crafting cultures final business plan
DESCRIPTION
Business Administration, Sample Business PlanTRANSCRIPT
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OFC VENTURE CHALLENGE
2014 BUSINESS PLAN COMPETITION
Tennessee State University
Members
Xinyi Yan
Mercy Sawe
Adrian Smith
Gbemileke Ogunranti
Olukayode Oke
ADVISORS
Anis Mnif, Kenneth Kungu
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EXECUTIVE SUMMARY
Crafting Cultures Inc. is a company that deals with the collection, global transportation and
distribution of the handicrafts from around the world with initial focus on products from Tunisia.
This includes products such as hand woven purses, textiles, olive woods, ceramic ornaments, pottery
and carpets, among others.
Our main objective is to create value-maximizing distribution channels which will provide artisans
sustainable avenues to sell their products in the global market place while providing them with
sustainable streams of income. We seek to create returns for our investors while seeking to eradicate
poverty in other parts of the world through market-based solutions.
There is a growing market for home accessory products, particularly in the high-end segment. The
global market for home accessories was estimated to be at least $100 billion in 2006. The home
accessory market is often used to estimate the demand for handcrafted goods. The American craft
market is one of the largest and most important markets for craft in the world, it imports home
accessories valued at $67 billion. Crafting Cultures Inc. will concentrate on premium handicraft
goods at the high-end segment which is a growing market in the United States. This market is
increasingly seeking a different look and labels reflecting diverse countries of origin. This market
seeks genuine and authentic handicraft products which many low-cost, large-scale mass-producers
and distributors cannot offer. Tunisian handicrafts are known to have a high demand in the USA due
to their unique look, a demand that has not yet been met. Crafting Cultures Inc. intends to provide the
market with unique and distinctive goods that have a story behind them and a distinct cultural
identity.
In doing this, we have identified our target markets as specialty shops/museum stores, discount
specialty stores, retailers, department stores, and mass merchants. Crafting Cultures Inc. will promote
its handicraft products channels including participation in international trade and gift fairs, electronic
media (a website linked with advanced search engine queries) and social media (Facebook, Twitter,
and YouTube).
In our initial operations, we will work with 20 Tunisian artisans who will be trained and contracted to
produce selected handicraft products for us. In addition, we will conduct frequent research and
development to keep us abreast of trends and constantly develop new designs and products in
collaboration with Tunisian artisans. Our Tunisia partner company will manage collection, labelling,
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and shipping of those products to the U.S. Once in the US, clearing, warehousing, distribution and
fulfillment of products will be contracted to OHL a 3rd
party Logistics Company who have
tremendous experience handling fulfillments for major corporations.
Based on our own projections, the estimated percentage mark up for our selected products ranges
from 35% to over 100% depending on the product. We believe that we can significantly improve on
our mark ups for several reasons. Our management team is composed of dedicated and
knowledgeable professionals, several of whom have a background in Supply Chain Management, a
core component of our business. They all are dedicated to work on improving the operational
efficiency to improve bottom lines for the company and artisans. Our collaboration with contracted
artisans and our strategy to engage in market-driven product design will help ensure sustainability of
our business. Lastly, there is tremendous government regulatory support for our business, both on
the US and Tunisian grounds based on the socio-economic potential the business portends for both
regions.
Given the above, Crafting Cultures Inc. is seeking a one-time seed investment of $1.5 million in
capital investment. This investment will ensure smooth flow of operation in the first year. After the
first year of operations, Crafting Cultures Inc. will be able to expand its business, improve on sales
and distribution channels and generate more revenue. By year 2, we project that the company will
generate enough funds be able to start paying back on capital investments.
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Table of Contents
EXECUTIVE SUMMARY .......................................................................................................................... ii
1.0 COMPANY BACKGROUND ......................................................................................................... 1
1.1 Our History ................................................................................................................................... 1
1.2 Vision Statement ........................................................................................................................... 1
1.3 Mission Statement ......................................................................................................................... 2
1.4 Our Values .................................................................................................................................... 2
1.5 Goals and Strategy ........................................................................................................................ 2
1.6 Unique Success Factor .................................................................................................................. 3
2.0 PRODUCT ........................................................................................................................................ 3
2.1 Product Categories ........................................................................................................................ 3
2.1.1 Ceramics ............................................................................................................................... 3
2.1.2 Carpets .................................................................................................................................. 3
2.1.3 Woodwork............................................................................................................................. 3
2.1.4 Mosaic ................................................................................................................................... 4
2.2 Product Design .............................................................................................................................. 4
3.0 MARKET ANALYSIS AND MARKET STRATEGY .................................................................... 4
3.1 Market Overview .......................................................................................................................... 4
3.2 Market Segment ............................................................................................................................ 5
3.3 Needs and Identification ............................................................................................................... 5
3.4 Pricing ........................................................................................................................................... 5
3.5 Market Acceptance ....................................................................................................................... 6
3.6 SWOT Analysis (see appendix II) ................................................................................................ 6
3.7 Marketing/Promotion strategy ...................................................................................................... 6
4.0 PLANNED OPERATIONS .............................................................................................................. 6
4.1 Pre-Shipping ................................................................................................................................. 6
4.1.1 Collection .............................................................................................................................. 6
4.1.2 Packaging .............................................................................................................................. 6
4.2 Shipping ........................................................................................................................................ 7
4.3 Distribution ................................................................................................................................... 7
4.4 Distribution Channels and Targeted Buyers ................................................................................. 7
4.4.1 Retail stores ........................................................................................................................... 7
4.4.2 E-commerce retailers (Internet) ............................................................................................ 7
4.4.3 Trade and Gift Fairs .............................................................................................................. 7
4.4.4 Fair Trade Buyers ................................................................................................................. 8
5.0 MANAGEMENT AND OWNERSHIP ............................................................................................ 8 5.1 Structure and Common Stock ...................................................................................................................... 8
5.2 Key Individuals ........................................................................................................................................... 8
5.3 Personnel Needs .......................................................................................................................................... 9
5.4 Board of Directors ....................................................................................................................................... 9
6.0 FINANCIAL PLAN.......................................................................................................................... 9
6.1 Start-up Cost ................................................................................................................................. 9
6.2 Adjustments in the Operating Budget ........................................................................................... 9
7.0 OFFERING ..................................................................................................................................... 10
7.1 Proposal ...................................................................................................................................... 10
7.2 Exit Strategy ............................................................................................................................... 10 APPENDIX I: Product Samples ................................................................................................................................. 11
APPENDIX II: SWOT Analysis and Organization Chart........................................................................................... 12
APPENDIX III: Operating Expenses .......................................................................................................................... 13
APPENDIX IV: Income Statement and Table 1 ......................................................................................................... 14
APPENDIX V: Cash Flow Statement ......................................................................................................................... 15
APPENDIX VI: Operations Schematic ...................................................................................................................... 16
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1.0 COMPANY BACKGROUND
1.1 Our History
Crafting Cultures Inc. is a company that deals with the collection, global transportation and
distribution of the handicrafts and allied products. Our company originated in the halls of Tennessee
State University out of conversations between five dedicated students focused on creating a successful
entrepreneurial venture while addressing social issues such as poverty alleviation and income
inequality. As social entrepreneurs, we were looking for wealth generation opportunities that also
contribute to social good. Crafting Cultures was created to exploit a tremendous revenue-generating
potential that exists in the handicraft business afforded to those who could create market solutions to
connect handicraft artisans and their products around the world with unmet demand for those products
in resource-rich global markets.
Products in the crafts sector represent over $10 billion in retail sales in the US. African goods
make up a tiny fraction of this market, even though they produce some of the most unique products
which have great demand. Most of the gift or decorative items with African motifs are actually mass-
produced in Asia. The number of direct importers of African goods is very limited. The small market
share of African goods in the crafts market is attributed generally to the logistical difficulty experienced
by artisans in meeting the demands of markets such as America.
We see tremendous opportunities for generating sustainable revenues for our company, while
promoting the dignity of artisans through fair prices and sustainable income which lift their quality of
life, while affording consumers access to tasteful handicraft gifts, accessories and home decor from
around the world. This will create value for us, customers and artisans.
Our main objective is to create value-maximizing distribution channels which will provide
artisans sustainable avenues to sell their products in the global market place while providing them with
sustainable streams of income. We seek to create returns for our investors while seeking to eradicate
poverty in other parts of the world through market-based solutions.
Crafting Cultures Inc. is seeking seed investment of 1.5 million dollars in capital investment. This
investment will ensure smooth flow of operation in year one. We project increased revenue based on
expanded and improved sales channels. By year 2, the company will generate enough funds be able to
start to payback the capital investment.
1.2 Vision Statement
Creating bridges to worlds cultures through the imagination of artisans while enhancing
livelihoods.
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1.3 Mission Statement
To be an innovative leader in the distribution of craft products and improving means of livelihood
for talented low income artisans around the world by providing new market opportunity for their
products.
1.4 Our Values
Crafting Cultures Inc. is guided by several Core Organizational Values in all of our decisions.
Fair Prices, Sustainable Income and Improved Quality of Life for Artisans
Partnership and Collaboration: Our relationships with artisans, employees, customers and
shareholders are based on mutuality, respect, and compassion
Communication, Transparency and Trust: We strive for honesty and integrity in all our
interactions, and work to create and maintain trust with our stakeholders
Sustainable Development: We believe in long-term environmental, economic, and social
sustainability, and strive to practice responsible stewardship in all of our operations
Culture, Craft and Tradition: We believe that cultural continuity and pride in heritage sustains
the spirit of individuals
Quality: We strive for the highest quality possible in all of our products and services
1.5 Goals and Strategy
Crafting Cultures will be selling handicrafts products within six months of investments. Within
the first year we plan to:
Negotiate, develop and facilitate the signing of handicraft production contracts with identified
artisans in Tunisia within 2 months of funding
Negotiate, develop and facilitate the signing of contracts with an identified handicrafts logistics
company in Tunisia to collect and ship products within 2 months of funding
Negotiate, develop and facilitate the signing of contracts with a logistics company in USA for
receiving, storage and distributions in the USA within 2 months of funding
Negotiate and sign a contract for a part-time consultant to advise the company on handicraft
trends, and participate in research and development of future products
Develop, test and launch an online selling platform for retail and wholesale handicraft selling of
handicraft within six months of funding
Import one container featuring a variety of selected handicrafts every quarter, with first container
landing in the USA within six months
Participate in two Handicraft fairs in the USA within the first year
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In year 2 we plan to:
Import two containers featuring a variety of selected handicrafts every quarter
Participate in three Handicraft fairs in the USA
By Year 3, Crafting Cultures Inc. expects to have created a considerable amount of market
presence and be well positioned to target multiple countries simultaneously. Our initial plans is to work
with 20 Tunisian artisans for our products supply. Our partner company will manage collection and
shipping of products to the U.S. In addition, we will conduct regular research and development to keep
abreast with trends and constantly develop new designs and products.
1.6 Unique Success Factor
A McKinsey study in 2010 showed the following unique value for Tunisian made art works:
Tunisia as a producer and exporter country promises 20-30% lower operating costs than competing
countries such as Morocco or Turkey. There is zero percent corporate tax for totally exporting
companies; 15-25% investment subsidy for projects designated as regional development areas; and
training grants of up to 50% of the training costs for artisan re-training. These are all factors in favor
of our business in Tunisia.
In the United States, the government has committed millions of dollars to support trade in Tunisia
indicating a favorable regulatory environment for companies trading with Tunisia. USAID has
undertaken several studies on the Handicraft market in Tunisia
2.0 PRODUCT
Crafting Cultures Inc. products would be collection of handicrafts from around the world with
initial focus on products from Tunisia which include hand woven purses, textiles, olive woods, Ceramic
ornaments, pottery and carpets.
2.1 Product Categories
Crafting Cultures Inc. will be focusing on the following product categories (See Appendix I):
2.1.1 Ceramics
The two main centers of ceramic in Tunisia are Nabeul on the Cap Bon peninsula and Guellala on
the islands of Jebra. Nabuel is known for its brightly colored, glazed pottery. Much of this is produced
solely for visitors and is of very good quality.
2.1.2 Carpets
Tunisian handmade carpets are highly sought-after and consist of two types: knotted and woven
varieties. The knotted variety cost more and has up to 160,000 knots per square meter.
2.1.3 Woodwork
The popular wooden items on sale in Tunisia include salad bowls and containers for salad
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dressing, and wooden dolls dressed in colorful clothes. The material used in making this woodworks is
mainly olive-tree wood suitable for making bowls and oil containers.
2.1.4 Mosaic
Mosaic work in Tunisia dates back to Punic times but flourished with the Roman occupation.
This art work produced with intricate patterns using finely polished pieces of brick, glass and marble.
Mosaics arts are used in tilings for house or as walls of buildings.
2.2 Product Design
In developing designs, trend information is very important. Marketing experts advise that 10 to 20% of a
product line should be based on trends. Our consultant will advise the company on design trends which will form
the basis for training the artisans on subsequent product designs.
3.0 MARKET ANALYSIS AND MARKET STRATEGY
The Tunisian handicraft business is promising due to high demand of its products in US and globally.
3.1 Market Overview
There is a growing market for home accessory products, particularly in the high-end segment.
The global market for home accessories was estimated to be at least $100 billion in 2006 according to
the study done by US AID in 2006 titled Global Market Assessment for Handicrafts. The home
accessory market is often used to estimate the demand for handcrafted goods. The report identifies
major markets for home accessory markets including United States, Germany, France, United
Kingdom, Spain, the Netherlands, Japan, Hong Kong, among other Western European nations. The
American craft market is one of the largest and most important markets for craft in the world, it imports
home accessories valued at $67 billion. More than 127000 people are currently employed in the American art
and craft sector. Growth is expected for Western markets for these products, and demand for these
products is also expected to grow in other regions such as China and India where middle-class
populations are also expanding. This trend suggests that there are numerous and expanding
opportunities for artisans in developing countries to create products for these markets.
China and India, Vietnam along with several other Asian countries, currently dominate handicraft
production worldwide. However, Chinas dominance has been pegged on mass-produced low-cost, high
volume, Western-designed goods. According to the USAID report (2006) a China backlash trend
from both from buyers and consumers may be developing in the marketplace, as they increasingly look
for a different look and labels reflecting diverse countries of origin. Countries such as Indonesia,
Thailand, Cambodia, and Philippines offer compelling products but face challenges. Some problems
are: a limited understanding of foreign markets, changes in customer trends and styles resulting from an
insufficient capacity to conduct market research. This trend where consumers are increasingly looking
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for unique products with unique designs displaying distinct identity differentiated from traditional
producer and supplier countries of craft good can be met by handcrafts from Tunisia.
Tunisian handcrafts are known to have a high demand in the USA but that demand is rarely met
due to logistical challenges and lack of a proper knowledge of the US market and its buyers,
appropriate product designs, and marketing. The value of Tunisian handicrafts exports reached 385
million dinars ($244 million) from January to June 2012, according to figures provided by the National
Crafts Board (Office National de l'Artisanat ONA). In two recent trade fairs in the US market, Tunisian
handicraft products enjoyed unprecedented sales figures indicating a great demand for the Tunisian
handicraft products. It was tremendous vote of confidence from trained shoppers of the quality and
value of those products in meeting US market demand and trends.
3.2 Market Segment
Crafting Cultures Inc. will concentrate on premium good at the high-end segment. There is a
growing market for handicraft products, particularly in the high-end segment especially in the United
States. Crafting Cultures Inc. has established supplies of products that met the international standard in
terms of the quality and the quantity of the production. The unique nature of the goods is that they are
of good quality and are originally made in Tunisia. According to USAID report in 2006, many buyers
and consumers seek unique products made in countries other than China. Our consultant will help in
market research and product development to ensure our products address the high-end segment
changing tastes and desires.
3.3 Needs and Identification
There is a market for genuine and authentic handicraft products targeted to the needs and tastes of high-
end market segment niche consumers who are not adequately served by low-cost, large-scale mass-
producers and distributors. Tunisian handcrafts are known to have a high demand in the USA due to
their unique look, but that demand is rarely met. Crafting Cultures Inc. intends to provide the market
with unique and distinctive goods that have a story behind them and a distinct cultural identity from
Tunisian Handicraft producers. This will provide access to the US market for Tunisian artisans, creating
employment in that region and thereby addressing one of our primary missions. It will also provide
customers with access to unique handicraft products.
3.4 Pricing
Crafting Cultures Inc. purchases and sells a variety of handicraft products. Each product will be
separately priced based on its cost. Our price is set based on two major factors: US handicraft market price
research and our total product cost (see table 1 in appendix IV). The percentage mark up for products ranges
from 35% to over 100% depending on the product.
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3.5 Market Acceptance
The marketing efforts will mainly target the high end consumers of the products and early buyers
will include the home and interior decor, Museums hotels and restaurants the recreational centers,
libraries and the high end offices. Those who purchase the crafts could use it for personal fulfillment
gifts and souvenirs for loved ones.
3.6 SWOT Analysis (see appendix II)
3.7 Marketing/Promotion strategy
Crafting Cultures Inc. will promote its handicraft products using various methods. For instance,
participation in international trade and gift fairs such as the NY Now which is held in February and
August of every year. Also, electronic media (a website linked with advanced search engine queries)
and social media (Facebook, Twitter, and YouTube) will be utilized since, targeted direct end users are
home decor and interior design professionals that rely on constant and reliable decorations that go
according to the existing trend in the season.
4.0 PLANNED OPERATIONS
Our Operations is divided into three parts namely:
1) Pre-shipping
2) Shipping
3) Distribution
4.1 Pre-Shipping
This stage of the operation involves two major activities: crafts collection and packaging
4.1.1 Collection
We create a collection center in Tunisia which will be managed by our agent who is licensed by
the World Fair Trade Organization. This agent will be our business partner in Tunisia who liaises with
the selected artisans about necessary details (contract agreement, processing fees, delivery, returns, etc.)
and collect all merchandises for preparation for shipment. Initially 20 artisans will be contracted to
supply selected products to our collection center in Tunisia.
4.1.2 Packaging
Once all the items are delivered to the collection unit in Tunisia, the person in charge will oversee
the process of individually packing items, using standardized size boxes, and labeling boxes and case
packaging with specific labels for easy re-shipping. If the order is delivered directly to large retailers,
most of these buyers will require very specific packaging requirements which will be executed in
Tunisia. The warehouse manager in Tunisia will be in charge of providing all the shipping forms and
services. These will include custom box availability, labeling, as well as specific packaging (by sets,
individually, etc.). The labels are bar coded so as to conform to world labeling standards.
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4.2 Shipping
Our operation will start by shipping of one container per quarter to designated port at the east
coast US. Our orders will be consolidated from several producers into a 20ft container. The first order
will consist of a minimum order of 2,500 hand woven purses, 1,000 units of Mosaic art, 3, 400 units of
Olive- wood products comprising of 400 large salad bowls and 3,000 kitchen utensils, 1,500 bales of
textile and 100 rugs (50 knotted rugs and 50 woven rugs).
Shipping by ocean will be our main mode of transportation. However, air freight will be used for
very limited orders and based on customers request only, when dealing with small orders of different
products/artisans and limited delivery time.
4.3 Distribution
In the United States, the clearing, warehousing, distribution and fulfillment of products will be
contracted to OHL a 3rd
party Logistics Company. We choose OHL because they have distribution
centers within the Nashville area which has 7 major highways running through it. They also have years
of experience handling importations of goods to the US and handling fulfillments for major
corporations (operations schematic See appendix VI).
4.4 Distribution Channels and Targeted Buyers
Crafting Cultures Inc. will focus on the following 4 different categories:
4.4.1 Retail stores
Retailers sell goods directly to individual end users and are subdivided into large retailers,
specialty shops/museum stores, discount specialty stores, department stores, mass merchants and chain
stores. Our initial target will be specialty shops and museum stores including museum stores, gift shops,
coffee companies, garden shops, zoos, small boutiques, home designers, home dcor stores among
others. Specialty shops in particular are interested in unique, handmade crafts and normally sell higher
priced products. We will also target department stores which carry specialty products. Once a brand
name has been established, we will target the large retailers, department stores and discount specialty
stores such as TJ Maxx, Marshalls, Home Goods among others.
4.4.2 E-commerce retailers (Internet)
Another major channel of emphasis to promote our products is on the internet through a well-
designed e-commerce website for crafting cultures Inc. Also, catalogs will be utilized together with the
online retail channel. However, product lines will change frequently on the website as buyers search the
internet for novelty gifts.
4.4.3 Trade and Gift Fairs
Participation in international trade and gift fairs is a primary sales outlet for handicraft products
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for small retailers as they attract tens of thousands of prospective buyers. They allow suppliers like us
to interact with potential U.S. buyers, allow them to see and touch our products, and create new supplier
relationships especially with small buyers who may lack the resources to travel overseas to find
products. Previous participation by Tunisian handicraft producers in trade fairs resulted in return of
150% or more on total costs of participation.
4.4.4 Fair Trade Buyers
These buyers are from both larger and smaller companies and are interested in working with
artisans who respect fair trade practices. We are currently in the process of joining the World Fair Trade
Organization, as a member we will have access to the fair trade distribution network.
5.0 MANAGEMENT AND OWNERSHIP
Crafting Cultures Inc. has a passionate and dedicated management team with experience and
education in various disciplines. Until a formal Board of Directors is appointed, Crafting Cultures will
consult the TSU Director of the Small Business Development Center (SBDC).
5.1 Structure and Common Stock
Crafting Cultures Inc. will be a C Corporation with 100,000 authorized common stock shares.
Three seats out of nine in the Board of Directors will be reserved for the investors.
5.2 Key Individuals
The management team of Crafting Cultures, Inc is a major competitive advantage for the
company. Majority of our team have educational backgrounds in Supply Chain Management, a core
component of our business. Each individual has settled in a position that compliments his/ her
knowledge base, background, and personal interests. (See appendix II for organization chart).
Mr. Olukayode Oke (Chief Executive Officer) has the responsibility to facilitate the strategic
planning and goal setting for the company, and also fidelity to our core values in our operations. Mr.
Oke holds a Bachelors degree in Systems Engineering. He is currently an MBA student concentrating
in Supply Chain Management and MIS.
Mr. Adrian Smith (Chief Financial Officer) is responsible for maintaining and safeguarding the
financial health of the company including such duties as Strategic financial planning, cost management,
budgeting and forecasts, and financial reporting. He holds a Bachelors degree in Business
Administration, Accounting option. He currently is pursuing an MBA, Finance option.
Mr. Gbemileke Ogunranti (Chief Operations Officer) will be responsible for the daily operations of
the company ensuring operational efficiency in the whole value chain. Mr. Ogunranti holds and
Bachelors degree in Mechanical Engineering, Masters of Science in Industrial and Production
Engineering. He is currently an MBA student in Supply Chain Management and MIS.
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Ms. Mercy Sawe (Vice President of Research and Development) is responsible for coordinating
Research & Development efforts and the development of new products to meet customer tastes and
trends in the US market. She will liaise with the Vice President for Sales and Marketing in executing
her roles. Mercy, a CPA, holds a Bachelors degree in Business Administration. She is currently
pursuing an MBA degree with a concentration in Supply Chain Management.
Ms. Xinyi Yan (Vice President of Sales and Marketing) will be responsible for developing and
sustaining our strategic marketing and sales efforts. She will be responsible for development of our
marketing strategy, our internal and external marketing initiative and materials, and market research.
She will liaise with our Vice President of Research and Development in development of new products
and new markets. Ms. Yin holds a Bachelors degree in Economics. She is currently an MBA student,
Supply Chain Management concentration.
Mr. Anis Mnif, a Tunisian national and current MBA program director at Tennessee State University,
will serve as a consultant in our initial start-up efforts. Mr. Anis is a subject matter expert in Handicraft
products from Tunisia and has participated in past efforts for creating exposure of Tunisian artisans to
the US market. He holds an MBA from Tennessee State University, and a Masters in Economic
Development from Vanderbilt University.
5.3 Personnel Needs
Crafting Cultures Inc. founding members will initially fulfil essential roles within the company.
However, as the company evolves the roles may be re-evaluated. Part-time consultants will be
contracted to offer specialty services such as legal advice and contract administration, and product
research and development. As the company evolves, full-time employees may be considered for these
roles.
5.4 Board of Directors
After receiving the initial investment funding, Crafting Cultures will form a nine member Board
of Directors. Three seats will be reserved for the investors, while others are open for management,
elected officials, and professionals with extensive business and marketing experiences.
6.0 FINANCIAL PLAN
6.1 Start-up Cost
In reference to the income statement we will need investment financing of 1.5 million to buy materials
for the second quarter of the first year (see appendix III & IV). During this second quarter of the first year
we have projected our first inflows of revenue from customer receipts (see appendix V)
6.2 Adjustments in the Operating Budget
Furniture- This item features only in year one as initial start-up cost.
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Office Supplies- In 2nd
year, we propose less paper transactions resulting in 34% cost cuts.
Bank Fees- Bank Fees fluctuate throughout each year. We have a free small business account, but we
are being charged currency exchange fees. The breakdown of this fee is: 0.3% of COGS (Goods
bought from artisans in Tunisia) + 0.3% of Warehouse expense in Tunisia.
Shipping and custom clearance- Shipping and related expenses are estimated at $20,000 for the first
year, with an increase of $20,000 every year for next two years (see appendix III).
Warehouse (Tunisia and US) - Warehouse expense increase by 20% each year to account for an
increasing amount of warehouse space needed.
Products Delivery- Product delivery expense is expected by 50% for each additional container.
Booth Rental and Design (Trade Show) On average it cost about $20,000 for booth/selling space in
a trade show. It is projected to have a return of 150% or more of its cost.
7.0 OFFERING
7.1 Proposal
Crafting Culture Inc. is projecting and seeking a onetime capital investment of $1.5 million. The
venture capitalist will be given 40 percent ownership in the company as well as three of the nine
member seats on the Board of Directors. At the conclusion of 3 years, Crafting Cultures Inc. founding
members will purchase the investors shares in the company.
7.2 Exit Strategy
By the end of year three, Crafting Cultures, Inc. will have demonstrated its service capabilities as well
as the financial success of the company. It is then that the firm in collaboration with stakeholders will
discuss possible exit strategies.
1. An option would involve the acquisition and merger of Crafting Cultures by a leading or equally
successful company. The selling price will be negotiated with the stakeholders based on the following
criteria:
- Market share size and penetration
-Milestones achieved,
- Patent portfolio
2. Crafting Cultures Inc. will go public by the end of year three, through an initial public offering (IPO).
Investors would retain 40% of the firm in preferred stock. This will provide the investor with the
leverage to negotiate a stock selling price and a generous return on investment.
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APPENDIX I: Product Samples
WOODWORKS
CERAMICS
MOSAIC
TEXTILES
Scarves
Fouta
Bed Spreads
Curtain Throw
CARPETS
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APPENDIX II: SWOT Analysis and Organization Chart
Organizational Chart
Strengths Weaknesses
Lower price for products compared to current
or existing product prices in market
Strong relationship with private and partner
companies in Tunisia.
Product quality and its Uniqueness
Company foundation is based on tested two
years market research.
U.S. government support (Duty free)
Consumers have limited knowledge of
Tunisian handicraft products, as well as their
background stories
Limited production capacity and slow
production process
Opportunities Threats
Growing demand in US market for distinct and
unique products from different cultures
Growing demand for handmade global and
cultural goods in the US driven by growing
interest in interior decoration and greater
spending on home furnishings
Emerging markets with a growing middle-class
Trade agreements between US and Tunisia
with tax incentives (Duty Free)
Frequently changing market trends
Increased competition from producers all
over the world, particularly in China and
other emerging Asian county producers
Frequently changing market trends
Government Regulations & trade policies
Production capacity (skill and time lag) for
particular hand-made products
Board of Directors
Adrain Smith
Chief Financial Officer
Oke Olukayode
Chief Executive Officer
Leke Ogunranti
Chief Operations Officer
Xinyi Yan
VP Sales & Marketing
Mercy Sawe
VP Research & Development
Consultant
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APPENDIX III: Operating Expenses
No. Budget Item Per Quarter Total cost
1
1.1 5 employees @22,000 110,000 27500 110,000
1.2
Subtotal 27500 110,000
2
2.1 Furniture 15,000 3750 15,000
Subtotal 3750 15,000
3
3.1 Local and international calls 480 120 480
3.2 Office supplies & Equipment 2,900 725 2,900
3.3 Internet fees 240 60 240
3.4 Bank fees 652.8 163.2 652.8
3.5 Office space 8820 2205 8820
Subtotal 3273.2 13092.8
4 Contractual
4.1 Consultants 20,000 5000 20,000
4.2 Shipping and custom clearance 20,000 5000 20,000
4.4 Online store platform maintenance 1,500 375 1,500
4.5 Warehouse fee (In Tunisia) 20,000 5000 20,000
4.6 Warehouse in the US 22,000 5500 22,000
4.7 Products delivery (in the US) 8,000 2000 8,000
4.8 Marketing Material Design and Printing 20,000 5000 20,000
4.9 Research & Development 20,000 5000 20,000
4.10 Booth rental and design(Trade show) 20,000 5000 20,000
Subtotal 37875 151500
5
5.1 2,500 purses $22.00 per unit 55000 220000
5.2 1,000 Mosaic boxes $20.00 per unit 20000 80000
5.3 3,400 Olive wood products
3000 utensils $9.50 per unit 28500 114000
400 large bowls $50.00 per unit 20000 80000
5.4 1,500 Textile
250 Fouta "Patridge Eye" 100x200cm $20.00 per unit 4100 16400
250 Fouta "Patridge Eye" 50x80cm $9.00 per unit 2250 9000
250 Fouta "Chaine Beige" 100x200cm $20.00 per unit 5000 20000
250 Fouta "Chaine Beige" 50x80cm $9.00 per unit 2250 9000
400 Scarfs "Zine" 70x200cm $20.00 per unit 8000 32000
100 Scarfs "Noor" 70x200cm $20.00 per unit 2000 8000
6 100 Rugs
6.1 50 Knotted rugs $40.00 per unit 2000 8000
6.2 50 Woven rugs $50.00 per unit 2500 10000
Subtotal 151600 606400
7
7.1 Travel(Local and International) 15,000 3750 15,000
Subtotal 3750 15000
Grand Total 227,748.20 910,993
Travel expenses
Year one Crafting Cultures Inc. Operating Expenses budget
Salaries (+ tax)
Equipment
Administrative costs
Cost of Goods Sold (1 Container per Quarter)
No. Budget Item Per Quarter Total cost
1
1.1 5 employees @22,000 110,000 27500 110,000
1.2
Subtotal 27500 110,000
2
2.1 Furniture 0 0
Subtotal
3
3.1 Local and international calls 480 120 480
3.2 Office supplies & Equipment 1,000 250 1,000
3.3 Internet fees 240 60 240
3.4 Bank fees 1450.8 362.7 1450.8
3.5 Office space 8820 2205 8820
3.7 Copying and postage 0 0 0
Subtotal 2997.7 11990.8
4 Contractual
4.1 Consultants 20,000 5000 20,000
4.2 Shipping and custom clearance 60,000 15000 60,000
4.4 Online store platform maintenance 1,500 375 1,500
4.5 Warehouse fee (In Tunisia) 28,800 7200 28,800
4.6 Warehouse in the US 31,680 7920 31,680
4.7 Products delivery (in the US) 18,000 4500 18,000
4.8 Marketing Material Design and Printing 20,000 5000 20,000
4.9 Research & Development 20,000 5000 20,000
4.10 Booth rental and design(Trade show) 60,000 15000 60,000
Subtotal 64995 259980
5
5.1 2,500 purses $22.00 per unit 165000 660000
5.2 1,000 Mosaic boxes $20.00 per unit 60000 240000
5.3 3,400 Olive wood products
3000 utensils $9.50 per unit 85500 342000
400 large bowls $50.00 per unit 60000 240000
5.4 1,500 Textile
250 Fouta "Patridge Eye" 100x200cm $20.00 per unit 12300 49200
250 Fouta "Patridge Eye" 50x80cm $9.00 per unit 6750 27000
250 Fouta "Chaine Beige" 100x200cm $20.00 per unit 15000 60000
250 Fouta "Chaine Beige" 50x80cm $9.00 per unit 6750 27000
400 Scarfs "Zine" 70x200cm $20.00 per unit 24000 96000
100 Scarfs "Noor" 70x200cm $20.00 per unit 6000 24000
6 100 Rugs
6.1 50 Knotted rugs $40.00 per unit 6000 24000
6.2 50 Woven rugs $50.00 per unit 7500 30000
Subtotal 454800 1819200
7
7.1 Travel(Local and International) 15,000 3750 15,000
Subtotal 3750 15000
Grand Total 554,042.70 2,216,170.80
Travel expenses
Year two Crafting Cultures Inc. Operating Expenses budget
Salaries (+ tax)
Equipment
Administrative costs
Cost of Goods Sold
No. Budget Item Per Quarter Total cost
1
1.1 5 employees @22,000 110,000 27500 110,000
1.2
Subtotal 27500 110,000
2
2.1 Furniture 0 0
Subtotal 0 0
3
3.1 Local and international calls 480 120 480
3.2 Office supplies & Equipment 1,000 250 1,000
3.3 Internet fees 240 60 240
3.4 Bank fees 981.6 245.4 981.6
3.5 Office space 8820 2205 8820
3.7 Copying and postage 0 0 0
Subtotal 2880.4 11521.6
4 Contractual
4.1 Consultants 20,000 5000 20,000
4.2 Shipping and custom clearance 40,000 10000 40,000
4.4 Online store platform maintenance 1,500 375 1,500
4.5 Warehouse fee (In Tunisia) 24,000 6000 24,000
4.6 Warehouse in the US 26,400 6600 26,400
4.7 Products delivery (in the US) 12,000 3000 12,000
4.8 Marketing Material Design and Printing 20,000 5000 20,000
4.9 Research & Development 20,000 5000 20,000
4.10 Booth rental and design(Trade show) 40,000 10000 40,000
Subtotal 50975 203900
5
5.1 2,500 purses $22.00 per unit 110000 440000
5.2 1,000 Mosaic boxes $20.00 per unit 40000 160000
5.3 3,400 Olive wood products
3000 utensils $9.50 per unit 57000 228000
400 large bowls $50.00 per unit 40000 160000
5.4 1,500 Textile
250 Fouta "Patridge Eye" 100x200cm $20.00 per unit 8200 32800
250 Fouta "Patridge Eye" 50x80cm $9.00 per unit 4500 18000
250 Fouta "Chaine Beige" 100x200cm $20.00 per unit 10000 40000
250 Fouta "Chaine Beige" 50x80cm $9.00 per unit 4500 18000
400 Scarfs "Zine" 70x200cm $20.00 per unit 16000 64000
100 Scarfs "Noor" 70x200cm $20.00 per unit 4000 16000
6 100 Rugs
6.1 50 Knotted rugs $40.00 per unit 4000 16000
6.2 50 Woven rugs $50.00 per unit 5000 20000
Subtotal 303200 1212800
7
7.1 Travel(Local and International) 15,000 3750 15,000
Subtotal 3750 15000
Grand Total 388,305.40 1,553,221.60
Travel expenses
Year two Crafting Cultures Inc. Operating Expenses budget
Salaries (+ tax)
Equipment
Administrative costs
Cost of Goods Sold
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APPENDIX IV: Income Statement and Table 1
Table 1: Sales Revenue Breakdown per Container
2,500 purses @ $50.00 per unit 1,500 Textile
1,000 Mosaic boxes @ $40.00 per unit 250 Fouta "Patridge Eye" 100x200cm @$50.00 per unit
3,400 Olive wood products 250 Fouta "Patridge Eye" 50x80cm @$22.50 per unit
3000 utensils @$20.00 per unit 250 Fouta "Chaine Beige" 100x200cm @$50.00 per unit
400 large bowls @ $85.00 per unit 250 Fouta "Chaine Beige" 50x80cm @ $22.50 per unit
100 Rugs 400 Scarfs "Zine" 70x200cm @$50.00 per unit
50 Knotted rugs @ $200 per unit 100 Scarfs "Noor" 70x200cm @ $50.00 per unit
50 Woven rugs @$500 per unit
Year 3 Total Quarter 4 Quarter 3 Quarter 2 Quarter 1 Year 2 total Quarter 4 Quarter 3 Quarter 2 Quarter 1 Year 1 Quarter 4 Quarter 3 Quarter 2 Quarter 1
Sales & Investment
(first Quarter) 4,263,000.00$ 1,065,750 1,065,750 1,065,750 1,065,750 2,842,000.00$ 710,500 710,500 710,500 710,500 2,065,750.00$ 355,250.00$ 355,250.00$ 355,250.00$ 1000000
Trade Show Revenue 150,000.00$ 50,000 50,000 50,000 100,000.00$ 50,000 50,000 50,000.00$ 50,000.00$
Total Revenue 4,413,000.00$ 1,065,750.00$ 1,115,750.00$ 1,115,750.00$ 1,115,750.00$ 2,942,000.00$ 710,500.00$ 760,500.00$ 710,500.00$ 760,500.00$ 2,115,750.00$ 355,250.00$ 355,250.00$ 405,250.00$ 1000000
Cost of Goods Sold 1,819,200.00$ 454,800 454,800 454,800 454,800 1,212,800.00$ 303,200 303,200 303,200 303,200 606,400.00$ 151,600.00 151,600.00 151,600.00 151,600.00
Gross Profit 2,593,800.00$ 610,950.00$ 660,950.00$ 660,950.00$ 660,950.00$ 1,729,200.00$ 407,300.00$ 457,300.00$ 407,300.00$ 457,300.00$ 1,509,350.00$ 203,650.00$ 203,650.00$ 253,650.00$ 848,400
Selling / Contractual /
Administrative
Expense 396,970.80$ 99,242.70 99,242.70 99,242.70 99,242.70 340,421.60$ 85,105.40 85,105.40 85,105.40 85,105.40 304,592.80$ 76148.2 76148.2 76148.2 76148.2
Net Operating Income 2,196,829.20$ 511,707 561,707 561,707 561,707 1,388,778.40$ 322,195 372,195 322,195 372,195 1,204,757.20$ 127,502 127,502 177,502 772,252
Other Non-Operating
Expense (Income) -$
Earnings Before Taxes 2,196,829.20$ 511,707 561,707 561,707 561,707 1,388,778.40$ 322,195 372,195 322,195 372,195 1,204,757.20$ 127,502 127,502 177,502 772,252
Income Taxes 439,365.84$ 102,341 112,341 112,341 112,341 277,755.68$ 64,439 74,439 64,439 74,439 240,951.44$ 25,500 25,500 35,500 154,450
Income Before
Extraordinary Items 1,757,463.36$
409,366 449,366 449,366 449,366
1,111,022.72$
257,756 297,756 257,756 297,756
963,805.76$
102,001 102,001 142,001 617,801
Total Extraordinary
Items -$
Net Income 1,757,463.36$ 409,366 449,366 449,366 449,366 1,111,022.72$ 257,756 297,756 257,756 297,756 963,805.76$ 102,001 102,001 142,001 617,801
Crafting Cultures Inc. Pro Forma Income Statement
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APPENDIX V: Cash Flow Statement
-20,000
-266,970.80-110,000
-439,365.843,576,663
0
00
4,332,291.48
4,332,291.48
Cash receipts from
Year 3
Crafting Cultures Inc.
Cash Flow Statement
Cash at beginning of Year $ 2,574,828.48
OperationsCash receipt from customers 4,413,000Cash paid for
Research and DevelopmentGeneral operating and
administrative expensesWage expenses
Net cash Flow from Investing -1,819,200
Income TaxesNet Cash Flow from Operations
Investing ActivitiesCash paid for
Purchase of materials and
equipment -1,819,200
Net increase in Cash
Cash at End of year
Financing Activities
Net Cash Flow from Financing Activities
-20,000
-159,592.80-110,000
-240,951.44585,205.76
0
Cash receipts from1,500,000
1,463,805.761,463,805.76
General operating and administrative
expenses
Year1
Crafting Cultures Inc.Cash Flow Statement
Cash at beginning of Year
OperationsCash receipt from customers 1,115,750Cash paid for
Research and Development
Wage expensesInterestIncome Taxes
Net Cash Flow from Operations
Investing ActivitiesCash paid for
Purchase of materials and equipment -621,400
1,500,000
Net cash Flow from Investing Activities -621,400
Financing Activities
Net increase in CashCash at End of year
Venture Funding
Net Cash Flow from Financing Activities
-20,000
-210,421.60-110,000
-277,755.682,323,822.72
00
0
2,574,828.48
2,574,828.48
Year 2
Crafting Cultures Inc.
Cash Flow Statement
Cash at beginning of Year $ 1,463,805.76
OperationsCash receipt from customers 2,942,000Cash paid for
Research and DevelopmentGeneral operating and administrative
expensesWage expenses
Net cash Flow from Investing -1,212,800
Income TaxesNet Cash Flow from Operations
Investing ActivitiesCash paid for
Purchase of materials and equipment -1,212,800
Net increase in Cash
Cash at End of year
Financing Activities
Net Cash Flow from Financing Activities
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APPENDIX VI: Operations Schematic
Product and Information Flow