Business Plan for a Bookshop

BBA-E, 2
nd
semester(session 2008-12)
Submitted to: Madam Shandana Shoiab
Small and Medium Enterprise(SME)

BOOKS N BOOKS
20-city towers
university road
Peshawar

Business Plan

Principals:
NUAMAN ZAHID
NADEEM AFZAL
SHAHID NAWAZ MUGHAL
EXECUTIVE SUMMARY
Books n Books will be a general partnership type of business. The shop will
be jointly owned by Nuaman Zahid, Nadeem Afzal and Shahid Nawaz Mughal.
Books n Books will be establishing its shop in citytowers main university road
Peshawar. This area is well known for every sort of shopping. Our facility is a
5,500 square ft. shop which allows us to stock a large amount of inventory.
Our start-up expenses come to Rs 25 million, which are single time fees
associated with opening the shop. These costs are financed by a bank loan
and our investment as well.
We have divided the market into three segments of potential customers.
They include casual shoppers, hard to find shoppers and specific category
shoppers.
We will provide our customers a relaxed atmosphere for reading the
books by the arrangement of comfortable chairs and tables.

EXECUTIVE SUMMARY(continued.)
We will be having a buyback program to lower inventory acquisition costs and
allow the customers to discard unwanted literature and music.
Books n Books will offer a wide range of every kind of books and music CDs and
DVSs on low prices.
Our main competitors are London Book Shop and Saeed Book Bank and also
local bookshops
Our competitive edge will be the lower prices we will charge our customers and
the larger selection we can offer.
One of the most critical elements of Books n Books success will be its
marketing and advertising.
Our sales forecast for the first three years is estimated to be as under:

Year 1 Year 2 Year 3
Rs.1,304,000 Rs.1,357,000 Rs.1,428,000
NATURE OF THE BUSINESS
Books n Books is a bookshop on main university road. It is
the goal of the management to acquire local market
share in the bookshop industry through low price, a
dominant selection of products, a competitive variety of
services including a buyback/trade program and hard to
find book search, plus a relaxing, friendly environment
that encourages browsing and reading.

FINANCES REQUIRED
Our start-up expenses come to Rs 25 million, which are
single time fees associated with opening the shop.
These costs are financed by a bank loan and our
investment as well. We expect to be operating at a loss
for the first couple of months before advertising begins
to take effect and draw in customers. Books n Books will
be receiving periodic influxes of cash to cover operating
expenses during the first two years as it strives toward
sustainable profitability. We do not anticipate any cash
flow problems during the next three years
INDUSTARY ANALYSIS
Market Segmentation
We anticipate serving the needs of all the potential customers
within a ten to fifteen mile radius in which the approximate
population is 150,000 (estimate).
Bookshops serve the entire purchasing population of its
geographical area but focuses on customers who desire to
purchase books/music at low prices because they are seen either
as near commodity items or, in the case of books, are not
considered to be a long-term investment (i.e. they will trade them
back). This is especially true with people seeking to cut costs with
the bad economy. Even though we service the entire book reading
population in University road and the surrounding area, we can
divide our customers based on purchasing habits.
Continued..
Casual Shoppers: These are customers who go to the bookshop with no set idea of
what they want to purchase. They seek to spend a fair amount of time browsing the
store and often are considered impulse buyers. Often they leave the store with small
purchases or without buying anything. These customers are attracted to bookshops
with low prices and large inventory.
"Hard to Find" Shoppers: These are customers with very specific needs. They are
looking for a difficult to obtain item, usually a book that is out of print. If we can
satisfy this customer, then we are able to build significant customer loyalty. These
clients are generally price insensitive and are also drawn to bookshops that have large
inventory.
Specific Category Shoppers: These customers are those types that generally buy
books or music of one category, such as fiction or textbooks. These customers
generally have a good idea of what they want to purchase and have the greatest
buyback/trade potential. These customers represent the highest volume purchaser,
often leaving the store having spent Rs500-1500.

COMPETITORS
Our main competitors are: London Bookshop (which holds approximately 30% local
market share), Saeed Book Bank (which holds approximately 20%), and other local
new and used bookshops.

DESCRIPTION OF THE VENTURE
Products and Services
Books n Books will offer a wide range of book, magazine, and music selections. This
includes just about every conceivable category including fiction, non-fiction, business,
science, children's, hobbies, textbooks, and other types of books. Our music selection
will concentrate on CD's and DVDs as these are the most popular and take up the least
amount of floor space. In addition, we will be offering a competitive buy and trade
service to assist in lowering our inventory acquisition costs and making our store more
attractive to our customers. In addition, we offer a search and order service for
customer seeking to find hard to get items. Books n Books will have a relaxed "reading
room" type atmosphere that we will encourage through the placement of chairs,
couches, etc. We strongly encourage our customers to spend as long as they like
reading through our book selection and enjoying a quiet, relaxing environment. Our
store hours will be 8:30 a.m. to 8:00 p.m. Monday-Saturday and 10:00 a.m. to 6:00
p.m. Sunday. Once profitability becomes stable, we will extend these hours.

Continued..
Office Equipment and Personnel
We will initially recruit 3 computer operators
and 8 salesmen. The computer operators will
be working on separate computers on
separate counters. The computers will help
us in recording day to day sales and will also
give us the inventory data. The sales men will
be paid a good salary and will be recruited by
the basis of their relevant experience.
The store will be requiring racks of different
sizes in which books and CDs/DVDs will be
placed.
As we are providing reading facility also, so
for that purpose we will arrange chairs and
tables.

BACKGROUND OF THE
ENTREPRENEURS
Nuaman Zahid
BBA in progress.
No experience in this field.


Nadeem Afzal
BBA in progress
Have served in a local book shop as a salesman.


Shahid Nawaz Mughal
BBA in progress
Have served in Saeed Book Bank as a salesman.

OPERATIONAL PLAN
The business and science books will be purchased from National Book
foundation, as they give discounts and offer attractive packages for the
retailers. For the textbooks we will have to get registered with the local
textbook board. And for the other type of books including fiction, hobbies,
children and story books will be purchased from the distributors in Lahore.
Music CDs and DVDs will be purchased the markets of Karachi, Lahore and
from foreign distributors as well.
For the inventory control system we will buy software through which we
can keep the management informed about day to day sales, quantity of stock
and also about the customers who visit us regularly.
The customers will select books or music selections from the display in
the racks and the salesmen will provide the item. Customers can also give
orders for the books which are not available with us, we will request the
distributor for that order and will provide it to the customer.
We will be using updated accounting softwares and database softwares.

MARKETING PLAN
Competitive Edge
The firm's competitive edge will be the lower prices we will charge our
customers and the larger selection we can offer: through our large store,
buyback/trade program, and leveraging management excellent supplier
contacts. As stated before, in the bookstore industry, low cost and dominate
selection are the two success criteria. We plan to create these advantages in a
new, comforting environment that will retain customers.

MARKETING PLAN(continued..)
Marketing Strategy
One of the most critical elements of Books n Books success will be its
marketing and advertising. In order to capture attention and sales we will use
prominent signs at the store location, billboards, media bites on local news, and radio
advertisements to capture customers. We will arrange book fairs in colleges and
universities and will offer books to the students on discount rates.


MARKETING PLAN(continued.)
Sales Strategy
Since our store will be a standalone facility, there is little in the way to
directly influence how we close the sale other than to have an attractive storefront
with our low prices and excellent selection. We believe this in itself is its own seller.
One critical procedure we will be establishing is to insure top customer service and
reliability and that our store always has enough inventory of all our products. We will
be using industry data on inventory for bookstore chains to assist us.


MARKETING PLAN(continued.)
Sales Year 1 Year 2 Year 3
Fiction Books Rs.164,292 Rs.172,507 Rs.182,512
Sci-Fi Books Rs.184,829 Rs.194,070 Rs.205,327
Textbooks Rs.143,756 Rs.150,944 Rs.159,698
Children's
Books
Rs.184,829 Rs.194,070 Rs.205,327
Biography
Books
Rs.123,219 Rs.129,380 Rs.136,884
Business
Books
Rs.112,951 Rs.118,599 Rs.125,477
CD's and
Music
Rs.184,829 Rs.188,526 Rs.199,460
Other Rs.205,366 Rs.209,473 Rs.214,081
Total Sales Rs.1,304,071 Rs.1,357,569 Rs.1,428,767
Sales Forecast
ORGANIZATIONAL PLAN
Form of ownership
Books n Books will be a general
partnership type of business. The shop
will be jointly owned by Nuaman Zahid,
Nadeem Afzal and Shahid Nawaz
Mughal. We expect to begin offering
services in December.

Roles of owners
All the owners will have to
attend any type of meeting and
business deal. The members will have to
be present during the working hours.

FINANCIAL PLAN
Year 1 Year 2 Year 3
Assets
Current Assets
Cash Rs.179,568 Rs.182,408 Rs.220,036
Inventory Rs.122,562 Rs.125,933 Rs.130,793
Other Current Assets Rs.8,000 Rs.8,000 Rs.8,000
Total Current Assets Rs.310,130 Rs.316,341 Rs.358,830
Long-term Assets
Long-term Assets Rs.8,000 Rs.8,000 Rs.8,000
Total Long-term Assets Rs.8,000 Rs.8,000 Rs.8,000
Total Assets Rs.318,130 Rs.324,341 Rs.366,830
Liabilities and Capital Year 1 Year 2 Year 3
Current Liabilities
Accounts Payable Rs.125,904 Rs.97,722 Rs.101,894
Current Borrowing Rs.20,000 Rs.13,000 (Rs.2,000)
Other Current Liabilities Rs.10,000 Rs.10,000 Rs.10,000
Subtotal Current Liabilities Rs.155,904 Rs.120,722 Rs.109,894
Long-term Liabilities Rs.125,000 Rs.120,000 Rs.110,000
Total Liabilities Rs.280,904 Rs.240,722 Rs.219,894
Paid-in Capital Rs.124,000 Rs.124,000 Rs.124,000
Retained Earnings (Rs.112,180) (Rs.86,774) (Rs.40,381)
Earnings Rs.25,406 Rs.46,394 Rs.63,316
Total Capital Rs.37,226 Rs.83,619 Rs.146,935
Total Liabilities and Capital Rs.318,130 Rs.324,341 Rs.366,830
Net Worth Rs.37,226 Rs.83,619 Rs.146,935
Pro Forma Balance Sheet

FINANCIAL PLAN(continued.)
Pro Forma Income statement

Year 1 Year 2 Year 3
Sales Rs.1,304,071 Rs.1,357,569 Rs.1,428,767
Direct Cost of Sales Rs.1,004,135 Rs.1,031,752 Rs.1,071,575
Total Cost of Sales Rs.1,004,135 Rs.1,031,752 Rs.1,071,575
Gross Margin Rs.299,936 Rs.325,817 Rs.357,192
Gross Margin % 23.00% 24.00% 25.00%
Expenses
Payroll Rs.111,000 Rs.125,600 Rs.130,600
Sales and Marketing and
Other Expenses
Rs.36,000 Rs.15,000 Rs.15,000
Rent Rs.60,000 Rs.65,000 Rs.68,000
Utilities Rs.3,600 Rs.4,000 Rs.4,000
Insurance Rs.7,200 Rs.7,200 Rs.7,500
Payroll Taxes Rs.17,093 Rs.18,840 Rs.19,590
Other Rs.15,000 Rs.10,000 Rs.10,000
Total Operating Expenses Rs.249,893 Rs.245,640 Rs.254,690
Profit Before Interest and
Taxes
Rs.50,044 Rs.80,177 Rs.102,502
Interest Expense Rs.13,750 Rs.13,900 Rs.12,050
Taxes Rs.10,888 Rs.19,883 Rs.27,136
Net Profit Rs.25,406 Rs.46,394 Rs.63,316
Net Profit/Sales 1.95% 3.42% 4.43%
FINANCIAL PLAN(continued.)
Pro Forma Cash Flow

Year 1 Year 2 Year 3
Cash Received
Cash from Operations
Cash Sales Rs.1,304,071 Rs.1,357,569 Rs.1,428,767
Subtotal Cash from
Operations
Rs.1,304,071 Rs.1,357,569 Rs.1,428,767
Additional Cash Received
New Current Borrowing Rs.5,000 Rs.0 Rs.0
New Long-term Liabilities Rs.50,000 Rs.0 Rs.0
New Investment Received Rs.54,000 Rs.0 Rs.0
Subtotal Cash Received Rs.1,413,071 Rs.1,357,569 Rs.1,428,767
Expenditures Year 1 Year 2 Year 3
Expenditures from
Operations
Cash Spending Rs.111,000 Rs.125,600 Rs.130,600
Bill Payments Rs.1,156,323 Rs.1,217,129 Rs.1,235,539
Subtotal Spent on Operations Rs.1,267,323 Rs.1,342,729 Rs.1,366,139
Additional Cash Spent
Principal Repayment of
Current Borrowing
Rs.0 Rs.7,000 Rs.15,000
Long-term Liabilities Principal
Repayment
Rs.0 Rs.5,000 Rs.10,000
Subtotal Cash Spent Rs.1,267,323 Rs.1,354,729 Rs.1,391,139
Net Cash Flow Rs.145,748 Rs.2,840 Rs.37,628
Cash Balance Rs.179,568 Rs.182,408 Rs.220,036
FINANCIAL PLAN(continued.)
Monthly Revenue Break-even Rs.90,541
Assumptions:
Average Percent Variable Cost 77%
Estimated Monthly Fixed Cost Rs.20,824
Break Even Analysis

FINANCIAL PLAN(continued.)
All the partners will contribute initially Rs.15million. It means each of the
partners will invest 5million. The remaining 10million will be obtained from a bank
by taking a loan.

We expect Rs.3million to be the expenses of store decoration, reading room
arrangements, computer systems and initial promotions.

Of the remaining 2.2million, we will have our inventory.

ASSESSMENT OF RISK
Weaknesses of the business
Though two of the partners
have experience of sales in
bookshops but are not having the
experience to manage such a large
scale shop. The local community is
not that much attracted towards
reading and studying books other
than their text, so this may also be a
weakness of our business.

MISSION
Books n Books mission is to provide quality literature of all types at the
lowest possible prices in Peshawar. The firm additionally seeks to provide a
comfortable atmosphere for its clients that promote browsing, relaxation,
and an enjoyable environment to spend extend time in. Books n Books
attraction to its customers will be our large selection of books, magazines,
music CD's and DVDs and our purchasing/buyback option, which lower our
book acquisition costs and allows our customers to discard unwanted
books/CD's in exchange for cash.
OBJECTIVES
These are the goals for the next three years for Books n Books:
Achieve profitability by the mid of Year 2.
Earn approximately Rs.200,000 in sales by Year 3.
Pay owners a reasonable salary while running at a profit.

KEYS TO SUCCESS
In order to survive and expand, Books n Books must keep the following issues in
mind:
We must attain a high level of visibility through the media, billboards, and other
advertising.
We must establish rigid procedures for cost control and incentives for
maintaining tight control in order to become THE low-cost leader in books.
In order to continually attract customers, we must be able to keep the maximum
amount of inventory available and achieve a high level of customer service.