DESIGNS BY
KEN
PHASE 4 INDIVIDUAL PROJECT
KENNETH C HOLMES
ENTR615-1504B-01
PROFESSOR THERESA PAVONE
DECEMBER 14, 2015
DESIGNS BY KEN PRELIMINARY BUSINESS PLAN
Executive Summary:
The life of urban man is so hectic. With a daily schedule full of business meetings and
deadlines, and an active social life filled with sporting events and outdoor activities, concerts, the
club scene, dating, and hanging out with friends, it is no wonder men have so little time to tend
to their fashion needs. This is where Designs by Ken comes to the rescue. Designs by Ken is an
online men’s wear store that offers a variety of apparel options to fit today’s man’s professional
and casual needs, and makes the process convenient and fast.
1.1 Mission Statement:
The Designs by Ken mission is simple, provide the urban man with apparel options that
are current, trendy, and meet his apparel needs, and make the process simple and quick.
1.2 Keys to success:






Provide a website that is easy to access, navigate, enticing, and provides current and
trendy apparel options that fit the urban man’s lifestyle.
Provide links to partner apparel websites that offer accessories, socks and underwear, and
shoes, to provide the total look.
Maintain a strong and positive relationship with the clothing manufacturer, investors and
partner websites to encourage and foster a collaborative team environment.
Establish and maintain an organized operational structure that fosters fast and reliable
product production, delivery to warehouse, and online shipping and delivery to the
customer.
Establish and maintain a solid advertising strategy that promotes Designs and Ken, and
entices the target consumer to purchase the product.
Establish and maintain a strong professional relationship with entertainment and athletic
industry leaders to create sponsorship and media attention.
Vision Statement:
My vision for Designs by Ken is to start with a website that carries a small collection of
professional and casual men’s apparel, and expand the collection and business as visibility and
revenues grow. Ultimately, I want to open a Designs by Ken store in West Hollywood, and carry
a full collection of men’s apparel, and dress today’s man from head to toe. Additionally, I want
to see Designs by Ken apparel in major department stores and private men’s shops.
Company Summary:
Designs by Ken will offer the urban man fashions that are current, on trend and creative,
that will meet the needs of the busy working urban man. Kenneth Holmes and his team will
maintain an efficient and cost effective system that ensures merchandise is promptly received
from the manufacturer, and quickly shipped to the customer.
Additionally, Designs by Ken will maintain a strong focus on marketing to our target
consumer, in all major metropolitan areas across the U.S. The marketing strategy will focus on
national and regional publications, internet advertising, trunk shows to obtain department store
and men’s shop accounts, fashion shows to increase consumer awareness of the online store and
product, and athletic and entertainment venues will be utilized to sponsor industry events.
2.1 Company ownership:
Designs by Ken will be a partnership which includes:



Kenneth C Holmes, Owner, manager and Designer.
Investors, Business Partner, Financier, Designer and Collection Advisor.
Production Company, Design and Collection Advisor.
All parties will work together as a team to create product that meets the target consumer’s
needs, and encourages and promotes the growth of Designs by Ken.
2.2 Type of organization:
Designs by Ken will be registered as an LLC (Limited Liability Corporation). This type
of entity will provide personal property and assets protection from business debts and litigation,
will tax business profits and losses as owner’s personal income on my tax return, provides all the
protections of a corporation without double taxation, and is simple and inexpensive to form.
2.3 Statement of Ethics:
To ensure best business practices are applied to all transactions, a Code of Conduct and
Ethics will be assembled and provided to all employees, the investors and clients, and will be
enforced to ensure full compliance with all legal, ethical, and professional standards, as well as
ensuring a strong ethical standing in the business and consumer community.
2.4 Statement of Social Responsibility:
Designs by Ken is a proponents of the environment and preserving our planet for future
generations. The result is a shipping and packaging program that only uses 100% recycled plastic
and cardboard, and full participation in the local Los Angeles recycling program.
Designs by Ken is also involved in local functions including fashion shows and benefits
that raise funds for local foundations, and the annual West Hollywood Halloween Carnaval,
which is the largest street party in the world, it takes place on October 31st, and hosts 500,000
participants.
2.5 Startup Summary:
Designs by Ken startup cost will include: production cost of product inventory, monthly
rental of warehouse space, set up of electric and phone utilities, LLC registration and state fees,
payroll for staffing, setup of office with equipment, software and supplies, creation and
maintenance of the website and social media service, setup and configuration of print and radio
advertising service, packaging and shipping costs of online orders. While state and federal grants
will be sought to enable growth and stability, the sum I am seeking to launch Designs by Ken
will be $225,000.
PRODUCT COST FOR START-UP LINE
Product
No-iron cotton long sleeve solid dress shirts
No-iron cotton long sleeve animal print casual shirts
Polyester long sleeve shimmer shirts
Poly/cotton blend slacks
Stretch Slim Denim
Stretch Straight leg Denim
Stretch Loose fit Denim
Cost Each Quantity
$10
$15
$10
$10
$10
$10
$10
Total Cost
Total
500
400
500
500
500
500
500
$5,000
$6,000
$5,000
$5,000
$5,000
$5,000
$5,000
3400
$36,000
DESIGNS BY KEN: START-UP COSTS
AND REQUIRED INVESTMENT
Initial inventory production cost
$36,000
Warehouse rent for one year
$16,200
Full service website setup and advertising
$8,200
Radio and Print Advertising
$1,200
Customer order supplies and shipping
Office furniture and Equipment
Quick Books Pro
$1,400
$200
Warehouse Phone and Electric Service
$3,120
Liability Insurance
$1,200
LLC registration
$400
Additional required cash investment
$157,080
Total Start-up Costs:
$225,000
Products:
Designs by Ken will offer the urban male styles that are creative and traditional, clean
lined, with soft and comfortable fabrics, in season-less and seasonal colors, that easily transition
from professional to evening including:






100% no-iron cotton, button down dress shirts, in a variety of solids and patterns.
100% no-iron cotton, button down casual shirts, in a variety of creative prints.
100% polyester button down shirting, in a variety of shimmering colors.
50/50 cotton/poly blend dress pants, in traditional colors.
Stretch denim, in slim fit, straight leg and loose fit, and available in dark indigo, vintage
and black.
Shirt sizing from SMALL to XXL.

Pant sizing from waist 28 to 42, with inseams from 30 to 36.
Additional style and colors will be added based on season, fabrication and color availability,
and customer request including:




100% no-iron cotton, button down short sleeve dress shirts, in seasonal colors for spring
and summer.
Short sleeve casual shirts, in festive colors, patterns and prints, for spring and summer.
100% cotton twill Shorts in seasonal and all season colors.
100% cotton denim shorts in Dark Indigo, Vintage, Black and White.
As Designs by Ken grows, the plan is to expand the collection and include underwear,
accessories, pullover shirts, vests, blazers and jackets.
Prices currently range from $50 to $100, and new item prices will be based on type of
garment and fabrication.
3.1 Production and distribution chain:
Designs by Ken will use the direct to retailer chain of distribution (manufacturer to
Designs by Ken to the customer).






The production house (ARGYLE Haus of Apparel or Indie Source) will handle
production from start to finish, by using their full service package.
All supply sources and services are 100% U.S. based.
Finished product will be shipped from the manufacturer to my local warehouse.
My warehouse will be used for receiving and storing finished product, reviewing and
printing online orders, and shipping customer orders.
Customer orders will be shipped from my warehouse by USPS and UPS to the customer.
Domestic orders of $100 and up will be shipped free by the USPS, all other orders will be
charged to customer, and shipped by the USPS or UPS.
3.2 Product Shipping:
Designs by Ken will use USPS for domestic orders and UPS for international shipping.
Domestic orders $100 and more will ship for free, express shipping is available for $15. All other
domestic and international shipping will be charged to customer.
3.3 Location:
The location of both the manufacturer and the warehouse is Los Angeles. Los Angeles
provides a regional base for manufacturing, easy communication between Designs by Ken and
the manufacturer, convenient warehousing and shipping to anywhere in the U.S., and around the
world. Additionally, it provides an ideal city for making entertainment and athletic industry
connections, and the possibility of a Designs by Ken retail shop.
Market Analysis Summary:
The men’s wear industry is of global proportion, and each year new manufacturers and
designers from across the globe enter the marketplace, making competition for the consumer’s
disposable income intense. With increased competition and difficult global time, industry leaders
must adapt to maintain their global position. This is done by: utilizing intensive advertising and
public relations strategies to maintain their position, build consumer loyalty, and compete with
new competition; and by following fabrication and color changes, adopting new styles based on
consumer lifestyle and status, and by staying on top of trends (Pearson, 2015).
For 2010, the men’s wear industry generated revenues of over $402 billion, reflecting
growth of 14% over five years. Apparel and footwear represent 60% of the total market, and
denim generating over $115 billion, with increased demand for premium denim, and reduced
demand for low priced denim at just below $3 billion. Revenues of outerwear rose, with pants,
shorts and shirting showing the highest volume. Neckwear generated $413 million in revenues,
and a 26% gross profit. Suiting represented 35% of total revenues, with reduced revenues
because of higher unemployment and less disposable income. Canada, South America, and the
United States had the largest markets, representing 35% of global revenues (Pearson, 2015).
For 2014, China’s had the fastest growth of the top five developing nations, with $78
billion in industry revenues. The UK experienced a revenue increase of 5%, and continues to
maintain strong sales (Pearson, 2015).
The men’s wear industry is expected to continue growing, and for apparel producers to
maintain their customer base, they will have to use aggressive and targeted advertising,
differentiate their collections from the competition’s, and potentially combine tactics to maintain
and strengthen their position and market share (Pearson, 2015).
4.1 Industry competition:
The men’s wear industry has many major players. The designers and online retailers that
I will be competing with include:

Ralph Lauren: A U.S. based designer whose apparel appeals to the
sophisticated male and female consumer. His collection includes men’s wear,
women’s wear, children’s wear, the Ralph Lauren Purple Label for men,
home fashions, hosiery for men and women, and fragrances. Ralph Lauren
has an international presence, with his collection found in department stores,
Ralph Lauren stores around the world, and Ralph Lauren.com.

Calvin Klein: A U.S. based designer whose apparel appeals to
male and female consumer who likes clean lined, simple, chic
and season-less clothing, that easily transition from professional
to evening, and coordinates with many garments. His collection
includes men’s and women’s sportswear, couture and denim,
and licensed products including: men’s sportswear, outerwear,
accessories, lingerie, men’s and women’s hosiery, swimwear,
eyewear, furs, and fragrances. He has an international presence, with his collection found
in department stores, Calvin Klein stores around the world and Calvin Klein.com.

Perry Ellis: A U.S. based designer whose apparel appeals to the male
consumer who likes styles, colors and patterns that defy tradition, are loose
fitting, and stylish for today’s man. He has an international presence, and his
collection is found in department stores, Perry Ellis stores around the world,
and Perry Ellisl.com

BOMBFELL.com: Is an online men’s clothing store that provides men membership and a
personal stylist. Your stylist chooses product based on your size, style and budget, or you
can make their own selection. They make product selection, purchasing,
and return convenient and simple, and send product on a monthly basis,
unless cancelled by the member. They offer product from many reputable
labels, a full collection of head to toe styling that is classic, casual, preppy
and hipster, prices range from $69 to $200, and regular shipping is always
free.

Topman.com: Topman is a UK based men’s wear retailer, has over
400 stores around the world, as well as their own website. Topman
features their own label, as well as up and coming British designers,
and will dress the customer from head to toe with chic and casual,
dressy and professional apparel. They offer an in-store personal stylist,
and free standard shipping. Their prices range from under $10 up to
$500, and they provide students a 10% discount.
4.2 Target market:
The Design by Ken target consumer is
the U.S. based urban male with an annual
income of $40,000 and up, age 25 to 45, will
potentially attract ages 20 to 24 and 46 to 50, is
single or married, urban and suburbia, lives in
warm and cold climates, enjoys an active social
life, does not like to shop, or does not have
time to shop, and has good taste and style. In a
nutshell, he is “The confident and well-dressed
urban man, who know what he likes, and
expects high quality for a fair price”.
U.S. Male target Market
Population in millions
Age
10.35 11.74
10.22
9.94
11.16
10.81
20 - 24
25 - 29
30 - 34
35 - 39
40 - 44
45 - 49
The chart data indicates: there are 11.74
million men age 20 to 24, 11.16 million men
age 25 to 29, 10.81 million men age 30 to 34,
9.94 million men age 35 to 39, 10.22 million
men age 40 to 44, and 10.35 million men age 45 to 49. These figures indicate there are 42.13
million men age 25 to 44, and another 22.09 million men age 25 to 29 and 45 to 49, totaling
64.22 million potential male customers.
4.3 Slogan and Logo:


The slogan is “Apparel for the confident and well-dressed man”
The Logo is:
DESIGNS BY
KEN
4.4 Strategy and Implementation Summary:
Designs by Ken will apply the following media outlets:





Extensive internet advertising on websites specifically geared for men, and social media
sites including Facebook and Twitter.
National magazines including GQ, Esquire and Men’s Health, to gain national attention.
Radio advertising in major metropolitan areas, to gain regional attention in major
metropolitan areas.
Entertainment production company and celebrity endorsements as they occur.
Trunk shows at major department stores and private men’s shops, to gain a retail
presence.
4.5 Niche Marketing:
Designs by Ken uses the niche marketing approach, because the collection caters to the
urban male, age 25 to 45, with an income of $40,000 and up.
4.6 Competitive advantage:
Designs by Ken will offer the urban man a website that is easy to navigate and purchase,
helps him find the right look for professional and casual apparel that fits his budget of time and
money, convenient delivery options, and will not break the bank.
Designs by Ken focuses on the 25 to 45 year, young man, but will also appeal to ages 20
to 24 and 46 to 50 man. Additionally, the collection provides options that make a statement that
says “I am a confident and well-dressed man”.
Management Summary:
Kenneth Holmes will be responsible for daily operations, and the design and product
decisions will be a coalition between Kenneth Holmes, the investors, and the manufacturer.
Kenneth Holmes has over 30 years in the retail industry, and a Fashion Design degree from the
Art Institute of Fort Lauderdale. The venture capital group has expertise in the field of fashion
design and marketing, and the manufacturer has expertise in the field of fashion design, trend
research, distribution and marketing. The combined forces of the three will provide enormous
input and decision making to produce the best product for the line, drive sales and success.
5.1 Personnel Plan:
Designs by Ken will start with a staff of two:

Kenneth C Holmes, Manager, Staff Coordinator and Designer.


One warehouse coordinator, handle receiving orders from the manufacturer, and
process online orders.
Starting with one warehouse employee, and adding based on sales and time
scheduling.
Designs by Ken Why:
Since I studied Fashion Design at the Art Institute of Fort Lauderdale, it has been my
dream to create a men’s wear collection that addresses the needs of the urban man, as well as my
own. It comes as no surprise that many products on the market today are the result of research to
solve a problem the creator had, only to find out that many people across the country have the
same problem. Designs by Ken will solve both, fashions that appeal to myself and urban men
across the country.
Designs by Ken will also introduce a new competitor to the marketplace, provide better
quality product completely sourced and manufactured in the U.S.A., provide the urban male
creative options at affordable pricing, the ability to add new products quickly, quick and
affordable delivery, quick replenishment, and excellent service.
Projected First year financial statements:
DESIGNS BY KEN BALANCE SHEET: PROJECTION FOR
2016
ASSETS
CURRENT ASSETS
Cash
Accounts Receivable
Inventory
Prepaid Expenses
Notes Receivable
Short-term CD
TOTAL CURRENT ASSETS
FIXED ASSETS
Long-Term Investments
Land
Building
Accumulated Depreciation
Machinery and Equipment
Accumulated Depreciation
Furniture and Fixtures
Accumulated Depreciation
Other Fixed Assets
NET FIXED ASSETS
OTHER ASSETS
Goodwill
TOTAL ASSETS
LIABILITIES
CURRENT LIABILITIES
Quarter 1 Quarter 2 Quarter 3 Quarter 4
$141,324
$0
$26,000
$6,250
$0
$100,000
$273,574
$141,495
$0
$31,000
$6,330
$0
$140,000
$318,825
$168,354
$0
$42,000
$6,475
$0
$150,000
$366,829
$193,923
$0
$39,000
$6,830
$0
$200,000
$439,753
$0
$0
$0
$0
$1,100
$0
$500
$0
$0
$1,600
$0
$0
$0
$0
$1,100
$0
$500
$0
$0
$1,600
$0
$0
$0
$0
$1,100
$0
$500
$0
$0
$1,600
$0
$0
$0
$0
$1,100
$0
$500
$0
$0
$1,600
$0
$275,174
$0
$320,425
$0
$368,429
$0
$441,353
Accounts Payable
Accrued Wages
Accrued Payroll Taxes
Interest Payable
Short-Term Notes
Current Portion of Long-Term Debts
TOTAL CURRENT LIABILITIES
LONG-TERM LIABILITIES
Mortgage
Other Long-Term Liabilities
TOTAL LONG-TERM LIABILITIES
TOTAL LIABILITIES
$0
$4,800
$0
$1,125
$0
$11,250
$17,175
$0
$9,600
$0
$1,125
$0
$11,250
$21,975
$0
$9,600
$0
$1,125
$0
$11,250
$21,975
$0
$9,600
$0
$1,125
$0
$11,250
$21,975
$0
$180,000
$180,000
$197,175
$0
$180,000
$180,000
$201,975
$0
$180,000
$180,000
$201,975
$0
$180,000
$180,000
$201,975
$19,175
$58,824
$77,999
$275,174
$40,100
$78,350
$118,450
$320,425
$60,100
$106,354
$166,454
$368,429
$80,100
$159,278
$239,378
$441,353
OWNERS EQUITY
Paid In Capital
Net Income
TOTAL EQUITY
TOTAL LIABILITY AND EQUITY
DESIGNS BY KEN INCOME STATEMENT:
PROJECTIONS FOR 2016
Category
Quarter
1
Quarter
2
Quarter
3
Quarter
4
Revenue
Expenses
Product Cost
Warehouse Rent
Website and Social Media
Radio and Print Advertising
Free Shipping Expense
Office Equipment
Electric and Phone
Quick Books Pro
Liability Insurance
Payroll
LLC Registration Fees
Total Expenses
$129,000
$155,000
$200,000
$310,000
$36,000
$4,050
$300
$300
$420
$400
$780
$50
$300
$4,800
$100
$47,500
$30,000
$4,050
$300
$300
$500
$400
$780
$50
$300
$9,600
$100
$46,380
$36,000
$4,050
$300
$300
$645
$400
$780
$50
$300
$9,600
$100
$52,525
$72,000
$4,050
$300
$300
$1,000
$400
$780
$50
$300
$9,600
$100
$88,880
Gross Income
Tax Rate 28%
$81,500 $108,620 $147,475 $221,120
$22,820 $30,414 $41,293 $61,914
NET INCOME
$58,680
$78,206
$106,182
$159,206
DESIGNS BY KEN CASH FLOW STATEMENT: PROJECTIONS
FOR 2016
Fiscal Year Begins January 1,
2016
Pre
Startup
Quarter Quarter
1
2
Quarter
3
Quarter
4
Cash on hand (Period Start)
Cash Receipts
Cash Sales
Collection from CR accounts
Loan/other cash injections
Total
Total Cash Available Before Cash Out
$225,000
$0
$0
$0
$0
$0
$225,000
$216,000
$0
$0
$129,000
$0
$129,000
$345,000
$275,575
$0
$0
$155,000
$0
$155,000
$430,575
$360,270
$0
$0
$200,000
$0
$200,000
$560,270
$482,820
$0
$0
$310,000
$0
$310,000
$792,820
Cash Paid Out
Purchases Inventory
Office Equipment
Office furniture and fixtures
Gross Wages (Exact Withdrawal)
Repairs and Maintenance
Website maintenance and advertising
Radio and Print advertising
Car, delivery and travel
Accounting and Legal
Rent
Telephone
Electric
Liability Insurance
Taxes
Interest
Free customer shipping
Cost of website setup
Total
$0
$1,100
$500
$0
$0
$0
$0
$0
$400
$0
$0
$0
$0
$0
$0
$0
$7,000
$9,000
$36,000
$0
$0
$4,800
$0
$300
$300
$100
$0
$4,050
$330
$450
$300
$0
$1,125
$420
$0
$48,175
$30,000
$0
$0
$9,600
$0
$300
$300
$100
$0
$4,050
$330
$450
$300
$0
$1,125
$500
$0
$47,055
$36,000
$0
$0
$9,600
$0
$300
$300
$100
$0
$4,050
$330
$450
$300
$0
$1,125
$645
$0
$53,200
$72,000
$0
$0
$9,600
$0
$300
$300
$100
$0
$4,050
$330
$450
$300
$0
$1,125
$1,000
$0
$89,555
Cash Paid Out (non P & L)
Loan Principal Payment
Capital Purchases
Other Start-up Costs
Reserve and Escrow
Owners Income
Total
Total Cash Paid Out
$0
$0
$0
$0
$0
$0
$9,000
$11,250
$0
$0
$0
$10,000
$21,250
$69,425
$11,250
$0
$0
$0
$12,000
$23,250
$70,305
$11,250
$0
$0
$0
$13,000
$24,250
$77,450
$11,250
$0
$0
$0
$15,000
$26,250
$115,805
$216,000
$275,575
$360,270
$482,820
$677,015
Cash Position End of quarter
(All financial based on estimates, results will likely vary)
Performance standards applied:
Appropriate performance measures will be applied to ensure Designs by Ken performs to
expectations, meets the requirements established by contract with the investor, meets the needs
of the target consumer, and in the process enables the growth of the business.
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Gaebler, K. (2015). LLC Advantages and Disadvantages. Retrieved from Gaebler.com:
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N.A. (2015). British Mens Fashion. Retrieved from Topman: www.topman.com
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www.notablebiographies.com › Ki-Lo
N.A. (2015). Perry Ellis Biography. Retrieved from bio: www.biography.com/people/perry-ellis20686321
N.A. (2015). Ralph Lauren Biography. Retrieved from bio: www.biography.com/people/ralphlauren-9374814
N.A. (2015). The Monthly Clothing Service Entirely For Men. Retrieved from Bombfell:
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