Our biggest savings of the year
Liquid Culture
Executive Summary
Opportunity
Problem
Women enjoy the outdoors the same as men. They are able to hunt or hike or fish etc. Why should men have all the fun? Women do not enjoy having the clothes be ugly and corse and the tools be designed to utilize a man’s strength. Women are equal to men. They do not need to be exactly like men.
Solution
Liquid Culture will offer creative women’s outdoor clothing, online, that is both functional and beautiful. Larry Wilson and Maggie Granger, co-owners of Liquid Culture, will create a cost-effective operation that will eliminate the cost of inventory by having a third-party, Magic Clothing Company, handle all manufacturing and shipping of clothing to the customer. Liquid Culture will process the order and collect the payment online. The order will then be sent to Magic Clothing Company to be filled and shipped. Liquid Culture will focus on clothing design and marketing of its products.
Market
Women’s outdoor wear has grown into a billion dollar niche in the clothing industry. The popularity of the Internet has launched a number of online stores for women’s outdoor wear but no women’s outdoor company we know of is exclusively selling their products online. Yet.
The key is amplified word of mouth via social media, with emphasis on content and opinion leaders related to outdoor fashion and women’s health and women fitness sites.
Our messaging will focus on the eliminating the compromises others make and stepping up to the distinctive style of Liquid Culture. And of course social media will also be an important marketing tool in bringing customers to our website.
Competition
- The women’s offerings at major online outdoor offerings including REI, Columbia, Patagonia, LLBean, and others.
- Amazon.com and other major sellers of generalized clothing include outdoor clothing for women.
- We also have women-specific competition, especially titlenine.com.
Why Us?
Liquid Culture’s mission is to present consumers with designs, styling and clothes that energizes any outdoor activity. Whether it be snowboarding, running along the beach, or drifting down a river, Liquid Culture has comfortable, durable clothing that will look and feel wonderful.
Expectations
Forecast
Liquid Culture’s Year 1 line consists of the best fabric, designs and styling on the market. Larry Wilson and Maggie Granger, co-owners of Liquid Culture, have fifteen years of experience between them in the outdoor garment industry. Maggie has been a senior clothing designer for Manic Woman Clothing for the past seven years. Larry has been the website administrator for South Face the past eight years.
Our projections here indicate we are generating unrealistically high cash balances. We leave that here for now, but with the certainty that actual results will emerge using a lot more expenses than what we project here. We know it will happen. So we leave the existing estimates with a huge cushion for the realistic expenses later.
Financial Highlights by Year
Financing Needed
$460K funding includes $260K from $130K each from the two founders, plus a $200K loan.
We estimate $58.5K in startup expenses and $401.5K needed in cash reserves to support deficit spending for the first few months.
Opportunity
Problem & Solution
Problem Worth Solving
Women enjoy the outdoors the same as men. They are able to hunt or hike or fish etc. Why should men have all the fun? Women do not enjoy having the clothes be ugly and corse and the tools be designed to utilize a man’s strength. Women are equal to men. They do not need to be exactly like men.
Our Solution
Liquid Culture’s mission is to present consumers with designs, styling and clothes that energizes any outdoor activity. Whether it be snowboarding, running along the beach, or drifting down a river, Liquid Culture has comfortable, durable clothing that will look and feel wonderful.
Target Market
Market Size & Segments
Liquid Culture will be focusing on two distinct groups of women that purchase outdoor clothing:
- Women 17-25 years of age: Youth drives the market so this is the important group to attract to the website. They have less money than the older group so we must give them what they want for less. The key is to have inexpensive selections in each clothing group that have the popular cut. The company’s logo attractiveness to this group can not be stressed strongly enough. The initial small purchases will grow larger over time.
- Women 26-40 years of age: They are the core group that will drive Liquid Culture’s success. This target group is responsible for the growth of outdoor women’s wear. They will be harder to pull into the website. Once there, the key will be promoting the quality, attractiveness and savings. In addition, we will have to assure that the purchase will fit the way the customer wants it to. It will be crucial that the return policy is hassle-free and speedy.
Competition
Current Alternatives
- The women’s offerings at major online outdoor offerings including REI, Columbia, Patagonia, LLBean, and others.
- Amazon.com and other major sellers of generalized clothing include outdoor clothing for women.
- We also have women-specific competition, especially titlenine.com.
Our Advantages
Liquid Culture’s advantage is its focus on the process than on product. The website is just the endpoint of an entire marketing program to drive customers’ interest in Liquid Culture. Though we have confidence in the quality and attractiveness of our products, we know that building the road to the website is our most important job.
Larry Wilson’s experience with South Face is pivotal to the success of Liquid Culture’s website. South Face’s website averaged five million hits a year and is considered one of the most accessible and attractive websites in the clothing industry. His experience is invaluable in assuring customers’ satisfaction with the shopping experience online.
Larry will introduce a new clothing measurement feature that is fun to use and will reduce customers confusion on how the clothing will fit. This will increase customer satisfaction and reduce returns.
Maggie Granger will be in charge of the clothing design team. As senior clothing designer for Manic Woman Clothing, she watched the Manic Woman’s sales grow by 20% for the past five years. Her clothing designs have been praised in the industry and have spawned many imitators. With Liquid Culture, Maggie is ready to change how quality women’s outdoor clothing is sold.
Liquid Culture’s agreement with third party fulfillment is another strong competitive advantage. Our design team will work closely with the third party manufacturing facilities. The third parties will reduce our inventory needs and will produce sufficient product to meet the planned demand. This will keep production costs low for products and put a cap on Liquid Culture’s overhead.
Keys to Success
Keys to Success
Our keys to success are:
- Tying into the trend towards independent successful women. Standing for equality. Meaning something to women. Caring.
- Social media. Our persona has to be real. It has to match who we really are and what we really believe. People smell fake. We won’t be.
- Accessible website that is entertaining to surf. Like a trip to your favorite store where you always find something new that you want.
- Establishing a strong advertising campaign in a traditional media vehicle; i.e. magazines.
- Excellent vendor relationship that will facilitate quality manufacturing of Liquid Culture’s clothing and quick shipment of orders.
- Acquiring an excellent design staff.
Execution
Marketing & Sales
Marketing Plan
Liquid Culture’s marketing strategy is a simple one. Social media is the key, with amplified word of mouth, offering an attractive solution to a real problem that real women have. We see the need. Our social media will curate content related to women’s issues, women’s health, women’s activities, and of course we will take a stand on real issues in the real world related to equality in the workplace as well as on the trail and on the water. We’ll promote as well in women’s fitness websites like Self, Shape and Strive, Liquid Culture will introduce customers to their products and website. We will also advertise in CosmoGirl and Ellegirl websites.
And of course, amazon.com. We will use amazon.com to get the brand noticed and lead people to the website. Amazon can very much help branding.
For the first two months, Liquid Culture will offer 10% off for all purchases under $100 and 15% off all purchases over $100. We will offer the same discount strategy three more times during the year when new seasonal clothing is introduced.
Sales Plan
Liquid Culture will launch a $245,000 ad campaign targeted at our core customer groups, mainly in social media with a smattering of some web ads. The focus of the ads will be to "keep the money you give to the middleman" and use it to get outdoors and enjoy life. We estimate it will take most of the year to build our sales to the point where we begin to show a profit.
Liquid Culture will offer discounts at various times of the year to even out seasonality and build initial awareness of the website
Operations
Locations & Facilities
Company headquarters in Bend, OR. Website to be hosted on the Amazon cloud.
Bend is a rapidly growing community as outdoor-sports-oriented as they come, a center for skiing, mountain biking, backpacking, river running, running, and other outdoor sports.
Manufacturing will be farmed out to existing operations offering piece work, probably based locally during the initial phase and in Asia later on.
We will need a short delivery schedule to manage inventory effectively. Not getting clogged with unusable inventory is essential. We will have to build to have on hand only the top selling products, and allow a short delivery schedule on all others.
Milestones & Metrics
Milestones Table
| Milestone | Due Date | Who’s Responsible | |
|---|---|---|---|
|
Initial fulfillment strategy
|
Oct 09, 2020 | Product team | |
|
Initial website launch
|
Jan 01, 2021 | Web team | |
|
amazon.com key products launch
|
Feb 15, 2021 | Sales | |
|
Website phase 2
|
May 31, 2021 | Web team | |
|
Volume fulfillment options review
|
July 18, 2021 | Product |
Key Metrics
Key Metrics:
- Inventory turnover
- Unit sales by item, class, and category
- amazon.com sales by item, class, and category
- yields for facebook advertising
- # of Facebook pageviews, likes, and shares
- Twitter followers and retweets
- # of visitors to the website
- Favorite pieces of clothes and jewelry
- affiliate sales
Company
Overview
Ownership & Structure
Larry Wilson will manage the marketing team, as well as the development and administration of Liquid Culture’s website. Maggie Granger will be in charge of the clothing design team. She will also manage the production of the designs by Magic Clothing Company.
The business will begin as an LLC held by the two co-founders.
Team
Management Team
Liquid Culture will offer creative women’s outdoor clothing, online, that is both functional and beautiful. Larry Wilson and Maggie Granger, co-owners of Liquid Culture, will create a cost-effective operation that will eliminate the cost of inventory by having third parties handle all manufacturing and shipping of clothing to the customer. Liquid Culture will process the order and collect the payment online. The order will then be sent to third parties to be filled and shipped. Liquid Culture will focus on clothing design and marketing of its products.
Personnel Table
| 2020 | 2021 | 2022 | |
|---|---|---|---|
| Marketing / Website Director | $78,000 | $79,560 | $81,151 |
| Design Director | $84,000 | $85,680 | $87,394 |
| Designers (3) | $216,000 | $220,320 | $224,727 |
| Web Administrator | $57,600 | $58,752 | $59,927 |
| Office Manager | $42,000 | $42,840 | $43,697 |
| Marketing Staff (2) | $96,000 | $97,920 | $99,878 |
| Accountant | $43,200 | $44,064 | $44,945 |
| Totals | $616,800 | $629,136 | $641,719 |
Financial Plan
Forecast
Key Assumptions
We assume a successful ramp-up. Yes, sales forecast is probably too optimistic. But we believe there is a real market window, real need, and the climate is right.
Revenue by Month
Expenses by Month
Net Profit (or Loss) by Year
Financing
Use of Funds
Liquid Culture’s start-up costs consists mostly of design and marketing. Liquid Culture has $260,000 in investments and $200,000 in a short-term loan.
To Be more specific, start-up expenses are listed as:
Legal $1,000
Office expenses $500
Consultants $5,000
Rent $2,000
Leased Office Equipment $10,000
Computer Equipment/Software $30,000
Website $10,000
Totaling : $58,500
We will also be purchasing $401,500 of long term assets
Sources of Funds
We will be getting $460,000, which includes:
$130,000 from founder 1
130,000 from founder 2
Short term loan of $200,000
Statements
Projected Profit & Loss
| 2020 | 2021 | 2022 | |
|---|---|---|---|
| Revenue | $2,170,000 | $2,230,000 | $2,295,000 |
| Direct Costs | $933,100 | $958,900 | $986,850 |
| Gross Margin | $1,236,900 | $1,271,100 | $1,308,150 |
| Gross Margin % | 57% | 57% | 57% |
| Operating Expenses | |||
| Salaries & Wages | $616,800 | $629,136 | $641,719 |
| Employee Related Expenses | $123,360 | $125,827 | $128,344 |
| Rent | $24,000 | $24,000 | $24,000 |
| Utilities | $6,000 | $6,000 | $6,000 |
| Marketing | $325,500 | $334,500 | $344,250 |
| Sales Expense | $21,600 | $21,600 | $21,600 |
| Total Operating Expenses | $1,117,260 | $1,141,063 | $1,165,913 |
| Operating Income | $119,640 | $130,037 | $142,237 |
| Interest Incurred | $6,560 | ||
| Depreciation and Amortization | |||
| Gain or Loss from Sale of Assets | |||
| Income Taxes | $16,962 | $19,506 | $21,335 |
| Total Expenses | $2,073,882 | $2,119,469 | $2,174,098 |
| Net Profit | $96,118 | $110,531 | $120,902 |
| Net Profit/Sales | 4% | 5% | 5% |
Projected Balance Sheet
| Starting Balances | 2020 | 2021 | 2022 | |
|---|---|---|---|---|
| Cash | $401,500 | $382,497 | $436,071 | $558,857 |
| Accounts Receivable | $81,000 | $40,140 | $41,310 | |
| Inventory | $159,817 | $164,475 | $164,475 | |
| Other Current Assets | ||||
| Total Current Assets | $401,500 | $623,314 | $640,686 | $764,642 |
| Long-Term Assets | ||||
| Accumulated Depreciation | ||||
| Total Long-Term Assets | ||||
| Total Assets | $401,500 | $623,314 | $640,686 | $764,642 |
| Accounts Payable | $224,733 | $183,060 | $184,360 | |
| Income Taxes Payable | $16,962 | $4,877 | $5,331 | |
| Sales Taxes Payable | $84,000 | $44,600 | $45,900 | |
| Short-Term Debt | $200,000 | |||
| Prepaid Revenue | ||||
| Total Current Liabilities | $200,000 | $325,695 | $232,537 | $235,591 |
| Long-Term Debt | $0 | $0 | $0 | $0 |
| Long-Term Liabilities | $0 | $0 | $0 | $0 |
| Total Liabilities | $200,000 | $325,695 | $232,537 | $235,591 |
| Paid-In Capital | $260,000 | $260,000 | $260,000 | $260,000 |
| Retained Earnings | ($58,500) | ($58,500) | $37,618 | $148,149 |
| Earnings | $96,118 | $110,531 | $120,902 | |
| Total Owner’s Equity | $201,500 | $297,618 | $408,149 | $529,051 |
| Total Liabilities & Equity | $401,500 | $623,314 | $640,686 | $764,642 |
Projected Cash Flow Statement
| 2020 | 2021 | 2022 | |
|---|---|---|---|
| Net Cash Flow from Operations | |||
| Net Profit | $96,118 | $110,531 | $120,902 |
| Depreciation & Amortization | |||
| Change in Accounts Receivable | ($81,000) | $40,860 | ($1,170) |
| Change in Inventory | ($159,817) | ($4,658) | $0 |
| Change in Accounts Payable | $224,733 | ($41,673) | $1,300 |
| Change in Income Tax Payable | $16,962 | ($12,085) | $454 |
| Change in Sales Tax Payable | $84,000 | ($39,400) | $1,300 |
| Change in Prepaid Revenue | |||
| Net Cash Flow from Operations | $180,997 | $53,574 | $122,786 |
| Investing & Financing | |||
| Assets Purchased or Sold | |||
| Net Cash from Investing | |||
| Investments Received | |||
| Dividends & Distributions | |||
| Change in Short-Term Debt | ($200,000) | ||
| Change in Long-Term Debt | $0 | $0 | $0 |
| Net Cash from Financing | ($200,000) | $0 | $0 |
| Cash at Beginning of Period | $401,500 | $382,497 | $436,071 |
| Net Change in Cash | ($19,003) | $53,574 | $122,786 |
| Cash at End of Period | $382,497 | $436,071 | $558,857 |
