger
1
1
1
1
1
1
1
Daily
Total
22
14
22
18
22
16
15
7
129
12
Table 4 - Weekly Schedule
4.6 Human Resource Costs
The chart below will show the amount of staff needed and the wages that they will
be paid in the first year. As planned, the owner, a manager, three part time staff and
a blogger will need to be employed. The employees will be paid fairly in the first
year and the wages and salaries will increase with commitment and strong
performance. $85 734 will be the expected salary and wage expense for the first
year.
Salary and Wage Expense
Number of Employees:
Owner
Manager (full time)
Full time staff
Part time staff
1
1
350,000
0.82
Salaries/Wages
Owner
Manager Salary
Full time staff (wage rate/hr)
Part time staff (wage rate/hr)
40,000
28,800
$12.25
$10.50
Salary and Wage Costs
Owner
Manager
Full time staff
Part time staff
Total Salaries and Wages
40,000
28,800
16,934
85,734
Table 5 - Human Resource Costs
5.0 Marketing Plan
5.1 Products/Service
Premier will initially only offer adidas and Nike products. This includes footwear,
jerseys, shorts, keeper gear, shin pads, socks, balls, referee gear, accessories,
customizable products and gift certificates. Both brands will be featured equally and
the majority of their product line will be available in the store. Although there will
only be two brands, variety will still be present. Premier will offer products for
different surfaces (ex. natural grass, artificial turf and tile) and different weather
13
conditions. Premier plans on carrying a larger amount of the higher-level products
compared to lower end. This is because of their larger profit margins and to ensure
that the target market is satisfied.
The service will be excellent because of Premier’s expectations of the staff. The
employees will be experienced players who will know the product line by
experience, not only specifications and technical aspects. They will be given
opportunities to test products and sit through product knowledge sessions with
adidas and Nike representatives. The owner, manager and blogger will offer online
service. They will respond to all comments on the blog and social network platforms
and keep the audience happy with a constant flow of products and events posted
online.
5.2 Price
The products will be competitively priced in the Canadian market. Both adidas and
Nike offer a Canadian manufacturer suggested retail price that will be followed. This
will be surprisingly be less than some competitors when offering the same soccer
cleat for example as some businesses mark-up prices even higher. If products make
it to the season after, they will be marked down to reduce the amount of units in
storage.
5.3 Place
Like stated previously, Premier is located in Unit 22 of 1820 McCormond Drive in
University Heights. This store will be in the new University Heights Square. This
area is expected to be a highly populated residential area in the future.
Premier has also placed it in a position to offer its services to two main target
markets. The first is teenagers who strive to become top division players. Based on
the owner’s experience, this is an age where players are given opportunities to
become better and when they become capable and conscious consumers. The
second target market is active families with parents under the age of 50. This one is
important because in Canada, soccer is the most popular sport for youth. Children
tend to be more active when their parents are as well.
5.4 Promotion
Premier plans on using these four different styles of promotion as its competitive
advantage:
1.
2.
3.
4.
Location
Online Presence
Service/Environment
Sponsor
14
Location is a significant advantage being part of the soccer community. It is near the
Sasktel Soccer Centre, Centennial Collegiate Institute and community soccer pitches.
The Sasktel Soccer Centre currently has two outdoor fields, three indoor artificial
turf fields and a tile court as well. The indoor fields were created to help supply the
recent demand of indoor soccer in Saskatoon. Tournaments are hosted year around
at the Sasktel Soccer Centre as well. Centennial Collegiate Institute is well known for
having the only soccer academy in the Saskatoon school division. Around the store
are the Forest Park soccer fields too, there are seven fields at the time.
The online presence is another promotion tool for Premier. Premier will be one of
the only e-commerce soccer stores in Canada. It will offer free shipping for
purchases over $75 and offer holiday deals as well. Premier will also be present on
Facebook, Twitter and Instagram to allow customers to keep in contact with the
store. These will be used to show users the new products as well as offer exclusive
sales.
Service and the store environment may sound generic, but it is important to use this
cost-free tool as an advantage. The service provided in-store and online will be
excellent with consumer interaction and follow up messages. This will show the
store’s appreciation to all customers. The environment is unique because of the
store’s locker room merchandising style. Products will be able to be placed nicely on
the left wall as if the store was a real team room. In the future televisions playing
professional matches will be purchased to be watched inside of the store.
Sponsoring players and teams will be used to help increase sales in the city and
across the nation. Premier will search for fantastic players who are well mannered
to represent the store. In return they will be offered a 40% discount on all products.
In the first year, Premier would also like to sponsor a team. Teams may drop off
sponsorship requests or the store will directly ask a team, the team will be provided
a discount on team gear and will be provided team kits with Premier’s logo as the
sponsor. It is important to pick a top division team that is capable of winning
provincials because it will offer Premier a good marketing tool across Canada at the
national tournament. In the future, more teams will be sponsored.
5.5 Competitors
Premier has two different sets of competition. One would include the local stores
and the other would be e-commerce soccer stores. The local retail stores include
XtraTime Sports/Soccer Locker and Sport Chek. The online competition would be
Eurosport, Pro-Direct, Soccer Corner and We Got Soccer. XtraTime Sports/Soccer
Locker and the e-commerce stores offer high quality and high-tiered products
similar to Premier. The substitutes on the other hand are unlimited; Saskatoon
provides stores of many different recreational activities. In conclusion, Premier has
a strong market to compete with.
15
The main competitor is XtraTime Sports/Soccer Locker. They offer more brands
than Premier, but Premier offers a more selection within the brands sold. Like
Premier, XtraTime Sports/Soccer Locker provides equipment for both men and
women from high-tier to low-tier. XtraTime Sports/Soccer Locker currently has a
large following in Saskatoon but no online presence what so ever. They prove to be
Premier’s top opponent in the retail soccer industry.
5.6 Purchasing Patterns of Consumers
Both males and females are expected to do business at Premier. It is expected that
the average consumer will be a parent purchasing products for their teenage
children. As for patterns, the busiest months on average will be May and October
because of the new seasons but December for Christmas shopping. The store is also
expected to be busy on weekends during local soccer tournaments as well as
professional tournaments such as Summer Olympics, Euro’s and World Cup.
5.7 Policies
There are a few policies that Premier would like its customers to follow. The first is
that no accounts receivables will be open. Customers will need to purchase products
up front whether it be inside of the store or online. For return on regular priced
items, the customer has 14 days to return it if it was purchased in-store or 14 days
after the product was received if it was purchased from the e-commerce store.
These products can only be returned if they have been not been used, purchase is
proven and tags are still attached. If the items are returnable a full refund can be
given on the card that the purchase was made on or a store credit can be provided.
Sale items will be given seven days to return under the same policies as regular
priced items but only as an exchange rather than a full refund.
5.8 Marketing Expenses
The chart below shows the planned marketing expenses for the year of 2013. The
cost of the website will only be in the first year, this will be provided by Toran Dobni
at Forte Ideas. Business cards and stickers will be made by Sam Seto at Think Out of
the Box Media yearly. Sponsoring teams will be the last marketing expense for the
store, the $720 will cover one team. In the future, costs for sponsoring teams will
rise to support more teams. For the most part, Premier will try to keep marketing
expenses lower by utilizing social media.
Year
Website
Business
Cards
Stickers
Sponsoring
2013
$2,500.00
$120.00
$250.00
$720.00
16
Total
Expenses
$3,590.00
Table 6 - Marketing Expenses
6.0 Financial Plan
6.1 Capital Requirements
Premier requires $100 000. $20 000 will be from a bank loan from CIBC and $80
000 will be in the form of equity financing from the owner and two members of the
owner’s family. The family members are willing to be patient on their return,
making equity financing a good choice for Premier.
Bank debt
Equity
Total
20,000
80,000
100,000
Table 7 - Capital Requirements
5.2 Summary of Projected Income Statement
The sales on the chart below are based on 20 customers a day purchasing an
average of $40. This means that store is open 360 days that year. Growths in the
following years will be based on an inflation factor of 1.025, which increases the
average purchase per customer. In the following year, the growth rate number of
customers will grow by 20% and will continue to grow after as well. This estimate is
accurate due to the fact that the Saskatoon market is limited but the Canadian
market is not.
2013
Sales
COGS
Gross Profit
2014
2015
2016
288,000
144,000
144,000
354,240
177,120
177,120
417,560
208,780
208,780
(30,104)
(30,104)
(6,739)
(36,843)
10,671
(26,172)
2017
492,199
246,100
246,100
554,955
277,477
277,477
Table 8 - Gross Profit
Net Income
End RE
34,930
8,758
54,598
27,451
Table 9 – Net Income and Retained Earnings
Number of Customers/day
Number of Days/year
Average Purchase/customer
Total Sales
20
360
$40.00
288,000
24
360
$41.00
354,240
28
360
$42.03
417,560
32
360
$43.08
492,199
35
360
$44.15
554,955
17
Growth
Rate
Customers
Number
of
20%
15%
15%
10%
Table 10 – Revenues
5.3 Summary of Projected Balance Sheet
For the
Year Ended
2013
Total Assets
Total Liabilities
Total Equity
82,192
32,296
49,896
2014
2015
77,439
34,282
43,157
89,962
36,134
53,828
2016
2017
127,120
38,362
88,758
147,471
40,020
107,451
Table 11 - Balance Sheet
5.4 Critical Variables
There are two main critical variables that affect the success of the business. The first
is the number of customers a day and the second is the average purchase made by
the customer. This means that Premier is reliant on the growth of the entire sport
across the country. This could change the growth rate number of customers for
better or for worse. These are sensitive and can alter the average owner
compensation easily, which in conclusion can decide the fate of the business. The
sensitivity analysis below will show how the number of customers can affect the
profits and average owner compensation when the average customer purchases $40
worth of products.
Customers/day
12
14
16
18
20
22
24
26
28
Average 5 year Profit
(55,605)
(36,837)
(19,427)
(3,105)
12,671
28,119
43,392
58,522
73,486
Average
Owner
Compensation
42,501
42,501
42,501
42,051
49,232
60,570
71,733
82,753
93,608
Table 12 - Sensitivity Analysis
18
5.5 Contingency Plan
After comparing the base case of customers to the break-even case it looks as if
Premier will need to make some big changes if it sees failure in the first two years. If
the company is not profitable by the second year, the store can be either moved to a
more affordable location or be changed to an exclusive e-commerce store. If Premier
changes to another location, no other equipment will be needed to run the business.
If the store changes to e-commerce only, a lot of the equipment could be sold to keep
costs down and the business itself could be run out of a more affordable location.
Base Case
Cust/day
Breakeven
Cust/day
20
24
28
32
35
25
25
26
25
25
Table 13 - Breakeven Analysis
5.5 Dividend Policy
Dividends are to be paid out when the business profits $20 000 or more. Using the
base case in the financial model, it shows that $35 905 will be paid for its first time
in the fifth year.
5.6 Economic Forecast
In Premier’s financial model, there was assumption made that the Canadian
economic situation will be stable for the next five years. This means that for
financial purposes, the inflation rate and debt interest rate remains the same. The
inflation rate is 2.5% and the debt interest rate is 7%.
5.7 Break-Even Analysis
The break-even case was measured by determining how many customers
purchasing $40 were needed to make the net income equal zero. The red line is the
projected break-even analysis and the blue line is the base case. As you can tell from
the graph, Premier is not expected to break-even until after the second year of doing
business. The first year 25 customers are needed to break even, while the base case
states that Premier will have 20 customers. The break-even case stays stable
because of the operating costs that remain steady, specifically the leasing expense.
19
40
35
30
25
20
15
10
5
0
1
2
3
4
5
Table 14 - Break-Even Analysis Graph
5.8 Net Present Value
The net present value of the investment of 80% equity financing for Premier is $95
221.
5.9 Internal Rate of Return
Based on the 80% equity financing, the internal rate of return is 36.4%.
5.10 Average Owner Compensation
Average owner compensation was the most important tool for measuring the
success of the business because it shows the expected pay to the owner. When the
company is near breaking even, the owner will make about $40 000. It is not until
the company profits over $20 000 when the owner truly benefits (Table 12 –
Sensitivity Analysis). You can see a large difference when there is an expected 22
customers a day.
5.11 Risk Analysis
For most businesses, viewing the net present value and the internal rate of return
can give the owner a good idea if the venture is low risk or high risk. In this case,
average owner compensation was able to judge the risk level of Premier. Based on
the base case, this venture is risky because profits will not be made for the first two
years of business.
6.0 Summary
To conclude, this business plan is not ready for deployment. This is based on the
base case that has been built. There needs to be way of acquiring more customers
and reducing operating costs, specifically leasing a building. The solution to this
20
could be to operate this business out of another brick and mortar store or to operate
exclusively online. The business would be strong in the Canadian market offering
high quality products and service but may have difficulties penetrating the
Saskatoon market with fewer brands and no history. Another reason that shows
that the business is not ready is the expected owner compensation. It is difficult to
make a living for the first two years because the business most likely not be
profitable.
21