Expanding Your Business

Student’s Name
Instructor’s Name
Course Details
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A Small Retail Clothing Shop
In the 21st century, many people pay a lot of attention to their image. Products aimed at improving the image of people get highly sought after in contemporary times. Starting a business that deals with image improvement products such as makeups, apparels, and ornaments is a worthwhile endeavor today worth all the time and resources one can get. Having identified the niche of investment, going for a small retail clothing shop for a start would provide one with an avenue to tap into the billion dollar industry. Sound financial decisions need a thorough evaluation before getting started. A financial plan, a marketing strategy, and a business location would help one decide if an intended business can survive the competition. Also, there are plans to expand the business in future if the first try turns out as expected.
Financial Plan
Financial plans exist to aid in the analysis of the starting cost, running cost, and profits after starting a business. There are three steps to an economic idea that is the planning phase, operating phase, and profit phase.
The start-up budget for a small retail store that stocks highly sought after fashion items would require an input of roughly $500,000. The estimated startup include single off expenses, monthly charges, goodwill value of the shop, and the stock. A breakdown of the startup expenses is as shown below.
Start-up Budget
Monthly Expenses Projected Monthly Expenses
Salary
Lease
Marketing
Maintenance
Permits
Electricity
Shop Upholstery
Goodwill
Insurance
Stock 10000
2500
500
300
1000
500
50000
130000
1700
300000
Total 496500
Out of the $496500, some amounts are one-off costs.

Shop upholstery and good will do not take place each month. For insurance, permits, and maintenance, they will have to go into the yearly expenses. After taking off the one-time costs, the business will have to sustain itself through sales.
The business targets those people with a taste for fashion, and they do not have qualms about spending. Profits made such high-end target clients are in the 40-60 percent of the product purchase price. With the amount of benefit targeted, an assumption exists that the business will have to generate profits that are half its stock at any time of the year. If for example, the firm manages to sell only 25% of the stock that translates to $75000 worth of stock. When the profits get factored in, the $75000 sales get multiplied by 40% to obtain the net sales for that period. Forty percent is the lease expected return on investment that a business dealing in clothes can get. The yield on investment of 25% of the stock would translate to 100000 worth of sales, which is 30000 in profits. The net profit gets calculated after subtracting all the monthly expenses. In this case, they are salary, lease, marketing, and electricity. Net profit for each month when the shop is operating at its minimal capacity is 16500.
The business would break even the time all the starting capital gets recovered. Considering that there are costs that are yearly, the profits of one month in a year would go into settling the expenses. For each year, only the earnings of eleven months will go into savings. In thirty-three months, the business would have generated all the monies that went into its establishment. If the one-month profits that go into settling yearly costs get out of the question; the business breaks even at thirty-one months from the day of commencing operations. It is after breaking even that enterprises get expanded further. However, some entrepreneurs can do as they wish if achieving profitability is not what they desire.
Guerrilla Marketing Strategies for the Clothing Business
Guerilla marketing strategy entails the use of the most unconventional methods to attract and keep customers. However, for this business nothing strange takes place but an implementation of the proven guerilla strategies. Some of the commonly used approaches are giving away products, aggressive follow-up; get a celebrity to endorse the store, use of social media, and coupons (Hutter, Katharina and Stefan 39).
Product giveaways help in the marketing of an establishment. Getting, shirts, bags, caps, and pens branded in the name of the business as gifts would solidify the presence of the company in people (Hutter, Katharina and Stefan 41). Many people love tips no matter how cheap they may seem. For every customer that will visit the shop, there will be a gift. It does not matter whether they buy an item or not, even those who do window shopping will get branded pens. Giving things to anyone who visits the shop creates a difference in the already saturated market. A shopper will always give priority to a shop they have visited in the past.
Aggressive follow up goes into addressing any complains that a buyer may have or any opinion raised by a customer. Since the business does not manufacture the products it sells, there may exist manufacturing defects. Expedited resolving of issues puts a company ahead of the rest (Hutter, Katharina and Stefan 41).
Celebrity endorsement is not a new strategy in marketing, even established brands use celebrities to advertise their products (Hutter, Katharina and Stefan 44). A personality will get recorded entering the store where he proceeds to make a purchase. When getting out of the store, just right at the entry the celebrity will stop and look back and the hanging banner of the business name while as he counterchecks with the branding of the package he carries. The video would go into the next step of guerrilla marketing.
Millions of people spend at least ten minutes of their time on social media. Anyone keen on generating a large following and a customer base would not ignore social media. A three-minute video posted on social media can translate into thousands of sales (Hutter, Katharina and Stefan 47). The right video to get published is that of the celebrity discussed in the previous paragraph. People crave for attention and a sense of belonging. Even if there is nothing special about a place, just because a celebrity was pictured there will put the site on the map.
Coupons are a great way to maintain customers as well as making many sales. A person will come to a store with a ticket, but they will end up spending more on other products after getting done with the coupon (Hutter, Katharina and Stefan 50). A weekly give away of cards assures a business of sales each week. In business, tickets are baits used to lure potential customers to a store.
Using all of the above techniques will assure business continuity in the face of stiff competition. Some methods may be too expensive, but they are worth a try; for example, the celebrity marketing gimmick. Location for a Second Store
Uncertainties that come with starting a business are not different with those of opening a second store. Unknown to many would be entrepreneurs, is that the presence of a new store creates curiosity hence attracting customers. For a small clothing shop, it is best to find a busy place for the second store. New York City comes to mind the moment one thinks of busy streets and human traffic in the USA. New York City is among the densely populated cities of United States of America.
The 5th Avenue is an ideal location for the second store. Many shops on 5th Avenue engage in the clothing business. Many New Yorkers flock to 5th Avenue when they are in search of clothing. In addition to being the ideal place, the 5th Avenue has many established stores that one is likely to tap into their overflowing customers. Visitors to New York are expected to pass through 5th Avenues while touring New York. The 5th Avenue is a place where buyers find the seller and not the other way around.
With an already running store, it would be so easy to secure financing for the second store. The first shop would act as collateral in obtaining a bank loan. Financial institutions would gladly grant credit for the second store after perusing the financial reports of the first store (Berger, Allen and Gregory 300). Financial statements of the current store together with projections for the next year would get presented to several banks. It is not a guarantee that a walk to any bank will result in debt financing. Some banks do not give loans of a debt funding nature. Also, several financial institutions advance debt funding loans to customers.

Works Cited
Berger, Allen N., and Gregory F. Udell. “Small business and debt finance.” Handbook of entrepreneurship research. Springer, Boston, MA, 2003. 299-328.
Hutter, Katharina, and Stefan Hoffmann. “Guerrilla marketing: The nature of the concept and propositions for further research.” Asian Journal of Marketing 5.2 (2011): 39-54.