Business Plan

Reed’s Footwear
Group No. 10

This Report Contains

Core Idea of the Business
and Product
Operational and
Financial Feasibility
Marketing Plan
Growth and Expansion
Strategy
Date: May 24 2010
Reed’s Footwear
A Business Plan
 Reed’s Footwear
A Business Plan

Prepared For
Ms. Nyla Ansari
Lecturer, Business Communication
Institute of Business Administration

Prepared By
Nadia Naeem
Sarah Hussain
Mudassir Ali Soomro
Areeb Ekhlaque
Mohammad Salman Ghani

May 24, 2010

Page 4 Reed’s Footwear

Contents

Executive Summary 5
Core Idea of the Business 6
Purpose 7
Tagline 7
Positioning 7
USP 7
Outlet Locations 8
Demographic Analysis 8
Product Categories 9
Methodology and Resources 9
Customer and Supplier Profile 10
Major Competitors 10
Operations 12
Marketing Plan 15
Financial Feasibility 16
Growth and Expansion Strategy 20
Business Plan Page 5

Executive Summary
This project for Business Communication is aimed to serve as a
tool for relaying to potential investors and stakeholders the worth,
feasibility and viability of a business venture that has been care-
fully devised in order to convince and persuade these stakeholders
into developing an interest in this plan.

The business venture, in a nutshell, is a service that sells custom-

ized formal shoes for men. It is aimed at creating a different,
unique market offering and targets a niche market that appreciates
choice, freedom of expression and convenience.

The business report has been structured into segments, each of

which focuses on a particular aspect of the service. These aspects
are basically the functional departments of the service: Marketing,
Operations, HR and Finance. Each department has been managed
by a particular representative of the company, such that we have
been able to capitalize on each of the management and communi-
cation strengths of our members.

The major tools and focus used for communication were by em-
ploying a clear definition and purpose for this report, by maintain-
ing the emphasis on the salient features consistently and by using
our tools of persuasion, which have been specifically focused upon
in our marketing section.

This report is in essence, strong in terms of communication for it

goes into just the necessary amount of detail and uses precise tools
and methodology in order to make its point and create effective
communication.
Page 6 Reed’s Footwear

Core Idea of the Business

There is a shift in consumer markets towards
distinctiveness and greater customization. Even
though the apparel industry has captured this
trend, no such change is seen in the footwear in-
dustry. Our business is aimed at delivering the
superior fit and comfort that only customized
shoes can provide to customers. We provide
high quality, premier leather shoes to cater to
the needs of the high-end middle-aged male
customer.

We bring total shoe design and customization to

everyone who’s serious about expressing their
individuality and achieving peak performance.
Visit our store where an expert will guide you to
the three step customization experience. It
starts with an individual computerized fit for
each foot, so no matter what design you have
chosen, your finished shoe will be unique to
you. Now nothing can stand in your way.
Business Plan Page 7

Purpose
There has always been a disparity between the
product available in the market and the image
of that product that the customer has in his/her
mind. A buyer is never satisfied with his pur-
chase when his needs aren’t satisfied. And here
we come not just to satisfy our customers but to
delight them. This is our basic purpose of com-
ing up with the idea of commencing this type of
business.

Tagline
Restart your art—design your own.

Positioning
A customized footwear line for the corporate
male and youngsters

USP
Customization of colour, fabric, design and fit
A 30 day money back guarantee
 Page 8 Reed’s Footwear

Locality of our Exclusive Outlets

Zamzama, Defence
Pak-Tower
Dolmen
Mall, Tariq
Road

Pakistani Demographics (2009-

2010)
Roughly 36% of the total population of Pakistan
is between the ages 20 and 35.

Approximately 22% of the population falls be-

tween 25 and 40, which we classified as corpo-
rate males.

49% of our population are youngsters who have

keen interest in sports.

Source: Federal Statistics Board of Pakistan

Business Plan Page 9

Product Categories
Casual and formal shoes for men.

Sneakers and sports shoes for youngsters

Methodology and Resources

The business will operate from a flagship retail
outlet in Zamzama, Karachi which is one of the
biggest markets of consumer items in the city.
Space for the outlet has been identified and pre-
liminary negotiations have begun.

The craftsmen and machinery can be acquired

from the ShoeStore which has announced its
closing. This saves training cost for the human
resource and high initial cost for new machinery
and equipment.
Page 10
Reed’s Footwear

Key suppliers have been identified and contrac-

tual discussions are underway.

Customer Profile
Locality—Clifton, DHA, K.D.A, Gulshan.
Male, belonging to Elite class who are conscious
about their dressing and lifestyle.
Young boys and sportsmen of ages 20-30.
Corporate males of ages 25-40.

Supplier Profile
Leather is supplied from the Pakistan Leather
Manufacturer, situated in Punjab.
Other raw materials for the trim department are
bought from factories in Kasuri, Punjab.
Trained employees hired to supply the finished
shoes to our specific outlets.

Major Competitors
ENGLISH BOOT HOUSE
Park Towers
Shop #120, Shahrah-e-Firdousi
Seaside, Clifton
Tel: (92-21) 3-583-0294, 3-583-0217
Business Plan Page 11

FOOT PRINT (CUSTOM-MADE SHOES)

Shop #1, 10-C, 5th Commercial Lane, Zamzama
Phase 5, D.H.A.
Karachi, Pakistan.
Tel: (92-21) 3-537-1717

ZAPATERIA
Shop #1, Plot 40-C, Street 10, Badar Commercial Area
Phase 5, D.H.A.
Karachi, Pakistan.
Tel: (92-21) 3-534-1206

URBAN SOLE
Dawood Center 124-R, Shop #3
Block 2, Main Tariq Road
Karachi, Pakistan.
Tel: (92-21) 3-454-8281

Atrium Mall, GF 54-33, Atrium Mall, Saddar

Karachi, Pakistan
Tel: (92-21) 3-564-1013
Page 12 Reed’s Footwear

Operations
People who want to buy customize shoes can
visit our exclusive outlet and can order of their
own choice or from our catalogue. Footwear can
be defined as garments that are worn on the
feet. Footwear has become an important com-
ponent of fashion accessories.
The leather is bought from the Pakistan Leather
Manufacturer situated in Kasuri, Punjab. Then
the leather is used to fulfil the need of the cus-
tomers through different departments.

Clicking or Cutting Department

In this department, the top part of the shoe or
the "upper" is made. The clicking operative is
given skins of leather, mostly cow leather but
not restricted to this type of leather. Using metal
strip knives, the worker cuts out pieces of vari-
ous shapes that will take the form of "uppers".
This operation needs a high level of skill as the
expensive leather has to be wasted at the mini-
mum level possible. Leather may also have vari-
ous defects on the surface such as barbed wire
scratches which needs to be avoided, so that
they are not used for the uppers.

Closing or Machining Department

Here the component pieces are sewn together by
highly skilled machinists so as to produce the
Page 13 Reed’s Footwear

completed upper. The work is divided in

stages. Various edge treatments are also done
onto the leather for giving an attractive look to
the finished upper. At this stage only, the eyelets
are also inserted in order to accommodate the
laces in the finished shoes.

Lasting & Making Department

The completed uppers are molded into a shape
of foot with the help of a "Last". Last is a plastic
shape that simulates the foot shape. It is later
removed from the finished shoe to be used fur-
ther in making other shoes. Firstly, an insole to
the bottom of the last is attached. It is only a
temporary attachment. Sometimes, mostly
when welted shoes are manufactured, the insole
has a rib attached to its under edge. The upper
is stretched and molded over the last and at-
tached to the insole rib. After the procedure
completes, a "lasted shoe" is obtained. Now, the
welt- a strip of leather or plastic- is sewn onto
the shoe through the rib. The upper and all the
surplus material is trimmed off the seam. The
sole is then attached to the welt and both are
stitched together. The heel is then attached
which completes the "making" of the shoe.
That was the process for heeled shoes. When a
flat shoe is in the making, there are considerably
Business Plan Page 14

fewer operations. The insoles in this case is flat

and when the uppers are 'lasted', they are glued
down to the surface of the inner side of the in-
sole. The part of the upper, that is glued down,
is then roughed with a wire brush to take off the
smooth finish of the leather. This is done be-
cause rough surface absorbs glue to give a
stronger bond. The soles are usually cut, fin-
ished and prepared as a separate component so
that when they are glued to the lasted upper, the
result is a complete and finished shoe. Soles can
also be pre-molded as a separate component out
of various synthetic materials and again glued to
the lasted upper to complete the shoe.

Finishing Department and the Shoe Room

The finishing of a shoe depends on the material
used for making it. If made of leather, the sole
edge and heel are trimmed and buffed to give a
smooth finish. To give them an attractive finish
and to ensure that the edge is waterproof, they
are stained, polished and waxed. The bottom of
the sole is often lightly buffed, stained and pol-
ished and different types of patterns are marked
on the surface to give it a craft finished look. A
"finished shoe" has now been made.
For shoe room operation, an internal sock is fit-
ted into shoe which can be of any length- full,
half or quarter. They usually have the manufac-
Page 15 Reed’s Footwear

turers details or a brand name wherever appli-

cable. Depending on the materials used for the
uppers, they are then cleaned, polished and
sprayed. Laces and any tags that might have to
be attached to the shoes, such as shoe care in-
structions, are also attached. The shoes, at last,
get packaged in boxes. These operations can be
changed to meet the needs of the customer.

Marketing Plan
We will be advertising in popular magazines
and local publications that are aimed at the
target market we plan on selling our product
to.
Online advertising on social networking sites
such as Orkut, Twitter and Facebook, which
are used by a wide number of corporate males
and youngsters who are of school and univer-
sity going age.
Marketing partnerships and alliances will be
formed with schools, universities, corporate
Business Plan Page 16

firms, government organizations, men’s ap-

parel stores and sporting goods stores.
Word of mouth.
Target Market
Locality—Clifton, DHA, K.D.A, Gulshan.
Male, belonging to Elite class who are conscious
about their dressing and lifestyle.
Young boys and sportsmen of ages 20-30.
Corporate males of ages 25-40.
Market Research
We have conducted telephonic and survey-
based interviews with sample audiences in our
target market.
Localized and extensive secondary and primary
market research has been undertaken.
Ethnographic and observational study has also
been carried out.

Financial Feasibility
Start-up Capital needed is estimated to be
PKR 13.8 Million out of which 8.8 million will
be financed internally and 5 million exter-
nally.
Business Plan Page 17

PKR 2 million will be kept as a reserve in a

bank at a rate of 12% interest annually in or-
der to meet the requirements of negative cash
flow for initial four years or to finance any un-
expected problem in the business.
External funding is divided into 20 equal por-
tions and each portion is work PKR 250,000.
These portions have been created for inves-
tors looking to make 14% ROI per year, for a
initial period of 5 years. Each investor will re-
ceive PKR 35,000 yearly as a return on his/
her initial investments.
It is estimated that the firm will reach Break-
even by the 51st month of its operation, when
operations will yield positive returns for the
business. After 51 months, Profit Margin is ex-
pected to remain 17%-19% each year.
Initial inventory to be bought in the start of
the 1st month of operations is estimated to be
PKR 260,000, after which Sales are expected
to start.
Cost of Goods Sold will represent 40% of the
sales.
Advertising, utilities, labour and transport
will be our biggest expenditures with Adver-
Page 18 Reed’s Footwear

tising being the highest in the first few months

so that the target market is made aware of the
existence of this business. After that the ad-
vertising expense is decreased as innovative,
yet cost-effective techniques will be employed
to promote the business to the target market,
which cannot be used initially as awareness
will not be present for the business.
Depreciation is done under the straight line
method for a period of 10 years.

Estimated financial results for the first five

years of operation follow.
 Year 1 Year 2 Year 3 Year 4 Year 5 Page 19

Revenues PKR 650,000 PKR 1,150,000 PKR 1,450,000 PKR 1,700,000 PKR 2,300,000

Cost of Sales 260,000 460,000 580,000 680,000 920,000

Gross Profit 390,000 690,000 870,000 1,020,000 1,380,000

Interest Earned 240,000 180,937 147122 129184 123,478

Operating Expenses 400,000 415,000 425,000 440,000 455,000

Depreciation Expense 7800 7800 7800 7800 7800

ROI Expense 700,000 700,000 700,000 700,000 700,000

Taxes 14390 29,934 33,809 35,046 38,156

Net Profit/Loss -492,190 -281,797 -149,487 -33,662 302,522

Reed’s Footwear
Business Plan Page 20

Growth and Expansion Strategy

The business idea that has been presented has
much opportunity and potential to grow in the
long term. To start, the business will establish
itself in the high-end male niche market, build-
ing a reputation for quality and comfort.

Our short -term expansion strategy is two-

pronged:

1. We are currently in the negotiation phase of

a partnership contract with NIKE and expect
within the year to expand into a line of cus-
tomised sportswear to capture younger cus-
tomers.

2. Take the business virtual by allowing cus-

tomers to participate in the design and cus-
tomisation process and consequently provid-
ing shipping option to customers residing
outside of Karachi
Business Plan Page 21

The long-term strategy for growth includes

1. Acquiring the latest German three dimen-

sional digital technology which enables many
manufacturing processes from foot mapping
and cutting to stitching to be digitally exe-
cuted through robotics cutting costs, turn-
over time per shoe and enabling greater flexi-
bility.

2. Opening retail outlets in major cities of Paki-

stan including Lahore, Islamabad and Mul-
tan.
Page Reed’s Footwear

Conclusion
On the basis of the exhaustive financial and op-
erational feasibility analysis and our sound mar-
keting plan, you can see that our business idea
has great potential to cater to an untapped mar-
ket and provide impressive returns on your in-
vestment. Project
115A
Jason Trade Towers
Sharae– Faisal
Karachi
Phone: 111-1-REEDS
E-mail:
[email protected]
www.reeds footwear.com