Background
The aggregate population of the country has enormously grown at a pretty rapid pace as a result of the continued childbirths and women’s expectancy. With these enormous statistics, it is presumable that the demand for post- and pre-natal items, infant clothing, such infant basics as baby cribs, and maternity apparel has immensely increased, creating opportunities for innovative Companies like Mummy and Infant Wear. Consequently, because of these high-demands, Mummy and Infant Ware are oriented to provide the maternity market with high quality and affordable maternity clothes for both expecting women and infants. This study will give an overview of the Company’s three-year financial forecasts plan by evaluating market variables likely to affect the general financial projections.
Pro forma Development
For the pro forma financial projection, Mummy and Infant Wear Company will anticipate a continually expanding potential market, along with the expansion of the institution and current trends. The financial market make the assumption that gross margins are normal in the industry and thus consider the maternity clothing business to be in a rather stable state in terms of technology and trends.
Financing
As projected in the spreadsheet.
The start-up expenses include an estimated $3,330 consisting of several items:
- Legal expenses for obtaining licenses and permits as well as the accounting services totaling $100.
- Insurance (general liability, workers’ compensation and property casualty) coverage at a total premium of $1,500.
- Premises Renting and Motor vehicle Leasing at a total of $700.
- Other start-up expenses including website ($700)
- Phone and utility deposits totaling to $30
- Marketing promotion Services at $450
The required start-up assets of $ 4060 include:
- Shelves and Racks $450
- Display Cases $450
- Mirrors $130
- Tailoring Machines $780
- Fabrics $1000
- Cash Register $780
- Store Investors $670
- Office Equipment and Furniture $500
Finance Source Assumptions
The company’s funding would come from the company’s owners, investors, and bank loans. The owners would made contributions of $4,000 and $2,000, respectively. All other investors would make a contribution of $1,440, bringing the total amount of money invested to $7,140. All of the remaining $1000, which is required to pay the start-up fees and assets, would come from two bank loans: a one-year loan in the amount of $700 and a long-term loan in the amount of 500, both for a total of five years. The overall start-up is thus considered to be $8,440 in this case.
Revenue Estimates
The Company intends to have a total of 10 brands in the long-run which includes; good maternity clothing for expectant women, infant clothes, beddings, shoes, branded t-shirts, and winter clothes among others. Each brand item is expected to be sold at a price of $13 and would be sold wholesomely as a package and every sale is thus projected at $130. This would in return give the company a good return over the years. For the first year there not much to be accrued as the company will be getting introduction in the market. The total projected revenue across the four quarters are projected in spreadsheet. In the first quarter, the company will expect little sales of around two full brands. In the third quarter of the first year, the company will not expect many sales. However, in the last quarter, the Company makes a lot of profit due to both availability of the wares and the awareness of the brands.
Cost Projects and Margin
In the Cost-Revenue theory, cost variables are majorly divided into two enormous domains; Direct or Fixed Cost, the direct costs are as a result of wages or salaries to the company employees, Materials and supplies that are majorly budgeted for, lease and rents of premises, and Utilities such as electricity bills, water bills among others, these resulted in Q1 to Q12 of $254, $259, $259, $274, $270, $281, $303, $281, $300, $304, and $502 respectively.
For Variable costs, the Company would pay for advertisement, insurances, selling expenses, Equipment fixing expenses, and other production related expenses. The total variable costs were $591, $939, and $949 for the three years respectively. As a result, the total operating expenses increased from Q1 with $549 as compared to Q12 with $1383. The average gross margin percentage over the years is 70.9%, derived from dividing the sum of the entire quarterly gross margin by twelve. From the above figures, the net income indicated a gradual increase from $11 in quarter one to $1077.
Market Segmentation
A small section of the infant wear business is served by the Mummyinfant website. According to Plante (2018), the maternity wear industry in the U.S. is predicted to reach $24.5 billion by 2025, which signposts an prospect for non-specialist stores to claim a stake in this classification. Moreover, the industry constitutes more than two thousand retail establishments and more than five hundred websites that provide maternity apparel (Plante, 2018). The maternity retail industry has gone a long way from supplying dowdy, baggy-style maternity garments to allowing women to express their individuality while still looking wonderful as their bodies change during pregnancy.
First Year
Maternity wear customers normally choose their apparel selections depending on their unique preferences. They often look for products that remind them of their pre-pregnancy apparel so that they may maintain their style while expecting a child. During the first year of the firm market intrusion, the firm believes that pregnant women often relate with products as personal their feelings, which is a great way to increase sales. The Company’s products are unique to make customers satisfied.
Second Year
The sales prediction for the second year accounts for lower sales in the first year while the firm raises knowledge of the firm’s product and website and slower sales in the second year. The Company will increase sales during this fiscal year by customizing all the produced women and infant clothes with the logos of up to thirty-two other children’s online games institutions. In addition, the market for college maternity apparel, such as sundresses, children’s hoodies and long-sleeved tee shirts, will be explored as the firm expands. During the first three months of this year, the Company will improve sales on eBay with tremendous expected expansions underway.
Third Year
The sales approach in the third year will be based on providing excellent customer service. All personnel will get training in providing excellent customer service. A fundamental principle is that all customers should get as much individual attention as possible. No client should leave the business disappointed, even if they do not buy anything. Employees will be trained on dealing with any form of issue that may develop in the workplace. Any member of the team may resolve the majority of issues. If anything happens that the employee cannot resolve, they will notify the management of the situation.
The overall result of this technique is that clients are welcomed immediately upon entering the business and that their requirements are handled in a discreet but friendly manner. Lastly, Mummy and Infant Wear will capitalize on their competitive advantage by offering a wide range of products for children and women to expand their market share. This Company, being the first major Company to base its operations on expectant mothers and infants, its break-even period can be after a very short time.
Reference
Plante, S.G. (2018). Dressing for two: The prudish, sexy, shaming, expensive history of maternity clothes. Web.