1. BUSINESS PLAN ON
PREPARED BY:
JOLI N SADARANI
ENROLL NO. :107360592062
ROLL NO: 87
SUBMITTED FOR:
PARTIAL FULFILLMENT OF REQIREMENT OF TWO YEARS OF FULL MBA
INDEX
1. Introduction
2. Keys to success

2. 3. Objectives
4. Mission
5. Company ownership
6. Startup summary
7. Startup
8. Products
9. Market analysis summary
10. Market segmentation
11. Target market segment strategy
12. Industry analysis
• Shoe only stores
• Large department stores
• Small women’s retails store
13. Competitions and buying patterns
• Nordstrom
• sakes
14. Strategy and implantation summary
15. Sales strategy
16. Sales forecast
17. Samples
18. Milestones
19. Captives edge
20. Management summary
21. Personal plan
22. Important assumptions
23. Brake even analysis
24. Projected p&l account
25. Projected case flow
26. Projected balance sheet
27. Business ratio
INTRODUCTION
Passion Soles is a women-only shoe store in Eugene, OR.
Eugene badly needs an upscale shoe store for women because
the current stores have an inadequate selection. Currently,
women that need a special pair of shoes often must travel up to
Portland to find the right shoes.

3. Passion Soles will have an unmatched, extensive selection of
different shoes. Generally, the size of Passion Soles' selection is
cost prohibitive due to all the different sizes that must be stocked
per style. Passion Soles has a unique business model that allows
them to have an extensive selection at the cost of only stocking
one size per style. This is accomplished through a special
relationship with the wholesaler so Passion Soles can receive a
customer's needed size within two days. Rush overnight shipping
is available at additional cost.
Passion Soles will leverage Holly Heels' extensive knowledge of
the women's retail shoe industry to quickly gain market share.
Profitability will be reached by month ten and $284,000 will be
generated in revenue in year three.
Keys to Success
The key to success is to meet the demand for an upscale women's shoe
store with a wide selection and focused customer attention.
Objectives
The objectives for the first three years of operation include:
1. To create a product-based retail store whose primary goal is to
exceed customer's expectations.

4. 2. To increase the number of clients served by 20% per year by serving
an unmet need with outstanding selection and customer service.
3. To develop a start-up business, surviving off of its own cash flow.
Mission
Passion Soles' mission is to provide Eugene with an upscale selection of
women's shoes and outstanding customer service. We exist to attract and
maintain customers. When we adhere to this maxim, everything else will
fall into place. Our services will exceed the expectations of our
customers.Company Summary
Passion Soles is an upscale women's shoe store located in Eugene, OR.,
an un-serviced niche. Customers looking for these shoes must travel up to
Portland. Passion Soles will be able to offer a wide selection because they
will typically only have one size available per style. This one size is used as
a demonstrative model. All other sizes are available within two days.
Company Ownership
Passion Soles is a sole proprietorship owned by Holly Heels.
Start-up Summary
Passion Soles will incur the following start-up costs:
• Computer system with CD-RW, printer, Microsoft Office, QuickBooks
Pro, and POS software.
• POS terminal/cash register.
• Back office desk and chair.
• Front of store counter.
• Shelving racks.
• Display racks.
• Chairs, mirrors.
• Assorted halogen track lighting.
Please note that the following items which are considered assets to be
used for more than a year will labeled long-term assets and will be
depreciated using G.A.A.P. approved straight-line depreciation method.
Start- up Funding
Start-up Expenses to Fund $600

5. Start-up Assets to Fund $29,400
Total Funding Required $30,000
Assets
Non-cash Assets from Start-up $14,368
Cash Requirements from Start-up $20,032
Additional Cash Raised $0
Cash Balance on Starting Date $20,032
Total Assets $34,400
Liabilities and Capital
Liabilities
Current Borrowing $0
Long-term Liabilities $0
Accounts Payable (Outstanding Bills) $0
Other Current Liabilities (interest-free) $0
Total Liabilities $0
Capital
Planned Investment
Holly $30,000
Other $0
Additional Investment Requirement $0
Total Planned Investment $30,000
Loss at Start-up (Start-up Expenses) ($600)
Total Capital $29,400

6. Total Capital and Liabilities $29,400
Total Funding $30,000
Start- up
Requirements
Start- up Expenses
Legal $500
Stationery etc. $100
Other $0
Total Start- up Expenses $600
Start- up Assets
Cash Required $20,032
Other Current Assets $0
Long-term Assets $9,368
Total Assets $29,400
Total Requirements
Products
Passion Soles will sell upscale women's shoes. The general categories of
shoes that will be sold are:
• Sandals
• Stylish work shoes
• Loafers
• Dress shoes
• Canvas athletic/stylish shoes

7. Passion Soles will strive to have one of the largest selection of shoes in
Oregon, barring the larger stores in Portland. Passion Soles will accomplish
this by having one size per style in stock as a demonstration model.
Passion Soles will then order the style in the needed size and it will
arrive within two days (rush one day service is available). This will be
accomplished through a special relationship with the wholesaler who is
able to send out the right size in the right style on demand. Often a
wholesaler will be unwilling to ship out individual shoes, but Passion Soles
was able to secure an exclusive arrangement with a its wholesaler to meet
this need.
Market Analysis Summary
Passion Soles will be targeting two distinct groups of fashion-concious
female shoppers--professional workers and housewives. While both groups
are interested in dress shoes, the professionals will also be looking for
fashionable shoes they are able to wear with their business attire. The
housewives might be looking for fasionable but more casual shoes.
Market Segmentation
Passion Soles is targeting two different population segments within the
broad category of the fashion-conscious female with disposable income.
• Professionals: these are full-time working professional women. They
typically earn more than $45,000. They will purchase shoes for the
workplace, as well as for leisure time.
• Housewives: The household income of this group is $60k-$120k,
generally toward the higher end of this range.

8. Market Analysis
Year 1 Year 2 Year 3 Year 4 Year 5
Potential Customers Growth CAGR
Professionals 9% 12,457 13,578 14,800 16,132 17,584 9.00%
Housewives 8% 14,544 15,708 16,965 18,322 19,788 8.00%
Other 0% 0 0 0 0 0 0.00%
Total 8.47% 27,001 29,286 31,765 34,454 37,372 8.47%
.
Target Market Segment Strategy
These markets will be targeted through an attractive, eye-catching
storefront in a popular mall. Most women within the target market shop at
malls. Malls allow them to visit many different stores within the same
vicinity. By just having a visible storefront in a well traveled mall, Passion
Soles will receive walk-through customers.
While the leased space in a mall is expensive, one of the benefits that you
pay for is the mall association which spends money on marketing the mall
and the stores within the mall.

9. Industry Analysis
Women's shoe retail industry is made up of several different types of
companies:
• Shoe- only stores : As the name implies, these stores only sell
shoes. Generally the shoe-only stores will either sell athletic shoes for
men and women, or dress shoes for only one sex.
• Large department stores : these types of stores sell everything,
including shoes.
• Small women's retail stores : these types of stores cater to
women by only selling women's clothing and shoes.
Competition and Buying Patterns
Passion Soles has three direct competitors in Eugene:
• (name omitted). This is a women's only clothing and shoe store. They
have a nice selection of clothing but a poor selection of shoes. The
shoe styles are not cutting edge. The price point for the shoes is $30-
$120.
• (name omitted). This is a large, complete, department store. The
store however, suffers from cluttered displays and a general sense of
disorganization. Shoes here are $30-$120.
• (name omitted). This is a national franchise that only sells shoes, for
both men and women. This company will sell knock-offs, shoes just
like name brands, but with their name on it. While this store has a
huge selection, the quality of the shoes leaves a lot to be desired.
This is somewhat understandable as the shoes typically sell for $13-
$50. While the shoes are often good copies of famous brands, the
execution is sometimes off. Many of the shoes are made out of
pleather and look like they were dipped in wax, giving them a tacky
appearance.An indirect competitor is a shoe smith that will dye
shoes. The shoes are typically dyed to match a specific dress. Not all
colors can be dyed, and dying in general is not the ideal situation.
Dying shoes creates a new shoe color that is acceptable only 20% of
the time.
major competitors
• Nordstroms: mid- to high-end department store known for their
outstanding customer service. The shoe price point is $60-$300.
• Saks : this department store caters to the high class, older crowd.
Shoes range from $75-$400.

10. • The buying habits for fashion-conscious women consist of typically
buying at least one pair of shoes per month. Women generally
purchase a pair of shoes to go with a specific dress. Once the woman
purchases the dress she will then begin the sometimes long search
for the perfect pair of shoes.
Strategy and Implementation Summary
Passion Soles will leverage their competitive edge of extensive selection to
drive sales. This is indeed a competitive edge because it is typically cost
prohibitive for a store to have as much of a selection that Passion Soles will
offer
. Because of a unique business model, Passion Soles is able to leverage
their financial resources and offer an unmatched selection. This is done by
carrying a large selection of styles by only stocking one size per style.
Once the customer has chosen the style, Passion Soles will have the
customer's shoes in one to two days.
Sales Strategy
Passion Soles' sales strategy will be based on display and visibility. A
highly visible store with attractive product displays located in the mall will
get a high percentage of foot traffic.
This is especially the case for a women's shoe store. Women love to shop
for shoes. Some women even use shoe shopping as a form of therapy,
similar to eating chocolate. These activities can make them feel better.
The sales strategy will simply be,
have the most complete selection of shoes. Assuming the prices are
reasonable, having an extensive selection will drive sales because we
believe our target markets of fashion-conscious females are always looking
for the perfect pair of shoes to coordinate with their fashion style.
Sales Forecast
The first month will be used to set up the store front. The first employee will
be hired and display inventory will be purchased. There will be no sales
activity during the first month.
The second month will begin to see sales activity, and it is forecasted that
around month four sales will really begin to pick up. The reason for this is

11. that word will get out about Passion Soles and more and more people will
be coming in to check out the extensive selection.
A third employee will be hired in December for the holiday season.

12. Samples

18. Sales Forecast
Year 1 Year 2 Year 3
Sales
Professionals $84,402 $118,745 $135,454
Housewives $54,861 $89,184 $102,095
Total Sales $139,263 $207,929 $237,549
Direct Cost of Sales Year 1 Year 2 Year 3
Professionals $33,761 $47,498 $54,182
Housewives $21,945 $35,674 $40,838

19. Subtotal Direct Cost of Sales $55,705 $83,172 $95,020
Milestones
Passion Soles will have several milestones early on:
• Business plan completion. This will be done as a road map for the
organization. This will be an indispensable tool for the ongoing
performance and improvement of the company.
• Set up the store front.
• Revenues exceeding $75,000.
• Profitability.
Milestones
Milestone Start Date End Date Budget Manager Department
Business plan completion 1/1/2001 2/1/2001 $0 ABC Marketing
Set up the store front 1/1/2001 2/1/2001 $0 ABC Department
Revenues exceeding $75,000 1/1/2001 9/31/2001 $0 ABC Department
Profitability 1/1/2001 10/31/2001 $0 ABC Department
Totals $0
Competitive Edge
Passion Soles' competitive edge is an unmatched selection in Eugene. This
selection will be achieved in two ways. The first way is a very specific effort
to carry as many styles of shoes as possible. Passion Soles recognizes
that Eugene currently does not have a single store that offers a wide
selection of decent quality shoes for the fashion conscious female
consumer. The competitive edge is the recognition of this unserved niche
and the serving of this demand.
Passion Soles will be able to offer a large selection through a unique
inventory model that stocks only one size per style. The advantage is that
for the same amount of money that Passion Soles invests in overhead,
they can offer far more styles.

20. This model is effective because women are willing to order a pair of shoes
sight seen but not fitted. Passion Soles offers two day delivery with an
additional expense rush overnight option.
Management Summary
Holly Heels, the founder and owner received her Bachelor of Arts in
marketing from the University of Portland. Throughout college, and full time
after graduation, Holly worked at Nordstroms. She started out as a sales
person in the Nordstroms outerwear department, where Holly was named
employee of the month five times. This caught the attention of her
supervisors and after one year of full-time work at Nordstroms, she was
offered a position as the assistant manager of the women's shoe
department.
Holly worked as the assistant manager for one and a half years before
receiving a promotion to manager of the department, a huge responsibility
and honor. Holly learned all of the "ins and outs" of the Nordstroms retail
shoe industry in this job. After three years, Holly decided to leave and seek
another job. She had always wanted to live in a smaller town and, upon
visiting a friend in Eugene, began to do some market research about the
women's shoe industry in Eugene. She realized that there was an unmet
demand for fashionable shoes and she began to write a business plan to
serve this need. She was confident that she would be able to leverage all of
her industry knowledge and create a store in Eugene serving fashion-
conscious women.
Personnel Plan
Holly will be working full time at Passion Soles. She will be in charge of all
administrative details, hiring, inventory management, etc. Beginning with
month two, Holly will hire a full-time sales clerk to help her at the store. By
December, she will hire an additional full-time employee in time for the
holiday season.
Personnel Plan
Year 1 Year 2 Year 3
Holly $36,000 $40,000 $42,000
Full-time employee $17,600 $19,200 $19,200

21. Full-time employee $1,600 $19,200 $19,200
Total People 3 3 3
Total Payroll $55,200 $78,400 $80,400
Financial Planhe following sections will outline important financial
information.
Important Assumptions
The following table details important financial assumptions.
General Assumptions
Year 1 Year 2 Year 3
Plan Month 1 2 3
Current Interest Rate 10.00% 10.00% 10.00%
Long-term Interest Rate 10.00% 10.00% 10.00%
Tax Rate 30.00% 30.00% 30.00%
Other 0 0 0
Break-even Analysis
The Break-even Analysis indicates that approximately $13,000 is needed in
monthly revenue to reach the break-even point.

22. Break- even Analysis
Monthly Revenue Break-even $12,369
Assumptions:
Average Percent Variable Cost 40%
Estimated Monthly Fixed Cost $7,421
Projected Profit and Loss
The following table will indicate projected profit and loss. We estimate
purchase of new shoe display inventory, primarily for the seasonal changes
in styles. Because these are displays, we are tracking them as expenses. It
is estimated that new styles (especially around the change in seasons) will
require regular purchase of shoe displays as part of the normal course of
business.

23. Pro Forma Profit and Loss
Year 1 Year 2 Year 3
Sales $139,263 $207,929 $237,549
Direct Cost of Sales $55,705 $83,172 $95,020
Other Production Expenses $0 $0 $0
Total Cost of Sales $55,705 $83,172 $95,020
Gross Margin $83,558 $124,757 $142,529
Gross Margin % 60.00% 60.00% 60.00%
Expenses
Payroll $55,200 $78,400 $80,400
Sales and Marketing and Other Expenses $1,200 $1,200 $1,200
Depreciation $1,056 $1,056 $1,056
Shoe Display Inventory $7,000 $5,000 $5,000
Utilities $1,200 $1,200 $1,200
Insurance $1,800 $1,800 $1,800

24. Rent $21,600 $21,600 $21,600
Payroll Taxes $0 $0 $0
Other $0 $0 $0
Total Operating Expenses $89,056 $110,256 $112,256
Profit Before Interest and Taxes ($5,498) $14,501 $30,273
EBITDA ($4,442) $15,557 $31,329
Interest Expense $255 $224 $37
Taxes Incurred $0 $4,283 $9,071
Net Profit ($5,753) $9,994 $21,165
Net Profit/Sales -4.13% 4.81% 8.91%
Projected Cash Flow
The following chart and table will indicate projected cash flow. We
anticipate borrowing $5,000 in June to cover shoe display inventory
purchases and other expenses.
Pro Forma Cash Flow

25. Year 1 Year 2 Year 3
Cash Received
Cash from Operations
Cash Sales $139,263 $207,929 $237,549
Subtotal Cash from Operations $139,263 $207,929 $237,549
Additional Cash Received
Sales Tax, VAT, HST/GST Received $0 $0 $0
New Current Borrowing $5,000 $0 $0
New Other Liabilities (interest-free) $0 $0 $0
New Long-term Liabilities $0 $0 $0
Sales of Other Current Assets $0 $0 $0
Sales of Long-term Assets $0 $0 $0
New Investment Received $0 $0 $0
Subtotal Cash Received $144,263 $207,929 $237,549
Expenditures Year 1 Year 2 Year 3
Expenditures from Operations
Cash Spending $55,200 $78,400 $80,400
Bill Payments $78,704 $118,797 $133,576
Subtotal Spent on Operations $133,904 $197,197 $213,976
Additional Cash Spent
Sales Tax, VAT, HST/GST Paid Out $0 $0 $0
Principal Repayment of Current Borrowing $1,260 $3,000 $740
Other Liabilities Principal Repayment $0 $0 $0

26. Long-term Liabilities Principal Repayment $0 $0 $0
Purchase Other Current Assets $0 $0 $0
Purchase Long-term Assets $0 $0 $0
Dividends $0 $0 $0
Subtotal Cash Spent $135,164 $200,197 $214,716
Net Cash Flow $9,099 $7,732 $22,833
Cash Balance $29,131 $36,863 $59,697
Projected Balance Sheet
The following table will indicate the projected balance sheet.
Pro Forma Balance Sheet
Year 1 Year 2 Year 3
Assets
Current Assets
Cash $29,131 $36,863 $59,697
Other Current Assets $0 $0 $0
Total Current Assets $29,131 $36,863 $59,697
Long-term Assets
Long-term Assets $9,368 $9,368 $9,368
Accumulated Depreciation $1,056 $2,112 $3,168
Total Long- term Assets $8,312 $7,256 $6,200
Total Assets $37,443 $44,119 $65,897
Liabilities and Capital Year 1 Year 2 Year 3

27. Current Liabilities
Accounts Payable $10,056 $9,738 $11,090
Current Borrowing $3,740 $740 $0
Other Current Liabilities $0 $0 $0
Subtotal Current Liabilities $13,796 $10,478 $11,090
Long-term Liabilities $0 $0 $0
Total Liabilities $13,796 $10,478 $11,090
Paid-in Capital $30,000 $30,000 $30,000
Retained Earnings ($600) ($6,353) $3,641
Earnings ($5,753) $9,994 $21,165
Total Capital $23,647 $33,641 $54,807
Total Liabilities and Capital $37,443 $44,119 $65,897
Net Worth $23,647 $33,641 $54,807
Business Ratios
The following table compares our ratios to Standard Industry Code #3144
(Women's footwear, except athletic).
Ratio Analysis
Year 1 Year 2 Year 3 Industry Profile
Sales Growth 0.00% 49.31% 14.25% 10.45%
Percent of Total Assets
Other Current Assets 0.00% 0.00% 0.00% 33.22%
Total Current Assets 77.80% 83.55% 90.59% 85.17%
Long-term Assets 22.20% 16.45% 9.41% 14.83%

28. Total Assets 100.00% 100.00% 100.00% 100.00%
Current Liabilities 36.85% 23.75% 16.83% 26.82%
Long-term Liabilities 0.00% 0.00% 0.00% 25.97%
Total Liabilities 36.85% 23.75% 16.83% 52.79%
Net Worth 63.15% 76.25% 83.17% 47.21%
Percent of Sales
Sales 100.00% 100.00% 100.00% 100.00%
Gross Margin 60.00% 60.00% 60.00% 22.01%
Selling, General & Administrative Expenses 74.12% 49.27% 48.20% 10.93%
Advertising Expenses 0.43% 0.23% 0.21% 1.05%
Profit Before Interest and Taxes -3.95% 6.97% 12.74% 2.49%
Main Ratios
Current 2.11 3.52 5.38 2.58
Quick 2.11 3.52 5.38 1.37
Total Debt to Total Assets 36.85% 23.75% 16.83% 57.34%
Pre-tax Return on Net Worth -24.33% 42.44% 55.17% 6.10%
Pre-tax Return on Assets -15.36% 32.36% 45.88% 14.29%
Additional Ratios Year 1 Year 2 Year 3
Net Profit Margin -4.13% 4.81% 8.91% n.a
Return on Equity -24.33% 29.71% 38.62% n.a
Activity Ratios
Accounts Payable Turnover 8.83 12.17 12.17 n.a

29. Payment Days 27 30 28 n.a
Total Asset Turnover 3.72 4.71 3.60 n.a
Debt Ratios
Debt to Net Worth 0.58 0.31 0.20 n.a
Current Liab. to Liab. 1.00 1.00 1.00 n.a
Liquidity Ratios
Net Working Capital $15,335 $26,385 $48,607 n.a
Interest Coverage -21.57 64.74 818.20 n.a
Additional Ratios
Assets to Sales 0.27 0.21 0.28 n.a
Current Debt/Total Assets 37% 24% 17% n.a
Acid Test 2.11 3.52 5.38 n.a
Sales/Net Worth 5.89 6.18 4.33 n.a
Dividend Payout 0.00 0.00 0.00 n.a