1.0 Executive Summary
Your T-Shirt! is an exciting new business that allows people to
custom design a shirt (specifically the design on the front or back) any
way that they would like. By intelligently leveraging cutting edge technology,
Your T-Shirt! will harness the power of computer sublimation to allow custom
shirt printing in production runs as small as one unit. The company was founded
by David Inkler. The company is set up as a Washington L.L.C. Your T-Shirt!
will have a storefront in Seattle as well as a comprehensive website that allows
ordering to occur anywhere.
Imagine the ability to create a totally custom shirt. You choose
the material and style of the shirt, and then the image or graphic you want on
the front and/or back. This is the ultimate form of expression. There are no
limits to what you can communicate. Some people might show their fanaticism for
a particular sports team, others a musician. Or you might have a social message
or cause on your shirt. Whatever you may decide, you can print any image
on your shirt.
Products
Your T-Shirt! will offer customers a variety of options for
creating their own custom shirts. The majority of orders will be for
t-shirts, however other style shirts will be available. Your T-Shirt! has
developed a strategic relationship with Hewlett-Packard (HP) printer
division. We will use their printer sublimation technology that
allows a computer image to be applied to a shirt in a high quality, high
resolution, economically feasible manner. This technology creates an image
durable enough to withstand thousands of washings. Its photo-like quality, due
to significantly higher printer resolution than anything on the market, will
show off any image. The technology is cost effective enough to offer customers
the ability to order just one unit. Most other competitors' costs prohibit
printing custom shirts in one-off production runs. Finally, the customer
may choose from an extensive library of existing images, supply their own
image, or have an artist create an image for them.
Your T-Shirt! has two sustainable competitive edges to
assist them in market penetration. The first edge is a enormous catalog of
graphic images. By establishing strategic partnerships with companies that have
existing graphic image libraries, Your T-Shirt! is able to offer an
unprecedented number of options. Their second edge is the high quality of
sublimation offered. From previous work experience, David has established close
business and personal ties with HP's printer division and will exclusively be
using prototype technology that offers an unprecedented high resolution
sublimation process for shirts.
Management
Your T-Shirt! will be led by David Inkler and is not his
first t-shirt venture. While in college David produced and sold tie-dye shirts.
This early business experience gave David valuable insight into the market, the
products, and the customer's needs and desires. Since leaving college David
worked in Hewlett-Packard's printer division, and it was this experience that
provided useful business and professional contacts within the shirt sublimation
technology industry that he is currently leveraging. After three years in
marketing at HP, David went back to school to earn his MBA. David will use his
educational skills, his technological business contacts, and his previous shirt
industry experience to make Your T-Shirt! profitable. Sales forecasts indicate
that Your T-Shirt! will achieve sterling sales for years two and three
respectively. Net profit will correspondingly be untarnished.
1.1
Objectives
·
To become known as the premier
custom shirt sublimation service.
·
Achieve profitability within 12
months.
·
Design and implement strict
financial controls to help ensure success.
1.2
Mission
Your
T-Shirt!'s mission is to offer the finest in custom shirt sublimation production.
Your T-Shirt! will offer customers the best product at the best price.
Customer's expectations will always be exceeded
1.3
Keys to Success
·
Leverage cutting edge technology as a competitive advantage.
· Exceed customer expectations by offering high quality products at
reasonable prices with quick turnaround times.
· Employ careful financial and accounting analysis to ensure
efficiency and proper controls
2.0 Company
Summary
Your T-Shirt! is a start-up organization. It has
been formed as a Washington registered L.L.C. by David Inkler. The L.L.C.
formation was chosen as a way to minimize personal liability issues for the
owner and avoiding the double taxation found in traditional corporations
1.1
Company Ownership
David
Inkler is the Founder and President of Your T-Shirt!
1.2
Start-up summary
Your T-Shirt! will incur the following expenses for start up:
·
Two Apple Macintosh
computers -- These will be high end models and utilize the
following software: Microsoft Office, Adobe Photoshop and Illustrator,
Macromedia FreeHand, and QuickBooks Pro.
·
HP XX Laser Printer
-- This is a prototype printer not available to the public.
·
In-store computer
kiosk -- This allows customers to view options for shirts and existing
imagery.
·
Website -- This will
be used for information disbursement as well as ordering.
·
Shelving display unit
-- To display assorted graphic images on paper for easier viewing.
·
Broadband Internet
connection.
·
Two desk/chair/office
supplies sets.
·
Small shirt inventory
-- Inventory will be kept small to lower overhead. This will be
accomplished by using a shirt vendor who is one shipping day away, effectively
using a just-in-time (JIT) system for managing inventory.
·
Heat application unit
-- To make the sublimation transfer.
3.0 Product
and Services
Your
T-Shirt! is a custom T-shirt sublimation company that offering customers a
choic of imagery (outs or theirs) to apply to the front or
back of a shirt.
Sublimation is a
process using heat to transfer (embed) ink into a fabric surface such as a shirt.
The alternative method of
creating custom shirt designs is called silk-screening, a process in which a
screen is made with an image
and that image is transferred onto a shirt. Because set-up costs are
high silk-screening is not cost
effective for small number production runs. Another disadvantage is that
silk-screening applies a thin layer of
ink to the surface the shirt inhibiting breathability. The sublimation
process avoids this problem since the ink is not coating the fabric's surface,
but rather, is embedded in the fabric. Only with recent technological advances
has sublimation become cost effective in small production runs.
While other vendors
are able to offer sublimation in single production runs, their computer based
sublimation process produces lower
image quality. Your T-Shirt! takes sublimation one step further by producing
the graphic images at a
higher resolution than other existing technologies. Through a
strategic relationship with David's former employer, Hewlett-Packard, Your
T-Shirt! has access to their new prototype sublimation high resolution
printer giving Your T-Shirt! a significant advantage.
Your T-Shirt! will
offer custom sublimation mainly on T-shirts, but will have other
shirt styles available. Customers can choose from traditional cotton-blend
shirts or all natural fiber cotton shirts.
Customers can then
choose from pre-existing graphics or custom artwork. The pre-existing graphics
are chosen from an extensive catalog. Your T-Shirt! has developed strategic
relationships with several companies that offer a wide range of graphic images.
The relationships allow Your T-Shirt! to list the other company's graphics
within their catalog thereby significantly options. These images can be
viewed and ordered online, providing customers with flexibility and
convenience. Your T-Shirt! will have a comprehensive Website that will allow
ordering a customer's home, or where ever they may be. Additionally, Your
T-Shirt! will have a computer kiosk in the store front as an in-store catalog
Your T-Shirt! will
also offer custom artwork or graphic options for sublimation. The customer may
bring in a graphic or may use Your T-Shirt!'s sub-contracted artist to realize
their vision. Your T-Shirt!'s artist can take a customer's pencil drawing
or even articulated thoughts and turn them into a new design. Your T-Shirt!
will offer a range of different shirt options. As indicated by the name, there
will be an emphasis on T-shirts. Short sleeves, long sleeves, organic fabrics,
and a variety of polo, rugby and other styles will also be offered.
4.0 Market
Analysis Summary
Your T-Shirt! has segmented the market into two
groups, organized by the type of product that they purchase. The first group is
customers that desire an already created graphic image to be placed on the
their shirt. The second group are those that prefer custom artwork to be placed
on their shirt. Your T-Shirt! has decided to divide the market by the products
that they purchase because it offers an intuitive, easy method of targeting the
two different groups. An additional reason for segmenting the market based on
the two products is because the demographics for the buyers of the two products
are distinct enough to group them separately.
4.1
Market Segmentation
Your T-Shirt! has segmented their market into two distinct
groups. As mentioned previously, the two segments are grouped by the type of
product they chose. Although Your T-Shirt! is dividing the market by
product type, it is effectively dividing the market by age as well since the
customers who purchase the custom artwork shirts tend to be older than the
group preferring the ready-made graphics. While this is not a hard and
fast rule, it is a fairly accurate generalization.
Graphics -- This is group
purchases a shirt and has an existing graphic placed on the shirt. This is the
less expensive option and lends itself to low production numbers, as low as
one, since there is not the inherent expense of artwork creation.
·
Ages 14-25
·
69% are students
·
Median individual
income is $26,000
·
Go out to eat 3.4
times a week
·
Listen to 3.6 hours of
music a week
Artwork -- This segment
prefers having custom artwork created and placed on their shirt. They
generally have the image or style in mind and will direct the artist to create
it. Occassionally when the customer will not have an exact image in mind but will
rely on the artist's skills to help shape the work. Some of these customers
will use Your T-Shirt!'s partner artist, others will have a friend or other
service provider develop the art.
·
Ages 24-43
·
Median individual
income is $42,000
·
Go out to eat 2.7
times a week
·
Listen to 3.3 hours of
music a week
· 18% are using the
shirt as a form of communication for a cause or a message
| Market Analysis | |||||||
| Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | |||
| Potential Customers | Growth | CAGR | |||||
| Graphics | 7% | 7,879,664 | 8,431,240 | 9,021,427 | 9,652,927 | 10,328,632 | 7.00% |
| Artwork | 8% | 5,969,854 | 6,447,442 | 6,963,237 | 7,520,296 | 8,121,920 | 8.00% |
| Total | 7.43% | 13,849,518 | 14,878,682 | 15,984,664 | 17,173,223 | 18,450,552 | 7.43% |
4.1
Target Market Segment Strategy
Your T-Shirt! has
chosen these two market segments because their demographics (reasonably young)
have the highest likelihood of purchasing a custom shirt. Both of these
segments are reasonably young. This is important because most of Your
T-Shirt!'s products are T-shirts and younger people tend to wear them
frequently.
Music is also an
important interest for the target markets since both segments listen
to and watch more than average amount of music. T-shirts are particularly
popular at music events. This phenomenon may be explained in part by the
expressive nature of both music and T-shirt graphics. Your T-Shirt! will
provide a form of expression, allowing each customer to choose what aesthetic
or idea they want to communicate.
Lastly, the business
will be located in Seattle which has a young, hip scene. There are many music
and other venues that cater to Your T-Shirt!'s demographic and these will
be useful in developing awareness of Your T-Shirt!
4.2
Service Business Analysis
The T-shirt design
industry is a primarily brick and mortar based industry. Most companies offer
either silk-screening or sublimation services to typically local customers.
While most of the products are T-shirts, there is a niche of companies that
offer these printing services for uniforms, team jerseys, etc. Most of the
participants in the industry fall into two categories, those that sell to
individuals and those that sell in multi-unit production runs. The companies
that sell to individuals are almost always silk-screeners who have a limited
number of silk-screens already developed. The customer chooses which one they
want and a T-shirt is made. This type of vendor is often the typical T-shirt
maker that you see at fairs. The second type of sells most of their products in
larger production lots. This can be explained by the fact that for custom work,
whether silk-screens or sublimations, it is not cost effective to produce in
small lots.
Recently, a number of
companies began offering computer-based sublimation enabling them to offer
low production runs. The technology the various companies are using, with Your
T-Shirt! being an exception, are is in its infancy an is of low resolution.
While the new technology allow companies to offer sublimation using computers,
the image quality is average at best. Your T-Shirt! is able to
leverage proprietary technology as a competitive edge to produce a much
higher quality computer sublimation.
4.2.1 Competition and Buying Patterns
Your T-Shirt! has
identified three competitors, two are local companies, the third is an
Internet-based shirt designer.
·
T-shirt World -- This local competitor specializes in silk-screening.
70% of their business is silk-screening with the remaining 30%
sublimation. They require a minimum order of 10 with a 2-3 week lead time.
This company only uses pre-existing designs for their silk-screening and
for sublimations you must use their artist.
·
Shirt Shack -- This local retailer is geared toward organizations or
teams with production runs of 20 or more. They do fairly good work but are
rigid regarding custom work.
·
Design House -- This is an Internet-based retailer that primarily
offers computer sublimations. Design House has a catalog of approximately 200
images for the customer to choose from. They do allow customers to
use their own graphic. The quality of the sublimations is mediocre at best
because they can only use off the shelf technology.
Another minor source
of competition comes from home kits that turn your ink jet printer into a
T-shirt making machine. While these kits do offer some competition, the
image quality is not good, therefore this will only appeal to children or
the home hobbyist, someone not very concerned with image
quality.
5.0 Strategy
and Implementation Summary
Your T-Shirt! will leverage their two competitive
edges to quickly gain market share. The competitive edges are an unprecedented
catalog of graphic images and the quality of their computer generated
sublimations, a function of using prototype HP sublimation technology. The marketing
campaign will emphasize the ability to completely customize a shirt. Youth
events and student groups will be targeted. The sales campaign will emphasize
making the experience as easy and pleasing as possible to encourage repeat
customers and word of mouth referrals.
5.1
Competitive Edge
Your T-Shirt! has two
competitive edges that they will use to their advantage to achieve market
penetration.
·
Large catalog of graphics -- Your T-Shirt! is developing several strategic
relationships with existing graphics companies that have an extensive images
catalogs. It would be difficult and expensive for Your T-Shirt! to create
their own library of graphics but by developing relationships with companies
who own existing libraries, Your T-Shirt! is able to offer its customers an
expansive array of imagery. Your T-Shirt! pays a royalty for use of these
graphics.
·
Quality of the sublimation -- Due to its networking contacts at Hewlett-Packard, and
the use of prototype technology, Your T-Shirt! will be able to produce
sublimations of much higher quality than any of their competitors. This gives
Your T-Shirt! a fantastic competitive edge. At some point within the next two
years this technology may be available to the public, however because
of the close contacts Mr. Inkler shares with HP, Your T-Shirt! will
always have cutting edge technology available, well in advance of any public
release.
5.2
Sales Strategy
The sales strategy will emphasize the fact that ordering a
shirt from Your T-Shirt! is a very easy and pleasing experience. The sales
effort will work on the continual development of the website, the main tool
used for ordering. It will be quite important to have a friendly, easy to use
web interface for two main reasons. One, there are so many choices available
that it could become daunting to the customer. The second reason is that a
large portion of sales will be placed on the website. It is imperative to make
it so easy that people don't stop part way through ordering due to cumbersome
or difficult instructions. The website embraces the philosophy of making
the experience so easy and pleasing that the customer comes back to buy more.
Your T-Shirt! will also rely on three other factors to help
boost sales. The first is exemplary customer service. Having excellent service
will provide the customer with the feeling that the business is looking out for
the customer's interest. Second, when a customer places an order, they
will probably be excited to see the finished product, so Your T-Shirt! will
ensure the fastest turnaround time possible. Lastly, sales will be boosted
by offering customers a high quality product. We will use high grade cotton
shirts and state-of-the-art sublimation printing materials.
5.2.1 Sales Forecast
The sales forecast is reasonably conservative so that goals
will be achievable. Sales will be slow initially, a function of the fact that
Your T-Shirt! is a startup organization and it will take time to build a
sufficient foundation. The following table and chart show sales forecasts
by both month and year.
The sales forecast is broken down by product, graphics
or artwork. "Graphics" indicates the customer will be using a
pre-existing graphic, either one that they are bringing in or one that they are
purchasing a license to use from Your T-Shirt! "Artwork"
denotes that the customer is using a graphic that is being created specifically
for them. All customers will purchase their shirt from Your T-Shirt!
|
Sales Forecast
|
|||
|
Year 1
|
Year 2
|
Year 3
|
|
|
Sales
|
|||
|
Graphics
|
$98,235
|
$242,151
|
$278,454
|
|
Artwork
|
$19,647
|
$48,430
|
$55,691
|
|
Total Sales
|
$117,882
|
$290,581
|
$334,145
|
|
Direct Cost of Sales
|
Year 1
|
Year 2
|
Year 3
|
|
Graphics
|
$49,118
|
$121,076
|
$139,227
|
|
Artwork
|
$9,824
|
$24,215
|
$27,845
|
|
Subtotal Direct Cost of Sales
|
$58,941
|
$145,291
|
$167,072
|
5.3 Marketing Strategy
The marketing campaign
will seek to increase visibility for Your T-Shirt!, emphasizing the ability of
the customer to completely customize their design. Your T-Shirt! will use
several different venues to communicate this message.
·
Advertising -- Your T-Shirt! will run ads in several teen/young adult
magazines whose readership demographics are similar to Your T-Shirt!'s.
·
Youth events -- Many different events will be sponsored as a means of
increasing visibility. These include but are not limited to music festivals
and sporting events along with the new genre of extreme sporting
events.
·
Student groups -- Your T-Shirt! will attempt to gain awareness of
the different student groups who actively purchase shirts for their members.
Awareness will be achieved through a combination of sponsorship of student
organization events as well as advertisements in magazines that specifically
target this demographic.
5.4
Milestones
Your
T-Shirt! has identified several milestones that are tangible and achievable.
The milestones will serve as goals that the organization must reach to be
successful. Please review the following section for details.
|
Milestones
|
|||||
|
Milestone
|
Start Date
|
End Date
|
Budget
|
Manager
|
Department
|
|
Store build-out
|
1/1/2003
|
2/15/2003
|
$0
|
David
|
Construction
|
|
Website completion
|
1/1/2003
|
2/28/2003
|
$0
|
David
|
Web Development
|
|
First quantity order
|
4/1/2003
|
4/15/2003
|
$0
|
David
|
Sales
|
|
$50K in sales
|
9/1/2003
|
9/15/2003
|
$0
|
David
|
Sales
|
|
Profitability
|
12/1/2003
|
12/31/2003
|
$0
|
David
|
Accounting
|
|
Totals
|
$0
|
||||
6.0
Web Plan Summary
Your T-Shirt! will have a website developed that is based on the
philosophy that the site must be user-friendly. Your T-Shirt!'s entire product
catalog will be available on the site for customers to place orders.
Because of the large volume of graphic image choices, it will be imperative
that the site is easy to navigate through all the different options.
The store will have a computer kiosk for customers to access the
graphics catalog. The customer can then place the order online or take the
information to an employee to place the order.
The initial cost of the website will be the
largest. Monthly maintenance costs will be marginal relative to the development
and design costs.
6.1 Website
Marketing Strategy
The website will be integral in Your T-Shirt!'s marketing effort as the
site is a key sales tool for both local and distant customers. The URL
address will always be used in promotional material, encouraging people to
check out the company, concept, and the products. In additional to inclusion in
the traditional marketing campaigns, Your T-Shirt! will submit their website to
a variety of search engines, significantly increasing the number
of inquiries from people searching out custom shirts.
6.2 Development
Requirement
A computer programmer/designer has been identified as a candidate to manage the design, implementation, and maintenance of the website. The majority of the tasks will be completed by him, a few tasks that are outside of his skill set will be subcontracted to his associates.
7.0
Management Summary
Your T-Shirt! has been founded and will be led
by David Inkler. David received his undergraduate degree in accounting/marketing
from Seattle University. Upon graduation David moved down to Corvallis, Oregon
and worked with Hewlett-Packard in their printer division. David spent three
years with HP as a product marketing specialist, providing marketing assistance
at a national level as well as being responsible for more grass roots, event
specific marketing.
Recognizing that he did not want to spend the
rest of his life working for someone else and recognizing that he did not have
a sufficient skill set to start his own company yet, David enrolled in the
University of Washington's MBA program. David did a cost benefit analysis and
determined that it would be wise to take on debt and forgo two years of wages
to be able to pursue his dream of opening his own business.
The completion of the MBA program forced David
to then make some significant decisions regarding what business he wanted to
start. While in college David had a few years of experience with
t-shirts making and selling tie-dyed shirts to friends and at various
music events. Within that niche, David quickly got a sense of what his
customers wanted in tie-dyed t-shirts. Making the tie-dyes
also gave David an outlet for his creativity.
When working for HP David became quite good
friends with several of the unit leaders. It was these relationships that
provided David with the opportunity to use cutting edge technology for his
t-shirts. HP had been working on sublimation technology for several years,
continually trying to increase the resolution quality. HP saw David's business
idea as an excellent marketing project to test the technology and the business
model. David and HP entered into an agreement where David would receive HP's
latest equipment and in return David would provide HP with a wealth of product
and marketing feedback. This appeared to be a win-win situation.
David's idea of developing a custom t-shirt printing business was a
marriage of his business skills, his previous t-shirt experience, the
leveraging of exclusive cutting-edge technology and his creativity. The more he
thought about it the more he was convinced that this idea would satisfy his
need for a challenging yet enjoyable job/business.
7.1
Personnel Plan
Your T-Shirt! will require the following personnel for
operations:
·
David -- Business
development, finance and high level accounting, customer service, shirt
printing
·
Printer -- Shirt
printing
·
In-store retail
employee -- Help customers with placing or existing orders
·
Bookkeeper -- Accounts
receivable and payable
·
Independent
contractor -- Graphic artist
|
Personnel Plan
|
|||
|
Year 1
|
Year 2
|
Year 3
|
|
|
David
|
$22,000
|
$26,000
|
$30,000
|
|
In-store employee
|
$13,000
|
$13,000
|
$13,000
|
|
In-store employee
|
$7,200
|
$11,000
|
$11,000
|
|
Printer
|
$16,200
|
$21,000
|
$21,000
|
|
Bookkeeper
|
$10,000
|
$12,000
|
$12,000
|
|
Total People
|
5
|
5
|
5
|
|
Total Payroll
|
$68,400
|
$83,000
|
$87,000
|
8.0
Financial Plan
The
following sections outline important financial information.
8.1
Important Assumption
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
|
8.2 Break-even Analysis
The Break-even Analysis indicates what will be needed in monthly revenue
to reach the break-even point
8.3 Projected Profit and Loss
The following table presents projected profit and loss.
8.4 Projected Cash Flow
The following chart and table display projected cash flow.
8.5 Projected Balance Sheet
The following table shows the projected balance sheet.
8.6 Business Ratios
The following table
displays many business ratios specific to Your T-Shirt! as well as industry
ratios. Our SIC industry class is currently T-shirts, custom printed -
5699.0406. The following ratios are in variance to the industry ratios, please
review the following explanations detailing the nature of the variance:
