1. Introduction
The business in which I have decided to invest in the future is the “Bags, luxury costumes and the formal wear rental” in India. It is the business which is so far not been practiced and initiated at a commercial scale. So there is an opportunity for me to exploit the market and be a pioneer in this field.
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The idea for this business comes to mind because of the large demographic and population in India. In India most of the youth consider fashion as a religion and youth accounts 30% of the total population (Population council, 2007). Moreover with the growth of the retail sector and with a contribution in 10% GDP, it is been predicted that rental clothing sector will play a significant role in the growth of a country economy (Research and Market, 2010).
2. Business descriptions
My business will basically involve giving luxury bags, luxury cloths such as tuxedos, bridal wear, suits, gown and cloths for new parents on rent. In my business, I will basically buy luxury cloths from different brands. Which are known worldwide for their quality and durability. I will be buying cloths and bags from Versace, Louis Vuitton, DKNY, Dolce and Gabbana. The choice for the cloths will depend upon the current fashion trend and on a demand of a customer. These cloths will be given on rent but at a same time will be sold out to customers to minimize the expenses of depreciation cost, as the fashion trend continues on changing and demand for that garment will decline.
Giving cloths on rent is not a new thing, it is been widely practiced from decades in the European countries. For example celebrities mostly hire dresses for the social occasion. Now common people have also started to take cloths on rent, this helps them to switch from the changing fashion trend without doing any monetary promise of buying. This helps them to cut down the expenses.
2.1 Business operation
I will be going to operate my business from my native place Faridabad, Haryana, India. As there is no one indulge in this kind of a business so far. The location for my business is best suited to start up cloth rental services, as my town is on the periphery of the three metropolitan cities. This will help me in providing services better and faster. The store will be on lease from where I will be operating my business. It will be located on a fashion street with various other outlets catering the local population of 1477000 (Haryana online). This will help the customers to view the range of luxury cloths and bags offered by me, while doing window shopping Hire it out will be open 7 days a week from 9AM to 8PM. At the time of festivals the working hours will be increased. “Hire it out” will be giving free membership to the customers, and will be charging 1000 rupees for a dress or a bag for a single day hire. Customers with membership will be given discount, just to create trust and to create a brand loyalty in then. New Customers can walk in a store and choose the dress of there like, which will be altered as per their needs. Whereas regular customers can choose a dress from the catalogue, which will be send every month to them via mail. Dresses and bags will be delivered at the customer’s residence prior a day of an event, without charging for the service.
Business plan in the initial phase will be to target the local population, but in future will open more branches in different locations. Once the business builds brand and secure its image.
2.2 Ownership
Hire it out, will be a venture between myself and my mother. We will be having equal shares in the company.
2.3 Key assets of my business
The key asset of my business is my co-owner; she has done masters in fashion designing and has an experience of 23 years. Her experience and presence in the fashion industry will help our business in creating a huge customer base.
2.4 Goals
Hire it out has a certain goals, which we want to achieve in the coming years. Which are as follows:
Creating awareness about our services.
Creating a huge customer base.
To start generating profit and start expanding business from local community to national community.
Introduction of new clothing line and bags with generation of profit.
But the prime aim of my business will be to create a brand image, which should be synonymous to the quality.
3. Unique selling proposition of my product and service
The unique selling proposition of my product will be the faster, cheaper and better services with no additional cost or fine for delaying in delivery of rented cloths by customers. Moreover giving cloths and bags on rent will help in cut down carbon dioxide emission in atmosphere, which will reduce the pollution and will maintain the ecological balance (Times online,2009), which is required in the current time of global warning. This itself will be a motivating factor for consumers to opt for a cloths on rent to wear for a single occasion, instead of buying. Furthermore, there is another USP of my products that the cloths can be altered and tailored as per the specific need and taste of a customer. In addition to this we will be maintain the secrecy of our customers, as no one wants to let other people know that they hire cloths on rent
3.1 Future products
As soon as the business will start generating profit, “Hire it out” will start giving jewellery, shoes and authentic luxury watches on rent.
4. Target Customers
My business will not target a particular segment. I will be targeting the whole local population comprising 55% men and 45% women in Faridabad (Census of India, 2001). My product services will be available to men, women and to the youth. As we all know, fashion is not bounded by a particular gender. Faridabad is an urban city with five multinational companies and fourteen colleges (www.Faridabad-online.com). So I will be emphasizing more on the youth and the executives working in these multinational companies, as they will be the one who will be hiring luxury cloths frequently.
Youth: there are 14 colleges in a city, so in colleges there will be number of parties like proms, orientation, freshers and debutant balls for which boys and girls would require formal wear cloths. This will make them approach us to get cloths hire on rent, as it would be expensive for them to buy clothes for each occasion. As they will be having limited resources. Moreover youngsters have belief not to repeat a dress, as it symbolizes status and fashion sense.
Executives working in multinational enterprises: every second day there is a conference, summit or an organizations formal annual dinner for this executives would hire cloths from us, as they will not be able to buy a new piece of luxury dress every second day.
Brides: brides will be hiring from us expensive and luxury gowns for a marriage. As these gowns are to wear once in a lifetime. So they will not prefer to spend so much on a dress, instead they will hire it for a day.
Homely women: this segment will be the majority one coming to hire luxury cloths and bags from us on rent. As there are social occasions like get together, charity events and public functions in which mostly homely women participate.
Travelers: though in this segment, we will not be having many clients, but still each and every customer matters a lot in a business. So I will be providing services to travelers, who are on a short visit to a new country and who do not want to carry an excess baggage with them. Our services will deliver them luxury cloths and bags at their living place for example hotel, prior to their date of arrival. For this they need to choose dresses online and need to pay for the shipping cost.
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4.1 Customers perspectives
“Hire it out” prepared a questionnaire, which was distributed among Indian students studying in Bangor University and it was also mailed to friends working back in India. Questionnaire was send to 40 people out of which 32 people replied. It was seen that youth accounts more, who will be hiring cloths on rent and second in list was homely women.
4.2 Competitor’s analysis
Luxury rental clothing industry is a competitive industry. But “Hire it out” will be having no direct competition with any of its competitors. As all the competitors are running their business from the remote area, that to with no variety and exclusivity of luxury cloths (Times of India, 2009). So far “Hire it out” has identified three of its competitors which are big bazaar, DCM garments and exotique garments (Sinha, 2009). The disadvantage of all these operators are that they are charging for the membership and for the home delivery services (PRlog, 2009), which “Hire it out” will not be charging from its customers. Moreover these operators do not dry-clean every time, after they are being use by a customers. For the dry clean of a cloth they charge extra from the customers and at the same time do not maintain the secrecy of the customers, which “Hire it out” maintains. So overall “Hire it out” has a differential advantage over its customers through Hire it out is following a no frill strategy.
5. Implementation and strategy
5.1 Philosophy
My business strategy will be to add on my knowledge, personal experience and a blend of marketing skills to cater customers’ needs. So that we can be a pioneer in this competitive industry and create a brand name. Which can be synonymous to luxury clothing industry.
5.2 Marketing strategy
At the present time, marketing is an important tool. It is not only about creating a brand image but also about creating a relationship with customers. My marketing strategy will comprise of both these factors. I will be putting banners, logos and slogans of “Hire it out” throughout the town to create awareness and to make population know that we are the trend setters in this field.
To build relationship with customers, I will be giving out discount coupons as a reward. If the current customers refers a new customers to the business. In addition to this I will be sending customers a feedback form, so that I can know about the experience, expectations and changes they would like to bring in business.
In the initial phase of the marketing, I will be focusing more on the local community as the business needs to be established. For this I will depend upon the local print like local newspaper, pamphlets and local television channels. I will also be using direct mailing method and will send mails to local population with discount coupons.
In the advance stage of my business, when business starts generating profit then only I will bring in the use of internet for advertising of my business. As it is very expensive to buy a domain and to hire a web designer to create a site.
5.3 Management style
As myself and my mother are the co-owners of the business. We will be looking after the daily operations and will be buying luxury cloths and bags. We will be hiring three people out of which two will be for the sales and front office work. Last one for the tailoring services
5.4 Leadership: as I will be having a degree in marketing I will be looking after the customer relationship, delivery of cloths and maintaing the financial records. Whereas my co-owner will be looking after the inventory, day to day operations and supervision of staff
5.5 Staff: we will be hiring three employees out of which two will be the part time employees and one will be the permanent. Part time employees will be indulging in sales and front office work. Where as permanent employee will be doing a tailoring work. This measure is done to cut down the expenses and diversify those assets on some other things.
6. Financial implication
Hire it out will require an Rs 35 lakhs ruppes to start up the business. Out of which Rs 10 lakhs will be my own capital and rest will be on loan. For the loan either I will go to the private equity firm or to the SIDBI (Small industries development bank of India) both of these enterprises promote young entrepreneur and provides loans if the idea for the business is feasible and profitable. The advantage of approaching SIDBI is that they gives you payment for the bills (bill discontinuity facility), which no other bank or private equity firms give. In addition to this, SIDBI provides more facilities like finance for the capital expenditure and working capital (The economic times, 2007).
6.1 Use of funds
Funds will be diversify for the reconstruction of the shop and for buying things like luxury cloths, bags, computer systems. Most importantly some part of the funds will also be used for buying the inventory control system and for paying maintaince of employees and their salaries.
6.2 Break even analysis
I am doing this break even analysis on a yearly basis. In this I will be including, interest for the loan, depreciation cost for the dresses and the machine. I will be taking interest rate and premium rate as per the ongoing rate in India. Fixed expenses are the predicted values.
Hire it out has a total budget of Rupees 35 lakhs to setup a business, out of which Rs 10 lakhs will the personal capital employed and Rs 25 lakhs will be on the loan. Loan is taken at a @8% per annum and depreciation cost is @20%per annum. Rent for showroom is Rs 5000 per month, salary to staff is Rs 20000 per month and electricity and water charge be Rs 2000 per month.
As shop is taken on a lease, to reduce the fixed asset expenses and out of five people employed in the business, two are family people. Who has equal share in business, they can cut down on the salaries and on administration charges to generate profit. Hire it out assumes that they will start generating profit by the end of year.
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