Company Background Business Description:
Litswitchkins is a personal home decorations service that sells customized light switch panels. We are structured as a Sole Proprietorship, but during the coming year we’d like to become a Limited Liability Company (LLC).
Business Model:
Litswitchkins will create nice home decorations for customers. Each light switch panel will be made for the individual. We will consult and deliver our customers exactly what they need. Clients can change these light switch panels if they ever get tired of them. We’re convenient and offer high quality products!
Mission Statement:
We will provide our customers with convenience, style, and creative light switch panels. We will try to make their experience as memorable as possible. We will sell at low prices, provide great service, and allow our customers to express their unique style.
Market Opportunity: Opportunity:
Individuals want the opportunity to express themselves and their unique style through their choice of home décor. While they might have the chance to decorate their walls, they have few options to highlight their individuality through their light switch panels. Target Market:
We will target families with an income of at least $50,000. Customers have an interest in crafts, often an artsy personality, are hardworking, and would like to spend more time on transforming their home into THEIR home.
Industry Overview:
The home decorations market has annual industry sales of over $130B with annual growth of 1% over the past five years. Rising consumer confidence along with increased disposable income as the economy recovers should lead to increased growth over the next five years.
Market Research:
My consumers are in the greater Columbus area, which has a population of about 1,836,536 individuals. I’m targeting families with an income of at least $50k. Based on a survey of 30 people, I believe that roughly 8% of this target population will purchase my product/service. This means that in the test market of Columbus alone, I have a target market of almost 189,560 people.
Leadership:
Founder and CEO, Lacey Hernandez, is a student at George Washington High School. She is taking an intensive business class and has consistently been on the honor roll.
Contact Information: @LitSwitchKins -Twitter
Year founded 2013
Number of Employees 1
Investment Opportunity $1,185
Annual Operating Costs $1,440
Annual Sales $14,745 Annual Profit $4,207.08
Return on Investment 355%
Litswitchkins
Home Decor
Where Creativity comes to life
What is your business opportunity?
The Home Decor business is viable opportunity for the greater Columbus area. Columbus has a large population of middle-class consumers who are spending more money on Home Decorations. Individuals from these professions earn $30,000 or more per year, providing them with substantial amounts of disposable income.
Describe the problem/unmet need your business is solving?
What these individuals have in terms of income, they lack in terms of reasonably priced home decorations and creativity. As a result, they would lack a broad spectrum of unique, creativity their homes.
How does your business solve the problem/unmet need?
Litswitchkins seeks to provide these individuals with reasonably priced home decorations and creativity.
What is your type of business? (Manufacturing, Wholesale, Retail or Service) Describe
in detail why you chose this business type.
Litswitchkins will be a manufacturing/retail business that will provide these individuals with reasonably priced home decorations and creativity.
OPPORTUNITY RECOGNITION & BUSINESS STRUCTURE 1.1 Business Opportunity
Which business ownership type did you select for your business? (Sole proprietor,
Partnership, LLC, S-Corp, C-Corp) Describe in detail why you chose this business
ownership structure.
Litswitchkins will be a Sole Proprietorship, wholly owned and operated by Lacey Hernandez. However, when my profits allow it, I would like to become a Limited Liability Company.
A mission statement is a company’s constant reminder to its employees and customers
of why the company exists in a concise way.
Describe what your company does best and why in one-two sentences.
Litswitchkins, a home decorating manufacturer, will provide clients with fun and unique light switch covers that are based on the clients customized light skins. Light switch covers are placed onto clients light switch panel to enable a little coordination to their rooms.
Social Responsibility is often described as “doing well by doing good.” In addition to
making a profit entrepreneurs need to consider how they support social good.
How is your business socially responsible? Be specific.
How do you plan to give back to a social cause with your time or money?
Litswitchkins will also give back to the community by using recycled paper, and even recycling any paper we MAY use. In the future, Litswitchkins hopes to volunteer to donate light switch panel covers for the less fortunate. After three years, Litswitchkins plans to contribute 1% of yearly net profit to a local home furnishing store.
What are your personal qualifications to run this particular business? (experience,
certification, classes, skills) To complete this section refer to your strengths from your
SWOT.
1.3 Type of Business Ownership
1.4 Mission Statement
1.5 Social Responsibility
Litswitchkins has many personal characteristics and skills that are particularly valuable in the home decoration business, including: a passion for home decorating, attention to detail, organizational skills, flexibility, creativity, sociability, ability to multi-task, high physical energy, and endurance.
What industry does your business belong to?
What is the size of that industry? (For example: revenue, services providers, industry
trends)
The home decorating business is one of the fastest-growing segments in the home décor. According to the American Society of Interior Designers (ASID), about 9,000 home decorators are currently serving some 72,000 clients nationwide. Those numbers are expected to double over the next five years.
What is the size of your potential target market?
What data did you find that supports your business opportunity?
My consumers are on in the greater Columbus area, which has a population of 1,836,536 individuals. Based on a survey of 30 people, I believe that roughly 10% of the population will purchase my product. This means that my business has potential earnings of 189,560.
Based on your research, describe your market segment within your target market. Be as
detailed as you can, using the following guiding questions.
Demographics:
What objective social and economic facts did you find?
Geographics:
Where do your customers live, or where are businesses located?
Psychographics:
What are some psychological characteristics (attitudes, beliefs,
interests, etc…) of your customers?
What are the buying patterns for your target market?
Demographic Information: Professional couples and families, with household incomes of over 50,000. Geographic Information: Greater Columbus area.
Physcographic Information: Has an interest in crafts, often an artsy personality, hard working, would like to spend more time on transforming their home into THEIR homes.
Buying Patterns: Usually on their feet, and would like to transform their homes for a low price 2.1 Market Research
2. Market Research
Which direct competitors run similar businesses? Describe these competitors?
Direct Competition: Based on Website research, I have three major competitors in Columbus: Lillian Vernon has low prices, but lacks quality
Home Decorators has excellent quality, but lacks service SmithE has excellent service, but lacks low prices
Which indirect competitors fulfill the same want or need with a different business?
Describe these competitors?
Indirect Competition:
Home Depot, because although they might not only sell what I’m selling but they include this into their stores, and if they got a lot stronger, I’d have to compete
Describe your competitive advantage, or what makes your business better than your
competitors? Use the following guided questions to help identify potential differentiators
for your business:
What product or service can your business provide that your competitors don’t?
What mix of products or services can your business provide that your
competitors don’t?
What specialized selling or delivery method can give your business a competitive
edge?
In what unique ways can your business meet customers’ wants or needs?
2.3 CompetitorsList your three competitive advantages that put you ahead of the competition. Go
beyond price.
Litswitchkins has three major competitive advantages:
1. It will focus on customer service but allowing them to customize their skins. 2. It will focus on giving the best quality out!
3. Litswitchkins will be one of the few or ONLY who makes skins for your light switch panel!
What trends in your industry could provide additional opportunities for growth?
What next steps would you take to grow your business and/or making it operational?
Litswitchkins anticipates that, after a profitable customer base had been built locally, the company will develop an intensive growth strategy. Litswitchkins intends to increase its market penetration by opening an online store. This will allow Litswitchkins to grow into a national business, which, in turn, will increase its consumer base. Litswitchkins anticipates that the online store will attract roughly 200 new consumers per year. By the end of year six, Litswichkins will have the profits necessary to open a physical store.In its second year, Litswitchkins plans to double its sales. In year one, net profit will be $1,836. In year two, I expect Litswitchkins net profit to be $3,672
What trends in your industry could provide potential challenges to your business?
What barriers to starting this business exist? What additional education or training could
you pursue to overcome these obstacles?
2.5 Business Growth bUSI
The biggest challenge facing Litswithckins in its early years will be gaining new customers. Handing out flyers and brochures will barely generate enough customers to cover monthly expenses.
The biggest long-term challenge for the company is competition. The home decoration has very low start-up costs. Anyone with the skill and capital can open a new business that will be in direct competition with Litswitchkins. Litswitchkins will overcome these challenges by creating a gradual increase in start-up costs, and try to make our business as unique as possible.
What is one unit of sale? Remember that a unit of sale is what the customer actually
buys from you, so it should be clear and easy to describe.
One Unit is defined as making one light switch panel for a client’s home décor.
List all the steps it takes to get your product or service to your customer. Be specific and
add lines if needed.
Delivery of Service
Description of Step
Using my Twitter account, potential client will determine what types of product/service they would like
Travel to wholesale vendor to purchase materials necessary to make product/perform service
Create product/ implement service
Call customer to schedule delivery/ Call customer to schedule follow-up service
Deliver product/ Send confirmation for next visit Return Home
3. FINANCIAL INFORMATION & OPERATIONS 3.1 Definition of One Unit
List all the variable expenses, materials and labor, related to your unit of sale.
MaterialsDescription Material Cost/Units Cost Per Unit
1 Light Switch Panel $16.80/48 units 0.35
2 Acessories (brushes, rhinestones) 0.65
3 Paint 3.00
Total Material Cost $ 4.00
Labor
Labor Cost Per Hour Time To Make Unit Labor Cost Per Unit
$10.00 0.25 $2.50
Total Labor Cost $2.00
Total Costs Of Goods Sold $6.50
Selling Price per Unit
$15.00
Variable Expenses per Unit
Costs of Goods Sold
Materials
$4.00
Labor
$2.50
Total Cost of Goods Sold
$6.50
Other Variable Expenses
Commission
$0
Other
$0
Total Other Variable Expenses
$ 8.50
Total Variable Expenses
$8.50
Contribution Margin per Unit
$6.50
Fixed Expense Explanation Average Cost
Insurance As a food service business, it is imperative that Eva's Edibles is
insured to protect against liability $15
Salary Office work (tweeting, faxing,a nd delivery $20
Advertising Business cards, flyers, brochures $45
Interest Will not have loan $0
Depreciation Saving money, to replace asset. To cover other fixed expenses. (Emergency money)
Utilities Cell-Phone $20
Rent Home $20
Other Expenses Covered under depreciation $0
Equal Sum $120
A
REVENUE
selling price × units sold$14,745
B
Gross Sales
selling price × units sold$14,745
C
Sales Returns
selling price x units returned$0
D
Net Sales
B – C$14,745
VARIABLE EXPENSES
Costs of Goods Sold
E
Materials
cost of materials × units sold$3,932.00
F
Labor
cost of labor × units sold$2,457.50
G
Total Cost of Goods Sold
E + F$6,389.50
Other Variable Expenses
H
Commission
cost of commission × units sold$0
I
Packaging
cost of packaging × units sold$1,966.00
J
Other
cost of other costs × units sold$0
K
Total Other Variable Expenses
H + I + J$1,966.00
L
Total Variable Expenses
G + L$8,355.50
M
CONTRIBUTION MARGIN
D – L$6,389.50
FIXED OPERATING EXPENSES
N
Insurance
cost of insurance × 12 months$180.00
O
Salaries
cost of salaries × 12 months$240.00
P
Advertising
cost of advertising × 12 months$540.00
Q
Interest
cost of interest × 12 months$0
R
Depreciation
cost of depreciation × 12 months$0
S
Utilities
cost of utilities × 12 months$240.00
T
Rent
cost of rent × 12 months$240.00
U
Other fixed expenses
cost of other × 12 months$0
V
Total Expenses
N + O + P + Q + R + S + T + U$1,440
W
PRE-TAX PROFIT
M – V$4,949.50
X
Taxes (15%)
W × 0.15$742.43
Y
NET PROFIT
W – X$4,207.07
What are your start-up expenditures? What are your cash reserves? Complete the table
below:
How much of this start-up investment can you afford to pay yourself? $500
How much of the start-up investment will you need to finance? (Total Start-up
Investment- What you can afford to pay) $685
Items Explanation Vendor Cost
1 Computer Online Marketing Wal-Mart $300
2 Telephone
Communicating
with customers ATT&T $100
3 Light switch panel
To be able to
create designs Home Depot $50
4 Paint
To paint the light
switch panels Target $50
5 Painting tools To paint designs Target $50
Total
Expenditures $550
Emergency Fund
Unexpected
Expenditures 1/2 start up $275
Reverse for Fixed Expenses
In case I do not break even for the
first 3 months of operations
3 months of fixed
expenses $360
Total Start-Up $1,185
Annual Net Profit $4,207.07 29% 0.29
Total Annual Sales $14,745 ROS% ROS Per $1
Annual Net Profit $4,207.07 355% 3.55
Total Start-Up $1,185 ROI% ROI Per $1
Fixed Monthly
Expenses $120.00 18.46 19
Contribution
Margin Per Unit 6.5
Break Even
Amount Break Even Units 3.7 Start-Up Investment
A marketing plan focuses on the Five P’s: People, Product, Place, Price and Promotion.
In this section, describe your people, product, place, and price portions of the marketing
plan.
Who are your target customers, and how will you use people to market your business to
them?
What are the features and benefits of your product or service?
Where will you sell your product or service?
What strategies for determining prices will you use?
Litswitchkins plans to marker exclusively to professionals with an average annual income $50,000. Based on research data, many people love to redecorate their businesses and they usually like to paint their walls. But their left with these ugly, plain, and boring light switch panels. Litswitchkins will help them coordinate their rooms a little. The marketing plan will highlight the following customer benefits:
1. Unique room
2. Less time thinking about what to do with ugly light switch panels 3. Cute designs
4. If you don’t like any of our designs we allow you to do your own!!! 5. Less money replacing the light switch panel
6. More time to enjoy your room 7. Nice service.
4. MARKETING & SALES
In this section, you will describe your promotional strategies that you will use to attract
and retain customers. Remember to explain how you will innovatively use existing
platforms (such as blogs, social media, etc…) to effectively appeal to your target
market.
What advertising will you do as part of your promotional strategies? Why will this form(s)
of advertising be effective for reaching your target market?
What visual merchandising will you do as part of your promotional strategies? Why will
this visual merchandising be effective for reaching your target market?
What publicity and public relations will you include as part of your promotional
strategies? Why will these publicity and public relations initiatives be effective for
reaching your target market?
What sales promotions will you include as part of your promotional strategies? Why will
these forms of sales promotions be effective for reaching your target market?
LitSwitchKins will engage in four types of promotional activities: establishing an Internet presence via Twitter, utilizing free advertising venues, promotions at local events, and programs for retaining current clients.
1. Internet Presence @litswitchkins: LitSwitchKins will develop a twitter account, which will provide full information about services and display a selection of various products. The Twitter page will offer monthly promotions and offer a sign up list for prospective clients. Sample products/services will be showcased
2. Youtube: Litswitchkins will utilize the free advertising opportunities of the internet by releasing an updated commercial of business every two months.
3. Sales Promotions: LitSwitchKins will also participate in local events at shopping malls, cultural fairs, and other appropriate venues. LitSwitchKins will offer customers loyalty cards where they will receive a 10% discount on their fourth purchase.
What will be your overall personal selling strategy to get sales from customers in your
target market?
LitSwitchKins will depend heavily on personal selling. This involves contacting past customers and pursuing business contacts through George Washing High School.
Direct mail pieces and the brochure will have a mail-back card to capture a prospective client’s e-mail address and telephone number. Litswitchkins will follow up all mail-back cards personally by e-mail or phone.
Future selling strategies will include asking customers for referrals and recommendations of potential clients. Again, LitSwitchKins will get in touch with each prospect personally.
Steps a consumer follows to purchase my service:
1. Customer will contact LitSwitchKins by phone or email for a free consultation.
2. Customer will schedule an appointment for LitSwitchKins to make payment and pick-up product/service.
In this section, you will detail your first-year sales estimate. Use the following guiding
questions to help with your estimates.
Maximum Capacity: What are the maximum amounts of units could you physical make
or deliver in a month?
Break-Even Units: How many units do you need to sell to cover fixed expenses every
month?
Market Analysis: How many units can you sell based on your number of customers in
your target market segment?
Seasonality: How will sales be affected by different seasons and holidays? How will
your ability to produce be affected by sales and holidays?
Factor Influence on sales
Market Analysis Given the large number of individuals in the greater Columbus area (1,836,536), hitting 983 in annual sales is feasible, especially since customers may buy multiple units at a time.
Maximum Capacity Lacey has a maximum capacity of 80 units per week (20 hours), which means she can serve a maximum of 240 customers per month. As a result, Litswitchkin’s sales estimates are aligned with her maximum capacity.
Breakeven Units Lacey must sell at least 19 units per month to cover her operating expenses. Lacey’s sales estimates are above her breakeven point. Seasonality Lacey’s business will not be affected by seasonality because of more gifts
bought during holiday seasons.
Month Units Revenue
January 110 $ 1,650
February 25 $ 375
March 110 $ 1,650
April 110 $ 1,650
May 25 $ 375
June 25 $ 375
July 110 $ 1,650
August 110 $ 1,650
September 25 $ 375
October 110 $ 1,650
November 25 $ 375
December 198 $ 2,970
