Magnifique

Online Designer Handbag for the Indian Fashionista

Asma Sultana II MBA 12MBA03 Entrepreneurship Development

Introduction
Entrepreneurship is a process of identifying and starting a business venture, sourcing and organising the required resources and taking both the risks and rewards associated with the venture. A home based business is a small business that operates from the business owners home office. Home businesses are usually defined by having a very small number of employees and limited resources. The home based business, I, intend to start is an online rental/purchase service for designer handbags.

Home Based Business Idea

Fashion is an expensive prospect. Fashion cycles that are short lived, and bags that are astronomically priced, its impossible for many fashion conscious women to keep up with trends. Magnifique will solve the problem by giving women the opportunity that they have missed for so long. Magnifiques online rental/purchase service will provide women with access to designer handbags fulfilling their desires for luxury experience. Rental of luxury goods, such as yachts, formal wear has been available for many years. Why not handbags? I am proposing to give women a taste of the good life. The business will cater to the urban Fashionista who would die to wear Louis, Prada and Chanel, but who could never afford to pay the high price tags. Magnifique will give women the opportunity to rent bags for a certain period of time in return for a rental value. The customers can also buy the products.

Mission
To give fashion forward women the opportunity to rent and purchase designer handbags. To help women fulfill their desires for luxury experience.

Do your homework
A phenomenon that is in its infancy, online handbag rental/purchase services have been rapidly increasing in popularity in US, UK and Canadian markets. However, there remains large untapped opportunity in India. To start the business: Conducting a research to identify the target market. I should create an attractive website, making it easy for our customers to find the bags there are looking for. Creating an exclusive partnership with high end brands. Employ an optimized courier network to ensure fast and timely delivery.

 Efficient inventory management system, so that the requested bag is in stock.

Business Rule with family

There is no as such business rule related with family as I will be handling the business.

Business Name
Magnifique is my business name. It is a French word which means magnificent, splendid, wonderful, royal and gorgeous.

Business Equipment
The equipment required is two computers, cleaning and packaging materials to maintain the warehouse and dispatching service.

Dress Code
Magnifique is an online service wherein there is no direct contact between the buyer and the seller. Thus, there is no particular dress code.

Dealing with distractions

The main distractions in rendering the service can be internet disconnection and the courier service not available at the prompt time. This requires me to enter into a contract with the data connection provider and the courier service.

Friends and Neighbours

I consider my friends and neighbours to be my best customer. I would ask them to promote my product through word of mouth.

Advantage of Tax As, I am a woman entrepreneur, I can get tax benefits if my income is below Rs.200000. I will not be charged any tax. Adequate Insurance Coverage
I believe its necessary to insure my business. Since my business includes rental/courier service, all the products have to be insured in case of any damages that can be covered through insurance.

Hire outside employees

Initial website development will be outsourced to a developer. Website maintenance will be done by me and one more employee. I would one more employee for maintaining the warehouse and evaluating the rented bags.

Clients coming home

As Magnifique is an online service, there will be no clients coming home.

Zoning Restrictions As Magnifique is an online business, there are no zoning restrictions. Marketing Plan: Products Offered:
Regular Handbags Designer Handbags

Pricing
Regular Bags will range from Rs.200-Rs.4000. Designer Bags will range from Rs.4000-Rs.15000 and above.

Target Market
The online service targets the Indian female customers who are fashion forward and aged between 1850 years.

Efficient Location (Place)

The business will be started in the house itself. As the company is an online service there is no comprehensive location strategy. The bags will be delivered directly from my warehouse to my clients using local couriers. Things that are kept in mind about location: Comply with the necessary regulations Maintain efficient inventory management system.

Network (Promotion)
Building a strong network is important or the business to grow and expand. Magnifiques strategy aims to attract, capture and retain its customers. I will attract potential users to my website through a number of communication techniques. Since Magnifique operates in the online arena, search engine optimization will be the key to increase traffic to the site. Build strong online presence by advertising on fashion and lifestyle websites and magazines. To capture, entice and retain the users, Magnifique will offer: A yearly membership fee and offer attractive benefits. Members can collect loyalty points which they can put towards a free rental. Magnifique members will receive a free weekly rental on their birthday. Finally, members will also have access to various promotions (such as rent one bag and get another one for 20% less) throughout the year. New arrivals notifications will be sent to the members. Tailor the new arrivals emails to match my customers preferences as indicated in their membership form. This strategy can increase the sales. Members will also receive Magnifique newsletter informing them of any new fashion trends, new designers etc. Developing relationship with local and international retail partners. Word of mouth:- To stimulate further demand I will also offer loyalty points to users who refer their friends to our website.

Operational Plan
Purchase bags Collection Upload on the website Place the order Customers Browse through the Make payment Products will

Be shipped within 2-3 days. For returning the rented bags: The customers need to slip in the bag into the pre-addressed shipping box that will be included when the bag is sent and drop if off at the post office.

Phone/ Website
To order a bag, customers will simply have to browse through the collection and place the order on the website itself. The phone number and e-mail id will be mentioned on the website wherein the customers can place their order and send in their complaints.

P.O. Box
The P.O. Box number will be mentioned on the website. In case, the rented/ purchased products are returned back, the customers simply have to slip the bag into the preaddressed shipping box (that will be included when the handbag is sent) and drop it off at the post office.

Financial Plan
Raising sufficient capital to get off the ground is a risk for any start-up. The start-up finance will be provided by my father in the form of a loan as well as my own capital. Raising this capital internally not only reduces the capital required from outside investors but also instils an increased level of ownership and responsibility.

The key drivers in terms of financial are:

Revenue Rental amount from bags Sale of bags Bag rental insurance Purchase of bags Labour Marketing costs Expenses

Courier fees (These are passed on to the Maintenance of warehouse (Since the initial consumer) start-up will be operated out in the residence itself, the warehouse costs will be minimal) Annual Membership fees Website designing and maintenance

Products- 50 bags
Regular (25 bags) Range * Quantity 200*5 500*5 1000*5 2000*5 3000*3 4000*2 Total Amount 1000 2500 5000 10000 9000 8000 72000 Designer (25 bags) Range* Quantity 4000-6000* 7 7000-9000*7 10000-12000*6 12000-15000*5 Total Amount 42000 63000 72000 75000 252000

The total cost to get 50 bags is Rs.2, 87,500.

Budget (Start-up expenses)

The budget given below is for a period of 6 months:Particulars Amount Fixed Assets Computers (2 nos.) 30000 Current Asset Inventory 2,87,500 Start-up expenses Website designing 10000 Warehouse maintenance (7000*6) 42000 Labour (Website handling) (8000*6) 48000 Internet charges(1000*6) 6000 Marketing Overhead 20000 Importing / Cargo from Manipur and 40000 Singapore Total 483500

Sources of Funds
Loan from my father amounting to Rs.4, 00,000. My own investment amounting to Rs.83500.

Income statement
Particulars Revenue: Rental amount Sales Annual Membership fees Total Revenue Last years loss Costs of goods sold Website designing Purchase of bags Computers Gross profit/loss Operating expense: Warehouse Maintenance Labour (website handling) Internet Marketing overhead Importing Profit/ Loss 42000 48000 6000 20000 40000 -328000 42000 48000 6000 8000 20000 -244200 42000 48000 9500 5000 20000 50900 10000 2,87,500 30,000 -172000 2000 50000 -120200 1000 55000 175400 25000 (15 bags) 120500 (25 bags) 10*1000= 10000 155500 37000 (22 bags) 192800 (40 bags) 30*1000= 30000 2,59,800 -328000 50000 (30 bags) 385600 (80 bags) 40*1000= 40000 475600 -244200 2014 (1/7/2014- 2015 (1/1-2015- 2015 (1/7/201531/12/2014) 31/6/2015) 31/12/2015)

Key assumptions: Average rental period is 2 weeks. Minimum bag amount- Rs. 4000 for rental service

Balance sheet at the end of 31/12/2014 for a period of 6 months Liabilities Long term liabilities: Loan from father 400000 Amount Assets Current Assets: Cash in hand (25000+ 120500) Capital 83500 Inventory (287500-145500) Working Capital Total current assets Fixed Assets Computers Total 403500 Total 30000 483500 142000 166000 453500 145500 Amount

Graph representing the revenue, gross profit/loss and Net profit/ loss.
500000 400000 300000 200000 100000 0 -100000 -200000 -300000 -400000 -328000 -172000 1 2 -120200 -244200 3 145500 229800 175400 Revenue 50900 Gross Profit/Loss Net profit/Loss 435600

Proud of my company
Yes, I am proud of my company, because this kind of rental/purchase service has not been started in India. An untapped market opportunity combined with a strategic business plan, limited financial need and a passionate and capable management team can position Magnifique to become a success in the Indian market.

Six Thinking Hats

White Hat: Knowledge possessed or needed white hats are the thinking hat that focusses on the data which is available. 1st in India to launch the rental service for bags and shoes. The internet is becoming an increasingly significant distribution channel. Women today are more fashion conscious. Similar business is popular in countries such as US, UK and Canada. The information I will need is the current market trend. Red Hat: Wearing the red hat, you look at the problems using intuition, gut reaction and emotions. I like this business, since it is a new concept. It might be successful. Investment/ Financial problems may occur as I need to enter into partnership with international/ national retailers. Purchase option on my website might be more successful than the renting option. Black Hat: Using black hat thinking, you look at all the risks, drawbacks and criticism. The black hat helps in highlighting the weak points. Indian market may not accept the renting option. Goods might not be in good condition when returned. Tough competition from online shopping websites such as Jabong and Myntra. Fashion trends keep changing. Yellow Hat: The yellow hat helps you think positively. The benefits/advantages associated with the venture. Helps women to be more fashion forward. Provides cost advantage. No competition in India for rental service. Offer membership option that will provide members benefits and cost savings. Green Hat: The green hat stands for creativity. Helps in developing new solutions, opportunities and alterations. Expand the business- Open a showroom in Bangalore and Mumbai. Offer members a style assessment via virtual stylist. Create exclusive partnership with international brands. Offers other products like shoes, clothing, and accessories.

Milestones
2014: Establishment of Magnifique. 2015: Increase the inventory level. 2016: Offer other products like shoes, clothes, accessories. Hire more employees (especially women and physically challenged people) 2017: Set up showrooms in Bangalore and Mumbai. 2018: Cater to the international market. 2019: Best Entrepreneur Award.

SWOT Analysis: Strengths

1st in India to start such a service. Offers high end affordable bags. Increased traffic through internet marketing. Women can rent the bag designer bags instead of buying it. Weaknesses:

Limited financial resources. Start-up establishment will take time. Opportunities

Expand the business- Open a showroom in Bangalore and Mumbai. Offers other products like shoes, clothing, and accessories. Threats

The renting option of bags is a new concept in India which may not be accepted. Goods might not be in good condition when returned. Tough competition from online shopping websites such as Jabong and Myntra. Fashion trends keep changing.

Questionnaire
1. How old are you? a. Under 20 b. 20-25 c. 25-34 d. 35-45 e. Older than 45 2. On average, how much do you spend a year on handbags? a. Rs.200-Rs.1000 b. Rs1000-Rs.4000 c. Rs.4000-Rs.8000 d. 8000 and above 3. What proportion of this would be spent on brand name bags? a. 0% I dont buy brand name bags b. Less than 25% c. Between 25% and 50% d. Between 50% and 75% e. More than 75% f. 100% 4. What is your annual income? a. 0 Im a student b. Under Rs.10000 c. Rs.10,000 Rs.20,000 d. Rs.20,000 Rs. 30,000 e. Rs.30,000 Rs.40,000 f. Over Rs.50,000 5. On average, how much do you spend per handbag? a. Rs.200-Rs.1000 b. Rs1000-Rs.4000 c. Rs.4000-Rs.8000 d. 8000 and above

6. What Brand name bags do you currently own and wear? a. Gucci b. Louis Vuitton c. Coach d. Others (please specify) 7. What brand name bags would you like to wear? (can choose more than one) a. Fendi b. Marc Jacobs c. Gucci d. Prada e. Balenciaga f. Chanel g. Louis Vuitton h. Coach i. Other (please specify)

8. How often do you wish you could buy a new brand name bag? a. Once a week b. Once a month c. Every 1 to 3 months d. Every 3 to 6 months e. Every 6 months to 1 year f. Less frequently than once a year 9. If you could afford it, would you use a service that would allow you to rent branded bags for a defined period of time selected by you? a. Yes b. No 10. What would you be willing to pay to rent a brand name bag for a month? a. Below Rs.500 b. Rs.500-Rs.1000 c. Rs.1000-5000 d. Above Rs.5000