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KARGHACustom Rajasthani Quilts
Business Proposal
Confidential
Submitted By
Bhavya Soni
MBA
Central University of Rajasthan
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1. Executive Summary2. Mission3. Key to success4. Objectives5. Company Summary6. Start up Summary7. Company ownership8. Company location and Facility9. Product and Service
9.1 Product and Service description
9.2 Competitive Structure
9.3 Sales Literature
9.4 Fulfillment
9.5 Technology
9.6 Trend Tracking
9.7 Future products and services
10. Market Analysis summary
10.1 Market Need
10.2 Market Trends
10.3 Market Growth
10.4 Local Sales
10.5 Internet Sales
11. Market Segmentation
11.1 Gift buyers
11.2 Art buyers
12. Target Market Strategy
13. Strategy and Implementation Summary
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13.1 Value Preposition
13.2 Marketing Strategy
- Promotion
- Pricing
- Sales
- Sales Forecast
13.3 Web Plan Summary
- Web marketing strategy
- Development Requirements
14. Personnel Plan
15. Financial Plan
15.1 Financial Assumptions
15.2 Key Financial Indicators
15.3 Break Even Analysis15.4 Projected profit and loss
15.5 Projected balance sheet
15.6 Business Ratios
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KARGHA is a sole proprietorship, owned by Mr. Bhavya Soni. We sell original,
high-quality custom quilts to discerning customers who give them as gifts or
keep them as heirloom artworks. We do the customer response, design,
piecing, and machine quilting; hand-quilted works are quilted by independent
local women hand-quilters with roughly 20 years of experience, with whom
we have negotiated per-piece prices. KARGHA quilts are manufactured in the
owner's home, and sold directly to our customers in Rajasthan through our
retail outlet at Rajsthali, Jaipur (Rajasthan), as well as over our website. Ourstrength is transforming even the vaguest ideas and descriptions from a
customer into beautiful and meaningful quilt designs which both giver and
recipient appreciate.
KARGHA works to provide custom, individually designed, warm and
snuggly quilt art to customers who value originality but don't have the time or
skills to create such pieces on their own. By working with our customers in the
design phase, we give them the satisfaction of having input into their gift or
artwork, without the intense investment of their own time and labor that
would be necessary to produce such a quilt themselves. The result is a
personalized, usable, beautiful quilt which will be appreciated for generations
to come.
We have been making quilts on commission as a hobby for one year now, and
cannot keep up with the demand from new customers when doing this part-
time. Starting, we will open KARGHA as a full-time venture operated out of
our home. Our goals are to be able to pay ourselves and our independently
contracted women hand-quilters a decent wage for doing the work we love,
and to repay a small start-up loan within two years of opening the business.
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We will minimize the financial risks by requiring payment at the time of
commission. For the customer, this means that they can take as long as they
want to work with us on a design, but once we have agreed on the design, they
must pay us in full for the quilt before we will begin creating it. This
arrangement has been the one which works best for both sides in the past.
Most of the value of the quilts comes from the labor of designing and creating
them, rather than from the materials (fabric, thread, etc.) Of which they are
composed. Our start-up requirements are therefore fairly small (under
Rs.50,000):
Rs.10,000 of inventory (a basic fabric library) Rs.10,000 for a second sewing machine Rs.16000 cash reserve Rs.8000 for website development Rs.6000 of various supplies, legal fees, etc.
We will invest Rs.25,000 to start the business, and need another Rs.25,000 for
initial inventory of fabric and equipment. Based on current prices for our
quilts, and the time needed to complete each one, we are forecasting sales of
Rs.4,50,000 in the first year. We expect to begin breaking even in the third
month.
At KARGHA, we know that our customers value originality and high-quality
work as much as they value their time. Using only a small portion of their time
to provide us with the important information about their desires in
commissioning a quilt, we will provide them with high-quality, custom-
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designed quilt art which can proudly be given as a gift, kept as an heirloom,
and displayed prominently as a piece of artwork in a home or office. In the
process of delivering customer value preposition our aim is to empower the
women labor associated with us.
Effectively establishing our reputation as an exceptional business:Nationally, we are unique in creating truly custom-designed quiltswhich do not rely on standard geometric quilt designs.
Catering to our customers' need to feel unique by emphasizing thepersonal nature of the customization process, which puts the customer,
and his or her personality and feelings, at the center of the product.
Quickly (1-2 weeks) turning out these finished custom quilts, bothlocally and through our website, for a price premium which enhancesthe prestige of the customized product.
Maintaining originality of design and quality of skills to turn bulk,inexpensive fabrics and materials into high-end artworks which
can bring high prices.
Create and sell 6 original, custom quilts per month, at prices whichcover owner's labor.
Use contacts in local artisan groups and in our customer base to createsuccessful word-of-mouth advertising.
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Establish a website to provide more information and to initiate non-localsales.
Pay back initial investment with 10% interest in two years
KARGHA is a sole proprietorship, owned by Mr. Bhavya Soni. We sell original,
high-quality custom quilts to discerning customers who give them as gifts orkeep them as heirloom artworks. We do the customer response, design,
piecing, and machine quilting; hand-quilted works are quilted by independent
local women hand-quilters with roughly 20 years of experience, with whom
we have negotiated per-piece prices. KARGHA quilts are manufactured in the
owner's home, and sold directly to our customers in Rajasthan through our
retail outlet at Rajsthali, Jaipur (Rajasthan), as well as over our website. Ourstrength is transforming even the vaguest ideas and descriptions from a
customer into beautiful and meaningful quilt designs which both giver and
recipient appreciate.
KARGHA works to provide custom, individually designed, warm and
snuggly quilt art to customers who value originality but don't have the time or
skills to create such pieces on their own. By working with our customers in the
design phase, we give them the satisfaction of having input into their gift or
artwork, without the intense investment of their own time and labor that
would be necessary to produce such a quilt themselves. The result is a
personalized, usable, beautiful quilt which will be appreciated for generations
to come.
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To begin our business, we will need a stock of materials, and time to begin the
first commissions for the business, which are currently being negotiated with
two interested buyers, who have offered to advertise our business through
word of mouth with friends and family members. We plan to begin
our official advertising campaign by placing brochures in likely locations
around Rajsthali and RTDC hotels, and by creating our business website
Initial inventory consists of threads and a basic fabric library:
Between 1/4 and 1 yard each of 300 different cotton fabrics, coveringhues and shades in all color groups
3-4 yards each of 25 different cotton backing and background fabricsThese fabrics will give us the necessary initial range to execute a wide variety
of designs which rely on subtle color grading and variation for their
effectiveness. The fabric library will be supplemented month by month, as
designs are finalized and as particular fabrics need replacing, or new, more
popular ones, become available.
Expenses include:
A fabric board, at least 8'x8', in order to lay out patterns vertically fordisplay to clients and during the design process
Initial marketing materials (brochures and website) Extra insurance to cover the value of the inventory and the sewing
machines, as well as work in progress
We would also like to have a decent initial fund of cash in our businessaccount, about Rs.16,000 to cover unforeseen expenses such as repair of
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the sewing machine, or promising new advertising possibilities (like a
local quilt convention)
Legal Rs.2000
Fabric board Rs.2000
Brochures Rs.500
Supplies: rotary heads, pins, extra machine needles, insurance Rs.1500
Website development Rs.8000
Total start-up expenses Rs.14000
Cash required Rs.16,000
Start-up inventory Rs.10,000
Other current assets Rs.10,000
Total assets Rs.36,000
KARGHA is a sole proprietorship, owned by Mr. Bhavya Soni.
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The company is located in the home of Mr. Bhavya Soni. Some quilting work is
done off-premises, in the home of the contracted women hand-quilters. All
locations are maintained smoke-free, since fabric items can easily absorb
odors.
KARGHA manufactures all-cotton, high-quality, custom quilts with original
designs. Through our design process, our customers work with us to provide
the information, ideas, and sometimes even images (like photographs) that
allow us turn their intentions into beautiful works of quilt art. When
completed, our quilts are hand-delivered or shipped securely to our clients, or,
if they prefer, to the intended recipient of the gift, along with instructions on
the proper care and maintenance of their heirloom-quality quilt.
We make six different quilt options, which are differentiated by size into "crib
quilts" (for babies and children), queen-size quilts, and king-sized quilts, and
by quilt type (machine quilted or hand quilted). Use of hand-dyed fabrics,
larger sizes, and special requests or processes (including photo transfer, etc.)
will require additional charges and completion time.
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Quilting type: Price Time
Machine Rs.600 3-4 weeks
Hand Rs.750 4-5 weeks
Quilting type: Price Time
Machine Rs.1,000 6-7 weeks
Hand Rs.1,350-1,500 8-9 weeks
Quilting type: Price Time
Machine Rs.1,500 7-8 weeks
Hand Rs.1,750-2,000 9-10 weeks
Price and time variables are determined mostly by the intricacy of the image
and quilting designs requested, and reflect additional labor costs. Time to
finish does not include shipping time, which will be determined (and paid for)
by the client. Since these are custom artworks, we will encourage our local
clients to view the finished quilt themselves before sending it to a recipient,
and may even provide delivery services for local clients.
For customers ordering over the web, we will make arrangements to ship via
their preferred shipper, but will recommend insured delivery with signature
and confirmation via ups and fed-ex, since the quilts are irreplaceable. When
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we ship, rather than deliver, we will provide the primary wrapping of the
quilt, first in un-dyed cotton, then in waterproof plastic wrappers within a
larger, padded box, to ensure safe arrival in the quilt's original condition. I will
not ship any quilt without delivery confirmation or insurance, as each quilt
represents roughly 1/6 of our monthly earnings.
There are only a handful of other businesses offering custom-designed quilts,
and our competitive advantage stems from our design expertise. Many
businesses which claim to offer "custom quilts" are really just offering
customers a choice between several pre-determined original designs. We, on
the other hand, can help a customer generate ideas, even take basic
information about the color of a child's room and his favorite book and create
a completely new design which is tailored to the customer's taste. And, most
importantly, our design features emphasize our client's ideas and feelings, and
our skills, by creating quilted pictures, rather than the traditional,
geometric quilt designs other businesses offer. Our real challenge is simply to
get our name out there, because we are offering services far more complete
than most other quilt makers.
Our closest competitors are local pre-manufactured quilt retailers, other quilt-
selling websites, and the do-it-yourself quilting market. However, none of
these competitors offers the combination of factors which define our niche.
Retailers, both local and national via websites, offering finished quilts allow
the customer only to choose however pre-determined designs, with
customization limited at most to color choices. The only other option for
custom-designed quilts, offered through quilting classes and books, requires
an enormous investment of time on the part of the customer.
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Indirect competitors include other personalized services and gift options, from
season tickets at a cricket game to other art media, including sculpture,
paintings, and drawings. Our challenge is both to enable customers to see
personalized quilts as an appropriate choice, and then to demonstrate the
superior quality of our quilts.
KARGHA fills a unique niche, offering the status and personalization available
with a fully custom quilt, without a major investment of the customer's time.
We are therefore targeting those busy professionals who see prestige in gifts
and purchased artwork not solely in its expense, but by the extent to which itreflects their values: handmade or unique, rather than mass-produced;
consisting of all-natural materials, rather than synthetics; made by (and thus
funding and supporting) an identifiable small-scale artisan rather than a large
corporation; and reflecting sincere feelings of love and caring, rather than
commercialized, standardized emotions (more information on our target
market can be found in the market analysis section, below.)
At the end of this plan are sample brochures such as those we will distribute at
local arts and quilting retailers. These brochures contain pictures of some
previous quilts, as well as customer comments on the high quality of our
workmanship and willingness to customize our designs.
Each brochure also includes the URL for our website. Sample pages from the
website have been printed out and attached to the plan as well.
We buy most of our fabrics from the local division of a national fabric chain,
to keep down costs. Since most of the design value comes from the
combination of fabrics, our ideal fabric supply provides a broad range of
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styles, colors, and textures available in small (1/4 yard) to very large (entire
roll) amounts. The local fabric store in this larger chain meets this needs, and
their low prices (Rs.30-80/yard) for fabric ensures a good return on the fabric
expense.
Occasionally, customers may want a particular theme or style in the fabric
choices, so we also maintain the option of shopping from other local fabric
retailers, and of charging a premium for specialty or special-order fabrics
(locally hand-dyed artisan cottons and silks, brand-name fabrics from disney,
mayur etc.). Many of the artisan fabrics are available through craftspeoplehere in Jaipur, while the national ones are most available online.
Our business as a whole is a relatively low-tech establishment in terms of
manufacturing. Since, we stress the value of individually designed and hand-
crafted quilts. However, our use of a website will attract more technologically-
savvy customers, and we anticipate possibilities for design which incorporate
photos and other images which are emailed to us by the customer, enabling
their direct input into the finished design.
We will use a database to track our orders and to spot trends in customer
requests. For example, we may find that web customers more often request
customized text embroidery on a quilt, while our local customers want to
choose individual fabrics from our collection. Keeping track of these trends
will enable us to tailor our marketing approaches to different customer
groups.
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Our products are driven directly by customer demand. Whatever they request,
within reason, we will give them. So, each design, each quilt is the direct resultof suggestions or requests from the customer, and future products will reflect
any changes in customer preferences.
In the future, once our business is established, we may take some design time
to create a series of stock elements which can be combined in different ways to
provide less expensive options for customers who want customization, but
cannot afford to fully commission their own quilt.
Eventually, we would like to employ other local craftspeople to do the piecing
and quilting of the artworks, so that we can focus on design and customer
interaction. However, this is a long-term goal (5-10 years away), and will
depend on increasing demands for our products which require additional
labor.
Quilts are not only decorative; they can be cherished gifts and investments in
artwork. KARGHA will target two separate groups - gift buyers, particularly
people buying quilts for new children and grandchildren, and art buyers, whoare looking for a piece of usable art which they can keep and pass on to later
generations or sell in the future as an antique. Because such high quality quilts
are more labor and time intensive to make, they are more expensive than
ordinary crib or bed coverlets. The market most interested in our products
will, therefore, be people with an above average level of disposable income,
who value quality workmanship and original - even custom - design work in
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the gifts and decorations they choose to purchase. The capital city has a high
percentage of such consumers who support a number of craftsmen and
women, but very few of these crafts involve high quality textile work other
than clothing. This is a market niche that can and should be tapped.
"Do you believe that spending Rs.15,000 on a media center is vulgar, but that
spending Rs.15,000 on a slate shower stall is a sign that you are at one with
the zen-like rhythms of nature?"
In his book, on the new counter culture-as-mainstream elite, David Brooks
describes a typical grocery store catering to discriminating premium: "the
visitor to fresh fields is confronted with a big sign that says 'organic items
today: 130.' This is like a barometer of virtue. If you came in on a day when
only 60 items were organic, you'd feel cheated. But when the number hits the
three figures, you can walk through the aisles with moral confidence." This
scene takes place daily in stores.
These sorts of consumers abound in the Jaipur, and as brooks points out, their
wealth and status are based on education, brains, and merit, rather than on
inherited wealth. This new elite values high-quality, time-intensive products
that are visibly non-mass-produced, and this value is understood as a moral,
not just political, calculation. While such consumers have numerous optionsfor high-end foods, bath products, furniture, and so on, they do not have a
great deal of free time, because their wealth and their lifestyles involve the
full-time work of all adult members of the family (preferably in some socially-
conscious or technologically advanced field).
We are offering these kinds of consumer access to individually crafted, locally
made, unique, high-quality quilt art. In buying our product, our customers get
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the kind of personalized gift they want, and can pay someone else to invest the
time needed to make the item, since their own time is already full. Quilts, in
particular, speak to their ideas about tradition and slow, time-intensive labors
of love that these customers may associate with their own mothers and
grandmothers, and which the women in particular may feel guilty for not
being involved in them. For a price premium, we will make an original, usable
work of art that they can be proud to give to their discriminating friends and
families, from its all-cotton fabric and batting to the brochure which describes
our small, local artisan business.
Quilting used to be seen as an old-fashioned, rather fuddy-duddy kind of
endeavor. Recent exposure to issues in the historical aspects of quilting as a
forum for women's expression has begun transforming this thinking, and
quilting is on the way to being recognized as a valuable (and occasionally
subversive) form of mostly-female art. This kind of counter-cultural
interpretation will, of course, appeal to our market segment.
In addition, we are targeting in beginning more and more to identify their
socially-conscious consumerism as rooted in local buying, which is an
advantage when selling in the Jaipur market. We anticipate that some of our
local customers will initially encounter us online at our website when
searching for locally made gift products, and will only then come to visit us in
person.
With the increasing use of technology in everyday business endeavors, there
are expected to be an ongoing growth in the number of good-paying jobs
utilizing creative and critical thinking skills, the characteristics that define our
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target market. We also expect that as the economy continues to recover, high-
income consumers will feel more and more confident about placing some of
their disposable income into more decorative and luxury items, such as the
custom quilts we are offering. Since the income of many of the urban elite
residents of the Jaipur premium is tied directly or indirectly to the technology
sector, improvements in revenue among high-tech industries in the next 5
years will increase our market segment, as well as their comfort level
concerning large purchases. Art-buying in the Jaipur, in particular, seems tied
to the fates of technology firms, according to Royal art gallery owners. When
stock goes up, the young, high-tech employees there seem more willing to
invest in items like artwork, rather than hanging onto their cash in case of
hard times.
Art world news noted in a September, 2009 article on art galleries that the
Jaipur high-end art and gift buying population, in particular, places a high
value on supporting local artists. According to the 2001 census, the Jaipur has
almost 1 and a half million residents with incomes over Rs.50,000, including
326,142 residents with incomes over Rs.10,00,000 per year, who would easily
be able to afford our products. Within the Jaipur, the vast majority of high-
income residents are clustered in urban areas such as the c-scheme and Raja
Park metropolitan areas, and larger college cities like Bajaj Nagar. As these also
tend to contain more liberal populations who express interest in issues such as
art. We are focusing our initial local marketing on the C-scheme, Raja Park
and MI Road areas, rather than traveling to more rural towns.
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A recent study by TOI reported that nationally, 43% of all internet users had
household incomes of at least Rs.50,000. This means that almost half of the
people with access to our website are in the target demographic of wealthy
surfers who would be able to afford one of our products. In the Jaipur, an
internet-savvy area, only 38% of all internet users had such high incomes,
meaning that our marketing strategy locally needs to focus on areas where we
can guarantee we will be contacting a high percentage of our richer
customers.
A word tracker search on "gifts" reveals that approximately 8,000 people permonth are looking for "gifts," "personalized gifts," "unique gift ideas," and "baby
gifts." by including the right keywords in our website, and promoting the idea
of custom quilts as a personalized gift idea, we can make our services more
visible to these potential customers.
Our market, aside from geographical divisions (ie., Jaipur versus internet
customers), is generally divisible into two main categories: people who are
buying gifts for others, and those who are buying a quilt as a "gift" to
themselves or an investment in heirloom-quality quilt art.
We hope that many of our customers, having purchased one quilt from us,
will come back to us for more unique gifts; we expect that our long-term
customers will thus move back and forth customers the two categories.
Customers will generally encounter us with only one of the two agendas in
mind, and we have developed different strategies to appeal to these different
needs.
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These are potential customers seeking to buy a gift are looking for something
that speaks of their own taste, but more than that, of their intimate knowledge
of, and thoughtfulness toward, the gift recipient. For our customers, KARGHA
becomes the magic medium by which their caring feelings towards the
recipient are made manifest in a tactile, tangible object, which can then be
passed on to a friend or family member who will cherish it (and the giver)
forever. The key to this transformation is the design process. Our customers
give us as much or as little information about themselves and the gift recipient
as they wish - the more detail, the better the quilt can reflect the unique
personalities, wishes, and love of both people. We have created basic forms
and questions for all our prospective customers to consider, but in-person
consultations, supplemented by email and telephone conversations with the
designer for our website customers, will be the selling point. Our customers
are getting personalized services, and they will feel pampered and catered to.
these customers are buying our quilts to display in their houses and offices, to
declare to their guests, their clients, and their colleagues that they value high-
quality, original art with a hand-made feel. These clients may send us
photographs of the locations in which they would like to hang their quilts, and
consult with us about their taste in subjects, colors, and styles. Our design
services for art-buyers are more akin to interior designing than to gift-
making, as we will try to make quilts that both co-ordinate with, and yet stand
out from, their surroundings. These quilts require the same sort of consulting
as gift quilts, but with a focus on the buyer only, and not a recipient. These
quilts may depict aspects of the buyer's hobbies or occupation. They may
incorporate meaningful elements from the buyer's family history or
professional journeys. They may depict treasured pets or family members,
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living or passed. These customers are commissioning artworks that will
beautifully represent some aspect of their lives of which they are proud.
By focusing on gift-givers and art-buyers within premium market, we are
remedying a major paradox these clients face, and taking advantage of our
unique market niche.
These customers value high-quality, non-mass produced goods, but don't have
the time to make them. We specialize in individualized original designs for
people who can afford to pay for high-end quilts.
Both segments require some level of input into the design phase of the product
in order to obtain the kind of personalized feel they are looking for, and our
expertise in translating their ideas and feelings into images fits this needperfectly. In addition, the personalization services add value to the product far
beyond the high quality of our workmanship by making our customers - and
the quilt recipients - feel special and unique and because these two different
segments of the customer base may approach their initial searches via
different routes. We are locating brochures and advertisements (locally) in
three places:
General upscale or high-end consumer areas like organic grocerystores, local symphony pamphlets, and upscale day care facilities
Gift-centered retail centers such as artisan co-ops, holiday markets, andupscale shopping centers
Art-centered retail centers such as antique stores and art galleries
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To target both segments on our website, we will include searchablekeywords such as "personalized gifts," "baby gifts," "custom artwork," and
"gift ideas."
We hope that many of our customers, having purchased one quilt from us,
will come back to us for more unique gifts; we expect that our long-term
customers will thus move back and forth between the two categories.Customers will generally encounter us with only one of the two agendas in
mind, and we have developed different strategies to appeal to these different
needs.
At KARGHA, we understand that you are busy, but that your limited timedoesn't reflect your unlimited love and caring for your friends and family. We
have the time and the skills to turn your ideas and feelings into a snuggly,
warm, and beautiful quilt that you will be proud to give as a gift or display on
your wall, an artwork which can be appreciated for generations to come. Our
prices are high because they reflect the many hours of work we spend
designing, piecing, and quilting your original work of art. Buying a quilt from
us is an investment - in your relationships with your gift recipient, in the value
of the artwork, and in your own preferences and personal style.
Our marketing strategy relies on word of mouth, an inexpensive, attractive,
and fully accessible display space (our website), and a small amount of ad
placement.
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Our promotion strategy is threefold:
To locate brochures and ads about our product in areas where ourcustomers normally shop: high-end organic grocers, artisan co-ops,
local bookstores, and the like.
To spread word-of-mouth among friends and family working in thekinds of high-tech and high-income, socially-conscious jobs that our
customers inhabit
To create and promote a website, linked to other quilting sites, topacific-area quilting promotions, and to sites about local crafts
In addition to these direct promotions, we have arranged for a selection of our
quilts to be sold at a local artisan's fair, where information about the possibility
of buying a custom quilt will be prominently displayed.
Our pricing is high not only to compensate for the labor involved in creating
the product, but to establish our custom gifts as a luxury good, with all the
status considerations that involves. Our customers are paying for the product,
but they are also paying for the prestige of being able to commission an
original work of art.
Our sales strategies will focus on the personalization process by responding to
all potential customers' inquiries in person in the medium they most prefer -
emails will be responded to by email or phone, phone calls will be returned by
phone calls and by face-to-face visits. We have a large collection of existing
quilt designs to show potential clients, so that they can see the quality of the
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work offered. Ideally, these consultations will take place in the owner's home,
where our customers can browse through the fabric library to get inspirations,
and can form a personal connection to the owner/designer, and imagine the
contract as the beginning of a creative partnership.
In addition to the relatively minor direct costs of fabric, thread, notions, etc.,
used up in each quilt, we have another direct cost for hand-quilted pieces
which is paid directly to the independently contracted hand quilters. For each
hand-quilted crib quilt, the quilter receives Rs.150; for each queen-sized, she
receives Rs.350; and for each king-sized, Rs.400. These additional non-
inventory direct costs are listed in the profit and loss table.
Based on current prices for our quilts, and the time needed to complete each
one, we are forecasting sales of Rs.4,50,000 in the first year.
KARGHA's website will primarily showcase the range of styles the owner has
used in the past. In addition to the gallery, the website will offer information
on pricing, the design process and expected customer participation.
The owner has some experience designing websites, but will be quite busy
getting other aspects of the business ready for opening. We have hired a
colleague with extensive website design experience to create the preliminary
setup, based on layouts we have specified. The site will be hosted by a hosting
provider with whom we are familiar, who allows relatively inexpensive
upgrades in space and features, should we want to expand the site in the
future. Since the purpose of the site is mainly marketing related, and no actual
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sales are transacted there, the focus will be on providing useful information to
potential clients, sharing stories and images of past quilts, and offering tips and
encouragement to other creative and art quilters out in cyberspace. The
website will also include a list of upcoming appearances and lectures by the
owner.
The website URL will be included on all our brochures and business cards. We
will give a couple of cards to every client along with their completed quilt,
with the request that they pass on them on to friends and relatives who might
be interested in our quilts, if they were satisfied with their own. This has
worked so well in the past that the current website (a one-page bare-bones
site) already gets over 10 hits a week.
The development requirements for the website are external. Our colleague willdesign, create, upload, and launch a revised website for KARGHA. He will use
dream weaver to create the site, and estimates that time from initial design to
launch will take about three weeks, since we have already approved the layout
and map.
The company has only one full-time worker - the owner. KARGHA will also
contract with independent quilters to do quilting work on the hand-quilted
pieces. The portion of the quilt price paid out to the hand-quilters is listed in
the profit and loss table, under direct cost of sales.
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The owner has several years of experience at marketing, designing, and
producing custom quilts for others. He has been working part-time at this
business for the last one year; over the last year, demand has increased to the
point where he can no longer do quilts simply as a hobby without saying "no"
to 3/4 of the commission requests. He will use his contacts and word-of-
mouth advertising to turn this into a full-time business.
One of the best contacts he currently has is with two local hand-quilters,
through the local quilting association. Both have done contracted work for
him before and are very interested in taking on a more demanding schedule ofcommissions. The commissions listed in the sales forecast (Rs.150 for a crib
quilt, Rs.350 for a queen, Rs.400 for a king) have been worked out already
with the contracted quilters. One of these women is retired, and one is a
housewife whose children have just left for college. Both make use of
advanced hand-quilting techniques and are very skilled; they have experience
with a range of styles, fabrics, and thread types.
Owner Rs.24,000 Rs.28,000 Rs.30,000
Other Rs.0 Rs.0 Rs.0
Total people 1 1 1
Total payroll Rs.24,000 Rs.28,000 Rs.30,000
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KARGHA will begin commissions in January, 2012, with the first quilts to be
completed within 3-6 weeks after commission.
We anticipate a steady and increasing interest in quilt commissions, based on
the trends we have seen in the last several years. The financial plan is built on
the tax and interest rates shown below.
General assumptions
Year 1 Year 2 Year 3
Plan month 1 2 3
Current interest rate 10.00% 10.00% 10.00%
Long-term interest rate 10.00% 10.00% 10.00%
Tax rate 30.00% 30.00% 30.00%
We expect a steady but slow rise in sales over the next three years, up to the
maximum capacity of 6 quilts per month. As the business and its reputation
grows, we will be able to direct clients toward the best quilt for them more
efficiently, and streamline the design and production processes.
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The break-even analysis shows the projected break-even point for KARGHA,
taking into account all variable and fixed costs, including fees paid to thecontracted quilters. We will pass the break-even point in the third month, and
be profitable thereafter.
Break-even analysis
Monthly units break-even 3
Monthly revenue break-even Rs.2,613
Assumptions:
Average per-unit revenue Rs.862.26
Average per-unit variable cost Rs.116.98
Estimated monthly fixed cost Rs.2,259
The profit and loss for KARGHA is encouraging. In addition to paying good
wages and fees to the owner and the contracted hand quilters, the business
will be able to pay for the necessary insurance, taxes, loan interest, and a small
marketing budget, and still make a modest profit.
The projected marketing and promotion expenses are low, because the owner
already has an established reputation and clientele, from her part-time forays
into quilting in the last few years. The marketing budget includes items like
advertisements in local papers and magazines, church and synagogue
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directories (a great source for customers seeking gifts!) And yellow page ads,
as well as brochures in likely local venues.
The cash flow table and chart show our projected cash position. The table also
shows the planned repayment of the start-up loan. (Appendix)
The projected balance sheet is quite solid. We do not project any real trouble
meeting our debt obligations. As business progresses, we will build up our cashreserves so that we can take a vacation or sick time starting in the third year.
We would also like to be able to pay our quilters bonuses for their 20th quilt
completed, 30th quilt, and so on, although these numbers are not included in
the financials of the plan - actual amount will depend on achieving the sales
goals set forth, so we are leaving ourselves some flexibility.
The ultimate goal is to create a suitable net worth to see ourselves into
retirement within 20 years, since this is not the sort of business that can be
sold to another person. Most of our assets are cash, and we expect this trend to
continue in the future, given the nature of the business.
The some of the more important ratios from the quilting for
individuals industry are given in table attached. Our ratios differ from the
industry standard in several areas; this is largely because this closest industry
type more accurately fits what our subcontracted quilters are doing, and does
not represent businesses engaged in creating new gifts/works of art from
scratch.
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