Siberian Academy of Public Administration

SAPA

Business Plan

Venetian Lion

Executive Summery

This business plan proposes the idea of selling Italian souvenirs and Venetian glass in Novosibirsk. Our merchandise will include the following: Venetian glass such as glassware, souvenirs, frames for photos, statuettes, clocks, etc.; souvenirs such as trinkets, reproductions of Italian artwork, cards and Venetian masks.

These kinds of goods are new for the Novosibirsk market. People are usually very interested in everything new and the shop will be very popular. Certainly, our city is full of different kinds of souvenirs from the various countries of the world. However, Italy does not have a great deal of representation here. All we can find here is Italian clothes, Italian shoes and Italian furniture. But all this merchandise is so called 'material things'. They are practical, but do not have anything to do with the immaterial side of people. For Russians Italy is a wonderful, magical and magnificent place. And they want some piece of its beauty. The goods that we are going to sell will be very beautiful and, according to studies Russians, are especially fond of beautiful things.

We will buy goods directly from Italian suppliers. Hence, the cost of the goods will not be very high due to not using a middle man. We plan to negotiate a long term contract with our suppliers to avoid any risks. Also it is possible that our suppliers will provide us some discounts thus we will be their steady customers. This will give us an opportunity to make some of our merchandise not very expensive, so it will be affordable to many.

After one year of work we are going to have 5% of this market. After 3 years we will have 20%of the market. After 6 years we will be the leader in the market and our market share will be 40%. Besides we plan to open one more shop on the left bank of the river Ob. The best location will be somewhere on Marx Square and along Marx Prospect. We are going to open this shop 3 years after the opening of the main shop in the center of the city.

The total necessary capital investment is 2,370,000 roubles. According to our forecast we will breakeven after 1.5 years of work. After that we will work on opening a new shop on the left bank of the river Ob. This will not need extra investments because we will use our operating profit.

If the business is a success we plan to run a marketing survey in other Siberian cities and towns to find out if it will be successful to open branches around Siberia.

Background and Description of the Business

Some time ago a friend of mine returned from Italy. She started torturing me telling about all the beautiful things she had seen there. Buildings, cathedrals, towers, bridges, statues, Venetian gondolas, glass, masks and many other things. I thought how much I would love to see all this. And then I realized that here, in Siberia, we cannot find anything like this. It would be good to bring a little piece of Italy to our city. And the idea of selling Italian goods came to me.

What Italian goods will we sell here? To solve this problem we should decide on some certain economic characteristics of the product. Obviously, we want our ware to be in brisk demand. Then it should be eye-catching, unique and special. The prices should vary so many people can afford our goods. Having thought over all these details I have decided that the best type of goods to be sold here would be Italian souvenirs and that type of thing. Thus our merchandise will be the following: Venetian glass such as glassware, souvenirs, frames for photos, statuettes, clocks, etc.; souvenirs such as trinkets, reproductions of Italian artwork, cards and Venetian masks.

We will buy goods directly from Italian suppliers. Hence, the cost of the goods will not be very high due to not using a middle man. We plan to negotiate a long term contract with our suppliers to avoid any risks. Also it is possible that our suppliers will provide us some discounts thus we will be their steady customers. This will give us an opportunity to make some of our merchandise not very expensive, so it will be affordable to many.

There are reasons why this kind of business will be successful in Novosibirsk:

These kinds of goods are new in the Novosibirsk market. People are usually very interested in everything new and the shop will be very popular.

The goods that we are going to sell will be very beautiful and according to studies Russians are especially fond of beautiful things.

A certain part of our products will not be expensive, so they will be affordable to many.

Italian products in general are of high quality. This also concerns souvenirs and Venetian glass. Real Italian things are way better than Russian made but which pretend to be Italian.

Organization of the Business

The shop will work from 10 am till 8 pm every day, without tea breaks. Hence, the working day will be 10 hours long. Thus it is favorable to have people working in 2 shifts, one shift from 10 am till 1 pm, second shift from 1 pm till 8 pm.

The organization of the company will be as follows (see chart 1).

Chart 1. The Organization of the Business.

The head of the company is the director. The rest of the staff will be managers (2 people), guard (2 people), an accountant, sales people (4 people), stock people (2 people) and cashiers (2 people). Guard, sales people and stock people will work in 2 shifts. This means that at one time in the shop there will be a manager, a cashier, 2 sales people and a guard. The accountant will come in the morning and be busy with accounts. It is unnecessary for him to be in the shop all day.

Now there are a more detailed description of the staff and their responsibilities.

DIRECTOR

General management and decision making.

Financial management (investment, loans).

Organization of supply, contract conclusion.

MANAGERS

Administrative activities.

Organization of the supply goods from the stock.

Daily decision making.

Transporting goods from the stock to the shop.

Controlling the work of the subordinates.

Working day after another the whole shift.

SALES PEOPLE

Serve customers.

One working day a week off.

STOCK PEOPLE

Store keeping.

Monitoring of the safety of the goods.

Loading and reloading goods.

Saturday and Sunday are days off.

ACCOUNTANT

Accounting.

Monitoring goods transporting to the shop and filling in all necessary documents.

Monitoring how cash is transported to the bank.

Paying wages, taxes, accounts payable.

Saturday and Sunday are days off.

CASHIER

Taking care of cash, responsible for its safety.

Responsible for the cash transporting to the bank.

One day a week off.

CLEANER

Cleaning floor, windows, shelves, etc.

Arrives every morning before opening of the shop.

Sunday is a day off.

GUARD

Working regime is set up by the company which provides us with the guard. We pay for the service. The only condition will be that the guard will be the same; no changes in staff are allowed.

Situation Analysis

Market

Certainly, our city is full of different kinds of souvenirs from the various countries of the world. However, Italy does not have a great deal of representation here. All we can find here is Italian clothes, Italian shoes and Italian furniture. But all this merchandise is so called 'material things'. They are practical, but do not have anything to do with the immaterial state of people. For Russians Italy is a wonderful, magic and magnificent place. And they need some piece of its beauty.

Competitors

In general, there are two kinds of competitors. First kind those who sells the same product (in our case, Venetian glass). Here, in the city, we have no competitors of this type. Nobody in the city sells the same kind of goods as this shop. Yes, they do sell different kinds of glass and souvenirs but nobody deals with this type. Second type of competitors ones that sell souvenirs and this type of thing. There is still a great deal of souvenirs are being sold in the city. But what do they sell here? If we take the souvenir market (see graph 1), we can see that about 80% of it is clay ceramics, 5% - metal-made things, 5% - different kinds of glass and 10% - wooden-made things. All these do not have much value from an artistic point of view. Mostly it is 'rough' art that is not sublime. Sometimes there is a need for more refinement and we cannot find much of it in our market. Thus there is the need for Venetian glass with its refinement, daintiness and beauty.

Diagram 1. The souvenir market.

Clients

Of course, our products will not be very cheap. Venetian glass itself is quite expensive (though it depends on the size of a thing and on work done on it). But prices are going to vary, from relatively cheap to extremely expensive, for many people can afford these products. Hence, our target market will be the middle and upper classes. For our merchandise to be available to more people, the shop will be situated downtown. Somewhere on Krasniy Prospect, Sovetskaya St., Vokzalnaya Magistral or Lenin St. would be the optimal location. Probably the best place would be on Krasniy Prospect in the area between Lenin Square and Krasniy Prospect metro stations.

Selling season

Obviously, the shop will have a consumption peak period on the eve of holidays such as Saint Valentine's Day, Woman's Day, Christmas Day, the New Year's Day, etc. I think we will not sell much in the summer time, because many people travel abroad or are on vacation out of the city. And also there are not many holidays during the summer time. During this time we will allocate additional advertisement on TV, in magazines, organize lotteries and drawings.

Problems and Opportunities

There are a lot of different little shops and departments where souvenirs and glass are sold. People may have no wish to go downtown in order to visit our shop, but go to some local shop and buy something cheaper. 'Why should I go downtown to visit some new shop (and I don't even know if there's something interesting there) if I can buy good stuff not so far from my home?' they think. There is only way out broad advertising campaign. We must make people think they can find everything they want in our shop. They should think our goods are the best.

During the consumption peak period it is possible that a client will want to buy something (a ware he/she saw in the booklet or on the site), but this particular type of thing might be out of stock. Thus we will have to get extra supplies of goods before the holidays.

This problem is a special one that concerns the features of our goods. Glass and some other goods we are going to sell are very fragile. They can be broken or scratched during transportation or being in the warehouse. Thus we will have to insure our goods. Also we will use special packages and boxes, which will prevent glass from damage. People who will transport goods will assume the risk of damage and will pay for any breakage.

There are no suppliers of this kind of goods in Russia. Hence, we will have to look for Italian suppliers. While we find them, this will give as the opportunity not to set high prices because the historical cost of the goods will not be very high we will not have any mediators. If we negotiate a long term contract with our suppliers, we will be provided with a discount. Thus we will have the opportunity to reduce prices if it will be necessary.

Objectives

To repeat, today situation in the souvenir market is as follows:

Diagram 2. The souvenir market.

After one year of work we are going to have 5% of this market. After 3 years we will have 20%of the market. After 6 years we will be the leader in the market and our market share will be 40%.

Diagram 3. The souvenir market.

Also another goal of ours will be to open one more shop on the left bank of the river Ob. The best location will be somewhere on the Marx square and along the Marx prospect. We are going to open this shop 3 years after the opening of the main shop in the center of the city.

Marketing Strategy and Tactics

According to the budget we are going to spend 500 000 roubles on marketing. This will include several items:

The most important item in our advertising campaign will be the following. There are quite a few shops and boutiques in our city, which sell Italian goods, such as clothes, perfumes, furniture, household articles and other accessories. My idea is to publish one united booklet relating to all Italian goods, which are sold in our city. Thus if a person buys, for example, Italian furniture, he/she can also look for some other Italian goods to match with what he/she has already bought. The booklet is going to be colored, printed on high-quality paper. It will have separate sections dedicated to various Italian goods. Copies of this united advertising booklet will be in all shops represented in it. A copy will be a bonus with every purchase. Also it will be given for free to anyone who wishes. Hence our shop will be advertised in every place where Italian goods are sold.

As a continuation of the idea of the booklet, we are going to make a web-site. In it customers will find the same information as in the booklet. The site will provide an additional service: the opportunity to order and/or buy goods online.

During the first five months after our shop is open we are going to work out a special broad marketing campaign. This will include:

intensive advertising on TV and radio;

discounts for those who buy goods of more than 700 roubles wroth;

monthly lotteries and drawings for our customers. Everybody who buys anything gets a lottery-ticket and then at the end of the month the lottery will take place. Prices will not be very expensive, rather of little value. Drawing of more expensive prices will take place every month also;

special discounts on weekends;

special prices for the first 10 customers;

after 5 months of work a 7-day vacation to Italy will be drawn among all customers.

Other major advertising campaign will be as follows.

Advertisement on TV programs. On the city local TV there are several programs that make report about various shops, boutiques in our city and goods they can offer. Among them are fancy, luxurious and fashionable furniture, clothes, commodities and household goods. The names of these programs are 'Dorogoye Udovolstvie' ('Expensive Pleasure'), 'Udachnaya Pokupka' ('Successful purchase') and some others. With their service we can make a very good detailed report about our shop. And this will have a good effect on many people, especially well-to-do women, watch such programs.

Advertisement in local newspapers. As in the case with TV programs, we will advertise or even publish a whole article in special advertising newspapers, which are free and delivered to apartments. One of them is 'Kupecheskaya' ('For Merchants'), the informational-advertising newspaper. It is delivered to the apartments of well-to-do people in the city center.

Several billboards will be located downtown and along main city streets and prospects.

Budget

The budget of the business will be as follows.

Table 1. Budget, roubles.

Thus the total necessary capital investment is 2,370,000 roubles. According to our forecast we will breakeven after 1.5 years of work. After that we will work on opening another shop on the left bank of the Ob. It will not require extra investments thus we will use our operating profit.