Course/Programme: |
BA Business |
Level: |
5 |
Module Title: |
Entrepreneurship and Business Development |
Module Leader: |
Mervyn Sookun |
Assignment titles: |
Individual Business Plan |
Assignment number: |
|
Weighting: |
100% |
Date given out: |
August 2024 |
Submission date: |
30th September 2024 |
LSC UoS BA in Business
Student Name:
Student ID:
Executive Summary
This business plan introduced a new venture in sustainable handicraft business that focused on responsible sourcing, quality craftsmanship, and environmentally friendly practices. Tools of digital marketing can be used for e-commerce, marketing. Employees must be provided with the required skills for effectively using technology. It will be ensured that facilities are also suitable for meeting the standards of the environment and production. Generally, the stable political environment in the UK coupled with supportive tax policies was propitious. The business model encapsulated and expanded on intricate value chain and risk management strategies that would be sensitive to probable economic fluctuations and environmental regulations. Through an all-round feel of transparency and sustainability, the business sought to build a respected and potentially profitable position in the expanding market of sustainable handicraft market.
1. Introduction
Sustainability has become a necessity that is gaining popularity across all the fields. Nowadays, sustainability is a development, not a trend. Customers are becoming more aware of the consequences of the things they buy and the effect they have on the environment and society. Especially in the fashion, home décor and accessories industries where most traditional methods of production greatly harm the environment. Thus, the need to satisfy this increasing market can be done through the manufacture and marketing of the company’s products which are environmentally friendly and crafted by professional artisans. This business plan focuses on the Sustainable Handicraft Business namely EcoCrafts, understanding of the industry, business model and organisational suitability, market attractiveness in addition to the value chain.
2. The Business Concept
This EcoCrafts Company will be a sustainable handicraft business that will manufacture various home decors, accessories, and textiles handmade from environmentally friendly materials. The mission of the company is twofold. First, to provide consumers with responsive products that do not pollute the environment as most commercial products do. Secondly, to help develop traditional crafts and minimise their use by those in large-scale production.
2.1 Product/Service
The proposed tangible products of the company will entail products such as textiles, accessories, and home decorations like cushioned furniture, throws, tablecloths, jewellery trinkets and more. Products will also include those made from recycled metal or bamboo handbags, wooden items from recycled timber, and pottery among others. All fabrics used will be organic fabrics including cotton, bamboo and metals shall be recycled metal. Local and fair-trade, certified suppliers will be used to minimise the carbon footprint of the business within the production process.
The business’s unique selling proposition is its ability to market a product that is both, sustainable and culturally relevant and skilfully made. Every piece will capture the story of the artisan behind it and the effects of it on the environment. It will also be possible to add special extras which will let the consumers modify the look of the purchased object through the addition of monograms or individual designs.
2.2 Target Market
The target consumers for the Handicraft Business are those who seek to buy organic and sustainable products due to the reasons of efficiency and their love for handmade goods. Such consumers are usually young people from Generation Y and Z aged between 18 and 45 years. With a good level of income, and values that imply buying products and services of ethical and sustainable brands. According to a study conducted in 2021, 64% of the group prefer to patronise sustainable brands and would be willing to spend 20% more on a product if it is eco-friendly (Deloitte, 2024).
The business will use a psychographic dimension since it will target consumers with a certain attitude towards the environment and the production of products. That is, why the positioning will be based on the targeting of urban markets in the UK, US and Western Europe – the regions that are more sensitive to environmental issues. Global market leaders for sustainable goods are completely developed metropolitan areas, for instance, London, New York, Berlin as well as Denmark (Medium, 2023). As reported, in 2022, the global market related to eco-friendly products is quite huge and is estimated to reach $393 billion by the year 2032 which shows the tremendous growth of the market (Statista, 2024).
Figure
1: Position Map
(Source: Created by Learner)
2.3 Core Values
The core values of the business include:
1. Sustainability: About the theme, the company also aims to take responsibility and preserve the environment which is why packaging materials used are environmentally friendly while minimising waste.
2. Fair Trade and Ethical Practices: Primarily, it is important to maintain wage and working conditions equity of all artisans. The company will deal with certified Fair Trade organisations to obtain the raw materials as well as to ensure that all the ideals of the Fair Trade are met.
3. Cultural preservation: The business purpose is to continue the traditional methods of constructing that seem to be overshadowed by the industrial revolution process. The products are going to inform the customer about the artisan and the culture of the place where it was produced, thus strengthening the brand's mission of appreciation cultures.
2.4 Scope of the Business
The business will be conducted at national and international levels with the initial business being an online e-commerce store to attract customers from all over the world. It consists of marketing and selling of fairly-traded handicrafts particularly through the internet through physical shops with a focus on environmentally friendly and traded products. In the first year of the business, it is desired to establish cooperation with owners of eco-friendly lifestyle shops. Shops will be based in London and Berlin which are interested in the sustainable approach. For the long term, the business aims at diversifying its products to include clothes and furniture that will be manufactured using eco-friendly resources. Besides, it will seek opportunities in partnerships with hotels, restaurants and offices seeking soft furnishings that are eco-friendly.
2.5 Location
The company will be based in Brighton, UK since the area has a sustainable value and a large number of artists. Brighton offers access to the talented hand and a friendly community environment that appreciates a fair and organic economy. It also has the advantage of nearness to London thus it will be easier for the city to access the larger market and possible business ties with clients (London, UK, 2024). For production, the planning is to be mostly decentralised and artisans from different regions will be producing materials gradually thus minimising transport costs and environmental effects.
2.6 Key Stakeholders
The key stakeholders will include (Kalubowila and Rajapakse, 2021):
1. Artisans: The artists who make the products to be sold lie at the base of the operation. In return, they will gain adequate rewards and acknowledgement for the competence they acquired. Artisans will be from various cultures, thus increasing the number of people endowed with different crafting techniques and ideas.
2. Customers: Another important group of stakeholders is consumers who pay respect to environmentally friendly products. The business will get their attention; interest them through product offerings which reflect their values and second through the presentation of the sustainability and ethical candidate label of the business.
3. Suppliers: Raw materials inevitably include eco-friendly products – the providers are organic cotton growers and suppliers of recycled metals. The main implication is that this implies that reliable relationships with suppliers will guarantee the supply of these materials over the long term.
4. Investors: People or any organisation will only invest in a
business that is trustworthy and take part in ethical business
practices and be environmentally conscious (Stein, 2024). These
investors, who are external stakeholders, will be the sources of
funding and gross illuminators of the business’ mission. This will
financially help the EcoCrafts to grow and expand its o
peration.
Figure
2: Stakeholder matrix
(Source: Created by learner)
3. Viability Analysis
Depending on various analysis, it will be shown that the business has a strong chance of succeeding because of it alignment with the efficient supply chain and the current market trends of affordable fashion.
3.1 Macro Analysis
A detailed STEEPLE analysis assesses factors that are outside the organisation and may affect the outcome of the company.
Social Factors
The awareness of the consumers concerning the environmental impact of the product they use is on the rise with young generations as some of the most active players in this space. It is evident in the worldwide demand with findings indicating that about 73% of the consumers are willing to alter their consumption patterns to meet demands of environmental conservation. People’s concern with sustainability has perhaps never been higher and, therefore, the handicraft company can benefit more, as it entails products with considerably smaller impacts on the environment (Barbu et al., 2022).
Technological Factors
Online selling has been made easier by the enhancement of technology in the current world, especially some e-commercial platforms. The emergence of Etsy and Amazon Handmade shows that more people are looking for exclusive handmade items. Etsy saw a 36% increase in sales of sustainable products in the period between years 2019 to 2021 (Business of Apps, 2023). Moreover, digital marketing like the use of Instagram and Facebook ads will also be employed to effectively reach out to the grout of environmentally conscious consumers (Maffett and Brusa, 2022).
Economic Factors
Currently, the UK's GDP will increase to 7.4% in 2021 and the same is the projected growth rate for 2023 (Statista, 2024). It is very important to mention that after the period of covid-19 pandemic, people stay focused on sustainability as the economy aims at recovering after the virus's impact. Despite these difficulties such as harsh inflation and supply chain issues, consumers are always willing to purchase high-quality and environmentally friendly products.
Figure 3: GDP rate of the UK
(Source: Statista, 2024)
Environmental Factor
The business is quite relevant because there is a shift across the globe from using high carbon footprints, waste and pollution. All governments across the globe are adopting more and more environment-friendly policies and Integrated Environment Plans, the United Kingdom has kept carbon dues to ZERO by 2050 (UK Parliament, 2024). Sustainability materials and practices in the business will enable the business to meet legal obligations and consumers who seek to have a small impact on the environment.
Political Factor
Political support for sustainable business practices is well established across most countries across the world. The UK government provides several tax reliefs, and grants for businesses that promote sustainability. For example, the Green Business Fund finances energy-efficient equipment. The corporate tax rate in the UK is 19% which is relatively low in comparison to other European countries which make a perfect environment for small businesses to thrive (GOV.UK, 2024).
Legal Factor
Legal requisites to facilitate sustainable business are on an expansionary trend. In the UK there is the Modern Slavery Act this means that organisations make sure that their supply chain is not associated with forced labour and human trafficking (PWC UK, 2024). EcoCrafts will strictly follow with the help of purchasing products from Fair Trade-certified suppliers. Furthermore, growth in the rules and regulations such as eco-labelling and product declaration will complement the mandate of the company to ensure consumers are informed about the product.
Ethical Factor
It found that ethical consumerism is on the increase at a rate that is unprecedented. Different research has it that in 2020, the ethical market in the UK stood at £122 billion, a tremendous improvement from £29 billion in 2000 (Wood, 2024). This trend points to the potential of drawing consumers willing to invest in goods and services which are socially and environmentally responsible, characteristic of the company.
3.2 Industrial Analysis
The strategic tool used for analysing the attractiveness and competitive intensity of an industry is defined by Porter's Five Forces (Isabelle et al., 2020). By identification of these forces, a business like EcoCrafts can be identifying the potential opportunities and threats.
Threat of competition (Moderate)
The industry of sustainable handicrafts is diverse with both small and large scale manufacturers along with artisanal and smaller producers. It can be leading to an intense competition for the share of the market. Product differentiation plays an important role in the success of the industry. Materials of high quality, unique designs along with strong storytelling can be helping businesses in standing out. Customers have low costs of switching, as most of the handicrafts are similar. It can be making it easier for the customers in switching between competitors like The Muddy Boots.
Threat of new entrants (Low)
There have been no significant entry barriers financially for this industry. However, it will be a challenge to establish supply chains and build a reputation. The economies of scale can be enjoyed by the large producers in terms of distribution and material sourcing. Moreover, artisanal and smaller businesses can be leveraging their personalised approach and unique craftsmanship. Moreover, the new entrants can be facing challenges due to regulations of the environment along with standards of fair trade.
Bargaining power of buyers (Moderate)
The market segments play an important role to define this power (Chang et al., 2022). In a setting of retail, the large buyers have more power of bargaining. However, the buyer power can be reduced due to direct-to-consumer sales. The buyers will be having less power of bargaining if the business is offering high-quality and unique products.
Bargaining power of suppliers (Moderate)
This power depends on the ability of the raw materials along with the supplier numbers. Suppliers can have more power of bargaining with concentrated suppliers. If inputs used in the handicrafts are difficult to source and unique, the suppliers can be having more power of bargaining.
Threat of substitutes (Moderate)
The cheaper and mass-produced alternatives can be posing a threat to handicrafts which are sustainable. Consumers prioritising quality, sustainability and uniqueness will be less likely switching to substitutes.
3.3 Financial Projections
Cash flow forecast
Items |
1st Year |
2nd Year |
3rd Year |
4th Year |
5th Year |
RECEIPTS OF CASH |
|
|
|
|
|
Angel investors |
£ 20,000 |
£ - |
£ - |
£ - |
£ - |
Contribution of owner |
£ 5,000 |
£ - |
£ - |
£ - |
£ - |
Loan from bank / financial institution |
£ 25,000 |
£ - |
£ - |
£ - |
£ - |
Sales made in cash |
£ 42,000 |
£ 67,200 |
£ 107,520 |
£ 182,784 |
£ 292,454.40 |
Cash collection from debtors |
£ 12,600 |
£ 20,160 |
£ 32,256 |
£ 54,835.20 |
£ 87,736.32 |
Total Receipts of Cash |
£ 104,600 |
£ 87,360 |
£ 139,776 |
£ 237,619.20 |
£ 380,190.72 |
|
|
|
|
|
|
DISBURSEMENTS OF CASH |
|
|
|
|
|
Start-up Costs |
|
|
|
|
|
Market research |
£ 150 |
£ - |
£ - |
£ - |
£ - |
Business registration |
£ 1,400 |
£ - |
£ - |
£ - |
£ - |
Trade licenses and business certifications |
£ 1,600 |
£ - |
£ - |
£ - |
£ - |
Raw materials |
£ 5,000 |
£ - |
£ - |
£ - |
£ - |
Deposit for rent on premises |
£ 4,000 |
£ - |
£ - |
£ - |
£ - |
Refurbishment of premises availed on rent |
£ 8,500 |
£ - |
£ - |
£ - |
£ - |
Legal and professional fees |
£ 1,200 |
£ - |
£ - |
£ - |
£ - |
Staffing and hiring costs |
£ 600 |
£ - |
£ - |
£ - |
£ - |
Purchase of furniture and fixtures |
£ 4,000 |
£ - |
£ - |
£ - |
£ - |
Purchase of equipment and machinery |
£ 12,500 |
£ - |
£ - |
£ - |
£ - |
Purchase of motor vehicles |
£ 2,500 |
£ - |
£ - |
£ - |
£ - |
Marketing and promotions |
£ 350 |
£ - |
£ - |
£ - |
£ - |
Employer's liability insurance |
£ 1,550 |
£ - |
£ - |
£ - |
£ - |
Public indemnity insurance |
£ 1,250 |
£ - |
£ - |
£ - |
£ - |
Website development for business |
£ 3,000 |
£ - |
£ - |
£ - |
£ - |
Office supplies and stationeries |
£ 1,200 |
£ - |
£ - |
£ - |
£ - |
Others |
£ 1,200 |
£ - |
£ - |
£ - |
£ - |
|
|
|
|
|
|
Fixed Costs |
|
|
|
|
|
Insurance |
£ 675 |
£ 675 |
£ 675 |
£ 675 |
£ 675 |
Legal and accounting charges |
£ 500 |
£ 500 |
£ 500 |
£ 500 |
£ 500 |
General and administrative costs |
£ 400 |
£ 400 |
£ 400 |
£ 400 |
£ 400 |
Marketing and promotions |
£ 1,500 |
£ 1,500 |
£ 1,500 |
£ 1,500 |
£ 1,500 |
Repair and maintenance |
£ 1,200 |
£ 1,200 |
£ 1,200 |
£ 1,500 |
£ 1,500 |
Interest on loan |
£ 150 |
£ 150 |
£ 150 |
£ 150 |
£ 150 |
Rent on premises |
£ 18,000 |
£ 18,000 |
£ 18,000 |
£ 18,000 |
£ 18,000 |
|
|
|
|
|
|
Variable Costs |
|
|
|
|
|
Direct materials |
£ 8,190 |
£ 13,104 |
£ 20,966.40 |
£ 35,642.88 |
£ 57,028.61 |
Direct labour |
£ 5,460 |
£ 8,736 |
£ 6,988.80 |
£ 11,880.96 |
£ 38,019.07 |
Overhead costs |
£ 2,730 |
£ 4,368 |
£ 6,988.80 |
£ 12,500 |
£ 18,750 |
Electricity and utilities |
£ 2,184 |
£ 3,494.40 |
£ 5,591.04 |
£ 9,504.77 |
£ 15,207.63 |
Staff salaries and wages |
£ 6,500 |
£ 7,200 |
£ 7,500 |
£ 8,000 |
£ 8,500 |
Travel and transportation |
£ 1,092 |
£ 1,747.20 |
£ 2,996 |
£ 5,392 |
£ 9,705 |
Income taxes |
£ 2,730 |
£ 4,368 |
£ 6,988.80 |
£ 13,235 |
£ 24,200 |
Office supplies and stationery
|
£ 150 |
£ 150 |
£ 250 |
£ 300 |
£ 350 |
Repayment of bank loan |
£ - |
£ - |
£ 3,000 |
£ 5,000 |
£ 10,000 |
|
|
|
|
|
|
Total Disbursements of Cash |
£ 101,461 |
£ 65,592.60 |
£ 83,694.84 |
£ 124,180.61 |
£ 204,485.31 |
|
|
|
|
|
|
Net Changes in Cash Balance |
£ 3,139 |
£ 21,767.40 |
£ 56,081.16 |
£ 113,438.59 |
£ 175,705.41 |
|
|
|
|
|
|
Add: Opening Cash Balance |
£ - |
£ 3,139 |
£ 24,906.40 |
£ 80,987.56 |
£ 194,426.15 |
|
|
|
|
|
|
Closing Cash Balance |
£ 3,139 |
£ 24,906.40 |
£ 80,987.56 |
£ 194,426.15 |
£ 370,131.56 |
Positive cash flows and stable increase in cash flows can be observed in the above cash flow forecast throughout the first five years. The main sources identified for cash generation in this business is sales. However, the sales of the business involve cash sales as well as credit sales.
4. Scrutinising the Business Idea
4.1 Value Chain Analysis of the Business
Primary Activities
Inbound logistics: It will be including sourcing the raw materials; storage and transportation along with relationships with suppliers (Frazelle, 2020).Materials should be efficiently stored and transported for minimising waste and costs. Strong relationships should be built with suppliers for ensuring the supply chain, which is reliable.
Operations: The important factors will include processes of production, quality control and management of waste. Eco-friendly practises should be implemented for minimising impact on the environment along with reducing waste.
Marketing and sales: A strong identity of the brand will be developed which can be reinstated with the target audience. Products will be promoted through different channels which include public relations, online advertising and social media.
Outbound logistics: Sustainable materials of packaging will be used for minimising waste. Products will be delivered efficiently through different channels including online platforms and retail stores.
Service: Excellent customer service will be priced for promptly addressing inquiries. Maintenance, repair and services of replacement will be offered as a requirement.
Support activities
First activity will be procurement. It includes the selection of suppliers and negotiation. Reliable suppliers who are selected and identifying who can be adhering to the standards of sustainability.
In terms of human resource management, it will be important to develop and attract the skilled artisans who can be sharing the values of the business (Mahapatro, 2021). Opportunities should be provided for professional development and growth.
The other important factors include infrastructure and the development of technology. New technologies should be explored for improving sustainability and efficiency. It will be ensured that facilities are also suitable for meeting the standards of the environment and production.
4.2 Business Model Canvas
Key Partners Retailers Suppliers Non-Profit organisations |
Key activities Design and development Sales and marketing Management of the supply chain Production |
Value Propositions Sustainable practices, ethical sourcing and handcrafted quality |
Customer relationships Personalised attention will be provided along with tailored experiences |
Customer Segments Ethical sourcing, high-quality craftsmanship along with a sense of connection to the origins of the product. |
Key Resources Materials Artisans Intellectual property
|
Channels Direct sales in the form of retail partnerships and online stores. Indirect sales include wholesale partnerships with boutiques and ethical retailers. |
|||
Cost Structure Labour costs Material costs Costs of sales and marketing Overhear costs |
Revenue Streams Training and workshops Product sales Partnerships |
Table 1: Business model canvas
(Source: Created by the learner)
5. Risk and Mitigations
The first risk which can be highlighted is changes in the preferences of customers, downturns in the economy along with the global events which can be affecting handicraft demands. Mitigating strategies for this issue are diversifying the lines of products, building strong relationships with customers along with monitoring the trends of the market. It is important to foster loyalty with the help of exclusive offerings and personalised service.
The next risk is disruptions in supply chain which include challenges in sourcing the raw materials, fluctuation in costs of materials along with disruptions in processes of production which can be affecting operations (Kanike, 2023). Mitigation strategies for this issue include the development of strong supplier relationships, exploring the alternative options of sourcing along with implementing of strategies of inventory management.
The third challenge includes the social and environmental risks. It includes failure in adhering to the regulations of the environment or ethical standards which can be damaging the reputation of the business and can be leading to legal consequences. Mitigation strategies include obtaining certifications, implementing of practices of sustainable along with conducting audits regularly. Materials which are eco-friendly can be used along with minimising the impact on the environment along with reduction of waste.
The fourth challenge is the completion of goods which are mass-produced. They are cheap which can be competing with the products which are handcrafted. Mitigation strategies for the same include highlighting the uniqueness, targeting the niche markets along with leveraging storytelling. Emphasis should be placed on craftsmanship, quality along with the unique features of items which are handcrafted.
The last challenges include the technological challenges. It includes difficulty to adopt the new technologies and managing the digital platforms which can hinder the growth of the business. Mitigation strategies for the same include investments in technology, seeking support and training along with collaboration with the experts (Journeault et al., 2021). However, the challenges can include time constraints, high costs of implementation along with regulatory issues.
6. Conclusion
The company is well-positioned to capitalise on a nascent market for eco-friendly, artisanal products. Such a company would focus on responsible production concerning cultural traditions to meet this growing need for an emerging eco-sensitive consumer demographic and preserve handicrafts. Such intense research into the value chain and the company's business model would determine that such a competitive advantage can be capitalised on under the company's core operating principles. Proper strategy, a significant and effective marketing strategy, and a sound collaboration system would position the EcoCrafts for long-run success. At the same time ensuring real positive changes to environmental sustainability and welfare among the local population.
7. Reference
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Chang, H., Liu, S. and Mashruwala, R.(2022) Customer bargaining power, strategic fit, and supplier performance. Production and Operations Management, 31(4), pp.1492-1509. https://doi.org/10.1111/poms.13627
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Frazelle, E.(2020) Supply chain strategy: the logistics of supply chain management. McGraw-Hill.
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Isabelle, D., Horak, K., McKinnon, S. and Palumbo, C.(2020) Is Porter's Five Forces Framework Still Relevant? A study of the capital/labour intensity continuum via mining and IT industries. Technology Innovation Management Review, 10(6).
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Kalubowila, M. K. and Rajapakse, R. A. C. P. (2021) Development of an information flow model to overcome the challenges in Sri Lankan handicraft industry. 2021 International Conference on Advanced Research in Computing (ICARC-2021)
Kanike, U.K.(2023) Factors disrupting supply chain management in manufacturing industries. Journal of Supply Chain Management Science, 4(1-2), pp.1-24. https://doi.org/10.18757/jscms.2023.6986
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Maffett, M.G. and Brusa, J.O. (2022) THE EFFECT OF ONLINE ADVERTISING ON CONSUMER BUYING INTEREST IN ONLINE SELLING APPLICATIONS WITH CUSTOMER SATISFACTION AS AN INTERVENING VARIABLE (Case Study of Medical Doctor and Nurses in Chicago). MEDALION JOURNAL: Medical Research, Nursing, Health and Midwife Participation, 3(4), pp.136-143.
Mahapatro, B.(2021) Human resource management. New Age International (P) ltd..
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Stein, Z. (2023) Sustainable investing. Available at: https://www.carboncollective.co/sustainable-investing/stakeholders#:~:text=Investors%20provide%20a%20company's%20capital%20to%20grow,seeing%20their%20investment's%20value%20increase%20over%20time. (Accessed: 20 September 2024)
Wood, Z. (2021) UK annual spending on ethical products. Available at: https://www.theguardian.com/money/2021/dec/31/uk-annual-spending-on-ethical-products-surpasses-100bn-for-first-time (Accessed: 20 September 2024)