Business Plan of Leather Products

Business Plan For Leather Products

Assignment Of Entrepreneurship

SUBMITTED TO: Sir Sajjad Mohsin SUBMITTED BY: Zohra Tanveer Mi10MBA017

Business Plan For Leather Products

BUSINESS PLAN FOR LEATHER PRODUCTS Executive Summary History of leather Introduction Company information  Business Ownership  Mission Marketing mix Operations management     

Equipment Product Design Location Supply Chain Management Distribution Chain

Financial Projections  Profit & Loss Account  Balance Sheet

Business Plan For Leather Products

BUSINESS PLAN OF LEATHER PRODUCTS History Of Leather: The second largest industry in regard to exports is the Leather Industry. Contributing more than $800 million in 2009 to the foreign exchange in Pakistan. This industry has the potential of delivering more and providing a large number of jobs by diversifying product range and improving quality. The leather industry in Pakistan is as old as the history of the country. During the colonial era just a few number of tanneries were working in large cities such as Karachi, Lahore, and New Delhi etc. In the 1950s the number of well-equipped tanneries increased in Karachi, Lahore and other major industrial cities. Leather industry’s core products in Pakistan are;    

leather garments gloves tanned leather footwear

In the 50s and 60s most of the tanned leather was exported in raw form but soon after the local tanning industry making semi-finished leather made rapid progress in making finished products due to availability of raw material, labor and growing demand in the foreign market. Pakistan Leather Industry has the production capacity of more than 100 million square meters and against the production capacity it is producing only 60 million square meters. More than 450 units of leather garment manufacturers in Pakistan are producing approximately 5 million pieces against the production capacity of exceeding 7.5 million pieces.

Business Plan For Leather Products The industry has been facing some challenges which have been slowing down the production process.  Energy crisis  Environmental challenges  Lack of proper training

Introduction Of Business: The business which I want to start is of leather products namely leather jackets & gloves. Use of leather goods is increasing day by day. Now-a-days fancy leather goods are being used by the people of even remotest area of our country, because lifestyle has been changing very fast. Fancy leather products are durable and beautiful to look at in comparison to other similar products.

Market Potential: With the development in tanning technology, good quality leathers are coming to market. Leather products have very high demand in domestic and foreign market. The demand for leather products like hand bags, wallets, purses & belts etc. is increasing gradually. It brings maximum unit value realization as compared to other leather products. The main foreign markets for leather products are Europe, Canada, Japan and USA. There is good scope for expansion of the industry.

Target Market:  Labors  Young boys & girls  Children  Working class

NAME OF BUSINESS: The name of my business is “JILANI LEATHER FIELDS” which is indulged in the business of manufacturing leather jackets & gloves.

Business Plan For Leather Products

Mission: “To become the premier manufacturing organization in the leather industry, gaining market competitiveness and diversifying into value added leather with clean, well maintained and friendly environment”.

Objectives:  Our aim is to maximize business without compromising on quality.  We are committed to meet the changing demands of an evolving organization.  We aspire to improve quality norms and enhance our product range. Raw Materials:      

Leather Silk Cloth for lining Adhesives Solution, spirit, buckles, buttons etc. Satin Andlis

Business ownership The name of business owner is Mr.Tanveer Aslam Jilani. There are three type of structures from which business can be started, which are as follow;  Sole proprietorship  Partnership  Joint stock company

Business Plan For Leather Products But for starting Jilani Leather Fields I will prefer sole proprietorship because sole proprietorship is one of the least expensive business structures to begin. There are some other factors for choosing this structure which are; a) Limited capital requirements b) Full control c) Full training d) Better knowledge of the market e) Simple accounting records

Total Capital Requirement: The total capital requirement including fixed capital and working capital is estimated at Rs: 10 lac. Product Information: Two types of leather products are offered; 1. Leather jackets 2. Leather gloves  Working gloves  Wielding gloves

SIZE PRICE 9.5 -10 inches Rs:75 each pair 14-16 inches Rs:180 each pair

These are available in 3 different sizes in jackets;  Small  Medium  Large Prices of jackets ranging from Rs: 3000-12000

Business Plan For Leather Products MARKET ANALYSIS The Market Analysis section of a business plan shows the entrepreneur’s knowledge and expertise about the particular business being started (or currently running.) This segment should have a full description of the business’s history, growth, and trends. It must include a complete description of the needs, size, and unique characteristics of the potential customers, clients, or patients. It should also assess whether those needs are currently being met. If not, it must explain how your business will meet them, including a projected estimated market share to be acquired. In addition, this portion should reflect the geographic location of your target market, pricing and gross margin levels, and possible trends and/or changes that may impact all the above. Market Trends Market trends are the upward or downward movement of a market, during a period of time. The market size is more difficult to estimate if one is starting with something completely new. In this case, you will have to derive the figures from the number of potential customers, or customer segments. Market potential of leather products is considerably high in Pakistan as well as in foreign also. Target Market  Local market 

Labor



Working class



Youth



Children

 Foreign market

Business Plan For Leather Products Competitive Analysis Competitor analysis in marketing and strategic management is an assessment of the strengths and weaknesses of current and potential competitors. This analysis provides both an offensive and defensive strategic context to identify opportunities and threats. The market for leather products is highly competitive. Competitors are very strong in this business. To give them tough competition I will adopt following strategies.  Cost-cut strategy  Price skimming strategy  Penetration strategy  Positioning strategy  Segmentation strategy

MARKETING MIX: The marketing mix and the 4 Ps of marketing are often used as synonyms for each other. In fact, they are not necessarily the same thing. "Marketing mix" is a general phrase used to describe the different kinds of choices organizations have to make in the whole process of bringing a product or service to market. The 4 Ps is one way – probably the best-known way – of defining the marketing mix, and was first expressed in 1960 by E J McCarthy. The 4Ps are:    

Product (or Service) Place Price Promotion

Business Plan For Leather Products Products Or Services Product or service must meet customer requirements whatever these might be. For example, an important aspect is function - products should do what they say they can do and what they are expected to do. My company is offering leather jackets & gloves. Two types of leather products are offered; 1. Leather jackets 2. Leather gloves

Place Roughly one fifth of the cost of a product is spent getting it to consumers. Of course, the actual figure varies widely from product to product but generally distribution is a very important element in the marketing mix. Different organizations use different approaches to reaching their customers. I will distribute my products to different local retailer’s local brands who then sell these products in foreign markets. Promotion It is the process of communicating with customers? For marketing purposes, communication of products and services contributes to the persuasion process to encourage consumers to avail themselves of whatever is on offer. The key processes involved in promotion, include:      

branding - creating a distinctive image and character to an organization/and or its products and services advertising - to inform and persuade the public packaging - presenting the product in a desirable and appropriate way public relations activities and other forms of publicity sponsorship Special promotions - e.g. buy one get one free.

Business Plan For Leather Products 

Direct selling

Objectives Of Promotion However, there are three basic objectives of promotion. These are as follows: o To present information to consumers as well as others. o To increase demand. o To differentiate a product. Following marketing technique is used for my business.

Direct Selling For the promotion of my businesses I will use direct selling. Direct selling is a type of sales channel where products are marketed directly to customers, wholesalers and retailers eliminating the need for middlemen. I will conduct Direct selling in one-on-one, in a group or party format, or online.

Developing A Promotional Strategy The promotional strategy for Jilani Leather Fields is based on following factors;  Segmentation Dividing the marketing into distinct groups? There are 3 segment of market if we consider customers .i.e.  Children  Young  Old But when we consider then as professionals there are two classes:  Working class  Labor class

Business Plan For Leather Products  I will use following market research methods to identify target customer for Jilani Leather Field;    

Sales analysis and buying patterns Questionnaires Focus groups Face-to-face interviews

 I will use above mentioned methods to know the;      

Potential customers Consumption habits of customers Disposable income Buying habits Expectations & expirations Priorities

 Targeting Deciding which of these groups to communicate with, and how to talk to them? Jilani Leather Field is targeting young people and children’s for jackets and gloves for labor class.  Positioning For giving my competitors tough competition I will go for following positioning strategies;  Branding and messaging  Corporate identity Price Price needs to be relevant to the product/service and the market. A manufacturer should seek to provide to its customers with products at affordable prices. A firm's pricing decision is often aimed at attracting a particular market segment. The prices for my products are following;

Business Plan For Leather Products

 Working gloves  Wielding gloves

SIZE PRICE 9.5 -10 inches Rs:75 each pair 14-16 inches Rs:180 each pair

These are available in 3 different sizes in jackets;  Small  Medium  Large Prices of jackets ranging from Rs: 3000-12000

Pricing Strategies Pricing strategy is an important part of the marketing mix. The price of a product should reflect its image and the need to give a consumer what they want. I will use following pricing strategies for selling my products.    

Cost-Plus Pricing. Hour-Based Pricing Penetration Pricing Skimming

PRICING FACTORS: Pricing factors are;     

manufacturing cost, market place, competition, market condition Quality of product.

Business Plan For Leather Products OPERATIONS MANAGEMENT: Operations management is an area of management concerned with overseeing, designing, and controlling the process of production and redesigning business operations in the production of goods or services. It involves the responsibility of ensuring that business operations are efficient in terms of using as few resources as needed, and effective in terms of meeting customer requirements. It is concerned with managing the process that converts inputs (in the forms of materials, labor, and energy) into outputs (in the form of goods and/or services). Manufacturing Process: The proposed items are manufactured by units in different methods. The main operations are pattern making, economical layout of patterns, clicking of components, and skiving decoration by embossing machine or hand, folding, coloring, assembling, stitching, fitting and finishing. Personnel hiring: I will hire people who can sew leather jackets & gloves. For hiring purposes, I will give add in newspaper and by printing banners? I will hire 25 people for my business with special sewing skill vested in them. Equipment/ machinery: 1. Flatbed Ind. Sewing machine Complete with motor 2.Cylinder bed sewing machine Complete with motor 3.Upper Leather skiving machine Complete with motor 4.Misc. tools & equipment’s

2 x Rs 7500/- Rs 15,000

1 x Rs 35,000/- Rs 35,000/1 x Rs 25,000/- Rs 25,000/L.S Rs 15,000/-

Business Plan For Leather Products

Distribution Channels: Jilani Leather Field will distribute its products to local retailers and local brands. After penetrating into the leather market we will also start selling direct to customers by eliminating the use of intermediary. Supply Chain Management Supply chain is the sequence of organizations facilities, functions and activities that are involved in producing and delivering a product and service. It also refers to movement of materials and information within a facility and outgoing shipment of goods and materials in supply chain.  Need for supply chain management  Improve operations  Increasing levels of outsourcing  Increasing transportation cost  Competitive pressures  Manage inventories  Benefits of supply chain  Lower inventories  Higher productivity  Greater agility  Shorter lead times  Higher profits The main supply chain members of Jilani leather field are HMB & PRIME INDUSTRIES, from whom it purchases leather as a raw material.

Business Plan For Leather Products Product Design: Product design is one of the crucial stages in Operations Management. The design of a product or a service is one of the most important steps. This will definitely affect the earnings from the product. The basic limiting characteristics of the production system design are set during the product design phase. In designing the product, or the item to be processed in non manufacturing systems, the product designer specifies materials, tolerances, basic configurations, methods of joining parts and the like, and through these specifications sets the minimum possible production cost.  First of all process begins with purchasing rough or unfinished leather.  This leather is put into a boiler of wood containing high quantity of concentrated chemicals to convert it into soft material for 3-4 hours.  Then the leather is dried and pressed, after that cutting is performed of different designs.

Raw Materials:      

Leather Silk Cloth for lining Adhesives Solution, spirit, buckles, buttons etc. Satin Andlis

Proposed Capacity My business capacity is greatly dependent on the market size and the number of potential client or no: of orders one can attract/get. Leather products will be designed and stitched by the tailors. On average, my business having variety of design made by our tailors and we also prepare orders according to customers demand and requirements. The expected number of orders we receive will be 2-3 orders. Each order consisted of;  Gloves 350  Jackets 150

Business Plan For Leather Products Location Of Production Facilities The production activity should be located where a firm can be most productive and yield the highest revenues per unit of investment.

A Highly Productive Business Unit: 

Is one that is near to the market, so that the demand for units of output is high relative to costs of making that input?



Is one that is close to a skilled labor force? The easier it is for the firm to attract labor with appropriate skills the more likely it is to produce high value outputs and low costs per unit of output.



One that locates close to high value raw materials. The further materials have to travel the lower the productivity of the plant will be.

For Jilani Leather Fields the location which i will prefer is Defence Road Sialkot. I am choosing this location because of many factors;  Electricity rates in that area are cheaper  Industrial area

Business Plan For Leather Products FINANCIAL PLAN: Financial planning is the task of determining how a business will afford to achieve its strategic goals and objectives. Usually, a company creates a Financial Plan immediately after the vision and objectives have been set. It describes about the activities, resources, equipment and materials that are needed to achieve these objectives, as well as the timeframes involved. Basically, the financial plan section of the business plan consists of three financial statements, the income statement, the cash flow projection and the balance sheet and a brief explanation/analysis of these three statements

The expenses which I incurred before opening of the shop are:1. Initial investment     

Machines &equipment’s= 90,000 Furniture= 20,000 Storage cabinets & stools= 20,000 Cartons= 20,000 Stationary materials= 1,000

Salary of the employees:1. Full-time workers= 8,000 per month 2. Part-time workers=4,000 per mon Profit And Loss Analysis I have assumes the profits and losses which will be incurred by me in the running course of business. I have estimated the profits and losses for these years.

Business Plan For Leather Products Profit & loss account: Sales C.G.S Gross margin Expenses Depreciation Start-up-cost Workmen’s compensation Packing material Telephone Utilities Salaries Repairs operating expenses Profit before interest Tax expenses Interest expenses Net profit

Rs: 5,90,000 3,70,000 2,20,000 4,000 50,000 5,500 5,000 2,000 15,000 50,000 1,000 2,550 84,950 2,000 1,500 81,450

Balance sheet

CAPITAL & LIABILITIES Borrowings

63,550

ASSETS

Rs:

Furniture

20,000

Long term liability

2,50,000

Land & building

4,00,000

Total liability

3,00,000

Machines

90,000

Capital

9,00,000

Cash

2,00,000

Inventory

5 ,00,000

Preliminary expenses

60,000

Accumulated dep:

25,000

Total Assets

12,95,000

Net profit

81,450

Total Liabilities & Capital 12,95,000

Business Plan For Leather Products SWOT ANALYSIS

Strength  High quality leather is used as raw material  Fashionable and wearable Exclusive and unique print designs  Specialized product range  Efficient use of colors and lining material  Quick response to Changing consumer needs and demand  Having large variety of quality products in all sizes  Offers products at affordable prices

Weaknesses



Lower profit margins to compete with already existing leather businesses.



Limited capital for marketing.



Start-up establishment which will take time to implement systems and policies.

Opportunities  Raise brand profile/ customer awareness through advertising and connections to retailers & local brands  Increase product range  Explore and expand designs

Business Plan For Leather Products  Use innovative stitching methods  Incorporate sustainable elements into designs  Location advantage.

Threats  Time required penetrating market of established clothes boutique  Competition from other leaders in market  Market saturation  Economic recession