Investment Project
I have pondered for years about the socks business, and with each passing day, it is getting better. “Designer Sock” business is a sole proprietorship venture that I began one year ago. It is strategically located in a storefront next to a sneaker shop. I singlehandedly embarked on a journey to realize my dream with my life’s savings of $19,578.40. I procured a lease of the storefront at a rental rate of $1000 monthly. I also paid a store rent deposit of $3000 at commencement since I didn’t have a commercial rental reference. The collective set-up costs for utilities such as lights, water, and electricity for the store, whose commercial services’ deposit was $1000. Furthermore, I had to purchase a counter, displays, a vacuum cleaner, mirrors, a cash register, and cleaning materials for the store. The initial additional costs for the rental start-up and set-up were $6200.
The “Designer Sock” business has operated with limited inventory due to financial shortcomings for the last year. I employed a strategy to purchase two pairs, one for display and one for sale, of each style of socks. Since the yearly rental sum was about 60 percent of the total capital investment available, I bought one thousand pairs of socks that included five hundred diverse styles, whose wholesale price was $5.20 each, making the inventory start-up cost $5200. The sales projection at commencement was a thousand sets of socks monthly at $16.00 per pair, which would generate revenue of sixteen thousand dollars.
I chose sole proprietorship business formation because of a start-up venture’s inherent advantages and benefits. First and foremost, it is easy to set up an entity under sole proprietorship, coupled with the low formation and running costs. I only created the business name, “Designer Sock,” decided on the location, and filed for a business license with the county government authority to begin. Those were the only legal requirements to commence individual entrepreneurship. Consequently, I chose the business formation option since I had limited investment capital and wanted to minimize operational costs, including salaries. Next, an individual entrepreneur is not liable to pay corporate business taxes to the government from its revenues (Sherano, 2021). Finally, sole tradership is not restricted to formal business structure and preparing annual reports.
Likewise, sole proprietorship has its share of cons in operations and management. For instance, this business formation has unlimited liability on financial credit ownership and obligation matters. It is also difficult to raise money for expansion under individual entrepreneurship. Financial lenders do not trust business owners’ financial position and trends since the annual reports do not authenticate them. Sherano (2021) states that investors are risk-averse, and only audited financial reports substantially guarantee their returns.
As such, bearing the financial difficulties in securing a business debt, I wish to pursue a transition procedure that will have the venture converted into a limited private business. I will incorporate other willing shareholders to raise the expansion capital investment and easily access business debt when necessary. The past year’s sales and customer demands trend point out that capital investment is the main shortcoming in exponentially growing the business and profitability. With increased stock, sales will rise, and eventually, the enterprise will generate more revenue.
Designer Sock Performance and Financial Reports
Assessing the business activity and sales level for the last year I have been in operation, there are good prospects if the capital base is expanded. The sales have grown gradually, though different seasons have varying demands, as shown in the clustered column chart below. The sales grew steadily from 38 pairs of socks to 700 in August. There was a sharp decline in September and October and a rapid rise in November and December with 700 and 1000 pairs of socks sales respectively. In only four months, I was able to meet half of the annual sales, that is, the month of July, August, November, and December. In only December, the business hit the target of selling 1000 pairs per month.
Among the challenges contributing to low sales is limited inventory in the Designer Sock. I only have one pair of socks per style for sale, yet customers have been asking for as many pairs of the same item as four. This implies that adequate stock would also lead to increased sales and revenue. I will stock at least nine pairs of each item with sufficient capital, one for display and the rest for sale. Therefore, I need money to stock at least seven more pairs of each of the 500 items to have the anticipated inventory size. Going with the current market price, I require an additional $18200 to reduce stock-out.
The Designer Sock business has books and information systems of account, such as an inventory management system to alert whenever an item reaches re-order quantity. I use an active business account to run the business’s financial matters. Every purchase or payment is made using mobile banking. I always help customers who have difficulties using mobile banking platforms to make payments. The Designer Sock business does not trade in the securities market since it is not a public limited company and thus, can only raise resources through bank loans and credit cards.
Since I do not have the personnel, I perform the work alone, including; ordering stock, arranging the socks on displays, answering calls, book-keeping, shipping orders, stocking shelves, helping customers, and cleaning the store every day. However, I am looking forward to the expansion, and hence, I will require employees to help serve many customers. I will employ a pacesetting management style to inculcate the spirit of hard work and high-quality service. For instance, I will endeavor to arrive first at the workplace and leave last. I will lead the rest by example and not wait for them to do something I’m not willing to touch.
Designer Sock Business Ethics, Integrity, and Social Responsibility
The business values are integrity, honesty, and social responsibility to the immediate environment. I resolved that I would follow my conduct and not do things that are convenient for seasonal gain. For instance, I do not sell low-quality socks to maximize profit because that will be dishonesty to my customers. This is regardless of the covet emptor principle of the buyer-seller relationship. Also, while at work, I only concentrate on the job and answer calls and emails that are only related to the business. Lastly, I promote school-going children with an additional pair of socks whenever they make a purchase exceeding four sets.
Honesty, integrity, and social responsibility of Designer Sock’s activities help protect the business reputation and earn social trust in the society where it operates. One of the ethical dilemmas inherent in the business is where you purport to be the leading and best socks retailer, yet only one pair of socks per style is on the shelves. This can also be an ethical lapse since you may promise customers to meet the socks they like, but they pop in next time and meet the stock is out due to limited inventory.
The government’s primary role in a sole proprietorship is to protect customers or consumers. For instance, if Designer Sock’s products cause harm to the customers, the purchaser can take recourse in law and hold my business to account. The government also helps create an environment conducive for businesses to thrive by providing basic amenities such as water, electricity, a good road network, parking space, and a communication network (Herbert and Harto, 2022). Transport infrastructure is essential because it facilitates easy access to the physical business location, while the communication feature helps me reach distant customers through social media or mobile calls. These utilities play a significant role in enhancing a lively business, thus, increasing revenue and profitability. Lastly, the government regulates business activities to ensure they transact authorized goods and services for population consumption. Designer Socks enterprise is registered and licensed to operate a socks business under my leadership.
Designer Socks Marketing
The Designer Sock business is leveraging digital marketing as an anchor for success in a changing world. Digital marketing entails reaching massive multitudes through social media platforms, calls, and messaging (Herbert and Harto, 2022). For instance, the start of the business created a buzz about the idea on social media. Advertising on social media costs $50 for a scope of 500 persons, but I’m planning to increase it to $500 to reach 5000 people monthly.
The Designer Sock business is next to a sneaker shop operating for the past ten years. I opened it strategically to take advantage of the same audience we appeal to and draw from its established customer base. Consumers of sneakers and socks are the same, adding benefit by selecting its location next to the sneaker shop. Additionally, to market the business in the grand opening celebration, it spent about $571 for the entire experience. I invited the mayor for a ribbon-cutting ceremony, and all the local businesses and residents were in attendance. Also, my family was very proud during the grand opening and told everyone they knew about my success.
Domestic and Internal Business Feasibility
Today’s world has become a global village, and businesses are transacting beyond the topographical and territorial barriers and boundaries. Advanced telecommunication channels and social media have shortened the distance between the buyer and seller. The items are a call or a message away from a client in the current and dynamic business world. Therefore, as the Designer Sock business continues, it focuses on integrating and advertising its products on all social media platforms such as Facebook, Instagram, WhatsApp, Twitter, and Tiktok. This will reduce the business’ reliance on the physical customers visiting the shop and expand its market niche and revenue.
Designer Sock’s Information Technology SWOT Analysis
Strength
- I’m also specializing in offering exceptional customer service to in-store and online buyers.
- I have been running personal social media platforms; hence, easy to operate the Designer Sock social media accounts.
Weaknesses
- The business has an inefficient network infrastructure to reach out to customers online.
- The IT software is outdated and slow; thus, it does not provide real-time order statistics across the pool of online customers.
Opportunities
- The Designer Sock is situated in an area with a good network infrastructure offered by the government.
- The business will recruit proficient computer employees and can manage online customers without any challenges.
Threats
- Network security of suppliers and customers may negatively impact our operations if it is inferior or neglected.
- High cost of remaining current in highly dynamic and sophisticated communication technology infrastructures.
Current Financial Cash Flows
Budgetary Request to “Show Me the Money, INC.”
The above analysis of cash flows is without salaries since Designer Sock has not employed staff. However, that is not the ideal position and an assumption of an extra $4000 per month to help the proprietor run the business. Additionally, additional capital of $18,200 will be necessary to stock the inventory adequately and, finally, an extra $600 to beef up marketing and reach more than 4500 persons in advertisement and designer socks promotion. The following items budget will be adequate if we secure your financial help.
Budget Deficit 80,021.6
Since the initial capital investment is $19,578.40, there is a deficit of $80,021. Therefore, my appeal to “Show Me the Money, INC.” is to offer financial capital of $80,021 to bridge the investment gap. I have run the Designer Sock business since the previous financial year, the niche is unique, and its prospects are promising. The business is likely to triple its revenue and profitability with the necessary capital infusion. It did not make losses in the first year of operation, and it’s a clear indication that the Designer Sock enterprise is a feasible venture. Ultimately, this is a business worth your attention, and the investment returns will be fantastic.
Reference List
Herbert, J., & Harto, P. (2022). The influence of financial reporting quality, family ownership, and audit quality on investment efficiency. Academy of Accounting and Financial Studies Journal, 26, 1-13.
Sherano, J. (2021). Business plan: Valoumade. Doctoral dissertation. Universitas Multimedia Nusantara, 12-34.