You are on page 1of 17

1

The following business plan outlines the organizational

design and operational control of a new small business. This

business is a women’s retail clothing store which, for the

purposes of this plan, is called simply “Her Place.” The

business plan for Her Place can be characterized as in part

characteristic of any successful small-business startup plan,

and in part specific to the women’s clothing business. Basic

operating issues for Her Place –- finance, staffing and employee

relations, management controls, insurance, to name a few –- are

those characteristic of most small businesses. Industry-

specific factors affecting Her Place include the interrelated

elements of the type, style, and price of clothes sold (e.g.,

sportswear, professional and business clothes, high-fashion,

maternity, ect.), the demographics of the target clientele

(e.g., children, “junior,” age and income range, etc.), location

(mall or street, area, etc.), and others.

Goal: The goal of this Business Plan is to establish Her

Place as a successful boutique within one year of opening its

doors, and within eighteen months from the present.

Method: This Business Plan breaks the overall process of

opening Her Place for business into a series of task

requirements which should be met by certain target dates if the

whole project is to remain smoothly on track. For example, a

location must be obtained and suitably remodeled before ordered


2

merchandise begins to arrive, or the merchandise will have to be

stored elsewhere for a time, with consequent costs and delays.

This system of progress control can be easily charted,

allowing for an at-a-glance comparison of actual progress to

date against the schedule. The horizontal axis displays a

calendar of the project period, allowing days to be checked off

day by day. The vertical axis lists activities of events. The

form of such a chart is as in the following sample:

Chart I

Task: Target Date:

Month 1 Month 2 Month 3 Month 4

xxxxxxxxxxxxxxxxxxxxxxxxxxxx

Lease Obtained -- x]

Interior Designed -- x ]

Fixtures Ordered -- x ]

Fixtures Delivered -- ] x

First Merchandise
Order -- ]

] = scheduled date x = actual date

In this example, the lease was obtained just in time, and the

interior was designed and fixtures ordered in advance of the

schedule dates. The fixtures were a little late arriving,

however. It is almost time for the first order of merchandise,

and this still has to be made. A chart of this type can be used
3

to track overall progress by areas, and kept handy over the

office desk, while the sub-steps in each area are in turn

tracked on area charts.

The Business: Her Place will be a women’s daywear boutique

located in an urban area. Its target clientele will be middle

to upper-middle income working women who need attractive but

practical clothing that they can wear to work, to dinner with

friends, and so forth. Many potential customers work in an

appearance-conscious and fashion-conscious milieu –- in the

entertainment industry, art galleries, other boutiques, design

consultancies, to name a few typical examples of businesses

which are to be found in the urban neighborhoods which Her Place

is intended to serve.

Her Place Philosophy: The following philosophy, based on

the proprietor’s own experiences as a retail clothing customer,

is the basic guide to the Her Place approach to its business.

“There are a lot of women out there who are tired of clothes

that are trendy and immediately outdated, or cutesy but

impractical. They are on budgets, and they want clothes they

can wear and get use out of. They also want good service –-

“not pushy, but there when you need them.”

Functional areas: The essence of fashion retailing is

merchandise and service. Thus the most important factors for

the success of Her Place are its buying strategy and its sales
4

force. These are the two mutually supporting “line departments”

which will bring in the business. In addition to these line

functions, however, there are also three broad functions which

“staff departments” will have to serve. One is merchandising

support. The ultimate key to Her Place’s success will be return

business and favorable word-of-mouth. But these must be

supported by marketing, both “mass-marketing” (e.g., ads), and

targeted marketing (e.g., to a customer mailing list). A

secondary support function is that of obtaining and maintaining

the physical apparatus of the store –- the storefront itself,

fixtures, utilities, cleaning services, and insurance. Finally,

a vital support function concerns maintaining Her Place as a

business entity, legally and financially. Business licenses

must be obtained and renewed. Accounting and tax services must

be secured. Sufficient finance must be available not only to

get the store open, but to keep it open through the vital break-

in period while business is built to a profitable level.

Finally, membership in community and business organizations can

be a useful source of links and contacts.

Let us deal with each of these broad areas in turn,

beginning with the two “line” functions of merchandising and

sales service.

Merchandising: Selection of appropriate merchandise is the

most vital, but also the most imponderable, aspect of the


5

women’s apparel industry. Sound general rules can be set forth

for efficient handling of the more general aspects of a business

startup. These are universally encountered by new business, and

often legal or other formal procedures (e.g., accounting rules)

have been created for them. It is therefore relatively simple

to establish a control system that shows a series of goals to be

met and procedures for meeting them.

Fewer formal rules can be established for the industry-

specific features of Her Place. The reason for this is that the

women’s appeal industry is in so large measure a matter of

fashion, and therefore of instinct –- the merchant’s instinct

for what the customer will like, and the customer’s instinct for

what she actually does like. No amount of good planning in the

other aspects of a business will save a women’s clothing store

that consistently fails to offer fashions that consumers are

willing to buy.

Certainly, fashion does not arise altogether spontaneously,

out of nowhere. The fashion industry tries to shape it, and in

the short run it usually does so with fair success, so that all

the latest successful gimmicks will be seen on next season’s

racks. But some heavily promoted items, such as the miniskirts

of the late 1980s, have been rejected by customers in spite of

all the marketing efforts made to pressure them into buying.


6

Sound fashion judgement cannot be reduced to rules, but

current trends can be followed in the fashion magazines, and

Women’s Wear Daily is one of the most distinguished industry

trade papers in America. Trends in women’s wear also follow

broader social movements.

To take one example, the population of the 20th century

will be older on average, with the baby-boomers in midlife. In

the years between 1998 to 2005 most baby-boomers will be turning

50. People will be conscious of and concerned about health

(Shath and Ram 7-10), which will affect the activities they

undertake and therefore the clothes they buy. For example, a

woman who walks to work (for exercise, to save auto usage, etc.)

will be particularly interested in clothing that remains cool

and comfortable to wear even after a long brisk walk.

There is also some reason to believe that the 2000 decade

will be one of greater sobriety after the glitz and excess of

the 1980s and following the boom of the stock market during the

1990s. After a correction in the “bull” stock market in the

beginning of 2000, a more classical sense of style may replace

the obsessive trendiness of the leveraged-buyout years. Dress

will likely be more practical. The luxury of spending excess

money will be reduced as the middle class becomes more practical

in spending.
7

The growing ethnic diversity of Americans will mean a

broadened redefinition of American ideals of beauty and style

(Lord 313-319). And the rise of ethnic groups entering the

United States (with a million people per year crossing our

boarders from Mexico) will continue to influence our consumer

economy. The United States Latino community alone is a

tremendously growing consumer industry, who’s influence is only

just beginning to be recognized by American businesses.

Once the decision is made what sort of styles to order, the

practical problems of where and how to buy, and the mechanics of

placing orders, come to the fore (Shafter and Greenwald 31-62).

Clothing wholesalers take as wide a variety of forms as

retailers do, appealing to different market segments and

offering different types of services to their retail-business

customers. An interesting recent development is the factory

outlet store in urban areas, which is patronized by both

retailers and individual members of the buying public. This

provides an opportunity for the business buyer to see what the

final customer is looking for and at.

A key to successful retail marketing is understanding what

the customer really wants. By “really” we do not mean

mysterious subliminal motivations, but the desires that go into

a buying choice. Customers want certain qualities, but the

qualities they actually shop for are those, which they feel
8

contribute to the desired qualities. This can be diagrammed as

follows: the vertical axis shows “what” items –- what the

customer wants. The horizontal axis shows “how” items –- which

are seen as contributing to the “whats” (Eureka and Ryan 21-24).

Chart II

“How” Items

what: “how” how:


what:

Looks nice Fabric


“What” Items
Good Comfortable Cost
practical
dress Inexpensive Color
Simple
Design

By an analysis of this sort, we can guide our instinct as to how

customers will respond to general wants with particular

purchases.

Once merchandise has been purchased, it must be effectively

displayed. The goal of merchandise display is primarily, of

course, to show off the merchandise to good effect, but a

related goal is to get the best use out of the store space. As

one guide puts it, “Make every inch of your store pay” (Shafter

and Greenwalk 240). As an example, inexpensive jewelry can be

placed on or next to the sales counter, converting what is

otherwise “dead space” into a source of impulse buying.


9

Sales: Service has always been a vital feature of the

retail business. “Retail is about people, for people, with

people" (Kacker 149). The appearance of the factory outlet

store has actually increased the importance of service for

boutiques. The customer who does not need or want sales

assistance will go to the outlet to save money. The customer

who is willing to pay the higher retail price in a boutique may

in part want the convenience of location, but their primary

motivation is likely to be the desire for better service.

The total number of employees that Her Place will require

will be no more than half a dozen, not counting the proprietor.

The store will be open seven days and three evenings a week, and

two employees should be on hand at most times. The actual

number of employees to be hired depends in part on the number of

hours per employee. The “personnel function” will be handled

directly by the proprietor, and along with merchandise buying

will be one of her key decision areas.

The goal of personnel management is, above all, to minimize

employee turnover, which is very expensive (Shafter and

Greenwald 268-269). In the retail boutique environment, such as

for Her Place, turnover has not only the direct costs of hiring,

firing, and training costs, and of reduced average employee

experience level, but also the indirect cost of weakened store

image.
10

Boutique customers are drawn most of all by attractive

merchandise, but also by sales people whom they know and trust,

who project a sense of style the customers relate to, and whose

advice they feel they can rely on. Customers may, indeed,

follow a trusted sales person from one store to another. A

store with a transient, ever-changing sales force cannot project

so strong an image nor draw a base of loyal customers.

One tempting source of employees for a new retail business

is “pirating” of employees from existing stores (Shafter and

Greenwald 289-290). Often such pirated employees are drawn by

the offer of higher wage. Pirating is of particular

attractiveness in the women’s fashion area, since Her Place’s

proprietor has personal contacts with good salespeople at the

stores where she does her own shopping. However, aggressive

pirating may create hostilities with other stores, and is thus

to be avoided when possible. For Her Place, the best approach

is to let potential employees now working at other stores know

that Her Place will be opening and is looking for people, but

leaving the next step to the other person rather than out-and-

out soliciting for an application.

An unstructured interview process is best for Her Place’s

requirements. A simple application form will serve for

background and previous experience, but the main employee


11

requirement is not specialized skills but a “good fit” with the

store’s ambience and prospective customers.

Merchandise selection and display, and sales force

management are the key “line functions” for the operations of

Her Place. In support of these line functions are the

fundamental “staff functions” of marketing, store operations,

legal requirements, accounting and financial management, and

general business relations.

Marketing: The greater part of the “marketing” of a women’s

retail boutique such as Her Place is closely intertwined with

the basics of merchandise selection and sales service. Women

walk into a boutique in the first place if the merchandise in

the window is interesting, and will linger if they find more

interesting merchandise on the racks, and if they find the sales

people knowledgeable and helpful. But a boutique cannot rely

entirely on this sort of marketing. A new business, especially,

must let customers know it is open, through advertising.

Once a customer base appears, marketing is also used to

support that base. A simple and typical procedure is to get the

address of all new customers for a customer mailing list, used

to notify customers of sales, new merchandise, etc. This is a

simple way to promote greater repeat business.

Such marketing tactics also lend themselves to simple and

effective forms of market research. “Market research” is a


12

phrase with intimidating overtones. It conveys a notion of a

specialized “priesthood” of marketing-research wizards who

advise large corporations on the subconscious motivations of the

public. But market research is available to small businesses as

well as large. In women’s retail, simply keeping abreast of the

fashion magazines constitutes a form of market research.

Likewise, as noted earlier, factory-outlet stores give retail

merchants an opportunity to see what end-buyers are looking for.

A simple example of a market-research scheme involves use

of a mailing-list mailer, which as we have seen Her Place will

utilize anyway. How do customers respond to “personalization”

of a mailer by a hand-written note? Does it encourage greater

response? This can be tested by sending out half the next

mailing with such a note, and the other half without it, while

keeping track of the response rate from each group (Andreasen

17-20). A simple market research project of this sort requires

minimal extra effort and investment, and can yield information

that makes for more effective marketing.

Store Location and Operation: It is said that in real

estate the three most important considerations are location,

location, and location. This is nearly as true in retail.

Location costs (usually rental or lease of a store front) is one

of the largest items of a retail store’s costs, and it is a

fixed cost. In slow seasons, employee hours can be cut and less
13

merchandise in quantity and expense can be brought, but the rent

still has to be paid every month.

Location can also determine the success or failure of a

store. If a shopping center has plenty of available store

fronts and low rents, it may also be a “dead” center that draws

few customers. Or it may draw the wrong customers, or customers

in the wrong mood; e.g., a grocery store draws hurried,

businesslike shoppers who want to buy their food and run; they

aren’t likely to drop into a neighboring boutique. Hence a

grocery store nearby is unlikely to be a good “draw.” A

department store, on the other hand, draws customers who will

then check out neighboring boutiques. Thus the typical

regional-mall layout, with large “magnet stores” bracketing a

series of boutiques and specialty shops.

Along with the storefront come some one-time requirements

and ongoing requirements. If the location was previously a

similar type of store, it may already have appropriate interior

furnishings, fittings, and décor. Otherwise, these things will

have to be procured. It is perhaps more expensive to hire a

decorating firm to handle the setup, but the results may be more

predictable and desirable than a do-it-yourself job (especially

undertaken at a time when so many other preparations also have

to be made).
14

In a shopping center, leasing, maintenance, insurance, and

related functions may all be handled through the center

management agency. For a street-front store, each of these

aspects of the location will have to be handled separately.

Legal and General Business Functions: These are functions

which are not peculiar to a women’s fashion boutique, or even to

retail business, but are encountered by small businesses of all

sorts. Business licenses must be obtained, along with zoning

permits for remodeling, if required, etc. Bank accounts must be

opened, correspondence seen to, the books kept accurately. To a

degree, these general business requirements overlap with the

general features of location requirements – lease negotiation

and payment, insurance, and so forth.

These “staff” functions are at once important, time

consuming, and not themselves related to the women’s fashion

business. As a result, they are not only a draw on the

proprietor’s time, but also a mental distraction from the

problems of running a successful boutique. For this reason,

serious consideration should be given to hiring an office

manager, or a management service, so that routine matters in

this area can be handled, and decision requirements clearly

outlined and presented to the proprietor.

Finance is a matter which requires particular attention,

however. The complexities of tax accounting are such that


15

specialized assistance is necessary. At the same time, the

balance sheet is so clearly related to the fundamental health of

the business that the proprietor must make a special point of

keeping fully abreast of and aware of the state of Her Place’s

finances at all times.

The above plan simply outlines the requirements which must

be met if Her Place is to have a successful opening and a first

year that points the way on the road to profitability. It will

be appreciated that this is strictly a framework, to which

specifics need to be attached to become useable. But these

specifics are by their nature unique to a particular situation,

and impossible to generalize on. Only for a specific instance

can we speak of local licensing requirements, state insurance

laws, the customer mix in a particular area, rents and leases of

alternative possible locations, and so on.

It should be clear from the above, however, that opening

even a small business such as Her Place is a project which to be

successful requires clearly defined goals and careful planning.


16

Works Cited

Andreasen, Alan R. Cheap but Good Market Research. Homewood

IL: Dow Jones-Irwin, 1988.

Eureka, William E., and Nancy E. Ryan. The Customer-Driven

Company. Dearborn, MI: ASI Press, 1988.

Kacker, Madhav P. Transatlantic Trends in Retailing. Westport,

CN: Quorum Books, 1985.

Lord, Shirley. “Everybody’s All-American.” Vogue (February,

1989), 313-319.

Shafter, Harold, and Herbert Greenwald. Independent Retailing.

Englewood Cliffs, NJ: Prentice-Hall, 1976.

Shath, Jagdish N., and S. Ram. Bringing Innovation to Market.

New York: John Wiley and Sons, 1987.


17