Business Plan - 44316313 - Joseph Davishka PDF

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Summary

Mandatory 25% Business Plan, which is the main assignment in Module 1 in this unit. This Plan got a 84% mark, only losing marks for not enough visual presentation(add 2 or 3 pictures), not enough reasoning behind my Finances (eg. 1st year revenue) and my valuation of the company not having enough de...

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Spa Serendib Business Plan The essence of Sri Lanka

Joseph Davishka Ranasinghe 44316313 1.0

Business Plan Pitch

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In the modern world, physical appearance has taken yet another step forward and become a vital factor of an individual’s life. Research shows that a record number of men and women have invested in beauty products and cosmetics in the last 4 years. When it comes to physical appearance, few other factors are as important as having healthy, glowing skin. Research (which will be studied in great detail in the following report) suggests that no other cosmetic product sells more than skin care products such as face masques, cleansers etc. Spa Serendib is an initiative that sees the incredible business opportunity in this field, and we believe that we possess the necessary quality in our products to deliver amazing results to our consumers, while maintaining sustainable production methods and profitable margins. Inspired by the age-old ayurvedic medicinal and beauty traditions of Sri Lanka that dates back to more than a 1000 years, the products offered by Spa Serendib captures the very essence of Sri Lanka by using 100% natural ingredients, grown and natured in the Pearl of the Indian Ocean itself. We plan to create rich, soothing skin care products that will make users feel refreshed and confident. Spa Serendib have chosen Sydney, Australia as it’s first market entry due to the connections and familiarity that the CEO and founder, Joseph Davishka, has with the city. Over 10 years of work experience in the retail industry in Sri Lanka, backed with a degree and Master’s in accounting from Macquarie University, he has the necessary skill set to lead this company into great heights. To get the initial seed funding required for planning and research, we have decided to utilise Kickstarter as a crowdfunding platform to reach our $50,000 goal. This platform will also give us much needed initial exposure that will prove to be vital to our marketing plan in the future. We will be offering 4 tiers of rewards for our backers, depending on the amount they wish to back us by;

i.)

$5 – A heartfelt thank you would be provided on our website for every $5 backer.

ii.)

$50 – A hand cream with a personalized thank you note will be given for our $50 backers.

iii.)

$100 – A hand cream, lip balm and a ‘Spa Serendib’ vanity bag will be given to all our $100 backers . $500 – A bundle of all our 4 products with a ‘Spa Serendib’ vanity bag and an invitation to the gathering where the CEO and top management of Spa Serendib will be present to interact with our loyal backers. (To be held on the same date and place as the 3rd and last training workshop of our sales force).

iv.)

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2.0TheBusinessOpportunity 2.1 Customer Need and & Target Market Spa Serendib made the choice of entering the Australian Market, starting from Sydney, in 2019, due to the high demand and the growing market for natural skin care products in Australia. In 2019, the market for Skin Care products is valued at $2422.19 million AUD and expected to grow by a further 1.5% annually. Furthermore, Key market indicators such as consumer spending and population have been steadily increasing during the last 10 years. ("Skin Care - Australia | Statista Market Forecast", 2019). The target market for Spa Serendib have been categorized into 2 main areas; educated females aged 15-24, and both females and males 25 and over. The management and marketing team of Spa Serendib have chosen this specific market for a variety of reasons. Females in the Greater Cities of Australia make up for 50% of the population and 1,550,000 of them fall into the age category from 15-24 ("2017 Census QuickStats: Australia", 2017). A study done by Roy Morgan (Aussie men facing up to skincare, 2016) also confirmed that the number of males buying skin care products have increased steadily over the years, with the largest consumer buying rate was found to be between the ages of 25-34 years.

Source: Roy Morgan Single Source (Australia), April 2015-March 2016, n=6,513

2.2 Social Impact Physical appearance is an important factor in a healthy lifestyle, particularly when it comes to an individual’s self-esteem and confidence. Skin care plays a major role in physical appearance, as it can be one of the most striking features of any person. Unfortunately, there are many people who experience skin care problems in their daily lives. In fact, 85% of the Australian Population aged 15-24 years old face the most common skin disease in Acne. ("What causes acne and pimple breakouts? | All About Acne", 2018). The natural skin care products such as the facemasks and facewash of Spa Serendib, which are enriched with minerals, will be a major benefit to those affected by Acne.

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Spa Serendib will also create more job opportunities in Sydney, particularly in fields such as sales, accounting and data research. 2.3 Relevant Megatrends The very base of Spa Serendib are the natural ingredients used in making all its products. The ingredients which contain natural resources such as Cinnamon, Virgin Coconut, Aloe Vera etc. are all tested and proven to be extremely healthy for skin care. A study done by research giants Kline (Team, 2019) showed that consumers were placing more emphasis on natural ingredients in recent years, and names it as a megatrend from 2019 onwards. A demographic area that Spa Serendib will focus on is manufacturing gender-neutral products. This will drive non-bias, equality and representation. In the same study mentioned above, Kline (Team, 2019) states that gender-neutral products such as ours will be more accessible and be considered a megatrend. Spa Serendib will also focus on being more sustainable, using glass bottles and recyclable material for packaging, almost completely eliminating the use of plastic. Today many companies provide sustainable reports to notify stakeholders of their doings (EY, 2016). 2.4 Similar successful campaign A good example of a start-up that has been successful so far can be ‘Savvy Boheme”. A similar brand to Spa Serendib, Savvy Boheme ethically manufactures skin care products using natural ingredients. Based in Texas, USA, Savvy Boheme reached their goal of $10,000 US ($14,070 AUD) within just 3 months with over 105 backers on Kickstarter. ("Ethically Sourced, Natural Skin Care by Savvy Bohème", 2016). After their successful Kickstarter campaign, Savvy Boheme went on to set up kiosks in various festivals and events. Furthermore, they followed the trend into online retailing and offered their product on Amazon. Although there are similarities between Savvy Boheme and Spa Serendib, it is important to note that there are differences in factors such as our vision and mission, our product lines, quality and manufacturing process, geographical location and strategy. 2.5 Opportunity Testing Plan A simple and a cost-effective way to test the business opportunity, the customer’s immediate reaction to the product and overall demand for the product would be offer free samples of selected products in small kiosks in places such as universities and a few shopping malls in Sydney. The only cost associated with this method would be the wages of the salespersons, rates of shopping malls for the kiosks and the manufacturing costs of the samples. A condition for the customers who uses the samples would be to submit their email addresses, thereby allowing our marketing team to receive feedback after 2 months of using the products. This information could also be used for future advertising of the brand.

3.0 Sales and Marketing Strategy 3.1 Marketing Fundamentals Product There will be 4 main products offered by Spa Serendib:

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1. Face masque – Virgin Coconut 100g 2. Body Lotion – Cardamom Rose 250g 3. Hand cream – Sandalwood Spice 30g 4. Lip balm - Ceylon Lime & Aloe Vera 12g These four products will also be available in a special ‘bundle package’. The all-natural products of Spa Serendib will be manufactured in an ethical manner, with humane and healthy working environments and no testing on animals. Furthermore, we will focus on two main areas in terms of the key product factors. i.)

Improved Performance: The ingredients used in manufacturing our products such as Coconut, Cardamom, Sandalwood, Aloe Vera & Cinnamon are “ayurvedic” ingredients that have been used in Sri Lanka for over a 1000 years for medicinal and beauty purposes. They have been tested and proven to be extremely effective by scientists. Ayurveda offers vast amounts of information on principles of anti-aging activity, skin care and anti-aging herbs, helping in the exploration of possibilities of developing new anti-aging cosmeceuticals with natural ingredients for topical applications (Datta & Paramesh, 2010).

ii.)

Unique Product & packaging: The unique nature of Spa Serendib products, due to its age-old Sri Lankan ingredients will be one of our competitive advantages over other skin care products in the Australian market. The products will also be bundled in sustainable, eco-friendly and attractive packaging that will portray the culture of Sri Lanka and attract customers.

Price The 4 main products of Spa Serendib will be priced fairly competitively, to avoid price wars and keeping up with our target profits, using brands that are similar in nature and size to us such as ‘Alya Skin’ and ‘Sand & Sky’. However, due to the higher manufacturing costs and uniqueness of Spa Serendib products, the pricing the products at a slightly premium rate, as it is a perfect strategy for newcomers to the market who have unique characteristics (Quickbooks Australia, 2018). We will also be utilizing a phycological pricing strategy by lowering the price by $0.01 of each product and the bundle. 1. Face masque – Virgin Coconut - $49.99 2. Body Lotion – Cardamom Rose - $44.99 3. Hand cream – Sandalwood Spice - $19.99 4. Lip balm - Ceylon Lime & Aloe Vera - $19.99 5. Bundle - $114.99 Place

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We believe that this will be a key factor in the success of the brand. We aim to introduce the product to Sydney, with a long term plan of catering to the rest of Australia and eventually entering the global market. Our main competitors in the Australian Market, ‘Alya Skin’ and ‘Sand & Sky’, distribute their products through retail outlets and online retailing. A study done by research giant Roy Morgan ("Cosmetics and skincare products increasingly bought online", 2019) showed that the real winners of the skin care retailers are chemists/pharmacies such as Priceline and Chemist Warehouse, where 42% of Australian women do their skin care and cosmetic shopping. Therefore, Spa Serendib will focus on distributing our products to every Priceline and Chemist Warehouse in Sydney. The same study done by Roy Morgan ("Cosmetics and skincare products increasingly bought online", 2019) states that a growing trend can be seen in online shopping of skin care and cosmetic products in Australia, with 26% buying products online, rising from the earlier 18% four years ago. Due to this trend, and the low cost of this method, Spa Serendib will heavily focus on online retailing, spending resources on developing an extremely efficient and attractive website for our customers.

Source: Roy Morgan Single Source (Australia), Jan-Dec 2014 (n=4,280), Jan-Dec 2018 (n=3,945).

Spa Serendib will go one step further than our competitors and place small kiosks in malls and universities in Sydney for the first year, which will serve as selling and marketing both at the same time. We will outsource its delivery of goods to the Priceline pharmacies and Chemists Warehouses, using courier services such as DHL, for the first 4 years, with the aim of investing in 3 large delivery trucks at the end of the 4th financial year. Promotion

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Spa Serendib’s main marketing goal is to be known as a quality skin care product that can be accessed conveniently at a reasonable price. To achieve this goal our marketing plan must be executed to perfection. Therefore, it is essential that we our promotion process is simple, yet effective. When we advertise our product, we want to focus on the factors that make Spa Serendib’s product unique from our competitors. Therefore, we will focus on the “ayurvedic” aspect of our product and the proven benefits of using our age-old, natural products. We want to generate an ‘exotic’ feeling in our potential customers when they see or hear of our product. For this we will focus on how the ingredients originate from ancient beauty traditions in Sri Lanka, a secluded island in Asia, also known as the “Pearl of the Indian Ocean”. As stated earlier, Spa Serendib will have kiosks in malls and universities, along with our well trained sales team, to meet the customer face to face and explain our products in detail. This would help us get more exposure as well. To enhance our public relations, we will focus on marketing our ‘Not tested on animals, say no to animal testing’ policy and our 100% vegetarian ingredients. Our marketing team and finance team will also work together to fund charitable projects in the long term. In the month of April, starting from the 2nd year of operations, we will have a 25% storewide discount to celebrate the Sinhala & Tamil New Year which is celebrated in Sri Lanka. We will also allow customers to create a Spa Ceylon personal account, where discounts, promotions and offers will be available for our most loyal customers. Sales Force Spa Serendib aims to have a total of 15 employees in our sales force within the first 3 months of operation. They will be hired based on work experience and personality-based interviews where they will be asked open ended questions. We will have 4 weeks of training followed by 2 workshops, which will be conducted by the AMI and other corporate training specialists. 3.2 Social Media & Free Publicity There will be Official Spa Ceylon social media accounts on platforms such as Facebook, Twitter, Instagram, Pintrest and Snapchat. These accounts, along with our website, will be updated on a daily basis. The Official Spa Ceylon Snapchat Scan code will be on display on every kiosk so consumers, particularly young ones, can follow it, where any special promotions or sales will be displayed in a funky and modern way. A special Spa Serendib Snapchat Geo-Filter could also be obtained in some malls and universities that the kiosks are held in the opening few months of the brand, when special promotions are offered, which are going for $5 per 20,000 square feet. The email addresses obtained by giving out free samples could be used as a (indirect) method of free publicity. 3.3 Measuring Marketing Success i.) Brand awareness – Website traffic, Page views, trending on Twitter?

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ii.) Brand engagement - Number of likes, comments and shares on social media, email surveys, website surveys. iii) Customer Retention – Amount (in $) of products consumed by existing customers. Our marketing team will be measuring results on a monthly basis. If Spa Serendib reaches its goal of entering the global market, we will look to sources such as SAP Hybris for more complex and critical market information.

4.0 Operational Strategy 4.1 Operational Structure

CEO

R&D Manager

Design

Sales & Marketing Manager

Operations Manager

Development

Warehousing Sales & Distribution

Customer service

HR Manager

Finance Manager

Manufacturing

Accounting

Investing

As shown above, Spa Serendib will utilize a functional organizational structure, due to the benefits it brings to the organisation such as specialization, high levels of motivation and minimization of cost ("Main Advantages of Functional Organization Structure | Org Charting", 2019). The organization structure is divided into the 5 main functions that Spa Serendib will carry out its daily operations. Each Manager will have a well-trained work force to carry out the functions of it’s respective departments. Suppliers of the raw materials needed to manufacture the 4 products will be shipped from Sri Lanka, as it is much more economical, even with the added shipping cost, in the long run. A shipment every month will be the most efficient and effective regularity of orders, reducing wastage and minimizing storage cost. The needed, high-quality ingredients are freely available in Sri Lanka and can be bought through the leading wholesale and retail supermarket ‘Cargills’, who have been operating for almost a100 years. The CEO (Joseph Davishka) has a good professional relationship with the Board of Cargills Ltd., due to being in a managerial profession there before moving to Sydney, Australia. The materials needed for packaging will be bought in Australia, ‘BioPak’ being the most ideal supplier for this. 4.2 Outsourcing 9

Spa Serendib will outsource 2 of our main activities to third parties who either possess more skill or simply have the required means that we cannot supply internally. i.)

Shipping & Delivery – DHL will be approached for shipping the raw materials needed to manufacture the products and to deliver the products to the Chemist Warehouses and Priceline Pharmacies in Sydney.

ii.)

Website – The designing of the website will be outsourced to EB Pearls, a reputed website designing company, due to the major importance placed on online retailing by Spa Serendib.

4.3 Operational Risks There are many risks in entering the skin care market of Australia, and our focus is on those risks that are more likely to occur and the severity of it. Through this method, the more critical risks can be identified, tracked and mitigated. i.)

Risks that can be mitigated through insurance Although the likeness maybe less, Spa Serendib will not take chances when it comes to protecting our assets. ‘Allianz Insurance’ will insure our machinery, vehicles, manufacturing plant and stock. Liability insurance will also be bought, to protect any property damage or personal damage to third parties. (Allianz offers a package that will cover both these risks).

ii.)

Risks that must be mitigated through active monitoring and tracking. These risks are the biggest threats to Spa Serendib and must be dealt with extreme caution.

Critical Risk Table

Risk Factor

Type

Likelihood

Consequence

Mitigation tactics

Mitigation Costs

Implementation of strict new rules in the skin care industry

Regulatory Risk

High

Extremely costly penalty fees, fines, court cases.

Hire a corporate lawyer when needed.

$8,000$10,000.

New Entries to the AU skin care industry.

Competitiv e Risk

High

Harder to gain the required market share.

Invest in R&D to stay one step ahead of existing and potential competitors.

Included in R&D Expenses.

Hiring wrong/incompeten t sales force

People Risk

Medium

Failure to successfully carry out the detailed

Tough recruitment process and quarterly

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marketing plan.

employee reviews. Negotiable with supplier.

Declining Biodiversity

Market Risk

Medium

Increased price of natural ingredients needed for production.

Sign longterm contracts with suppliers.

Late shipments

Operational Risk

Low

Delayed orders to new customers & Retailers, bad first impression.

Hire DHL regularly to develop relationship.

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There is a very high probability of other risks that Spa Serendib will face in its daily operations. However, we are ce...