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Business Plan for E-business Essay ABC Company is an aboriginal products company offering Australian aboriginal artists materials and products, such as painting, boomerang and other handicrafts. Based on the internet, ABC Company also provides timely information about Australian aboriginal culture like their history or daily news. It is the responsibility of ABC Company to support the development of indigenous people’s culture and improve their living quality in the same time. The Market ABC is at the forefront in an exciting and growing market. We focus on the market of Australia and extend to the tourists and Australian indigenous culture lovers. Most aboriginal products stores do not supply the sufficient and related knowledge of aboriginal culture. And our special supporting stagey helps communities get $1 from our sales every $100 for the sake of attracting more aboriginal artists enter the business. It is a different point from other current there is no such e-business company like XX operated today. The Organization ABC is owned and operated by our group members. Since our company is operated online, our management team is the group of our four founders. It is founded on the idea that maintaining satisfied customers is essential to the bottom line. With this in mind, our team will be working hard to ensure that all of their customers expectations are exceeded in all transactions. To maintain a presence within the art and craft community and close relationships to customers and also our suppliers aboriginal people, we will focus more on the professional knowledge of Australian indigenous culture and encourage local communities to join us. Financials The sales growth will be conservative in the first year as when our focus is on the advertisement and make our products well known by potential customers. It is estimated that the sales increase in a 33% phase from second year of business operation. The marketing costs will remain the 10% of total sales. And we may consider company expansion if projected sales met or exceeded our target. 1. Company Summary ABC Company is founded in September of this year in UNSW. The company will offer a variety of products and services of aboriginal culture. In order to have sufficient information and resources of aboriginal culture, we will cooperate with some institutions and communities. For the aspect of products, we will offer aboriginal art such as artefacts and painting which are brought from eBay, institutions such as Tandanya in Adelaide and personnel (Tandanya 2013). Moreover, we will provide aboriginal culture and its history on the website. The resources of those will be picked up from variety of institutions, communities and government’s website. For the first three years, we will focus on the business on the website. Therefore, customers and visitors can experience aboriginal culture on our website 24 hours, seven days a week. When our business is stable, we will expand our services and establish a physical store in Alice Spring. The mission of our company is to become the best platform which spreads aboriginal information and provides products. 1.1. Market Niche In the recent market in Australian, indigenous arts occupy a small part. In the recent years, the sale of aboriginal art is $8m every year, which is equivalent to sale 11 years ago (Rothwell 2013). One reason is that people has few opportunities to engage the aboriginal culture. Moreover, few places have aboriginal arts. Most of arts are sold in the regional institutions and cultural centre, and are offered on few numbers of website. The mission of our company is to be the best platform to provide aboriginal culture and arts. Therefore, we will spread indigenous culture firstly through our website so that more people are familiar with their culture. Moreover, we will offer a variety of products on the website such as gifts and painting. The range of price is from about $50 to thousands of dollars. After getting information of the product, customers could purchase the arts what they are interested in. There are two characteristics of our products. Firstly, we are not only sell aboriginal arts, but share the information and background of each art. Therefore, customers could understand the meaning of it. Secondly, as we stock artwork from institution and artists, the price could be lower than other stores. Therefore, our products have high quality with a lower price. 1.2. Social responsibility of our business There are two main social responsibility of our business: spreading the culture and facilitating the economy. As we share aboriginal culture on our website, more people will familiar with its culture. Therefore, our first social responsibility is to spread aboriginal culture. For example, we will share information about meaning of painting, dancing and their music instead of merely selling products. Culture is a part of fortune for a country. Therefore, it is necessary to prevent it from disappearing. Additionally, we will help some communities and extract $1 from our sales every $100. As we stock some artefacts from communities, it will increase the sales of them. Moreover, we will donate for the community to help it spread aboriginal culture. As a result, it probable creates more job opportunities for aboriginal as more people are interested in its culture. 2. Our service and product Our company will provide a series of services and products on the website. For the aspect of service, we will divide into three stages. In the first stage, we will share information about aboriginal culture and artwork. The profile of artists and their painting also is offered. In this stage, we will focus on spreading the culture of aboriginal. In the next stage, when our business is stable, we will expand our service to day tour that visits physical museum and institution. For example, in South Australia, we will have a day tour to Tandanya to watch a show and have a workshop in Brambuk in Victoria. In our final stage of service, we will offer an opportunity to experience ancient Aboriginal rock art paintings, music, dance and storytelling in Northern Territory (Cultural Tour, 2013). In order to achieve it, we need find more partners with us to organize the planning of travel. For the aspect of our product, we will focus on selling them on our website in the first three years. In the meantime, we will establish a small physical store in Alice Spring. We will offer several products such as artefacts, artwork, crafts, glass and didgeridoos. Every product will attach profile of artist. As we purchase some artefacts and paintings from artists, there will be some unique artworks on our website. Therefore, it is a good choice for gifts to your friends, and good collections for collectors. Moreover, we also have some books about aboriginal culture that will be sold on our website. 3. Market Analysis In recent years, the consumptions of aboriginal culture products (arts, paintings, craft and so on) are decreasing in both Australia domestic and international markets. However, it does not mean that the value of have dropped a bit. ABC Company aims to expand the market size of the indigenous products in Australia markets and international markets by selling indigenous tourism products; in the meantime, increasing the value of indigenous tourism products by spreading the Australia aboriginal culture information online. The Company will market to four primary customers: 1. Tourists. 2. Amateur artists and crafters, including collectors and hobbyists. 3. Professional artists. 4. Businesses, such as architects, graphic designers, or direct mail advertisers. In the meantime, customers who are interested in aboriginal culture are also our potential customers. 3.1. Target market segment strategy 1. Tourists. In general, tourists normally visit the physical stores near the attractions. However, tourists’ purchase amounts are limited to size, material, and there are strict regulations of overseas travelling. Therefore, it is necessary to have partnership between travel agencies and light companies, by sending advertisement via email to the tourists. Then tourists can order indigenous tourism products from overseas or even order the products while they are in Australia before their returns. 2. Amateur artists and crafters, including collectors and hobbyists. In general, most part of this segment will be targeted in low and mid-price level of our products compare with the profession artists. However, we will also consider some customers from this segment are eager to purchase the high-price level products. 3. Professional artists. Considering professional artists not only need to purchase the products, but also need to get regular customer service. Our business will try to set up connections between professional artists and indigenous tourism products services. For the business, such as architects, graphic designers, interior designers, or direct mail advertisers, we will provide large amount order discount for the business oriented purchases or group-buying. 3.2. Service business analysis Our company is an online business store sells indigenous tourism products from Australia to worldwide. Currently customers can buy indigenous products from the stores which are located around the famous attraction sights. However, due to the strict regulations of overseas travelling, some indigenous tourism products are restricted by the materials, amount, and size. Therefore, some customers prefer to order indigenous tourism products online. Our products include: artworks, Didgeridoos, paintings, dolls, books, clothes, and some special order products, etc. 3.2.1. Competitions Besides the traditional attraction sights stores, there are two main competitors in Australia, Alperstein Designs and Spirit Gallery. Alperstein Designs entered the marketplace in 1996 and open online in 2013 (Alperstein Designs, 2013), it is Australia owned business. Alperstein Designs manufactures and designs products for gifts and indigenous tourism industries. Alperstein Designs has its own creative team, and works with Australia artists and designers in order to produce unique products. The products are manufactured in Australia and Asia. Alperstein Designs provides wholesale service nationally and internationally, it also has private label service for the customers who have exclusive desires. Spirit Gallery is located in The Rocks Centre. It was established in 2002 as a small Aboriginal art crafts store in the heart of historic Rocks area of Sydney Australia (Spirit Gallery 2013). The products include: aboriginal arts, carvings, boomerangs ceramics, glassware basket weaving, bark paintings, and didgeridoos. Spirit Gallery also presents exhibitions for local aboriginal artists. 4. Business Strategy Summary 4.1. Competitive edge Instead of merely selling indigenous tourism products, ABC Company aims to spread Australia aboriginal culture and history. This point is different our business from many of our competitors. ABC Company’s target markets are not only large consumers, but also have different price levels from low to high, in order to fulfil all kinds of the customers’ requirements. 4.2. Marketing strategy Our marketing strategy will focus on customer loyalty, partnership, and online promotion. ABC Company will make partnership between aboriginal institutions and communities, travel agencies and flight companies. For the institutions and communities, we could provide teaching instruments for educational needs in order to achieve the promotional goals and special discounts for students and teachers via email. In the meantime, we can get potential customers and aboriginal culture and history information from them. By working partnership with tourism agents, our business can attract customers by sending emails. Moreover, we could also provide discount deals to the customers who used partner travel agencies and flight companies. Our online promotion will rely on social networks such as, Facebook page, Twitter page, and Aboriginal culture and history videos on YouTube. Our company also have the search engine support from Google. All our promotion plans are based on the Internet, since we are an online store. 4.3. Sales strategy The purpose of our company is to provide the friendliest online shopping experiences for our customers. First, we design and refine our website to make sure it is user friendly. Second, provide secure online payment by using Paypal. Third, provide fast and accurate delivery by working with TNT, UPS, and FedEx. Fourth, we provide the best return/exchange policy to build trust with our customers and maintain retention and loyalty. Most importantly, we will also help some aboriginal communities and extract $1 from our sales every $100. 4.3.1. Sales forecast The following table and chart highlight forecasted sales. 5. SWOT and Competitor Analysis 5.1. SWOT Analysis Strength Our company provides not only a variety of aboriginal products but also offers the services of aboriginal culture. Besides, the social responsibilities which improve the traditional culture play a key role in the objective of our company. Comparing with other aboriginal products suppliers, we do not rely on the big production of manufactory chain. Instead, we stock artwork from our local institution and artists. In the meantime, the price could be lower than other similar stores. All in all, the most strength in our company is the unique and special quality with a lower price. Weakness The weakness of our company is the volume production in the short term. Since our suppliers are the aboriginal people from the local community and institution. It is difficult to replenish our stock as we required. Moreover, the professional knowledge of aboriginal culture and communication to the people is another challenge for us. Opportunity The aboriginal art has become more and more significant in Australia’s tourist trade. People from all over the world begin to focus on the traditional culture when they travel to Australia. Although there are many stores especially in tourist attractions, the lack of aboriginal culture information has confused the customers and they cannot understand the reason they buy this work of art. It is an opportunity for us to bring the aboriginal culture to the Internet from physical world. Threat There are amounts of aboriginal culture shops today and the aboriginal show that will attract more customers and tourists. However, our business cannot show the real perform to our potential customers. There are two main competitors for our company: Alperstein Designs and Spirit Gallery. 5.2. Competitor Analysis Our Company vs. Alperstein Designs For Alperstein Design, there are several advantages compared with our company. First, it has its own creative team; therefore, it could have its unique products. Moreover, it provides private label service for customers who wants exclusive products. Therefore, Alperstein pay more attention on different kinds of high quality products. For our company, even though we do not have creative team, we provide a variety of services and products which are collected from different institutions and personnel. Overall, the price of our products will lower than Alperstein and we provide information of aboriginal culture as well. Our Company vs. Spirit Gallery For Spirit Gallery, it is a brick-click company which means both physical and online business are operating. Moreover, it will provide detailed information about Didgeridoo. Spirit Gallery also presents exhibitions for local aboriginal artists. Though we do not have a gallery for business, we provide particular aboriginal information not only focusing on Didgeridoo, but different kinds of artists and culture. Therefore, compared with Spirit Gallery, our company pay more attention on spreading information on the website. As a result, our business is more convenient for customers searching information and products. 6. Financial Plan 1. Sales growth will be conservative in first 12 month as it takes time for us to advertise and make our products well known by potential customers. It is estimated that the sales increase in a 33% phase from second year of business operation. 2. Marketing costs will remain the 10% of total sales. 3. We may consider company expansion if projected sales met or exceeded our target. 4. There would be a physical store in Alice Spring after three years in order to attract more tourists and present our arts work in more comfortable ways. 6.1. Important Assumptions 1. All the assumption is based on the fact that the investment of this business is from founders’ savings. 2. Assume the overall economy of the world especially tourism marketing is stable so that economic situation would not affect business operation dramatically. 6.2. Projected Profit and Loss Several important assumptions are made to calculate the projected profit and loss: 1. Sales are estimated in a conservative basis, while expenses are estimated above average to maximum values. 2. First years sale will be relatively low as it will take time to be well known by potential customers in order to reach the optimal sales target. With the consideration of first year operation, the sale of business is conservatively assumed at $102,000 in year 1 following by $128,000 and $170,240 in second and third year with gross margin ratio at 59.90%, 60.80% and 57.98% respectively. The net profit for each year stays at $20,596.36, $26,788.61 and $37,678.14 while the net profit to sales ratios are 20.19%, 20.93% and 22.13% accordingly. The further detail information can be referred to Appendix 1-1. 6.3. Projected Cash Flow In terms of the cash flow statement, the sales are main sources of cash inflow, and it increases in the same pace with business expansion. It is based on the assumption that there is no issue on collecting cash from sales. On the other hand, most cash spending is due to paying to aboriginal artists, sponsor contribution to aboriginal communities and utility bills. As showing on Appendix 1-2, the net cash inflows for first three years are at $17,351, $14,222 and $11,426 respectively. 6.4. Projected Balance Sheet Referring to Appendix 1-3, the net worth is steadily growing in first three years. Though there will be a physical store in Alice Spring to present our products and attract new customers, our business is primarily focusing on online buyers. Therefore, most assets are current ones. Furthermore, profits generated from business operation are determined to be retained for future business risk safeguard and opportunities capture. 6.5. Break-even Point Analysis For the purpose of break-even analysis, several factors are assumed as the fixed costs. It includes marketing costs ($5,000), Depreciation ($2,000), utilities ($2,000), Insurance ($400) and other costs ($120) with a total amount of $9,520. Gross margin of first year at 59.90% is extracted as the benchmark to calculate break-even point. As a result, our business needs to make $15,894 sales to be break-even. 7. Recommendation and Conclusion There are many places need to be improved and modified in the future. Firstly, about 60% of operating cost is the cost of rent; therefore, it will save much money if we can cut this cost. One of the effective and efficient ways is to get a closer supply chain relationship. The optimal situation is called just in time that we can acquire the product when we need it as soon as possible. We do not need a facility and staffs to stock and manage our product consequently. Furthermore, it is necessary to corporate with various partners such as culture institution, travel agent, museum and artists. It is easy to manage and corporate with our partners in the first three years. However, we need more partners when our business is stable such as travel agent. Therefore, the more partners we have, the more benefits we get. Additionally, a user friendly interface will encourage customers staying on our website. In order to achieve this, it is imperative to hire website designer or use tools such as WordPress (WordPress 2013). In conclusion, the mission of our company is to be the best platform spreading aboriginal information and providing products. We will offer a variety of services and products both on the website and physical stores for different customer segmentations. As a result, it will facilitate the economy of aboriginal and social stability. 8. Reference List: Alperstein Designs 2013, Alperstein Designs, viewed on 30th September 2013, http://alpersteindesigns.com.au/. Cultural Tours 2013, Territory Discoveries, viewed on 1st October 2013, http://www.territorydiscoveries.com. Rothwell, N, 2013, ‘Plunging sales crisis for indigenous art’, The Australian, viewed on 29 September 2013, http://www.theaustralian.com.au/. Spirit Gallery 2013, Spirit Gallery, viewed on 30th September 2013, http://www.spiritgallery.com.au/. Tandanya, 2013, ‘National aboriginal cultural institute inc.’, viewed on 29 Sep 2013, http://www.tandanya.com.au/. WordPress 2013, Themes directory, viewed on 1st October 2013, http://wordpress.org/themes/. Appendix Appendix 1-1 Profit and Loss