Business plan example - The Market

The Children's World target market includes the pre-adolescent to young adult groups on a global scale. Using data supplied by the Bureau of the Census the total population of the world is estimated at 5,700,000,000. Of this basis group, we have conservatively placed our estimate of our total target market at slightly over 300 million customers. At the present time our sales are hovering at the 250,000,000 unit mark (up from 86,000,000 in 1940) giving us an 83.3% market share. We believe that the requested funding will allow us to increase this market share to roughly 95% over the next two years. This would increase our sales by an additional 35,000,000 units per year (see Appendix A for source information and calculations).

Our primary focus (and most of our extensive field testing) is on the 1-5 year old individual. Our products are gender specific, with male vs. female sales forecasts mirroring the population demographics. As our products gain acceptance within this market, we will move to expand into the teenage markets as this time frame is known for its friction between family sub-units. This will mask the effects of the "de-imprinting" irritations, and will aid us in minimizing any public disclosure (and competitor espionage) during the early phase of our market introduction.

All Children's World products are protected by the trademark and copyright laws, however we will not seek patent protection for the "essence" lines. Instead, we will keep these lines as a trade secret, thus preventing public disclosure and the subsequent possibility of legal entanglements from disgruntled parents, consumer activists, etc.

Initial responses from our market test customers indicate that our new lines are enjoying an excellent reaction. Inquiries from prospective customers suggest that there is considerable demand for these toys. Relationships with leading retailers, major accounts, and distributors substantiate the fitness of Children's World for considerable growth and accomplishment.

Competition

Although Children's World is a broad based manufacturing and transportation company, competitive threats today come primarily from other toy manufacturers. However, with 83.3% of the overall market, the competition does not play a significant role on company pricing/credit policies.

The major competitors that are facing Children's World are as follows:

Mattel, Inc. (Hawthorne, CA) Primarily a game manufacturer/marketer with sales of over $50,000,000/year.

Roadmaster Corp. (Olney, IL) Manufacturer of juvenile riding toys with sales of over $100,000,000/year.

Parker Brothers (Beverly, MA) Primarily a game manufacturer/marketer with sales of over $250,000,000/year.

Flexible Flyer Co. (West Point, MS) Manufacturer of juvenile riding toys with sales of over $50,000,000/year.

Tyco Toys, Inc. (Mount Laurel, NJ) Manufacturer of trucks/cars with sales of over $100,000,000/year.

Hasbro, Inc. (Pawtucket, RI) Primarily a game manufacturer/marketer with sales of over $50,000,000/year.

In spite of the competition in the toy industry, Children's World has continued to deliver a high quality, low cost product that is unique to this industry. In addition, our research indicates that our performance is superior to any other company on the market today.

The gift market is heavily seasonal, with the preponderance of sales coming late in the year. As stated in the "Background" section of the Business Description above, Children's World has experienced an increase in the public awareness of our year end close-out (where we give away surplus inventory). Because of this practice, the public has begun to think of us on a seasonal basis as a philanthropic organization.

It is our belief that we will be able to turn this mistaken perception around with the funds that we are seeking via this proposal. After all, in all comparisons Children's World's products provide more features and have superior performance than competitive products. In most cases, the difference in the number of features is substantial. A complete technical comparison is available upon request.

Marketing Strategy

The "state of the art" of the industry today dictates that toys are produced without ever being touched by human hands. Our new revolutionary product line capitalizes on the fact that our toys have traditionally been hand built by our local elf community. Although our production methods are slow in comparison to other manufacturers, our quality levels are high while our costs are kept very modest. In addition, the exciting new breakthroughs that we have achieved in our R&D department (see the Description of the Business section above) will further increase the sales and usage of our products.

To get the most out of our marketing dollars, we have developed the following strategy for promoting our products:

Pricing and Profitability. Our pricing is tied to our philosophy of operating at a break even basis. However, because of both the past losses incurred in the toy giveaways, and to pay for the capital improvements outlined in this plan, we will increase our pricing in order to retire the newly incurred debt. We are projecting a first year net profit of $30,000,000 as the result of this project.

Selling Tactics. Consistent with previous years, preseason publicity outlining new merchandising concepts is utilized extensively to generate paid advertising participation from retailers and shopping centers world wide. This has worked well, and we have no plans to alter this strategy.

Distribution. Central pre-distribution hubs have now been established in each country. This concept permits faster delivery, without the need to return to the North Pole each time the sleigh needs restocking. This is the most cost effective procedure implemented by Children's World in the last 50 years.

Advertising and Promotion. Cooperative advertising funds are available to all participating retailers which leverages our national advertising exposure 400%. Proof of advertising activity from the participating merchant in the form of a paid invoice from the merchant and a tear sheet from the print media is required for final payment.

Public Relations. This activity has outgrown our in-house capabilities. Therefore, we have retained the services of an international public relations firm, Good, Better and Best, Inc., to coordinate those activities. The firm provides us their services at cost, as they benefit measurably through their visibility and association with Children's World .

Business Relationships. Children's World participates heavily in trade shows during the Summer months. This activity permits us to maximize our efforts and focus on the major retailers and buyers. Promotional activity by retailers may need to be reviewed in the near future, as seasonal promotion once targeted exclusively for December, has been pushed backward to Thanksgiving, and on occasion is now occurring as early as Halloween. This is a concern we are reviewing with our public relations firm.

Finding the Money Required to Starting a New Small Business. Now that You have computed your first financing requirements, where
will you get the money? The first source is your personal savings. Subsequently relatives, friends, or other people might be found
who would like to"enterprise" their savings in your business. Before getting too large a share of money from external sources,
remember you should have personal control of enough to guarantee yourself possession.

Once you can show that you have closely exercised your fiscal Requirements and can demonstrate experience and integrity, a
financing institution may be willing to finance a part of your working requirements. This may be done on a short-term basis of
from 60 days to up to one year. Any institution which has money to give is primarily concerned with safety. The security may be a
business advantage, but when you are just starting the ideal security is usually your home or some other private asset.

The next thing the lender will want to see is Some Kind of Business program. If you complete a business plan - which includes a
cash flow forecast - that the lender will observe you have done some realistic and serious thinking about your company and be more
likely to think about your request.

Become acquainted with your banker. In picking a banker consider Progressiveness, attitude toward your company, credit services
offered, and also the dimensions and direction policies of the bank. Is the bank progressive? The physical look of the lender may
provide you some indication. When the workers are pretty youthful, considering your issues and active in civic affairs that the
lender is very likely to be innovative. The nature of the lender's advertising may also be a clue for its progressiveness.

To succeed the banker should be interested in helping you to Become a better manager, and build a lasting relationship that will
mean rewarding business for you as well as the bank over the years.

Will the bank give you the kind of credit you need? For example, If seasonal accumulations of stock turned into a problem will the
lender create a loan against field or public warehouse receipts? If your funding is tied up in accounts receivable during your
heavy selling season, will the bank accept these receivables as collateral for a loan? Will the lender consider a term loan?

Finally, understand the dimensions and direction policies of the bank. Will Your maximum conditions fall nicely inside the
bank's"legal limit"? If you plan to do some export business, does it have a currency department? In the event that you or your
traders sell on installment conditions does the bank have facilities for handling installment paper? How deeply is the lender
concerned with the rise and prosperity of the regional community?

When you deal with your banker, sell yourself. Whether or not you Need a bank loan, also make it a practice to visit your banker
at least once every year. Openly discuss your plans and problems. It is the bank's business not to betray a confidence. If you
need financial aid carefully organize, in written form, complete information that will present a comprehensive comprehension of
your whole proposal. Many business-people or prospective business operators destroy their chances of obtaining financial help by
failing to present their proposition properly.

Trade creditor or gear maker, Firms from which you Buy equipment or merchandise may also provide capital for you in the form of
extended credit. Producers of store fixtures, cash registers, and industrial machinery frequently have financing plans under which
you may buy on an installment basis and pay out of future income. You don't need to cover the merchandise simultaneously. If goods
are for resale, no safety aside from repossession rights of these unsold merchandise is involved. However, too extended a use of
charge can prove expensive. Usually cash discounts are offered when a bill is paid within 10, 30, or 60 days. By way of instance,
a term of sale quoted because"2-10; net 30 days" signifies a cash discount of two percent will be granted if the bill is paid
within 10 days. If not paid in 10 days, the whole amount is due in 30 days. If you do not take advantage of the cash discount,
you're paying 2 percent to use money for 20 days, or 36 percent per year. That can be high interest. Prevent it.

One of the principal causes of failures among businesses is Inadequate funding. If you do go into company, remember it is your
responsibility to provide, or obtain from other people, sufficient money to supply a firm foundation for your business.

Sharing Ownership With Other People. Now that you have determined what Business to start and about how much capital will be
required, you may find it necessary to join with a couple of associates to establish the enterprise.

If you lack specific technical or management skills which are of Major importance to your preferred business a partner with these
abilities may prove a most satisfactory way to cover the deficiency. If you're extremely proficient in your particular area but
lack direction training and abilities, you might look for a partner using a background in direction. If you might need more
start-up money, sharing the possession of this company is 1 way to get it. Great care should be taken in deciding upon a partner.
Personality and character, in addition to ability to render financial or technical aid, influence the achievement of a pa333ship.

A partnership may be a mixed blessing. A spouse who places in time Or cash has got a right to expect a share in running the
enterprise.

In a venture the liability for the debts of the firm is Infinite, just as it's in a single proprietorship. Therefore, the owners
are Personally accountable for the firm's debts, even in excess of the amount that they Have spent in the organization. In a
corporation the accountability of the owner is Limited To the amount that they pay for their shares of stock. A partnership, such
as a single proprietorship, lacks continuity. Thus, the Company terminates upon the Death of the proprietor or a partner, or upon
the withdrawal of a partner.

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