PHASE 5INDIVIDUAL PROJECT

DESIGNS BY KEN

KENNETH C HOLMES

ENTR615-1504B-01

PROFESSOR THERESA PAVONE

DECEMBER 21, 2015

DESIGNS BY KEN INTERNET BUSINESS PLAN

Executive Summary:

The life of urban man is so hectic. With a daily schedule full of business meetings and deadlines, and an active social life filled with sporting events and outdoor activities, concerts, the club scene, dating, and hanging out with friends, it is no wonder men have so little time to tend to their fashion nee

This is where Designs by Ken comes to the rescue. Designs by Ken is an online men’s wear store that offers a variety of apparel options to fit today’s urban man’s professional and casual needs, and makes the process convenient and fast.

1.1 Mission Statement:

The Designs by Ken mission is simple, provide the urban man with apparel options that are current and trendy, meet his apparel needs, and make the process simple and quick.

1.2 Keys to success:

  • Provide a website that is easy to access, navigate, enticing, and provides current and trendy apparel options that fit the urban man’s lifestyle.
  • Provide links to partner apparel websites that offer accessories, socks and underwear, athletic apparel, and dress and athletic shoes, to provide the total look.
  • Maintain a collection where pieces coordinate with multiple items, enabling multiple outfits and looks that easily transition from day to evening.
  • Maintain a strong and positive relationship with the Designs by Ken staff, clothing manufacturer, investors, and partner websites to encourage and foster a positive company culture, and collaborative team environment.
  • Establish and maintain an organized operational structure that fosters fast and reliable product production, delivery to warehouse, and shipping and delivery to the customer.
  • Establish and maintain a solid advertising strategy that promotes Designs and Ken, and entices the target consumer to purchase the product.
  • Establish and maintain a strong professional relationship with entertainment and athletic industry leaders to create sponsorship and media attention.

Vision Statement:

My vision for Designs by Ken is to start with a website that carries a small collection of professional and casual men’s apparel, and expand the collection and business as visibility and revenues grow. Ultimately, I want to open a Designs by Ken store in West Hollywood, and carry a full collection of men’s apparel, and dress today’s man from head to toe. Additionally, I want to see Designs by Ken apparel in major department stores and private men’s shops.

Company Summary:

Designs by Ken will offer the urban man fashions that are current, on trend and creative, that will meet the needs of the busy working urban man. Kenneth C Holmes and his team will maintain an efficient and cost effective system that ensures merchandise is promptly received from the manufacturer, and quickly shipped to the customer.

Additionally, Designs by Ken will maintain a strong focus on marketing to our target consumer, in all major metropolitan areas across the U.S. The marketing strategy will focus on national and regional publications, internet advertising, trunk shows to obtain department store and men’s shop accounts, fashion shows to increase consumer awareness of the online store and product, and entertainment and athletic venues will be utilized to sponsor industry events.

2.1 Company ownership:

Designs by Ken will be a partnership which includes:

  • Kenneth C Holmes, Owner, manager and Designer.
  • Investors, Business Partner, Financier, Designer and Collection Advisor.
  • Production Company, Design and Collection Advisor, and product producer.

All parties will work together as a team to create product that meets the target consumer’s needs, and encourages and promotes the growth of Designs by Ken.

2.2 Type of organization:

Designs by Ken will be registered as an LLC (Limited Liability Corporation). This type of entity will provide personal property and assets protection from business debts and litigation, will tax business profits and losses as owner’s personal income on my tax return, provides all the protections of a corporation without double taxation, and is simple and inexpensive to form.

2.3 Company Culture:

Designs by Ken will practice the Social Corporate Culture, which encourages employee collaboration, and fosters teamwork and employee trust. The mission is to build a loyal and skilled team that is responsible, has a sense of identity, and takes pride in their work. The plan is simple, as Designs by Ken grows, team member’s responsibilities will grow, title and pay will grow, ultimately building a team of professionals, dedicated to the growth and success of Designs by Ken, and their career.

2.4 Management Style:

As the Designs by Ken team leader, I will utilize a hybrid of two styles, Participative and Transformational. The Participative style will encourage team members input, with the final decision on Ken, the manufacturer and the investors, will boost employee morale by making the staff part of the decision process, will encourage the acceptance of change, and will filter out employees who do not want to participate and grow. The Transformational style will require high visibility on my part, will keep my eye on the big picture and delegate responsibility to my employees, and will set goals that must be achieved.

Designs by Ken employees will receive business cards to hand out, to promote the website and grow the business. It is my belief that encouraging participation, and delegating responsibility will encourage their personal growth, and foster the team of professionals Designs by Ken will need as the business grows.

2.5 Statement of Ethics:

To ensure best business practices are applied to all transactions, a Code of Conduct and Ethics will be assembled and provided to all employees, the investors and clients, and will be enforced to ensure full compliance with all legal, ethical, and professional standards, as well as ensuring a strong ethical standing in the business and consumer community.

Designs by Ken will practice a policy that ensures a safe and ethical workplace, provide equal opportunity for all, zero tolerance for discrimination or theft of any kind, the expectation that all employees perform their job to the best of their ability, and established penalties for those who do not comply. This policy will also ensure investors, the manufacturers staff and all parties are treated with respect, professionalism, and the Designs by Ken commitment to all contractual obligations.

The Human Resource process will apply best hiring practices, use best judgement when selecting the right personnel, perform background and reference checks, and maintain records of all personnel for promotional and disciplinary needs, including firing.

2.6 Statement of Social Responsibility:

Designs by Ken is a proponents of the environment and preserving our planet for future generations. The result is a shipping and packaging program that only uses 100% recycled plastic and cardboard, and full participation in the local Los Angeles recycling program.

Designs by Ken is also involved in local functions including fashion shows and benefits that raise funds for local foundations, and the annual West Hollywood Halloween Carnaval, which is the largest street party in the world, it takes place on October 31st, and hosts 500,000 participants.

2.7 Startup Summary:

Designs by Ken startup cost will include: production cost of product inventory, monthly rental of warehouse space, set up of electric and phone utilities, LLC registration and state fees, payroll for staffing, setup of office with equipment, software and supplies, creation and maintenance of the website and social media service, setup and configuration of print and radio advertising service, packaging and shipping costs of online orders. While state and federal grants will be sought to enable growth and stability, the sum I am seeking to launch Designs by Ken will be $225,000.

PRODUCT COST FOR START-UP LINE
Product / Cost Each / Quantity / Total
No-iron cotton long sleeve solid dress shirts / $10 / 500 / $5,000
No-iron cotton long sleeve animal print casual shirts / $15 / 400 / $6,000
Polyester long sleeve shimmer shirts / $10 / 500 / $5,000
Poly/cotton blend slacks / $10 / 500 / $5,000
Stretch Slim Denim / $10 / 500 / $5,000
Stretch Straightleg Denim / $10 / 500 / $5,000
Stretch Loose fit Denim / $10 / 500 / $5,000
Total Cost / 3400 / $36,000
DESIGNS BY KEN: START-UP COSTS AND REQUIRED INVESTMENT
Initial inventory production cost / $36,000
Warehouse rent for one year / $16,200
Full service website setup and advertising / $8,200
Radio and Print Advertising / $1,200
Customer order supplies and shipping
Office furniture and Equipment / $1,400
Quick Books Pro / $200
Warehouse Phone and Electric Service / $3,120
Liability Insurance / $1,200
LLC registration / $400
Additional required cash investment / $157,080
Total Start-up Costs: / $225,000

Products:

Designs by Ken will offer the urban male styles that are creative and traditional, clean lined, with soft and comfortable fabrics, in season-less and seasonal colors, that easily transition from professional to evening including:

  • 100% no-iron cotton, button down dress shirts, in a variety of solids and patterns.
  • 100% no-iron cotton, button down casual shirts, in a variety of creative prints.
  • 100% polyester button down shirting, in a variety of shimmering colors.
  • 50/50 cotton/poly blend dress pants, in traditional colors.
  • Stretch denim, in slim fit, straight leg and loose fit, and available in dark indigo, vintage and black.
  • Shirt sizing from SMALL to XXL.
  • Pant sizing from waist 28 to 42, with inseams from 30 to 36.

Additional style and colors will be added based on season, fabrication and color availability, and customer request including:

  • 100% no-iron cotton, button down short sleeve dress shirts, in seasonal colors for spring and summer.
  • Short sleeve casual shirts, in festive colors, patterns and prints, for spring and summer.
  • 100% cotton twill Shorts in seasonal and all season colors.
  • Stretch denim pants in white for spring and summer.
  • Stretch denim shorts in Dark Indigo, Vintage, Black and White.
  • 50/50 cotton/poly blend jackets, to coordinate with dress slacks (suit separates).

As Designs by Ken grows, the plan is to expand the collection and include socks and underwear, accessories, activewear, swim wear, pullover shirts (both dress and casual), vests, blazers, jackets and coats.

Licensing will be pursued to make expanding the collection easier, less time consuming and costly. Licensing can potentially include: fragrances, socks and underwear, accessories (belts, wallets, and so on) etc., and will be approved by the investors, and myself.

Prices currently range from $50 to $100, and new item prices will be based on type of garment and fabrication.

Collection pieces will be designed to coordinate with multiple pieces, allowing for many different outfits and looks, and easily transition from day to evening.

3.1 Production and distribution chain:

Designs by Ken will use the direct to retailer chain of distribution (manufacturer to Designs by Ken to the customer).

  • The production house (ARGYLE Haus of Apparel or Indie Source) will handle production from start to finish, by using their full service package.
  • All supplies and services are 100% U.S. sourced and based.
  • Finished product will be shipped from the manufacturer to my local warehouse.
  • My warehouse will be used for receiving and storing finished product, reviewing and printing online orders, and shipping customer orders.
  • Customer orders will be shipped from my warehouse by USPS or UPS to the customer.

3.2 Product Shipping:

Designs by Ken will use USPS for domestic orders and UPS for international shipping. Domestic orders $100 and more will ship for free, express shipping is available for $15. All other domestic and international shipping will be charged to customer.

3.3 Location:

The location of both the manufacturer and the warehouse is Los Angeles. Los Angeles provides a regional base for manufacturing, easy communication between Designs by Ken and the manufacturer, convenient warehousing and shipping to anywhere in the U.S., and around the world. Additionally, it provides an ideal city for making entertainment and athletic industry connections, and the possibility of a Designs by Ken retail shop in West Hollywood.

Market Analysis Summary:

The men’s wear industry is of global proportion, and each year new manufacturers and designers from across the globe enter the marketplace, making competition for the consumer’s disposable income intense. With increased competition and difficult global time, industry leaders must adapt to maintain their global position. This is done by: utilizing intensive advertising and public relations strategies to maintain their position, build and maintain consumer loyalty, and compete with new competition; and by following fabrication and color changes, adopting new styles based on consumer lifestyle and status, and by staying on top of trends (Pearson, 2015).

For 2010, the men’s wear industry generated revenues of over $402 billion, reflecting growth of 14% over five years. Apparel and footwear represent 60% of the total market, and denim generating over $115 billion, with increased demand for premium denim, and reduced demand for low priced denim at just below $3 billion. Revenues of outerwear rose, with pants, shorts and shirting showing the highest volume. Neckwear generated $413 million in revenues, and a 26% gross profit. Suiting represented 35% of total revenues, with reduced revenues because of higher unemployment and less disposable income. Canada, South America, and the United States had the largest markets, representing 35% of global revenues (Pearson, 2015).

For 2014, China had the fastest growth of the top five developing nations, with $78 billion in industry revenues. The UK experienced a revenue increase of 5%, and continues to maintain strong sales (Pearson, 2015).

The men’s wear industry is expected to continue growing, and for apparel producers to maintain their customer base, they will have to use aggressive and targeted advertising, differentiate their collections from the competition’s, and potentially combine tactics to maintain and strengthen their position and market share (Pearson, 2015).

4.1 Industry competition:

The men’s wear industry has many major players. The designers and online retailers that Designs by Ken will be competing with include:

  • Ralph Lauren: A U.S. based designer whose apparel appeals to the sophisticated male and female consumer. His collection includes men’s wear, women’s wear, children’s wear, the Ralph Lauren Purple Label for men, home fashions, hosiery for men and women, and fragrances. Ralph Lauren has an international presence, with his collection found in major department stores, Ralph Lauren stores around the world, and Ralph Lauren.com.

Year to date September 2015, Net Revenues are $3.5 billion, Gross Profit is $2.079 billion, Gross Profit Margin is 57.9%, and Net Income is $224million. The outlook for 2016 indicates revenues expected to increase by 4% globally. The Ralph Lauren strategy remains the same, maintain multiple distribution, merchandising and global differentiation, as well as inspiring design, product development, supply chain, advertising and marketing, and superior customer service (N.A., Ralph Lauren Reports Better-Than-Expected Second Quarter Fiscal 2016 Results, 2015).

  • Calvin Klein: A U.S. based designer whose apparel appeals to male and female consumer who likes clean lined, simple, chic and season-less clothing, that easily transition from professional to evening, and coordinates with many garments. His collection includes men’s and women’s sportswear, couture and denim, and licensed products including: men’s sportswear, outerwear, accessories, lingerie, men’s and women’s hosiery, swimwear, eyewear, furs, and fragrances. He has an international presence, with his collection found in department stores, Calvin Klein stores around the world and Calvin Klein.com.

For 2015, first quarter revenues ending May 3, 2015 were $653.9 million, quarterly earnings were $95.7 million, anticipating the same for the second quarter, and a 6% increase for the entire year. The 2015 figures represent a 5% revenue increase from $665 million, and a 25% earnings increase from $82.1 million from the first quarter 2014. Calvin Klein’s strategy is simple, defy traditional fashion, and utilize provocative advertising that keeps the press talking about him (N.A., Calvin Klein, Inc. Key Developments, 2015).

  • Perry Ellis: A U.S. based designer whose apparel appeals to the male consumer who likes styles, colors and patterns that defy tradition, are loose fitting, and stylish for today’s man. He has an international presence, and his collection is found in department stores, Perry Ellis stores around the world, and Perry Ellisl.com.

For 2015, Annual Revenues were $889.97 million, Gross Income $290.81 million, and Net Income was ($37.18 million). For 2016, annual revenues are $205.4 million and climbing. Perry Ellis International is experiencing reduced income and inventory, net income losses, and is losing market share, but is hopeful for the future. Theplan is to continue to provide creative and innovative styling, and enhance their consumer relationship with operational and customer service excellence, to return the company to profitability (N.A., Annual Financials for Perry Ellis International Inc., 2015).

  • BOMBFELL.com: Is an online men’s clothing store that provides men membership and a personal stylist. Your stylist chooses product based on your size, style and budget, or you can make their own selection. They make product selection, purchasing, and return convenient and simple, and send product on a monthly basis, unless cancelled by the member. They offer product from many reputable labels, a full collection of head to toe styling that is classic, casual, preppy and hipster, prices range from $69 to $200, and regular shipping is always free. Bomfell.com is backed by venture capital groups, therefore is a privately held company, and their financial are not publicly available.
  • Topman.com: Topman is a UK based men’s wear retailer, has over 400 stores around the world, as well as their own website. Topman features their own label, as well as up and coming British designers, and will dress the customer from head to toe with chic and casual, dressy and professional apparel. They offer an in-store personal stylist, and free standard shipping. Their prices range from under $10 up to $500, and they provide students a 10% discount. Since Topman is a privately held retailer, their financial are not publicly available.

4.2 Target market: