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U 2 Me Cards & Gifts Shop Business plan

PREPARED BY: NILESH H. GOSAI (10F22) NIJA J. SUKHADIYA (10M64) NIKITA R. GAMIT (10M65) VIJAY C. KUMBHAR (10F38)

SUBMITTED TO: DR. H.J.JANI

(G.H.PATEL P.G. INSTITUTE OF BUSINESS MANAGEMENT)

S.P.UNIVERSITY
(MBA PROGRAMME 2010-12)

Declaration
We, the undersigned here by declared that the business plan work presented in this report is our own work, and has been carried out under the supervision and guidance of Dr,H.J.JANI, G.H.Patel P.G. Institute of Business Management, V.V.Nagar.

This work has not been previously submitted to any other university for any other examination.

DATE:

/ Nilesh h. Vijay c.

Signature PLACE: V.V.Nagar. Gosai Kumbhar Nija j. Sukhadiya Nikita r. Gamit

Preface

Being a student of M.B.A., I am extremely happy to submit this project report of small-scale industry under prescribed syllabus of S.P.University for particularly introducing a subject New Enterprise Management. With a view to create and developed such a skill and attitude among the students in practical and professional education. The main purpose or an object of this Business Plan report is to make students learn about various factors that should be kept in mind before setting up. In other words, it is purely entrepreneurship development and training for the establishment of small-scale industry. The contribution of SSI is very high in the economic growth rate of the country so, it is essential to understand management and working of SSIs as a student of management.

Acknowledgement

It is really a matter of great pleasure for me to present this creative and practical work. At this stage, Business plan Development report is an important part of learning and it is presented by every entrepreneur before starting of actual production.

I take this opportunity to express my sincere thanks to all those who helped me in the preparation of this report. I would like to express my thanks to Prof (Dr). H.J, JANI also a Director of our college for his guidance and all those who assisted me in the preparation of the project.

At last but not the least, I am sincerely thankful to Mr. Om Tairaiya, Director of our college

Date : Place: V.V.nagar

Signature, Nilesh h. Gosai Vijay c. Kumbhar Nija j. Sukhadiya Nikita r. Gamit

NUMBER 1 2 3 4 5 6 7 8 9 10 11 12 13.

CONTENTS INTRODUCTION PERSONAL INFORMATION PRESENT STATUS AND MARKET POTENTIAL TYPE OF UNIT COST OF PROJECT MEANS OF FINANACE PRELIMINERY PREOPERATIVE EXPENSES MANPOWER REQIREMENTS UTILITIES AND OVERHEAD ADMINISTRATIVE EXPENSES BREAK EVEN ANALYSIS PROJECT IMPLEMENTATION SCHEDULE BIBLIOGRAPHY

PAGE NO. 6 8 10 15 16 17 18 19 19 20 21 23 33

Index Annexures
NUMBER 1 2 3 4 CONTENTS REQIREMENT OF RAW MATERIAL WORKING CAPITAL REQIREMENT DEPRECIATION CALCULATION TOTAL FIXED COST PAGE NO. 24 25 28 29

5 6 7

PROFITABILTY ANALYSIS RATIO ANALYSIS CASH FLOW STATEMENT

30 31 32

1. Introduction
We all like getting presents. Admit it. Even if you're someone who tells their friends not to bother with a birthday present, you still feel a great of excitement when that gift-wrapped package inevitably finds its way into your hands. Giving gifts is a tradition that spans all sections of society, no matter what age group, income or group to celebrate almost every major occasion of the year. On top of the domestic market, the gift industry in this country is boosted by the occasions and youth. If you're someone who adheres to the adage that it's better to give than to receive, you will have undoubtedly spent many hours in gift shops searching for the ideal present. But have you ever thought what it would be like on the other side of the counter? It's difficult to define the gift retail sector for the simple reason that it's almost impossible to restrict the definition of a gift. From CDs to theatre tickets, plants to cuddly toys, anything can be bought and given as a present. In fact, as more high-street retail outlets set up gift services and add gift products to their core range, the market is becoming increasingly fragmented. Nevertheless, three distinct breeds of pure gift shop still survive:

Traditional -stocking a range of local products, often drawing on the reputation of the area. Also may stock traditional gifts such as candles and soaps.

Design-led - stocking well-designed gifts and accessories, often at the higher end of the price bracket. Card and gift shops - placing a much greater emphasis on cards with a smaller selection of gifts. High-street chains dominate this sector.

Gift giving is so popular that an entire industry sector has developed to serve it. Manufacturers and specialist suppliers serve thousands of gift retailers all over the Country, selling gifts of every description. Unlike economic downturns, though, businesses are long-term prospects - so we believe a good idea remains a good idea no matter what the economic climate, and then gift shops are still worth to investing. This report is intended to set for the project that has been undertaken by us. So that, their nature has been understand with its projected requirements and its responsibilities. This project contains projection bearing and profitability of the venture and its worthiness. It also introduces and gives personification data of the manufactures with brief information of all the partners and firm with location and location advantages with primary facts of the product and project that is U 2 Me cards and gifts shop. U 2 me cards and gifts shop is an retail business that offers a wide range of cards and gifts. U 2 me motto is "Fun, Functional, & Funky, that's U 2 me. U 2 me is a retail gift store specializing in cards and gifts.

2. Personal Information Partner: - 1


Name Age Address :::Nilesh Gosai 22 years Ram Krishna Nagar Gundala Road, Gondal. Education Qualification Financial Contribution Responsibility Share in Profit ::::M.B.A. 25 % of Owned Capital Managing Director 25%

Partner: - 2
Name Age Address :::Vijay Kumbhar 23 years Po: Sevala Ta: Chanasma Dist:Patan Education Qualification Financial Contribution Responsibility Share in Profit ::::M.B.A. 25 % of Owned Capital Finance Manager 25%

Partner: - 3
Name Age Address :::Nija Sukhadiya 22 years 37-Dharangri, Anand-v.v.nagar road, Anand. Education Qualification Financial Contribution Responsibility Share in Profit ::::M.B.A. 25 % of Owned Capital Marketing Manager 25%

Partner: Name Age Address :::Nikita Gamit 22 years At-Zarapan,

Ta:mandvi Dist-surat, Education Qualification Financial Contribution Responsibility Share in Profit ::::M.B.A. 25 % of Owned Capital HR manager 25%

3. Present status & Market Potential


The Market:

We think that, U 2 me has been successful in doing something that no other retail card/gift store has been able to do, successfully appeal to two distinct target market segments. U 2 MEs first target segment is university students. This segment is identified by their younger age and higher disposable income relative to their household income. For many students, the years at university is the first time they are living away from home and away from their parents often watchful and restrictive eyes. This means that students like to use their disposable income to its full potential, sometimes (unfortunately for them) beyond their financial means. The second distinct segment that U 2 Me will be successful in appealing to is the university faculty and staff, and the N.R.I./University community. This segment is an older, more mature market relative. They are looking for a safe and friendly atmosphere that provides a mixed with youthful excitement.

Competitive Edge:

U 2 MEs competitive edge will be their ability to effectively serve both market segments at the same time, a feat that no other gift/card shop has been able to do. We will accomplish this by leveraging two competitive advantages. The first element is a wide product selection that appeals to both target markets. Our other motto; "Risque not Raunchy" captures this idea well. While some of the products come close to pushing the limits of good taste, nothing is offensive or outrageously obscene. This creates an atmosphere that has an edge, but one in which anyone would feel
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comfortable. This wide product span helps allow us to serve two distinct sets of customers. A wide product selection is not inherently enough on its own to serve two customer segments however. The second element of their competitive edge is the high level of customer service that supports the broad product selection. Our store provides outstanding service to customers who feel like they are truly welcome and enjoy the entire shopping experience. All of the U 2 MEs employees are trained to create a helpful, gracious, welcoming experience for all customers. The sales staffs recognize that it is their job to provide the customer with whatever type of assistance they may need. The customer will leave the store feeling that we exist to cater to their individual needs.

Competitors

Your Choice

Archies Card star Heartbeat

Product:
YOU 2 MEs product base:

Food gift baskets: with snacks, chocolate, etc. Bath and Body Baskets: scented soaps, fragrances, oils, lotions, and perfumes, etc.

Soft gift/toys baskets: with teddy bear, hearts, and variety of children toys, etc.

Glass item & novelty items baskets Variety of Cards and wrapper baskets Customized Baskets: as not included in above basket and customer will want items on customized basis.

And many more and more.


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Target Market Segment Strategy:


The market segments will be chosen for two specific reasons,

location/proximity and customer demographics, specifically age: Location/Proximity We established store within several blocks of a large university campus. Students are continually walking off campus, looking for chocolate, fun, and diversions from school, all convenient enough so that they can easily get back on campus for the next class. Customers who need to do a bit of gift shopping on their break or before they leave for home are able to get to U 2 me within five minutes. Our store is also only a small distance from the large campus making it quite accessible to students, faculty, and campus employees. U 2 me will be able to secured a desired location within Bhaikaka Circle, one of the premier shopping areas. The fact that U 2 me will be established next to A.V. Road will be significant. A.V.Road is known for their high traffic. A.V.Road is very good at choosing good retail locations for our stores. Customer Demographics

University communities: While students do not have the highest household income, since the majority of their time is spent in school instead of working, they have a very high rate of disposable income. This can be explained by two reasons. First, when students enter university, this is often the first time that they are no longer under the watchful eye of their parents, who have controlled or affected the purchasing behaviour and lifestyles of their offspring. For many of the students, they suddenly have more freedom in the lives and how they spend their money.

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A second explanation of this phenomenon is that students tend to spend money in a short-sighted manner. The overwhelming majority of students receive financial aid and it is uncommon for all of the money from financial aid to be spent solely on books and tuition. Frequently a good portion becomes their disposable income. Many students take the viewpoint that if they are going to be taking on debt to complete school, then a little more debt, which provides them ample disposable income, is OK, as they will eventually pay it off years down the road when they are making good money. These two explanations offer insight into why students, those with low household incomes have high levels of disposable income. We recognize this reality and cater to these students with products that appeal to them.

Surrounding communities: The members of the community population, older than the university students, want a safe and friendly atmosphere where they can enjoy a sense of homesickness mixed with youthful excitement. The problem with most card and gift shops is their inability to cater to a wide cross section of the population. They are either too fashionable or trendy and turn off the more mature crowd, or they are too safe and secure so that only your grandparents would shop there. This "hallmarkification" of gift and card shops is quite common. We want to be successful in appealing to both the young and fashionable crowd (students) as well as the more mature crowd (university faculty, staff, and the surrounding city communities). We people accomplished this feat in part by offering a wide product selection with the two target segments in mind and offering every customer benchmarked customer service, a way of treating customers so that every customer that enters the store recalls their experience as a pleasant experience that exceeded their expectations.

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Marketing Strategy
Our marketing strategy will be a strategic effort to develop an awareness of U 2 me in the community and the wide range of attractive products that they offer. The strategy will use several formats of media:

Print advertising: The Daily local newspaper and pamphlets will be the print medium of choice. Not only is their presence felt throughout the District but they are the best media for students, University staffs and people of Anand.

TV advertising: Television commercials are an expensive yet effective media source for a marketing campaign. Production is often one of the large cost drivers for commercials. As a way of significantly decreasing/eliminating production costs as well as developing a catchy, unique, and memorable commercial piece, the technical assistance of a few university students to develop Flash-based commercials. These commercials create an edgy, distinct message that will be able to communicate the range of products and distinctiveness that U to me will be offer. By reducing the production costs to almost zero, we will be able to use TV advertisements which they would otherwise not be able to afford.

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4. Type of Unit
Name of The Unit Brand Name that's U 2 me Address ::U 2 me cards and gifts "Fun, Functional, & Funky,

:-

Bhaikaka circle,

V.V.Nagar (Anand) Reason for Site Selection : - For this we dont need a prominent high-street location. People are quite happy to find a wonderful gift shop with a good reputation so Bhaikaka circle is best for our venture.

Type of Unit Requirement of Land

:-

Partnership Firm :- 800 squares foot.

Partners

:-

Nilesh Gosai Vijay Kumbhar Nija Sukhadiya

Nikita Gamit Cost of Project :Rs 60.45 lacks

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5. Cost of Project

The cost of the project has been estimated at total Rs. 60.45 (Rupees in Lacks)

Land (800 square feet) Land development expenses Building :-

::-

45.00 lacks 00.00 lacks

02.00 lacks :08.00 lacks

Furniture and Fixture Costing Marketing budget :-

00.50 lacks 01.01 lacks 03.94 lacks 60.45 lacks

Preliminary & Preoperative Exp.:Working Capital Total ::-

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6. Means of Finance

Promoters Contribution Long Term Loan Other Total :-

::-

Rs. 60.00 lacks Rs. 20.00 lacks

Rs. 00.00 lacks :Rs. 80.00 lacks

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7. Preliminary & preoperative Expenses


Legal Expenses, Security Fees :Project Report Preparation :Rs. 00.60 lacks Rs. 00.10 lacks Rs. 00.11 lacks Rs. 00.20 lacks Rs. 01.01 lacks

Electrification & Water Deposit :Inauguration exp. & other Exp. :Total :-

Important Assumptions The following table details important financial assumptions.


General Assumptions Current Interest Rate Long-term Interest Rate Tax Rate Growth rate of revenue Growth rate of expanses Year 1 10.00% 10.00% 30.00% 10.00% 6.00% Year 2 10.00% 10.00% 30.00% 10.00% 6.00% Year 3 10.00% 10.00% 30.00% 10.00% 6.00%

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8. Manpower Requirement
Sr. No. 1. 2. 3. 4. Particular Partner salary worker Clerk Peon & Watchman Total No. 4 4 1 1 10 Amt. (per month) 48,000 16,000 6,000 1,000 71,000 Amt. (yearly) 5,76,000 1,92,000 72,000 12,000 8,52,000

9. Utilities & Overhead


Amt. (per month) 5,500 2,000 600 5,000 13,100 Amt. (Yearly) 66,000 24,000 7,200 60,000 1,57,200

Sr. No. 1. 2. 3. 4.

Particular Power Fuel Water Transportation Total

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10. Administration Expanses

Sr. No. 1. 2. 3. 4. 5. 6. 7.

Particulars Postage & Stationery Telephone Advertisement &Publicity Repair & maintenance Insurance Sales expenses Miscellaneous expenses Total

Amt. (per month) 1,000 1,000 15,000 5,000 5,000 5,000 3,000 40,000

Amt. (Yearly) 12,000 12,000 1,80,000 60,000 60,000 60,000 36,000 4,80,000

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11. Break Even Point Analysis

Particular Sales Less : Variable Costs Raw material Power Fuel Water Salary & wages Other expanses Fixed cost Earning after interest Less : Income tax @ 30% Profit after tax

Amount 60,00,00 0 41,96,40 0 33,00,00 0 66,00 0 24,00 0 7,200 5,11,200 2,88,000 8,52,800 9,50,800 2,85,240 6,65,560

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The narrow interpretation of the term break even analysis refers to a system of determination of that level of activity where total cost equals its total selling price. The broader interpretation refers to that system of analysis, which determines the probable profit at any level of activity.

Fixed cost BEP = x 100 (Fixed cost + profit before tax)

8,52,800 = x 100 8,52,800 + 9,50,800

8,52,800 = x 100 18,03,600

47.28 %

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12. Implementation Schedule

The implementation schedule is as given below:-

Sr. No . Product selection & completion of market 1. survey Preparation Of Project Report Particulars

Time Duration 1 Month 1 Month

2. 3.

Registration and other Formalities Sanction of Loan by Financial Institutions

1 Month Maximum 2 week Maximum 2 week 2 Month

4. 5.

Acquisition Of Land Building Construction

6. 7.

Arrangement Of Power Furniture and fixture work

Maximum 3 Week 15 Days

8. 9. 10.

Appointment Of Staff and Labours Sales arrangement

15 Days 2 weeks

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Annexure-1

RAW MATERIAL (keeping minimum level per month)

Sr . No . 1. 2. 3. 4. 5. 6.

Particular

Amount

Food gift items Bath and Body items Soft gift/toys items Glass & novelty items Variety of Cards and wrapper Other Total

40,000 70,000 60,000 65,000 25,000 15,000 2,75,0 00

Name & Addresses of the raw material suppliers: 1.Sonam Clock Pvt. Ltd
Address: Survey No. 337, Morbi Rajkot Highway, At: Lajai, Gujarat India Website : http://www.sonamquartz.in

2.Pooja gofts
Address: 144/b Aji G. I. D. C, Phase-2, K-road, Rajkot, Gujarat India
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Website : http://www.poojagifts.in

3.Siddharth Entreprise-India
Address: 21, Moonlight Complex, Opp. Gurukul, Drive in Road, Memnagar, , Ahmedabad - 380052, Gujarat India

4.Patmanjari Handicrafts India


Address: 121, Kunj Residency Plaza, Maktampur,, Bharuch, Gujarat India

Annexure-2

Working Capital Requirement


a) RAW MATERIAL (keeping minimum level per month) Sr . No . 1. 2. 3. 4. 5. 6. Food gift items Bath and Body items Soft gift/toys items Glass & novelty items Variety of Cards and wrapper Other Total 15,000 2,75,0 00 40,000 70,000 60,000 65,000 25,000 Particular Amount

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b). PERSONNEL WAGES & SALARY Sr. No. 1. 2. 3. 4. Particular Partner salary worker Clerk Peon & Watchman Total No. 4 4 1 1 10 Amt. (per month) 48,000 16,000 6,000 1,000 71,000 Amt. (yearly) 5,76,000 1,92,000 72,000 12,000 8,52,000

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c) UTILITIES Sr. No. 1. 2. 3. Particular Power Fuel Water Total Amt. (per month) 5,500 2,000 600 8,100 Amt. (Yearly) 66,000 24,000 7,200 97,200

d) OTHER EXPENSES Sr. No. 1. 2. 3. 4. 5. 6. 7. 8. Particulars Postage & Stationery Telephone Transportation Advertisement &Publicity Repair & maintenance Insurance Sales expenses Miscellaneous expenses Total Amt. (per month) 1,000 1,000 5,000 15,000 5,000 5,000 5,000 3,000 40,000 Amt. (Yearly) 12,000 12,000 60,000 1,80,000 60,000 60,000 60,000 36,000 4,80,000

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e) TOTAL WORKING CAPITAL REQUIRED

Sr. No. 1. 2. 3. 4.

Particular Raw material Salaries Utilities Other expenses Total

Amt. (per month) 2,75,000 71,000 8,100 40,000 3,94,100

Annexure-3

Depreciation Schedule
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Sr. No. 1. 2.

Particular Building (20%) Furniture (10%) Total

Amount 40,000 80,000 1,20,000

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Annexure-4 Total Fixed Cost

Sr. No. 1. 2. 3. 4.

Particular Interest on loan Total depreciation 40% of salary 40% Total of other expenses

Amount 2,00,000 1,20,000 3,40,800 1,92,000 8,52,800

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Annexure-5
Year 2
6600000 46,78,15 2 3696000 69960 25440 7632 562320 316800 8,52,800 11,29,04 8 338714. 4 7,90,334

Profitability Analysis
Particular
Sales Less : Variable Costs Raw material Power Fuel Water Salary & wages Other expanses Fixed cost Earning after interest Less : Income tax @ 30% Profit after tax

Year 1
60,00,00 0 41,96,40 0 33,00,00 0 66,000 24,000 7,200 5,11,200 2,88,000 8,52,800 9,50,800 2,85,240 6,65,560

Year 3
7260000 52,15,76 6 4139520 74157.6 26966.4 8089.92 618552 348480 8,52,800 11,91,43 4 357430. 2 8,34,004

Year 4
7986000 58,15,76 4 4636262 78607.0 6 28584.3 8 8575.31 5 680407. 2 383328 8,52,800 13,17,43 6 395230. 8 9,22,205

Year 5
8784600 64,85,43 5 5192614 83323.4 8 30299.4 5 9089.83 4 748447. 9 421660. 8 8,52,800 14,46,36 5 433909. 5 10,12,45 6

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Annexure-6 Ratio Analysis


Net Profit After tax = x 100 Sales
6,65,560 x 100 60, 00,000 11.09 %

1. NET PROFIT RATIO

= =

2. GROSS PROFIT RATIO

Gross Profit x 100 Sales


9,50,800 x 100 60, 00,000 15.85 %

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Annexure-7

Cash Flow Analysis

Sources of Fund Cash from Operation Cash from Receivables Operating Cash flow Other cash Inflow Long term Loan Promoters Contribution Sales of Business Assets Total other cash inflow Total Cash Inflow Cash Outflow Land Building Furniture & Fixtures Account payable decreases Repayment of Loan Interest on Loan Opening Balance Net Surplus Closing Balance

Year 1 7,85,560 0 7,85,560

year 2 6,70,334 7,50,000 14,20,334

year 3 7,14,004 6,40,000 13,54,004

year 4 8,02,205 8,50,000 16,52,205

year 5 8,92,456 7,50,000 16,42,456

20,00,000 60,00,000 0 80,00,000 87,85,560

0 0 0 0 14,20,334

0 0 0 0 13,54,004

0 0 0 0 16,52,205

0 0 0 0 16,42,456

45,00,000 2,00,000 8,00,000 9,00,000 0 2,00,000 0 21,85,560 21,85,560

0 0 0 7,50,000 4,00,000 2,00,000 21,85,560 22,55,894 22,55,894

0 0 0 9,00,000 4,00,000 1,60,000 22,55,894 21,49,898 21,49,898

0 0 0 10,20,000 4,00,000 1,20,000 21,49,898 22,62,103 22,62,103

0 0 0 7,40,000 4,00,000 80,000 22,62,103 26,84,559 26,84,559

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Bibliography

www.Bplan.com www.buztecinternational.in www.business.int.ask.com

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