1.0 Executive Summary
The purpose of this business plan is to raise and examine the allocation of $60,000 for the continued development and expansion of a drop shipping ecommerce platform. Madison’s Boutique, LLC (“the Company”) was founded by Madison Jane. The business will offer apparel, accessories, home décor, and related products from its state-of-the-art platform.
The Operations
The Company will offer a broad spectrum of apparel, accessories, and home décor products through its website. As mentioned above, the business will implement a drop shipping model that will allow the business to completely eliminate its inventory holding risks. The Founder has sourced a number of suppliers that will fulfill orders on behalf of the business as each order is placed. This will allow the Company to focus its efforts on marketing and for sourcing in-demand products that will be enjoyed by targeted demographics.
In addition to the Company’ state-of-the-art platform, the Company will also offer products on a third-party marketplaces with a focus on Amazon.
The third section of the business plan will discuss the operations of Madison’s Boutique.
The Financing
At this time, the Company is seeking $60,000 via a loan. The terms of this investment will be determined during negotiation. The funds will be primarily used for the following:
- Development of the Madison’s Boutique website
- Social media and search engine optimization operations
- Working capital
Once the business reaches profitability, the Company could easily acquire additional financing (either debt or equity) to further expand the operations of the business. This document assumes that the business will finance its ongoing growth with the retained earnings of the business.
Expansion Plan
Over the next three years, the Company will continually add new listings by sourcing additional suppliers that can fulfill orders that are rendered through the Madison’s Boutique platform. The business will aggressively use both search engine optimization as well as social media in order to increase daily traffic. The Company may also carry its own inventories to further increase gross profits.
Revenue Forecasts
Below is an overview of the anticipated revenues and profits of the business over the next three years:
2.0 The Financing
2.1 Funds Required
Madison’s Boutique, LLC will require an investment of $60,000 to launch operations. The funds will be used as follows:
2.2 Management Equity
This will be further discussed during negotiation.
2.3 Exit Strategies
Given the low operating costs and substantial profits generated by Madison’s Boutique, the Company could be easily sold to a third party for a substantial price to earnings multiple. The business’ use of drop shipping would make the business a strong candidate for an acquisition. The anticipated P/E multiple for this type of business is two time’s the previous year’s earnings. This event would not happen for three to five years, at minimum.
3.0 Operations
As discussed in the executive summary, Madison’s Boutique – through its state-of-the-art ecommerce website – will offer a broad range of apparel, accessories, home décor goods, and related products. The Company will coordinate its sales with third-party suppliers that will complete the fulfillment of each order that is sourced through the business’ platform. On each sale, Management anticipates that the business will generate gross profits of 30%. In order to ensure maximum uptime and access to ongoing marketing tools, the business will use Shopify as its ecommerce service provider. The business will be able to provide its inventories to any customer within the United States.
In addition to the Company’s website, the business will also maintain listings on major marketplaces including Amazon, eBay, Etsy, and other platforms that allow third party sellers. This will further increase revenues on a monthly basis as the business establishes a strong brand name among these platforms.
As will be discussed in the fifth section of the business plan, the Company will use a number of marketing strategies that will ensure that a substantial amount of traffic is generated on a daily basis. This will encompass SEO, social media marketing, video marketing, and affiliate marketing.
4.0 Market and Online Boutique Industry Analysis
4.1 Economic Analysis
This section of the business plan will discuss the economy as a whole, the apparel and home décor sales industries, the customer profile of the Company, and the ongoing competitive matters that the business will face.
Currently, the economic climate in the United States is moderate. The economic issues as a result of the pandemic have been resolved. Interest rates, over the past twenty-four months, remained low which allowed for the rapid recovery in the economy. Moving forward, ongoing interest rate increases are expected to occur in order to reduce ongoing inflationary issues.
It should be noted that negative changes in the economy should not overtly impact Madison’s Boutique’s ability to generate revenue. By operating in a drop shipping capacity, the business will eliminate inventory holding risks. This will allow for greater capital to be allocated towards marketing campaigns. Additionally, the business will showcase a number of products that carry a low pricing point, which will remain affordable to most people.
4.2 Industry Analysis
Each year, over $300 billion of apparel is sold within the United States. There are 250,000 companies that operate online platforms and brick-and-mortar boutiques that provide these products to the general public. The growth rate of this industry has been substantial over the past ten years given the ubiquitous use of the internet.
One of the common trends within this industry is through the use of dropshipping. As discussed throughout this document, the Company will implement a dropshipping model in order to offer products among a number of different suppliers.
4.3 Customer Profile
The following demographic profile will be used in conjunction with marketing efforts:
- Household income of $40,000 to $120,000
- Will spend $50 to $250 per purchase on the Madison’s Boutique platform.
- Lives within 150 miles of a major metropolitan area
- Has access to high speed internet at home and on their mobile devices
There are nearly 150 million people that fall into the above demographic profile.
4.4 Competition
The ongoing competition that Madison’s Boutique will face will be substantial. There are numerous companies that operate in a drop shipping capacity for apparel, home décor items, and related products. One of the ways that the Company will maintain a substantial differentiating factor is that the business will carry inventories from a broad range of well established brands within its ecommerce store. The Company will also implement a high impact marketing campaign that will ensure that the platform receives substantial traffic on a daily basis.
5.0 Marketing Plan
5.1 Marketing Objectives
• Develop ongoing relationships with numerous companies that offer drop shipping of home décor, apparel, accessories, and related products.
• Use targeted advertisements on Facebook and Instagram.
• Use search engine optimization in order to drive organic traffic to the platform.
5.2 Revenue Forecasts
5.3 Marketing Strategies
Management intends on using an number of marketing strategies that will ensure that the Madison’s Boutique website will receive substantial traffic on a daily basis. The Company intends on solely using an online based marketing campaign to achieve its sales goals.
One of the foremost strategies that Madison’s Boutique will use to drive sales is the usage of social media. The Company will maintain an in-house marketing team that will manage the business’ pages on Facebook and Instagram. The business will showcase all inventories that are offered on the website through these platforms. During the first six months of operation, the business will aggressively use targeted advertisements among people that fall into the demographic profile discussed in the previous section of this document. As Madison’s Boutique expands, these expenditures will be increased on a monthly basis.
The Company will also work with well known internet personalities that will promote the Madison’s Boutique brand name. These individuals will be paid to direct traffic to the business’ website. These individuals will take an upfront fee as well as a small percentage of all sales that are directed to the platform.
The business will also develop an affiliate marketing campaign that will allow third parties to promote traffic to the website. The Company will provide competitive commission rates on each successful sale that has been directed by a third-party website.
On an ongoing basis, the Company will use search engine optimization that will ensure that when searches for specific types of home décor, apparel, and related products are conducted – the business’ website will appear frequently within the search. The Company will work with a qualified SEO firm in order to achieve these goals. The business will also maintain an account with SEMRUSH in order to ensure that the SEO campaigns undertaken by the business take hold appropriately.
6.0 Organizational Plan
6.1 Corporate Organization
6.2 Organizational Budget
7.0 Financial Plan
7.1 Underlying Assumptions
The Company has based its proforma financial statements on the following:
- Madison’s Boutique, LLC will acquire $60,000 from an investor in order to launch operations.
- The Company will not incur inventory holding risks as the business is operating on a drop shipping basis for its apparel, accessories, home décor products, and related sundries.
7.2 Financial Highlights
- Madison’s Boutique will grow at a compounded annual growth rate of 35%.
- The business’ drop shipping model will allow the Company to substantially reduce its financing risks.
7.3 Sensitivity Analysis
The Company’s revenues are sensitive to negative changes in the economic on a limited basis. Madison’s Boutique, on a drop shipping basis, is providing the general public with a broad range of apparel, home décor, and related products. The Company does not need to carry inventory, which will allow the business to allocate most of its capital towards marketing expenditures. The low operating costs of the business will further reduce the economic risks of Company.
7.4 Source of Funds
7.5 Financial Proformas
A) Profit and Loss Statement
B) Cash Flow Analysis
C) Balance Sheet
7.6 Breakeven Analysis
7.7 Business Ratios
Appendix A – SWOT Analysis
Strengths
- As the Company is operating in a dropshipping capacity, the business does not have any inventory holding risks.
- The Company will offer apparel, housewares, and related products from a number of different qualified suppliers.
- Low operating costs allows for substantial reinvestment into the Company’s marketing campaigns.
- Highly driven and experienced Founder/CEO, Madison Jane.
Weaknesses
- Continued need to invest in large scale marketing campaigns.
- Ongoing competitive matters among other companies that operate in a drop shipping capacity.
- Negative economic changes could impact revenues.
Opportunities
- Hire social media influencers in order to boost the brand name of Madison’s Boutique.
- Acquire a working capital line of credit or third party investment in order to further expand operations.
- Acquire companies that operate in a similar capacity.
Threats
- Continued inflation could cause marketing and underlying operational costs to increase.
- Changes in fashion and home décor trends will require that Madison’s Boutique continue to adjust its inventory listings.