Business plan for Signs ethical t-shirt company with mathematical symbols

Business Plan: T-Shirts

Executive Summary Signs is an ethical t-shirt company that will sell primarily online to a market that ranges from 13-30, male and female, all ethnicities but progressive, urban and fashion-forward. The company will be run by the three founders, each with distinct roles to play in the success of the business. It is projected that Signs will be profitable at some point within the second year, so it will be important to obtain sufficient financing to get the company to that point. The market is quite promising – while competitive this emerging niche is growing faster than the overall fashion market, which itself is growing faster than GDP growth. So this is a promising market, where there are few barriers to entry, giving companies the freedom to find their business model. The Signs business model focuses on rapid turnaround of creative designs based on signs and symbols. There will be a lot of different shirts, and one of the ways we will appeal to our target market is that these shirts can be designed and in stores or for sale online within a few days. This is a much quicker turnaround than most fashion companies can offer, giving us an edge in terms of delivering timely designs that will appeal to the instant gratification nature of the target market.

Mission, Vision and Culture Signs is a fashion design company, focusing on T-shirts. The company\\\\\\\'s mission is to bring style and individualistic expression to the world. The vision is to see everybody wearing clothing that expresses uniqueness and identity. The culture of Signs is built around these values. The company is focused on design as the defining element of culture. The team is committed to diversity, openness and a positive society. These cultural values are expressed in terms of having fun, working hard, and delivering a unique product that expresses the shared values of the signs collective. Our designs are cute, relatable, intelligent and distinctive. As part of the culture we want to ensure a positive working environment where creative expression is the norm. Responsibility to the team is also important – we are creatives but driven and determined ones who work hard to achieve our goals.

Company Description Signs is a fashion design company, with a focus on creative and fun T-shirts for the 13-30 market. We seek to create designs that resonate with our audience, comprised on millennials and younger who grew up in a digital culture. The use of signs, symbols and artefacts to express ideas of positive, fun, and creative light is a central element that distinguishes our company. The company is comprised of the creative designers and the business team, which will focus on sales, marketing and accounting. Production is the responsibility of the general manager. The team will work in a small design studio, with manufacturing outsourced to local companies that pay a living wage to their workers. Our suppliers will need to live by the same values that we do, which means no slave labor or sweatshops, and this is an essential part of the Signs ethos. The t-shirt industry is highly competitive, and it can be difficult to differentiate. Even among quality designers, there is intense competition. We seek to win market share in a couple of ways. The first is to create a distinctive brand ethos based on happiness, signs and symbols, and openness. These youthful values are going to be an essential differentiator from the more corporate t-shirt companies. We also anticipate that we will be able to turn around designs quickly, and have made this a part of our business model as well. Our target market is characterized by relatively short buying cycles – an idea that is a hot meme today can become obsolete quickly, so the ability to have an idea over coffee, finish the design that afternoon and two or three days later be selling online and in local stores is something that we are making part of our business model. Most t-shirt companies cannot compete on this basis, so we are aiming to disrupt the normal timeline in the fashion business. This is one of the reasons why we want to produce locally; our competitors get their shirts for Bangladesh, Cambodia, Pakistan…that takes time. We feel that disrupting that with a constant stream of limited run fresh designs will give us a pathway to gain distribution in cool local boutiques, and online. The Opportunity The fashion industry in the United States was worth an estimated $315 billion in 2012 and is expected to grow to $385 billion by 2025, a growth rate of 7% average per year, which is faster than overall economic growth (Statista, 2017). The particular niche that Signs will occupy is, give or take some local retail distribution, the online original design t-shirt market, which IBISWorld (2016) estimates to be worth $367million, or just over 1% of the total fashion market. This niche is growing at 8.7%, faster than the growth of the fashion industry overall. There are a couple of reasons why this is a good business to be in. If we look at the Porter\\\\\\\'s Five Forces model, there are low barriers to entry, but sellers typically have bargaining power despite the competition because the focal point for consumers lies with the uniqueness of the designs. Higher forms of fashion are typically determined by the fashion itself, rather than other aspects of the industry, and this high-end t-shirt market is no different. The substitutes are low-end t-shirts, which are unacceptable to the target market. Further, there is no particular intensity of rivalry. That the consumers are more or less price takers with any firm that has good designs makes this an attractive industry in which to operate, though challenged by the fact that its high growth and low barriers to entry are going to make it much more competitive going forward. The reality is that there is little in the way of open space in fashion that is free from competition. When you look at the most successful fashion companies, they are either old-established companies or they are new companies that entered highly competitive spaces and still found a way to thrive. This is what Signs will do, by leveraging sound design, targeting a rapidly growing lucrative market, and by executing a rapid turnaround strategy to deliver the freshest designs. Whether this is feasible is another matter. The failure rate for new fashion companies is quite high – there are a lot of people who wish to make designs, and the barriers to entry are low. Having good designs is not enough – one needs great designs to have a chance. But more than that, it is essential to have a good business plan. Producing a few shirts and selling them online is not a viable business model, and that is why we intend to build a professional brand, not just resting on our designs, but having a strategy and the financing to execute that strategy. Even then, it has to be accepted that upstart fashion companies have a high failure rate and the best we can do is to ensure that we learn lessons from other companies and avoid the common pitfalls associated with these types of businesses, such as mispricing the market, lack of adequate planning and no experience or knowledge of the business side of business (i.e. finance, production, accounting) (Pryor, 2016). We also feel that the online market, and small local boutiques, offers the best chance to start a successful business with our budget. One of the major pitfalls that designers suffer is when they put all their energy into creative, but spend money unwisely trying to catch the eye of major distributors (Winser, 2014). By focusing on small-scale distribution channels than can be scaled without incurring substantial marginal costs, we believe that we can establish a business that is profitable early, and then grow that business without going heavily into debt to make that happen; we are trying to win over consumers, not the fashion world, initially. Thus, we are a differentiated company because we take a business approach. Maussabi (2015) notes that many young fashion brands fail because they do not pay enough attention to the needs of the market, they don\\\\\\\'t offer variety, the do not understand the back end (i.e. supply chain) of the business, and they focus too much on the creative under the impression that alone will carry them to success. We are different, not just for our vision but for the talent that we have put together to execute that vision. We do not need to capture much of the market to have a viable business. Our overhead is relatively low, and we will be able to be profitable with just a few hundred thousand in revenue. That still seems like a lot of t-shirts, which is why we have put together a comprehensive marketing plan.

Key Success Factors It is worth considering what the key success factors are in the fashion business. They are first and foremost having great design in this case one that appeals to the target audience. If marketing is targeting a certain group and the designs appeal to some other market, then the company is bound to struggle. Getting this alignment right and appealing to the customer is an essential success factor. But this is not all. Fashion companies with great designers can still often fail because of a lack of business sense. The designer is often the owner, and tries to run the business, despite not being particularly good at it, or even inclined. Thus another key success factor for Signs will be the ability of the other members of the team to convert great designs into money – having the talent on board to execute a sophisticated marketing strategy, to manage cash flows, to obtain financing, and to effectively work the company\\\\\\\'s supply chain, and manage customer service. These can be quite disparate functions, and each member of the team will have to wear multiple hats. Juggling the different roles with skill and aplomb will be a key success factor early on. Furthermore, the pro forma financial projections show that the company will need to obtain about $100,000 in order to remain solvent until the point at which sales cross the breakeven point and the company becomes profitable. It is believed that the principals can each contribute this in either cash or kind (forgoing pay), and to do so will be a key success factor. Insolvency is a risk for any start-up, and in this case the ability to obtain this financing – and any subsequent financing that might be required due to unexpected circumstances – will be a key success factor.

Marketing Plan The marketing plan for Signs focuses on a couple of key elements, but is mainly driven by the principles of inbound marketing. This is a common technique in digital marketing, focusing on attracting eyeballs, and then converting them to customers. This approach is used in both B2B and B2C spaces, and is effective and cost-efficient. This approach contrasts with the approach many young fashion companies take. Many young fashion companies either invest heavily in advertising and runway in order to attract large buyers – often failing and losing a lot of money in the process. Alternately, there are the shoestring designers who are keen to get their designs to the public, but end up doing a lot of personal selling, which is often not a natural skill for them. Our plan seeks to leverage the limited funds that we have by investing in technology that amplifies our voice to wherever our market happens to be. That starts with the website. We have tapped some friends to help build the website, but the core of the design actually comes from the t-shirt design team, so it reflects our brand well. Moreover, the design work is of a professional standard. We kept the website simple, built for e-commerce, but adding in the lifestyle component that is essential in B2C inbound. Content marketing can be powerful – we seek to focus our content on lifestyle marketing, where we will showcase how our brand fits in with the lifestyle of our target market. Neil Patel (2017) notes that the company is always marketing to consumers, no matter the channel, so it is necessary that each channel is aligned with the voice of the company and is aligned with the strategy. One of the main strategic thrusts that we have enjoyed is the \\\\\\\"building a business\\\\\\\" concept, which aligns with our value of openness. We will showcase how we are building this business, and behind the scenes with our team. This content will be placed on our blog, and on our social media channels, featuring video, still photos, and gifs, as each has a different role. We will work a variety of social media channels, but particularly will focus on the channels that are trending with our target audience – these channels can be quite changeable from one year to the next so we will need to be proactive about identifying them. There are some other great ideas out there – from pieces on charitable work, to the use of humor, or simply tying our product into the lifestyle that our target market aspires to, the latter a tactic that worked well for Herschel (Conley, 2016). This latter approach also helps to create a certain amount of interaction with our audience, which creates more interaction going forward. Hitcase is a company that has enjoyed success in building a huge social audience that contributes to the company\\\\\\\'s content creation; that approach not only delivers highly-amplified marketing efforts but allows the company to do so without a dramatic increase in costs. By focusing on these low-cost forms of promotion – methods that appeal strongly to our target market, we are targeting the end buyer and driving them to our website where they will make the purchase. Creating a certain amount of street credibility will help us in the coming months when we are trying to get our product in boutique shops. That part of the distribution strategy is important to us, because it provides greater visibility to those who are not familiar with our digital presence. However, we estimate that these boutiques – leading independent boutiques in influential cities – are only ever going to be 10-20% of our total sales. The digital marketing strategy may be optimized to attract eyeballs, but that alone is not going to make Signs successful. The marketing strategy therefore also needs to incorporate calls to action that get people to buy. Also, we need people to sign up for our newsletters so that we may build a database of customers. One of the things that will help us a lot is to understand the profile of the early adopters, because we can then take that profile, and market through Facebook via lookalike, for example. Management and Operations The initial Signs team will consist of a head designer, a digital marketing specialist and a business manager. The business manager will be responsible for running the supply chain and operations side of things. This role will include the accounting and finance functions as well. Many small fashion companies struggle with finance, so managing cash flow is an essential task for Signs, both in the early days and when it comes time to scale. Operations is a big part of this role as well. Marketing is relatively easy – it requires some investment in equipment to produce visual content, but overall is a low-cost component. The designer will be responsible for that part of the production process, though the business manager will be responsible for the designs being produced to a schedule. The business manager will then have to source material and manage the process of actually producing the shirts. The initial idea is to work with an existing t-shirt producer so that the shirts can be made quickly, and locally. If necessary, we may have to invest in our own press to produce shirts. It is likely that we will have a small press anyway for limited works. The operations manager and marketing specialist will need to work together to fulfill orders and ensure payment is collected. This side of the business promises to require new people shortly, but for the time being as in many start-ups the principals will have to wear many hats. The ownership of the company will belong to each of the first three founders, split 3 ways evenly, which will allow each person to leverage his or her unique talents to help grow the company. This stands in contrast to many fashion companies which are either designer-owned, and thus subject to the designer\\\\\\\'s weaknesses in business management, or they are investor owed, which can crush the freedom of the designer to be creative. So a three-way ownership split keeps everybody fully engaged with the project, from the designer to the managers, while allowing each to focus on his or her respective strengths. As the company grows, there will be the option to give equity to new hires, though that is a bridge that the ownership group will cross later. There are a few different risks that need to be managed, but the most important is probably the financial risk that will exist as the result of taking on debt in order to build the business. Other risks worth noting are the risk associated with the dependence of the company on its three principals. Each plays a critical role and while any one individual could be replaced, it would be difficult to do so without disruption to the business. Risk also includes the risk of injury or death to a principal, which can only really be defended with insurance. There are also risks such as fire and property damage that will need attention to ensure that they are insured against. Cash risks demand that each payment should have two of the three principals as signatory to ensure that the business manager does not control exclusive access to the company\\\\\\\'s finances. As the company expands, it will likely need more people. Initially, the core three people should be sufficient, in the sense that the business will be very small. However, human resources will be required as the company starts to grow – by the time the second year is done (or if the company is more successful than anticipated, by the time it is doing those volumes), more people will be required. Signs will need to build its brand in such a way that it can attract top talent, especially design talent if that is what is required. When the first employees are hired, the company will need to have policies governing holiday time, diversity, pay, benefits and other issues. HR is not normally the first hire, so either the business manager will need to acquire an expertise, or a third-party human resources specialist will need to be contracted to set up the HR systems and begin the process of making the first hires. Legal is another area where none of the principals has sufficient expertise. While they have taken rudimentary business law courses, that mostly just means that they know the elements of a contract. The company will need a lawyer on retainer who is experienced with small business, preferably in fashion, and this expense will need to be built into the company\\\\\\\'s financial projections. The most important thing for any small business owner to know is when to call a lawyer, so hopefully the principals are aware of when they need to make that call. Signs is a company with a strong ethical pulse. The company will have a written policy with respect to workplace diversity, and ethical practice. Using American supplies that pay a living wage is one of the core elements of the ethical program, as this is something in which the company founders believe, and want to practice. Further, Signs takes the view that its target market shares these values. The ethical values of Signs will be promoted on the company\\\\\\\'s website, and are expected to align strongly with the values of the target customer base. But each of the founders believes strongly in these ethical principles of corporate stewardship, of treating people with dignity, and of living in a positive, global world, so these values are going to be baked into the organizational culture from the outset.