Executive Summary
Footwear has become an integral part of fashion, and life in general, in the last couple of decades. Interestingly, before, shoes were not considered essential for health but were used purely for walking or running. Today, consumers deliberate on the size of the sole, the balance, and aesthetics when buying shoes. Multinational footwear companies have changed the way they contemplate consumer needs, and thorough market research has come up with impressive shoe designs for different activities. For instance, some shoes are meant explicitly for runners, while others are designed primarily for light jogging. Arguably, the industry has grown tremendously because of the changes in fashion, healthcare, and manufacturing. Health practitioners have encouraged the wearing of shoes based on activities endured for purposes of proper balance and statue. On the other hand, shoes have been used as accessories in both high and street fashion.
Manufacturing in the footwear industry has changed because of technological advancements. Indeed, more companies produce a significant number of shoes per day due to efficient and supportive innovations in the field. It is critical to point out that online retail businesses have also pushed the industry forward with more clients opting to buy their shoes online and have them shipped across the world. This goes to show the importance clients place on having the right shoes in their closets. The industry is highly saturated but has some loopholes that, if appropriately targeted, can give a newcomer an essential advantage over the rest. Amara Shoes aims to fill one of the gaps in the industry that will not only push the sector forward but will also give the company a much needed competitive edge.
Introduction
Amara Shoes will be an online footwear stall that will target men, women, children, and athletes. The target audience for the store is broad due to the healthy-living component, as well as the fact that many children are exposed to sports at an early age through their schools. It is critical to note that the footwear offered by Amara Shoes will be custom-made and manufactured in-house. The company will not have a physical store but will be available on a 24/7 basis so that people from different parts of the world can also shop whenever they want. For purposes of streamlining services, the market segment will be divided into two broad categories, which are the primary and secondary groups.
Currently, various online stores offer footwear to the public. However, very few shops offer custom-made pieces. The customer journey will involve a client picking out several options on the site to create their perfect shoe. Each option will also give the client information based on how their choice affects their general health and their shoe choice. For example, an athlete will get suggestions based on the footwear’s ability to support the body during strenuous running fully. On the other hand, a client looking for comfortable shoes for their evening walks will have different choices as their activity is not as strenuous. Although competition is high, the store has innovative strategies that will ensure it captures a significant percentage of the target market, as will be presented in the Market Analysis Summary section.
Critically, the online footwear industry brings in approximately USD 70 billion per year in the US alone. The size of the market is expected to continue growing since healthy-living and exercise enthusiasts have created a demand for activity-specific shoes. Therefore, a market that initially had both shoes to wear at all times, now is keen on wearing different shoes for their various activities. For example, ladies have become interested in buying flat-soled shoes for going to work, heels for evening events, and sport shoes for their exercises. Interestingly, these different activities can be broken down further, and this creates the need for more shoes.
Objectives
The store will have three main objectives as listed below:
- To make Amara Shoes the best footwear store by offering customized products to its clients. As mentioned, this has not been done by any other store as footwear stalls often have pre-made shoes for their target clients.
- Actively recreate shoes that help clients reach their health goals. Indeed, a significant number of the target audience are looking to enhance their healthy living through exercises, and the right kind of shoe can make their goals attainable.
- To create an online loyalty club on the website for people with different shoe design interests that allows them to interact, discuss designs and also get more information on new trends.
Goals
The store will have two main goals as goals will be revised every two years. The goals are:
- Ensure that 50% of the clients return within the first year of operation for a second purchase. This will enhance brand loyalty and also increase sales and profit for the company.
- Have 70% of the first-time purchases join the loyalty club so that they can get news on new designs and also more information about their type of shoes.
Mission
To help the community attain their goals through practical, affordable and beautiful footwear.
Vision
Amara Online Shoes Store will motivate, through innovation, technology and price control, communities all over the world to safely, affordably and directly impact their lives through proper footwear that enhances healthy lifestyles.
Values
The online store will have four core values namely authenticity, quality, commitment, and efficiency.
Authenticity
This is a vital value for the company as it enhances value addition. The company will take up a buyer’s market where authenticity is critical to ensure the consumers get the product they want. Indeed, authenticity can also be achieved by being original and all the company’s efforts will be imprinted on originality.
Quality
Similar to authenticity, quality enhances value addition to any product or company. Due to this, Amara Online Shoe Store will ensure quality in all its core business activities. Towards this end, the company will ensure to offer superior designs on all the products and also provide excellent consumer experiences. The latter is critical in developing trust among the clientele and enhancing consumer loyalty.
Commitment
Importantly, the company will be committed to the client base. This will be achieved through the production of high quality products and satisfactory consumer experiences. Indeed, Amara Online Shoe Store will also be committed to its staff by providing good working conditions and appreciating the efforts of the employees. The staff are vital in realizing the company goals and will be treated as such.
Efficiency
To ensure consumer loyalty and also attract more clients, the company will use efficiency as a core value in all its operations. Efficiency provides quality enhancement and also ensures that the operating costs are as low as possible.
Company Summary
Amara Shoes will offer quality yet affordable footwear for everyone in the family. This includes athletes, children, men, and women. Critically, the company will not only make running shoes, but an array of footwear that can be used for various activities. Additionally, the shop will include accessories for the user that can be included as an added purchase. For example, for the exercise lover, accessories such as exercise watches will be sold. These accessories will not be exclusively owned by Amara Shoes but will be offered through partnerships with the manufacturers. Amara Shoes will get a percentage of the sales of the accessories, thereby adding to the company’s revenue stream. It is also critical to note that the company will run a loyalty club accessible to all members. The club will not be free and will offer discounts to users to entice membership. The company will ensure that customer service is at par with the associated quality of the products. Removing pain points from the consumer journey is essential in keeping ahead of the organization’s competition. The company structure will include an independent marketing team that will be in charge of making the consumer journey efficient for the user.
As mentioned, the company’s mission is to help the community attain their goals. The company will do this in three ways, namely offering practical solutions, affordable products, and beautiful designs on all their footwear products. The three stated elements will help communities realize their goals as they target financial management, aesthetics, and reliability. Thus, different goals from various clients will fit within the mission of the company. It is also critical to note that the company logo will be included in all its merchandise, including the accessories. As stated previously, the accessories will not be manufactured by the company; therefore, they will not be exclusively owned by Amara Shoes. However, the packaging included in the accessories will have the Amara Shoes logo.
Start-Up Summary
Amara Store is a start-up and several things have been considered to make the start-up successful. The following are some of the crucial considerations that will ensure the start-up is both successful and delivers on its mission:
Website
The stall is an online shop that will use a website for check-out purposes. The website will be user friendly and it will also be compatible in order to be used on either the computer or the phone. The website development will involve highly experienced personnel who will be outsourced to ensure the daily management of the website as well.
Inventory Control
Inventory control will be handled in-house as manufacturing will also be done solely by the company. However, since the company is a start-up, it costs less to contract an already established and affordable manufacturing partner to develop the shoes but using Amara Shoes designs only. A long term goal is to have a fully functional factory for in-house designers.
Pricing
The pricing of the products has to be considered in order to align with the general company’s budget. The shoes are highly affordable, ensuring that the manufacturing process also enhances cost-saving measures. It is also important to note that the pricing of the products will also determine the staff remuneration that will be offered. Indeed, the company requires highly qualified staff but has to keep the overhead costs low in order to offer quality yet affordable products.
Products
As mentioned earlier, Amara Shoes will offer various products to its clients. The products will be divided into the following 5 broad categories:
Men’s Shoes
The products will target all men despite the specific type of shoe they are looking to purchase. Under this category, the user can choose from sport shoes, office shoes and home shoes. It is prudent to state that the sub-categories will also have further divisions based on material and colour. The site will use these options to come up with the perfect shoe for the man shopping. Evidently, the category will also have “shopping for a man” tab for anyone who will be looking to gift a man in their life shoes. This tab is different as it will inquire on the various attributes and preferences of the man in order to come up with the right shoe for the gift.
Women’s Section
This is the second category and will also include some of the sub-categories that are in the men’s section. For example, women will be able to choose their shoes based on material and colour. Additionally, they will also pick out their favorite heel size based on the activity. Whereas an office shoe for an executive will have options for 5 inch heels, the same office shoe for an office assistant will go up to 2 inches only. This is due to the fact that the office assistant has to run around all day unlike the executive, thus, needs lower and more comfortable shoes. Other people will also be able to shop for women using the “shopping for a woman” tab.
Children’s Shoes
The children’s section will be further divided into two broad sub-categories, namely, youth and kids. The youth section will target children aged 10 to 18 while the kids section will target children under the age of 10. The two groups will be further categorized into indoor and outdoor shoes. It is critical to note that the outdoor shoes will include both running and non-running footwear for the target audience. The shopper will be able to also pick out material and color for the desired shoe. This section will not have a tab for “shopping for children” as it is assumed that since the target group are not able to pay on their own, their parents or guardians will be shopping for them.
Running Shoes
A section specific to running shoes will also be included on the website. This category will be divided into men and women and will target track lovers. Indeed, whereas the men’s and women’s sections will have options for running footwear, this section will target professionals who can choose the type of track they participate in mostly. For example, people doing marathons will have a different type of shoe compared to people participating in sprint. The different types of running affect the type of sole and material for durability purposes, thus, they have to be separated for quality concerns.
Walking Shoes
This section will have options for people who do professional walking races. Additionally, the section will include gym shoes for both men and women. Gym shoes have been included in this section due to the fact that their design are near similar to those of professional walking athletes, especially for treadmill usage.
Market Analysis Summary
Industry Analysis
As mentioned previously, the online footwear industry records about USD 70 billion per year. This is a culminate number collected from both international brands and local franchises. The industry has been growing over the last couple of years and is expected to develop even further in the future. One of the reasons for the steady growth of the industry is the fact that more people are making keen choices on footwear based on the argument that comfortable shoes equal good health. Often, when discussing good health, professionals suggest nutrition and exercise as the main components. In regards to exercise, being physically fit has been associated with lower risks of lifestyle diseases. Whereas many marketing strategies have not entirely used the fact that comfortable shoes enhance better posture and health in general, health professionals have been instrumental in advising their clients on the right shoes to wear. Physiotherapists and occupational health experts have been on the front row vouching for the importance of shoes in enhancing general health. This push for better shoes has created a demand for more customized footwear in the country.
Worldwide, more clients are looking for better brands that are not only affordable, but that also support the different terrains that the clients frequent. For example, the shoe needed by a ranger in Congo Forest are significantly different from those needed by an executive in Tokyo. Technology and globalization have helped the industry expand at an incredible rate. Clients can see what other people in different parts of the world are wearing while compare rates of different brands at the same time. The internet has also boosted the industry as people can purchase their favorite brands easily.
Importantly, the most sold footwear online is athletic. Arguably, these are the most purchased because of the impact of various sport personalities. For example, football fanatics will look to buy shoes associated with Leo Messi or Christiano Ronaldo as they are considered exceptional players. Towards this end, they will also purchase brands that their favorite players have endorsed. The same goes for people who are a fan of Serena Williams, or play tennis, and clients who admire Michael Jordan and play basketball. Arguably, these sports celebrities have pushed the footwear industry to the next level due to their fan base. It is prudent to note that these shoes are often expensive for a significant percentage of the market, who turn to counterfeits to get the assumed quality and brand.
Indeed, the celebrities have also pushed the growth of companies such as Nike and Adidas to be dominant brands in the sector. Critically, even though these companies offer quality products, all their shoes are pre-manufactured, and their clients have to choose from a provided catalog, the footwear that best suits them. Currently, none of the major footwear manufacturers offer the custom-made services that Amara Shoes proposes. The self-customizing component gives Amara Shoes an edge over its competitors, including the multinationals. Additionally, it also pushes the industry forward by putting the manufacturing decisions in the hands of the end-user. Such an action promotes feelings of ownership among the clients, which is not easily attained with celebrity-endorsed merchandise. The shoe industry also has several accessories that accompany the products. For instance, watches for exercise enthusiasts, headphones and earphones, and even carryon cases for people in need of small and convenient bags when they are jogging.
Interestingly, women also purchase more online products than men. The assumption that women are more avid shoppers than men, however, does not mean that men’s shoes are not bought in as many volumes as women’s shoes. Women are still the most avid shoppers for men’s fashion items as they buy them as gifts. The same is applicable for children’s online shopping as mothers are often more involved in that than fathers. The fact is relevant for the industry as men and women have different pain points when it comes to consumer journeys. For instance, whereas women might find choosing footwear based on integral preferences on pitches and sports challenges, men will not. On the other hand, women might prefer aesthetics to the durability of sportswear, unlike men. It should be mentioned that these are only examples and in no way suggest that women cannot choose footwear based on sports and durability preferences.
Looking at the online aspect, men and women often engage with brands differently. Gender is one of the most common aspects of online data collection as it determines where the user gets their digital information. For example, whereas men will get information in sport magazines or gym groups online, women will get them in career groups or entertainment sections. The type of language used is also different when targeting men and women. Arguably, all these differences have shaped how both genders interact with the industry. In the past, the footwear industry was mainly male-dominated. Today, more women are keen on footwear as well.
Market Segmentation
As explained earlier, the footwear industry has an extensive market. To get the right clients, the company will segment the market into two broad categories, namely: sports and non-sporty.
Sports Market Segment
The sports market segment is made up of athletes, sports fans, and exercise enthusiasts. This is arguably the largest market segment for footwear. The designs of shoes made for this segment are referred to as sport shoes. The company will divide the segment into true sport, warrior sport, weekend sport, fashion sport, and helper sport. The true sport part of the sports market segment will include professional athletes. These are people who are highly considered with the quality and function of their footwear, but are less concerned with durability. It is critical to note that the designs that will be offered for this category will have to also adhere to professional sport guidelines for footwear.
The second group, the warrior sport, are people who do extreme sports every once in a while. This group is interested in both quality and durability as they do not use the sports shoes often. On the other hand, the weekend sports group are people who go to the gym or do other sporting activities on the weekend. Their desire for durability is not as strong as that of the warrior sport segment. All gym enthusiasts will be grouped in the weekend sport segment as well.
Additionally, the fashion sport group is made up of people who love sports, participate in it but also highly value fashion. Therefore, they are more keen on what fashions are trending at that particular time aesthetics rate highly than durability for this group. Lastly, the helper sport category is made up of people who do sporting activities as a way of giving back to the community or raising funds for a charitable cause. Their desire for durability and comfort ranks higher than that for aesthetics.
Non-sporty Market Segment
The second market segment will be referred to as non-sporty. This will target people looking for shoes that do not have the sports requirement. Office shoes, indoor shoes, and children’s shoes will all be included in this segment. One of the things that has to be considered for this segment is durability. Indeed, a significant percentage of the group will look at how long the products will last. On the same note, they will be willing to pay higher rates for more durable shoes. Critically, infant shoes will be a special category under this segment. Few footwear companies currently offer customized infant shoes. This part of the segment will target parents looking for the perfect shoes for their newborns. The additional fact that they will “design” the shoes virtually will make the footwear bought more meaningful for the family.
Indeed, the non-sporty market segment allows the company to come up with various creative marketing strategies. This is because despite being smaller in size compared to the sports market segment, this group is more versatile and highly stratified. The segment will have to cater for a wide range of needs from infants to teens to young adults and the elderly. The different activities that these groups need the shoes for will also have to be considered in order to offer quality and comfortable shoes.
SWOT Analysis
This section will present the company’s strengths, weaknesses, opportunities and threats analysis.
Strengths
One of the key strengths of the company is its ability to customize footwear to fit the preferences of the client. The process of customization is also user friendly. Ideally, the client gets to the company’s landing page and picks the category they are interested in buying. Once they do that, they choose shoe size, material, and color. After this they are presented with various front, side, back and heel designs that they choose from to create a complete shoe. The user can re-do this process as many times as needed to get the right design for him or her. Once they have the right shoe, they can proceed to order where they put in a delivery address and pay for the shoe. It is important to note that the company will have pre-designed parts of shoes. Users will also be able to change the shapes by making certain elements smaller or bigger. Additionally, users will be able to add accessories such as beads to their shoes. Secondly, the engaging process of making the perfect shoe ensures that many users stay on the site for a while. Data collected from the clients can be used for target advertising on the site. This can become another revenue stream for the company.
Weaknesses
As a start-up company, the main weakness is, it currently cannot set up a fully functioning factory for producing the shoes. Due to this, the company has to rely on a manufacturing company to make the shoes, while the in-house company team works solely on the designs. This is a weakness as the brand has pushed itself in the market, saying they manufacture their shoes. In order to understand how this affects the brand, it is critical also to point out how the partnership is to work. The partnership with a manufacturing company will work when Amara Shoes develops viable shoe designs and shares these with the company. The designs will, however, not be produced as is, but instead will be separated to ensure that various combinations can still produce a viable shoe. It is these pieces that will be made available to the public, who will virtually create their preferred shoes. The fact that a third party has been trusted to do the manufacturing can affect the business and brand in two ways. First, the public image will be negatively affected if it is known that the company does not do the production as is claimed. Secondly, quality might be compromised by the third party, and this will affect the bottom line.
Opportunities
One opportunity the company can take advantage of is the establishing of a factory. This will cement the company’s uniqueness in the industry as they will be in full control of the customized pieces. A fully functional company will have several advantages. First, it can be used as a marketing tool to attract more clients as more people will want to occasionally visit the factory and see how their shoes are put together. Factory tours can be used as a yearly marketing campaign to increase sales. Secondly, the factory can offer another revenue stream if the company offers other small footwear companies the ability to manufacture their brands within the factory. Such collaborations will enhance the ability of the company to grow from a start-up to a medium and eventually large scale organization.
A second opportunity lies in the infant brand that is included in the company’s catalog. As stated previously, few companies have fully developed their infant brand. This is mainly because many infants do not need shoes. However, the company can take advantage of the sentimental element that is attached to infant merchandise to encourage parents to virtually design and buy infant shoes. It is important to note that the fact that there is a significant gap in the market in regards to this specific product makes it easier for Amara Shoes to use to position itself strategically in the market.
Threats
One significant threat the company faces is the high competition in the sector. As stated earlier, the company already has high competition from multinational brands. The threat can be mitigated if Amara Shoes offers quality, affordable, and costumer-centered footwear. It is for this reason that the company has focused on virtual designing of the footwear by the potential client. It instills a more profound feeling of ownership among the client-base, in turn, encouraging loyalty to the brand. Further, there is also high competition with other local brands. Since Amara Shoes is a purely online store, it will face threats from other countries brands that are also sold online.
A second threat is the growing technology that has affected the industry over the last few years. Technology has shaped the way the manufacturing industry has worked mainly for purposes of cost-saving and quality. The fast changes can be detrimental to a start-up that is yet to grasp the integrals of the market entirely. Amara Shoes must enough market research to fully understand the expectations and needs of the target market. Additionally, before the establishment of the factory (a future goal of Amara Shoes), it will be necessary for the company to understand any upcoming changes in both technology and policies to reduce the stated risks.
PESTLE Analysis
Political
The political sphere has not negatively influenced the industry. There are different policies and laws that guide the sector that Amara Shoes will have to consider. The laws are not only in regards to manufacturing but also staff employment as the company will hire several staff to conduct the day-to-day activities of the organization. It is also important to note that the company will have to adhere to tax policies by the US government. This is because the company will be legally registered in the US as a limited company. Other tax measures that will be considered include PAYE and VAT. Currently, the political branch has been supportive of the manufacturing industry in the US, and this has led to the growth of the industry. However, high taxes and high labor fees have pushed many manufacturing companies in the US to outsource to China.
Economic
Exchange rates and inflation percentages will affect the pricing of all Amara Shoes products. Exchange rates are essential for clients in other countries. The products will be valued using USD. Thus, other currencies, depending on whether they are stronger or weaker than the USD, will be affected. It is critical to point out that the site will have an automatic currency converter that will work based on the user location. The converter will make it easier for users to know how much they will spend in their currencies, including shipping. Inflation rates will be different in various countries. Thus, it will affect the market based on where the company’s main clients reside. Currently, inflation rates are high due to the global coronavirus pandemic. It is expected that the pandemic has negatively affected the economy, and inflation rates will remain high for the next few months.
Socio-cultural
One socio-cultural element that will affect the company is the growing health cautious population. More people are interested in healthy living, as stated previously, and exercising is a core aspect of this type of life. Therefore, this trend will work for the benefit of the company as it increases the target market. The company can tap into the existing exercise enthusiasts’ groups on social media to advertise. Additionally, targeting marketing through search engine optimization will ensure that everyone online looking for healthy living choices such as food, will also see Amara Shoes advertising. Secondly, the impact of the coronavirus on the economy might reduce accessibility to extra money that can be used to purchase a wide range of shoes. Such an impact will, thus, negatively affect the company, and mitigation measures have to be considered if this happens.
Technological
As mentioned previously, the industry has been significantly affected by technological advancements. It is prudent to state that the advancements have allowed the sector to move forward through innovation and quality efficiencies. However, rapid technological changes will also affect the company negatively. As a start-up, the company has limited funds for setting up a functional factory. New technology will render the current ones useless and will require more funds to install. The company has to conduct thorough market research to understand the needs of the people and where the industry is headed in order to know the right technology to purchase. Several policies affect technological advancement in the sector, and these have also to be considered before setting up the factory.
Legal
There are several laws that the company has to adhere to for operation purposes in the US. The first is copyright laws, where the company has to purchase copyright for its custom design. This law ensures that other companies do not use the same designs for their brands. Additionally, it protects the company from counterfeits that might be used to lure clients to other rival companies. A second law that has to be considered revolves around online businesses. It is indeed mandatory for online businesses to offer legitimate details about their products to their clients. If the company is not able to deliver on what has been promised, the law protects the buyer as they can get their money back. Footwear labeling is also a vital legislature for the company as well as retailing policies.
Environmental
Currently, environment conservatives have forced a majority of manufacturing companies to adhere to environmental laws. One of the factors that can affect Amara Shoes is the material that clients prefer for their shoes. For instance, some clients prefer animal skin for their shoes. However, due to conservation measures that have been encouraged, these materials will not be used on Amara Shoes. In turn, such clients will look elsewhere to get their preferred shoes. Additionally, issues such as tanning, which is common in footwear industries have to be reconsidered for their impact on the environment.
Strategy and Implementation Summary
Amara Shoes will strategically help consumers design their shoes and then produce it for them at an affordable price. The stated strategic position sets the company apart from competitors and also enhances its competitive edge as currently, few companies do the same. It is critical to point out that the company has to ensure user-friendly interfaces for the designing phase of the project. Additionally, the users have to get their shoes within the shortest time possible. Thus, several things have to be considered when discussing the strategy and implementation of the same.
Delivery time is critical in ensuring the success of Amara Shoes. The company has to reduce the time required to manufacture the shoes significantly. Indeed, the company aims to inform the user how many days will be needed for their specific design to be completed and delivered as he or she is placing the order. However, no single order will take more than 4 days to complete and delivered to the owner. It is expected that a majority of orders will take a maximum of two days to manufacture and deliver to the owners. However, the company faces a challenge in delivery as clients residing far will wait several more days to get their products. To ensure that clients get the shoes on time, the strategy includes the addition of both normal and express shipping. The user will have to pay extra for express shipping as it ensures the delivery time is reduced significantly. Importantly, Amara Shoes will have to sign a memorandum of agreement with a reliable shipping company to ensure timely services.
Marketing and Communications Strategy Summary
The company will also use a marketing strategy to reach out to its target audience. Both traditional and digital media will be used to spread advertising messages. However, more emphasis will be put on digital advertising as the company’s clients are online. Social media will be critical in ensuring sales as a significant number of people use more than one social media platform. Currently, Facebook, Instagram, Twitter, TikTok, Snapchat, and WhatsApp are the leading social media platforms in the world. Amara Shoes will open accounts in all the mentioned social media platforms and engage users through targeted marketing. These social media platforms will be the first point of engagement with a significant number of the target market. Therefore, the social media platforms will disburse the developed marketing communications materials to the audience. Both call and website buttons will be activated on the social media platforms to ensure the clients have an easier time accessing the company.
Critically, the marketing and communications strategy also includes affiliate marketing and the use of social media influencers to advertise the company and its products. The influencers will be selected based on their experience and the target audience they attract to their pages. No celebrity will be included as an influencer at inception due to limited financial resources. However, the strategy leaves this option open for future needs. Further, users on the site who check out will include their email addresses, and targeted advertising can be done via email based on their purchase history. This makes it easier for the company to prepare highly customized adverts for individual buyers based on their preferences. It is expected that the combined marketing communication approach will enhance the company’s clientele.
Management Summary
Amara Shoes will have two founders and 16 employees in the first year of operation. The founders will be tasked with giving clear direction on how to achieve the mission and vision of the company. The company will also hire a senior manager who will be tasked to oversee the day to day activities of all employees. The manager will be the link between the staff and the founders. Six staff will be dedicated to the Marketing and Communications team. They will be in charge of advertising and enticing clients to buy into the brand. Out of the six members, one will be the head of the department and will have two assistants, one specifically for marketing and the other tasked with managing the communications aspect of the business. One member will be the webmaster, while the remaining two employees in the department will manage social media, content, and emails.
The company will have three staff members in the finance and accounting department, and an additional three employees will be in the production department. The remaining three employees will be in dispatch. It is critical to point out that the company will also have several consultants to work with from time to time. For example, the marketing and communications department will work with a web development partner who will be managed directly by the webmaster. Additionally, the dispatch team will work with logistics partners who will ensure that shoes are delivered on time. The top management agrees that the consultants are critical as the company is a start-up. However, there is lee-way for hiring similar professionals to sit in-house after the company starts recording profits.
Financial Plan
Below is the initial budget for the start-up.
Table 1: Start-up Capital
The initial amount needed for the start-up is USD 27,600. The biggest bulk of this budget will be dedicated to production, which caters for both raw materials and the shoe manufacturing processes. It is important to note that the company expects to make a down payment to the manufacturing partner and then pay monthly based on the number of shoes that will be ordered and manufactured according to the standards provided. It is critical to also point out that the budget above has not included staffing components. This is separate and staff will be included on a rolling basis and not all of them will begin at the same time. For example, the dispatch team will be hired first as the founders set up the business and try to negotiate with a logistics partner. It is expected that the beginning will also involve a lot of website testing, therefore, the web master will also be recruited a few weeks ahead of the rest. Below is a summary of the expenses expected to be recorded on the initial hiring of the staff.
Table 2: Salary Expenses
Whereas the start-up expenses are mainly one off, there are various expenses that are recurring. For example, all the salaries have to be paid monthly. Below is a summary of all recurrent expenses on a monthly basis.
Table 3: Recurrent Expenses
Importantly, licenses will be paid annually, thus, there is need to also analyze the expenses on a yearly basis. The table below shows the yearly recurrent expenses over a period of 4 years, when the business expects to break even and start recording profits.
Table 4: Recurrent Expenses Per Year
The table has included expenses for trainings and website management. It is prudent that all staff be trained, initially on the company mission, vision, values and goals. Additionally, the staff have to be trained to offer the highest services to the clientele as well as how to represent the company’s brand in whatever work they do and at all times. It is critical that the staff get refresher trainings and get capacity build on trends in their fields of work to ensure that they offer quality service. Below is the expected revenue projection in the first five years of operation.
Table 5: Revenue in Five Years
The projected revenues have been calculated based on the market size. The growing market size makes it easier for the company to break even in two years. It is expected that the first year will record negatives due to the capital needed to set up the business. Additionally, it is expected that sufficient marketing and advertising will be conducted in the first year to encourage more clients in the second year. Debatably, expenses in the project have not changed and this is because the company will maintain their expenses in the first five years to increase profit. After the fifth year, it is anticipated that the expenses will change based on an increased client and staff base. A different financial plan will be presented to the management after the first five years of operation. Critically, the finance and administration department will be tasked with ensuring the budget is followed. They have the lee-way to also adjust the budget in collaboration with the heads of the departments. Below are more summaries of the income statement, breakeven analysis, cash flow analysis and balance sheet for the first 3 years.
Table 1: Income Statement for the First 3 Years
Table 2: Break-Even Analysis
Table 4: Balance Sheet
Conclusion
In conclusion, Amara Shoes is a start-up that manufactures custom-made shoes and accessories all over the world. The company will be legally registered in the US and will have a team of 18 staff in the initial five years of operation. Indeed, the footwear industry in the US has grown in the last couple of decades due to the increasing pressure of having the right shoes for different activities. Undoubtedly, this is one of the most competitive industries in the world. Some of the well-known brands include Nike and Adidas. However, there is a gap in the industry where clients are rarely given a chance to choose the design of their preferred shoes and manage the process from inception to delivery. Further, market research shows that consumer journeys on online retail shops are rated as time-consuming and difficult. Amara Shoes proposes to fill in this gap by providing easy to use designs that clients can manipulate to create their preferred shoe design. Additionally, the company will make the consumer journey easier and more engaging than its competitors.
The company has several strengths that can be used to set it apart from its competitors. For instance, the full involvement of the client in the shoemaking process makes it entertaining and also enhances feelings of ownership. Secondly, the company will introduce the infant line, where parents can create their newborns’ shoes. These shoes will be for aesthetic purposes only, and the fact that parents can choose color and material makes it even more appealing to them. Additionally, the infant line will create memories for the family, adding a sentimental value to the purchase. Despite the strengths, the company still faces high competition from multinationals that have been in operation for decades. Debatably, excellent customer service coupled with an easy-to-use web application for the designing of the shoes will ensure loyal clients for the company despite the threat from competitors.